In a scathing letter written directly to Mick Mulvaney, acting director of the Consumer Financial Protection Bureau (CFPB), the Assistant Director and Student Loan Ombudsman watchdog Seth Frotman resigned his position and will be stepping down at the end of this week, the AP reported on Sunday.
In the resignation letter the AP was able to obtain, Frotman rips into Mulvaney, saying, “It is with great regret that I tender my resignation as the Consumer Financial Protection Bureau’s Student Loan Ombudsman … However, after 10 months under your leadership, it has become clear that consumers no longer have a strong, independent Consumer Bureau on their side.”
Frotman speaks to Mulvaney’s willingness to “protect the misguided goals of the Trump Administration to the detriment of student loan borrowers” and accuses “leadership” of blocking a report showing evidence that banks ‘were ripping off students.”
“When new evidence came to light showing that the nation’s largest banks were ripping off students on campuses across the country by saddling them with legally dubious account fees, bureau leadership suppressed the publication of a report prepared by bureau staff,” the letter reads.
Frotman goes on to list three bullets points where Mulvaney and the Trump administration have watered down the Bureau’s enforcement powers making “sweeping changes,” including: Undercutting enforcement of the law; Undermining the Bureau’s Independence; and Shielding bad actors from scrutiny, while highlighting each with examples.
Three months ago Mulvaney downgraded and folded the student loan ombudsman’s office into the “consumer information unit,” the New York Times reported.
“Unfortunately, under your leadership, the Bureau has abandoned the very consumers it is tasked by Congress with protecting,” Frotman writes, “instead, you have used the Bureau to serve the wishes of the most powerful financial companies in America.”
Mick Mulvaney was appointed acting director by Trump in November after the resignation of the CFPB’s Richard Cordray who faced fierce opposition from Republicans in Congress both personally and because of his position he held since the Bureau’s inception created out of the Dodd-Frank Wall Street Reform And Consumer Protection Act passed in 2010 and opened for business as a public consumer watchdog in 2011.
After Cordray, “one of the few remaining Obama-era banking regulators,” resigned, the Washington Post reported in November, it was the opportunity for “clearing the way for President Trump to remake a watchdog agency loathed by Republicans and Wall Street.”
“A federal judge once said that Cordray had ‘more unilateral authority than any other officer in any of the three branches of the U.S. government, other than the president,’” the Washington Post goes on to say. Cordray is now the Democratic candidate for governor of Ohio.
Likewise, the Student Loan Ombudsman position was created and Frotman has been ombudsman for the last 3 years.
The position is responsible for overseeing the $1.5 trillion student loan market. In the years since its creation it has ‘forced companies to pay $750 million in refunds and other relief to student borrowers, according to the consumer bureau,” the New York Times reports.
It was reported by Bloomberg and CNN Money when Mulvaney was appointed interim acting director of the CFPB that in a 2014 interview Mulvaney did with the Credit Union Times, he called the CFPB “a sick, sad” joke and that it was essentially run by a “one person dictator.”
On a Side Note
President Trump has nominated Kathy Kraninger to be director of the CFPB. According to a July report from NPR she has been working as a deputy under Mulvaney at his other job, director of White House Office of Management and Budget.
On July 19th Kraninger faced a tough confirmation hearing where Democrats confronted her saying that she was not only unqualified because she has no financial industry regulation experience, but that they had emails showing she was “the architect of the administration’s ‘botched’ response to hurricane damage in Puerto Rico.” They also questioned her about her involvement in the White House’s “zero-tolerance” policy which saw thousands of children being separated from parents as a means to deter not only illegal immigration but those seeking asylum as well.
As for Kraninger, she claimed in her opening statement that she has had a “lifetime” of public service, starting with being a college intern for Senator Sherrod Brown (Ohio, D) one summer when he was a U.S. Rep. and then spending two-years in the Peace Corps.
During the hearing Senator Brown said he had met with Kraninger and asked about her views on payday lenders “charging 600 percent interest rates” saying that her answer was that “the market will take care of this.” Kraniger replied instead saying, “Under my stewardship, the bureau will take aggressive action against bad actors who break the rules…”
While the timing is not known, Kraninger is expected to be given a senate confirmation, until then Mulvaney will remain acting director of the CFPB. Mulvaney just dropped a law suit against an online predatory lender who was alleged to have been charging 900 percent interest rates, a case the CFPB had been pursuing.
As for the Republican Senators in her confirmation hearing, they said her “management experience” at the OMB qualifies her for the job.