By Claire Lampen
In its original conception, the Consumer Financial Protection Bureau (CFPB) exists to impose oversight on our market such that you, the consumer, don’t get grifted by investors and lenders. Like so many other government institutions, however, the Trump Administration has turned that concept on its head. On Thursday, ahead of a scheduled meeting with the CFBP director, a collection of economic justice groups announced in an open letter that they would not take a seat at the table.
The Obama Administration established the CFBP in 2010, with the passage of the Dodd Frank Wall Street Reform and Consumer Protection Act. The idea was to guard against another mass meltdown and 2008-style crash, by regulating the non-bank financial institutions—private student loan companies, private mortgage lenders, credit reporting agencies, and so forth—that had been playing fast and loose with other people’s money. Unsupervised, they undertook exploitative and deceptive lending practices, tacking on hidden fees and fines, often unbeknownst to customers. The CFPB aimed to make sure people knew what they were buying into, while at the same time keeping shady financial practices in check.
In the Donald Trump presidency, what should be an independent watch-dog agency has been co-opted to serve the “interests of the financial services industry, abandoning its founding mission ‘to protect consumers from unfair, deceptive or abusive practices and take action against companies that break the law,'” according to a letter co-signed by Dora Galacatos, Executive Director of the Fordham Law School Feerick Center for Social Justice, and co-director Sarah Ludwig, and legal director Susan Shin of the New Economy Project.
“Before the Trump administration took over the CFPB, we had a long working relationship with the agency and engaged in constructive debate on rule-making proposals and more,” the letter reads. “Given the CFPB’s shift under the Trump administration to an unabashedly pro-industry stance, we have no reason to believe that meeting with you today would yield constructive outcomes for the people and communities the CFPB was created to protect.”
In February 2018, for example, Trump’s acting CFPB chief, Mick Mulvaney, gutted the Office of Fair Lending and Equal Opportunity, which existed to ensure that, for example, people weren’t offered higher or lower interest rates based on the color of their skin. Mulvaney—who also sought to consolidate a weakened CFPB under the president’s authority—dissolved the body’s advisory board, comprised of experts who offered insight into intricate economic, financial, and policy decisions. And earlier this month, the CFPB defanged payday loan restrictions that would have protected low-income borrowers from predatory lenders imposing staggering interest rates.
That last move came courtesy of the bureau’s new director, Kathy Kraninger, formerly of the Office of Management and Budget and nominated by Trump to her current position in July. At the time, Massachusetts Senator and 2020 presidential candidate Elizabeth Warren blasted the appointment in a report probing Kraninger’s CV. At the OMB, Warren argued, Kraninger’s “inability to ensure an adequate, timely response” to Hurricane Maria in Puerto Rico “turned a national disaster into a man-made disaster.” Further, Kraninger helped craft a budget that would have, according to Warren, inflated the country’s affordable housing crisis. She also helped architect the “zero tolerance” immigration policy that provided for family separation at the U.S. border with Mexico.
While the New Economy Project has traditionally met with the CFPB director during their New York visits, the organization—along with the National Center for Law and Economic Justice and New Jersey Citizen Action,which sent the CFPB similar letters—are taking a hard pass this time.
Read the New Economy Project’s full letter here.