Kraninger’s statement and her answers to senators’ questions (many of which were similar to the sample questions my colleague Daniel Press had proposed), showed that she understood the BCFP must accord due process to the firms it regulates and respect consumer choices while fulfilling its role prescribed by Congress in consumer financial protection.
At the hearing, Kraninger made it clear she was against the “regulation by enforcement” engaged in by the bureau’s first director in which de facto rules for the industry were frequently set by arbitrary punishments of certain firms. She said she favored competition as the best method to provide consumers with more affordable small-dollar loans. And she said she would work with Congress should it want to change the structure of the BCFP.
The Senate should confirm Kraninger, and Congress should then take her up on her offer to help make the agency more accountable. It should make the BCFP subject to the appropriations process in order for Congress to exercise oversight through the “power of the purse.” And it should ensure BCFP leadership is accountable by either making the director removable by the president or replacing the director with a multimember, bipartisan commission.
Of all the qualities for leading government regulatory agencies, the most important one is that of restraint. Acting BCFP Director Mick Mulvaney, who is also Kraninger’s boss in his other post as director of the Office of Management and Budget, got it right when he said that the BCFP should not “push the envelope,” as his predecessor boasted of doing
As Mulvaney wrote in a January op-ed in The Wall Street Journal:
There will absolutely be times when circumstances require us to take dramatic action to protect consumers. At those times, I expect us to be vigorous in our enforcement of the law. But bringing the full weight of the federal government down on the necks of the people we serve should be something that we do only reluctantly, and only when all other attempts at resolution have failed.
All industries are constantly changing and no individual can claim a mastery of every aspect an industry. Kraninger will have employees with industry expertise, but she should (and we believe she does) realize that the private sector must be allowed to lead through permissionless innovation, particularly in the fintech sector of financial services that carries so much promise for consumers. Above all, those who make the rules that govern the private sector must themselves follow the rules set by Congress and the U.S. Constitution.
Kraninger is worthy of confirmation, but any director of any government agency or bureau must be subject to the Constitution’s checks and balances.