Watchdog leashed
Trump wants consumer protection agency to heel, leaving consumers to wolves.
There’s an unwarranted mean spirit about the Trump administration that’s un-American. You can see it in how the White House allowed toddlers who were brought into the country illegally to be separated from their parents. You can also see it in how the administration seems hell bent on discarding rules designed to protect people from the same unscrupulous manipulators of banking laws that 10 years ago birthed the recession.
President Trump has shown utter contempt for the Consumer Financial Protection Bureau, the post-recession federal agency created to protect borrowers from wolves in the lending industry. In November, Trump named White House budget director Mick Mulvaney to also head the CFPB. Mulvaney subsequently told CFPB employees they were being too aggressive and froze a new rule cracking down on predatory lenders.
Created in 2010 under the Dodd-Frank Act, the CFPB has become a shell of itself under Mulvaney. He has put the success of banks and financial trade groups above the interest of consumers. He has replaced veteran CFPB staff with people who think more like him, including Kathy Kraninger, a mid-level executive at the Office of Management and Budget chosen by Trump to succeed Mulvaney at the CFPB.
Kraninger’s nomination was approved Aug. 23 by the Senate Banking Committee in a 13-12 party-line vote. Sen. Elizabeth Warren, D-Mass., who came up with the CFPB idea while teaching law at Harvard, says Democrats hope to block Kraninger’s appointment by focusing on her lack of experience in financial regulation. Being the minority party, however, likely means the Democrats can only delay the inevitable.
That prospect has disheartened CFPB staffers like Seth Frotman, who recently resigned as the agency’s top student loan official. “The bureau’s new political leadership has repeatedly undercut and undermined career CFPB staff working to secure relief for consumers,” said Frotman in his resignation letter. “Their actions will affect millions of student borrowers.”
The bad news for college students doesn’t stop there. Education Secretary Betsy DeVos is dismantling Obama administration guidelines that forgave the debt of students who took out loans to attend colleges that failed to deliver on educational promises. DeVos has proposed new rules that would put the onus on students to prove the colleges knowingly deceived them.
DeVos’ proposal was described by National Student Legal Defense Network director Aaron Ament as “a giveaway to predatory for-profit colleges and a stunning show of indifference toward students working to better their lives.” Indifference has become the operative word for the White House when it comes to protecting consumers from conniving lenders. This is no time for the Education Department to turn its back on college students saddled with huge debts and diplomas that too often aren’t worth the paper they’re written on. Student loan debt hit $1.5 trillion this year, making it bigger than credit card debt or auto loan debt. Texas ranks second nationally in student loan debt, $92.5 billion. Only California’s debt is higher, $120 billion.
Yet, under Mulvaney’s leadership the CFPB has been turned into a toothless watchdog whose bark no one fears. That trend undoubtedly will continue when Kraninger takes Mulvaney’s place. In fact, the payday loan industry is so sure of that it has asked for a stay of its lawsuit challenging tougher lending rules imposed during the Obama era. The Trump administration is saving it the trouble of pursuing the court case.
What kind of presidency is this that consistently favors money lenders over consumers and goes out of its way to dismantle systems put in place to ensure fairness? This White House — in taking for granted the faithful support it receives from those Americans who have the most to lose from such policies — is pledging its allegiance to a creed said to be the slogan of master of deception P.T. Barnum: There’s a sucker born every minute.
What kind of presidency is this that consistently favors money lenders over consumers and goes out of its way to dismantle systems put in place to ensure fairness?