This has been a great week for having our noses rubbed in things we knew were happening but didn’t want to believe it was this bad.
The biggie, of course, is the college admissions scandal, in which wealthy families were busted bribing their way into top schools.
Most of us parents probably assumed all along the system was rigged in favor of the rich. But it was hugely disheartening to learn how much money was changing hands, and how effective the racket was, to make sure children of privilege could elbow aside those of lesser means to cheat their way into a leading university.
No less dismaying, though, were a pair of reports showing how significantly consumer protection has waned under the Trump administration.
We all probably suspected since President Trump took office that he’d go easier than his predecessor on businesses that abused, misled or defrauded consumers. But to see the hard facts makes it painfully clear that Trump has little if any interest in watching our backs.
“The Consumer Financial Protection Bureau still has hundreds of dedicated staff members who want to enforce the law,” said Chris Peterson, director of financial services for the Consumer Federation of America and author of one of this week’s reports.
“The one thing that’s changed is the political leadership,” he told me, “and that leadership has signaled that it’s going to be less aggressive in holding businesses accountable for their practices.”
I heard the same from Alan Zibel, who came up with similar findings in his report for the advocacy group Public Citizen.
“They’re sending a message that corporate wrongdoers can do whatever they like, and they’re throwing consumers under a bus,” he said.
Public Citizen found that the CFPB pursued 35 enforcement actions against businesses with fines of at least $5,000 during the first two years of Trump’s time in office. That’s down from 64 during the last two years of the Obama administration.
The Consumer Federation determined that the bureau’s enforcement activity has plunged by 80% from 2015, when the CFPB was at the height of its powers. Average compensation to consumers, it found, is down by — wait for it — 96% per case.
I asked the bureau what it had to say about this. I received a statement declaring that “the bureau is and will continue to vigorously enforce the law.”
“In the first two months of 2019, the bureau announced five public enforcement actions,” it said. “The bureau also has a significant number of open non-public investigations being handled by enforcement staff.”
Trump’s appointee as CFPB director, Kathy Kraninger, a person with no background in consumer protection or financial services, testified this week before the Senate Banking Committee.
She said she’s emphasizing “stability, consistency and transparency as hallmarks as we mature the agency and institutionalize the many partnerships that are key to our success.”
Those are laudable goals, although it’s hard not to notice her to-do list doesn’t contain the words “consumer” and “protection.”
Sen. Elizabeth Warren (D-Mass.), who spearheaded creation of the CFPB after the 2008 financial crisis, pointed out to Kraninger that enforcement actions have plunged under Trump’s watch. She asked how many lawsuits have been filed against student lenders.
Kraninger said she didn’t have “the specific answer to that question.”
“The public record seems to show zero,” Warren shot back. “Not one single action.” She noted that 50 cases were filed against student loan companies under the previous administration, with $712 million in restitution recovered for consumers.
“You are supposed to be the cop on the beat, but you are only watching out for the crooks who are cheating American consumers,” Warren said. “If you had any decency you'd either do your job or resign.”
The Consumer Federation report concludes that “under the leadership of acting Director Mick Mulvaney, and more recently, Director Kathy Kraninger, enforcement activity at the CFPB has declined to levels that are either nonexistent or significantly below that of the prior administration, even in the areas where consumer complaint activity is the highest.”
It says the bureau returned about $43 million in restitution to consumers every single week when Richard Cordray, an Obama appointee, was in charge. Under Mulvaney that figure dropped to $6.4 million a week, and under Kraninger is now down to about $925,000.
Debt collectors seem to have received particularly lax treatment. Since Trump took office, the federation found, the CFPB has announced only one case of enforcing the Fair Debt Collection Practices Act. It settled this case without ordering a single dollar of restitution to victims.
Similarly, while Obama was in power, the bureau announced 15 student lending-related cases with an average $47.5 million in restitution per case. Under Trump, as Warren observed, the bureau hasn’t announced or resolved a single student-lending enforcement action, and has provided no relief to borrowers.
“Nobody’s broken any student-lending laws over the last two years?” said Peterson, the federation report’s author and a former CFPB official. “That’s ridiculous.”
Public Citizen found that a get-out-of-jail-free mentality isn’t unique to the CFPB.
The Consumer Product Safety Commission completed only three enforcement actions against businesses in 2018 and four in 2017. That’s about half the number of product safety enforcement actions during Obama’s final two years.
Meanwhile, the Federal Trade Commission completed 40 enforcement actions against corporations during Trump’s first two years, down 31% from 58 cases in Obama’s final two years.
“Trump’s appointees seem to believe that consumer protection is a last resort,” said Public Citizen’s Zibel. “That’s a 180-degree difference from what he promised during the campaign.”
Indeed, while Trump was always clear about his intention to roll back rules for businesses, he consistently said this would not be at the expense of safeguarding consumers.
The bureau’s position is that it’s “vigorously” enforcing the law. The numbers indicate otherwise.
“These numbers are a matter of public record,” said Peterson. “The public record speaks for itself.”
Either the CFPB is now turning a blind eye to corporate malfeasance or U.S. businesses have had a collective come-to-Jesus moment and are now committed as never before to doing the right thing.