Kathy Kraninger’s First Six Months: A Record of Failing Consumers

Just Six Months In At The Consumer Financial Protection Bureau (CFPB), Director Kathy Kraninger Is:

Gutting The Payday Lending Rule To Boost Industry Profits At The Expense Of Consumers—Despite Conducting No New Research Supporting The Proposed Changes

Kraninger’s first major policy move as CFPB director was to propose gutting crucial payday lending regulations that protect borrowers from an unaffordable cycle of debt—even though the bureau had conducted no new research to inform its industry-friendly proposal.

Making It Easier For Debt Collectors To Harass Consumers By Sending Unlimited Texts And Emails

Under Kraninger’s leadership, the CFPB has proposed allowing debt collectors to send an unlimited number of texts and emails to consumers. The bureau’s proposed rule purports to limit phone calls from debt collectors—but could result in consumers receiving dozens of unwanted calls per week.

Considering An Overhaul Of The CFPB’s Overdraft Rule, Which Could Let Banks Charge Consumers Additional Fees

Under Kraninger’s leadership, the CFPB is reviewing its overdraft rule, which has successfully decreased the amount of bank account overdraft fees paid by consumers.

Neglecting The CFPB’s Duty To Supervise Lenders’ Compliance With The Military Lending Act

Kraninger has asked Congress for “clear authority” to conduct supervisory examinations of banks and lenders for compliance with the Military Lending Act (MLA), even though legal experts and thirty state attorneys general agree that the CFPB already has supervisory authority over MLA compliance.

Turning A Blind Eye To The Student Loan Crisis At The CFPB

Under Kraninger’s leadership, the CFPB has not filed a single new lawsuit against a student loan company. Kraninger even refused to acknowledge that there is a national student debt crisis when questioned during a congressional hearing.

Refusing To Say Whether The CFPB Should Even Exist—And Continuing To Neglect Enforcement At The Bureau

Kraninger refused to say whether the CFPB should even exist when questioned during a congressional hearing. She has previously refused to say whether she believes the bureau is constitutional as currently structured.


Kathy Kraninger Is Trying To Gut The Payday Lending Rule And Boost Industry Profits At The Expense Of Consumers—Despite Conducting No New Research Supporting The Proposed Changes

Kathy Kraninger’s First Major Policy Proposal At The CFPB Was To Weaken Protections For Borrowers Of Predatory Payday Loans—And The Payday Industry Is Estimated To Make $7.3 To $7.7 Billion Dollars From Kraninger’s Proposed Rollback Of The Payday Rule.

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]

Sen. Elizabeth Warren (D-MA) And Rep. Maxine Waters (D-CA) Called On Kathy Kraninger To Rescind The CFPB’s “Proposal To Weaken The Payday Lending Rule.” “Sen. Elizabeth Warren (D-Mass.) called on Kathy Kraninger, the new director of the Consumer Financial Protection Bureau, to ‘immediately’ rescind a proposal to weaken the payday lending rule, becoming the latest prominent Democrat to weigh in on Kraninger’s first major initiative. ‘The rule you released today makes a mockery of the CFPB’s statutory mission of protecting consumers. It should be withdrawn immediately,’ Warren, who helped establish the CFPB under President Barack Obama, said in a letter […] House Financial Services Committee Chairwoman Maxine Waters (D-Calif.) also called on Kraninger to withdraw the rule in a statement Wednesday. Sen. Sherrod Brown (D-Ohio), the ranking Democrat on the Senate Banking Committee, which oversees the industry, criticized the revision as well.” [Katy O’Donnell, “Warren calls on Kraninger to ‘immediately’ withdraw payday revision,” Politico, 02/07/19]

The Payday Lending Industry Is Estimated To Make $7.3 To $7.7 Billion Dollars From Kraninger’s Proposed Rollback Of The Payday Rule.

During Her March 2019 Appearance Before The Senate Banking Committee, Kathy Kraninger Acknowledged That The CFPB’s Own Analysis Found That “The Payday Lending Industry, On An Annualized Basis, Would Save About $7.3 To $7.7 Billion That They Would Not Otherwise Have Under The Previous Rule.” “VAN HOLLEN: Thank you. I’m looking at your analysis here now. Are you familiar with the Dodd-Frank Act Section 1022-b3 analysis that accompanied the notices? KRANINGER: Yes, Senator. VAN HOLLEN: And, are you familiar with the fact that you found that the payday lending industry, on an annualized basis, would save about $7.3 to $7.7 billion that they would not otherwise have under the previous rule? KRANINGER: Senator again there were a number of things that were looked at including – VAN HOLLEN: I’m just asking you about this provision which is right here in the documents you submitted. Does it conclude that by rescinding the rule on an annualized basis payday lenders will be able to pocket $7.3 to $7.7 billion dollars more? Isn’t that what it says right here? KRANINGER: Yes, Senator it does.” [Press Release, Sen. Chris Van Hollen, 03/12/19]

The CFPB Conducted Zero New Research To Inform Its Industry-Friendly Payday Proposal.

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]

Over 8,000 Public Comments Submitted In Support Of Kathy Kraninger’s Proposed Payday Lending Rule Use Specific, Duplicative Language To Describe Why The Commenter Supports Payday Lending—Over 16% Of Total Comments.

As Of May 30, 2019, 52,011 Comments Have Been Submitted On The CFPB’s Proposed Rule On Payday, Vehicle Title, and Certain High-Cost Installment Loans.

