By Bartlett Naylor and Lisa Gilbert
“We’re not burning it down.”
That’s Mick Mulvaney describing his management of the U.S. Consumer Financial Protection Bureau (CFPB). Yet he keeps setting fires – terminating enforcement, ignoring supervision, slashing funding, leaving vacancies unfilled and closing outstanding cases.
John Michael “Mick” Mulvaney also serves as the U.S. Senate-confirmed director of the U.S. Office of Management and Budget (OMB). Running OMB should more than absorb his waking hours, so it’s natural to assume that Mulvaney would function as the CFPB’s caretaker. Instead, Mulvaney is stopping just short of “burning it down:”
- He has failed to announce any new enforcement actions. The last enforcement action announced by the CFPB was on 21, 2017, which involved Citibank student loan services failures. Prior to that, the bureau took action at least once a week, sometimes more. These cases involve firms that deceived borrowers, illegally posing as government agents, stealing from consumers, lying to loan officers and more, and have returned $12 billion to more than 28 million victims. But since Mulvaney took over, there have been zero enforcement actions.
- He terminated numerous cases against firms, including at least one at a firm that contributed to his campaign for Congress. World Acceptance Corp. received a CFPB letter in January telling it that it would no longer be under investigation, following four years of work by the agency. The firm had contributed $4,500 to Mulvaney’s campaigns when he ran successfully for Congress from South Carolina.
- He sidelined a rule meant to reduce abuse by loan sharks. On Jan. 16, 2018, Mulvaney announced that he “intends to engage in a rulemaking process so that the Bureau may reconsider the Payday Rule.” Already, the CFPB invested five years drafting this rule, incorporating a million public comments and countless meetings and roundtables with industry and consumer advocates.
- He defanged the Office of Fair Lending and Equal Opportunity, a team responsible for combating racist lending. Defying the statute, Mulvaney summarily stripped it of oversight and enforcement powers.
- He requested $0 funding for his first quarter of operations, drawing down reserves.
- He placed political operatives, many from the U.S. House Financial Services Committee, in key supervisory positions. The law requires the CFPB to hire exclusively on merit.
- He has ordered a foundational policy review of virtually all of the CFPB activities, from enforcement to rulemaking. Specifically, he is asking firms suspected of abuse to file public comments.
- He rewrote the CFPB’s mission statement, adding protection of Wall Street as a goal, which most would say is the exact opposite of his agency’s mission.
Congress created the CFPB in response to reckless, fraudulent and predatory lending that caused the financial crash of 2008. Existing bank regulators didn’t deal with this conduct because they were concentrating on industry profits as a proxy for safety and soundness, which they viewed as their primary oversight mandate. Those profits, however, came from a business model based on unfair, deceptive and abusive practices.
Public Citizen, as a consumer protection organization, fought especially keenly for the creation of this agency in Congress. Then-Harvard Law School Prof. Elizabeth Warren conceived it in a paper titled “Unsafe at Any Rate,” an homage to Public Citizen founder Ralph Nader’s “Unsafe at Any Speed.” Consumers deserve dedicated protection against Wall Street’s scams just as they do against shoddy automobile manufacture and exploding toasters.
Whether Mulvaney savages the agency to oblige his former campaign sponsors or to fulfill his anti-government nihilism, it all amounts to political arson. Eventually, Trump will have to nominate a permanent director who faces Senate confirmation, as the law provides. Until then, we can only hope that the fires Mulvaney has set don’t rage out of control.
In the meantime, members of Congress should continue to hold Mulvaney accountable. In what is expected to be an epic showdown, U.S. Sen. Elizabeth Warren (D-Mass.) in a Thursday hearing at 10 a.m. EDT will grill Mulvaney on his tenure at the CFPB. Public Citizen will live-tweet the hearing from @Public_Citizen. Please join us if you can.