What does Mulvaney’s appointment mean for the future of CFPB?

Source: USA Today
November 28th, 2017

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WASHINGTON — In naming Mick Mulvaney to be the acting head of the federal government’s primary financial services regulator, President Trump is placing a loyalist in charge of what was designed as a semi-independent federal agency. 

A federal judge ruled Tuesday that Trump could indeed name his budget director to temporarily lead the Consumer Financial Protection Bureau, an Obama-era creation that grew out of the 2008 financial crisis.

Mulvaney’s appointment puts the Consumer Financial Protection Bureau into uncharted waters as it experiences its first change in party control in its seven-year history.

But Mulvaney, also director of the White House Office of Management and Budget, isn’t just any caretaker director.

At OMB, he’s responsible for coordinating the president’s federal regulatory policy — but he will also head up the CFPB, which Congress set up specifically to be outside the president’s direct influence.

He’s a budget director in charge of what is effectively an off-budget federal agency, with the CFPB relying on transfers from the Federal Reserve System rather than annual appropriations from Congress.

And he’s a longstanding critic of the agency he’s now in charge of. Mulvaney has even called the bureau a a joke “in a sick, sad way.”

All of that puts Mulvaney in a position to shape the future of the CFPB — created by the Dodd-Frank Wall Street Reform and Consumer Protection Act in 2010.

“The story here is the future of the CFPB and why this person is one of the most unqualified and unsuitable people to head it,” said Mike Calhoun, president of the Center for Responsible Lending, a consumer advocacy group. “It’s a secondary story that they’re trying to rush him in under this procedure.”

 That procedure is the Federal Vacancies Reform Act, which allows the president to make temporary appointments to key federal posts when there’s an opening. But Dodd-Frank outlined a competing process that allowed outgoing director Richard Cordray to appoint his chief of staff, Leandra English, to that position before he left office last Friday.

Under the law, Mulvaney can serve for no longer than 210 days until the president nominates — and the Senate confirms — a permanent director.

On Tuesday, a federal judge in Washington ruled that the president can appoint acting agency leaders.

Mulvaney tweeted out a photo of himself getting to work.

On his first day in the job — after crossing the street from his office in the White House complex bringing doughnuts to his colleagues — Mulvaney imposed a 30-day moratorium on new regulations, froze hiring and put a temporary hold on payments to victims of illegal banking practices.

“You should expect that this agency will stay open. Rumors that I’m going to set the place on fire or lock the doors or blow it up are completely false,” Mulvaney said.

“That said,” he continued, “anybody who thinks that a Trump administration CFPB would be the same as an Obama administration CFPB is simply being naïve. Elections have consequences at every agency, and it includes the CFPB.”

Mulvaney, a former Republican congressman who is already spearheading the Trump administration’s efforts to roll back regulations across the federal government, now controls an agency whose decisions impact any American with a checking account, mortgage, credit card or consumer loan.

Among the issues at the top of the bureau’s agenda:

Payday lending: The CFPB published a rule this month requiring that payday lenders document that a borrower has the capacity to repay a loan, and bars those lenders from continuously trying to withdraw electronic funds from borrower’s bank accounts.

Because it’s a final rule, rescinding it would likely require an act of Congress or a lengthy regulatory process that would send the rule back to the drawing board.

Debt collection: The bureau has been drafting a rule to address complaints of abusive debt collection practices, which are the single biggest source of complaints to the federal government about any industry. That rule requires the CFPB to consult with small businesses that would be affected by the regulation.

Overdraft fees: Financial institutions steer consumers into overdraft protection programs that cost $15 billion in fees last year, according to the CFPB. The bureau is studying more disclosure requirements and other regulations to help consumers understand their overdraft options.

“I do think it’s clear that Cordray’s departure will bring the CFPB closer into the president’s orbit,” said Richard L. Revesz, a law professor at New York University. “And the fact of the matter is that the director — the permanent director, whoever the president nominates — will also share the president’s agenda.”

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