Jennifer Bissell-Linsk in New York">
The Trump administration launched a twin assault against the Consumer Finance Protection Bureau on Monday, announcing a plan to scale back its enforcement activities and proposing to put control of its budget into the hands of a potentially hostile Congress.
The consumer watchdog, created in the wake of the financial crisis in the teeth of opposition from Republicans and banking sector lobbyists, will go “no further” than legally required by the Dodd-Frank act in enforcing consumer protection laws relating to financial products, according to its new strategic plan.
Acting director Mick Mulvaney, a long-time CFPB critic who is running the agency alongside his other job as White House budget director, said that “by hewing to the statute” the new operating plan “should serve as a bulwark against the misuse of our unparalleled powers”.
The move was accompanied by a White House budget proposal to give Congress control over of the agency — along with two other regulatory bodies created after the crisis, the Financial Stability Oversight Council and Office of Financial Research — which would allow it to cut funding aggressively if it wished. The bureau currently submits funding requests to the Federal Reserve.
The White House also sketched a budget for the agency that would give it $6.4bn less over the next 10 years versus previous projections.
For years Republican lawmakers have accused the watchdog of unduly burdening the financial industry and made attempts to dismantle it.
Since assuming control of the agency, Mr Mulvaney has made clear the CFPB’s approach would change, saying the agency would look out for “quantifiable and unavoidable harm” to consumers, without a culture of “regulation by enforcement”.
Under his Obama-era predecessor, Richard Cordray, the CFPB collected billions of dollars in penalties from financial institutions, including Ocwen, Citigroup, JPMorgan and Wells Fargo, as a part of a mission to “empower consumers” and make “rules more effective by consistently and fairly enforcing those rules”.
Consumer advocates have accused Mr Mulvaney of attempting to create a skeletal version of the agency he once tried to shutter.
“What we’re seeing in the Trump administration with acting directory Mulvaney is a real disappointment to consumers,” said Ira Rheingold, executive director of the National Association of Consumer Advocates. “It’s a disgrace and defies the purpose of why the CFPB was created. We had a financial crisis because of the abuses in the industry and now it appears they will serve those institutions.”
The bureau has delayed implementing new rules governing payday lenders and curtailed enforcement actions of that controversial segment of the US finance industry. It dropped a lawsuit against California-based Golden Valley and halted an investigation into World Acceptance Corp, one of the biggest payday lenders in the US.
Mr Rheingold said that without a more aggressive bureau, state attorneys-general would likely step up their own enforcement actions. Consumers can also sue. However, the right to class-action lawsuits against financial services has separately been limited under the Trump administration.
Source : https://www.ft.com/content/70c48fea-1001-11e8-8cb6-b9ccc4c4dbbb600