Special Report Documents Mulvaney’s Disastrous Tenure at the CFPB
WASHINGTON, D.C. – Today, marking the one-year anniversary of Mick Mulvaney’s installation as Acting Director of the Consumer Financial Protection Bureau (CFPB), Allied Progress released a special report detailing how he and his team of political appointees have spent the past year sabotaging important consumer protections to benefit powerful special interests and shady financial predators.
“Since Mick Mulvaney entered the doors of the CFPB one year ago, he has systematically and strategically undermined the Bureau’s consumer protection mission. Payday loan borrowers, military servicemembers and their families, people of color facing discriminatory lending practices, student loan borrowers – no one has been spared at Mick Mulvaney’s CFPB except the powerful special interests that he should be holding accountable and protecting us all from,” said Karl Frisch, executive director of Allied Progress.
He continued, “The financial interests and predatory lenders that bankrolled Mick Mulvaney’s campaigns for Congress have cashed in on his tenure at the CFPB. They showered him with tens of thousands of dollars in campaign cash and in return he’s gone to bat for them, dropping investigations, watering down fines, and going soft on their crimes against consumers.”
SPECIAL REPORT: Mulvaney Spent Year Sabotaging Consumer Protections, Helping Financial Predators
Mick Mulvaney’s First Steps At the CFPB Were To Cut Off The Bureau’s Access to Data and Funding
Upon First Taking Over At The Bureau, Mick Mulvaney Shut Off Important Data Collection…
In December 2017, Mick Mulvaney Temporarily Froze CFPB Data Collection Used To Protect Consumers From Discrimination And Industry Misconduct “The Trump administration’s interim director of the Consumer Financial Protection Bureau [Mick Mulvaney] said he has frozen the agency’s collection of personal information due to cybersecurity concerns, a step-in changing policies criticized by the financial industry.”[Yuka Hayashi, “New CFPB Chief Curbs Data Collection, Citing Cybersecurity Worries,” The Wall Street Journal, 12/04/17]
- ““Data is essential for effective financial regulation. It allows regulators to see how markets are functioning and monitor the impact of rules,” Gilford said. “As GAO stated in its report, ‘[p]rior to and during the 2007-2009 financial crisis, [GAO] and others noted that the lack of data on consumer financial products and services hindered federal oversight in areas such as mortgages and fair lending.’” [Trey Garrison, “CFPB: Data collection practices within the norm for regulators,” HousingWire, 09/23/14]
- “The interim head of the Consumer Financial Protection Bureau announced Thursday [May 31, 2018] he would lift the freeze on the bureau’s collection of private consumer data, which helps its examiners oversee financial institutions.”[Lalita Clozel, “CFPB to Resume Private Consumer Data Collection,” The Wall Street Journal, 05/31/18]
Then Mulvaney Asked for $0 In Funding For The Coming Fiscal Year.
In January 2018, Mick Mulvaney Requested $0 From The Federal Reserve To Fund The CFPB. “Every quarter, the Consumer Financial Protection Bureau formally requests its operating funds from the Federal Reserve. Last quarter, former director Richard Cordray asked for $217.1 million. Cordray, an appointee of President Barack Obama, needed just $86.6 million the quarter before that. And Wednesday, President Donald Trump’s acting CFPB director, Mick Mulvaney, sent his first request to the Fed. He requested zero.” [Michael Grunwald, “Mulvaney requests no funding for Consumer Financial Protection Bureau,” Politico, 01/18/18]
- “Forty Senate Democrats – led by Senators Jeff Merkley, Sherrod Brown and Elizabeth Warren – wroteSenate Majority Leader Mitch McConnell and Minority Leader Chuck Schumer that reducing the CFPB’s funding would adversely impact its ability to conduct independent investigations and protect consumers. They view Mulvaney’s latest request as a further move to defund and weaken the CFPB.” [Zack Friedman, “Trump Administration Requests $0 In Funding For Consumer Protection Agency,” Forbes, 01/19/18]
Mulvaney Fired 25 Consumer Experts Who Had Advised The Bureau And Closed The CFPB’s Student Loan Office.
