Off the Record, On the Issues with John

Uncertainty surrounds the CFPB’s future as leadership changes; litigation delays rulemaking; and Section 1071 compliance is extended.

By John Alexander, DakCU Director of Legislative & Regulatory Affairs

Current State of the CFPB

• President Trump dismissed CFPB Director Rohit Chopra and installed a series of acting directors, including Scott Bessent and then Russell Vought. Trump nominated Jonathan McKernan to be the new permanent head, but McKernan took a different job at Treasury and his nomination has been withdrawn.  No other individual has been nominated.
• Acting Director Russell Vought, under the direction from the current administration, ordered the CFPB to halt nearly all of its work and sought to terminate approximately 90% of the agency's workforce.
• Vought's actions have been challenged in court, and we are awaiting a ruling from the DC Circuit regarding whether the severe dismantling of the CFPB can continue.
• Meanwhile, the "One Big Beautiful Bill Act" slashed the CFPB's funding cap by almost 50%.  This may not be a problem for the current leadership given attrition that has already occurred but will constrain any future Democratic administration in the absence of new legislation.

 
CFPB Litigation Update
A quick reminder on the CFPB lawsuit against Navy Federal: the Bureau had alleged unfair debt-collection practices, such as threats to contact service members’ commanding officers and restricting access to accounts during disputes. The CFPB initially pursued a $95 million lawsuit but has since dropped the case entirely.

However, some enforcement cases are proceeding.

•  E.g., on June 9, CFPB reopened a case against a student loan debt-relief company.

CFPB Rulemaking
Implementation of recent rules, such as caps on credit card late fees and bank overdraft fees, has been suspended or delayed, with many rules tied up in litigation or subject to reversal by the new administration and Congress.

• The 1033 Rule – Compliance Delayed: CFPB seeking vacatur of its own rule.
• The 1071 Rule – Compliance Delayed; CFPB promises to initiate a new rulemaking.
• Credit Card Late Fee Rule – Vacated.
• Digital Payment LP Rule – Repealed.
• Overdraft Rule – Repealed.
• BNPL Interpretive Rule - Withdrawn.

Section 1071 Compliance Extension
The Consumer Financial Protection Bureau (CFPB) extended compliance deadlines for Section 1071 of the Dodd-Frank Act. Section 1071 requires financial institutions, including credit unions, to collect and report data on small-business lending, particularly to businesses owned by women and minorities.

This extension follows multiple lawsuits that paused enforcement only for the plaintiffs involved, creating potential inconsistencies across the industry. To prevent an uneven regulatory environment, the CFPB pushed back compliance deadlines uniformly for all lenders.

The new compliance dates are:

• Largest lenders (Tier 1): July 1, 2026 (first reports due June 1, 2027)
• Mid-sized lenders (Tier 2): January 1, 2027 (first reports due June 1, 2028)
• Smaller lenders (Tier 3): October 1, 2027 (first reports due June 1, 2028)

During this extended period, the CFPB will prioritize diagnostic examinations, allowing credit unions to identify and correct compliance errors without penalties.

NCUA Board-Member Removal Lawsuit
Three months ago, two NCUA board members filed suit after being removed by presidential order via single-sentence emails. The Department of Justice has moved to dismiss the case, arguing that current law does not expressly protect NCUA board members from at-will removal. The plaintiffs counter that the three-member board structure was intended to insulate the agency’s independence and assert that any board actions taken since their dismissal may be invalid for lack of quorum.

Building Leadership Resilience: A Step-by-Step Succession Planning Workshop
September 24, 2025 | 1:00 PM CST
Leadership continuity is a vital component of credit union resilience. With the NCUA’s succession planning rule going into effect January 1, 2026, federally insured credit unions must adopt and maintain a formal succession plan covering key leadership positions. 

This webinar workshop will provide practical, step-by-step guidance on building a compliant plan, assessing leadership gaps, preparing for both emergency and planned transitions, and aligning succession with your credit union's long-term strategy. Join ViClarity for this session and leave with actionable tools to strengthen your governance and exam-readiness, because strong leadership keeps your mission moving forward even through change. Register here!

The Dakota Credit Union Association’s dues-supported compliance solution –  ViClarity – is a world leader in credit union compliance. To access materials, you will need to log in with your username and password. If you have questions about establishing your members-only account with ViClarity, click here for detailed instructions or contact John Alexander in the DakCU office.
 
Stay Connected
For more information or to share your perspectives, feel free to contact me.  ​