In summer of 2015, back when Mick Mulvaney was a relatively low-profile Congressman in the habit of accepting tens of thousands of dollars in donations from payday lenders, he co-sponsored House Resolution 3118 — a proposal to eliminate the Consumer Financial Protection Bureau. H.R. 3118 never went anywhere — it didn’t even get a vote — but three years later, Mulvaney has effectively completed the bill’s mission. As acting director of the CFPB, Mulvaney has overseen a total gutting of the agency created by Sen. Elizabeth Warren (D-MA) in the wake of the financial crisis to advocate for the little guy against predatory banks and lenders.
Mulvaney, who is also the Director of the Office of Management and Budget, temporarily stepped in as acting director of the CFPB, to much controversy, after Richard Cordray resigned in November 2017. His appointment was contested by Cordray’s deputy, Leandra English, who sued, unsuccessfully, to block Mulvaney from taking over.
Consumer advocates worried that Mulvaney would dismantle the fledgling agency, and, in nine short months, he has done just that: freezing new hires, zeroing out the CFPB’s budget, dropping lawsuits against predatory lenders, revising rules in the banks’ favor and, importantly, shutting down its student lending office, responsible for returning more than $750 million in relief to borrowers.
On Monday, Seth Frotman, the federal government’s top student loan official, gave notice in a blistering open letter calling Mulvaney out by name.
“Under your leadership, the Bureau has abandoned the very consumers it is tasked by Congress with protecting,” Frotman wrote. “Instead, you have used the Bureau to serve the wishes of the most powerful financial companies in America.”
Frotman, who began working for the CFPB when it was established in 2011, has been the agency’s student loan ombudsman since 2016. It has been his job to ensure that the 44 million consumers struggling under the weight of $1.4 trillion in student debt were being treated fairly by the banks servicing their loans. Mulvaney, Frotman said in his letter, made that job practically impossible.
Mulvaney and his fellow political appointees, Frotman said, “repeatedly undercut and undermined career CFPB staff working to secure relief for consumer.” Particularly troubling, he noted, was the bureau’s choice not to question the Education Department’s abrupt decision to stop sharing student loan information with the CFPB last September when, he said, “leadership folded under political pressure.”
In his letter, Frotman went on to accuse Mulvaney and his fellow appointees of blocking both efforts to raise awareness about predatory for-profit schools and attempts to alert the Education Department that its moves shielding student loan companies from oversight were illegal. According to Frotman, Mulvaney and company were also responsible for suppressing a report “showing that the nation’s largest banks were ripping off students on campuses across the country by saddling them with dubious account fees.” Friday is Frotman’s last day at the bureau.
Mulvaney’s designated successor, Kathy Kraninger, narrowly received the Senate Banking Committee’s seal of approval last week. Her nomination will now go before the full Senate; if approved, she’ll soon take the reins at an agency Mulvaney has effectively de-fanged and demoralized in less than a year at the helm.