Category: Look Out for the Little Guy

Student Loan Watchdog Quits; Blames Trump Administration

The federal official in charge of protecting student borrowers from predatory lending practices has stepped down.

In a scathing resignation letter, Seth Frotman, who until now was the student loan ombudsman at the Consumer Financial Protection Bureau, says current leadership “has turned its back on young people and their financial futures.” The letter was addressed to Mick Mulvaney, the bureau’s acting director.

In the letter, obtained by NPR, Frotman accuses Mulvaney and the Trump administration of undermining the CFPB and its ability to protect student borrowers.

“Unfortunately, under your leadership, the Bureau has abandoned the very consumers it is tasked by Congress with protecting,” it read. “Instead, you have used the Bureau to serve the wishes of the most powerful financial companies in America.”

The letter raises serious questions about the federal government’s willingness to oversee the $1.5 trillion student loan industry and to protect student borrowers.

Frotman has served as student loan ombudsman for the past three years. Congress created the position in 2010, in the wake of the financial crisis, as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act. As ombudsman and assistant director, Frotman oversaw the CFPB’s Office for Students and Young Consumers and reviewed thousands of complaints from student borrowers about the questionable practices of private lenders, loan servicers and debt collectors.

Since 2011, the CFPB has handled more than 60,000 student loan complaints and, through its investigations and enforcement actions, returned more than $750 million to aggrieved borrowers. Frotman’s office was central to those efforts. It also played a role in lawsuits against for-profit giants ITT Tech and Corinthian Colleges and the student loan company Navient.

Over the past year, the Trump administration has increasingly sidelined the CFPB’s student loan office. Last August, the U.S. Department of Education announced it would stop sharing information with the bureau about the department’s oversight of federal student loans, calling the CFPB “overreaching and unaccountable” and arguing that the bureau’s actions were confusing borrowers and loan servicers alike. Of the move, Frotman writes, “the Bureau’s current leadership folded to political pressure … and failed borrowers who depend on independent oversight to halt bad practices.”

In May, Mulvaney called for a major shake-up in Frotman’s division. The Office for Students and Young Consumers would be folded into the bureau’s financial education office, signaling a symbolic shift in mission from investigation to information-sharing. While the CFPB told NPR at the time that the move was “a very modest organizational chart change,” consumer advocates reacted with alarm.

Christopher Peterson, director of financial services at the nonprofit Consumer Federation of America, called the move “an appalling step in a longer march toward the elimination of meaningful American consumer protection law.”

In his resignation, Frotman also accuses the CFPB’s leadership of suppressing a report, prepared by his office, revealing new evidence that some of the nation’s largest banks were “saddling [students] with legally dubious account fees.”

The Trump administration has also taken steps outside the CFPB to curb oversight of the student loan industry. The Justice and Education departments have argued that debt collectors should be protected from state efforts to regulate them. And, earlier this month, Education Secretary Betsy DeVos moved to scrap a rule meant to punish schools where graduates struggle with poor earnings and deep debt. The department defended its decision, saying it would instead give borrowers school performance data so they can decide for themselves what colleges offer the best value.

Mick Mulvaney was tapped to run the CFPB while also serving as director of the Office of Management and Budget. Before joining the Trump administration, he was a Republican congressman from South Carolina and a fierce critic of the bureau he now manages. He once called the CFPB “a joke … in a sick, sad kind of way” because, Mulvaney argued, it often acted above the law with no accountability to Congress.

Frotman has served at the CFPB for seven years, since its inception. He arrived in early 2011 as part of the Treasury Department’s implementation team. Frotman began in the Office of Servicemember Affairs as senior adviser to Holly Petraeus. That office was instrumental in expanding service member protections under the Military Lending Act and in cracking down on lenders and retailers that preyed on service members.

Petraeus, now retired, tells NPR she felt “privileged” to have worked with Frotman at the CFPB. “Seth is a true public servant. I think he’s leaving for the purest of motives: He wants to help student borrowers.”

