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Mulvaney consolidates fair-lending enforcement, continuing CFPB reform

Acting Director Mick Mulvaney followed through on shrinking the Consumer Financial Protection Bureau's enforcement actions by folding the agency's Office of Fair Lending and Equal Opportunity into the office of the director.

In an email sent to agency staff Jan. 30, Mulvaney announced that he consolidated the office responsible for enforcement and day-to-day oversight and plans on re-purposing its staffers to focus on "advocacy, coordination and education."

Mulvaney hinted that more structural changes to the agency could come. "These changes are intended to help make the Bureau more efficient, effective, and accountable, and I plan to seek both internal and external input as I continue to evaluate how we work," he wrote in the email.

John Czwartacki, senior adviser to the acting director, said in a statement that "it never made sense" to have enforcement and supervisory functions within two separate teams, one dedicated to fair lending cases and one dedicated to all other cases.

"[B]y elevating the Office of Fair Lending to the Director's Office, we have enhanced its ability to focus on its other important responsibilities," Czwartacki said.

Mulvaney also announced that he was consolidating an office handling consumer complaints into the consumer education and engagement division, but clarified that he does not anticipate the change to affect any "internal operations and functions." He said the structural changes would not change individuals' employment status.

The change affects a key office originally tasked with policing "fair, equitable, and nondiscriminatory access to credit," according to the CFPB website. The office was previously led by Assistant Director Patrice Ficklin under the division of Supervision, Enforcement & Fair Lending. In the past, the office has taken the lead on a number of high profile investigations, such as fair lending law violations at BancorpSouth Bank.

Former Director Richard Cordray tweeted that it was "very upsetting" to see the CFPB make the structural change.

"We took on tough cases about redlining and other violations," Cordray posted. "Some don't like it but it is the law of the land."

Consumer groups strongly criticized the decision, arguing that the change will ultimately allow financial companies to harm consumers. Lisa Gilbert, vice president of legislative affairs at Public Citizen, said the fair lending office was critical in helping minorities and low-income borrowers.

"Gutting the office's enforcement powers is the latest example of interim CFPB Director Mick Mulvaney unashamedly working on behalf of big banks and predatory lenders instead of consumers," Gilbert said in a statement.

Mulvaney, whose leadership status is still being contested in court, has promised to dial back the agency's pursuit of enforcement actions, telling CFPB employees that he would only follow through on cases where there is "quantifiable and unavoidable harm to the consumer." Mulvaney has said he is reviewing open investigations launched by his predecessor Richard Cordray and has already dropped inquiries into World Acceptance Corp. and four online lenders.

The CFPB is also asking the public for comments on how it should handle investigative demands, as part of an initiative to find "evidence" for how the agency should function.