When I was a kid, one of the old reruns that played on TV in the afternoon was a show called “Gomer Pyle.” Gomer had a number of catch phrases, one of which (see the image on the right) came to mind as I learned about another thing Donald Trump and his Republican henchmen on Capitol Hill were doing to make our economy and our society less just and definitely not great. The Trump presidency has been full of “surprises” on many fronts. Making it easier for businesses to discriminate against black and Latino Americans? Well, that’s no surprise.
Since Trump entered the Oval Office, he has taken aim at the Consumer Financial Protection Bureau. The CFPB—conceived of and initially organized by Elizabeth Warren—is one of the Obama Administration’s signature achievements, one that strongly reflects the progressive value that government must act vigorously to protect regular Americans from being abused, ripped off, or mistreated by corporations and businesses. In 2013 it issued the following guidance on auto loans:
Certain lenders that offer auto loans through dealerships are responsible for unlawful, discriminatory pricing. Potentially discriminatory markups in auto lending may result in tens of millions of dollars in consumer harm each year.
[snip] “Consumers should not have to pay more for a car loan simply based on their race,” said CFPB Director Richard Cordray.
[snip] The CFPB recommends that indirect auto lenders within its jurisdiction take steps to ensure that they are operating in compliance with fair lending laws as applied to dealer markup and compensation policies. These steps may include, but are not limited to:
- Imposing controls on dealer markup, or otherwise revising dealer markup policies;
- Monitoring and addressing the effects of markup policies as part of a robust fair lending compliance program; and
- Eliminating dealer discretion to markup buy rates, and fairly compensating dealers using a different mechanism that does not result in discrimination, such as flat fees per transaction.
You might think that righting this wrong and combating racial discrimination in car loans sounds like a no-brainer, something that any right-thinking American could get behind. You might also think that the CFPB’s guidance here is very reasonable, as it even offers a clear suggestion on how to avoid violating anti-discrimination laws (the recommendation that lenders pay flat fees to dealers). However, if you think the Trump Administration agrees with you, well, you’re as wrong as someone who thinks orange is anyone’s natural skin color.
Earlier this month, Trump’s appointee to run the CFPB, Mick Mulvaney (yes, he also has another full time job as the Director of the White House Office of Management and Budget, but let’s stick to one stupendously stupid set of actions at a time here, ok?) essentially asked Congress to render the CFPB a toothless actor subject to the whims of whichever party controls Congress. Mulvaney asserted that: “the bureau is far too powerful, and with precious little oversight of its activities.”
Really? See, I thought the reason for the CFPB’s creation was that the financial industry was far too powerful, and that consumers needed protection from that power. On Team Trump, however, the playbook says the opposite, that it’s the banks that need protection. I’d like to see Republicans run on that slogan. More on the political implications of this matter later.
Back to this week’s news. On Wednesday the Senate voted to get rid of the aforementioned CFPB guidance on automobile lending and discrimination. 50 Republicans and one Democrat, Joe Manchin of West Virginia, voted with Trump on this. There’s little question that the Republican controlled-House will follow suit. Top House Republican Jeb Hensarling of Texas said: “I look forward to finally repealing this harmful and flawed bulletin very soon.”
What about the filibuster you say? That didn’t apply here because Republicans are using the Congressional Review Act to get rid of this CFPB rule, so by law the filibuster cannot be used. What about the fact that the CRA is supposed to apply only to rules issued within the previous 60 Congressional working days, while this rule is from 2013? Well, when you’re a Republican, you just twist and push and pull the law every which way you can so that you get the interpretation you want. To put it another way, they are going to Merrick Garland the shit out of this thing.
It’s no joke. Here’s Senator Sherrod Brown (D-OH) on this unprecedented GOP tactic: "Expanding the power of the CRA to overturn guidance from decades ago will threaten protections hardworking families rely on, making it harder for middle class Americans to get ahead and responsible businesses to follow the law."
The discrimination that this CFPB rule targeted is very real. In late 2013, Ally Financial paid $98 million in penalties and in compensation to non-white borrowers as a result of its discriminatory practices. In 2015, Fifth Third Bank similarly had to pay $18 million in restitution to its victims, while American Honda Finance coughed up $24 million. Once Trump and Mulvaney get their go-ahead from Congressional Republicans, it will become much harder to win such settlements according to “legal experts.”
Yes, the Mulvaney-Trump CFPB just played a major role in the $1 billion fine issued against Wells Fargo for some of the most egregious trickery a bank has ever perpetrated against its own customers. But let’s get real here. There’s hamstringing an agency and then there’s openly ignoring blatant theft. The Trump Adminstration gets no credit for doing the minimum they have to do in order to avoid complete and total dereliction of duty.
Here’s the bigger picture:
The consumer bureau — like other financial regulators in the Trump era — has been pursuing far fewer cases against banks than under the Obama administration.
That is largely by design. Administration officials including Mr. Mulvaney have repeatedly said that overly harsh regulation has left the banking industry with less capacity to make loans to American businesses and to otherwise support a growing United States economy.
The evidence for such claims is scant. At the end of last year, federally insured banks had $9.7 trillion of loans outstanding — at or near their historical high point — even as most of the regulations erected under President Barack Obama remain intact, according to data from the Federal Deposit Insurance Corporation.
As for profits, the aforementioned Wells Fargo booked $5.9 billion in the first quarter of 2018 alone, and other large banks took home hefty sums as well. It doesn’t sound like they are suffering too badly under all those regulations big bad Obama and his progressive minions put into place.
Earlier I mentioned the politics of matters like this one, and I want to return to that now. There have been plenty of discussions, some more productive than others, about the Democratic Party and whether we should focus on “race, not class” or “class, not race”—as if the two weren’t deeply intertwined.
To those not paying close attention, it might be easy to pigeonhole the CFPB and what it does as strictly a Bernie Sanders/Elizabeth Warren, anti-corporate thing that’s about economic inequality but which ignores race. As its actions on discriminatory car loans as well other examples show, fighting racial discrimination stands at the core of the CFPB’s work—work that the Trump Administration is trying to bring to a halt.
This is not the first time I’ve called for Democrats to make the Consumer FInancial Protection Bureau central to their campaign message. It’s a perfect example of how, when Democrats are elected to office, they translate their values into action. One of the most important Democratic values is a belief that the government must help balance the scales when bad actors in private industry use their vast financial power to take advantage of the vulnerable. That’s exactly what the CFPB does. And it gets results.
Democrats can point to the CFPB—and the Trump Administration’s attempts to gut it—as one of the most clear contrasts between progressive and conservative values. Conservatives want more profit at all costs, no matter whether that profit comes at the expense of people being ripped off, or as a result of racial discrimination.
We progressives, on the other hand, aren’t naive enough to be surprised that some businesses act unethically or immorally. We also understand that strong, smart regulations protect the businesses that do the right thing, but who have a hard time competing against the ones who profit by doing wrong either against all consumers or against Americans of color specifically.
That sounds like a message that can convince middle and working class voters of every race that Democrats are the ones who are on their side.
Ian Reifowitz is the author of Obama’s America: A Transformative Vision of Our National Identity (Potomac Books).