Seth Frotman, the Bureau of Consumer Financial Protection's (BCFP or Bureau) student loan ombudsman, resigned. In a resignation letter addressed to Acting Director Mick Mulvaney, Mr. Frotman states that under the current leadership, the Bureau is failing consumers, specifically student loan borrowers. The letter cites the following changes within the Bureau that sparked Mr. Frotman's decision:

  1. Undercutting Enforcement of the Law: Mr. Frotman claims that the Bureau folded to political pressure and undermined its own authority to oversee the student loan market. 
  2. Undermining the Bureau's Independence: Mr. Frotman discusses how the Bureau "protect[s] the misguided goals of the Trump Administration to the detriment of student loan borrowers." Mr. Frotman's criticism extends to the Department of Education, which he mentions "attempts to preempt state consumer laws and shield student loan companies from accountability." AMr. Frotman also mentions that the Bureau's senior leadership dismissed complaints by long-term Bureau employees who brought to light issues with the Department of Education.
  3. Shielding Bad Actors from Scrutiny: Mr. Frotman discusses how the Bureau suppressed a publication prepared bythe Bureau itself regarding large banks "ripping off students on campuses across the country saddling them with legally dubious account fees."

Mr. Frotman's resignation is effective September 1, 2018.

insideARM Perspective

Mr. Frotman's resignation comes practically nine months to the day after Richard Cordray, the Bureau's former director, stepped down and Acting Director Mick Mulvaney came on board. Considering Mr. Frotman's harsh words about the Trump administration and the direction of the BCFP under the leadership of a Trump-selected Acting Director, it is also notable that Mr. Frotman's resignation letter comes the less than a week after the Committee on Banking, Housing, and Urban Affairs approved the nomination of Kathy Kraninger, another Trump pick, as the Bureau's next director.

Next Article: IRS Private Debt Collection Program Pays Off

Tags: CFPB