Editor’s note: A version of this first appeared on Medium.
I was fired from the Consumer Financial Protection Board’s Consumer Advisory Board last week, along with all of its other members. Why? Because the acting head of the bureau, Mick Mulvaney, appears intent on running the consumer protection bureau into the ground while claiming a lack of “global perspective” and wanting a “fresh start.”
Never mind that this board has been the most diverse it has ever been — split about evenly between consumer advocates and business people (with some academics thrown in for good measurement). If Mr. Mulvaney was concerned the board was only wild-eyed consumer protection activists, he didn’t appear to notice executives from industry giants Citi, Discover, FICO, Mastercard and PNC. Or if he really cared about private sector innovation, as he claims, he missed the presence of fintech legend Max Levchin, TrueAccord’s Ohad Samet, NerdWallet’s Tim Chen, Oportun’s Raul Vazquez (both of the latter being Core portfolio companies, for disclosure) and myself.
This mass firing is the latest in a string of actions meant to kill a regulatory body that was formed in response to the most devastating consumer financial abuse in nearly a century. Mr. Mulvaney, famous for having called the bureau a “sick, sad joke” before taking its helm, was installed as a cynical gesture by a president who knew the bureau was too popular to dismantle. Mr. Mulvaney has all but kicked the life out of the bureau through a series of navel gazing exercises and a moratorium on all (but Wells Fargo’s) enforcement of legal consumer protections.
“Good riddance,” you say? I’d ask you to think again. Yes, our financial regulatory system is a messy patchwork of state and federal agencies. Yes, the industry is spending way too much on compliance, shuffling way too much paperwork. Yes, I think the CFPB overused its stick relative to its carrots in the past. Instead, we should make a long-term, concerted effort to modernize our regulatory infrastructure (taking inspiration from the United Kingdom and Singapore).
But consider the alternative: every rule in place today is a response to incredible harm done to hardworking Americans by greedy, unscrupulous, short-sighted and sometimes outright criminal actors in finance. The CFPB, in several short years, has collected more than $12 billion in penalties for 29 million Americans who were sold misleading products or services.
As a profit seeking capitalist who invests in high-growth fintech startups (like Ripple, Mosaic, Oportun and more than 30 others), I believe in guard rails, in rules, in regulation. And I believe the prudential regulators’ primary responsibility of safety and soundness of our financial system does not adequately protect consumers. And I believe financial products are sufficiently complex and materially impactful on people’s lives and livelihoods that having a consumer watchdog is entirely warranted — even if it is a pain the ass, a cost to the system, and a drag on innovation. The stakes are just too damn high, for each household and for our country.
So, yeah, I’m sad we were fired for no good reason. It was a genuine honor to serve on the Consumer Advisory Board for more than a year. But that’s completely immaterial to the systemic irresponsibility I believe Mr. Mulvaney is exhibiting to his duty to protect everyday Americans from harm. Further, wildly oscillating regulatory entities cost the industry by introducing even greater uncertainty. And what is perhaps to me the most annoying: Even a conservative, limited-regulation leadership can express itself in smart governance and shifting priorities; it does not need to resort to spreading organizational cancer.