The CFPB’s New Mission

Since the day in late November when he showed up at the Consumer Financial Protection Bureau, doughnuts in hand, Mick Mulvaney has said that things were going to change. For almost two months, the acting director appointed by Trump has implemented seemingly small, but important, shifts that indicate what the bureau will look like in the years ahead. In a memo to bureau staff made public by ProPublica, Mulvaney finally laid out his vision for the agency: a government entity that doesn’t “push the envelope.”

In an email to the bureau’s staff, Mulvaney said that he had been struggling to come up with a central thesis for how exactly the agency would change. Mulvaney wrote that the philosophy of the previous director, Richard Cordray, was “to aggressively ‘push the envelope’ in pursuit of the ‘mission;’ that we were the ‘good guys’ and the ‘new sheriff in town,’ out to fight the ‘bad guys.’” The acting director then declared, “That is what is going to be different.”

Mulvaney went on to say the “entire governing philosophy of pushing the envelope frightens me a little ... it’s not appropriate for any government entity to ‘push the envelope.’” The acting director described concerns that the bureau would overstep and create long-lasting damage to individuals, reputations, and businesses. What will this new philosophy look like in practice? Mulvaney vowed to only pursue lawsuits if evidence of “quantifiable and unavoidable harm” is found. And the agency will rely more heavily on its rulemaking efforts as the engine of change, instead of enforcement, meaning that the bureau won’t focus on fines or lawsuits to cull bad behavior. Instead, the CFPB will primarily look to the creation and implementation of new rules, in hopes of changing dangerous practices—a process that is less punitive and more time-consuming.

This memo is in line with the plan that Mulvaney has already started enacting. In the nearly two months that Mulvaney has been at the helm of the bureau, he has instituted policies that have pulled back on the agency’s rulemaking, enforcement, and collection of personal data. According to Nick Bourke, the director of the consumer-finance project at the Pew Charitable Trusts, this strikes at some of the key areas of success for the bureau. “Enforcement has been the biggest impact the CFPB has had so far,” Bourke told me during an interview in November. And thus far, the implementations of new rules for prepaid cards, payday lenders, and mandatory arbitration clauses—all considered big victories for the bureau—have been slowed or killed since Mulvaney took on leadership of the bureau.

The process of paring back the scope of the bureau’s enforcement efforts is already underway, and already questions have been raised about Mulvaney’s close relationships with some of the entities that he is now in charge of regulating. On Monday, Mulvaney shuttered an investigation of World Acceptance Corporation, a small-dollar loan operation from his home state of South Carolina that contributed an estimated $4,500 to his political campaigns over a three-year period. Earlier this month, Mulvaney dropped a lawsuit against a group of payday lenders in Kansas accused of misleading customers and charging interest as high as 950 percent. Campaign donation records show between 2012 and 2016, Mulvaney received contributions totaling more than $60,000 from groups in the payday-lending industry.

This new trajectory of the agency will almost certainly ruffle longtime advocates of the bureau and supporters of its work under Cordray. Many have feared that Mulvaney, who has been a vocal critic of the CFPB, would shut down the agency, or, short of that, gut it from the inside. Tuesday’s memo didn’t exactly assuage those concerns. “When I arrived at the CFPB, I told folks that despite what they might have heard, I had no intention of shutting down the Bureau,” Mulvaney writes. “Indeed, the law doesn’t allow that.”

In January, the acting director asked the Federal Reserve to refrain from giving the agency any money for the second quarter of 2018, saying that instead, the bureau could use some of the $177 million reserve fund accrued during Cordray’s tenure to operate. “The request—or lack thereof—will serve to reduce the federal deficit by the amount that the Bureau might have requested under different leadership,” Mulvaney wrote.

With a new mission for the bureau articulated, Mulvaney has cemented the Trump administration’s vision of the CFPB: a smaller, quieter, and less active financial regulator—one that looks a lot more like the regulators of the pre-recession era.