Regulatory change came fast and furious in April. The Trump administration continues to shift the regulatory landscape with the Consumer Financial Protection Bureau (CFPB) announcing new enforcement priorities and rule changes, while Congress and the courts have blocked several key fee regulations.
Join Ncontracts' team of regulatory experts as we break down these developments and what they mean for your financial institution. Want more detailed analysis and guidance? Additional resources are available in Ncomply to help you navigate these changes.
President Trump signed an Executive Order directing federal agencies like the Department of Justice and CFPB to stop using disparate impact theory to enforce civil rights and fairness laws. Disparate impact theory holds that even neutral policies can be discriminatory if they disproportionately harm protected groups (like women or minorities). While this order changes enforcement priorities, it doesn't eliminate existing laws, and courts have previously upheld disparate impact as valid under laws like the Fair Housing Act.
Financial institutions should remain cautious about abandoning fair lending analysis because: courts can still apply this legal theory independent of executive branch directives, state laws may still protect against disparate impact, and the long statute of limitations means current practices could face enforcement under future administrations.
Financial institutions should continue conducting thorough fair lending analysis despite the executive order for three reasons:
The CFPB is dramatically restructuring its approach to enforcement and supervision for 2025, focusing on clear consumer harm (particularly fraud affecting servicemembers and veterans) while reducing examinations by 50%. The Bureau will prioritize large banks, emphasize consumer remediation over penalties, and avoid actions based solely on statistical evidence or novel legal theories.
Key changes include making mortgages the top priority, pursuing only intentional racial discrimination cases, abandoning statistical redlining assessments, and deprioritizing areas including medical debt, peer-to-peer platforms, student loans, remittances, consumer data, and digital payments. Prudential banking regulators may maintain different priorities despite the CFPB's new direction.
The CFPB and Cornerstone Credit Union League jointly asked a court on April 30, 2025, to invalidate the Bureau's rule that prohibited reporting medical debt to creditors, acknowledging the agency exceeded its authority. The court canceled a planned injunction hearing and ordered all parties to submit briefs on a pending intervention motion by May 7.
The CFPB announced plans to restart the rulemaking process for Section 1071 of Dodd-Frank, which requires collecting small business lending data, after facing strong opposition from financial institutions. The Bureau has paused compliance deadlines for plaintiffs in the Texas Bankers Association lawsuit and announced it will deprioritize enforcement for all other entities. A new Notice of Proposed Rulemaking is expected soon, potentially changing requirements for all covered institutions. Meanwhile, Congressional efforts to repeal Section 1071 entirely continue, with the House Financial Services Committee recently advancing the "1071 Repeal to Protect Small Business Lending Act."
Congress has overturned the CFPB's overdraft rule through the Congressional Review Act, sending a resolution to President Trump that will nullify regulations capping overdraft fees at $5 for large institutions or requiring them to treat overdrafts as loans under Regulation Z. This action permanently prevents the CFPB from issuing similar fee cap regulations without new Congressional authorization.
A Texas federal court vacated the CFPB's Credit Card Late Fee Rule (which would have reduced late fees from $32 to $8) through a consent judgment, ruling it violated both the CARD Act and the Administrative Procedure Act. Despite these regulatory rollbacks, financial institutions should still review their fee structures, as state-level enforcement and private litigation targeting unreasonable or unclear fees remains a significant risk.
The CFPB has reached an agreement with banking associations to end litigation over its UDAAP exam manual changes. It will dismiss its appeal, abandoning efforts to categorize discrimination as an unfair practice across all financial products, including deposit accounts. This reverses the agency's attempt to expand discrimination oversight beyond traditional lending products.
Effective June 2, 2025, the OCC will merge its Midsize/Community Bank and Large Bank Supervision functions into a unified Bank Supervision and Examination unit to improve resource sharing across institutions of all sizes. The agency is also reinstating the Chief National Bank Examiner office and elevating Information Technology and Security with a new Senior Deputy Comptroller. While promising more consistent oversight, banks may experience temporary disruption as they adjust to new processes and relationships.
The Federal Reserve and FDIC have rescinded their joint statements from early 2023 that established risk management expectations for banks engaging in cryptocurrency activities. This withdrawal, following the OCC's similar action in March 2025, reflects the Trump administration's more crypto-friendly regulatory stance. The FDIC clarified that banks may engage in permissible crypto-asset activities while adhering to safety, soundness, and applicable laws. The Fed also withdrew its guidance on dollar tokens. Despite these regulatory shifts, financial institutions must maintain strong risk management frameworks and continue complying with AML/CFT regulations, including enhanced due diligence and monitoring for crypto transactions.
The Trump administration is terminating the Veterans Affairs Servicing Purchase (VASP) program, which bought defaulted VA loans from servicers to prevent foreclosures. No new participants will be accepted after May 1, though existing cases will continue. Financial institutions should update loss mitigation procedures and notify CFOs of potential impacts to loan charge-offs if they used the program.
The FTC's updated Children's Online Privacy Protection Act rules impact financial institutions with youth accounts, online banking, or educational tools for children. Key changes include requiring age verification on "mixed audience" websites, expanding "personal information" to include biometrics and government IDs, and strengthening parental consent requirements through "text plus" verification. The rules take effect June 23, 2025, with full compliance required by April 2026. Financial institutions should review their policies and technology to ensure compliance.
Federal regulators have conditionally approved Capital One's acquisition of Discover Bank while simultaneously penalizing Discover $100 million for misclassifying consumer credit cards as commercial for 17 years, which cost merchants over $1 billion in excessive interchange fees. The approval comes as Congressional Republicans attempt to overturn the OCC's 2024 rule that eliminated automatic merger approvals and revised how factors like financial stability and community needs are evaluated in bank consolidations.
The White House removed two of three NCUA board members on April 18, leaving Chairman Kyle Hauptman as the sole member. The removed board members have filed a lawsuit questioning presidential authority to dismiss independent agency board members without cause. Despite these governance issues, the NCUA indicates that most credit union matters will proceed normally through delegated staff authority.
NASAA has adopted amendments to its model rule for broker-dealers that require recommendations be made in customers' best interest and prohibit using the titles "advisor" or "adviser" without proper investment adviser licensure. These changes aim to prevent investor confusion about fiduciary relationships and enhance protections as more mid-sized brokers may become state-registered following potential SEC threshold changes. Since many states directly adopt NASAA models, broker-dealers should promptly review their procedures, marketing materials, and documentation for compliance.
Change is constant—whether it’s a new regulation or another update. Learn how to build a change management program that’s both structured and agile in our upcoming webinar.