Senators demand answers from the director of the CFPB after the resignation of a student watchdog: NPR

Senate Democrats sent a terse letter to Mick Mulvaney, Acting Director of the Consumer Financial Protection Bureau, asking for answers after the resignation of the CFPB Student Loans Ombudsman.

Jacquelyn Martin / AP

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Jacquelyn Martin / AP

Senate Democrats sent a terse letter to Mick Mulvaney, Acting Director of the Consumer Financial Protection Bureau, asking for answers after the resignation of the CFPB Student Loans Ombudsman.

Jacquelyn Martin / AP

In an attempt to "evaluate the independence and efficiency" of the student loans office of the Federal Bureau of Consumer Protection, fifteen Senate Democrats sent a terse letter to Mick Mulvaney, Acting Director of the CFPB, on Thursday evening. The letter was first obtained by NPR.

The letter arrived on Mulvaney's desk less than three weeks after the resignation of Seth Frotman, the CFPB student constable, writing in a resignation letter to Mulvaney that, under the direction of the acting director, the Bureau abandoned the consumers by Congress with protection. Instead, you used the office to serve the wishes of the most powerful financial companies in America. "

The Trump administration has not hidden its desire to protect loan officers from any surveillance. A year ago, the Department of Education terminated agreements to share information with the CFPB and to collaborate with the law enforcement office. In March, the department issued guidelines according to which loan service providers, as federal contractors, should be exempted from state efforts to regulate them more closely. And in May, Mulvaney called for a major reshuffle of the Frotman division. The Office for Students and Young Consumers has been integrated with the Bureau's Office of Financial Education, signaling a symbolic change of mission, from inquiry to exchange of basic information .

"Taken together, Senate Democrats wrote in their new letter to Mulvaney, these changes leave millions of families with more than $ 1.5 trillion in student debt forced to fend for an industry with an abundance of practices. well-documented predators and abusive behavior. "

Senators, including Sherrod Brown, a prominent member of the Senate Banking Committee, and Patty Murray, a prominent member of the Senate Education Committee, concluded with a list of eight issues raised by Frotman's resignation and a request for quick answers . . They understand:

• How many supervision exams have major student loan companies made in the last 10 months?
• How many steps of law enforcement staff have been recommended to take against student loan officers?
• Have any of these recommendations been implemented to date?

Senators also asked Mulvaney if The CFPB removed a report, as Frotman alleged, which found evidence showing that banks were charging doubtful account fees to students. If this is true, says the letter, Mulvaney should provide the report and all the documents that relate to it.

Democratic senators gave Mulvaney until October 1 to answer their questions.

A CFPB spokesperson could not be reached for comment.

Following Frotman's departure, Mulvaney reacted little. In a Wednesday interview on CNBC, he said, "I've never met the gentleman, I do not know who he is."

Mulvaney went on to say that he believed that the CFPB Student Loan Office had been excessive and that the Frotman reduction deserved was justified:

"Here's what we did at [Frotman’s] part of the student loan operation, which is the law gives us the responsibility of private student loans, agree? This represents about 8% of the market. As part of a handshake agreement within the Obama administration, the office was reviewing and regulating public student loans, which account for most of them, 92% of them . We said, "No, no, no. The law says we will be responsible for private student loans. That's what we are going to do, and [Frotman] apparently did not like that. "

Mulvaney's words sowed confusion, giving the impression that the entire CFPB would abandon its role of watchdog in the federal student loan market, but a spokesman then said that Mulvaney was not referring to the office . in general but specifically to the office of the mediator.

The CFPB has processed more than 60,000 student loan complaints since 2011 and has handed over more than $ 750 million to injured borrowers, according to last year's report from the office's ombudsman office. Since the Great Recession, the Bureau has aggressively overseen the student loan sector, even pursuing for-profit giants ITT Tech and Corinthian Colleges.

Last year, the CFPB sued Navient, arguing that one of the country's largest student loan providers "created barriers to repayment by providing misinformation, treating payments improperly, and failing to complain. ". Navient called the allegations "unfounded".

Prior to joining the Trump administration, Mulvaney was a Republican member of South Carolina and a virulent critic of the office. He once described the CFPB as "joking … in a sick and sad style".