Why you should pay attention to the power struggle at the Consumer Financial Protection Bureau
It’s been less than a decade, and yet memories of 800,000 job losses a month and an economic meltdown have faded so far out of the collective American psyche that the public seems unmoved by the Trump administration’s potential effort to defang maybe the most important consumer protection agency in the nation’s history.
In 2008 and 2009, real estate markets from Charlotte to San Francisco were cratering, as was the stock market. Wages were rapidly decreasing as the unemployment rate seemed stuck on an upward trajectory. The U.S. economy shrank by nearly 6.5 percent during the final quarter of 2008 and another 5.5 percent in the first quarter of 2009. Economists openly fretted about the real possibility of a repeat of the Great Depression. We were spared by “only” having to suffer the worst economic downturn since the 1930s.
It was bad. But there was one bright spot that resulted: the first real attempt in a generation by Congress to rein in the corporate and Wall Street excesses and recklessness that were at the center of the crash. Perhaps the most important piece of what came to be known as the Dodd-Frank financial reform law was the Consumer Financial Protection Bureau. It was essentially the creation of a Goliath to protect everyday Americans from corporate Goliaths. Since its inception, it has done just that. And well.
The bureau has helped nearly 29 million Americans and returned $11.8 billion to them. Consumer debts have been reduced by nearly $8 billion. Veterans and their families have received about $130 million in compensation from unsavory financial practices. About 50 million households have better mortgage protections. And the bureau helped to uncover credit abuses such as those committed by Wells Fargo.
If President Trump gets his way, the bureau’s acting director will be Mick Mulvaney, the administration’s current Office of Management and Budget director. Mulvaney has criticized the bureau since before it even began regulating Wall Street, calling it “the very worst kind of government agency” and “a joke.” Mulvaney also claimed the agency is unaccountable and doesn’t have enough congressional oversight. That’s not quite accurate.
The CFPB is regularly inspected by the Government Accountability Office and has an inspector general. It was purposefully designed to avoid the politics – and corporate lobbyist pressure – that too often consumes Congress.
While the headlines focus on the fight for control of the bureau between Mulvaney, who showed up at the bureau Monday morning with doughnuts, and Leandra English, who was named acting director by outgoing director Richard Cordray, there is more at stake. No matter who wins that legal tug of war, if the bureau’s power is gutted, it will be another promise Trump has broken to everyday Americans. That must not be allowed to happen.
This story was originally published November 27, 2017 at 2:40 PM with the headline "Why you should pay attention to the power struggle at the Consumer Financial Protection Bureau."