“A sick, sad joke”

Mick Mulvaney, the Consumer Financial Protection Bureau and trial lawyers

2018 June

Eight years ago, Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act. It came in response to the financial crisis of 2007 and the Great Recession that followed.

Included in Dodd-Frank was the authorization to create the Consumer Financial Protection Bureau (CFPB), an independent government agency responsible for consumer protection in the financial sector.

Today, both Dodd-Frank and the CFPB are on the endangered species list.

In 2010 Congress tasked the bureau with the responsibility to “promote fairness and transparency for mortgages, credit cards and other consumer financial products and services.” The agency’s director for five years was Richard Cordray who made the bureau’s priorities mortgages, credit cards and student loans.

While those priorities don’t sound controversial, business groups took umbrage with the CFPB and its mission to protect consumers in the financial sector. Maybe it was because the CFPB recovered billions of dollars for consumers who were victims of corporate deceit and negligence. Cordray and his independent bureau really got under the skin of business groups and Republicans.

L.A. Times consumer columnist David Lazarus described it well when he wrote “Financial firms and their Republican allies repeatedly make the case that the CFPB is a rogue agency determined to undermine capitalism, democracy and the American way of life.”

In 2014, then Congressman Mick Mulvaney said in an interview with the Credit Union Times that the CFPB is a “sick, sad joke run by essentially a one-person dictator.”

Protecting consumers is not the priority of many American businesses, and the CFPB became an early target when a “business-first” president moved into the White House. One year later, guess who is now the Acting Director of the CFPB? Yup, the same Mr. Mulvaney, and to many consumers, that truly is a “sick, sad joke.”

A few weeks ago, as Lazarus reported in his L.A. Times column, “Mulvaney appeared before Congress to make a legally required report to lawmakers on how the CFPB is doing. Apparently, the agency has been overly concerned with consumer protection and has been unfairly preventing businesses from absconding with people’s cash.”

Lazarus quoted Mulvaney that the CFPB “needs to recognize free markets and take a humble approach to enforcing the law.” He reported that Mulvaney “laid out a four-point plan for Congress to improve the CFPB by making it less effective and less independent.”

The response from the consumer campaign director for the U.S. Public Interest Research Group was that “Mulvaney was trying to defang and defund the bureau so that future directors can’t carry out its mission.”

On the surface, this scenario is troubling for trial attorneys who protect consumers from unfair business practices. But, it could also be positive news.

The comments about Mulvaney remind me of a radio commentary delivered by Robert Reich, the Secretary of Labor under former President Bill Clinton who is now a political commentator, UC Berkeley professor and best-selling author.

The commentary appeared on Public Radio’s Marketplace in 2004 but is still relevant today. The title was Toothless Tigers and Tort Reform. Reich was talking about the lax oversight of a government agency (the Food and Drug Administration) while Republicans in Congress were trying to strip Americans of their right to seek remedy from harm via private lawsuits.

Wow, I guess it is true that the more things change, the more they stay the same.

Reich said then: “The question must be asked: How is the public going to be protected if the FDA remains weak and if private lawsuits are cut off?”

He said, “At exactly the same time, Republicans are clamoring for what they call ‘tort reform.’ Tort reform is a nice way of saying that people who are harmed by companies shouldn’t be able to sue them and collect damages.”

Reich added “You might ask the same question all over government these days. Pick an agency. They’re supposed to protect the public. But they’re all understaffed, their budgets have been whacked, and many of them are in the pockets of the very companies and industries they’re supposed to regulate.”

Reich concluded his commentary with a message that still rings true for trial attorneys and consumers:

“They can’t have it both ways. Either regulatory agencies have to be made tougher and more independent and given the resources they need to protect the public, or we’ve got to rely on courts and private lawsuits to make sure companies have every financial incentive to protect the public. Absent both – tough regulators and the threat of private lawsuits – the public is at serious risk.”

Reich’s comments in 2004 were downright prescient.

His message from 14 years ago is as accurate today as it was then. Trial lawyers and the civil justice system are the public’s last line of defense against the businesses who do financial harm to them.