Kraninger Maintains Reckless Mulvaney-era Decision to Cease CFPB Lender Examinations Intended to Prevent Military Lending Act Violations
But Despite Her Rhetoric, There’s Nothing Stopping Her from Using Her Authority Today
WASHINGTON, D.C. — The Consumer Financial Protection Bureau is out with its annual servicemember report which found a 47 percent spike in complaints made to the CFPB between 2016 and 2017 from soldiers being financially taken advantage of by debt collectors, credit reporters, and student loan servicers. The findings are a sobering reminder why CFPB Director Kathy Kraninger must reverse the baseless and harmful decision made by her predecessor Mick Mulvaney to stop proactive examinations of lenders for any violations of the Military Lending Act – an enforcement measure the CFPB has every right to conduct today but chooses not to.
“It boils down to this: Kathy Kraninger has clear authority to supervise lenders to prevent financial exploitation of our servicemembers, and she should use it,”said Jeremy Funk, spokesman for Allied Progress. “Kraninger has all the tools she needs to put predatory lenders on notice that they will not, for instance, get away with fleecing military members and their families with credit card rates exceeding the 36 percent cap. But she is choosing not to use them. She is instead playing games with our troops’ financial well-being by claiming she needs more clarity from Congress before she can do her job of looking out for MLA violations. She knows this is completely unnecessary because Congress already gave the CFPB authority to enforce the Military Lending Act and because creditors complied when the Cordray-era CFPB routinely conducted these kinds of examinations.”
Added Funk:“What this is really about is turning a blind eye to predatory lenders scamming and abusing our brave men and women in uniform. Why would the Trump administration do that? Could be the over 2.2 million reasons the lending industry gave Donald Trump’s inauguration and political committees.”
WHAT YOU NEED TO KNOW:
The CFPB Acknowledges That Servicemembers Are Being Financially Exploited By Debt Collectors, Credit Reporters, And Student Loan Servicers
Servicemembers’ Complaints To The CFPB Skyrocketed 47% From 2016 To 2017.
There Was A 47% Increase In The Volume Of Complaints That Servicemembers Made To The CFPB From 2016 To 2017. “The Bureau has received approximately 123,500 complaints from servicemembers since July 2011. The number of servicemembers, veterans, and military families turning to the Bureau for help has continued to increase over time. As a result, the complaint volume from servicemembers has also risen over the years. From 2016 to 2017 there was a 47% increase in complaints received from servicemembers.” [“Office of Servicemember Affairs Annual Report,” Consumer Financial Protection Bureau, January 2019]
Financial Exploitation Of Servicemembers Hurts Both Our National Security And Our National Debt
Financial Strain Forces As Many As 8,000 Servicemembers To Leave The Military Each Year, Costing Taxpayers $456 Million Annually
Thousands Of Servicemembers Have To Leave The Military Each Year Because Of Their Personal Financial Issues, At A Cost Of $456 Million A Year To The Military. “For example, an average of 4,700 to 8,000 servicemembers are separated each year from the military for financial issues (e.g., losing their security clearance due to unpaid debts). These separations take a real toll not only on servicemembers and their families, but also cost the government hundreds of millions of dollars (up to $456 million per year) to recruit and replace those servicemembers.” [“Office of Servicemember Affairs Annual Report,” Consumer Financial Protection Bureau, January 2019]
Many Servicemembers Enlist In Order To Ease Their Student Debt Burdens, But Loan Servicers Are Only Making Things Harder For Them
Many Servicemembers Enlist In The Military “Because Of Student Debt.”
