Count Mick Mulvaney as one of the many people Donald Trump has appointed to head up agencies they actively want to destroy.
Back at a 2015 House of Representatives hearing, Mulvaney — a former congressional representative before Trump appointed him to be the director of the Office of Management and Budget — made it clear how much he loathes the Consumer Financial Protection Bureau (CFPB).
“I don’t like the fact that CFPB exists, I’ll be perfectly honest with you,” Mulvaney said of the agency created after the 2008 Great Recession to act as a consumer watchdog overseeing the practices of banks, credit unions, pay-day lenders, mortgage and foreclosure services, and other financial companies.
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Of course, Mulvaney isn’t alone in his feelings about the CFPB. Many in the Washington political establishment, and definitely the Wall Street bosses who back them, dislike even minimal oversight of the financial sector — so they’ve been on a mission to destroy the agency since before it was even established.
“Wall Street hates it like the devil hates holy water,” said Democratic Sen. Dick Durbin.
Under Trump, the assault on the CFPB has escalated. When its former Director Richard Cordray announced his resignation and then departed earlier than anticipated from his position in late November, it opened the door for Trump to try to ram through Mulvaney’s appointment as director.
The idea was that Mulvaney could do what so many other Trump appointees have excelled at: aim a wrecking ball at a government agency.
In a statement, Teddy Kỳ-Nam Miller, the economic equity director of the Greenlining Institute, predicted that “Mulvaney will be as big a gift to Wall Street grifters as Scott Pruitt has been to polluters.”
It’s not clear that Trump has the power to simply appoint Mulvaney to head up the CFPB — though, as usual, he is insisting he can do whatever he wants.
A dispute over presidential powers left the CFPB with two possible directors as this story was being written: Trump’s pick Mulvaney, and Leandra English, who Cordray named as the CFPB’s deputy director before he left and who many believe is legally entitled to head the agency.
At least in theory, the CFPB is supposed to be nonpartisan. Established in 2010 as part of the post-Wall Street meltdown legislation known as the Dodd-Frank Act, the CFPB was meant to be a watchdog to protect consumers from the kind of predatory lending practices that helped wreck the economy in 2008 and disproportionately targeted working-class people and minorities.
Cordray’s term wasn’t due to end until July 2018. Trump tried to use the opportunity to install Mulvaney — despite the fact that architects of Dodd-Frank Act say the law provides the CFPB with its own internal mechanism for succession in the event of a vacancy before the end of a director’s five-year term. With that in mind, Cordray appointed English as deputy director, expecting she would then become the acting director in his absence.
The struggle for control led to both Mulvaney and English declaring they were the agency’s director at the start of this week. On Monday, English sent a memo to CFPB employees as the “acting director” — countered two hours later by one from Mulvaney, in which he directed employees to “disregard any instructions you receive from Ms. English in her presumed capacity as acting director.”
As this article was being written, Trump had won the first battle in the courts, with — surprise! — a Trump nominee, Federal District Court Judge Timothy Kelly, refusing a request from English for a restraining order to block Mulvaney’s appointment.
Make no mistake: The Republicans and Wall Street would love to see the CFPB completely defanged — and they harbored a particular hatred for Cordray, as the New York Times reported:
Mr. Cordray’s critics were quick to cheer his departure. Representative Jeb Hensarling of Texas, the Republican chairman of the House Financial Services Committee, called the bureau a “rogue agency” that is “long overdue for new leadership.”
Mr. Cordray has been a whipping boy on Capitol Hill for years — Congress called him to testify nearly 30 times — but in recent months he also came under attack from other federal agencies. In one case, the Justice Department sided with a mortgage lender that questioned the agency’s constitutionality.
The CPFB has had some modest successes — which is why Wall Street and their political backers hate it. While Cordray was director, the CFPB was able to win “$12 billion in refunds and canceled debts for 29 million consumers,” the Times reported. “It cracked down on abusive debt collectors, strengthened protections for mortgage borrowers and created a complaints system that helped hundreds of thousands of people resolve disputes with financial companies.”
But the CFPB’s successes are overshadowed by the many ways that it was — along with other portions of Dodd-Frank — deliberately designed to not be effective at holding large Wall Street firms accountable.
While $12 billion in refunds might seem like a lot, one 2014 estimate by three Federal Reserve Bank economists found that the total cost of the Great Recession bailout of Wall Street would end being between $6 trillion and $14 trillion — all of it borne by taxpayers.
That’s $19,000 to 45,000 per American to bail out banks that were deemed “too big to fail” — even as millions lost their homes or ended up underwater on their mortgages.
In the specific case of the CFPB, Dodd-Frank limited the agency’s effectiveness by putting what the Consumer Federation of America called “a number of unprecedented controls” on its authority — such as requiring an annual audit; making its actions subject to judicial review; allowing other agencies to petition to veto CFPB rules; and including a cap on its budget, something that no other government financial regulator is subject to.
The focus now on the legal question of who should succeed Cordray obscures a larger issue: that the CPFB, as well as the other post-recession “reforms” passed as part of Dodd-Frank, were largely toothless to begin with — window dressing to allow Democrats in particular to talk about bringing large banks to heel, while never doing much to threaten the power or profits of Wall Street.
many of the new regulatory concepts survived in the final bill, [but] most of them wound up whittled down to such an extreme degree that they were barely recognizable in the end…[T]he Consumer Financial Protection Bureau…went from being a powerful, independent agency run by Elizabeth Warren to a smaller bureau within the Federal Reserve System run by — well, anyone but Elizabeth Warren.
Dodd-Frank limited the scope and effectiveness of its activities by explicitly capping the bureau’s annual budget — uniquely among bank regulators — and imposing substantial burdens, some of them also unique, on its rulemaking process. The CFPB’s regulations can also be blocked by the interagency Financial Services Oversight Council, if that body decides they are a threat to financial stability.
Or Congress can block them — as it did recently when the CFPB proposed, after five years of study, measures to stop financial institutions from forcing consumers into arbitration, allowing banks to hide fraudulent practices with non-disclosure orders, as in the recent case of Wells Fargo and its creation of fake accounts.
Despite widespread support for the CFPB’s proposal to allow consumers to refuse arbitration, Congress came down squarely on the side of the banks.
None of this, of course, is to say that Trump’s push to dismantle the CFPB doesn’t matter. Every instance in which his administration is able to get its way and his political hacks are able to bulldoze their way through government agencies or tear up regulations only strengthens the administration’s hand, while harming ordinary people.
At a time when Washington is poised to pass a massive tax giveaway to the wealthy, the attack on the CFPB is one more slap in the face to working people — one that again exposes the lie at the heart of Trump’s supposed “economic populism.”