In the first five years of the Consumer Financial Protection Bureau under director Richard Cordray, it recovered more than $12 billion in restitution for wronged consumers — around $2.4 billion per year on average.
In a little over three years since then, Mick Mulvaney, who headed the CFPB under President Trump, and his successor, Kathy Kraninger, ended up recovering a paltry $800 million, according to consumer group Public Justice’s executive director F. Paul Bland.
Other agencies like the Consumer Product Safety Commission and the Federal Trade Commission also saw precipitous dropoffs in enforcement.
Bland and other consumer advocates say consumer protection was not a priority in the previous administration. Mulvaney worked to defang the CFPB agency, had said he wanted the the watchdog agency to have more “humility,” and effectively dismantled its consumer advisory council in 2018. Many of the government agencies responsible for regulating companies’ behavior, in fact, relaxed regulations and enforcement or accepted smaller settlements after finding corporate wrongdoing.
“The last four years have seen a profound decline in federal laws to protect consumers, and agencies haven't used the tools they have to hold bad actors accountable,” said Rachel Weintraub, legislative director and general counsel for Consumer Federation of America.
Under the Trump administration, agencies focused on slashing regulations rather than promulgating them and many were chronically understaffed and under-resourced, Weintraub said.
In the Biden administration, the government agencies responsible for rules and enforcement will look very different with new leaders and staff to address problems in the marketplace — many of which will come with consumer protection experience rather than from industry. For example, Rohit Chopra, Biden’s pick to head the CFPB, has consumer protection advocates optimistic because of his experience as an FTC board member and a consumer advocate.
Chopra and his peers will have among their priorities: fighting consumer fraud, drug pricing, loan origination and servicing (payday loans have been a special focus), forced arbitration and more.
Companies should heed the new, more muscular approach to consumer protection; there’s now increased risk of enforcement actions if they misbehave as well as the accompanying bad publicity.
Oxygen in the news cycle
Another key difference between the Biden and Trump administrations when it comes to cracking down on unethical behavior by financial institutions is the freedom and space to do so.
The Trump tenure was peppered with scandal, conflict of interest, breaking of norms, investigations, and two impeachments. Consumer protection advocates are hopeful that under a Biden administration, less chaos will amount to better awareness around issues that affect Americans.
Over the past few years, consumer organizations have been playing defense, put in a position to respond to the chaotic actions of an administration many saw as actively working against consumer protection.
Instead of pursuing an agenda to protect consumers in the financial marketplace, the news cycle set an agenda of damage control for these groups.
Sometimes, the chaos and the anti-consumer (or even anti-human rights) aspects converged. One example Public Justice’s Bland gave was a day in 2019 when rumors emerged that the Trump administration was considering a policy that allowed anti-gay discrimination in the workplace.
Bland and his group spent the day trying to figure out who would be the right plaintiff for a court challenge should the rumors turn out to be true, and mounted a social media campaign. By 8 p.m. new rumors indicated the plans were abandoned, but they had already cost consumer and advocacy groups valuable time and resources.
“This continued at some level for four years,” he added, “it was very hard to have conversations where people could focus on broader systemic problems of corporate power, deceptions, predatory lending, civil rights violations.”
Without “this endless series of ‘drama of the day’,” Bland said, things will be different.
“The consumer protection community has been doing a lot of defense,” said Weintraub. Going forward, it hopes to do more.
“This is not going to be a situation where consumer advocates come in and dictate what these agencies do,” said Bland. “But they'll listen, and I expect to be given an opportunity to make our case.”