Category: Consumer Protection

Mulvaney installs 6 Trump loyalists at CFPB after revelations of anti-administration ‘Dumbledore’s Army’ uprising

Mick Mulvaney, the director of the Consumer Financial Protection Bureau, has installed six Trump loyalists in the agency. The news comes in the wake of revelations about a cadre of anti-Trump CFPB employees who called themselves “Dumbledore’s Army,” a reference to an anti-fascist underground group of students in the Harry Potter books.

As The Intercept’s Ryan Grim reports, Mulvaney announced in a Thursday memo his intention to bring those administration loyalists into the bureau that “by statute, is supposed to be an independent agency that was created in the aftermath of the 2007-08 financial crisis.”

Mulvaney’s short tenure at the helm of the CFPB has already been rife with controversy. In late November, President Donald Trump named him acting director of the agency when the former director stepped down. The move immediately caused scandal because Mulvaney also leads the White House’s Office of Management and Budget — and because the outgoing director had already named his former chief of staff, Leandra English, as his interim successor. Soon after, news that Mulvaney was directing staff to “disregard” English appeared — hence the cabal of resisters within the agency.

As The Washington Post reported shortly after it became clear Mulvaney was taking the reigns of the agency despite mounting legal challenges, the job makes him one of the most powerful men in the country.

The director of the CFPB, a federal judge quoted by the Post once noted, “enjoys more unilateral authority than any other officer in any of the three branches of the U.S. Government, other than the President.”

Of his six new hires, Grim noted Thursday, only three will work full-time for the agency — the other three, like the director himself, will split their time between the supposedly-independent bureau and their other jobs within the Trump administration.

[Raw Story]

Trump picks fight with CFPB, calls agency a ‘total disaster’

President Trump is picking another fight with the Washington swamp by naming his own man as temporary boss of a federal agency conservatives hate.

“The Consumer Financial Protection Bureau, or CFPB, has been a total disaster as run by the previous Administrations pick,” he tweeted Saturday.

“Financial Institutions have been devastated and unable to properly serve the public. We will bring it back to life!” the tweet said.

Leadership of the bureau — the brainchild of liberal Massachusetts Sen. Elizabeth Warren — was put in play Friday by the resignation of director Richard Cordray.

Before he left, Cordray named his chief of staff as his interim replacement. Cordray’s permanent replacement will be decided by Trump and the Senate.

Trump wants Office of Management and Budget director Mick Muvaney to be the agent’s interim boss. Mulvaney has called the agency “a sad, sick joke.”

Senior administration officials said Saturday that a 1998 law trumps the agency’s internal rules — and they won’t shy from a court fight over the dueling interim directors.

“We have gone out of our way to avoid an unnecessary legal battle with Director Cordray,” one official said. “But his actions indicate that he wants to provoke one.”

[New York Post]

Reality

A “disaster”? Maybe fore Trump’s Wall Street friends. Below are several key accomplishments that have benefited consumers since the Dodd–Frank Wall Street Reform and Consumer Protection Act was enacted:

Securing Almost $12 Billion in Consumer Relief

  • The CFPB helped over 29 million individual consumers receive $11.8 billion dollars in due relief, while responding to over 1 million consumer complaints since openings its doors.[2]
  • Through enforcement action alone, the CFPB reduced $7.7 billion in consumer debts while winning $3.7 billion in compensation for consumers.[3]
  • Nearly 50 million households have benefited from new CFPB mortgage servicing protections that protect consumers from surprise costs and terms when repaying their mortgage, and offer additional protection if a borrower falls behind on their mortgage payment.[4]
  • More recently, the CFPB, partnering with the Los Angeles City Attorney’s Office and the Office of the Comptroller of the Currency, uncovered deceptive banking practices at Wells Fargo Bank defrauding millions of customers.[5]  Enforcement action by the CFPB forced Wells Fargo to pay full refunds to consumers harmed by illegal practices and to pay a $100 million penalty for their wanton behavior.

