Ten Questions for Kraninger: Time for CFPB Nominee to Come Clean

Little is Known about Trump’s CFPB Nominee, She Must Answer Important Questions with Detail and Transparency

WASHINGTON, D.C. – On Thursday, the Senate Banking Committee will consider the nomination of Kathy Kraninger, President Trump’s choice to lead the Consumer Financial Protection Bureau (CFPB), yet there is still much the public does not know about her record or experience other than the fact that she has no record on consumer protection or financial and banking regulatory issues. Noting that is time for Kraninger to “come clean,” consumer advocacy group Allied Progress released 10 questions she must answer with detail and transparency before Senators consider her nomination.

It is time for Kathy Kraninger to come clean about her record of mismanagement. With zero experience working on consumer protection issues or holding powerful financial interests accountable, it is incumbent on this nominee to provide Senators with important details about her career and plans for the CFPB should she be confirmed,” said Karl Frisch, executive director Allied Progress.

10 Questions Kraninger Must Answer 

QUESTION 1: What was your involvement with the Trump Administration’s family separation immigration policy?

What We Know

  • Kraninger’s fingerprints are likely all over the Trump Administration’s family separation policy.  Kathy Kraninger was likely involved in implementing the Trump Administration’s policy of separating children from their parents at the border. This involvement would have been in her official capacity at OMB. Kraninger has budgetary oversight of the Department of Homeland Security and Department of Justice, and OMB has oversight of the policy change that prompted families to be separated at the border. [Kate Berry, “CFPB nominee likely connected to Trump’s ‘zero-tolerance’ immigration policy,American Banker, 06/19/18]

QUESTION 2: What was discussed at your February 2018 meeting with GEO Group’s Vice President for Public Policy?

What We Know

QUESTION 3: What was your role in the response efforts for the crisis in Puerto Rico after Hurricane Maria?

What We Know

  • Although Puerto Rican officials assert that they have “restored power to 98 percent of the grid’s customers,” service can be “nightmarishly unreliable” and still dependent on “private generators.” A May 2018 report in the New York times found that, “while officials say the $2.5 billion reconstruction effort has restored power to 98 percent of the grid’s customers, swaths of hilly country across the island are still pitch black after dark, punctuated by lights run on private generators. […] Even restored sections of the grid are nightmarishly unreliable, as evidenced by last month’s outage, the second major power failure in a week and the fourth since early February.” [James Glanz and Frances Robles, “How Storms, Missteps and an Ailing Grid Left Puerto Rico in the Dark,” The New York Times, 05/06/18]

QUESTION 4: Do you agree with Mick Mulvaney’s request for zero funding for the CFPB?

What We Know

  • On January 18, 2018, Mulvaney sent his first request to the Federal Reserve for CFPB funding and requested zero dollars. Mulvaney said the bureau would instead use funds from the CFPB’s “‘reserve fund,’” maintained by Director Cordray “in case of overruns or emergencies.” [Michael Grunwald, “Mulvaney requests no funding for Consumer Financial Protection Bureau,”Politico, 01/18/18]

QUESTION 5: How would you run the CFPB differently than Mulvaney?

What We Know

  • The White House, Mulvaney, Sen. Mitch McConnell (R-KY) and Rep. Jeb Hensarling (R-TX) have all praised Kraninger because she will allegedly continue the work of “Acting Director” Mulvaney.

The White House said, “‘As a staunch supporter of free enterprise, she will continue the reforms of the Bureau initiated by Acting Director Mick Mulvaney.’”

“Acting Director” Mulvaney said, “‘I know that my efforts to rein in the bureaucracy at the Bureau of Consumer Financial Protection to make it more accountable, effective, and efficient will be continued under her able stewardship.’”

Senate Majority Leader Mitch McConnell said, “‘Ms. Kraninger’s resume and reputation suggest she’s well-suited to continue on the course Acting Director Mulvaney has charted toward transparency, accountability, and effectiveness within proper limits.’”

