Dr. CFPB Seeks Cure to American Medical Debt Sickness

Imagine your credit score drops because of debt from a surprise healthcare expense or a medical bill you’ve already paid — or worse, one you didn’t actually owe. That’s the reality for millions of Americans who have faced the financial strain of medical debt appearing on their credit reports. But no more: The CFPB just made a big move to clear about $49 billion in medical debt from millions of credit reports. The result will be higher credit scores for 15 million people.

The CFPB’s new rule also means that debt collectors can’t use your medical bills to destroy your financial future. This is a win, especially for Black and Latine families, who are far more likely to have high levels of medical debt because of historic and ongoing racial inequality in employment, housing, and healthcare. The rule can start to chip away at the structural racism that has kept medical debt disproportionately high for these families.

AFR’s senior policy counsel, Christine Zinner said it best (and in The New York Times):

[The] rule is yet another example of the CFPB’s commitment to lessening the crushing financial burdens of medical debt, which is one of the most common reasons people file for bankruptcy in the United States. These debts erode savings and force families to cut back on basic living expenses like groceries and health care. Medical debt should not be weaponized to undermine people’s ability to take out a loan or qualify for a mortgage or even to damage employment prospects.

Rep. Waters also praised the rule: “This final rule is a culmination of policy work that I have done for more than a decade in Congress to bring attention to this issue and advance legislation to stop medical debt from ruining the futures of hardworking American families.” Health care providers, like the American Medical Association, support this rule as well, noting the proposal will “be an important step towards reducing the financial impact on patients and physicians.”

Of course, the U.S. Chamber of Commerce and ACA International, which represents creditors and debt collectors, immediately filed a lawsuit to block this sensible rule.

So, while credit scores might get a well-deserved boost, it’s clear that the fight to keep financial systems fair and transparent is far from over. But with a strong CFPB in the mix, at least we’ve got a shot — and not the kind that comes with a needle and an outrageous medical bill.

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BANKING AND FINANCIAL STABILITY: New Year, New Admin – Under Stress – A Bank in Kansas
CONSUMER: Defend the CFPB – Getting Billions Back – One Million Illegal Accounts – Kicking Back on Mortgages – Credit Card Defaults
CAPITAL MARKETS: Backseat Banking –Auditing Accounting
PRIVATE MARKETS: Hands Off Peoples’ Pensions! – PE & Healthcare – Other Private Markets News
CRYPTO: SEC-CFTC – Tethered – Real Taxes on Digital Assets – Crypto Cons
HOUSING: Unaffordable Home Loans – Fannie and Freddie – Tech and Tenants
CLIMATE AND FINANCE: Banks Bow Out of Climate Promises – Bring Out the Data
POLITICS AND MONEY: Crypto’s Day in Office

Feedback? Reach us at afrnews@ourfinancialsecurity.org

BANKING AND FINANCIAL STABILITY

New Year, New Admin.

On Jan. 20, Donald Trump will return to the Oval Office. The first former American president to be convicted of a litany of felonies, President-Elect Trump now appears poised to deliver big wins to Big Business.

The Securities and Exchange Commission’s Gary Gensler and Commodity Futures Trading Commission’s Rostin Benham are stepping down. The incoming administration will install more industry-friendly appointees to their positions, which could mean overturning, rolling back, or replacing existing rules.

Trump’s pick for the Department of Housing and Urban Development, Scott Turner, has previously opposed efforts to help lower income people attain affordable housing, having supported a bill that allowed landlords to refuse to accept recipients of federal housing assistance and opposing bills to expand affordable housing or to support and study the homeless population. Turner was also a proponent of Opportunity Zones during Trump’s previous tenure, which saw billions of dollars funneled toward tax breaks for wealthy real estate investors instead of the local communities for whom they were intended.

And: Federal Reserve Vice Chair for Supervision Michael Barr plans to resign on February 28, a decision that the Revolving Door Project views as acquiescence to Trump’s deregulatory agenda. RDP also plans to track the billionaires who have bought their way into Trumpish influence – like oil magnate Harold Hamm, who has effectively picked appointments for Interior Secretary and Energy Secretary.

Under Stress.

The Bank Policy Institute and American Bankers Association, two trade associations representing the country’s largest banks, joined other industry groups in a lawsuit against the Federal Reserve and its set of required annual assessments meant to make the financial system safer. Every year, the Fed subjects banks with at least $250 billion in assets to stress tests, attempting to see whether these large financial institutions can weather losses and continue lending during economic downturns. Usually, this means making sure the banks have enough capital on hand to absorb shocks under different scenarios. The industry groups claim that they just want more clarity surrounding the process – but BPI and the ABA have been vocal opponents against regulators’ attempts to make related capital rules stronger.

