A new report from the Office of the Inspector General of the Federal Reserve and Consumer Financial Protection Bureau (CFPB) found that the CFPB stopped reporting to congressional appropriations committees under the direction of then-acting director Mick Mulvaney – in violation of the Dodd-Frank Act.
Section 1017(e)(4) of the act requires annual reporting to the committees, which was suspended beginning with Mulvaney’s tenure in 2017.
The report quotes the Dodd-Frank Act section as saying: “The director shall prepare and submit a report, on an annual basis, to the Committee on Appropriations of the Senate and the Committee on Appropriations of the House of Representatives regarding the financial operating plans and forecasts of the director, the financial condition and results of operations of the bureau, and the sources and application of funds of the bureau, including any funds appropriated in accordance with this subsection.”
The CFPB published the report on its website under the direction of Director Richard Cordray from 2012-2016, the report states, adding that the bureau did so “to fulfill its statutory responsibility and commitment to accountability and transparency.”
The OIG report says the report stopped from 2017 through 2019.
“Bureau officials informed us that this change was based on a decision by interim bureau leadership,” the OIG report stated. “After we inquired about this change, current bureau leadership decided that section 1017(e)(4) requires the agency to submit the annual report.”
The move is notable because of the emphasis with which Mulvaney placed on adhering strictly to the statutory requirements of the Dodd-Frank Act. When he was appointed acting director of the agency, he said, “I’m a member of the executive branch of government, we intend to execute the laws of the United States including the provisions of Dodd-Frank that govern the CFPB.”
Among the examples are:
- His draw down of the CFPB reserve fund in 2018, stating there is “no specific statutory authority requiring the establishment of or maintenance” of a “reserve fund.”
- Mulvaney said the CFPB would refocus its efforts in a five-year strategic plan, saying, “If there is one way to summarize the strategic changes occurring at the bureau, it is this: we have committed to fulfill the bureau’s statutory responsibilities, but go no further.”
- In his first appearance as acting director before the House Financial Services Committee, Mulvaney asserted he was under no obligation to answer questions. “The statute requires me to be here, and I am happy to be here. I do not have to answer a single one of your questions,” Mulvaney said. “I will, and I look forward to doing that. But I don’t have to. The statute says that I shall appear before Congress.”
- Mulvaney worked to re-establish the name of the CFPB, telling the audience at an American Bankers Association event that the Dodd-Frank Act stated, “There is ‘established to the Federal Reserve System an independent bureau to be known as the Bureau of Consumer Financial Protection.’ ”
On March 30, 2020, Director Kathy Kraninger signed a decision memorandum stating that the bureau is obligated to submit the annual report described in section 1017(e)(4), the OIG report stated.
“A bureau official informed us that the bureau is developing a process to begin publishing this report annually,” the report stated.
The Dodd-Frank Act requires the reporting of financial operating plans and forecasts, but does not allow those plans to be subject to review by the appropriations committees.
“It also states that the bureau director has no obligation to consult with or obtain the approval of the OMB director with respect to any of the reports, plans, forecasts, or other information required to be provided to OMB, nor does OMB have any jurisdiction or oversight over the affairs or operations of the bureau,” the OIG report stated.