Month: November 2017

Who’s the boss? That’s the awkward question after the departing head of a government agency charged with looking after consumer rights appointed a deputy to temporarily fill his spot. The White House then named its own interim leader.

One job, two people — and two very different views on how to do it.

The first pick is expected to continue the aggressive policing of banks and other lenders that have angered Republicans. The second, President Donald Trump’s choice, has called the agency a “joke,” an example of bureaucracy run amok, and is expected to dismantle much of what the agency has done.

So come Monday, who will be leading the Consumer Financial Protection Bureau?

​Both say law on their side

Senior Trump administration officials said Saturday that the law was on their side and they expect no trouble when Trump’s pick for temporary director of the CFPB shows up for work. Departing director Richard Cordray, an Obama appointee long criticized by Congressional Republicans as overzealous, had cited a different rule in saying the law was on his side.

In tendering his resignation Friday, Cordray elevated Leandra English, who was the agency’s chief of staff, into the deputy director position. Citing the Dodd-Frank Act that created the CFPB, he said English, an ally of his, would become acting director upon his departure.

Corday’s move was widely seen as an attempt to stop Trump from shaping the agency in the months ahead.

The White House cites the Federal Vacancies Reform Act of 1998. Administration officials on Saturday acknowledged that some other laws appear to clash with Vacancies Act, but said that in this case the president’s authority takes precedence.

Important, though temporary, job

Who prevails in the legal wrangling is seen as important even though this involves just a temporary posting. Getting a permanent replacement approved by the Senate could take months.

The president’s pick for temporary appointee, Mick Mulvaney, had been widely anticipated. Mulvaney, currently director of the Office of Management and Budget, has been an outspoken critic of the agency and is expected to pull back on many of Cordray’s actions in the six years since he was appointed.

Trump announced he was picking Mulvaney within a few hours of Cordray’s announcement Friday.

“The Consumer Financial Protection Bureau, or CFPB, has been a total disaster as run by the previous Administrations pick,” Trump tweeted Saturday from his private Mar-a-Lago club in Palm Beach, Florida, where he is spending a long Thanksgiving weekend. “Financial Institutions have been devastated and unable to properly serve the public. We will bring it back to life!”

The administration officials, speaking on condition of anonymity to discuss the White House’s thinking, called Trump’s appointment of an acting director a “routine move.” They said the Justice Department’s Office of Legal Counsel has already approved Trump’s appointment of Mulvaney and will issue a written legal opinion soon.

The clashing appointments raise the question: What happens when the two new heads show up and try to sit at the same desk and give orders?

One of the administration officials said Mulvaney was expected to start working Monday and that English was expected to also show up — but as deputy director.

Leandra English

English is a trusted lieutenant of Cordray’s who has helped investigate and punish financial companies in ways that many Republicans, Mulvaney in particular, think go too far. In his announcement Friday, Cordray highlighted English’s “in-depth” knowledge of the agency’s operations and its staff. Before joining the CFPB, English served at the Office of Management and Budget and Office of Personnel Management.

“Leandra is a seasoned professional who has spent her career of public service focused on promoting smooth and efficient operations,” Cordray said in the statement.

Mick Mulvaney

Mulvaney was a South Carolina representative to the House before becoming head of the budget office. A founder of the hard-right House Freedom Caucus, he was elected in 2010 as part of a tea party wave that brought many critics of the U.S. budget deficit to office. He has taken a hard line on federal spending matters, routinely voting against increasing the government’s borrowing cap and pressing for major cuts to benefit programs as the path to balancing the budget.

He also has been unsparing in his criticism of the CFPB. In a widely quoted comment, he once blasted the agency as “joke,” saying its lack of oversight by Congress and its far-reaching regulations had gone too far.

“The place is a wonderful example of how a bureaucracy will function if it has no accountability to anybody,” he told the Credit Union Times in 2014. “It turns up being a joke in a sick, sad kind of way.”

