CFPB Nominee Kathleen Kraninger Clears Cloture Hurdle in Senate

President Trump’s nominee to become the next director of the controversial Consumer Financial Protection Bureau (CFPB) cleared a key hurdle on Thursday when the Senate voted along party lines by a 50 to 49 margin to invoke cloture, ending debate and setting up a final vote on the confirmation of Kathleen Kraninger on the floor of the Senate next week.

The vote was strictly along party lines, with Republicans voting yes and Democrats voting no. One Republican, Sen. James Inhofe (R-OK), was not present for the vote but is expected to be a yes vote when the roll is called on the Senate floor on Kraninger’s confirmation next week.

If confirmed Kraninger will serve a five year term as the CFPB’s director, succeeding Richard Cordray, the Elizabeth Warren protegé who served as the agency’s first director from 2013 until November 2017, when he resigned to run for governor of Ohio. Cordray lost to Republican Mike DeWine in the November 6 election.

On Cordray’s resignation, President Trump named Office of Management and Budget (OMB) director Mike Mulvaney to simultaneously serve as acting director of the CFPB. During his tenure at the agency, Mulvaney has rolled back a number of Cordray’s more controversial orders.

One of Mulvaney’s first acts was to change the name of the agency from CFPB to “Bureau of Consumer Financial Protection” or BCFP, because that is how the 2010 Dodd-Frank law that authorized the establishment of the agency described it. In the press and with most of the public, however, “CFPB” continues to be used more often than “BCFP.”

Kraninger currently works as a senior official at the OMB, and is considered to be a loyal lieutenant to Mulvaney and the Trump agenda.

However, Kraninger has virtually no experience in consumer finance regulation, and how she will conduct herself if confirmed “is still somewhat of a mystery,” as the American Banker reported:

Now a senior official at the Office of Management and Budget, Kraninger has signaled that she favors a pro-free-market, limited government approach to regulation and will hew closely to the vision of her boss Mick Mulvaney, the acting CFPB director who also heads the OMB.

But unlike Mulvaney — who before running the CFPB referred to the bureau as a “sick, sad joke” — Kraninger is not linked with such rhetoric, making her views about the agency uncertain.

Democrats have been adamantly opposed to Kraninger’s confirmation.

Sen. Elizabeth Warren (D-MA), considered to be the “intellectual godmother” of the CFPB, has led the charge against Kraninger, as Inside ARM reported recently:

On November 27, 2018, Senator Elizabeth Warren (D-MA) issued a letter to her fellow senators strongly urging them to vote against the nomination of Kathy Kraninger as the next Director of the Bureau of Consumer Financial Protection (BCFP or Bureau). The letter comes on the eve of the Kraninger vote, which is expected to occur in the very near future. Congress.gov also states that the floor debate on Kraninger is to occur today (or, if not today, sometime in the near future).

In the seven-page long letter (eleven pages with citations), Sen. Warren issues a warning to the Senators that Kraninger would continue the work of Acting Director Mick Mulvaney — evidenced by her prior endorsement of Mulvaney’s work — and would “defang the consumer watchdog.” Sen. Warren accuses Mulvaney of:

• Drastically slowing and, in some cases, stopping the Bureau’s enforcement of consumer protection laws.
• Turning the Bureau into a “partisan, biased regulator, benefitting his campaign donors and political cronies at the expense of consumers.”
• Making it easier for corporations to cheat consumers by “decimating the BCFP’s resources and enforcement tools.”
• Dismantling civil rights protections while promoting a political appointee “with a history of racially provocative statements.”

Sen. Warren also states that Kraninger’s own record at the Office of Management and Budget (OMB) “demonstrates that she is unfit to lead the [BCFP].”

One leading conservative group is squarely in favor of Kraninger’s confirmation.

“Based on her testimony at her confirmation hearing in July, the Competitive Enterprise Institute supports Kathleen Kraninger’s nomination to head the BCFP (formerly known as the CFPB),” John Berlau, senior fellow at the CEI said in a statement:

At the hearing, Kraninger made it clear she was against the ‘regulation by enforcement’ policies pursued by the Bureau’s first director, Richard Cordray, who arbitrarily and retroactively applied regulatory punishments against certain financial firms without due process. Kraninger says she favors competition as the best method to provide consumers with more affordable small-dollar loans. And she says she will work with Congress should it want to change the structure of the BCFP. The Senate should confirm Kraninger, and Congress should then take her up on her offer to help make the agency more accountable.”

Daniel Press, a CEI policy analyst, added:

The Bureau of Consumer Financial Protection director is an immensely important position. Not only does the Bureau have the authority to regulate nearly every consumer financial product in the economy, but the director has enormous unilateral power in writing and enforcing those rules. At her July testimony, Kraninger affirmed that as director, she would continue the important task of reforming the Bureau’s mission to better promote a free, competitive consumer financial marketplace. The Senate should vote to support such a mission and swiftly confirm this nominee.

Barring something unexpected, the Senate is expected to confirm Kraninger in a straight party line vote next week.