The CFPB has vacated a rule established in October under the Biden administration after a lawsuit from the Bank Policy Institute and other banks. Chief legal officer Mark Paoletta announced in court that the rule was deemed unlawful by Bureau leadership. The plaintiffs argue it imposes excessive compliance costs and fails to clarify liability regarding consumer data misuse. Additionally, the CFPB faces significant budget cuts and job reductions as proposed by the Trump administration, despite a temporary court ruling blocking these cuts.
Mark Paoletta, the CFPB's chief legal officer, confirmed in a federal court filing that the reason for vacating the rule stemmed from an immediate lawsuit from the Bank Policy Institute.
The banking groups argued that the rule, created under Section 1033 of the Dodd-Frank Act, would be expensive to follow and didn’t clearly address who's responsible for fraud.
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