Consumer Protection Bureau To Lose Its Fangs Under Trump Administration's New Plan The new head of the Consumer Financial Protection Bureau is making the agency less aggressive in its mission. A new plan calls for it to fulfill "its statutory responsibilities, but go no further."
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Trump Administration Plans To Defang Consumer Protection Watchdog

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Trump Administration Plans To Defang Consumer Protection Watchdog

Trump Administration Plans To Defang Consumer Protection Watchdog

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STEVE INSKEEP, HOST:

We have news this morning about the plans of the new leader of the Consumer Financial Protection Bureau. Mick Mulvaney is President Trump's appointee to run the agency that was created to protect Americans after the financial crisis. NPR has obtained an internal memo that says a new strategic plan to be unveiled today will make the bureau less aggressive. In an early move in that direction, the bureau has already dropped a lawsuit against an online loan shark. NPR's Chris Arnold reports.

CHRIS ARNOLD, BYLINE: This agency is a powerful and independent watchdog, but many Republicans have wanted to shut it down since day one because they think it's too powerful. Mick Mulvaney is one of them. As a congressman, he called the bureau a joke.

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MICK MULVANEY: A joke. And that's what the CFPB really has been in a sick, sad kind of way. Some of us would like to get rid of it.

ARNOLD: In fact, Mulvaney drafted legislation to do just that. So people at the bureau were shocked when President Trump appointed Mulvaney to run this consumer protection agency. Within weeks, Mulvaney pulled the plug on a lawsuit. It accused a company called Golden Valley Lending of illegally charging people up to 950 percent interest rates. It took staffers years to build the case.

CHRISTOPHER PETERSON: People are devastated and angry. Just imagine how you would feel if years of your life had been dedicated to pursuing justice, and you lose everything.

ARNOLD: Christopher Peterson is a former enforcement attorney at the Consumer Financial Protection Bureau. He says if the CFPB had pursued and won the lawsuit, that could've clawed back money to help thousands of people who've allegedly been hurt, people like Julie Bonenfant.

JULIE BONENFANT: I was literally facing eviction because I was so behind on my rent, and I had no idea where I was going to come up with the money, and it was just really rough.

ARNOLD: Bonenfant does administrative work for the city of Detroit. She's 27. But last year, she and her boyfriend broke up. Her car got stolen. And she got behind in her rent. So she found Golden Valley and took out a loan. But she says she had no idea what she was getting into.

BONENFANT: It was just misleading. It was just the way it was presented was literally presented as, like, I was going to make four large payments and then be done.

ARNOLD: But after those payments, the lender kept taking money out of her checking account. And she was told she'd agreed online to a lot more payments. She said she didn't realize that. But a screenshot from the Golden Valley website says on her $900 loan, her payments will total $3,735. That's more than four times what she borrowed in less than 12 months.

BONENFANT: I'm trying not to cry, but it was just such a bad year. And, obviously, I didn't really want to tell anybody, like, what had happened because it was so embarrassing and so shameful that I would've fallen for something like this.

ARNOLD: Bonenfant's so far paid more than $3,000 to Golden Valley and rung up more than a thousand dollars in overdraft fees at her bank. Finally, she went to her boss at work for help.

BONENFANT: He looked at it. And he was like, this is criminal. You know, they should be in jail. That's illegal.

ARNOLD: Lawyers at the CFPB came to a similar conclusion. That's why back in April, the bureau sued Golden Valley Lending for unfair, deceptive and abusive business practices. The lawsuit was moving forward until Trump's interim director Mick Mulvaney came on board. And the lawsuit was dropped.

PETERSON: Dismissal of this lawsuit shows an outrageous disregard for the rule of law.

ARNOLD: Christopher Peterson, the former CFPB attorney, worked on the case early on. He says this lender is one of the worst of the worst. It swindled people across the country out of tens of millions of dollars. On top of that, the lawsuit names a key backer of Golden Valley. It turns out he was recently convicted of racketeering in a case involving another online lender. So Peterson says he can't see why Mulvaney would drop this lawsuit against Golden Valley.

PETERSON: The Trump administration is just going to turn them loose and let them off the hook, despite the fact they were making 950 percent interest rate loans to struggling families in ways that were illegal and unauthorized under both state and federal law.

ARNOLD: Mick Mulvaney declined an interview. And in an email, his press person first said that the decision to drop the lawsuit was made by, quote, "professional career staff," not Mick Mulvaney. But that's not true. According to several CFPB staffers who spoke to NPR but who didn't want to be named for fear of losing their jobs, they say Mulvaney decided to drop the lawsuit, even though the entire career enforcement staff wanted to press ahead.

After repeated questions from NPR, Mulvaney's press person acknowledged that Mulvaney was, in fact, involved in the decision to drop the lawsuit. In his new strategic plan and in memos, Mulvaney is clear. He wants to rein in this watchdog agency. He says the previous director was too aggressive and, quote, "pushed the envelope." Now, Mulvaney, wants more, quote, "humility and moderation." He's also suggested that high interest rates, so-called payday lenders will not be a priority.

KARL FRISCH: Mick Mulvaney is a payday industry puppet.

ARNOLD: Karl Frisch is with the consumer group Allied Progress. He points to campaign contributions Mulvaney took from payday lenders.

FRISCH: As a congressman, he took $62,000-plus from the payday lenders. And now at the CFPB, he's doing their bidding.

ARNOLD: Or maybe it's just conservative ideology for less regulation. Either way, there appear to be plenty of unhappy Golden Valley customers.

ROBERT ROGERS: He goes, basically, sir, your mother took out the debt. She needs to pay it back, or there's going to be consequences for that.

ARNOLD: Robert Rogers builds customized motorcycles and guns. He says he was trying to help his retired mother in California after she got into one of these Golden Valley loans. The costs seemed really high, so he called up the company.

ROGERS: And that's when I was like, OK, well, where's this money going? Where - you know, what's the interest rate on this thing?

ARNOLD: Rogers says the man on the phone wouldn't answer those questions. And Rogers says the guy even threatened him.

ROGERS: Pretty much every other word out of his mouth was F'in this or F'in that. You know, like, we'll come to your [expletive] house. You know, I'll get my money by any [expletive] means necessary, brah (ph). He became, like, some kind of just really bad gangster movie.

ARNOLD: Golden Valley did not respond to requests for an interview. It turns out the company is officially headquartered on an Indian reservation. And in a court document, the company argues its loans are governed by tribal law. The CFPB lawsuit said, no, Golden Valley is making illegal loans across the country. For her part, Julie Bonenfant in Detroit still hasn't paid off her debt to Golden Valley. And she doesn't like that President Trump's appointee dropped the lawsuit.

BONENFANT: I actually voted for Trump. I feel kind of, like, stupid, just kind of, like, betrayed.

ARNOLD: Mick Mulvaney hasn't given details about why the case was dropped. Meanwhile, staffers at the bureau say they're worried that Mulvaney will block more of their efforts to go after shady financial firms. Right now he's reviewing numerous ongoing lawsuits and investigations. Chris Arnold, NPR News.

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