Report: CFPB\'s Equifax Probe Stalls as Mulvaney Defangs Watchdog

 Andrew Soergel

The Consumer Financial Protection Bureau has reportedly pulled back from a full-fledged investigation into the Equifax breach that last year exposed the sensitive personal information of tens of millions of Americans, the latest example of the agency's defanging under acting head Mick Mulvaney.

Reuters reported the development Monday, citing "people familiar with the matter" as saying Mulvaney has scaled back efforts to look into how Equifax managed to expose the Social Security numbers, addresses, birth dates – and in some cases driver's license numbers and credit card information – of more than 145 million Americans.

The sources indicated Mulvaney – President Donald Trump's Office of Management and Budget director who moonlights as the head of a consumer watchdog agency he once described as a "sick, sad" joke – has not ordered new subpoenas against Equifax, requested testimony from executives or followed up on plans to specifically look into Equifax's data protection practices.

Reuters also reports the CFPB recently pushed back when officials at the Federal Reserve, the Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency offered to help perform on-site examinations of credit bureaus like Equifax, Transunion and Experian.

All would have been relatively routine functions for the watchdog agency under former Director Richard Cordray, who tendered his resignation from the bureau last year and has since announced his candidacy for Ohio governor as a Democrat.

The bureau under Cordray leveled billions of dollars in fines to companies and organizations it deemed to have taken advantage of American consumers. It was widely expected that the watchdog agency would eventually look into the breach, which went undetected and unreported for months and has drawn condemnation from both Republicans and Democrats during subsequent cybersecurity hearings on Capitol Hill.

Around the time the Equifax security breach was announced in September, a CFPB spokesman said in a statement that the bureau "is authorized to take enforcement action against institutions engaged in unfair, deceptive or abusive acts or practices, or that otherwise violate federal consumer financial laws" but that he could not "comment further at this time" about the specifics relating to an Equifax investigation.

The consumer protection bureau's operations changed, however, once Trump appointed Mulvaney to head the organization – an act that was in itself controversial, as there was no clear road map to resolve an unexpected changing of the guard, leading to a public leadership showdown between Mulvaney and Deputy Director Leandra English.

Much to the chagrin of Democrats and advocates of the bureau that was created under the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act, Mulvaney has been outspoken in his efforts to rein in the watchdog organization's ability to fine and punish private sector institutions.

In a memo that circulated to bureau employees last month, Mulvaney indicated leadership would "be reviewing everything that we do, from investigations to lawsuits and everything in between."

"Simply put, the days of aggressively 'pushing the envelope' of the law in the name of the 'mission' are over," Mulvaney wrote, indicating changes would be on the horizon at the bureau launched under former President Barack Obama.

Some conservatives, private sector advocates and long-standing critics of the bureau have taken to heart Mulvaney's memo as a sign that the institution under Trump will adopt a more hands-off approach. But it's that same belief that has sparked condemnation from Democrats and bureau allies.

"Since Mick Mulvaney took over the Consumer Financial Protection Bureau a couple months ago, he's done nothing but undermine it," Sen. Elizabeth Warren, D-Mass., said in a Facebook post earlier this month. "Step after step to weaken protections for consumers, and wink after wink to predatory payday lenders and big banks."

Warren's post referred specifically to Mulvaney's recent decision to place the responsibilities of the Office of Fair Lending and Equal Opportunity under his direct control. The office was primarily responsible for targeting allegations of discrimination within the private sector, and Mulvaney critics have alleged that the move effectively weakens the bureau's ability to punish companies for engaging in discriminatory practices.

But that's certainly not Mulvaney's only move that's drawn the scorn of Democrats and those concerned that he's effectively gutting the bureau from within. He recently made a funding request of zero dollars to the Federal Reserve, which is responsible for allocating resources to allow the watchdog agency to remain open. Mulvaney said there was more than enough stashed away in an emergency fund launched under Cordray to keep the CFPB running in the months ahead.

The bureau under his watch also recently dropped a lawsuit against payday lenders accused of taking advantage of American consumers – which sparked considerable criticism, considering the legal process had been initiated under his predecessor and that Mulvaney had received tens of thousands of dollars from the payday lending industry as a South Carolina congressman before Trump tapped him to lead the Office of Management and Budget.

"Apparently Mick Mulvaney is only interested in pushing the envelope when those envelopes are filled with campaign contributions from the very industries he now oversees at the CFPB," Karl Frisch, executive director at the progressive consumer-focused think tank Allied Progress, said in a statement last month.

The bureau under Mulvaney has in recent months issued a series of requests for public information and comments related to its operations – with the goal of potentially modifying its operations further going forward.

It's unclear how long the former South Carolina congressman will remain at the helm of the bureau, though acting directors' congressional terms of employment are relatively lax. But it's clear that as long as Mulvaney, who at one point co-sponsored a bill designed to completely eliminate the bureau he now oversees, is at the helm, the CFPB is likely to continue shifting into a significantly more passive role, fulfilling Trump's deregulatory ambitions as Democrats seethe.

Equifax may not be completely off the hook – the Federal Trade Commission is still looking into the company's breach, and lawmakers could end up passing legislation that would rein in its data storing practices. But it appears as though the consumer protection bureau's investigation efforts have come to a standstill.

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Andrew Soergel
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