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Warren’s consumer dream dismantled

Senator Elizabeth Warren says she wants “Mick Mulvaney to follow the law . . . so consumers don’t get cheated.”TASOS KATOPODIS/EPA/Shutterstock

WASHINGTON — Eight years ago, Elizabeth Warren fought tooth and nail for a strong federal consumer protection agency that would be free from political influence, with a budget outside Congress’s grasp and a single, independent director appointed to a lengthy five-year term. “My second choice is no agency at all and plenty of blood and teeth left on the floor,” she said then.

Warren won that battle, but the nightmare scenario she warned against has come true anyway.

Trump budget czar Mick Mulvaney, temporarily named to run the agency, is systematically defanging the Consumer Financial Protection Bureau she dreamed up — and taunting her while he does it.


“Despite what you might have read, I’m pretty sure that I’m not the devil,” Mulvaney told a group of state attorneys general on Thursday. “So all the stuff that you’ve read about me and the CFPB, I urge you to take with a grain of salt — except the part about me keeping Elizabeth Warren up at night.”

Mulvaney, whose appointment as the interim director of the CFPB is being contested in a so-far losing battle in federal court, bashed Warren three days in a row in front of various audiences last week. He told one group he’s “tired” of sending form letters back to her weekly barrage of inquiries. He told another that the agency was “tainted” by the “original sin” of its creator.

The intensity of Mulvaney’s repeated gibes at Warren for questioning his leadership of the agency stands out even in Donald Trump’s Washington, where the tone of policy debates is often acid and ad hominem.

For her part, Warren is virtually powerless to stop Mulvaney’s revamping of the agency that is her brainchild. She says she is appalled, but has so far resisted Mulvaney’s attempts to make their fight over its mission personal.


“This isn’t about me,” she said in an interview with the Globe last Thursday. “This is about the hundreds of thousands of people who get cheated by payday lenders and student loan servicers when the CFPB can’t do its job.”

It’s hard to overstate how central the agency is to Warren’s consumer-protection philosophy and the arc of her career; its creation was the culmination of her life’s work and helped launch her career as a senator.

As a law professor, Warren became an expert on consumer debt and personal bankruptcy, which led her to believe that US credit institutions frequently took advantage of average Americans with tricks and traps that mostly went unpunished. She floated the idea of a watchdog consumer organization in a 2007 article, saying people with mortgages, car loans, and other forms of credit need a “cop on the beat” ensuring financial institutions aren’t cheating them.

After the Wall Street meltdown in 2008 — spurred by many financial institutions pushing irresponsible subprime mortgages — her idea gained traction, and was eventually included in the Dodd-Frank financial reform law in 2010. President Barack Obama appointed Warren to set up the new agency and hire its staff, but stopped short of making her its first director. So Warren ran for the Senate instead.

If Warren runs for president in 2020, as some think she may, the bureau will likely loom large on her resume. The agency says it has returned $12 billion to 29 million consumers since its founding.


Mulvaney, a former congressman, insists he’s carrying out the duties exactly as prescribed in the law.Susan Walsh/Associated Press/File 2018

Mulvaney, who called the CFPB a “sick, sad” joke when he was in Congress and fighting to abolish it, is making quick work of moving the agency away from punishing financial institutions, saying employees should instead focus on educating companies about existing rules and crafting new ones.

He also believes the director of the CFPB has far too much power. “I am the judge, I am the jury, and I am the executioner in some of these investigations, and that is completely wrong,” he told a group of credit union advocates Thursday.

Mulvaney was not available for an interview Friday, according to a CFPB spokeswoman.

Since taking over the agency three months ago, Mulvaney has dropped a lawsuit against payday lenders charging more than 900 percent interest in Kansas, hobbled the part of the agency that punishes lenders for racial discrimination, and urged the CFPB’s employees to act with “humility and moderation.”

The agency hasn’t filed a single enforcement action under Mulvaney’s reign, in sharp contrast to the CFPB’s average before he took the job of three actions a month. Mulvaney told employees in a memo that he wanted them to move away from enforcement except in extreme situations.

Warren visited employees on every floor of the CFPB headquarters after Trump won the presidential election, taking selfies and giving pep talks about the need to stay the course. But the appointment of a director so opposed to the agency’s original mission was beyond what financial reform advocates ever imagined, and it raises the question whether the agency’s employees will stick around.


So far, the shakeup hasn’t taken a toll on the agency’s head count. There are about 1,700 CFPB employees now, compared to 1,500 in 2015. But resumes are flying out the door in departments hit hardest by Mulvaney, such as the fair lending division. Other staffers are waiting to see what Mulvaney does before eyeing the exits. He has tried to buttress morale, hosting a series of meet and greets

with employees, including one this week, where he attempts to disarm the CFPB crowd with a chatty, friendly demeanor.

