Garnet Capital Advisors Blog

The Trump Administration may be looking more closely at the political center in its search for the director of the Consumer Finance Protection Bureau (CFPB) than its pick of Acting Director Mick Mulvaney would suggest due to a changing political climate. 

The Trump Administration may be looking more closely at the political center in its search for the director of the Consumer Finance Protection Bureau (CFPB) than its pick of Acting Director Mick Mulvaney would suggest. 

The more moderate candidates being considered have a consumer protection background.

Mulvaney has won kudos from the banking industry for his change of direction from Obama-era Director Richard Cordray, who described the CFPB as a “cop on the beat” against the financial industry. Mulvaney was hailed as someone who intended to work with the financial industry rather than acting as if it needed monitoring and sanction during his tenure at the helm of the CFPB, which was established in response to the 2008-2009 financial crisis.

A More Deadlocked Political Climate

Why then do industry insiders believe that the current administration may be moving to the political middle?

Well, first, not everyone was thrilled with Mulvaney’s new direction, which was released as a memo to the CFPB’s staff and ran, in modified form, in an op-ed in the Wall Street Journal. He was viewed as moving away from the CFPB’s mandate to focus on consumer protection and the overall thrust of his comments as downplaying agency commitment to the provisions of Dodd-Frank.

Second, consumer advocates and Democrats not thrilled with his position have a bit more power than they did before the Alabama election. With the election of Democrat Doug Jones in that state, as American Banker points out, the Republican majority in that body shrank to 1 vote. That’s not much, and Republicans don’t want to unnecessarily alienate their colleagues across the aisle.

Third, as American Banker also observes, the Trump administration has enough credibility with conservative voters that they can afford to appoint a more moderate CFPB director. 

Republicans in Congress don't want to alienate Democrats unnecessarily.

As a result, a number of candidates with a background in consumer protection are being discussed. One is Jonathan Dever, an Ohio representative whose law firm counsels clients who are in or approaching foreclosure of their homes. Another is Dan Iannicola, who worked in Treasury during the George W. Bush administration and who has spearheaded financial literacy initiatives, working with the CFPB. 

Democratic support is apparently the reason that J. Mark McWatters, the chair of the National Credit Union Administration (NCUA), is being discussed, as he does not have a specific consumer protection background. He was, however, supported by Democrats for the NCUA post.

More conservative candidates are also being considered, among them Randy Neugebauer, a former Republican congressman from Texas, who has strongly criticized the CFPB in the past. Todd Zywicki, who teaches law at George Mason University, and Mark Calabria, an economist who works with vice-president Mike Pence, have also been mentioned as potential candidates. 

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