“[T]he battle to save the bureau has created some strange bedfellows,” the report said. “Mortgage lenders, which have historically been one of the groups that bristled at the bureau’s oversight, have also pushed for the agency to not be shuttered, at least without careful planning, according to three people familiar with internal discussions at the bureau.”
Despite the efforts of the bureau’s acting director and leader of the White House Office of Management and Budget (OMB), Russell Vought, one of the events that may have hampered the actions designed to stop the bureau’s activities was directly related to the mortgage market. Vought’s attempt to completely shut the bureau’s activities down hit a “roadblack” stemming from “an arcane feature of the mortgage industry,” the report explained.
That feature is the weekly publication of the Average Prime Offer Rate. Shortly after assuming the acting director role, Vought’s stop work order impacted the weekly publication of the rate, but the feedback and impact on the mortgage market was swift.
“Because lenders need that rate to certify that their loans are in compliance with safe-lending rules, the mortgage market would freeze if the bureau abruptly stopped publishing it,” the report said. “And so the agency’s new leaders allowed employees to restart that function.”
This is characterized as “an early lesson for the Trump administration that shutting down an agency that is deeply woven into American’s financial industry infrastructure is a tricky task,” and is seen as a key roadblock that has stumbled the White House’s efforts to minimize the functions of the agency.
Another key roadblock that has emerged is the lawsuit pitting bureau leaders against members of the National Treasury Employees Union (NTEU), which has challenged the White House Office of Personnel Management (OPM)’s approval to dismiss 1,175 CFPB employees — the vast majority of its workforce.
Last week, the judge overseeing that case in the U.S. District Court for the District of Columbia explained that she was “leaning” toward issuing a preliminary injunction that would effectively pause a plan to wind down the agency’s operations.
This came following testimony from the CFPB’s chief operating officer, Adam Martinez, and claims from employees that CFPB director nominee Jonathan McKernan will seek to shutter the agency once he’s confirmed by the Senate.
But the White House contends that McKernan’s nomination and recent orders for staff to continue performing “statutorily required work” are proof of its intentions to keep a scaled back bureau operating.
