Waters Statement on CFPB Student Loan Ombudsman Announcement

“In August 2018, former CFPB Assistant Director and Student Loan Ombudsman Seth Frotman shared with the Committee a resignation letter he sent to Mick Mulvaney alleging that the agency's new leadership had ‘abandoned the very consumers it is tasked by Congress with protecting.’ Nearly a year after Mr. Frotman stepped down from his position, the Trump Administration appears to be continuing its efforts to ignore the needs of consumers by appointing, as his replacement, a high-ranking official from one of the nation's largest student loan servicers. This servicer has faced a myriad of legal challenges, along with criticism by the Education Department's Inspector General and the CFPB for its shoddy work that harmed student borrowers. I am deeply concerned by this new appointment made by Treasury Secretary Mnuchin, in consultation with Director Kraninger, and will continue to conduct rigorous oversight of the CFPB to ensure it is fulfilling its duties to protect our nation’s borrowers from unlawful student loan servicing practices.”

Chairwoman Waters has long-expressed concerns about the Trump Administration’s pattern of appointing or nominating individuals to run agencies with missions they oppose, including Ben Carson, Secretary of the U.S. Department of Housing and Urban Development; Mick Mulvaney, the unlawfully appointed acting Director of the Consumer Financial Protection Bureau; and Scott Garrett, who was nominated to be the President of the Export-Import Bank.

The recent announcement that Robert Cameron will serve as the Private Education Loan Ombudsman at the CFPB comes on the heels of letters sent by Chairwoman Waters, Education and Labor Committee Chairman Bobby Scott (D-VA), and Oversight and Reform Committee Chairman Elijah Cummings (D-MD), to the CFPB, U.S. Department of Education and FedLoan Servicing requesting information and records concerning unlawful student loan servicing practices.

In October 2018, Chairwoman Waters also led the call for the Committee to use the full range of its oversight authorities to conduct a formal investigation into allegations raised by Seth Frotman, former Assistant Director and Student Loan Ombudsman at the CFPB.

In March 2019, Chairwoman Waters invited Seth Frotman to testify before the Committee, along with other consumer protection experts, as part of its work to oversee the Trump Administration's efforts to undermine the CFPB.

In May 2019, the U.S. House of Representatives approved H.R. 1500, the Consumers First Act sponsored by Chairwoman Waters. The bill would reverse the Trump Administration's actions to undermine the CFPB, including by reestablishing a dedicated student loan office and ensuring it is adequately staffed to carry out its critical functions and duties.

In June 2019, House Financial Services Committee Oversight and Investigations Subcommittee Chairman Al Green (D-TX) held a hearing on state efforts to oversee the student loan servicing market, including PHEAA, in the midst of weak federal oversight.

On September 10, 2019, the full Committee will hold a hearing entitled, “A $1.5 Trillion Crisis: Protecting Student Borrowers and Holding Student Loan Servicers Accountable.”

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