Trump’s CFPB Pick Is Enigma to Bankers
(Bloomberg) -- Meet Kathy Kraninger, President Donald Trump’s pick to run a financial regulator that has drawn frequent attacks from members of his administration and Republican lawmakers.
For many bankers, consumers and senators, her confirmation hearing Thursday will be a chance to do just that. The little known White House budget official, who has spent the bulk of her career in Washington working on national security issues, was first put on financial firms’ radars last month when Trump selected her to lead the Consumer Financial Protection Bureau.
The CFPB, a controversial watchdog created in the wake of the financial crisis to protect ordinary Americans from predatory lending, is one of the most politically charged agencies in Washington. A brainchild of Wall Street critic Elizabeth Warren, Democrats praise it as a regulatory crown jewel. Republicans blame it as a bastion of government waste and overreach. So Kraninger’s appearance before the Senate Banking Committee is expected to be full of partisan bickering.
In her prepared testimony, Kraninger said she would focus on making the CFPB fair and transparent with a goal of empowering consumers to make “good choices,” while providing certainty for financial companies. Kraninger added that she would limit the agencies’ data collection from firms and closely scrutinize its “expenditure of resources.”
She also pledged to “take aggressive action against bad actors who break the rules by engaging in fraud and other illegal activity.”
Democrats are poised to criticize Kraninger for lacking financial-policy experience and will probably argue that at the CFPB, she would be a stand-in for her current boss in the Trump administration, Office of Management and Budget Director Mick Mulvaney. Mulvaney, a former House lawmaker who routinely ripped the CFPB when he was in Congress, has been leading the consumer agency on a part-time basis since November.
Already a group of Democrats led by Warren, a senator from Massachusetts, have tried to postpone Kraninger’s hearing, citing her failure to respond to their request for more information about her background.
“Ms. Kraninger has no relevant experience in banking, finance, or consumer protection," Warren wrote in a report earlier this week. “Her record does not justify a massive promotion to lead the federal agency charged with protecting consumers."
Still, a Republican-controlled Senate bolsters Kraninger’s prospects of getting the 51 votes needed to be confirmed. GOP lawmakers have already touted her experience in government management and ability to rein in federal spending -- which has been a top priority of Mulvaney’s at the CFPB. Republicans have also praised her work over the past year and a half at the White House, where she oversaw the administration’s work on budgets for several financial regulators.
“Ms. Kraninger’s resume and reputation suggest she’s well-suited to continue on the course Acting Director Mulvaney has charted," Senate Majority Leader Mitch McConnell said in a statement last month. “I look forward to supporting her nomination."
Created by the 2010 Dodd-Frank Act, the CFPB’s jurisdiction covers a wide range of financial products including mortgages, credit cards, student loans and payday loans. It’s now in the crosshairs of Trump’s deregulatory agenda.
Should she be confirmed, Kraninger would oversee all of the agency’s rulemaking, supervision of financial firms and enforcement activities. She would also be in charge of managing the regulator’s more than 1,600 employees, many of whom have grown increasingly worried about their job status. Under Mulvaney’s leadership, cost-cutting has been a top priority and his aides have considered relocating staff to places like Dallas and eliminating some departments entirely.
Kraninger, a graduate of Milwaukee’s Marquette University and Georgetown University Law Center in Washington, has been an associate director at OMB since 2017. Previously she worked for the Department of Homeland Security and on the Senate and House budget committees. Her work on Capitol Hill includes working on the staff of Republican Senator Susan Collins of Maine and the Senate Appropriations Committee when it was chaired by Richard Shelby, an Alabama Republican.
The consumer agency’s rulemaking and enforcement has slowed under Mulvaney, and Kraninger’s confirmation hearing will be the first opportunity to hear her thoughts on agency policies. Before Mulvaney took the the helm, the regulator had been pursuing tougher regulations for payday lenders.
Still, some analysts predicted that the expected squabbling between Democrats and Republicans will distract from any tidbits that Kraninger might provide on where she stands on the issues.
“We expect she will shed little new light regarding her views about specific matters," said KBW analyst Brian Gardner. “Instead, we expect she will be generally supportive of restraining the CFPB’s reach, which should not surprise."
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