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Student Loan Watchdog Quits Trump Administration with scorching resignation letter

Gloria Shur Bilchik — Wed, 29 Aug 2018 02:41:04 +0000

Mick Mulvaney, Donald Trump’s appointee to head up [translation:destroy] the Consumer Financial Protection Bureau comes in for devastating criticism in a letter of resignation submitted by Seth Frotman, a seven-year veteran of the Bureau who served as its Student Loan Ombudsman.

In his letter, as published by NPR, Frotman describes the ways in which Mulvaney has undermined and essentially reversed the original mission of the CFPB in general, and the office of the student loan ombudsman in particular.

“…After 10 months under your leadership, it has become clear that consumers no longer have a strong, independent Consumer Bureau on their side,” writes Frotman…” Unfortunately, under your leadership, the Bureau has abandoned the very consumers it is tasked by Congress with protecting. Instead, you have used the Bureau to serve the wishes of the most powerful financial companies in America.”

From his letter, you can tell that Frotman liked his job and was passionate about helping student-loan borrowers get fair treatment from lenders. When Mulvaney took over as interim director, he quickly began turning the CFPB on its head, Frotman implies. Frotman charges Mulvaney with undermining the bureau’s mission, undercutting enforcement, and switching the focus from protecting consumers to “going above and beyond” to protect lenders’ interests.

Frotman cites several instances that demonstrate Mulvaney’s intent to wreck the CFPB from within—something that Republicans have wanted to do since Day 1 of the bureau conceived and promoted by Senator Elizabeth Warren [D-MA].

“For example” writes Frotman, “Late last year [2017], 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. When pressed by Congress about this, you chose to leave students vulnerable to predatory practices and deny any responsibility to bring this information to light.”

Frotman also calls some actions by the bureau, under Mulvaney’s leadership, as “unprecedented,” “illegal,” and designed to “shield the biggest financial institutions from accountability.”

“The current leadership of the Bureau has made its priorities clear—it will protect the misguided goals of the Trump Administration to the detriment of student loan borrowers,” writes Frotman. “…American families need an independent Consumer Bureau to look out for them when lenders push products they know cannot be repaid, when banks and debt collectors conspire to abuse the courts and force families out of their homes, and when student loan companies are allowed to drive millions of Americans to financial ruin with impunity.”

Frotman cannot be accused of making this stuff up. For a bit of context, it should be noted that when Mulvaney was in Congress, he sponsored legislation to abolish the CFPB. In June 2018, after being appointed acting director of the bureau by Trump, Mulvaney fired the agency’s consumer advisory council, which according to NPR,” is designed to help consumer groups work with the CFPB to identify problems facing Americans who are treated unfairly by financial firms.”

Frotman’s decision to resign with a bang echoes that of an ever-growing cadre of career government employees—dedicated to and passionate about the good things that good government can do—who have quit the Trump Administration on principle. His experience with Mulvaney also parallels what well-intentioned federal employees have encountered in other Trump-run agencies, such as the Environmental Protection Agency.

You have to wonder how many others, perhaps not as articulate as Frotman, in agencies whose missions are similarly threatened under Trump, are suffering in silence, keeping their heads down, trying to continue the mission they thought they were supporting, hoping that this is just an Orwellian nightmare from which America will wake up before it’s too late.

Here’s the full text of Frotman’s resignation letter, as published by NPR.

August 27, 2018

…

Acting Director Mulvaney:

It is with great regret that I tender my resignation as the Consumer Financial Protection Bureau’s Student Loan Ombudsman. It has been the honor of a lifetime to spend the past seven years working to protect American consumers; first under Holly Petraeus as the Bureau defended America’s military families from predatory lenders, for-profit colleges, and other unscrupulous businesses; and most recently leading the Bureau’s work on behalf of the 44 million Americans struggling with student loan debt. However, after 10 months under your leadership, it has become clear that consumers no longer have a strong, independent Consumer Bureau on their side.

Each year, tens of millions of student loan borrowers struggle to stay afloat. For many, the CFPB has served as a lifeline—cutting through red tape, demanding systematic reforms when borrowers are harmed, and serving as the primary financial regulator tasked with holding student loan companies accountable when they break the law.

