As I wrote in a recent article about Kathy Kraninger's Senate hearing to discuss her nomination to lead the Bureau of Consumer Financial Protection (BCFP or Bureau), she didn't really say much. That isn't stopping Senator Elizabeth Warren (D-MA) from trying to get Kraninger to go on the record about a range of topics, including debt collection.
First, of note is that Senator Warren's office released a July 2018 report entitled Record of Failure; Kathy Kraninger's Disastrous Tenure at the Office of Managementand Budget. You can read it here. The report concludes,
Ms. Kraninger has no relevant experience in banking, finance, or consumer protection. The entire case for her nomination rests on her purported management abilities. Yet a close look at her record shows consistent mismanagement, often with devastating results for poor and vulnerable people. Her record does not justify a massive promotion to lead the federal agency charged with protecting consumers.
Now, back to the hearing
During the nearly three-hour hearing on July 19, Democrats were head-scratchingly frustrated by Kraninger’s refusal to answer direct questions. They were determined to link Kraninger to the Trump Administration’s extremely unpopular immigrant child-separation policy and the less than stellar response to the Puerto Rico hurricane disaster – proving that she does not have the character or empathy needed to run an agency charged with protecting consumers. Senator after senator tried to nail down answers on her personal positions but she just wouldn’t budge.
And... to the post-hearing follow up
Following the hearing several Democratic Senators, led by Elizabeth Warren, submitted three sets of questions for the record -- approximately 10 pages in total.
One set alone covered debt collection generally, and federal student loan servicer and debt collectors specifically. The following are among the questions asked of Kraninger:
- Title X of the Dodd-Frank Wall Street Reform and Consumer Protection Act establishes the CFPB to administer and interpret Dodd-Frank's prohibition on unfair, deceptive and abusive acts or practices. The Act instructs the Bureau to supervise non-banks that are large participants of a market for consumer financial products or services, which includes federal student loan servicers and debt collectors. If confirmed, do you plan to have the CFPB continue to supervise federal student loan servicers and debt collectors?
- The U.S. Department of Education does not have the statutory authority to enforce the Dodd-Frank Act's prohibition on unfair, deceptive and abusive acts or practices. Do you believe CFPB has the statutory authority to enforce the Dodd-Frank Act's prohibition on unfair, deceptive and abusive acts or practices if the violations are committed by federal student loan servicers, debt collectors, or other Department of Education contractors?
- In 2017, the U.S. Department of Education revoked two memoranda of understanding between the Department and the CFPB. These information-sharing agreements covered the sharing of confidential information related to the Bureau’s oversight of certain Education Department contractors. Do you agree with Secretary DeVos’ decision to revoke information-sharing from the CFPB?
- Will you insist that the U.S. Department of Education maintain a memorandum of understanding between its own ombudsman and the student loan ombudsman at the Consumer Financial Protection Bureau, as required by 12 U.S. Code § 5535 “to ensure coordination in providing assistance to and serving borrowers seeking to resolve complaints related to their private education or Federal student loans” (emphasis added by Sen. Warren)?
- If confirmed, how do you plan to collaborate with the Education Department to resolve student complaints related to federal student loans?
- If confirmed, how do you plan to work with state attorneys general given the numerous issues of deception and predatory actions of federal student loan servicers...[in the context of the March 12, 2018 Department of Education interpretation of the Higher Ed Act that preempts state regulation of federal student loan servicers]?
- Would be appropriate - if confirmed - to express a preference to career enforcement attorneys for a particular outcome in any of the Bureau's ongoing litigation?
In another set of questions the Senators sought clarity on the nominee's testimony that "regulation by enforcement...is not appropriate, and something we would not engage in." They asked whether Kraninger would continue to use the Bureau's authority to enforce Unfair, Deceptive, Abusive Acts and Practices.
They also asked whether she thought it appropriate that "OMB Director Mulvaney has deviated from the typical practice for independent financial regulators and added more than ten political appointees to the CFPB in senior roles?"... and whether she would commit to removing those appointees.
Finally, the Senators asked whether Kraninger - if confirmed - would commit to keeping the consumer complaint database public.
My gut tells me that Senator Warren and her colleagues will not receive the responses they are seeking. Or any responses. One thing to remember is that when the tables were turned, former Director Cordray was also accused of stonewalling Congress and providing shallow responses to questions. So, it seems that this is the way these things go. Say as little as possible for the record, so you can't be held to your word.
Democrats claim that the current Bureau leadership regime is political. It may be. But it's hard to keep a straight face and suggest that this was not the case under Director Cordray, even without a set of political appointees at the helm. Cordray was political. And he had the final word on pretty much everything that came out of the agency. So, I'm not sure there's much difference.