Acting Director Mulvaney Disbanded the Bureau’s Consumer Advisory Board, Firing All 25 Members
In June 2018, Mick Mulvaney Disbanded The CFPB’s Consumer Advisory Boards. “The Consumer Financial Protection Bureau fired all 25 members of the agency’s Consumer Advisory Board during a conference call Wednesday, saying it wanted to bring in more diverse views. Anthony Welcher, a political appointee and the CFPB’s policy advisory for external affairs, told consumer advisory members during a brief call that the agency would be modifying how the board works.” [Kate Berry, “Mulvaney makes it official, fires CFPB advisory board members,” American Banker, 06/10/18]
- “CAB members have expressed concern with more than just refusing to meet, but the entire strategic direction of the CFPB. Since taking over last November as acting director, Mulvaney has overseen efforts to sideline enforcement, undermine the offices of fair lending and student loan enforcement through restructuring, sought to delay a major rulegoverning payday lenders, and temporarily freeze consumer complaint data collection. The CAB was not consulted on any of these changes.” [David Dayen, “Mick Mulvaney Is Required By Law To Meet With His Consumer Advisor Board. But He’s Refusing, Board Members Say,” The Intercept, 06/04/18]
And Mulvaney’s CFPB Folded The Bureau’s Student Loan Office Into A Separate Office, A Move Critics Said Would Weaken The Bureau’s Efforts TO Protect Borrowers…
In May 2018, Mick Mulvaney Folded The Bureau’s Student Loan Office Into Another Office At The Bureau “The student arm of the Consumer Financial Protection Bureau is being folded into another office at the agency, a consolidation that some fear will limit its ability to stand up for student loan borrowers. In a memo obtained Wednesday by The Washington Post, Mick Mulvaney, acting director of the CFPB, informed staffers of a reorganization that will tuck the office for students and young consumers into the bureau’s office of financial education. [Danielle Douglas-Gabriel, “Mick Mulvaney takes aim at consumer bureau’s student protection unit,” The Washington Post, 05/09/18]
- The Office Was Responsible For Helping “Students From Every State Get Answers About Breakdowns In Their Loan Process.” “The student lending office… helped students from every state get answers about breakdowns in their loan process. It sued predatory loan processors and for-profit colleges, including Navient and ITT Tech. It stamped out illegal loan servicing practices at the country’s largest banks, including Citibank, Discover and Wells Fargo.” [Diana Hembree, “Mulvaney Blasted For Closing CFPB Student Lending Watchdog That Recovered $750M For Fraud Victims,” Forbes, 05/10/18]
- Critics Said The Move Would Weaken Consumer Protections. “The move raised alarm bells among consumer advocates, who said that Mulvaney was once again seeking to weaken consumer protections by moving the student loan division under the broader financial education unit. [Donna Borak and Katie Lobosco, “Changes at CFPB’s student loan division worry advocates,” CNN Money, 05/09/18]
Mulvaney Even Weakened Efforts To Protect Servicemembers And Put The Bureau’s Anti-Discrimination Efforts In The Hands Of Someone Who Thinks Most Hate Crimes Are Hoaxes
And Moved The Bureau’s Office of Fair Lending And Equal Opportunity Under His Direct Control…
In February 2018, Mick Mulvaney Moved The CFPB’s Office Of Fair Lending And Equal Opportunity Out Of The Bureau’s Enforcement Division And Under His Direct Control. “CFPB Acting Director Mulvaney, in a previously unreported move, said that he would be putting the Office of Fair Lending and Equal Opportunity, or OFLEO, under his direct control, startling consumer protection and civil rights advocates, and raising concerns that the office would be unable to carry out its mission — and that, indeed, that was the very purpose of the shift.” [David Dayen, “After Boasting About Lowering Black Unemployment, Donald Trump Undermines The Federal Unit Defending Against Housing Discrimination,” The Intercept, 02/01/18]
- “OFLEO already conducted advocacy, coordination, and education through engagement with the industry. But segregating enforcement and supervision takes the stick away from the carrot. Additionally, almost nothing at the CFPB sits within the Office of the Director, and certainly not anything enforcement-related. The move suggests that Mulvaney particularly wanted this element of enforcement and supervision under his thumb. “I can’t imagine it means anything good,” said Adam Levitin, a law professor at Georgetown University and former CFPB advisory board member.”[David Dayen, “After Boasting About Lowering Black Unemployment, Donald Trump Undermines The Federal Unit Defending Against Housing Discrimination,” The Intercept, 02/01/18]
…While Putting A Someone Who Charge Who Thinks Most Hate Crimes Are Hoaxes.
