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Links to the news sources from today's episode:

1. CFPB Withdraws ‘Inappropriate’ Filing in NY AG’s Suit Against Citi

🔗 Banking Dive – March 27, 2025

The CFPB withdrew a legal brief that supported the New York Attorney General’s case against Citibank, admitting the filing was “inappropriate.” The Bureau had proposed a new interpretation of the Electronic Funds Transfer Act (EFTA) that had no judicial precedent, suggesting EFTA could cover wire transfers despite existing exclusions. The CFPB acknowledged this stance lacked fair notice to regulated parties and bypassed standard rulemaking procedures. The move reflects a broader rollback under the current administration, including the dismissal of several enforcement actions initiated under previous leadership.

2. CFPB Pushes to Vacate Townstone Settlement, Refund Mortgage Lender

🔗 Banking Dive – March 27, 2025

The CFPB is seeking to vacate a redlining settlement with Townstone Financial and return the $105,000 it paid. Acting Director Russ Vought criticized the original case—initiated under previous leadership—as abusive and lacking evidence, targeting the company based on controversial speech rather than clear regulatory violations. The agency also cited First Amendment concerns. This reversal follows a broader trend of case dismissals (e.g., Capital One, JPMorgan, Wells Fargo) under the Trump-era CFPB leadership.

3. CFPB Set to Ditch BNPL Rule

🔗 Finextra – March 28, 2025

The CFPB plans to revoke an interpretive rule that would have treated “pay-in-four” Buy Now, Pay Later (BNPL) products like credit cards—granting consumers similar protections (e.g., dispute rights, refunds). This U-turn comes after a lawsuit by the Financial Technology Association, which claimed the rule exceeded the CFPB’s authority. The rule was seen as part of a broader regulatory clampdown, which is now being unwound under new leadership that has dropped several lawsuits against major banks.

4. How Fed Debit Card Regs Could Drive Debanking

🔗 Brookings – March 2025

Brookings authors argue that the Fed’s proposal to lower debit card swipe fees could worsen “debanking”—where consumers lose or are denied access to bank accounts. For banks, swipe fees help subsidize basic accounts for low-income customers. Reducing these fees may make offering such accounts unsustainable, pushing more people out of the financial system. The article suggests that regulating overdraft fees would be more effective, and warns of unintended consequences like fintech favoritism and mega-bank advantages.

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