Consumer advocates are worried that Mulvaney’s biggest moves to take the teeth out of the agency are still to come.

“I do think Acting Director Mulvaney is preparing to trash the hotel room,” said Chris Peterson, a former CFPB employee and a senior fellow at the Consumer Federation for America. “I don’t think he’s going to burn the hotel down, but I think he’s going to cause a lot of havoc.”

Warren said she’s not sure what Mulvaney’s intentions are yet, but she was disturbed by his recent move to change the mission statement of the organization to include easing “burdensome” regulations.

“When he changes the mission statement of the agency to talk about the importance of being gentle with financial institutions that cheat consumers, I’m alarmed,” Warren said. “That’s not good.”

With Democrats in the minority in the Senate, Warren and her colleagues can’t force Mulvaney to testify about his leadership plans, issue subpoenas, or conduct other more aggressive forms of oversight. Instead, she’s limited to sending letters requesting information from him about his decisions.


Those letters have gotten more personal in recent weeks. In December, Warren accused Mulvaney of a “naked effort to politicize the consumer agency.” In January, she and other lawmakers asked him whether political donations from payday lenders to his former campaigns had influenced his decision to drop suits against the industry. Mulvaney fired back last month that Warren was not engaging in “civil discourse” and that he would now question her motives, as well.

“You have failed to provide any clarity on the rationale for your actions to harm consumers,” Warren replied this week, reattaching her original questions.

Mulvaney, who as a congressman complained that the CFPB was given so much statutory independence that its director was essentially a “dictator,” is now reminding Warren how little power she has to stop him. He insists he’s carrying out the director’s duties exactly as prescribed in the law.

“If you don’t like it, talk to the person who wrote the statute,” he told a Chamber of Commerce crowd.

Former US representative Barney Frank, a Massachusetts Democrat who helped write the statute, said Mulvaney is wrong, and that Dodd-Frank requires the CFPB to enforce laws against deceptive and unfair practices. That mandate was part of Republicans’ objections to the CFPB in the first place. “He’s now denying that the law means what his party was criticizing the law for meaning,” Frank said.

Warren agrees. “I want Mick Mulvaney to follow the law,” Warren said. “If he would do what the statute said, which is level the playing field so consumers don’t get cheated, we wouldn’t have a problem.”

Warren said she has no regrets about pushing for the CFPB to be a strong, independent agency headed up by one person, instead of a bipartisan board like other quasi-independent agencies.Dina Rudick/Globe Staff/File 2018

She also has no regrets about pushing for the CFPB to be a strong, independent agency headed up by one person, instead of a bipartisan board like other quasi-independent agencies, including the Securities and Exchange Commission.

“Look at the SEC, which has a board and has been tangled for years and years and years in partisan bickering,” she said. “The consequence of a board has been to freeze the SEC so that it’s often not able to follow through on its mission to protect individual investors.”

Republicans, who have long pushed to eliminate the CFPB, largely back Mulvaney’s move to slow-roll the agency. The Senate may begin debate on amending Dodd-Frank as soon as next week, though lawmakers are unlikely to be able to corral the 60 votes necessary to eliminate or significantly change the CFPB.

“It’s a rogue agency,” said GOP Senator David Perdue of Georgia.

Senator Richard Shelby, a Republican member of the banking committee, told the Globe he hopes to eliminate the CFPB altogether. “I’d get rid of it,” he said.

Warren has been using the changes at the CFPB as part of a broader argument about Trump stacking his Cabinet with officials who are abandoning working-class Americans.

But the senator does not appear to have been able to exact a political price for Mulvaney’s actions yet. The controversy over the young agency is not something swing voters in the Heartland know much about: 81 percent of Americans surveyed in a poll conducted last year by said they didn’t know enough about the CFPB to have an opinion about it. But when the role of the agency is described, substantial majorities of voters — including Republicans — support the CFPB.

Warren says she’s frustrated that she can’t do more to help the agency for now, but she’s hopeful the bureau’s employees will ride out the storm.

“The people who work at the CFPB are a pretty tough lot,” she said. “They didn’t come to the CFPB because they thought the lenders that had cheated families were somehow going to lay down and die. They came to the CFPB knowing they would wade into one fight after another.”

The intensity of Mulvaney’s repeated gibes at Warren stands out even in Donald Trump’s Washington.Alex Brandon/Associated Press/File 2018

Liz Goodwin can be reached at Follow her on Twitter @lizcgoodwin