Mulvaney offers Congress its own baby

Mick Mulvaney wants Congress to take back a baby it put up for adoption, the Consumer Financial Protection Bureau.

If you were hoping he would lead an effort to do away with the controversial agency, you’ll be disappointed. If you were hoping that it would grow more powerful, you’ll be disappointed.

As a member of Congress, Mulvaney certainly was no fan of the CFPB. As acting director of it, he stands in the middle of opposing forces.

In the bureau’s semi-annual report, you can tell Mulvaney hasn’t exactly gone native. He calls CFPB “too powerful, and with precious little oversight of its activities.” He implies that many of its activities have taken it beyond its statutory boundaries. Mulvaney says the director’s job embodies legislative, judicial, and unchecked executive powers. Quoting James Madison, he calls this “the very definition of tyranny.”

He adds, “The best that any Bureau Director can do on his own is to fulfill his responsibilities with humility and prudence, and to temper his decisions with the knowledge that the power he wields could all too easily be used to harm consumers, destroy businesses, or arbitrarily remake American financial markets.”

We know where Mulvaney’s coming from.

Now Mulvaney has presented Congress with four statutory requests for CFPB. In essence, he wants to make it a regular agency.  At the top of his list, Mulvany recommends Congress change how CFPB receives funding, so that it becomes part of the normal appropriations process. Under the Dodd-Frank law that established the CFPB, the bureau receives its funding from the Federal Reserve Board. The bureau requested $217 million for the first quarter of fiscal 2018. That was under the previous (and first) director, Richard Cordray. Mulvaney requested zero for the second quarter. He found the bureau had a balance of $177 million, versus expected expenses of $145 million. Mulvaney states he could find no statutory authority for maintaining a reserve fund.

Mulvaney also recommends that Congress require legislative approval of “major” Bureau rules and create an independent inspector general for CFPB.

About those major rules: CFPB established two of them in the period covered by the report. One sparked a lot of debate, to do away with arbitration in consumer finance disputes. It received a joint resolution of disapproval from Congress, which President Donald Trump signed. The other concerned payday, vehicle title and “certain high-cost installment loans.” It requires lenders, before making such loans, to make sure people can pay them back. It prevents lenders from raiding loan-holder’s back accounts.

Should CFPB have an inspector general? Right now it is overseen by the IG of the Federal Reserve Board of Governors. There is no specific IG for the bureau itself. The Bureau has received 15 reports since March 2017.

Finally, Mulvaney recommends Congress “ensure that the director answers to the president in the exercise of executive authority.” Recall that when Cordray left, he appointed a 34-year-old chief of staff as his successor. The White House responded by sending over Mulvaney, who is still director of the Office of Management and Budget. In a standard set-up agency, the resignation of the agency head invokes the Vacancies Act. That means the president can name the acting successor. Cordray, though, cited the Dodd-Frank Act in choosing his own successor.

The Consumer Financial Protection Bureau has been debated since its inception. It’s served as proxy for larger arguments among politicians over who’s for the little guy or who’s for “Wall Street banks,” to borrow Sen. Elizabeth Warren’s (D-Mass.) phrase. Many agencies provide similar battlegrounds — EPA, FDA and Interior, for example. Their appointees and resulting policies move back and forth according to party in power. Somehow the Republic survives.

If Congress takes up Mulvaney’s recommendations, it would be giving itself back responsibility it already exercises for every other agency.

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