Mick Mulvaney, Consumer Bureau’s Chief, Urges Congress to Cripple Agency

April 3, 2018

WASHINGTON — In his first report to Congress as the acting director of the Consumer Financial Protection Bureau, Mick Mulvaney called on lawmakers on Monday to cripple the agency that he has been temporarily tasked with overseeing.

Mr. Mulvaney, a longtime and unapologetic critic of the financial crisis-era bureau, has spent the last several months freezing its enforcement activities, dropping cases on payday lenders and shutting out career staff from major decisions. He has called for the bureau to be more “humble” and less aggressive in its efforts to protect consumers and to consider the impact on businesses when making decisions.

Being on the inside seems to have only redoubled Mr. Mulvaney’s concerns about the bureau’s mandate, which he first expressed while representing South Carolina as a Republican in the House.

“The bureau is far too powerful, and with precious little oversight of its activities,” Mr. Mulvaney, who is also director of the White House’s Office of Management and Budget, said in a message accompanying a 56-page report to Congress that was released on Monday.

Mr. Mulvaney made a series of recommendations to lawmakers that would curb the bureau’s power and independence. He called for it to be funded through congressional appropriations, rather than through the Federal Reserve, which has insulated it from political jockeying. He also recommended that bureau rules be subject to legislative approval and advised that the president should have direct oversight and authority over the bureau’s director. Right now, the director can be removed by the president only for specific and justifiable cause, rather than for political or other reasons.

Mr. Mulvaney also recommended the creation of an inspector general’s office to monitor the activities of the bureau.

“By structuring the bureau the way it has, Congress established an agency primed to ignore due process and abandon the rule of law in favor of bureaucratic fiat and administrative absolutism,” Mr. Mulvaney said.

Republican lawmakers have tried for years — without success — to curb the powers of the agency, which was authorized in 2010 and enjoys broad support among congressional Democrats.

While Mr. Mulvaney — or the person that Mr. Trump eventually selects to succeed him — can weaken enforcement efforts, the fixes that he called for would require legislation. The chances of this are slim, as Democrats in the Senate have vowed to block any bills that would harm the consumer bureau.

On Monday, critics of Mr. Mulvaney assailed the report as an affront to vulnerable consumers.

“He wants to take away the bureau’s independence and then make it harder for it to do its job,” said Mike Litt of the United States Public Interest Research Groups, a consumer advocacy organization. “Recommendations in today’s report, if implemented, would stop the agency from protecting consumers and prevent it from ever being effective in the future.”

But the banking industry, which has chafed at the bureau’s enforcement powers and its approach, has been more than pleased with the direction that Mr. Mulvaney has been charting. On Monday, bank lobbyists cheered his efforts to deregulate.

“We strongly believe an independent, bipartisan commission at the C.F.P.B. — not subject to the political shifts of changing administrations — is the best way forward to provide for accountability, certainty and stability at the C.F.P.B.,” Richard Hunt, president of the Consumer Bankers Association, said.

Next week, Mr. Mulvaney is scheduled to appear before Congress to testify about the state of the consumer bureau. The appearance will likely set up a public showdown with Senator Elizabeth Warren, the Massachusetts Democrat who helped create the agency in the wake of the 2008 financial crisis and who has been its most vocal and influential defender.

House Republicans passed legislation last year that would defang the bureau, but even they appear resigned to the fact that it is likely to survive largely intact. The House is considering how to move forward with a more modest bill to loosen regulations on small and medium-size banks that the Senate passed with bipartisan support in March.

Last month, Representative Jeb Hensarling of Texas, the Republican chairman of the House Financial Services Committee and a longtime proponent for curbing the agency’s power, said he was willing to get behind a financial regulation bill that left the consumer bureau untouched. The reason: He supports Mr. Mulvaney.

“Right now, I’m very happy,” he said of the bureau’s direction under Mr. Mulvaney. “May he rule forever.”