Mulvaney’s Fair Lending Policy Director Even Claimed, “That The Great Majority Of Hate Crimes Were Hoaxes.” “A senior Trump appointee responsible for enforcing laws against financial discrimination once questioned in blog posts written under a pen name if using the n-word was inherently racist and claimed that the great majority of hate crimes were hoaxes. Eric Blankenstein, a policy director at the Consumer Financial Protection Bureau, expressed those and other controversial views more than a decade ago on a political blog he co-authored with two other anonymous contributors.” [Robert O’Harrow Jr., Shawn Boburg, and Renae Merle, “Trump anti-discrimination official once called most hate crimes hoaxes,” The Washington Post, 09/26/18]
Mulvaney Even Decided To Stop Examining Lenders For Predatory Behavior Towards American Servicemembers.
In August 2018, Mick Mulvaney’s CFPB Ceased The Proactive Examination Of Lenders For Violations Of The Military Lending Act. “The Trump administration is planning to suspend routine examinations of lenders for violations of the Military Lending Act, which was devised to protect military service members and their families from financial fraud, predatory loans and credit card gouging, according to internal agency documents.” [Glenn Thrush, “Mulvaney Looks to Weaken Oversight of Military Lending,” The New York Times, 08/10/18]
- “The agency’s supervisory exams have been critical in uncovering previous instances of wrongdoing and led to several of its biggest fines. In 2014, the bureau fined one of the largest payday lenders in the country, Ace Cash Express, $10 million after determining the Texas, steered low-income borrowers, including those in the military, into a succession of financially damaging high-interest loans.” [Glenn Thrush, “Mulvaney Looks to Weaken Oversight of Military Lending,” The New York Times, 08/10/18]
Mulvaney Has Dropped Investigations And Pulled Back On Strong Enforcement Actions… Sometimes To The Benefit Of His Campaign Donors.
Mulvaney Has Gone Soft On Payday Lenders… Including The Ones That Funded His Campaigns
Mulvaney Has Dropped Enforcement Actions Against Predatory Payday Lenders…
In January 2018, Mick Mulvaney Dropped A Lawsuit Against Four Payday Lenders Associated With An American Indian Tribe. “The Consumer Financial Protection Bureau is dropping a lawsuit against a group of payday lenders associated with an American Indian tribe in a sign the regulator is changing direction under Mick Mulvaney, the acting director appointed by the Trump administration.”[Zeke Faux, “CFPB Signals Shift by Dropping Payday Lender Lawsuit,” Bloomberg, 01/18/18]
- The Companies Had Engaged In “Rent-A-Tribe” Lending, Which Allows Them To “Charge Interest Rates Higher Than What States Allow.” “The case was filed in Kansas because the CFPB alleged that the companies largely operated out of a call center in Overland Park, despite being formally organized on an American Indian reservation in California… The business model used by the four companies mirrors what’s referred to as the “rent-a-tribe” structure, where a payday lender nominally establishes its business on American Indian reservations, where state regulations generally do not apply. Some payday lenders favor the model because they can charge interest rates higher than what states allow.” [Steve Vockrodt, “CFPB drops Kansas payday lending case, stoking fears Trump is backing off the industry,”Kansas City Star, 01/19/18]
…Trimmed Their Fines, Sometimes By Up To A Million Dollars…
Mulvaney’s CFPB Settled With Triton Management Group Regarding Their Deceptive Loan Practices. “The Bureau of Consumer Financial Protection… announced a settlement with Triton Management Group, Inc., a small-dollar lender that operates in Alabama, Mississippi, and South Carolina under several names including ‘Always Money’ and ‘Quik Pawn Shop.’” [Press Release, Consumer Financial Protection Bureau, 07/19/18]
- The Fine Mulvaney’s CFPB Agreed To Was Only One Third Of What The Previous CFPB Director Had Sought. “The U.S. consumer finance watchdog ordered [the] Alabama-based payday lender… to return $500,000 to borrowers who were overcharged, a fine that people familiar with the matter said was only a third of what the prior Obama-era head of the agency had sought.” [Patrick Rucker, “S. consumer watchdog slashes fine in payday lender settlement,” Reuters, 07/19/18]
- The Mississippi Payday Lender Was Found To Be “Routinely” Overcharging Borrowers And Hiding The True Cost Of Their Loans. “Triton Management, which operates about 100 storefront lending offices across the South, routinely overcharged borrowers in Mississippi, the CFPB said. Customers who went in to borrow a few hundred dollars for about a month could end up paying more than twice that sum if they extended the life of the loan. Triton did not disclose the true costs to borrowers, the CFPB concluded.”
