CALIFORNIA – Senators Monique Limón and Tim Grayson introduced Senate Bill 852 to strengthen financial consumer protections in the state, in response to the Trump Administration’s plans to dismantle the Consumer Financial Protection Bureau (CFPB).
The CFPB has returned $21 billion to consumers from its enforcement and supervisory work.
However, the Trump administration’s budget cuts and regulatory changes could limit the agency’s effectiveness in enforcing consumer protections.
On April 3, a D.C. court removed a temporary block that had prevented the administration from dismantling to the CFPB, after they assured they wouldn’t act immediately.
According to the bill authors, the ‘federal government’s antipathy towards consumer protection is a call for California to step up its efforts.’
“By relying on federal law, California cedes its sovereignty and invites a hostile CFPB to intervene in an action, potentially moving the case to a more favorable forum in a federal district court likely to favor corporate interests over those of consumers,” said the bill authors.
Recent CFPB changes could weaken protections for Californians
The California Department of Financial Protection and Innovation (DFPI) regulates consumer financial protection laws and oversees 4,391 lenders, brokers, and Property Assessed Clean Energy (PACE) program administrators.
Currently, DFPI enforces laws differently across industries, sometimes allowing similar violations to go unpunished.
AB 1864 expanded DFPI’s authority, but enforcement depends on licensing.
DFPI can act independently against unlicensed violators but must coordinate with the CFPB for licensed ones, which bill authors say can slow enforcement.
SB 852 gives the DFPI clearer authority to enforce laws against unfair, deceptive, or abusive practices by licensed financial entities.
Critics say DFPI already has the power to oversee and penalize licensed businesses
The California Mortgage Bankers Association opposes the bill, arguing that the DFPI already has the power to oversee and penalize licensed businesses if needed.
“And, under existing law, the DFPI can partner with the Attorney General to prosecute egregious UDAAP [Unfair, Deceptive, or Abusive Acts or Practices] cases against bad actors under California’s unfair business practices statutes,” wrote the association.
SB 852 passed committee with 5 votes in favor and 2 against, then was re-referred to the Judiciary Committee for further review.
