WASHINGTON–CFPB Director Kathy Kraninger offered her thoughts on the “four tools” the Bureau uses, and added she has met with NCUA about eliminating any examination duplication that may be taking place.
Speaking to NAFCU’s Congressional Caucus, Kraninger, who is nine months into a five-year term, found a warmer audience in credit unions than did prior Director Richard Cordray, as under Kraninger the Bureau has generally looked to dial back its regulatory approach and rules.
Addressing what she called the “four tools” the Bureau has been provided by Congress to protect consumers, Kraninger provided a broad overview of Education, Regulation, Supervision and Enforcement.
“As director, I intend to use each of those tools to carry out this important mission,” said Kraninger. “The lens I’ve put on this is prevention of harm to consumers. I think that’s the way for us to perform the appropriate role. To me, prevention of harm comes through fostering a culture of compliance, from helping consumers gather financial know how, and from consumers and industries both knowing their rights and responsibilities.”
Here’s what Kraninger had to say about each of the “four tools”:
Education
“I think this is truly the most important part of what we do, because the Bureau cannot be with the consumer at every point of a transaction. Giving them the tools and skills is essential to financial well-being,” she said, pointing to the Bureau’s expanded “Misadventures in Money Management” tool for active-duty service members as one example.
“We want to help people to have the capacity to absorb financial shocks,” said Kraninger. “We have found consumers can experience financial well-being or the lack thereof across a wide range of incomes.”
Kraninger cited the Bureau’s savings initiative, “Start Small, Save Up,” as one program aimed at helping people begin a savings habit, especially for emergencies. “Tackling emergency savings seems to be a place to start to getting people to think about building wealth,” said Kraninger.
She also pointed to the study the Bureau recently conducted in conjunction with H&R Block, which CUToday.info reported here.
Regulation
In her view, said Kraninger, regulation is about having “clear rules of the road…that increase competition. Where the Bureau has discretion in its rulemaking we will focus on preventing consumer harm...”
Kraninger said she has sought to decrease unnecessary rulemaking and, sounding a theme often used by credit unions, has recognized “one size does not fit all when it comes to regulating the financial services system.”
She said the Bureau has received more than 1,750 comments on its request for feedback on the cost of its rulemaking that it is now reviewing. In response to earlier feedback, it has also sought to publish its rules and support materials in plain language.
Supervision
“I am well aware most of you in the room are not subject to our examination and I’m sure you’re very glad of that,” Kraninger said, drawing laughs from her audience. “I chair the FFIEC right now, so there is an opportunity to collaborate around the approach to examinations. I have had a chance to sit down with the Bureau’s examiners and participate in a site visit to see how they go about their business and walk through the systems they use and the steps they take to make sure an institution is fulfilling its obligations. I am challenging staff to take a fresh look at that entire process, whether we’re using technology to automate certain tasks and taking advantage of our relationships with our fellow regulators. Our approach is going to be to incentivize institutions to do precisely what we want them to do and to have good compliance management systems in place, to self-report, and to provide restitution where appropriate.”
Kraninger said she has had discussions with NCUA Chairman Rodney Hood about eliminating any overlap were CFPB rules and NCUA rules both apply to credit unions.
Enforcement
“Enforcement is a critical tool for us, but a different dynamic given your relationship with your members,” said Kraninger. “But we do acknowledge there are bad actors in the system and in figuring out how we can help consumers navigate that minefield sometimes means we do have to intervene with an enforcement action. Public, decisive action does send a message to the marketplace. We will continue to do that.”