Mick Mulvaney’s Plan to Neuter Consumer Watchdog Comes Into Focus

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Mick Mulvaney. Photo: SAUL LOEB/AFP/Getty Images

When President Trump installed Mick Mulvaney as the new head of the Consumer Financial Protection Bureau last year, it was obvious why. The CFPB exists to protect consumers from predatory financial practices, which makes it popular with Americans, but unpopular among the GOP and its donors. Mulvaney, who has called the bureau a “sick, sad joke,” was at the CFPB to weaken it.

The former South Carolina congressman set to work immediately, instituting hiring and regulation freezes. “Rumors that I’m going to set the place on fire or blow it up or lock the doors are completely false,” he said at the time.

But after two months on the job, Mulvaney sure looks like he’s setting the bureau on fire. This week alone, he’s made headlines three times after making major moves to weaken CFPB protections, seek finical industry feedback on its performance, and limit its budget.

It began on Tuesday, when the bureau said it will reconsider payday-lending rules that went into effect last year. The rule, which requires payday lenders to determine up-front if borrowers can afford to repay a loan, was one of the last moves made by former director Richard Cordray. “The CFPB’s new rule puts a stop to the payday debt traps that have plagued communities across the country,” he said at the time.

But the payday-lending industry opposes the rule and now Mulvaney has started the process to roll it back. That, the AP notes, would be a long and painstaking process, requiring the CFPB to “conduct research to show the current rules are not working, put out notices for repealing the rules, and consider public and industry comments, among other steps.” The faster route to dumping the rule is through Congress, where a bill to do just that was introduced last month.

The CFPB followed its move on the payday-loan rule with an announcement on Wednesday that the “policies and practices” of the bureau will be examined to “ensure they align with the bureau’s statutory mandate.” The process will involve soliciting feedback about the CFPB from the public and the financial industry. That has some consumer advocates worried.

“It is a troubling move from a man who is clearly hell-bent on dismantling the agency he has been tasked with overseeing when he should be fulfilling its mission to protect consumers and hold bad financial actors accountable,” Karl Frisch of the consumer watchdog Allied Progress told the L.A. Times.

Mulvaney’s latest move threatening the future of CFPB was revealed on Thursday. In his first quarterly request for operating funds at the bureau, Mulvaney asked the Federal Reserve for $0.

His intention is not to cut off funding to the bureau — not yet, at least — but rather to drain its rainy-day fund. “Mulvaney reveals his intentions for CFPB — no need for rainy day fund to protect consumers. Bad sign of what’s to come,” Democratic senator Mark Warner tweeted.

The $177 million fund was maintained by Cordray in case of emergencies or cost overruns, but Mulvaney wants to use it to pay for the next quarter’s operating expenses. “I know of no specific statutory authority requiring the establishment or maintenance of such a fund. Moreover, I see no practical reason for such a large reserve,” he wrote in a letter to Fed Chair Janet Yellen.

He went on to write that the $145 million that would have come to the CFPB can now be used to pay down the federal deficit, which was $666 billion in 2017. While “it may not make much of a dent in the deficit,” Mulvaney wrote, “the men and women of the Bureau are proud to do their part to be responsible stewards of taxpayer dollars.”

Mulvaney’s Plan to Neuter Consumer Watchdog Comes Into Focus