Senator Warren Questions CFPB Director Kraninger About Lack of Enforcement Action
"You are supposed to be the cop on the beat, but you are only watching out for the crooks who are cheating American consumers. If you had any decency you'd either do your job or resign."
Washington, DC - At a Senate Banking Committee hearing today, United States Senator Elizabeth Warren (D-Mass.) questioned Consumer Financial Protection Bureau (CFPB) Director Kathy Kraninger on the lack of enforcement action taken by the CFPB under her leadership and that of interim Director Mick Mulvaney. Citing data from a new report, Senator Warren criticized Director Kraninger for the sharp decline in enforcement actions, and a significant drop in compensation to consumers.
A full transcript of the Senator's exchange with Director Kraninger is available below.
Transcript: Senator Warren Presses Kraninger on Lack of Enforcement
Action at CFPB
Tuesday, March 12, 2019
Senate Committee on Banking, Housing, and Urban Affairs
SENATOR WARREN: Thank you, Mr. Chairman. So before the 2008 crisis, it was open season on consumers. Giant financial institutions cheated people on mortgages, on credit cards, and a bunch of other financial products, and government regulators did nothing. After the crisis, the CFPB was created to be a cop on the beat to aggressively enforce laws that protect consumers, especially those who get regularly cheated. So, Director Kraninger, during your confirmation hearing, you testified, "Under my stewardship, the Bureau will take aggressive action against bad actors who break the rules." Is that still your plan?
DIRECTOR KRANINGER: Yes, Senator, it is -
SENATOR WARREN: Good. You also said before you became director that the interim director, Mick Mulvaney, never made a decision you disagreed with. So let's put that together and see how you and Director Mulvaney have been doing in your combined year and a half running the CFPB.
Let's start with student loans. The law that set up the CFPB established a student loans ombudsman at the Bureau because Congress believed that students needed a regulator who had their back when loan companies and for-profit colleges tried to cheat them. Director Kraninger, in the past year and a half, how many lawsuits has the CFPB filed against student loan companies?
DIRECTOR KRANINGER: I don't know the specific answer to that question.
SENATOR WARREN: Well, I can tell you, because it's a matter of public record.
DIRECTOR KRANINGER: Yes, we do have active litigation -
SENATOR WARREN: How many have you filed?
DIRECTOR KRANINGER: There are two active cases in the area.
SENATOR WARREN: Gee, what the public record seems to show is zero. Right. Not one single action against lenders and servicers who scam students. Not one dollar returned to students who get cheated. In contrast, when he led the CFPB, Rich Cordray filed 15 cases and he recovered $712 million for those students who have been cheated. In fact, you have done worse than nothing. You and Mulvaney disbanded the (Office of Students and Young Consumers). It was so bad that your student loan ombudsman resigned because the "leadership of the Bureau has abandoned its duty to fairly and robustly enforce the law."
So that's student loans. Now let's ask about discrimination. Before the financial crisis, banks targeted communities of color for the worst of the worst cheating mortgages. So after the crash, Congress said there would be a special office at the CFPB to enforce laws to stop lending discrimination. Director Kraninger, in the last year and a half, how many lawsuits has the CFPB and the DOJ filed for fair lending violations?
DIRECTOR KRANINGER: I can tell you, Senator, that we do have ongoing investigations in this area.
SENATOR WARREN: How many have you filed?
DIRECTOR KRANINGER: I've been on the job for three months as of today but there are active -
SENATOR WARREN: That's right, and you have Mick Mulvaney together, you've said you agree with everything he's done, that's a year and a half period. How many have been filed in a year and a half? It's a matter of public record.
DIRECTOR KRANINGER: I understand that -
SENATOR WARREN: And the answer is, zero.
DIRECTOR KRANINGER: - there is active investigation happening.
SENATOR WARREN: The answer is zero, that you have filed. Not one single action against lenders who discriminate. Not one dollar returned to borrowers who got turned down or charged more because of the color of their skin. Rich Cordray filed 11 lending discrimination cases, recovered almost $620 million for consumers who were targets of discrimination. And again, in this area you have done worse than nothing. You took enforcement powers away from the CFPB experts who were in charge of the Office of Fair Lending. And who did you put in charge of the office? A political appointee with a history of writing racist blogs.
Okay, student loans, lending discrimination, now let's do credit reporting companies and debt collectors. Two-thirds of the complaints that come through the CFPB hotline are about credit reporting or debt collection. Under Rich Cordray, the CFPB brought 20 debt collection cases and 24 credit reporting cases, putting almost $1.2 billion back into the pockets of consumers who were cheated. Director Kraninger, in the last year and a half, the CFPB has filed three cases alleging violations of credit reporting or debt collection laws. How much relief did the Bureau win for consumers in those cases?
DIRECTOR KRANINGER: With respect to restitution and injunctive relief, there are a number of -
SENATOR WARREN: How many dollars went back to the consumer?
DIRECTOR KRANINGER: Senator, I'm assuming that you have it in front of you, I do not-
SENATOR WARREN: I do have in front of me because it's a matter of public record. I'm a little surprised you don't know the answer, because the answer's the same in all three of the questions I've asked you. It's zero. You have put zero dollars back in the pockets of consumers who were cheated. So, student loans, lending discrimination, credit reporting companies, debt collectors. Much more we could talk about but I see I'm out of time.
It seems pretty clear to me that you stopped enforcing the laws designed to protect consumers. Money returned to consumers as a result of the CFPB's lawsuits has slowed to a trickle. And when you do bring a case, the settlements you've secured from the companies average about 1/25th the size of the ones that Rich Cordray got. That's hundreds of millions of dollars that companies stole from consumers and that you are permitting them to keep.
Director Kraninger, you are supposed to be the cop on the beat, but you are only watching out for the crooks who are cheating American consumers. If you had any decency, you'd either do your job or resign. Thank you, Mr. Chairman.
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