If there is one role that government should play, it is in protecting consumers.
We’ve all been there before, feeling helpless and ripped off by some big corporation that holds all the cards while giving us few options.
That’s never right.
So while the government was briefly shutting down this weekend, I was more concerned about what had become of the independent Consumer Financial Protection Bureau. It was established after the financial meltdown in 2008 as an independent agency to hold financial institutions accountable, so that people like me wouldn’t have to worry about seeing their 401k savings gutted again.
Last May, the House of Representatives passed the Financial Choice Act, which would have stripped the Consumer Financial Protection Bureau of most of its powers. Rep. Elise Stefanik voted for that bill.
But when that bill went nowhere in the Senate and the CFPB director resigned, President Trump appointed his budget director Mick Mulvaney to take over with, I suspect, the same mission in mind.
Mulvaney maintained he was not there to burn the place down, but it is clear the agency is on fire.
It started with a simple change to its mission statement, emphasizing replacing “outdated, unnecessary or unduly burdensome regulations” instead of “making rules more effective by consistently and fairly enforcing those rules.”
Semantics? Maybe, but it appears to be a clue that the mission of the agency has shifted away from consumers and toward big business.
Perhaps more telling was Mulvaney’s request this month for no funding in the second quarter of the fiscal year, saying that the agency had more than enough money in its reserves to cover its expenses. It requested over $200 million in the second quarter last year.
It was a clear indication that the Consumer Financial Protection Agency — which provided close to $12 billion in refunds to consumers since it was formed — was not planning on pursuing any significant enforcements.
“Defang” is the word you often hear when describing Mulvaney’s efforts regarding the agency.
Mulvaney has also slowed down the implementation or delayed many new rules that would have been positives for consumers.
It also dropped a lawsuit against “payday lenders.”
“Payday lending” is the practice in which desperate consumers seek a small — usually less than $1,000 — short-term loan that will be paid back with their next paycheck to get them through some financial emergency. It is a multi-billion-dollar industry.
Many describe it as “predatory lending” on millions of low-income consumers. The way it works is that if the initial loan cannot be repaid, it gets rolled over into a new loan and then another one after that as fees and interest pile up.
It sounds like loan sharking without breaking legs.
New rules by the Consumer Financial Protection Agency required lenders to check whether borrowers were capable of repaying the loans within 30 days while still meeting basic living expenses. They also limited the number of loans you could take.
Many called that over-regulation. Others called it consumer protection.
The agency announced it was considering a repeal of those rules.
According to an editorial in the St. Louis Post-Dispatch, the “payday lending” industry spent $2.8 million on congressional donations in the 2016 election cycle.
Then-Congressman Mick Mulvaney received $31,700 of that money.