Mulvaney’s misfire: CFPB name change could cost industry millions of dollars


From the beginning, acting Consumer Financial Protection Bureau Director Mick Mulvaney’s desire to change the name of the agency he runs was a strange one. Insisting that the “Consumer Financial Protection Bureau does not exist” because the Dodd-Frank Act that created it referred instead to the Bureau of Consumer Financial Protection, he changed the agency’s logo to BCFP and recommended the financial services industry follow suit.

But here’s the thing: Dodd-Frank referred to both the CFPB and BCFP in its statutory language and changing the bureau’s name (and its abbreviation) didn’t accomplish anything other than to confuse the industry it supervises and consumers it protects.

Then again, maybe that’s the point. Critics were quick to accuse Mulvaney of changing the name precisely to lower the CFPB’s brand recognition with consumers, particularly given that the former South Carolina congressman was an outspoken opponent of the agency’s creation. After all, CFPB gets 3.4 million monthly searches on Google. BCFP doesn’t really register. It’s hard for consumers to turn to an agency for which they don’t even know the name.

Still, the financial services industry mostly shrugged at the name change. Banks, credit unions and their trade groups appear largely to be going along with Mulvaney’s plan.

But based on a surprising new internal agency analysis, they may want to rethink that — and fast.

According to The Hill, the internal analysis shows the financial services industry would pay approximately $300 million if the CFPB goes through with forcing a name change. As the paper reported:

“The CFPB enforces dozens of financial regulations meant to protect and inform consumers who have purchased loans or lines of credit. The agency’s analysis found that firms would be forced to spend roughly $300 million total to update internal databases, regulatory filings and disclosure forms with the new name in order to comply with those rules. An agency analysis estimated that the changes necessary to comply with the Fair Credit Reporting Act, the Electronic Fund Transfer Act and certain mortgage regulations would cost firms $100 million for each rule.”

In addition, the name change would cost the government between $9 million to $19 million, The Hill said.

For now, some in the industry are brushing off the analysis, noting that the CFPB has yet to require the name change on regulatory filings and the like.

“Major hypothetical that I don’t waste much time thinking about,” said one industry group head late Monday. “I am not convinced those estimates are even correct since there has been zero direction exactly what would need changing.”

Yet it’s difficult to imagine any industry representative being so cavalier if a hypothetical proposal by former CFPB Director Richard Cordray, a Democrat, was estimated by the CFPB to cost the industry $300 million. Indeed, they frequently objected to CFPB proposals during his tenure as too costly.

But the industry is a fan of Mulvaney, who has dialed back enforcement at the agency, reopened its payday lending proposal and generally favored a deregulatory approach. That Mulvaney once called the CFPB a “sick, sad joke” is generally seen as a mark in his favor.

Still, it’s hard to understand why the industry would risk hundreds of millions in potential costs in Mulvaney’s quest to bury the agency, especially considering that Democrats object to the name change, suggesting they will almost certainly change it back to CFPB if they retake the White House. At that point, the industry could pay hundreds of millions of dollars again to return the agency to CFPB. (The media, too, including everyone from The New York Times to American Banker to Breitbart, isn’t recognizing the name change because it may confuse readers and would interfere with an article’s ability to be seen by search engines like Google.)

Ultimately, it’s hard to understand why Mulvaney himself would move forward with something that his own agency estimates would cost the government millions of dollars and the industry hundreds of millions. (An agency spokesman did not respond to a request for comment.)

The need for fiscal discipline has been a hallmark of Mulvaney’s tenure, both at CFPB and his other job as head of the Office of Management and Budget. Though he has not opposed all new regulations, he has repeatedly worried about their potential costs. And in an April 2017 interview with Bloomberg BNA — before he was named head of the CFPB — he faulted the Obama administration for not doing a proper cost-benefit analysis for new rules, saying the Trump administration would be different.

“We actually plan to look at the costs of regulations,” he said.

If that’s true, he need look no further than his own suggested name change for a chance to make a difference.

Now is the chance for Mulvaney to put the industry’s money where his mouth is.

Bankshot is American Banker’s column for real-time analysis on daily events.

Rob Blackwell

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