Kathy Kraninger, the president’s choice to be the nation’s top consumer financial watchdog, lacks any apparent consumer-protection, regulatory or industry experience — but Republicans say that all is offset by her management and budgetary skills.
Democrats aren’t impressed. They contend that the nominee for director of the Consumer Financial Protection Bureau should think twice about touting those skills at her Senate confirmation hearing Thursday because they’re linked to two of the Trump administration’s biggest controversies.
As associate director for general government at the White House Office of Management and Budget, Kraninger oversaw the budgets of agencies that developed and implemented the child-separation policy at the border and the federal government’s bungled response to Hurricane Maria in Puerto Rico.
On Wednesday, Sen. Elizabeth Warren (D-Mass.), released a 14-page report outlining what it called Kraninger’s “disastrous tenure” at OMB. In addition to the immigration and hurricane response roles, the report slams Kraninger for overseeing a budget developed by the Department of Housing and Urban Development that fails to address the nation’s affordable housing crisis.
“The entire case for her nomination rests on her purported management abilities,” the report concludes. “Yet a close look at her record shows consistent mismanagement, often with devastating results for poor and vulnerable people.”
Democrats on the Senate Banking Committee have pressed Kraninger in letters to detail her roles in those administration policies. But so far, Kraninger has not responded. Because of that, all 12 Democrats on the committee wrote to Chairman Mike Crapo (R-Idaho) asking him to delay Thursday’s confirmation hearing.
“You’d like to have somebody that cares about consumers and has management experience,” said Sen. Sherrod Brown (D-Ohio), the panel’s top Democrat.
“We’ve got one of those two, and the one is inadequate because she won’t answer any questions on that, so I guess I don’t even get to the second question, where of course I’m concerned,” he said. “I’m not inclined to support her because I’ve seen nothing yet to make me want to support her.”
A spokeswoman for Crapo said Thursday’s hearing would not be postponed. Kraninger has drawn support from business and financial industry groups. After meeting with her last month, Senate Majority Leader Mitch McConnell (R-Ky.) backed her nomination.
But with Sen. John McCain (R-Ariz.) at home fighting cancer, Republicans have only a one-vote majority in the Senate. A poor performance by Kraninger at the hearing could put her nomination in jeopardy.
“It matters how well she does,” said Charles Gabriel, president of policy research firm Capital Alpha Partners. At this point, he put her odds of confirmation at about 65%.
President Trump’s decision last month to tap Kraninger to head the CFPB came as a surprise to consumer advocates and people in the financial industry.
She was a little-known White House aide whose background has been largely in Homeland Security, and critics of the choice immediately pointed to her lack of experience for a job as one of the nation’s top financial regulators.
At the Office of Management and Budget, Kraninger oversees the budget for five agencies, including the Department of Homeland Security. She served as deputy assistant secretary for policy at the Department of Homeland Security during the Bush administration and also worked for the Senate Homeland Security and Governmental Affairs Committee and the Senate Appropriations subcommittee handling Homeland Security funding.
The CFPB, which was created by the 2010 Dodd-Frank law, has been a partisan flashpoint since the start. Democrats, who strongly back it, said it is needed to protect consumers after other financial regulators put the health of banks ahead of average Americans.
Since opening in 2011, the CFPB has provided consumers about $12 billion in refunds and debt relief from financial institutions. The bureau also played a key role in penalizing Wells Fargo & Co. after the bank created millions of accounts in customers’ names without their consent.
But most Republicans strongly oppose the CFPB. They argue the bureau has too much power, lacks congressional accountability because it is funded directly by the Federal Reserve and the CFPB’s aggressive actions under its first director, Richard Cordray, restricted consumer access to credit.
When Cordray stepped down in November, Trump installed OMB Director Mick Mulvaney to also serve as acting director in a controversial move that led to protests and a legal challenge from Corday’s chosen successor, Leandra English. Bureau supporters were infuriated because Mulvaney had been an outspoken critic of the agency.
Since taking over, Mulvaney has scaled back the bureau’s enforcement efforts and made it more industry friendly, publicly declaring it no longer would “aggressively push the envelope” to protect consumers. Mulvaney would have had to step down as acting director last month under a time limit in the law used to install him. Kraninger’s nomination means he can remain as the CFPB’s acting director while the Senate mulls her confirmation.
Kraninger has worked for Mulvaney at OMB since March 2017 and is seen as a protege who would continue his approach to running the agency.
“They don’t want a do-gooder crusader,” Gabriel said of most Republicans. “They want somebody who will ... give financial companies due process where they really felt they were denied that under Cordray.”
Sen. John N. Kennedy (R-La.), a member of the banking committee who sometimes split with fellow Republicans, said he planned to support Kraninger.
“She comes highly recommended by Mulvaney, and I’ve looked at her background and I think she’ll be a fine public servant,” Kennedy said this week. He said that he wasn’t worried about her apparent lack of consumer protection or financial background and that “she’s very, very bright and … she can learn what she has to.”
Stewart A. Baker, who was assistant secretary for policy at the Department of Homeland Security while Kraninger worked there, said she was a fast learner who excelled at a variety of tasks, including coordinating all of the agency’s screening programs.
“She was really, really competent, and I gave her additional responsibilities every opportunity that I had,” he said. “I have a lot of confidence she will master this new subject matter …with a determination to make government work and work well.”
But Sen. Susan Collins (R-Maine), who was one of the few Republicans to vote for Dodd-Frank, said she has some concerns even though she knows Kraninger from her time in the Senate.
“I know that Kathy’s very talented and she’s a smart attorney and can learn most anything, but obviously it would be to her advantage to have some sort of consumer protection or financial background, so that’s something I definitely want to talk to her about,” said Collins, who plans to meet with Kraninger this week.
Brown met with her last week and said his concerns weren’t allayed.
“She hasn’t answered any letters [or] requests giving us any substantive answers about her management experience other than she’s got a really good-looking resume, including, I might add, being an intern for me in 1994 when I was in the House,” Brown said of Kraninger, who is from Chagrin Falls, Ohio.
He and Warren wrote to Kraninger on June 18 asking for a “complete description” of any role she played at OMB in the administration’s “zero tolerance” immigration policy that has separated nearly 3,000 children from their parents crossing the U.S.-Mexico border since April.
Last week, Brown, Warren and Sen. Catherine Cortez-Masto (D-Nev.) signed on to a letter from Sen. Robert Menendez (D-N.J.) asking Kraninger to detail her role at OMB in budget and policy decisions related to the administration’s response to Hurricane Maria in Puerto Rico. A recent study estimated the hurricane and its aftermath led to about 4,600 deaths.
Menendez is expected to press Kraninger on the Puerto Rico hurricane response at Thursday’s hearing.
Brown said Kraninger’s lack of answers on those topics mirrored her inability to articulate detailed views on consumer protection issues.
“Every question I asked her about substance, she said the free market will take care of it,” he said.
“The free market will take care of payday lending. The free market will take care of poverty. The free market will take care of bank overreach,” he said. “That was her answer to everything.”
2:10 p.m.: This article was updated with comments from Stewart Baker.
This article originally was published at 1 p.m.