Showdown at the Consumer Financial Protection Bureau

When two competing “acting directors” showed up for work this week to lead the federal government’s Consumer Financial Protection Bureau (CFPB) — one an Obama administration holdover, the other named by President Trump — it was not only a bizarre moment but proof of how desperately Republicans want to defang the aggressive agency.

The CFPB, created in 2010, is the first federal agency to focus on protecting people from the excesses and scams of banks, credit card and mortgage issuers, debt collectors and other financial players.

GOP lawmakers — and their generous campaign donors from the financial industry — have been cringing since the bureau’s inception at every bold move the agency made under director Richard Cordray, who resigned last week.

Cordray named a longtime bureau employee to be his successor, using authority granted in the Dodd-Frank Act that created the bureau. Within hours, President Trump appointed his own pick for the temporary job, Mick Mulvaney, setting up Tuesday’s showdown in federal court.

U.S. District Judge Timothy Kelly refused to block Mulvaney’s appointment, finding that “denying the president’s authority … raises significant constitutional questions.” With that, the consumer bureau moved immediately into the Trump era.

Mulvaney is an odd choice by the president because he already has a demanding full-time job running the Office of Management and Budget, is facing a potential budget crisis that could close the government, and has said the agency he’s been named to run is a “sick, sad” joke.

Leandra English, Cordray’s choice, is likely to press the issue. But whatever the ultimate outcome, the real issue is whether consumers end up with any significant protection against financial abuses.

Trump has made his views clear, tweeting Saturday that under Cordray the bureau was “a total disaster.” Well, maybe it was — for the financial institutions whose misdeeds were exposed and punished.

A list of some of the bureau’s major accomplishments shows why financial players want it disarmed:

  • Collecting $11.7 billion in relief for more than 27 million consumers in actions against credit card companies for abusive practices, banks for charging erroneous overdraft fees and mortgage companies for wrongful disclosures.
  • Fining Wells Fargo $100 million for setting up unwanted accounts for unsuspecting customers who knew nothing about what was going on.
  • Creating a consumer-friendly website to investigate and resolve problems, as well as making complaints public so consumers could avoid poorly performing institutions.

You’d think that Trump, who fashions himself as a populist champion of the middle class, would want his supporters protected from financial scammers. But ever since the CFPB became a strong financial cop on the beat, congressional Republicans have repeatedly tried to undermine it.

One ploy the industry and its allies in Congress have been promoting is to turn the bureau into a commission. This might sound benign, but the Senate can too easily stymie a commission’s work by creating partisan gridlock or leaving so many vacancies that the panel can’t function.

That’s what has happened to the Federal Election Commission, which is supposed to police campaign finance abuses.

With Mulvaney winning the first round in court and Trump in position to nominate a new director, efforts to undermine this strong consumer champion are well underway.