As CFPB Director Kraninger Heads to Capitol Hill, Here’s The Top 5 Ways She’s Put Industry First

Kraninger’s “Buyer Beware” Philosophy of Inaction Is Costing Consumers Billions

Washington D.C. – Now ten months on the job, Trump CFPB Director Kathy Kraninger is firmly set in her ways of prioritizing industry demands over consumer needs. As Kraninger prepares to testify at back-to-back Congressional appearances today and Thursday, consumer watchdog group Allied Progress released a ‘Top 5’ list of anti-consumer decisions the Director should answer for (see below). That includes Kraninger’s refusal to defend the bureau’s constitutionality, which industry has already seized on in the courts, and her decision to derail protections from the payday loan debt trap, which has already cost consumers over a billion dollars and counting.

“Kathy Kraninger has rarely strayed from the example set by her predecessor, right-wing ideologue Mick Mulvaney, who considered the bureau’s mission to protect consumers a joke,” said Jeremy Funk, spokesman for Allied Progress. “Like Mulvaney, Kraninger’s preferred method of dealing with illegal behavior from big banks, predatory lenders, and other financial scammers is to pretend it doesn’t exist. She’s gone out of her way to receive industry advice and consent on her rulemaking, especially from those who have showered millions of dollars on Donald Trump’s campaign and personal businesses. And now Kraninger is streamlining her input from special interests by stacking her Consumer Advisory Board with financial industry insiders. If you think the bureau couldn’t creep further from its mission, just wait.”

Top 5 Ways Donald Trump And Kathy Kraninger Have Let Corporate Special Interests Take Over The CFPB

1)   Kraninger Says “Buyer Beware” To Consumers as CFPB Investigations Have Plummeted By 70% With Just Twenty Enforcement Actions In 2019.

The CFPB Has Seen A 70% Decrease In Investigations Since The Transition “From Democratic To Republican Leadership,” Announcing Just Twenty Enforcement Actions In 2019.

During a national TV appearance last month, Kraninger doubled down on her philosophy that consumers should ‘help themselves’ – that they shouldn’t expect the CFPB to do the job it was created to do. The only consolation she could offer consumers mistreated by industries she’s supposed to hold accountable was a cold and trite piece of advice: ‘Buyer Beware.’  It explains why there has been a 70 percent drop in CFPB investigations since the transition from Democratic to Republican leadership, with the agency announcing just 20 enforcement actions in 2019.

The CFPB Has Issued Only 20 Enforcement Actions In 2019 And Bureau Investigations Have Decreased 70% Since The Leadership Transition Between Democrats And Republicans. “One of Porter’s main priorities has been defending the CFPB, an agency born out of the 2010 Dodd-Frank Act that has been scorned by congressional Republicans. Porter said she plans to continue holding the bureau accountable. She notes that Kathy Kraninger, a Trump appointee, has ‘no expertise and no experience’ in consumer finance. The CFPB has so far this year issued 20 enforcement actions, with investigations down 70% in the changeover from Democratic to Republican leadership.” [Neil Haggerty and Kate Berry, “The next Elizabeth Warren? How Katie Porter is shaking up House banking panel,” American Banker, 10/14/19]

2)   Following The Release Of Kraninger’s Proposed Debt Collection Rule Allowing Debt Collectors to Send Unlimited, Unsolicited Texts and Emails to Consumers, the Debt Industry Said They Were “Pleased” With The Rule, And That It Was “A Clear Step Forward.”

Consumer Advocates Charged That The CFPB’s Proposed Rule Gave The Debt Collection Industry “‘Almost Everything’” It Wanted And Accused The Bureau Of “‘Catering To Businesses Instead Of Consumers.’”

Consumers Advocates Charged That The CFPB Gave Debt Collectors “‘Almost Everything That The Industry Wanted’” And Accused It Of “‘Catering To Businesses Instead Of Consumers.’” “Consumer advocates, though, say the bureau set the limit too high. ‘We’re very upset and very concerned — I think outraged might be the right word for it,’ said Margot Saunders, senior counsel at the National Consumer Law Center. ‘Almost everything that the industry wanted, the bureau gave them,’ Saunders said. ‘Although they didn’t go as far as the industry wanted, the whole rule is to expand collectors’ rights. … They’re not expanding consumers’ rights.’ […] Melissa Stegman, senior policy counsel at the Center for Responsible Lending, agreed, accusing the CFPB of ‘again catering to businesses instead of consumers’ in an emailed statement.” [Katy O’Donnell, “CFPB overhauls rules for debt collectors as consumer groups balk,” Politico, 05/07/19]

ACA International’s President Called The Release Of Kathy Kraninger’s Proposed Debt Collection Rule “A Historic Time For Our Industry.”

