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Mulvaney Takes the CFPB in a New Direction

Jan 29, 2018 by Brian Arnesen

Mick Mulvaney cfpb memo
On January 23, 2018, CFPB Director Mick Mulvaney sent out a memo to all staff at the CFPB that redefined the mission and purpose of the agency. That memo, which was leaked and published by ProPublica, stated that the CFPB would cease being a regulator that “pushed the envelope” through its enforcement actions and would instead serve everyone it works for.

“We work for the people. And that means everyone: those who use credit cards, and those who provide those cards; those who take loans, and those who make them; those who buy cars, and those who sell them.”

Mulvaney also laid out how the CFPB will be different under his leadership.

“There will absolutely be times when circumstances dictate that we take dramatic action to protect consumers. And at those appropriate times, I expect us to be vigorous in our enforcement of the law. But bringing the full weight of the federal government down on the necks of the people we serve should be something that we do only reluctantly, and only when all other attempts at resolution have failed. It should be the most final of last resorts.”

Mulvaney made it clear the CFPB will not enact new policies through enforcement actions but instead look for quantifiable evidence of consumer harm.

"In 2016, almost a third of the complaints into this office related to debt collection," Mulvaney wrote. "Only 0.9% related to prepaid cards and 2% to payday lending. Data like that should, and will, guide our actions." The CFPB was often criticized for having a vendetta against payday lenders. It’s clear that debt collection will replace payday lending as the new focus of the CFPB.

This memo marks a 180° change from the Cordray-era CFPB, who saw itself as “a new cop on the beat” and would punish lenders at will for what it deemed to be predatory practices—often based on its own unclear rulemakings. The old saying “Shoot first and ask questions later” easily summed up how many lenders viewed the former CFPB under Cordray.

As expected, this memo has caused plethora of reactions from different groups. Some lenders are rejoicing that the former “attack dog” of the Obama administration is now much more an agency that will work with them, rather than against.

Proponents of consumer protection in a post-mortgage-meltdown world see the new director as someone who is now squarely on the side of lenders and business, instead of the consumers the Bureau was formed to protect. They are worried that the CFPB’s reluctance to punish lenders could lead to consumer harm, less stringent regulatory enforcement and a repeat of 2007/8.

One thing is for certain, this is a new CFPB with a new mission. For now.