Mulvaney Pushes for CFPB Reforms During House, Senate Hearings

Consumer Financial Protection Bureau (CFPB) Acting Director Mick Mulvaney this week appeared before the House Financial Services Committee and the Senate Banking Committee to discuss the Bureau’s Semi-Annual Report to Congress. The bulk of the hearings focused on Mulvaney’s proposals, included in the report, to substantially reform CFPB’s structure and operations.

During his Wednesday appearance before the House Financial Services Committee, Mulvaney, a former member of the Committee during his time in Congress as a representative of South Carolina, focused predominantly on the report’s recommendation that the Bureau’s funding be subject to the congressional appropriations process.

Under the Dodd-Frank Wall Street Reform Act, which established the CFPB in 2010, the Bureau is exempt from congressional appropriations, and instead receives funding directly from the Federal Reserve. Mulvaney argued that the lack of congressional oversight for the CFPB is a fundamental flaw, saying “It’s [the CFPB] not accountable to you. It’s not accountable to the public. It’s not accountable to anybody but itself.”

Chairman Jeb Hensarling (R-TX) largely echoed Mulvaney’s concerns about the power at the disposal of the CFPB director. In his opening statement, Hensarling stated, “So powerful is the CFPB director that he alone has been granted the unprecedented power to declare any mortgage credit card or bank account unfair or abusive, at which point Americans can’t have them.”

Committee Democrats led by Ranking Member Maxine Waters (CA) and Ranking Member of the Capital Markets, Securities, and Investment Subcommittee Carolyn Maloney (NY) questioned the legality of Mulvaney appearing before them as the acting director. Waters stated that Dodd-Frank was clear on this issue; the deputy director, currently Leandra English, should be elevated to acting director in the absence of a Senate-approved presidential nominee. A lawsuit, filed by English, is currently in front of a federal appellate court panel seeking to resolve the dispute.

Democrats also raised concerns about Mulvaney’s dual roles as the CFPB acting director and Office of Management and Budget (OMB) director. Representative Nydia Velázquez (NY) asked a series of yes or no questions aimed at highlighting the potential conflicts of interest a presidential cabinet member could face running the independent CFPB, even temporarily.

Thursday’s Senate Banking Committee hearing followed a similar pattern to the House hearing, with Republicans and Democrats expressing differing views about the nature of the CFPB and its proper mission.

Senator Tom Cotton (R-AR) expressed amusement that Republicans and Democrats had “switched sides” on the CFPB. Cotton stated that under the previous leadership of the CFPB, Republicans were the party dismayed by the actions taken by the Bureau, while Democrats were pleased with the enforcement direction undertaken by the CFPB. With the roles now seemingly reversed, Cotton argued that Congress should adopt the CFPB report’s four recommendations (especially subjecting the CFPB to the appropriations process, requiring congressional approval for major CFPB rule proposals, and allowing the president to remove the director at will) to exercise more control over the Bureau.

A recording of the entire House hearing is available here. A recording of the Senate hearing is available here.