As Of May 30, 2019, 52,011 Public Comments Have Been Submitted On The CFPB’s Proposed Rule On Payday, Vehicle Title, and Certain High-Cost Installment Loans. [Docket Browser Search for CFPB-2019-0006, Regulations.gov, accessed 05/30/19]

At Least 6,587 Comments State, Verbatim, “Please Don’t Make It More Difficult For Me To Get These Loans. […] Millions Of Americans Like Me Rely On Payday Loans, And The Government Shouldn’t Take Away Our Access To Credit.”

At Least 6,587 Submitted Comments On The CFPB’s Proposed Payday Rule State, Verbatim, “As You Take A Second Look At The Payday Loan Rule, Please Don’t Make It More Difficult For Me To Get These Loans. […] Without Them, I May Not Be Able To Meet My Financial Obligations. Millions Of Americans Like Me Rely On Payday Loans, And The Government Shouldn’t Take Away Our Access To Credit.” At least 6,587 comments submitted on the CFPB’s proposed rule on Payday, Vehicle Title, and Certain High-Cost Installment Loans contain the exact phrase: “Without them, I may not be able to meet my financial obligations. Millions of Americans like me rely on payday loans, and the government shouldn’t take away our access to credit.” [Docket Browser Search for CFPB-2019-0006, Regulations.gov, accessed 05/30/19]

  • The full comment reads: “Dear Consumer Financial Protection Bureau, As you take a second look at the payday loan rule, please don’t make it more difficult for me to get these loans. Payday loans have helped me manage my finances and are very important to me. Without them, I may not be able to meet my financial obligations. Millions of Americans like me rely on payday loans, and the government shouldn’t take away our access to credit.” [Docket Browser Search for CFPB-2019-0006, Regulations.gov, accessed 05/13/19]

At Least 861 Comments State, Verbatim, That The Borrower Supports The “Proposal To Rescind And Delay Portions Of The 2017” Rule Because “Mandatory Underwriting Would Be Too Costly And Time-Consuming.”

At Least 861 Submitted Comments On The CFPB’s Proposed Payday Rule State, “I Support Your Proposal To Rescind And Delay Portions Of The 2017 Payday, Vehicle Title, And High-Cost Installment Loans Rule. Mandatory Underwriting Would Be Too Costly And Time Consuming.” At least 861 comments submitted on the CFPB’s proposed rule on Payday, Vehicle Title, and Certain High-Cost Installment Loans contain the exact phrase: “I support your proposal to rescind and delay portions of the 2017 Payday, Vehicle Title, and High-Cost Installment Loans Rule. Mandatory underwriting would be too costly and time-consuming.” [Docket Browser Search for CFPB-2019-0006, Regulations.gov, accessed 05/30/19]

  • The full comment reads: “I support your proposal to rescind and delay portions of the 2017 Payday, Vehicle Title, and High-Cost Installment Loans Rule. Mandatory underwriting would be too costly and time-consuming for small dollar loans to remain viable, which means $20 billion in credit for consumers in dire straits would be eliminated from the economy. These are customers that banks do not cater to, and they therefore would find themselves without any access to credit. In emergencies, these consumers could be forced to turn to criminal syndicates, write bad checks, or let critical bills go unpaid. The CFPB should be focused on expanding consumer access to credit, not eliminating it. The Cordray rule violated free market principles and I applaud you for reconsidering it. This proposed rulemaking is a critical step toward moving CFPB away from liberal activism and toward its mission of protecting consumers, and I would strongly support any and all additional efforts to revisit Obama/Cordray regulations to ensure consumers are not harmed by losing access to products due to excessive regulation.” [Docket Browser Search for CFPB-2019-0006, Regulations.gov, accessed 05/13/19]

At Least 221 Comments Claim, Verbatim, That The Borrower Took Out Payday Loans Because They “Needed To Replace [Their] Hot Water Tank” And Their “Appliances Needed To Be Repaired And Eventually Replaced,” Citing Cash Connection As Their Lender Of Choice. 

At Least 221 Submitted Comments On The CFPB’s Proposed Payday Rule Claim The Borrower Takes Out Payday Loans Because They “Needed To Replace [Their] Hot Water Tank” And Their “Appliances Needed To Be Repaired And Eventually Replaced.” At least 221 comments submitted on the CFPB’s proposed rule on Payday, Vehicle Title, and Certain High-Cost Installment Loans contain the exact phrase: “I borrow from Cash Connection to help maintain my home. I needed to replace my hot water tank. Then my appliances needed to be repaired and eventually replaced.” [Docket Browser Search for CFPB-2019-0006, Regulations.gov, accessed 05/30/19]

  • The full comment reads: “I borrow from Cash Connection to help maintain my home. I needed to replace my hot water tank. Then my appliances needed to be repaired and eventually replaced. Borrowing a small loan allows me to leave my other money alone so that I can still pay my regular bills.” [Docket Browser Search for CFPB-2019-0006, Regulations.gov, accessed 05/13/19]

At Least 435 Public Comments On The Proposed Payday Rule Mention Cash Connection, A Payday Lender. [Docket Browser Search for CFPB-2019-0006, Regulations.gov, accessed 05/30/19]

At Least 225 Comments Claim, Verbatim, “I Have A Long Commute To Work And Its Better For Me Financially To Borrow From Cash Connection So That I Can Still Make It To Work Than To Not Take Care Of My Car And Lose My Job Because Of Absences.” 

