Here’s How the GOP Might Finally De-Fang the CFPB
Update: The Consumer Financial Protection Bureau on Monday released a new five-year strategic plan, outlining a less aggressive approach to its mission of protecting consumer rights. The consumer watchdog revised its mission and vision for 2018 through 2022. Under the new mission, the CFPB will be “equally protecting the legal rights of all,” including consumers … Continue reading Here’s How the GOP Might Finally De-Fang the CFPBThe post Here’s How the GOP Might Finally De-Fang the CFPB appeared first on MagnifyMoney.
Posted — UpdatedRefocusing CFPB’s mission is in line with a spade of drastic changes to the bureau under Mulvaney, who was tapped by President Donald Trump to take the helm at the federal agency in November.
In the past few weeks, Mulvaney has:
- Requested $0 in quarterly funding from the Federal Reserve, instead, saying it would make do with dipping into its reserve fund.
- Issued a call for public comment on its enforcement, supervisory, rule-making, market monitoring and education activities.
- Wrote to the CFPB staff in a memo that the agency will have a more limited vision.
Meanwhile, the CFPB, under Mulvaney, has:
- Dropped a lawsuit against four online payday lenders whom the CFPB alleged in its original complaint had preyed on working families by making loans with interest rates up to 950%.
- Announced it would “reconsider” federal restrictions on payday loans.
- Announced a yearlong delay to the effective date of a 2016 prepaid rule that would have protected prepaid cardholders.
- Dropped a four-year investigation into World Acceptance Corporation, a payday lender, from which Mulvaney has received $4,500 in campaign contributions in the past.
The moves show that Mulvaney, as expected, is actively seeking to overhaul the consumer watchdog. MagnifyMoney interviewed several experts, who all say this trend of reversing rules, dropping investigations and limiting the mission of the consumer watchdog will continue.
Yet it’s not all bad news. After a long-fought legal battle, the CFPB won a major court victory this week. In a case questioning the constitutionality the CPFB, the Court of Appeals for the District of Columbia Circuit reversed its own decision that ruled it unconstitutional in 2016.
Conservatives have long decried the independent nature of the agency and its sweeping level of oversight in the financial sector, which includes the freedom to write new rules and regulations in the interest of consumer protection.
The Trump administration and Republicans have long sought to curtail the CFPB’s power as part of a broader effort to lighten federal regulation over financial institutions.
Richard Cordray was the agency’s first director, holding office from 2012 until he announced he was cutting his tenure eight months short at the end of November 2017. He had been criticized by Washington conservatives but well-received by Democrats and consumer advocates.
Legislative action … not likely
“Without 60 votes you cannot get ordinary things through the Senate,” Copland explained. “And neither party seems willing to compromise with the either on most legislation.”
Copland added that an unusual case would be for the Supreme Court to strike down some elements of the CFPB, forcing the Congress to restructure the agency. But he thinks it’s unlikely to happen given the court has been hesitant to do so with Obamacare.
“My impression is that there isn’t even much of an appetite to do that legislatively, because Mulvaney is already doing it through the administrative process,” she said. “They don’t even really need to purse anything externally. It’s like a self-sabotage as opposed to having the sabotage coming from the Congress.”
Death by a thousand paper cuts
Indeed, there are plenty of administrative maneuvers to scale back the bureau, which is well underway. It’s clear Mulvaney is already utilizing this strategy, given the small ways he has already scaled back the agency’s operations.
He has support from Republicans on Capitol Hill as well.
“The administration can’t get rid of an agency constructed by the Congress, although they certainly can change the focus and direction of an agency,” Copland said. “I think that’s happening. At least once they get their nominee in place.”
Stegman pointed out Mulvaney’s appointment itself is a backdoor way to overhaul the bureau.
“We will exercise, with humility and prudence, the almost unparalleled power Congress has bestowed on us to enforce the law faithfully in furtherance of our mandate,” wrote Mulvaney. “But we go no further. The days of aggressively ‘pushing the envelope’ are over.”
Mulvaney’s deregulatory agenda has critics on guard.
“He’s made public comments [that] he sees his constituency and the people that he cares about equally as corporations and consumers, which is completely counter to the CFPB’s mission to specifically protect consumers,” Stegman said. ”That’s really concerning.”
Under Mulvaney, Stegman expects cases that may have been under investigation to be dropped, and changes be made to rules that already have been made final.
“It’s not a priority for Mulvaney,” Stegman said. “So he’s not gonna pursue this.”
This story has been updated. It was originally published Jan. 31, 2018
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