The Bureau of Consumer Financial Protection has announced it will no longer proactively examine the institutions it regulates for violations of Military Lending Act, instead deciding the law requires it to react to complaints filed by servicemembers.
Critics of the decision say it is another move by acting director Mick Mulvaney to weaken the consumer protections offered by the federal government, while proponents of the move say it curtail what was deemed to be “overly aggressive” enforcement activity by the agency under former director Richard Cordray.
Mulvaney has vowed to uphold the letter of the law when it comes to running the BCFP, and his successor, Kathy Kraninger, has promised to do the same, if confirmed by the Senate.
The announced caught military families by surprise, according to a published report. The bureau had actively investigated and brought enforcement actions against companies that were accused of taking advantage of servicemembers and their families. But instead of being proactive in examining institutions for potential infractions, the BCFP will instead rely on complaints submitted to the agency’s website or via a hotline to determine whether an investigation is warranted. Servicemembers are four times as likely to be targeted by predatory lenders as non-servicemembers.
“It will go from a proactive system to something that is completely reactive,” said Christopher L. Peterson, a law professor at the University of Utah and former attorney at the BCFP. “Over time, it is going to have a real impact on the lives of these people who devote their lives to the service of our country.”
A spokesman for the BCFP said that Mulvaney has asked Congress to draft legislation that would give the agency the legislative authority to resume its supervisory examinations.