A staff attorney, suspected of manipulating evidence that led to the removal of the Consumer Financial Protection Bureau’s payday loan rule, operated a business in Texas for three years whose model was criticized as predatory, according to records obtained by a watch group.
Christopher G. Mufarrige has purchased a certificate of ownership for a company named CNJ Auto Finance in Houston, Texas, in 2008, and led the company until 2011. Pictures of site taken at the time indicated that CNJ Auto Finance was a “buy here, pay here” car dealership. These companies provide used car loans to customers with low credit at a high interest rate and quickly repossess the vehicles in the event of default. Dealers often resell the same used car multiple times to different borrowers, much like payday lenders try to get multiple loans in a single borrowing cycle.
Mufarrige and a person of the same name had separate Buy Here Pay Here stores at the same address; the apparent parent’s activity lasted from 2012 to 2016, when the Texas Office of Consumer Credit Commissioner closed it for unlicensed use.
Mufarrige was the subject of a New York Times story last week involving a memo from the former CFPB economist, who alleged that several appointees used bogus statistics and gimmicks to downplay the value of payday lending regulations. The original rules, established under a previous regime, were targeted by Trump’s CFPB, led by Kathy Kraninger. In a few days, Kraninger’s CFPB is expected to release a revised payday rule, which removes the key feature: it won’t require payday lenders to assess their clients’ ability to repay their loans.
After leaving CFPB last year, Mufarrige now works as a partner in antitrust and competition practice at Wilson sonsini, a DC law firm. Mufarrige received his BA in Economics from Texas Christian University, the same state where CNJ Auto Finance was located.
Mufarrige refused to respond officially to the Perspective. The CFPB did not respond to a request for comment.
During the Trump administration, there have been numerous instances of appointees who previously worked for industries they now claim to regulate. The situation of Christopher G. Mufarrige seems to take these conflicts of interest to the extreme.
Derek Martin, director of Allied Progress, who obtained the information on Mufarrige, stressed the Trump administration’s loyalty to corporate interests, especially in the area of high-cost loans. “We knew that predatory lenders had gained tremendous influence in the White House by pumping millions of dollars into Donald Trump’s campaign and personal affairs fund,” Martin said. “We didn’t know there was also a man inside who was sabotaging the conclusions of the career bureau economists.”
TO FOLLOW THE STATUTES Regarding administrative procedures, CFPB had to demonstrate that years of previous research which informed the original troubleshooting rule was wrong, and establish an evidentiary basis to revise the rule. People have been asked to guide this process towards the conclusion the Trump administration intended to remove the ability to pay.
Mufarrige was one such person, brought in as a “lawyer-adviser” to then-director Mick Mulvaney in October 2018. (Kraninger was confirmed in December.) Mufarrige spent over a year in the office. , and the Times noted that he “had often criticized the 2017 rule as flawed and unnecessary”.
According to the note from former CFPB economist Jonathan Lanning, Mufarrige had a “tenuous and often imperfect understanding of economics.” He has repeatedly attempted to “cite evidence selectively”, “to argue for conclusions based on presumptions” and to make “critical errors on basic economics”. The memo also alleges that Mufarrige was responsible for senior officials misrepresenting aspects of the payday rule evidence and analysis to the press. Lanning pointed to Muffarige’s conflicting claims to justify certain conclusions, saying at one point that “costs by default [on payday loans] are high ”, and sentences later indicating“ the default costs are low ”.
Mufarrige “was fighting to have his name removed” from the list of employees working on the revised payday loan rule, a requirement under the Congressional Review Act. Some in the office believed Mufarrige’s friendship with Ronald Mann, a professor who worked for a payday loan business group, explained his reluctance to be on the list of contributors.
Lanning reflected on Mufarrige’s motivations for his attacks on the wage rule. “It seems like a really personal issue for him,” Lanning wrote in a comment attached to the memo.
He didn’t know how personal it was.
The payday loan rule also covers auto title loans, where a person exchanges title to their vehicle for cash quickly. This differs from Buy Here Pay Here transactions, where individuals buy used vehicles at subprime interest rates. But both practices involve high cost loans.
Consumer advocates have accused Buy Here Pay Here resellers of taking advantage of the vulnerable and desperate. They target poor and vulnerable clients, buying lists of bankrupt filers and sending them direct mail. About a quarter of Buy Here Pay Here customers go into default, according to the New Jersey attorney general’s office.
When CNJ Auto Finance, the company attributed to Christopher G. Mufarrige, was active, the Buy Here Pay Here outlets makes $ 80 billion in loans per year, with more lots than new car dealers.
CNJ has encountered its fair share of legal problems. In August 2010, Mufarrige himself was continued by Houston’s 1st Choice Auto Auction, which alleged it had taken possession of $ 194,000 in luxury vehicles without making payment. CNJ “refused to return” or “pay for the vehicles,” one Bentley and four Mercedes, according to the complaint. The case was dismissed in March 2011 for unknown reasons.
The Klein Independent School District in Klein, Texas also hit Mufarrige’s business with a trial in 2013 over $ 2,926 in unpaid property taxes on a dealer’s inventory lot. This case was also dropped later in the year.
A second Buy Here Pay Here dealership named CAJ Auto Finance was located at the same address in Houston, assigned to a John Mufarrige, a relative of Christopher G. Mufarrige. A John Mufarrige appears on LinkedIn as a 30-year computer science student at Lone Star College in Houston. John Mufarrige listed the same residential address in Spring, Texas on his CAJ Auto Finance certificate of ownership as Christopher G. Mufarrige did for his certificate of ownership for CNJ Auto Finance.
CAJ Auto Finance’s activity did not end well. It closed in june 2016, but in April of that year, the Texas Office of Consumer Credit Commissioner (OCCC) issued a cease and desist order against the company for having “financed the sale of its vehicles without a license” for several years. The CAJ had explained to the OCCC that it was no longer active on two occasions, in December 2015 and January 2016, but the OCCC insisted that there were “reasons to believe that it always collects on existing accounts ”.
During the Trump administration, there have been numerous instances of appointees who previously worked for industries they now claim to regulate. Christopher G. Mufarrige’s situation seems to push these conflicts of interest to the extreme. Among other duties, he worked on predatory loan signing rules, having spent several years operating a business whose model is seen by many as an example of predatory lending.
“The payday rule-making process has really been corrupted from the ground up, leaving millions of Americans vulnerable to payday loan debt,” said Derek Martin of Allied Progress. He urged Congress to take bipartite legislation presented to Congress cap interest rates on consumer loans at an annual rate of return of 36%.
UPDATE: A previous version of this article listed Mufarrige as a “political appointee”. It has a Washington-specific definition of someone appointed by the White House or an agency head. It is not known who specifically brought Mufarrige to the CFPB, but he did not seek confirmation from the Senate as some political candidates do. He was specifically a “lawyer-adviser”, as the article indicates, reporting to other persons appointed to the CFPB. References to “political appointee” have been removed to avoid confusion.