By Charlene Crowell ( TriceEdneyWire.com) – Recent and stunning disclosures of racially-offensive writings by a high-ranking official at the Consumer Financial Protection Bureau (CFPB) has unleashed an escalating barrage of criticisms, including calls for the official to be fired and more probing questions regarding the agency’s commitment to fair lending. Since a September 28 Washington Post article first reported how Eric Blankenstein, CFPB’s Policy Director for Supervision, Enforcement and Fair Lending, used a pen name in blogs dating as far back as 2004, a spate of fury has been unleashed. Disguising his authorship, Blankenstein claimed that the use of the N-word was not racist, and further alleged that most hate crimes were hoaxes. A subsequent New York Times article alleged that people who perpetuated the Obama birther conspiracy are not racist either, and noted that as late as 2016, Blankenstein’s personal Twitter account posted racially charged comments. Keep in mind that Blankenstein was hand-picked by CFPB head Mick Mulvaney. Patrice A. Ficklin, a CFPB career staff member and Director of its Office of Fair Lending and Equal Opportunity reports to Blankenstein and is quoted in the Post article. Ficklin said, “And while he has been collegial, thoughtful and meticulous, I have had experiences that have raised concerns that are now quite alarming in light of the content of his blog posts — experiences that call into question Eric’s ability and intent to carry out his and his Acting Director’s repeated yet unsubstantiated commitment to a continued strong fair lending program under governing legal precedent.” By October 1, Anthony Reardon, National President of the National Treasury Employees Union, advised CFPB of its dissatisfaction with the Blankenstein blogs. “There should be zero tolerance for comments that Blankenstein has admitted authoring and nothing less than swift and decisive action is called for,” said Reardon. “That someone with a history of racially derogatory and offensive comments has a leadership position at CFPB reflects poorly on CFPB management and your commitment to fulfilling the mandate of the agency to ensure that discriminatory and predatory lending practices are stopped.” Two days later, on October 3, the Center for Responsible Lending (CRL) publicly called for Blankenstein to be fired. “Mr. Blankenstein must be removed from his post and this must be combined with a demonstrable commitment by CFPB head Mick Mulvaney to fair lending,” said Yana Miles, CRL’s Senior Legislative Counsel. “Thus far, the Mulvaney approach has been worse than inaction – it has been an appalling retreat from enforcing anti-discrimination laws…. The enduring legacy and present-day experience of financial discrimination is the key driver of the racial wealth gap. Vigorously addressing this is a legal and moral imperative.” A second civil rights organization agreed with CRL’s call for Blankenstein’s termination. “Eric Blankenstein’s racist and sexist remarks show that he is not fit to lead the CFPB Office of Fair Lending,” said Vanita Gupta, president and CEO of The Leadership Conference on Civil and Human Rights. “Our nation’s history of financial discrimination is the key factor in the growing racial wealth gap.” “Entrusting Blankenstein given his history of racially derogatory remarks will undermine progress for fair lending efforts to close the gap,” continued Gupta. “If the CFPB is serious about eradicating discrimination, it must immediately remove Blankenstein, and must ensure that it is led by a person with a demonstrated commitment to civil rights enforcement. His writings make clear that Mr. Blankenstein is not that person.” The same day, another pivotal development occurred. A letter signed by 13 U.S. Senators representing 11 states wrote Mulvaney, demanding answers to a series of questions no later than October 22. The questions span Mulvaney’s personal awareness of the writings, the guidelines and procedures used to fill the position, whether a Member of Congress, or an executive branch employee recommended his hiring, what action he intends to take as Acting Director and more. In part, the Senators’ letter states, “We are deeply concerned that you have placed a person with a history of racist writing at a senior position within the Consumer Financial Protection Bureau…Mr. Blankenstein was not hired through the competitive service process like most CFPB employers; he is one of your hand-selected political appointees. Further, you have specifically tasked him with overseeing the CFPB’s fair lending supervision and enforcement work at a time when you have decided to restructure the Office of Fair Lending and Equal Opportunity.” The letter was signed by Senators Richard Blumenthal (D-CT), Cory Booker (D-NJ), Sherrod Brown (D-OH), Maria Cantwell (D-Washington State), Kirsten Gillibrand (D-NY), Kamala Harris (D-CA), Edward Markey (D-MA), Catherine Cortez Masto (D-NV), Jack Reed (D-RI) Mark Warner (D-VA), Robert Menendez (D-NJ), Elizabeth Warren (D-MA), and Ron Wyden (D-OR). Even before the Blankenstein scandal, Mulvaney’s actions and inactions at the CFPB have brought a series of concerns by civil rights and consumer advocates alike. Particularly noteworthy among their stated concerns under Mulvaney include: CFPB has yet to issue any violations of the Equal Credit Opportunity Act; The Bureau declared an intent to ignore the Disparate Impact standard, a long-standing legal test that holds the effects of discrimination, not the intent are legal violations; Personally praised the repeal of anti-discrimination auto lending guidance; Sided with payday lenders in their challenge of the Bureau’s payday rule promulgated under the previous director; Announced the Bureau’s fair lending office would be stripped of its supervisory and enforcement powers; and Relegated the development of regulation on fair lending for minority and women-owned businesses to a low-level concern. It took decades of vigilant struggle for civil rights, fair lending, and consumer protection to be codified in federal laws. It is time to remind the CFPB and all federal agencies that they have a duty to uphold the nation’s fair lending laws – regardless of personal beliefs. Charlene Crowell is the Center for Responsible Lending’s Communications Deputy Director. She can be reached at Charlene.firstname.lastname@example.org.
