Acting Consumer Bureau Chief Opts Not to Refill Funding Reserve This Quarter

The acting director of the Consumer Financial Protection Bureau on Wednesday made an unusual request of the controversial bureau’s funding source: he asked the Federal Reserve for zero dollars for the next quarterly installment in the bureau’s reserve fund.

“This letter is to inform you that for the second quarter of fiscal year 2018, the bureau is requesting $0,” Mick Mulvaney, who is running the bureau under a legal challenge while he continues as White House budget director, wrote to Fed Chairman Janet Yellen.

The size of the reserve fund, used for contingencies, is the amount “determined by the director to be reasonably necessary to carry out the authorities of the bureau under federal consumer financial law,” his letter said. Noting that the projected expenses are currently $145 million, he said his review of the financial condition of the bureau showed that the Bureau of Consumer Financial Protection Fund at the Federal Reserve Bank in New York has $177.1 million in projected expenses. “Simply put, I have been assured that the funds currently in the bureau fund are sufficient for the bureau to carry out its statutory mandates.”

Mulvaney added that “previous bureau leadership” had opted to maintain a reserve fund to address possible financial contingencies, “although I know of no specific statutory authority requiring the establishment or maintenance of such a reserve.”  He also said he sees no practical need for the new quarterly payment and intends to spend down the current reserve.

“While this approximately $145 million may not make much of a dent in the deficit,” Mulvaney added, “the men and women at the bureau are proud to do their part to be responsible stewards of taxpayer dollars.”

Wall Street Journal columnist Kimberly Strassel hailed the move as “inspiring,” noting that earlier in the week Mulvaney had internally distributed a new organizational chart that will “for the first time pair a political appointee alongside alongside each career staffer who runs a major department.” Mulvaney also issued a “call for evidence” from industry, asking regulated financial companies to catalog the bureau’s past investigative demands.

Those moves, along with a recent policy change on regulation of payday lenders, prompted a rebuttal tweet from former CFPB Director Richard Cordray, who resigned in November and is running for governor of Ohio. As reported by The Hill, the Democrat referred to the payday lending change as “truly shameful action by the interim pseudo-leaders” of the bureau.

The reserve fund move was condemned as “another leap forward in his quest to dismantle the bureau” by Karl Frisch, executive director of the liberal nonprofit Allied Progress. “There can be no clearer signal of Mick Mulvaney’s intent to defang and dismantle the Consumer Financial Protection Bureau than his request of zero dollars in funding and his decision to instead drain the Bureau’s reserve set up to provide funding during emergencies,” Frisch said. “What he hasn’t done is offer one announcement about actions taken to protect consumers.”