The position of BCFP director is critically important. Not only does the Bureau have the authority to regulate nearly every consumer financial product in the economy, but the director has enormous unilateral power and discretion in writing and enforcing those rules. As Supreme Court nominee Brett Kavanaugh wrote in the constitutional challenge to the Bureau, PHH v. CFPB, “Indeed, other than the president, the Director of the CFPB is the single most powerful official in the entire United States government.”
Below are five questions we at CEI would like to see answered during the confirmation hearing.
- Vision for the agency
Ms. Kraninger, in your view, what does consumer financial protection look like, and what role should a regulator like the BCFP play in the financial marketplace? How would a BCFP under your leadership be different, or similar, from previous directors?
- Payday loan rule
Perhaps the most pressing rulemaking on the Bureau’s agenda is the reconsideration of the payday, vehicle title, and high-cost installment loan rule. Given that the compliance date for the rule is only one year away, action will needed to be taken immediately if you intend to reconsider the rule. From your analysis, what are the greatest flaws in the rule that need to be changed and how would you go about changing them?
- Disparate Impact
Acting Director Mulvaney has indicated the Bureau’s intention to reconsider certain interpretations of the Equal Credit Opportunity Act, in particular, a guidance document recognizing disparate impact liability. Given your view of ECOA, do you believe that the statute imposes disparate impact liability? And if not, would you support rescinding that interpretation?
- Regulation by enforcement
The Bureau has become notorious for “regulation by enforcement,” that is, the act of using court rulings and administrative decisions to make changes in the rules, as opposed to the formal rulemaking process. Acting Director Mulvaney has announced that this practice is over at the Bureau. But to really end regulation by enforcement, the Bureau will have to better define some of its powers.
For example, the Dodd–Frank Act of 2010 created a new standard in consumer protection prohibiting “abusive” conduct, in addition to the well-established “unfair” and “deceptive” standards (UDAAP). The standard, however, is so broad and malleable that it gives the BCFP an extraordinary amount of power. It would not take much prompting for an new, aggressive director to take advantage of such a broad standard in the future. As director, would you find it valuable to define the term “abusive” through the rulemaking process rather than through enforcement?
- Reorganizing the Bureau
One of Acting Director Mulvaney’s foremost priorities was the reorganization of the Bureau—eliminating duplicative departments and creating new ones. One of the most discussed changes is the creation of an office of cost-benefit analysis, modeled after the Bureau of Economics at the Federal Trade Commission.
If confirmed, how would you structure the office of cost-benefit analysis to ensure its’ effectiveness and independence from the rest of the Bureau? Can you point to examples of deficient cost-benefit analysis and outline how you would improve upon the process?