Consumers need a hero, not a hack, to head the CFPB

Consumers need a hero, not a hack, to head the CFPB
© Camille Fine

There has been a lot of attention focused on the battle over who is the legitimate director of the Consumer Financial Protection Bureau (CFPB).

The president has appointed Office of Management and Budget Director Mick MulvaneyJohn (Mick) Michael MulvaneyTreasury retweets Trump, possibly violating campaign law Poll: Majority of likely voters support consumer bureau mission Top Republicans concerned over impact of potential Trump drug rule MORE (who once referred to the agency as a “sad, sick joke”) to be interim director, raising a number of issues and concerns about its future direction.

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For starters, there is a serious legal question as to whether Mulvaney even has a legitimate right to the appointment. A lawsuit is pending by CFPB’s other acting director, Leandra English, arguing that Dodd-Frank requires that she head the agency until a new director is confirmed by the Senate.

 

Add to that concerns that Mulvaney is intimately linked to the White House as a political actor, while Dodd-Frank requires that the CFPB director be independent, and it’s no wonder so many consumer advocates are alarmed.

But the longer-term picture is equally important to consider: President Trump appears poised to select a nominee — in a matter of weeks — to serve as the next director of the CFPB.

Politico reported this week that the president’s list of possible picks is now down to three alarming names: Rep. Jeb HensarlingThomas (Jeb) Jeb HensarlingThe data is mightier than the sword, Mr. President It’s possible to protect national security without jeopardizing the economy California wildfires prompt deficit debate in Congress MORE (R-Texas), former acting Comptroller of the Currency Keith Noreika and George Mason University law professor Todd Zywicki. 

Choosing any of the three is likely to spark a confirmation fight the likes of which haven't been seen in Washington outside of a Supreme Court pick.

Cordray leaves big shoes to fill. He was one of the most effective watchdogs in Washington and was every American consumer’s best friend. He took on big banks like Wells Fargo, insisting they should not be allowed to keep their customers out of court when they defrauded millions of them by opening fake accounts no one ever asked for.

He was a much-needed thorn in the side of predatory payday lenders, which have devised a myriad of schemes to lock low-income Americans into a cycle of endless debt and triple-digit interest rates.

None of the men on Trump’s list are likely to do any of those things. 

Rep. Hensarling, who announced his retirement from Congress just days before Cordray left the CFPB, has received millions in campaign contributions from the very banks the agency is meant to keep a check on, including $1.35 million from commercial banks like Wells Fargo, which ranks among Hensarling’s most generous campaign contributors.

In fact, Hensarling is the top recipient — among all 435 Members of the House — of contributions from commercial banks. For President Trump to select Hensarling would be like selecting the banking and payday lending industries' No. 1 lobbyist to head the agency.

Noreika is no better. As acting director of the Office of the Comptroller of the Currency (OCC), he was one of the most vocal adversaries of the CFPB’s common-sense arbitration rule, which was designed to allow consumers — like the millions defrauded by Wells Fargo — to ban together and take their bank to court.

But Noreika’s position shouldn’t be particularly surprising to anyone paying close attention. Prior to his gig at the OCC, he was a lawyer for the likes of Wells Fargo and JPMorgan Chase. Noreika acted as an industry advocate, rather than a government official, stooping to using plainly incorrect math in a politicized analysis that closely tracked banking industry talking points.

No wonder the New Republic wrote that Noreika has “empowered banks to engage in reckless abuse of their customers.” In fact, when the CFPB issued a rule that placed some limits on payday lenders, for example, Noreika rushed out guidance urging national banks to begin offering their own versions of payday loans.

It would be quite a statement for President Trump to nominate a man to head the CFPB who believes that America is better off when payday lenders are readily able to trap consumers on a debt treadmill. 

While Todd Zywicki may, at first glance, seem like a stealth candidate without the damning paper trail of Hensarling or Noreika, even a quick glance at his views on the agency’s work are reason for real concern. 

In addition to questioning the constitutionality of the CFPB’s mere existence, Zywicki has bemoaned the very position he is now being considered for, writing that the CFPB should not have a “powerful single director."

What's more, in what we can only presume may be a case of political prophecy, he asserted that while former Director “Richard CordrayRichard Adams CordrayPoll: Majority of likely voters support consumer bureau mission Election Countdown: Takeaways from too-close-to-call Ohio special election | Trump endorsements cement power but come with risks | GOP leader's race now rated as 'toss-up' | Record numbers of women nominated | Latino candidates get prominent role in 2020 Michigan race shows two parties on different trajectories MORE may be willing to accommodate particular transparency concerns, his successor could choose to alter those decisions just as easily.”

Zywicki has also attacked the CFPB’s independence. In sharp contrast to the goals of the Dodd-Frank Act, Zywicki advocates a system that would give Congress full budgetary control of the agency so that the CFPB could have its funding slashed if it ever pursued a major contributor who had a lot of sway in the Congress.

“Congress could exercise its spending authority,” he said, as a way to leverage control of the agency’s work. Nevermind that many of those same members of Congress — like Rep. Hensarling — are far too subject to the influence of the powerful banking industry. 

So it’s no wonder that those of us who fight for consumers are so concerned about the initial list of names being floated as possible successors to Cordray. If President Trump is truly considering nominating any of these three for the job, let me be the first to tell him: You’re in for a fierce political fight.

The president would be wise to heed the bipartisan counsel of voters who have overwhelmingly approved of the CFPB’s mission and work during Cordray’s leadership.

If Trump misses this opportunity and nominates someone like Rep. Hensarling, Noreika or Zywicki for the job, he will be making a huge strategic and political mistake that will be met with the full opposition of those who believe consumers need a hero — not a hack — looking out for them in Washington.

F. Paul Bland, Jr. is the executive director of Public Justice, an organization advocating on behalf of consumers, employees, civil rights and the environment.