As Director of the Fair Financial Services Project of Texas Appleseed, a sister organization and part of our collaborative network, Ann Baddour helps bring low-income and immigrant consumers into the financial mainstream, combating problems such as predatory lending. For the past four years, she has also been a member of the Consumer Financial Protection Bureau’s Consumer Advisory Board, or CAB, and since last October, has served as CAB chairwoman.
On June 6, Baddour and the rest of the 25-member volunteer board were removed, two days after 11 of them held a press conference, criticizing the cancellations of CAB meetings and apparent efforts to sideline the Board since a Trump appointee took over the Consumer Financial Protection Bureau, or CFPB.
Read what she has to say about it in a New York Times op-ed published on June 7, entitled “Why Did the Consumer Financial Protection Bureau Fire Us?”
According to Baddour, the CFPB, “established to put the financial well-being of families ahead of the interests of lobbyists and Wall Street,” is being “gutted.”
“This sudden move and other recent changes at the bureau, including efforts to loosen rules intended to protect families and businesses, raise the worrisome prospect that the country will once again end up on a path to foreclosed homes, market failures and taxpayer bailouts,” wrote Baddour.
The CFPB, an independent agency created in 2011, was authorized by the Dodd–Frank Wall Street Reform and Consumer Protection Act, passed in 2010 in response to the 2007-2008 financial crisis and Great Recession. Its mandate covers a broad swathe of activities that have a huge impact on people’s lives—from the mortgages they obtain to purchase homes, to the loans they incur to buy cars or educate their children or start a new business, to the credit card debt they incur in paying for medical care, food, and other essential goods and services.
The CFPB has been remarkably effective in its mission, at least until the departure of founding Director Richard Cordray on November 24, 2017.
During its first six years, the CFPB recovered nearly $12 billion for about 29 million consumers who had been cheated or overcharged, collecting an additional $589 million in civil penalties. It has also undertaken broad efforts to educate consumers through such means as its Financial Aid Shopping Sheet, adopted by more than 3,200 colleges to help students and their parents figure out how to pay for higher education, and its Know Before You Owe initiative, which has helped more than 4 million home buyers understand the mortgage process and their borrowing options.
Another major accomplishment was its adoption last October, of a rule meant to protect against payday lending practices that prey on low-income borrowers with short-term, high-interest loans. Under its new director, Mick Mulvaney, put in place by Donald Trump after Cordray’s departure, the agency sided with industry trade groups that sued to push back the scheduled August 2019 implementation of the rule, while it prepares a watered down version. On June 12, a federal judge refused the request but the rule remains in jeopardy.
Mulvaney, who was Director of the Office of Management and Budget when Trump named him Acting Director of the CFPB and continues in that role, is a former Congressman who tried to legislate the CFPB out of existence. The New York Times has reported that Mulvaney accepted nearly $63,000 in campaign contributions from payday lenders.
It is no surprise that, under Mulvaney, the agency has been rolling back the protections put in place under Cordray as well as backing off enforcement actions and generally seeking to undo the agency’s success in protecting consumers,
The CAB, whose members include law school professors, consumer advocates from such groups as Habitat for Humanity and the National Consumer Law Center and industry representatives from such companies as MasterCard, Citi and NerdWallet, has been an important part of the CFPB’s work. The CFPB website describes the CAB as a “crowdsourced group of experts on consumer protection, consumer financial products or services, community development, fair lending, civil rights, underserved communities, and communities that have been significantly impacted by higher priced mortgage loans.”
The CAB, which is legally required to meet at least twice annually, was meeting three times a year under Cordray, typically holding two of those meetings by June. Since Mulvaney took over, it has not met once. Its last meeting took place on Nov. 1-2, prior to Cordray’s departure.
According to news reports, Mulvaney canceled two meeting dates in February and one the first week of June.
CAB members wrote to him twice expressing concern but received no meaningful response before resorting to a press conference.
Mulvaney indicated that he plans to have an entirely new board in place by the fall and that none of the original members is welcome to apply for a seat.
On June 16, the White House announced that Kathy Kraninger, an associate director at the Office of Management and Budget who works under Mulvaney, will be nominated to replace him at the CFPB. The nomination is subject to confirmation by the Senate