Politics

Trump’s Controversial Pick for Banking Watchdog Clears First Hurdle

All eyes may be on Kavanaugh, but Kathy Kraninger nomination is kicking up dust too

Kathy Kraninger is one step closer to a floor vote on her nomination to lead the CFPB. (Alex Wong/Getty Images file photo)

The Senate Banking Committee advanced Thursday the controversial nomination of Kathy Kraninger to be director of the Consumer Financial Protection Bureau. The vote split on party lines, 13-12. 

The panel’s chairman, Michael D. Crapo of Idaho, said Kraninger was “well prepared” to lead the bureau, and that it’s no surprise her nomination is contentious because the CFPB was the most disputed aspect of the 2010 Dodd-Frank Act financial overhaul. 

But Democrats blasted her as a “protégé” of acting chief Mick Mulvaney who would continue his policies to rein in the enforcement actions and investigations of the bureau.

The committee also voted 25-0 to send the nomination of Kimberly Reed to be president of the Export-Import Bank, and approved four other nominees by voice vote.

Both the CFPB and the Ex-Im Bank have been without a confirmed head since 2017.

Mulvaney, also the Office of Management and Budget director, has led the CFPB since last November after former Director Richard Cordray resigned. Kraninger currently works for Mulvaney at OMB.

Ranking member Sherrod Brown said “Kraninger is in a class by herself” because “unlike the other five nominees she has no, zero, relevant” experience in the field she would operate in: consumer financial protection.

“The scammers ... are now cheering at the possibility of getting Mr. Mulvaney’s protégé” confirmed for a five-year term, the Ohio Democrat said.

Democrats were critical of reports last week that Mulvaney planned to end the bureau’s practice of conducting routine examinations under the Military Lending Act, which bars high-interest loans to active duty military personnel.

“CFPB should still be supervising these institutions. We don’t want to exempt certain products ... so they can be used to exploit” members of the military, complained Rhode Island Democratic Sen. Jack Reed.

During her July confirmation hearing, Kraninger repeatedly declined to disclose advice she gave concerning the administration’s border security approach to departments whose policies she was charged with overseeing. The practice of separating children, even very young ones, from their parents involved as many as 3,000 children before Trump ordered it stopped.

“It is a moral stain that will follow you for the rest of your life,” Massachusetts Democratic Sen. Elizabeth Warren told the nominee.

Before Thursday’s votes, Warren continued her criticism, accusing Kraninger of “refusing to describe her role in two very public management failures,” the border security policy and the administration’s response to hurricane damage in Puerto Rico in 2017.

The administration is refusing to release documents about her role because it would “destroy” her nomination, Warren said. If she was involved in these two efforts, she was involved in failures, and if she wasn’t, then she doesn’t have the management experience she claims, Warren said.

Other nominations

The committee also approved by voice vote the nominations of Elad Roisman to be a member of the Securities and Exchange Commission; Michael Bright to be president of the Government National Mortgage Association; Rae Oliver to be Inspector General at the Department of Housing and Urban Development; and Dino Falaschetti to be director of the Office of Financial Research.

It is unlikely that many of these nominees will make it to the Senate floor in the waning days of the 115th Congress. Besides the limited number of legislative days remaining, Democrats have forced procedural votes on many nominees, slowing the confirmation process. The Senate is also likely to put much of its focus on the nomination of Brett Kavanaugh to the U.S. Supreme Court and on politically-charged issues as the November midterm elections near.

Both the CFPB and the Export-Import Bank have been political flashpoints for partisan warfare in Congress. The CFPB was created by Dodd-Frank and is a favorite agency of Democrats, who allege that Mulvaney has undermined the bureau’s consumer protection mission. Democrats see Kraninger, associate director of OMB, as someone who will continue to lessen the agency’s impact.

Reed’s nomination, by contrast, isn’t controversial in itself, but conservative Republicans dislike the Ex-Im Bank, arguing that it picks winners and losers in foreign trade and provides benefits amounting to welfare to the winners. The committee had rejected the nomination last year of former Rep. Scott Garrett of New Jersey to head the bank, and conservatives have since held up the nominations of four others for the bank’s board.

Currently, the bank’s five-member board has only one member, Gerrish. Without a three-person quorum, the bank can’t enter trade deals valued at more than $10 million. As a result, the bank’s business has fallen precipitously since 2015, the last time it had a quorum.

Height Capital Markets, a securities firm that tracks the impact of federal actions on stocks, predicted Thursday that Kraninger’s nomination would not be taken up this year and would die with the end of this Congress. She would have to be renominated in the next Congress.

Mulvaney has been acting director of the CFPB since late November. Federal law allows the position to be filled on an acting basis only for 210 days. Kraninger’s nomination in June occurred just before that clock expired.

If Kraninger’s name isn’t put back in for the post in the new year, Mulvaney would have a fresh 210 days to lead the bureau before another nominee must be named. Height predicted that, at the earliest, the CFPB would have a new director in March 2019.

Watch: Singing Their Support for High Court Nominee Kavanaugh

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