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CFPB Student Loan Chief Resigns, Says Mulvaney Has Abandoned Consumers

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Consumer Financial Protection Bureau building in Washington, D.C. Photo by Diego M. Radzinschi

In a blistering letter, the CFPB’s student loan ombudsman resigned Monday, charging that the agency, under Acting Director Mick Mulvaney, no longer protects consumers and is now serving the interests of the most powerful financial companies in America.

“After 10 months under your leadership, it has become clear that consumers no longer have a strong, independent consumer bureau on their side,” Seth Frotman, the agency’s assistant director and student loan ombudsman, wrote in his letter.

He accused Mulvaney of abandoning the interests of consumers.

Mulvaney is a Trump Administration selection and has consistently signaled that the agency has become much friendlier with business interests than the agency was under his predecessor, Obama Administration nominee Richard Cordray.

Frotman said that when the Education Department decided last year to stop cooperating with the bureau in oversight of the largest student loan companies, the agency did nothing.

He said that recently, senior leadership of the bureau blocked efforts to call attention to activities of “predatory for-profit schools”

And he accused the agency of failing to alert the Education Department about the harms associated with preempting state consumer laws in dealing with student loan companies.

“Sadly, the damage you have done to the bureau betrays these families and sacrifices the financial futures of millions of Americans in communities across the country,” he concluded.

The student loan ombudsman position is mandated by the Dodd-Frank Act.

After the Education Department decided it no longer would work with the consumer agency, the CFPB released data showing it had handled about 50,700 complaints related to student loans. And Frotman’s office produced data showing that its work has resulted in some $750 million being returned to student borrowers.

In a statement the CFPB said it does “not comment on specific personnel matters. We hope that all of our departing employees find fulfillment in other pursuits and we thank them for their service.”