CFPB's Mulvaney looks to rein in ‘tyranny’ of agency he runs

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Acting Consumer Financial Protection Bureau Director Mick Mulvaney proposed dramatic curbs to his agency's power Monday, including a recommendation that all CFPB rules must be approved by Congress.

In yet another breathtaking move for the agency since Mulvaney took the helm in late November, the CFPB's semiannual report called for the bureau to be funded through congressional appropriations, all major CFPB regulations to be subject to review by lawmakers, the CFPB director to have to answer to the president and the creation of a dedicated inspector general for the bureau.

Mulvaney said the CFPB has accumulated too much power and fits "the very definition of tyranny."

“The Bureau is far too powerful, with precious little oversight of its activities,” Mulvaney wrote in a letter accompanying the report. “The power wielded by the Director of the Bureau could all too easily be used to harm consumers, destroy businesses, or arbitrarily remake American financial markets."

Mulvaney said the four changes to the Dodd-Frank Act that he wants Congress to enact would "establish meaningful accountability for the bureau."

He appeared to view the semiannual report as a tool to urge Congress to change the CFPB's structure while Republicans are still in control. But all four recommendations, which would require some Democratic support, are unlikely to pass with Democrats loath to change the agency's structure.

In January, the U.S. Court of Appeals for the D.C. Circuit upheld the constitutionality of the CFPB's structure, ruling that the single head of an independent agency who can only be fired by the president "for cause" does not violate the constitution.

But Mulvaney suggested otherwise in the report.

"By structuring the Bureau the way it has, Congress established an agency primed to ignore due process and abandon the rule of law in favor of bureaucratic fiat and administrative absolutism," Mulvaney wrote. "While Congress may not have transgressed any constraints established by the Supreme Court, the structure and powers of this agency are not something the Founders and Framers would recognize."

In a footnote, the report said no other office or agency approved Mulvaney's legislative recommendations. The views in the report "are those of the Acting Director and do not necessarily reflect the views of the Board of Governors of the Federal Reserve System or the President."

Mulvaney said many members of Congress will disagree with his actions heading the CFPB, just as many disagreed with the actions of his predecessor, former CFPB Director Richard Cordray, who left the agency in November to run for governor of Ohio.

"Such continued frustration with the Bureau’s lack of accountability to any representative branch of government should be a warning sign that a lapse in democratic structure and republican principles has occurred," Mulvaney wrote. "This cycle will repeat ad infinitum unless Congress acts to make it accountable to the American people."

The semiannual report included a list of significant rules adopted by the CFPB in the past year, an analysis of complaints about consumer products and services, an analysis of the CFPB's fair lending mission, and information on CFPB efforts to increase diversity of its workforce and contractors.

Despite criticism of Mulvaney's leadership, he said he is fulfilling his responsibilities at the CFPB "with humility and prudence."

"All human beings are imperfect, and history shows that the temptation of power is strong. Our laws should be written to restrain that human weakness, not empower it," he wrote.

A big chunk of the report listed the public enforcement actions that the CFPB took against companies from October 2016 to September 2017, when Cordray ran the agency.

Mulvaney has said the agency will determine on a case-by-case basis whether to continue with such actions. Many of the companies with outstanding enforcement actions have petitioned Mulvaney to drop them outright. So far, he has dropped six actions against payday lenders. The CFPB has not filed any enforcement actions since late November, when Mulvaney was named by President Trump to lead the agency.

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Regulatory reform Regulatory relief Dodd-Frank Payday lending Mick Mulvaney CFPB