Consumer bureau tightens reins
Watchdog agency could be too popular for Trump to sideline
WASHINGTON — With the election of President Donald Trump, the nation’s consumer watchdog agency faced a quandary: how to shield the Obamaera institution from a Republican administration determined to loosen the federal government’s grip on business.
In the weeks after the election, Richard Cordray, 58, the Democrat who leads the agency, the Consumer Financial Protection Bureau, directed his staff to compile stories from ordinary Americans thanking it for resolving complaints.
The anecdotes, which he solicited in an email to share with the Trump transition team, could provide a counterpoint to critics who had cast the agency as a regulatory scourge on the economy. And implicit in his request to employees was the belief that some accolades would come from parts of the country that helped elect Trump — evidence that the popularity of consumer safeguards transcends party divisions.
“There must be hundreds of such stories,” Cordray wrote in the email in November, which was obtained in a public-records request. He added, “I can think of no better vindication” of the agency’s consumer relief efforts.
While many federal agencies have begun to loosen the reins on the companies they regulate, the Consumer Financial Protection Bureau, born out of the Dodd-Frank financial law in 2010, has taken the opposite course. Congress granted it unusually broad authority — and autonomy from the White House and Congress — to both enforce existing federal rules and write new ones, including issuing fines against financial companies.
Under Trump, it has openly embraced its mission, cracking down on debt collectors, pushing out a major new financial rule on arbitration and pursuing a flurry of enforcement actions against payday lenders and others.
The approach comes as the Trump administration has taken an uncharacteristically low-key public stance toward the agency, a prominent blue holdout in a federal regulatory regime newly awash in red.
The White House’s restraint was based in part on a pragmatic assessment, according to people familiar with the strategy. At one point, contemplating a high-profile run on the agency, the White House examined polling data from political bellwether states, two people briefed on the matter said. The agency, they concluded, was too popular to pick a public fight with.
The bureau has curtailed abusive debt collection practices, reformed mortgage lending, publicized and investigated hundreds of thousands of complaints from aggrieved customers of financial institutions, and extracted nearly $12 billion for 29 million consumers in refunds and canceled debts.
This week, it began mailing out refund checks totaling $115 million to 60,000 people who had paid illegal fees to Morgan Drexen, a debt settlement company that collapsed two years ago.
The agency has also rolled out the arbitration rule, and it has been putting the finishing touches on a rule that could reshape the multibillion-dollar payday lending industry.
“This has been an agency that has gotten people’s attention in a lot of ways,” Cordray said. “They have a lot of things they say about us.”
Republicans in Congress, who have vehemently opposed the agency since its creation, have also been unable to muster enough support to derail its work. Efforts to strike down a rule ordering new consumer protections on prepaid debit cards never made it to a vote in either the House or the Senate.
Administration officials have isolated the bureau from parts of the government that, under President Barack Obama, helped fulfill its mission. In public statements and documents, officials atthe Justice Department, Treasury Department and Office of the Comptroller of the Currency have all turned a cold shoulder toward Cordray and his staff.
Lobbyists for the financial industry are working behind the scenes on efforts to dismantle some of the bureau’s signature initiatives, according to people directly involved in the plans. They include lawsuits to be filed in reliably conservative courts when new regulations are issued.