Party lawmakers have seethed for the last year at the cutback on enforcement and curtailed funding requests at the Consumer Financial Protection Bureau, the brainchild of Sen. Elizabeth Warren. | Win McNamee/Getty Images Congress How Democrats plan to save the agency Republicans love to hate A maligned consumer protection bureau gets new allies in the Democratic House.

Newly empowered House Democrats are vowing an all-out fight to salvage the Consumer Financial Protection Bureau in the face of the Trump administration's drive to curb the agency's power.

Party lawmakers have seethed for the past year as Mick Mulvaney has cut back on enforcement and curtailed funding requests for the bureau, the brainchild of President Donald Trump's nemesis, Sen. Elizabeth Warren (D-Mass.).


Mulvaney, Trump's budget director, will soon depart as acting CFPB chief to be replaced by his little-known lieutenant at the Office of Management and Budget, Kathy Kraninger, who has no experience in consumer affairs or banking. That could give the Democrats a much stronger hand in defending the Obama-era bureau, by doing everything from securing its independent source of funding to conducting endless oversight hearings.

Fending off further GOP attempts to rein in the CFPB "would be a battle with this administration, and it would be a test of wills," said Rep. Lacy Clay of Missouri, the top Democrat on the House Financial Services subcommittee with jurisdiction over the agency.

"I'm ready to fight that battle," Clay said.

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Maxine Waters, the California Democrat who will take over as chairwoman of the Financial Services Committee, has made clear that shielding the agency will be a key priority. And even if Kraninger is confirmed as CFPB director by the time the gavel switches hands, there will be pressure from consumer advocates to investigate lingering questions from Mulvaney's tenure on how the agency has handled everything from fair lending enforcement to student loans.

"You can't protect consumers without looking at and investigating the CFPB under Mick Mulvaney," said Karl Frisch, executive director of the consumer group Allied Progress.

"We certainly need to know what motivated decisions that are now in place — it doesn't matter who's in charge at that point," he added.

Waters also introduced a bill last month to "reverse the harmful changes the Trump administration has imposed."

Her bill would limit the number of political appointees at the bureau — a category Mulvaney dramatically expanded — and restore the organizational structure of the student loan and fair lending offices, which he folded into larger divisions.

It would also require that the agency's consumer complaint database remain publicly accessible and restore the panel of Consumer Advisory Board members that Mulvaney dismissed suddenly in June.

The legislation won't get traction with a Republican Senate, but it provides a road map for Waters' oversight agenda.

Unlike that of most agencies, the CFPB's financing isn’t determined by the congressional appropriations process — it comes through the Federal Reserve system by a fixed formula instead — so lawmakers can't throw around funding threats to get their way. There's no legal mechanism for lawmakers to reopen unsatisfactory agency settlements. And as long as Congress is divided, Democrats' CFPB legislation won't go anywhere.

“They can make life for Mulvaney or Kathy Kraninger less pleasant, but they're not ultimately going to be able to have much of an impact on policy — they don't have powers that will allow them to do that," said Ori Lev, former deputy enforcement director for litigation at the bureau.

Still, the electoral victory by House Democrats itself is a major step to protecting the agency: They’ve denied the GOP a united Congress to pass legislation limiting the bureau's power.

Republicans have proposed replacing the CFPB director with a bipartisan commission and funding the agency through appropriations — moves that CFPB defenders say would cripple the bureau and expose it to political pressure.

There are rare points of potential bipartisan agreement on CFPB oversight — both parties have called for more transparency on its rulemaking process, for instance, and neither is thrilled with Mulvaney's decision to eliminate routine supervisory exams on lending to members of the military.

For the most part, though, the Financial Services hearing room will be the setting for a Democratic revenge play.

At the top of the list for Democrats is the way the bureau has handled its fair lending obligations. The issue burst into the spotlight in late September with the revelation that a top Mulvaney appointee in charge of fair lending, Eric Blankenstein, had anonymously written racially offensive blog posts in 2004.

If Blankenstein is still in his position come January — Mulvaney has referred the matter to an inspector general — he can count on being hauled up to the Hill to explain himself. But it's not just 14-year-old blog posts generating concerns about the bureau's commitment to thwarting discrimination.

One of Mulvaney's first moves upon taking over in late November 2017 was to move the agency's fair lending office into the supervision and enforcement unit, effectively sidelining the office's Obama-era chief, Patrice Ficklin. No fair lending cases have been announced since then.

Meanwhile, the CFPB rulemaking agenda released in October lists "re-examining" its duties under a law policing credit discrimination. And the bureau is expected to release a proposal in March scaling back requirements for its 2015 update to a mortgage disclosure law that helps track discrimination.

Democrats are also eager to dig into the agency's handling of student loans — another office Mulvaney downgraded.

Waters penned a letter in October urging Financial Services Chairman Jeb Hensarling (R-Texas) to use "the full range of the Committee's oversight authorities" to investigate charges by a departed CFPB official that political appointees had repeatedly undermined career staff efforts to police student loan servicers. That included quashing a report on banks allegedly charging students dubious fees.

Waters' bill would require the CFPB to hand over all documents related to the report's suppression.

Finally, the scheduled January release of the agency's planned revision to its payday-lending rule will offer an early opportunity to question Mulvaney on how meetings with industry donors may have influenced his thinking.

There will be plenty of demands on the agency to "'show your work,'" said a former CFPB official who dealt with Republican congressional requests in the past. "'Let's see your scratch paper.'"

Zachary Warmbrodt contributed to this report.

