A Trump-appointed judge has issued his ruling. Mick Mulvaney – the Tea Party Congressman turned Trump apparatchik – will run the Consumer Financial Protection Bureau. The political extremist who once said the CFPB was "extremely frightening," who called it "a joke... in a sick, sad kind of way" and said he would "like to get rid of it," is now its Acting Director.
Mulvaney didn't wait for the judge's ruling before taking the helm. He showed up at the office bearing doughnuts for the staff.
Were the condemned being served their last meal?
A quick review of the CFPB website on Monday showed that he had already placed himself at the top of the org chart:
On his first day on the job, Mulvaney froze all hiring and rule-making, bringing the bureau's critical work to an effective standstill. The banks had won the first round. And Trump proved once again that, when it comes to fighting for working Americans, he's just another fast-talking huckster.
The Bad Banker's Friend
Donald Trump was hostile to the CFPB from the start, and he said this as he shoehorned Mulvaney into the director's chair (in a tweet, naturally):
"The Consumer Financial Protection Bureau, or CFPB, has been a total disaster as run by the previous Administrations pick. Financial Institutions have been devastated and unable to properly serve the public. We will bring it back to life!"
Devastated? Wrong as usual, Mr. President. The CFPB began operations on July 21, 2011. Over the last five years, Bank of America stock has risen more than 180 percent. JPMorgan Chase's stock has risen more than 145 percent. Citigroup's has gone up more than 109 percent. Wells Fargo's is up more than 67 percent. None of these too-big-to-fail banks has suffered financially, despite committing the largest corporate crime wave in human history.
And now, Trump and Mulvaney plan to lift another burden from their shoulders. It's good to be kings ... of fraud. But then, Trump's been fighting for bad bankers from the beginning of his presidency – that is, when he isn't appointing them to senior positions in his administration.
Meet the Director
Who is Mick Mulvaney? He's Wall Street's flunky, a tool of the serial fraudsters who nearly brought down the global economy. Mulvaney took the lead in blocking an ethics investigation into the use of ex-lobbyists by the Trump administration, a move one Bush Administration ethics official called “unprecedented and extremely troubling.”
Throughout the Obama years, Mulvaney insisted he was a hardliner on government deficits. He embraced his role as leader of the "shutdown caucus" that was willing to bring government to a halt rather than increase the nation's debt. He nearly derailed relief efforts for Hurricane Sandy victims with an amendment that would have blocked any expenditures that weren't offset by spending cuts elsewhere.
Then, as Donald Trump's Budget Director, Mulvaney embraced a package of tax cuts for the rich and for corporations that increases the deficit by $1.5 trillion, justifying it with fringe economic ideas incubated in the far right.
That's a pretty convenient conversion. But no such conversion awaits Mulvaney at the CFPB. He hated it then and, as recent comments have demonstrated, he hates it now.
Wrong From the Start
When the CFPB was created, Congressional Republicans immediately went on the attack. Sen. Richard Shelby attacked the bureau with a counter-proposal that would have forced regulators to “determine the economic impacts of proposed rule-makings, including their effects on growth and net job creation.”
Senate Republican leader Mitch McConnell said at the time, "We’re simply not going to ... confirm (Cordray) or anybody else to this agency that shouldn’t exist in its current form.” In 2013 McConnell remarked, “If I had my way, we wouldn’t have the [CFPB] at all.” And in 2014 he said in secretly-recorded comments that Republicans would "definitely” defund the Consumer Financial Protection Bureau, which he called “the biggest part of the Dodd/Frank bill.”
Representative Spencer Bacchus was more candid then his Republican colleagues , telling a witness before the Financial Services Committee: “In Washington, the view is that the banks are to be regulated, and my view is that Washington and the regulators are there to serve the banks."
Shelby, Trump, Mulvaney, and other bank-servile Republicans never mention the cost of deregulation. The lack of bank regulations resulted in 8 million lost American jobs, when bank fraud and mismanagement led to the 2008 crisis. That ultimately cost each American household between $50,000 and $120,000, according to a study by the Dallas Federal Reserve.
