The landscape of consumer financial protection is undergoing significant changes, with credit unions at the forefront of advocating for reforms. America’s Credit Unions (ACU) has recently urged Congress to overhaul the structure and powers of the Consumer Financial Protection Bureau (CFPB) emphasizing the need for increased congressional oversight and transparency. Simultaneously, federal agencies have rescinded 2026 guidance on Special Purpose Credit Programs (SPCPs) marking a shift in fair lending policy.
These developments come at a crucial time, as state-level elections in finance-heavy states like California and New York are set to influence the financial industry significantly. The outcomes of these elections will shape the regulatory environment for banks and financial institutions, particularly in areas such as consumer protection and fair lending practices.
ACU’s Call for CFPB Reforms
In a letter to the House financial services Committee, ACU’s Senior Vice President of Advocacy, Greg Mesack, outlined several key recommendations for CFPB reform. These include placing the Bureau under the regular appropriations process, restructuring it to create a five-person, bipartisan commission, and applying more rigorous statutory standards to the CFPB’s regulatory cost-benefit analysis process. Mesack emphasized the importance of promoting responsible innovation and preventing regulation by enforcement.
ACU also highlighted the need to reduce duplicative supervision of credit unions, which are already subject to comprehensive oversight by the National Credit Union Administration (NCUA). The organization has been a vocal advocate for CFPB reform in recent years, aiming to preserve strong consumer protection while recognizing the unique structure and mission of credit unions.
Federal Agencies Rescind 2026 SPCP Guidance
On August 25, 2026, seven federal agencies, including the FDIC, NCUA, OCC, CFPB, HUD, DOJ, and FHFA, rescinded their 2026 interagency statement addressing SPCPs under the Equal Credit Opportunity Act (ECOA) and Regulation B. The agencies stated that creditors should no longer rely on the prior guidance and emphasized that SPCPs must comply with ECOA, Regulation B, and, where applicable, the Fair Housing Act (FHA).
The 2026 statement had encouraged creditors to establish SPCPs designed to meet the credit needs of specified classes of persons. However, the agencies noted that the statement relied on a provision of Regulation B that has since been amended and on HUD guidance concerning the FHA that is no longer in effect. The rescission follows several related federal actions, including the CFPB’s amendment of Regulation B in June 2026 to revise the requirements applicable to SPCPs offered by for-profit organizations.
The agencies cautioned creditors against relying on prior guidance that suggested generalized remedial ‘equity’ initiatives absent specific cases of unlawful discrimination. This rescission is part of a broader shift in fair-lending policy, requiring creditors to review their program eligibility criteria and compliance procedures.
State-Level Elections and Their Impact on the Financial Industry
As the federal role in consumer protection undergoes changes, state-level elections are gaining prominence. Races in finance-heavy states like California and New York will have an outsize impact on the financial industry. Key issues include regulating prediction markets, fee and interest rate limits, and consumer protection laws.
In New York, Governor Kathy Hochul is leading Republican Bruce Blakeman by 10 points, according to the latest Siena Poll. Hochul has taken an aggressive position against prediction market operator Kalshi, joining Attorney General Letitia James in challenging the company’s operations. James, seeking a third term, is ahead by 18 points against Republican Saritha Komatireddy.
In California, Democrats Jane Kim and state Sen. Ben Allen are competing to replace Ricardo Lara as the state’s top insurance regulator. The race is consequential due to California’s property-insurance market facing an underwriting crisis. Kim advocates for a larger state role, while Allen emphasizes wildfire mitigation and insurer accountability.
In Arizona, Democratic Gov. Katie Hobbs is seeking reelection against Republican Rep. Andy Biggs. Hobbs has been a leading skeptic of the emerging prediction market industry, issuing an executive order prohibiting state executive-branch employees from using nonpublic government information to trade on platforms such as Kalshi and Polymarket. Arizona Attorney General Kris Mayes is running against Republican challenger Warren Petersen, leading by 6 points.
These state-level elections will shape the regulatory environment for financial institutions, influencing consumer protection and fair lending practices in the coming years.
