In an unusual weekend announcement, on Saturday a White House spokesperson revealed that President Trump has selected Kathy Kraninger, an associate director at the Office of Management and Budget (OMB) under Mick Mulvaney, as his nominee to lead the Bureau of Consumer Financial Protection. Kraninger was on nobody's reported short list... or at least if she was, it was an extremely well-guarded secret.

According to Kraninger's Linkedin profile, she graduated in 1997 from Marquette University, and in 2007 from Georgetown University Law Center. She has been at OMB since March 2017. In the ensuing years she served as deputy assistant secretary for policy at the Department of Homeland Security, and also worked at the Transportation Department.

White House spokeswoman Lindsay Walters said in a statement that Kraninger "will bring a fresh perspective and much-needed management experience to the [bureau], which has been plagued by excessive spending, dysfunctional operations, and politicized agendas. As a staunch supporter of free enterprise, she will continue the reforms of the Bureau initiated by Acting Director Mick Mulvaney, and ensure that consumers and markets are not harmed by fraudulent actors. The White House hopes that she will be promptly confirmed by the Senate."


The announcement is drawing criticism from both sides. Karl Frisch, executive director of consumer group Allied Progress, said, “This looks like nothing more than a desperate attempt by Mick Mulvaney to maintain his grip on the C.F.P.B. so he can continue undermining its important consumer protection mission on behalf of the powerful Wall Street special interests and predatory lenders that have bankrolled his career. Kraninger has absolutely no relevant experience that indicates she is qualified to be America’s chief consumer advocate.”

On the conservative side, J.W. Verret, a professor at George Mason University’s Antonin Scalia Law School, said she is a “mid-level budget staffer lacking expertise, chosen to lead one of the most powerful agencies in the government." He compared her nomination to the ill-fated confirmation process for Harriet Miers, the Supreme Court nominee chosen by President George W. Bush who was rejected by fellow Republicans as unqualified. Verret is also a colleague of Todd Zywicki, who was reportedly an early contender for the BCFP job, and re-emerged late last week as one of two remaining finalists. 

The banking industry was pleased with the pick. American Bankers Association president and CEO Rob Nichols released this statement,

"We congratulate Kathy Kraninger on her nomination to lead the Consumer Financial Protection Bureau. Her experience at OMB alongside Acting CFPB Director Mick Mulvaney, along with her years of work on Capitol Hill and in the executive branch, would serve her well in this important position. We trust she shares our interest in ensuring consumers have access to the financial products they want and need, while maintaining the protections they deserve.

We also appreciate Acting Director Mulvaney’s willingness to review the Bureau’s policies and priorities to ensure they are meeting the Bureau’s mission, and we hope Ms. Kraninger will build on that foundation. We look forward to learning more about her views on specific regulatory issues during the confirmation process."

insideARM Perspective

While Verret compares this nomination to the Miers Supreme Court debacle, to me it is reminiscent of something much more recent -- former CFPB Director Richard Cordray's eleventh hour elevation of his top aide Leandra English. English was also a little-known manager who - it seemed to many - was hand-picked to continue the work of her boss, in spite of her lack of name recognition and political gravitas. I recall searching in vain for a photo of English when the announcement was made. Evidently nobody else could find one either, until finally she was photographed by the press in a meeting with lawmakers following Cordray's announcement. In this case, other than the photo I pulled from Kraninger's Linkedin profile, I note that the Wall Street Journal had to go back to 2008 to locate one.

Meanwhile, Mulvaney said just last week that he had not been involved in the process of choosing his successor. According to a report last Tuesday, Mulvaney told reporters he was recently told by White House Counsel Don McGahn that the Trump administration will adhere to a June 22 deadline for selecting a permanent CFPB director. He said that Treasury Secretary Steve Mnuchin and top White House economic advisers Larry Kudlow and Kevin Hasset have been leading the search, and “Once they name a person I look forward to working with him or her to get that person up to speed.”

This seems hard to believe, given how closely Mulvaney must work with Kraninger at OMB. It also seems unlikely that Trump wouldn't have asked Mulvaney for his opinion about her.

One has to wonder whether keeping Mulvaney in office long enough to make permanent change (or at least change that is super-difficult to reverse) is the driver of this selection. 

Ballard Spahr's Alan Kaplinsky did the research on Section 3345(a)(2) of the Federal Vacancies Reform Act (FVRA) - which Trump used as the source of his authority to appoint Mulvaney as Acting Director - earlier this year. He noted, "[if the first] nomination is rejected, withdrawn, or returned by the Senate, Mr. Mulvaney can continue to serve for another 210 days and assuming the President makes a second nomination within that 210-day period, Mr. Mulvaney can continue to serve until the second nominee is confirmed or for no more than 210 days after the second nomination is rejected, withdrawn, or returned. Given [this], Mr. Mulvaney’s service as Acting Director could potentially continue into 2019."

In a tweet, the Credit Union National Association (CUNA) said, "We are hopeful that under her leadership, the Bureau will recognize the unique structure of credit unions and the enormous benefit that credit unions provide to 110 million members."


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