The Trump Administration has been openly hostile to Consumer Financial Protection Bureau and recently proposed massive cuts in the new budget. Director Mick Mulvaney was viewed as an appointment designed to dismantle the consumer protection agency. Now, as NPR reported, Mulvaney has ordered the dropping of the case against Golden Valley Lending which alleged charged consumers up to 950 percent interest rates. The Administration owes the public a full explanation for this decision. There may be a reason (such as deferring to state prosecution) but the decision on its face is troubling.
In a prior memo, Mulvaney was highly critical of the aggressive stance taken by the bureau and insisted that the bureau needed to protect financial-services companies as well as citizens. While Mulvaney insisted that “professional career staff” made the decision, media sources said it was Mulvaney who pushed to drop the case.
I believe that there were good-faith objections to the lack of congressional control over the CFPB but this decision is baffling given the almost confiscatory rates imposed by Golden Valley.
Golden Valley Lending, Inc., Silver Cloud Financial, Inc., Mountain Summit Financial, Inc., and Majestic Lake Financial, Inc. were all targeted for predatory online loans offers. Golden Valley Lending and Silver Cloud Financial offered online loans of between $300 and $1,200 with annual interest rates ranging from 440 percent up to 950 percent. These rated violated state law and were allegedly based on deceptive practices.
For example, Julie Bonenfant, 27, a Michigan resident reported that she took out a $900 loan from Golden Valley, but in less than 12 months, she was hit with payments of $3,735. That is quite shocking on its face.
Mulvaney has transferred staff from the enforcement office dealing with lenders.
Most of the comments here are useless for any purpose other than illustrating the desirability of actually reading a complaint before writing about it. A group of tribal lenders were sued for violations of a number of federal laws relating to consumer lending, including non-disclosure and misrepresentation, which is another word for fraud. The tribes were also utilizing collection efforts in states in which the loans were unenforceable for running afoul of usury laws.
Why the Trump administration decided to drop the case does not require a detailed analysis; it despises the CPFB and consumer protection laws in general.
The loans in question constitute criminal usury in most states, which means that the lenders forfeit the right to recover either interest or principal. The bottom line is that a lender may make these loans if it wishes, but it cannot legally enforce them. Why do you think Tony Soprano never went to small claims court?
“Most of the comments here are useless for any purpose other than illustrating the desirability of actually reading a complaint before writing about it. … Why the Trump administration decided to drop the case does not require a detailed analysis; it despises the CPFB”
There is no question in my mind that these loans should not have occurred, but one has to deal with the law, the principle’s behind the Constitution and that pleasing outcomes do not always represent the law based upon the Constitution or a free people.
Mike, how familiar are you with administrative law and its execution? Does Congress even have a right to give up its power to an administrative agency that can extend its own power and act according to its own rules and regulations? Can that lead to lawlessness?
The Consumer Financial Protection Bureau CFPB can represent the worst of the administrative state and leads to unlimited power by an administrative agency. That power can be upheld by the DC courts that can and are packed even though the administrative decision had nothing to do with what Congress actually desired.
Allan, your comment is probing, thoughtful and makes some excellent points. This will be a lengthy reply, but let me tell you the true story of my brilliant career in constitutional litigation because it will explain some of my views on administrative law.
I received a telephone call from my younger brother one evening many years ago. Two of his UCF college buddies had been arrested late that afternoon and charged with trespass in a public building in Daytona Beach. I met with them after they had posted bail the following day. They had been celebrating spring break with tens of thousands of other students and had parked their car illegally. Correctly concluding that it had been towed and impounded, they went to the Daytona Beach police station to find out how to get their car back. As you might expect, the police were deluged that week and informed the guys that they had not received any paperwork on the car as yet and to check in later.
They returned several times that afternoon, only to be told that the paperwork on the car had still not been turned in. Frustrated, they informed the officer that they were going to remain in the station until they received the paperwork. Equally frustrated, the officer informed them that the police were overwhelmed with spring break calls and that if they didn’t leave the station, he would arrest them for trespass. They didn’t, and he did.