Protecting Service Members from Predatory Practices

  • The CFPB’s enforcement actions provided $130 million in due compensation to service members, veterans, and their families that were harmed by illegal private sector predatory practices.[6]
  • In collaboration with the Department of Defense (DOD), the Office of Servicemember Affairs at the CFPB visited more than 145 military installations, handling over 71,000 consumer complaints from service members and their families,[7] and advised DOD on better rules to protect service members from financial exploitation.[8]

Saving Consumers $16 Billion in Undisclosed Credit Card Fees

  • The Credit Card Accountability, Responsibility and Disclosure (CARD) Act, now under CFPB jurisdiction, reined in the usurious late fees charged on credit cards, limited predatory practices targeting young consumers on college campuses, curtailed sharp interest rate hikes, increased access to consumer credit, and made credit card costs more transparent, saving consumers more than $16 billion in undisclosed fees.[9]
  • The number of new consumer credit cards increased steadily since implementation and enforcement of the CARD Act to 6.5 million new credit cards and $37.5 billion in available credit in July of 2016.[10]
  • In collaboration with private industry, the CFPB made it easier for stay-at-home spouses to gain access to credit cards by allowing them to use total household income in their applications for new accounts or higher credit limits.  This has helped more than 16 million married individuals who do not work outside the home access necessary credit.

Trump repeals consumer arbitration rule, wins banker praise

President Trump on Wednesday signed a repeal of the Consumer Financial Protection Bureau’s rule on forced arbitration, winning praise from banking and business groups.

Trump approved the resolution to repeal the CFPB rule, meant to prevent banks and credit card companies from blocking customers from joining class-action lawsuits against them, in a private Oval Office signing.

The House passed a resolution to repeal the rule in July, which passed the Senate two weeks ago.

Trump was joined by the heads of several banking lobbying groups that opposed the CFPB rule, contending it would kill cheaper options for consumers while enriching trial lawyers.

The chiefs of the Consumer Bankers Association, Independent Community Bankers of America, National Association of Federally-Insured Credit Unions and several other groups attended the signing.

The arbitration rule repeal is a major victory for finance and business groups, which promised to fight the measure soon after it was released in July. Critics say the rule went too far in restricting arbitration based on a CFPB study they consider flawed and misleading.

“Arbitration is a well-established and tested process that offers better results for consumers and helps avoid frivolous class-action suits,” said Independent Community Bankers of America President Camden Fine.

“[Independent Community Bankers of America] thanks the president for swiftly signing this measure into law because it preserves community banks’ contractual right to pursue fair and timely resolution through arbitration and avoid prohibitively expensive and protracted litigation.”

Richard Hunt, Consumer Bankers Association president and CEO, said the arbitration rule “was about protecting trial lawyers and their wallets,” praising Trump and Congress for ensuring “consumers have the necessary tools to receive relief without going through drawn-out class action proceedings.”

Dan Berger, National Association of Federally-Insured Credit Unions president and CEO, said the group “was honored to have been invited to the White House to watch the undoing of a rule that likely would have had negative effects on the credit union industry.”

Democrats and the CFPB criticized Trump, claiming he sides with banks over consumers. They’ve long called for action on forced arbitration, which they say denies fraud victims basic legal rights, and the CFPB rule was the most ambitious effort to regulate the practice.

CFPB Director Richard Cordray said “in signing this resolution, the president signed away consumers’ right to their day in court.”

“This action tips the scales of justice in favor of Wall Street banks less than 10 years after they caused the financial crisis,” said Cordray, who asked Trump on Monday to spare the rule. “By blocking our arbitration rule, this action makes it nearly impossible for ordinary people to stand up for themselves against corporate giants like Wells Fargo and Equifax.

“Now more than ever, it is critical that the Consumer Bureau remain a strong check on financial companies,” he said.

Better Markets, a nonprofit aligned with the CFPB, said, “Today, the Trump administration and Republicans in Congress have made it clear, they are on the side of Wall Street banks not Main Street consumers.”

Rep. Tim Ryan (D-Ohio) called Trump’s repeal “a disgrace,” tweeting that “If [Trump] cared about working people he’d veto this swampy legislation.”

[The Hill]

Pence casts tie-breaking vote to make it more difficult for consumers to sue banks and credit card companies

The Senate has voted to nullify a consumer-oriented rule that would let millions of Americans band together to sue their banks or credit card companies.

Vice President Mike Pence cast the tie-breaking vote Tuesday night to stop the rule from going into effect – the fifth instance he has broken a 50-50 tie since taking office.

Many consumers must go through an arbitrator to resolve financial disputes, but the Consumer Financial Protection Bureau finalized a rule that bans most types of mandatory arbitration clauses.

The rule exposed banks to large class-action lawsuits. Supporters say that possibility would help ensure banks, credit card companies and other lenders treat consumers appropriately.

The vote comes months after House action and reflects the effort of the Trump administration and congressional Republicans to undo regulations that the GOP argues harm the free market.

Democrats said before the vote that nullifying the rule would be a victory for Wall Street.

