Jonathan P. Baird

In following the actions of the Trump Administration, one area that has received insufficient attention is the dramatic weakening of consumer protection. Trump and his appointees are gutting consumer protections and opening the door to more Americans being fleeced, defrauded, and preyed on by predatory lenders.

Nowhere is this more evident than in Trump’s actions around the Consumer Financial Protection Bureau (known as the CFPB), the federal agency created after the 2008 financial meltdown. The agency has had a mission to protect the public from unfair and deceptive financial tricks and traps.

Trump and his appointees have turned a once-vibrant federal agency into a do-nothing embarrassment. During the last four years of the Obama Administration, enforcement actions averaged three-to-five each month. Since the start of the Trump Administration, there have been zero enforcement actions.

During the Obama years, the CFPB returned more than $12 billion to more than 24 million people who were cheated by banks, credit card companies and student lenders. It helped many millions more by creating new rules for mortgages, credit cards, checking accounts, prepaid cards and payday loans. Such rules made the market fairer.

I would mention the Wells Fargo scandal, when the bank cheated millions of its customers by opening fake accounts without permission. Customers got hit up with unanticipated fees and charges. The CFPB, during the Obama years, imposed a $100 million fine on Wells Fargo.

Now, under the Trump Administration, the practice of refunding dollars to consumers who were bilked as well as the practice of imposing civil penalties on bad-actor banks and corporations are things of the past. Not surprisingly, in its 2019 budget plan, the Trump Administration proposed to cut the CFPB budget and to restrict its enforcement powers.

The Trump Administration actually requested $0 in second quarter 2018 funding for the CFPB.

At the helm of CFPB, Trump placed Office of Management and Budget Director, Mick Mulvaney. Mulvaney had previously called the agency a “sick, sad joke” and as a Congressman had co-sponsored legislation to eliminate it.

This is another fox in the chicken coop situation where the President appointed an individual fundamentally opposed to the mission of the agency he is supposed to run. Matt Taibbi wrote that putting Mulvaney in charge of CFPB was worse than Vlad the Impaler running the Red Cross. Mulvaney, a former House Freedom Caucus member, has compared government regulation to a “slow cancer”.

According to the National Institute on Money in State Politics, during his six year career as a Congressman from South Carolina, Mulvaney received $57,100 in campaign contributions from the payday lending industry. That industry also gave large sums to Trump.

Advance America, the nation’s largest payday lender, donated $250,000 to Trump’s inauguration. Rod Aycox, a title loan executive, and his wife each gave Trump $500,000. The payday lending industry’s trade group, the Community Financial Services Association of America will hold its 2018 annual conference and expo at the Trump National Doral resort in Miami in April.

So as was predictable, in January, the CFPB dropped a lawsuit against four payday lenders that charged interest rates as high as 950 percent. These payday lenders had been previously fined repeatedly under the Obama Administration.

The CFPB also quietly closed a nearly four year investigation into a subprime lender from South Carolina that allegedly charged customers exorbitant interest rates. The South Carolina company, World Acceptance Corporation, had previously given Mulvaney $4500 in campaign donations between 2013-2016.

On March 23, Mulvaney announced the CFPB will drop its probe of Kansas-based National Credit Adjusters, a company that collects debt from high-interest loans issued on tribal lands. The previous CFPB Director, Richard Cordray, had been set to sue NCA before the change of administration. Reuters also reported that Mulvaney will likely end the CFPB investigation into Security Finance, Cash Express, and Triton Management Group, three other payday lenders.

Even more disturbing, the CFPB announced it is reconsidering rules governing payday lending which were finalized last October under previous Director Cordray. The rules required payday lenders to verify that borrowers could pay back the loans before lending. The rules also capped the number of times someone could take out successive loans.

The anti-consumer bent of the Trump Administration has shown up in multiple other ways. Trump’s appointees to the U.S. Consumer Product Safety Commission have consistently aligned themselves with the position of regulated industries at the expense of consumer safety. They have eased enforcement, backed off recalls and protective rule-making. The inevitable result will be less safe products. Remember exploding android phones and defective hoverboards. Dangerous products can be a matter of life and death.

Education Secretary Betsy DeVos has sided with student loan services and for-profit colleges rather than the students who have been defrauded or loaded up with debt they cannot repay. DeVos has stalled debt forgiveness to thousands of students who claim that for-profit colleges cheated them. She also revoked Obama-era directives that penalized student loan servicing companies for poor service and that required the companies to provide borrowers with accurate information about their debt.

In her most recent move, DeVos bizarrely argued that states lack the authority to oversee student loan companies operating in their states and that this regulation should be left to the federal government.

The pattern could not be clearer: welcome to predatory lenders, scam artists and all variety of shady businesspeople. We need to remember that the President is the same individual who conned hundreds of young people and their parents into paying to attend fake Trump University. As a builder, he was legendary for hiring contractors who he then stiffed and never paid after their work was completed.

Democrats, progressives, and independents need to stand strong for consumer protection. The last thing we need now is for Democrats, including corporate-friendly Democrats, to be acting like Republicans. The political choices in 2018 and 2020 must be posed as starkly as possible. If they are not, too many voters might pass on casting a ballot, feeling it does not matter.  That is an alternative we cannot afford.