President Trump appointed someone who hates the Consumer Financial Protection Bureau (CFPB) as its acting Director: Mick Mulvaney, who already has a very important full-time job as Director of the Office of Management and Budget (OMB). Mulvaney took over as acting director in late November after the CFPB’s first and wildly successful Director, Richard Cordray, stepped down.
Mulvaney’s contempt for consumer protection and for the CFPB is well documented, even calling the CFPB “a sick, sad joke” and that “some of us would like to get rid of it.” It’s obviously not a joke and has been very helpful for the 31 million ripped off Americans who have received more than $12 billion in compensation, after being ripped off by financial firms, due to action by the CFPB under Director Cordray.
Yet, in less than one year, acting director Mulvaney is doing as much as possible to take “consumer protection” out of the consumer protection agency. Frankly, he’s well on the way to turning it into a “financial predators’ protection bureau.” This isn’t always clear, so we’ve decided to track acting director Mulvaney’s actions here, which we will be updating as his anti-consumer rampage continues:
Prior to the change, CFPB’s mission statement read: The Consumer Financial Protection Bureau is a 21st century agency that helps consumer finance markets work by making rules more effective, by consistently and fairly enforcing those rules, and by empowering consumers to take more control over their economic lives.
Sounds pretty good, right? And so, for the first 6+ years of its existence, the CFPB went about protecting Main Street consumers across the country. In fact, it quickly (and quietly) became the most successful consumer protection agency in the history of the country.
Then President Trump nominated known anti-consumer Mick Mulvaney to the role of acting director, who quickly changed just about everything, including the mission statement which now reads: The Consumer Financial Protection Bureau is a 21st century agency that helps consumer finance markets work by regularly identifying and addressing outdated, unnecessary, or unduly burdensome regulations; by making rules more effective; by consistently enforcing federal consumer financial law; and by empowering consumers to take more control over their economic lives.
Not only did he almost immediately change the mission statement of a wildly successful government agency, he also informed CFPB staff that, as government employees, they work for the people “who use credit cards,” but also for “those who provide those cards.” In theory, that might sound great, but as a practical matter, it simply makes no sense for an agency that is required by law to protect consumers from those very same credit card providers, banks and other financial institutions.
That’s right, Mick Mulvaney, the acting head of the CONSUMER financial protection bureau, is just as worried about the Corinthian College students who were the victims of predatory lending practices and who were given inflated job placement rates, as he is the ECMC Group that had to forgive $480 million in student loans to them.
Mulvaney’s moratorium expired some time ago, as it has now been more than 60 days and no new actions have been taken by the CFPB. How does that compare to the previous year? During the same time period last year, under former Director Cordray, 16 enforcement actions were taken. Given the recent Wells Fargo and Equifax scandals, along with the vital consumer protection rules waiting to be implemented, this seemingly endless freeze is costing Main Street consumers daily.
In December 2017, the CFPB closed a four-year investigation into World Acceptance, an installment lender based in South Carolina. Later, it became known that World Acceptance had given thousands of dollars in campaign donations to Mulvaney when he served as a South Carolina congressman. While there is no law against this and no evidence of a quid pro quo, the mere fact that he dropped an investigation into a financial services company that was charging 200% interest rates should make everyone furious.
Mulvaney is seeking comments from the financial industry on whether or not they have complaints or any other feedback on how the CFPB conducts investigations of the industry and any supposed burdens on the industry that come with cooperation. This is essentially like the Mayor of Chicago asking Al Capone to head crime prevention efforts for the city …. let’s just say there would be a whole lot more crime and a lot less prevention if that were the case.
Mulvaney stated in early January that instead of having the prepaid card rule go into effect in April of this year, the date would be scrapped and the CFPB would now be looking at making changes to the already approved rule. The CFPB proposed a very reasonable, common sense rule that merely required companies to disclose the fees they are going to charge on prepaid cards and 2) cooperate with consumers who discover unauthorized charges or errors and fix them. But, that was too much for Mulvaney who has delayed implementation and is considering making changes to the rule.
Much like the prepaid card rule, the payday lending rule is now being reconsidered by acting director Mulvaney. Again, a straightforward and reasonable rule, that would have required payday lenders to vet whether or not a borrower could pay back their loans and would have restricted some loan practices. Now, it is under threat of being eliminated all-together, or being rewritten in such a way that it would be essentially meaningless. And that puts Main Street consumers and potentially the economy as a whole in harm’s way. One of the main reasons why the CFPB was established in the first place was to catch and ultimately prevent illegal and dangerous behavior in the financial services sector.
Mulvaney moved the Office of Fair Lending and Equal Opportunity (OFLEO) so it is now under his direct control. The OFLEO is in charge of policing anti-lending discrimination laws which, so far, has recouped tens of millions of dollars for ripped-off minority homeowners.
