Last month, the United States Supreme Court finally put the Director of the Consumer Financial Protection Bureau (CFPB) into alignment with the rest of the executive branch of government by ruling that the CFPB Director is an at-will employee of the President of the United States.
This ruling is an opportunity for the partisan fighters on both sides of the political aisles to exhale and concern themselves with the proper consumer protection role of the agency whose Director is now accountable to the voters.
On January 18, 2017, nearly the eve of President Trump’s inauguration, the CFPB breathlessly filed suit in federal court at the Middle District of Pennsylvania against student loan servicer Navient as it seemingly worried about its future under a Republican President.
Navient is a contractor to the Department of Education hired to service loans guaranteed by the government and loans made directly by the government. The CFPB alleges that “hundreds of thousands of borrowers” were harmed by steering borrowers away from Income Driven Repayment (IDR) and towards costlier options.
However, court documents reveal that in nearly four years, the CFPB has produced exactly zero borrowers who have been “steered” as they allege. In fact, ultimately, the CFPB only produced 16 witnesses for deposition on this matter, none of whom remain part of the case after it was revealed that every single one of them had received multiple communications on the availability of IDR including via phone, email, and mail.
As the CFPB case withered for lack of evidence, partisan defenders of the CFPB such as organized labor, Democrats in Congress and a new activist group called the “Student Borrower Protection Network”--- conveniently headed by a former CFPB official-- have publicized the case and organized parallel cases against Navient to prop up the CFPB’s.
After three and a half years and four discovery extensions the CFPB case against Navient has produced rancor inside the CFPB and on Capitol Hill but zero consumers harmed as alleged and parallel cases in Florida and New York have all but collapsed over the past year.
Last summer in Tampa, U.S. District Court Judge Susan C. Bucklew, a Clinton-appointee, ruled to dismiss a much-ballyhooed case against Navient around the Public Service Loan Forgiveness (“PSLF”) program. Judge Bucklew pointed out the obvious in her ruling: Navient neither owns the loans or services the program in question as part of its contract with the Department of Education.
In the Southern District of New York, U.S. District Court Judge Denise Cote, another Clinton-appointee, dismissed 14 of the 15 claims made by the American Federation of Teachers (AFT) against Navient which mirrored the Florida case and the ongoing CFPB claims about steering and misleading borrowers. Tellingly, the plaintiffs’ lawyers have informed the Court that they now stand to lose $5 million on the lawsuit.
At the U.S. Supreme Court, Chief Justice Roberts wrote for the majority that “[the Constitution] vests the entire ‘executive Power’ in the President alone...and, if necessary, [the President may] remove those who exercise the President’s authority on his behalf.”
This is a clarion call for accountability and bipartisanship in the pursuit of genuine consumer protection. The CFPB Director Kathy Kraninger should apply her new accountability to take control of a misguided and failing case foisted upon her by Rob Cordray and end it.
And ultimately, presiding District Judge Robert Mariani should heed the rulings of fellow jurists in New York and Florida and throw out this politically driven, frivolous lawsuit that has wasted the court’s precious time and countless resources.