The White House on Saturday said it would nominate Kathy Kraninger, a White House budget official, to serve as the next director of the Consumer Financial Protection Bureau, in a push to continue scaling back the Obama-era agency’s aggressive efforts to regulate consumer financial products.
The announcement sets up a high-stakes Senate fight over confirmation, after the acting CFPB director, Mick Mulvaney, has worked to limit the agency’s ambitions and drawn sharp criticism from Democrats for what they say are his efforts to undermine consumer protections. Mulvaney’s main job is the director of the Office of Management and Budget, where he is also Kraninger’s boss.
If confirmed, Kraninger would become one of the country’s most powerful regulators, steering an agency with more than 1,700 employees and significant power to police the way banks and other financial institutions interact with consumers. The consumer bureau, inspired partly by the writings of now Sen. Elizabeth Warren (D-Mass.) when she was a Harvard law professor, was created as part of 2010’s financial reform law, the Dodd-Frank Act. Its goal was to correct what creators said were rampant failures in policing consumer financial products, like mortgages, ahead of the 2007-2009 financial crisis.
But Republicans have long despised the agency, which they have accused of regulatory overreach. The first Obama-picked director, Richard Cordray, stepped down last year to run for governor of Ohio as a Democrat.
Kraninger is in many ways an unexpected choice for the position. Her resume does not clearly show experience in finance, banking or consumer issues. She has worked closely with Mulvaney at the OMB and for Trump since the presidential transition, a senior White House official said. The associate director at the OMB, she previously worked for the Department of Homeland Security and the Senate Appropriations Committee.
She is “wholly unqualified,” said Karl Frisch, executive director of Allied Progress, an advocacy group that favors strict financial regulations.
The White House rejected the criticism, noting that at OMB, Kraninger oversees the budget for financial regulators.
Kraninger “will bring a fresh perspective and much-needed management experience to the [agency], which has been plagued by excessive spending, dysfunctional operations, and politicized agendas,” Lindsay Walters, the deputy White House press secretary, said in a statement. “As a staunch supporter of free enterprise, she will continue the reforms of the Bureau initiated by Acting Director Mick Mulvaney, and ensure that consumers and markets are not harmed by fraudulent actors.”
During less than six months in the job, Mulvaney has launched a top-to-bottom review of the bureau, scaling back its ambitions and even asking lawmakers to take away some of its powers. Earlier this month, Mulvaney angered Democrats and consumer advocates by firing the agency’s 25-member advisory board, days after some of its members criticized his leadership of the watchdog. He has also called for the CFPB to cut its budget 20 percent next year.
Kraninger is expected to maintain Mulvaney’s approach. She believes in limited government and that regulations should not be used to “smother entrepreneurial activity,” a senior White House official said. But she also believes the government has a role in preventing fraudulent activity that can be harmful to markets and consumers, the official said.
Kraninger’s nomination is likely to draw protests from Democrats and consumer advocates worried that the CFPB has been weakened during the Trump administration and is no longer aggressively going after the financial industry for bad behavior.
Trump is expected to nominate Kraninger next week before a key deadline on replacing Mulvaney expires. Mulvaney would remain acting director while the Senate considers Kraninger’s nomination.