In creating the Consumer Financial Protection Bureau, as mandated by the Dodd-Frank Act, Democrats said they were piecing together an agency that would be decidedly apolitical.
Over the years, however, that “apolitical” Bureau evolved into what is perhaps the most partisan government agency in history. Republicans have been unwavering in their efforts to dismantle and weaken the Bureau, citing its “unconstitutionality” as a reason it should be recast as a committee with congressional oversight and budget authority.
After years of beating back critics, the agency’s defenses fell with the departure of Director Richard Cordray, and the election of President Donald Trump. The former left to run for governor of Ohio. The latter took the opportunity to appoint Mick Mulvaney, who also serves as director of the White House’s Office of Management and Budget, to temporarily serve as acting director. During his tenure, now drawing to a close, Mulvaney did from the inside what so many tried to do from the outside—tossing aside controversial, industry-hated rules, deemphasizing the importance of issued guidance, scaling back enforcement actions, curbing controversial data collection efforts, and casting away consumer advisory boards.
The changing of the guard at the Bureau, however, may not be going entirely as planned.
Nominated by the White House to serve as Mulvaney’s replacement is one of his OMB subordinates, Kathy Kraninger, who previously worked for the Department of Homeland Security and for the Senate Appropriations Committee’s Homeland Security Subcommittee. Since March 2017, Kraninger has served as Associate Director for General Government at the Office of Management and Budget, where she oversees and monitors approximately $250 billion in budgetary resources for numerous Cabinet departments and federal agencies.
The differences between Mulvaney and Kraninger were immediately noticeable at her confirmation hearing last Tuesday before the Senate Banking Committee. Where Mulvaney was brash and undeterred in his approach at the Bureau, Kraninger struggled to comment effectively on past, present, and future doings at the agency.
Kraninger was at her most effective when delivering her opening testimony. “Throughout my career, I have focused on implementing common-sense solutions to complex problems and delivering real value for the American people,’ she said. “While I will not prejudge and cannot predict every decision that will come before me as Director, if confirmed, I can assure you that I will focus solely on serving the American people.”
Kraninger added that Congress established the Bureau “to ensure all consumers have access to markets for consumer financial products and services…that are fair, transparent, and competitive.”
“I am firmly committed to satisfying this Congressional mandate,” she said.
Kraninger separated her initial agency priorities into four categories. First, “the Bureau should be fair and transparent, ensuring its actions empower consumers to make good choices and provide certainty for market participants.”
It should make robust use of cost-benefit analysis, as required by Congress. “In my experience, effective use of notice and comment rulemaking is essential for ensuring the proper balancing of all interests,” she said. “It also enables consideration of tailoring to reduce the burden of compliance, particularly on consumers and smaller marketplace participants.”
The Bureau should also work closely with the other financial regulators and states on supervision and enforcement. “Nothing is more destructive to competitive markets and consumer choice than fraudulent behavior,” Kraninger said. “Under my stewardship, the Bureau will take aggressive action against bad actors who break the rules by engaging in fraud and other illegal activity.”
Another priority: “The Bureau must recognize its profound duty to the American people to protect sensitive information in its possession.”
“Under my leadership, the Bureau would limit data collection to what is needed and required under law and ensure that data is protected,” Kraninger said. “This issue clearly needs more attention, particularly because many consumers are unaware of the vulnerabilities or unsure of what actions to take to protect themselves.”
Lastly, “the Bureau must be accountable to the American people for its actions, including its expenditure of resources,” she said.
Getting specific answers from the nominee during her confirmation hearing, however, was akin to nailing Jell-O to the wall. Throughout the nomination hearing, flabbergasted Democrats frequently accused Kraninger of refusing to answer questions about her government career and record in any detail.
“I appreciate your agility and facileness,” said Sen. Brian Schatz (D-HI). “I am trying to get an answer from you and I just can't. It is maddening because this is not a trivial aspect of your basic qualifications for the job. You're coming in and asserting you are a manager, and you can't characterize anything that you're doing as a manager.”
“It is no mystery that Mr. Mulvaney is no fan of the CFPB. That aside, would you say he has done a good job in his role as acting director?” asked Sen. Jon Tester (D-MT). “Mr. Mulvaney has pulled back the payday lending rule; he has eliminated the Office of Students and Young Consumers; he has pulled out the prepaid accounts rule. Did you support him in those actions? Do you think those were the right actions to take?”
“I will take aggressive action if I am confirmed,” Kraninger said, seemingly avoiding any direct answers to Tester’s questions.
“I think it is important to let the process happen on this because it is actively under reconsideration and so it is inappropriate to comment, she said of the Payday loan rule’s repeal and possible reinstatement. “But I appreciate your interest in it, sir.”
“I know how to filibuster,” Tester shot back. “You know how to filibuster. Just answer the question.” She didn’t.
“You can answer these questions, you really can,” Tester said as his time wound down. “You are going to be the head of this agency. You are going to be leading this agency. Your recommendations are going to count for something. It would be really helpful for me to know, if I am going to vote for you or not vote for you, where you are at.”
“For months, I urged the Administration to nominate someone to lead the CFPB who had a track record of working for consumers,” said Sen. Sherrod Brown (D-Ohio). “Unfortunately, Ms. Kraninger has no experience whatsoever in consumer protection.”
“If my Republican colleagues are concerned about transparency and accountability and responsiveness, they should note this nominee’s failure to reply to a simple request about her responsibilities in her current job, a request that we submitted four weeks ago,” he added. “Nobody wants Mr. Mulvaney out of the CFPB faster than I do, but American consumers can’t afford five years of someone who stands with the bankers in this administration and on Wall Street.”
Sen. Elizabeth Warren (D-Mass.) echoed that sentiment. “So, you don’t have any experience in consumer finance or consumer protection. No qualifications at all. Evidently the one thing you have done in your career is work on President Trump’s Fiscal Year 2019 budget request for the CFPB,” she said.
For their part, Kraninger’s finely tuned bureaucratic defenses, may have been a response to wide-ranging attacks on her previous work within the Trump administration. Among the table-pounding topics were her role, if any, in policies like the White House’s family separation immigration policy at the southern border, the much-maligned response to the crisis in Puerto Rico following Hurricane Maria, and what Democrats describe as “a $1.9 trillion tax break for millionaires.’
Despite head-banging and facepalms among her Democrat inquisitors, both sides of the aisle concede that Kraninger likely will get the Senate votes needed for confirmation. “Given her depth and diversity of public service experience, I have the utmost confidence that she is well-prepared to lead the Bureau in enforcing federal consumer financial laws and protecting consumers in the financial marketplace,” said Sen. Mike Crapo (R-Idaho).
Kraninger made her final pitch: “This agency clearly needs solid management to take it forward and become part of the financial regulatory framework of this nation as a mature regulator,” she said. “That is the direction I would like to take it if confirmed. I believe that we can continue to push for transparency and accountability at the Bureau and to have a really clear decision-making process that takes into account all of the interests across the nation from consumer groups, to the financial institution, and all of you here today.”