CFPB head Mulvaney says agency needs zero funding this quarter

WASHINGTON >> In his first quarterly funding request as acting director of the Consumer Financial Protection Bureau, Mick Mulvaney is asking for nothing.

“This letter is to inform you that for the Second Quarter of Fiscal Year 2018, the Bureau is requesting $0,” he wrote Wednesday to Janet L. Yellen, chair of the Federal Reserve, which provides the watchdog agency’s funding.

Mulvaney said that the bureau had enough money on hand to cover its anticipated $145 million in expenses for the quarter, which began Jan. 1, and that he plans to slash the bureau’s reserve fund.

Mulvaney is an outspoken critic of the bureau who was made acting director in November — a controversial move by President Trump that is being challenged in court. In a 2014 interview, Mulvaney called the bureau a ?????”joke … in a sad, sick kind of way” and said that he “would like to get rid of it.”

In his letter to Yellen, he said: “I have been assured that the funds currently in the Bureau Fund are sufficient for the bureau to carry out its statutory mandates for the next fiscal quarter while striving to be efficient, effective and accountable.”

The request for no funding came as Mulvaney announced the first step toward an overhaul of the agency: a review of its entire operation. Consumer advocates criticized that move, announced Wednesday, and on Thursday they blasted the funding request.

“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,” said Karl Frisch, executive director of Allied Progress, a consumer watchdog group.

Because any Fed surplus is returned to the U.S. Treasury each year, Mulvaney said his funding decision will help reduce the federal budget deficit. The Congressional Budget Office has estimated the 2018 budget deficit will be $581 billion.

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

He said he decided not to follow the practice of his predecessor, Richard Cordray, in maintaining a reserve fund “to address possible financial contingencies.”

Mulvaney, who also serves as White House budget director, questioned whether the bureau had the legal authority to establish a reserve fund. And he added that he saw “no practical reason” for a large reserve given that the Fed has never denied a bureau request for funding since it was created in 2010.

Mulvaney intends to “spend down the reserve fund until it is of a much smaller size,” he wrote.

When the 2017 fiscal year ended Sept. 30, the bureau’s fund had an unobligated balance of $177.1 million, according to its annual financial report. On Oct. 12, Cordray requested $217.1 million for the first quarter of 2018. The Fed transferred the money six days later.

The bureau was created by the Dodd-Frank Wall Street Reform and Consumer Protection Act to oversee credit cards, mortgages and other financial products.

The agency has provided consumers about $12 billion in refunds and debt relief from financial institutions since opening in 2011. It also played a key role in penalizing Wells Fargo & Co. for its creation of unauthorized accounts.

But Republicans and many financial firms have said the bureau has been too aggressive in enforcing consumer protection laws and drafting new regulations to avoid future abuses.

Mulvaney said on his first day on the job in November that he told bureau employees, “Look, I’m not here to shut the place down because the law doesn’t allow me to do that. That being said, we’re going to run it differently than the previous administration.”