Elizabeth Warren: Trump’s Student-Loan Watchdog Pick Is ‘Revolving Door Corruption’
WASHINGTON — Sen. Elizabeth Warren (D-MA) blasted the chief of the Consumer Financial Protection Bureau for appointing a high-ranking official from a scandal-plagued loan servicer to be the Bureau’s new student-loan watchdog.
On Monday, Warren’s office released three fiery letters the senator had sent to Trump-nominated CFPB Director Kathy Kraninger, Treasury Secretary Steven Mnuchin, and Robert Cameron, the man picked to serve as the CFPB’s new student-loan ombudsman. The ombudsman position was created to give student borrowers an outlet for filing complaints about their private lenders and getting help to resolve their disputes. The ombudsman is also charged with compiling and analyzing data about the student-loan market and offering advice to the CFPB, Treasury secretary, and Congress about how to improve that market.
There is nearly $1.6 trillion in outstanding student-loan debt held by close to 45 million Americans. Economists say the burden of that debt can be crushing, hampering young people from getting married, saving for retirement, and starting a small business. Federal Reserve Chairman Jerome Powell testified last year that student debt could be long-term drag on the U.S. economy. Tackling the student-debt crisis has become a hotly contested issue in the 2020 Democratic presidential primary, with Warren proposing to eliminate nearly all student debt (and fully all of it for lower-income borrowers) and Sen. Bernie Sanders (I-VT) calling for complete student-debt forgiveness.
An uproar ensued when Kraninger announced on August 16 that she had filled the Bureau’s vacant student-loan ombudsman position with Cameron, whose previous job included overseeing “compliance activities” at a student-loan organization that has faced thousands of complaints and multiple lawsuits called the Pennsylvania Higher Education Assistance Agency (PHEAA). Seth Frotman, the previous ombudsman who was appointed under President Obama, called Cameron’s appointment “an insult to the nation’s 45 million borrowers who deserve an advocate in their corner.”
But that criticism pales in comparison to what’s contained in Warren’s new letters. In them, she writes that PHEAA and its loan-servicing arm once received 1,500 complaints in a single year, accounting for 15 percent of all federal loan complaints received by the CFPB. She cites a 2017 CFPB investigation that uncovered “flawed payment processing, botched paperwork, and inaccurate information” by PHEAA. She goes on to say that PHEAA has a “proven track record of failing borrowers.”
On Cameron specifically, Warren calls his appointment “mind-boggling.” She adds: “A former PHEAA executive’s appointment to the role represents the worst form of revolving-door corruption and conflict of interest, and it epitomizes industry capture of our government.”
Warren, who popularized the idea of an independent consumer protection agency, says she wants Cameron’s appointment reversed. She zeroes in on the fact that Cameron “oversaw compliance activities” at PHEAA at the same time the agency was accused of repeatedly mistreating borrowers. “Given Mr. Cameron’s responsibility for PHEAA’s compliance with federal law, regulations, and programs, and PHEAA’s record of compliance failures, it is clear that student-loan borrowers cannot count on Mr. Cameron to uphold their interests,” she writes.
In her letter to the CFPB, Warren urges Director Kraninger to “reconsider” Cameron’s appointment. In her letter to Treasury Secretary Mnuchin, she presses him to “use your authority to reject this appointment.” Finally, she asks Cameron himself to “reconsider your decision to accept this position” or, at the very least, recuse himself from any matters related to PHEAA during his time at CFPB.
The CFPB and PHEAA did not immediately respond to requests for comment. The Bureau sent Rolling Stone the following statement attributable to Cameron after his appointment was first announced: “As a dedicated public servant, including my civilian and military experience as well as my experience at PA Treasury and the PA Governor’s Office of General Counsel drafting regulations and implementing and enforcing a myriad of statutes and regulations, I’m confident that I can contribute to achieving the mission of the Private Student Loan Ombudsman. In all of my work, my commitment has always been to serve the American people and I look forward to continuing that mission at the Bureau.”