CFPB News: Mulvaney Replacement, BCFP Signage and Other Musings

Financial Services Law

As the President nominates the virtually unknown Kathy Kraninger as Director, the Acting Director gets a reprieve while taking a wrecking ball to the status quo at the agency formerly known as the CFPB.

What happened

Back in April, we asked, “Who’s next to lead” the CFPB (or Bureau)? Unless President Trump nominates a replacement, Mick Mulvaney’s term as Acting Director will come to an end June 22, 2018, because of the 210-day limit under the Federal Vacancies Reform Act.

That said, as long as President Trump names a replacement before that end date, Mulvaney will get a reprieve, continuing in the role until the replacement is confirmed. And that nominee is expected to be one of Mulvaney’s own aides, Kathy Kraninger.

So what do we know about Kraninger? Very little, actually. Largely a career congressional staffer on the appropriations side, she does not appear to have any experience with agency management, or with the supervision of consumer financial products. Her current position is program associate director for general government at the Office of Management and Budget, where she oversees budget development and execution for a number of executive branch agencies, including the Departments of Commerce, Justice, Homeland Security, Housing and Urban Development, Transportation and Treasury. She graduated from Georgetown Law School in 2007. She was described by one admirer as “a good communicator, a brilliant and quick thinker,” with “the ability to work on long-term issues while simultaneously handling short-term crises.”

In the meantime, and continuing the effort to change the face of the Bureau, Mulvaney changed the commonly used name of Consumer Financial Protection Bureau (or CFPB) to the Bureau of Consumer Financial Protection (or BCFP) to reflect the technical title of the Bureau set forth in the Dodd-Frank Act, including a building signage change last week. Mulvaney also disbanded all three advisory groups to the Bureau and dismissed a high-profile case dating back to the prior administration.

In a blog post titled “Transforming the way we engage,” the CFPB announced that all three of the advisory groups for the Bureau have been disbanded. The Dodd-Frank Wall Street Reform and Consumer Protection Act mandated the creation of a Consumer Advisory Board, to meet at least twice annually.

Under former Director Richard Cordray, the 25-member group (comprising academics, consumer advocates and industry representatives from financial companies such as PNC Bank and Citigroup) typically met with the CFPB at least three times a year. The Bureau also formed two additional advisory groups, the Community Bank Advisory Council and the Credit Union Advisory Council.

Since Mulvaney took the helm last November, none of the groups has met, with two scheduled meetings of the Consumer Advisory Board canceled. Members of the groups were particularly unhappy, not just that they were being disbanded, but because they were also informed they were ineligible to reapply for new groups being formed by the Bureau.

Despite criticism that the move demonstrates Mulvaney’s efforts to stock the board with his own selections, the CFPB characterized the situation as a transition “from former modes of outreach to a new strategy to increase high-quality feedback.”

The Bureau will continue to fulfill its statutory obligations to convene the Consumer Advisory Board and plans to “provide forums” for the councils, using the current 2018 application and selection process to reconstitute the groups “with new, smaller memberships,” according to the blog post. “By both right-sizing its advisory councils and ramping up outreach to external groups, the Bureau will enhance its ability to hear from consumer, civil rights and industry groups on a more regular basis.”

Why it matters

The dramatic makeover of the CFPB (or BCFP) continues, and new leadership will likely continue the sea change. Look for more of the same from Mulvaney’s replacement, if and when her appointment is confirmed.