CFPB Director Says Agency to Issue Revised Payday Loan Rule, Defends Rule-Making Process

In letter, Kraninger rebuts Senate Democrats' claims of improper interference in revamping Obama-era rule

Consumer Financial Protection Bureau Director Kathy Kraninger, pictured during her Senate confirmation hearing in Washington on July 19, 2018, sent a letter to Senate Democrats on Monday saying that she will “defend the agency’s action” in revamping a payday lending rule. (Alex Wong/Getty Images)
May 18, 2020 at 7:12 pm ET

Consumer Financial Protection Bureau Director Kathy Kraninger said she is pressing ahead with a revised payday lending rule despite criticism from Senate Democrats who accused the CFPB’s political appointees of interfering with the rule-making process, according to a letter obtained by Morning Consult from Sen. Sherrod Brown’s (D-Ohio) office. 

“Upon my determination, the Bureau will issue a final rule on the basis of the record before the agency,” Kraninger wrote in the letter, dated Monday. “And upon that basis, I will defend the agency’s action.” 

The letter answers one dated May 4 sent by Brown, the Senate Banking Committee’s ranking member, Sen. Elizabeth Warren (D-Mass.) and other Senate Democrats that asked the CFPB to stop work on revamping an Obama-era payday lending rule that would unwind a provision that requires lenders to determine if borrowers have the ability to repay a loan. The agency had expected to revise the rule by the end of April, but it hasn’t yet been issued. 

The rule-making process drew fresh scrutiny from the Democratic senators after The New York Times reported April 29 that a career economist at the agency had alleged in a memo that political appointees at the agency had manipulated the agency’s research to support the revamp of the 2017 payday lending rule. The memo also said Trump administration appointees had pressured staff economists to alter their findings to underplay harm to consumers if the payday rule was changed. 

Kraninger wrote that the article “does not represent the robust process the Bureau engaged in” to develop the proposed revisions to the rule or the CFPB’s process to consider submitted comments before finalizing a potential new rule. 

She also said that the CFPB is considering 200,000 public comments it received during the 90-day comment period, and that it is considering comments submitted after the comment period closed. 

The New York Times report drew calls from consumer advocates and Democratic lawmakers to delay the rule revision, and some had hoped Kraninger would do so after the end-April deadline passed without the revised rule. 

“It’s certainly disappointing to hear this from Kraninger,” said Graciela Aponte-Diaz, the Center for Responsible Lending’s director of federal campaigns. 

In her letter to Senate Democrats, Kraninger said that decisions like these “ultimately rests with me as Director. 

“With any major decision of the Bureau, as well as countless subsidiary decisions, there are often views and ideas competing for consideration,” Kraninger wrote. “This results in thorough and informed debate and sometimes friction among Bureau staff of all levels, including among both career and political appointees.” 

Politico Pro first reported Kraninger’s letter. 

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