Mick Mulvaney is fond of saying he wants to make the Consumer Financial Protection Bureau into a “gold-standard” regulator, arguing that its tone and substance should be more like the Securities and Exchange Commission.
Which makes it extra tough to explain the sophomoric way the CFPB handled the decision to dismiss the members of three advisory councils earlier this week.
During a conference call on Wednesday morning, a Mulvaney aide told 60-plus members of the three panels that the boards were being disbanded and reconstituted with new membership. (The current members would not be allowed to reapply.)
The news wasn’t exactly a shock — warnings from members of the Consumer Advisory Board that they saw something like this in the offing had appeared in the pages of American Banker — but the rationale and manner in which it was done was still surprising.
Anthony Welcher, a political appointee and the CFPB’s policy adviser for external affairs, said the decision was made in part because the committees — the Consumer Advisory Board, Community Bank Advisory Council and the Credit Union Advisory Council — were too expensive to maintain.
He said the bureau saves hundreds of thousands of dollars a year “by not having the meetings the way that we’ve been structuring them.”
Welcher later added that the dismissed members could continue to offer their input, just not on the government’s dime.
“We're not necessarily going to be paying for your travel to have that conversation," he said.
But members immediately protested that no one previously had asked them to pay their own way, and many appeared willing to do so anyway.
It’s difficult to understand how the CFPB’s costs for such outings could be so high, unless members were staying at the Ritz Carlton. Moreover, it was unclear why the agency couldn’t find a cheaper way to hold such meetings. Maybe the CFPB should look into videoconferencing.
After the firings became public, however, John Czwartacki, the agency’s chief spokesman, doubled down on that rationale, twisting the knife in the process for those who had objected.
“The outspoken members of the Consumer Advisory Board seem more concerned about protecting their taxpayer funded junkets to Washington, DC and being wined and dined by the Bureau than protecting consumers,” he said in a statement.
The statement raised eyebrows because it was a rare public dig at individuals by a federal agency.
"The way it was done was ham-handed,” said one consumer finance attorney who spoke on condition of anonymity. “Who's kidding who? Foolish that the spokesman would needlessly antagonize."
But the CFPB offered an additional rationale for disbanding the councils.
During the conference call, Welcher justified the decision on the basis that the CFPB was receiving too much feedback from the coastal (presumably east and west) parts of the country.
"There is a huge gap of outreach," Welcher said. "The coastal regions have a huge voice in a lot of these issues and that the middle part of the country has been missed and that is something that is going to be addressed in a very prolific way."
That argument probably came as a surprise to members like Angela Beilke, the mortgage banking manager for First Premier Bank of Sioux Falls, S.D., who chairs the community bank panel. Or Gregory Higgins, who is vice chairman of the credit union advisory panel as well as the general counsel for Wings Financial Credit Union in Apple Valley, Minn.
Indeed, of the 19 members of the Community Bank Advisory Council, only four hail from coastal states. The vast majority represent states in the middle of the country, including Idaho, Kansas, Illinois, North Dakota and Iowa, just to name a few of the states represented on the council.
The situation is a little more coastal-heavy on the credit union panel, which has nine of its 17 members based in states like Maine, Oregon, Washington and North Carolina, but is divided roughly equally with members from the heartland.
The Consumer Advisory Board, meanwhile, is made up of 25 representatives from many nationwide consumer groups and even large financial firms, including Mastercard, Discover, Citigroup and PNC, making a geographic argument mostly moot.
So if geography and cost weren’t the real issues, what was?
It’s likely that Mulvaney is skeptical of the panels, which were assembled by his predecessor, Richard Cordray, and included members like the National Consumer Law Center, which has been critical of his tenure as acting director. He had already canceled two planned meetings with the Consumer Advisory Board, and the CFPB made clear it won’t hold any until this fall, when new membership is in place.
How much it all really matters is open to debate. It’s not clear how much advice Cordray took from the panels, and it’s unlikely Mulvaney would have been swayed by them either.
But it’s yet another controversy during Mulvaney’s six-month tenure — and it provides additional ammunition for Mulvaney’s critics, who argue that he doesn’t have consumers’ interests at heart.
Between the dodgy rationales and petty insults, it doesn’t feel like the kind of thing a “gold-standard” regulator would do.
Kate Berry contributed to this column. Bankshot is American Banker’s column for real-time analysis of today's news.