These Musings have spent the better part of the past 6 ½ years expressing my frustration at the lack of regulatory humility demonstrated by the nation’s consumer financial regulator (CFPB). But something unprecedented in the CFPB’s relatively short history happened without much fanfare[1] in late May that deserves recognition and praise from this inveterate regulatory cynic. In fact, instead of whining about a lack of muse for my writings, I should be expressing my gratitude for the unambiguous statement of regulatory humility reflected in the new enforcement principles announced by the CFPB on May 29, 2026 (the “Enforcement Principles”).[2]
Even though these Enforcement Principles carry no force of procedural or substantive law, they do, in fact, respond directly to the kinds of cultural and normative complaints I have been making about the CFPB throughout most of its existence.[3] If the Enforcement Principles are engrained culturally, however, the CFPB could become the kind of regulator that balances its consumer protection purpose with a sensible and cooperative relationship with the consumer finance industry. So, what exactly do these Enforcement Principles actually say?
The Enforcement Principles
Published on the CFPB’s website, the agency identified four Enforcement Principles to guide when the agency will and won’t bring an enforcement action.
· First, actual harm: enforcement will be directed at real and meaningful consumer injury, not theoretical or speculative harm, and not cases where consumers simply made unwise decisions.
· Second, due process: enforcement actions must rest on a clear grant of statutory authority or a regulation adopted through notice and comment, and the CFPB expressly disclaims stretching its statutory bounds through novel interpretations or using enforcement to advance a policy agenda.
· Third, collaboration: not every violation requires an adversarial proceeding, and institutions that self-report and voluntarily remediate by making consumers whole now rather than after years of litigation, will not be punished for their candor.
· Fourth, efficiency: the CFPB will not duplicate the work of state and other regulators better positioned to act, and will not bring actions to inflate its enforcement statistics or generate press coverage.
These Enforcement Principles are a clear articulation of the kind of regulatory humility I have been pining for from the CFPB: self-imposed limits on enforcement discretion committed to writing. Frankly, I never would have imagined that an enforcement agency would tie its own hands in this fashion. Prosecutors and enforcers always seek to maintain maximal power and discretion to create leverage against defendants and the CFPB has always had maximalist enforcement staff. Those kinds of folks usually find that It’s Hard to Be Humble.
Praise where due
The Enforcement Principles speak directly to many of the broader concerns expressed in my Open Letter to the new CFPB leadership in early 2025; notably concerns about cultural issues[4], unfairly demonizing industry, the lack of regulatory humility, and focus on technical violations without consumer harm. Similarly, industry laments about “regulation by enforcement” (and “enforcement by regulation”) boil down to due process concerns about whether enforcement has been properly considered and whether violators have sufficient prior notice of the illegality of their actions. Finally, regulatory efficiency is something I think everyone should be able to agree on. I am 100% grateful and appreciative for these Enforcement Principles[5] and have every reason to believe CFPB will honor them under current leadership and under a Brian Johnson led CFPB (should he be confirmed).
But my current praise of the CFPB’s recent actions runs deeper. Rather than employing DOGE-era tactics to effect dramatic change without due process[6], along with announcing these cultural and normative changes, CFPB has also been busy with substantive efforts to change its regulations through durable and administratively sound methods. For example, among a long list of regulations at various stages of reconsideration, CFPB’s Spring 2026 regulatory agenda[7] shows CFPB tackling regulatory reform in a variety of ways in support of the Trump Administration’s efforts to promote access to mortgage credit. This includes (i) pre-rule consideration of changes to CFPB’s definitions and enforcement posture regarding unfair, deceptive and abusive practices, (ii) a request for information about reforming TRID, and (iii) a pre-rule proposal regarding QM and ATR rules. Most of all, much to my delight, the brutal LO Compensation Rule is listed on the CFPB’s long term agenda for possible rescission or modification.
Meanwhile, the CFPB has already supplied an early test of the Enforcement Principles. In June, the agency announced (ironically via press release) a “redress agreement” with Bilt Rewards without any consent order, civil penalty, or formal enforcement action. Based on the CFPB’s press release, Bilt self-reported a situation with apparent consumer harm arising from Bilt’s transition to a new bank partner and agreed to provide financial redress to affected consumers. Although articulation of what exactly Bilt did wrong and details about the consumer redress are lacking, it appears that CFPB is honoring the actual harm and collaboration principles and arguably due process as well (no novel legal theory was stretched to get there; indeed, no legal theory was articulated at all). Whether a press release touting this informal resolution hews to its aversion to enforcement-by-publicity, well, 3 out of 4 ain’t bad.
