Usually, when a witness appears before a congressional committee, she or he receives a warm welcome from the committee’s chairperson or at least some words like “thanks for being here” (whether heartfelt or not).
It was clear at the outset of Thursday’s appearance by Consumer Financial Protection Bureau (CFPB) Director Kathleen (“Kathy”) Kraninger before the House Financial Services Committee that welcome and thanks were unlikely. But the comments were heartfelt.
“I would like to welcome Director Kraninger to what I hope will be her last appearance before this Committee as CFPB Director,” Chairwoman Maxine Waters (D-Calif.) said as the hearing began.
Waters then proceeded to eviscerate the administration of President Donald Trump and Kraninger, who was appearing before the committee for the CFPB’s semiannual report to Congress. Kraninger testified before the Senate Banking Committee Wednesday.
The House chairwoman indicated that actions CFPB has taken under Kraninger’s direction are intended to “sabotage the very agency you have been entrusted with leading.” She said Kraninger’s actions were “a betrayal of the consumers you are tasked with protecting” and that consumers deserve better.
“Ten years after we passed the Dodd-Frank Act to end the predatory and discriminatory practices that caused the financial crisis, we find ourselves in the midst of an economic and health crisis – caused by incompetence and exacerbated by narcissism – that will once again hit the most vulnerable Americans the hardest,” Waters said. “The scale of the crisis is unprecedented – today we learned from the Bureau of Economic Analysis that the Gross Domestic Product (GDP) decreased at an annual rate of 32.9% in the second quarter of 2020, which is the largest drop ever recorded.”
Waters then turned to the CFPB, which she noted has reported receiving a record number of complaints about financial institutions during the coronavirus crisis. “Our consumers need a strong Consumer Bureau that provides robust protections on their behalf and holds financial institutions accountable when they commit abuses,” she said. “We know that consumers are reporting major hardships in working with payday lenders, mortgage servicers, credit card companies, and the credit reporting bureaus,” she said, adding “they are reporting long wait times, inconsistent information from consumer representatives, and a lack of follow up.”
She focused then on Kraninger. “Unfortunately, our witness today, Consumer Bureau Director Kathy Kraninger, has done next to nothing of substance about any of this. Instead, she has focused the Consumer Bureau on weakening critical consumer protections, relaxing enforcement against financial institutions, and undermining the agency from the inside.”
She then ticked off a list of actions the bureau had taken under Kraninger’s watch which she charged made her point:
- “You issued a final rule rolling back key safeguards for payday, car title, and installment loans, exposing consumers to high-cost, predatory loans.”
- “You also weakened the reporting requirements under the Home Mortgage Disclosure Act (HMDA), willfully hindering the ability of the Consumer Bureau, researchers, journalists, advocates, and others to detect redlining and patterns of discrimination in mortgage lending.”
- “You have issued an advanced notice of proposed rulemaking to make substantial changes to the agency’s Qualified Mortgage rule, which is the rule implementing the standard that lenders first demonstrate that a borrower can repay a loan before signing the mortgage documents.”
On that last point, Waters reminded the CFPB director that the provision was adopted in the wake of the 2007-08 financial crisis. “You may not remember the financial crisis, but I and the members of this committee do,” she said. “We included this standard in Dodd-Frank because the proliferation of unaffordable and predatory mortgage loans was a central driver of the 2008 financial crisis and caused millions of families, and especially borrowers of color, to unfairly lose their homes.”