The Trump administration has been systematically dismantling the Consumer Financial Protection Bureau, brainchild of Elizabeth Warren and the most solid success of the Dodd-Frank Wall Street reform. It was clear when Trump put then-Office of Management and Budget Director Mick Mulvaney in charge on an “acting” basis that the CFPB’s days of working on behalf of Main Street against Wall Street were over. Now new documents obtained by American Oversight under the Freedom of Information Act and provided to Mother Jones show the deep level of commitment Mulvaney and the team he brought in have to that one goal. Mulvaney went on a political hiring spree as a means of undercutting the career staffers, putting people in place who applied for the jobs on the basis of “their experience working to weaken the bureau’s authority.”
Mulvaney started by undermining the basic structure of the agency, crafted by lawmakers to avoid politicization by limiting the political appointees to just one—the director—and staffing with career civil service employees. Mulvaney created a slew of new positions for political appointees, setting up a parallel structure through which his hand-picked team would be able to control or override the existing staffers. He packed his team with people who touted in their resumes their previous efforts to undermine the agency.
Among his first hires was lawyer Brian Johnson, a longtime aide to Texas Rep. Jeb Hensarling on the House Financial Services Committee, where the Republican had been a powerful foe of the CFPB. Johnson was appointed as a senior director, acting as Mulvaney’s deputy. His resume “noted that he conducted ‘oversight’ and ‘investigations’ of the bureau’s spending and highlighted that he had ‘drafted and assembled several titles of the Financial CHOICE Act, including CFPB reforms.'” He brought in Eric Blankenstein as a senior-level policy director in the bureau’s law enforcement arm. Blankenstein “emphasized his time poking holes in the very same laws while doing legal work for banks under CFPB scrutiny. One line on his CV highlighted working at law firm Williams and Connolly, where one of his clients there was TCF Bank.” TFC Bank had been targeted by the CFPB in January 2017 for bilking customers with bogus overdraft services and fees. Within six months of Blankenstein’s hiring, that case was settled under favorable terms for the bank, with “what people inside the agency have reportedly dubbed ‘the Mulvaney discount’—drastic reductions in fines for corporate offenders.”
Mulvaney also brought in Hallee K. Morgan as an attorney-adviser in the director’s office. Morgan had worked with Johnson for Hensarling, and she got the job by “highlight[ing] her work writing an internal House report rejecting disparate impact theory, which holds that discrimination can happen even if unintended by the lender, and has been the legal underpinning of the vast majority of the CFPB’s lending discrimination cases.” Mulvaney soon after announced that he was “reviewing” the use of disparate impact in fair-lending cases, and Trump signed an executive order invalidating its use in auto-lending investigations.
“If their hiring was based in part on touting a commitment to fight against the work of the Bureau, that raises real ethical questions for me,” Melissa Jacoby, a consumer finance professor at the University of North Carolina at Chapel Hill School of Law, told Mother Jones. “How is that helping the American public?” That’s a rhetorical question, of course. The CFPB under Trump isn’t supposed to be helping the American public. To the extent that it still exists, it’s intended to do nothing, to allow financial service companies and auto dealers and banks and student-loan providers and payday lenders to more effectively bleed us all dry, particularly people of color and poor people. It also invites a return to the practices of Wall Street that resulted in the global economic meltdown last decade.
“If they are successful in trying to weaken this organization, that’s something that will be felt by American families,” says Jacoby. “As people’s memories of the 2008 crisis fade…it may be helping to create more opportunities for systemic risk again. And that’s going to be on them.”