Was the move part of Mick Mulvaney’s reshaping of the Consumer Financial Protection Bureau? Or was it something more sinister, as consumer advocates have alleged.
The issue at hand is the CFPB closing an investigation into World Acceptance Corporation, which is headquartered in South Carolina, Mulvaney’s home state. The company has donated to the former congressman’s political campaigns.
President Donald Trump appointed Mulvaney as acting director of the CFPB in November.
World Acceptance Corp. said in a news release Tuesday that it had received a letter from the consumer agency “indicating the investigation into the company’s marketing and lending practices has been completed. … The CFPB noted it does not intend to recommend enforcement action,” American Banker reported.
The CFPB has declined comment on World Acceptance Corp’s news release. It is unclear to what extent that decision was driven by Mulvaney.
The payday lender has given at least $4,500 in campaign donations to Mulvaney, who represented South Carolina in the U.S. House until joining the Trump Administration as White House budget director.
In 2013, ProPublica reported that the company’s business model depended on convincing low-income consumers to become repeat borrowers trapped in a “debt cycle.”
Closing the 4-year-old investigation of the company based in Greenville has drawn criticism.
“The Consumer Financial Protection Bureau was established to protect consumers from predatory lenders like World Acceptance Corporation, but under Mick Mulvaney’s control the Bureau is undermining that important mission,” Karl Frisch, executive director of Allied Progress, said in a news release. “Worse still, Mulvaney’s CFPB appears to be rewarding bad financial actors who also happen to be his campaign contributors.”
U.S. Sen. Elizabeth Warren, D-Mass., said Mulvaney was returning a favor to a campaign donor.
“Dropping this case is more evidence that Mick Mulvaney is just using his time at CFPB to pay back the donors who funded his political career,” Warren said to ProPublica.
In recent weeks, Mulvaney has taken several steps to roll back the aggressive enforcement regime that was instituted under former director Richard Cordray, Credit Union Times reported. Mulvaney has said that the agency will be reexamining its basic functions and he has said that the agency will be revising its payday lending rule.
Last week, the CFPB dropped – without explanation – a case in Kansas federal court against four payday lenders located on Indian reservations it had accused of unlawfully collecting on high-interest loans (rates between 440 and 950 percent), according to The National Law Journal.
On Twitter, Cordray called the move “Unconscionable!”
Mulvaney has received $57,100 in campaign contributions from the payday lending industry over the course of his political career, according to the National Institute on Money in State Politics which was reported by International Business Times.
Meanwhile two court cases challenging whether President Trump has the power to appoint Mulvaney are pending in federal court, Credit Union Times reported. In one of those cases, deputy director Leandra English has alleged that she, and not Mulvaney, should be running the bureau, citing sections of Dodd-Frank.
In the latest move, the U.S. Circuit Court of Appeals for the District of Columbia has agreed to move the case on an expedited schedule, with all briefs due by March 6.