In response to a request for comment, the CFPB issued this statement: “The Bureau does not comment on specific personnel matters. We hope that all of our departing employees find fulfillment in other pursuits and we thank them for their service.”

[NPR]

 

Ben Carson moves to roll back Obama-era fair housing rule

Housing and Urban Development Secretary Ben Carson is taking new steps to roll back an Obama-era rule intended to combat housing segregation.

On Monday, the Trump administration formally began the process of revamping a 2015 rule that required cities and towns to examine historic patterns of segregation and create plans to combat it, or lose federal funding.

The administration argued that the Affirmatively Furthering Fair Housing rule hinders the development of affordable housing.

The current rule is “suffocating investment in some of our most distressed neighborhoods that need our investment the most,” Carson said in a statement. “We do not have to abandon communities in need.”

Sara Pratt, a former Obama official who helped develop the rule, said that the Trump administration’s moves would enable communities to ignore long-standing barriers to fair housing and integration.

“You’re going back to communities willfully blinding themselves to patterns of segregation,” said Pratt, whose law firm is representing a coalition of groups suing the Trump administration for its earlier efforts to suspend the rule. “Without this rule, communities will not do the work to eliminate discrimination and segregation.”

The Trump administration said it would instead focus on increasing the supply of affordable housing across the country. Carson told The Wall Street Journal that he would “encourage the development of mixed-income multifamily dwellings all over the place” by making HUD money contingent on looser zoning rules.

Conservatives had vocally opposed the original rule by arguing that it was “an attempt to extort communities into giving up control of local zoning decisions,” according to Rep. Paul Gosar, R-Ariz.. Despite Carson’s stated interest in using federal funds to shape local zoning policies, they praised the Trump administration for taking the next big step in undoing the original rule.

“Secretary Carson’s work to rollback Obama’s overreaching housing rule is a great step in the right direction,” Gosar said in a statement. “I look forward to seeing HUD completely rescind the utopian Obama regulation.”

[NBC News]

DeVos ends Obama-era protections for students of for-profit colleges

Education Secretary Betsy DeVos moved Friday to end rules passed under the Obama administration that penalized for-profit colleges with a record of leaving graduates in crippling debt and with few job prospects.

In a statement that appeared on the Education Department’s website on Friday, the agency claimed the move was born out of an effort to treat all types of institutions “fairly.”

“Students deserve useful and relevant data when making important decisions about their education post-high school,” DeVos wrote in the statement.

“That’s why instead of targeting schools simply by their tax status, this administration is working to ensure students have transparent, meaningful information about all colleges and all programs. Our new approach will aid students across all sectors of higher education and improve accountability.”

The agency is now seeking public comment on whether or not the Department of Education should require institutions to disclose publicly whether their programs are accredited as well as their program graduation rates and costs.

After the 30-day comment period, the Obama-era rule is set to be reversed on July 1, 2019.

DeVos’ plan to roll back the gainful employment rule was first reported last month. At that time, the agency refused to comment on the proposal until its completion and publication.

DeVos has taken a number of steps to roll back other Obama-era rules targeting for-profit colleges, including dismantling a team dedicated to uncovering fraud at such institutions and reinstating a for-profit college accreditor despite her own staff’s warnings that the organization did not meet federal standards.

OSHA to reduce Obama-era injury report requirements for large companies

The Trump administration has proposed rolling back an Obama-era Labor Department rule requiring companies with 250 or more workers to submit detailed forms to the agency on workplace injuries, a move labor advocates say will allow companies to cover up the extent of injuries.

The department’s Occupational Safety and Health Administration (OSHA) issued a notice on Friday stating that it is seeking to roll back the rule passed under the Obama administration that greatly increased the amount of detail supervisors are supposed to provide to the federal government on workplace injuries.

Some of that information was then posted publicly by the Labor Department under the rule, and included summaries of incidents that occurred in larger-scale companies.

A spokesperson for the Labor Department told NBC News that the rule change would not alter the agency’s ability to collect information from companies on workplace injuries and safety violations.

