CFPB 101: What Kathy Kraninger Needs To Know About Consumer Financial Education

Financial Education Is An Integral Part Of The CFPB’s Mission To Protect Consumers.

When It Was Established, The CFPB Was Required To Create An Office Devoted To Educating Consumers On Financial Decisions.

Dodd-Frank Required The CFPB to Create An Office On Educating Consumers On Financial Decisions. Title X of the Dodd-Frank Act required the CFPB to establish an office “charged with educating consumers on financial decisions.” The bill did not provide other guidelines for the office. [Dodd-Frank: Title X – Bureau of Consumer Financial Protection, Legal Information Institute, accessed 12/06/18]

The CFPB’s Consumer Education And Engagement Division Provides Resources To Inform Consumers’ Financial Decisions, Including Financial Coaching For Veterans And Economically Vulnerable Consumers.

The CFPB’s Consumer Education And Engagement Division Provides Resources To Inform Consumers’ Financial Decisions. The CFPB’s Consumer Education and Engagement Division “provides information for American consumers to consider in their financial decision making process. The Division includes six program offices supported by a central front office: Consumer Engagement, Financial Education, Consumer Response, Servicemember Affairs, Older Americans, and Community Affairs.” [Consumer Education and Engagement Division, Consumer Financial Protection Bureau, accessed 12/06/18] 

  • The CFPB Offers A Wide Range Of Tools, FAQs, And Guides To Consumers In Order To Help Them Manage And Plan Their Finances. The CFPB provides information to educate consumers on a range of financial topics including auto loans, payday lending, basic banking functions, debt collection, and student loans. On its website, the CFPB provides detailed guides on buying a home, taking out loans, and planning for retirement. Their site encourages consumers to browse “answers to hundreds of financial questions [… and] guides for financial decisions”. [Consumer Tools, Consumer Financial Protection Bureau, accessed 12/06/18]
  • The CFPB Offers Financial Coaching To Veterans And Consumers Considered Economically Vulnerable. The CFPB “provides the services of 60 certified financial coaches nationwide to veterans and economically vulnerable consumers in transition.” [Financial education for adults, Consumer Financial Protection Bureau, accessed 12/06/18]

Consumer Financial Education Is Under Threat

Mick Mulvaney Called For Industry Review Of All The CFPB’s Consumer Financial Education Programs. 

Under Mick Mulvaney’s Leadership, The CFPB Issued A Request For Information (RFI) Calling For Public Comment On All The Bureau’s Consumer Financial Education Programs. 

In April 2018, The CFPB, Under Mick Mulvaney’s Leadership, Released A Request For Information (RFI) On Consumer Financial Education. On April 4, 2018, the CFPB “issued a Request for Information (RFI) on consumer financial education. […] the 11th in a series of RFIs announced as part of Acting Director Mick Mulvaney’s call for evidence to ensure the Bureau is fulfilling its proper and appropriate functions.” [“CFPB Issues Request For Information On Consumer Financial Education,” Consumer Financial Protection Bureau, 04/04/18]

  • The RFI Was Intended To Garner Information On The Efficiency And Effectiveness Of The Bureau’s Consumer Financial Education Programs.The CFPB sought “comments and information from interested parties to assist the Bureau in assessing the overall efficiency and effectiveness of its consumer financial education programs, […] the Bureau’s delivery of financial education through online tools, print publications, and community collaborations.” [“CFPB Issues Request For Information On Consumer Financial Education,” Consumer Financial Protection Bureau, 04/04/18]

Kathy Kraninger’s Experience Working On Financial Literacy Issues Is Limited To A Program She Worked “A Little Bit” On While In College… Over 20 Years Ago.

During Her ConfirmationHearing, Kathy Kraninger Said She Worked “A Little Bit” On A Program Promoting Financial Literacy While In College… Over 20 Years Ago. 

