Kraninger Confirmed as BCFP Director, CUNA Outlines CU Priorities

The Senate voted 50-49 Thursday to confirm Kathy Kraninger as the next director of the Bureau of Consumer Financial Protection (BCFP). Kraninger replaces Acting Director Mick Mulvaney and will serve a five-year term as director.

“We’re pleased to have a new permanent director leading the BCFP, as credit unions and other parts of the financial services marketplace need stability at the bureau,” said CUNA President/CEO Jim Nussle. “We look forward to working with Ms. Kraninger and her staff on ways to help credit unions serve members better.”

CUNA wrote a letter to Kraninger shortly after she was officially confirmed highlighting key consumer protection priorities for credit unions, and offering any necessary feedback, data and expertise that might assist her in her duties leading the Bureau.

“Consumers lose when one-size-fits-all rules force credit unions to pull back safe and affordable options from the market, pushing consumers into the arms of entities engaged in the very activity the rules were designed to curtail,” the letter reads. “Under your leadership, the Bureau has an opportunity once again to examine and, where necessary, modify its approach to regulation in a manner that ensures it's fulfilling its consumer protection mission without impeding the availability of safe and affordable financial products and services.”

CUNA strongly urged the Bureau to closely monitor the impact its rules have on credit unions and their members, and to appropriately tailor regulations to reduce burdens or exempt credit unions entirely, as appropriate.

“Congress very clearly conveyed to the Bureau the authority to exempt any class of covered entities from its rules. CUNA has strongly urged the Bureau to use this authority to help protect credit union members from the many problems associated with creating one-size-fits-all rules that are inappropriate for the different not-for-profit structure of credit unions,” the letter reads. “Credit unions and credit union service organizations (CUSOs) should receive appropriate exemptions from the Bureau’s regulatory requirements.”

CUNA also offered several recommendations be incorporated into Bureau rule-makings, including:

  • Debt collection: CUNA requests the focus remain on practices of third-party debt collectors, which have been the subject of more frequent consumer complaints. Any rule-making in this area should be reasonable and tailored to mitigate any potential indirect impacts on credit unions and other lenders;
  • Short-term, small-dollar lending: Rules governing these loans should be meaningfully tailored to address predatory practices and should be crafted so not to inhibit credit unions from participating in the emergency credit market;
  • Remittances: The Bureau should make three key revisions in its current rules:
  1. Raise the safe harbor threshold from 100 to 1,000 remittance transfers in both the prior and the current calendar years;
  1. Eliminate or allow a consumer to opt out of the 30-minute cancellation requirement; and
  1. Urge Congress make permanent the fee estimates safe harbor.
  • Home Mortgage Disclosure Act: CUNA suggests the following modifications to the rule:
  1. Allow reporting for Home Equity Lines of Credit (HELOCs) to once again be voluntary;
  1. Reduce the data set for all credit unions to data points specifically enumerated in the Dodd-Frank Act;
  1. Increase the mortgage thresholds to exempt as many credit unions as possible from HMDA reporting;
  1. Clarify which fields the Bureau currently plans to make public and solicit additional comment on the use of a privacy “balancing test.”
  • Unfair, Deceptive, or Abusive Acts or Practices (UDAAP): CUNA supports a Bureau UDAAP rule-making that including the following actions:
  1. Solicit feedback on whether to eliminate or clarify the overly-subjective “abusive” prong of UDAAP and whether other aspects of its UDAAP authority should be changed;
  1. Clarify that previous enforcement actions or consent orders that conflict with statutory or judicial precedent create no new expectations for compliance; and
  1. Clarify and reaffirm the Bureau’s narrow authority under the Dodd-Frank Act in regulating the business of insurance—particularly as it applies to credit unions and banks selling insurance—and that UDAAP is not a backdoor to regulate insurance activities.
  • Ability-to-repay/Qualified Mortgage: CUNA recommends the Bureau engage in a meaningful and prolonged feedback process to ensure any amendments to this rule does not create overly burdensome requirements on credit unions; and
  • Small business data collection: This is one of the last rule-makings required of the Bureau by Dodd-Frank, and CUNA recommends any rule issued expressly exempts credit unions from reporting requirements.

Kraninger was nominated in June and approved by the Senate Banking Committee in August.

During her nomination hearing before the Senate Banking Committee, Kraninger said that rule-makings by the Bureau should be tailored "to reduce the burden of compliance, particularly on consumers and smaller marketplace participants."
Kraninger outlined four priorities for the Bureau during the hearing saying that the Bureau should be fair and transparent, work closely with other financial regulators and states on supervision and enforcement, recognize the importance of protecting consumers’ personal data, and be accountable for its actions. Some committee members cited the need for a commission to oversee the Bureau rather than its current single-director structure, something CUNA and the state leagues have been pushing.

Along with advocating for a commission-led Bureau, CUNA and the state leagues have pressed the BCFP to use its statutory authority to exempt credit unions from certain rule-makings and instead focus on the bad actors in the marketplace.

Kraninger currently serves in the Office of Management and Budget and has previously worked in the U.S. Senate and the Department of Homeland Security.

CUNA created a comprehensive white paper with numerous specific ways the Bureau can provide credit unions with regulatory relief, and submitted it in response to a series of Bureau requests for information on how it performs its functions.