By Richard A. Roth, J.D. and Jacob
Bielanski
The nomination of Kathy Kraninger to be Director of the Consumer Financial Protection Bureau was confirmed by the Senate by a vote of 50-to-49 on Dec. 6, 2018. Kraninger will be the second Senate-confirmed CFPB Director, following Richard Cordray. Mick Mulvaney has been serving as Acting Director since Cordray’s resignation.
As the narrow margin for confirmation implies, Kraninger’s nomination was very controversial, with public interest and industry advocacy groups lining up to oppose each other. For example, the Center for Responsible Lending charged that she would “continue [Acting Director] Mulvaney’s destructive course. Kraninger has no track record at all of consumer protection, or of standing up for vulnerable people.” During debate, Sen. Sherrod Brown (D-Ohio) complained that “Her one and only qualification is that she will be a rubber stamp for special interests. That is unconscionable.”
Kraninger’s tenure as Program Associate Director at the Office of Management and Budget came in for severe criticism, with Democrats attempting to link her to the separation of families at the U.S. southern border and with what they asserted were inadequate hurricane responses. (Acting CFPB Director Mulvaney also is Director of the OMB.)
Post-vote comments. Following the contentious confirmation of the new Bureau Director, reactions were divided, mostly among political lines. American Bankers Association President and CEO Rob Nichols said that Kraninger “believes in promoting competition and appropriately tailoring regulations by taking into account both costs and benefits.”
House Financial Services Committee Chairman Jeb Hensarling (R-Texas) said that “As Congress continues its efforts to reform the Bureau into a law enforcement agency that truly protects consumers and is accountable to the people, I am confident that with her experience and knowledge of budget management, Kathy will excel as Director of the Bureau.”
Other comments were less positive. Bartlett Naylor of Public Citizen said “Watch your wallets, protect your purses and batten down your bank accounts. With the confirmation of Kathleen Kraninger, Trump and Senate Republicans are putting Americans at the mercy of predatory lenders and abusive financial firms. Kraninger has absolutely no training or experience relevant to consumer protection.”
“Mick Mulvaney’s disastrous tenure as Acting-Director of the Consumer Bureau had a devastating impact on the financial security and economic stability of millions of Americans,” Rep. Nancy Pelosi (D-Calif) said in a statement following the confirmation. “Director Kraninger must abandon the Administration’s shameful campaign to destroy this vital consumer watchdog.”
“In the year that Mulvaney headed the [CFPB], he made it responsive to consumers rather than to the bureaucrats and busybodies who thought they knew best and wanted to dictate consumers’ financial choices,” Competitive Enterprise Institute Senior Fellow John Berlau said. “This was in sharp contrast to Mulvaney’s predecessor, Richard Cordray, under whose tenure the bureau arbitrarily and retroactively applied regulatory punishments against certain financial firms without due process.”
Center for Responsible Lending Senior Legislative Counsel Yana Miles countered this assessment, saying “Mulvaney’s tenure at the CFPB wasn’t public service—it was service to predatory lenders.”
Despite this, consumer advocacy groups seized the opportunity to criticize the new director for a past that appeared to lack consumer advocacy positions. Senator Cortez Masto (D-Nev) said Kraninger “fails to understand [CFPB]’s core functions,” while the National Association for Consumer Advocates (NACA) said Kraninger “does not fit the profile for the role.” Better Markets President and CEO Dennis Kelleher added that Kraninger has demonstrated a “disqualifying lack of experience or qualifications for leading the consumer protection bureau and an inexcusable lack of genuine commitment to protecting consumers.”
“Ms. Kraninger’s career has zero ties to consumer protection or financial services,” NACA executive director Ira Rheingold said. “Instead, her government background is plagued with links to controversial decisions that are an affront to human rights and justice.”
Both NACA and Americans for Financial Reform made references to the White House family separation program. Some critics claimed Kraninger had a “hidden” role in the program, which detained children of those arrested for illegally crossing the U.S. border separately from their parents or guardians, as part of her duties while serving as associate director for general government programs at the Office of Management and Budget.
Republicans, including Reps. Patrick McHenry (R-NC) and Blaine Luetkemeyer (R-Mo), largely focused on what Kraninger’s confirmation means for the future of the organization. Luetkemeyer, who is currently the chair of the House Subcommittee on Financial Institutions and Consumer Credit, noted that he looked forward to the new director prioritizing “transparency.” McHenry, a member of the House Financial Services Committee, sees expansion of family and small business access to the financial system. “With a full-time Director in place, the BCFP can focus on their important work protecting American consumers,” McHenry added.
Many comments took a muted approach. Some, like the Consumer Bankers Association (CBA), congratulated Kraninger, but used largely non-committal wording with regards to the CFPB future. “We look forward to working with Ms. Kraninger on common-sense regulations that protect consumers while also allowing our well-regulated banking system to serve families and small businesses,” CBA President and CEO Richard Hunt said. The Independent Community Bankers of America added their support and commitment to work with Kraninger.
House Democrats, meanwhile, avoided overt partisan attacks against Kraninger, specifically, but laid out expectations for Kraninger’s term. Similar to Pelosi, Ranking Member on the House Financial Services Committee, Rep. Maxine Water (D-Calif) called on the new director to “roll back” what she said were “anti-consumer” policies instituted by Mulvaney.
Meanwhile, the Consumer Federation of America (CFA) referenced the “turmoil” of the confirmation, but expressed hope for the new director. “Director Kraninger has an opportunity to prove her [skeptics] wrong by setting a bold consumer protection agenda,” CFA director of financial services Christopher Peterson said. “We hope she seizes this vital opportunity.”
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