Kraninger has the tools to rein in an unwieldy CFPB

The Senate Banking Committee voted to approve the nomination of Kathy Kraninger to serve as director of the Consumer Financial Protection Bureau (CFPB).

Her nomination represents an opportunity to turn around a massive bureaucracy, which has been used, under the guise of consumer protection, to attack many of America’s vital financial service providers.

It is clear the CFPB is in need of an overhaul, and Kathy Kraninger is the right leader for the job. She has a proven record of keeping bureaucracy in check.

{mosads}She also manages, develops and oversees large budgets in her current role as an official within the Office of Management and Budget (OMB), where she works under CFPB Acting Director Mick Mulvaney. With a long history of advocating for less regulation, Kraninger will be a welcome change for the CFPB.

An agency created in response to the 2008 financial crisis through the Dodd-Frank Wall Street Reform and Consumer Protection Act, the bureau is “independent,” meaning free from presidential — or just about any — oversight.

With a seemingly unlimited budget and a predominantly progressive-leaning staff, this brain child of Sen. Elizabeth Warren (D-Mass.) has become a prime example of government bureaucracy run amuck. 

What was created to defend consumers against a future financial collapse quickly turned into a political weapon by former Director Richard Cordray, who used his tenure to push an aggressively partisan agenda. There’s perhaps no greater example of this than the bureau’s Payday, Vehicle Title, and High-Cost Installment Loans Rule.

This rule was a solution in search of a problem from the start. Despite some of the lowest CFPB complaint numbers, the bureau was set on regulating payday loans out of existence.

Ignoring studies, millions of consumer comments and congressional concern, the bureau forged ahead, releasing a rule that would — based on its own estimates — lead to the ruin of nearly 75 percent of the legal, regulated financial service center industry.

The facts show that stores would be shuttered, over 60,000 jobs would be lost and the nearly 30 million consumers who rely on small-dollar loan products for access to credit would be left with nowhere to turn but the unregulated black market.

Unable to change consumer demand or behavior, Cordray and his allies at the CFPB worked to limit the supply. In typical out-of-touch Washington style, they thought they knew better than American consumers when it comes to their financial needs and choices.  

Unfortunately, the Small Dollar Loan Rule is just one instance of vast CFPB overreach. There are countless others; the Arbitration Rule, for example. Congress has tried to reign in the agency through the various renditions of the Financial CHOICE Act and even a few Congressional Review Act resolutions, but nothing will be as effective as a new, confirmed leader at the helm.

If confirmed, Kraninger will undoubtedly be a strong advocate for CFPB reform, as well as a much-needed check on many of the regulations that linger from Director Cordray. Her confirmation cannot come soon enough. The CFPB must get back in the business of helping consumers, rather than hurting them.

With Acting Director Mulvaney currently spearheading such efforts, there is no better pick than Kraninger to bring them across the finish line and continue to advocate for businesses and consumers in the future.

Swift action is needed to stop many of the rules remaining from the Cordray era, including the Small Dollar Loan Rule. If there is any hope of saving these businesses and access to credit for millions of Americans, the CFPB must rescind the Small Dollar Loan Rule.

The Senate should act swiftly to confirm Kathy Kraninger and the get the CFPB turned around before it’s too late.

Ed D’Alessio is the executive director of the Financial Service Centers of America, a national trade association representing non-bank financial service providers throughout the U.S.