CFPB to Slash Examinations, Switch to All-Virtual Reviews (1)

Consumer Financial Protection Bureau examiners sidelined by the Trump administration will be back on the job as early as April, but the number of exams they conduct and the scope of their supervision will be cut back dramatically.

CFPB supervisors will begin developing the scope of their exams next week, setting the stage to review companies’ books and records starting in the second quarter, top agency officials said at a Thursday virtual meeting with examiners, according to multiple people familiar with the situation who requested anonymity to discuss internal deliberations.

The CFPB is expected to carry out fewer than 70 exams over the course of 2026, a steep drop from the past. The agency oversees banks, financial technology companies, debt collectors, consumer credit reporting companies, and others.

The CFPB averaged more than 600 “supervisory events” a year from fiscal 2020 through 2024, according to its most recent performance report.

And all exams will be conducted virtually, rather than having examination teams travel to review company records and speak with employees in person, the people said. That’s a stark change from previous agency practice.

The rollbacks come as other federal banking regulators are also taking steps to curb their examinations and focus only on core financial risks.

Some CFPB supervisors who aren’t conducting exams will be assigned other work, the people familiar with the matter said.

The plans were announced Thursday at a meeting led by Victoria Dorfman, a CFPB senior legal adviser; Calvin Hagins, principal deputy assistant director for the Office of Supervision Examinations; and Cassandra Huggins, principal deputy assistant director for supervision policy and operations. Examination staff members weren’t allowed to ask questions at the meeting, the people said.

“We told you we were performing our statutory duties. Why does this surprise you?” a CFPB spokesman said. “Also if you want to work at CFPB so badly I can send you an application.”

‘Humility Pledge’

CFPB examiners have been largely shut out from their work since Russell Vought, the agency’s acting director, took over last February. The agency also closed out hundreds of exams with outstanding issues last year.

The CFPB in November said it planned to restart examinations but expected supervisors to recite a “humility pledge” to the companies they oversee at the start of every exam.

The CFPB officials leading Thursday’s meeting didn’t tell examiners whether they had to recite the pledge before starting their work, but they did say that the principles outlined in the pledge would guide supervision moving forward, people with knowledge of the matter said.

The pledge stated that supervision would be “fundamentally different” than how it was conducted under former CFPB Director Rohit Chopra.

Exams would be shorter than the typical eight weeks and focus on “pressing threats to consumers, particularly service members and their families, and veterans, and in the areas that are clearly within the Bureau’s statutory authority,” the humility pledge stated.

The CFPB last April said it would shift its supervisory and enforcement focus back to traditional banks with more than $10 billion in assets and away from financial technology and other nonbank companies. The internal email from CFPB Chief Legal Officer Mark Paoletta also said supervisory events would drop by half.

Disparate Impact

The biggest change to CFPB examinations will come from the agency’s separate move to bar the use of disparate impact to determine consumer harm. Under that theory, examiners can use statistical reviews of lending and other outcomes to determine whether unintentional discrimination took place.

Moving forward, examiners can only look for overt violations of law, which can require finding explicit documentation of discriminatory intent.

The CFPB is currently developing a regulation intended to eliminate the use of disparate impact to enforce the Equal Credit Opportunity Act, a key 1974 fair lending law.

The exam restart comes as the full US Court of Appeals for the District of Columbia Circuit is set to hear oral arguments next month in a challenge to Vought’s plan to dismantle the CFPB, including terminating up to 90% of the agency’s staff.

The CFPB earlier this month requested $145 million from the Federal Reserve to fund its operations. The Trump administration had previously argued that it couldn’t request the money due to a provision in the 2010 Dodd-Frank Act, but a federal judge in Washington rejected the administration’s interpretation and ordered the CFPB to request additional funds.