CFPB disbands advisory group

Inside Subprime: June 18, 2018

By Jacob Rogers

A group of outside experts intended to advise the Consumer Financial Protection Bureau on economic and financial policy has been dissolved, according to the Associated Press.

Two of the Consumer Advisory Board members were told on a conference call on June 6 that the board will be replaced. An email on behalf of Mulvaney to the 25-member group informed everyone else of the board’s disbandment.

According to the law that created the CFPB, officials have to meet with the advisory board twice a year at a minimum. Members said that under previous director Richard Cordray, who retired in November of last year, the meetings would involve deep dive discussions about financial industry issues and policy, as well as areas of concern like fair lending practices.

Mulvaney was not as vigilant about these meetings. Board members told the AP that Mulvaney would never schedule discussions longer than 20 minutes, citing a busy schedule. Two days prior to the actions taken by the CFPB, Mulvaney said concerns about the cancellations were overblown. But former board members like Josh Zinner, CEO of Interfaith Center on Corporate Responsibility, see a more insidious motive.

“The reason to let us go is an attempt to silence the voices that would be concerned about the direction the Bureau has taken under this administration,” said Zinner, who had been a board member since 2015.

The CFPB, naturally, sees things differently. The Bureau cited various reasons for disbanding the current board, saying it wanted save money and have more diversity in the group. One spokesman for the bureau, John Czwartacki, accused the members of being only interested in “protecting their taxpayer-funded junkets.”

Former members say these arguments are, at best, misleading. The cost of maintaining the board is a few hundred thousand dollars, compared to the Bureau’s $630.4 million estimated 2018 budget. Max Levchin, founder and CEO of the financial services company Affirm, told the AP that members offered to pay their own travel and lodging costs if it was a true concern, which the recording of the conference call confirms.

“Without this direct line to all stakeholders, CFPB’s job becomes much harder, perhaps nearly impossible,” said Levchin.

In addition to consumer advocacy groups and academics, the board was also comprised of representatives from Citigroup, Mastercard and PNC.

The CFPB says a new group will be called in the fall, but it will be smaller and none of the recently released members will be eligible to apply. Additionally, two other boards, one which deals with credit unions and another with community banks, will be disbanded and remade.

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