Victories are short-lived in Washington. Within hours of an important court ruling that found the much-maligned structure of the Consumer Financial Protection Bureau to be constitutional, the Trump administration took steps to further reign in the Bureau’s enforcement powers.
Specifically, a unit dedicate to discrimination cases, the Office of Fair Lending and Equal Opportunity, has been rendered impotent, critics say. That was accomplished, they say, by bringing that unit’s functions under the direct control and discretion of Director Mick Mulvaney.
A statement from the Bureau counters that accusation, choosing instead to tout the benefit of organizational changes that move the unit closer to the Bureau’s seat of power. “By elevating the Office of Fair Lending to the Director’s Office, we have enhanced its ability to focus on its other important responsibilities,” it said. “By combining these efforts under one roof, we gain efficiency and consistency without sacrificing effectiveness.”
Context, critics respond, is everything. Mulvaney, who also serves as Director of the Office of Management and Budget, was appointed by the President to replace the outgoing Director Richard Cordray, a Democrat who has led the Bureau since its inception.
Mulvaney has wasted little time in scaling back the reach of the agency. He has requested no funding for the coming budget year, and initiated a series of Requests for Information seeking comment on enforcement, supervision, rulemaking, market monitoring, and education activities. Past rulemaking is being reviewed and delayed. Mulvaney chose to drop the assessed penalties against a payday lender accused “of deceiving consumers” and failing to disclose the true cost of the loans, which carried interest rates as high as 950 percent a year.
On Jan. 31, the CFPB issued a Request for Information on its administrative adjudication proceedings, agency reviews overseen by in-house “judges.”
“The Bureau is seeking to better understand the benefits and impacts of its use of administrative adjudications, and how its existing process may be improved, the announcement says.
The existing rules pertain to the general conduct of administrative adjudication proceedings, the initiation of such proceedings and prehearing rules, hearings, decisions and appeals, and temporary cease-and-desist proceedings. To date, there have been eight administrative adjudication proceedings under the Rules that were not immediately resolved by the issuance of a consent order. Six of these proceedings were settled during the course of the adjudication, one proceeding is pending, and one proceeding has resulted in a final decision.
“The Bureau understands that the administrative adjudication process can result in undue burdens, impacts, or costs on the parties subject to these proceedings, the RFI says.
Previously, the CFPB published a Request for Information (RFI) about the Bureau’s Civil Investigative Demands (CIDs).
Among those weighing in on the administrative shuffle with the Office of Fair Lending and Equal Opportunity are the consumer advocacy groups Americans for Financial Reform, Consumer Action, and U.S. PIRG:
“This week, OMB Director Mick Mulvaney, in the role he is asserting as the CFPB’s acting director (and facing a legal challenge to his status) told employees of several re-structuring moves,” they wrote in a joint statement. “While Mulvaney’s statement expressed his intention for efficiency we must ask: Is this transfer designed to diminish the Consumer Response unit’s important role in helping all units of the agency collect and understand the ongoing complaints that consumers raise? What benefit does this transfer provide consumers and will this relocation affect the Complaint unit’s budget? Under previous Bureau leadership, each division, department and office had a mandate to regularly monitor the consumer complaints that related to that department’s functions. Will that mandate continue?”
The groups also lamented similar restructuring at the CFPB’s Consumer Response (Complaints) unit, which they say “empowers consumers and the consumer agency with firsthand information to help individuals make wise financial decisions, helps the Bureau prioritize its efforts to focus on patterns of harmful practices and helps to hold companies accountable.”