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Consumer protection down the drain – posted 3/25/2018 and published in the Concord Monitor on 4/1/2018

March 25, 2018 Leave a comment

In following the actions of the Trump Administration, one area that has received insufficient attention is the dramatic weakening of consumer protection. Trump and his appointees are gutting consumer protections and opening the door to more Americans being fleeced, defrauded, and preyed on by predatory lenders.

Nowhere is this more evident than in Trump’s actions around the Consumer Financial Protection Bureau (known as the CFPB), the federal agency created after the 2008 financial meltdown. The agency has had a mission to protect the public from unfair and deceptive financial tricks and traps.

Trump and his appointees have turned a once-vibrant federal agency into a do-nothing embarrassment. During the last four years of the Obama Administration, enforcement actions averaged three-to-five each month. Since the start of the Trump Administration, there have been zero enforcement actions.

During the Obama years, the CFPB returned more than $12 billion to more than 24 million people who were cheated by banks, credit card companies and student lenders. It helped many millions more by creating new rules for mortgages, credit cards, checking accounts, prepaid cards and payday loans. Such rules made the market fairer.

I would mention the Wells Fargo scandal, when the bank cheated millions of its customers by opening fake accounts without permission. Customers got hit up with unanticipated fees and charges. The CFPB, during the Obama years, imposed a $100 million fine on Wells Fargo.

Now, under the Trump Administration, the practice of refunding dollars to consumers who were bilked as well as the practice of imposing civil penalties on bad-actor banks and corporations are things of the past. Not surprisingly, in its 2019 budget plan, the Trump Administration proposed to cut the CFPB budget and to restrict its enforcement powers.

The Trump Administration actually requested $0 in second quarter 2018 funding for the CFPB.

At the helm of CFPB, Trump placed Office of Management and Budget Director, Mick Mulvaney. Mulvaney had previously called the agency a “sick, sad joke” and as a Congressman had co-sponsored legislation to eliminate it.

This is another fox in the chicken coop situation where the President appointed an individual fundamentally opposed to the mission of the agency he is supposed to run. Matt Taibbi wrote that putting Mulvaney in charge of CFPB was worse than Vlad the Impaler running the Red Cross. Mulvaney, a former House Freedom Caucus member, has compared government regulation to a “slow cancer”.

According to the National Institute on Money in State Politics, during his six year career as a Congressman from South Carolina, Mulvaney received $57,100 in campaign contributions from the payday lending industry. That industry also gave large sums to Trump.

Advance America, the nation’s largest payday lender, donated $250,000 to Trump’s inauguration. Rod Aycox, a title loan executive, and his wife each gave Trump $500,000. The payday lending industry’s trade group, the Community Financial Services Association of America will hold its 2018 annual conference and expo at the Trump National Doral resort in Miami in April.

So as was predictable, in January, the CFPB dropped a lawsuit against four payday lenders that charged interest rates as high as 950 percent. These payday lenders had been previously fined repeatedly under the Obama Administration.

The CFPB also quietly closed a nearly four year investigation into a subprime lender from South Carolina that allegedly charged customers exorbitant interest rates. The South Carolina company, World Acceptance Corporation, had previously given Mulvaney $4500 in campaign donations between 2013-2016.

On March 23, Mulvaney announced the CFPB will drop its probe of Kansas-based National Credit Adjusters, a company that collects debt from high-interest loans issued on tribal lands. The previous CFPB Director, Richard Cordray, had been set to sue NCA before the change of administration. Reuters also reported that Mulvaney will likely end the CFPB investigation into Security Finance, Cash Express, and Triton Management Group, three other payday lenders.

Even more disturbing, the CFPB announced it is reconsidering rules governing payday lending which were finalized last October under previous Director Cordray. The rules required payday lenders to verify that borrowers could pay back the loans before lending. The rules also capped the number of times someone could take out successive loans.

The anti-consumer bent of the Trump Administration has shown up in multiple other ways. Trump’s appointees to the U.S. Consumer Product Safety Commission have consistently aligned themselves with the position of regulated industries at the expense of consumer safety. They have eased enforcement, backed off recalls and protective rule-making. The inevitable result will be less safe products. Remember exploding android phones and defective hoverboards. Dangerous products can be a matter of life and death.