Congress weighs in

U.S. Rep. Jeb Hensarling, chairman of the powerful House Financial Services Committee and a longtime critic of Cordray, said Mulvaney would “fight not only to protect consumers from force, fraud, and deception but will protect them from government interference with competitive, innovative markets and help preserve their fundamental economic opportunities and liberties.”

Democrats have seized upon Mulvaney’s words in criticizing his appointment to the agency.

U.S. Rep. Maxine Waters of California, the top Democrat on the Financial Services Committee, issued a statement Saturday calling Mulvaney “unacceptable” to lead the CFPB because of his “noxious” views toward its mission to protect consumers.

“He was also the original co-sponsor of a bill to completely eliminate the Consumer Bureau,” she wrote, “and supported other legislation to harmfully roll back Wall Street reform.”
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The director of the Consumer Financial Protection Bureau resigned Friday and named his own successor, leading to an open conflict with President Donald Trump, who announced a different person as acting head of the agency later in the day.

That means there are now effectively two acting directors of the CFPB, when there should only be one.

Typically an acting director position would be filled according to the Federal Vacancies Reform Act of 1998. But Richard Cordray, along with his resignation, elevated Leandra English, who was the agency’s chief of staff, into the deputy director position.

Under the Dodd-Frank Act that created the CFPB, English would become acting director. Cordray, an Obama appointee, specifically cited the law when he moved English, a longtime CFPB employee and ally of his, into that position.

​Trump appoints CFPB critic

Within a few hours, President Donald Trump announced his own acting director of the agency, Mick Mulvaney, who is currently director of the Office of Management and Budget. Mulvaney had widely been expected to be Trump’s temporary pick for the bureau until a permanent one could be found.

Mulvaney is a long-time critic of the CFPB, and has wanted the agency’s authority significantly curtailed. So the difference between English and Mulvaney running the agency would be significant.

Senate confirmation needed

The person nominated to be director of the CFPB requires confirmation by the Senate, and it could be many weeks or months before the person would be able to step into the role permanently. Cordray’s move was aimed at allowing his favored successor to keep running the agency for as long as possible before a Trump appointee is confirmed by the Senate.

Cordray had announced earlier this month that he would resign by the end of this month. There is wide speculation that Cordray, a Democrat, is resigning in order to run for governor in his home state of Ohio.

What CFPB does

The CFPB was created as part of the laws passed following the 2008 financial crisis and subsequent recession. The agency was given a broad mandate to be a watchdog for consumers when they deal with banks and credit card, student loan and mortgage companies, as well as debt collectors and payday lenders. Nearly every American who deals with banks or a credit card company or has a mortgage has been affected by new rules the agency put in place.

Cordray used that mandate aggressively as its first director, which often made him a target for the banking industry’s Washington lobbyists and congressional Republicans who believed Cordray was overreaching in his role, calling the CFPB a “rogue agency.”

As director, he also was able to extract billions of dollars in settlements from banks, debt collectors and other financial services companies for wrongdoing. When Wells Fargo was found to have opened millions of phony accounts for its customers, the CFPB fined the bank $100 million, the agency’s largest penalty to date.
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Overhauling welfare was one of the defining goals of Bill Clinton’s presidency, starting with a campaign promise to “end welfare as we know it,” continuing with a bitter policy fight and producing change that remains hotly debated 20 years later.

Now, President Donald Trump wants to put his stamp on the welfare system, apparently in favor of a more restrictive policy. He says “people are taking advantage of the system.”

Trump, who has been signaling interest in the issue for some time, said this past week that he wants to tackle the issue after the tax overhaul he is seeking by the end of the year. He said changes were “desperately needed in our country” and that his administration would soon offer plans.

​Work on new policy begins

For now, the president has not offered details. Spokeswoman Sarah Huckabee Sanders said more specifics were likely early next year. But the groundwork has begun at the White House and Trump has made his interest known to Republican lawmakers.

