The CFPB Is Under Attack

Director Richard Cordray resigned from the Consumer Financial Protection Bureau on November 24, 2017, leaving Deputy Director Leandra English in charge as Acting Director.  

The Dodd-Frank Act of 2010, which created the CFPB, specifically states that the deputy director becomes “Acting Director in the absence or unavailability of the Director.”  According to former Representative Barney Frank (D-Mass), a co-author of the law, this language was specifically added to insulate the independence of the agency from the vagaries of the political process.

Trump, however, immediately said he was appointing Mick Mulvaney, the Senate confirmed (51-49) head of the Office of Management and Budget to also stand as acting director of the CFPB.  The administration claims that this appointment falls under the Federal Vacancies Reform Act of 1998, which allows for a president to appoint a Senate-confirmed official to head an agency in case of a vacancy. 

(Mulvaney, a former  U.S. Representative (R-SC), is a long-time opponent of the CFPB who claims that the agency is "the worst" kind of federal agency, and while a member of Congress sponsored legislation to eliminate the CFPB.  While in Congress he aligned with the Tea Party and was a founding member of the so-called Freedom Caucus.)

A federal district court judge in Washington, D.C. was reviewing the situation to determine who will be in charge of the CFPB until a new director is nominated and approved.

Update 30 May 2018: 

In early May, Mick Mulvaney, Acting Director of the CFPB (and longtime opponent of the CFPB's existence) announced plans to move the agency’s student loan division into the bureau’s consumer information unit.  This will derail enforcement of rules protecting student loan holders, and allow student loan companies and collectors to continue their abusive ways.

Back in February, Mulvaney did the same thing to the fair lending division , cutting off multiple legal cases against predatory lenders. Some of whom had been charging as much as 950% interest on short-term loans. 

This is yet another attempt by Mulvaney and Trump to derail and ultimately dismantle one of the most effective agencies in the country. For now, Mulvaney is disrupting both the rule creation process and the rule enforcement process, to the detriment of consumers across the country. His plan is to change the agency from its designed purpose of assisting and protecting consumers, to a simple clearinghouse for letting people know their legal rights.  That’s important, too - but it doesn’t help a student loan holder, or any person who’s been finacially ruined by a predatory lender, to go after the company that is violating laws and affecting the lives of millions of people.  

As of early April, the CFPB had initiated exactly -0- enforcement actions under Mulvaney, as opposed to the 2-4 per month under Cordray.  Since then there has been one: a $1 billion fine for Wells Fargo in relation to their forced insurance program related to auto loans, and issues relating to some mortgage interest rate lock extensions. (Although the work for that was done mainly under Director Cordray.)

Also in early May, Mulvaney said he no longer wanted the CFPB’s database of over 1.5 million complaints against financial institutions to be public, dismissively calling it a Yelp for financial services".  (Perhaps related to the fact that 8 of the top 10 (and 19 of the top 30) offenders by number of complaints have donated money to his Congressional campaigns? Since he was quite blunt in his Congressional testimony in early April 2018 about his preference for “pay to play”, that’s not exactly a wild guess.)

The CFPB as designed - and as it was run for the first several years of its existence - is what good government is supposed to be. Under Richard Cordray, the Agency was able to help return over $12 billion to wronged consumers, took predatory companies to court, and investigated and fined banks that abused their customer’s trust. 

Mulvaney is doing his best to destroy all that is good about the CFPB. 

Update 2 April 2018: 

Today Mick Mulvaney, Acting Director of the CFPB (and longtime opponent of the CFPB's existence) asked Congress to:

  • Take control of the CFPB's funding
  • Make the Director firable - at will - by the President
  • Install an "inspector general" to oversee the Bureau
  • Give themselves (Congress) the sole power to finalize the CFPB's rules.

Each of his requests go against how and why the Agency was created under Dodd-Frank after the financial disasters of 2008. The CFPB was designed to protect consumers from unscrupulous businesses. The Agency is to be independent (within the Federal Reserve System), so that it can not be used as a political toy or tool by elected officials.  Mulvaney, having failed to prevent the Agency's creation during his Congressional career, has been been specifically placed in a position to attempt to destroy it from the inside.

Mulvaney will be speaking to the House Financial Services Committee on 11 April 2018, and the Senate Finance Committee on 12 April.