Now that it is under his direct supervision, rather than under the “Supervision, Enforcement, and Fair Lending department of the CFPB, the OFLEO will be focused on “advocacy, coordination and education.”
In early January, Mulvaney requested $0 in funding from the Federal Reserve for the first quarter of 2018. He cited the CFPB’s rainy day fund as being large enough to cover operating costs. Drawing down the rainy-day fund and other “status quo” efforts are clear indicators that acting Director Mulvaney sees no need to proactively work on behalf of consumers and instead put the CFPB in a state of non-activity and by using the agency’s reserve fund for day to day operations, Mulvaney will ensure the agency has as few resources as possible to respond to any future crises that may require an aggressive federal response (think Equifax or Wells Fargo).
Announced in early February, Mulvaney has decided to pull the CFPB back from a full-scale probe of the Equifax hack, which collected more than 145 Million Americans’ sensitive data, including social security numbers. Instead, Mulvaney has not ordered any subpoenas, has not sought any testimony and has shelved on-the-ground tests – all tools typically used in investigations by the CFPB. Instead, Equifax CEO’s are collecting millions in bonuses (for hitting their profits) while Main Street consumers live in constant fear that their identity will be the next one stolen.
On Feb. 12th, President Trump announced his proposed budget, and with it he sought to bring the Consumer Financial Protection Bureau under the Congressional appropriations process – almost guaranteeing its neutering. Currently, the CFPB requests funds from the Federal Reserve, which is not subjected to Congressional appropriations and which helps keep it isolated from politics. In fact, the CFPB would receive $6.4 Billion less in funding over the next 10 years were it to be subject to congressional appropriations. Subjecting the CFPB to the congressional appropriations process only harms Main Street consumers, something candidate Trump promised on the campaign trail he would never do.
On Feb. 12th, it was reported that CFPB acting director Mulvaney would be dropping yet another investigation, this time into Golden Valley Lending, a payday lender which was found to have charged as much as 950% in interest. Yes, you read that right NINE HUNDRED AND FIFTY PERCENT. Mulvaney said he wasn’t in fact involved in the decision, but later a spokesperson said that he has been involved. This marks the second time Mulvaney has dropped an investigation into a lender the CFPB had earlier charged with “unfair, deceptive and abusive business practices” and establishes a clear trend of what’s likely to come – predatory actors facing not even a slap on the wrist, ultimately leading to more Main Street consumers in harm’s way.
The CFPB is now seeking input about the effectiveness of its supervisory activities and has now added even more topics, including consumer complaint reporting, to a review of all aspects of the agency’s operations. And, not only is he looking to reshape future action (which will likely turn out to be inaction) Mulvaney continues to implement a freeze on all enforcement actions – which has been in place since last November. The lack of enforcement only hurts Main Street consumers and lets the predators in the financial industry know they can get away with these unfair, illegal and/or discriminatory behavior.
Over the past 3 months Acting Director Mulvaney has been on an anti-consumer rampage, discarding many of the policies of his predecessor and now he’s got his eyes set on perhaps the most important tool the agency has: targeting “unfair, deceptive or abusive acts or practices,” otherwise known as UDAAP. While Mulvaney can’t repeal the provision that gives this duty to the CFPB, it appears he, along with the new leadership he’s installed, no longer seem interested in pursuing financial firms that engage in behavior categorized as UDAAP. This signals a troubling shift in focus at the CFPB, one that moves away from protecting CONSUMERS and towards protecting financial PREDATORS.
In the 3+ Months since President Trump made Mick Mulvaney the Acting Director of the CFPB, the business community has been cozying up to the Consumer Financial Protection Bureau. So much so that one payday lender CEO, who had been the center of a now dropped CFPB investigation, reached out to acting director Mulvaney for a job at the CFPB. Why has the business community felt so at ease with the acting director? It’s likely due to the new atmosphere at the CFPB. In fact, that new atmosphere has produced credible differences between the consumer protection focus of the past director and the financial predator protection of the new acting director. In the past 3+ months, under the supervision of acting director Mulvaney, the CFPB has issued a total of ZERO enforcement actions. During the four years prior, under Director Cordray, the CFPB was averaging between 3 and 5 enforcement actions per month. While the consequences of this new attitude at the leadership level of the CFPB may not be felt by consumers at this given moment, they will undoubtedly be felt (and likely significantly) in the months and years to come.
