Title Matters – The CFPB Has Pushed Its Last Envelope

Finally, some sanity from the Consumer Financial Protection Bureau!  The following is from the Opinion page of the Wall Street Journal today, January 24, 2018:

The CFPB Has Pushed Its Last Envelope

By Mick Mulvaney

When I arrived at the Consumer Financial Protection Bureau in November, I told employees that despite what they might have heard, I had no intention of shutting down the bureau.   As members of the executive branch, we are charged with faithfully executing the law.  The law mandates that we enforce consumer-protection laws, and we will continue to do so under my watch.

At the same time, I explained that things would be different under new leadership.  Then I read a quote from my predecessor, Richard Cordray, that highlighted how he ran the bureau: “We wanted to send a message: There’s a new cop on the beat… Pushing the envelope is a loaded phrase, but that’s absolutely what we did.”   I’ve seen similar language elsewhere.  It’s fair to say that the bureau’s previous governing philosophy was to “push the envelope” aggressively, under the assumption that we were the good guys and the financial-service industry was the bad guys.

That is going to be different.  That entire governing philosophy of pushing the envelope frightens me a little.   We are government employees, and we work for the people.  That means everyone: those who use credit cards and those who provide the credit; those who take out loans and those who make them; those who buy cars and those who sell them.  All of those people are part of what makes this country great, and all of them deserve to be treated fairly by their government.  There is a reason Lady Justice wears a blindfold and carries a balance scale along with her sword.

It is not appropriate for any government entity to “push the envelope” when it comes into conflict with our citizens.  We have the power to do damage to people that could linger for years and cost them their jobs, their savings and their homes.  If the CFPB loses a court case because we “pushed too hard,” we simply move on to the next matter.  But where do those we charged go to get their time, their money and their good names back?  If a company closes its doors under the weight of a multiyear Civil Investigative Demand, we still have jobs at CFPB, but what about the workers who are laid off as a result?

There will absolutely be times when circumstances require us to take dramatic action to protect consumers.  At those times, I expect us to be vigorous in our enforcement of the law.  But bringing the full weight of the federal government down on the necks of the people we serve should be something that we do only reluctantly, and only when all other attempts have failed.

In my office you can find a copy of “A Man for All Seasons,” about the life of St. Thomas More.  My favorite passage is an exchange between the famous lawyer and his son-in-law, who encouraged Moore to arrest a man for simply being “bad.”  His response is one of the most concise and articulate defenses of the rule of law in history:

“This country is planted thick with laws, from coast to coast – man’s laws, not God’s – and if you cut them down… do you really think you could stand upright in the winds that would blow then?  Yes, I’d give the Devil the benefit of the law, for my own safety’s sake.”

Put another way: If you push the envelope now in pursuit of your mission, what’s to stop someone else – with a different mission, perhaps – from pushing that envelope against you tomorrow?

What does all of this mean for how we operate at the bureau?  Simply put, we will review everything we do, from investigations to lawsuits and everything in between.

When it comes to enforcement, we will focus on quantifiable and unavoidable harm to the consumer.  If we find that it exists, you can count on us to pursue the  appropriate remedies vigorously.  If it doesn’t, we won’t go looking for excuses to bring lawsuits.

On regulation, it seems that the people we regulate should have the right to know what the rules are before being charged with breaking them.  This means more formal rule making and less regulation by enforcement.

And we will be prioritizing.  In 2016, almost a third of the complaints into this office related to debt collection.  Only 0.9% related to pre-paid cards and 2% to payday lending.  Data like that should, and will, guide our actions.

Speaking of data, the Dodd-Frank Act, which established the CFPB, requires us to “consider the potential costs and benefits to consumers and covered persons.”  To me, that means quantitative analysis should drive our decisions.  And while qualitative analysis certainly can play a role, it should not be to the exclusion of measurable “costs and benefits.”  There will be a lot more math in our future.

In intend to exercise our statutory authority to enforce the laws of this nation.  I intend to execute the statutory mandate of the bureau to protect consumers.  But we will no longer go beyond that mandate.  If Congress wants us to do more than it set forth in the Dodd-Frank Act, it can change the law.

The CFPB has a new mission:  We will exercise, with humility and prudence, the almost unparalleled power Congress has bestowed on us to enforce the law faithfully in furtherance of our mandate.  But we go no further.  The days of aggressively “pushing the envelope” are over.

Mr. Mulvaney is director of the Office of Management and Budget and acting director of the Consumer Financial Protection Bureau.  This article is adapted from a Jan. 24 memo to CFPB staff.”