CFPB chief asks Congress to clip bureau's wings

Mick Mulvaney, acting director of the Consumer Financial Protection Bureau, wants Congress to clip the CFPB's wings. In a recent message to Congress, Mulvaney requested several changes to the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act, the law that created the consumer watchdog agency. Among them: require congressional approval of any major rulemaking by the CFPB, fund the bureau through congressional appropriations rather than the Federal Reserve's coffers and make the bureau's director accountable to the president.

Mulvaney, former director of the Office of Management and Budget, has been a harsh critic of the CFPB. In 2015, while serving as a Republican congressman from South Carolina, he joined dozens of other Republican lawmakers in co-sponsoring legislation to repeal provisions of the Dodd-Frank Act that created the CFPB.

Since assuming the director's post late last year ‒ following the resignation of the Bureau's first director, Richard Cordray ‒ Mulvaney has taken several steps to rein in the bureau's rulemaking. For example, he delayed implementation of a controversial rule set for prepaid debit cards, announced the CFPB will rethink plans to regulate payday lenders and similar nonbanks that make short-term loans to consumers, and he's rewritten the bureau's mission statement to hone its focus on "outdated, unnecessary or unduly burdensome regulations."

Unique, controversial

Creation of the CFPB has been one of the most controversial aspects of the Dodd-Frank Act. Architects of the provision, led by Sen. Elizabeth Warren, D-Mass, argued a federal consumer financial watchdog agency was necessary to keep banks and other financial services providers from playing fast and loose with consumers' finances – a trend they saw contributing to the 2008 financial crisis. To achieve this end, the bureau was set up unlike any other federally regulated agency, insulating it from political influence.

The law directed that the CFPB be funded through monies the Federal Reserve collects for providing services to financial institutions, rather than through congressional appropriations, which is the case for most federal agencies. The CFPB also has a single director – unlike the Federal Trade Commission, Federal Communications Commission and other consumer protection agencies that are governed by boards of directors. To further insulate the bureau, the law stipulates the director, appointed to a five-year term, can only be fired for cause, not to make way for political appointees.

Mulvaney, in a message included in the Semi-annual report of the Bureau of Consumer Financial Protection submitted to Congress on April 2, 2018, stated, "the Bureau is far too powerful" and has "precious little oversight of its activities." He had harsher words for Congress: "By structuring the Bureau the way it has, Congress established an agency primed to ignore due process and abandon the rule of law in favor or bureaucratic fiat and administrative absolutism."

In his message, Mulvaney conceded his recommendations may not be popular with some members of Congress. And recent rumblings from Capitol Hill suggest Democrats are primed for a fight. A March 27 letter from a group of over two dozen Democratic senators blasted Mulvaney's efforts to water down or rescind pending rules for payday lenders, stating that "a majority of our constituents" support strong consumer protections for "predatory" lenders like payday loan companies. "The CFPB's role in serving as a watchdog for American consumers while making our financial markets safe, fair and transparent continues to be of critical importance," the senators added.

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