Mulvaney’s CFPB Settled With The Hydra Group Over Their Unlawful Payday Loan Practices. “…a federal district court in the Western District of Missouri entered an Order effectuating a settlement between the Bureau of Consumer Financial Protection (Bureau) and Richard Moseley, Sr., Richard Moseley, Jr., and 20 interrelated corporate entities controlled by Moseley, Sr. and Moseley, Jr., in the Bureau’s lawsuit regarding the unlawful origination and servicing of short-term, small-dollar online loans to consumers nationwide.” [Press Release, Consumer Financial Protection Bureau, 08/10/18]
- In Addition To Forfeiting Assets, The Settlement Called For Just A $1 Civil Fine Against The Men Involved In The Scheme. “The consent order entered into… calls for the Moseleys to forfeit approximately $14 million in frozen assets. A $69 million order to pay defrauded borrowers was suspended. According to the order, the suspended judgment and $1 civil fine were set because of the “defendants’ limited ability to pay.” [Brian Kaberline, “KC-based payday lenders will pay civil fine of just $1,” Kansas City Business Journal, 08/13/18]
- The Group Was Accused of making loans to consumers “that the borrowers had not authorized and charged biweekly ‘finance charges’ indefinitely.” “Federal officials say the Moseleys operated a group of companies, referred to as the Hydra Lenders, that made $227.7 million in loans, generating $69.6 million in gross profits, since January 2008, according to a consent order. A bureau complaint alleges that the Hydra Group made loans to consumers that the borrowers had not authorized and charged biweekly “finance charges” indefinitely.” [Brian Kaberline, “KC-based payday lenders will pay civil fine of just $1,” Kansas City Business Journal, 08/13/18]
…And Even Dropped The Investigation Into A Payday Lender That Gave Him Thousands In Campaign Cash.
Also, in January 2018, Mick Mulvaney’s CFPB Dropped An Investigation Into World Acceptance Corporation, A Payday Lender That Has Donated Thousands To Him. “World Acceptance Corporation, one of the largest small-loan consumer finance companies in North America, today announced the company received a letter from the Consumer Financial Protection Bureau indicating the investigation into the company’s marketing and lending practices has been completed. More importantly, the CFPB noted it does not intend to recommend enforcement action. As a result, the company is relieved of the document-retention obligations required by the bureau’s investigation.” [Press Release, World Acceptance Corporation, 01/22/18]
- “World, which does business as World Finance, was the subject of an investigation by ProPublica and Marketplace last May. Our story showed how the company’s loans are deceptively expensive and often trap borrowers in a cycle of debt. World’s business hinges on convincing low-income borrowers to renew their loans over and over again, a practice that can radically increase the amount of interest they pay. The company also packages nearly useless insurance products with its loans in many states, allowing it to skirt state interest rate caps, our investigation found. World boasts more than 800,000 customers.” [Paul Kiel, “High-Cost Lender World Finance Target of Federal Probe,” ProPublica, 03/13/14]
Mulvaney Has Pulled Back On Examining Equifax – Another Of His Campaign Donors – In The Wake Of The Company’s Massive Data Breach.
