Opinion: As CFPB Oversight Wanes, Financial Institutions Must Project and Maintain Trust

When people are in the process of deciding which financial institution they want to do business with, a firm belief that the bank or credit union is trustworthy is paramount. In fact, the latest PYMNTS report on this subject found that nearly 70% of consumers prioritize trust over convenience in the selection process.

Not only should consumer deposits be secure, but financial institutions should maintain data privacy, their fees shouldn’t be excessive, and credit qualification should be fair, transparent, and have a clear recourse if anything goes afoul of the law.

Enter the Consumer Financial Protection Bureau (CFPB), which was formed in 2010 to safeguard consumers from abuses by the financial sector. This government agency’s role is to enforce existing rules and laws and take action against financial institutions that engage in unfair, deceptive, or abusive practices.

In short, the CFPB gives people a level of confidence that their money and information is secure and that they will be treated fairly and legally. 

In early May, the agency announced plans to drop roughly 70 of its compliance documents, which it has been using since its inception.

Although final decisions are still being made, now is the time for banks and credit unions to assure customers, both current and prospective, that they will continue to deliver the best service to all.

Many consumers clearly remember what happened 17 years ago. In 2008, the U.S. housing market collapsed, sparking a domestic recession and a global economic downturn.

Fingers pointed at the country’s financial institutions for loose (some say predatory) lending practices and issuing an overabundance of subprime mortgages. To say it got ugly is an understatement. Nearly 10 million Americans lost their homes to foreclosure, and unemployment spiked across the nation.

No one wants to go through that again.

While these aren’t fun memories to revisit, they’re worth dredging up in light of what’s happening within the CFPB. After all, this watchdog agency was formed through the Dodd-Frank Wall Street Reform and Consumer Protection Act to rebuild trust in the tarnished industry after the financial crisis. And in many ways it did.

On May 9, President Donald Trump signed into law measures to eliminate two CFPB rules that were established under the Biden Administration. Gone is the CFPB’s Overdraft Rule, which would have eliminated “junk fees” assessed by banks and credit unions that have more than $10 billion in assets.

Trump also repealed the Defining Larger Participants of a Market for General-Use Digital Consumer Payment Applications rule that supervises larger nonbank companies that offer apps such as digital wallets, payment apps and peer-to-peer payment.

Diluting the CFPB’s power and influence over how financial institutions function certainly may have merit, but the public needs to be reassured that it won’t lead to serious macro and microeconomic problems.

The CFPB’s compliance documents are used to ensure that financial institutions adhere to federal consumer finance laws. With them, the agency puts the onus on banks and credit unions to prove that they are acting lawfully.

Yet, too many compliance documents have bogged down the system. Per a New York Federal Reserve analysis, it resulted in high compliance costs, business uncertainty, legal risk, and even a reduction in financial services for consumers.

Eliminating nearly 70 compliance documents, which was spurred by a review that found them in violation of the Administrative Procedure Act, a federal law that governs how federal agencies operate, banks and credit unions are able to shed some of the inordinate administrative burdens.

It will be a relief for these businesses, but ultimately, it is also good for consumers, since it will streamline processes and potentially lower costs.

As long as the banks and credit unions adhere to high standards, of course. There is no reason to assume they won’t, because it would only hurt their reputation.

A 2025 poll commissioned by the Center for Responsible Lending and Americans for Financial Reform found widespread support for the CFPB. Among its findings: 82% of Americans believe it is important to regulate financial services to ensure they are fair for consumers, and 67% favor the CFPB, including solid majorities across party lines.

CFPB guidance has given consumers the impression that they will be treated fairly under the law and that problems will be investigated.

Moreover, the agency has ensured that consumers can check a comprehensive CFPB database for complaints about a company’s credit products. If the financial institution doesn’t comply with requirements to add that data, it can reduce the amount of information available.

It would be prudent for all banks and credit unions to take preemptive action. Reassure consumers that they will continue to act in good faith, adhere to the highest level of lending requirements, comply with all laws, and be an overall positive partner with their customers and members.