Democrats push CFPB's Mick Mulvaney on payday lending

Three Senate Democrats are demanding the head of a consumer watchdog bureau to explain why he plans to weaken protect...

Posted: Feb 23, 2018 9:39 PM
Updated: Feb 23, 2018 9:39 PM

Three Senate Democrats are demanding the head of a consumer watchdog bureau to explain why he plans to weaken protections that guard against payday lenders.

Senators Elizabeth Warren, Jeff Merkley and Richard Blumenthal in a letter Friday rebuked Mick Mulvaney, the acting director of the Consumer Financial Protection Bureau, for failing to explain recent changes at the agency, including delaying rules to rein in payday loans and dropping lawsuits against payday lenders.

"You have failed to provide any clarity on the rationale for your actions to harm consumers," the senators wrote in response to a Feb. 15 letter by Mulvaney obtained by CNNMoney. "You failed to answer a single one of our questions."

Related: Trump official: Regulators don't have a 'blank check'

In that letter, Mulvaney refuted the Senators' claims that his actions at the agency were not based on a "careful examination of law and facts." The response was just two paragraphs long.

"I never thought to consider, for instance, whether your vote against repealing the bureau's arbitration rule was influenced by campaign donations you may have received from trial lawyers or other parties who stood to gain financially from the rule," Mulvaney wrote in his letter.

Since his appointment, Mulvaney has pressed ahead in restructuring an agency he believes has too much power and has often acted too aggressively.

The bureau was created by the 2010 financial reform law known as Dodd-Frank. Its mission was to protect American consumers from predatory lenders and bullying debt collectors. But it has reversed course under Mulvaney, the interim director appointed by Trump last November.

Related: Democrats to Trump's CFPB chief: Who's looking out for consumers?

In January, the bureau delayed rules to rein in payday lenders that cash-strapped Americans often use to obtain small amounts of money - typically between $200 and $1,000. Usually the money needs to be paid back in full when a borrower receives his or her next paycheck, and such loans often come with exorbitantly high interest rates.

Mulvaney has publicly disputed he is killing a rule that protects consumers.

"I think it's inaccurate to say that we've wiped out the payday rule," Mulvaney said at a recent hearing on the president's budget earlier this month. "We've simply given notice that we're going to take additional comments on additional rule making."

The CFPB has also dropped lawsuits against four payday lenders.

The agency, under former CFPB Director Richard Cordray, had accused lenders of deceiving consumers and unlawfully withdrawing from their bank accounts to pay debts they didn't legally owe. Two of the firms, Golden Valley and Silver Cloud Financial, have offered online loans of $300 and $1,200 with interest rates up to 950%.

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