This lawsuit was filed after the Fed announced it was planning to rework the stress tests because of the “evolving legal landscape” (read: incessant industry lawsuits to prevent regulatory oversight), including potentially disclosing the test models before subjecting the banks to the stress tests, sort of like giving students the test questions in advance of the exam.

A Bank in Kansas.

The FDIC has charged a small Midwest bank a $20.4 million penalty, one of the largest levied by the agency in at least 40 years. The regulator alleges that the bank, Weir, Kansas-based CBW Bank, helped facilitate billions in transactions from banks in regions that are at high risk of drug-related money laundering. The FDIC found that the bank used a self-created system to detect money laundering which was rife with errors and lapses in scrutiny. The bank also allegedly processed hundreds of millions of dollars worth of checks for foreign financial institutions and so-called money services businesses without proper due diligence. CBW suggests that the fine could “imperil” its existence.

CONSUMER

Defend the CFPB.

AFR’s Chen Zinner took to the pages of USA Today and the airwaves of NPR to argue for the many merits of the CFPB, and the future of this vital agency as Trump 2.0 looms:

Trump ran as a populist. At one point he even proposed capping credit card interest rates. So the Trump administration really has a decision to make about whether any of the populist rhetoric that came out of their campaign is meaningful or just a cover to let Wall Street take control of the CFPB.

Getting Billions Back.

The CFPB is providing a $1.8 billion refund to 4.3 million consumers who were charged illegal junk fees or were victim to deceptive bait-and-switch advertising by credit repair companies including Lexington Law and CreditRepair.com. AFR’s Amanda Jackson celebrated that enforcement action, recognizing that misleading and fraudulent credit repair services can harm consumers who are struggling with poor credit histories and heavy debt burdens and can reinforce the structural racism embedded in credit scoring and credit access.

One Million Illegal Accounts.

The CFPB is suing Walmart and Branch Messenger for illegally opening deposit accounts for over a million drivers in Walmart’s Spark Driver program, forcing them to use these accounts to get paid and charging more than $10 million in junk fees. The lawsuit claims Walmart misled drivers about access to their earnings, required them to use Branch accounts or face termination, and charged fees for transferring funds. The CFPB is seeking to stop the companies’ illegal actions, provide restitution, and impose penalties.

Kicking Back on Mortgages.

Late last month, the CFPB sued the real estate agency Rocket Homes for allegedly offering illegal kickbacks to brokers and agents to steer prospective homebuyers toward borrowing money from the affiliated lender Rocket Mortgage. The agency’s investigation found that the company allegedly violated the Real Estate Settlement Procedures Act by incentivizing agents (with a $250 gift card to the top 5 agents) to provide referrals and requiring those agents to “preserve and protect” customer relationships by pushing them away from competing lenders and products.

Credit Card Defaults.

U.S. credit card defaults have surged to their highest level in 14 years, with lenders writing off over $46 billion in seriously delinquent loans during the first nine months of 2024 — a 50% increase from the previous year. Rising delinquency rates could signal broader troubles for households and lenders that could reverberate across the financial system and economy. With total U.S. household debt at a new high of $17.94 trillion, driven by mortgages, auto loans, and student loans, lower-income households are being hit the hardest.

CAPITAL MARKETS

Backseat Banking.

Vanguard struck a passivity deal with the FDIC, limiting its influence over the banks in its portfolio. The agreement prevents Vanguard from nominating directors or influencing policies on certain issues in FDIC-regulated banks (and bank holding companies with FDIC-regulated subsidiaries) in which Vanguard has at least a 10 percent stake. The aim is to address concerns over the power of large asset managers to shape bank policies. While a step in the right direction, it falls short of what 38 unions, investors, and advocacy organizations advocated for to address concerns that large asset managers are almost always — and therefore actively, not passively — voting their shares in alignment with management. BlackRock is kicking and screaming to avoid signing a similar agreement – at least until Trump regulators take over.

Auditing Accounting.

Last month, 12 advocacy organizations, unions, and investors urged the SEC to approve a proposal by the Public Company Accounting Oversight Board, a regulatory body overseeing the entities that audit companies’ financials, which would require auditing firms to disclose standardized and comparable metrics of both their firms and individual company audits. That would make it easier for audit committees and investors to compare how different auditing firms are evaluating companies and make informed decisions.

