Trump appointee promises ‘dramatically different’ CFPB

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Mick Mulvaney has broad authority to slow watchdog agency’s crackdowns, refunds

Senior Reporter
Expert on consumer credit laws and regulations

New head of CFPB promises dramatic changes to the agency

The Trump administration’s new head of the U.S. Consumer
Financial Protection Bureau has broad powers to halt the agency’s crackdowns on
corporations and stop the payment of refunds to harmed consumers, legal experts say.

Mick Mulvaney, who started as acting director of the
CFPB on Monday, told reporters that he put payments from
the agency’s approximately $50 million civil
penalty fund
on hold for at least 30 days for review. The fund compensates
consumers who were harmed by companies but cannot collect a refund.

Mulvaney also said the consumer protection bureau’s enforcement
actions – about 100 ongoing crackdowns – are under review.

The deregulation-minded former South Carolina congressman,
who co-sponsored legislation
to eliminate the CFPB
in 2015, signaled big changes coming in the way the
bureau operates.

A ‘dramatically different’ operation at CFPB

In remarks to reporters, Mulvaney said he will meet the
bureau’s legal requirements, not “set the place on fire.”

“That being said, the way we go about it, the way we
interpret it, the way we enforce it, will be dramatically different than it was
under the last administration,” he said.

Mulvaney is currently head of the White House Office of
Management and Budget
, a leader in administration deregulation efforts, as well
as acting director of the CFPB.

The director of the consumer protection bureau has wide
leeway when it comes to pursuing crackdowns and getting payback for consumers.

“You cannot settle or file a lawsuit unless you’ve gone
through the director,” said Anthony Alexis, former head of the consumer
bureau’s enforcement office.

Alexis, who left the agency earlier this month to become a
partner at the Goodwin Procter law firm in Washington, said that in his
experience at the bureau, investigations of companies can begin without the
director’s approval.

“The way we go about it, the way we interpret it, the way we enforce it, will be dramatically different than it was under the last administration.”

But once an investigation has found reason to bring an
enforcement action, he said, the director’s sign-off was required – as part of
an executive approval process – before the agency would either make a
settlement with a company or take it to court.

The review of existing cases Mulvaney announced is a step
that any new administration would undertake, another former CFPB lawyer said.

“Any new director is going to review the actions of the
previous administration’s director,” said Allyson Baker, an enforcement
attorney at the CFPB from 2011 to 2013 now with the Venable law firm in
Washington. “I don’t think you’re going to see a radical change in enforcement
in the near term,” she added.

While the new acting director announced a halt of payments
from its civil penalty fund, halting payments to consumers already in progress
under a settlement or court order would be difficult, former CFPB enforcement
attorney Jenny Lee said. Lee is now a trial partner at Dorsey & Whitney in
Washington.

“Any new director is going to review the actions of the previous administration’s director. I don’t think you’re going to see a radical change in enforcement in the near term.”

A court triumph for Trump

Mulvaney will be in charge of the consumer bureau as acting
director for some time, after passing a crucial test Tuesday.

U.S. District Judge
Timothy J. Kelly rejected a request from the agency’s deputy director, Leandra English, to issue
an injunction blocking Mulvaney
from taking the position, under succession
provisions of the Dodd-Frank Act that created the bureau. The previous
director, Obama appointee Richard Cordray, left the job Friday.

While the case continues in U.S. District Court in
Washington, the rejection of the injunction means Mulvaney will exercise the
director’s authority over rule-making, enforcement actions and other agency functions.
The White House is reportedly considering candidates for a permanent director,
who will face confirmation by the Senate.

The bureau, created in 2011 by the Dodd-Frank Act, has been
a significant source of redress for consumers who were taken in by practices of
financial companies, including credit card issuers.

Possible slowdown in fraud crackdowns, consumer refunds

The consumer bureau has crackdowns in progress on the nation’s
largest debt settlement company
, for example, as well as high-cost
tribal lenders
and an online loan marketing and servicing company that
allegedly collected
debts not legally owed
.

In a series of crackdowns
on faulty card “add-on” products
, a dozen card issuers and affiliates were
hit with penalties that refunded $2.8 billion to card users.

Those payments were part of a total of $29 billion in
refunds, including debts that were erased, that the agency has put in
consumer’s pockets. Consumer advocates now predict that the refunds will slow
to a trickle.

“Expect Mulvaney to throttle ongoing investigations and
enforcement actions,” Ed Mierzwinski, consumer program director at U.S. Public
Interest Research Group, said in an email interview. “There’s a new sheriff in town
and he is not expected to reduce corporate crime.”

“Expect Mulvaney to throttle ongoing investigations and enforcement actions. There’s a new sheriff in town and he is not expected to reduce corporate crime.”

Advice to consumers: Be more vigilant now

If the bureau eases its enforcement efforts as expected,
consumers should be more vigilant, as lenders and other financial services may take
advantage of the new environment, consumer advocates say.

However, legal
experts said the agency could hardly cease bringing enforcements against
companies, particularly ones that had caused widespread consumer harm. 

The CFPB referred questions to an OMB press spokesman, who
did not respond to requests for comment on Wednesday.

At stake, CFPB complaint database’s future

Also in question is the future of the CFPB’s public complaint
database
, with information on nearly 1 million consumer problems with
credit cards, debt collectors and other companies.

In Congress, Mulvaney
sponsored a bill
requiring the CFPB to verify people’s complaints
before publishing them. The bill’s
requirement that all facts alleged in each complaint be verified would have
made it more difficult for complaints to be published.

While the existence of
the database is mandated under Dodd-Frank, the agency’s director has broad
authority to implement the one-paragraph provision of the law.

See related: Consumer protection chief resigns, Trump to pick successor, Rewards cards draw a surge of complaints to CFPB




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