- The Washington Times - Tuesday, February 13, 2018

President Trump’s proposed federal budget steps up his assault on regulation, and nowhere does he draw those battle lines more clearly than his plan to cut the budget of the Obama-era Consumer Financial Protection Bureau and bring the agency under congressional oversight.

The administration’s budget for fiscal 2019, released Monday, would cap the CFPB’s budget at $485 million — equivalent to its 2015 budget. The bureau’s last budget requested under Obama-appointed former Director Richard Cordray was $630.4 million.

Conservatives have criticized the bureau, which gets its funding from the Federal Reserve, as a rogue regulator that’s unaccountable to voters and has too much power to investigate and punish the lending industry. In one of the most high-profile cases, Mr. Cordray increased the fine against a New Jersey mortgage company from the $6.5 million recommended by an administrative law judge to $109 million, prompting the lender to appeal in federal court and win an overturning of the fine.

Office of Management and Budget Director Mick Mulvaney, who is serving temporarily as acting head of the CFPB, said the bureau shouldn’t seek to punish financial-service companies.

“If there is one way to summarize the strategic changes occurring at the Bureau, it is this: we have committed to fulfill the Bureau’s statutory responsibilities, but go no further,” Mr. Mulvaney wrote in a mission statement outlining a new five-year plan for CFPB.

Mr. Mulvaney said the CFPB would focus on protecting seniors from financial fraud, and continue to protect consumers generally from unfair, deceptive or abusive practices.

In his first budget request to the Federal Reserve last month, Mr. Mulvaney asked for no money, saying the CFPB had more than enough money available to cover its expected $145 million in expenses for the first quarter. He said he intended to slash the bureau’s reserve fund that had been built up by Mr. Cordray.

“I have been assured that the funds currently in the Bureau Fund are sufficient for the bureau to carry out its statutory mandates for the next fiscal quarter while striving to be efficient, effective and accountable,” he told the Fed. “This letter is to inform you that for the Second Quarter of Fiscal Year 2018, the Bureau is requesting $0.”

Liberals in Congress are reacting with hostility to Mr. Trump’s plans to overhaul the seven-year-old agency and refocus its mission.

Sen. Elizabeth Warren, Massachusetts Democrat who pushed for the bureau’s creation under the Dodd-Frank financial regulatory law, said Tuesday that big banks and payday lenders who contributed to Mr. Mulvaney’s congressional campaigns “are doing cartwheels” over the new five-year plan.

“Mulvaney wants the agency to stand up for big banks and scammers instead of holding them accountable when they cheat consumers,” she said on Twitter.

Rep. Maxine Waters of California, the top Democrat on the House Financial Services Committee, said the president’s budget “would harm American consumers, hurt our nation’s communities and wipe out financial reforms that are in place to prevent another financial crisis.”

A former senior official at CFPB said in the three months since Mr. Mulvaney took over the helm at the bureau, “there’s not much going on with enforcement.” The ex-official also said the administration has installed political appointees at CFPB who serve as “a babysitter or political minder” on holdover bureaucrats from the Obama era.

“Some people are collecting their checks and just waiting it out,” the ex-official said of current CFPB employees. “We had a lot of true believers. That enthusiasm is not there. People are in some ways biding their time.”

Before Mr. Cordray left the bureau in November to run for the Democratic nomination for governor of Ohio, he was criticized for using enforcement actions to make examples of certain companies, which critics said amounted to rule-making by enforcement. The process of federal rule making typically takes much longer than bringing an enforcement action.

The White House said that its proposals for CFPB will “prevent actions that unduly burden the financial industry and consumer choice.” The administration said it wants to impose discipline on the bureau and “reduce wasteful spending.”

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