Kathy Kraninger, President Trump’s nominee to take over as Director of the Bureau of Consumer Financial Protection (BCFP), shared a confirmation hearing yesterday with Export Import Bank nominee Kimberly Reed – but Kraninger received a whole lot more airtime.
During the nearly three-hour hearing, Democrats were head-scratchingly frustrated by Kraninger’s refusal to answer direct questions. They were determined to link Kraninger to the Trump Administration’s extremely unpopular immigrant child-separation policy and the less than stellar response to the Puerto Rico hurricane disaster – proving that she does not have the character or empathy needed to run an agency charged with protecting consumers. Senator after senator tried to nail down answers on her personal positions but she just wouldn’t budge.
Sen. Elizabeth Warren (D-MA) concluded her time by characterizing the policy of separation of children from their parents as “a moral stain that will follow you for the rest of your life.”
Sen. Catherine Cortez-Masto (D-NV) said “I’ve heard you say your intent is that the Bureau is transparent and accountable. But we can’t get you to be transparent and accountable about your work at the OMB.”
Sen. Chris Van Hollen (D-MD) said, “You’ll be heading up an independent agency; not a line position responsible just for implementing. So I think your personal positions are relevant.” He then asked, “What is your personal view on the family separation policy?” As she did many times during the hearing, Kraninger dodged the question.
Sen. Heidi Ketkamp (D-ND) posed a series of “yes” or “no” questions about Kraninger’s related experience: Do you have experience working at a bank? Regulating banks? Supervising payday lenders, debt collectors, or other similar business? Worked on financial literacy, or volunteered in this area? Have a PhD or masters in economics or finance? Taken consumer protection classes in law school?
The response to most of the questions was “no… like many other nominees…” (she was cut off each time). She did say she worked on some financial literacy-related curriculum through some volunteer work in college. And she did say that law school taught her about the Administrative Procedures Act, privacy law and cybersecurity law – all of which are relevant to the job as head of the BCFP.
Sen. Jack Reed (D-RI) asked whether she would support lowering the top rate for small dollar loans from 36%. Kraninger responded that she supports competition in the market and rates that justify the risks. It wasn’t exactly the response he was looking for.
One personal position Kraninger did articulate was her belief that discrimination is abhorrent, and that she would make fair lending a priority. She also offered that she would consider with an open mind whether to re-instate the Office of Student Lending, and what to do with the currently under review payday, vehicle title and high-cost installment loan rule.
Sen. Jon Tester (D-MT) as others, shaking his head at frustration over not getting straight answers said, “You’ve probably got the votes to get confirmed. You’re going to lead this agency. Your opinions will matter. You have the ability to answer the questions. Just answer them.” Concluding with, “I liked your statement that you submitted. All of the principles were good. Your answers did not reflect those principles.”
You can read her opening statement here, in which she outlined four priorities:
- The Bureau should be fair and transparent, make robust use of cost benefit analysis, and make effective use of notice and comment rulemaking.
- The Bureau should work closely with other financial regulators and the States on supervision and enforcement, and take aggressive action against bad actors.
- The Bureau must protect sensitive information in its possession, and limit data collection to what is needed.
- The Bureau must be accountable for its actions.
Republicans asked easier questions. But actually, they didn’t get a whole lot of specific insight either into what her philosophy would be as the leader of the BCFP.
Sen. Pat Toomey (R-PA) referred to the Bureau’s former practice of imposing policies that had effect of being a rule -- using powers of enforcement and guidance -- rather than the Administrative Procedures Act to establish rules (he offered the case of indirect auto lending, which was “so egregious” and was repealed by the Senate). He asked whether she would commit to using the APA. She said absolutely yes. That was probably the most direct response given by the nominee.
Sen. Thom Tillis (R-NC) opened by giving her an opportunity to provide a further response to Sen. Toomey. She said what would be helpful is continued competition in the small dollar lending space. “It’s a difficult position to be in because it’s on the regulatory docket and it’s important not to prejudge the issue.” He then said he hoped she would claw back new regulations that may have appeared on the surface to protect consumers but in reality are harmful in terms of cost or consumers’ access to capital.
Following the hearing I had a conversation with Daniel Press, policy analyst at the Competitive Enterprise Institute. In advance of the hearing, Press articulated these five questions he hoped the nominee would answer. We were in agreement on our takeaway: We didn’t know a whole lot about Kathy Kraninger before the hearing; we still don’t know a whole lot about Kathy Kraninger, except that she seems to favor the free market.
If approved by the Senate Banking Committee, Kraninger's nomination will move to the full Senate for a vote.