December 01, 2017

Warren, Brown Ask Mulvaney and English for Details on Halt of Payments from CFPB's Civil Penalty Fund to Defrauded Consumers

Mulvaney announced a freeze on payments to fraud victims for 30 days while he gets "a handle on what that fund is all about"

Text of the letter (PDF)

Washington, DC - United States Senators Elizabeth Warren (D-Mass.) and Sherrod Brown (D-Ohio) today requested information about Office of Management and Budget Director Mick Mulvaney's claims that the Consumer Financial Protection Bureau (CFPB) will halt payments from the agency's Civil Penalty Fund.

The Civil Penalty Fund was established by Congress through the Dodd-Frank Act in 2010, "to provide compensation for consumers who have been harmed by violations of federal consumer financial protection law." The money is collected by the CFPB through civil penalties and returned to consumers who were harmed but did not receive full compensation. Of the $12 billion returned to consumers by the agency to date, $4 billion has been returned through the Civil Penalty Fund.

In a letter to CFPB Acting Director Leandra English and Mr. Mulvaney, the senators questioned Mr. Mulvaney's authority to halt all payments from the fund to fraud victims for at least 30 days while he gets "a chance to see what's happening." 

"The Civil Penalty Fund is a vital resource for millions of Americans to recoup their losses when financial institutions cheat them out of their hard-earned dollars. Halting payments - even for a month - may cause further damage to people who have already been cheated," wrote Senators Warren and Brown. "Doing so in order to ‘get a handle on what the fund is all about' is especially inexcusable given the hundreds of employees at the CFPB - including Acting Director English - with knowledge of the Fund and years of experience in making certain that those funds go to fraud victims."

The senators asked for additional information regarding the freeze, including how long it will last, what the criteria will be for ending it, and who will make the decision to do so. They also requested more details about Mr. Mulvaney's vague promise of "exceptions" to the freeze, and what the agency's policy would be for any exceptions made.