Jeb Hensarling, Chairman of the House Financial Services Committee, said, “‘We have seen some of that good under the leadership of Acting Director Mulvaney, and I have no doubt that will continue under the leadership of Kathy Kraninger.’”

[“President Trump to tap Mulvaney associate to lead Consumer Bureau,” National Public Radio, 06/16/18; Press Release, Consumer Financial Protection Bureau, 06/19/18; Press Release, Office of Senate Majority Leader Mitch McConnell, 06/20/18; and Press Release, House Financial Services Committee, 06/18/18]

QUESTION 6: Would you maintain Mulvaney’s changes to the Consumer Advisory Board?

What We Know 

  • In June 2018, Mulvaney disbanded the legally required Consumer Advisory Board completely. On June 6, Mulvaney’s CFPB “fired the agency’s 25-member advisory board” just “days after some of its members criticized his leadership of the watchdog agency.” In a statement announcing the board’s dismissal, CFPB spokesman John Czwartacki said, “‘the outspoken members of the Consumer Advisory Board seem more concerned about protecting their taxpayer funded junkets to Washington, D.C., and being wined and dined by the Bureau than protecting consumers.’” [Renae Merle, “Mick Mulvaney fires all 25 members of consumer watchdog’s advisory board,” The Washington Post, 06/06/18]
  • The director of the CFPB “is legally required to meet with the 25-member Consumer Advisory Board twice a year.” In the wake of Mulvaney’s disbandment of the board, a representative for the Bureau said, “‘The Bureau will continue to fulfill its statutory obligations to convene the Consumer Advisory Board and will also continue to provide forums — for the Community Bank Advisory Council and the Credit Union Advisory Council.” [Katy O’Donnell, “Mulvaney guts consumer bureau’s advisory board,” Politico, 06/06/18]

QUESTION 7: Which CFPB-regulated industries are overregulated? Underregulated?

What We Know

  • Mike Crapo (R-ID) criticized CFPB rules on the grounds that businesses use resources complying with rules that could be used to grow and create jobs. Crapo claimed that the “3,500 pages of final rules [from the CFPB] affecting the mortgage market” would “[tie]up resources that could be better spent on growing business, creating jobs and boosting the economy.” Crapo also criticized a lack of cost-benefit analysis and input from small businesses in the CFPB rulemaking process. [Press Release, “CRAPO: I WILL CONTINUE TO FIGHT FOR ACCOUNTABILITY AND TRANSPARENCY AT CFPB,” Senator Mike Crapo, 07/16/13]
  • Former Senate Banking Chairman Richard Shelby (R-AL) has said that some of the CFPB’s rules “make it more difficult for companies to lend and offer products in the marketplace.” In 2016, Then-Chairman of the Senate Banking Committee, Richard Shelby (R-AL) said, “‘Nearly five years ago, the Bureau of Consumer Financial Protection opened its doors. Because of the Bureau’s structure and the means by which it is financed, it remains one of least accountable agencies in the federal government. As a result, the very consumers that the CFPB was designed to help have been harmed by the Bureau because some of its rules make it more difficult for companies to lend and offer products in the marketplace.’” [Press Release, “SENATE BANKING HEATS UP DURING CONSUMER FINANCE PANEL,” Consumer Bankers Association, 04/05/16]

QUESTION 8: Do you agree with the Mulvaney’s decision to drop lawsuits against or investigations into payday lenders and other industries that have donated to his campaigns?

