Trump Strips Consumer Watchdog Of Enforcement Powers In Lending Discrimination Cases

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The Trump administration has stripped enforcement powers from a Consumer Financial Protection Bureau unit responsible for pursuing discrimination cases, part of a broader effort to reshape an agency it criticized as acting too aggressively.

From Washington Post. Story by By Renae Merle.

The move to sharply restrict the responsibilities of the Office of Fair Lending and Equal Opportunity comes about two months after President Trump installed his budget chief, Mick Mulvaney, at the head of the bureau. The office previously used its powers to force payouts in several prominent cases, including settlements from lenders it alleged had systematically charged minorities higher interest rates than they had for whites.

That unit now will move inside the office of the director, where staffers will be focused on “advocacy, coordination and education,” according to an email Mulvaney sent them this week. They will no longer have responsibility for enforcement and day-to-day oversight of companies, he wrote.

Mulvaney has also dropped a lawsuit against payday lenders and said the agency will reconsider rules the financial industry complained would be particularly onerous. He also updated the bureau’s mission statement to include addressing “outdated, unnecessary, or unduly burdensome regulations.”

In a memo to staffers last week, Mulvaney said the CFPB would still look to protect consumers but would not try to “push the envelope.”

“Bringing the full weight of the federal government down on the necks of the people we serve should be something that we do only reluctantly, and only when all other attempts at resolution have failed. It should be the most final of last resorts,” he wrote.

Civil rights and consumer groups said separating the fair-lending office from its enforcement power weakens its power to pursue cases.

“These changes . . . threaten effective enforcement of civil rights laws, and increase the likelihood that people will continue to face discriminatory access and pricing as they navigate their economic lives,” Lisa Donner, executive director of Americans for Financial Reform, said in a statement.

The Office of Fair Lending and Equal Opportunity has headed up some of the CFPB’s most high-profile cases, including a 2015 settlement against Hudson City Savings Bank, a New Jersey-based bank accused of racially discriminating against minority mortgage borrowers. The bank was required to provide $25 million in loan subsidies in what the CFPB called the country’s largest settlement in a redlining case.

The office’s work in the auto lending market has been among the bureau’s most controversial.

In 2013, it led the CFPB case that resulted in Ally Financial, one of the nation’s largest automobile lenders, paying $98 million to settle charges that it systematically allowed minorities to be charged more for car loans than whites.

Then-Attorney General Eric H. Holder Jr. called the decision the “largest-ever settlement in an auto-loan discrimination case.”

Many of Mulvaney’s initial efforts to overhaul the CFPB have gained broad approval among conservatives and the financial services industry. As a Republican congressman, Mulvaney once called the CFPB a “joke” and his supporters say he is bringing a rogue agency under control.

But critics worry Mulvaney’s move to reduce the powers of the fair-lending office reflects the administration’s resolve to hobble an agency created after the global financial crisis to protect consumers against the financial industry.

Read more at Washington Post.

lending discrimination
Trump’s new Consumer Financial Protection Bureau chief, Mick Mulvaney, Jan. 20, 2018. Photo: Washington Post/Jabin Botsford.