But then, those costs are borne by the people, not the privileged few. So what do they care?
Campaign of Fear
As of this writing, the CFPB's home page explains its mission in consumer-friendly language, with options such as, "Submit a complaint," "Get answers to money questions," and "Reach your financial goals."
The bureau's considerable accomplishments are also listed there:
"$11.9 billion in relief to consumers from our enforcement actions”; “29 million+ consumers will receive relief because of our actions"; or, "97% of consumers get timely replies when we send their complaints to companies."
It's hardly the stuff of totalitarianism. But to hear Mick Mulvaney and his fellow Republicans speak of it, you'd think it was filled with proto-fascist bureaucrats run amok. They've attacked the bureau with a campaign of fear.
Mulvaney himself said of the CFPB, “It’s a wonderful example of how a bureaucracy will function if it has no accountability to anybody,” and that the bureau's director was "essentially a one-person dictator.” That language might have been dictated by the Consumer Banking Association, which said recently that "the CFPB's current governing structure is a dictatorship, period."
The Real World
In reality, the CFPB operates under strict rules and limits. As the Consumer Federation of America notes, it "faces far more oversight of and constraints on its activities than any other banking regulator."
The CFPB's oversight and constraints include: semi-annual testimony and annual reports for Congress; annual audits; mandated evaluations of its rules' effect on small business, including cost-benefit analysis; appeals processes and judicial review of its actions; the ability of other regulators to veto its decisions; and, a capped budget.
These rules came in for some criticism at the time, because they limited the CFPB's authority. Eighteen former members of the Federal Reserve’s Consumer Advisory Council (CAC) issued a letter in 2010 calling a fully independent Consumer Financial Protection Agency. Instead the agency was officially downgraded to a bureau and placed within the Federal Reserve system, an idea that the former CAC members had specifically rejected.
Nevertheless, the bureau has racked up an impressive series of accomplishments. In addition to its work educating consumers, the bureau has played a key role in bringing illegal bank behavior to light and holding them accountable. For example, it played a critical role in disclosing that Wells Fargo committed two million felonies by illegally opening millions of phony bank accounts for its customers – a practice that was encouraged at the highest levels of the organization.
Why Shouldn't Trump Pick His Own People?
What Trump did in placing Mulvaney at the Bureau will seem reasonable to a lot of people. Why shouldn't the president be able to hire the people he wants? Actually, there are very good reasons why some positions come with fixed terms, and with strict rules about hiring, Senate confirmation, and replacement of senior officials. It's important to insulate some positions from partisan political pressure, to protect them from exactly the kind of behavior we are seeing from Republicans today.
The double appointment of Mulvaney as both CFPB Director and head of the Office of Management and Budget raises additional concerns about conflicts, salaries, blurring of institutional roles, and ethics. (Remember, Mulvaney already has a tarnished record in that area.)
Sen. Elizabeth Warren, the architect of the CFPB, has written an excellent letter to Mulvaney and Trump's White House lawyer asking them to address these and other concerns.
They Live to Serve
Mulvaney is part of a Trump economic team that includes Gary Cohn and Steven Mnuchin, two of the most predatory bankers in the country. instead of going to jail, those two bankers now go to work every day setting financial policy for the rest of us.
It's like letting the town gangsters hire the chief of police.
Now that Team Trump has succeeded in overriding the independence of this regulator, it's undoubtedly preparing to target others. The underlying problem is the role of money in politics. As long as big campaign contributors call the shots, reform is always going to be endangered by people like Trump, McConnell, and Mulvaney. This is one battle in the struggle to regain democratic control of the country's democratic institutions.
It turns out that Rep. Bacchus was right, at least as long as people like these are in charge: Washington really is there to serve the banks. And Mick Mulvaney is there to bring the doughnuts.