All heat, no light: Kraninger gives little sense of CFPB views

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As much attention as Kathy Kraninger has drawn over her selection as the administration's choice to run the Consumer Financial Protection Bureau, she has mostly been a blank slate on financial regulatory issues.

That remained the case following her three-hour nomination hearing Thursday.

Kraninger, a senior official at the Office of Management and Budget, spent much of the hearing getting grilled over the administration's now-rescinded "zero tolerance" policy of separating immigrant children from their parents at the southern U.S. border, which Democrats say she helped implement while at OMB.

The nominee signaled that she carries similar pro-free-market views as acting CFPB Director Mick Mulvaney — who is also OMB director — while she does see financial services players in particular need of regulatory scrutiny, such as the credit bureaus and Wells Fargo.

But in response both to questions about immigration and financial regulation, Kraninger mostly avoided direct answers, which visibly frustrated members of the Senate Banking Committee.

"You are going to be the head of this agency, your recommendations are going to count for something, so it would be really helpful for me to know where you're at," said Sen. Jon Tester, D-Mont.

Although the hearing appeared to do little damage, if any, to Kraninger's confirmation prospects, Democrats were still able to land some rhetorical punches on the OMB official over her role in the administration's immigration policy.

The tensest moment came in questioning from Sen. Elizabeth Warren, D-Mass., when Kraninger attempted to deny she played a part in developing the separation policy.

"I had no role in setting the policy," she said.

But Warren dug in, insisting that Kraninger specifically describe her involvement in creating a plan for reuniting children with their parents.

Kraninger said she took part in meetings but refused to answer beyond that. "I will not characterize the advice I provided," she said, later elaborating: "I don't believe it's appropriate or fair or right for me to articulate the advice I gave or to characterize the discussions that others brought to the table."

Warren reminded Kraninger that she was under oath.

"You don't want to admit that you had something to do with this," Warren said.

"It's not appropriate for me to provide my opinion," Kraninger responded.

"Do you think that purposely inflicting that on children is immoral?" Warren asked.

"There are many heartbreaking stories that appear in the news every day," Kraninger said.

To which Warren replied: "You were part of it, Ms. Kraninger. It is a moral stain that will follow you for the rest of your life."

Sen. Catherine Cortez Masto, D-Nev., said Kraninger's lack of candor about her work in the administration was a concern in assessing her qualifications to lead the consumer bureau.

"We can't even get you to be transparent and accountable about your work at the OMB," Cortez Masto said. "If you can't tell us what you do on a day-to-day basis, how can we trust what you are doing at the CFPB?"

But the hearing was also a backdrop for the contentious politics that have enveloped the CFPB since it was created in 2011 in response to the financial crisis by the Dodd-Frank Act.

Several senators rattled off a list of questions related to whether Kraninger had worked for a bank or credit union, or had any experience working with credit bureaus, debt collectors or student loan processors.

Kraninger responded that she had some experience working on college curriculum related to financial literacy.

In her prepared testimony, Kraninger described a background that included, among other things, interning for Sen. Sherrod Brown of Ohio, now the Banking Committee's top Democrat, when he was in the House and teaching as a Peace Corps volunteer in the Soviet Union.

"There I saw firsthand the devastating impact of communism, the economic consequences of central planning, and the absence of free markets and the rule of law," she said.

Kraninger described four priorities for the CFPB that hewed closely to Mulvaney's vision: the bureau should be "fair and transparent," by specifically using a cost-benefit analysis in its rulemaking, and that it should work closely with other federal and state regulators on supervision and enforcement. She also said the CFPB "would limit data collection" and be accountable in its "expenditure of resources."

When questioned by Warren specifically about the OMB's budget that called for a 23% cut for the bureau in 2019, Kraninger would not say whether she would fire civil servants or reduce the agency's cybersecurity budget.

"It's not my budget, it's the president's budget," Kraninger said.

Sen. Pat Toomey, R-Pa., was one of the few to elicit a clear and specific response from the nominee when he asked Kraninger whether she would limit the CFPB's mandated data collection for small-business lending.

"I can absolutely commit to you that the law will be carried out and the authority given to the bureau to tailor that narrowly," she said.

Several lawmakers were clearly frustrated by Kraninger's answers, even while acknowledging she will likely be confirmed in the GOP-held Congress. Tester noted that Kraninger "probably" had the votes to be confirmed.

Sen. Brian Schatz, D-Hawaii, tried to get Kraninger to admit that she had been coached by lawyers not to answer questions.

"I am trying to get an answer from you and I just can't," Schatz said. "It is maddening because this is not a trivial aspect of your qualifications for the job. You are coming in saying you are a manager and you can't explain anything you do."

Asked by Sen. Thom Tillis, R-N.C., Kraninger also refused to describe her views on the CFPB's payday lending rule, claiming that she had to respect the rulemaking process that was reopened by Mulvaney.

"On payday, it's on the regulatory docket for the agency and is something that cannot be prejudged," she said.

She did, however, agree with Tillis, who asked whether she thought the CFPB "had great power."

"Congress through the Dodd-Frank Act gave the bureau incredible powers and independence from the president in its structure," Kraninger said. "My focus is on running the agency as Congress established it. I'm very open to changes to that structure to make the agency more transparent."

The hearing got off to an unusual start when Brown and committee Chairman Mike Crapo, R-Idaho, sparred over Democrats' request to delay the hearing since Kraninger had not yet provided requested documents related to the family-separation policy.

“I am unaware of the Banking Committee delaying a hearing for such a reason," Crapo said.

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Dodd-Frank Payday lending Regulatory relief Mick Mulvaney Elizabeth Warren Sherrod Brown Kathy Kraninger CFPB