America’s Whittling Away of Consumer Protections

Mick Mulvaney has been clear, so very clear, about his vision for the Consumer Financial Protection Bureau.

As acting director of the bureau, Mulvaney has already articulated his intention to slow down regulation of the financial industry. On Wednesday, he made good on that promise, in dramatic fashion—effectively ousting all 25 members of one of the bureau’s advisory boards. The dismantled group had previously been tasked with advising the agency on regulations related to fair lending and civil rights, among other issues.

Until today, the CFPB had four advisory bodies: the Academic Research Council, the Community Bank Advisory Council, the Credit Union Advisory Council, and the Consumer Advisory Board (CAB). Members of the CAB said that they were notified that they would no longer serve on the board, and that they could not reapply for positions, during a call on Wednesday morning with Anthony Welcher, who recently joined the Bureau as the Policy Associate Director for External Affairs.

In a statement released on Wednesday the Bureau said that it was starting the process of “right-sizing” its advisory councils as a response to a recent public comment period, which focused on external outreach and evaluation. Consumer advocates say there’s good reason to be skeptical, even alarmed, about this explanation.

“Firing current members of the advisory board is a huge red flag in this administration's ongoing erosion of critical consumer financial protections that help average families,” Chi Chi Wu, an attorney at the National Consumer Law Center, and a CAB board member, said in a statement. “Apparently Acting Director Mulvaney is willing to listen to industry lobbyists who make campaign contributions, but not the statutorily appointed Consumer Advisory Board members.”

The bureau wasted no time launching a counterattack: “The Bureau has not fired anyone,” John Czwartacki, a spokesperson for the bureau, said in a statement responding to criticism. “The outspoken members of the Consumer Advisory Board seem more concerned about protecting their taxpayer-funded junkets to Washington, DC and being wined and dined by the Bureau than protecting consumers.”

The agency is required by law to meet twice a year with the Consumer Advisory Board to discuss trends in the financial industry, regulations, and the impact of financial products and practices on consumers. But Mulvaney, the agency’s interim director, has canceled meetings between the CFPB and its advisory groups several times during his short tenure. The move to eliminate the CAB comes after several board members expressed concern about the the acting director’s distance. Board members implored him to keep this week’s scheduled meeting on the books. (It, too, was canceled.)

Bureau officials say that the current board’s term will officially end directly before the next board meets for the first time—meaning, their tenure as advisers to the CFPB is abruptly over. The agency has said it will stand by the commitment to meet with its various advisory boards in the future, and will put together a new CAB board in the fall, with fewer members who are all limited to a one-year term.

That promise is probably of little consolation to the many Democrats who have loudly opposed Mulvaney’s management of the agency, and warned that he would defang the Bureau. Given the interim director’s comments and actions thus far, it seems all but certain that any advisory board assembled by Mulvaney and his inner circle will have more conservative and corporate-friendly leanings, than the current board members appointed prior to the departure of Richard Cordray, an Obama-era appointee.

The swift dissolution of the CAB’s current membership raises many fresh questions. Since he took over, Mulvaney has slowed rulemaking and implementation of some of the Bureau’s most high-profile victories: including regulations on payday lending and rules that would force financial advisers to put customer interest ahead of their financial gain. Mulvaney has articulated a very specific vision for the Bureau: a smaller, leaner, and less active agency that does far less regulation and enforcement than it once did.Those ideals fit in neatly with the Trump administration’s vision of how government agencies should operate, and Mulvaney has proven time and again that he’s happy to abide by those parameters.