Kraninger outlines her vision for a revamped CFPB

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WASHINGTON — The Consumer Financial Protection Bureau should be focused on preventing consumer harm rather than merely handing fines against companies, Director Kathy Kraninger said Wednesday.

In her first policy speech since taking the helm of the agency in December, Kraninger signaled a continued shift in emphasis away from enforcement actions under Trump-appointed leadership. She said the agency should not view "outputs," such as money returned to consumers or the volume of enforcement actions, as measures of its success.

“All too often agencies tend to judge themselves by their outputs,” Kraninger said at an event hosted by the Bipartisan Policy Center, which followed a three-month listening tour with stakeholders. “For example, how many complaints did they handle … how much money did they recover.

“If we succeed in fostering a culture of compliance and preventing harm, we would expect the number of complaints and the number of meritorious complaints to decline.”

Along the lines of focusing more on prevention and education, Kraninger said the CFPB will soon be launching a “savings boot camp,” which will include a series of videos to educate consumers.

“Tackling emergency savings is a logical place to start,” Kraninger said. “The goal is to move the needle on the number of Americans in this country who can cover a financial shock like a $400 emergency.”

Kraninger succeeded former acting Director Mick Mulvaney and has been the focus of criticism by consumer advocates who say she plans to continue Mulvaney's efforts to rein in the agency.

Mulvaney, who also ran the Office of Management and Budget, where Kraninger worked, took initial steps to freeze enforcement actions, halt staffing and conduct a full review of the agency's operations, among other things. He also brought on roughly a dozen of political appointees to help run the bureau.

Kraninger said the agency will continue to use enforcement as a tool when appropriate.

“Enforcement is an essential tool that Congress gave the bureau [and] there will always be bad actors who don’t comply with the law,” she said. “I am committed to ensuring that enforcement investigations proceed carefully and purposefully.”

And she said that there is “not a goal” to reduce the CFPB’s staffing, but that there also are not plans to increase staffing.

Kraninger also addressed a number of rulemakings and her approach to make the rule-writing process transparent.

“I don’t believe anyone benefits from rules that are rushed out the door,” she said.

Specifically, she said the agency plans to release proposed rules to implement the Fair Debt Collection Practices Act “in the coming weeks.”

Kraninger said she hopes the proposed rules will better address how modern communications are utilized in debt collection activities.

“The proposed rules also would protect consumers with clear bright line limits on the number of calls they will receive from debt collectors on a weekly basis,” she said.

She added that the agency will propose that collectors provide consumers with “more and better information at the outset of collection” to help them identify their debts and understand their options.

Kraninger said those options will include “their rights in disputing debts and paying them.”

The CFPB will also embark on a symposium series over the next few years, Kraninger said. She said the first topic that the symposium will address will be clarifying the meaning of "abusive" in the 2010 Dodd-Frank Act. The law added the term to the longstanding prohibition against "unfair" and "deceptive" activities.

“Whereas unfairness and deception doctrines have been substantially developed under the Federal Trade Commission Act, abusiveness does not have the same record," she said. "Some clarification particularly with regard to reasonableness standards may be useful."

The CFPB has drawn much political theater since it was created after Dodd-Frank, with Democrats pushing for the agency to be a strong cop on the beat and Republicans arguing it has gone overboard in its enforcement of the financial services industry.

Kraninger said she hopes to move the agency away from politicization but appeared sympathetic to Republicans’ concerns that overregulating firms limits lending.

“The CFPB must acknowledge that the costs imposed on regulated entities absolutely affect access to and the availability of credit to consumers,” she said.

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Enforcement actions Debt collection Financial regulations Financial literacy Kathy Kraninger Mick Mulvaney CFPB