In February 2018, Mick Mulvaney Pulled Back On A Probe Into Equifax. “Mick Mulvaney, head of the Consumer Financial Protection Bureau, has pulled back from a full-scale probe of how Equifax Inc failed to protect the personal data of millions of consumers, according to people familiar with the matter.” [Patrick Rucker, “Exclusive: U.S. consumer protection official puts Equifax probe on ice – sources,” Reuters, 02/05/18]
- In 2017, Equifax Was Hacked And “145 Million Americans’ Social Security Numbers, Birthdays, Driver’s License Numbers, And Addresses” Were Stolen. “Between May and July of last year, hackers stole145 million Americans’ Social Security numbers, birthdays, driver’s license numbers, and addresses from Equifax, one of the three largest credit reporting agencies in the country. The Wall Street Journal, reviewing documents submitted to Congress, reports that stolen data also included tax identification numbers and driver’s license states and issuance dates. Some email addresses were also acquired by hackers.” [David Z. Morris, “The Equifax Hack Exposed More Data Than Previously Reported,” Fortune, 02/11/18]
- Mulvaney Has Taken At Least $5,000 In Campaign Cash From Equifax’s Political Action Committee (PAC).[Equifax Inc. Political Action Committee to Mulvaney for Congress, Federal Election Commission, Accessed 02/05/18
Mulvaney Has Repeatedly Reduced Penalties For Companies That Broke The Law
Mulvaney’s CFPB Reduced The Penalty Against A Predatory Debt Collector…
July 2018: Mulvaney’s CFPB Settled With National Credit Adjusters, LLC And Bradley Hochstein. “The Bureau found that NCA and Hochstein violated the Consumer Financial Protection Act of 2010 and that NCA violated the Fair Debt Collection Practices Act…. Under the terms of the consent order, NCA and Hochstein are barred from certain collection practices and Hochstein is permanently barred from working in any business that collects, buys, or sells consumer debt.” [Press Release, Consumer Financial Protection Bureau, 07/13/18]
- Under Mulvaney, The CFPB Reduced The Penalty Against The Company From $3 Million To $500,000. “The CFPB said it reduced the penalty Hochstein must pay to $300,000, from the $3 million imposed in the consent order, while National Credit was ordered to pay $500,000, also down from $3 million. The CFPB did not specifically designate that any of the money go to consumers who were harmed.” [Kate Berry, “CFPB penalizes payday debt collector but reduces fine,” American Banker, 07/13/18]
- The Company Was Found To Be “Engaging In Unlawful Debt Collection Acts And Practices That Harmed Consumers.” “The Bureau of Consumer Financial Protection announced late last week it settled with the National Credit Adjusters, a private company, as well as its chief executive and part owner Bradley Hochstein. In a press release, the CFPB said it found NCA and Hochstein used a network of debt collection companies to collect debt from consumers, with some engaging in unlawful debt collection acts and practices that harmed consumers. The CFPB said the acts were frequent and included representing that consumers owed more than they were legally required to pay and threatening consumers and their family with lawsuits, visits from debt collectors and arrest if they didn’t pay.” [“The CFPB Settles With National Credit Adjusters,” com, 07/16/18]
…And A Bank That Charged Deceptive Overdraft Fees.
Mulvaney’s CFPB Settled With TCF National Bank “Regarding Its Marketing And Sale Of Overdraft Services.” “…the Bureau of Consumer Financial Protection (Bureau) filed in federal district court a proposed settlement with TCF National Bank regarding its marketing and sale of overdraft services. TCF National Bank is headquartered in Wayzata, Minn., and operates approximately 318 retail branches across Minnesota, Wisconsin, Illinois, Michigan, Colorado, Arizona, and South Dakota.” [Press Release, Consumer Financial Protection Bureau, 07/20/18]
- The CFPB Adjusted Its Civil Penalty Downward To Account For A Separate Unannounced OCC Penalty Against TCF.“The CFPB said it had imposed a $5 million civil penalty but adjusted that downward to account for a separate $3 million penalty imposed by the Office of the Comptroller of the Currency, which did not publicly disclose its enforcement action against the bank.” [Kate Berry, “CFPB orders TCF to refund consumers for overdraft charges,” American Banker, 07/20/18]
- TCF Was Accused Of Obscuring Overdraft Fees And Deceiving Customers. ““The Consumer Financial Protection Bureau sued the $21 billion-asset TCF, based in Wayzata, Minn… alleging the bank had engaged in deceptive and abusive practices. TCF obscured its overdraft fees and made it appear to customers that the fees were mandatory for opening new checking accounts, the CFPB said.” [Kate Berry, “CFPB orders TCF to refund consumers for overdraft charges,” American Banker, 07/20/18]
Mulvaney Has Teamed Up With Industry To Weaken Important Consumer Protection Rules
Mulvaney’s CFPB Has Worked To Weaken Rules That Industry Doesn’t Like.