Paul Winfree, director of budget policy and deputy director of Trump’s Domestic Policy Council, told a recent gathering at the conservative Heritage Foundation that he and another staffer had been charged with “working on a major welfare reform proposal.” He said they have drafted an executive order on the topic that would outline administration principles and direct agencies to come up with recommendations.

“The president really wants to lead on this,” Winfree said. “He has delivered that message loud and clear to us. We’ve opened conversations with leadership in Congress to let them know that that is the direction we are heading.”

Trump said in October that welfare was “becoming a very, very big subject, and people are taking advantage of the system.”

​Clinton’s campaign promise

Clinton ran in 1992 on a promise to change the system but struggled to get consensus on a bill, with Democrats divided and Republicans pushing aggressive changes. Four years later, he signed a law that replaced a federal entitlement with grants to the states, placed a time limit on how long families could get aid and required recipients to go to work eventually.

It has drawn criticism from some liberal quarters ever since. During her presidential campaign last year, Democrat Hillary Clinton faced activists who argued that the law fought for by her husband punished poor people.

No evidence of fraud

Kathryn Edin, a professor at Johns Hopkins University who has been studying welfare since the 1990s, said the law’s legacy has been to limit the cash assistance available to the very poor and has never become a “springboard to work.” She questioned what kinds of changes could be made, arguing that welfare benefits are minimal in many states and there is little evidence of fraud in other anti-poverty programs.

Still, Edin said that welfare has “never been popular even from its inception. It doesn’t sit well with Americans in general.”

Robert Rector, a senior research fellow at Heritage, said he would like to see more work requirements for a range of anti-poverty programs and stronger marriage incentives, as well as strategies to improve results for social programs and to limit waste. He said while the administration could make some adjustments through executive order, legislation would be required for any major change.

“This is a good system,” he said. “We just need to make this system better.”

Administration officials have suggested they are eyeing anti-poverty programs. Trump’s initial 2018 budget proposal, outlined in March, sought to sharply reduce spending for Medicaid, food stamps and student loan subsidies, among other programs.

Budget director Mick Mulvaney said this year, “If you are on food stamps and you are able-bodied, we need you to go to work.”
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Retailers worked hard to attract shoppers to stores on Black Friday, offering in-person deals meant to counter the ease of shopping online.

A better economy helped, to be sure, but stores have also tried to improve the store experience and offer better service. They’ve also made a big push toward offering store pickup for online orders.

But online leader Amazon is still the first and only stop for many shoppers. So stores are getting creative with the deals.

Victor Moore said he arrived about two hours ahead of Best Buy’s 8 a.m. opening in Nashville and scored one of the about 14 “doorbuster” deals on a 55-inch Toshiba smart TV for $280, a $220 savings. Moore said he’s done some online shopping, but the allure of in-store-only deals drew him out from behind the computer.

“This is the first successful doorbuster that I’ve ever been a part of,” Moore said. “I’ve been in lines before, but never actually got the items that I was waiting for.”

Annette Peluffo usually avoids Black Friday and buys online. But a $250 gift card reward for buying an iPhone 8 plus at a Target store in Miami was hard to resist. She plans to use the money to buy toys for her nephews and nieces in the coming weeks. “I just came here for the iPhone. I am not going to any other store,” she said.

Not just one day

Still, Black Friday isn’t what it used to be. It has morphed from a single day when people got up early to score doorbusters into a whole month of deals. That has thinned out the crowds. And brick-and-mortar stores face plenty of challenges.

With the jobless rate at a 17-year-low of 4.1 percent and consumer confidence stronger than a year ago, analysts project healthy sales increases for November and December. The National Retail Federation trade group expects sales for that period to at least match last year’s rise of 3.6 percent and estimates online spending and other nonstore sales will rise 11 to 15 percent.

But analysts at management consultancy Bain & Company say Amazon is expected to take half of the holiday season’s sales growth.

