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Mulvaney faces Elizabeth Warren grilling over new tone at CFPB



The tables have turned for Mick Mulvaney.

Photographer: Zach Gibson / Bloomberg

When Mulvaney was a South Carolina congressman, he eagerly joined other Republicans to turn Pinata from Richard Cordray, the head of the Consumer Protection Bureau. Cordray's trips to Capitol Hill were full of partisan attacks, as GOP legislators routinely accused him of relinquishing control and burdening banks with rules that restrict lending.

Mulvaney will be the best this week. President Donald Trump's Budget Director takes on two roles as Deputy Director of the CFPB. As of Wednesday, when he appears before the Financial Services Committee of the House of Representatives, Mulvaney will spend two days in Congress contemplating his role as financial adjuster, whom he once called a "sick, sad" joke.

The hearings are likely to resemble a role reversal of the Cordray era. Instead of beating the CFPB director, the Republicans will certainly boast to Mulvaney of taking steps to defuse the agency created to tackle the abuses fueled by the 2008 financial crisis. And this time, the outraged lawmakers will be democrats who are expected to scold him for putting consumers at risk.

Photographer: Andrew Harrer / Bloomberg

A highlight will be Mulvaney faced with Senator Elizabeth Warren, the financial industry's most vocal congressional critic and the CFPB's biggest defender. Since Mulvaney took office in November, Warren has examined everything from his stance on GOP congressional advisers to his decisions to drop enforcement measures. Mulvaney's appearance on Thursday before the Senate Banking Committee will be the first opportunity for the Massachusetts Democrat to publicly discuss with him.

While analysts and bankers expect a lot of theatricality, they do not expect to learn much about what Mulvaney is doing behind the scenes

"His time will be more than substance consumed by rhetoric and political debate," said Quyen Truong former CFPB official who now practices law at Stroock & Stroock.

Here's a look at what Mulvaney was and was prepared for lawmakers to rely on if he testifies:

Enforcement

Mulvaney promised to "stuff the envelope," a term he used To underline the point under CFRD CFR's questionable legal action against financial companies

A few days after taking office, Mulvaney suspended all enforcement actions and has since dropped some cases, including investigations into South C Arolina-based lender World Acceptance Corp , and Ohio Mortgage Company Nationwide Biweekly Administration. Other investigations have stalled, lawyers say.

"The slowdown was a relief," said Maria Earley, a former CFPB attorney who now represents Reed Smith's financial firms. "It gives companies more room to breathe." [19659004] Nevertheless, risks remain for companies that were investigative targets. Some states, especially those with the Democratic Attorney General, are cranking up the cask to lift the doldrums of the CFPB.

"Remember, Attorney Generals can enforce the CFPB rules," said Joe Jacquot, a former Assistant Attorney General in Florida and now a partner at Foley & Lardner. "There is certainly a segment of AGs worried about a back down on the CFPB."

Reorganization of Employees

Mulvaney has laid the foundation for lasting change Political hires include Chief Conductor Kirsten Sutton and Senior Advisor Brian Johnson, both formerly chairing the House Financial Services Committee, Jeb Hensarling, a Texas Republican who funded legislation that would undo many of the powers of the CFPB

The agency's staff are turned off by their oversight and enforcement team, and the group now belongs to the Equal Opportunities Office, which means that Employees do not have the same tools o Investigate companies that are suspected of discriminating against borrowers.

Regulation

Mulvaney has sought public support for everything from enforcement to specific rules to the CFPB's consumer data collection procedures. Analysts say the industry's answers could provide a roadmap for Mulvaney and its permanent successor to the CFPB.

Advice to Legislators

Last week, Mulvaney proposed changes to legislation that would undermine much of CFPB's independence. 19659004] He wants Congress to demand that the CFPB receive its funding by appropriating resources from Congress rather than the Federal Reserve. He also called on legislators to make it clear that the CFPB Director is directly accountable to the President and gives the White House more power to expel the Agency's leader. In addition, he argued that Congress should have the last word on important CFPB rules, a situation that would make it unique among financial regulators.

Such revisions are unlikely to take place because few Democrat MPs would support them. 19659012] Agency Rebranding

Mulvaney made some symbolic changes to show that there is a new sheriff in town.

The CFPB has long been known for its light green logo, which consists of a headlight motif "efforts to illuminate the financial landscape and promote transparency in the marketplace." Last month, the agency unveiled a new seal featuring an eagle spreading its wings over a blue field to reflect "American imagery and references to the nation's founding documents."

The CFPB scholarship program for law students was renamed in honor of Joseph Story, a conservative judge on the Supreme Court, who was previously named after Louis Brandeis, a supré, courtroom known for taking over banks.

Warren Grillen

Warren, who designed the CFPB, wants to grill Mulvaney. In a recent letter, she called on him not to answer her questions about what he does in the agency.

Mulvaney blamed the Democrats for isolating the CFPB from virtually all accountability when it was founded in 2010 by Dodd-Frank Act.

"I can understand your frustration," Mulvaney wrote to Warren in a April 4 note. "I sincerely hope that we can work together to address the source of our mutual frustration with the office."

Collaboration between Mulvaney and Warren could be the most unlikely outcome of all.


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