“This proposal maintains safety and health protections for workers while protecting sensitive worker information from public disclosure,” communications director Megan Sweeney told NBC. “The data OSHA continues to collect is robust and enables the agency to most effectively protect workers on the job.”

The Labor Department argued that the original rule violated workers’ privacy by exposing incidents that they were involved in to Freedom of Information Act requests.

Public safety advocates argued that the rule’s rollback would only hurt workers.

“The existing rule is in place to protect workers,” said Sean Sherman, an attorney at the Public Citizen Litigation Group which is involved in a lawsuit over the rule. “The idea that you can protect workers by rolling back a strong worker protection is absurd.”

http://thehill.com/regulation/labor/399323-osha-reduces-obama-era-injury-report-requirements-for-large-companies

Trump slashes funding that helps people sign up for Obamacare

The Trump administration is once again slashing funding for a program that helps Americans sign up for Obamacare.

The Centers for Medicare & Medicaid Services announced Tuesday that it would provide only $10 million for the navigator program for this fall’s open enrollment season. The move is the latest effort by the Trump administration to undermine the Affordable Care Act.

This past year, navigators only received $36 million in funding, down from $63 million in 2016. The reduction was paired with a 90% cut in Obamacare’s advertising budget.
The agency once again defended the decrease by saying that navigators, which usually hail from non-profit and community organizations, are not effective. They enrolled less than 1% of consumers who signed up for 2018 coverage in 34 states using the federal exchange, according to CMS.

Navigators say they don’t get credit for all the consumers they help guide through the process but don’t actually sign up. Also, navigators assist people with enrolling in Medicaid, which is not reflected in the numbers.

The Trump administration broadened the opportunity for private sector agents and brokers to assist consumers in signing up last fall. They assisted 42% of enrollees, the agency said.

Navigators applying for funding will also be encouraged to show how they will educate people about the newly expanded alternatives to Obamacare, such as association health plans and short-term plans. The Trump administration is making it easier for Americans to sign up for these policies, which many experts say will weaken Obamacare by siphoning off younger and healthier enrollees. These alternative plans don’t have to provide all of the Affordable Care Act’s consumer protections.

Consumer groups decried the move.

[CNN]

U.S. Opposition to Breast-Feeding Resolution Stuns World Health Officials

A resolution to encourage breast-feeding was expected to be approved quickly and easily by the hundreds of government delegates who gathered this spring in Geneva for the United Nations-affiliated World Health Assembly.

Based on decades of research, the resolution says that mother’s milk is healthiest for children and countries should strive to limit the inaccurate or misleading marketing of breast milk substitutes.

Then the United States delegation, embracing the interests of infant formula manufacturers, upended the deliberations.

American officials sought to water down the resolution by removing language that called on governments to “protect, promote and support breast-feeding” and another passage that called on policymakers to restrict the promotion of food products that many experts say can have deleterious effects on young children.

When that failed, they turned to threats, according to diplomats and government officials who took part in the discussions. Ecuador, which had planned to introduce the measure, was the first to find itself in the cross hairs.

The Americans were blunt: If Ecuador refused to drop the resolution, Washington would unleash punishing trade measures and withdraw crucial military aid. The Ecuadorean government quickly acquiesced.

The showdown over the issue was recounted by more than a dozen participants from several countries, many of whom requested anonymity because they feared retaliation from the United States.

Health advocates scrambled to find another sponsor for the resolution, but at least a dozen countries, most of them poor nations in Africa and Latin America, backed off, citing fears of retaliation, according to officials from Uruguay, Mexico and the United States.

“We were astonished, appalled and also saddened,” said Patti Rundall, the policy director of the British advocacy group Baby Milk Action, who has attended meetings of the assembly, the decision-making body of the World Health Organization, since the late 1980s.

“What happened was tantamount to blackmail, with the U.S. holding the world hostage and trying to overturn nearly 40 years of consensus on best way to protect infant and young child health,” she said.

In the end, the Americans’ efforts were mostly unsuccessful. It was the Russians who ultimately stepped in to introduce the measure — and the Americans did not threaten them.

