Let’s talk about the brave new world of Trump consumer protection we’re entering, as articulated yesterday by Mick Mulvaney documentcloud.org/documents/4357…
Yesterday, he emailed CFPB staff, and nothing stood out to me more than this: Enforcement should be really rare, he said. In his mind, filing a lawsuit against a bank or payday lender is “bringing the full weight of the federal government down on the necks of the people we serve”
He promised more rules and “less regulation by enforcement.” The question is no longer: did a company treat consumers unfairly? It becomes: did the company violate a specific rule that said it shouldn’t do that exact thing? Because that’s what’s fair, he thinks. 
So, true to form, the CFPB dropped its investigation of World Finance yesterday. There are basically no federal rules for the installment loan industry, and how could they have violated rules that don’t exist? propublica.org/article/consum…
Now, take a gander at a contract for a 90% interest rate loan from World. And after your eyes uncross, think about the fact that the company’s hundreds of thousands of customers are low-income. It’s an enormously complicated financial product. documentcloud.org/documents/6953… 
Insurance is a key way that the industry jacks up the prices of the loans and charges an effectively higher interest rate. Insurance is such a key part of the loans that the companies are regulated by the insurance commissioner in some states. propublica.org/article/instal… 
So, back to “regulation by enforcement.” One thing installment lenders used to do a lot was send employees to borrowers’ homes when they fell behind. This was called “chasing” customers. After the CFPB sued some payday lenders for doing this, World stopped. 
In its 6 years of existence, the CFPB never got close to passing rules for installment lenders. It’s an industry that loans to millions of people across the South and Midwest. The CFPB got stuck on payday loan rules, which were only issued last year and may now be undermined.
So, high-cost lenders like World and payday lenders can rest easy. The rule-writing process is slllloooww. And they won’t be called to task by the new CFPB, it seems, for deceiving customers with an impossible-to-understand product. Because that wouldn’t be fair.