ACA International’s President Said, “The Release Of The CFPB’s Proposed Rules On Debt Collection Is A Historic Time For Our Industry.” ACA International President Jack Brown III said, “[t]he release of the CFPB’s proposed rules on debt collection is a historic time for our industry. As with any change, there are challenges and opportunities presented to our members; the rules provide opportunities to deploy modern technology in communicating with consumers while also presenting challenges of fertile ground for consumer attorneys to plow.” [“Industry Insight: What ACA Members Are Saying on the CFPB Proposed Debt Collection Rule,” ACA International, 05/07/19]

Following The Release Of Kathy Kraninger’s Debt Collection Rule, ACA International Said It Was “Pleased” That The CFPB Addressed Modern Communications Technology, Which The Group Said Had “Long Been A Source Of Great Frustration For Debt Collectors.” “ACA is pleased that the CFPB chose to address the use of modern technology and communication, which have long been a source of great frustration for debt collectors.” [“CFPB Releases Long-Awaited Proposed Debt Collection Rule,” ACA International, 05/10/19]

The Receivables Management Association Said Kraninger’s Proposal Marked “A Clear Step Forward.”

RMAI Called The Release Of Kraninger’s Debt Collection Proposal “One Of The Most Exciting Weeks For The Industry.” “The release of the CFPB Debt Collection NPR made last week one of the most exciting weeks for the industry.” [“RMAI Update May 2019,” Receivables Management Association International, May 2019]

RMAI’s President-Elect Called Several Aspects Of Kathy Kraninger’s Debt Collection Rule “A Clear Step Forward.” “‘The atmosphere was one of anticipation and excitement. Director Kraninger’s remarks acknowledging the importance of the collection industry to the health of the credit ecosystem and the necessity for the rules to address innovations in technology and electronic communications and the adoption of standard forms and notices are a clear step forward in providing the industry the clarity that we have been seeking.’ – Jim Mastriani, RMAI President-Elect” [“CFPB Debt Collection Town Hall Recap,” Receivables Management Association International, 05/09/19] 

3)   In February, The Trump-Kraninger CFPB Admitted They Conducted Zero New Research Before Releasing Their Industry-Friendly Proposal To Gut Payday Loan Borrower Protections.

Kathy Kraninger Proposed Gutting The CFPB’s Payday Lending Rule And Eliminating Its Crucial Ability-To-Repay Provision, Which Requires Lenders To Verify That Borrowers Can Repay Their Loans.

In February 2019, Kathy Kraninger Proposed Gutting The CFPB’s Payday Lending Rule By “Eliminating Nearly All Of The Regulation’s Substantive Requirements, Including The ‘Ability To Repay’ Mandate.” “Payday lenders won a major victory on Wednesday after the Consumer Financial Protection Bureau moved to gut tougher restrictions that were to take effect later this year. The industry has spent years trying to fend off the new rules, which were conceived during the Obama administration. The regulations were intended to prevent spiraling debt obligations by limiting the number of consecutive loans that could be made and requiring lenders to verify that borrowers could pay back their loans on time while still covering basic living expenses. In her first major policy move, the bureau’s new director, Kathleen Kraninger, proposed eliminating nearly all of the regulation’s substantive requirements, including the ‘ability to repay’ mandate. There was ‘insufficient evidence and legal support’ for the provision, the bureau said. It also sought to drop a limit that would have prevented lenders from making more than three short-term loans without a 30-day ‘cooling off’ period.” [Stacy Cowley, “Consumer Protection Bureau Cripples New Rules for Payday Loans,” The New York Times, 02/06/19]

CFPB Policy Associate Director Thomas Pahl: “We Did Not Do Any New Research” While Revising The Payday Rule.

CFPB Policy Associate Director Thomas Pahl Told House Financial Services Subcommittee Members That “‘We Did Not Do Any New Research’” For Its Overhaul Of The Payday Lending Rule. “Thomas Pahl, the CFPB’s policy associate director for research, markets and regulations, defended the agency’s overhaul of its 2017 payday rule, announced earlier this year, by claiming the study the CFPB relied upon to impose tough ability-to-repay standards did not address vehicle title loans and was limited to data collected from one payday lender in five states. ‘We did not do any new research,’ Pahl told the House Financial Services subcommittee on economic and consumer policy. ‘We have decided to reconsider the rule, in part, because the research that was done — [there was] nothing wrong with it in and of itself — is not a very strong basis for addressing all vehicle title lenders nationwide and all payday lenders nationwide and for that reason we have questions about it, and that’s why we put it out for public comment to see if there are other sources of information on this point before the bureau makes a final determination.’” [Kate Berry, “Democrats grill CFPB official on payday rewrite,” American Banker, 05/16/19]

4)   The Trump-Kraninger CFPB Appointed A Former Mortgage Banker That Was Called The “New Face Of The Housing Crisis” To Serve On The Bureau’s Consumer Advisory Board.

