Acting Consumer Financial Protection Bureau Director Mick Mulvaney on May 9 announced a sweeping reorganization of the bureau that could see the acting director have more influence over enforcement and supervision and lead to more political oversight of its consumer complaint database.
The bureau’s Office for Students and Young Customers and the Office of Consumer Response will be absorbed into the Office of Consumer Education and Enforcement, Mulvaney announced in an email to CFPB staff obtained by Bloomberg Law.
In addition, Mulvaney announced that the CFPB would now have an Office of Cost Benefit Analysis that would be housed within the director’s office and that the bureau’s Project Catalyst, an effort to provide room for financial technology companies to experiment, will now be called the Office of Innovation and be housed within the director’s office.
The announced changes are an attempt to put Mulvaney’s stamp on an agency he likely will not lead on a permanent basis.
“He’s not wasting any time to leave his mark,” Lucy Morris, a former deputy enforcement director at the CFPB and now a partner at Hudson Cook LLP, told Bloomberg Law in a telephone interview.
The CFPB restructuring has drawn industry ire over the new degree of oversight it brings to several offices.
In one move, Mulvaney has brought the CFPB’s Office of Consumer Response into the bureau’s Office of Consumer Education and Engagement. That unit, which operates and monitors the CFPB’s industry-loathed public consumer complaint database, had been housed in the CFPB’s operations unit.
Mulvaney has publicly discussed making the complaint database nonpublic, deriding it as a sort of Yelp for government filled with unverified complaints.
Moving the consumer response division doesn’t necessarily mean the bureau is going to take down the complaint database immediately, Benjamin Olson, the former deputy assistant director in the CFPB’s Office of Regulations, told Bloomberg Law.
But the consumer response division is going to have much closer oversight by Sheila Greenwood, a Mulvaney political appointee who oversees the consumer education and engagement office, Olson said in a telephone interview.
“By moving consumer response over, you get it under political supervision,” he said.
Along with moving the consumer response unit to the education and engagement office, Mulvaney announced that the CFPB’s Office for Students and Younger Consumers would move into that division, as well.
That unit, led by Student Loan Ombudsman Seth Frotman, is responsible for overseeing private student lenders and servicers to determine whether there are problems bubbling up from $1.5 trillion in outstanding student loan debt.
Although the student loan ombudsman does not have enforcement authority, the unit’s work has contributed to an ongoing CFPB enforcement division lawsuit against student loan servicer Navient Corp. and more than $750 million returned to borrowers.
“It’s not the job of consumer education to go after folks who are doing bad things,” Persis Yu, the director of the National Consumer Law Center’s Student Loan Borrower Assistance Project, told Bloomberg Law in a telephone interview.
The aggressive oversight of private student lenders and servicers led Education Secretary Betsy DeVos to end an information-sharing agreement with the CFPB on Aug. 31.
By moving the student loan watchdog into the CFPB’s education unit, Mulvaney may be trying to tame the unit and take away its aggressive oversight, Christopher Peterson, a professor at the University of Utah Law School and a former top CFPB official, told Bloomberg Law.
“The government needs somebody to keep track of whether companies are cheating their customers. They’re moving it because they want to stop that,” Peterson said in a May 9 telephone interview.
Mulvaney has also moved to create an Office of Cost Benefit Analysis within the director’s office.
The CFPB is required to do cost-benefit analyses on the regulations it issues.
Most of that work is done in the bureau’s Division of Research, Markets and Regulation.
Although Mulvaney’s email to CFPB staff did not say exactly what the new office would be doing, the fact that it is in the director’s office indicates that it will have a lot of power to oversee regulatory efforts, Morris said.
“This is another way to slow down the process. It’s consistent with Mulvaney’s memo to the staff in January, where he said there’s going to be a lot more math in the future,” she said.
But the new office’s reach could extend far beyond regulations, Olson said.
Enforcement, supervisory, and other nonregulatory efforts at the bureau could be subject to review by the new cost benefit analysis office, potentially allowing the acting director to exert more influence, he said.
“This indicates that there is going to be a check from the top,” Olson said.
Mulvaney’s latest maneuvers inside the CFPB come after he shifted the bureau’s Office of Fair Lending and Equal Opportunity into the bureau’s enforcement division Feb. 1 and began naming political appointees to oversee the CFPB’s day-to-day operations. Mulvaney indicated in his May 9 email that he is looking to hire a new political appointee to oversee the CFPB’s legal division.
Mulvaney has also been referring to the CFPB as the Bureau of Consumer Financial Protection and commissioned the creation of a new seal for the agency.
Put together, the moves from the acting CFPB director are an attempt to reshape both the bureau and its interactions with the public before he returns to his full-time job as Office of Management and Budget director.
“Mulvaney certainly seems to be dismantling the parts of the agency that help it connect to the public,” National Consumer Law Center Associate Director Lauren Saunders said in an email to Bloomberg Law.
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