"I am the acting director of the CFPB," Mick Mulvaney told a group of bankers Tuesday, "something that's apparently keeping Elizabeth Warren up late at night, which doesn't bother me at all."
His audience, a Washington gathering of credit union executives, chortled appreciatively. The rest of us should grimace, and hold on to our wallets.
Mulvaney, in his first public speech since being appointed acting director of the Consumer Financial Protection Bureau by President Trump, spent most of his 14-minute presentation sucking up to his hosts at the Credit Union National Assn., which has been among the severest critics of the CFPB in the financial industry.
That puts the credit unions in the same camp as Mulvaney himself, who has been hostile to the bureau's very existence, first as a Republican congressman from South Carolina and subsequently as Trump's budget director, a position he still holds.
Mulvaney's efforts to emasculate the CFPB, especially since taking over the bureau in January, have drawn repeated fire from Warren, who conceived of the CFPB before her election to the Senate from Massachusetts in 2012 and has been its major defender in Congress since its founding. The CFPB was part of the 2010 Dodd-Frank Wall Street Reform Act.
On Jan. 31, Warren and five Democratic congressional colleagues raised hell over several steps the CFPB had suddenly taken to scrap regulatory initiatives against abusive payday lenders.
Mulvaney suspended a regulation, five years in the making, aimed at preventing payday lenders and other profiteers from low-income borrowers from lending to customers who can't repay the loans, running up fees on customers, and engaging in other abuses. He abruptly withdrew, without explanation, a federal lawsuit against four allegedly abusive installment lenders. And he closed an investigation into World Acceptance Corp., a payday lender in his home state of South Carolina that had been accused of abusive practices, but had contributed at least $4,500 to Mulvaney's congressional campaigns. But that was the tip of the iceberg.
"We are concerned," Warren and her colleagues wrote, "that reversing the rule and dismissing the case are connected to the nearly $63,000 in campaign contributions that payday lenders gave to Mr. Mulvaney's campaigns." They asked for an explanation of the actions, documents connected with the actions and a roster of any meetings Mulvaney or others in the bureau had had with payday lender representatives.
Mulvaney's reply was right in line with the infantile approach the Trump administration has taken to questions about its activities. "Prior to your letter," he responded to Warren, "I would have never thought to consider … whether your vote against repealing the Bureau's arbitration rule was influenced by campaign donations you may have received from trial lawyers or other parties who stood to financially gain from the rule. Perhaps I should reconsider."
The rule he mentioned would outlaw forced arbitration clauses in consumer finance contracts. (It's been long overdue, as Wells Fargo customers know.) As it happens, Warren's campaign against arbitration predated her campaign for the Senate by at least five years. So Mulvaney wasn't merely infantile, but wrong.
In any event, Mulvaney still hasn't replied to the lawmakers' questions. Responding to the letter, Warren said, "Mick Mulvaney continues to violate Dodd-Frank and other legal requirements in his attempt to gut the CFPB." Her office said she "looks forward to Mulvaney following the law and providing the American people with appropriate explanations for his actions, which she has requested several times."
In his address to the credit union executives, Mulvaney expanded on previous remarks making clear that he sees the role of the Consumer Financial Protection Bureau, despite its name, as protecting lenders as much as consumers. Some of his remarks matched the credit union lobbying group's statements word-for-word, such as "We … recognize the fact that one size does not fit all when regulating this industry."
He said the CFPB would be applying rigorous cost-benefit analysis to all its regulatory initiatives. "We are there to help protect people who use credit cards," he said. "We're also there to help and protect the people who provide that credit …. We are there to help people who borrow money; but we're mindful and respectful of the people who provide those loans."
Regulated industries always complain that their regulators are overreaching, that their rules are too expensive and unnecessary. Any regulator, to be effective, has to recognize that much of this is background noise.
Mulvaney had telegraphed his milder approach in a Jan. 23 email to CFPB personnel, in which he drew a sharp distinction between his viewpoint and that of his Democratic predecessor, Richard Cordray. In his talk, he implied that Cordray had "abused" his authority by taking an overly aggressive stance on regulation.
Mulvaney is trying to sell an appalling distortion of the CFPB's responsibility. The companies that provide loans don't need the bureau's "protection" or "respect" — their soundness is overseen by other regulators. The CFPB's role is to ferret out and stop behavior that hurts consumers. Mulvaney is signaling not merely a quantitative change in its balance, but a qualitative change. His kid-gloves approach to the payday lending industry is a harbinger of how this will work in practice.
At the close of his talk Tuesday, Mulvaney told the credit unions, "We need you to do what you do … thank you for what you're doing."
Mulvaney is one confused regulator. He's not there to thank credit unions. He's there to keep an eye on them, and make sure what they're doing is legal, honest and fair to customers. Sen. Warren and her colleagues are trying to remind him of that fact, and his response is to throw tantrums.