Donald Trump appointed both Mick Mulvaney and Jerome Powell. One wants to rip up financial regulations with his bare teeth, the other actually wants to protect the economy.
Mulvaney runs the Consumer Financial Protection Bureau, which he once called a “sick, sad” joke. The sickest, saddest joke is that he now runs the main regulator of the financial industry.
Since taking over a few months ago, he’s decided to give up on probing the lax security that led to the identity theft of a third of Americans, wants to protect payday lenders instead of the millions of poor people those lenders prey on, and asked Congress for a budget of $0 to carry out the agency’s work.
That seems about right for what he wants to accomplish; he literally threw the word “fair” out of the agency’s mission statement when he took over. The goal, it looks like, is to do as little as possible and call it “humility toward those we serve.” Contrast that with Jerome Powell, Trump’s new chair of the Federal Reserve.
Holding the big guys accountable
I wasn’t a fan of making Powell Fed chair. But it wasn’t because of him — it’s because Trump pushed a more qualified and experienced woman out of the job. Just because Obama was the one who gave it to her.
That meant Powell, who was already on the board and has a philosophy similar to the ousted Janet Yellen, wasn’t filling a vacancy on a board which already has too many. But unlike Mulvaney, he’s not giving up.
While Mulvaney was busy writing op-eds to defend sitting on his butt, Powell was meeting with Wells Fargo executives to hammer out the terms of what are effectively economic sanctions on the bank for its poor behavior — including illegal sales practices like opening millions of accounts consumers never asked for. The old CFPB, by the way, fined the bank $100 million for that. (And then the same Republican critics who said the CFPB abuses its power said it went soft on the bank. Which is it?)
Effectively, Wells Fargo won’t be allowed to get any bigger until its board of directors can prove the bank is operating above board again. To start accomplishing that, Wells Fargo will push a quarter of its board out and replace them. (Half of the people who were on the board during the worst behavior are already gone.) It will also give the Fed an outline of how else it plans to clean house.
Powell had not yet taken over as Fed chair when he oversaw the negotiations, but he clearly plans to continue pursuing this kind of targeted regulation — holding financial leadership accountable for banks who abuse consumers and jeopardize the economy. He’s been talking about it for a while.
“We simply expect much more of boards of directors than ever before,” Powell said in a speech last year before being nominated to lead the Fed. “There is no reason to expect that to change. We do not intend [to] lower the bar for boards or lighten the loads of directors.”
He concluded: “We need financial institutions that are strong enough to support economic growth by lending through the economic cycle. To achieve that goal, we need strong and effective boards of directors at firms of all sizes.”
At least one Trump appointee gets it — taking care of consumers, and in turn the larger economy, requires accountability. Stripping regulations and standing back is simple negligence.
Article last modified on July 12, 2018. Published by Debt.com, LLC . Mobile users may also access the AMP Version: The CFPB Is Giving Up on Regulation. But the Fed Isn’t - AMP.
Article last modified on July 12, 2018. Published by Debt.com, LLC .