OMB chief Mulvaney could be temporary CFPB boss

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Mick Mulvaney once called the Consumer Financial Protection Bureau “a sad, sick joke.” Now, he may get to oversee Elizabeth Warren’s favorite regulator.

Mulvaney, President Donald Trump’s Office of Management and Budget director, is being considered for a temporary role as interim director of the consumer watchdog after Richard Cordray steps down later this month, according to two people familiar with the matter. Mulvaney would be expected to name someone else or a team of people to run the CFPB on a day-to-day-basis so he could keep his focus on OMB, said one of the people.

The goal is to hit the ground running in overhauling an agency that some Republicans have called corrupt and that GOP lawmakers widely blame for burdening lenders with unnecessary red tape. It could be months before Trump nominates a permanent CFPB director and his selection is confirmed by the Senate.

Under a federal vacancies law, Trump can replace an outgoing director temporarily with someone from another agency who has already won Senate approval. Treasury Secretary Steven Mnuchin has also been considered to run the CFPB on a temporary basis, said one of the people who asked not to be named because the deliberations are private.

A call to OMB’s press office wasn’t returned.

Cordray, who was appointed by former President Barack Obama, announced his resignation Wednesday. In anticipation of Cordray’s departure, the White House has been working on a plan to revamp the CFPB for months, including compiling a list of possible candidates to succeed him, people familiar with the matter said. Mulvaney, a former Republican congressman from South Carolina, has been heavily involved in the Trump administration’s discussions, the people said.

Candidates the White House has considered as a permanent CFPB head include Todd Zwyicki from George Mason University’s Mercatus Center, former congressman Randy Neugebauer and Brian Brooks, Fannie Mae’s former general counsel, as well as acting head of the Office Comptroller of the Currency Keith Noreika.

Brooks and Noreika have indicated privately that they’re not interested in the job, said people familiar with the matter. Noreika, a former lawyer for big banks, said Thursday that he plans to return to the private sector. Noreika announced his plans after the Senate confirmed Joseph Otting, a former Mnuchin deputy at OneWest Bank, to lead the OCC.

For the CFPB, the White House is also considering Republicans who have worked as state attorneys general or people with experience in the finance industry.

Senator Warren, the Massachusetts Democrat who is one of Wall Street’s most relentless critics in Congress, has already warned that the White House risks threatening vital consumer protections by installing a “Trump-appointed industry hack” at the CFPB. Warren is credited with conceiving of the agency, and repeatedly touts that it has returned $12 billion to people who’ve been harmed by financial firms.

An interim director could immediately change the tone at the CFPB by making it more friendly to banks, halting work on unfinished regulations and slowing down rules that haven’t yet taken effect.

A temporary head could also have a major impact on the CFPB’s oversight of specific companies. Investigations into wrongdoing might be shut down and supervisory exams could be less intrusive.

Another expected target of a Trump-installed director would be the CFPB’s database of consumer complaints. Hated by banks, it allows the public to review grievances about specific firms and has been used by the CFPB to open investigations. Getting rid of the database entirely may be difficult, according to some lawyers, but it’s within the director’s authority to make it private and to temporarily shut it down.

Bloomberg News
Policymaking Consumer banking Compliance Richard Cordray Donald Trump CFPB