» Court Challenges, Leadership Changes, and the Future of the CFPB

Back To Compliance Digest

Court Challenges, Leadership Changes, and the Future of the CFPB

March 8, 2025

The Consumer Financial Protection Bureau remains a central player in the ongoing debate over the federal government’s regulatory role. With the Trump Administration pushing for a reduced CFPB footprint and courts weighing in on staffing reductions, the agency’s future remains in flux. While the Administration has backed away from talk of shutting down the CFPB entirely, significant changes are already underway, including the departure of Mark McArdle, Assistant Director for Mortgage Markets.

1.Court Ruling on CFPB Workforce Reduction

In late January, former CFPB Director Rohit Chopra was dismissed, and agency staff were instructed to halt many of their regulatory and supervisory functions. A federal court quickly intervened, with Judge Amy Berman Jackson issuing an order blocking mass terminations at the agency while she reviews arguments from both CFPB leadership and the CFPB’s employee union.

At a hearing last Monday, Judge Berman Jackson reaffirmed her earlier order, stating she would continue to monitor the situation to prevent the CFPB from being “choked out of its very own existence” before a formal ruling is made. Another hearing is scheduled for this coming Monday, where the legal battle over the agency’s staffing and operational direction will continue.

2.Trump Administration Clarifies CFPB Strategy

While there was initial speculation that the Trump Administration aimed to dismantle the CFPB, CFPB Chief Operating Officer Adam Martinez clarified this week that the agency is not being eliminated, but rather “right-sized” for efficiency. He noted that the new leadership under Acting Director Jonathan McKernan is focused on running a more streamlined agency that prioritizes legally required functions rather than discretionary enforcement actions.

This shift was further reinforced when the CFPB’s homepage, which had briefly displayed a “404 error” with an unplugged socket illustration, was restored to direct consumers to the agency’s complaint portal—one of its core statutory functions. This suggests that while the CFPB’s structure may be shrinking, certain consumer protection responsibilities will remain active.

3.Mark McArdle Departs as Part of Broader CFPB Staffing Reductions

As part of ongoing restructuring efforts, Mark McArdle, Assistant Director for Mortgage Markets, has announced his departure from the CFPB. McArdle was a well-respected liaison between the mortgage industry and the agency, frequently engaging with trade groups and industry professionals in Washington, D.C. His exit marks a continued shift in the CFPB’s engagement with the mortgage sector and raises questions about the future direction of regulatory oversight in mortgage lending.

4.What This Means for Mortgage Lenders and Brokers

While the CFPB is undergoing significant changes, recent court rulings suggest that the agency will not be completely dismantled. Instead, expect a much leaner CFPB that moves away from aggressive enforcement actions. The era of “regulation by enforcement,” which characterized previous years, appears to be winding down under McKernan’s leadership.

However, mortgage professionals should not assume that all compliance risks have vanished. Many consumer protection laws remain in effect, and states may step up enforcement actions where federal oversight declines. Mortgage professionals should continue to monitor compliance requirements at both the federal and state levels.