Commentary

Kraninger Will Run CFPB Despite Lack Of Consumer Finance Experience

The U.S. Senate narrowly confirmed Kathy Kraninger, an official at the Office of Management and Budget with no apparent experience in consumer finance, to be the new director of the Consumer Financial Protection Bureau by a party-line vote of 50-49.

“As CFPB director, Kraninger will wield immense power and influence over U.S. banks, lenders and credit card companies. The agency’s chief has sole control of the CFPB’s budget and can unilaterally decide the bureau’s enforcement of fair lending and consumer protection laws,” observes Sylvan Lane for The Hill.

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“Republicans argued that her management experience at the OMB qualified her for the job,” writes NPR’s Emily Sullivan. “… But Democrats disagreed, saying Kraninger has no financial industry regulation experience and was unresponsive to their hearing questions. They contended she was an architect of the federal government's ‘botched’ response to Hurricane Maria in Puerto Rico.” 

“Instead of turning to help them you pinched pennies,” Sen. Bob Menendez, D-N.J. told her, Sullivan adds.

“The CFPB was born in response to the global financial crisis to police the way banks manage mortgages, credit cards, payday loans and other financial products,” Renae Merle reminds us in the Washington Post.

But it “has been a political football throughout its existence, with Democrats regularly praising it as the crown jewel of post-crisis reforms and Republicans arguing that it’s a stark example of government overreach,” writes Bloomberg’s Jesse Westbrook.

“Kraninger is seen as close to White House budget chief Mick Mulvaney, who's drastically curtailed the CFPB's oversight powers as its acting director since November 2017. Trump nominated Kraninger in June to succeed Mulvaney, who quickly rallied GOP senators in support of her confirmation,” writes The Hill’s lane.

“Under Mulvaney, who once called the bureau a ‘sick, sad’ joke, the CFPB took a sharp turn in its activities. Mulvaney reportedly scaled back an investigation into the Equifax data breach, relaxed restrictions on often predatory payday lenders, and recommended Congress pursue sweeping changes to the CFPB’s powers,”  Emily Stewart writes for Vox.

“He disbanded all of its advisory boards and councils and went as far as to try to change its acronym to the BCFP -- the Bureau of Consumer Financial Protection -- a maneuver that by one estimate could cost companies $300 million. In August, the CFPB’s top student loan watchdog quit, saying current leadership had ‘turned its back on young people and their financial futures.’"

Stewart also points to a recent Washington Post story by Kate Rabinowitz that uses graphs to illustrate how the “watchdog agency has gotten smaller, quieter and less active under Trump.”

Rabinowitz, who documents how enforcement actions against financial institutions have dramatically fallen under Mulvaney, quotes from a speech he gave at the American Bankers Association(ABA)'s annual conference in April.

“I won’t talk too much about regulation by enforcement, but the short version is we’re not doing it anymore,” he said. Mulvaney also said, “People wondered when … I took the job if I was going to try and shut the place down, and I told them no, because I can’t.” 

Not surprisingly, the ABA was thrilled with yesterday’s appointment of Mulvaney’s protege.

“We learned during her nomination hearing that she believes in promoting competition and appropriately tailoring regulations by taking into account both costs and benefits,” ABA president and CEO Rob Nichols says in a press release that also pats Mulvaney on the back for his “reforms and outreach efforts” while he led the agency. “We share those views, and believe those principles will benefit consumers while allowing banks to better serve their customers and innovate.”

Kraninger, a native of Ohio who graduated magna cum laude from Marquette in 1997 and then earned a law degree from Georgetown University Law Center, was a member of  the Peace Corps in the Ukraine, according to her bio. Before joining the OMB, she served as the clerk on the Senate Appropriations Subcommittee on Homeland Security, among other positions in the D.C. bureaucracy.

Rich Cordray, who led the CFPB during the Obama administration and recently lost a bid for the governor’s seat in Ohio, tweeted: “I see the Senate has confirmed Kathy Kraninger as CFPB Director. Like me, she had not run an agency before. Like me, she will find talented and dedicated people who will make her proud. Like me, she will see the good, bad, and ugly and have to figure out what to do about it all.”

Granted, he blasted Mulvaney in a follow-up tweet, but his encouraging words to Kraninger stand out as about as diplomatic as a politician can be in these bitterly divided days.

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