The Consumer Financial Protection Bureau is undergoing some absurd Trump-era drama, the kind that would have blown all our minds and been the top story for a week on Jon Stewart’s Daily Show under Obama or Bush, but that now makes up just one small ingredient in the rich gumbo of fucking insanity we are fed every day.
Richard Cordray, who had led CFPB since 2012, stepped down last week, probably because he wants to run for governor of Ohio. The Trump administration tried to appoint OMB director Mick Mulvaney, who has called the agency a “joke” and is known to most for criticizing those greedy Meals on Wheels fuckers, to replace him. Except the law that created the agency, the Dodd-Frank Wall Street reform law, says that when the director leaves, the deputy director takes their place. So the deputy director, Leandra English, has also assumed leadership of the agency. Both sent welcome emails to staff this week; Mulvaney brought in donuts.
As it currently stands, a judge has ruled in Trump and Mulvaney’s favor.
As with so many Trump-era stories, this development is very disturbing, beneath the surface layer of Veep-style stupidity. It’s not just a naked power grab—though it is also that—it’s an attempt to undermine an agency that is explicitly designed to protect consumers from the endemic abuses of financial institutions.
The agency has levied more than $5 billion in fines as of March 2016, and returned $12 billion to consumers who have been cheated of their money by financial institutions. By the end of his first day, Mulvaney had already instituted a freeze on hiring, new regulations, and the issuing of new civil penalties. Trump and his Republican enablers and servants aren’t just trying to control the agency for the sake of it: They’re trying to destroy it, to help the financial industry and hurt consumers.
Not many federal agencies are set up like the CFPB was, with the mission to protect consumers so explicit—it’s literally in the name! It was also supposed to be at least partially immune from the sort of partisan pressure that led to the complete defanging of agencies like the FEC and the pro-industry capture of the FCC. The director can’t be fired, and the party controlling the White House or Congress can’t end up with a decisive majority on any sort of controlling commission. But all the good intentions in the world could not protect the CFPB from politics, nor from the corrosive influence of the industries it was supposed to regulate.
The theory of “regulatory capture,” where government agencies designed to regulate an industry end up serving the interests of that industry rather than the interest of the public, is proven every day in Washington. It’s even worse than that formulation suggests: The FCC’s recent decision to obliterate net neutrality to see that agencies, for example, shows agencies often make decisions that benefit not “an industry” as a whole, but just a few extremely large and powerful companies that dominate those industries.
The CFPB was never immune to this. Long before Trump, several top employees walked right through the revolving door to work for the industries they used to regulate. Peter Carroll left his position as the CFPB’s assistant director of mortgage markets to go and be “senior vice president of capital markets at Wells Fargo Home Mortgages,” whatever the fuck that is. Another CFPB employee, Lisa Applegate, left a role in regulating mortgages at the agency to go and help Wells Fargo sell those mortgages. Raj Date, a former deputy director at the CFPB and the agency’s first interim leader, left the agency to start his own financial technology venture capital firm with several other former CFPB employees. That firm has helped start companies like College Ave, a private student loans company, offering loans with interest rates of up to 12.5 percent for undergraduate loans. Another of their listed companies, PayJoy, will lend you money for a new phone—but they’ll shut your phone down remotely if you don’t make payments. Cool job, Raj!
Still, the fact that the financial industry hates the CFPB so much should tell you how important it is, hampered and weakened by Washingtonitis as it is. In August, the New York Times reported that financial industry lobbyists were “working behind the scenes on efforts to dismantle some of the bureau’s signature initiatives,” and they’ve been fighting the agency tooth and nail since its inception. Last year, a secretive non-profit even ran ads on cable attacking the agency. That doesn’t happen unless you’ve pissed off some rich guys.
It isn’t theoretically impossible to create a good agency that protects consumers from predatory financial practices. Really, it shouldn’t even be a “partisan” goal to begin with. But it is basically impossible to do so in an age where industry influence seeps like poison gas into every corridor in Washington, where the payouts for leaving your agency to go work for the bad guys are simply too appealing (and where there’s no law stopping that), and where money rules the day.
It’s of course relevant and important that Trump is attempting to grab power so nakedly, and flouting our good friends The Democratic Norms in doing so. Presidents shouldn’t do things just because they want to, whether they’re legal or not (boy, we’ve all said that a lot since January 20, 2017). But the bigger truth here is that the CFPB was never safe from toxic corrosion, be it from Mick Mulvaney’s donut coup or from financial sector influence in general. Without curbing the influence of industry across the board—without banishing the entire class of overpaid Brooks Brothers motherfuckers in D.C. whose lives’ work is to sway the government in favor of their industries and away from whatever is actually good for people—we’ll never have a CFPB safe from the Mick Mulvaneys of the world.