At Least 225 Submitted Comments On The CFPB’s Proposed Payday Rule Claim The Borrower Takes Out Payday Loans Because Of Car Issues And “Its Better For Me Financially To Borrow From Cash Connection So That I Can Still Make It To Work.” At least 225 comments submitted on the CFPB’s proposed rule on Payday, Vehicle Title, and Certain High-Cost Installment Loans contain the exact phrase: “I have a long commute to work and its better for me financially to borrow from Cash Connection so that I can still make it to work than to not take care of my car and lose my job because of absences.” [Docket Browser Search for CFPB-2019-0006, Regulations.gov, accessed 05/30/19]

  • The full comment reads: “I borrow because my car expensesinsurance, repairs, gasnever seem to go away. I have a long commute to work and its better for me financially to borrow from Cash Connection so that I can still make it to work than to not take care of my car and lose my job because of absences.” [Docket Browser Search for CFPB-2019-0006, Regulations.gov, accessed 05/13/19]

At Least 435 Public Comments On The Proposed Payday Rule Mention Cash Connection, A Payday Lender. [Docket Browser Search for CFPB-2019-0006, Regulations.gov, accessed 05/30/19]

At Least 142 Comments Claim, Verbatim, That Payday Loans Allow The Borrower To Help Pay For Their Daughter’s College So She Won’t “Grow Her Student Loan Debt To An Amount She Will Never Be Able To Pay Off,” Noting, “Shes A Good Student And Has A Job But She Still Needs Some Help.”

At Least 142 Submitted Comments On The CFPB’s Proposed Payday Rule State, Verbatim, “I Borrow To Help My Child Pay For College. Shes A Good Student And Has A Job But She Still Needs Some Help. […] I Can Borrow A Small Loan Rather Than Have Her Grow Her Student Loan Debt To An Amount She Will Never Be Able To Pay Off.” At least 142 comments submitted on the CFPB’s proposed rule on Payday, Vehicle Title, and Certain High-Cost Installment Loans contain the exact phrase: “help my child pay for college. Shes a good student and has a job but she still needs some help. I figure its what a parent does. I can borrow a small loan rather than have her grow her student loan.” [Docket Browser Search for CFPB-2019-0006, Regulations.gov, accessed 05/30/19]

  • The full comment reads: “I borrow to help my child pay for college. Shes a good student and has a job but she still needs some help. I figure its what a parent does. I can borrow a small loan rather than have her grow her student loan debt to an amount she will never be able to pay off.” [Docket Browser Search for CFPB-2019-0006, Regulations.gov, accessed 05/13/19]

At Least 208 Comments Claim, Verbatim, “I Now Take Care Of My Parents And My Children” And “Want To Be Able To Enjoy Life And Not Feel Burdened By The Additional Expenses That Are Piling Up.”

At Least 208 Submitted Comments On The CFPB’s Proposed Payday Rule Claim, “I Now Take Care Of My Parents And My Children” And “Want To Be Able To Enjoy Life And Not Feel Burdened By The Additional Expenses That Are Piling Up.” At least 208 comments submitted on the CFPB’s proposed rule on Payday, Vehicle Title, and Certain High-Cost Installment Loans contain the exact phrase: “I borrow because I now take care of my parents and my children. I still want to be able to enjoy life and not feel burdened by the additional expenses that are piling up.” [Docket Browser Search for CFPB-2019-0006, Regulations.gov, accessed 05/30/19]

At Least 212 Comments Claim, Verbatim, “My Medical Expenses Are Too High For Me To Pay Without Borrowing. I Need My Medications. My Insurance Doesnt Cover Most Of My Expenses.”

At Least 212 Submitted Comments On The CFPB’s Proposed Payday Rule Claim, “My Medical Expenses Are Too High For Me To Pay Without Borrowing. I Need My Medications. My Insurance Doesnt Cover Most Of My Expenses.” At least 212 comments submitted on the CFPB’s proposed rule on Payday, Vehicle Title, and Certain High-Cost Installment Loans contain the exact phrase: “I borrow because my medical expenses are too high for me to pay without borrowing. I need my medications. My insurance doesnt cover most of my expenses.” [Docket Browser Search for CFPB-2019-0006, Regulations.gov, accessed 05/30/19]

NOTE: Allied Progress Submitted An Earlier Version Of This Research As Part Of Its Own Comment On The Payday Rule. The Totals Of The Above Comments May Include One Allied Progress Comment Containing The Quoted Text.


Kathy Kraninger Is Trying To Make It Easier For Debt Collectors To Harass Consumers By Sending Unlimited Texts And Emails

The CFPB Has Proposed A New Rule That Would Allow Debt Collectors To Send Consumers An Unlimited Number Of Texts And Emails. 

The CFPB’s Proposed Rule Would Allow Debt Collectors To “Send Consumers Unlimited Amounts Of Texts And Emails.”  