The CFPB Appointed Rebecca Steele, A Former Mortgage Banker Who Was Once Called The “New Face Of The Housing Crisis,” To Serve On The Bureau’s Consumer Advisory Board.

On October 3, 2019, The CFPB Announced That Rebecca Steele, President And CEO Of The National Foundation For Credit Counseling, Was Appointed To The Bureau’s Consumer Advisory Board. “Consumer Financial Protection Bureau Director Kathleen L. Kraninger today announced the appointment of members to the Consumer Advisory Board (CAB), Community Bank Advisory Council (CBAC), Credit Union Advisory Council (CUAC), and Academic Research Council (ARC). These experts advise Bureau leadership on a broad range of consumer financial issues and emerging market trends. […] The following members will serve on each of their respective committees: Consumer Advisory Board (CAB) […] Rebecca Steele, President/CEO, National Foundation for Credit Counseling (Washington, DC)” [Press Release, Consumer Financial Protection Bureau, 10/03/19]

In October 2013, The New York Times Referred To Rebecca Steele, Then Rebecca Mairone, As The “New Face Of The Housing Crisis” Due To Her Role In “Saddl[Ing] The Housing Giants Fannie Mae And Freddie Mac With Bad Mortgages That Resulted In Over $1 Billion In Losses.” “More than five years after the housing bust, the roll call of banking executives who have been blamed by the public for the crisis has grown ever longer. But when it comes to top managers who have been hit with a jury verdict for pushing dubious mortgages, the list is small indeed. The new name added this week was Rebecca S. Mairone, a midlevel executive at Bank of America’s Countrywide mortgage unit, who was held liable by a federal jury in Manhattan for having saddled the housing giants Fannie Mae and Freddie Mac with bad mortgages that resulted in over $1 billion in losses.” [Landon Thomas Jr., “Bank’s Midlevel Executive Becomes a New Face of the Housing Crisis,” The New York Times, 10/25/13]

5)   Last Month, CFPB Director Kathy Kraninger Announced She Would No Longer Defend The Constitutionality Of The Consumer Bureau’s Single Director Structure – An Argument Companies Are Now Citing To Challenge CFPB Enforcement Actions In Court.

Following CFPB Director Kathy Kraninger’s Announcement That The CFPB Would No Longer Defend The Constitutionality Of Its Independent Director Structure, The House Of Representatives Filed An Amicus Brief With The Supreme Court Outlining The CFPB’s Independence.

Following CFPB Director Kraninger’s Announcement that “The Agency Would No Longer

Defend The Constitutionality Of The CFPB Director’s For-Cause Removal Provision,” Speaker Pelosi And Chairwoman Waters Announced “A Filing By The U.S. House Of Representatives With The Supreme Court In Support Of The Independence Of The Consumer Financial Protection Bureau.” “Speaker Nancy Pelosi and Financial Services Committee Chairwoman Maxine Waters announced a filing by the U.S. House of Representatives with the Supreme Court in support of the independence of the Consumer Financial Protection Bureau (Consumer Bureau or CFPB).  The House’s motion in the Seila Law v. CFPB case to file an amicus brief follows a recent announcement by CFPB Director Kathy Kraninger that the agency would no longer defend the constitutionality of the CFPB Director’s for-cause removal provision.” [Press Release, Office of the Speaker of the House of Representatives, 10/07/19]

Lawmakers Noted That “The For-Cause Removal Protection” For The CFPB Director Provides “A Degree Of Independence To The Agency.”

The Lawmakers Noted That “The For-Cause Removal Protection For The Director” Of The CFPB “Is Designed To Provide A Degree Of Independence To The Agency.” “The Trump Justice Department also urged the Supreme Court to consider the case in order to strike down the for-cause removal protection for the Director of this independent regulatory agency. The CFPB’s for-cause removal provision is designed to provide a degree of independence to the agency and to prevent the President from removing the CFPB Director at will.” [Press Release, Office of the Speaker of the House of Representatives, 10/07/19]

In The Wake Of Kraninger’s Announcement, Companies Facing Adverse Action From The Bureau Have Begun “Arguing That Because The CFPB Has Declared Itself Unconstitutional It Has No Authority To Bring Any Actions.”

Companies Challenging CFPB Enforcement Actions Have Begun “Arguing That Because The CFPB Has Declared Itself Unconstitutional It Has No Authority To Bring Any Actions.” “Companies have already begun challenging existing CFPB lawsuits, arguing that because the CFPB has declared itself unconstitutional it has no authority to bring any actions. One such instance came on Oct. 3 in litigation the CFPB launched in April 2017 against mortgage servicer Ocwen Financial Corp. The company said in a motion that the bureau’s reconsideration of its constitutionality means the enforcement case needs to be stopped.” [Evan Weinberger, “CFPB May Not Get Supreme Court Closure It Wants,” Bloomberg Law, 10/04/19]

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