Congress Should Oppose Mick Mulvaney’s Troubling Track Record & Requests

U.S. PIRG

U.S. PIRG to Congress: Oppose Mick Mulvaney’s Troubling Track Record & Requests

April 11, 2018

For Immediate Release

WASHINGTON – Upon request by the House Financial Services Committee, U.S. PIRG submitted a statement for the record for a committee hearing on the Consumer Financial Protection Bureau’s semi-annual report. Wednesday’s hearing marks Mick Mulvaney’s first appearance before Congress as acting director of the CFPB. He is also scheduled to appear before the Senate Banking Committee on Thursday.

“Mick Mulvaney is obstructing the work of the Consumer Bureau and promoting his own agenda,” said Mike Litt, consumer campaign director with U.S. PIRG, a consumer advocacy group. “Even worse, he’s trying to defang and defund the bureau so future directors can’t carry out its mission.”

PIRG detailed harms posed to consumers by Acting Director Mulvaney, including the following:

Conflicts of Interest

The appointment of Mulvaney after Director Richard Cordray resigned put the agency’s independence and mission at risk. The CFPB was set up to be independent from politics, but Mulvaney is the director of the White House’s Office of Management and Budget and a former member of Congress who co-sponsored a bill to eliminate the CFPB.

Foreseeing vacancies, The Dodd-Frank Wall Street Reform and Consumer Protection Act clearly stated that the CFPB’s deputy director shall serve as acting director in the absence or unavailability of the director.

However, Pres. Donald Trump, citing the Federal Vacancies Reform Act of 1998, named Mulvaney the CFPB’s acting director instead. As U.S. PIRG has argued in a friend-of-the-court brief in the resulting legal dispute, Leandra English v. Donald J. Trump and John M. Mulvaney, the law and public interest are best served by having Ms. English serve as acting director, as Dodd-Frank intended. The D.C. Circuit Court of Appeals is hearing expedited oral arguments in English v. Trump this Thursday, April 12th.

Agency Actions that Put Consumers at Risk

During Mulvaney’s tenure, the Consumer Bureau, contrary to its mission, has taken actions that put consumers at risk of unfair practices, including:

• Announcing its intention to reconsider and delay the CFPB’s payday lending rule that requires lenders to make sure borrowers can repay their loans.

• Dropping its lawsuit against four online lenders it had accused of deceiving consumers by collecting debts not legally owned, with interest rates as high as 950 percent.

• Abandoning a full-scale investigation into the Equifax data breach, according to news reports. Mulvaney has since claimed the agency’s “position” on Equifax hasn’t changed. But it’s unclear if the CFPB is using all available tools to complete a robust investigation.

Recommendations to Congress in his Semi-Annual Report

Mr. Mulvaney’s four recommendations to Congress for statutory changes to the CFPB would take away the agency’s independence and make it harder for it to do its job, as explained below:

1. Fund the Bureau through Congressional appropriations: This move would make the CFPB the first banking regulator in the U.S. without independent funding since the 1860s. Due to constant political gridlock over the budget, the Bureau would probably end up like the two appropriated non-bank financial regulators, the Securities and Exchange Commission and Commodity Futures Trading Commission, facing ongoing challenges both in levels of funding and restrictions placed on their ability to use funds.

2. Require legislative approval of major Bureau rules: This change would make the CFPB the only agency that needs Congress to approve its major rules. Congress can repeal new rules already with a simple majority vote in both houses through the Congressional Review Act. Further, the Bureau is already the only regulatory agency whose rules can be overturned by other regulators. This recommendation would make it virtually impossible for new protections to ever see the light of day.

3. Ensure that the director answers to the president: The president already can fire the CFPB director “for cause,” such as corruption or incompetence. This recommendation appears to give the president the authority to fire the director at will, or arbitrarily.

4. Create an independent inspector general for the Bureau: There’s already an inspector general for the CFPB at the Federal Reserve Board. Likely, this would replace the current IG with a presidential appointee, undermining his or her independence.

“It’s bad enough when the acting director requests zero dollars for the next quarter, drops lawsuits versus payday lenders, and delays protection against debt traps, as Mr. Mulvaney has,” said Litt. “It’s even more harmful to cut off the Bureau’s ability to get funding or issue and enforce protections. Congress should oppose Mulvaney’s requests to hamstring the agency and urge President Trump to nominate a qualified, independent director for Senate confirmation.”

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U.S. PIRG is the federation of state Public Interest Research Groups. PIRGs are non-profit, non-partisan public interest advocacy organizations that stand up to powerful interests whenever they threaten our health and safety, our financial security, or our right to fully participate in our democratic society. On the web at www.uspirg.org.