Examiners at the US Consumer Financial Protection Bureau have adopted a lighter touch in company inspections this year, with more than half of exams undergoing an "expedited review" that identifies only minor lapses. This shift, according to sources, is driven by pressure from the agency's new political leadership, who have signaled that thorough scrutiny is unwelcome and that examiners' jobs could be at risk.
The shift to a lighter-touch examination process at the US Consumer Financial Protection Bureau could potentially expose consumers to greater harm if serious compliance issues are overlooked or minimized by the agency, impacting the financial industry's oversight.
Examiners at the US Consumer Financial Protection Bureau (CFPB) have adopted a lighter touch in company inspections this year, with more than half of exams undergoing an "expedited review" that identifies only minor lapses, according to three people with knowledge of the matter. This approach marks a departure from the agency's past practices.
The CFPB resumed examinations in the spring after the Trump administration had suspended most of the agency's work upon taking office last year. The expedited reviews mean supervisors identified at most only minor lapses with little risk of harm to consumers, making penalties unlikely. These reviews are more lenient and were historically rare.
Sources indicated that the agency's new political leadership made it clear through policy changes and communications that thorough scrutiny was unwelcome and that examiners' jobs were at risk. Supervisory experts and former agency officials warned that this could expose consumers to harm if serious problems are overlooked or minimized. This shift also reflects the administration's efforts to cut federal workers and narrow exams.
Representatives for the CFPB did not respond to requests for comment, and the White House referred Reuters to the CFPB. The Trump administration has argued that financial industry oversight has become too onerous, hurting lending and the broader economy, though consumer advocates dispute this. The administration also states it is trying to focus examiners on core risks.
Former CFPB acting director Russell Vought had previously accused the agency's staff of "thuggery" and stated that the agency had shifted its supervisory approach to do "as little damage as possible." The administration had also attempted to slash the CFPB's workforce, including supervisory staff, though these plans are on pause pending confirmation of a new director.
Last year, the agency announced it would cut the number of exams by half and refocus them away from areas like student loans and medical debt toward mortgages and redress for military service members, primarily focusing on banks rather than nonbanks. Examiners are now also required to recite a "humility pledge" during exams, with a reminder of "most unpleasant" consequences for being too aggressive.
Larry Lee, a former CFPB attorney, stated that examiners have no incentive to diligently look for violations in the current climate, warning that "undiscovered compliance issues may fester and explode into tomorrow's widespread but preventable consumer injuries." Historically, exams were designed to focus on the riskiest companies, and expedited reviews were rare. Austin Hinkle, former senior counsel in the CFPB's Supervision Division, suggested that a significant number of expedited reviews might indicate either the wrong companies were chosen for examination or that career staff are being told to back off when violations are identified.
Lorelei Salas, who resigned as the CFPB's director of supervision, felt that leadership had demonized supervisory staff and that by no longer focusing on nonbanks, the agency was ignoring companies that pose the highest risks to consumers. She described the outlook for consumers as "pretty grim."
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