Column: CFPB celebrates record of consumer protection — except for the whole watchdog thing
Kathleen Kraninger marked her first six months as head of the Consumer Financial Protection Bureau this week, and the agency celebrated by releasing a scorecard of her accomplishments.
The listed achievements highlight Kraninger’s stated goal of shifting the bureau to more of an educational role, rather than being at the forefront of holding businesses accountable for illegal or abusive practices.
They also illustrate what consumer advocates have been saying since President Trump took office: The Consumer Financial Protection Bureau is now barely in the consumer-protection game.
“Despite the handful of enforcement cases cited by the CFPB to commemorate this dubious anniversary, the number of enforcement actions completed by the bureau has plunged in the Trump era,” said Alan Zibel, research director of Public Citizen’s Corporate Presidency Project, which tracks changes amid the current push for deregulation.
“While it’s gratifying that the CFPB is still filing some new enforcement cases, the numbers clearly show that Trump’s CFPB is putting corporate interests well before consumer protection,” he told me.
I’ll state up front that I had a bunch of questions for the bureau about its Kraninger scorecard, which I tried repeatedly to have answered. No one at the CFPB responded.
I did, however, receive a statement from Kraninger.
“It is an honor and privilege to serve American consumers,” she said. “As director, my focus is to prevent harm to consumers by using all the tools Congress gave us, including education, regulation, supervision and enforcement. I look forward to building on the efforts and progress of these first six months.”
Note how that list of tools places education ahead of regulation, supervision and enforcement. This is consistent with Kraninger’s past comments about her vision for the CFPB.
“Empowering consumers to help themselves, protect their own interests, and choose the financial products and services that best fit their needs is vital to preventing consumer harm and building financial well-being,” Kraninger said in April during a speech to the Bipartisan Policy Center, a Washington think tank.
Helping consumers help themselves is a long way from the bureau’s original marching order in 2011 to serve as “a cop on the beat to enforce the laws on credit cards, mortgages, student loans, prepaid cards, and other kinds of financial products and services.”
This week’s victory lap by Kraninger emphasizes the shift in focus by touting first and foremost the agency’s educational outreach efforts.
Among the accomplishments cited were activities such as “launched an initiative,” “performed an extensive analysis,” “issued a set of reports” and “provided technical assistance.”
Then there was this one: “Issued the first proposed rulemaking to implement the requirements and prohibitions applicable to debt collectors under the Fair Debt Collection Practices Act since it was passed in 1977.”
That’s an impressively non-descriptive way of describing the CFPB’s controversial proposal for debt collectors to be allowed to deluge consumers with an unlimited number of text and email messages.
More than two dozen U.S. senators called on the bureau last week to rethink the plan.
“By allowing debt collectors to send consumers unlimited text messages and emails without first receiving affirmative consent for such a method of communication, the proposed rule permits collectors to overwhelm consumers with intrusive communications,” the senators wrote in a letter to Kraninger.
The scorecard also refers blandly to a reconsideration of “the Mandatory Underwriting Provisions of the small dollar rule.”
What that actually means is a rollback of Obama-era rules requiring payday lenders to make sure borrowers can repay high-interest loans, rather than trapping people in endless cycles of debt.
After patting itself on the back for its educational endeavors, the CFPB scorecard listed steps taken on Kraninger’s watch to enforce the law. Of 13 cases cited, no fewer than eight begin with the phrase “took action against.”
What does that mean? I wish I could tell you. I asked the CFPB to clarify but, again, the agency didn’t bother to respond.
It apparently doesn’t mean filing lawsuits against questionable corporate actors because those are listed separately. The scorecard features just two lawsuits filed during Kraninger’s six months in office, one against a debt collector and one against a credit-repair firm.
The “took actions” look mostly like cases being settled with a handful of unnamed companies.
As best as I can tell from CFPB records, these include a fine of $1 — yes, a single buck — for a guy who provided high-interest loans to veterans.
The scorecard boasts that Kraninger “secured over $12 million in redress for consumers and $22 million in civil money penalties.” That sounds like a lot until you put it in historical context.
In 2015, the CFPB reported taking in more than $2 billion in fines and restitution. In 2016, the final year of the Obama administration, those figures totaled $482 million.
In 2017, as the pro-business Trump administration took power, CFPB fines and restitution fell to $223 million.
Total fines and restitution last year jumped to $896 million, but that figure is misleading.
Almost all that cash involved just two companies — Wells Fargo and Citibank — and those cases were begun when Richard Cordray ran the agency. He was appointed by former President Obama.
Excluding the Wells and Citi settlements, total CFPB penalties last year were $61 million.
This makes Kraninger’s $34 million over six months seem more like regulatory pocket change than proof of an aggressive upholder of the law.
“If, as Director Kraninger says, her goal is to protect consumers, there’s scant evidence of that judging by the number of cases brought or the light-touch treatment of payday lenders and other predatory actors in the financial services industry,” said Sally Greenberg, executive director of the National Consumers League.
Ed Mierzwinski, senior director of the federal consumer program for the U.S. Public Interest Research Group, said Kraninger accomplishes little by focusing on “feel-good consumer education efforts.”
“The spotty enforcement record shows the agency is not focusing on returning cash to victims, nor on adequately punishing lawbreakers to deter further wrongdoing in the marketplace,” he said.
The scorecard concludes with this managerial triumph: “During her first six months, Director Kraninger has also visited all of the bureau’s regional offices throughout the country and engaged with regional staff.”
That too sounds impressive until you find out the CFPB only has four regional offices, in New York, Chicago, San Francisco and Atlanta.
The trips undoubtedly were highly educational.