In First Semi-Annual Report to Congress, Mulvaney Asks That the CFPB Be Rendered Defenseless to D.C. Politicians Swimming in Wall Street Money
WASHINGTON, D.C. – Today, Mick Mulvaney called on Congress to cripple the Consumer Financial Protection Bureau (CFPB) and render it effectively defenseless to attacks by D.C. politicians swimming in special interest money from Wall Street. The request comes in the form of a series of recommendations included in Mulvaney’s first semi-annual report to Congress. According to a release from Mulvaney’s press office:
“The first recommendation is to fund the Bureau through Congressional appropriations. The second is to require legislative approval of major rules. His third recommendation is to ensure that the Director answers to the President in the exercise of executive authority. And the fourth is to create an independent Inspector General for the Bureau.”
If successful, the recommendations would result in a massive gift to CFPB-regulated industry that has spent tens of millions of dollars lobbying Congress to neuter the bureau and hinder its ability to protect consumers from big banks, predatory lenders, and other Wall Street special interests. The CFPB is an independent financial regulator – it was specifically designed to be shielded from industry influence over Congress and the White House.
“Mick Mulvaney knows the work of the CFPB is extremely popular with consumers. That is why he didn’t propose the outright elimination of the bureau – though that is effectively what he is seeking. The CFPB was designed to be an independent financial watchdog so that politicians in D.C. who take millions from Wall Street special interests can’t easily stop its important work,” said Karl Frisch, executive director of Allied Progress.
He continued, “Mulvaney wants to put members of Congress in charge of the CFPB’s funding and require congressional approval of its consumer protection rules because he knows it will grind the bureau’s work holding big banks, predatory lenders and other bad financial actors to a halt. Who better to go to bat against the CFPB than a bunch of D.C. politicians on the take from Wall Street special interests.”
“The courts have already ruled that it is perfectly constitutional to prohibit the President from firing the CFPB’s director without cause. Under the law, the President can appoint a new director when the previous director steps down or their five-year term expires. That’s not a good enough for Mulvaney and Wall Street. They won’t stop until the CFPB’s director constantly wonders if defending consumers and holding industry accountable on any given day will cost them their job,” he concluded.
- The CFPB’s budgetary independence is a key element of its financial regulatory independence. The CFPB’s “budgetary independence…allows the CFPB to be on par with other financial regulators” with independent funding. That independence is “a key element of financial regulatory independence, providing additional freedom to make difficult regulatory decisions.” Fannie Mae and Freddie Mac were less stringently regulated in part because of Congressional pressure on their regulator. [Aaron Klein, “Why the CFPB showdown threatens the independence of financial regulators,” Brookings, 11/28/17]
- Under current law, the Bureau is funded by the self-financed Federal Reserve. “Republicans have cast the project as a misuse of public dollars in a time of tight budgets. ‘The CFPB is funded by the Federal Reserve, which happens to be taxpayer money,’ Hensarling said in a February speech that denounced the renovation. But the Federal Reserve is self-financed, largely with income on securities such as government bonds, so the amount Congress needs to set aside for the office redo is precisely zero.” [Karen Weise, “Republican Attacks on a CFPB Office Renovation Don’t Add Up,” Bloomberg, 07/10/14]
- Giving Congress total control of the CFPB’s funding would “sabotage the CFPB’s independence.” As the National Association of Consumer Advocates noted, giving Congress total control of the CFPB’s funding would “relegate it to the politically charged, corporate lobbyist-influenced congressional appropriations process” and would “sabotage the CFPB’s independence.” Additionally, “The CFPB needs the independence that Federal Reserve funding provides to pursue its public-interest mission to protect the financial markets and its participants. Its independence is critical because the CFPB’s mission and goals often diverge from the rich, politically powerful financial industry interests it oversees.” [Christine Hines, “Congress should not hold CFPB hostage in budget talks,” American Banker, 01/25/18]
- Like many other financial regulators, the CFPB director serves for a fixed term – this keeps it independent from political or partisan influence. “Financial regulators conduct rulemaking and enforcement to implement law and supervise financial institutions. These agencies have been given certain characteristics that enhance their day-to-day independence from the President and Congress, which may make policymaking more technical and less ‘political’ or ‘partisan,’ for better or worse.” [Henry B. Hogue, Marc Labonte, and Baird Webel, “Independence of Federal Financial Regulators,” Congressional Research Service, 02/24/14]
- The law permits the President to remove the director only “for inefficiency, neglect of duty, or malfeasance in office.” [Establishment of the Bureau of Consumer Financial Protection, 12 USC § 5491 (2010).]
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