Consumer protection bureau losing its teeth

For nearly seven years since it began, the federal government’s first agency dedicated to protecting consumers fought successfully to prevent rip-offs by credit card and loan issuers, debt collectors, payday lenders and other big financial players. 

Now, in less than three months, Mick Mulvaney, the acting director named by President Trump, is dismantling the Consumer Financial Protection Bureau (CFPB) piece by painful piece. 

Mulvaney, who also has a demanding day job as the White House budget director, is doing just what many Republicans and their business allies have long wanted, reining in the only federal agency that has stood up for the little guy, collecting nearly $12 billion compensation for them from financial scammers.

MICK MULVANEY:I’m not ‘gutting’ CFPB

On Monday, the administration doubled down on its plan to defang the bureau: Trump's new budget would slash its funding, curtail its enforcement powers, and turn power over its future budget to Congress, where Republican lawmakers can starve it. Further, a new strategic plan promises that the bureau will act with "humility and moderation." Less money, less power and more humility sounds like the formula for an industry lapdog, not a watchdog.

It’s easy to tell the agency’s new direction just by looking at who’s happy and who's not. Consumer groups are mortified. Sen. Jeff Merkley, D-Ore., says Mulvaney is transforming the CFPB into the “corporate financial protection bureau.” Meanwhile, the rapacious payday lenders are pleased, and they plan to hold their annual conference in April at — you guessed it — the Trump National Doral Golf Club in Florida.

Among the acting director's most troubling actions:

►Weakening a commonsense rule, created during the previous director's watch, requiring payday lenders to determine before granting a high-interest, short-term loan that borrowers can pay it back, usually in 45 days. This and other restrictions, five years in the making, were designed to prevent borrowers from getting trapped in debt. For now, the bureau will grant waivers to payday lenders while it reconsiders the rule.

Legitimate businesses normally want to know before making loans whether they’ll get their money back. In fact, the last time lenders didn’t care — recall the no-doc loans of the mid-2000s — it helped lead to a housing bubble and a historic financial crisis.

►Dropping a lawsuit against four online payday lenders accused of charging customers from 440% to 950% interest — violating interest-rate caps in 17 states. Typically, an $800 loan could cost a consumer $3,220 over 10 months. These lenders look similar to "rent-a-tribe” operations established on Native American reservations to avoid state law enforcement, but actually do business elsewhere. Some owners have been convicted in federal courts for exploiting borrowers across the country.

►Stripping enforcement powers from the Office of Fair Lending and Equal Opportunity, an office mandated in the 2010 Dodd-Frank Act that created the bureau. The office has pursued lenders accused of charging higher rates to minorities, and it collected more than $80 million for people cheated in auto loans. Mulvaney is moving the unit into his own office, where the bureau said it can “focus on its other important responsibilities.” It's hard to see which responsibilities could be more important than stopping lenders from discriminating.

These are just a few of the actions that undermine the bureau's mission. Last week, for example, Mulvaney named a new chief of staff — a longtime top aide to a Texas Republican who has repeatedly pushed House measures to defang the aggressive agency.

And according to a report by Reuters, Mulvaney won't pursue subpoenas and sworn testimony to investigate credit bureau Equifax for a data breach that exposed personal data of 145 million Americans. The agency responded that it is working with government partners '"on Equifax's data breach and response." We'll see. 

Regardless of any single action, Mulvaney is an odd choice to direct any agency dedicated to consumers. He once called the bureau a “sick, sad" joke. As a congressman from South Carolina, he was a favorite of the commercial banks, whose PACs and employees gave more than $200,000 to his campaigns, and of the payday industry, which donated nearly $63,000. In 2015, he co-sponsored a measure to weaken the bureau's ability to prevent discriminatory auto loans  — a measure that consumer groups fought.

If Trump, who fashioned himself during the campaign as a populist champion of the middle class, really wanted someone to tear down the consumer bureau, he picked the right man. 

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