CFPBFacts.com

Category Archive: Mismanagement

1. Warren 2020?

   January 11, 2019 5:51 pm Leave a Comment

   This month, the CFPB’s chief architect Senator Elizabeth Warren officially announced the formation of her presidential exploratory committee. But Warren’s brainchild and main 2020 campaign talking point might be doing her more harm than good.

   While still serving as a Harvard University professor, Warren spearheaded the Bureau’s creation through Congress’s Dodd-Frank Wall Street Reform and Consumer Protection Act. She believed that having a “watchdog” agency keep a close eye on wall street and other financial institutions would be a surefire way to protect consumers. Sadly, for Warren, the CFPB has been anything but a success.

   Since its inception in 2010, the Bureau has issued more than $5 billion in penalties, punishing employers under the pretense of “protecting consumers.” In one year alone, credit unions took a $7 billion regulatory hit after accounting for revenue lost. For consumers, these additional and abusive regulations make it more difficult to receive much-needed loans for simple things such as covering rent or paying a utility bill.

   Additionally, the Bureau has been deemed unconstitutional on more than on occasion. In a district court case, newly confirmed Supreme Court Justice Brett Kavanaugh had stated that, aside from the President, the Bureau was a “more unilateral authority than any other officer in any of the three branches of the U.S. Government.” He argued that the Bureau’s “combination of power” was “massive in scope” and triggered the question on constitutionality.

   Unphased by this and other criticisms, Senator Warren continues to position herself as a proponent of the CFPB and a leading critic of the financial sector. But her role in shaping one of the most controversial and scandal-ridden agencies may come back to haunt her during her presidential campaign. Perhaps she would be better off discussing her DNA heritage.

2. What do House Democrats have in store for the CFPB?

   November 21, 2018 8:04 pm Leave a Comment

   Upon winning back a majority in the U.S. House of Representatives, Democrats have set their eyes on restoring many of the changes made under Mick Mulvaney, acting director of the CFPB.

   In vowing to treat the Agency like any other government entity, House Democrats plan to step up congressional oversight into the Agency. A complete reverse from their previous sentiment of having a laissez-faire attitude over the CFBP. Many of the same Democrats previously turned a blind eye and even circumvented any attempt by Republicans to add more CFPB congressional oversight under former Obama Administration appointed Director, Richard Cordray. Rep. Maxine Waters (D-CA) even stated that a Rep. Jeb Hensarling’s (R-TX) asks of the CFPB were “intrusive and aggressive demands.”

   But just last month, Waters introduced a bill that would essentially reverse much of Mulvaney’s progress in deregulating the overreaching bureau while adding more congressional control.

   During Mulvaney’s tenure, he successfully led the charge to cut burdensome regulations and rein in spending; upsetting many staunch Democratic CFPB supporters like Rep. Waters. Empowered by the recent House victory, Waters plans to push back against Mulvaney’s reforms– as well as stop any more from being put through.

   Other Democrats have flocked to her side, stating that they are “ready to fight that battle” and restore the Bureau to its former self: an agency with little oversight and out of control tax dollar spending.

   But sadly for Waters, her bill won’t get much traction in the Republican-controlled Senate. The CFPB and its future leadership have a good shot at continuing to rein in the rampant Agency.

3. Could the CFPB be Unconstitutional?

   August 10, 2018 12:16 pm Leave a Comment

   One recent court ruling would say so.

   The Fifth Circuit Court of Appeals recently ruled that the Federal Housing Finance Agency (FHFA) is unconstitutionally structured. How is this related to the CFPB you ask? Well, the FHFA is almost identically structured to the CFPB.

   For one, both agencies are controlled by a sole director. Unlike most independent federal agencies, the FHFA and CFPB are not checked by either fellow commissioners or board members, making the director of the agency virtually supreme.

   Secondly, both sole directors can only be removed by the President “for cause” as opposed to “at will.” This means that either the director has to willingly step down, break the law, or do something so outlandish that the President would be forced to remove him or her.

   But perhaps most importantly, both the FHFA and the CFPB fall outside the usual appropriation process. The FHFA receives funding directly from its regulated entities while the CFPB receives its funding directly from the Federal Reserve. Both circumvent the usual appropriation process to staff and maintain the agencies day to day processes, ensuring their insulation from Congressional control.

   The Fifth Circuit’s recent ruling stated that the FHFA’s structure is too isolated from Presidential control and executive oversight, thus the Agency’s structure violates the Constitution’s separation of powers. This ruling sparks interest into the Constitutionality of the CFPB. If both the Agency and Bureau are similarly structured and one of them was just ruled unconstitutional, then shouldn’t the other?