In May 2019, The CFPB Issued Its Proposed Debt Collection Rule That Would Allow Debt Collectors To “Send Consumers Unlimited Amounts Of Texts And Emails.” “The Consumer Financial Protection Bureau […] proposed rules that would give the industry the go-ahead to send consumers unlimited amounts of texts and emails, accelerating a trend the watchdog bureau says could be beneficial for everyone.” [Renae Merle, “Trump administration wants to allow debt collectors to call 7 times a week and text, email as much as they want,” The Washington Post, 05/07/19]

  • Under The Proposed Rule, Consumers Would Be Required To Actively “Unsubscribe” From Digital Communications. “It regulates how debt collectors may use voicemails, emails and text messages to communicate with consumers. Notably, the Proposed Rulemaking would permit consumers to ‘unsubscribe’ from future communications through these methods. Under the Proposed Rulemaking, consumers could limit the ways debt collectors contact them, e.g., while at work.” [Thomas H. Wagner, “The CFPB’s Long Awaited Debt Collection Rule is Certain to Shake Up the Industry,” The National Law Review, 05/20/19] 

Public Comments On The Proposed Debt Collection Rule Are Due Monday, August 19, 2019. [“CFPB to Open Comment Period on Proposed Debt Collection Rule,” ACA International, 05/20/19]

The Rule Would Limit Phone Calls From Debt Collectors To No More Than Seven Times Per Week Per Debt—Which Could Actually Result In Consumers Getting “Dozens Of Calls Each Week” From Debt Collectors.

The CFPB’s Proposed Rule Would Limit Phone Calls From Debt Collectors To No More Than Seven Times Per Week Per Debt…

The Proposed Rule Would Limit “The Number Of Times A Debt Collector May Attempt To Contact A Consumer By Telephone About A Specific Debt,” With Collectors Able To Contact A Borrower “No More Than Seven Times Per Week.” “It provides a numeric limit on the number of times a debt collector may attempt to contact a consumer by telephone about a specific debt. Under the proposal, debt collectors could try to contact consumers no more than seven times per week, and once contact is made, a debt collector would have to wait at least one week before calling the consumer again.” [Thomas H. Wagner, “The CFPB’s Long Awaited Debt Collection Rule is Certain to Shake Up the Industry,” The National Law Review, 05/20/19]

  • The Proposed Rule Would Restrict The Number Of Calls A Collector Could Make Per Debt. “The senators also raised concerns over other components of the Administration’s proposal, including allowing a debt collector to call a consumer seven times a week per debt.” [Press Release, Sen. Catherine Cortez Masto, 06/07/19]

…Which Could Result In “Dozens Of Calls Each Week” For Consumers With Multiple Debts, Such As Separate Bills For A Single Medical Event.

April Kuehnhoff, An Attorney For The National Consumer Law Center, Noted That The Seven-Call Weekly Limit “Could Be Particularly Tough On People With Medical Debt” As A Single Medical Event Could Result In Several Bills From Several Providers, “Potentially Resulting In Dozens Of Calls Each Week.” “For instance, the center wants a limit of just three telephone attempts each week on a debt. The seven-call limit could be particularly tough on people with medical debt, Kuehnhoff said. They may accumulate bills from several providers for a single medical event — hospital, doctors, a lab and a nursing home, for example — and all could be in collections separately, potentially resulting in dozens of calls each week. [Kaiser Health News, “New rules would change how collectors can go after medical debt,” The Oregonian, 06/02/19]

Consumer Advocates Say The Proposed Rule Gives The Debt Collection Industry “Almost Everything” It Wants—And Call It Another Example Of The CFPB “Catering To Businesses Instead Of Consumers.”

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.’”

Consumer 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]

The Debt Collection Industry “Responded With Limited Enthusiasm” To The Proposal, With The CEO Of Trade Group ACA International Saying They Appreciated The “‘Potential Clarity’” Of Parts Of The Rule. “While debt collectors and consumer advocates were still digesting the 538-page proposal, the industry initially responded with limited enthusiasm while consumer advocates slammed the plan. Mark Neeb, CEO of collection trade group ACA International, said the group appreciates the ‘potential clarity’ provided by parts of the rule. ‘However, we think there are several areas that need to be clarified and improved upon before the rule is finalized, including the arbitrary limit on call attempts that could unnecessarily impede communications with consumers,’ Neeb added.” [Katy O’Donnell, “CFPB overhauls rules for debt collectors as consumer groups balk,” Politico, 05/07/19]


Kathy Kraninger Is Considering An Overhaul Of The CFPB’s Overdraft Rule, Which Could Let Banks Charge Consumers Additional Fees

Kathy Kraninger’s CFPB Is Reviewing How The Overdraft Rule Impacts Industry, Even Though The Bureau Has Found That It Led To Fewer Fees For Consumers.

The CFPB Is Currently Reviewing Its Overdraft Rule In Order To “Minimize Any Significant Economic Impact” On Businesses.

In May 2019, The CFPB Announced It Was Opening Its 2009 Overdraft Rule For Public Comment In Order To “Consider The [Rule’s] Effect On Small Businesses” And “Minimize Any Significant Economic Impact Of The” Rule. “[On May 13, 2019] the Consumer Financial Protection Bureau (CFPB) published a notice on how it plans to periodically review regulations under the Regulatory Flexibility Act (RFA) and to request public input. Additionally, the Bureau published a notice requesting public input as part of its first RFA review examining the 2009 Overdraft Rule. In Section 610 of the RFA, Congress specified that agencies review certain rules within 10 years of their publication, and consider the rules’ effect on small businesses. The purpose of the review is to minimize any significant economic impact of the rules upon a substantial number of small entities, consistent with the stated objectives of applicable statutes. At the conclusion of each review, the Bureau will determine whether the rule should be continued without change, or should be amended or rescinded.” [Press Release, Consumer Financial Protection Bureau, 05/13/19]

The CFPB Has Found That Its Overdraft Rule Led To “A Material Decrease In The Amount Of Overdraft Fees Paid By Consumers.”

