The Consumer Financial Protection Bureau’s (CFPB’s) Student
Loan Ombudsman, Seth Frotman has had enough of the political maneuvers
affecting the way he does his job overseeing student loan regulation. On August
27, 2018, Frotman resigned from the CFPB. His resignation letter shows how the
organization has changed under the Trump administration.
Frotman Resigns from CFPB Saying It Is Failing Student Borrowers
Seth Frotman has been with the United States Consumer Financial
Protection Bureau since the beginning. He moved from the Treasury Department shortly
after the CFPB was founded through the Dodd-Frank Wall Street Reform and
Consumer Protection Act in 2010. He began as senior advisor to Holly Petraeus
in the Office of Servicemember Affairs. Petraeus
calls Frotman “a true public servant.”
Frotman’s work with the CFPB has always involved student
loan regulation. In his role under Petraeus, he helped military service members
and veterans get relief from predatory lending under the Military Lending Act. For
the last three years, he has served Assistant Director and Student Loan
Ombudsman.
CFPB’s History of Strong Student Loan Regulation
Since 2011, the CFPB, and specifically Frotman’s Office for Students
and Young Consumers has reviewed over 60,000 student loan complaints. The
office has investigated and filed enforcement actions resulting in over $750
million in damages repaid to borrowers. It has filed lawsuits against
for-profit colleges including ITT Tech and Corinthian College, and has brought enforcement
of student loan regulation against lenders like Navient.
Trump Administration, Mick Mulvaney Curb CFPB Enforcement
The CFPB was created early in the Obama Administration.
During President Barack Obama’s term in office, it was instrumental in cracking
down on predatory lending strategies and protecting students and consumers from
unfair business practices. But since the Trump Administration named Mick
Mulvaney as Acting Director of the Bureau, Frotman
says the agency’s priorities have changed. His scathing resignation letter
accuses Mulvaney and the Trump Administration of:
- Undercutting enforcement of the law
- Undermining the Bureau’s independence
- Shielding bad actors from scrutiny
His letter says:
“Unfortunately, under your leadership, the Bureau has abandoned the very consumers it is tasked by Congress with protecting. Instead, you have used the Bureau to serve the wishes of the most powerful financial companies in America.”
Obstruction, Secrecy, and Red Tape Control CFPB Actions
It is easy to see where Frotman is coming from. Before
coming to the CFPB, Mick Mulvaney had called the Bureau “a joke
… in a sick, sad kind of way.” Since assuming the position of Acting Director
he and the Trump Administration have pushed the student loan office to the side.
Then in May 2018, Mulvaney announced that the Office for Students and Young
Consumers would be folded into the education office, further removing it from
its role in student loan regulation.
The Trump Administration has also sought to protect lenders,
instead of students. In February 2018, Education Secretary Betsy DeVos argued student
loan servicers should be protected against state consumer protection laws. In
August 2017, the Department of Education stopped sharing information with Frotman’s
office, making it harder for the CFPB to detect violations of student loan
regulations.
Frotman also accuses Mulvaney and CFPB leadership of
concealing a report showing that some of the nation’s largest banks were
saddling students with “legally dubious” account fees. The report was
suppressed even after Mulvaney was pressed by Congress to bring the information
to light.
Frotman Says Americans Need a Strong, Independent Consumer Protection Agency
Frotman concludes:
“American families need an independent Consumer Bureau to look out for them when the lenders push products they know cannot be repaid, when banks and debt collectors conspire to abuse the courts and force families out of their homes, and when student loan companies are allowed to drive millions of Americans to financial ruin with impunity.”
The CFPB under the Trump Administration has other priorities.
The shift has been severe enough to push Frotman from his post and force him to
resign, an act Petraeus calls “the purest of motives: He wants to help student
borrowers.”
Dani K. Liblang is a consumer protection
attorney at The Liblang Law Firm, PC, in Birmingham, Michigan. She helps
students and borrowers fight back against predatory lending and violations of
student loan regulations. If you are being harassed by debt collectors, contact The Liblang Law Firm
today for a free consultation.
2 comments:
You have done good information on this article and You have written well on above topic and also thanks for sharing with us.
mortgage-loan-in-hindi
Awesome post….Thanks for sharing this awesome article.
directv head office
delta airlines main office
Post a Comment