Trump administration's consumer protection bureau drops lawsuit into lender alleged to charge 950% interest

Key Points
  • The Consumer Financial Protection Bureau, led by Trump appointee Mick Mulvaney, dropped a lawsuit into a lender alleged to charge up to 950 percent interest.
  • Mulvaney is moving to reduce aggressive enforcement at the bureau, angering career officials there, according to NPR.
  • Democrats are likely to use the CFPB moves in attacks alleging the GOP looks out for companies at the expense of consumers.
Trump's consumer watchdog drops case against payday lender
Trump's consumer watchdog drops case against payday lender

The federal consumer watchdog has dropped a lawsuit against a lender that allegedly charged people up to 950 percent interest rates.

It's part of a move away from aggressive enforcement under interim director Mick Mulvaney that has angered career staff, NPR reported.

The Consumer Financial Protection Bureau confirmed to CNBC on Monday that it scrapped the suit against Golden Valley Lending in January. Mulvaney, who also heads the administration's Office of Management and Budget, was appointed by President Donald Trump to lead the CFPB after Democrat Richard Cordray resigned.

Mulvaney — a harsh critic of the CFPB while serving in Congress — decided to scrap the legal action even though career officials wanted to move ahead with it, several CFPB staff members told NPR.

The move is one of several Mulvaney has taken to scale back the CFPB, which was created during the Obama administration after the global financial crisis to protect consumers from malpractice in the financial industry.

Under Mulvaney, the bureau also delayed a payday lending rule from taking effect and scrapped an investigation into a payday lender who gave to Mulvaney's congressional campaign, according to NPR. The report also said the CFPB will unveil a new strategic plan Monday saying it will "fulfill its statutory responsibilities but go no further."

Republicans like Mulvaney have long argued that the CFPB is too powerful.

Golden Valley Lending did not immediately respond to CNBC's requests for comment. NPR said Golden Valley declined to comment.

The push to overhaul the consumer protection bureau comes as Trump touts efforts to relax regulations on businesses to boost economic growth and job creation. But Democrats will likely seize on the CFPB moves as evidence that the Trump administration has looked out for companies at the expense of consumers.

The NPR report cites 27-year-old Julie Bonenfant, a Michigan resident who said she took out a $900 loan from Golden Valley. In less than 12 months, her scheduled payments will total $3,735, NPR said. She told the radio network she voted for Trump and felt "betrayed" by him because Mulvaney dropped the lawsuit.

The changes at the CFPB could add to Democratic lines of attack ahead of November's midterm elections. The minority party in Congress has repeatedly criticized the new GOP tax law because it gives massive, permanent rate cuts to corporations but only temporary reductions for individuals. Republicans say they want to extend the household tax cuts.

The role of government in regulating businesses will likely play a role in this year's midterm elections and the 2020 presidential election. An NBC News/Wall Street Journal poll taken in January found 58 percent of Americans think the government should "do more" to solve problems, while only 38 percent believe it "is doing too many things better left to businesses and individuals."

Read the full NPR report here.