The Head of the Consumer Financial Protection Bureau Asks Congress to Gut His Own Agency

He calls the bureau “the very definition of tyranny.”

Ron Sachs/Zumapress

Before joining the Trump administration, White House budget director Mick Mulvaney made no secret of his dislike for the Consumer Financial Protection Bureau (CFPB), the agency created in the wake of the 2008 financial crisis to better supervise Wall Street.

As a congressman, Mulvaney proposed legislation to eliminate the bureau, calling it a “sick, sad” joke. Now as the Trump-appointed interim head of the agency, Mulvaney on Monday presented his first report to Congress on the work of the bureau, recommending four major changes to the CFPB’s structure, funding, and oversight, that would vastly weaken the consumer watchdog.

The report offers yet more evidence that Mulvaney is capitalizing on his temporary position atop the CFPB to bring years of proposals to undermine the agency to life.

“The bureau is far too powerful, and with precious little oversight of its activities,” Mulvaney writes in a blistering introduction. Mulvaney then cites the Federalist Papers, quoting James Madison on how overly powerful bureaucracies meet “the very definition of tyranny.”

While there are in fact many checks on the CFPB’s activity across all three branches of government,  Mulvaney calls the CFPB’s current structure “a warning sign that a lapse in democratic structure and republican principles has occurred.”

Mulvaney makes a number of major policy recommendations in the report. While the CFPB is currently funded through a special appropriation from the Federal Reserve, Mulvaney suggests it instead be funded through the regular congressional budget process. The move would give Congress, and accordingly, whichever political party is in the majority, far more control over the bureau. He also asks Congress to pass a law requiring legislative approval of any CFPB rules. Since its inception in 2011, the CFPB has passed a number of rules aimed at curbing abusive practices by financial institutions, including new limits on payday lenders that are popular with consumers, and rules that helped the CFPB undertake enforcement efforts that have recovered millions of dollars on behalf of hundreds of thousands of consumers.

In a move that is likely related to the controversy surrounding Mulvaney’s own appointment this fall, the report also suggests Congress enact a law clarifying that the CFPB’s director must answer directly to the president. When the Obama-appointed CFPB director Richard Cordray stepped down from his post in November, Cordray, citing the 2010 law that established the bureau, appointed an interim director to succeed him. The Trump administration argued that, under a different federal law, Trump had the right to install his own interim director. A district court initially ruled in Trump’s favor, installing Mulvaney, but the battle is still winding through the courts. 

Mulvaney also advises that Congress create an independent inspector general dedicated to overseeing the CFPB. Debbie Goldstein of the Center for Responsible Lending, a financial services watchdog group, calls the suggestion “a red herring” given that the CFPB is already overseen by an inspector general that also monitors the Federal Reserve’s Board of Governors. 

“The Consumer Financial Protection Bureau was established as an independent agency in order to buttress it from the enormous political pressures of the banking lobby,” said Goldstein in an emailed statement. “Mulvaney’s proposed changes would make consumer protection dependent on Congress and the White House standing up to the financial industry.”

The rest of Mulvaney’s CFPB report details the bureau’s work towards its enforcement and supervision missions. Most of the actions described took place from April through September 2017—when Cordray was still in charge.

OUR NEW CORRUPTION PROJECT

The more we thought about how MoJo's journalism can have the most impact heading into the 2020 election, the more we realized that so many of today's stories come down to corruption: democracy and the rule of law being undermined by the wealthy and powerful for their own gain.

So we're launching a new Mother Jones Corruption Project to do deep, time-intensive reporting on systemic corruption. We aim to hire, build a team, and give them the time and space needed to understand how we got here and how we might get out. We'll publish what we find as a major series in the summer of 2020, including a special issue of our magazine, a dedicated online portal, and video and podcast series so it doesn't get lost in the daily deluge of breaking news.

It's unlike anything we've done before and we've got seed funding to get started, but we're asking readers to help crowdfund this new beat with an additional $500,000 so we can go even bigger. You can read why we're taking this approach and what we want to accomplish in "Corruption Isn't Just Another Scandal. It's the Rot Beneath All of Them," and if you like how it sounds, please help fund it with a tax-deductible donation today.

We Recommend

Latest

Sign up for our newsletters

Subscribe and we'll send Mother Jones straight to your inbox.

Get our award-winning magazine

Save big on a full year of investigations, ideas, and insights.

Subscribe

Support our journalism

Help Mother Jones' reporters dig deep with a tax-deductible donation.

Donate