By Charlene Crowell
U. S. Rep. Maxine Waters (D-Calif.)
(TriceEdneyWire.com) – In the wake of a recent series of anti-consumer actions taken by Mick Mulvaney, the Trump-appointed Consumer Financial Protection Bureau’s Acting Director, a bicameral call for accountability was released on January 31. Led by Congresswoman Maxine Waters of California and Sen. Elizabeth Warren of Massachusetts, two other Congressional Black Caucus Members, Congressmen Keith Ellison (MN) and Al Green (TX) joined Senators Richard Blumenthal (CT) and Jeff Merkley (OR) as signatories.
Together, the group of lawmakers seek to know what prompted Mr. Mulvaney’s actions as well as his ties to the payday lending industry.
A January 31 letter calls into question the following specific actions that have occurred over the past month:
Halting implementation of the agency’s final rule preventing abusive payday lending (the ‘Payday Rule);
Announcement of the Bureau’s intention to initiate a rulemaking process that appears designed to weaken the Payday Rule;
Withdrawing a Bureau lawsuit against four online payday lenders who allegedly misled customers on interest rates that spanned a low of 440 percent to as high as 950 percent; and
Ending an investigation of World Acceptance Corporation, a high-cost installment lender that began in 2014 after consumers complained of unaffordable loans and aggressive collection practices.
“For too long, some payday, auto title, and installment lenders have taken advantage of American workers who need a little extra money to pay an unexpected medical bill or fix their car,” wrote the lawmakers. “For too many families, one unexpected expense or tight week traps them in a cycle of debt that lasts months or years…The rule finalized by the CFPB last October was carefully balanced to end that cycle of debt while ensuring that borrowers retain access to needed credit.”
The Dodd-Frank Wall Street Reform Act that created the CFPB intended for it to be an independent agency, charged with serving as the consumer’s financial cop-on-the-beat. Its director was to be nominated by the President and confirmed by the Senate to a five-year term of service. Additionally, CFPB was to secure its funding directly from the Federal Reserve Bank, rather than through Congress’ annual appropriations process that could enable powerful special interests to restrict necessary funding.
Even though he Dodd-Frank Act also a defined succession plan for an Acting Director in the event of personnel changes, two people were appointed to this same role. One, Leandra English was lawfully appointed by the now-departed Director Richard Cordray, while another, Mr. Mulvaney, was appointed by President Trump. The lawmakers’ letter is addressed to both appointees.
An appellate federal court will eventually decide who should be the legal Acting Director; but in the interim, Mulvaney leads CFPB while retaining his position as Director of the Office of Management and Budget. In his prior role as a South Carolina Congressman, he co-sponsored a bill to eliminate the CFPB and accepted nearly $63,000 in campaign donations from payday lenders. These donations included $4,500 from World Acceptance Corporation’s political action committee.
“The CFPB spent five years honing the Payday Rule, conducting research and reviewing over one million comments from all types of stakeholders: from payday lender, to state regulators, to faith leaders,” wrote Ranking Members Warren and Waters.
Now Mr. Mulvaney oversees the daily operations of the same Bureau that returned $12 billion to nearly 30 million consumers in about six years. Instead of regulating financial services, this Acting Director prefers allowing private enterprise to determine consumers’ choices – including those that are harmful and predatory. He also wants financial businesses to have more input on determining what regulations CFPB should use in their supervision and monitoring.
As CFPB’s Acting Director, Mulvaney also wrote a letter to Federal Reserve Chairwoman Janet Yellen advising that “for Second Quarter of Fiscal Year 2018, the Bureau is requesting $0.”
Mulvaney added, “While this approximately $145 million may not make much of a dent in the deficit, the men and women at the Bureau are proud to do their part to be responsible stewards of taxpayer dollars.”
When the federal deficit is hundreds of trillions of dollars, it strains credulity to believe that $145 million will lighten the nation’s debt. But an emerging pattern of the current Administration is to allow lengthy delays that could eventually become denials. As this column has previously reported, key consumer protections in student loans have been delayed as well, and through the Congressional Review Act, a rule that would have allowed consumers to have their own day in court to resolve financial and credit issues has also been rejected. Moreover, Mulvaney directed the CFPB to delay implementation of its prepaid card rule that was designed to help stop abusive fees for users.
