This Dud CFPB Nominee (and Your Objection) May Boost Financial Education

By Dan Kadlec

June 20, 2018

Few people outside Washington have heard of Kathy Kraninger. Now she is in line to run the Consumer Financial Protection Bureau, and in that capacity set the course for financial education in the U.S. for years.

Her nomination this week as director of the CFPB serves as a call to action for the financial literacy community. Do you want the federal government to take individual financial capability seriously? Right now, it does not. Below, I will explain what you can do about it.

Kraninger has zero experience in financial education, which is also the case in other areas that might qualify her for the director’s post. She is a budget officer with a background in Homeland Security. She has no experience in consumer advocacy, as a regulator, or in financial services.

She does have “midwestern humility” that helps make her “the ultimate public servant” as the acting director Mick Mulvaney stated in his endorsement. Are you feeling better yet?

Democrats clearly are not. Elizabeth Warren from Massachusetts quickly fired off a note asking if Kraninger in her time at Homeland Security or the Office of Management and Budget had anything to do with policies now “ripping kids from their parents” at the border. She vowed to fight the nomination “at every step” until that is known.

Many believe the Kraninger nomination is a red herring designed to do one of two things—keep Mulvaney in charge or replace him with an empty vessel that will carry his freight. Mulvaney is taking the teeth out of this regulatory body. President Trump likey.

Warren will fight nominee ‘at every step’

And get this: If the Kraninger nomination goes south, the clock resets on the length of time Mulvaney is allowed to serve as acting director. He could serve through three failed nominations before being forced to step aside, leaving him in the acting director role well into 2020. Fans of the TV show Walking Dead will recognize the pattern: Bite, chew, swallow, repeat. In Mulvaney’s case: Nominate a dud, fail to confirm, go back to work, repeat.

By law, Mulvaney could not remain as acting director beyond this week unless a permanent director was nominated. Now that the White House has teed up Kraninger, Mulvaney is free to remain throughout what surely will be an arduous confirmation process.

Kraninger might get confirmed. That must be said. Democrats may not be able to squash the appointment, her epically lacking resume notwithstanding. In that case, Mulvaney would have his empty vessel. Kraninger is a Mulvaney protégé likely to keep the wrecking ball swinging. Already, Mulvaney has declined funding, stalled enforcements, softened rules and let financial education initiatives die on the vine.

This is how politics is played, and it may be time for the financial literacy community to join the game. Neither Mulvaney nor Kraninger have been outspoken critics of financial education. We don’t really know where they stand, except that they want to dismantle as much as of the CFPB as possible. Financial education—the motherhood and apple pie part of the CFPB—is collateral damage, in part because there is no organized financial literacy lobby to press its merits.

Financial literacy advocates have had a chance to be heard during Mulvaney’s review of CFPB operations. This is a formal review and he has called for comments from the public. The comment period for financial education ends July 9, and so far, relatively few leaders in the field have gone on the record. Right About Money offered these comments last week.

Now, there may be another opportunity to be heard…

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…through the Kraninger confirmation process. If they choose, senate questioners may highlight the need for financial education by asking pointed questions of the nominee. She may in turn make concessions to win votes.

Most questions, naturally, will center on the CFPB’s rulemaking and enforcement activities. Kraninger would not be the nominee if she opposed the ongoing dismantling. But she might signal support for financial literacy—and then be stuck with it—if she thinks that will get her over the hump. If she fails to win confirmation, the issue is still front and center.

Now is the time to contact your senator and express support for federally led financial education research and programs. This is especially the case if you live in a state where a senator serves on the Senate Banking Committee, which will vet the nominee.

You want the senator to ask if Kraninger would seek funding for financial literacy research, new consumer tools, and awareness events; if Kraninger would commit to current financial education staff levels; if Kraninger would empanel a consumer protection advisory group like the one recently disbanded.

This is how the financial literacy community can move the needle. Key senators come from some states that measure up fairly well on financial literacy assessments. Chairman Mike Crapo, for example, hails from Idaho, which scored a B on the most recent assessment from the Champlain College national report on high school financial literacy. Sen. Richard Shelby’s home state of Alabama scored an A. Sen. Tim Scott’s South Carolina scored a B.

These same states also get high marks on economic and personal finance instruction in schools. At some level, the influential senators from these states must appreciate the CFPB’s financial literacy effort. They may be open to bringing it into the daylight through the confirmation process. The full list of senators on the banking committee can be found here. They are also listed below. Contact yours today.

These U.S. senators will vet CFPB director nominee

U.S. senators that serve on the banking committee will vet Kathy Kraninger as part the nomination process for director of the Consumer Financial Protection Bureau. That puts them in a unique position to win concessions from the nominee looking for enough votes to be confirmed.

Kraninger is a protégé of acting director Mick Mulvaney, and as such she is likely on board with his efforts to curtail rulemaking and enforcement. But she might yield in the area of financial education if key senators signal that is something they support.

Here are the Republican senators on the banking committee: Chairman Mike Crapo, Idaho; Richard Shelby, Alabama; Bob Corker, Tennessee; Patrick Toomey, Pennsylvania; Dean Heller, Nevada; Tim Scott, South Carolina; Ben Sasse, Nebraska; Tom Cotton Arizona; Mike Rounds, South Dakota; David Perdue, Georgia; Thom Tillis, North Carolina; John Kennedy, Louisiana; Jerry Moran, Kansas.

Here are the Democrats: Ranking Member Sherrod Brown, Ohio; Jack Reed, Rhode Island; Robert Menendez, New Jersey; John Tester, Montana; Mark Warner, Virginia; Elizabeth Warren, Massachusetts; Heidi Heitkamp, North Dakota; Joe Donnelly, Indiana; Brian Schatz, Hawaii; Chris Van Hollen, Maryland; Catherine Cortez Masto, Nevada; Doug Jones, Alabama.