Mulvaney hikes pay of political appointees at CFPB

Mick Mulvaney, the director of Office of Management and Budget whom President Donald Trump’s has running the Consumer Financial Protection Bureau sinxe CFPB director Richard Cordray stepped down, has given big pay raises to the deputies he has hired to help him run the CFPB, according to salary records obtained by The Associated Press.

Mulvaney has hired at least eight political appointees since he took over in late November. Four of them are making $259,500 a year, and one is making $239,595 -- more than the salaries of members of Congress, cabinet secretaries, and nearly all federal judge.

The full story is here.

Results of Philly soda tax

We've blogged many times on the idea of taxing sugary drinks to stem the obesity/diabetes epidemic. Go, for instance, here and here. Critics claimed that these so-called soda taxes would do little to improve health while hurting grocers, particularly small grocers, who would get pummeled by consumers cutting back on purchases of sugary drinks. Nonetheless some cities enacted soda taxes. One was Philadelphia. Preliminary research from last fall on the effect of the tax shows that sugary-drink consumption is down considerably without discernible impact on store sales. Read about it in this article by Philadelphia's health commissioner, Dr. Thomas Farley.

Planet Money Podcast: Mulvaney Vs The CFPB

Here. Listen to it while driving. It  explores people involved in the CFPB's dismissal of the Golden Valley payday lending case and quotes Chris Peterson.

Post by Steve Schultze on PACER fees decision

In a detailed and informative post entitled Judge Declares Some PACER Fees Illegal but Does Not Go Far Enough, open-courts activist Steve Schultze says explains that

Five years ago, in a post called “Making Excuses for Fees on Electronic Public Records,” I described my attempts to persuade the federal Judiciary to stop charging for access to their web-based system, PACER (“Public Access to Court Electronic Records”). Nearly every search, page view, and PDF download from the system incurs a fee ranging from 10 cents to $3 (or, in some cases, much more). I chronicled the many excuses that the [federal] courts have provided for charging what amounts to $150 million in fees every year for something that should—by all reasonable accounts—not cost much to provide.

He then explains why, in  his view, federal district judge Ellen Huvelle's recent opinion holding some PACER fees impermissible "is good, but not good enough."

Schultze also has written a law-review article arguing that "free access to electronic court records is a constitutionally necessary element of the structure of our modern Judiciary."

Mulvaney Cites Own Conduct as Prime Reason to Limit CFPB Powers

In case you missed the punchline of Jeff Sovern's post on the CFPB's annual report, the news is not the report itself (which conscientiously recites the CFPB's actions between February and September 2017, before Mick Mulvaney was appointed Acting Director following Richard Cordray's departure), but the cover letter, in which Mulvaney proposes that Congress gut the agency.

Perhaps Mulvaney's most dramatic proposal is to "require legislative approval of major Bureau rules." That one is truly breathtaking. It would really mean that the CFPB couldn't issue major rules at all: Anything it wanted to do would require legislation enacted by both Houses of Congress and signed by the President (or passed by a majority sufficient to override a presidential veto). None of the major regulatory agencies is subject to that kind of limitation; if it were, it wouldn't be a regulatory agency, just a proposer of legislation, a particularly futile role in an era of partisan gridlock in Congress.

Mulvaney's proposal to ensure that the CFPB Director "answers to the President" is code for eliminating the CFPB director's protection against being fired without cause by the President, the constitutionality of which was recently affirmed by the D.C. Circuit. The proposal would turn the CFPB from an independent agency into one whose director must do the President's bidding, whether that advances the agency's purpose of protecting consumers or not. 

The proposal that the Bureau be funded by congressional appropriations would eliminate the significant financial independence it now enjoys by receiving its funding through the Federal Reserve System.

Next to these, the suggestion that the CFPB get an inspector general seems pretty innocuous. The first three, however, would ensure that the inspector general would probably have plenty to do investigating improper political pressures on the agency and failure to carry out statutory mandates.

The icing on the cake is Mulvaney's argument that those who disagree with his own actions as Acting Director should support his proposals to make the agency's director more "accountable." Mulvaney's determination to hamstring the agency hardly seems like a sufficient reason for Congress to step in and complete the job.

 

Mulvaney in Bureau's Semi-Annual Report Calls for Limiting CFPB Independence

by Jeff Sovern

The report is here. Here's an excerpt from Mulvaney's statement at the beginning of the report:

As has been evident since the enactment of the Dodd-Frank Act, the Bureau is far too powerful, and with precious little oversight of its activities. Per the statute, in the normal course the Bureau’s Director simultaneously serves in three roles: as a one-man legislature empowered to write rules to bind parties in new ways; as an executive officer subject to limited control by the President; and as an appellate judge presiding over the Bureau’s in-house court-like adjudications. In Federalist No. 47, James Madison famously wrote that “[t]he accumulation of all powers, legislative, executive, and judiciary, in the same hands … may justly be pronounced the very definition of tyranny.” Constitutional separation of powers and related checks and balances protect us from government overreach. And while Congress may not have transgressed any constraints established by the Supreme Court, the structure and powers of this agency are not something the Founders and Framers would recognize. By structuring the Bureau the way it has, Congress established an agency primed to ignore due process and abandon the rule of law in favor of bureaucratic fiat and administrative absolutism. 

