This commentary originally appeared in the Salt Lake Tribune.
As a Utahn, I join many of you in my political representation at the national level. My member of Congress is Republican Rep. Mia Love, who is up for re-election this year.
Love is a two-term congresswoman who serves on the House Financial Services Committee, a standing committee committed to oversight of the nation’s economy in sectors such as housing and banking.
After the financial collapse of 2008, Congress enacted Dodd-Frank legislation to regulate an industry that had thrown the economy into a downward spiral. Pre-crisis, lenders were seeking consumers to lure into mortgages that were financially unsustainable, and the market for subprime loans and mortgage-backed securities (derivatives) was expanding at unprecedented speeds.
Rating organizations like the Standard and Poor’s were nothing short of complicit as they granted bundles of subprime loans AAA ratings generally reserved for the most safe investments. As consumers defaulted on their bad loans and financial institutions lost profit streams as a result, a credit freeze plagued the market and the Federal Reserve watched as American households lost over $19 trillion in wealth.
Created as part of the same Dodd-Frank reforms, the Consumer Financial Protection Bureau (CFPB) was established in 2011 to protect Americans from the harmful financial practices that contributed to this nation’s worst economic crisis since the Great Depression. The CFPB oversees financial markets, evaluates stability and provides consumers with a necessary watchdog in an industry with a history of malfeasance. Since 2011, the CFPB has collected and paid out approximately $11.8 billion in consumer relief payments to victims of payday loans and predatory banking practices. Just this year, they have initiated over 20 settlements between banks and consumers, and high-profile rulings like the recent case involving Wells Fargo can work to ease minds and restore consumer confidence in the financial sector.
However, when these reforms came in front of Love in a bill that would gut the agency’s rule-making and enforcement powers, Love voted in favor of HR 10, which would have weakened financial regulations against things like payday lending. Her position on her constituent’s personal finances was made clear in February of 2016 when Love confronted a top CFPB official on the purpose of the agency, “I find it offensive that you would say that people aren’t smart enough to make decisions for themselves,” she said.
In alignment with Love on their feelings towards the federal bureaucracy is Trump appointee Mick Mulvaney. After an intense internal battle for power at the agency, Mulvaney prevailed as CFPB director and has since caused a stir among career bureaucrats and constituents alike.
Ignoring the CFPB’s accountability to Congress, Mulvaney was on record in 2014 as a South Carolina representative claiming that the CFPB was the “[perfect] example of how a bureaucracy will function if it has no accountability to anybody.” He furthered his comments by adding that the bureau was, in his opinion, “a sick, sad joke.” Joining agency heads like Scott Pruitt and Rick Perry in criticizing the very agencies they now lead, Mulvaney is proving he has more interest in causing a stir than he does in protecting American consumers.
In January of this year, Mulvaney oversaw an agency decision to halt protections for consumers regarding payday lending. The rules, finalized in October of 2017, would have required lenders to determine up-front whether borrowers could actually afford the loan they were taking out. Utah has a particular stake in this decision, as last year over 45,000 Utahns failed to pay their payday loans on time, cycling themselves into debt.
As Love has made her words and votes clear when it comes to bills like HR 10, her election in November of this year becomes all the more important. The crash of 2008 still looms fresh in the minds of Utah residents and proper financial protections are necessary to ensure the next bubble doesn’t threaten the economic security of the the entire state.
Austin Anderson is a legislative intern with Alliance for a Better Utah.