Under Mulvaney, watchdog is losing its teeth
For nearly seven years since it began, the federal government’s first agency dedicated to protecting consumers fought successfully to prevent rip-offs by credit card and loan issuers, debt collectors and payday lenders.
Now, in less than three months, Mick Mulvaney, the acting director named by President Trump, is dismantling the Consumer Financial Protection Bureau (CFPB) piece by piece.
Mulvaney is doing just what many Republicans and their business allies have long wanted, reining in the federal agency that stands up for the little guy, having collected nearly $12 billion compensation from financial scammers.
On Monday, the administration doubled down on its plan to defang the bureau: Trump’s new budget would slash its funding and curtail its enforcement powers. Further, a new strategic plan promises that the bureau will act with “humility and moderation.” Less money, less power and more humility sounds like the formula for an industry lapdog, not a watchdog.
Sen. Jeff Merkley, D-Ore., says Mulvaney is transforming the CFPB into the “corporate financial protection bureau.” Meanwhile, payday lenders are so pleased that they plan to hold their annual conference at Florida’s Trump National Doral Golf Club.
Among the acting director’s most troubling actions:
Weakening a rule requiring payday lenders to determine before granting a high-interest, short-term loan that borrowers can pay it back, usually in 45 days. This and other restrictions were designed to prevent borrowers from getting trapped in debt.
Legitimate businesses normally want to know before making loans whether they’ll get their money back.
Dropping a lawsuit against four online payday lenders accused of charging customers from 440% to 950% in- terest — violating interest-rate caps in 17 states. Typically, an $800 loan could cost a consumer $3,220 over 10 months. Some owners have been convicted in federal courts for exploiting borrowers across the country.
Stripping enforcement powers from the Office of Fair Lending and Equal Opportunity, an office mandated in the 2010 Dodd-Frank Act that created the bureau. The office has pursued lenders accused of charging higher rates to minorities, and it collected more than $80 million for people cheated in auto loans.
These are just a few of the actions that undermine the bureau’s mission. Last week, for example, Mulvaney named a new chief of staff — a top aide to a Texas Republican who has pushed House measures to defang CFPB.
Regardless of any single action, Mulvaney is an odd choice to direct the agency. He once called it a “sick, sad” joke. As a congressman, he co-sponsored efforts to weaken it’s ability to prevent discriminatory auto loans — a measure consumer groups fought.
If Trump, who fashions himself a middle-class champion, really wanted someone to tear down the consumer bureau, he picked the right man.