Consumer watchdog agency needs to get back to doing its job

In the seven years since opening its doors, the Consumer Financial Protection Bureau (CFPB) has played a vital role in promoting and defending fairness in the American consumer marketplace. 

The results speak for themselves: The CFPB has returned $12 billion to nearly 30 million consumers who were cheated by financial companies, helped resolve more than a million consumer complaints and put a stop to a raft of harmful banking, credit card, mortgage and student loan practices. 

But the bureau’s future now hangs in the balance. Recently, the president nominated a CFPB director: Kathy Kraninger, an ally of the current acting director who has no previous consumer protection experience.

{mosads}The Senate now must determine whether to confirm Kraninger to a five-year term. The work of the Senate in the coming months will determine whether the bureau stays true to its mission to protect consumers against harmful financial practices, or it continues to back away from its mission.

Prior to a confirmation vote, the Senate must insist that Kraninger share her vision for the CFPB. Any director confirmed by the Senate for a full term should make clear that his or her aim will be  to rededicate the bureau to its essential (and congressionally mandated) mission of consumer protection.  

That means conducting vigorous oversight of the financial industry to identify unfair, deceptive and abusive practices; enforcing the law to stop illegal acts and seek compensation for those who’ve been harmed; establishing clear rules of the road so that financial service providers treat consumers fairly; and helping get results for consumers who file complaints.

The past six months have demonstrated how essential it is that the director hold a commitment to the CFPB’s core mission. The director has the authority to not only set the agenda and tone, but to fundamentally redefine the bureau’s mission and even subvert its operations.

Ever since Mick Mulvaney, the president’s current budget director, took over as the CFPB’s acting chief in November, the bureau has been stepping back from the vigorous approach to combating financial fraud and abuse that the previous leadership had cultivated.  

In some respects, this was not a surprise: As a member of Congress, Mulvaney had strongly opposed the creation of the CFPB and later called it a “sick, sad joke.” But Mulvaney’s willingness to hamstring the very organization he leads has been striking.

One of his first moves was to restrict the bureau’s enforcement activities. In December, he revised the bureau’s mission statement to make relaxing the rules on financial companies a top priority.

He also recently set in motion plans to remove from public view the bureau’s Consumer Complaint Database, an enormously successful and popular tool that has helped hold financial firms accountable for resolving disputes.     

Mulvaney’s more targeted efforts have been just as damaging. In January, for example, the CFPB announced it would reconsider a rule protecting consumers from abusive payday lenders and dropped enforcement actions against some of the most predatory among them.

Those actions have raised concerns that Mulvaney plans to water down, or entirely eliminate, the CFPB’s payday loan protections before they even go into effect.  

None of those actions squared with the intentions of lawmakers who established the CFPB. Crucially, the bureau was designed to be independent from political influence. Directors who are confirmed by the Senate hold five-year terms and can be removed by the president only for cause.

By making fundamental changes to the bureau during his tenure as acting director while also serving as a high-ranking Trump administration official, Mulvaney has erased that independence. The nomination of one of his deputies to lead the agency suggests further erosion of that independence. 

The nomination announcement clarifies the essential role of the Senate confirmation process. Given her lack of experience in consumer protection, it is not possible to predict whether Kraninger will meet this bar. It is incumbent on the Senate to make sure that new leadership gets the bureau back to doing its job. 

Anna Laitin is the director of financial policy for Consumers Union, the advocacy division of Consumer Reports.