Along with other valuable regulations designed to protect consumers and the nation from another “Great Recession,” the creation of the Consumer Financial Protection Bureau was designated a consumer watchdog and guardian. And though the formation of the CFPB – led by now-Sen. Elizabeth Warren – was an uphill fight, since its creation it’s done good work, including a $100 million fine on Wells Fargo in the false-accounts scandal. The agency stands as a guardian against predatory lending practices and potentially anti-consumer actions by credit-card companies and big banks.
But with the exit of longtime director Richard Cordray, who appointed senior CFPB executive Leandra English as acting director, a firestorm is on and will likely continue in federal courts. The agency’s supposed to be independent and not subject to the same kind of presidential or congressional control as others – a wise move in its establishment so it wouldn’t be vulnerable to the whims of politicians and could stay the course in protecting consumers.
But President Trump immediately named his budget director, Mick Mulvaney, as the acting director. He and English clashed immediately and courts ultimately will rule on who’s in charge. Though Trump may win early rounds from Republican judges, his position is hardly absolute.
Trump calls the agency a “disaster” only because it holds a couple of reins on the financial industry, and Trump would like that industry freed up to take the country to the brink again, presumably. Mulvaney wasted no time, of course, ordering no more hiring and no more regulations for now. He said the president “wants me to get it back to the point where it can protect people without trampling on capitalism.” Right. In other words: He wants me to gut it.
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Mulvaney will do as he’s told, of course, or run the risk of the president’s tweeting wrath. Trump, who knows little of the details of government, doesn’t really understand the agency, and evidenced by his tax ideas to help the super wealthy and big business, he doesn’t care about the middle-class the CFPB is supposed to protect.
So absent any Republican opposition to rolling back the powers of this agency, if not simply shuttering it, Democrats will likely be powerless to protect the CFPB and consumers.
That is horrendous, because in the wake of the financial collapse of 2008 and thereafter, this agency was one with promise, a sign that President Obama understood that consumers needed protection from the vultures in the financial industry. And the Wells Fargo accounts scandal, coming years after the Great Recession, was strong evidence as to the good work of which the CFPB was capable.
Trump has populated the financial regulation part of his bureaucracy with millionaires who are looking to protect other millionaires but not anyone else.
And without action from the courts standing up for the independence of this valuable watchdog, it appears that’s exactly what’s going to happen.