Trump's CFPB choice faces uphill battle — and that's part of the plan

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President Trump has yet to formally name Kathy Kraninger as his choice to head the Consumer Financial Protection Bureau, but her nomination is already in trouble — and that may be just fine with the White House.

Kraninger has no experience in consumer finance and is currently Mick Mulvaney’s deputy at the Office of Management and Budget, two points likely to guarantee opposition from Senate Democrats and a grueling confirmation battle that will likely stretch out for months.

“The Democrats will certainly strongly oppose Kraninger’s nomination,” said Alan Kaplinsky, co-practice leader at Ballard Spahr’s Consumer Financial Services Group.

With Sen. John McCain, R-Ariz., still out on extended medical leave, Senate Republicans have just 50 votes, giving them no room to maneuver if Democrats stay united. If even one GOP senator opposes Kraninger, her nomination will fail.

“I’ll be very surprised if the Republicans push" her nomination, Kaplinsky said. “While the Republicans still have the ability to get her confirmed, I don’t see them picking a fight right now before the midterm elections. They will reassess things after the elections.”

But that risk appears to be part of the White House plan, according to industry observers, and ultimately designed to extend Mulvaney’s tenure as acting CFPB director for as long as possible.

“Either Ms. Kraninger is confirmed and she continues the reforms begun by Mulvaney for a five-year term, or her nomination is defeated and Mulvaney continues the reforms himself until well into next year,” said Ben Olson, a partner at Buckley Sandler and a former deputy assistant director at the CFPB. “The longer the nomination process lasts, the longer the Vacancies Act allows Mulvaney to stay.”

The White House may even be secretly hoping Kraninger’s nomination is defeated.

“President Trump would not be the first president to make a nomination that won't get confirmed to extend the tenure of an acting official,” said Anne Joseph O'Connell, the George Johnson professor of law at Berkeley Law School.

Under the Federal Vacancies Reform Act, Mulvaney has 210 days to serve as acting director of the CFPB, a period that expires June 22. But that time is extended if the White House nominates a permanent successor, allowing him to remain in office as long as Kraninger’s nomination is pending.

If she is not confirmed by the end of the year, when Congress ends its session, Mulvaney could begin to serve a second term of 210 days until another nominee is put forward and pending, according to O’Connell. Even if that second nomination were to fail, Mulvaney could get a third 210-day period to serve as acting director.

"Conceivably, we estimate that the Vacancies Act provides a path for Mr. Mulvaney to serve in an acting capacity atop the CFPB into 2020," wrote Isaac Boltansky, director of policy research at Compass Point Research & Trading, in a note to clients.

The result gives the White House significant leverage over Senate Democrats, who vigorously oppose Mulvaney’s actions in office. Either Democrats confirm a successor, or they leave Mulvaney in office for the foreseeable future.

A White House spokeswoman sought to portray Kraninger as a skilled manager with government experience, while criticizing the CFPB’s actions under the Obama administration.

Kraninger “will bring a fresh perspective and much-needed management experience to" the CFPB, "which has been plagued by excessive spending, dysfunctional operations and politicized agendas,” Lindsay Walters, a deputy press secretary, said in a statement Saturday.

Kraninger, an assistant director at the Office of Management and Budget, has spent most of her career at the Department of Homeland Security. She most recently was the Republican clerk for the Senate Appropriations subcommittee on homeland security and previously held the same job in the House.

Part of Mulvaney’s agenda has been to drastically reduce the size and scope of the CFPB. He told reporters last week that he wants to cut the bureau’s budget by at least 20%. He has also sought to restructure the agency and reduce enforcement actions against banks and other financial companies. Since Mulvaney took office in late November, the CFPB has issued just two enforcement actions, far less than comparable periods under its former director, Richard Cordray.

Observers expect Kraninger, if approved, to work closely with the dozen political appointees hired by Mulvaney, many of whom came from the House Financial Services Committee.

“Perhaps her background is precisely what the administration wants, as its main focus may be to reorganize the agency and reduce its budget,” said Richard Horn, a principal at Garris Horn in Tucson, Ariz., and a former senior counsel and special adviser at the CFPB.

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Mick Mulvaney Kathy Kraninger CFPB