Sen. Brown Blasts Kraninger’s CFPB Reorganization

A key Senate Democrat is blasting CFPB Director Kathy Kraninger for announcing a huge agency reorganization within weeks of an election that could cost her the director’s job.

“A reorganization of this magnitude is inappropriate just weeks before an election that will determine whether you continue as Director past January 20, 2021,” Senate Banking ranking Democrat Sherrod Brown of Ohio, wrote in a letter to Kraninger.

“It is critical that the public and this committee understand why Director Kraninger would undertake such a major reorganization, which amounts to a demotion for the Office of Enforcement—a critical part of the CFPB’s mission to protect consumers—just weeks before the election,” Brown said in a statement shortly after learning of the reorganization.

Brown is in line to chair the Banking Committee if Democrats gain control of the Senate. If Democratic Presidential nominee Joe Biden is elected president, he is certain to replace Kraninger as director.

Brown said he had told Kraninger during a phone call that the reorganization of the agency’s Office of Supervision, Enforcement, Fair Lending “will weaken the Bureau’s ability to hold financial institutions accountable for violating the law and obtain redress for harmed consumers.”

For instance, Brown said that Kraninger has disbanded a team that determines the enforcement division’s overall priorities and stripped the enforcement division of a vote in deciding whether potential violations should be resolved through examinations or an enforcement action.

“After seeing details of the SEFL reorganization, I am even more convinced that it is misguided and will weaken the Bureau’s ability to protect consumers from exploitation, abuse, and discrimination in the marketplace,” Brown wrote.

A CFPB spokesperson defended the reorganization.

“Over the past seven-plus months, the Supervision, Enforcement, and Fair Lending Division has undertaken a review of their operations, including extensive input from SEFL staff and others throughout the bureau,” she said. “On the basis of that review, SEFL delivered to the director recommendations to improve SEFL’s structure in order to facilitate the division’s critical work in exercising two of the bureau’s four tools to protect consumers: supervision and enforcement.”

Ironically, if Biden is elected, Kraninger could be fired based on a lawsuit she supported. The Dodd-Frank Act, which established the CFPB, stated that the director was appointed for a five-year term and could only be removed for cause. That would have meant that Kraninger could have stayed in office until late 2023 no matter who is elected on Nov. 3.

However, Seila Law, a law firm, challenged that structure and this summer, the U.S. Supreme Court struck down the agency’s structure and ruled that the director could be removed by the president at will.

As a result, if Biden is elected, he could fire Kraninger and no doubt will.

In his letter to Kraninger, Brown asked that the director, at least, delay the reorganization until it becomes clear whether she will still have the job.