Politics & Policy

Kathy Kraninger Is the Wrong Choice to Lead the CFPB

OMB director Mick Mulvaney speaks at a press conference at the Consumer Financial Protection Bureau in Washington, D.C., November 27, 2017. (Joshua Roberts/Reuters)
The post is too important — and too powerful — to be left to an unqualified nominee.

The White House recently nominated Kathy Kraninger, a mid-level staffer at the Office of Management and Budget, to succeed acting director Mick Mulvaney as head of the Consumer Financial Protection Bureau (CFPB). The surprise announcement was immediately met with derision, as Kraninger has no apparent expertise in consumer protection or financial regulation, having spent her career as a specialist in homeland security and related appropriations matters.

Kraninger’s first exposure to most of the rules promulgated by the CFPB will, by all appearances, come during preparation for her confirmation hearings. Law students currently doing summer clerkships at the CFPB will have more experience with consumer-credit regulation than the nominee to lead the bureau.

Kraninger’s lack of relevant qualifications is especially problematic in choosing her to serve as director of the CFPB, a post that the U.S. Court of Appeals for the D.C. Circuit last year deemed the “second-most powerful” in the entire federal government, behind only the presidency. It is also disquieting in that this will be the first time a Republican nominee will take the helm at the CFPB, which was created in the mold of Senator Elizabeth Warren and quickly filled with career staff who demonstrated loyalty to Senator Warren’s progressive philosophy.

The CFPB was established as a key element of the Dodd–Frank financial reform legislation passed in response to the 2008 financial crisis. The agency wields unprecedented authority but has little accountability to the president or the Congress. It was insulated from effective congressional oversight by design, given a dedicated source of direct funding — the Federal Reserve — outside the normal budgetary process. And its director, once confirmed, serves a five-year term and is removable only “for cause,” meaning that she is hardly accountable to the president, either.

In short, if confirmed, Kraninger would be a five-year mistake, and neither Congress nor the President could really do anything about it.

During the George W. Bush administration, conservative columnists like George Will and Bill Kristol spoke out against the nomination of Harriet Miers to the U.S. Supreme Court. The widespread, bipartisan backlash that followed torpedoed Miers’s nomination, and history seems to have vindicated it. Will noted at the time that the president’s argument for Miers amounted to “trust me.” He argued that the exercise of “constitutional reasoning is a skill acquired, as intellectual skills are, by years of practice sustained by intense interest.”

Much as Miers lacked the requisite experience in consititutional reasoning to sit on the Supreme Court, Kraninger lacks the specialized expertise in the highly complex issues surrounding financial and consumer-credit regulation to lead the CFPB. Yet the administration essential message to senators is, “Trust us, she works for Mick Mulvaney.” As someone who admires Director Mulvaney’s current leadership and his prior service in the House, I would reluctantly submit that word-of-mouth recommendation is simply not good enough for the nominee to such a powerful position.

The administration has argued that Kraninger has experience overseeing the CFPB’s budget, but the CFPB draws its funding from the Federal Reserve, which, again, operates independently of the federal budget process. More important, serving as the OMB staffer who provides feedback on an agency’s budget is no substitute for real management experience. Editing budget documents for an agency or department is a far cry from actually understanding what the institution does.

Administration supporters have begun to imply that opposition to Kraninger is a matter of her gender, as Bush’s backers once implied that Miers’s critics disapproved of a woman serving on the Supreme Court. But President Trump has successfully appointed highly qualified women to other financial-regulatory roles, like Chair McWilliams at the FDIC and Commissioner Peirce at the SEC. Playing the gender card simply won’t fly when Kraninger is so thoroughly unqualified to lead the CFPB.

The Senate and the American people should be concerned, and Kraninger should be heavily scrutinized in her confirmation hearings. The CFPB has unfettered power over the financial tools used by Americans every day to save for their future, buy homes, and fund routine purchases; it is not the right agency for on-the-job training.

J. W. Verret is an associate professor of law at George Mason University's Antonin Scalia Law School.