The law they were charged with violating was a Daytona Beach city ordinance providing for fines and imprisonment for anyone convicted of trespass in a public building. The ordinance also authorized the appropriate building custodian (in this case, the Chief of Police) to promulgate and post rules describing the conduct which would constitute trespass in that building. Since this was a misdemeanor offense, it was set for trial before a county judge.
The charged bothered me for a number of reasons. To begin with, I thought it frivolous and arbitrary. More importantly, how does an agency charged with law enforcement get to define the laws it will enforce? After hitting the books I arrived the morning of trial and submitted to the court a motion to dismiss the charge on the ground that the ordinance unconstitutionally delegated a legislative function to an executive agency. The judge listened to arguments from me and the prosecutor, denied the motion and announced that jury selection would begin following adjournment for lunch. After the judge left, his courtroom deputy walked over to me and cynically suggested that he was sure that I could work out a deal with the state attorney for a small fine and no jail time and he could go fishing since the docket was empty the rest of that Friday afternoon. I demurred, trying to hide my annoyance.
When I returned after lunch break, the same deputy came over and informed me that the judge wanted me to renew my motion when we reconvened. This time the court noted that it had reviewed my authorities over lunch and granted the motion, ruling that the ordinance violated the separation of powers provisions in both the Florida and U.S. constitutions. The court deputy got to go fishing, my clients were triumphant and I walked out of the courtroom as though I were the second coming of Clarence Darrow, a notion of which I have been disabused on a number of occasions over the ensuing years.
The case provided some valuable lessons, however. First, most legislative oppression is local. Second, lawyers need to be more sensitive to the possible constitutional dimensions of a case; judges cannot rule on issues that are not brought to their attention. Third, legislative bodies love to avoid responsibility whenever possible. This is primarily accomplished by ceding their authority to the executive branch and then criticizing the judicial branch when it has to become involved to clean up the mess.
My view is that Congress routinely and improperly permits agencies to fill in the substantive blanks in legislation, which is ultimately destructive of the legislative process in the same way that the enforcement of the now ubiquitous mandatory arbitration clauses in contracts of adhesion is ultimately destructive of the common law. Both circumstances effectively preclude ordinary citizens from meaningful participation in the process, produce glaring inconsistencies in the results and eliminate accountability for the consequences,
Had I the leisure, which I do not, or the stamina, which I assuredly do not, to undertake a thorough review of the Code of Federal Regulations, or even the Florida Administrative Code, I am confident that I (and many other lawyers smarter than I) would find large sections that are arguably unconstitutional on a variety of grounds. But regulations are largely drafted by lawyers who represent those interests possessing the financial resources to control the outcome (and to make the necessary political contributions for the privilege). The CFPB was created for the purpose of leveling the playing field for some purposes, but that does not mean that it is less susceptible to lawlessness than any other agency. The efforts to give it a degree of autonomy recognized the fact that it would be taking on an uphill battle. The efforts to eliminate it represent, as much as anything else, the fact that it is losing that battle.
As for the case under discussion, I am not aware of any overreaching. The underlying legal theories are well-known and well established. Judicial economy would not have been served by filing a separate action in each of the affected states. And contrary to the views of Mr. Mulvaney, the financial services industry has never encountered any particular difficulty in protecting its interests. Moreover, it is fair to assume that the defendant lenders had calculated that the profitability of their operations was more than sufficient to mitigate the risk of adverse government action. History has taught them that.
Mike, I thank you for your considered reply. This is the type of discourse this blog should be involved with but isn’t. Perhaps that is because of an undue focus on politics rather than the law and our Constitution.
Your analysis of the problem and the lessons involved was well done and I thank you for it and the story involved. That analysis, I believe, places us on the same page. I see you also show your other hat in looking out for those that need help for the “uphill battle” being faced and why the CFPB was created. That is precisely the reason why the legislature should be doing its job, not leaving so much interpretation to an administrative agency. If it is an uphill battle we don’t want battle weary bureaucrats taking shortcuts making, interpreting, and enforcing the law.
At the present time, the Trump administration is trying to readjust the processes by which administrative law functions. I am suggesting that what the CFPB is using in its case against the lenders might conflict with what we will see when the process is completed. You might not feel there is overreaching, but I think you would agree that to really understand what is being done and to determine whether or not the processes that have been and/or will be used cannot be adequately determined with a superficial evaluation.