Mick Mulvaney’s CFPB Delayed The Prepaid Card Rule Based Primarily On Industry’s Concerns…
In January 2018, Mick Mulvaney’s CFPB Delayed The Implementation Of The Prepaid Card Rule To April 2019. “The Consumer Financial Protection Bureau (Bureau) announced… that it has finalized updates to its 2016 prepaid rule. The Bureau’s 2016 prepaid rule put in place requirements for treatment of funds on lost or stolen cards, error resolution and investigation, upfront fee disclosures, access to account information, and overdraft features if offered in conjunction with prepaid accounts. The changes announced [in January 2018] adjust requirements for resolving errors on unregistered accounts, provide greater flexibility for credit cards linked to digital wallets, and extend the effective date of the rule by one year to April 2019.” [Press Release, Consumer Financial Protection Bureau, 01/25/18]
- “The Rule Aims To Give Consumers Who Use Prepaid Cards Protections Similar To Those For Debit Cards And Credit Cards, Including Fee Disclosures And Protection Against Loss And Theft.”[Yuka Hayashi, “Trump Administration Delays Prepaid-Card Rule by a Year,” The Wall Street Journal, 01/25/18]
- Mulvaney’s CFPB Specifically Cited Industry Concerns When It Agreed To Delay The Rule. “The industry complained that the rule was too broad and could leave them on the hook for fraudulent losses. Now, the CFPB says it will give the industry more flexibility on cards linked to digital wallets, such as PayPal and Google Wallet. It will also give prepaid card providers more time to investigate claims before refunding money customers say they have lost to fraud. The CFPB, citing concerns that the industry needs more time to comply, said the rules would now go into effect in April 2019.” [Renae Merle, “Consumer watchdog delaying new prepaid card protections by one year,” The Washington Post, 01/25/18]
…And Then Mulvaney’s CFPB Teamed Up With Industry To Try And Delay Implementation of the Bureau’s Payday Lending Rule
In May 2018, Mick Mulvaney’s CFPB Filed A Joint Motion With Payday Lending Industry Trade Groups To Delay Implementation Of The Payday Lending Rule. “The CFPB and the payday industry groups [The Community Financial Services Association of America and the Community Service Alliance of Texas] filed a joint motion May 31 to stay both the regulation and the litigation filed in April. A proposal to rewrite or repeal the existing payday rule would be introduced in February 2019, according to the motion.” [Evan Weinberger, “CFPB Payday Rule Will Go Live Next Year, Judge Says,” Bloomberg News, 06/10/18]
- The Payday Lending Industry Objected To Many Of The Rules Requirements. “Payday lenders have balked at the rule’s requirements, including a mandate that lenders determine a borrower’s ability to repay a loan of 45 days or less. They also object to the rule’s “lockout” periods for new loans, limits on rolling over loans and restrictions on electronically debiting borrower accounts to pay their debts.” [Kate Berry, “CFPB goes back to the drawing board on payday rule,” American Banker, 06/13/18]
- Despite Both Sides Best Efforts, A Judge Denied The Request For a Delay Of The Rule’s Effective Date. “The Consumer Financial Protection Bureau’s payday lending regulations will take effect next year despite a request from the bureau and industry groups to delay its effective date while the rule is reworked. Judge Lee Yeakel of the U.S. District Court for the Western District of Texas on June 12 rejected a request from the CFPB, the Community Financial Services Association of America, and the Community Service Alliance of Texas to stay the effective date until 445 days after a new version of the rule is completed.”[Evan Weinberger, “CFPB Payday Rule Will Go Live Next Year, Judge Says,” Bloomberg News, 06/10/18]
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