In 2013, then-Rep. Mick Mulvaney (R-S.C.) complained that CFPB Director Richard Cordray had rejected the candidates for agency advisory boards who had been recommended for Congress.
Earlier this month, Mulvaney, now the Acting CFPB Director, was finally able to do something about it.
So he fired the members of three agency advisory boards.
In one of his most controversial moves, Mulvaney terminated members of the agency’s credit union, community bank and consumer advisory boards, all of whom had been appointed by Cordray.
The firings were the latest move by Mulvaney to ensure that the Trump Administration has a lasting footprint at the CFPB before the president officially nominates a new director. The agency has given a variety of reasons for the firings, ranging from the cost of providing members with high-priced junkets to Washington to the bureau’s desire to meet with more diverse groups of people.
But back in August 2013, Cordray and more than two dozen House members were unhappy with the advisory boards. They wrote to Cordray complaining that non-bank lenders, including payday lenders, had not been appointed to any advisory boards, according to a letter obtained by CU Times under the federal Freedom of Information Act.
The members suggested that a separate advisory board of non-bank lenders should be established.
The letter continued, “When the Consumer Advisory Board was being formed in 2012, members of Congress and others submitted the nominations of several highly qualified industry leaders. All of these eminently qualified industry nominees were rejected.”
The three advisory boards are required under federal law. Mulvaney said he – or whoever is selected as the permanent agency head – will select new members for each of the panels.
Members of the credit union advisory council have remained mum about the firings and have not responded to requests for comment.
But just days before they were fired as members of the Credit Union Advisory Council, the group’s two leaders wrote to the agency outlining the importance of the group.
“The CUAC bridges the gap between the bureau’s strong policy knowledge, and the practical realities and experience and philosophical differences as compared to other players in the financial services industry,” Katherine Proefke, the panel’s chairman, and Gregory Higgins, the group’s vice chairman, wrote in a letter.
Proefke is assistant vice president of compliance at Chevron Federal Credit Union in Oakland, Calif., while Higgins is SVP and general counsel at Wings Financial Credit Union in Saint Paul, Minn.
In outlining their work, the two council leaders gave specific examples of how the group was able to shape agency policy.
On Home Mortgage Disclosure Act rules, the council pointed out that many credit unions use different systems for mortgage and home equity originations. That presents a problem when the credit unions had to aggregate the data into a single HMDA file.
As a result, the bureau increased the reporting threshold for open-end lines of credit from 100 to 500 loans for a two-year period.
Proefke and Higgins said the credit union advisory council helped the agency establish realistic thresholds for small financial institution exemptions.
And in regard to payday lending, the group’s efforts resulted in the bureau exempting loans modeled after the NCUA’s Payday Alternative Loan program, they said.
The two, in a twist of irony, pointed out that their regulatory philosophy was much more in line with Mulvaney’s, who fired them, than with Cordray’s, who appointed them.
The same could not be said for the Consumer Advisory Board.
Leaders of that board have been outspoken in their criticism of the agency under Mulvaney.
“The current CFPB administration neither respects nor welcomes interactions with the CAB,” fired consumer board members Kathleen Engel and Judith Fox wrote in an op-ed for CNN. “Since Richard Cordray, the former director, resigned last fall, Mulvaney has canceled all our phone calls and has never taken the time to meet with us. In contrast, Cordray met with us at length three times yearly.”
Engle is a research professor of law at Suffolk University; Fox is a clinical law professor at the University of Notre Dame Law School.
Just weeks before they were fired, the consumer board took a survey of current and former board members to gauge their views of agency operations. The results were submitted as a response to the agency’s request for information about its functions.
Some 39 current and former board members responded, and their views differed widely from Mulvaney’s.
For example, Mulvaney has raised the possibility of making the agency’s complaint database public. More than 86% of the consumer board members said they believed the public database harmed competition or transparency.
Republicans on Capitol Hill have said major CFPB rules should be subject to congressional approval. More than 86% of the respondents said they disagreed or somewhat disagreed with that view.
Finally, Mulvaney has said the agency will revisit its strict rules governing payday loans. As a House member, he was critical of the strict rules and since taking over the CFPB, he has indicated that the agency will take a friendlier view of the payday loan industry.
On the other hand, almost three-quarters of the consumer advisory board members said the rule is effective or somewhat effective.
The future makeup of the advisory councils and boards has not been determined. Earlier this year, the agency asked for people to apply for the positions.
And Mulvaney has indicated that he believes meeting with a variety of groups of people is a more effective way of doing business.