Battle continues for the CFPB

Trump keeps giving in-kind contributions to Elizabeth Warren’s 2020 campaign-in-waiting

The battle for control of the Consumer Financial Protection Bureau

via WaPo 202 – BY JAMES HOHMANN with Breanne Deppisch and Joanie Greve

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In 2007, a small quarterly journal published an article by a little-known bankruptcy professor at Harvard Law School named Elizabeth Warren that called for a “Financial Product Safety Commission” to protect Americans from predatory lenders and faulty mortgages the same way that the Consumer Product Safety Commission protects them from toasters that burst into flames.

Warren’s idea seemed prescient a year later when economic calamity struck, and Barack Obama pushed to include it in what became the 2010 Dodd-Frank law. As a special adviser to the Treasury Department, Warren brought the concept to life in what’s now the Consumer Financial Protection Bureau.

The big banks and their allies inside the Obama administration blocked Warren from being appointed to lead the agency permanently. The job went instead to Richard Cordray, but the Harvard professor’s consolation prize wasn’t bad: She got elected to the U.S. Senate in 2012.

Now Cordray has stepped down as director to go home to Ohio so he can run for governor next year. A legal battle has broken out over who is in charge: Cordray’s deputy Leandra English or President Trump’s budget director Mick Mulvaney. Both are claiming to be acting director.

Yesterday Mulvaney declared a temporary freeze on hiring and rulemaking. During a news conference, he said Trump wants the agency to stop “trampling on capitalism.” In the past, Mulvaney has been one of the CFPB’s most outspoken critics. He’s said it exercises far too much power and called it “a joke … in a sick, sad way.” On Monday, the former congressman said his views have not changed. Mulvaney says Trump wants him to stop the CFPB from ‘strangling’ capitalism

“Mick Mulvaney wants to take the cop off the beat … and whenever there are no cops, we all know what happens. That’s how the financial crisis of 2008 grew and then nearly blew up our entire economy,” Warren said in a telephone interview last night. “Here we stand less than 10 years after the Wall Street banks threw this economy over a cliff and their principal tool was cheating American families on home mortgages, and today, Mick Mulvaney says that the agency designed to prevent that from happening again should tilt more in favor of Wall street banks.”

Trump campaigned like a populist but governs like a plutocrat. Warren finds herself increasingly well positioned to prosecute that case for Democrats. The effort to dismantle the agency she dreamed up personally pains her, and she pledges to fight tirelessly to protect it, but Mulvaney’s takeover also offers a compelling political rationale to build a 2020 campaign around – if she chooses.

Many of the white working-class folks who turned out for Trump across the industrial Midwest did so because they believed he was so wealthy that he could thumb his nose at fat-cat bankers. They took him at his word that he’d be tougher on the big banks and the billionaire class than Hillary Clinton because he didn’t need to give paid speeches or raise money from them for his foundation. With a White House full of Goldman Sachs alumni, the reality has not matched the rhetoric. The GOP tax plan offers additional data points.

Sen. Elizabeth Warren (D-Mass.) speaks at a Capitol rally last month to demand more help for people affected by hurricanes Irma, Maria and Harvey. (Michael Reynolds/European Pressphoto Agency)

“It’s a very stupid moment,” said Warren. “Wall Street banks hated the idea of this agency long before it was born. They spent more than a million dollars a day lobbying against financial reform, and the center of their bullseye was the consumer agency. Lobbyists were repeatedly quoted saying that they knew there would be some financial reform, but that the consumer agency would never, ever make it into law. And when the agency was signed into law, a lobbyist for one bank said, ‘The game isn’t over. It’s just halftime.’ They have spent every day since then trying to take the legs out from underneath that agency…

“They have been spectacularly unsuccessful,” she added. “The agency has forced the big banks to return more than $12 billion directly to families they cheated, and it’s handled more than a million complaints against the financial institutions. The agency has helped make life a little fairer for working families, and that’s why the Wall Street banks hate it.”

Trump seems fixated, even obsessed, with Warren. He mentions her all the time. Yesterday, during a White House ceremony to honor Navajo veterans who served as code talkers during World War II, he went off script to insult her as “Pocahontas.” “I just want to thank you because you’re very, very special people,” the president said. “You were here long before any of us were here. Although we have a representative in Congress who, they say, was here a long time ago. They call her ‘Pocahontas.’”

Adding insult to injury, Trump took this dig in front of a portrait of Andrew Jackson – the president who signed the Indian Removal Act into law, masterminded the “trail of tears” and disregarded a pro-Native American Supreme Court decision.

