*

Dismissal of cases against companies accused of cheating

millions of consumers

*

Dismissals issued during Trump nominee's confirmation

hearing

*

Show administration's dismantling of agency includes

general

retrenchment in enforcement

(Recasts, adds context on remaining enforcement cases)

By Douglas Gillison

Feb 27 (Reuters) - The U.S. Consumer Financial

Protection Bureau on Thursday dropped five enforcement actions

against financial services companies accused of wrongdoing under

the prior administration, including a major case against Capital

One.

The unprecedented mass dismissals eviscerated much of the

watchdog agency's remaining stable of legal actions against

financial services companies investigated for abusive and

predatory practices.

President Donald Trump is moving rapidly to dismantle the

CFPB, which he has said should be eliminated, claiming its

enforcement had become politicized. The dismissals occurred

while his nominee to head the CFPB, Jonathan McKernan, was on

Capitol Hill testifying before the Senate in a confirmation

hearing.

The CFPB's fate has looked grim since Trump took office last

month and Thursday's actions confirmed its disassembly would

include a swift retrenchment if not total reversal of pending

enforcement actions.

McKernan nevertheless told lawmakers he would continue to

take consumer protection enforcement actions if confirmed.

The agency dropped the case against Capital One after

accusing the bank last month of illegally cheating customers out

of more than $2 billion in interest payments.

It also dismissed on Thursday a lawsuit brought last

year against the student loan servicer Pennsylvania Higher

Education Assistance Agency (PHEAA), accused of illegally

collecting on student loans discharged in bankruptcy.

The CFPB likewise dropped a case against the Berkshire

Hathaway ( BRK/A )-owned Vanderbilt Mortgage and Finance, accused

of steering borrowers toward unaffordable mortgages.

It also dropped cases against Rocket Homes, which the agency

in December charged with resorting to illegal kickbacks in a

mortgage scheme, and Heights Finance, an installment lender

officials had accused of illegal "loan churning" to generate

hundreds of millions in fees and added costs.

Representatives for Capital One, Vanderbilt, PHEAA, Heights

Finance and the CFPB did not respond to requests for comment.

Rocket Homes said the case against it was based on faulty

claims and never should have been brought.

"We are proud to put this matter behind us and remain

focused on our mission to help everyone home," the company said

in a statement.

Last week, the CFPB dropped a case against online lender

Solo Funds, which the agency had said had deceived borrowers

about loan costs.

By late Thursday, court records showed that fewer than 20

pending CFPB enforcement actions remained and of those another

six were either paused or likely to be paused in light of change

of control at the agency.

Republicans and industrial lobbies have long reviled and

even sought to abolish the CFPB. After dropping the Solo Funds

case, Russell Vought, the agency's acting director, said on X

that the CFPB's case had nearly destroyed an innovative company.

However, Erin Witte, director of consumer protection at

the Consumer Federation of America, a non-profit organization,

said Thursday's en masse dismissal showed the Trump

administration was inviting corporations to abuse the public.

"We're getting a very strong message here that if you're

a bank, if you're a student loan servicer, and you're violating

the law, the CFPB is not only not going to pursue you, they're

going to let you out of your case scot-free," she said.

The consumer advocacy group Public Citizen likewise

expressed outrage, warning that unchecked misconduct would send

the United States "hurtling down the path that led to financial

crises in the past."

Since taking office, Trump and his downsizing czar Elon Musk

have vowed to destroy the CFPB. They have fired scores of staff,

shut the agency's Washington offices and moved to cancel its

lease, while placing virtually all agency workers on temporary

leave. Employee unions and Democratic elected officials have

challenged these actions in court.

Despite Trump's comments, the administration has said in

court filings that it intends to operate a more streamlined and

efficient CFPB, which agency advocates fear will mean retaining

all but a skeleton crew unequal to the task of enforcing the

law.

Pending the outcome of a legal motion filed this month by an

employee union, the administration has agreed not to fire more

personnel, alter or remove data or defund the agency.

In his confirmation testimony on Thursday, McKernan

criticized the agency's past enforcement actions as excessive

but said if confirmed he would work to uphold the agency's legal

mandates.

"I'm fully committed to following the law fully and

faithfully," he said.