Senate Dems Hammer CFPB & Financial Regulators on Coronavirus Response

Senate Democrats on Tuesday hammered the Trump Administration’s economic response to the Coronavirus, telling CFPB Director Kathy Kraninger that she and others should have called for a special meeting of the Federal Stability Oversight Council to respond to the issue.

“The principals have not done what they should have done,” Senate Banking Committee ranking Democrat Sherrod Brown (D-Ohio) told Kraninger during a hearing on the bureau’s semi-annual report.

Kraninger said the FSOC will meet this month, although the meeting has not been announced to the public.

Under questioning by Sen. Jon Tester (D-Mont.) about whether the Coronavirus was causing an economic emergency, Kraninger said, “I take my lead from the Secretary of the Treasury.”

Tester fired back, “If Mnuchin is the one making the calls, why do we have directors for anything else?”

She said financial agency heads are communicating about the issues.

“There’s a lot of information sharing that’s going on on the agency level,” she said.

However, Sen. Mark Warner (D-Va.) said the CFPB should be taking the lead on such issues as forbearance for credit card customers.

Kraninger said federal financial regulators have issued a statement saying that financial institutions will have examination flexibility.

That statement said, in part, “The agencies understand that many financial institutions may face current staffing and other challenges. In cases in which operational challenges persist, regulators will expedite, as appropriate, any request to provide more convenient availability of services in affected communities. The regulators also will work with affected financial institutions in scheduling examinations or inspections to minimize disruption and burden.”

Warner said that statement contained no level of detail about how the financial regulators will help consumers facing financial problems as a result of the Coronavirus.

Brown also blasted Kraninger’s tenure at the CFPB.

“President Trump has tried to turn the Consumer Protection Bureau into another agency that helps his wealthy friends at the expense of the people it’s supposed to serve,” he said, adding that, “Under her leadership, we see a clear pattern: Sabotaging the agency’s work to hold corporations accountable.”

But Banking Chairman Mike Crapo (R-Id.) said he believes Kraninger had done a good job.

“Under Director Kraninger’s leadership, the CFPB has demonstrated a commitment to ensuring that its regulations are data driven, appropriately tailored to satisfy statutory obligations, and based on sound evidence and legal support,” he said.

Crapo and other Republicans expressed concern about the CFPB’s single-director structure — an issue that is pending before the Supreme Court.

Crapo said he believes the agency should be governed by a board of directors.

Kraninger, who has declined to defend the constitutionality of the agency structure, said she looks forward to the court’s ruling, saying that she hopes the court will provide “certainty and clarity.”

“It has thwarted many of our enforcement actions,” she added.

Just before the hearing, Brown and the committee released a report criticizing Kraninger’s first year as director.

“Not only has Director Kraninger neglected her own duty to ensure that ‘federal consumer financial laws are enforced consistently,’ she has undermined career public servants who have attempted to fulfill the agency’s purpose — protecting consumers from corporate abuse,” the Democrats said. “She has repeatedly placed the agency on the side of large corporate interests, at the cost of hardworking families’ paychecks.”

The Democrats also said a task force that Kraninger formed to examine consumer protection laws is loaded with industry representatives. They said Kraninger had to waive the ethics requirements for two members of the task force because they had a personal financial interest in agency business.

Those people, who were not named, were experts in consumer financial affairs.