Democrats Scrutinize Consumer Watchdog Agency Saying It Has Abandoned Its Mission
The new head of the Consumer Financial Protection Bureau was assailed by Democrats on the House Financial Service Committee on Thursday who contend an industry-friendly shift by the Trump administration has undermined the agency’s mission.
When the bureau opened in 2011 it was seen as the centerpiece of the Dodd-Frank financial reform act.
But under Mick Mulvaney, who served as the bureau’s acting director for about a year before being named President Trump’s acting chief of staff, new policies weakened oversight of lending to minorities and those in the military, and established more lenient standards for the payday loan industry.
“This committee will not tolerate President Trump’s anti-consumer actions,” said Committee Chairwoman Rep. Maxine Waters in her opening statement, setting the stage for the contentious hearing that followed.
She went on to say Mulvaney did nothing less than strip ” the office of its ability to enforce fair lending, giving lenders a free pass to abuse service members.”
In her first appearance on Capitol Hill since succeeding Mulvaney three months ago, Kathy Kraninger defended her predecessor’s actions, arguing they’ve actually strengthened the agency.
“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.
“The bureau is stronger, not weaker,” she said.
But Waters, who has reintroduced legislation, the Consumers First Act (H.R.1500), which would direct Kraninger to reverse Mulvaney’s policy changes, persisted.
“I am committed to reversing the damage that Mulvaney has caused,” she said. “His mission was to dismantle the agency from within.”
She went on to say the Democratic majority on the committee does not believe Kraninger is doing enough to foster transparency and accountability or to change issues raised during Mulvaney’s 13-month tenure.”
Waters also wanted to know how much direction Kraninger has received from either Mulvaney or the president since she took the job in December.
“The decisions I make at the bureau are my decisions,” Kraninger said.
Republicans on the committee tried gamely to defend Kraninger and apologized for the aggressive stance of the Democrats.
Among them was Rep, Roger Williams, R-Texas, who said he thought Mulvaney did a great job when at the bureau and that he thought the same of Kraninger’s performance during her short tenure.
But based on letters submitted to the committee by consumer groups, those who share Williams’ opinion are in the minority.
In one of those letters, Debbie Goldstein, executive vice president of the Center for Responsible Lending, said that “attempting to scrap the payday lending rule, failure to bring enforcement action against unscrupulous financial actors, and leaving our service members and military families vulnerable to predatory lenders all undermine the founding mission of the CFPB.
“As head of an independent agency that is supposed to be free from political and outside industry influence, Kathy Kraninger has more political staff than her predecessors did and conflicting reports have indicated that the consumer bureau has met with payday lenders to weaken important consumer protections,” Goldstein said.
In another letter, the Credit Union National Association said that under Kraninger’s leadership, “the CFPB has an opportunity once again to examine and, where necessary, modify its approach to regulation in a manner that ensures the Bureau is fulfilling its consumer protection mission without impeding the availability of safe and affordable financial products and services.”
The letter goes on to express support for a bipartisan, multi-member commission to lead the bureau rather than rely on a single director.
“While there are many measures the Bureau must take to improve the regulatory landscape, Congress also has a responsibility to ensure the CFPB is an effective agent of consumer protection,” the association said. “The current structure — with a single, powerful director –gives too much authority to one person and does not provide enough oversight and accountability. Congress should enact legislation that changes the leadership structure to a multi-member, bipartisan commission.”
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