It took little time this week to show how polarizing the Consumer Financial Protection Bureau (CFPB) and its director, Kathy Kraninger, are on Capitol Hill.
Before the agency chief even spoke at a hearing Thursday in front of the House Financial Services Committee, the panel's chairwoman, Rep. Maxine Waters, D-CA, said, "I would like to welcome Director Kraninger to what I hope will be her last appearance before this committee as CFPB director.”
Perhaps the bald vitriol is a reflection of the bitter partisan divide regarding Kraninger's position, whose occupant the Supreme Court last month — along party lines — ruled the president could fire "at will." The ruling came after now-former Solicitor General Noel Francisco asked the court to find the agency's structure unconstitutional. The court stopped short of that, but ended the days under which the bureau chief could be removed only for "inefficiency, neglect of duty, or malfeasance in office."
The opposition may also be personal. Kraninger has a history of drawing pointed rebukes from lawmakers.
"If the consumer bureau can't get relief for consumers who have been harmed — and you admit they've been harmed — then what are you doing?" Rep. Carolyn Maloney, D-NY, asked Kraninger during a hearing last year after House Democrats leveled a blistering 333-page report at the agency chief, accusing her of going against the advice of her employees and "leaving consumers high and dry" because the CFPB didn’t require remediation during a number of settlements.
"If you're not following direction from your staff to help consumers that are harmed, then you are absolutely worthless," Maloney said in October.
This week's sharpest barbs came in response to the bureau's actions toward mortgage services, payday lenders — and addressing questions in general.
"I will tell you that Director Kraninger is very, very good at not answering questions," Sen. Jon Tester, D-MT, said during Wednesday's hearing in front of the Senate panel. "By the way, that’s not a good quality. ... These hearings with Director Kraninger have been a total waste of time."
The CFPB told mortgage servicers in a memo that it wouldn't penalize them if they acted in "good faith" — guidance Sen. Elizabeth Warren, D-MA, called a "get out of jail free card."
"Your leadership has been a miserable failure," Warren said. "Based on your actions in this pandemic, you should resign."
Warren, to be sure, may have more invested in ensuring the CFPB runs well. She served as the bureau's architect — even if she never ran the regulator. Then-President Barack Obama withdrew her nomination when it became questionable whether she'd garner enough Republican support to be voted in to that position.
Kraninger defended the CFPB's guidance, saying the number of complaints in the mortgage arena has fallen since the coronavirus pandemic has taken hold. At the same time, housing advocates this week sued the bureau over a rule that reduced the number of mortgage lenders that must report application data used to enforce fair lending.
The CFPB chief also took flak over the bureau's move this month to roll back the "ability-to-repay" portion of a 2017 payday-lending rule.
"It is outrageous that in the middle of this pandemic ... you've provided this big payday to payday lenders at the expense of the consumer," Sen. Chris Van Hollen, D-MD, said Wednesday. "It's bad at any time, but especially egregious at a moment when so many families are struggling to make ends meet."
Previous payday regulation would have cut credit access by 70%, Kraninger said, adding that the new rule was meant to foster competition and let banks offer venues geared toward small-dollar lending.
As she had before, Kraninger deferred to Congress on matters regarding the CFPB's structure.
Rep. Bill Huizenga, R-MI, asked the director Thursday about the viability of a five-member bipartisan commission to lead the bureau.
"With respect to additional changes on structure or otherwise, I leave those in the hands of Congress," she said, without giving an opinion on any particular hierarchy. "I welcome the [proposed] action on structure by Congress, generally speaking, and I do believe Congress would come to a good conclusion on that."
That marks a familiar refrain for Kraninger who, during her nomination process, said "the ultimate question of the constitutionality of the Bureau's structure is one for Congress or the courts to resolve."
A year later, when the Justice Department asked the Supreme Court to rule on the CFPB’s constitutionality, Francisco wrote in his brief that Kraninger had "reconsidered that position."
"Litigation over [the CFPB's constitutionality] has caused significant delays to some of our enforcement and regulatory actions," she clarified in an email to staff. "I believe this dynamic will not change until the constitutional question is resolved either by Congress or the Supreme Court."
Kraninger's testimony Thursday even left room for a similar change of heart.
"If I see legislation that I think would be detrimental to the agency ... I certainly will let you know my views," she said.