4. It’s Official: Mick Mulvaney Keeps Winning

   July 13, 2018 9:05 pm Leave a Comment

   Mick Mulvaney, the Consumer Financial Protection Bureau’s (CFPB) acting director, just can’t stop winning. Not only is he reining in the CFPB’s regulatory excesses and saving taxpayer money, but the agency’s leftover Democrats are officially giving up their efforts to undermine his reforms.

   In light of President Trump’s recent nomination of budget official Kathy Kraninger to replace Mulvaney, the CFPB’s longtime shadow director is leaving the agency for good. Leandra English, who was appointed acting head of the CFPB by former director Richard Cordray before his departure, stepped down from her position this week. Through her attorney, English also announced plans to drop her legal challenge against the agency. For months, she had been posturing to replace Mulvaney and keep the CFPB under the Democrats’ control.

   Of course, English and other Democrats wouldn’t have been in such a precarious position if the CFPB wasn’t subject to the whims of White House leadership. Sen. Elizabeth Warren (D-MA) and other liberal Democrats intentionally designed the agency to operate outside of congressional oversight. While Congress is free to question CFPB officials and request information, the agency does not have to alter its practices based on congressional inquiries or prove its worth to Congress through the normal appropriations process. In fact, the CFPB is the largest federal agency that does not report to Congress.

   This made sense to Warren when President Obama was in power, but it blew up in her face when President Trump was elected. It’s a lesson for Democrats: Ignore checks and balances at your own peril.

5. Mick Mulvaney Strives to Rein In Rogue Agency

   May 16, 2018 2:47 pm Leave a Comment

   Mick Mulvaney, acting director of the Consumer Financial Protection Bureau (CFPB), recently pledged to reduce the regulatory oversight of the agency. Mulvaney plans to create an “office of cost benefit analysis” to weigh the economic cost of CFPB enforcement actions, not to mention agency operational costs.

   The heightened scrutiny is long overdue. After years of bureaucratic excess under former CFPB director Richard Cordray, the agency has become the poster child of the Washington swamp. In 2011, the CFPB employed 58 workers. In 2017, the agency had nearly 1,700 employees on payroll—a roughly 2,750 percent increase in a matter of several years.

   And the CFPB’s workforce—funded by the American taxpayer—does not come cheap. The agency currently boasts more than $333 million in annual personnel compensation and benefit costs, in addition to roughly $20 million in travel costs. This equates to over $205,000 per employee!

   As operational costs have ballooned, so has the toll of CFPB enforcement actions. Since its inception, the agency has ordered more than $5 billion in penalties, affecting banks, mortgage companies, payday lenders, and other employers.

   Mr. Mulvaney has his work cut out for him.

6. CFPB Finances Under Fire

   February 6, 2018 10:27 pm Leave a Comment

   Richard Cordray may be running for governor in Ohio, but he left the Consumer Financial Protection Bureau (CFPB) in shambles. More than 25 free-market organizations, including Americans for Tax Reform and FreedomWorks, have asked CFPB Acting Director Mick Mulvaney to audit the agency’s finances.

   Jason Pye, vice president at FreedomWorks, had the following to say: “Every aspect related to the CFPB should be put on the table, and what we can do through administrative action, either through the audit process or whatever rollbacks we need to do, we should do it.”

   For years, the agency escaped congressional oversight, unilaterally issuing broad regulations that overburdened employers and employees alike. Under Cordray’s watch, the U.S. Court of Appeals for the District of Columbia Circuit described the CFPB as “unconstitutionally structured” and a “gross departure from settled historical practice.” In U.S. Circuit Judge Brett Kavanaugh words: The CFPB’s structure “poses a far greater risk of arbitrary decision making and abuse of power, and a far greater threat to individual liberty, than does a multi-member independent agency.” The Department of Justice (DOJ) even filed court papers asking a federal appeals court to order the restructuring of the CFPB. The DOJ argued that the agency’s structure came into a separation-of-powers issue, since Cordray wasn’t sufficiently answerable to the White House.

   An audit is long overdue. It’s time to hold the CFPB accountable, and see where taxpayer money’s been going all these years.

7. New CFPB Renovations Hit $124 Million

   January 17, 2018 5:42 pm Leave a Comment

   The Consumer Financial Protection Bureau’s (CFPB) Washington, D.C. headquarters is in the middle of massive renovations—and expensive ones at that.

   As the Daily Caller’s Richard Pollock recently reported, renovation costs for the new CFPB headquarters have skyrocketed, posting 25 percent in cost overruns. Original cost estimates for the agency’s renovation came in at $55 million, but the CFPB ran up the proposed cost to $216 million. The proposal was so egregious that the Federal Reserve Inspector General rejected it in 2014, claiming there was no “sound basis” for the estimated figure.

