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Tag: U.S. Consumer Financial Protection Bureau

  • Trump nominates new CFPB director, but White House says agency is still closing

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    NEW YORK (AP) — President Trump nominated Stuart Levenbach as the next director of the Consumer Financial Protection Bureau on Wednesday, using a legal maneuver to keep his budget director Russell Vought as acting director of the bureau while the Trump administration continues on its plan to shut down the consumer financial protection agency.

    Levenbach is currently an associate director inside the Office of Management and Budget, handling issues related to natural resources, energy, science and water issues. Levenbach’s resume shows significant experience dealing with science and natural resources issues, acting as chief of staff of the National Oceanic and Atmospheric Administration during Trump’s first term.

    Levenbach’s nomination is not meant to go through to confirmation, an administration official said, speaking on condition of anonymity to discuss personnel matters. Under the Vacancies Act, Vought can only act as acting director for 210 days, but now that Trump has nominated someone to the position, that clock has been suspended until the Senate approves or denies Levenbach’s confirmation as director. Vought is Levenbach’s boss.

    The CFPB has been nonfunctional much of the year. Many of its employees have been ordered not to work, and the only major work the bureau is doing is unwinding the regulations and rules it put into place during Trump’s first term and during the Biden administration.

    While in the acting director role, Vought has signaled that he wishes to dismantle, or vastly diminish, the bureau.

    The latest blow to the bureau’s future came earlier this month, when the White House said it does not plan to withdraw any funds from the Federal Reserve, which is where the bureau gets its funding, to fund the bureau past Dec. 31.

    The White House and the Justice Department are using a legal interpretation of the law that created the bureau, the Dodd-Frank Act, that the Fed must be profitable in order to fund the CFPB’s operations. Since roughly 2022, the Fed has been cash-flow negative since it owns bonds from the COVID-19 pandemic that pay very low interest but must pay out higher interest to the banks that deposit reserves with it. This means, on paper, the Fed is not earning a profit at the moment and therefore has no money to allot to the CFPB.

    Several judges have rejected this argument when it was brought up by companies, but it’s never been the position of the government until this year that the CFPB requires the Fed to be profitable to provided the CFPB with operating funds.

    “Donald Trump’s sending the Senate a new nominee to lead the CFPB looks like nothing more than a front for Russ Vought to stay on as Acting Director indefinitely as he tries to illegally close down the agency,” said Sen. Elizabeth Warren, the top Democrat on the Senate Banking Committee, in a statement.

    The bureau was created after the 2008 financial crisis as part of the Dodd-Frank Act, a law passed to overhaul the financial system and require banks to hold more capital to avoid another financial crisis. The CFPB was created to be a independent advocate for consumers to help them avoid bad actors in the financial system.

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  • Trump administration moves to overrule state laws protecting credit reports from medical debt

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    NEW YORK (AP) — The Trump administration is moving to overrule any state laws that may protect consumers’ credit reports from medical debt and other debt issues.

    The Consumer Financial Protection Bureau has drafted what’s known as an interpretative rule related to the Fair Credit Reporting Act, interpreting the law in a way that says the FCRA should preempt any state laws or regulations when it comes to how debt should be reported to the credit bureaus like Experian, Equifax and Trans Union.

    This repeals previous Biden-era rules and regulations that allowed states to implement their own credit reporting bans. More than a dozen states like New York and Delaware prohibit the reporting of medical debt on a consumers’ credit report.

    Medical debt is often the most disputed part of a consumer’s credit report, because insurance payments can take time, and oftentimes patients do not have the means to fully pay a medical bill if insurance is not covering a procedure that has already taken place.

    The three credit bureaus jointly announced in 2023 they would no longer track any medical debts below $500, which at the time the bureaus said would eliminate 70% of all medical debts reported on consumers’ credit files. But some states have gone further than that. New York, Delaware and others passed laws where medical debts can no longer be reported to the credit bureaus.

    The CFPB, which is largely not operating at the moment with the exception of actively repealing previous rules written under President Biden or earlier, says in its rule that Congress intended to “create national standards for the credit reporting system” under the FCRA and state laws run afoul of that intention.

    The Kaiser Family Foundation estimates that Americans owe roughly $220 billion in medical debt. In Republican-controlled states like South Dakota, Mississippi, West Virginia and Georgia, roughly one in six Americans have outstanding medical debt, according to the KFF.

    Having outstanding, delinquent medical debt can impact the ability for an individual to apply for a mortgage, a credit card or an auto loan.

    A spokesperson for the Bureau did not immediately respond to a request for comment.

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