The Consumer Financial Protection Bureau has issued its first penalty under the leadership of Mick Mulvaney. Wells Fargo will pay a total of $1 billion to the CFPB and the Office of the Comptroller of the Currency as part of a settlement over charges tied to the company's mortgage and auto lending business.
Mulvaney, who currently serves as acting director of the CFPB in addition to his director role at the Office of Management and Budget, has long been a critic of the bureau's authority. He spoke with host Kai Ryssdal about the agency's decision to fine Wells Fargo and how long he plans on wearing two hats. Below is an edited transcript of their full conversation:
Kai Ryssdal: I can't be the only guy who read the headlines when this thing leaked last night and said, "Wait, this is the CFPB doing this fine?" How did this come to pass?
Mick Mulvaney: We had concurrent jurisdiction over this with the OCC, the Office the Comptroller of the Currency, and decided in the last several months to actually work together with them on an enforcement action, something that has been legal for a long time, hasn't been done in a long time, at least not this level. So we had jurisdiction over some of the claims, the OCC had some over others, and just we just decided to do it together.
Ryssdal: Yeah, but the premise of the question, sir, is that the CFPB under Mick Mulvaney has, in your own words, not been extremely active.
Mulvaney: Oh, I'm sorry. I'm sorry, I thought you meant the legal structure. No, that's actually, that's actually not true. All I said is that I wasn't going to push the envelope. We weren't going to try and be overly creative and go after folks who might not be breaking the law. I think anybody who would look at the facts, including those that were admitted by Wells [Fargo], could tell you that they broke the law. So no, I've said from the very beginning we were going to enforce the law. That's exactly what we've done today.
Ryssdal: About how you were running the place: You said to the House Financial Services Committee the other day, you said, "Listen, I haven't burned the place down, we're just doing a new way of regulating." What does that mean? What does that look like?
Mulvaney: Well, there's a lot of discretion in regulations. Regulations are a lot of times very, very gray. Keep in mind, Congress is pretty sloppy. I say that having formerly been in Congress. They don't often take a lot of time to give a lot of clarity, to sort of paint the big picture with a big brush but don't get down into the details, and they leave that to the administration, to the executive branch. And there's a lot of discretion down at that level. And I'm going to exercise mine differently than my predecessor would have. That means, I think I dismissed one lawsuit out of 26, that we might not bring as many lawsuits as he did. But that doesn't mean we're not enforcing the law. I'm a bureaucrat now, and that means that my job is to enforce the law, and I'm going to do what the statute tells me to do, but I'm not going to go beyond that, and that's the biggest difference between me and the previous leadership of the bureau.
Ryssdal: But you've delayed enforcement of some rules, you've dropped lawsuits against payday lenders, you've stripped out some protections of fair-lending provisions. I guess the question writ large is —
Mulvaney: — Actually, Kai, I don't think any of that is true. I dismissed one lawsuit, not lawsuits. We haven't — the only thing we changed at Fair Lending was to bifurcate it. Fair Lending has two functions. They have a supervision and enforcement function, that is one, and they have an education function. Within the structure of the bureau, those two functions are performed in two different places, so instead of leaving it together in the Office of Fair Lending, we simply put part of it in Supervision and Enforcement, part in Education — have not changed the actual operations of what we're doing at all.
Ryssdal: Fair enough. Let me ask the question directly then. To the point that many of the critics of what you're doing in the bureau have to say, which is do you believe there is a place for consumer protection in the government?
Mulvaney: Yes, and I think I've said that. Happy to say that. Yes, I absolutely do. Especially when it comes to federal enforcement over federal entities. We have federally chartered financial securities providers, for example, and the law says we are supposed to do it. I'm all for changing the bureau. Don't get me wrong. But that has as much to do with the power that's given to me as an individual as it is with the way we protect consumers.
Ryssdal: So since you pointed out that you are a bureaucrat now, sir, you are the rare bureaucrat in Washington — and I say this without meaning anything pejorative about the people who work in this government who do noble service — but you're the rare one who says, "I have too much power."
Mulvaney: Yeah, well it's the way I explain it to people, if you don't like what I did today — let's say you're Wells Fargo, and you think that I was unfair in arriving at this figure today. You have no one to complain to. There's no elected officials you can complain to. Conversely, let's say you're in a consumer group and you don't think we were harsh enough on Wells Fargo. There's no elected official that you can complain to. Not your congressman or senator, not the president of the United States. Nobody. I don't answer to anybody. I honestly don't think that's fair. I have a tremendous amount of discretion as to who we sue, who we don't sue, what lawsuits we might dismiss and as, sort of, part of today's discussion, what amount we settle at with folks like Wells Fargo. And if you don't like that then, you need to change the statute to take that authority away from me, and I think that should be done.
Ryssdal: Do you think there's no merit to consumer protection being insulated from the political winds in Washington?
