GOVERNMENT

Under Richard Cordray, the CFPB became the new ACORN

SIERRA MARIE WILLIAMS

How Cordray and Warren attracted passionate Ivy Leaguers to shake down banks and give the money to Democratic organizations with no oversight

WASHINGTON – Maybe the Consumer Financial Protection Bureau started out with good intentions. Richard Cordray took the helm one year after the CFPB was created. CFPB architect U.S. Senator Elizabeth Warren was passed over for the position after setting up the agency through that year.

Cordray stepped down in the fall of 2017 and, giving many relief, President Donald Trump appointed budget hawk Mick Mulvaney to lead the organization.

Since its inception, the CFPB has penalized a wide variety of companies and individuals for violating federal consumer financial protection laws. The CFPB has the authority to issue penalties for violations of a range of laws, but the majority of fines issued to date have been for violations of several specific statutes, most often the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 – the same law that created CFPB.

The damages assessed by the CFPB vary widely from case to case – the CFPB has issued fines ranging from $1 to over $2 billion to different companies in different circumstances. To date, the CFPB has ordered over $11 billion in total penalties in settlements for 28 million “harmed consumers” since opening for business.

The total $11.8 billion was revealed by Wall Street Journal editorialist Holman Jenkens, who in November 2017 revealed one investigation by CFPB fabricated racial discrimination in auto lending based on racial assumptions of borrowers based on their names, locations, and interest rates. By assuming borrower’s were of a minority race because of higher interest loans and location of residence, Cordray led a charge against auto dealers and eventually collected a settlement.

“By such means the agency fabricated—there is no other word—evidence of racial disparity in auto lending to shake money out of lenders, without effective court appeal, because the agency was able to hold necessary approvals the banks sought from other federal agencies hostage until the banks settled,” Jenkins wrote.

On July 21, 2011, Senator Richard Shelby wrote an op‑ed for the Wall Street Journal affirming his continued opposition to a centralized structure, noting that both the Securities Exchange Commission and Federal Deposit Insurance Corporation had executive boards and that the CFPB should be no different. He noted lessons learned from experiences with Fannie Mae and Freddie Mac as support for his argument.

The CFPB formally began operation on July 21, 2011, shortly after President Obama announced that Sen. Warren would be passed over as Director in favor of Richard Cordray, who prior to the nomination had been hired as chief of enforcement for the agency.

The growing agency with no oversight expanded in a nondescript office building. New recruits would show up to no desk, no phone and way too much to do. All-hands meetings were held in the elevator lobby, with people sitting on the floor while Warren gave pep talks.

The bureau had attracted staff who wouldn’t mind the bare bones and Robin Hood principles all that much.

“It didn’t faze me at all because I was an entrepreneur. It just brought me to the first day of my company, where we’re all on picnic tables in an attic,” Pete Carroll, CFPB assistant director for mortgage markets, said. “It turned out to be the nerve center. Someone said, ‘Do you want to move?’ I said, ‘No, this is great! Everybody’s buzzing around, Elizabeth Warren’s popping her head in.’ I was like, ‘this is awesome, this is the greatest thing ever.’”

A 2014 U.S. Government Accountability Office (GAO) audit quickly honed into the CFPB’s “Civil Penalty Fund” (CPF). The audit, requested by Congresswoman Shelley Moore Capito, ultimately asked that the CFPB concluded “specific factors” were needed for the CPF allocations.

“The GAO found that the CFPB failed to document the factors that the CFP administrator considered in deciding to allocate $13.4 million for consumer education and financial literacy programs,” the report reads. “While the report indicates that the CFPB had revised its procedures for administering the CPF to include the factors the administrator will consider when determining such allocations, the GAO found that, at the time of its audit, the revised procedures did not include steps for the administrator to document the specific factors that were considered as part of an allocation.”

The report showed escalating growth and reach of the CFPB with more and more money in, ready to be allocated.

“The report indicates that as of May 30, 2014, the CFPB had collected more than $139 million in civil penalties and allocated over $31 million to compensate seven classes of harmed victims. It also made one allocation of $13.4 million for consumer education and financial literacy programs, with funds in such allocations designated for a program that provides financial coaching for transitioning veterans and economically vulnerable consumers. Based on the numbers shown in the report, which include a set-aside of approximately $1.5 million for administrative expenses to administer payments to victims, the CPF had more than $93 million in unallocated funds as of May 30, 2014.”

Cordray’s leadership of the CFPB saw CFP allocations to the Legal Aid Society of the District Columbia, led by senior Democratic National Committee officials; the People’s Community Action Corporation of St., Louis, which included Democratic lawmakers and appointees of President Obama on the board; and the Mississippi Center for Justice, whose task is “advancing racial and economic justice” and “attacking predatory lending practices.”

These allocations were approved by Cordray and the board, which was compiled of CFPB staff.

“They started out with such a complete rethinking of everything,” said Jo Ann Barefoot, a former deputy comptroller of the currency who tracks the CFPB for a financial services consultancy who was on the CFPB Consumer Advisory Board in 2015. “I think they were more clear on what they were not than what they were.”

In 2015, an update posted in the FAQ section at the CFPB website showed a second allocation “for consumer education and financial literacy programs” of $15.4 million. These allocations went to activist organizations. The pay out list is rife with Democratic allies of Cordray and the Obama Administration.

In emails obtained through the Freedom of Information Act, Cordray’s staff prepared for Cordray to speak at a “Leaders in Housing Counseling” forum hosted by the National Housing Resource Center (NHRC). NHRC, led by Bruce Drophalen, former ACORN Housing and then-director of seeming ACORN spin-off NHRC, is a project of the George Soros-funded Tides Foundation, and began operating in early 2012. ACORN’s Affordable Housing Centers of America ceased to exist around the same time.

ACORN was disbanded in 2010 when Congress barred federal departments from giving tax dollars to the group, and then Warren got Congress to create CFPB shortly after.

Did CFPB’s support of NHRC and liberal groups fill the void ACORN’s disbanding created?

Did Cordray lead the charge for CFPB to fill the shoes of ACORN, robbing the rich with false investigations with no oversight and swindling the poor by allocating penalties to liberal allies?

It seems so.

With Mulvaney at the helm, the CFPB is under a new microscope.