You’d think President Donald Trump’s White House budget director Mick Mulvaney would have his hands full. After all, he was in charge of the recent government shutdown, which he called “kind of cool.” In his spare time, however, Mulvaney is also running the Consumer Financial Protection Bureau, or CFPB — as in running it into the ground.
In perhaps his most Orwellian move to date, Trump handed the reins of the CFPB to Mulvaney, who once called the agency a “sick, sad joke.” And Mulvaney is a man on a mission: He is relentlessly transforming the Consumer Financial Protection Bureau into the Payday Lender Protection Bureau. Here’s a sample of his recent work:
▪ Without explanation, the CFPB dropped a Kansas lawsuit against four payday lending companies. The lawsuit alleged the companies ran a payday call center in Overland Park, despite being formally organized on an Indian reservation in California.
▪ The CFPB quietly ended an investigation into a South Carolina installment lender that donated to Mulvaney’s campaigns as a lawmaker.
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▪ Mulvaney requested no money for the agency’s budget in the second quarter of 2018.
Most disturbing, however, Mulvaney has said the CFPB will “reconsider” its recent regulation that would require predatory lenders to evaluate whether borrowers can repay their loans. This likely is the first step toward killing a vital small-dollar lending restriction that grassroots activists and consumer groups fought for years to enact.
The CFPB, under former director Richard Cordray, had been bringing the payday loan industry to heel. For example, its enforcement action against Cash America resulted in $19 million in consumer refunds and fines for alleged robo-signing of debt collection documents, overcharging military borrowers and destroying records.
Now, however, the nation’s loan sharks are beginning to reap the rewards of their ongoing efforts to take money from our most vulnerable citizens and use it to buy influence: Since 2015, they’ve given $1.5 million to congressional lawmakers, $300,000 to the Republican National Committee and the National Republican Congressional Committee. They’ve also spent $6.2 million to fight regulation at the state level. That doesn’t include the $2 million the payday loan industry spent to defeat a Missouri interest rate cap initiative in 2012.
Payday and car title loans drain $8 billion in fees every year from people who take them in hopes of short-term financial relief, and who typically end up in long-term debt traps.
Lenders’ annual interest rates in Missouri and Kansas routinely exceed 400 percent, but local legislators have shown no appetite to place meaningful restrictions on an industry that rewards them with handsome contributions and gifts.
Kansas City and other regional municipalities have successfully placed zoning restrictions on lenders, but it’s largely been up to the feds to battle the payday bullies. Federal prosecutors recently obtained a conviction against Leawood businessman Scott Tucker, who was sentenced to over 16 years in prison for an illegal payday lending scheme.
Mulvaney has told CFPB staff that the agency must work for “those who take loans, and those who make them.” The available evidence, suggests, however, that he is working to ensure that those who take loans will continue to be taken by those who make them.
We can begin to right this wrong at the ballot box in November. It would be “kind of cool” to see predatory lenders face fresh, determined legislative opposition in Missouri, Kansas and nationwide starting no later than January 2019.
John J. Miller is a local attorney and consumer rights advocate.