In 2013, The CFPB Found That The Overdraft Rule “Led To A Material Decrease In The Amount Of Overdraft Fees Paid By Consumers.” “The Bureau has estimated in 2013 that the rule led to a material decrease in the amount of overdraft fees paid by consumers.” [“Overdraft Rule Review Pursuant to the Regulatory Flexibility Act,” Regulations.gov, 05/15/19]

Under The Current Rule, Consumers Must Opt-In To Overdraft, But Half Of Consumers Never Remember Doing So And Some Transaction Types Are Even Exempt From The Opt-In Requirement.

The CFPB’s Current Overdraft Rule Requires Consumers To “Opt In To Give Their Accounts The Ability To Overdraft”…

The CFPB’s Current Overdraft Rule Requires Consumers To “Opt In To Give Their Accounts The Ability To Overdraft.” “Consumers must actually opt in to give their accounts the ability to overdraft. Financial institutions have been required by law since 2010 to give consumers a notice that explains the institution’s overdraft policies, including the fees and alternatives. (Consumer advocates say consumers should opt out and allow their cards to be declined at the register, rather than rack up overdraft fees.)” [Maria LaMagna, “Overdraft fees haven’t been this bad since the Great Recession,” MarketWatch, 04/02/18]

…However, Half Of Consumers Who Have Gone Into Overdraft Do Not Recall Signing An Opt-In Agreement.

Half Of Consumers Who Have Gone Into Overdraft “Don’t Remember Ever Signing” An Opt-In Agreement, With Some Transactions Exempted From The Requirement. “Banks have been criticized, however, for making the opt-in agreements unclear. Half of consumers whose accounts have gone into overdraft don’t remember ever signing one, according to the Pew Charitable Trusts, a nonprofit based in Philadelphia. Plus, the opt-in agreements apply only for transactions that are not pre-authorized, such as a one-time debit card transaction (not a recurring one) or an ATM withdrawal.” [Maria LaMagna, “Overdraft fees haven’t been this bad since the Great Recession,” MarketWatch, 04/02/18]

The Banking Industry Has Welcomed The Review Of Overdraft Rule, While Consumer Advocates Worry It Could Leave Vulnerable Consumers Worse Off.

The Banking Industry Has Welcomed The Review Of The Overdraft Rule…

A Banking Industry Trade Group Said It “Welcomed the Review Of the Overdraft Rule” Because It “Could ‘Minimize The Economic Impact On Community Banks.’” “However, the Independent Community Bankers of America said it welcomed review of the overdraft rule. It could ‘minimize the economic impact on community banks that provide this service as a safe and convenient option to help consumers to manage their financial shortfalls,’ said Rhonda Thomas Whitley, the group’s vice president and regulatory counsel.” [Renae Merle, “Trump administration may overhaul rules limiting bank overdraft fees,” The Washington Post, 05/14/19]

…While Consumer Advocates Have Voiced Concern That Rolling Back The Rule Will Make It Harder For Vulnerable Consumers To Recover Financially.

Americans For Financial Reform, A Consumer Advocacy Organization, Said It Was Concerned About The Review Being Used To “‘Water Down The Rule,’” Making Financial Recovery Harder For “‘Vulnerable Consumers.’” “‘I am most concerned about the CFPB using [the review] to water down the rule,’ said Linda Jun, senior policy counsel at Americans for Financial Reform. ’For vulnerable consumers, overdraft fees often compound their vulnerabilities by making it even harder to recover.’” [Renae Merle, “Trump administration may overhaul rules limiting bank overdraft fees,” The Washington Post, 05/14/19]

Banks Are Already Raking In Billions From Overdraft Fees Under the Current Rule—Industry Took In Over $11.5 Billion From Overdraft Fees Last Year Alone.

Banks Made Over $11.5 Billion In 2018 From Overdraft Fees Paid By Consumers.

“In 2018, The Banking Industry “Made More Than $11.5 Billion From Overdraft Fees.” “Banks typically charge customers about $35 each time they withdraw more than they have in their accounts. The industry made more than $11.5 billion from overdraft fees last year, according to FDIC data.” [Renae Merle, “Trump administration may overhaul rules limiting bank overdraft fees,” The Washington Post, 05/14/19]

Americans Paid Over $34 Billion In Overdraft Fees In 2017 – The Most Paid Since the End Of The Great Recession.

In 2017, Americans Paid “A Whopping $34.3 Billion In Overdraft Fees” – “The Most They’ve Paid Since 2009, During The End Of The Great Recession.” “Consumers paid a whopping $34.3 billion in overdraft fees in 2017 — the most they’ve paid since 2009, during the end of the Great Recession, according to a new report from Moebs Services, a research firm that focuses on financial institutions.” [Maria LaMagna, “Overdraft fees haven’t been this bad since the Great Recession,” MarketWatch, 04/02/18]

Overdraft Fees Have Increased 50% At Banks Since 2000—And Have Almost Doubled At Credit Unions. 

