Mick Mulvaney Liquidates the CFPB’s Advisory Boards

The Consumer Financial Protection Bureau has some advisory groups. One is called the Community Bank Advisory Council. Another is called the Credit Union Advisory Council. The largest one is called the Consumer Advisory Board. Under the Dodd-Frank law that created the CFPB, the director is supposed to meet with the 25-member Consumer Advisory Board twice a year.  Acting Director Mick Mulvaney has not met with the board a single time since assuming office in November 2017. Meetings have been scheduled and canceled, with Mulvaney, who also heads the Office of Management and Budget, each time citing his busy schedule.

On Monday, 11 members of the Consumer Advisory Board held a press conference to express their frustration with Mulvaney, and one of their primary complaints was that he is refusing to meet with them. This is how Mulvaney responded:

Mick Mulvaney, acting director of the Consumer Financial Protection Bureau, fired the agency’s 25-member advisory board Wednesday, days after some of its members criticized his leadership of the watchdog agency.

The CFPB said it will revamp the Consumer Advisory Board, known as the CAB, in the fall with all new members.

The panel has traditionally played an influential role in advising the CFPB’s leadership on new regulations and policies. But some members, who include prominent consumer advocates, academics and industry executives, began to complain that Mulvaney was ignoring them and making unwise decisions about the agency’s future.

Actually, Mulvaney didn’t stop there. He liquidated all the advisory groups, including the Academic Research Council, and he informed them all that they are ineligible to reapply for membership.

He was nice enough to have Anthony Welcher, the CFPB’s policy associate director for external affairs, inform the advisers of their fate on a conference call.

During the call, Welcher said revamping the CAB would save the agency “multi-hundred-thousand dollars a year” by not having its periodic meetings in Washington. But several board members objected, noting that they would be willing to pay their own way to attend the meetings.

“The new bureau leadership has never met with any of us to determine, and even have a sense of, whether this is valuable advice that the bureau is receiving,” said Josh Zinner, chief executive of the Interfaith Center on Corporate Responsibility.

The CFPB exists to protect people from predatory financial institutions like payday lenders and credit card companies, but Mulvaney and the Trump administration represent these predatory industries. And they’re not subtle about it.

Last week, Mulvaney sided with payday lenders who sued the CFPB to block implementation of new industry regulations. The CFPB filed a joint motion with the payday lenders asking the judge to delay the case until the bureau completes a review of the rules, which could take years.

The following is from a October 5, 2017 press release on the payday lending rule that is still on the CFPB website:

The Consumer Financial Protection Bureau (CFPB) today finalized a rule that is aimed at stopping payday debt traps by requiring lenders to determine upfront whether people can afford to repay their loans. These strong, common-sense protections cover loans that require consumers to repay all or most of the debt at once, including payday loans, auto title loans, deposit advance products, and longer-term loans with balloon payments. The Bureau found that many people who take out these loans end up repeatedly paying expensive charges to roll over or refinance the same debt. The rule also curtails lenders’ repeated attempts to debit payments from a borrower’s bank account, a practice that racks up fees and can lead to account closure.

“The CFPB’s new rule puts a stop to the payday debt traps that have plagued communities across the country,” said CFPB Director Richard Cordray. “Too often, borrowers who need quick cash end up trapped in loans they can’t afford. The rule’s common sense ability-to-repay protections prevent lenders from succeeding by setting up borrowers to fail.”

Payday loans are typically for small-dollar amounts and are due in full by the borrower’s next paycheck, usually two or four weeks. They are expensive, with annual percentage rates of over 300 percent or even higher. As a condition of the loan, the borrower writes a post-dated check for the full balance, including fees, or allows the lender to electronically debit funds from their checking account.

I think it’s obvious how this rule financially protects consumers. It’s pretty jarring to have the acting director join the payday lenders in court, siding against his own agency. It’s hard to see how taking actions like that could fail to cause dissent and criticism within the Bureau and among its advisers.

Mulvaney deals with that by purging.

And he can get away with it because Congress is in Republican hands and won’t do a thing to enforce the statutes or protect the bureau. If the Democrats take control of either chamber of Congress in November, you can be sure that there will be fireworks when Mulvaney is compelled to appear before various committees. That is, there will be fireworks assuming Mulvaney agrees to show up. Every indication is that he won’t and that the president will be just fine with that.

Martin Longman

Martin Longman is the web editor for the Washington Monthly and the main blogger at Booman Tribune.