“This was supposed to be a ceremony honoring war heroes,” Warren told me last night. “All he had to do was smile and thank them for their incredible service. But he couldn’t make it through the ceremony without throwing in a racial slur. He thinks he’s going to shut me up? It’s not going to work.”

— Every time the president mentions the senator, he elevates her. Not only does this help Warren raise beaucoup bucks from the progressive netroots, it also boosts her 2018 reelection campaign in Massachusetts. Trump got 33 percent of the Bay State’s votes last year, and his popularity has dropped sharply since then.

President Trump speaks during a meeting with Navajo Code Talkers in the Oval Office. (Jabin Botsford/The Washington Post)

Senate Majority Leader Mitch McConnell made the same mistake in February. He called for a vote to formally block Warren from speaking on the Senate floor against the nomination of Jeff Sessions to be attorney general. The majority leader said she broke the chamber’s rules by reading past statements about Sessions from Coretta Scott King and Ted Kennedy. “She was warned,” McConnell said. “She was given an explanation. Nevertheless, she persisted.”

Over just the past few weeks, I’ve seen women wearing shirts that immortalize McConnell’s words on the streets of Washington, New York, San Francisco and Los Angeles. In what’s becoming the Year of the Woman redux, the Kentuckian played right into her hands.

Leandra English, who says that she is the acting director of the Consumer Financial Protection Bureau, sits for a photo op with Senate Minority Leader Chuck Schumer (D-N.Y.) and Sen. Elizabeth Warren (D-Mass.) before a meeting Monday on Capitol Hill. (Melina Mara/The Washington Post)

Leandra English, who says that she is the acting director of the Consumer Financial Protection Bureau, sits for a photo op with Senate Minority Leader Chuck Schumer (D-N.Y.) and Sen. Elizabeth Warren (D-Mass.) before a meeting Monday on Capitol Hill. (Melina Mara/The Washington Post)

— Warren says she would rather talk about substance than nicknames. During the interview, slipping into law professor mode, she offered an extended history lesson to argue that Mulvaney is not the legitimate acting director.

The CFPB’s general counsel, the Justice Department’s Office of Legal Counsel and the White House each argue that Mulvaney can temporarily hold the job under the Vacancies Reform Act of 1998.

Warren says Dodd-Frank was carefully written so that wouldn’t be the case. She said the vacancies act they’re citing only applies to agencies that already existed when it passed. She noted that an early draft of the statute creating the CFPB would’ve applied it to the agency, but this language was stricken.

English, who met with Warren yesterday at the Capitol, filed a lawsuit to stop Mulvaney from taking over, but a federal judge — who was recently appointed by Trump – declined to rule immediately on her request for a temporary restraining order. Assuming that he will side with the president who picked him, English can then appeal to the D.C. Circuit.

Warren noted that when the first banking regulator was established during the Civil War, the Office of the Comptroller of the Currency, it was carefully designed to be insulated from political pressure. “Congress has always kept banking regulators as far away from politics as possible,” she said. “Funding for all the banking regulators has been outside the political process. It’s done with fees and other mechanisms. The reason is pretty obvious. They didn’t want powerful banks to lean on the agency to go light on those banks. This is a big structural piece.”

— Mulvaney’s spokesman tweeted pictures throughout the day of him at work inside the CFPB as “acting director”: He pointed out that CFPB employees ate the doughnuts Mulvaney brought to the office

The president’s boosters say that he’s not being crazy – but crazy like a fox. People close to the White House argue that there’s a method to the “Pocahontas” madness. Trump would like to face Warren in 2020 because he thinks he could caricature her as an out-of-touch liberal from Taxachusetts. His allies argue that she’d be an ideal foil to get recalcitrant Republicans to support him as the lesser of two evils, just as they did with Clinton after the “Access Hollywood” tape came out last October. A poll from WBUR this month shows Warren’s favorable rating at 55 percent in Massachusetts, with 38 percent viewing her unfavorably.

But Trump might want to be more careful about what he wishes for. Remember, the Clinton campaign elevated Trump during the 2016 GOP primaries because her strategists thought he’d be so easy to beat. Jimmy Carter’s team thought the same of Ronald Reagan in 1980. By offering a bold contrast with Trump, Warren could galvanize the Obama coalition in ways Clinton could not and become the first female president.

— Life sometimes plays out in unpredictable ways. If Warren had gotten her wish to run the CFPB permanently seven years ago, it’s inconceivable that she’d be a top-tier contender for the presidency. Getting passed over turned out to be a blessing in disguise. I asked if she’s going to endorse Cordray for governor, assuming he runs. “Too early,” she said. “Call me later!”

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