Since 2000, Bank Overdraft Fees Are “Up 50%” And Credit Unions Fees Have “Almost Doubled.” “The average overdraft fee at a bank is now $30, up 50% from $20 in 2000. Credit unions, typically lauded for their consumer-friendly practices and prices, aren’t far behind. The average overdraft fee at a credit union almost doubled over that period, reaching $29, up from $15 in 2000. (To find those numbers, Moebs analyzed prices at more than 3,800 banks, credit unions and other financial institutions.)” [Maria LaMagna, “Overdraft fees haven’t been this bad since the Great Recession,” MarketWatch, 04/02/18]

Most Overdraft Fees Are Charged For Transactions Of $24 Or Less And Are Repaid Within Three Days—An Equivalent Loan Would Have A 17,000% APR.

In 2014, The CFPB Found That Most Overdraft Fees Are Incurred On Transactions Of $24 Or Less And That Most Overdrafts Are Repaid Within Three Days—As A Comparable Loan, That Would Carry A 17,000% APR.

In July 2014, The CFPB Found That “The Majority Of Debit Card Overdraft Fees Are Incurred On Transactions Of $24 Or Less And That The Majority Of Overdrafts Are Repaid Within Three Days” — Equivalent to a $24 Loan Paid Back In Three Days “Carry[ing] A 17,000 Percent Annual Percentage Rate (APR).” “[In July 2014], the Consumer Financial Protection Bureau (CFPB) released a report that raises concerns about the impact of opting in to overdraft services for debit card and ATM transactions. The study found that the majority of debit card overdraft fees are incurred on transactions of $24 or less and that the majority of overdrafts are repaid within three days. Put in lending terms, if a consumer borrowed $24 for three days and paid the median overdraft fee of $34, such a loan would carry a 17,000 percent annual percentage rate (APR).” [“CFPB Finds Small Debit Purchases Lead to Expensive Overdraft Charges,” Consumer Financial Protection Bureau, 07/31/14]

8% Of Account Holders Pay About 75% Of All Overdraft Fees.

According To The CFPB, “Just 8% Of Account Holders Pay About 75% Of All Overdraft Fees.” “Sometimes, consumers are charged repeatedly when they continue to make charges on their account, before realizing they have overdrawn it. That can add up, particularly for consumers with low incomes and tight budgets. Just 8% of account holders pay about 75% of all overdraft fees, according to the Consumer Financial Protection Bureau.” [Maria LaMagna, “Overdraft fees haven’t been this bad since the Great Recession,” MarketWatch, 04/02/18]


Kathy Kraninger Has Neglected The CFPB’s Duty To Supervise Lenders’ Compliance With The Military Lending Act

Kathy Kraninger Has Failed To Resume Supervisory Examinations Of Financial Institutions For Compliance With The Military Lending Act After They Were Halted By Her Predecessor Mick Mulvaney.

Kathy Kraninger’s CFPB Has Failed To Resume Supervisory Examinations Of Financial Institutions For Compliance The Military Lending Act After They Were Halted By Acting Director Mick Mulvaney.

Under Kathy Kraninger, The CFPB Has Failed To Resume “Examinations Of Financial Firms For Compliance With The Military Lending Act” After Mick Mulvaney Halted Them. “In addition, several senators sharply criticized Kraninger over the CFPB’s decision to halt examinations of financial firms for compliance with the Military Lending Act. Kraninger has yet to resume the exams after taking over for Mulvaney, who halted them. The Obama administration had conducted supervisory exams for years, and 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. In January, Kraninger sided with Mulvaney and specifically asked Congress to give the CFPB ‘clear authority’ to conduct supervisory exams for MLA compliance. [Kate Berry, “CFPB’s Kraninger grilled over payday, military lending,” American Banker, 03/12/19]

Kathy Kraninger Claims There Isn’t “Clear Authority” For The CFPB To Supervise Lenders’ Compliance With The Military Lending Act…

Kathy Kraninger Asked Congress For “Clear Authority” To Conduct Supervisory Examinations Of Banks And Lenders For Compliance With The Military Lending Act…

In January 2019, Kathy Kraninger Asked Congress To Give The CFPB “Clear Authority” To Conduct Supervisory Examinations 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 And Thirty State Attorneys General Agree “There Is No Question” That The CFPB Has Supervisory Authority For Compliance With The Military Lending Act (MLA).

Thirty State Attorneys General, Plus The AGs Of D.C., Puerto Rico, And The Virgin Islands, Criticized Acting Director Mick Mulvaney’s Move To Limit The CFPB’s Supervision Of Lenders For Compliance With The MLA.

In October 2018, “Thirty State Attorneys General,” Plus “The AGs Of The District Of Columbia, Puerto Rico, And The Virgin Islands,” “Sent A Letter To CFPB Acting Director Mulvaney” Expressing Concern About Reports That The CFPB Would “‘No Longer Ensure That Lenders Are Complying With The Military Lending Act (MLA) As Part Of Its Regular, Statutorily Mandated Supervisory Examinations.’” “Thirty state attorneys general, joined by the AGs of the District of Columbia, Puerto Rico, and the Virgin Islands, have sent a letter to CFPB Acting Director Mulvaney ‘to express our concern about recent reports that the [Bureau] will no longer ensure that lenders are complying with the Military Lending Act (MLA) as part of its regular, statutorily mandated supervisory examinations.’ Such recent reports included one from the New York Times published in August 2018 indicating that Mr. Mulvaney was planning to eliminate routine supervisory examinations of creditors for MLA violations because the CFPB lacks statutory authority to conduct such examinations.” [John L. Culhane, Jr., “State AGs criticize CFPB plans to end MLA exams,” Ballard Spahr LLP, 10/24/18]