The resolution will now go to President Donald Trump, who is expected to sign it into law.

[Business Insider]

 

Trump’s EPA chief met with chemical CEO before dropping pesticide ban

Environmental Protection Agency Administrator Scott Pruitt met privately with the CEO of a top chemical company before deciding to drop a ban on a widely-used pesticide that has been shown to harm children’s brains, The Associated Press reported Tuesday.

Pruitt, President Trump’s top environmental official, reportedly met with the CEO of Dow Chemical, Andrew Liveris, for 30 minutes at a Houston hotel on March 9, according to records obtained by the AP.

Pruitt announced later that month that he would no longer pursue a ban on Dow’s chlorpyrifos pesticide from being used on food. An EPA review found that even minuscule amounts of the pesticide could impact fetus and infant brain development.

An EPA spokeswoman told the AP that Pruitt and Liveris were “briefly introduced” at the conference, where both were speaking.

“They did not discuss chlorpyrifos,” the spokeswoman said. “During the same trip he also met with the Canadian minister of natural resources, and CEOs and executives from other companies attending the trade show.”

Pruitt also reportedly attended a larger group meeting with two other Dow executives, but the spokeswoman said they didn’t discuss the pesticide there.

The Pesticide Action Network and the Natural Resource Defense Council both sued the EPA days after Pruitt’s decision. “President Trump and his EPA flouted court orders and EPA’s scientific findings that chlorpyrifos puts children, farmworkers, their families and many others at risk,” Patti Goldman, the Earthjustice managing attorney handling the case, said in a statement at the time.

The American Academy of Pediatrics also called for the pesticide to be taken off the market, sending a letter to Pruitt on Tuesday saying they were “deeply alarmed” by his decision to allow the pesticide to continue to be used.

[The Hill]

FCC Puts Data Security Protections on Hold

As expected the Federal Communications Commission on Wednesday voted 2-1 along party lines to stop a new data security rule from taking effect.

The rule would have required internet service providers to take “reasonable” measures to protect consumers’ personal data.

It was part of a bigger set of privacy regulation, approved by the FCC in October, that’s supposed to protect consumers’ sensitive personal information online. The rules have been controversial because they establish stricter requirements for broadband and wireless companies than they do for other internet companies, such as Google or Facebook, which also collect user information and are regulated by the Federal Trade Commission.

FCC Chairman Ajit Pai signaled last week his intention for the full FCC to vote on pausing the rollout of the rule. He and acting Federal Trade Commission Chairwoman Maureen Ohlhausen issued a joint statement arguing that the FTC, and not the FCC, should regulate all privacy and data security and privacy practices online.

“All actors in the online space should be subject to the same rules, enforced by the same agency,” they said in the statement.

In January, several telecom and cable industry groups filed petitions challenging the rules. The data security rule was supposed to go into effect on March 2. Today’s vote puts the new rules on hold until the FCC votes on a reconsideration of them.

FCC Commissioner Mignon Clyburn, the only Democrat on the commission, criticized the move in a statement. She called the move a “proxy” for gutting the FCC’s full set of privacy regulation, and stated that consumers would be left vulnerable.

“If a provider simply decides not to adequately protect a customer’s information and does not notify them when a breach inevitably occurs, there will be no recompense as a matter of course,” Clyburn wrote.

This is the latest move by the Republican-led FCC to kill controversial regulations pushed by former Democratic Chairman Tom Wheeler. Pai has already closed consideration of rules to reform the cable set-top box market. He also reversed several other consumer-protection orders, reports and proceedings that were adopted in the final weeks of Wheeler’s FCC. This included telling nine companies they won’t be allowed to participate in the federal Lifeline program. Lifeline’s purpose is to provide low-cost broadband access to low-income consumers. Pai wants to reverse these orders and reports because they were decreed at the last minute by a departing administration.

Meanwhile, Pai has already begun to take steps to dismantle net neutrality. At the FCC’s open meeting last week, he led the vote to expand the number of companies that receive exemptions to parts of the net neutrality rules.

In opposition, Democrats in the Senate, including Ed Markey of Massachusetts and Al Franken of Minnesota, have vowed to fight to protect the privacy and net neutrality rules. In a statement, Markey said this was just the beginning of Pai’s efforts to dismantle many consumer protections.

“Chairman Pai has fired his opening salvo in the war on the Open Internet Order, and broadband privacy protections are the first victim,” he said. “This carve out for the broadband industry will make consumers’ information more vulnerable to breaches and unauthorized use.”

(h/t CNet)

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