   As renovation costs continued to escalate, the project was ultimately taken out of the CFPB’s hands and transferred to the General Services Administration (GSA). GSA’s budget, however, was nearly double initial estimates, hitting $99 million. According to the Daily Caller investigation, the GSA’s budget ballooned to more than $124 million in the end.

   CFPB employees have plenty to be thankful for. In Pollock’s words: They now “come to work in a building that features many high-end touches, including lounge seats for their plaza deck, sunken garden areas, male and female fitness rooms, and credenzas with quartz surfaces and premium drywall.” The agency even spent $88,000 for bike racks and parking striping in the garage.

   But White House Budget Director Mick Mulvaney, the acting CFPB director, is rightly standing up for taxpayers: “Some of the obvious questions I asked myself when walking into the renovated Bureau headquarters on my first day as Acting Director were: Who initially authorized these renovations, were they absolutely necessary, and were adequate cost controls in place? As I begin to focus on the Bureau’s budget, I hope to discover the facts behind these excesses and help ensure abuses won’t happen again.”

   If there is a Washington swamp, then the CFPB is its poster child. Taxpaying Americans are rooting for Mulvaney to drain it.

8. Richard Cordray Leaves Behind Shoddy CFPB Legacy

   December 18, 2017 7:07 pm Leave a Comment

   Richard Cordray has hit the campaign trail in Ohio, where he’s running for governor in 2018. But the former director of the Consumer Financial Protection Bureau (CFPB) leaves behind a shoddy legacy in Washington, D.C.

   Under Cordray’s watch, the CFPB turned into one of Washington’s most politically biased federal regulators. According to Federal Election Commission data, 100 percent of political contributions made by CFPB employees during the 2016 election cycle were sent to Democratic candidates. Even the Obama administration’s Justice Department was more ideologically diverse. This political bias skewed the agency’s hiring process. According to Ronald Rubin, a former CFPB enforcement attorney, Republican applicants were regularly denied agency jobs. “As screening techniques improved, Republicans were more easily identified and rejected,” Rubin has said, resulting in a culture of “political discrimination.”

   And don’t forget the CFPB’s unconstitutional structure. The U.S. Court of Appeals for the District of Columbia Circuit has claimed the CFPB’s structure “poses a far greater risk of arbitrary decision making and abuse of power, and a far greater threat to individual liberty, than does a multi-member independent agency.”

   As Cordray pitches Ohio voters, the CFPB may not be his best selling point.

9. Richard Cordray Uses Government Email for Politics?

   October 9, 2017 4:12 pm Leave a Comment

   In late July, Consumer Financial Protection Bureau (CFPB) Director Richard Cordray’s plan to run for Ohio governor leaked. Within days, Cordray received a message with an offer to help with his potential 2018 campaign, which he then forwarded to a redacted email address.

   According to the Washington Free Beacon, “an individual calling herself Debbie” wrote to Cordray’s government email account after learning about his plan to run in Ohio. Cordray then forwarded the message to another account. Kendra Arnold, executive director of the Foundation for Accountability and Civic Trust, claims the email exchange raises questions over Cordray’s handling of a government email address and the Hatch Act, which prohibits federal employees from using government resources for political activities. According to Arnold, “Simply receiving a partisan email and forwarding it to your own personal account is not a violation of the Act. In this case though, we do not know who Cordray forwarded the email to because of the redaction.” She continues: “The fact that the email was about Cordray running for office makes it incumbent on Cordray to explain.”

   We’re waiting for an explanation, knowing that Cordray has long overseen a politically biased CFPB. According to Federal Election Commission data, 100 percent of campaign contributions made by the agency’s employees went to Democratic candidates. Even the Obama administration’s Justice Department was more diverse in its workforce’s political preferences.

10. Richard Cordray in Violation of Hatch Act?

    August 10, 2017 1:44 pm Leave a Comment

    Richard Cordray, director of the Consumer Financial Protection Bureau (CFPB), plans to run for Ohio governor in 2018. But the longtime Democrat is not leaving Washington quietly.

    His agency is rushing to release a new rule targeting the payday loan industry, which provides short-term loans to low-income borrowers. Once the rule is released, the CFPB will require payday lenders to verify a borrower’s income, financial obligations, and track record before issuing any loan. This basically undermines the payday lending process, getting in the way of low-income Americans and the quick cash they need.

    The timing is also very curious. As he prepares for his gubernatorial run, Cordray needs to ingratiate himself with Ohio’s Democratic base. By issuing payday rules and other financial regulations, Cordray can build up the liberal credentials his campaign platform needs. But this calls into question the Hatch Act, which prohibits federal employees from engaging in political activity. If Cordray is using his position at the CFPB to score political points, then he would be breaking the law—a legitimate reason for President Trump to fire him.

    Because of the CFPB’s unconstitutional structure, Cordray can only be fired “for cause.” Illegal activity is certainly cause enough.