Advertisement

Mulvaney requests zero funding for the Consumer Financial Protection Bureau

Mick Mulvaney, the White House Budget Director and acting director of the Consumer Financial Protection Bureau, has requested $0 in funding for the CFPB in the second quarter of 2018, in a letter to Federal Reserve Chair Janet Yellen. (Jan. 18, 2018)

In his first quarterly funding request as acting director of the Consumer Financial Protection Bureau, Mick Mulvaney is asking for nothing.

"This letter is to inform you that for the Second Quarter of Fiscal Year 2018, the Bureau is requesting $0," he wrote Wednesday to Janet L. Yellen, chairwoman of the Federal Reserve, which provides the watchdog agency's funding.

Advertisement

Mulvaney said that the bureau had enough money on hand to cover its anticipated $145 million in expenses for the quarter, which began Jan. 1, and that he plans to slash the bureau's reserve fund.

Mulvaney, who also serves as White House budget director, is an outspoken critic of the bureau who was made acting director in November — a controversial move by President Trump that is being challenged in court. In a 2014 interview, Mulvaney called the bureau a ​​​​​"joke … in a sad, sick kind of way" and said that he "would like to get rid of it."

In his letter to Yellen, he said: "I have been assured that the funds currently in the Bureau Fund are sufficient for the bureau to carry out its statutory mandates for the next fiscal quarter while striving to be efficient, effective and accountable."

The request for no funding came as Mulvaney announced the first step toward an overhaul of the agency: a review of its entire operation. And on Tuesday, the bureau said it would consider revising or repealing regulations that were designed to protect consumers against harmful payday lenders.

In another sign of the bureau's shifting priorities, on Thursday it moved to dismiss a suit filed in April under its former director — Richard Cordray, an appointee of President Obama — against four online payday lenders affiliated with a Northern California Native American tribe.

The lenders — Golden Valley Lending, Silver Cloud Financial, Mountain Summit Financial and Majestic Lake Financial — are affiliated with the Habematolel Pomo of Upper Lake tribe. The lawsuit accuses them of violating federal consumer protection laws by making and collecting on loans with annual interest rates starting at 440% in at least 17 states.

In a statement Thursday, the bureau said it would continue to investigate the loans and could not comment further "because it is an open enforcement matter."

Consumer advocates blasted Mulvaney's funding request.

"There can be no clearer signal of Mick Mulvaney's intent to defang and dismantle the Consumer Financial Protection Bureau than his request of zero dollars in funding and his decision to instead drain the bureau's reserve set up to provide funding during emergencies," said Karl Frisch, executive director of Allied Progress, a consumer watchdog group.

Because any Fed surplus is returned to the U.S. Treasury each year, Mulvaney said his funding decision will help reduce the federal budget deficit. The Congressional Budget Office has estimated the 2018 budget deficit will be $581 billion.

"While this approximately $145 million may not make much of a dent in the deficit, the men and women of the bureau are proud to do their part to be responsible stewards of taxpayer dollars," Mulvaney wrote.

He also questioned whether the bureau had the legal authority to establish a reserve fund. And he added that he saw "no practical reason" for a large reserve given that the Fed has never denied a bureau request for funding since it was created in 2010.

Mulvaney intends to "spend down the reserve fund until it is of a much smaller size," he wrote.

When the 2017 fiscal year ended Sept. 30, the bureau's fund had an unobligated balance of $177.1 million, according to its annual financial report. On Oct. 12, Cordray requested $217.1 million for the first quarter of 2018. The Fed transferred the money six days later.

Advertisement

The bureau was created by the Dodd-Frank Wall Street Reform and Consumer Protection Act to oversee credit cards, mortgages and other financial products.

The agency has provided consumers about $12 billion in refunds and debt relief from financial institutions since opening in 2011. It also played a key role in penalizing Wells Fargo & Co. for its creation of unauthorized accounts.

But Republicans and many financial firms have said the bureau has been too aggressive in enforcing consumer protection laws and drafting new regulations to avoid future abuses.

Mulvaney said on his first day on the job in November that he told bureau employees, "Look, I'm not here to shut the place down because the law doesn't allow me to do that. That being said, we're going to run it differently than the previous administration."

Twitter: @JimPuzzanghera

UPDATES:

12:40 p.m.: This article was updated with details about the Consumer Financial Protection Bureau moving to dismiss a lawsuit against four online payday lenders.

This article was originally published at 10:55 a.m.

Advertisement
Advertisement