PRIVATE MARKETS

Hands Off Peoples’ Pensions!

Private equity is lobbying the incoming Trump administration to allow 401k and retirement funds to invest in high-risk assets like private equity and real estate, potentially unlocking trillions in capital for the industry. But concerns about whether everyday investors can handle these complex, opaque, risky, and high-fee investments remain. The increased demand for private funds raises concerns over transparency and market stability. Shouldn’t professional fiduciaries manage these decisions instead of individuals directly selecting funds? Despite these concerns, private equity firms are keen to tap into the $13 trillion in retirement savings, hoping to challenge the dominance of low-cost index funds.

PE & Healthcare.

Massachusetts Governor Maura Healey signed into law a bill that would subject private equity investors in the healthcare industry to increased scrutiny, some months after formerly Cerberus-backed Steward Health Care collapsed. The legislation requires PE and other external money managers to meet financial reporting requirements, increases the fines for noncompliance, and gives the Massachusetts Health Policy Commission more power over these proposed takeovers.

Other Private Markets News.

By All Accounts. A Blackstone-led investor group is buying a $2 billion stake in U.S. accounting firm Citrin Cooperman, marking a big move in the hot private equity-driven accounting sector. The New Mountain Capital-acquired firm has grown rapidly in recent years, with revenue almost tripling through acquisitions. Blackstone’s deal, valuing Citrin Cooperman at 15 times EBITDA, keeps its own ownership under 50% to avoid audit independence issues.

Systemic Risk. The Financial Times took a hard look at warnings from global regulators about risks emanating from private credit markets.

Next Up. Bloomberg collated a bunch of earnings calls to see what Wall Street investor types are thinking about 2025. In part, they are looking forward to an age dominated by private markets.

CRYPTO

SEC-CFTC.

SEC’s Gensler and CFTC’s Benham, both of whom are leaving by Trump’s inauguration, have been central to the legislative tussle over which side has how much power over the cryptocurrency market, a sector rife with bad actors, volatility, and insufficient oversight. On his way out, Benham calls for new rules to ensure “oversight and responsibility.” AFR has previously advised that the CFTC’s purview over crypto should be narrow, giving the SEC primacy in what are effectively securities markets. Duke University’s Lee Reiners thinks that the SEC should merge with the CFTC, a proposal that has “long had bipartisan support.” Handing crypto market oversight primarily to the CFTC, he says, would “worsen interagency conflict and duplicative oversight.”

The Trump pick for SEC, former SEC Commissioner Paul Atkins, may make for a “far friendlier atmosphere [for companies] than in recent years.” Ya think? Atkins, a lead author of the SEC portion of Project 2025, will probably try to undo some of what the SEC accomplished under Gensler, such as its climate risk reporting rule as well as let private equity access small, retail investors. He may also take a lighter touch toward enforcement.

Tethered.

Banks are eyeing Tether’s $10 billion in profits it raked in by issuing a stablecoin and are scrambling to get in on the action. European players like Societe Generale and BBVA are already launching their own stablecoins, while U.S. banks are waiting for the green light from regulators. But there is good reason for stalling approval: Stablecoins have yet to be proven as a truly effective means of payment and are primarily used to facilitate speculation.

Real Taxes on Digital Assets.

​​The U.S. Department of the Treasury released final regulations implementing tax reporting requirements for brokers of digital assets, as part of the bipartisan Infrastructure Investment and Jobs Act. While taxpayers still owe taxes on digital asset gains, these regulations make it easier to stay compliant by ensuring that brokers send the right info. No new taxes, just less room for error and a smoother filing process.

Crypto Cons.

Celsius’ collapse, as AFR’s Casia Thompson explains, is a masterclass in crypto fraud and chaos: founder Alex Mashinsky peddled false promises, a platform rigged with shady token schemes, and $5 billion in frozen funds that left everyday investors out in the cold. The company’s bankruptcy and Mashinsky’s guilty plea offered scraps of relief, but the saga exposes how weak regulation fuels crypto’s Wild West.

HOUSING

Unaffordable Home Loans.

The CFPB sued Vanderbilt Mortgage & Finance for pushing borrowers into unaffordable loans to buy manufactured homes, setting up many families to fail. The lawsuit claims that Vanderbilt ignored red flags about borrowers' ability to repay, approving them based on unrealistic estimates and insufficient income. As a result, many families faced late fees, penalties, and even lost their homes. The CFPB is out to stop these shady practices, get compensation for borrowers, and slap Vanderbilt with penalties.

