REBUILD THE CONSUMER FINANCIAL PROTECTION BUREAU (CFPB).
PROTECT THE OFFICE OF FAIR LENDING AND EQUAL OPPORTUNITY
For the entirety of the Trump administration the Consumer Financial Protection Bureau was under attack.
Donald Trump’s FY2019 budget drastically cut the Consumer Financial Protection Bureau’s (CFPB) budget and tried to greatly undercut its enforcement power. Under the Trump administration’s proposed restructure, the CFPB would be funded through Congress instead of the Federal Reserve, which is precisely what the Dodd-Frank financial law was trying to avoid back in 2010.
This funding change never took place, and we need to make sure it never does. The whole point is for the CFPB to be an independent watchdog agency that has autonomy from both the White House and Congress, providing “a single point of accountability for enforcing federal consumer financial laws and protecting consumers in the financial marketplace.”
As imagined, the CFPB...
...“makes consumer financial markets work for consumers, responsible providers, and the economy as a whole. They protect consumers from unfair, deceptive, or abusive practices and take action against companies that break the law. They arm people with the information, steps, and tools that they need to make smart financial decisions.
In a market that works, the prices, risks, and terms of the deal are clear upfront so that consumers can understand their options and comparison shop. Companies all play by the same consumer protection rules and compete fairly on providing quality and service. Congress has authorized the CFPB to take legal action against companies and people that violate federal consumer financial law. When the Bureau enforces the law, it or a court may order the violator to take action to remedy the harm it caused consumers. This can include requiring the person or company to compensate its victims for this harm.”
This is an agency that, by the end of 2016, had given $11.8 billion worth of relief to over 29 million consumers from supervisory and enforcement work alone. This included $3.7 billion in monetary compensation to consumers as a result of enforcement activity; $7.7 billion in principal reductions, cancelled debts, and other consumer relief as a result of enforcement activity; and $371 million in consumer relief as a result of supervisory activity. By the end of 2016, CFPB had handled over 1,080,000 complaints and had generated $589 million in civil penalties.
It sounds like it was going great, right?! So, what possibly could have gone wrong? A guy named Mick Mulvaney. Mick Mulvaney was the acting Director of the Consumer Financial Protection Bureau (CFPB) from November 2017 to December 2018. In January 2019, he became Donald Trump’s Acting Chief of Staff and, before all of this, he was a U.S. House Representative from South Carolina.
During his time as a congressman, the Finance, Insurance & Real Estate sector gave Mick Mulvaney $1,326,629…and boy did that pay off!! Those guys got a HUGE return on their investment!
Here are just some of the shenanigans Mick pulled during his time at the CFPB:
Shady Swamp Spotlight:
MICK MULVANEY
In 2013, ProPublica — an independent, non-profit newsroom that produces investigative journalism in the public interest — published a report that included World Finance, a billion-dollar company that hawked installment loans. It said, in part: “World and its competitors push customers to renew their loans over and over again, transforming what the industry touts as a safe, responsible way to pay down debt into a kind of credit card with sky-high annual rates, sometimes more than 200 percent. And when state laws force the companies to charge lower rates, they often sell borrowers unnecessary insurance products that rarely provide any benefit to the consumer but can effectively double the loan's annual percentage rate.” The next year, World Finance disclosed that it was under investigation by the CFPB.
Enter Mick Mulvaney, who announced the CFPB was going to “reconsider” the Obama-era rule on payday loans. The CFPB not only dropped the investigation into World Finance, but also an investigation into a group of payday lenders that at times charged interest rates over 900 percent.
The CFPB office in charge of overseeing fair-lending cases, the Office of Fair Lending and Equal Opportunity, was essentially stripped of its enforcement powers by the Trump administration — despite the fact that this office had seen great success.
These successes include a 2015 settlement against New Jersey-based Hudson City Savings Bank. The CFPB and the Department of Justice (DOJ) cited the bank for discriminatory redlining practices which resulted in denying minorities fair access to mortgage loans. The bank was required to provide $25 million in loan subsidies.
