Trump’s Pick to Lead CFPB to Face Senate Banking Committee Vote

Inside Subprime: Aug 21, 2018

By Holly Kane

Donald Trump’s controversial nominee to head the Consumer Financial Protection Bureau will face a Senate Banking Committee vote August 23, following last month’s contentious nomination hearing and amid strong pushback from consumer advocacy groups and Democratic senators.

White House official Kathy Kraninger was picked by Trump to head the Obama-era regulatory agency against the wishes of senators like Elizabeth Warren, who used last month’s nomination hearing to grill the nominee on her agency’s involvement in this administration’s “zero-tolerance” immigration policy. The Office of Management and Budget, where Kraninger is an associate director, handles the budgets of various government agencies, including the Department of Homeland Security.

One of Kraninger’s sharpest critics, Warren started the CFPB basically from scratch following the financial crisis of 2008 as a way to protect consumers from, among other practices, predatory lending. According to its own 2016 fact sheet, the supervisory and enforcement work by the CFPB has led to approximately $12 billion in consumer relief. But according to the Los Angeles Times, Mulvaney “has altered the bureau’s mission statement to make the top priority ‘identifying and addressing outdated, unnecessary, or unduly burdensome regulations’ and has publicly declared the agency no longer would ‘aggressively push the envelope’ to protect consumers.”

Kraninger’s confirmation would end acting director Mick Mulvaney’s controversial tenure, which included the former congressman dropping an investigation into a payday lending company that donated to his campaign. Mulvaney’s current role as OMB director – Kraninger’s boss – led critics to question whether she will continue Mulvaney’s streak of anti-regulatory measures.

Mulvaney dealt a major blow to consumers when, under his direction, the agency sought to reconsider its own pro-consumer payday lending rule that would require payday lenders to determine beforehand whether borrowers are able to pay back their loans. Payday loan companies typically target low-income borrowers who are strapped for cash and short on credit history, and the loans themselves have been shown to lead consumers into a debt trap.

Kranginger’s lack of experience in consumer finance and ties to Mulvaney led critics to question her vulnerability to special interests, particularly the payday lending lobby. Consumer advocacy group Public Citizen released a statement opposing the nomination, accusing Trump and Mulvaney of weakening the CFPB’s power to help consumers. “Kraninger, one of Mulvaney’s deputies, has neither experience as a regulator nor expertise in consumer financial issues,” the June 18 statement said. “The U.S. Senate must win a convincing pledge that Kraninger will honor the statutory mandate of this vital consumer protection agency and not be a Mulvaney puppet.”

According to coverage of the hearing by The Intercept, at Kraninger’s Senate hearing, she “admitted that she has never worked in any financial capacity, either at a bank or a credit union, or as a regulator. She has had no supervision responsibilities over payday lenders, credit bureaus, insurance companies, or debt collectors. She has no experience with the Equal Credit Opportunity Act, the Truth in Lending Act, or any other consumer protection law.”

Even if Kraninger doesn’t get the job, Mulvaney will remain in charge until the Senate confirms a nominee. Per the Federal Vacancies Reform Act, an acting federal official can hold his or her title up to six months, or until the President submits a nomination. The acting official, in this case Mulvaney, may then remain in that position for the duration of nomination proceedings.

Read more about Payday and Title Loans in our Subprime Reports.

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