Members of a Senate panel and White House budget director Mick Mulvaney agreed on just one thing Thursday: No one is happy with his power as acting director of the Consumer Financial Protection Bureau (CFPB).
While Republicans on the Senate Banking Committee praised Mulvaney for using his expansive, unchecked authority to rein in an agency they’ve loathed for half a decade, they expressed deep concerns about what that power could yield under another official.
Several questioned whether the CFPB should even exist, while others called for strict checks and fundamental changes to the agency’s structure.
Democrats who had long defended the CFPB portrayed Mulvaney as a usurper who has chained up a once powerful protector of consumers.
‘You’ve taken obvious joy in talking about how the agency would help banks much more than consumers,” said Sen. Elizabeth Warren (D-Mass.), the architect and most prominent defender of the CFPB. “You’re hurting real people to score cheap political points.”
President Trump appointed Mulvaney to be acting chief of the CFPB after former director Richard Cordray, a Democrat, resigned to run for governor of Ohio. Mulvaney had opposed the bureau’s existence as a GOP congressman from South Carolina and was involved in Republican efforts to gut the bureau.
Mulvaney, who also appeared before the House on Wednesday, urged lawmakers to take control over the CFPB’s funding, install an independent inspector general and disperse the director’s power to regulate and litigate among a broader array of bureau leaders.
Even so, Mulvaney made it clear that he saw no reason for the CFPB to exist at all.
“You could protect consumers without me being here,” Mulvaney said.
The CFPB director is empowered to request hundreds of millions of dollars in funding from the Federal Reserve without approval from Congress or Fed leaders. The director can also initiate enforcement actions against banks and lenders suspected of fraud, issue sweeping regulations and spend bureau money as he wishes without checks from lawmakers or staffers.
Mulvaney has taken several steps to limit the use of that power. He’s suspended the bureau’s collection of data from financial services companies, delayed a polarizing rule on payday loans and reshuffled the agency’s office overseeing lending discrimination.
While Republicans dug in on their concerns over the CFPB’s long-term structure, they lauded Mulvaney’s first steps toward reining in the bureau.
“You’ll bring a ray of sunshine to a black hole of democracy,” said Sen. Richard Shelby (R-Ala.), the former Banking panel chairman. “I like what you’re trying to do.”
Democrats argued that Mulvaney had turned an essential agency charged with protecting Americans from predatory lending into an impotent crony for banks and fraudsters.
They stressed the importance of preserving a strong, independent CFPB as designed by the Dodd-Frank Act, the 2010 law imposing strict new rules on the financial sector, which established the bureau.
“He’s hoping that if he does a bad enough job running the CFPB, Congress will take away the CFPB’s ability to protect consumers,” said Sen. Sherrod Brown (Ohio), the Banking panel’s ranking Democrat. “Congress should not fall for it.”
Democrats over the years have successfully defeated GOP efforts to control the CFPB’s budget through congressional appropriations, replace its sole director with a bipartisan commission and make its major regulations subject to lawmaker approval. Several of them defended the CFPB’s track record of aggressive policing of the financial sector.
Warren told the story of a constituent who had been trapped in a deceptive auto loan and was aided by the CFPB in his fight against the lender. Brown and Sen. Doug Jones (D-Ala.) bemoaned the thousands of residents in their states trapped in cyclical debt incurred through payday loans.
Mulvaney and Republicans said other federal agencies — such as the Federal Trade Commission (FTC), Office of the Comptroller of the Currency and Federal Reserve — could have accomplished the same result.
“Why would it be more magic to have the FTC do it than the bureau?” Mulvaney asked.
Republicans also griped about the ways they believe the CFPB has been harming consumers. Several said the CFPB’s previous collection of anonymized data from millions of loans, mortgages and credit cards posed a massive risk to Americans.
Mulvaney suspended the bureau’s data collection over concerns that the CFPB lacked sufficient cybersecurity. Democrats urged him to reconsider, calling the data a key tool in policing predatory lending that doesn’t include personally identifiable information.
Others focused on the potential chilling effect the CFPB’s aggressive oversight could have in lender markets for low-income consumers.
“You better be damn sure willing to list out all of the other people who are suffering because of the regulatory overreach,” said Sen. Thom Tillis (R-N.C.) to the bureau’s defenders. “Victims that because of the regulatory overreach aren’t getting loans.”