  • The AGs Asserted That, By Restricting Supervisory Examinations, The CFPB Is Failing Its Statutorily Mandated Duty To Enforce The MLA. “In addition to describing the benefits that the MLA provides to servicemembers, the AGs assert that the Bureau ‘would be failing to abide by its statutorily mandated duty to enforce the MLA by restrictively interpreting its examination authority to preclude lenders’ compliance with the MLA.’ […] The AGs argue that this language allows the CFPB to examine for MLA compliance because ‘Congress has explicitly provided [in the Consumer Financial Protection Act (CFPA)] that one ‘applicable authority’ available to the CFPB is examination of lenders in order to “detect[] and assess[] risks to consumers and to markets for consumer financial products and services.”’” [John L. Culhane, Jr., “State AGs criticize CFPB plans to end MLA exams,” Ballard Spahr LLP, 10/24/18] 

In A Letter To Kathy Kraninger, House Financial Services Committee Members Asserted 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 Examinations For Years During The Obama Administration, Citing “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]


Kathy Kraninger Has Turned A Blind Eye To The Student Loan Crisis At The CFPB

Kathy Kraninger Refused To Acknowledge That There Is A Student Debt Crisis In America…

Kathy Kraninger Refused To Acknowledge That There Is A Student Debt Crisis In America.

When Questioned By Rep. Ayanna Pressley (D-MA), Kathy Kraninger Refused To Acknowledge There Is A Student Debt Crisis In America. Rep. Pressley: Yes or no. Would you agree that we have a student debt crisis in our country? Kathy Kraninger: Certainly growing student debt is a concern that we absolutely need to look at and ensure that people… Rep. Pressley: Yes or no, would you agree that we have student debt crisis in this country? Kathy Kraninger: That word is a very loaded word and for that reason… Rep. Pressley: I’ll take that as a no. [“Putting Consumers First? A Semi-Annual Review of the Consumer Financial Protection Bureau,” House Financial Services Committee, 03/07/19 (3:59:46)]

…And Has Not Filed A Single New Lawsuit Against A Student Loan Company Since Taking Over The CFPB.

In March 2019, While Questioning Kathy Kraninger On Her Record At The CFPB, Sen. Elizabeth Warren (D-MA) Noted That The CFPB Had Filed ZERO Lawsuits Against Student Loan Companies.

In March 2019, While Questioning Kathy Kraninger On Her Record At The CFPB, Sen. Elizabeth Warren (D-MA) Noted That The CFPB Has Filed ZERO Lawsuits Against Student Loan Companies. Sen. Warren: Director Kraninger, in the past year and a half how many lawsuits has the CFPB filed against studxent loan companies? Kathy Kraninger: I don’t know the specific answer to that question… Sen. Warren: Well I can tell you ‘cause it’s a matter of public record. Kraninger: Yes we do have active litigation… Sen Warren: How many have you filed? Kraninger: There are two active cases in this area. Sen. Warren: Gee, what the public record seems to show is zero. Right, not one single action against lenders and servicers who’ve scammed students. Not one dollar returned to students who get cheated. In contrast, when he led the CFPB, Richard Cordray filed 15 cases and he recovered $712 million for those students who had been cheated. [“Senator Warren Questions CFPB Director Kraninger About Lack of Enforcement Action,” Senator Elizabeth Warren via YouTube, 03/12/19 (1:19)]

  • Warren Argued Kraninger Has “Done Worse Than Nothing” Because She And Mulvaney Disbanded The Office Of The Student Loan Ombudsman, Who Resigned After Questioning The Ability Of CFPB Leadership To Enforce The Law. Warren: In fact, you have done worse than nothing. You and Mulvaney have disbanded the Office of Student Ombudsman. It was so bad that your student loan ombudsman resigned because the quote leadership of the bureau has abandoned its duty to fairly and robustly enforce the law. [“Senator Warren Questions CFPB Director Kraninger About Lack of Enforcement Action,” Senator Elizabeth Warren via YouTube, 03/12/19 (2:08)]

Under Former Director Richard Cordray, The CFPB Filed “50 Cases Filed Against Student Loan Companies” And Returned $712 Million To Consumers. “That compares with 50 cases filed against student loan companies, which led to the recovery of $712 million for consumers under former CFPB Director Richard Cordray, an Obama appointee, Warren noted.” [Kate Berry, “CFPB’s Kraninger grilled over payday, military lending,” American Banker, 03/12/19]

Since Then, Kraninger’s CFPB Has Announced A Single Settlement With A Student Loan Company The Bureau Started Monitoring In 2014, Which Is Now “In The Process Of Winding Down Its Business.”

In May 2019, The CFPB “Announced A Settlement With Conduent Education Services, LLC (CES), A Student Loan Servicing Company That […] Is In The Process Of Winding Down Its Business.” “The Consumer Financial Protection Bureau (Bureau) today announced a settlement with Conduent Education Services, LLC (CES), a student loan servicing company that formerly operated under the name of ACS Education Services. CES is in the process of winding down its business. The Bureau found that CES engaged in unfair practices that violated the Consumer Financial Protection Act of 2010 by failing to adjust in a timely manner principal balances of student loans made under the Federal Family Education Loan Program. […] Among other things, the consent order requires that CES, if it has not already done so, make proper adjustments to the principal balances of the relevant loans or otherwise make restitution to borrowers or any third parties who paid off such loans. The order also requires CES to pay a $3.9 million fine.” [Press Release, Consumer Financial Protection Bureau, 05/01/19]