Update 27 February 2018: 

On December 22, 2017, Judge Timothy Kelly denied a preliminary injunction that would have blocked Mulvaney from leading the CFPB. After his final ruling on January 10, 2018, an appeal was filed. 

Kelly did not address the legal conflicts that result from Mulvaney heading both the Office of Management and Budget and the CFPB.  For example, as Director of the Office of Management and Budget, Mulvaney is the White House Budget Director.  As acting head of the Consumer Financial Protection Bureau, Mulvaney has a seat on both the FDIC board of directors and the Financial Stability Oversight Council.  

White House employees, such as the White House Budget Director, are not allowed to sit on the FDIC board of directors because it is a conflict of interest. 

In the first three months since Mick Mulvaney took over the Consumer Financial Protection Bureau, he has been working hard to remove the "consumer protection" portion of the CFPB's focus.

So far, Mulvaney has:

  • Scaled back the investigation into the massive Equfax data breach that at last check has affected nearly half of all Americans.
  • Blocked new payday lender regulations that were about to go into effect after years of work.
  • Requested a quarterly budget funding amount of $0.00. (Zero dollars.)
  • Dropped an investigation into payday lender World Acceptance Corporation - a company that donated to his Congressional campaigns.
  • Forced the CFPB to drop lawsuits against four payday lenders, including Golden Valley Lending and Silver Cloud Financial, who had been charging interest rates of up to 950% . (Yes, you read that right - nine hundred fifty percent.) 
  • Turned the CFPB's Office of Fair Lending and Equal Opportunity - originally set up to force lenders guilty of various types of discrimination to make financial restitution to those who were wronged - into an "advocacy, coordination, and education” group under his personal direction.  

Update 30 November 2017: 

U.S. District Judge Timothy J. Kelly (a Trump appointee) denied English's request for a temporary restraining order blocking Mulvaney from taking control of the CFPB, while acknowledging that there are constitutional issues that need to be resolved .  There will be additional hearings in the coming weeks, and likely a review by the U.S. Court of Appeals for the D. C. Circuit.

Mulvaney has already announced a 30-day hiring freeze, a 30-day halt on new regulations and filings for the CFPB, a 30-day halt on deposits to the civil penalty fund, and put a hold on all pending cases until he's personally reviewed them.  In interviews he has said that he is also seeking more political appointees to the agency to help him "refocus" the CFPB.

Mulvaney, a vocal supporter of the payday lenders- and recipient of over $60,000 in campaign contributions from those in the payday lending industry,  is now the acting director of the Consumer Financial Protection Bureau - which was about to roll out new rules regulating payday lenders. 

For more details: 

Opponents Seek To Kill Consumer Protection Agency By A Thousand Cuts (Forbes, 10 May 2018)

Mulvaney Downgrades Student Loan Unit in Consumer Bureau Reshuffle (The New York Times, 9 May 2018)

Mick Mulvaney doesn't want to show you complaints against banks that backed his campaigns, report says (Los Angeles Times, 8 May 2018)

Mulvaney, Watchdog Bureau’s Leader, Advises Bankers on Ways to Curtail Agency (The New York Times, 24 April 2018)

The government’s top consumer watchdog hasn’t taken a single enforcement action since Trump’s pick took over (Vox, 10 April 2018)

The Steady, Alarming Destruction of the Consumer Financial Protection Bureau  (The New Yorker, 7 Feb 2018)

Equifax compromised half of the country’s information. Trump’s CFPB isn’t looking into it. (Vox, 5 Feb 2018)

Trump administration strips consumer watchdog office of enforcement powers in lending discrimination cases (The Washington Post, 1 Feb 2018)

Mulvaney Regulatory Freeze: TRO Denial  (The National Law Review, 29 Nov 2017)

Would Trump’s CFPB Pick Mulvaney Back Consumers Or Payday Lenders?  (International Business Times, 28 Nov 2017)

Sorry, Mr. President. You can’t make Mulvaney ‘acting’ head of the Consumer Financial Protection Bureau  (The Washington Post, 27 Nov 2017)

Doughnuts and a lawsuit: The battle for temporary leadership of the CFPB  (Los Angeles Times, 27 Nov 2017)

CFPB Finalizes Rule To Stop Payday Debt Traps  (CFPB Newsroom, 5 Oct 2017. New rules have been put on hold by Mulvaney.)


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