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The CFPB
American Middle Class

President Biden Most Impressive Act Went Unnoticed: CFPB

The CFPB leadership has changed.  President Biden wasted no time. In his first four days in office, he issued 30 executive orders, presidential memoranda, and agency directives on the economy, immigration, government accountability, and more.

Many of the new president’s executive orders reversed Trump’s policies, so they got most of the mainstream media coverage.  

The resignation of Kathy Kraninger from the Consumer Financial Protection Bureau (CFPB) received minimal coverage from the media. Still, that’s one of the decisions that the middle class can benefit from significantly.

The Consumer Financial Protection Bureau (CFPB)

The CFPB was created following the 2008 financial crisis.  The purpose of the watchdog agency is to assure that American consumers are protected against predatory financial products.

In July 2010, Congress passed, and President Obama signed the Dodd-Frank Wall Street Reform and Consumer Protection Act, which created the CFPB.  Congress wanted to create a strong and independent regulatory agency.  The director will serve a 5-year term and can only be removed for “inefficiency, neglect, or malfeasance.” 

CFPB Results

  • In 2019, CFPB received approximately 352,400 consumer complaints. 
  • The CFPB returned nearly $13 billion to 31  consumers from 2011 through 2017
  • The CFPB has a special office to protect servicemembers, veterans, and military families.

Nearly 11 million homeowners lost their homes to foreclosure during the 2007-2009 financial crisis.  A decade after the financial crisis, the middle class is still recovering. Mortgage brokers with no oversight forced working-class Americans to buy homes that they could not afford. The CFPB was created to be a guardian of middle-class Americans.

Republicans in the House and Senate started attacking the agency before Obama even signed Dodd-Frank into law, claiming that the agency was too powerful that the president should be able to fire its director at will.

The Trump Administration started to implement various actions to weaken the agency days after Donald Trump was sworn into office.  Under pressure from the Administration, Richard Cordray, the agency director, resigned.  

President Trump appointed Mick Mulvaney as the acting director.  Mr. Mulvaney was one of the Republican congressmen who thought that the agency should not exist at all.  Shortly after his appointment, he started dropping agency lawsuits filed against predatory lenders and criminal mortgage and payday lenders.

Kathy Kraninger was nominated by President Donald Trump and confirmed by the Senate in 50-49 votes.  Ms. Kraninger continued implementing policies that weaken the guard wells against consumer financial abuses.

Seila Law LLC v. Consumer Financial Protection Bureau

In 2017, Seila Law, a California-based law firm under investigation by the CFPB for allegedly charging consumers illegal upfront fees for debt-relief services, refused to turn over material the CFPB.  

Seila Law filed a lawsuit claiming the leadership structure is unconstitutional, and the court should strike down the rest of the act creating the CFPB as well.

In a June 29, 2020 opinion, the U.S. Supreme Court ruled that the president can fire the head of the CFPB at will.  However, the agency itself lives to see another day.

President Biden Appointment

Using its newly minted power granted by the U.S. Supreme Court, President Biden asked Ms. Kraninger to resign and appointed Dave Uejio to run the agency.  According to his LinkedIn profile, Mr. Uejio is a consumer watchdog veteran who has been working at the agency for nearly a decade.

With Mr. Uejio at the helm, the agency can leverage its 1500-plus employees to enforce rules on payday lending, mortgage lending, debt collection and guard the American middle class against abuses in the banking and financial services industries.

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