I do not disagree with you about the business model of the lenders, but taking the easy way out is probably wrong so I think alternative action at this time would be more appropriate. I can’t comment on the complex views of Mr. Mulvaney because I don’t think that was the subject of your reply and such a discussion would probably involve a depth of discussion that neither you nor I could easily deal with.
Thanks for your input.
Has to do with the nature of the treaty between the tribe and the feds. Lawyers can have a field day.
Transparency. The public needs to know why the case was dropped to form an educated opinion.
It sounds like textbook predatory lending.
I think new rules and regulations are being created along with getting rid of rules that can make things illegal after the fact. I don’t think they want a lot of crazy push back on new ways of doing things. That type of craziness is all they seem to get from the Democratic Congress and lefties that are trying to prevent the President from doing anything whether good or bad. Let the Dems focus on the wrong ball which is what they have done to date.
I am not sure of the exact nature of the complaint. The administration wants a decline in overbearing federal regulations that inhibit business development. That appears appropriate. At present, the rules are being changed and it appears that the lawsuit being dropped by the CFPB is a general lawsuit against Golden Valley et al which would void collection due to state usury laws and possibly other things. This is unclear for if the state usury law prevents collection then one has to ask why the feds should be involved? (Could that be because Tribal nations are doing the lending?) The agency apparently spends a lot of money because it’s funding in Trump’s budget would be cut by $6.4 Billion (over ten years) and Congress would take control of the agency.
A lot of talk in the news media and here without much knowledge of what is actually being done and why including an assessment of the unintended consequences caused by the CFPB.
I am disappointed that Turley only presented one side of the issue that might even be solved when the new rules and regulations are put in place. There is another question. Should the affairs of the CFPB be based upon rules and regulations created and manipulated by the executive branch or should they be controlled by the legislative branch? Why hasn’t Turley discussed this aspect of the case?
Take note how Trump is not amassing power like Obama did. He is ridding the executive branch of power and placing it in the arms of Congress where it belongs. The dictator as the left likes to call Trump is not Trump who is ridding the executive branch of power, but the dictator was Obama who used his pen and phone when Congress didn’t do what he wanted.
I am disappointed that Turley only presented one side of the issue that might even be solved when the new rules and regulations are put in place.
Disappointed but not surprised. This is the reason I asked why the case was dropped. Of course it was reasonable, then it wouldn’t be a story of interest (no pun intended) to the anti-Trump crowd.
“This is the reason I asked why the case was dropped.”
Your question was on target, but I hadn’t read your response until after I posted my own.
However, do you not think that Trump’s beliefs involving how vague regulations are managed aren’t somehow at the core of this decision? A business never knows if it can be in violation of the law with such vague regulations being interpreted by the agency that passed them.
I wouldn’t be surprised to discover this was somewhat motivated by President Trump’s experience dealing with unelected bureaucrats wielding powers that are hostile to business. Not knowing why this decision was made is significant.
“Not knowing why this decision was made is significant.”
I think a lot has to do with how regulations are interpreted and how the regulators use the regulations. He is moving away from uncertainty which hamstrings businesses. In other words, the regulators don’t have after the fact final say on what a regulation actually meant
why should Government be involved with regulating interest rates? If two informed parties want to transact, why stop them. Regulations should be limited to requiring the transactors to be “informed”.
Why? Because both parties were not fully informed. As was reported, these rates were accomplished through deceptive wording in the contract. You can blame the consumer if you want but at some point there has to be a limit beyond which the tortured linguistics of con artists like this become illegal. These companies far exceeded those limits.
Is Trump getting a cut of the action?
Trump is attempting to transfer power from the executive branch that he runs to Congress that is out of his control.
You ought to try thinking before writing FishWings.
Equal branches of government Allan. He can’t TRANSFER POWER.
“Equal branches of government Allan. He can’t TRANSFER POWER.”
FishWings, I understand the checks and balances, but do you? Obama usurped power (“I have a pen and a phone”) Trump has a giant eraser and has erased a lot of what Obama did and returned that power back to Congress.