Fannie and Freddie.

The Treasury Department and the Federal Housing Finance Agency (FHFA) reached an agreement granting Treasury veto power over any proposal to end the conservatorship of Fannie Mae and Freddie Mac. The goal is intended to ensure a stable, orderly process for releasing the companies, but Republicans, including former FHFA Director Mark Calabria, argue that Treasury has no legal role in the decision. However, Trump-supporting billionaire, Bill Ackman, believes that the Trump administration will remove the lenders from conservatorship in the upcoming term, potentially leading to higher mortgage rates and deepening the current housing crisis.

Tech and Tenants.

A report from the White House Council of Economic Advisers found that private-equity-backed RealPage, the algorithmic price-setting software that allowed a cartel of landlords to conspire to gouge rents, cost tenants $3.8 billion in inflated expenses. Rent increases attributable to the software exceeded $100 a month in six major metro areas, the researchers said. Numerous class action lawsuits have implicated RealPage for its role in facilitating the illegal price-fixing, and late last year the Department of Justice filed suit against the Thoma Bravo-backed company.

Also, the DOJ moved to sue six large corporate landlords for their use of the algorithmic pricing: Greystar, Blackstone’s LivCor, Camden Property Trust, Cushman & Wakefield, Willow Bridge and Cortland Management. Together, they control over 1.3 million units in 43 states and D.C. If you want to know about their influence in your city, The Washington Post has an interactive map that gives you an idea.

CLIMATE and FINANCE

Banks Bow Out of Climate Promises.

Over the past several years, droves of large financial institutions have piled into coalitions of companies that have pledged to achieve net-zero emissions by 2050 and meet other climate goals, like the UN’s Net-Zero Banking Alliance (NZBA) or Glasgow Financial Alliance for Net Zero (GFANZ). These groups have ostensibly been a way for these institutions to develop best practices and deploy capital responsibly to contribute to decarbonization, though their effectiveness has been in question since Day 1. As Trump’s return to the White House approaches, more major U.S. banks have stepped back from these affiliations; the Net-Zero Banking Alliance has so far lost Goldman Sachs, Citigroup, Bank of America, Morgan Stanley, and Wells Fargo. Now, JP Morgan says it’ll pull back from the NZBA. This week, BlackRock bailed on the Net Zero Asset Managers (NZAM) Initiative. And, recently, GFANZ announced that member companies no longer needed to join one of eight UN-backed net-zero alliances.

Bring Out the Data.

AFREF and 36 partners want the Treasury’s Federal Insurance Office to release the homeowner insurance data that the National Association of Insurance Commissioners collected from over 330 insurers, in order to more fully understand and quantify risks to insurers and homeowners amid an insurance crisis accelerated by climate change.

Related: The wildfires tearing through Los Angeles might overwhelm the state’s insurer-of-last-resort, backed into a corner after other corporate insurers pulled out or raised rates to untenable levels due in part to rising climate disaster risk, as well as insurers’ desire to pad their record profits. Said AFR’s Kelsey Condon:

As we watch yet another devastating disaster destroy peoples’ lives, state and federal leaders not only continue to sit back, but actively advocate for less supervision of the insurers contributing to this crisis. Insurance companies underwrite and fund the fossil fuel projects driving the climate crisis - but refuse to share the very data communities and the public need to prepare themselves.

And AFR’s Moonyoung Ko:

Nowhere in the world is immune to climate change, and the unwillingness of regulators and politicians to act on the growing property insurance crisis as insurers charge exorbitant rates, deny and withdraw coverage, and drive people into bankruptcy—patterns we’ve long seen in the health insurance industry—must be questioned.

POLITICS and MONEY

Crypto’s Day in Office.

Crypto CEOs are eager to shape Trump’s crypto empire – and the entire financial regulatory system. As the presidential inauguration nears, crypto executives are descending upon the White House for a slice of influence and a spot on his crypto advisory council. CEOs from Circle, Crypto.com, and Coinbase, have met with Trump and have donated to his inaugural committee. The council — which is expected to include about 24 CEOs — is gearing up to shape digital asset policies under Trump’s administration, with some executives already in discussions about appointments. Not only does the crypto cabal want to shape crypto policy, it wants a pro-crypto litmus test over every federal financial regulator. The January 17 "Inaugural Crypto Ball" is just the appetizer to the incoming administration’s crypto buffet.