WASHINGTON— CFPB Director Kathy Kraninger was the subject of sharp questions and accusations during a tension-filled hearing before a House Committee, where Democratic members accused the CFPB of shirking its responsibility for protecting consumers from financial fraud.
During the session, Kraninger did also offer updates on the Home Mortgage Disclosure Act (HMDA), innovation, qualified mortgage (QM) patch, and other issues during her testimony.
Referring to a decision by Kraninger to not seek paybacks for consumers as part of a legal settlement with Enova International in January, Rep. Carolyn Malone (D-NY) said, “If you're not following direction from your staff to help consumers that are harmed, then you are absolutely worthless.”
Under that $3.2-million deal, Kraninger and the CFPB did not seek restitution for consumers who were harmed, even though agency staff had recommended she do so, according to documents released by the committee, the Hill reported.
Committee Chair Maxine Waters (D-CA) raised the same criticism. Republican members of the committee criticized the Democrats for “denigration of Kraninger,” according to The Hill.
Other Issues Addressed
Apart from that issue, Kraninger addressed a number of key issues affecting credit unions – including the Home Mortgage Disclosure Act (HMDA), innovation, qualified mortgage (QM) patch, and more – during her testimony before the House Financial Services Committee.
Kraninger, providing the Bureau's semi-annual report to Congress this week, also testified before the Senate Banking Committee.
NAFCU outlined some of the issues Kraninger discussed with the HFSC:
Data Collection
- HMDA: Kraninger said the Bureau "wants to balance the burden on smaller entities and promote fair lending." The Bureau is currently considering ways to reduce the burden of HMDA compliance.
- Small business data collection: Kraninger explained that it is a mandatory rulemaking stipulated by the Dodd-Frank Act and plans to hold a future symposium on the issue. The bureau issued a request for information on the issue in 2017.
- Privacy: Kraninger told the House Financial Services Committee that the Bureau is looking to bolster its protection of data that it collects, but noted that the Dodd-Frank Act specifically excludes from the CFPB's rulemaking, examination, and enforcement authority certain requirements for financial institutions covered under the Gramm-Leach-Bliley Act.
CFPB Rulemakings/Guidance
A number of CFPB rulemakings underway were brought up during the HFSC hearing. Of note for credit unions:
- Innovation: Kraninger gave lawmakers more details about the Bureau's recently finalized innovation policies that are intended to promote innovation and facilitate compliance at financial institutions. She said the Bureau is looking at ways to use alternative data models to ensure more consumers have access to credit, and how artificial intelligence could be used to improve fair lending compliance.
- QM patch: The Bureau released an advance notice of proposed rulemaking to revise the General QM definition in light of the possible ability-to-repay (ATR)/QM patch expiration. Kraninger said the Bureau is reviewing comments received to determine a transition period and address ATR requirement concerns.
- Remittance rule: Rep. Barry Loudermilk (R-GA) expressed concerns about consumers losing access to these services as the Bureau's exemption is set to expire. Kraninger said the Bureau is considering comments received to address threshold concerns and intends to include an item on its fall rulemaking agenda.
- Unfair, deceptive, or abusive acts and practices (UDAAP): Earlier this year, the Bureau held a symposium focused on clarifying "abusive" under UDAAP. Kraninger indicated that the Bureau is reviewing feedback to determine its next step in potential guidance on the issue.
CFPB Constitutionality/Authority
As CUToday.info reported, last month, the Bureau announced it will no longer defend its single-director structure. Kraninger reiterated this stance during the HFSC hearing, saying that the Bureau's statutory director-removal provision should be reviewed as it may be unconstitutional.
Kraninger also reminded lawmakers about her request for legislation that would give the Bureau clear authority to supervise institutions for compliance with the Military Lending Act (MLA).