The Dog Catches the Bus (Apr. 13)

Update 263 – The Dog Catches the Bus:
Mick Mulvaney’s Mysterious Mission at CFPB

This week saw Consumer Financial Protection Bureau (CFPB) Director Mick Mulvaney appear before both the House Financial Services and Senate Banking Committees. After years of working aggressively in Congress to shred the Bureau to pieces, Mulvaney is charged with the operating it; the dog that chased the bus so long now finds himself in the driver’s seat.

The particular spectacle may not be repeated.

Mulvaney’s mission is slated to end soon, as the President may appoint a full time Director this summer to replace him.  Former Director Richard Cordray’s term would have ended — and therefore Mulvaney’s time as Acting Director is set to end — on June 22.

What has Mulvaney done, or not done, with, or to, the Bureau?  We examine this below.

Good weekends all,

Dana

———————-
CFPB’s Intended Mission

The Consumer Financial Protection Bureau was created under the Dodd-Frank Act to bring all financial protection regulatory mandates under the roof of a single agency and to provide consumers with a remedy against predatory mortgage brokers, credit card issuers, payday lenders, and other fraudulent financial actors.  The Bureau was intended to be funded independent of political considerations and lobbying campaigns.

The CFPB has taken action on behalf of consumers in the aftermath of issues like the Equifax data breach and the Wells Fargo’s fake account scandal. Since the Bureau’s opening in 2011, it has taken enforcement action in cases of unfair, deceptive, and abusive acts and practices, discrimination, illegal mortgage-related compensation, and illegal debt-relief advance fees. It has also returned $12 billion to almost 30 million consumers who suffered losses at the hands of predatory lenders and debt collectors.

pasted image 0(1).png

Source: https://www.apnews.com/c80a20db4a5942e7af9632b0cbf75700

Mulvaney’s Contempt for the Mission

Enforcement: Mulvaney has made it his mission so far to weaken the agency from the inside.  Through his first five months he has not opened a single enforcement action and has discontinued four that were started by Richard Cordray.  While Mulvaney claims that his predecessor likewise did not issue an enforcement in his first six months, the acting director is unlikely to issue new enforcements going forward like Cordray did.  Yesterday, he confirmed that “Regulation by enforcement is done, we’re not doing it anymore.”

Funding:  Mulvaney is working to starve the CFPB of funding. Each quarter, the CFPB requests funding from the Federal Reserve. In January, Mulvaney requested $0 in funding for the CFPB, insisting $177 million in its bank would be sufficient. Fiscal conservatives applauded the move, but most observers were baffled. Without proper funding it is unlikely the Bureau will be able to carry out whatever limited function Mulvaney allows for.

Payday Lending:  Mulvaney has also opened up a re-examination of the final payday lending rule, which was exhaustively commented on and revised during Cordray’s Directorship. Payday loans started borrowers on negative long term debt cycles leading to credit card delinquency, unpaid bills, overdraft payments, and bankruptcy. The payday lending rule requires lenders to consider borrowers’ ability to repay a loan by completing a full-payment test on loans, having a principal payoff-option for certain short-term loans, providing less risky loan options, and limiting the amount of times a borrower can be debited. Mulvaney is expected to weaken the rule and its enforcement. Consumer advocates view CFPB dropping the Golden Valley Lending and three other payday lending cases involving interest rate charges of up to 950 percent as worrisome precedent.

Mulvaney’s Ideology

Director Mulvaney has been caught speaking from both sides of his mouth. This week, before the relevant House and then Senate committees, Mulvaney has actively campaigned against his own position as Director and pleaded for slashes to its budget and funding mechanism.

Funding:  Per Dodd-Frank, the CFPB is not subject to the Congressional appropriations process and instead is funded by the Fed. This is not uncommon in the banking regulatory space as it prevents political winds from derailing Wall Street’s watchdogs. Mulvaney claims this is inappropriate and wants to see the Bureau subject to the same funding shenanigans that the IRS suffers under. This would be uniquely dangerous for the CFPB as the acting director himself voted in 2012, 2013, 2014, and 2015 to defund the consumer agency while a member of the House.

Governance:  While Mulvaney pleads for more Congressional interference in the Bureau’s funding mechanisms, he suggests that the Bureau’s governance structure be altered from the single Director model to a Board. He claims that this is to prevent radical shifts in the CFPB’s mission and function as leadership changes while simultaneously arguing that he is not acting with any partisanship as acting director, instead enforcing the letter of the law. Mulvaney also went so far as to advocate for Congressional approval of CFPB rules, which would be a stunning abdication of a federal agency’s rulemaking responsibility. Finally, Mulvaney wants to give the President direct authority over the agency’s director, making the director easier to fire.

Oversight: Mulvaney also wants more policing of the CFPB, asking Congress for an inspector general’s office to be housed at the agency to monitor the bureau. This increased legal scrutiny is largely unnecessary and would make the bureau function less efficiently.

