CFPB drops probe into lender that gave to Mulvaney’s campaigns
The Consumer Financial Protection Bureau has dropped a probe into an installment lender that had been accused of trying to profit from repeat borrowers.
World Acceptance Corp., based in Greenville, S.C., said in a press release Tuesday that it had received a letter from the consumer agency "indicating the investigation into the company's marketing and lending practices has been completed."
"The CFPB noted it does not intend to recommend enforcement action," the company said in the release. Shares of the company jumped nearly 6% in intraday trading to $92.90 a share after the announcement.
Yet the decision immediately drew criticism from consumer advocates, who charged that acting CFPB Director Mick Mulvaney, who is from South Carolina, had received at least $4,500 from World Acceptance's political action committee when he was a lawmaker.
The CFPB does not comment typically on investigations.
"For the record, decisions to complete bureau investigations are made in the normal course by career enforcement staff, not the Director, and that is what occurred in this instance," said a CFPB spokesman. "Any suggestion that Acting Director Mulvaney had any role in the decision is simply inaccurate.”
The news was yet another sign of the agency lightening its approach to consumer lenders since Mulvaney took over from former CFPB Director Richard Cordray late last year. The agency dropped a lawsuit last week against a group of four online payday lenders associated with an American Indian tribe. The bureau also said last week that it plans to reopen its payday lending rule.
The CFPB had issued a civil investigative demand against World Acceptance in 2014, a year after ProPublica reported that the company's business model depended on convincing low-income consumers to become repeat borrowers.
"Our team fully cooperated with the bureau and responded to every request for information within the specified deadlines," Jim Wanserski, World Acceptance's interim president and CEO, said in the press release. He called the CFPB's move "a step forward."
Yet consumer advocates said the decision was out of step with the CFPB's purpose.
“The Consumer Financial Protection Bureau was established to protect consumers from predatory lenders like World Acceptance Corporation, but under Mick Mulvaney’s control the Bureau is undermining that important mission," Karl Frisch, executive director of Allied Progress, said in a press release. "Worse still, Mulvaney’s CFPB appears to be rewarding bad financial actors who also happen to be his campaign contributors."
Mulvaney recently launched a public review of all the bureau's activities and put a freeze on new enforcement actions. He also has directed the bureau's staff to stop collecting any personally identifiable information from companies it supervises, which critics say will slow investigations.