Consumer Protection
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Since the beginning, the CFPB has been under attack by certain segments of the financial industry, plus politicians who seek to protect predatory practices over the well-being of the American consumer. The first Trump administration was particularly aggressive in its fight against the CFPB, which means we need to watch them closely now.
The first time around, Mick Mulvaney was the acting Director of the CFPB, before he left to become Donald Trump’s Acting Chief of Staff. Prior to joining the Trump administration, Mulvaney was a U.S. House Representative from South Carolina. During his time in Congress, the Finance, Insurance & Real Estate sector gave him $1,326,629…and boy did that pay off!! Those guys got a HUGE return on their investment during Mulvaney’s short time at the CFPB! Here are just two of the many shenanigans Mulvaney pulled while there:
In 2013, ProPublica – an independent, non-profit newsroom that produces investigative journalism in the public interest – published a report that included reporting on World Finance, a billion-dollar company that hawked installment loans to consumers.
The report said, in part, that “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 year after the ProPublica report was published, World Finance disclosed that it was under investigation by the CFPB. But never fear! 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 Office of Fair Lending and Equal Opportunity, the CFPB office in charge of overseeing fair-lending cases, was essentially stripped of its enforcement powers by the Trump administration – even though it had achieved 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.
Another huge victory occurred just a year later, when the CFPB and DOJ settled with BancorpSouth for discriminatory mortgage lending practices that harmed Black Americans and other minorities. The complaint alleged that “Bancorp South 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.”
Ultimately, BancorpSouth paid “$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.”