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In October 2019, the Consumer Financial Protection Bureau, responsible for enforcing federal regulations on financial institutions, announced the creation of a new task force to conduct an “objective and independent assessment” of current financial regulation. On Tuesday, watchdog group Democracy Forward filed a trial against the CFPB, alleging that the bureau intentionally stacked the task force with supporters of Wall Street deregulation.

The lawsuit – filed on behalf of the National Association of Consumer Advocates, the US Public Interest Research Group, and a consumer finance professor who applied for a job on the task force and was dismissed – alleges that the Asymmetric membership is a violation of federal law designed to prevent special interest groups from influencing federal agencies through advisory boards.

During the Trump administration, according to consumer watchers, the agency focused more on deregulating financial institutions than controlling them. The first appointed by President Trump to head the CFPB, Mick Mulvaney, is a long-standing enemy of the agency. While in charge, he put investigations aside, weakened the regulation of payday lenders, and fired advisory boards made up of consumer credit experts. Since Kathy Kraninger took office in 2018, the office has moved away from enforcement action and instead prioritized supervision and prevention, a change that critics worry will prevent the disclosure of bad business behavior.

In the three months following the announcement of the creation of the working group, the CFPB decided to five members. The president she appointed, attorney Todd Zywicki, often critical the CFPB under President Obama called it “rail accident, ”And defended a company under investigation by the agency for a illegal debt relief swindle. Other members include a former Federal Reserve economist who has written articles calling for rescinding financial regulations, an attorney for several payday lenders sued or investigated by the CFPB, and a business professor who, in expert testimony, argued that payday loans with high interest rates are good for consumers.

Members of the task force have been criticized by Senator Elizabeth Warren (D-Mass.) – who proposed and helped build the CFPB after the 2008 financial crisis – and her Senate colleague Sherrod Brown (D-Ohio). The pair sent a letter to the Kraninger in February, expressing “significant concerns” about the composition of the task force and calling for it to suspend the task force and answer a detailed list of questions about how it was built.

“The members you have selected make it clear that the task force is just a pretext to remove regulations and consumer protections,” the senators wrote. “The pro-industry and deregulatory composition of the task force is no accident.”

They also wrote that they had heard from at least five consumer credit experts who applied to become members of the task force and were turned down. They asked if the task force was subject to the Federal Advisory Commission Act (FACA), which requires federal advisory boards to include a fair balance of views.

The Democracy Forward trial picks up where Warren and Brown left off. The lawsuit alleges that the actions of the CFPB in forming the task force violate the FACA.

According to the lawsuit, Kathleen Engel, mortgage finance expert and law professor at Suffolk University, was interviewed to join the task force after submitting an application through the CFPB’s open process. She previously served on the Consumer Advisory Council of CFPB, a group of prominent consumer credit experts that Mulvaney fired in 2018. In his interview with a politically appointed person, according to the lawsuit, he was asked questions aimed at determining his position on deregulation, instead of questions about his qualifications.

“The Federal Consumer Financial Law Task Force is the latest effort by someone appointed by Trump to outsource policy-making to private interests while excluding other voices,” said Anne Harkavy , executive director of Democracy Forward, in an emailed statement. “Amid an economic downturn, the CFPB should not exclude consumer advocates from major political conversations about how to protect American families.”


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