Day Two: Acting CFPB Director Mick Mulvaney Faces Bureau Defender Elizabeth Warren and other Members of the Senate Banking Committee

Mulvaney said under his leadership, the CFPB will end the practice of “regulation by enforcement.”

4/12/2018 10:00 AM

Day Two: Acting CFPB Director Mick Mulvaney Faces Bureau Defender Elizabeth Warren and other Members of the Senate Banking Committee

CFPB Acting Director Mick Mulvaney told the Senate Committee on Banking, Housing and Urban Affairs Thursday that the bureau will end the practice of “regulation by enforcement” under his leadership, which is expected to continue through the end of the year.

This comes as welcome news to ACA International members, many who are slated to attend Mulvaney’s keynote address during the Washington Insights Conference, May 21-23 at The Madison in Washington, D.C.

Thursday marked the second day this week that Mulvaney testified on Capitol Hill regarding his semiannual report which contains recommendations associated with the Dodd-Frank Wall Street Reform and Consumer Protection Act as a means to “establish meaningful accountability” at the bureau. While members of the House Financial Services Committee Wednesday treated Mulvaney with the ease and familiarity of a former colleague, Senate committee members from the left challenged him.

Indeed, when U.S. Sen. Bob Menendez, D-N.J., used his allotted time to criticize Mulvaney for supposedly failing to enforce the law, Mulvaney gained control of the exchange by stating, “do you know what regulation by enforcement is? Regulation by enforcement is where people find out that you accuse them of breaking the law after you file a lawsuit against them. That’s what I stopped. I believe you have the right to know what the law is before I sue you for breaking it.”

He later clarified the statement noting that the CFPB lacks stated rules and regulations relevant to the industries they regulate, and that enforcement would continue, but not in the same manner practiced under previous leadership.

While Republican senators approached Mulvaney in a more agreeable tone, U.S. Sen. Elizabeth Warren, a Massachusetts Democrat, did not hesitate to share her strong disapproval of Mulvaney’s strategy for managing the CFPB. Warren, who is widely credited with creating the CFPB, was a staunch supporter of former Director Richard Cordray.

“You never supported the consumer watchdog, Mr. Mulvaney,” Warren said as she lectured Mulvaney. “You are hurting real people to score cheap political points.”

She then noted that Mulvaney voted in favor of legislation [in his previous position as a congressman from South Carolina] that would have eliminated the CFPB, CBS News reported. She added a list of 11 bills to the record that she claimed would have made it "harder for states and other federal agencies to protect consumers and to hold cheaters accountable," according to CBS News.

To drive home the point, Warren noted that the CFPB shut down a company called Top Notch Funding that was defrauding 9/11 first responders with medical problems.

"Mr. Mulvaney, if the CFPB had been abolished like you wanted, Top Notch Funding might still be stealing from 9/11 first responders, right?" Warren asked.

"They might be," Mulvaney responded. "Or the [Federal Trade Commission] might have enforced the law,” CBS reported.

On Wednesday and Thursday, Mulvaney consistently noted that the CFPB is still litigating 25 cases that were already filed, and there are typically 100 active investigations, according to The Washington Post.  “We’ve not filed any lawsuits since I’ve been there. That doesn’t mean we’re not supervising and enforcing. We’re still going after bad actors,” he said.

Committee Chairman U.S. Sen. Mike Crapo, R-Idaho, indicated that he is concerned about the ever increasing amounts of “big data” and called for discussion on how the CFPB’s data collection process should be narrowed and enhanced.

“The CFPB’s data collection is especially concerning in light of a number of high-profile cyberattacks, such as last year’s Equifax data breach, and recent news about how outside groups have collected private information from Facebook users.”

While Crapo commended Mulvaney for treating these concerns seriously by temporarily freezing the agency’s collection of personal information as the agency reviews ways to improve its data-security program, U.S. Sen. Mark Warner, D-Va., picked up the ball on the Equifax comment noting that he’s “disappointed that [Mulvaney] hasn’t done anything to ensure that we don’t have another Equifax experience.”

Members of the committee and Mulvaney also discussed the need for some bipartisan efforts to change the structure and funding appropriations at the CFPB.

The Economic Growth, Regulatory Relief and Consumer Protection Act (S. 2155), sponsored by Crapo, continues to move through Congress after the Senate approved the bill 67-31 in March.

The Senate bill incorporates many House-backed measures but none to restructure the leadership of the CFPB and reportedly not enough to satisfy House Financial Services Committee Chairman Jeb Hensarling, R-Texas, who released a list of approximately 30 bipartisan bills that he would like to discuss adding to the Senate legislation. This list includes the Financial Institutions Consumer Protect Act (H.R. 2706) which prohibits policies related to Operation Choke Point. The move raised questions about the future of the Senate bill because some of the proposals could be nonstarters with Senate Democrats, whose support is critical to advance the legislation. Lawmakers will try to work out a compromise that both chambers can support.

Meanwhile, in other business related to the CFPB, The Hill reported on Thursday that CFPB Deputy Director Leandra English urged a three-judge panel on the U.S. Court of Appeals for the District of Columbia to rule that she —not Mulvaney—is the rightful leader of the bureau. According to The Hill, there was a question about language in the Dodd-Frank Wall Street Reform and Consumer Protection Act and how it impacts the president's authority under the Federal Vacancies Reform Act to temporarily fill vacancies. Read more here.

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