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The CFPB Has Been Great for Consumers. So of Course Trump Wants to Gut It.

Despite railing against Wall Street in 2016, the president is battling to hobble the one agency devoted solely to protecting financial consumers.

Jim Watson/Getty Images

For the civil servants at the sole financial regulator devoted to protecting consumers, Monday morning wasn’t just a dreary return to work after a holiday break. It also occasioned an awkward dance between two competing bosses who both claim to be in charge.

The Consumer Financial Protection Bureau’s first and so far only director, Richard Cordray, abruptly resigned last week. President Trump wants his budget director, the ultra–fiscal conservative Mick Mulvaney, who has called the CFPB a “sad, sick” joke, to lead the agency. Leandra English, who was deputy director under Cordray, argues that she should be made acting director automatically, and filed a lawsuit this weekend saying that Trump lacks the authority to replace her.

Why is Trump playing such a strong hand? He says it’s because the bureau was “a total disaster” under the previous leadership. “Financial Institutions have been devastated and unable to properly serve the public,” he tweeted over the Thanksgiving break. “We will bring it back to life!”

There’s no evidence at all, however, to back those claims. In fact, one would think Trump would be the CFPB’s biggest champion, given its wild success in helping everyday Americans square off against banks, which would seemingly fit with the populist façade he stood behind during his campaign. But as with so many things, Trump’s true colors bled through as soon as he got into office. Installing Mulvaney as the head of an agency he loathes is just one more kiss that Trump has blown to the finance sector.

Before the CFPB existed, there was no single government entity tasked with protecting American consumers from predatory practices in the financial industry. Some duties fell to the Federal Reserve, the Office of the Comptroller of the Currency, and the Office of Thrift Supervision, but financial entities such as mortgage lenders, credit card companies, debt collectors, credit reporting firms, and payday lenders faced few rules and scant oversight. If you can now read the plain-English, two-page disclosures that come with credit cards and mortgages, you have the CFPB’s work to thank. Before it changed the rules, the typical credit card contract had ballooned to 30 pages.

After Wells Fargo was exposed in 2016 for illegally opening millions of fake accounts for its customers, the CFPB secured full restitution for the victims and a $100 million fine. When the Equifax hack became public earlier this year, the CFPB started an investigation. The same happened when hundreds of RushCard customers lost access to the money they had stored on their prepaid debit cards.

Its success can also be added up in dollars and cents. It’s netted nearly $12 billion from financial firms to provide relief for 29 million consumers, including about $3.8 billion in direct compensation. Almost $400 million of that came without consumers having to lift a finger, thanks instead to its supervisory actions. Firms have also been made to pay $600 million in penalties.

Republicans who dislike the CFPB fire back that the heightened regulations have hurt banks, which hurts the economy. It’s hard to find the evidence for this claim, however. Big banks’ profits are just about back to where they were before the recession—a recession that they, it should be remembered, in large part caused. The CFPB doesn’t seem to have made much of a dent.

Even smaller banks have fared just fine since the CFPB was created in 2011. Community banks have mostly guarded their market share from larger institutions, and their lending rates have even grown. The smallest community banks have dwindled, but that was a trend that began two decades ago.

Republicans haven’t budged in the face of these facts, however. They opposed the creation of the CFPB from the beginning, and are devoted to whittling away at it. They’ve pushed to weaken its independence and effectiveness by monkeying with its structure. The House passed the CHOICE Act in June, which would strip the CFPB of its authority to supervise, police, and examine financial institutions; bar it from overseeing payday loans; and let the president fire its director at whim.

Candidate Trump appeared ready to strike a different pose in office. On the campaign trail, he railed against “hedge fund guys.” He promised not to “let Wall Street get away with murder,” arguing that “Wall Street has caused tremendous problems for us.” It was all part of his supposedly populist message that he would stand up for those left behind by an elite-driven economy and Washington, D.C.

Yet, now in office, he’s gone soft on banks. His administration has already loosened financial regulations, dropped a rule to rein in Wall Street bonuses, and allowed AIG to wriggle out of stricter rules to protect the economy if the insurance giant failed.

And he’s followed the rest of his party in attacking the CFPB. His budget zeroed out its funding completely and proposed other ways to significantly change it. His Treasury Department released a report arguing that the CFPB’s “unaccountable structure and unduly broad regulatory powers” have “hindered consumer choice and access to credit, limited innovation, and imposed undue compliance burdens, particularly on small institutions.” The Treasury also recommended that the president be able to fire the director, that its enforcement be slowed down, and that many of its supervisory powers be handed back to agencies that previously did barely anything to police financial firms.

If Mulvaney survives English’s court challenge, he would be able to bring much of that wish list to life. And there’s no reason to think he’d do anything different. He has outright stated, “I don’t like the fact that CFPB exists.” On Monday he got to work, saying all new regulations from the CFPB will be frozen for 30 days. If he remains the bureau’s leader, we can expect much, much more of the same.