The hard work and commitment of the immensely talented Bureau staff has had a tremendous impact on students and families. Together, we returned more than $750 million to harmed student loan borrowers in communities across the country and halted predatory practices that targeted millions of people in pursuit of the American Dream.

The challenges of student debt affect borrowers young and old, urban and rural, in professions ranging from infantrymen to clergymen. Tackling these challenges should know no ideology or political persuasion. I had hoped to continue this critical work in partnership with you and your staff by using our authority under law to stand up for student loand borrowers trapped in a broken system. Unfortunately, under your leadership, the Bureau has abandoned the very consumers it is tasked by Congress with protecting. Instead, you have used the Bureau to serve the wishes of the most powerful financial companies in America.

As the Bureau official charged by Congress with overseeing the student loan market, I have seen how the current actions being taken by Bureau leadership are hurting families. In recent months, the Bureau has made sweeping changes, including:

Undercutting enforcement of the law. It is clear that the current leadership of the Bureau has abandoned its duty to fairly and robustly enforce the law. The Bureau’s new political leadership has repeatedly undercut and undermined career CFPB staff working to secure relief for consumers. These actions will affect millions of student loan borrowers, including those harmed by the company that dominates this market. In addition, when the Education Department unilaterally shut the door to routine CFPB oversight of the largest student loan companies, the Bureau’s current leadership folded to political pressure. By undermining the Bureau’s own authority to oversee the student loan market, the Bureau has failed borrowers who depend on independent oversight to halt bad practices and bring accountability to the student loan industry.

Undermining the Bureau’s independence. The current leadership of the Bureau has make its priorities clear—it will protect the misguided goals of the Trump Administration to the detriment of student loan borrowers. For nearly seven years, I was proud to be part of an agency that served no party and no administration; the Consumer Bureau focused solely on doing what was right for American consumers. Unfortunately, that is no longer the case. Recently, senior leadership at the Bureau blocked efforts to call attention to the ways in which the actions of this administration will hurt families ripped off by predatory for-profit schools. Similarly, senior leadership also blocked attempts to alert the Department of Education to the far-reaching harm borrowers will face due to the Department’s unprecedented and illegal attempts to preempt state consumer laws and shield student loan companies from accountability for widespread abuses. At every turn, your political appointees have silenced warnings by those of us tasked with standing up for servicemembers and students.

Shielding bad actors from scrutiny. The current leadership of the Bureau has turned its back on young people and their financial futures. Where we once found efficient and innovative ways to collaborate across government to protect consumers, the Bureau is now content doing the bare minimum for them while simultaneously going above and beyond to protect the interests of the biggest financial companies in America. For example, late last year, when new evidence came to light showing that the nation’s largest banks were reipping 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. When pressed by Congress about this, you chose to leave students vulnerable to predatory practices and deny any responsibility to bring this information to light.

American families need an independent Consumer Bureau to look out for them when lenders push products they know cannot be repaid, when banks and debt collectors conspire to abuse the courts and force families out of their homes, and when student loan companies are allowed to drive millions of Americans to financial ruin with impunity.

In my time at the Bureau I have traveled across the country, meeting with consumers in over three dozen states, and with military families from over 100 military units. I have met with dozens of state law enforcement officials and, more importantly, I have heard directly from tens of thousands of individual student loan borrowers.

A common thread ties these experiences together—the American Dream under siege, told through the hear wrenching stories of individuals caught in a system rigged to favor the most powerful financial interests. For seven years, the Consumer Financial Protection Bureau fought to ensure these families received a fair shake as they strived for the American Dream.

For these reasons, I resign effective September 1, 2018. Although I will no longer be Student Loan Ombudsman, I remain committed to fighting on behalf of borrowers who are trapped in a broken student loan system.

Sincerely,

Seth Frotman

Assistant Director & Student Loan Ombudsman

Consumer Financial Protection Bureau

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After Equifax data breach, MO’s Ann Wagner votes against CFPB

Willy Kessler — Wed, 13 Sep 2017 19:39:14 +0000

The Consumer Financial Protection Bureau (CFPB) is, as it states on its Website, “a U.S. government agency that makes sure banks, lenders, and other financial companies treat you fairly. ” It was an important component of the the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act), a law designed to protect Americans from the excesses that led to the financial crisis of 2008. To date the Agency has been very effective. In the few years since it was established, it has settled over a million complaints and has saved consumers more than 11 billion dollars.

