Regulation by Enforcement Is Pushing the Envelope: CFPB's Kraninger

On her first day in office, CFPB Director Kathy Kraninger said she has the same reservations about using enforcement actions to regulate the financial services industry that her predecessor did.

“Regulation by enforcement certainly is pushing the envelope,” she told reporters Tuesday.

Her predecessor, former Acting Director Mick Mulvaney had said that the bureau had been regulating through enforcement actions—something that he said the agency must end.

But while Mulvaney initiated few enforcement actions while he served as acting director, she said the agency will take enforcement actions against companies when warranted.

Beyond that, Kraninger, who now will serve a five-year term, said little about myriad of issues confronting her controversial agency.

Kraninger said that data security and data protection will be an early focus of her tenure at the bureau, but she did not elaborate.

Asked about the agency’s latest move to make it easier for financial services companies to obtain “No-Action Letters,” Kraninger said she had not been “deeply briefed on the issue.”

Kraninger acknowledged that the CFPB, under Republican control, has had a contentious relationship with Democrats on Capitol Hill. However, she pointed out that she had been a congressional staffer for many years.

“I want to have a productive relationship with Congress,” she said.

To that end, she said she intended to contact Rep. Maxine Waters (D-Calif.) that day, if possible.

Waters, who has been an outspoken critic of the agency under Mulvaney’s leadership, likely will become the chair of the Financial Services Committee in the next Congress.

“Things have been waiting for my arrival,” Kraninger said, adding that “The staff is happy to have a full-time director.”

She acknowledged that under Mulvaney, the name of the agency became controversial. He attempted to rename the Consumer Financial Protection Bureau to the Bureau of Consumer Financial Protection.

Recent reports have said that such a renaming could cost the agency the financial community hundreds of millions of dollars and Democrats have criticized Mulvaney for having tried to do it.

She said she has not made a decision about the agency’s name.

“I care more about what the agency does rather than what the agency is named,” she said.

She said she will spend a significant time during the next few months traveling to the agency’s regional offices.

As she takes office, Kraninger is facing several huge issues.

Under the Obama Administration nominee Richard Cordray, the bureau had the reputation of strictly enforcing federal consumer protection law.

When Mulvaney took office, he signaled that the agency would become much friendlier toward business. For instance, he said the agency intends to revise its strict payday lending rule.

However, credit union trade groups said the agency has not gone far enough.

As Kraninger takes over, NAFCU President B. Dan Berger on Tuesday renewed his call for the NCUA to be the sole regulator of credit unions.

“The NCUA should be the sole regulator for credit unions and work with other regulators on joint rulemaking when appropriate,” he said, in a letter to Kraninger on Tuesday.

He stated, “Credit unions are swamped by unabated regulatory burden from the bureau and other regulatory entities, often from rules that are targeting bad actors and not community institutions.”

Berger called on Kraninger to use her power to exempt credit unions more widely, issue rules or guidance governing Unfair, Deceptive or Abusive Acts or Practices and exempt any new NCUA Payday Alternative Loan programs from the agency’s rules.

CUNA President.CEO Jim Nussle also has called on Kraninger to abandon what he called “one-size-fits-all” rules.

Kraninger may also be facing pressure from Congress to exempt credit unions from agency rules.

During the last Congress, some 70 senators and 329 House members asked Cordray to consider the regulatory burden that credit unions and community banks face—and possibly exempt them from some rules.

NCUA Chairman J. Mark McWatters also asked Cordray to exempt credit unions from some rules—particularly mortgage regulations. And then-NCUA Chairman Rick Metsger asked Cordray to exempt credit unions from the bureau’s payday lending rules.

Waters has blasted Mulvaney’s tenure, charging that he has undone many important consumer protection safeguards.

“I am committed to holding the Trump Administration accountable and ensuring that the Consumer Bureau can resume its important work protecting American consumers,” she said Tuesday, discussing the agency’s proposal to make it easier for financial services companies to obtain “No-Action Letters.”