Amazon said Friday that Thanksgiving continued to be one of its busiest shopping days, with orders through its app up over 50 percent from a year ago. Overall, online sales on Black Friday rose 18.4 percent to $640 million, from a year ago, as of Friday morning, said Adobe Analytics. Thanksgiving generated a total of $2.87 billion in online spending, up 18.3 percent from a year ago, the data firm said.

About 69 percent of Americans, or 164 million people, intend to shop at some point during the five-day period from Thanksgiving to Cyber Monday, according to a survey released by the NRF. It expected Black Friday to remain the busiest day, with about 115 million people planning to shop then.

“The consumer still likes to go to the stores,” said Charles O’Shea, Moody’s lead retail analyst. “I’ve seen a lot of traffic. Yes, there’s going to be a lot of online shopping. But I think the brick-and-mortar stores have done a nice job so far in attracting shoppers.”

That’s true of Karre Wagner, 20, a University of Minnesota student from St. Paul who was shopping at Mall of America in Bloomington with her boyfriend. She bought a Blu-ray player at the mall’s Best Buy store. She says she started holiday shopping on Black Friday, but she likes to go to the mall to shop.

Hands-on experience

“I like to see what I’m buying. I like to touch it, feel it, know exactly what I’m getting, and part of it is the experience,” she said. “I mean, sitting online is fine, but there’s just something about starting the holiday season with Black Friday.”

The shift to online buying is a major factor as industry analysts watch how the nation’s malls fare this holiday shopping season. The Mall of America in Minnesota says that 2,500 people were in line at the 5 a.m. opening Friday, in line with a year ago. Shoppers started queuing up as early as 5:45 p.m. on Thanksgiving. Jill Renslow, Mall of America’s executive vice president of business development, said stores like Nordstrom, Macy’s and Best Buy were crowded. She said the items that caught shoppers’ attention included voice-activated devices like Amazon Echo, nostalgic toys, clothing and shoes.

Macy’s CEO Jeff Gennette said customer counts were higher and business was better in the North and Northeast, even with fewer promotions from a year ago.

But much depends on whether people are buying or just looking, and if they’re buying things that aren’t on sale as well.

Chuck Boyd said he and his son arrived at 4 a.m. to be among the first five or six in line at Best Buy in Nashville to get one each of about 14 “doorbuster” deals. He said he prefers online shopping, but his son wanted a TV for his apartment at school, so Boyd came along to get one, too.

“I’d much rather do online,” Boyd said. “But this was the deal you could only do in the store.”
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Workers at a half dozen Amazon distribution centers in Germany and one in Italy walked off the job Friday, in a protest timed to coincide with Black Friday to demand better wages from the American online giant.

In Germany, Ver.di union spokesman Thomas Voss said some 2,500 workers were on strike at Amazon facilities in Bad Hersfeld, Leipzig, Rheinberg, Werne, Graben and Koblenz. In a warehouse near Piacenza, in northern Italy, some workers walked off the job to demand “dignified salaries.”

The German union has been leading a push since 2013 for higher pay for some 12,000 workers in Germany, arguing Amazon employees receive lower wages than others in retail and mail-order jobs. Amazon says its distribution warehouses in Germany are logistics centers and employees earn relatively high wages for that industry.

The strikes in Germany are expected to end Saturday.

The Italian action, a one-day strike, was hailed by one of the nation’s umbrella union leaders, the UIL’s Carmelo Barbagallo, as having “enormous symbolic value because it’s clear that progress, innovation and modernity can’t come at the expense and the interests of workers.”

The chief of the CISL umbrella labor syndicate, Annamaria Furlan, called on Amazon to work with unions for “proper industrial relations, employment stability and dignified salaries.”

The Italian strike was called for permanent workers. The unions advised workers who are on short-term, work-on-demand contracts to stay on the job, so they wouldn’t risk losing future gigs.

Amazon says it has created 2,000 full-time jobs in Italy, where unemployment remains stubbornly high.
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