Why It Matters Who Runs the Consumer Financial Protection Bureau is explained by John Cassidy (New Yorker).
On Monday morning, two people reported for work at the Consumer Financial Protection Bureau as if they were in charge. One was Leandra English, a senior bureau staffer whom Richard Cordray, the C.F.P.B.’s former director, appointed as his deputy shortly before leaving the post, last week. The other was Mick Mulvaney, the White House budget chief, whom the White House tapped to replace Cordray on an interim basis. The showdown has all the elements of a ripping Washington news story: conflict, strong characters, a looming court case, and a whiff of battles to come in the elections of 2018 and 2020.
… To insure that Wall Street lobbyists and their lackeys on Capitol Hill couldn’t hobble the new agency’s operations, the authors of the Dodd-Frank bill made the C.F.P.B. an independent agency: it receives its funding from the Federal Reserve rather than Congress. This structure infuriated Republicans, but the mortgage meltdown had amply demonstrated the dangers of regulatory capture.
So how has the C.F.P.B. used its independence? Last September, in its biggest enforcement action to date, the agency fined Wells Fargo, the third-largest lender in the country, a hundred million dollars, after discovering that employees of the bank had opened more than two million bank and credit-card accounts in the names of customers without informing them or obtaining their permission. And the work the agency has done that hasn’t drawn news headlines has been significant, too.
Examples of the agencies lesser known work include aimed at curbing abusive practices include restricting payday lenders and dealing with student loan complaints.
If Mulvaney is confirmed as the C.F.P.B.’s acting boss, or if Senate Republicans confirm some other nominee who thinks like him, the agency’s future and usefulness will be called into question. “The agency will be headed by someone who fundamentally doesn’t believe in its mission,” Elizabeth Warren said. “This would change every calculation that every giant bank makes in the executive suite when deciding just how close to breaking the law they want to come. If the cop is pulled off the beat, then the profits from cheating people look far more attractive to the banking executives.”
To be sure, Warren has a vested interest here, given her close ties to the C.F.P.B. But she is also speaking truths that experience has confirmed. In an industry as opaque and complex as finance, there are endless little ways—and also some big ways—to raise charges and stiff the customer. In seeking to prevent and remedy such abuses, the C.F.P.B. performs an invaluable public service, and its presence has done nothing to prevent the banks from making healthy profits. Indeed, their bottom lines are almost back to where they were at the end of the great real-estate bubble. Trump’s claim that financial institutions “have been devastated and unable to properly serve the public” is an utter falsehood, as is his claim that, in appointing Mulvaney, he was acting in the economic interests of ordinary Americans. The C.F.P.B. showdown provides yet another illustration of the false populism that lies at the heart of the Trump Presidency.