Since its inception, the Consumer Financial Protection Bureau (CFPB) has taken irresponsible actions to implement statutorily suspect regulations that makes a tough economy even more difficult to navigate for millions of Americans. These problems are occurring mainly because of the lack of Congressional oversight.
The outstanding research by the American Accountability Foundation (AAF), a government watchdog organization, reminded everybody about the flawed CFPB “sue and settle” litigation system and its activist ways which are metastasized to many corners of the federal government.
The AAF research specifically dives into the influence of the CFPB model and their takeover of enforcement activities at the Department of Education (DOEd). Former CFPB head Richard Cordray, was appointed as the Chief Operating Officer of Student Financial Aid office at the start of the Biden administration’s tenure.
This was a big deal. The Student Financial Aid Office oversees the outlay of public and the management of federal student loan debt. Essentially, Cordray has set up a mini CFPB to assist him overseeing this massive part of the Department of Education.
In 2021, Cordray reconstituted the DOEd Student Financial Aid Office of Enforcement as his mini-CFPB reporting directly to him. At the helm, Cordray appointed Kristen Donoghue, who was previously the enforcement director of the CFPB, where she ran a 140-person office responsible for enforcement when Cordray was the director. Since then, Nina Schichor, who previously was a Senior Attorney at CFPB, was brought in as the Deputy Director of the enforcement office.[1]
It appears the fix was in. According to an investigation of the Enforcement office by the Government Accountability Office, the vast majority of schools the Enforcement office has investigated are career colleges, despised by the Biden Administration because they offer an alternative to the over-priced campuses that dominate conventional higher ed.
Richard Cordray turned “the Office of Enforcement from his tenure at the CFPB a sue and harass model where he uses the heft of the federal government and its allies to bring disfavored industries to heel,” the AAF reported. Incredibly, he sought a 600 percent increase for his agents.
This strategy may accomplish a political point for Cordray (and others), but it makes very little fiscal sense. The AAF points out that by targeting an industry that only makes up a small of schools that enrolls about 7.5% of students, the Student Financial Aid office is providing virtually no oversight or investigative authority over traditional schools, of which about 92.5% of students attend.
Just like CFPB litigation or regulatory actions can often harm consumers, the targeting of certain schools, AAF argues, by the Student Financial Aid Office of Enforcement, “force[s] students to choose state-run or traditional private colleges and universities instead of career colleges, even if career colleges are the best fit for the student.”
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