Human Rights Watch Addresses Harmful CFPB Shifts Under Mulvaney

Is the right to be free from unfair debt collection practices by payday lenders a human right? According to a recent news release from Human Rights Watch, the actions of the Consumer Financial Protection Bureau (CFPB)—or lack of actions under Mick Mulvaney, to be more precise, when it comes to holding payday lenders and debt collectors accountable—are putting consumers at significant risk of harm. As the news release emphasizes, the “payday lending industry is notorious for trapping borrowers in cycles of growing debt, fueled by extreme interest rates up to 300 and 500 percent.”
When we talk about human rights, we do not typically think closely about consumer harms. However, as the news release intimates, matters of “business and human rights” present questions about consumer advocacy and how the financial well-being of a person affects his or her general health and security. What else does Human Rights Watch have to say about unfair debt collection practices and consumer rights?
Mick Mulvaney Says the CFPB is “Redundant and Unnecessary”
The Human Rights Watch news release points to Mulvaney’s recent congressional testimony, discussed in The Washington Post, in which he describes the CFPB as “redundant and unnecessary.” Given that Mulvaney is the interim director of the CFPB, he wields power over important consumer protection initiatives that he has deemed of little to no use.
In early April 2017, Mulvaney made a report to Congress on the states of the CFPB. In his testimony, according to an article in the Los Angeles Times, Mulvaney said that the CFPB needs to take “a humble approach to enforcing the law,” suggesting that it should take a more hands-off approach.
Changes Mulvaney Wants to Make to the CFPB, Weakening the Agency
In order “to improve” the CFPB, Mulvaney outlined four key strategies which ultimately would make the agency less effective:
  • Fund the CFPB through Congress instead of through the Federal Reserve. What could go wrong with this change? If Congress were to fund the CFPB, it could “give industry lobbyists far more influence over how much money the CFPB receives and what it can be used for.” Potential conflicts of interest through Congressional funding is the precise reason that the CFPB was funded from the Federal Reserve in the first place.
  • Have the CFPB director report to the president. If this were to happen, the president would be able to fire the director of the CFPB for any reason and could make the CFPB less independent.
  • Create an inspector general position to monitor CFPB activity. The inspector general of the Federal Reserve currently has this task, but a new inspector general presumably would be appointed by the White House, potentially giving the administration greater control over the agency.
  • Give Congress final legislative approval over any new rules enacted by the CFPB. Consumer protection advocates argue that such a change would allow lobbyists to have a say in the rules governing the CFPB (similar to concerns about Congress funding the CFPB) and that Congress would, in effect, have a veto power over the agency’s rulemaking activities.
One of the ways in which Mulvaney’s overarching plans for the CFPB are already having a negative impact on consumers has to do with payday lenders and debt collectors. By failing to curb unfair payday lending and collection practices, Mulvaney has signaled a shift in the CFPB’s power and its ability to protect consumers.
Contact an Oak Park Consumer Protection Lawyer
If you have questions or concerns about your current rights under the Fair Debt Collection Practices Act (FDCPA) or other state or federal laws, an experienced Oak Park consumer protection attorney can help. Contact the Emerson Law Firm for more information.
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