The State Department declined to respond to questions, saying it could not discuss private diplomatic conversations. The Department of Health and Human Services, the lead agency in the effort to modify the resolution, explained the decision to contest the resolution’s wording but said H.H.S. was not involved in threatening Ecuador.

“The resolution as originally drafted placed unnecessary hurdles for mothers seeking to provide nutrition to their children,” an H.H.S. spokesman said in an email. “We recognize not all women are able to breast-feed for a variety of reasons. These women should have the choice and access to alternatives for the health of their babies, and not be stigmatized for the ways in which they are able to do so.” The spokesman asked to remain anonymous in order to speak more freely.

Although lobbyists from the baby food industry attended the meetings in Geneva, health advocates said they saw no direct evidence that they played a role in Washington’s strong-arm tactics. The $70 billion industry, which is dominated by a handful of American and European companies, has seen sales flatten in wealthy countries in recent years, as more women embrace breast-feeding. Overall, global sales are expected to rise by 4 percent in 2018, according to Euromonitor, with most of that growth occurring in developing nations.

The intensity of the administration’s opposition to the breast-feeding resolution stunned public health officials and foreign diplomats, who described it as a marked contrast to the Obama administration, which largely supported W.H.O.’s longstanding policy of encouraging breast-feeding.

During the deliberations, some American delegates even suggested the United States might cut its contribution the W.H.O., several negotiators said.

Washington is the single largest contributor to the health organization, providing $845 million, or roughly 15 percent of its budget, last year.

The confrontation was the latest example of the Trump administration siding with corporate interests on numerous public health and environmental issues.

In talks to renegotiate the North American Free Trade Agreement, the Americans have been pushing for language that would limit the ability of Canada, Mexico and the United States to put warning labels on junk food and sugary beverages, according to a draft of the proposal reviewed by The New York Times.

During the same Geneva meeting where the breast-feeding resolution was debated, the United States succeeded in removing statements supporting soda taxes from a document that advises countries grappling with soaring rates of obesity.

The Americans also sought, unsuccessfully, to thwart a W.H.O. effort aimed at helping poor countries obtain access to lifesaving medicines. Washington, supporting the pharmaceutical industry, has long resisted calls to modify patent laws as a way of increasing drug availability in the developing world, but health advocates say the Trump administration has ratcheted up its opposition to such efforts.

[The New York Times]

CFPB chief Mick Mulvaney disbands consumer protection board

The Trump administration is disbanding a panel of experts focused on protecting consumers from financial abuse.

Members of the panel, called the Consumer Advisory Board, say Consumer Financial Protection Bureau Acting Director Mick Mulvaney has dissolved the group, which includes consumer advocates, financial industry representatives, community leaders and others. The board advises the CFPB, a federal agency formed after the housing crash to prevent financial abuse.

Mulvaney, told the board’s 25 members that they are being replaced and the panel overhauled, according to two of the members. These people requested anonymity since the announcement was not official yet.

“By both right-sizing its advisory councils and ramping up outreach to external groups, the bureau will enhance its ability to hear from consumer, civil rights, and industry groups on a more regular basis,” the CFPB said in a statement.

Under Dodd Frank, the 2010 financial reform law that created the CFPB, the consumer panel is required to meet twice a year. But meetings were repeatedly cancelled since Mulvaney took the helm at the bureau in November.

Nearly a dozen members of the consumer board have expressed concern about the direction of the CFPB.

“As the Bureau unilaterally shifts its mission from one prioritizing consumer protection and upholding fair market practices to one focused on industry regulatory relief, we see families, once again, being left behind,” Ann Baddour, the consumer panel’s chair and director of the Fair Financial Services Project at Texas Appleseed, said in the statement posted by the National Consumer Law Center.

[CBS News]

Trump cancels Philadelphia Eagles visit to the White House

The Super Bowl champion Philadelphia Eagles’ White House visit has been canceled due to the controversy over standing for the National Anthem at NFL games, President Donald Trump announced Monday.

