It is no secret that many Republicans have despised the Consumer Financial Protection Bureau from its inception, designed as an independent body insulated from political whims and Congressional budget wrangling.
Institutional animosity led President Trump to appoint Acting Director Mick Mulvaney upon the departure of inaugural head Richard Cordray, a Democrat. Mulvaney, critics say, was unleashed with a mission to dismantle the agency, or at least the politically unpalatable aspects, from the inside.
Those fears may have come to fruition this week when, in the pages of the CFPB’s semi-annual report Mulvaney included four recommendations for statutory changes to the Bureau.
“The Bureau is far too powerful, with precious little oversight of its activities,” Mulvaney said in a statement. “The power wielded by the Director of the Bureau could all too easily be used to harm consumers, destroy businesses, or arbitrarily remake American financial markets. I’m requesting that Congress make four changes to the law to establish meaningful accountability for the Bureau. I look forward to discussing these changes with Congressional members.”
The report’s first recommendation is to fund the Bureau through Congressional appropriations. The second is to require legislative approval of major rules.
Mulvaney also wants to ensure that the Director answers to the President in the exercise of executive authority. A final recommendation is to create an independent Inspector General for the Bureau.
Under Mulvaney’s leadership as acting director, in February 2017 the Bureau established a task force to help “identify and reduce unwarranted regulatory burdens.” It also issued guidance on topics such as maintaining compliance management systems, combatting elder abuse, responding to natural disasters, and ensuring accuracy in credit reporting.
“Shortly after President Trump appointed me as Acting Director, I made it clear that the Bureau will continue to execute the law, but will no longer go beyond its statutory mandate,” he wrote in the report. “As has been evident since the enactment of the Dodd-Frank Act, the Bureau is far too powerful, and with precious little oversight of its activities. Per the statute, in the normal course the Bureau’s Director simultaneously serves in three roles: as a one-man legislature empowered to write rules to bind parties in new ways; as an executive officer subject to limited control by the President; and as an appellate judge presiding over the Bureau’s in-house court-like adjudications.”
“I have no doubt that many members of Congress disagree with my actions as the acting director of the Bureau, just as many Members disagreed with the actions of my predecessor,” Mulvaney added. “Such continued frustration with the Bureau’s lack of accountability to any representative branch of government should be a warning sign that a lapse in democratic structure and republican principles has occurred. This cycle will repeat ad infinitum unless Congress acts to make it accountable to the American people.”
Consumer advocates fear what may become of the Bureau.
“As a member of Congress, Mick Mulvaney voted to outright get rid of the Consumer Bureau,” says Mike Litt, consumer campaign director at U.S. PIRG, a federation of state Public Interest Research Groups. “Now he is using his platform as acting director to promote his own agenda over the agency’s mission. He wants to take away the Bureau’s independence and then make it harder for it to do its job.
Litt pointed out that the CFPB, as a watchdog agency, has taken over 180 legal actions against companies like Wells Fargo and payday lenders, processed over 1 million consumer complaints, and returned $12 billion to over 26 million consumers.
“The recommendations in today’s report, if implemented, would stop the agency from protecting consumers and prevent it from ever being effective in the future,” he argued. “These are, simply put, attacks against the agency’s independence from Wall Street and industry pressure. Mulvaney wants the CFPB to be the only banking regulator that has its budget controlled by Congress. Then, he wants it to be the only agency of any sort that has to get its major rules approved by Congress.”
He added: “Congress is notorious for its dependence on financial sector campaign contributions. How many consumer protections will Congress approve? How much money will Congress allocate for this watchdog? Will a future director who believes in the agency’s mission be effective if the president can fire them without cause?”
If successful, “the recommendations would result in a massive gift to CFPB-regulated industry that has spent tens of millions of dollars lobbying Congress to neuter the bureau and hinder its ability to protect consumers from big banks, predatory lenders, and other Wall Street special interests,” Litt said.
Mulvaney knows the work of the CFPB is extremely popular with consumers. “That is why he didn’t propose the outright elimination of the Bureau, though that is effectively what he is seeking,” said Karl Frisch, executive director of Allied Progress. “Mulvaney wants to put members of Congress in charge of the CFPB’s funding and require congressional approval of its consumer protection rules because he knows it will grind the Bureau’s work holding big banks, predatory lenders and other bad financial actors to a halt.”