As President Trump was touting his administration’s success at lowering African-American unemployment in the State of the Union address on Tuesday night, an email appeared in the inboxes of staff at the Consumer Financial Protection Bureau. The email was an announcement from CFPB Acting Director Mick Mulvaney that he would be seizing control of the office in charge of preventing lending-discrimination by banks. This is a move that is sure to have severe repercussions for African Americans and other minorities in need of loans.
In the wake of the 2008 financial crisis, the CFPB was established to regulate the banking industry and ensure transparency for consumers. Within the bureau, the Office of Fair Lending and Equal Opportunity (OFLEO) was set up to stop racial discrimination in lending, which was a major contributor to the 2008 crash because so many predatory loans were aimed at minorities. Since 2011, OFLEO has succeeded in returning hundreds of millions of dollars to minority consumers who were ripped off by lending institutions using discriminatory practices. The office was doing exactly what Congress had empowered it to do.
Now it appears that the Trump administration wants to strip the CFPB of its regulatory power.
When Trump picked Mick Mulvaney to run the CFPB in November, the choice set off serious alarm bells with consumer protection advocates. Mulvaney once called the CFPB a “sad, sick joke.”
In moving OFLEO to a different part of the agency, and under his own control, Mulvaney is effectively stripping it of its power to police and regulate. It has been defanged. The office will now be lumped in with a personnel office that promotes “equal employment opportunity and diversity and inclusion” within the CFPB.
Senator Elizabeth Warren was a chief architect of the CFPB. When asked how she views Mulvaney’s changes, her response was this:
“For years, Mick Mulvaney opposed CFPB’s efforts to fight discrimination in the consumer financial marketplace even as the agency returned $400 million from discriminatory financial institutions to American families who had been overcharged or denied credit. Mulvaney is putting the Office of Fair Lending under his control so that he can weaken it – leaving neighborhoods and consumers across the country more vulnerable to bias.”