During Her ConfirmationHearing,When Asked About Her Experience With Promoting Financial Literacy, Kraninger Stated That She Worked A Little Bit On CurriculumFor A Financial Literacy Program While In College.When Kathy Kraningerwas asked,“Have you ever worked on financial literacy or volunteered your time to promote financial literacy especially for [youth]?”She responded, “Yes Senator, I actually have done that. I have some experience in — in working with individuals on — on that. Particularly, when I was in college we did have a program to promote financial literacy and … Working a little bit on curriculum in the area. And so it is something that is — is definitely important to the roles and responsibilities I would be taking on as director.”[“Consumer Financial Protection Bureau and Export-Import Bank Confirmations,”C-SPAN, 07/19/18]

Kathy Kraninger Will Carry On Mick Mulvaney’s Legacy At The CFPB

Kathy Kraninger Supports Mick Mulvaney’s Actions As Acting CFPB Director.

During Her Confirmation Process, Kathy Kraninger Said That Mick Mulvaney Was Doing A Good Job At The CFPB And “Couldn’t Point To Any Actions He’d Taken With Which She Disagreed.” “Kraninger, 43, has been a deputy of Mulvaney at the White House Office of Management and Budget. She told senators at her confirmation hearing this summer that Mulvaney was doing a good job at the CFPB, and in written responses to questions later that she couldn’t point to any actions he’d taken with which she disagreed.” [Jim Puzzanghera, “Senate confirms new consumer financial protection chief: Kathy Kraninger, protege of industry-friendly Mick Mulvaney,” Los Angeles Times, 12/06/18]

Rhetoric Vs. Reality: Correcting The Record On Consumer Financial Education

The CFPB’s Consumer Financial Education Programs Are Cost-Efficient Methods To Provide A Critical Service To American Consumers… Representing Only 7% Of The CFPB’s Overall Budget

RHETORIC: The CFPB’s Consumer Education Programs Are An Inefficient Use Of Government Time And Money.

In A 2016 Column, Housingwire Editor Sarah Wheeler Argued That The CFPB’s Consumer Education Programs “May Be A Complete And Utter Waste Of The Industry And Government’s Time, Effort And Money.” Wheeler wrote, “If you have hundreds of millions of dollars that can only be spent on consumer education, it’s easy to imagine how that goal could take on a life of its own, spawning a bloated consumer education complex overnight. Videos, brochures, interactive games, 10-week courses, etc, etc., that in the end only serve to enrich the very earnest purveyors of such material. “ [Sarah Wheeler, “Why we should quit wasting money on consumer education,” HousingWire[Blog], 10/25/16]

Jeb Hensarling’s Financial CHOICE Act Proposed Repealing The CFPB’s Authority On Consumer Education And Financial Literacy Programs. Jeb Hensarling’s Financial CHOICE Act proposed “repeal[ing] the CFPB’s consumer education functions, market monitoring authority, mandatory advisory boards and research functions.” [Ian McKendry, Kate Berry, and John Heltman, “Cheat sheet: Hensarling’s plans to gut CFPB, revamp stress tests,” American Banker, 02/10/17]

REALITY: Consumer Education And Financial Literacy Programs Are A Small Percentage Of The CFPB’s Budget.

The CFPB’s Large-Scale Efforts On Consumer Education And Financial Literacy Programs Is Only 8.4% Of The Bureau’s Overall Budget. Consumer education efforts represent a small percentage of the CFPB’s overall budget: In 2017, the Consumer Education and Engagement office’s budget was $54 million compared to the CFPB’s overall budget of $646 million, or 8.35%. [“The CFPB strategic plan, budget, and performance plan and report,” Consumer Financial Protection Bureau, May 2017]

REALITY: Some CFPB Consumer Education Programs Are Funded By Industry Settlements Through The Civil Penalty Fund.

