Rep. Lee Zeldin (R-NY) told Breitbart News in an exclusive statement Friday that Consumer Financial Protection Bureau (CFPB) Director Kathy Kraninger must “reverse” and withdraw from the agency’s consent judgment on the National Collegiate Master Student Loan Trusts (NCMSLTs).
Congressman Zeldin, a member of the House Financial Services Committee, told Breitbart News that it remains “vital” for the agency to withdraw from the Obama-era consent judgment against the Trusts. He contends that it could lower Americans’ access to credit and “skyrocket borrowing costs” and further penalize innocent actors in the financial markets such as pension and retirement plans and other consumers who have invested in the Student Loan Trusts.
“Protecting consumers from bad actors is of the utmost importance, but it must be carried out in a sensible way that does not limit their access to credit and skyrocket borrowing costs. Unfortunately, the Bureau’s action against the Trusts will harm the very consumers the CFPB is sworn to protect,” Congressman Zeldin told Breitbart News. “It is inappropriate for the CFPB to penalize innocent actors, including pension plans, retirement plans, and the consumers who have invested so much in them. It is vital the CFPB reverse this shortsighted decision, and I am hopeful Director Kraninger will correct course.”
Zeldin’s comment to Breitbart News comes as Sen. Thom Tillis (R-NC), a member of the Senate Banking Committee, said that the CFPB overstepped its authority by issuing the consent judgment against the NCMSLTs.
Rep. Zeldin led a letter, along with Rep. Sean Duffy (R-WI) and Rep. Ted Budd (R-NC), to the CFPB Director Kraninger in March, asking her to reconsider the agency’s consent judgment contending that if the consent judgment continues unabated, it could throw a wrench into the financial markets and could freeze the credit markets.
The House Republicans contended in the letter, obtained by Breitbart News, that the case against the Trusts would “penalize innocent actors, including pensions plans, retirement plans, and by extension the consumers that have entrusted their savings to them, for a third party’s alleged misconduct.”
Reps. Duffy, Zeldin, and Budd said that Kraninger’s action in reversing the consent judgment, “would protect the continued healthy functioning of the securitization market which provides affordable access to credit for American consumers and businesses.”
As an Obama administration holdover, former CFPB Director Richard Cordray reportedly exceeded the scope of his authority when the agency proposed a “consent judgment” against the National Collegiate Master Student Loan Trusts in September 2017, which could have a freezing effect on the overall credit market.
Further, without addressing the consent judgment, the CFPB could allow for a Barack Obama donor and Cordray associate to continue to benefit from managing the Trusts.
Before Cordray left the CFPB, he made a “consent agreement” with Vantage Capital Group’s Donald Uderitz, a friend of Corday’s, to make him the de facto administrator of the NCMSLTs massive student debt assets. Cordray did this in the name of stopping allegedly unfair student debt collection practices; however, the agreement made Uderitz the “judge, jury, and executioner” of the Trusts, giving Uderitz the power to collect loans as he sees fit. For instance, Uderitz can now saddle students with servicing and collection fees while reducing his fund’s exposure to tax liability.
Jared Whitley, a former Senate and White House staffer, wrote an op-ed in 2018, suggesting that to help lenders, future graduates, and students, the CFPB needs to withdraw from the consent judgment, which would fix this “fix the corrupt bargain” involving Udertiz’s sweetheart deal. Whitley also suggested that withdrawing from the consent judgment would help “drain the swamp” surround the CFPB.
Whitley said that by removing the consent judgment, President Donald Trump’s administration could prevent future students from becoming saddled with higher student loan rates and more debt.
“President Trump’s administration will have protected the current generation from higher student loan rates while they’re in college and punitive fees after they graduate,” Whitley said.
Sean Moran is a congressional reporter for Breitbart News. Follow him on Twitter @SeanMoran3.