Seth Frotman, an assistant director and student loan ombudsman at the Consumer Financial Protection Bureau, resigned in a scathing letter sent Monday to acting CFPB Director Mick Mulvaney, saying the bureau had “abandoned” consumers and was no longer enforcing the law.
Frotman has spent seven years in the CFPB’s student lending office. The unit had much of its authority gutted under administrative changes Mulvaney instituted earlier this year.
In the letter, Frotman alleged that Mulvaney had suppressed the publication of a report last year from the bureau’s staff that found large banks were ripping off students by charging them dubious account fees. Frotman's resignation will take effect Sept. 1.
The “current leadership of the Bureau has abandoned its duty to fairly and robustly enforce the law,” Frotman wrote.
Mulvaney is also the director of the White House Office of Management and Budget and has hired about a dozen political appointees to help oversee the CFPB. In May, he announced a restructuring that stripped the CFPB’s student lending office of all functions except consumer education.
“The Bureau’s new political leadership has repeatedly undercut and undermined career CFPB staff working to secure relief for consumers,” Frotman wrote in the letter. “When the Education Department unilaterally shut the door to routine CFPB oversight of the largest student loan companies, the Bureau’s current leadership folded to political pressure.”
The letter was sent to 10 lawmakers, including members of both the House Financial Services Committee and Senate Banking Committee, as well as Treasury Secretary Steven Mnuchin and Education Secretary Betsy DeVos.
Under former CFPB Director Richard Cordray, the CFPB’s student loan office returned more than $750 million to student loan borrowers.
Frotman said Mulvaney had undermined the CFPB’s independence and was shielding bad actors from scrutiny.
“The current leadership of the Bureau has made its priorities clear — it will protect the misguided goals of the Trump Administration to the detriment of student loan borrowers,” Frotman wrote. “Unfortunately, under your leadership, the Bureau has abandoned the very consumers it is tasked by Congress with protecting. Instead, you have used the Bureau to serve the wishes of the most powerful financial companies in America.”
Frotman joined the CFPB as part of the Treasury Department's implementation team in 2011 as a senior adviser to Holly Petraeus, the assistant director for the Office of Servicemember Affairs.
Frotman had been the deputy chief of staff for Rep. Patrick Murphy, D-Pa., and served as an assistant counsel for the New Jersey State Senate.
