The Consumer Bureau Dedicated to Protecting the Little Person Faces Some of the Greatest Threats Seen in its Short, Six-Year Existence.
Gutting the Consumer Bureau and Its Work from Within
Last month, amid a hurried (and ongoing) effort to pass what could easily be considered one of the most sweeping, detrimental pieces of legislation in at least a generation, President Trump appointed his Office of Management and Budget (OMB) Director, Mick Mulvaney, as the interim Acting Director of the Consumer Financial Protection Bureau. It’s a move that’s sparked some confusion and pushback—including several lawsuits—about who should rightfully lead the independent agency in the absence of Senate-confirmed Director (the Bureau’s first Director, Richard Cordray, stepped down last month run for Governor of Ohio).
But beyond the critically important legal and technical issues at-hand in this fight, the move to place Acting Director Mulvaney in charge of an agency he’s called a “sick, sad” joke represents a blatant attempt to intentionally undermine an agency that in just six years has returned $12 billion dollars to the pockets of 29 million harmed consumers, handled more than a million consumer complaints and established a number of strong protections to ensure that consumers aren’t taken advantage by bad financial actors.
While this warning might sound a bit excessive, what we’ve seen over the last several weeks clearly shows that the Acting Director is fully dead-set on doing as much damage as he can from the inside-out to an agency whose sole mission has been to protect the little guy. Indeed, just one month on the job at the Consumer Bureau, Acting Director Mulvaney has already established temporary hiring, regulatory, enforcement and data collection freeze throughout the agency. Moreover, as it’s been reported widely, he’s actively looking into all investigations and litigations currently before by the agency, the result of which has already led one investigation to be suspended.
Unfortunately, this is just one of the many very real and very dangerous attacks the agency is likely to face over the next several months and years. In fact, given the slow and deliberate nature of the legal process that’s to come coupled with the fact that the President has little-to-no incentive to quickly replace an Acting Director he has direct influence over, the confusion over the last month has only served to provide Congress a new and viable opening to weaken the agency and its work.
Congressional Attempt to Roll back the Historic Payday Rule
While there’s no shortage of examples of legislative efforts aimed at curtailing the effectiveness and independence of the agency, one of the more recent to surface since the President made his move comes from by Rep. Dennis Ross (R-FL) and five other House members, including Reps. Alcee Hastings (D-FL), Tom Graves (R-GA), Henry Cueller (D-TX), Steve Stivers (R-OH) and Collin Peterson (D-MN). Their effort, wrapped under the guise of ensuring access to credit is available, would not only permanently block the Consumer Bureau’s recently finalized rule against predatory payday and auto-title lending from ever taken effect, it would also restrict the ability of the only agency tasked with protecting consumers from ever producing a similar rule in the future.
If this legislation becomes law, it would give a free pass to payday lenders everywhere to continue with business as usual. That is, continue to saddle consumers with loans that carry predatory fees and triple digit interest rates that lead to long-term, debilitating debt. Each year, this vicious and predatory cycle of fees, high interest rates, and long-term debt ends up draining over 2.5 billion just from the pockets of borrowers within the states each represents (overall, $8 billion is drained by payday lenders nationally).
Like the agency itself, the Consumer Bureau’s payday rule was built on years of experience, policymaking, research and community engagement. If this rule is overturned, not only would it be devastating to millions of payday borrowers it would also serve to provide Acting Director Mulvaney —who while in Congress received tens of thousands of dollars in campaign contributions from payday lenders—with an unnecessary argument that bipartisan support existence to “rein in” the Consumer Bureau’s power and authorities, making his job of undermining the agency that much easier. This is why we along with our partners have begun to organize advocates across country to take action against this rule.
Congressional Attempt to Change the Independent Funding Stream for the Consumer Bureau
Adding to the uncertainly posed by Acting Director Mulvaney and the House legislation against the payday lending rule, last month the Senate Appropriations Committee introduced funding legislation that, if enacted, could create another tool to dismantle the agency. That tool, a policy rider included within the Financial Services and General Government markup legislation, would give Congress control over the agency’s annual budget, thus eliminating the Bureau’s independence to protect consumers. Right now, the CFPB is independently funded through the Federal Reserve System, but if the bill passes with this rider, it would give Congress (and the Acting Director) the power to drastically defund the Bureau each year—subjecting it to the political whims of members of Congress who believe the government shouldn’t be in the business of protecting consumers from predatory actors in the financial marketplace.
Subjecting the Consumer Bureau—and the millions of families who rely on the agency for protection against predatory financial practices—to the political whims of Congress would be a big deal, which is why our advocates have begun to take action, calling on their Senators to remove the provision in the Appropriations bill that would subject the Bureau to the appropriations process
Advocates Need to Raise Their Voices for Protecting Consumers, Now More Than Ever
If the financial crisis taught us anything, it’s that consumers can’t afford to be left alone to defend themselves against a financial system that is complex, often evolving and more likely than not stacked against them. Congress and the administration should let the Consumer Bureau do what it was designed to do. If the Consumer Bureau is going to survive these attacks, advocates need to step now to ensure it isn’t muzzled and quietly silenced by Congress and the administration.