It took little time this week to show how polarized the Consumer Financial Protection Bureau (CFPB) and its director, Kathy Kraninger, are on Capitol Hill.
Before the agency chief spoke in a hearing Thursday in front of the House Financial Services Committee, the panel chair, Rep. Maxine Waters, D-California, said: “I would like to welcome the director Kraninger to what I hope is his last appearance before this committee as director of the CFPB ”.
Perhaps the bald vitriol is a reflection of the bitter partisan divide over the position of Kraninger, whose occupant last month, the Supreme Court, along party lines, ruled the president. could shoot “at will.“The ruling came after the now former attorney general Noel Francisco asked the court find the agency’s structure unconstitutional. The court did not go there, but ended the days when the head of the bureau could be removed only for “inefficiency, negligence of duty or misconduct in office.”
The opposition can also be personal. Kraninger has a history of receiving sharp criticism from lawmakers.
“If the consumer office cannot get relief for consumers who have been harmed, and you admit that they have been harmed, then What are you doing? “Rep. Carolyn Maloney, Democrat of New York, asked Kraninger during a hearing last year after House Democrats leveled a overwhelming 333 page report at the agency chief, accusing it of going against the advice of its employees and “leaving consumers drugged and dry” because the CFPB did not require remediation during a series of settlements.
“If you don’t follow your staff’s instructions to help harmed consumers, then absolutely useless“Maloney said in October.
The sharpest spikes this week came in response to the bureau’s actions toward mortgage servicing, payday lenders and general inquiry handling.
“I will tell you that Director Kraninger is very, very good at without answering questions“Said Senator Jon Tester, D-MT, during Wednesday’s hearing in front of the Senate panel.” By the way, that’s not a good quality. … These hearings with director Kraninger have been a total waste of time. “
The CFPB told mortgage servicers in a memorandum that it would not penalize them if they acted in “good faith”; the orientation that Sen. Elizabeth Warren, D-MA, called a “get out of jail free card.”
“His leadership has been a miserable failure,” Warren said. “Based on your actions in this pandemic, you must resign.”
Warren undoubtedly may have invested more to ensure that the CFPB works well. She served as the office’s architect, even if she never ran the regulator. Then-President Barack Obama withdrew her nomination when it became questionable whether she would garner enough Republican support to be voted into that position.
Kraninger defended the CFPB’s guidance, saying the number of complaints in the realm of mortgages has decreased since the coronavirus pandemic took hold. At the same time, housing advocates this week sued the office about a rule that reduced the number of mortgage lenders who must report application data used to enforce fair loans.
The CFPB chief also received criticism for the bureau’s move this month to reverse the “repayment ability“Part of a 2017 payday loan rule.
“It is outrageous that in the midst of this pandemic … I have provided this great payday to payday lenders at the expense of the consumer,” Senator Chris Van Hollen, D-MD, said Wednesday. “It’s bad at any time, but especially egregious at a time when so many families are struggling to make ends meet.”
The previous payday regulation would have reduced access to credit by 70%, Kraninger said, adding that the new rule was intended to encourage competition and allow banks to offer small dollar loan-oriented locations.
As he had done before, Kraninger referred to Congress on matters related to the structure of the CFPB.
Representative Bill Huizenga, R-MI, asked the director Thursday about the feasibility of a five-member bipartisan commission to run the office.
“With regard to additional structural or other changes, I leave them in the hands of Congress,” he said, without commenting on any particular hierarchy. “I welcome the [proposed] action on the structure by Congress, broadly speaking, and I think Congress would come to a good conclusion on that. “
That marks a familiar refrain for Kraninger who, during his nomination process, said that “the fundamental question of the constitutionality of the structure of the Office must be resolved by Congress or the courts.”
A year later, when the Justice Department asked the Supreme Court to rule on the constitutionality of the CFPB, Francisco wrote in his brief that Kraninger had “reconsidered that position.”
“Litigation over [the CFPB’s constitutionality] has caused significant delays in some of our regulatory and compliance actions, “he clarified in an email to staff.” I believe that this dynamic will not change until Congress or the Supreme Court resolves the constitutional issue. “
Kraninger’s testimony on Thursday even left room for a similar change of mind.
“If I see legislation that I think would be detrimental to the agency … I will certainly let you know my views,” he said.