Democrats Seek Investigation Into Claims of Meddling at Consumer Bureau
Democratic lawmakers called on Friday for a formal investigation into allegations that President Trump’s political appointees at the Consumer Financial Protection Bureau improperly interfered in the drafting of a planned regulation on payday lending.
In a letter to the Government Accountability Office and the Federal Reserve’s inspector general, more than a dozen lawmakers asked for an examination of political pressure at the consumer bureau.
The pressure was described in a 14-page memo written by a bureau employee on his final day on the job. The employee, Jonathan Lanning, wrote that Trump appointees had pressured career employees and manipulated research to justify the forthcoming payday rule, which would allow lenders to offer high-interest loans without determining whether customers could afford them. The memo was detailed in a New York Times article on Wednesday.
The request was led by two members of the House Committee on Financial Services: Representatives Emanuel Cleaver II, Democrat of Missouri, and Gregory Meeks, Democrat of New York. It was also signed by Senator Cory Booker, Democrat of New Jersey.
“We request that the Office of Inspector General and Government Accountability Office review these troubling allegations and take any other appropriate action to determine whether abuse of authority or other official misconduct occurred,” the lawmakers wrote.
The lawmakers were joined separately by Senator Sherrod Brown, Democrat of Ohio. Mr. Brown called on the bureau director, Kathleen Kraninger, to “halt the issuance of any payday rule and restart the rule-making process,” in effect going back to the drawing board.
The consumer bureau has denied Mr. Lanning’s allegations in general terms. A spokesman said that the bureau maintained “a fair, transparent and thorough” process for making rules. The spokesman did not immediately return a request for comment on the lawmakers’ demand on Friday.
But the lawmakers asked both federal oversight offices to investigate whether the bureau provided advance notice of its relaxed payday rules to the lenders during an industry conference in 2019 in Las Vegas — a question raised by Mr. Lanning — and whether Trump appointees had lied to Congress about the forthcoming rule.
The new payday rule has been a top priority for Ms. Kraninger. The bureau was expected to issue the rule this week.
The allegations of political interference angered consumer groups and former bureau employees. Founded after the 2008 financial crisis to protect Americans from abusive practices and products, the Consumer Financial Protection Bureau was intended to be insulated from political pressure. The bureau’s funding comes directly from the Fed and, until Mr. Trump took office, its sole political appointee was its director.
Republicans, however, have long regarded the bureau’s design as unconstitutional. Mr. Trump’s first appointee to run the bureau, Mick Mulvaney, a former Republican congressman from South Carolina, added new levels of political appointees to oversee the bureau’s career staffers. He also took steps to weaken rules: One of his first priorities was to unwind a payday loan regulation, originally drafted under former President Barack Obama, intended to sharply limit high-interest loans.
Over the following year, Mr. Lanning said in his memo, Mr. Mulvaney’s team improperly pressured bureau economists to adjust their research findings to justify revoking that rule, while inserting language into a draft of the new rule that minimized the potential harm to consumers. And Ms. Kraninger, who succeeded Mr. Mulvaney last year, conducted little substantive review of the research before approving a draft of the forthcoming rule, Mr. Lanning said.
Former bureau officials and payday experts said Mr. Lanning’s accusations could imperil any new payday rule the bureau puts forward under Mr. Trump.
Federal law stipulates that before an agency changes a regulation, it must show that there is new evidence or data justifying the change. Mr. Lanning’s memo suggested that Mr. Mulvaney first decided to revoke the new rule, and that his deputies then sought ways to justify the decision.
David Super, a law professor at Georgetown who is an expert on federal administrative procedure, compared the payday rule-making to efforts by Trump appointees at the Department of Commerce to find after-the-fact justifications to include a citizenship question on the census. The Supreme Court last summer blocked the department from adding the question, agreeing with a lower court that the department’s reasons appeared to be contrived.
“It looks like the administration has not learned,” Mr. Super wrote on Twitter.