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Originally, the CFPB served consumers. Now it protects banks

Sunday , April 29, 2018 - 4:00 AM

E. KENT WINWARD, special to the Standard-Examiner

Last week I wrote about how money, whether we like it or not, is tied up with our justice system. The realities and expenses of justice require that we, through our elected representatives, invest our money wisely so that the system operates in a fair and just manner.

Mick Mulvaney, the interim head of the Consumer Financial Protection Bureau, gave us a crash course this week in how our system can become flawed.

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The CFPB was launched in 2010, its purpose to stop unfair and deceptive practices by financial institutions that harmed everyday people like you and me.

Inherent in the design of the CFPB was a funding mechanism that kept it separate from Washington politics. Consumers needed a governmental entity to represent and protect interests of individual citizens, rather than corporations, their lobbyists, their in-house legal advisers, and of course, their money. Enforcement actions by the CFPB netted close to $12 billion in refunds to consumers in its first six years.

All that ended when President Donald Trump appointed Mick Mulvaney as the head of the CFPB. WIth just a small tweak here and there, the balance of power and money shifted and the scales of justice tipped back in favor of the banks.

So, what did Mulvaney tell a group of bankers Tuesday at the American Bankers Association conference? Here are some of the comments taken from the transcript:

“People wondered when I got — when I took the job if I was going to try and shut the place down, and I told them no, because I can’t. If you are going to be a good bureaucrat —” [Laughter from bankers.]

“What are we not going to do? Obviously, we are not going to do stuff that’s not in the law. I’ve only got a few minutes left so I won’t talk too much about regulation by enforcement, but the short version is we’re not doing it anymore. I don’t think it’s fair.” [Applause from bankers.]

“We are going to maintain the Consumer Database. It is mandated by law. I don't see anything in here that I have to run a Yelp for financial services sponsored by the federal government. I don't see anything in [the statute] here that says that I have to make all of those [consumer complaints] public.” [Applause from bankers.]

“We had a hierarchy in my office in Congress. If you were a lobbyist who never gave us money, I didn’t talk to you. If you were a lobbyist who gave us money, I might talk to you.”

From Mulvaney’s comments, corporate profits are, once again, being elevated over the protection of everyday people.

Justice is hard work, and economic justice is even more difficult to enforce. For example, when a company deceptively takes $2 from each of its 300,000 clients, it's the equivalent of a bank robber pulling off a successful $600,000 bank heist. No individual can initiate legal action for $2. Without governmental intervention or law enforcement, economic justice is elusive.

Two weeks ago, the CFPB hit Wells Fargo with a billion-dollar fine due to its unfair and deceptive practices. The fine was levied because Wells Fargo had stolen $142 million from its customers. Mulvaney took over and negotiated the final settlement with Wells Fargo. So will a billion dollar fine teach Wells Fargo the lesson that it can’t steal from its customers? Well, in the first three months of 2018, the profit for Wells Fargo was $5.9 billion.

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To put it in perspective, let's bring the collective "Wells Fargo" down to an individual bank employee and drop three zeros off the end of all the numbers.

A bank employee is convicted of embezzling $142,000. Even though he is guilty, the bank employee retains his job, but he must pay back the embezzled funds. The employee and law enforcement negotiate a million-dollar fine. Meanwhile, the thief’s yearly salary remains at just under $24 million a year.

The new bureau chief head then schedules a meeting with the employee, where he tells the employee he isn’t going to be taking any new enforcement actions. Oh, and it might be wise to invest in some lobbyists to pay off lawmakers who don’t even represent you, because money talks. And as an added bonus, remember that bank robber database? The law says we still have to maintain it, but it doesn’t specifically say we have to allow public access, does it? We don’t really want people knowing who's ripping them off, do we?

On a macrolevel, the above scenario is exactly how the CFPB is operating under Mulvaney.

If money equates to justice in today's world, there won’t be any justice for consumers from the CFPB in the coming months. [Banker laughter and applause.]

E. Kent Winward is an Ogden attorney. Twitter: @KentWinward.

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