“The Philadelphia Eagles are unable to come to the White House with their full team to be celebrated tomorrow,” Trump said in a statement. “They disagree with their President because he insists that they proudly stand for the National Anthem, hand on heart, in honor of the great men and women of our military and the people of our country. The Eagles wanted to send a smaller delegation, but the 1,000 fans planning to attend the event deserve better.”

It’s an unprecedented move by Trump. The NBA champion Golden State Warriors declined an invitation from the President to visit the White House after winning the 2017 championship, but presidents typically honor their invitations to championship teams. Players also have refused those invitations in the past — Boston Bruins goaltender Tim Thomas declined to visit the White House in 2012 over disagreements with President Barack Obama’s policies.

The President typically invites the champions of major professional and college sports to the White House for a visit as a part of their victory celebrations.

Last month, the NFL announced it would require athletes to stand during the National Anthem in response to players who took a knee as protest to what some players see as the systemic oppression of people of color, including by police.

The movement was initially started by Colin Kaepernick, who was formerly with the San Francisco 49ers. He drew national attention for refusing to stand during “The Star-Spangled Banner” prior to kickoff.

“I am not going to stand up to show pride in a flag for a country that oppresses black people and people of color,” Kaepernick told NFL Media in August 2016.

Trump has repeatedly criticized players for not standing for the anthem and has gone as far as to say team owners should fire players for doing so.

The new NFL policy gives players the option of remaining in the locker room during the playing of the anthem if they do not wish to comply.

Players on the Eagles are some of the most outspoken social justice activists in the NFL, and multiple players took part in the protests during the anthem over the last two seasons. Many players from the team were not planning on attending the ceremony as a protest of Trump, his policies and his outspoken criticism of players who chose to kneel during the anthem.

The Eagles were originally invited to the White House after their win in February’s Super Bowl over the New England Patriots. It was the first Super Bowl championship in franchise history.

In response to Trump’s announcement, former Eagles receiver Torrey Smith, who was a member of the championship team and was traded during the off-season, called the move “a cowardly act.”

“So many lies smh Here are some facts 1. Not many people were going to go 2. No one refused to go simply because Trump ‘insists’ folks stand for the anthem 3. The President continues to spread the false narrative that players are anti military,” he said in one tweet.

Smith continued: “There are a lot of people on the team that have plenty of different views. The men and women that wanted to go should’ve been able to go. It’s a cowardly act to cancel the celebration because the majority of the people don’t want to see you. To make it about the anthem is foolish.”

Sen. Bob Casey, a Pennsylvania Democrat, said he’s skipping the White House event, and instead invited the team to take a tour of the US Capitol.

“I’m proud of what the @Eagles accomplished this year. I’m skipping this political stunt at the White House and just invited the Eagles to Congress. @Eagles How about a tour of the Capitol?” Casey wrote on Twitter.

Philadelphia Mayor Jim Kenney released a statement, where he said Trump’s decision “proves that our President is not a true patriot.”

“The Eagles call the birthplace of our democracy home, so it’s no surprise that this team embodies everything that makes our country and our city great. Their athletic accomplishments on the field led to an historic victory this year,” Kenney said.

“Disinviting them from the White House only proves that our President is not a true patriot, but a fragile egomaniac obsessed with crowd size and afraid of the embarrassment of throwing a party to which no one wants to attend,” he later said in the statement.

“City Hall is always open for a celebration,” he added.

Trump said in Monday’s statement that the fans are still welcome to come and partake in a “different kind of ceremony.”

“One that will honor our great country, pay tribute to the heroes who fight to protect it, and loudly and proudly play the National Anthem,” he said.

White House Director of Legislative Affairs Marc Short told CNN’s Erin Burnett he was unsure who canceled on whom.

“It’s unfortunate when politics gets in the middle of this,” Short said.
Trump said he will be at the ceremony alongside the United States Marine Band and the United States Army Chorus at 3 p.m. Tuesday to “celebrate America.”

