While many were kicking back during the last unofficial week of the summer, one of the most interesting bits of news that fell below the radar was the resignation announcement from Seth Frotman, the student loan ombudsman at the Consumer Financial Protection Bureau. It may seem a little inside baseball, but as reported in the New York Times, Frotman said in his resignation letter that "millions of borrowers had been harmed" by ‘sweeping changes’ at the bureau under Mick Mulvaney, President Trump’s budget director, who became the bureau’s acting director in November.
Why is this important? Because Frotman served as the CFPB’s chief watchdog over the $1.5 trillion student loan market, a position that is responsible for responding to borrower complaints (23,000 last year). Since its creation, the ombudsman has forced companies to pay $750 million in refunds and other relief to student borrowers.
Frotman’s resignation comes a year after James Runcie left the Department of Education’s Federal Student Aid office. He quit over what he said was political interference with his unit’s work. As a reminder, the Education Department manages the government’s $1.4 trillion portfolio of federal student loans owed by nearly 43 million borrowers. The message to student loan borrowers is clear: the government no longer has your back.
Here’s a quick roundup of everything else that happened during the last week of August:
- The U.S. and Mexico announced a new trade deal – let’s call it Nafta 2.0. While President Trump touted it as a replacement, the agreement reforms Nafta, at least as far as the U.S. and Mexico are concerned. The biggest changes are to automobile manufacturing rules, in an effort to bring more car production back to the U.S. from Mexico. Canada rejoined the negotiations soon after, but the week ended without a tri-party deal, thus blowing through the President’s Friday deadline. But sources say a final agreement including Canada could occur as late as the end of September.
- Q2 GDP was revised slightly higher—to an annual rate of 4.2 percent, helped by more business investment than originally forecast.
- The strengthening economy is boosting consumer confidence. The Conference Board’s consumer confidence index climbed its highest level since Oct 2000.
- Many stock market indexes (S&P 500, NASDAQ Composite, Russell 2000) climbed to new records, bolstered by strong corporate profits.