If sparing taxpayers unnecessary costs is the guiding force, then why has both the CFPB and Department of Education rejected earlier negotiated rulemaking and begun the process anew – at taxpayers’ expense?
“I certainly understand the desire to protect taxpayer dollars,” said Debbie Goldstein, Executive Vice President with the Center for Responsible Lending, “but I think the mission of the CFPB is to protect the taxpayers, the American people, from lenders who target them for high-cost and unaffordable loans. And the best way to save Americans millions of dollars is by preventing predatory lending, not by draining the CFPB’s resources.”
Charlene Crowell is the Center for Responsible Lending’s communications deputy director. She can be reached at email@example.com.
By Charlene Crowell, communications deputy director with the Center for Responsible Lending
Richard Corday and Hilary O. Shelton
(TriceEdneyWire.com) – After five years of field hearings, town hall meetings, multiple research reports, and over one million comments, the Consumer Financial Protection Bureau (CFPB) has announced a new rule to rein in predatory payday and car-title loans.
“These protections bring needed reform to a market where far too often lenders have succeeded in setting up borrowers to fail. . . Faced with unaffordable payments, consumers must choose between defaulting, re-borrowing, or failing to pay basic living expenses or other major financial obligations,” said Richard Cordray, CFPB Director.
Central to the CFPB’s rule, established Oct. 5, is the establishment of an ability-to-repay principle. High-cost loans of 45 days or less, as well as longer term loans that end in a balloon payment, must first take into account whether the loan is affordable when both borrower income and expenses are considered. These loans allow lenders to seize funds from either a borrowers’ bank accounts (payday loans) or repossess vehicles that were used as collateral (car-title loans).
Although marketed by predatory lenders as an easy lifeline in a financial emergency, research by CFPB, and other consumer groups found otherwise: payday lending’s business model is the tool that drowns borrowers into a sea of debt. With triple-digit interest rates of 400 percent or higher, payday and car-title loans drain $8 billion in fees on loans averaging $300-$400. Borrowers stuck in more than 10 loans a year generated 75 percent of all payday loan fees. Similarly, 85 percent of car-title loan renewals occur 30 days after a previous one could not be fully repaid.
Across the country, these high-cost lenders are most-often found in communities of color where Blacks, Latinos, and low-wealth families reside. The data and consistency of business locations in these areas suggest that lenders target financially vulnerable consumers.
Upon learning of CFPB’s payday rule, clergy and civil rights leaders who have steadfastly opposed payday and car-title lenders’ triple-digit interest rates were swift to speak in support. Their desire to rein-in the debt trap of these unaffordable loans was both strong and consistent.
“With little accountability for their actions, payday lenders have long preyed upon communities of color and drained them of their hard-earned savings,” said Hilary O. Shelton, the NAACP’s Washington Bureau Director and Senior Vice President for Policy and Advocacy. “This CFPB rule establishes a much-needed set of transparent responsibilities for lenders and basic rights and protection for borrowers.”
“We will work to defend and strengthen this rule,” continued Shelton, “so Americans face fewer burdens in establishing financial security.”
For Reverend Willie Gable, Jr., Pastor of Progressive Baptist Church in New Orleans and Member of the National Baptist Convention, USA, Inc., the country’s largest predominantly African-American religious denomination, the payday rule was both personal and pastoral.
“In my home state of Louisiana, the average payday loan interest rate is 391 percent,” said Reverend Gable, Jr., “With rates this high – and even higher in other states, cash-strapped people who needed only a couple hundred dollars soon discover they are in financial quicksand, paying loan fees were after week, that only sink them deeper into debt.”
“As best I can, I comfort those caught in payday lending’s web of debt,” Gable added. “Yet I also know that it is time for change. These shackles of debt must be broken.”
“President Trump and Congress should get on the side of civil rights advocates, the religious community, consumer organizations, and the public at-large by supporting and strengthening the CFPB’s new rules on payday lending,” challenged Vanita Gupta, president and CEO of The Leadership Conference on Civil and Human Rights, a coalition of more than 200 national organizations to promote and protect the civil and human rights of all persons in the United States. “Payday lending is bad for many consumers; but like many predatory scams, it invariably ends up as a weapon against the disadvantaged communities that are least able to bear its terrible burden.”
Looking ahead, many consumer advocates remain hopeful that CFPB will go even further with its rules, to include similar actions against harmful and longer-term loans.
At both the state and federal levels, civil rights leaders and consumer advocates must remain watchful to preserve, expand, and enforce existing interest rate caps now in effect in 15 states and the District of Columbia. Advocates must also remain watchful for any congressional actions that may be taken to preempt or undermine consumer protection