What We Know and What to Watch Under Kraninger, the CFPB’s New Director

On December 10, 2018, Kathy Kraninger was sworn in to serve as Director of the Consumer Financial Protection Bureau (CFPB) for a five-year term.  This followed her December 6, 2018 confirmation by the Senate with a vote of 50 to 49.  Kraninger succeeds Mick Mulvaney, her former boss at the Office of Management and Budget and the CFPB’s former acting director since November of last year.

Although much remains to be seen on the direction that Kraninger takes the agency, she assumes a full agenda from her predecessor and will be teed up to make several key decisions that are coming due.  Notably, by January 2019, the CFPB is expected to issue overhaul changes to the payday lending rule.  It is expected to complete three statutorily mandated look-back reviews of its remittance, mortgage servicing and ability-to-repay “qualified mortgage” rules in January.  By March 2019, the CFPB is expected to issue notices of proposed rule-making on the Home Mortgage Disclosure Act and on debt collection communications and practices.  Although no deadline has been set, the agency also intends to issue rulemaking to clarify the meaning of “Abusive Acts and Practices,” which Mulvaney himself promised the Bureau to deliver.

Kraninger will also be presented with several decisions, should she chose to make them, on the CFPB’s structure.  Under Mulvaney, the CFPB published a series of requests for information (RFIs) seeking comments on proposed reforms to the CFPB.  The RFIs covered a wide range of topics on the Bureau’s activities, such as enforcement, rule-making and consumer complaints, to name a few.  To date, no action has been taken by the CFPB on whether to make any reforms suggested by the industry.  Kraninger will also be able to decide whether to keep the political appointees hired by Mulvaney or chose her own team.

Other important areas to watch is whether Kraninger will continue Mulvaney’s emphasis on FinTech initiatives, such as the CFPB’s recently created Office of Innovation.  That office has proposed changes to the Bureau’s Trial Disclosure Waiver and No Action Letter programs to encourage financial services companies to develop new products and services by providing forms of relief, including safe harbors and guarantees to not bring enforcement actions under certain circumstances.  In addition, all eyes will be on whether Kraninger adopts Mulvaney’s efforts to curtail the CFPB’s powers and number of enforcement actions brought.

Despite all these uncertainties and the little we know about Kraninger at this point, one change is for sure.  Unlike Mulvaney, Kraninger will have to answer to a Democratic-controlled House starting in January.  But how she interacts with the new Congress–particularly, with Representative Maxine Waters (D-Cal.), who is the likely chair of the House Financial Services Committee–is another question.  Following Kraninger’s confirmation, Representative Waters released a statement that called on Kraninger “to put consumers first by rolling back the anti-consumer actions taken by her predecessor and allowing the Consumer Bureau to resume its work of protecting hardworking Americans from unfair, deceptive or abusive practices.”  Although Kraninger formerly worked as a congressional staffer, it will be interesting to see whether that experience will prove helpful if faced with Congressional challenge.

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