The folly of praising regulators
About 20 years ago I read one of those minute manager-style books called “Whale Done!”. The gist of this short read was that we could all learn how to manage people better from how killer whales are trained to do tricks. Apparently, orcas can only be trained with positive reinforcement, and you should just ignore their bad or unwanted behavior because you really can’t say “No!” to a killer whale. That is, orcas do not respond to negative criticism.[8]
Despite evidence that positive reinforcement may be more effective at shaping employee behaviors, in my experience the Whale Done! philosophy of using praise to shape desired outcomes doesn’t work at all when used by advocates or regulated institutions to curry favor, shape policy, or hold government regulators[9] like those at the CFPB accountable.[10] Regulators only respond to praise from their immediate superiors. To understand how that translates to dealing with regulators, my Uncle Jerry, at whose bank I served as General Counsel, used to remind me, “there never was a bank regulator whose boss gave them an “attaboy” for “going easy” on a bank.” [11]
So, I guess I am making excuses for not praising the CFPB more often. But, I praised former Director Chopra at the start of his tenure for what I thought was going to be a competition-based regulatory approach and look what that got us.
Meanwhile, despite its massive teeth and apex consumer finance enforcement regulatory position, CFPB is not totally killer whale-like in its response to criticism. For example, when I took CFPB to task for providing zero guidance on the TRID/Juneteenth business day issue, I heard it got passed around Washington DC embarrassing the CFPB for missing a simple chance to act for the benefit of consumers. I also know that many CFPB staffers were and are regular readers who sometimes feel a bit hurt by my criticism, but hopefully they don’t take it personally and recognize that with the power to make and enforce laws comes great responsibility.
All that said, other than voting in elections, all this cynical advocate or anyone else has are the constitutional protections of the First Amendment and due process to complain about agency action. As they say, the price of freedom is eternal vigilance and so, at least for the purposes of writing this blog,[12] I feel like my job security is evergreen. So why praise the CFPB at all, if praise doesn’t train regulators any better than criticism trains orcas? Because the praise is for my benefit, not theirs. A critic who asks for regulatory humility and then fails to acknowledge it when delivered is just a crank.[13]
Lucy and the football
Notwithstanding the CFPB’s latest welcome efforts at reform, the mortgage lending regulatory framework remains far too complicated, anti-consumer, and punitive. Compliance officers tempted to build these Enforcement Principles into their risk calculus are reminded that they create no enforceable rights, no safe harbor, no estoppel against a future Director and could vanish with a website edit. Without Congressional action memorializing changes like these, and even with a solid choice for CFPB Director like Brian Johnson, in this Charlie Brown’s eyes, Lucy is still holding the football.
[1] Ballard Spahr’s outstanding financial services team was on it though.
[2] Do not confuse these Enforcement Principles with the “Miranda rights for the regulated” espoused by the Humility in Supervisions Pledge CFPB examiners were asked to recite beginning with the 2026 examination cycle.
[3] See, e.g., too many Mortgage Musings to list here. To be clear, I’m not the only person who criticizes the CFPB, but there have also been times when I praised them. Heck, I kinda-sorta even praised the idea of DOGE before Elon Musk waived that chainsaw around. More on the folly of praising regulators to come.
[4] It is hard to ignore the impact that staffing reductions and changes at the CFPB must have also made on the cultural issues I have been mentioning in these Musings. Staff at the Bureau who confuse CFPB’s consumer protection mission with poverty reduction and/or racial equity objectives for vulnerable individuals are likely not to be returning for a while.
[5] Not everyone has gratitude for the CFPB’s recent enforcement actions.
[6] It appears the CFPB staffing case has been stayed another 60 days by an agreement between the employee union and CFPB to let Mr. Johnson have a chance to consider what the agency staffing will look like under his leadership.
[7] I realize this ”Spring Agenda” came out in July 2026. Better late than never.
[8] Killer whales are intelligent creatures and should not be kept in captivity to perform stupid tricks for humans. Dogs and children are another story.
[9] Although it might work for the current President personally.
[10] That said recent SCOTUS decisions in Trump v. Slaughter and Trump v. Cook case may have made regulators even more accountable to the President; unless they work for the Federal Reserve (“a special arrangement sanctioned by history”).
[11] Prophetically sadly and shamefully, Uncle Jerry’s bank was shut down by the FDIC in 2017 after the bank worked almost a decade to reverse losses arising from the mortgage meltdown and locate new capital. Apparently, despite no losses from bank runs, fraud, or mismanagement, a new EIC took over and just couldn’t be bothered.
[12] As for my law business that pays the bills, see https://blevy.substack.com/p/ed-104-safety-in-numbers.
[13] I have been credibly accused of being a bit cranky by Claude.
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