CFPB’s Kraninger on Financial Education: “Today’s consumers need these skills more than ever.”
Inside Subprime: April 26, 2019
By Aubrey Sitler
In a speech to the Bipartisan Policy Center, Consumer Financial Protection Bureau head Kathleen Kraninger expressed what she had gathered during a “listening tour” designed to inform potential public safeguards from predatory institutions.
While the mission of the consumer watchdog agency has always been to protect consumers and defend against bad actors engaging in unfair and abusive financial practices, Kraninger shifted the focus to consumer education in her speech.
“Empowering consumers to help themselves, protect their own interests, and choose the financial products and services that best fit their needs is vital to preventing consumer harm and building financial well-being,” Kraninger stated.
“Today’s consumers need these skills more than ever,” she said. “For example, fewer than half of Americans set aside money for their children’s college education. More and more people reach retirement with incomes and savings that simply won’t meet their needs.”
She also cited data from a Federal Reserve report that found 40 percent of Americans couldn’t manage a $400 emergency expense without selling something or borrowing.
In February, Kraninger proposed a rollback to the Obama-era payday loan rule, which would have protected consumers from abusive practices of predatory payday lenders, a plan that received harsh criticism from Democrats.
A report from the Consumer Federation of America revealed an 80 percent decrease in enforcement activity since 2017, and consumers’ average restitution sharply fell by 96 percent.
But a spokesperson for the bureau insisted that Kraninger’s goals were still in line with the CFPB’s intended mission. “It goes without saying that the director is committed to taking swift action against bad actors,” she told the LA Times. “The director could not have been more clear in her speech: ‘Let me state emphatically my view that enforcement is an essential tool Congress gave the bureau — particularly because education, rulemaking and supervision will not prevent every violation.’”
But Kraninger also called for an overhaul of the regulatory process, and stated that financial institutions should “self-examine, self-report, and provide restitution where appropriate.”