How Tea Partyer Mick Mulvaney wrecked the CFPB

One rainy afternoon early in February 2018, a procession of consumer experts and activists made their way to the headquarters of the Consumer Financial Protection Bureau in Washington to meet Mick Mulvaney, then the bureau’s acting director. The building — an aging Brutalist layer cake, selected by the bureau’s founders for the aspirational symbolism of its proximity to the White House, one block away — was under renovation, and so each visitor in turn trudged around to a side entrance. Inside the building, Mulvaney had begun another kind of reconstruction, one that would shift the balance of power between the politically influential industries that lend money and the hundreds of millions of Americans who borrow it.

Three months earlier, President Trump installed Mulvaney, a former congressman from South Carolina, as the C.F.P.B.’s acting director. Elizabeth Warren, who helped create the agency in the wake of the 2008 financial crisis, envisioned it as a kind of economic equalizer for American consumers, a counter to the country’s rising structural inequality. Republicans had come to view her creation as a “rogue agency” with “dictatorial powers unique in the American republic,” as the party’s 2016 platform put it. In Congress, Mulvaney had established himself as an outspoken enemy of the bureau, describing it, memorably, as a “joke” in “a sick, sad kind of way” and sponsoring legislation to abolish it.

Some of those invited to the meeting in February had picketed outside the bureau’s headquarters on Mulvaney’s first day at work. Their unease had only grown as Mulvaney ordered a hiring freeze, put new enforcement cases on hold and sent the Federal Reserve, which funds the C.F.P.B., a budget request for zero dollars, saying the bureau could make do with the money it had on hand. Within weeks, Mulvaney announced that he would reconsider one of the bureau’s major long-term initiatives: rules to restrict payday loans, products that are marketed to the working poor as an emergency lifeline but frequently leave them buried in debt. “Anybody who thinks that a Trump-administration C.F.P.B. would be the same as an Obama-administration C.F.P.B. is simply being naïve,” Mulvaney told reporters. “Elections have consequences at every agency.”

Mulvaney was also aware that appearances have consequences. For agency heads, it is important to appear open to all points of view about their regulatory decisions, especially if they end up having to defend them in court. In February, he agreed to meet with his critics in person. Thirty or so people gathered around a conference table as rain lashed the windows. Mulvaney, who is 51, has close-cropped hair and a bulldog countenance that befits his manner. A founder of the House’s hard-line Freedom Caucus, he can be sarcastic, even withering, in hearings and speeches. But Mulvaney struck a placating tone with his guests. He kept his opening remarks brief, according to six people who attended the meeting. Important things at the bureau would not change, he reassured them. “I’m not here to burn the place down,” he insisted. Mulvaney said he did not intend to discuss his plans for the payday-loan rule with them but encouraged everyone to share their views.

Many of Mulvaney’s guests came from advocacy groups, like Americans for Financial Reform and the Center for Responsible Lending, that often did battle with Washington’s powerful financial-industry lobby. But the meeting also included a dozen religious leaders, among them officials from national evangelical and Baptist organizations, whose members tend to be among Trump’s most loyal supporters. These leaders viewed payday lending as not only unfair but also sinful, and they had fought against it across Trump country — in deep-red South Dakota, on the same day Trump won the presidency, voters overwhelmingly approved a ballot measure effectively banning payday loans. The ministers had planned carefully for their moment with Mulvaney, and for 20 minutes they took turns detailing the harm that payday lending had inflicted on their neighborhoods and congregations. Eventually they gave the floor to the Rev. Amiri B. Hooker, who led an African-American church near Mulvaney’s old congressional district.

“I told him I was from Kershaw County,” Hooker told me recently, recalling his exchange with Mulvaney. “He smiled and asked how were the good folks from Kershaw.” When Hooker pastored in Lake City, an hour away from Kershaw, a quarter of his congregation either had taken out payday loans themselves or knew someone who had. He told Mulvaney about an 84-year-old congregant in Lake City whom, during a week that she was so sick that she missed services, he saw hobbling toward him down the street. “She said, ‘I had to go pay my bill,’ ” Hooker recalled. The woman had taken out a $250 loan almost three years earlier to cover her granddaughter’s heating bill. She was still paying it off, Hooker told Mulvaney, at a cost of $75 a month, rolling over the loan into a new one each time.

Despite his earlier reticence, Mulvaney seemed eager to offer his own view of how the bureau ought to operate. It wasn’t up to the federal government to stop people from taking the kind of credit that suited them, he suggested: “There’s no reason people should be taking these loans — but they do.” He pointed out that there wasn’t anyone in the room from North Carolina, where payday lending was illegal. They should plead their case to state officials. “You have a place to go to address payday loans, and it’s not me,” he said, according to multiple attendees. As the C.F.P.B.’s acting director, he wouldn’t stop enforcing the law as written. He only wanted a more efficient bureau, he explained, one steeped in evidence-based decision-making, one that educated consumers to make good decisions on their own. Mulvaney provided few details about how it would all look, but he promised the pastors he would follow up to let them know which way he decided to go on payday-loan regulation. “I’ve never heard from him,” Hooker says.

In the months that followed, Mulvaney’s vision for the Consumer Financial Protection Bureau would become clearer. This account of Mulvaney’s tenure is based on interviews with more than 60 current or former bureau employees, current and former Mulvaney aides, consumer advocates and financial-industry executives and lobbyists, as well as hundreds of pages of internal bureau documents obtained by The New York Times and others. When Mulvaney took over, the fledgling C.F.P.B. was perhaps Washington’s most feared financial regulator: It announced dozens of cases annually against abusive debt collectors, sloppy credit agencies and predatory lenders, and it was poised to force sweeping changes on the $30 billion payday-loan industry, one of the few corners of the financial world that operates free of federal regulation. What he left behind is an agency whose very mission is now a matter of bitter dispute. “The bureau was constructed really deliberately to protect ordinary people,” says Lisa Donner, the head of Americans for Financial Reform. “He’s taken it apart — dismantled it, piece by piece, brick by brick.”

Mulvaney’s careful campaign of deconstruction offers a case study in the Trump administration’s approach to transforming Washington, one in which strategic neglect and bureaucratic self-sabotage create versions of agencies that seem to run contrary to their basic premises. According to one person who speaks with Mulvaney often, his smooth subdual of the C.F.P.B. was part of his pitch to Trump for his promotion to White House chief of staff — long one of the most powerful jobs in Washington. Mulvaney’s slow-rolling attack on the bureau’s enforcement and regulatory powers wasn’t just one of the Trump era’s most emblematic assaults on the so-called administrative state. It was also, in part, an audition.