What We Know

  • Mulvaney’s CFPB closed an investigation into World Acceptance Corporation, a payday lender that gave him thousands in campaign cash. Under Mulvaney’s leadership, the CFPB completed an investigation into World Acceptance Corporation “without an enforcement action.” The CFPB had opened an investigation into World Acceptance Corporation under Richard Cordray’s leadership. “World Acceptance, one of the nation’s biggest payday lenders, is based in South Carolina and gave Mulvaney thousands of dollars in campaign contributions while he represented the state in Congress.” [“Former payday lender CEO now wants to run the CFPB,” Associated Press, 03/06/18]
  • Under Mulvaney’s leadership, the CFPB “dropped a lawsuit against an alleged online loan shark called Golden Valley Lending.” The case, which “took CFPB staffers years to build,” accused the lenders of illegally charging “people up to 950 percent interest rates.” One CFPB attorney who worked on the case called Golden Valley Lending “‘one of the worst of the worst’” for its predatory lending practices. [Chris Arnold, “Trump Administration Plans To Defang Consumer Protection Watchdog,” NPR, 02/12/08; Stacey Cowley, “Consumer Watchdog’s Latest Budget Request: $0,” The New York Times, 01/18/18.]
  • Mulvaney’s spokesperson claimed that the decision to drop the Golden Valley lawsuit was made by “professional career staff,” and not Mulvaney himself. He was later forced to admit Mulvaney was involved. However, several CFPB staffers, who spoke on condition of anonymity, said that “Mulvaney decided to drop the lawsuit even though the entire career enforcement staff wanted to press ahead with it.” Mulvaney’s spokesperson finally admitted “that Mulvaney was indeed involved in the decision to drop the lawsuit.” [Chris Arnold, “Trump Administration Plans To Defang Consumer Protection Watchdog,” NPR, 02/12/08.]

QUESTION 9: Do you agree with the Mulvaney’s decision to strip the Office of Fair Lending and Equal Opportunity of enforcement powers? What will you do at the CFPB to hold financial entities accountable for discriminatory lending practices?

What We Know

  • Mulvaney stripped the CFPB Office of Fair Lending and Equal Opportunity of enforcement powers. In February 2018, Mulvaney and the Trump administration “stripped enforcement powers” from the CFPB’s Office of Fair Lending and Equal Opportunity. The office was “responsible for pursuing discrimination cases.” Consumer advocates argued that “separating the fair-lending office from its enforcement power weakens its power to pursue cases.” [Renae Merle, “Trump administration strips consumer watchdog office of enforcement powers in lending discrimination cases,” The Washington Post, 02/01/18]
  • Mulvaney now has more control over the Office of Fair Lending and Equal Opportunity. The Office of Fair Lending and Equal Opportunity is “being moved to a position within the CFPB where it will lack authority to supervise loan makers and enforce fair lending laws.” It “will now be more directly under Mulvaney’s supervision, as part of the Office of Equal Opportunity and Fairness.” [Hannah Levintova, “The Trump Administration Just Made it Easier for Banks to Screw Over Minority Borrowers,” Mother Jones, 02/02/18]

QUESTION 10: Do you believe that the CFPB’s structure is constitutional? Will you protect it in court?

What We Know

  • In January 2018, the DC Circuit Court of Appeals upheld the constitutionality of the CFPB, as currently structured. “A federal appeals court has upheld the constitutionality of the Consumer Financial Protection Bureau’s structure, a decision that preserves the agency’s independence in the face of challenges from business interests and conservatives. The D.C. Circuit Court of Appeals ruled 7-3…that a provision in the 2010 Dodd-Frank law that limits the president’s ability to remove the CFPB director during his or her five-year term does not violate the president’s authority to appoint and remove executive branch officers.” [Colin Wilhelm and Josh Gerstein, “Court upholds constitutionality of Consumer Financial Protection Bureau,Politico, 01/31/18]
  • During a 2018 Senate Banking Committee Hearing, Mulvaney said of the CFPB, “I am assuming it’s constitutional every single day when I go in…” When asked about whether he considered the CFPB Constitutional, Mulvaney said, “‘I’m not sure that I have the discretion to consider this agency to be unconstitutional… I think the system starts to break down if people who work at places make their own conclusions about constitutionality.  If the President tells me it is unconstitutional, I’ll pay attention.  I am assuming it’s constitutional every single day when I go in…’” [Lindsay C. Demaree, “Senate Banking Committee Probes Mulvaney’s Leadership at the CFPB,” Consumer Finance Monitor, 04/13/18]

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