The U.S. Senate Committee on Banking, Housing and Urban Affairs considered testimony from CFPB Director Kathleen L. Kraninger on the Bureau's Spring 2020 Semi-Annual Report.

Testimony

In her testimony, Ms. Kraninger identified four key areas of focus for the CFPB: (i) providing financial education resources, (ii) implementing clear rules that encourage "competition, increase transparency, and preserve fair markets," (iii) ensuring a "culture of compliance" and (iv) following a consistent enforcement regime.

Ms. Kraninger noted the CFPB's efforts to address discrimination. Specifically, she stated that the CFPB referred four enforcement matters to the DOJ regarding discrimination under the Equal Credit Opportunity (or "ECOA") Act Section 706(g). These include "redlining in mortgage origination based on race and/or national origin."

She also noted the heightened number of complaints received by the CFPB regarding the struggle for consumers to make mortgage payments. She stated that, in response to the complaints, the CFPB was addressing lump sum payment issues and consumer confusion regarding forbearance options under the Coronavirus Aid, Relief and Economic Security (or "CARES") Act.

Member Statements

Ranking Member Sherrod Brown (D-OH) criticized the CFPB for not pursuing enforcement cases involving illegal discrimination. He noted that under the prior Director, the CFPB returned $500 million to Black, Latinx and Asian-American communities. He criticized the CFPB for "doing nothing" to address complaints concerning credit report-related mistakes made by banks and debt collectors. He added that in the midst of the coronavirus pandemic, the CFPB reduced requirements for banks and lenders to work with homeowners to avoid foreclosure while "push[ing] consumers into predatory payday loans."

Chair Mike Crapo (R-ID) advocated the establishment of a bipartisan board of directors for the CFPB, citing the recent U.S. Supreme Court opinion finding that the CFPB's single-Director configuration is "incompatible" with the U.S. constitutional structure (see previous coverage). On payday loans, Mr. Crapo noted the CFPB's decision to rescind mandatory underwriting requirements under the Small Dollar Loan rule, calling it an "important step toward ensuring the availability of credit" for consumers unable to access alternative options.

Commentary

The partisan divide over payday lending is an interesting policy issue with reasonable arguments to be made on both sides. In general, the Democrats want to limit or prevent persons from accessing this kind of credit given that the terms are onerous or unclear. The Republicans take the position that borrowers in need of small dollar loans are better off having some source of credit, even if it is expensive.

Primary Sources

  1. U.S. Senate Committee on Banking, Housing and Urban Affairs: Full Committee Hearing - The Consumer Financial Protection Bureau's Semi-Annual Report to Congress
  2. CFPB Spring 2020 Report
  3. U.S. Senate Committee of Banking, Housing and Urban Affairs, Testimony, Kathleen L. Kraninger
  4. U.S. Senate Committee of Banking, Housing and Urban Affairs, Member Statement, Mike Crapo
  5. U.S. Senate Committee of Banking, Housing and Urban Affairs, Member Statement, Sherrod Brown

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