Acting director Mulvaney has now made it known through multiple speeches that he believes other agencies (not the CFPB) should be focusing on consumer protections. Essentially, this would make the CFPB a “backup” rather than being the proactive consumer protector it was created to be (and has been for the past 5+ years). While it is true that other agencies (like the SEC and CFTC) have protecting consumers as part of their mission, it is not the primary focus of each agency. That is one of the reasons why the CFPB was created as an agency – to be solely focused on consumer financial protection. If the CFPB takes a step back, then no single agency will be focused on consumers and that is a problem. Protections will no longer be enforced, complaints will slip through the cracks and be forgotten and eventually businesses will be running around as if it the wild west – and that’s dangerous for everyone.
Over the past month or two, acting director Mulvaney has invited officials from the industry, which he is supposed to protect Main Street consumer from, to comment on the impact CFPB processes have on them. Now, acting director Mulvaney has gone a step further and invited industry officials to comment on rules ALREADY on the books. What does this mean? It means the vital consumer protection rules created over the past five plus years are in jeopardy. The same rules that proved their effectiveness by returning $12 Billion to nearly 30 Million Main Street consumers who were ripped off, taken advantage of or had illegal behavior done to them by actors within the financial industry. These rules took years to create and already took in comments during the public commenting period. Mulvaney is using this move to potentially water down existing rules – creating a friendlier environment for bad actors within the financial industry to carry out unlawful and/or harmful behavior on unsuspecting Main Street consumers.
Under acting director Mulvaney’s control, the CFPB has deviated from its main purpose: to be an aggressive protector of consumers throughout the country and help keep financial institutions accountable. Now, with the release of his most recent report, Mulvaney is looking to take away many of the tools that made the CFPB effective. He has recommended that the CFPB come under the Congressional appropriations process, which would make its budget susceptible to political fighting (even though protecting Main Street consumers should be a bipartisan effort). Let’s also not forget that Mick Mulvaney’s first budget request as acting director was $0. Second, Mulvaney wants to make major rules subject to approval by Congress. The CFPB rulemaking process is already extensive and can take months or even years to complete. Further extending this process only exacerbates the damage that will be inflicted on consumers. Lastly, Mulvaney want the Director of the CFPB to report to the President of the United States in exercising authority, completely eliminating any independence the agency is supposed to have. Subjecting the CFPB to this level of politicization would put Main Street consumers in harm’s way, all so financial predators can reap the financial benefits.
Acting director Mulvaney has long considered himself a fiscal hawk. In fact, earlier this year he announced that he would not be seeking new operating funds for the CFPB from the Federal Reserve. Instead, he wrote, “It is my intent to spend down the reserve until it is of a much smaller size, while still allowing the Bureau to successfully perform its functions, before making an additional financial request of the Board.” Yet, it was just discovered that Mulvaney has been paying four of his political appointees and one staff a salary of more than $235,000 per year. That number is at almost four times the median household income for the year 2016. Rather than protecting Main Street consumers from financial predators, acting director Mulvaney has used his power at the CFPB to enrich his friends and staffers who also believe in dismantling this incredibly important consumer protection agency.
Acting director Mulvaney has hired a known anti-consumer, pro-deregulation staffer to be the next policy director for research, markets and regulation. While a freeze on all activities remains in place (including a hiring freeze), that has not stopped acting director Mulvaney from installing political appointees committed to keeping the CFPB from discharging the very work it was created to perform. It is actions like these that continue to show Mulvaney isn’t willing to protect Main Street consumers best interests. Instead, he continually sides with financial predators, and this recent hire only seems to confirm that that things are likely going to get worse at the CFPB before they get better.
Acting director Mulvaney has repeatedly pointed to cyber security issues at the CFPB as one of the reasons why he halted the collection of personally identifiable information from the companies it oversees. However, it appears that many experts are now speculating that the unique response (to freeze all collection) was done simply so acting director Mulvaney could “cast the bureau in a negative light.” In fact, in a letter to companies, the CFPB stated that “there had been no data breach.” So it would seem that acting director Mulvaney is willing to do and say just about anything to bring the CFPB and its activities to a halt, leaving Main Street consumers twisting in the wing and with no means of addressing their grievances.
Speaking to a friendly crowd of more than 1,300 bankers, acting director Mulvaney has indicated he will remove the public facing side of the consumer complaint portal, meaning consumers will no longer be able to see if others have also been ripped off in the same way by the same firm. This means you, your family, and your friends will be left in the dark and unable to see complaints registered by other Main Street consumers. This decreases accountability at the CFPB and increases the possibility that millions of other consumers will unwittingly take their business to a bad actor because they don’t know any better and unfortunately won’t have the benefit of this shared source of vital consumer information.
Mulvaney announced on May 9th that the CFPB’s Student Loan Office would be folded into the Financial Education Office. This comes as part of acting director Mulvaney continues to push for a massive reorganization of the CFPB in an effort to curtail its oversight authority and effectiveness. While the Student Loan Ombudsman will remain, it is unclear the role they will have going forward or how effective they can be without Student Loan Office staff. This move comes as the CFPB is considering, thanks to acting director Mulvaney, settling with student loan servicer Navient which was being sued by the CFPB when it was under the leadership for former director Rich Cordray. Additionally, this comes as the country comes to grips with a massive student loan problem as 42 million Americans currently hold more than $1.4 trillion in student loans.