From 2013-2016, The CFPB Allocated Almost $29 Million From The Civil Penalty Fund For Consumer Education. To Date, It Has Funded Only One Consumer Education And Financial Literacy Program With Civil Penalty Fund Money. “To date, the Bureau has funded one consumer education and financial literacy program with Civil Penalty Fund money. That program provides financial coaching for two groups of Americans: (1) recent veterans who are transitioning from servicemember to veteran life, as well as military widows and widowers, and (2) economically vulnerable consumers who want to improve their approach to money management. The Bureau has contracted with Armed Forces Services Corporation to run this program.” [Civil Penalty Fund: consumer education and financial literacy, Consumer Financial Protection Bureau, accessed 12/11/18]

When Honda Settled A Discrimination Lawsuit With The Department Of Justice And The CFPB, The Company Agreed To “Pay $1 Million To Fund A Consumer Financial Education Program Focused On Consumer Auto Finance.” “In 2015, the U.S. Department of Justice and the Consumer Financial Protection Bureau settled a discrimination lawsuit with Honda HMC, alleging it ‘engaged in a pattern or practice of discrimination against African-American, Hispanic and Asian/Pacific Islander borrowers in auto lending.’ In addition to the $24 million in payments, Honda agreed to pay $1 million to fund a consumer financial education program focused on consumer auto finance that is designed to benefit African-American, Hispanic and Asian/Pacific Islander populations.” [Maria LaMagna, “Senate vote on auto loans may pave the way for more discrimination,MarketWatch, 04/18/18]

RHETORIC: The CFPB’s Civil Penalty Fund, Which Funds Consumer Education Programs, is a Non-Transparent “Slush Fund.”

Critics Of The CFPB Have Called The Civil Penalty Fund “A Slush Fund” Whose “Management Lacked Accountability.” They Have Charged That The Civil Penalty Fund Is “Tied To The Democratic Party” And That The CFPB Is Insufficiently Transparent With Its Consumer Education Spending.  In June 2013, Rep. Shelley Moore Capito introduced the H.R.3389, the CFPB Slush Fund Elimination Act of 2013, “to repeal the Consumer Financial Civil Penalty Fund and to deposit existing amounts in such Fund into the Treasury.” Capito “said the fund’s management lacked accountability.” [H.R.3389 – CFPB Slush Fund Elimination Act of 2013, 113thCongress, 10/30/13; Fred O. Williams, “Federal civil penalty fund pays refunds to scam victims,” CreditCards.com, 09/29/17]

An editorial piece published in Investor’s Business Daily referred to the Civil Penalty Fund as “a slush fund for poverty groups tied to the Democratic Party.” The piece highlighted groups approved for CFPB funding including the Legal Aid Society of the District of Columbia, the Mississippi Center for Justice, and the People’s Community Action Corp. of St. Louis. [“CFPB Joins Justice In Shaking Down Banks For Democrat Activist Groups,” Investor’s Business Daily,06/17/15]

REALITY: An Audit by the Government Accountability Office (GAO) Did Not Find a Lack of Accountability with the Civil Penalty Fund.

A Report Issued By The Government Accountability Office (GAO) In July 2014 Did Not Support” The Contention That The Civil Penalty Fund’s “Management Lacked Accountability.” In July 2014, the Government Accountability Office (GAO) “issued a report on the results of its review of the CFPB’s Civil Penalty Fund (CPF).  The review was requested by Representative Shelley Moore Capito, who chairs the House Financial Services Committee’s Subcommittee on Financial Institutions and Consumer Credit.” The GAO report “did not support” the contention that “the fund’s management lacked accountability” and “issued only a mild recommendation that the civil penalty fund document the factors that go into how it allocates funding for consumer education and financial literacy.” [Barbara S. Mishkin, “GAO issues report on CFPB civil penalty fund,” Ballard Spahr LLP, 07/31/14; Fred O. Williams, “Federal civil penalty fund pays refunds to scam victims,” CreditCards.com, 09/29/17]

 

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