May 03, 2018

Warren Joins Cortez Masto, Colleagues in Urging Fed Inspector General to Investigate Mulvaney’s Close Ties with Payday Loan Industry

Text of the letter (PDF)

Washington, DC – United States Senator Elizabeth Warren (D-Mass.) yesterday joined Senator Catherine Cortez Masto (D-Nev.) in sending a letter to Mark Bialek, Inspector General of the Federal Reserve System, urging him to investigate Mick Mulvaney’s actions as President Trump’s appointed ‘acting director’ at the Consumer Financial Protection Bureau (CFPB) after reports surfaced that Mulvaney has taken numerous actions to benefit payday lenders. Mulvaney has delayed the implementation of the CFPB’s ‘Payday Rule’ designed to protect consumers from predatory lending practices and withdrew a lawsuit against four deceptive payday lenders. The letter was also signed by U.S. Senators Sherrod Brown (D-Ohio) and Tina Smith (D-Minn.).

“These actions have unwound years of careful and collaborative work by the Consumer Bureau,” the senators wrote. “A 2014 report by the Consumer Bureau found that most payday loan borrowers cannot afford to repay their loans. Eighty percent of customers roll the balance over into a new payday loan within 14 days of it coming due, incurring new fees. Half of all payday loans are made to borrowers who roll over their loans at least ten times. Under the leadership of the former director, the Consumer Bureau issued the Payday Lending Rule to put an end to predatory debt traps by requiring lenders to ensure that consumers can actually afford to pay off their payday loans. The rule was supported by state regulators, consumer advocates and faith leaders. It was completed with the input of payday lenders and small dollar lenders as well. On the day the rule was set to take effect, Mr. Mulvaney announced his plan to strip those protections from consumers.”

The senators continued, “An Inspector General investigation is warranted due to Mr. Mulvaney’s recent public statements. He has evaded Congressional oversight by not responding to at least 100 questions from Members of Congress. When he testified before the House Financial Services Committee and the Senate Banking Committee, he stated that his interpretation of the law only required him to appear twice a year before the Committee but that he is not required to answer any questions. He stated, ‘I believe it would be my statutory right to just sit here and twiddle my thumbs while you all ask questions.’ For those reasons, a robust investigation into any conflicts of interest is required.”

A copy of the letter can be found here.