CFPB Director Kraninger was the sole witness at a House Financial Services Committee hearing thsi week on the Bureau’s Spring 2019 semi-annual report and at a Senate Banking Committee hearing yesterday on the report.

At the House hearing, Director Kraninger came under harsh criticism from Democratic members, with one member reportedly calling Ms. Kraninger “absolutely worthless.”  A primary focus of Democratic members was the CFPB’s settlements earlier this year such as those with Sterling Jewelers and NDG Financial in which the companies were not required to pay any redress to consumers.  The Democrats’ perspective is perhaps best summarized by the title of a 333-page report issued by the Committee’s majority staff to coincide with the hearing —“Settling for Nothing: How Kraninger’s CFPB Leaves Consumers High and Dry.”  The report discusses what it describes as appointments made by the Trump administration “to accomplish its goal of reining in the Consumer Bureau” and the handling of the settlements by such appointees.

At the Senate hearing, Democratic members also leveled harsh (but more civil) criticism at Director Kraninger, focusing on the Bureau’s supervision of student loan servicers and its proposed revisions to its final payday/auto title/high-rate installment loan rule (Payday Rule).  With regard to student loan servicers, several Democratic members voiced concern about the number of borrowers seeking loan forgiveness under the federal public service forgiveness program that have been rejected by the Department of Education.  These members called on the CFPB to respond more aggressively to the refusal of federal student loan servicers to provide information to CFPB examiners based on ED direction (including taking legal action against ED).

With regard to the Payday Rule, Democratic members raised questions about the Bureau’s evidentiary support for its proposed rescission of the Payday Rule’s ability-to-repay (ATR) provisions.  One Democratic member pressed Director Kraninger as to why the CFPB has not, despite indicating in its court filings that the Bureau did not believe there was a reason to delay the effective date of the Payday Rule’s payment provisions, sought to lift the stay of the August 19, 2019 compliance date for the payment provisions entered by the Texas federal district court hearing the lawsuit filed by two trade groups challenging the Payday Rule.  (The court also stayed the lawsuit and the compliance date for the ATR provisions.)  Director Kraninger indicated the CFPB had not done so because the trade groups were also challenging the Bureau’s constitutionality in their lawsuit.  She noted that the Bureau has yet to rule on a petition it has received to revisit the payment provisions and has one year to do so.  (Presumably Director Kraninger was referring to the rulemaking petition mentioned in the Supplementary Information to its proposal that seeks an exemption from the payment provisions for debit payments.)

With regard to the Bureau’s announcement that it would no longer defend its constitutionality in the appellate courts or the Supreme Court, Director Kraninger provided no insights into the rationale for the Bureau’s change in position other than to say that she believed there was a need for the Supreme Court to resolve the long-standing constitutional question.

Finally, in response to a question from a Republican member about the Bureau’s plans for providing clarity as to what is an abusive practice for purposes of the Dodd-Frank UDAAP prohibition, Director Kraninger stated that there would be news “in the not too distant future.”

Republican members of both committees were generally complimentary of Director Kraninger’s leadership, pointing to the Bureau’s innovation policies and Taskforce on Federal Consumer Financial Law as examples of praiseworthy initiatives.