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White House budget plan proposes cutting CFPB budget, restricting enforcement powers

Mick Mulvaney, director of the Office of Management and Budget and the acting director of the Consumer Financial Protection Bureau, arrives for a news conference in November. (Joshua Roberts/Reuters)

The White House on Monday proposed a major restructuring the Consumer Financial Protection Bureau that would significantly cut the watchdog agency’s budget and limit its enforcement power.

Under the proposal, included in President Trump’s 2019 budget plan, the CFPB would be funded through Congress rather than the Federal Reserve, giving lawmakers more influence over the agency’s priorities. The CFPB’s 2019 budget would also be capped at its 2015 level, $485 million, compared with a projected $630 million this year. The plan, which would take two years to implement, also calls for putting restrictions on the CFPB’s enforcement authority.

“The proposed reforms would impose financial discipline, reduce wasteful spending, and ensure appropriate congressional oversight,” according to a strategic statement released Monday. “. . . To prevent actions that unduly burden the financial industry and limit consumer choice, the proposal restricts CFPB’s broad enforcement authority over Federal consumer law.”

The proposal is the latest illustration of the Trump administration’s intention to drastically revamp an agency it says has acted too aggressively and wields too much power. The CFPB is an “unaccountable bureaucracy with unchecked regulatory authority,” the White House said in its proposal.

Trump appointed one of the agency’s most vocal critics, White House budget director Mick Mulvaney, to be the CFPB’s acting director in late November, and Mulvaney has already taken several steps to change its course. He ended lawsuits and paused investigations into payday lenders. The CFPB office in charge of overseeing fair-lending cases has also been stripped of its enforcement powers. Mulvaney has also launched a complete review of the agency’s operations.

Mulvaney has said the CFPB would change dramatically under his leadership, including not pushing the legal envelope to pursue cases. “We enforce the law. We do not make the law,” Mulvaney said Sunday on CBS’s “Face the Nation.”

Mulvaney’s efforts have alarmed Democrats and consumer groups that say he is defanging an agency meant to protect consumers.

“Supposed acting director Mulvaney of CFPB on Face the Nation yesterday talking about doing the job with ‘humility’ and not being aggressive. Financial cheaters, scammers, and fraudsters are not humble,” Richard Cordray, who led the agency under President Barack Obama, said Monday on Twitter. “To take them on, you must be aggressive to be effective, as he admits I was.”

The budget proposal, said Karl Frisch, executive director of the group Allied Progress, reflects Trump’s “unequivocal contempt for consumers and his unwavering loyalty to the big banks, predatory lenders, and Wall Street special interests.” Mulvaney is “clearly working from the outside and the inside to destroy the CFPB and cripple its ability to protect consumers from financial predators,” Frisch said.

Democratic lawmakers recently lashed out at Mulvaney after a report that the agency was backing off an investigation into a massive data breach at Equifax last year that exposed sensitive data about 145 million people. The CFPB denied that it had dropped the investigation but even Treasury Secretary Steven Mnuchin took notice of the news and had a conversation with Mulvaney about it, according to a Treasury Department spokesman.

Late Monday, the CFPB unveiled a new strategic plan that Mulvaney said would more closely marry the agency’s mission to the objectives outlined in the law that created it, 2010’s Dodd Frank federal reform.

“If there is one way to summarize the strategic changes occurring at the Bureau, it is this: we have committed to fulfill the Bureau’s statutory responsibilities, but go no further,” Mulvaney said in the report. “Pushing the envelope also risks trampling upon the liberties of our citizens, or interfering with the sovereignty or autonomy of the states or Indian tribes. I have resolved that this will not happen at the Bureau.”

The 16-page document deviates considerably from the draft of the report that was released last October before Mulvaney took control. The new, shorter strategic vision, includes a phase that Mulvaney has repeatedly used to describe how the agency will do its work in the future. The CFPB will act “with humility and moderation,” the report said.

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