Senator Elizabeth Warren (D-MA), Representative Maxine Waters (D-CA) and four other Democratic members of Congress submitted a letter to Consumer Financial Protection Bureau ("CFPB") officials questioning the agency's recent reversal of course regarding implementation of its rule on payday loans (the "Payday Rule").
As detailed in the letter, the rule was originally scheduled to become fully effective on January 16, 2018. On that same day, the CFPB issued a statement that it would undertake additional consideration of the Payday Rule and allow lenders to apply for waivers exempting them from the first compliance date. The Democrats note that the CFPB also elected to dismiss a case against installment lenders regarding their lending and collection practices and to drop an investigation into a high-cost installment lender accused of abusive business practices. Senator Warren and Representative Waters asserted that current CFPB Director Mick Mulvaney has received political donations from the industry.
The Democratic members of Congress asked the CFPB to provide information on the agency's "reversal" of its position on payday loans, including:
- the basis for Director Mulvaney's reversal of his former contention that only Congress has the ability to delay or reverse the Payday Rule;
- the analysis conducted by the CFPB to inform its decision to halt the Payday Rule;
- whether Director Mulvaney met with members of the payday loan industry before dropping cases or investigations against installment lenders; and
- all communications pertaining to discussion of the Payday Rule as well as related cases and investigation.
Commentary /StevenLofchie
Senator Warren raises fair and tough questions that deserve answers.
As discussed in a separate article regarding the CFPB, the need for Senator Warren to ask these questions (and the possibility that she may have a tough time getting them answered) is very much a case of being hoist by one's own petard. It is Senator Warren who is credited with structuring the agency as a one-ruler kingdom, largely immune from either Presidential or Congressional influence, and without the check of a two-party governing commission to challenge statements by the head of the agency. Now the Senator wishes to raise a legitimate challenge and is confronted by an agency structured in such a way that it can ignore her.
Whether or not the agency structure is ultimately held to be Constitutional, ceding control of an immensely powerful regulatory agency to a single individual largely outside of the authority of either Congress or the President is an imprudent way to run a government. Senator Warren might want to consider saying, "Whoops, I did a bad job on the architecture and it really should be fixed." Though she might find that politically untenable, by admitting such an error she would bring pressure on both parties to fix the structure of the CFPB. If she keeps silent, she loses any say over, or view into, the CFPB's decision-making process for the next five or so years, regardless of who wins the next election.
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