Payday lending rules: Lawmakers grill New CFPB chief Kathy Kraninger

by Ike Obudulu Posted on March 7th, 2019

Washington: House Democrats on Thursday criticized changes the Trump administration has made to the Consumer Financial Protection Bureau and grilled new chief Kathy Kraninger on Capitol Hill.

House financial services committee Chairwoman Maxine Waters said at the hearing she’s “deeply concerned” by damage done by former Director Mick Mulvaney — who ran the bureau while he also ran the White House budget office — to Obama-era regulations in the payday loan industry.

Critics have said the industry preys on vulnerable borrowers with ballooning interest rates up to 300 percent a year. Stricter rules for borrowing created by the Obama administration — intended to ensure borrowers could afford to take out the loans — have been put on hold.

A bill proposed by Waters, the Consumer First Act, would better guard consumers and reverse the changes by Mulvaney. Thursday, she suggested the White House budget director served simultaneously as CFPB chief to undermine the bureau.

“I am committed to reversing the damage that Mulvaney has caused,” she said in her opening statement. “His mission was to dismantle the agency from within. This committee will not tolerate the Trump administration’s anti-consumer actions.”

Kraninger, appointed CFPB director in December, said the changes have only strengthened consumer protection — and has backed Mulvaney’s efforts to rescind the Obama rules on payday lending.

“Protection of consumers and the mission of this agency is at the heart of every decision that I will make and certainly has been at the heart of every decision I have made thus far,” Kraninger said.

Waters pointed out that payday loan trade groups held their annual conference at the Trump National Doral Golf Club near Miami last year — giving the appearance, she said, of “impropriety and corporate influence.”

The chairwoman asked Kraninger directly if she’s received any directives from Mulvaney, President Donald Trump or others in the administration since her appointment. Kraninger said she hasn’t, and has only met with Mulvaney socially since the start of her CFPB tenure.

The bureau was created by the Dodd-Frank Act in 2010 to provide consumer protections after the financial crisis, and Republicans have attempted to overturn provisions of the law ever since.

Rep. Patrick McHenry, R-N.C., said the CFPB is a “powerful and unaccountable bureaucracy” that “ran roughshod” over U.S. businesses under President Barack Obama.

“You’ve had unilateral authority to do whatever you want,” he said.

During the Obama years, Republicans criticized the CFPB for carrying out regulation by enforcement, and have praised the job Mulvaney and Kraninger have done so far.

“For the first seven years of its existence, it seemed the CFPB did little more than harass private businesses, exceed its authority, imagine financial harm where none existed, serve the partisan agenda of one political party, and do all this while utterly ignoring the actual needs and desires of America’s consumers,” said Gerard Scimeca, vice president of Consumer Action for a Strong Economy. “Ms. Kraninger, not yet fully three months on the job, must be applauded for steering the CFPB in an entirely new direction, one not directed by ideology, but faithfully committed to open and transparent oversight of consumer needs in the financial services industry.”

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