Mick Mulvaney Is Quickly Deregulating the Financial Industry

The interim director of the Consumer Financial Protection Bureau is taking a more laissez-faire approach to policing the financial sector.

Mick Mulvaney, in his capacity as head of the OMB, speaks with President Trump in 2017. (Kevin Lamarque / Reuters)

Mick Mulvaney intends to make all the drama surrounding his appointment as interim director of the Consumer Financial Protection Bureau worth it.

One of Mulvaney’s first orders as interim director was to freeze hiring, rulemaking, and regulatory actions for 30 days. That’s fairly standard practice for leadership changes in federal agencies amid a party transition. But in the past few weeks, Mulvaney’s orders have started to extend beyond the ordinary due diligence.

In addition to plans for scrutinizing the agency’s budget, the temporary hiring freeze has become indefinite, though in December the acting director mentioned plans to bring on several political staffers in order to give “professional staff here ... a better feel for where the administration wants to take the bureau.” Senator Elizabeth Warren has criticized those hires as a move to politicize an independent agency. The changes that Mulvaney is instituting also include slowing down the implementation of new rules, a moratorium on collecting identifying information that could tie individuals to the financial data gathered by the agency, and tweaks to the agency’s mission statement add up to a reorientation that could fundamentally have a big impact on the bureau and the work it does. (The bureau didn’t respond to a request for comment.)

At the end of 2017, Mulvaney ordered a delay to the implementations of the bureau’s prepaid-card rules, which was set to go into effect in April, and would have forced financial institutions to limit customer’s losses in the event of a lost or stolen card, to provide easily accessible account information, and to look into and resolve transaction and account errors. The rule would have put significantly more pressure on the operators of such cards to provide accountability and risk management. In a statement that gave few specifics about what changes would be made, or when final implementation might occur, the bureau wrote, “The Bureau expects, based on its review of the comments received, to further extend the effective date of the 2016 rule.” Though the prepaid rule was finalized in 2016, implementation had been slowed as the agency sought comment for ways to improve it, and address concerns from the financial industry. In June, the agency asked for some specific feedback regarding tweaking the rules in order to prevent fraudulent claims, and to provide more clarity on how prepaid debit cards could be used in digital wallets.

On the same day that it announced a slowdown of prepaid implementation, the agency also announced that it was paring back requirements for the Home Mortgage Disclosure Act, which was put in place in 1975, and the authority to make rules related to the act was transferred to the CFPB via the Dodd-Frank Act. In 2015, the bureau set out to update what is known as Regulation C, the provision that governs how information on mortgages is collected, reported, and disclosed. And soon after, the bureau began toying with the idea of changing and clarifying some of Regulation C’s requirements. As of the first of the year, the agency will no longer ask financial institutions to resubmit erroneous data unless the errors were of material importance, and it won’t assess financial penalties for incorrect data. Going forward, the bureau is considering more significant revisions to the rule to reduce the reporting burden on financial institutions. That helps all types of financial companies that had complained about the difficulty of keeping up with the paperwork, reporting requirements, and fines associated with the rule.

Mulvaney has also instituted a freeze on any personal-data collection until the agency further shores up its cybersecurity defense. The use of personal-data collection in the agency’s robust complaint database, as well as the materials provided by financial institutions under the agency’s purview, has long been a sticking point for critics, who say that the practice could be dangerous. But the agency’s advocates note that the ability to pair personal data with financial information has allowed them to spot dangerous patterns, such as discrimination, and to create more tailored and effective rules.

Another telling change that’s come to pass since Mulvaney took over: changing the bureau’s mission statement, which appears on many public-facing documents such as press releases and emails. When Cordray, an Obama-era appointee, ran the agency, its mission statement read, “The Consumer Financial Protection Bureau is a 21st century agency that helps consumer finance markets work by making rules more effective, by consistently and fairly enforcing those rules, and by empowering consumers to take more control over their economic lives.” In recent weeks, that statement was changed to include language that supports Trump’s broader push for deregulation, a somewhat odd addition for a regulatory body.

In full, the statement now reads: “The Consumer Financial Protection Bureau is a 21st century agency that helps consumer finance markets work by regularly identifying and addressing outdated, unnecessary, or unduly burdensome regulations, by making rules more effective, by consistently enforcing federal consumer financial law, and by empowering consumers to take more control over their economic lives.”

Even though Mulvaney will only hold the title of interim director for a limited time, the changes that Mulvaney makes now will lay the groundwork whomever Trump chooses next (pending Senate confirmation). Mulvaney has long been a harsh critic of the agency, and the changes he’s implemented thus far do little to rebut the idea that Republican control of the CFPB means undermining existing work and making the agency more friendly to Wall Street.

When he first took over as head of the bureau, Mulvaney said, “Rumors that I’m going to set the place on fire, or blow it up, or lock the doors, are completely false.” And it’s true that during his short time at the CFPB, Mulvaney has done nothing that could be fairly characterized as destroying the agency. But the alterations he has made send a clear message. Under the Trump administration the CFPB will be focused on the same core principles that all other agencies are adhering to: deregulation and unwinding the vestiges of Obama-era policy. For the CFPB, a regulatory agency founded during Obama’s tenure, that means a new bureau entirely.