The CFPB Acknowledges That Many Servicemembers Enlist In The Military “Because Of Student Debt.” “For years, we have heard from servicemembers about how they entered military service not only with student debt, but because of student debt. Now we know that more than 200,000 servicemembers collectively owe more than $2.9 billion in student debt.” [“Office of Servicemember Affairs Annual Report,” Consumer Financial Protection Bureau, January 2019]
Kathy Kraninger Claims There Isn’t “Clear Authority” To Supervise Lenders For Compliance With The Military Lending Act…
Kathy Kraninger Asked Congress For “Clear Authority” To Conduct Supervisory Exams Of Banks And Lenders For Compliance With The Military Lending Act…
In January 2019, CFPB Director Kathy Kraninger Asked Congress For “Clear Authority” To Conduct Supervisory Exams Of Banks And Lenders For Compliance With The Military Lending Act. “The director of the Consumer Financial Protection Bureau on Thursday asked Congress to give it the ‘clear authority’ to conduct supervisory exams of banks and financial firms for compliance with the Military Lending Act. The director, Kathy Kraninger, sent a letter to Vice President Mike Pence and House Speaker Nancy Pelosi with draft legislation that would give the bureau ‘nonexclusive authority to require reports and conduct examinations on a periodic basis.’ ‘The requested authority would complement the work the Bureau currently does to enforce the MLA,’ Kraninger said in the one-page letter.” [Kate Berry, “CFPB’s Kraninger asks for ‘clear authority’ over military lending exams,” American Banker, 01/17/19]
…Even Though Legal Experts Agree “There Is No Question” That The CFPB Has Supervisory Authority For Compliance With The Military Lending Act.
In A Letter To Kathy Kraninger, House Financial Services Committee Members Explained That “There Is No Question” That The CFPB Has Supervisory Authority Over Regulated Entities For Compliance With The Military Lending Act.
According To Members Of The House Financial Services Committee, “There Is No Question” That The CFPB Has Supervisory Authority Over Regulated Entities For Compliance With The Military Lending Act, “As Has Been Detailed By Legal Experts, And Underscored By Republican And Democratic Members Of Congress.” On December 14, 2018, Democratic members of the House Financial Services committee, led by Rep. Maxine Waters (D-CA), sent a letter to CFPB Director Kathy Kraninger. They wrote “We believe servicemembers and their families deserve to have their rights under federal law fully upheld through strong supervision and enforcement by federal regulators, including the Consumer Bureau. For this reason, Congress granted the Consumer Bureau broad supervisory authority to oversee a wide range of regulated entities, required the Consumer Bureau to establish an Office of Servicemember Affairs, and in 2013, amended the MLA to give the Consumer Bureau, along with other federal agencies that oversee other financial institutions, the authority to enforce the MLA. As has been detailed by legal experts, and underscored by Republican and Democratic Members of Congress, there is no question the Consumer Bureau has the authority and the responsibility to supervise its regulated entities for compliance with the MLA.” [Letter to Kathy Kraninger from Rep. Maxine Waters et. al.,12/14/18]
The CFPB Conducted Supervisory Examinations For Years During The Obama Administration, Citing Its Authority Under Dodd-Frank.
The CFPB “Conducted Supervisory Exams For Years” During The Obama Administration, Citing “Cited Its Authority Not Just Under The Dodd-Frank Act, But Also In Regulating ‘Unfair, Deceptive Or Abusive Acts Or Practices,’ Known As UDAAP.” “Last year, Mick Mulvaney, at the time the acting director of the CFPB, claimed that further legislation was needed for the CFPB to examine financial firms for MLA compliance. The Obama administration had conduced supervisory exams for years, and has long cited its authority not just under the Dodd-Frank Act, but also in regulating ‘unfair, deceptive or abusive acts or practices,’ known as UDAAP. Mulvaney, now the White House chief of staff, had argued Dodd-Frank did not specifically identify the MLA among the 19 statutes under the CFPB’s authority.” [Kate Berry, “CFPB’s Kraninger asks for ‘clear authority’ over military lending exams,” American Banker, 01/17/19]
- “The bureau has always had enforcement authority over a range of lenders, including payday and installment lenders, but without supervisory authority, investigations can take longer and often are based on consumer complaints.” [Kate Berry, “CFPB’s Kraninger asks for ‘clear authority’ over military lending exams,” American Banker, 01/17/19]
In August 2018, Mick Mulvaney’s CFPB Decided to Ease Off Predatory Lenders Who Target Servicemembers.
- In August 2018, it was reported that the Trump Administration was proposing to roll back enforcement of the Military Lending Act, and weaken laws aimed at protecting servicemembers who buy cars.[Chris Arnold, “White House Takes Aim At Financial Protections For Military,” NPR, 08/13/18]
- Also, in August 2018, the CFPB announced that it would no longer use “supervisory examinations of lenders” to find violations of the Military Lending Act and will instead rely solely on consumer complaints. [Glenn Thrush, “Mulvaney Looks to Weaken Oversight of Military Lending,” The New York Times, 08/10/18]
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