The Dismal Future of Trump's Least Favorite Agency

The strangest thing about the man who's expected to be named the next leader of the Consumer Financial Protection Bureau is that he has long opposed the agency's work. This is the agency established in the wake of the 2008 market crash, whose regulatory reach touches countless financial products that Americans use every day—student loans, payday loans, credit cards, mortgages, and so on.

Earlier this week, the bureau’s current leader, Richard Cordray, announced he will step down by the end of November, likely to pursue the governor’s office in Ohio. As early as Friday, according to some reports, President Trump could announce his temporary replacement. The frontrunner for the job is said to be Mick Mulvaney, the current head of the Office of Management and Budget (OMB)—a man who once called the CFPB “a sick, sad joke.”

If appointed, Mulvaney will have the power to set the agenda for the Bureau’s work, but he likely won’t direct day-to-day operations. Because he currently holds a Senate-confirmed position, he’s eligible to serve as the acting head of the Bureau under the Vacancies Act. He can also simultaneously maintain his current position at the OMB, where he has proven himself a consummate supporter of Trump’s policies, particularly those that seek to roll back regulations. Additionally, Mulvaney has supported federal hiring freezes and workforce reduction via attrition in the name of savings. Although Mulvaney couldn’t unilaterally shutter the CFBP, or its operations, overnight, he could certainly make the agency weaker, and direct its efforts away from the sorts of aggressive actions that have been its hallmark.

The brainchild of Senator Elizabeth Warren, the Bureau was founded in 2010 as a provision of the Dodd-Frank Act, as a financial watchdog acting in the interest of American consumers. Since its founding, the agency has created new mechanisms for citizens to bring complaints and concerns about financial institutions and products, provided educational resources, and weighed in with rules and regulations regarding payday loans, prepaid cards, and fiduciary responsibility, among other issues. These are areas for which consumers voices weren’t represented in any regulatory agency prior to the financial crisis.  

The CFPB holds a uniquely independent role in government—which has long been a sticking point for conservatives. In order to keep the agency independent, the Bureau’s budget isn’t subject to congressional appropriation, but is instead provided through the Federal Reserve. And the Bureau’s leadership is directly appointed by the president. Nick Bourke, the director of consumer finance at the Pew Charitable Trust says that since its inception the CFPB has played an important role in protecting consumers, which includes “taking decisive actions to prevent bad practices from harming people.” According to Bourke, the entire industry would be best served if the next director provided continuity when it comes to the overall mission of the agency.

But the choice of Mulvaney would send a clear message otherwise, signaling that Trump intends to make good on his promise to disempower and potentially dismantle the agency. “It will be a great tragedy for American consumers if Mulvaney is appointed to head the CFPB,” said Paul Bland, the executive director of the advocacy group Public Justice, in an email. “He has voiced contempt for the agency, its important work and accomplishment. He has displayed hostility to the basic mission of consumer protection.” Mulvaney might well agree with that assessment. The OMB director once described himself as “a right-wing nutjob.”

While Bland sees this as a clear conflict, it’s Mulvaney’s outright hostility to the Bureau that might make him an ideal candidate in the eyes of Trump and congressional Republicans—all vocal critics of the Bureau’s creation, structure, regulations, and leadership since its creation.

Though just about everything about the Bureau irks conservatives, that doesn’t mean that all CFPB detractors will automatically see the appointment of Mulvaney as a good thing. “The agency will completely change course,” says Peter Wallison, a financial policy fellow at the American Enterprise Institute, a conservative think tank. “This is the right thing for the Trump administration to do once their nominee takes control of the agency, but it is bad government.”  Wallison says that a sudden change in regulatory approach could hurt the many companies that fall under the CFPB’s jurisdiction.