So what’s not to like? An awful lot if you are part of a financial industry that got used to running wild during the Bush years. As The New York Times asserts, the CFPB may have been too effective. It has far too much independence for Big Banking’s tastes; it can operate outside the realm of strategically distributed campaign funding and lobbyist blandishment.

Needless to say, when it comes to the CFPB, Republicans have been more than willing to take up the cudgels on behalf of their patrons in the financial sector. And nobody’s been more assiduous in going after the CFPB than Missouri’s own Ann Wagner, who, not incidentally, rakes in a big part of her considerable campaign war chest from grateful banking types.

The reason I’m returning to what is now an old and, at this point, oft-told story is simple: Equifax. The Equifax data breach that has exposed at least 148 million consumers to potential ID theft, to be precise. Also the fact that Equifax botched its response to its big fail by revealing the breach belatedly, and then offering inadequate follow-up, even, according to some sources, attempting to make money off of the disaster.

But don’t worry. The CFPB is on the case:

In a statement provided to HousingWire, CFPB Senior Spokesperson Sam Gilford said the bureau is already looking into the situation.

“The CFPB has authority over the consumer reporting industry, including supervisory and enforcement authority,” Gilford said in the statement.

“The CFPB is authorized to take enforcement action against institutions engaged in unfair, deceptive, or abusive acts or practices, or that otherwise violate federal consumer financial laws,” Gilford added. “We are looking into the data breach and Equifax’s response, but cannot comment further at this time.”

Additionally, Gilford said the CFPB is looking into the arbitration clause inserted into Equifax’s credit monitoring.

As CNN points out, consumers who want to take Equifax up on its offer of free credit monitoring for a year have to waive their right to sue, something that the CFPB is currently battling over on Capitol Hill.

“Equifax’s credit monitoring product contains a mandatory arbitration clause that denies people their right to join together to sue the company for wrongdoing,” Gilford said.

True, the New York Attorney General is also launching an investigation, and Congress is promising hearings. I don’t know about you, though, but when it comes to who is more likely to be thorough and transparent, I prefer that the task be at least shared with an agency like the CFPB, whose independence is assured. Unlike some congresspersons I could name, it doesn’t have any favors to repay that might soften the zeal with which it goes after a bad actor.

The CFPB went after Equifax and TransUnion earlier this year for deceiving consumers about the usefulness and cost of credit scores they sell. Given their record to date, I don’t need to add that the CFPB got results; it cost the credit agencies $5.5 million in fines and $17.6 million in restitution paid to consumers. The CFPB’s got a track record when it comes to Equifax and its ilk.

Of course, it’s the very independence of the CFPB that sticks in Wagner’s craw. It’s what lies behind the usual Republican charges of government overreach or, in a more grandiose vein, charges that it is not constitutional to have a government agency with so much power that is funded independently of congress and is led by an executive appointee who cannot be dismissed on the whims of various and sundry elected officials without substantial cause. So far, the courts, our constitutional arbiters, don’t agree with Wagner et al. when it comes to questions of constitutional overreach. (Do you, too, find “unconstitutional” kind of funny coming from GOP politicians who seem to be purposely blind to the constitutional issues that bedevil their current President?)

Wagner’s onus against the agency extends to its director. She has been in the forefront of trying to drum up an appearance of malfeasance on the part of CFPB director Richard Cordray, even going so far as to level poorly substantiated charges of workplace discrimination. Most recently, she and her anti-CFPB cadres have tried to besmirch the record of the CFPB investigation into Wells-Fargo’s financial malfeasance.

But right now, when a truly huge number of Americans are facing the potential of identify theft or worse, and the company responsible for losing their data is acting poorly, do you think Wagner could be prevailed upon to leave the CFPB alone and let it serve the people who need it? I’m not optimistic – it’s clear that Wagner sees the Trump presidency as a lifeline when it comes to her heretofore ineffectual crusade to re-empower our financial overlords, but maybe, nevertheless, we should ask her to “can” it? Or else.*

*Note to Ann Wagner: No, Ann, “or else” is not a threat of anything worse than an election. I know that many of your grey-haried constituents scare you silly, but you don’t need to be worried about anything worse than losing their votes.

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