Lawmakers on Tuesday grilled Kathy Kraninger, director of the Consumer Financial Protection Bureau, over the agency’s decisions to overhaul the payday lending rule and stop screening financial firms for compliance with the law. military loans.
In his first appearance before the Senate Banking Committee since being sworn in three months ago, the bureau chief was also urged not to take action on student loan debt.
Although Kraninger made less waves during her short tenure than her predecessor, former CFPB Acting Director Mick Mulvaney, she continued to come under scrutiny from consumer groups and Democrats concerned about the future of the Republican-controlled agency.
During the hearing, Senator Elizabeth Warren, D-Mass., Criticized the sharp drop in enforcement measures since the GOP took control of the agency. Asked about the number of lawsuits the CFPB has brought against student lenders, Kraninger objected, saying she did not have “the specific answer to this question.”
“The public record appears to show zero,” Warren replied. “Not a single action.”
This compares to 50 cases filed against student loan companies, which led to the recovery of $ 712 million for consumers under former CFPB director Richard Cordray, a person named by Obama, Warren noted.
Warren raised similar concerns about the lack of discrimination lawsuits within the agency under Mulvaney and Kraninger, as well as a significantly reduced workload on credit and debt collection issues. She also raised broader concerns about Kraninger’s leadership in the office, saying she had failed to live up to her mission.
“You’re supposed to be the cop in the field, but you only watch out for crooks who cheat on American consumers,” Warren said. “If you had any decency, you would either do your job or quit.”
In addition, several senators sharply criticized Kraninger for the CFPB’s decision to suspend reviews of financial companies for their compliance with the Military Loans Act. Kraninger has yet to resume exams after replacing Mulvaney, who interrupted them. The Obama administration has conducted surveillance reviews for years and has long cited its authority not only under the Dodd-Frank Act, but also to regulate “unfair, deceptive or abusive acts or practices,” known as from UDAAP.
In January, Kraninger sided with Mulvaney and specifically called on Congress to give the CFPB “clear authority” to conduct surveillance reviews for MLA compliance.
Senators Catherine Cortez Masto, D-Nev., Jack Reed, DR.I., and Chris Van Hollen, D-Md., Each insisted on what had changed to require the withdrawal.
“You seem to place the onus on the military and their families to report violations before the agency acts,” Cortez Masto said. “The CFPB is required to enforce the LBA. “
Kraninger defended the decision, responding that “the MLA has not been designated by Congress as one of the listed statutes.”
Cortez Masto then noted that Kraninger had changed his mind based on a legal analysis, asking to see a copy.
Kraninger said she would not be able to hand deliver the document, citing “protection of the deliberative process.”
Reed, an Army veteran, raised additional concerns about the lack of MP exams, given that the law provides for a 36% interest rate cap for members of the military and their families.
“You chose to read the law to protect payday lenders,” Reed said. “What is so frustrating to me is that if it’s administration policy, you decide you shouldn’t be overseeing these companies. Supervision prevents the need for law enforcement.
Democrats also criticized Kraninger’s handling of the payday loan rule, including the decision to reconsider the repayment capacity requirement included in the final settlement. Van Hollen asked Kraninger if she knew how much the breakdown industry was saving from its proposal last month to waive the rule’s basic subscription requirement.
“I’m looking at your analysis,” he said, brandishing a sheet of paper. “Are you aware of the fact that you found out that the breakdown industry would save $ 7.3 billion to $ 7.7 billion?” “
“I understand where you are going with this,” Kraninger said. “There are a number of facts here; we are in active litigation on this matter.
Van Hollen replied, “The question is not whether we should take the reins of payday loans, which you are trying to do. The question is whether we should be protecting consumers. Isn’t it your job to protect people from predatory lending? “
Several other Democrats, including Sen. Bob Menendez, DN.J., and Senator Tina Smith, D-Minn., Have also lobbied Kraninger over the growing student loan crisis and how the agency can do more. to protect borrowers.
“There is deep frustration with loan management agencies,” Smith said. “It feels like all the power is with these big companies. I thought it was a good thing when the CFPB released a proposal [in February 2017] to get data and figure out what was going on. ”
However, “since then 1.5 million Americans have defaulted,” she added.
Kraninger said she “didn’t know about this until last week” and would get back to the senator.
Meanwhile, Republicans have adopted a more conciliatory tone with the CFPB director, asking for details on the timing of upcoming regulations, among others. Senator Mike Crapo, R-Idaho, asked her about the CFPB’s pending debt collection rules, while Senator Tim Scott, RS.C., asked if credit unions would benefit from regulatory relief additional.
Still, Kraninger responded without giving details of the agency’s direction.
“It is certainly a goal of the office to understand and reduce the regulatory burden,” she said in response to Scott. “But it’s also important to know how this affects consumers. “