Another example of transferring power”
“Empowerment of State and local authorities. The President’s plan would return decision-making authority to the State and local level, including by expanding processes that allow environmental review and permitting decisions to be delegated to States.”
Whitehouse.gov
Why was the case dropped? Until that is disclosed then the rest of this is simply click bait.
Olly, we don’t have answers to that because almost all the news is based on trying to blame Trump. However, if the rules and regulations are being changed that might make the suit mute. The administration is not negating a victory rather a potential loss or victory. Under Trump, vague rules do not mean a violation of the law. I think Turley did a disfavor by not including all the things that impact this case. Turley is very smart so I don’t understand how he missed so many important factors. This is a complex question that was covered in a very simplistic and therefore misleading manner.
Trump is harming his own voter base of coal-miners and those with sub-standard employment in rural America. Democrats should be making an efgort to protect Trump’s former voters(;
Trump is trying to put rules and regulations where they belong. He is not like Obama who used regulations as if they were laws and therefore appear to be helping the little guy when in reality Obama was causing the little guy a lot of harm.
Turley said, “Golden Valley Lending and Silver Cloud Financial offered online loans of between $300 and $1,200 with annual interest rates ranging from 440 percent up to 950 percent. These rated violated state law and were allegedly based on deceptive practices.”
$300 times 4.4 equals $1,320 after one year; $5,808 after two years and $25,555 after three years.
$300 times 9.5 equals $2,850 after one year; $27,075 after two years and $257,212 after three years.
$1,200 times 4.4 equals $5,280 after one year; $23,232 after two years and $102,221 after three years.
$1,200 times 9.5 equals $11,400 after one year; $108, 300 after two years and $1,028,850 after three years.
If the loans do not result in confiscation of the assets offered as collateral, then the numbers cited above would constitute debt slavery.
DWS and other pols get campaign contributions from these vulture banks.
Of all da pro bankster administrations that have come along, this crooked T rump crew wins da prize for being most anti citizen.
And yet the financial community (aka Wall Street) donated more money to Hillary during the last election than it donated to all other candidates that participated in the primaries COMBINED.
“NPR reported”
I don’t personally consider NPR a reputable source of information — not just because of questionable practices, questionable management, and questionable information NPR has reported in the past — and not just because of investigative reporting that has exposed NPR’s biased agenda in the past — but because it’s comment section in the past was six different kinds of a joke, with blatant political censorship such as that employed at the ABC website, Mother Jones, The Hill, and elsewhere — where perfectly civil comments disappear, apparently because dissenting opinions or inconvenient facts are not tolerated, or at least not tolerated by the “moderator” that happens to be on duty an any given moment.
I had the same problem with the New York Times comment process many years ago. It seemed like half my comments were selected as “Editor’s Picks” (a presumed honor of some sort), and half my comments never made it past the “moderator.” The only reasonable conclusion I could reach is that “moderators” have their own personal agenda. That game gets tiring — fast.
No telling what information NPR decided not to mention. I just checked, and the website no longer has a comment section (or at least the article I checked didn’t have one) — so readers can’t supplement or correct information provided by NPR. That’s a bad sign. It’s one thing to never have had a comment section, but it’s something else to stop having one — like a Supreme Court that suddenly decides that it doesn’t allow publication of dissenting opinions.
I believe the powers behind these “news” websites are going to make a much greater effort to control the conversation in future elections.
WB – censoring comments has been going on a long time with the MSM. The only one I still read is The Guardian and whenever they are going to get push back they simply offer no comments – like yesterday’s story on the magistrate not letting Assange go free. Legacy media is a waste of time except for features.
I sometimes check out The Guardian (but I’ve also read some real biased nonsense there). It’s like foraging — you have to just keep wandering around looking for pieces of information, constantly separating opinion from fact, and not being misled when “journalists” become fixated on a story of lesser importance than stories that they barely cover, if at all. They all occasionally provide relevant facts (sometimes unintentionally), and you can even glean facts from incredibly biased “journalism,” as long as you know that the bias exists.
I’ve had some of my better online conversations/debates with people on the occasional Guardian comment pages — but like you said, they don’t always have a comment page.