A year later, the CFPB and DOJ settled with BancorpSouth for discriminatory mortgage lending practices that harmed African Americans and other minorities. The complaint alleged that “BancorpSouth engaged in numerous discriminatory practices, including illegally redlining in Memphis; denying certain African Americans mortgage loans more often than similarly situated non-Hispanic White applicants; charging African-American customers for certain mortgage loans more than non-Hispanic White borrowers with similar loan qualifications; and implementing an explicitly discriminatory loan denial policy.”
Upon court approval, “BancorpSouth will pay $4 million in direct loan subsidies in minority neighborhoods in Memphis, at least $800,000 for community programs, advertising, outreach, and credit repair, $2.78 million to African American consumers who were unlawfully denied or overcharged for loans, and a $3 million penalty.”
The CFPB backed off an investigation into credit reporting agency Equifax, which had a massive data breach that exposed the personal information of over 143 million consumers. Oh! And also, three senior Equifax executives together sold $1.8 million in Equifax stock within four days of discovering the breach.
Until Mulvaney struck, the CFPB had fielded over 72,000 complaints every single year from our service members, veterans and their families, and had returned over $130 million back to them. To achieve these numbers, the agency routinely examined lenders for potential violations of the Military Lending Act. This legislation was enacted in part to protect our heroes from fraud and predatory lending by capping the annual percentage rate charged to service members at 36 percent. Nevertheless, under Mulvaney, the CFPB announced it would no longer proactively conduct these examinations.
This despite the fact that a report by the Department of Defense found that "payday lenders are heavily concentrated around military bases in states where this product is legal" AND "active-duty military personnel are three times more likely than civilians to have taken out a payday loan" AND "predatory lending undermines military readiness, harms the morale of troops and their families, and adds to the cost of fielding an all-volunteer fighting force." Read the report here.
Easily winning the most petty and ridiculous category, Mick Mulvaney was determined to change the acronym of the agency to BCFP, meaning the Bureau of Consumer Financial Protection, from CFPB, which means the Consumer Financial Protection Bureau. Literally the same exact words in a different order. < Sidebar: What is with these people? They seem to think changing the name of something magically makes the whole thing go away. Remember NAFTA? >. He even changed the sign outside the office and established a "Name Correction Working Group.” Unfortunately for him, it was discovered that the change could cost the businesses that the CFPB regulates over $300 million to implement, and the agency itself between $9 million and $19 million.
Evidence:
United States. Office of Management and Budget. "An American Budget." Fiscal Year 2019.
United States. Consumer Financial Protection Bureau. "The Bureau." 29 Apr 2019
United States. Consumer Financial Protection Bureau. "Consumer Financial Protection Bureau: By the Numbers." December 2016
"Rep. Mick Mulvaney - South Carolina: Top Industries 2009 - 2016." OpenSecrets. 30 June 2019
Paul Kiel. "The 182 Percent Loan: How Installment Lenders Put Borrowers in a World of Hurt." ProPublica. 13 May 2013
United States. Consumer Financial Protection Bureau. "Consumer Financial Protection Bureau And Department Of Justice Action Requires BancorpSouth
To Pay $10.6 Million To Address Discriminatory Mortgage Lending Practices." 29 June 2016
Patrick Rucker. "Exclusive: U.S. Consumer Protection Official Puts Equifax Probe On Ice." Reuters. 5 Feb 2018
"Equifax Executives Sold $1.8 Million In Stock After Breach." CBS News. 8 Sept 2017
Glenn Thrush. "Mulvaney Looks to Weaken Oversight of Military Lending." New York Times. 10 Aug 2018
United States. Department of Defense. "Report On Predatory Lending Practices Directed at Members of the Armed Forces and Their Dependents." 9 Aug
2006
Renae Merle. "The CFPB Tried To Change Its Name. Here’s Why It’s Giving Up." Washington Post. 19 Dec 2018
Sylvan Lane. "Exclusive: Consumer Bureau Name Change Could Cost Firms $300 Million." The Hill. 3 Dec 2018