[CNN]

Trump tears into Canada for treating U.S. farmers ‘very poorly’

President Donald Trump attacked Canada on Friday morning, seemingly offering a defense of the controversial tariffs he imposed this week and accusing America’s northern neighbor of treating U.S. agricultural industries “very poorly.”

“Canada has treated our Agricultural business and Farmers very poorly for a very long period of time. Highly restrictive on Trade!” the president wrote on Twitter. “They must open their markets and take down their trade barriers! They report a really high surplus on trade with us. Do Timber & Lumber in U.S.?”

Trump has made resetting U.S. trade relationships around the globe a key priority for his administration, most notably with China, but also with top U.S. allies and trade partners like Mexico and Canada. He has complained previously about Canada’s treatment of the U.S. lumber and dairy industries, among others.

His attack against Canada came just hours after tariffs on imports of steel and aluminum from three key U.S. trade partners — Mexico, Canada and the European Union — went into effect at midnight Friday, after the administration said on Thursday that exemptions would not be extended.

Canadian Prime Minister Justin Trudeau offered a blistering rebuke to Trump during a news conference on Thursday.

“Let me be clear: These tariffs are totally unacceptable,” Trudeau said. “Canadians have served alongside Americans in two world wars and in Korea. From the beaches of Normandy to the mountains of Afghanistan, we have fought and died together.”

The tariffs have proved to be a controversial step that has also drawn the ire of prominent Republicans who have long supported free trade policies.

House Speaker Paul Ryan (R-Wis.) said in a statement that “I disagree with this decision” and that “instead of addressing the real problems in the international trade of these products, today’s action targets America’s allies when we should be working with them.” Sen. Ben Sasse (R-Neb.), a regular and outspoken critic of the president’s, said the tariffs were similar to the policies that he said sparked the Great Depression.

“This is dumb. Europe, Canada, and Mexico are not China, and you don’t treat allies the same way you treat opponents,” Sasse said. “‘Make America Great Again’ shouldn’t mean ‘Make America 1929 Again.’”

[Politico]

Trump wants a total ban on German luxury car imports

US President Donald Trump wants to escalate his trade war to include a total ban on German luxury cars, says a report in WirtschaftsWoche. According to the German publication, which says its report results from talking to several unnamed US and European diplomats, during French President Macron’s recent visit to Washington Trump told him that he would “maintain his trade policy until no Mercedes models rolled on Fifth Avenue in New York.”

This news follows news last week that Trump had already asked Commerce Secretary Wilbur Ross to launch an investigation into the national security threat posed by imported cars, trucks, and auto parts, as well as wanting to add 25 percent tariffs on imported vehicles. WirtschaftsWoche‘s article points out that just prior to his inauguration in 2017, Trump railed against the Mercedes-Benz vehicles he saw in New York.

When you walk down Fifth Avenue, everyone has a Mercedes-Benz in front of their house.” But that’s not reciprocity. “How many Chevrolets do you see in Germany? Not too many, maybe none at all, you do not see anything over there, it’s a one-way street,” said the real estate billionaire. Although he is for free trade, but not at any price: “I love free trade, but it must be a smart trade, so I call him fair.

The US market is extremely important for luxury German automakers, and a ban on importing new vehicles would be devastating for brands like Audi, BMW, and Mercedes-Benz. But even if Trump gets his wish, an import ban is highly unlikely to have the effect he’s looking for. Both BMW and Mercedes-Benz maintain large manufacturing presences here in the US, in part because any vehicles they build and sell here are exempt from existing import tariffs.

BMW’s factory in Spartanburg, South Carolina, employs over 10,000 workers and produced more than 371,000 cars in 2017. The Mercedes-Benz factory in Tuscaloosa, Alabama, builds a similar number of vehicles, and just last year parent company Daimler invested $1.3 billion expanding the facility. Daimler also has a new factory in Charleston, South Carolina building Sprinter vans.

Daimler declined to comment on the proposed ban, but a spokesperson pointed out that the company supports more than 150,000 jobs here, and 22.8 percent of Daimler’s shareholders are from the US. Audi and BMW had not responded to a request for comment by the time of publication.

[Ars Techina]

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