The Bureau of Consumer Financial Protection is on pace to levy the fewest number of enforcement actions in its seven years of existence, according to a published report.
The agency announced only three enforcement actions during the third quarter of 2017, compared with eight during the same period a year ago. The enforcement actions in the third quarter included $1.6 million in penalties, compared with $7.3 million during the same quarter last year. The enforcement actions taken during the third quarter included an $800,000 fine levied against National Credit Adjusters, a collection agency, and its former CEO, Brad Hochstein.
The dramatic decrease in enforcement actions is another bright line indicator that the era of “regulation by enforcement” at the BCFP is over. Mick Mulvaney, the acting director of the agency and the boss of Kathy Kraninger, who has been nominated to be his replacement as the BCFP’s next permanent director, has been very vocal and adamant that while the agency will still engage in enforcement actions when needed, the focus going forward will be on educating consumers about how better to protect themselves.
One report has gone as far as to call the reduction in fines and consent orders the “Mulvaney Discount.” One enforcement action, for example, included a fine of $500,000, which was $1 million less than the company made in excessive fees that were charged to consumers.
Mulvaney took over as acting director last November from Richard Cordray, who left the agency to run for governor of Ohio. During Cordray’s tenure at the BCFP (which was called the Consumer Financial Protection Bureau while he was in charge), the agency had taken an active role in enforcement, using consent orders and settlements to create de facto rules that financial services companies, including collection agencies, needed to follow.
Unlike Cordray’s “hang’em then try’em” roughshod directorship of the CFPB, the current director is responsible, intelligent and fair-minded. These aptitudes were foreign under the previous administration and in particular Mr. Cordray.
Mr. Mulvaney provides the even-handedness that is required when heading up any organization, especially those with the latitude under which the CFPB or BCFP (the acronym du jour) operates.