Trump’s likely pick for consumer financial protection bureau has no experience in consumer finance

Kathy Kraninger doesn't have experience in the issues her agency presides over.

Protesters gather in front of the Consumer Financial Protection Bureau (CFPB) headquarters on November 28, 2017 in Washington, DC. CREDIT: Mark Wilson/Getty Images
Protesters gather in front of the Consumer Financial Protection Bureau (CFPB) headquarters on November 28, 2017 in Washington, DC. CREDIT: Mark Wilson/Getty Images

Trump plans to tap Kathy Kraninger to lead the Consumer Financial Protection Bureau (CFPB), an agency which is supposed to provide oversight for the financial sector. Kraninger doesn’t have experience in consumer issues and financial services.

Kraninger also currently works for Mick Mulvaney, the acting director of the CFPB and the director of the White House Office of Management and Budget (OMB). Mulvaney has repeatedly called to get rid of the CFPB entirely.

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The CFPB was created in response to the financial crisis and was authorized by the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act.

Since the Trump administration began, officials have chipped away at the agency’s effectiveness, with Mulvaney leading the way. After he was named acting chief of the agency last fall, Mulvaney put in place a nearly six-month freeze on data collection and new regulations. Investigations have also slowed down. According to an April Associated Press report, the agency issued an average of two to four enforcement actions a month under former Director Richard Cordray, but there were zero enforcement actions since Nov. 21 of last year, a few days before he resigned.

In January, the agency announced it plans to rewrite a rule approved under Cordray that was supposed to prevent payday lenders from exploiting low-income borrowers. The agency may also pull back on its enforcement of compliance with a fair lending law that looks at disparate impact. Disparate impact is the idea that a lender could act in a discriminatory fashion despite not having the intent to discriminate because the policy itself has a disparate impact on a protected group, such as people of color.

In a 2014 interview with the Credit Union Times, Mulvaney said of the CFPB, “It’s a wonderful example of how a bureaucracy will function if it has no accountability to anybody. It turns up being a joke, and that’s what the CFPB really has been, in a sick, sad kind of way, because you’ve got an institution that has tremendous authority over what you all do for a living.”

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In her 15 months at the OMB, Kraninger put together the budget for the Department of Housing and Urban Development and other agencies, according to Politico. She has also done work for the House and Senate Appropriations Committees and Department of Homeland Security.

White House Deputy Press Secretary Lindsay Walters sent out a statement Saturday that called Kraninger a “staunch supporter of free enterprise.” Her statement continued, “She will bring a fresh perspective and much-needed management experience to the BCFP, which has been plagued by excessive spending, dysfunctional operations, and politicized agendas.”

A senior Trump administration official told Politico that the reason the White House chose a person who didn’t have relevant financial policy experience was because they considered problems with the CFPB to be “management issues.” The official added that conservatives should be comfortable with the pick because she has been part of Mulvaney’s vision for the agency.

The American Bankers Association congratulated Kraninger. “We also appreciate Acting Director Mulvaney’s willingness to review the Bureau’s policies and priorities to ensure they are meeting the Bureau’s mission and we hope Ms. Kraninger will build on that foundation,” it tweeted.

If Kraninger isn’t confirmed — and she may not be — Mulvaney will continue to serve as acting CFPB director until another nominee is put forward, giving him more time to roll back the agency’s work. Last year, the agency’s deputy director tried to block Mulvaney’s appointment but a federal judge ruled that he could serve under the Vacancies Reform Act. That means that if her nomination stalls or isn’t voted through, Mulvaney has more time to lead the agency.

The pick is likely to result in a contentious nomination process.

House Minority Leader Nancy Pelosi (D-CA) criticized the choice of Kraninger for the position and tweeted that “her apparent lack of experience in consumer finance raises serious questions about her ability to lead the agency.”

Paul Bland, executive director of Public Justice, a nonprofit legal advocacy organization, tweeted that unless her approach is very different from Mulvaney’s, the Senate should block her nomination.

Democrats will likely may question whether Kraninger is fit to lead the agency without significant experience or will significantly depart from Mulvaney’s approach. Some conservatives worry that by picking a relatively unknown person, the administration may have set themselves up for failure. However, the Trump administration has advanced a number of important nominations where Congress has been asked to vote for people to lead agencies in areas in which they have little to no policy experience.