Education Secretary Betsy DeVos has sided with student loan services and for-profit colleges rather than the students who have been defrauded or loaded up with debt they cannot repay. DeVos has stalled debt forgiveness to thousands of students who claim that for-profit colleges cheated them. She also revoked Obama-era directives that penalized student loan servicing companies for poor service and that required the companies to provide borrowers with accurate information about their debt.

In her most recent move, DeVos bizarrely argued that states lack the authority to oversee student loan companies operating in their states and that this regulation should be left to the federal government.

The pattern could not be clearer: welcome to predatory lenders, scam artists and all variety of shady businesspeople. We need to remember that the President is the same individual who conned hundreds of young people and their parents into paying to attend fake Trump University. As a builder, he was legendary for hiring contractors who he then stiffed and never paid after their work was completed.

Democrats, progressives, and independents need to stand strong for consumer protection. The last thing we need now is for Democrats, including corporate-friendly Democrats, to be acting like Republicans. The political choices in 2018 and 2020 must be posed as starkly as possible. If they are not, too many voters might pass on casting a ballot, feeling it does not matter.  That is an alternative we cannot afford.

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Trump’s Picks: Part 2 – posted 1/8/2017 and published in the Concord Monitor on 1/11/2017

January 8, 2017 Leave a comment

In a recent piece in the Monitor published on January 1, I ranked a number of Trump appointees on the 10 scale. I was assessing Trump’s worst pick. There were quite a few I did not get to who also deserve consideration. Because of the importance of the positions and because some of the names have escaped sufficient scrutiny, here is part 2.

Just to refresh recollection on my 10 scale, I rate 10 as superbly well qualified and 1 as abysmally unqualified.

Billionaire Betsy DeVos is Trump’s pick for Secretary of Education. This is a head scratcher pick. DeVos went to Holland Christian High School and Calvin College. She never taught in a public school or administered one. Nor did she ever send her children to public school. It is not clear she has ever set foot in a public school.

DeVos promoted a voter referendum in her home state of Michigan to allow state residents to use public funds to pay for tuition at religious schools. Her education advocacy has focused on expanding charter schools and on using taxpayer funded vouchers for private and religious school. A religious zealot, DeVos sees privatizing public schools as a way to “advance God’s Kingdom”. First amendment questions, anyone?

In the Draining the Swamp Department, it is impossible to ignore DeVos’s role as a Republican donor. DeVos is an heir by marriage to the Amway fortune. She and her relatives gave twenty current Republican senators $818,000 in campaign contributions. These are all senators who will be voting on her nomination once it clears committee.

I designate her a Swamp Fox. She is a 2. I don’t consider being a billionaire and an opponent of public education relevant qualifications. Her appointment is payback though for all the campaign cash she and her family gave to Republican candidates.

At the Energy Department, we have the nomination of former Texas governor and Republican presidential candidate Rick Perry. When Perry ran for president in 2012, he advocated abolishing the Department of Energy. Perry’s most famous moment was when, during a debate, he forgot the name of the department he wanted to abolish. He remembered he wanted to abolish Commerce and Education but he could not recall Energy. I guess Trump has a sense of humor. He must have liked appointing Perry to a position in a department he could not remember.

During the campaign Trump made fun of Perry for his glasses. He mocked that Perry wore the glasses to try and look smarter. At the same time, Perry called Trump “a barking carnival act” and ” a cancer on conservatism”.

Whether Perry or Trump were aware of it, the Energy Department has major responsibility for dealing with nuclear weapons. The last two energy secretaries, Ernest T. Moniz of M.I.T. and Stephen Chu of Stanford had high-powered academic careers. Dr. Chu had won the Nobel Prize. Perry, on the other hand, had an appearance on the television show Dancing with the Stars. He was eliminated in an early round.

Perry is a board member and owns stock in Texas-based Energy Transfer Partners, the company trying to build the much-disputed Dakota Access pipeline. Perry is a climate change denier. He gets a 1.5. It is a jump from Dancing with the Stars to nuclear weapons. God help us.

