On Friday, the head of the Consumer Financial Protection Bureau, Richard Cordray, resigned in advance of the end of his 5-year term. His departure was long expected, and the White House had indicated for some time it intended to appoint Mick Mulvaney, head of the Office of Management and Budget, as acting director until President Trump appoints, and the Senate confirms, a new permanent director. According to its stated plan, upon Cordray’s resignation, the White House went ahead and appointed Mulvaney as planned.
But as the Intercept’s Dave Dayen began pointing out last week, and as burst into full public view in the past 48 hours, the president’s action has run up against the language of the legislation creating the CFPB. As part of an effort to shield the CFPB from political pressures, the CFPB director is to be succeeded by its deputy director, pending Senate approval of the president’s pick to head the bureau. Until a couple days ago, the CFPB only had an acting deputy, so this rule may have been moot; but the day before his departure, director Cordray appointed Leandra English to the deputy role. Hence, under the law that created it, English is now the director of the bureau in the wake of Cordray’s departure.
The White House, though, is taking the position that another law, the Federal Vacancies Reform Act of 1998, overrules the language of the CFPB legislation. So now there are essentially two heads of the CFPB, and it appears this may require a court decision to be resolved. But however things shake out, the Trump administration clearly opposes the work of the CFPB; we need look no further from the president’s tweets from yesterday, in which he stated that the CFPB had been a “total disaster” and had “devastated” financial institutions. Likewise, Mulvaney himself has previously called the bureau a “sick, sad joke.” Such attacks by those nominally charged with running the agency are potent reminders that the insulation from political pressures intentionally included in the design of the CFPB was well-considered and essential to its operation.
Beyond this, the imbroglio over its leadership succession serves to highlight one essential fact: the CFPB has earned the ire not only of the White House, but of many Congressional Republicans and much of the financial industry at large, for the simple reason that it’s doing its intended job: protecting consumers from the predation of financial institutions. Here’s how a recent piece at The Intercept describes its accomplishments:
In fact, the CFPB has emerged as that rare beast — a fast-moving agency that actually chalks up wins for average Americans. By the end of 2016, shortly before Trump took office, the 5 1/2 -year-old bureau’s enforcement actions against everyone from the country’s biggest banks to small-time debt collectors had already returned $11.9 billion to 29 million consumers. The CFPB had created a public database of consumer complaints against banks and other lenders, and had issued new rules governing everything from mortgages to student loans to the prepaid cards that millions of “unbanked” Americans carry in their wallets. A year ago, the bureau finalized new rules giving prepaid customers some of the same protections enjoyed by those who use credit cards.
So it comes as no surprise that the CFPB has been targeted by the financial sector and the politicians it buys off for degradation and elimination. The Intercept piece describes a near-literal army of lobbyists and lawyers who attempt to gum up the agency’s ability to work by filing endless lawsuits and information requests that eat up the time of its employees. In fact, as you read this account, it begins to feel amazing that the CFPB has actually accomplished anything at all in the face of united and deep-pocketed resistance from the sectors it’s supposed to help regulate. You also get a sense of how deep-rooted the rot in the financial industry remains, nearly ten years after this sector of the economy nearly caused a new Great Depression and required a bailout via massive amounts of taxpayer money. From fake customer accounts created by Wells Fargo to rip off consumers, to obscure rules meant to cause credit card holders to miss payments and get dinged with penalties, to payday lenders that insist on every American’s right to the financial freedom to pay exorbitant interest and get caught in a downward spiral of unsustainable interest payments, a truly huge chunk of the financial sector sees screwing consumers as the key to its own financial success.
It’s a measure of our debased and badly askew political economy that the CFPB seems like a nearly miraculous government institution — a bureau that not only has the mission to protect consumer rights, but the enforcement power to back it up, and that moreover actually does its intended job. In a larger sense, it’s a shining example of government by the people working for the people. This is why the bureau has attracted such outsized enmity beyond just the financial sector: it’s a daily rebuttal to the right-wing lie that government is always a hindrance, never a good, and a rejoinder to the fiction that an unregulated market will provide consumers with the best choices. These are the reasons why the battle for proper succession to head up the CFPB, and advocacy for the bureau more generally, is so important.
To hear its opponents talk, you’d think that the CFPB houses a cabal of Marxists plotting to destroy the U.S. economy. The criticisms are overwrought and generally laughable on their face, and boil down to a rage at not being able to gouge consumers whenever and wherever desired. As a specific example, Donald Trump’s tweet that the CFPB has “devastated” financial institutions is notable for its lack of actual facts to back up the accusation. And this hysterical opposition is actually another sound strategic reason for engaging wholeheartedly in the defense of the CFPB: these ridiculous and unfounded criticisms end up highlighting the malfeasance of the financial industry and the need for the CFPB in the first place, leading the public to increased awareness of the benefits of the agency. Even the financial industry has appeared to mind the dangers of a direct assault on the CFPB until now — hence the attacks on the margins via lawsuits and other attempts to slow the CFPB down.
But now that the White House has chosen to put the agency in the crosshairs, attempting to place an outright enemy of the bureau as its head, the assault has become full frontal. Unfortunately for its opponents, the CFPB continues to enjoy overwhelming public support — including among Republicans. By highlighting his opposition to an agency with a clear and public-minded mission with broad support, the president in particular highlights the falseness of his faux populism and lack of interest in protecting ordinary citizens. To insistently remind the American people of the concrete and publicly beneficial accomplishments of the previous administration seems like folly, the strategy of someone who thinks that lying will get you everywhere. But the facts about the CFPB are easily accessible and digestible to the public at large. The president’s incipient war on the bureau should stick in the craw of any citizen who fears and loathes the outsize power and malignant tactics of big banks and big finance more generally.
The flip side is that Democratic defense of the CFPB is as close to a sure thing as you can get in politics. The bureau is popular, and its mission is well-understood by many Americans. Attacks by the GOP and defense by the Democrats demonstrate that the latter can be counted on to look out for average Americans, while Republicans paint themselves as the tools of big business. In fact, the Democrats should be advocating for expanding the resources of the bureau, as a way of exploiting Republican vulnerabilities in its broader alignment with a predatory financial sector. The GOP will keep gunning for the CFPB as long as it exists; it’s political good sense to make them pay the steep price they deserve. Like their current attacks on net neutrality and their hideous tax plan, Republicans have declared open season on average Americans, all in defense of the richest and most powerful people in the land.
