Xiangtan In an epic Washington tragicomedy, Republicans and Democrats this week both laid claim to leadership of the Consumer Financial Protection Bureau. Ironically, the battle ignited on Black Friday, arguably when consumers need the most protection. For a time, it left us with two people in charge. But this two-for-one special was no bargain.
The curtain on this drama lifted when Richard Cordray, the CFPB’s first and only director, suddenly promoted one of his managers, Leandra English, and then handed over the keys a week ahead of his scheduled resignation. By Cordray’s reckoning, English became the acting director Monday morning.
But that’s when President Trump’s choice, Mick Mulvaney, showed up at the financial watchdog headquarters with boxes of doughnuts to woo a disbelieving staff. He set up in the corner office before business hours, which left English to try to manage the bureau via email. A federal judge blessed the Mulvaney appointment on Tuesday. But this fight is far from over.
As you might imagine, the CFPB’s business came to a screeching halt as staffers agonized over which acting director to bet on. This would be a pure comedy if not for the tragic aspect of how the mess may derail part of the CFPB agenda that neither party really quarrels over: financial capability. The CFPB is the nation’s, if not the world’s, premier voice on financial literacy—a critical topic that has stalled too often already.
Cordray was either a saint or a sinner, depending on your view of how lenders should be regulated. That’s where the real juice lies in this battle—the banks and deregulation. To the extent that anyone in power is addressing the bureau’s financial literacy effort they almost universally agree…
• • •
…it has done yeomen’s work. Yet for a while at least, politics will surely get in the way.
We don’t have time for this nonsense. Every year, another class of graduates moves up with little knowledge of budgets, credit and investing. Every year, another crop of retirees enters that phase of life with insufficient savings and little more than Social Security to sustain them.
Financial education isn’t a game; it’s serious business and under Cordray it was treated as such. There is no reason to suspect that the Trump administration opposes the financial literacy mission. Indeed, financial literacy may be the one thing left standing on firm ground at the CFPB when the dust settles.
But there is ample cause for alarm. For one thing, this administration is willing to play politics with any issue, and Mulvaney has called the bureau a “joke” and at one point said, “I don’t like the fact that CFPB exists.” It is not unthinkable that innovation and progress in financial education will recede for a very long time.
Among the CFPB’s hallmark achievements in financial education: 17 million visitors have visited the Ask CFPB website; 17 million CFPB print publications addressing financial topics have been distributed to librarians and teachers; 20,000 frontline staff and volunteers in social service agencies have been trained on how to use the CFPB’s Your Money Your Goals financial empowerment toolkit. Cordray has led research into what constitutes financial well-being and how to promote it.
This work is far from done. One thing that CFPB research has revealed is that economically disadvantaged individuals often report high levels of financial well-being while economically advantaged individuals often report low financial well-being. The next step is to identify how and why this happens, and how to use that information to improve financial well-being on a broad scale. Will that get done now? How soon?
A CFPB pilot program in partnership with American Express showed that low-income households boost savings through pre-paid card accounts when offered incentives, nudges, and it is convenient. This has the potential to change the game and ensure that more people will retire with more than just Social Security for income. Who will pick up the slack and bring the program to scale if the CFPB mission atrophies?
Even a short-term hiccup in innovation and disruption is disturbing because so much is at stake and the benefits of financial education take years to manifest in broad economic terms. A long disruption would be tragic. As both parties play politics with this mission, let’s hope that somehow they see financial education as a common ground where everyone wins.