In response to a rumor that he was gravely ill and possibly dead, Mark Twain wrote to a newspaper that “the reports of my death are greatly exaggerated.”
But accounts of the slow death of the Consumer Financial Protection Bureau are not exaggerations. In his just released report to Congress, the agency’s Acting Director Mick Mulvaney was clear about his mission.
“The bureau is far too powerful,” Mulvaney wrote in his opening message.
And by too powerful, he seems to mean it’s too consumer-oriented.
Mulvaney, despite his claims to the contrary, seems to want to destroy the CFPB. Or rather, he would like it to be repurposed. Under his leadership, it should be renamed the Financial Services Protection Bureau.
Mulvaney is more of an assassin of the agency than a director. He’s a ninja working on behalf of businesses who don’t like being made to behave.
So, this month for the Color of Money Book Club selection, I’m recommending you read Mulvaney’s report to Congress. You can find it at consumerfinance.gov. Search for “semi-annual report.”
This isn’t reading for pleasure. It’s a reading assignment so that you understand why some companies may get away with abusing consumers.
With writing as dense as a bad Ph.D. dissertation, Mulvaney tries to make the case that he’s acting for the good of the American people.
“In Federalist No. 47, James Madison famously wrote that ‘[t]he accumulation of all powers, legislative, executive, and judiciary, in the same hands … may justly be pronounced the very definition of tyranny,'” Mulvaney writes. “Constitutional separation of powers and related checks and balances protect us from government overreach. And while Congress may not have transgressed any constraints established by the Supreme Court, the structure and powers of this agency are not something the Founders and Framers would recognize.”
Here’s more nonsense.
“The best that any Bureau Director can do on his own is to fulfill his responsibilities with humility and prudence, and to temper his decisions with the knowledge that the power he wields could all too easily be used to harm consumers, destroy businesses, or arbitrarily remake American financial markets.”
Put another way, Mulvaney wants to overrule the bureau’s intended mission — to be a fierce consumer advocate — and instead create a lapdog agency that will play nice with the very financial institutions that pushed us into the Great Recession.
And when he says the bureau’s actions might “harm consumers,” he means how dare we have an agency that can make companies explain in plain language the financial products they are selling to us.
When he says it may “destroy businesses,” he means predatory payday lenders should be left alone to trap financially fragile folks into serial loans with triple-digit interest rates.
What do you think his top recommendations are for the bureau? To continue strengthening consumer protections?
Nope. Read Mulvaney’s report and you’ll find that not one of his recommendations to Congress involves looking out for consumers. They are about stripping all power from the agency and making it a puppet.
Rather than having the CFPB continue to receive its funding from the Federal Reserve — which keeps the agency independent of party politics — Mulvaney suggests it rely on congressional appropriations. This will only make it a victim of the whims of politicians who are beholden to powerful business groups that give them campaign contributions. In Washington, it’s the money that controls the powerful.
“Ten years after reckless and abusive financial industry behavior caused the Great Recession, Mr. Mulvaney is throwing sand in the gears of effective consumer protection,” said Debbie Goldstein, executive vice president at the Center for Responsible Lending.
Mulvaney also wants Congress to require legislative approval of major bureau rules.
He knows all too well, having served in Congress, that this would weaken the ability of the CFPB to respond to industry misdeeds by subjecting the bureau to gridlock in the House and Senate.
Mulvaney argues that the CFPB has “precious little oversight of its activities.”
Now that is an exaggeration. There is the Congressional Review Act, which allows Congress to nullify rules by a federal agency. There’s even an effort right now to roll back the CFPB’s tougher rules for payday, vehicle, and other high-cost installment loans.
And what does the payday rule do? It requires lenders to make sure borrowers can afford to repay their loans.
Read past Mulvaney’s opening message and you can see for yourself the good the agency is doing. Its consumer-complaint system provides a strong advocate for people looking for help dealing with mortgage, debt-collection or student-loan companies.
For consumers who value knowing that the CFPB is looking out for their money, Mulvaney’s report is more frightening than any Stephen King novel.