February 07, 2020

Kraninger speaks on constitutionality, payday during semi-annual hearing

capitolCFPB Director Kathy Kraninger – during a House Financial Services Committee hearing to review the bureau Thursday – reinforced her position to no longer defend the bureau's single-director structure in a lawsuit set to be considered by the Supreme Court in March.

In a letter sent ahead of the hearing, NAFCU Vice President of Legislative Affairs Brad Thaler suggested areas where NAFCU believes the structure and operations of the bureau could be enhanced. The association is supportive of legislation to reform the bureau's governance structure to a bipartisan commission, as well as other reforms pursued by Congress. 

Following the Supreme Court's decision to take up the case, NAFCU President and CEO Dan Berger reiterated the association's stance "that a commission structure at the CFPB is absolutely essential to ensuring greater transparency and accountability."

During Thursday's hearing, Kraninger also discussed issues related to payday lending, indicating that the CFPB's new rule, expected to be released in April, intends to provide more clarity. NAFCU has previously called on the bureau to extend its safe harbor under the rule to include all future payday alternative loans (PALs) products following the NCUA's expansion of its PALs program. Members of NAFCU's Government Affairs team met with the CFPB in December to discuss the bureau's ongoing rulemaking efforts, including payday lending, and to share credit unions' perspectives.

In addition, Kraninger spoke on the bureau's ongoing rulemaking to revise the definition of qualified mortgage (QM) ahead of the expiration of the government-sponsored enterprise (GSE) patch. NAFCU has met with representatives at the CFPB to discuss the patch and signed on to a joint trades letter calling for the continued use of a modified debt-to-income ratio in conjunction with certain compensating factors.

In a letter to lawmakers earlier this month, Kraninger outlined the bureau's plan, which includes an extension of the GSE Patch until a new rule is finalized  or when either of the GSEs is removed from conservatorship (whichever occurs first). 

Committee members also addressed the CFPB's new policy statement "providing a common-sense framework" for addressing the "abusive" prong of the unfair, deceptive or abusive acts or practices provision (UDAAP). In response to questions on the possibility of a rulemaking, Kraninger indicated that there would need to be more engagement on the issue.

Clarifying UDAAP has been a priority for Kraninger since she became director of the bureau and NAFCU continuously called for clarification ahead of the statement.  

NAFCU will continue to work with the CFPB to share credit union concerns and monitor the bureau for upcoming rulemakings. View the CFPB's fall rulemaking agenda.