WASHINGTON–Interim CFPB Director Mick Mulvaney is making changes to an agency function responsible for policing fair lending, among other things, with analysts saying the move is weakening its enforcement powers.
Mulvaney is moving the Office of Fair Lending and Equal Opportunity under his own direct oversight and stripping the office of its enforcement authority, according to reports.
“That means the office won't be able to go after lenders that charge higher interest rates to minorities than to whites or otherwise discriminate,” CNN and the Wall Street Journal reported. “Instead, staff will now focus on ‘advocacy, coordination and education,’ according to a memo emailed to employees.”
Those responsibilities, while not being completely eliminated by the CFPB, will now be part of a broader division that oversees financial companies.
Alan Kaplinsky, a co-leader of the consumer financial services practice at the law firm Ballard Spahr, told CNN the move is the latest illustration that Mulvaney is keeping his word that the agency will not overreach its powers.
"They won't be 'pushing the envelope' in the fair lending area to go after companies where they are not on very solid ground," Kaplinksy was quoted as saying. "Those days are over now."
Under former Director Richard Cordray, CNN noted the office aggressively pursued discriminatory practices by auto dealers even though automakers fell outside the CFPB's jurisdiction.
The changes "send a troubling message about the enforcement of civil rights laws and will harm people -- especially in communities of color -- who are wronged by payday lenders, debt collectors, or auto dealers, among others," Vanita Gupta, president and CEO of The Leadership Conference on Civil and Human Rights and former acting head of the Civil Rights Division at the Justice Department, said in a statement.
CMM quoted a CFPB spokesperson as saying that characterization is inaccurate, as Mulvaney's goal was to increase efficiency and combine efforts under one roof.
"It never made sense to have two separate and duplicative supervision and enforcement functions within the same agency -- one for all cases except fair lending, and the other only for fair lending cases," said John Czwartacki, a CFPB spokesperson.