Mulvaney: I don't know what that means.
Ryssdal: That means, sir, that Congress runs hot and cold depending on who's in power and who's not. And one would hope that one would have a consistent regulatory framework where consumer financial interest could be protected.
Mulvaney: Absolutely agree, which is why I think you have to change the structure of what they've built. Ask you a question right now: Do you think we're giving consistent regulatory structure under Richard Cordray's leadership and then mine? Or is that going to be a dramatic swing from one to the other? And wouldn't we be better off with something a little bit more stable like the SEC, like the FDIC, like the OCC, that clearly don't have these wild politics attached to them? We are not like the other regulatory agencies right now. We are sort of associated with Elizabeth Warren, and that's not right. We need to be a regulator, not somebody's, you know, child.
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Ryssdal: Let me give you the chance to clear up a weird quote of yours that was floating around out there last week. You had gone before Congress and you said, "Listen, I'm here because the statute says I have to be here, but I don't have to answer your questions." And then you pointed out that others who actually have to go and testify that the law says "shall answer questions." You trying to make a point in that quote?
Mulvaney: Absolutely, and I would say it again. My statute says I shall appear before Congress. The other statutes within Dodd Frank say other people have to appear and testify or appear and answer questions. And any lawyer will tell you that you can make an argument that that means that you only have to appear, it means you don't have to do those other things. I want them to change that, to bring more clarity to it, to make sure that some director in the future doesn't just show up, kick his or her feet up on the table and not answer questions. That should be easily remedied. But for some reason, Sen. [Elizabeth] Warren objects to even those types of clarification being brought to the law. So yeah, I do it to make a point. I answered all their questions, but there's a lot of abuse that's potential here if a future director wanted to take advantage.
Ryssdal: To be fair, sir, Congress can't agree on what day it is, let alone change a major statute.
Mulvaney: In fairness, that's not true. You are cynical about the system, that is well earned. I used to be a member. I'm cynical as well. I will point out there is a bipartisan bill, believe it or not, that's already passed out of the Senate that has small changes to the bureau. I had asked that other things be put in there, including giving me more oversight from an independent inspector general. But they weren't able to agree on that. But that's not true [that] they can't do anything. They have been able to pass some small changes, and I hope they continue down that road.
Ryssdal: Quick change of gears. Let me ask you to put on your director of the Office of Management and Budget hat, and I'm not going to ask you to answer for Secretary Mnuchin and his statement the other day that these tax cuts are going to pay for themselves. But I do want to ask you about the report out from the CBO, the Congressional Budget Office, also a projection by the International Monetary Fund, saying that the Trump tax cuts are going to boost growth in this economy substantially in the short term 3.3 percent or more. But then they both say that growth is going to fall off to 1.9 percent, which is not going to get you the growth you need to get these tax cuts to pay for themselves. How do you respond?
Mulvaney: That has been the CBO's baseline number for the last several years going back, I think, three or four years into the middle of the Obama administration. The CBO believes that the new normal, that the baseline growth of the American economy, is going to be roughly 1.8, 1.9 percent. They said that when we introduced our first proposals on the taxes. They could maintain that when we also started to push our deregulatory agenda. Now they're, I think, grudgingly admitting that we were at least temporarily right and that we would boost economic growth. And then they go right back to the 1.8. And what we're saying is that no, we have fundamentally changed the structure of the economy, that the deregulatory policies, the energy policies and most importantly the tax policy have fundamentally changed the economy in the United States so that that 3 percent growth will be sustainable.
Ryssdal: And you just believe that, that's what you say?
Mulvaney: Well, I mean I can go into details if you'd like to. The big part of the tax bill was to change the way that we tax investment. We've dramatically reduced the way that we tax investment in this country. One of the ways we need to get productivity — one of the ways we can and will get productivity up, which is what drives GDP — there's actually two ways to do it. You can either grow the number of people working or if you grow their productivity. Obviously with a graying and aging population, that's hard to grow the number of people working — you could do some things to get people back into the workforce. But generally speaking, we focus on the other side of the equation, which is how do we get productivity up, and productivity comes from businesses investing in their workers. And that's the fundamental change that we made in the tax bill. We made it more profitable for businesses to invest in education, in technology, in modernization, in new factories. And that's why we think this is a structural change and not just a short-term sugar high that might come, say, from the marginal rate reduction by itself.
Ryssdal: Last question sir, and then I'll get out of your hair. How long are you going to be doing these two jobs, because it seems to me they're both full time or more?
Mulvaney: Until I have hair left. They are. But I do like them. The president and I were joking about that this weekend. I don't know. As long as he wants me to. I think I'm barred by statute to be at the bureau of consumer financial protection beyond June 22 unless they make a permanent nomination to the Senate before then. So I may be there. I wouldn't expect that I'm at the bureau longer than the end of this calendar year.