Watchdog Groups Call on Inspector General to Investigate CFPB Director’s Relationship with Payday Lenders

As Acting Director Mick Mulvaney prepares to step down, questions about violations of ethics regulations during his tenure at the Consumer Financial Protection Bureau remain unanswered.

WASHINGTON, July 24, 2018— Mick Mulvaney, the Office of Management and Budget (OMB) Director and Acting Director of the Consumer Financial Protection Bureau (CFPB), should be investigated for potential violations of ethics regulations according to a complaint filed today with the Inspector General for the CFPB by Change to Win and Americans for Financial Reform.

“Acting Director Mulvaney has done everything in his power to shift the CFPB away from its mission as a vigorous consumer watchdog. Nowhere are his historic conflicts and ethical misconduct so clear as in his treatment of the payday lending industry. We fear without a check on this abuse of power, the Trump administration’s penchant for servicing the business community will continue at the CFPB—an entity that exists to protect vulnerable consumers,” said Michael Zucker, director of Change to Win’s Retail Initiatives Group.

While a Congressman representing South Carolina’s 5th congressional district, Mulvaney accepted tens of thousands of dollars in campaign contributions from the payday lending industry, and introduced or supported legislation to eliminate the CFPB or weaken its regulatory powers on numerous occasions.

“As Acting Director of the CFPB, Mick Mulvaney is expected to protect consumers from abusive practices and take action against companies that break the law,” said Rion Dennis, Financial Reform Advocate at Americans for Financial Reform. “But instead of enforcing common-sense protections for borrowers, Mulvaney has spent his time undermining the Bureau by advancing a deregulatory ideology that puts consumers dead last. Before Mulvaney heads for the exit, we must examine the particulars of his tenure to avoid eroding the CFPB’s core mission even further.”

Since his appointment to the CFPB, Mulvaney has maintained a cozy relationship with the payday lenders while consistently working to undermine the Bureau’s regulation of the industry:

  • In January 2018, the former CEO of World Acceptance Corporation emailed Mulvaney to express her gratitude that the CFPB’s investigation into the company had been dropped.
  • In February 2018, Mulvaney discussed the CFPB’s ongoing case against the lender Cashcall with its CEO J. Paul Reddam. Mulvaney told Reddam that he thought all the payday lending cases had been dismissed.
  • Although the CFPB is required to meet with its Consumer Advisory Board at least twice a year to discuss emerging issues and concerns, Mulvaney cancelled the in-person meetings and eventually fired all 25 board members.

Under Mulvaney’s leadership, the CFPB terminated an enforcement actions and dropped an investigations into payday and installment lenders:

  • In January 2018, the Bureau voluntarily dismissed a lawsuit brought against four payday and installment lenders. CFPB staff told reporters that “Mulvaney decided to drop the lawsuit even through the entire career enforcement staff wanted to press ahead with it.”
  • Also in January 2018, installment lender World Acceptance Corporation announced that it had been informed by the CFPB that it was terminating an investigation into the company’s marketing and lending practices and would not pursue enforcement action.

Acting Director Mulvaney’s defense of the payday lending industry contravenes the mission of the CFPB and likely violates his obligation to act impartially in the performance of his duties.

Now that President Trump has nominated Kathy Kraninger, one of Mulvany’s deputies at the OMB, to serve as the next CFPB director, questions of ethical violations must be investigated to ensure the CFPB will uphold its mission to protect consumers going forward.

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