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How the consumer protection agency is being curtailed by the Trump administration

The Trump administration has made it clear that it plans to roll back the once-tough approach of the Consumer Financial Protection Bureau, which was born out the 2008 financial crisis, and intended to be a federal watchdog cracking down on predatory lending and shady financial dealings. William Brangham talks to Chris Arnold of NPR about its impact and its uncertain future.

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  • Judy Woodruff:

    Now to one other story tied to the president's budget proposals and policy priorities that were made public today.

    The Trump administration made it clear that it plans to roll back the once-tough approach of the Consumer Financial Protection Bureau. Its acting director, Mick Mulvaney, has already taken several steps to do so.

    And, as William Brangham reports, Mulvaney announced a new long-term plan for the agency that will place even more substantial limits on its reach.

  • William Brangham:

    The Consumer Financial Protection Bureau was born out of the 2008 financial crisis. It was intended to be a federal watchdog of sorts, cracking down on predatory lending and shady financial dealings that could hurt American consumers.

    From its inception, though, it has been criticized by Republicans and the financial industry for overstepping its mandate. Budget director Mick Mulvaney, who President Trump has appointed to run the bureau, once called it a sick, sad joke.

    Here's how he described it on "Face the Nation" yesterday"

  • Mick Mulvaney:

    This bureau is unlike any other federal bureaucracy. It's run by one person, right now me. It had almost unlimited access to funds. It has no accountability to Congress. It is perhaps the most unaccountable bureau or agency there is.

    We want to run that place with a good deal of humility and prudence. We're not being aggressive. We're not pushing the envelope. We're taking a different attitude towards the job, but the priorities have not changed.

  • William Brangham:

    For more on the future of CFPB, I'm joined by Chris Arnold of National Public Radio. He has been covering the bureau since it's opened.

    Chris, welcome to the "NewsHour."

    I wonder. Let's go back in time a little bit, 2008-2009, and the creation of this bureau. What was it was original mandate? Why was it born?

  • Chris Arnold:

    Well, first of all, I'm happy to be here.

    The original mandate went back to — you will remember a time, unless you were born very recently — that basically the largest financial institutions in this country wrecked the economy.

    I mean, it was just an unmitigated disaster, the worst recession in 50, 60, 70 years. So, in response to that, Congress did many things. They did Dodd-Frank. They also set up the Consumer Financial Protection Bureau.

    This was something that was championed, it's true, by Democrats. Senator Elizabeth Warren wasn't a senator at the time, but was crucial in forming. And Democrats seemed to love it. And they love all of the things you just Mick Mulvaney say are problems with it.

    They like that it's independent because they say, look, that allows it to be independent from the White House. It allows it — it gets its funding from the Fed, not Congress, so it can just go where it needs to go, do what it needs to do to protect the rights of you and me and everybody else who has to deal with banks or lenders or any kind of financial firm.

    So, that's where it came from. As we heard earlier, there's a group of Republicans, though, who do really not like this agency for all the reasons that Mick Mulvaney laid out. And this has kind of been happening for years now. Republicans didn't like it, Democrats did.

    But now President Trump has put Mick Mulvaney in charge. He's the new boss running this agency. And he has just come out with this new strategic plan, saying, well, here's what we're going to be doing going forward.

  • William Brangham:

    All right, Chris, is it a fair accusation that, under the Obama administration, the CFPB did overstep its authority, overstep its mandate?

  • Chris Arnold:

    No, I think, overall, you couldn't say that's a fair accusation.

    I think that just depends on who is the beholder there. Look, if you are an extremely conservative person who doesn't like regulation, you might see this bureau as, well, you know, they're doing too much. There's not enough controls on them, sure.

    But, look, at the end of the day, the Consumer Financial Protection Bureau returned almost $12 billion to consumers by going after companies that were swindling them out of their money. And, you know, is that overreaching? I don't know if that's up for me to say, but it doesn't sound like such a terrible thing.

  • William Brangham:

    So, when Mulvaney says that the agency, the bureau under his watch will now operate with humility and moderation, they will enforce the law, but they're not going to overstep, what does that mean to you? How do you read that?

  • Chris Arnold:

    Well, I can answer that two ways.

    One, in all of this, there is also a mention of, you know, we're not only going to be serving the people who get credit cards and who get loans, but those who offer credit cards and who make loans, and this agency should have a job to sort of help banks and financial firms who are struggling with regulation get out from under regulation that's too burdensome.

    So, I mean, it's a little bit counterintuitive, but here's an agency that's supposed to be policing, enforcing, being a watchdog over the financial industry, and Mick Mulvaney is now saying, well, we're going to use this agency to deregulate parts of this industry.

    It's a little bit of a brain-bender. Of course, who wouldn't want to get rid of regulations that aren't necessary? But I think that's part of what he's saying.

    I think the other thing, look, this is sort of generalizations here, but — and you can look at what's actually been done so far. Since Mick Mulvaney has come on board, there have been things that have happened. A rule to regulate payday lenders more aggressively has been put on hold.

    A payday lender that was being investigated by the Consumer Financial Protection agency, that investigation was dropped. It's also true that that company, that payday lending company, a high-interest lender, gave money to Mick Mulvaney's campaign when he was in Congress.

    And, thirdly, the story that I dug into, there was a lawsuit against what folks at the bureau, attorneys at the bureau who brought this lawsuit said there was this illegal online loan shark charging 950 percent interest rates, tricking people into these long strings of payments that went on and on and on, when you borrow 900 bucks and end up paying back $3,700 just months later.

    There was this lawsuit was in the works, and Mulvaney decided to drop that lawsuit. There was a bit of an exchange in my story today on NPR about that we can talk about if you want.

    But those are things that clearly have happened so far that may give us an indication about where things are going next.

  • William Brangham:

    All right, Chris Arnold of National Public Radio, thanks very much for your time.

  • Chris Arnold:

    Absolutely. Glad to be here.

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