02:24 - Source: CNNMoney
Warren to Mulvaney: You're hurting real people
CNN —  

The top government official in charge of regulating student loan companies is resigning in protest, writing in a blistering letter that the Trump administration has abandoned consumers.

Seth Frotman, the student loan ombudsman at the Consumer Financial Protection Bureau, submitted his resignation Monday to Mick Mulvaney, the acting director.

“After 10 months under your leadership, it has become clear that consumers no longer have a strong, independent Consumer Bureau on their side,” Frotman wrote.

Frotman wrote that the CFPB’s leadership has “repeatedly undercut” career staff working to fight predatory lenders, including student loan companies “allowed to drive millions of Americans to financial ruin with impunity.”

The bureau told CNN that it does not comment on personnel matters.

Republicans have long criticized the agency, which was created under the 2010 Dodd-Frank financial reform law. They argue that former director Richard Cordray overstepped his regulatory authority.

President Donald Trump named Mulvaney, who is also the head of the Office of Management and Budget, as interim director of the CFPB late last year.

As a member of Congress, Mulvaney had called the CFPB a “joke” and pushed to abolish it. Since taking the helm, he has pledged to put an end to “regulation by enforcement.”

In May, he restructured Frotman’s division, which was dedicated to protecting student loan borrowers. It was folded into the bureau’s office of financial education.

Between 2011 and 2017, the division worked to address more than 50,000 student loan complaints and returned more than $750 million to wronged student loan borrowers.

In his resignation letter, Frotman claimed that senior leadership suppressed a report by bureau staff last year on bank fees imposed on college students.

He also accused the leadership of blocking efforts from career staff to call attention to how the Trump administration’s actions “will hurt families ripped off by for-profit schools.”

Secretary of Education Betsy DeVos has recently moved to roll back Obama-era regulations on for-profit colleges.

Before Mulvaney’s tenure, the CFPB fined Citibank and Discover for what it said were illegal student loan servicing practices. It also sued Navient, one of the biggest student loan servicers in the country, for misleading borrowers and processing their payments incorrectly. That lawsuit is ongoing. Navient has denied wrongdoing.