The best that any Bureau Director can do on his own is to fulfill his responsibilities with humility and prudence, and to temper his decisions with the knowledge that the power he wields could all too easily be used to harm consumers, destroy businesses, or arbitrarily remake American financial markets. But all human beings are imperfect, and history shows that the temptation of power is strong. Our laws should be written to restrain that human weakness, not empower it.

I have no doubt that many Members of Congress disagree with my actions as the Acting Director of the Bureau, just as many Members disagreed with the actions of my predecessor. Such continued frustration with the Bureau’s lack of accountability to any representative branch of government should be a warning sign that a lapse in democratic structure and republican
principles has occurred. This cycle will repeat ad infinitum unless Congress acts to make it accountable to the American people.

Accordingly, I request that Congress make four changes to the law to establish meaningful accountability for the Bureau:

1. Fund the Bureau through Congressional appropriations;
2. Require legislative approval of major Bureau rules;
3. Ensure that the Director answers to the President in the exercise of executive authority; and4. Create an independent Inspector General for the Bureau.                 

Omri Ben-Shahar on the Problem of the California Disclosure About the Possiblity that Coffee Causes Cancer

Here, in Forbes. Another consumer protection that probably doesn't protect consumers

NY AG Brings Loan Sharking Case Against Lucchese Organized Crime Family for Charging 200% Interest While CFPB Dismisses Case Against Payday Lender Charging More Than Four Times as Much

by Jeff Sovern

Apparently the Lucchese Organized Crime Family charges less than a quarter of what payday lenders charge. Last week, New York State Attorney General Eric T. Schneiderman announced indictments of ten members of the group in the largest loansharking investigation in the office's history. Schneiderman's press release reports:

[U]surious interest payouts exceed[ed] a million dollars just during the approximately one-year investigation.

* * * 

Victims were allegedly charged exorbitant weekly loan rates averaging over 200 percent per year, effectively creating a high-cost debt trap for all individuals taking out such loans.

Now compare that to the CFPB's description of the payday lending case it recently voluntarily moved to dismiss under Mr. Mulvaney's leadership

* * * Golden Valley Lending and Silver Cloud Financial have offered online loans of between $300 and $1,200 with annual interest rates ranging from 440 percent up to 950 percent.  * * *

* * * 

The lenders’ websites did not disclose the annual percentage rates that apply to the loans. When contacted by prospective borrowers, the lenders’ representatives also did not tell consumers the annual percentage rate that would apply to the loans.

Which sounds worse? I've obviously left out a lot of the press releases out in the interest of brevity, but go read the full text of both and see which sounds worse to you.

As Trump and Pruitt prepare to roll back the Obama era fuel-economy standards, will EPA go to war with the Nation of California (which wants to stick with the more stringent standards)?

Many of our readers no doubt have read that Scott Pruitt (EPA head and climate change denier) is planning to scrap the Obama Administration's fuel-economy targets aimed at making cars more fuel efficient (and, in turn, having some positive effect on climate change). This article by Evan Halper explains that California plans to stick with the higher standards -- see chart below -- which could set off a legal and political war between California and the feds. As Halper notes, "California's rules apply to more than a third of cars sold across the country, and automakers are loath to create multiple production lines to comply with conflicting rules." In other words, California may have the power to effectively dictate the rules no matter what Pruitt does.

Continued Issues with Nondisparagement Clauses in Form Consumer Contracts

by Paul Alan Levy

Despite the passage of the Consumer Review Fairness Act in December 2016, businesses continue to use non-disclosure and non-disparagement clauses in form contracts to suppress criticism of their products and services. This blog post summarizes several situations in which we have been involved recently.

Premier Pools and Spas in Dallas

The most blatant and current of the situations involves the Dallas, Texas area franchise of a national pool construction business, Premier Pools and Spas. When Kasey and Michael Corcoran signed a contract for construction of a pool in their home, the form contract that they were given to sign included the following language buried in the tiny print of an arbitration clause (see paragraph 12):

“Therefore, buyers posting any comment on the internet that PPAS deems as disparaging before completing the arbitration process hereby agrees to pay PPAS a $3500.00 fee and remove the post with 48 hours of posting. Failure to remove any posting with PPAS with 48 hours and to pay this fee will result in PPAS notifying all three credit bureaus. . ..”