Major players in the financial industry hope for sweeping change at the Consumer Financial Protection Bureau (CFPB) now that a staunch conservative is in charge.
Office of Management and Budget Director Mick MulvaneyJohn (Mick) Michael MulvaneyMulvaney: Authority I have at consumer bureau ‘should frighten people’ WH press secretary: Trump’s mark on the judiciary will last for ‘decades and decades’ GOP could punt funding fight to January MORE was cleared to begin reshaping the CFPB when a federal court last week blocked an attempt to depose him.
While Democrats are fretting about the CFPB’s future, banks and others in the financial services sector are eager for a new start at an agency they’ve long considered unaccountable and harmful.
“We want Mick Mulvaney to be smart, reasonable and balanced,” said Richard Hunt, president of the Consumer Bankers Association. “He knows the CFPB has to work not only for the consumers, but for the markets together.”
Hunt called for a top-to-bottom review of CFPB personnel in the hopes of bringing in more employees who “understand the relationship between banks and consumers.”
Ironically, the very thing critics find most objectionable about the CFPB — the power instilled in a single director — now gives Mulvaney the ability to make wholesale changes to the CFPB’s priorities.
“The structure of the CFPB is just fundamentally flawed. Authority that I have now as the acting director really should frighten people,” Mulvaney said on Thursday.
“We’re going to try and limit as much as we can what the CFPB does to sort of interfere with capitalism and with the financial services market.”
Under its last director, Richard CordrayRichard Adams CordrayMulvaney: Authority I have at consumer bureau ‘should frighten people’ WH press secretary: Trump’s mark on the judiciary will last for ‘decades and decades’ Messy leadership change highlights need for CFPB commission MORE, the CFPB was aggressive in taking on the financial sector. The agency fined banks, financial services companies and lenders millions of dollars for alleged fraud while issuing rules that reshaped much of the industry. Democrats often tout the $12 million in restitution the CFPB won for more than 30 million defrauded consumers.
Republicans, who opposed the creation of the CFPB from the start, argue Cordray abused the extensive power and autonomy Democrats gave the bureau to insulate its work from interference.
But the GOP could do little to stop the bureau while Cordray was in charge. Congress doesn’t control the CFPB’s funding, and former President Obama would have vetoed any major legislative changes to the Dodd-Frank Wall Street Reform and Consumer Protection Act, the 2010 bill that created agency.
All that has changed after Cordray’s exit.
In one of his final acts on the job last month, Cordray made an attempt to shield the bureau by promoting Leandra English, his former chief of staff, to CFPB deputy director. That move would have put English in charge, had Trump not appointed Mulvaney to the role.
Barring a long-shot victory for English in the courts, Mulvaney — who once called the CFPB a “sick, sad joke” — will remain the CFPB director.
While he’s promised not to “burn down” the bureau, Mulvaney has already implemented a 30-day regulatory and hiring freeze — and more changes are likely coming.
Mulvaney will also get to decide which pending regulatory and enforcement actions the bureau can pursue, as well as how the bureau could undo measures taken by Cordray. One of his targets could be a CFPB rule on payday lending.
In another clue to Mulvaney’s intentions, the White House also appointed Brian Johnson, an aide to House Financial Services Committee Chairman Jeb HensarlingThomas (Jeb) Jeb HensarlingTrump moves to fill Fed, financial regulatory vacancies with two nominations Cordray announces he’s leaving consumer bureau, promotes aide to deputy director GOP eager for Trump shake-up at consumer bureau MORE (R-Texas), a staunch CFPB critic, as a senior adviser at the agency.
The preliminary moves have encouraged Hensarling and other opponents of the bureau.
“The problem is not so much who is running the CFPB,” Hensarling said. “The problem is the CFPB.”
“This is an agency that absolutely has to be reformed.”
Banking lobbyists have renewed their calls for Congress to replace the CFPB’s single-director model with a bipartisan panel, akin to the Securities and Exchange Commission. They say that distributing power among several members will help keep the CFPB stable, nonpartisan and less subject to the political whims of a director.
“Richard Cordray did more to explain to members of Congress and the public why we need a commission than anything we did in six years,” Hunt said.
“You need to bring in some more balance. Any balance would be better at the CFPB,” Hunt said. “I’m afraid we’ll be in this position in five years from now.”
Smaller firms are also hoping for relief from the CFPB regulations. Dan Berger, president of the National Association of Federally-Insured Credit Unions, said he wants Mulvaney to exempt credit unions from CFPB rules through a power given to the director in Dodd-Frank.
“We weren’t the cause of the financial crisis,” Berger said. “All the folks that almost brought our country to its knees from an economic standpoint, those were the targets of Dodd-Frank.”
“We want to see no more regulations on credit unions, period. We don’t want to be the target. We don’t want mission creep. We don’t want anything applying to us.”
While Republicans prepare to transform the CFPB, Democrats are mulling the few options they have to protect it from Trump’s influence.
Former Sen. Chris Dodd (D-Conn.) and former Rep. Barney Frank (D-Mass.) — the architects of the financial reform law that bears their names — held a call Thursday to argue that they wrote the law to ensure whoever the president nominates to the bureau would face Senate confirmation.
“This was a choice we made very deliberately, and the notion that that was just a suggestion on our part and that the president can pick or choose makes no sense,” Frank said.