Nestled inside the Consumer Financial Protection Bureau is an office that goes after financial companies whenever they discriminate against Americans.
That office just lost its teeth.
Mick Mulvaney, who was appointed by President Trump as the agency's interim director two months ago, is moving a powerful division of the bureau, the Office of Fair Lending and Equal Opportunity, under his own direct oversight and stripping the office of its enforcement authority.
That means the office won't be able to go after lenders that charge higher interest rates to minorities than to whites or otherwise discriminate. Instead, staff will now focus on "advocacy, coordination and education," according to a memo emailed to employees Tuesday.
Those responsibilities -- while not completely wiped out at the agency -- will be part of a broader division that oversees financial companies. The change was reported earlier by The Wall Street Journal.
Alan Kaplinsky, a co-leader of the consumer financial services practice at the law firm Ballard Spahr, said the move is the latest illustration that Mulvaney is keeping his word that the agency will not overreach its powers.
"They won't be 'pushing the envelope' in the fair lending area to go after companies where they are not on very solid ground," Kaplinksy said. "Those days are over now."
Under former Director Richard Cordray, an appointee of President Barack Obama, the office aggressively pursued discriminatory practices by auto dealers even though automakers fell outside the CFPB's jurisdiction.
Consumer advocates argue the restructuring will weaken the office's ability to pursue lawsuits.
Mulvaney's changes "send a troubling message about the enforcement of civil rights laws and will harm people -- especially in communities of color -- who are wronged by payday lenders, debt collectors, or auto dealers, among others," Vanita Gupta, president and CEO of The Leadership Conference on Civil and Human Rights and former acting head of the Civil Rights Division at the Justice Department, said in a statement.
A spokesman for the agency disputed those claims, arguing Mulvaney's goal was to increase efficiency and combine efforts under one roof.
"It never made sense to have two separate and duplicative supervision and enforcement functions within the same agency -- one for all cases except fair lending, and the other only for fair lending cases," said John Czwartacki, a CFPB spokesman.
But progressive Democratic Senator Elizabeth Warren of Massachusetts said Mulvaney has long opposed the agency's efforts to fight discrimination -- and the latest step was a way to undermine those efforts.
"Mulvaney is putting the Office of Fair Lending under his control so that he can weaken it -- leaving neighborhoods and consumers across the country more vulnerable to bias," Warren said in a statement to CNNMoney.
The consumer bureau has already begun rethinking Obama-era rules since Mulvaney took over. Last month, it said would reconsider rules to protect consumers from payday-lending traps. It also launched a formal review of how the agency investigates and enforces rules on big banks and predatory lenders.
And most recently the agency said mortgage lenders would not need to comply with new rules that would have forced them to provide detailed information about consumers, like their credit score or age. Regulators use that information to ensure that lenders are not discriminating against minorities.