BankThink Mulvaney’s proposed CFPB reforms are bad for small business, too

American Banker

Mick Mulvaney is something of a novelty among Washington bureaucrats: He seems to want less power.

Mulvaney, as acting director of the Consumer Financial Protection Bureau, just proposed watering down his own agency in order to make it less capable of fulfilling its mission to protect consumers. In doing so, he showed he has no regard for the millions of American small businesses that need fraud protection and want to see Wall Street held accountable for practices that harm our economy.

Not one of Mulvaney’s recommendations would help the CFPB do its job better. He asked lawmakers to put the agency at the mercy of politics by subjecting it to congressional appropriations, instead of funding it through the Federal Reserve as it is now, and said he wants CFPB rules to be subjected to legislative approval. He also believes the president should have direct oversight of the bureau’s director, including the option to remove the director for purely political reasons. Finally, Mulvaney asked for more policing of the agency through the creation an inspector general’s office housed at the agency that would monitor the CFPB’s work.

Ever since its establishment under the Dodd-Frank Act, the CFPB has been a popular Republican villain — even though it exists to curb many of the abuses that contributed to the 2008 financial crisis. Given its mission of consumer protection, and particularly its work to prevent predatory lending practices, entrepreneurs overwhelmingly support the agency. In fact, Small Business Majority’s opinion polling found 84% of entrepreneurs support the CFPB and believe it’s needed to prevent predatory financial practices and to ensure all financial institutions treat small businesses and consumers fairly. What’s more, nearly six in 10 entrepreneurs agreed that, for too long, Wall Street banks and financial companies wrote their own rules, leaving small businesses and consumers vulnerable and without protection.

Small-business owners largely disagree with Mulvaney’s desire for political oversight of the CFPB — six in 10 argue that its funding should remain independent, so financial industry lobbyists cannot block its work whenever the agency makes decisions they don’t like. Just 29% believe the CFPB’s funding should go through the congressional budget process.

Even though the CFPB has been championed primarily by Democrats, it’s important to note that the bureau transcends partisanship for small businesses. Indeed, business owners who identified as Republican outnumbered those who identified as Democrats (52% to 34%) in the survey.

Mulvaney, however, doesn’t seem interested in the views of small firms, and wants to reduce his own powers to reward the investors, lobbyists and large corporations that support his party. And let’s not forget his attempt to offer generous handouts to big businesses comes just months after Republicans gave enormous, permanent tax cuts to the wealthiest businesses while mostly ignoring the needs of small firms.

It’s enough already. Big businesses don’t need more favors from Mulvaney or anyone else, and Congress must protect an agency that looks out for our nation’s job creators. The CFPB must remain a strong and potent force so it can look out for the small firms that don’t have the resources to protect themselves.

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