The head of the Consumer Financial Protection Bureau has dissolved a group of outside experts that acts as a sounding board for the federal watchdog agency on important economic and financial issues as well as policy.
Bureau officials told the 25 members of the Consumer Advisory Board on a June 6 morning conference call that they will be replaced and the board will be reconstituted, according to two board members who participated. An email to board members on behalf of Acting Director Mick Mulvaney confirmed the actions.
“Everyone on the board has been fired,” said Judith Fox, a professor of consumer law at Notre Dame Law School who sat on the board for three years.
The law that created the CFPB mandates that bureau officials meet with the advisory board at least twice a year. Board members say that under Richard Cordray, the Obama appointee who retired as director in November, the board and CFPB officials would have extremely detailed discussions about industry issues or pockets of concern the bureau should be examining such as fair lending.
Under Mulvaney, meetings have been cancelled repeatedly. The most Mulvaney could ever commit to, according to board members, was one 20-minute phone call. Mulvaney’s staff cited a busy schedule, board members said.
Mulvaney has steered the bureau in a more industry-friendly direction since taking charge after Cordray’s resignation. One advisory board member suggested that Wednesday’s dismissals were aimed at quieting opposition to the bureau’s change of direction.
“The reason to let us go is an attempt to silence the voices that would be concerned about the direction the bureau has taken under this administration,” said Josh Zinner, CEO of Interfaith Center on Corporate Responsibility, and a member of the board since 2015.
The dismissals came just two days after Mulvaney said that concerns about the cancelled meetings were overblown.
On the conference call, Mulvaney political appointee Anthony Welcher told board members that the bureau was looking for more diversity among its members and looking for ways to save money. But now-former board members say those arguments are misleading. The board’s cost was several hundred thousand dollars, according to bureau officials, compared to the bureau’s estimated budget for 2018 of $630.4 million.
John Czwartacki, a Mulvaney appointee and spokesman for the bureau, said that the outspoken members of the board were only interested in “protecting their taxpayer-funded junkets.” But several members, including Max Levchin, founder and CEO of financial services company Affirm, said they offered to pay their own travel costs if there were concerns. A recording of the Wednesday conference call confirmed that several board members were willing to cover their travel and lodging costs.
Also along with consumer groups and academics, the board was made up of representatives from big financial companies like Citigroup, Mastercard, and Pennsylvania-based bank PNC.
“Without this direct line to all stakeholders, CFPB’s job becomes much harder, perhaps nearly impossible,” said Levchin, who had been on the board since 2015.
Bureau officials said the board would be reconstituted in the fall, likely with fewer members than its current 25-person membership. None of the current members of the board, who typically serve three year terms, would be eligible to apply. Members of two other boards, one at serves issues with credit unions and another that serves small community banks, which also provide outside expertise, would also be reconstituted as well. In total, 60 members across the three boards were dismissed on Wednesday.
Rumors of the dismissal or reconstitution of the board had been lingering for weeks. After a two-day meeting scheduled for Wednesday and Thursday of this week was cancelled, a group of CAB members held a press conference Monday to express their concerns about the lack of meetings. Mulvaney responded with a letter saying “there is no cause for concern in this regard” and that he looked forward to having the meetings.
Two days later, the board members were told they were no longer needed.
Now fired, some board members say they are considering possible legal options against the bureau and Mulvaney.