Talking at an outside group event, Mulvaney said the CFPB will now be considering the “scale and frequency” of bad actions when it comes to determining whether or not to take actions against companies. Citing an example, Mulvaney said “12,000 out of 3.5 million [transactions] is not that many.” Such prosecutorial discretion will inevitably lead to fewer companies or financial institutions being held accountable. Now, to us, if 12,000 people are being harmed by a single institution, action should be taken. Frankly, the head of the Consumer Financial Protection Bureau ought to operate with a philosophy that one consumer suffering harm is one too many. If implemented, we’re likely to see prosecutorial inaction at what was the most successful financial protection bureau in the history of the United States. And that just means more Main Street consumers are going to be put in harm’s way.
CFPB Acting director Mulvaney has now cancelled TWO Consumer Advisory Board (CAB) meetings. This comes in the wake of Mulvaney admitting a short while ago to giving more access to lobbyists who game him more money during his time in Congress. Additionally, while these meetings have been cancelled (yet are required by law to take place twice a year) industry insiders have met with Mulvaney or his senior staff numerous times. This shunning of the CAB is bad news for Main Street consumers. When industry insiders continue to get special treatment, that means rules, ordinances and enforcement policy is only being dictated by those who would be on the receiving end of such policy or rules. That means things are likely going to be slanted to favor the industry, rather than protect Main Street consumers. That is not the mission of the CFPB.
The CFPB, under former director Cordray’s leadership, wrote a rule that curbed short-term lending loans which easily trap people in cycles of debt. That rule is supposed to take effect next year, so the fight has been taken to the court room. Now, under acting director Mulvaney’s leadership, the CFPB is siding with the payday lenders (the very people the rule is aimed at). Once again, acting director Mulvaney is taking the side of financial predators (one of which was charging consumers 950% interest rates), rather than standing up for Main Street consumers who are harmed by deceptive practices these institutions practice. In fact, Mulvaney is such a trumpeter of the financial industry that he is seeking to either rewrite the rule (so it is substantially weaker) or repeal it altogether. Either way, it is clear, financial predators are the clear winner with acting director Mulvaney at the helm of the CFPB.
Going directly against his predecessor, acting director Mulvaney substantially cut a payday lender’s fine they were supposed to pay for harassing borrowers and mishandling credit report data. On top of cutting the fine in half, acting director Mulvaney DROPPED the insurance claims against the payday lender. That means the Main Street consumers harmed by this financial institution will not be receiving any remediation. This is yet another case of acting director Mulvaney letting payday lenders off the hook when they have wronged every day Americans.
Mulvaney and his CFPB are looking to eliminate what is known as “supervisory examinations” of lenders for violations of the Military Lending Act. Mulvaney is actively choosing to side with predatory payday lenders rather than the ripped off military service member who is giving everything to their country. Now, Mulvaney believes that the current practice is too “proactive” and not explicitly laid out in the Military Lending Act. However, for the past 5+ years, under the leadership of Director Rich Cordray, the CFPB conducted countless investigations and oversight related to both lenders and payday lenders and received zero legal opposition. On top of that, no lenders are challenging the CFPB’s authority to carry these investigations out. This move goes directly against the critical mission of the CFPB and is a blatant slap in the face to millions of taxpaying Americans serving their country and need, and are looking for, an ally against financial predators.
Mulvaney issued a fine (a rare occurance these days) to payday lender Cash Express LLC, which operates more than 300 store fronts in the United States, that wrongfully “hounded” borrowers by making empty threats to ruin customers credit scores as a way to coerce payment. The only problem is that fine was just $200,000… well short of the $3 Million former CFPB Director Rich Cordray was seeking. This unfortunately continues the new way the CFPB is conducting business… not fining predators and when they do, merely slapping them on the wrist. That is bad for Main Street consumers who are always the victims of this financial predatory behavior.
The CFPB has stated that it is revisiting the “ability-to-pay” provisions in the current rule. These protections are designed to make sure those giving out payday loans are giving them out to people who can pay them back. Borrowers frequently “rolling over” their payday loan (using another loan to pay of the current loan), are paying more and more in fees and they therefore get trapped in an escalating cycle of debt — a key aspect of the current payday lending business model. A rule drafted under acting director Mulvaney’s leadership is likely to significantly weaken these critical protections that exist in the current rule, meaning more Americans will receive loans they cannot pay back… trapping them in a vicious cycle of debt they are unlikely to get out of.