On Monday, the Consumer Financial Protection Bureau (CFPB or Bureau) released its semi-annual report highlighting its work. This is the first report issued by Acting Director Mick Mulvaney, and the report is as brazenly anti-consumer as you would expect from a man who once likened consumer safeguards to a “slow cancer,” has called the CFPB a “sick, sad” joke, and has stated that he believes the Bureau should not exist at all. Mulvaney, an ultraconservative who helped found the House Freedom Caucus during his tenure in the U.S. House, also heads the Office of Management and Budget, where he has also prioritized blocking regulatory safeguards put in place by other entities. And, true to his threats, Mulvaney has spent his tenure as Acting CFPB Director slowing or reversing the Bureau’s work that had been started under Richard Cordray, former director of the CFPB.
In the report, Mulvaney makes four recommendations for statutory changes to the CFPB that are both misguided and dangerous. These include making the Bureau subject to funding through congressional appropriations, requiring legislative approval for all major rules, ensuring the Bureau’s director answers to the president, and creating an independent inspector general. As Lisa Gilbert, Public Citizen’s vice president of legislative affairs put it, these proposals are a “knife in the heart” of the CFPB, “clearly designed to block, defund, and politicize the protections Dodd-Frank finally gave Main Street Americans” with the Bureau’s creation.
Mulvaney’s supposed rationale for this recommendation is that the CFPB is too powerful and lacks accountability. Even a brief review of the history of the CFPB shows how laughably untrue this charge is. And, worse, it ignores the critical function that this independent Bureau should be playing as a watchdog for consumers, ensuring that financial institutions are not ripping off their customers.
The CFPB was put in place after the Great Recession caused by the financial crisis and subprime mortgage crisis. The Bureau’s creators realized, correctly, that without safeguards to keep powerful financial institutions such as Wall Street banks from preying on consumers, these institutions would continue their rampantly destructive practices and cause untold financial harm to ordinary Americans. It was designed specifically to be an accountable regulator – the CFPB must report to Congress twice a year on its activities, and its director must testify before Congress four times each year. Furthermore, it is unique among federal agencies in that its rules can be vetoed by the Financial Stability Oversight Council.
The Bureau’s value to Main Street Americans cannot be overstated. Since its creation in 2011, the CFPB has issued or proposed rules protecting consumers from payday lenders, from predatory practices in prepaid credit cards, and from forced arbitration (though the Trump administration has already killed that last rule). As of early 2017, the CFPB had secured nearly $12 billion in relief for nearly 30 million consumers. It had handled over 1 million complaints, and fielded questions from the 13 million unique visitors to its Ask CFPB tool.
The Bureau’s independence from Congress is utterly essential to its effectiveness in acting on behalf of consumers. Republicans in Congress and the executive branch have unfortunately made clear that they have no desire to see further consumer financial protections passed, and indeed have spent the last two years attempting to roll-back Dodd Frank regulation already in place. A CFPB whose budget is controlled by a Republican Congress would be rendered utterly ineffectual. Instead, it should remain funded independently through the Federal Reserve.
Mulvaney’s proposal makes a mockery of American consumer protections. As Sen. Warren put it in her March 28 op-ed, Mulvaney and his fellow proponents of gutting the CFPB “never really cared about accountability. They only wanted the Bureau to be less effective at stopping financial firms from cheating people.”
In the era of Wells Fargo and Equifax, it’s clear that we need stronger, not weaker, protections against predatory practices in the financial industry. If Mulvaney and the Trump administration get what they want, what we’ll get instead is a financial industry unleashed to prey upon consumers to line its own pockets. We the people must take action to stop Congress from adopting Acting Director Mulvaney’s dangerous recommendations and to keep the CFPB independent!