I read the story about the warrant for Assange not being lifted — and I think it was at the Guardian, except that I remember posting a comment about it. I know it was a British publication and not the BBC (aka British CNN).
“The only one I still read is The Guardian ”
That explains some of your biased viewpoints that you leave on the table unexplained even after the factual material is provided.
NPR is unconstitutional.
If they violated state law, why did the state not prosecute?
Larry Uelk – if they are an arm of a tribe then the state has no power over them even online.
If I remember correctly, last year they entered into a stipulated settlement…
I am curious if this was a jurisdictional / sovereignty issue relating to the tribes that was the motivator to exit the case.
Better educating the public on predatory lending might be a more efficient use of the money.
Possibly. The Tribes are exempt the same way that “National Banks” were exempt from state regulation. Although, some states have had some success.
https://www.huffingtonpost.com/2015/06/29/online-payday-lenders-reservations_n_7625006.html
Squeeky Fromm
Girl Reporter
Sovereignty might be at issue in part, but I think this has more to do with regulations vs law and what branch of our government is supposed to legislate.
I believe that all of these lenders are Tribal Lenders and they are probably not subject to State usury laws and CFPB supervision.
Yet another bogus, BS article from anti-Trump Leftist Turley.
First, Turley fails to point out that Golden Valley Lending, Silver Cloud Financial, Mountain Summit Financial and Majestic Lake Financial are each online lenders based in Northern California and are owned 100% by the Habematolel Pomo of Upper Lake Indian Tribe, a federally recognized tribe of Native Americans that has 263 members.
Does Turley have a problem with how California’s government regulates businesses? No, of course not! He LOVES Leftist California.
Does Turley have a problem with Native Americans? No, of course not! He LOVES Native Americans. Ever wonder why Elizabeth “Pocahontas” Warren never voiced any problems with these Native American confiscatory lender? Well, Pocahontas isn’t going to attack a Native American Tribe is she?
Second, confiscatory lending has always been around and will continue to around as long as there are people willing to pay the exorbitant interest rates. Although these usurious interest rates might give some members of the “Friends of the Friends” a bad name, desperate people are willing to pay desperate rates.
Third, Turley, why don’t you go back to school and learn something for a change. Only don’t make it a Leftist school, okay?
Ralph, you go, girl!
This plus the plan replacing food stamps with gov’t provided food boxes seems yet another step on the line from Berlusconi to Mussolini.
The states can go after them. They have consumer protection bureaus.
So did the states sue?
Preposterous. Is there a rational fundamental-law-abiding American who thinks “consumer protection” is constitutional? Is “consumer protection” provided under the right to private property, the 9th amendment, “general Welfare” or the “commerce clause”? Providing “consumer protection” is akin to proposing that central planning, redistribution of wealth and social engineering are constitutional. “Consumer protection”
presumes that Americans are incapable of protecting themselves and presiding over their own affairs. Any “caveat emptor” financial advice must be conducted privately as free enterprise in the free markets of the private sector. Someone here in America didn’t get the memo. Americans are free to engage freely in free enterprise in the free markets of the free private sector as free people. People who don’t desire freedom for everyone should, as the saying goes, “get on old Paint and get the —- where they ain’t”. Consumer protection is high treason against the Sovereign – the Constitution – which provides freedom as it severely limits government. Compulsory government provided “consumer protection” is just about as inane as saying teachers can strike the taxpayer. Something has gone far astray in America. Government has no constitutional authority to arbitrarily subsume and nationalize the charity industry or the financial advice industry. This communism thing has got to be annihilated.
A loyal mouth piece of the oligarchs and bankers.
Wait. You’re jealous.
Thou Shalt Not Covet.
You and Karl want to forcibly impose a Covetocracy, AKA dictatorship.
If someone else has it, you WANT it.
If you order it, it happens, right?
Your desire alone for the property of others gives you a legal right to it.
You just HATE freedom, huh?
I have something to tell you, and it’s going to make you very sad…You see, that train has left the station, oh, about 80 years ago…What’s more, there is no Easter bunny…
this is to “Lochner was good law, I tell ya” georgie