The consumer protection official charged with safeguarding student borrowers is resigning in protest of the Trump administration, claiming it is siding with predatory lenders over consumers and enacting policies that will lead to “far-reaching harm.”
Seth Frotman wrote in a scathing letter that he would leave his position as student loan ombudsman at the Consumer Financial Protection Bureau at the end of the week. Frotman has held the position since the Obama administration.
“Unfortunately, under your leadership, the Bureau has abandoned the very consumers it is tasked by Congress with protecting,” Frotman wrote to Mick Mulvaney, the bureau’s acting director. “Instead, you have used the Bureau to serve the wishes of the most powerful financial companies in America.”
The Washington Post obtained a copy of the letter, which was first reported by the Associated Press.
The bureau said it does not comment on personnel matters.
The consumer protection bureau, created in the wake of the Great Recession, has long been a target of Republicans. Mulvaney, who is also President Donald Trump’s budget director, has proposed killing or revising Obama administration regulations and has scaled back enforcement.
The student loan ombudsman office was created to oversee the $1.5 trillion student loan market. The office was responsible for processing complaints from borrowers against loan servicers and also central to lawsuits against for-profit colleges accused of bilking students.
Frotman’s criticism of the agency’s work in the student loan market was sweeping. He wrote that the bureau has “abandoned its duty to fairly and robustly enforce the law,” undermining career staff as they try to investigate the student loan market.
He said the agency’s senior leadership had blocked efforts to call attention to actions elsewhere in the administration that “will hurt families ripped off by predatory for-profit schools.”
“At every turn, your political appointees have silenced warnings by those of us tasked with standing up for service members and students,” he said.
Frotman said the bureau is no longer scrutinizing the actions of bad actors in the industry. He said a report prepared by bureau staff about large banks ripping off students with “legally dubious account fees” was suppressed.