Pryor to acting director Mick Mulvaney’s appointment to the Consumer Financial Protection Bureau, Mr. Mulvaney had called the CFPB a “sad, sick joke” and called for an overhaul of the agency, including curtailing its budget.
Well, it looks as if Mr. Mulvaney is fulfilling his promises, even to demoting the “Consumer” in the Consumer Financial Protection Bureau (CFPB). In public communications Mr. Mulvaney now calls the CFPB the Bureau of Consumer Financial Protection.
There’s been a continued and concerted effort by the administration to rein in the CFPB and promoting Mr. Mulvaney to that position as interim director may only have been the first step!
About the time Mr. Mulvaney was appointed, President Trump himself tweeted, “The Consumer Financial Protection Bureau… has been a total disaster as run by the previous Administration’s pick. Financial Institutions have been devastated and unable to properly serve the public. We will bring it back to life.” Well, if neutering it is a step toward bringing the agency back to life, it’s an odd step, indeed.
So far it looks as if much of its previous work under Richard Cordray has been repealed. As Senator Dick Durbin (D-IL) said sometime back, the CFPB “is a watchdog agency. Wall Street hates it like the devil hates holy water, and they’re trying to put an end to it with Mr. Mulvaney stepping into Mr. Cordray’s spot.” He was spot on.
The CFPB had been under fire from the present administration for quite a while. Last year, before Richard Cordray resigned, he designated the agency’s chief of staff, Leandra English, as deputy director and, hopefully, his replacement. I wrote at the time that Mr. Cordray’s move appeared designed to stop the Trump administration from appointing its own interim agency head.
However, within hours of Cordray’s resignation, the Trump administration said it had picked Office of Management and Budget Director Mick Mulvaney as interim director of the agency. In an all-out circus, Mr. Mulvaney and Ms. English both claimed the acting director role, with Mr. Mulvaney eventually winning the post as acting director in initial legal rulings.
Bringing the CFPB back to life appears to be directly the opposite of what Mr. Mulvaney has been doing! The CFPB has not undertaken nor recorded a single enforcement action since Mr. Mulvaney was appointed last November. Sherrod Brown (D-OH), ranking Democrat on the Senate Banking Committee, said regarding Mr. Mulvaney’s semi-annual report to Congress, which took place just last week, the number of enforcement actions on his watch are actually negative four, because the agency “has withdrawn lawsuits against four payday lenders that charge consumers triple-digit interest rates.”
There are continuing questions about whether Mr. Mulvaney was put into that post illegally. David Dayen, author of Chain of Title: How Three Ordinary Americans Uncovered Wall Street’s Great Foreclosure Fraud, wrote in a recent The Nation article: “A three-judge panel in the US Court of Appeals for the DC Circuit is hearing arguments on whether President Trump violated the law by installing Mulvaney in the position on a “temporary” basis (now going on five months with no end in sight, and no nominee to replace him even named), when the [Dodd-Frank] statute says specifically that the deputy director should serve on an acting basis in the absence of the director. That original provision, which Trump ignored, was designed to maintain the check and balance in a president’s only being able to choose a director who gets confirmed by the Senate.”
Dayen goes on to say, “As Brianne Gorod added in an op-ed this week, while the statute calls for an independent director, Mulvaney could not be farther from independent: he currently serves as director of an agency located within the Executive Office of the President.”
During Mr. Cordray’s time in his role as director, the CFPB returned $12 billion to consumers who were wronged in their financial transactions. It appears Mr. Mulvaney is working to remove those regulations—starting with rules just finalized on payday lenders.
Addressing Mr. Mulvaney, Senator Elizabeth Warren says, “… this is about first responders and seniors and families who need someone on their side. You are hurting real people to score cheap political points.” Sen Warren listed numerous actions that returned hundreds of millions of dollars to credit-card customers cheated by banks, students scammed by predatory loans, military members put into shady car-loan agreements, and even 9/11 first responders scammed out of tax money. According to Senator Warren, none of these victims would have seen any restitution without the CFPB.
Mr. Mulvaney, as acting director of the CFPB, is proposing to water down the CFPB to make it less capable of fulfilling its mission to protect consumers! According to a recent American Banker opinion article, ”he showed he has no regard for the millions of American small businesses that need fraud protection and want to see Wall Street held accountable for practices that harm our economy.”
Not one of Mulvaney’s recommendations would help the CFPB do its job better. He is repeatedly asking that the CFPB be at the mercy of government rather than be an independent agency, subjecting it to congressional appropriations, asking CFPB rules to be subjected to legislative approval, that the president have direct oversight of the bureau’s director, including the option to remove the director for purely political reasons and the list goes on.
A national internet poll of 500 small business owners, conducted by Lake Research Partners for Small Business Majority, revealed nearly six in 10 entrepreneurs agree that for far too long, Wall Street banks and financial companies wrote their own rules, leaving small businesses and consumers vulnerable and without protection. They believe the CFPB is needed because its mission is to change that.
The Small Business Majority’s poll, quoted in the American Banker article, found 84% of entrepreneurs support the CFPB and believe it’s needed to prevent predatory financial practices and that financial institutions treat small businesses and consumers fairly. And, incredibly, 52% of the entrepreneurs self-identified as Republicans vs 34% as democrats and 11% as Independents.
“Small businesses, along with our economy, are getting stronger, but they’re certainly not immune to the lingering effects of our financial meltdown,” said John Arensmeyer, founder & CEO of Small Business Majority. “That’s why they feel strongly that Wall Street banks and other financial institutions need to be held accountable with tougher regulations. Predatory lending practices are still a problem and small businesses support the government’s and the Consumer Financial Protection Bureau’s role in fixing that.”
Mr. Arensmeyer notes in the American Banker article ”It’s enough already. Big businesses don’t need more favors from Mulvaney or anyone else, and Congress must protect an agency that looks out for our nation’s job creators. The CFPB must remain a strong and potent force so it can look out for the small firms that don’t have the resources to protect themselves.”
He’s right. The CFPB may need revisions, but not with the heavy handed political underhandedness Mr. Mulvaney is playing the game with. We need agencies that look out for the consumer. Voters need to stand up and be counted or we will continue to have the same old systems and little, if any, accountability.