Aug. 28 (UPI) — The federal official in charge of protecting student borrowers announced his resignation Monday, stating current leadership has abandoned consumers in favor of corporations.
Seth Frotman announced he will step down from his role as student loan ombudsman at the Consumer Financial Protection Bureau, effective Sept. 1. NPR obtained his resignation letter to the bureau’s acting director, Mick Mulvaney.
“Unfortunately, under your leadership, the bureau has abandoned the very consumers it is tasked by Congress with protecting,” Frotman wrote. “Instead, you have used the bureau to serve the wishes of the most powerful financial companies in America.”
Frotman has served at the CFPB for seven years, working as senior adviser to Holly Petraeus in the Office of Servicemember Affairs before taking on the role of student loan ombudsman.
The CFPB was founded in 2011 in response to the 2008 financial crisis and the position of student loan ombudsman was created by Congress to oversee the $1.5 trillion student loan market and process borrowers’ complaints against loan services and handle lawsuits against for-profit colleges.
“American families need an independent Consumer Bureau to look out for them when lenders push products they know cannot be repaid, when banks and debt collecors conspire to abuse the courts and force families out of their homes and when student loan companies are allowed to drive millions of Americans to financial ruin with impunity,” Frotman wrote.
He said the current leadership undercut enforcement of the law by allowing the Education Department to shut off oversight of the largest student loan companies, undermined the bureau’s independence by failing to call attention to how Trump administration policies would harm borrowers targeted by predatory for-profit schools and shielded bad actors from scrutiny by failing to act on a report that showed of the nation’s largest banks were “saddling [students] with legally dubious account fees.”
“Sadly, the damage you have done to the bureau betrays these families and sacrifices the financial futures of millions of Americans in communities across the country,” Frotman wrote.
The CFPB told NPR it doesn’t comment on specific personnel matters, but offered a general statement regarding employees who leave the bureau.
“We hope that all of our departing employees find fulfillment in other pursuits and we thank them for their service,” the bureau said.