Editor’s Note: Kathleen Engel is a research professor of law at Suffolk University Law School, and Judith Fox is a clinical professor of law at the University of Notre Dame Law School. Both were members of the Consumer Advisory Board of the Consumer Financial Protection Bureau for the past three years. The views expressed are their own.
Consumer Financial Protection Bureau acting director Mick Mulvaney has ousted a committed group of experts who volunteered their time and expertise to ensure a fair marketplace for businesses and consumers.
The Consumer Advisory Board (CAB) members who were dismissed served the American people by advising the CFPB as required under the Dodd-Frank Act, which Congress passed following the 2008 financial crisis. We were members of that board.
CAB members are not lobbyists paid to promote special interests. Rather, the members engage in intense meetings to advise the CFPB about a range of issues related to consumer financial products and consumer education.
The current CFPB administration neither respects nor welcomes interactions with the CAB. Since Richard Cordray, the former director, resigned last fall, Mulvaney has canceled our meetings and many of our regularly scheduled phone calls and has never taken the time to meet with us. In contrast, Cordray met with us at length three times yearly.
Mulvaney has completely silenced the voice of consumer advocates at an agency that is supposed to be about consumer protection. Worse yet, he has shifted the bureau’s focus from consumer protection to easing the regulatory burden on financial firms. It was just this thinking that caused the last economic crisis. While underregulated markets allow profits for good businesses playing fair, they also provide profits for those seeking to take advantage of people. The CAB helped support businesses that were “doing right” while guarding against those that profit by exploiting consumers.
Mulvaney’s CFPB hiring reeks of politics. Never before has the oversight of a financial regulator’s operations been subject to such transparent political hackery. The new regime believes it is not accountable to anyone and makes decisions without input from the public and without valid justifications.
Anthony Welcher, a Mulvaney political appointee, was tasked with dismissing the CAB in a conference call Wednesday. Initially, he claimed that responses to a recent CFPB Request for Information (RFI) justified disbanding the CAB. Welcher quickly backtracked when questioned about this claim, admitting that he couldn’t point to anything in the RFI responses that argued for kicking the current members off the CAB.
Welcher also said that the CFPB wanted a more diverse, smaller and inclusive group of members. This too did not hold water. The CAB members represent a wide variety of entities, ranging from large banks to community development organizations, and hailing from across the nation.
The disturbing irony of Welcher’s diversity comment is that Mulvaney and the other political appointees have been meeting with a parade of representatives from financial firms while refusing to interact with people who care about consumers and American families.
Worse yet, these meetings have not been disclosed to the public, which means that the public doesn’t understand that the CFPB is, in practice, the Anti-Consumer Protection Bureau.
In sharp contrast, the former CFPB director, Cordray, met with people from all constituencies and made sure the public knew of every meeting.
Welcher also suggested that town hall meetings and invitation-only roundtables can replace the in-depth conversations previously held with the CAB. Such engagements have significant value, and, until Mulvaney took over, were hallmarks of the bureau’s outreach efforts. Reestablishing these forms of consumer engagement is completely unrelated to the composition and current effectiveness of the CAB, which serves a different purpose.
Welcher’s flawed justifications are a smokescreen to cover Mulvaney’s true mission: to destroy the CFPB from within. He already has stopped all new enforcement actions, cut off the fair lending and student loan offices at the knees, and threatened to hide from the public the consumer complaint database that helps consumers find the “good” banks that won’t rip them off.
Mulvaney is employing secrecy, duplicity and name-calling to pave the way for the financial sector’s bad actors to exploit the hardworking people of this country. The CFPB risks becoming a shell with desks and people – and no consumer protection. If this happens, families still recovering from banks’ misdeeds 10 years ago soon will face the possibility of another financial tornado.
If you want to preserve the good work the CFPB is doing for consumers, write and call your elected representatives and tell them you want the CFPB to start protecting consumers again.
Note: An earlier version of this article said Mick Mulvaney had cancelled all of the CAB’s phone calls; some were not cancelled, according to the authors.