Small Business Perspective

Recent polling reveals that entrepreneurs and small-business owners support the CFPB’s mission. The small business poll showed 84 percent of entrepreneurs believe the CFPB is needed to prevent predatory practices, ensure fair treatment of small businesses and consumers, and provide fraud protection.  Just 29 percent of small-business owners think CFPB funding should be subject to Congressional appropriations.

What Comes Next?

Mulvaney’s hearings came along with reporting that the CFPB is exploring enforcing an unprecedented $1 billion fine against Wells Fargo for auto insurance and mortgage lending abuses. This stems from an investigation started under Richard Cordray. Such a fine would be the Bureau’s first under Mulvaney’s stewardship, and would align with the CFPB’s intended mission. Given Mulvaney’s apparent disdain for the organization he runs, these reports are far from certain.

Key will be CFPB’s decision on the payday lending rule. Given that then-Congressman Mulvaney’s campaigns were largely financed by payday lenders, it is hard to be optimistic that he will effectively curb payday lending abuses in any significant way.  It is unknown how long Mulvaney will stay on the job. His time as Acting Director expires on June 22, but he could stay in the role as long as President Trump does not appoint a successor to Richard Cordray. Who the President may ultimately appoint to lead the agency next is anyone’s guess.

33 thoughts on “The Dog Catches the Bus (Apr. 13)”

  1. Write more, thats all I have to say. Literally, it
    seems as though you relied on the video to make your point.

    You obviously know what youre talking about, why waste your intelligence
    on just posting videos to your weblog when you could be
    giving us something enlightening to read?

  2. Wonderful blog! I found it while surfing around on Yahoo News.
    Do you have any suggestions on how to get listed in Yahoo News?
    I’ve been trying for a while but I never seem
    to get there! Many thanks

  3. Hey there! This is my 1st comment here so I just wanted to
    give a quick shout out and tell you I genuinely enjoy reading
    your posts. Can you recommend any other blogs/websites/forums that deal with the same subjects?
    Thanks for your time!

  4. Excellent beat ! I would like to apprentice while you amend your website, how can i subscribe for
    a blog website? The account aided me a acceptable deal. I had been tiny bit acquainted of this your broadcast provided bright clear idea

  5. With havin so much content do you ever run into any problems of plagorism
    or copyright violation? My website has a lot of exclusive
    content I’ve either written myself or outsourced but it appears a lot of
    it is popping it up all over the internet without my agreement.
    Do you know any solutions to help prevent content from
    being ripped off? I’d definitely appreciate it.

  6. I really like your blog.. very nice colors & theme.
    Did you create this website yourself or did you hire someone to
    do it for you? Plz reply as I’m looking
    to create my own blog and would like to find out where u got
    this from. kudos

  7. That is really attention-grabbing, You are an overly professional blogger.
    I’ve joined your feed and stay up for in the hunt for extra of
    your great post. Also, I have shared your web site in my social networks

  8. Very good blog! Do you have any suggestions for aspiring writers?
    I’m planning to start my own site soon but I’m a little lost on everything.

    Would you suggest starting with a free platform like WordPress or go for a paid option? There are so many
    options out there that I’m totally overwhelmed .. Any ideas?
    Thank you!

  9. scoliosis
    Hi there to every body, it’s my first visit of this webpage;
    this blog contains remarkable and really fine material designed for
    readers. scoliosis

  10. scoliosis
    Superb website you have here but I was wondering if you knew of any forums that
    cover the same topics discussed here? I’d really like to be a part of online community where
    I can get advice from other experienced people that share the same interest.
    If you have any suggestions, please let me know. Appreciate it!
    scoliosis

  11. scoliosis
    Howdy! Would you mind if I share your blog with
    my facebook group? There’s a lot of folks that I think would really appreciate your content.
    Please let me know. Cheers scoliosis

  12. Quality content is the crucial to be a focus for the people to go to see the web site, that’s what
    this site is providing.

  13. I believe this is one of the most vital information for me.
    And i am glad reading your article. But wanna statement on few normal issues, The web site style is wonderful, the
    articles is actually great : D. Excellent activity, cheers

  14. Thank you, I’ve recently been looking for information about
    this subject for a long time and yours is the greatest I have
    came upon so far. But, what about the bottom line? Are you positive concerning
    the supply?

  15. Usually I do not learn post on blogs, but I would like to say that this write-up very pressured me to try and do it!
    Your writing style has been surprised me. Thank you, very great article.

  16. Great beat ! I wish to apprentice while you amend your web site, how can i subscribe for
    a blog website? The account helped me a
    applicable deal. I had been tiny bit familiar of this your broadcast provided vivid transparent idea

Leave a Reply to an gamefly

Your email address will not be published. Required fields are marked *