The CFPB Became Aware Of CES’s Problems As Early As 2014 And CES Agreed To “A Three-Year Remediation Plan” Starting In 2015. “The Consumer Financial Protection Bureau fined Conduent Education Services $3.9 million for failing to provide accurate account balances on more than 200,000 student loans that resulted in many borrowers paying off the wrong amounts. The bureau did not publicly state how much Conduent paid back to consumers as part of a three-year remediation plan that began in 2015. The failures happened when the company was known as ACS Education Services and was owned by Xerox, which spun off its business processing services unit in late 2016 with the public company renamed Conduent.” [Kate Berry, “CFPB fines student loan servicer $3.9 million for unfair practices,” American Banker, 05/01/19]

  • “19. Respondent disclosed the problem to the Bureau in 2014 and began remediating the problem in 2015. 20. In 2015, Respondent began implementing a remediation plan to review and, where necessary, adjust the principal balances of the Affected Loans. Respondent reviewed more than 200,000 packets of Affected Loans as part of its remediation process. 21.Respondent’s remediation process took nearly three years.” [Consent Order, 2019-BCFP-0005, 05/01/19]


Kathy Kraninger Refused To Say Whether The CFPB Should Even Exist—And Continues To Neglect Enforcement At The Bureau

Kathy Kraninger Refused To Say Whether The CFPB Should Even Exist Or Is Constitutional.

Kathy Kraninger Refused To Say Whether The CFPB Should Even Exist.

During A March 2019 Hearing Of The House Financial Services Committee, Kathy Kraninger Refused To Explicitly State That The CFPB Is Needed When Questioned By Rep. Rashida Tlaib (D-MI). Rep. Tlaib: Do you believe that we even need the bureau at all? Kathy Kraninger: I absolutely believe consumer protection is a responsibility of the federal government and as I said, Congress created the Bureau to that end. [“Putting Consumers First? A Semi-Annual Review of the Consumer Financial Protection Bureau,” House Financial Services Committee, 03/07/19 (2:44:13)]

Kathy Kraninger Refused To Say Whether The CFPB Is Constitutional As Currently Structured.

In Response To Written Questions Around Her Nomination, Kathy Kraninger Refused To Directly State Whether Or Not She Believes The CFPB Is Constitutional As Currently Structured. Question: “Do you believe the CFPB is constitutional in its current form? If you do not please explain why you or anyone else should be confirmed to a position that you believe is not appropriately accountable to Congress or the President, or may be unconstitutional.” “Response: While this is an important question, the ultimate question of the constitutionality of the Bureau’s structure is one for Congress or the courts to resolve. The Director of the Bureau has a responsibility to carry out the law as it is written, and run the agency consistent with various legal requirements and binding court precedent. That will be my focus.” [“Questions for Ms. Kathleen Laura Kraninger, Director-Designate, Bureau of Consumer Financial Protection, on behalf of Ranking Member Brown, Senator Jack Reed, Senator Robert Menendez, Senator Elizabeth Warren, Senator Brian Schatz, Senator Chris Van Hollen” US Senate Committee on Banking, Housing, and Urban Affairs, 07/19/18]

Trump’s CFPB Had Already Sharply Decreased Enforcement Actions And Now Kathy Kraninger’s Bureau Returns Only $925,000 Per Week To Harmed Consumers—Even Less Than Under Mick Mulvaney’s Leadership And Only A Fraction Of The $43 Million Returned To Consumers By The CFPB Under Richard Cordray.

CFPB Enforcement Actions Decreased 80% In 2018 From 2015—And Have Remained Low Under Kathy Kraninger’s Leadership.

The CFPB Announced 80% Fewer Enforcement Actions In 2018, While Mulvaney Led The CFPB, Than It Did In 2015, When Richard Cordray Was Leading The Bureau. “The number of public enforcement cases announced in 2018 declined by 80% from the Bureau’s peak productivity in 2015. In 2015, the CFPB announced 55 public law enforcement actions. In 2018, this number had declined to 11.” [Christopher L. Peterson, “Dormant: The Consumer Financial Protection Bureau’s Law Enforcement Program in Decline,” Consumer Federation of America, 03/12/19]

Under Kathy Kraninger’s Leadership, “Law Enforcement Activity Continues To Remain Significantly Below Earlier Levels Since Her Confirmation.” “Overall, enforcement activity and relief to the consumer has declined since the appointment of Mick Mulvaney in 2017. And, despite being touted as one of Director Kraninger’s initial priorities for her term of leadership, law enforcement activity continues to remain significantly below earlier levels since her confirmation.” [Christopher L. Peterson, “Dormant: The Consumer Financial Protection Bureau’s Law Enforcement Program in Decline,” Consumer Federation of America, 03/12/19]

Under Kathy Kraninger, The CFPB Returns $925,000 A Week To Consumers – Compared To $43 Million A Week Under Richard Cordray.

Under Richard Cordray, The CFPB “Returned About $43 Million In Restitution To Consumers Every Single Week,” While The CFPB Under Kraninger “Is Now Down To About $925,000.” “It says the bureau returned about $43 million in restitution to consumers every single week when Richard Cordray, an Obama appointee, was in charge. Under Mulvaney that figure dropped to $6.4 million a week, and under Kraninger is now down to about $925,000.” [David Lazarus, “While campaigning, Trump said he’d be a consumer champion. Guess what’s happened,” The Los Angeles Times, 03/15/19]

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