And then there is Rep. Tom Price of Georgia who is the pick for Secretary of Health and Human Services. Price, an orthopedic surgeon, has been a leading foe of Obamacare. He also favors privatizing Medicare and Medicaid. He opposed the Children’s Health Insurance Program, calling it “government-run socialized medicine”. He is a member of the Tea Party Caucus. He has introduced bills to bar federal funding for Planned Parenthood and he has wanted doctors to be able to enter into private contracts with Medicare beneficiaries so that doctors would be able to charge more than the amounts typically allowed by the program.

Price’s proposed overhaul of Obamacare does not require insurers to cover pre-existing conditions. He also opposes the Obamacare provision that mandates birth control access. Price opposes same-sex marriage and abortion rights.

A report in the Wall Street Journal has raised questions about Price’s conflicts of interest. He has traded medical stocks while working on health care legislation that could affect stock prices. Senate Democrats want to investigate whether there was insider trading.

The dude seems like something out of the 1950’s but he is hardly alone in that respect. I give him a 3.5. He gets 3 for being a doctor and .5 for breathing.

I would be remiss if I did not mention David Friedman, Trump’s choice for US ambassador to Israel. A bankruptcy lawyer, Friedman is so right wing he makes Benjamin Netanyahu look like Karl Marx. An opponent of a two state solution, Friedman favors stripping the Arab citizens of Israel (21% of the population) of their citizenship.

Friedman believes no settler should be removed from his “home” even if that “home” is located on the private property of Arab farmers. As a Jew, I am horrified by the type of ultra-nationalism and racism Friedman represents. Friedman’s brand of extremism will set back any hopes for peace between Israel and the Palestinians.

Friedman represented Trump in his past bankruptcy proceedings. He is the type who will promote Israel being a full apartheid state, supporting annexation and showing no concern for the rights of the Palestinians or Israelis who want peace. This choice is bankrupt. Friedman is a 1, a most reckless selection.

Steven Mnuchin, Trump’s national finance director during the campaign, is his pick for Treasury Secretary. Mnuchin has unusual qualifications. He ran a national bank, OneWest, that foreclosed on tens of thousands of Americans during the Great Recession. Many of these foreclosures were illegal, ruthless and fraudulent. OneWest engaged in systematic racial discrimination and predatory practices that particularly harmed seniors. Ironically, he will now be in charge of dismantling the Consumer Financial Protection Bureau.

Mnuchin was a co-founder and manager of the hedge fund, Dune Capital. He also made partner at Goldman Sachs where he had worked for 17 years. Trump got a lot of mileage during the campaign out of attacking Clinton’s speeches to Goldman Sachs but then he picks a Goldman Sachs alum for his Treasury Secretary.

This pick is a perfect example of Trump’s phony populism. Mnuchin also rates a 1. Guy is the prototype avaricious capitalist, a regular Gordon Gekko clone. We have very short memories if we can overlook all the misery caused by Mnuchin’s fraudulent foreclosures. He heartlessly profited throwing thousands out of their homes.

Finally, I did want to mention South Carolina Rep. Mick Mulvaney, Trump’s choice for head of the Office of Management and Budget (OMB). OMB is a little known but very important federal agency. As head of OMB, Mulvaney will be responsible for reviewing the budgets of all federal agencies and for ensuring they align with the administration’s priorities. He will also be doing cost/benefit analysis of federal regulations.

Mulvaney is a Tea Partier and a founder of the House Freedom Caucus. When the House Republicans shut down the government in 2013, Mulvaney saw the shutdown as “good policy”. He is among the group widely credited with pushing former House Speaker John Boehner out of power in 2015. He is an advocate of deep spending cuts. It remains to be seen whether Mulvaney will support a Trump infrastructure spending bill. This is a person who sees spending cuts as more valuable than spending itself. Human needs do not appear to be part of his equation. Mulvaney rates a 3. He is extreme but at least he is not a Klan member.

I am not giving any awards today. Is there such a thing as an anti-award?

Trump ran as a populist but he is filling his cabinet and important positions with billionaires and extreme right wingers. It is like he is trying to fulfill a stereotype Marxist fantasy of who is the power elite. Unfortunately, being extremely rich does not typically translate into being in touch. Usually it is the opposite.

One can only hope the Senate actually vets these folks.