CFPB Director Testifies Before Senate Banking Committee
Today the Senate Banking, Housing, and Urban Affairs Committee held a hearing with the Director of the Consumer Financial Protection Bureau (CFBP), Kathleen Kraninger, to discuss the Bureau’s most recent Semi-Annual Report to Congress.
The report details the Bureau’s activities during the pandemic to protect consumers’ finances and provide guidance to the financial industry to help consumers most in need of assistance. However, much of the hearing focused on the CFPB’s recent final rule on small-dollar lending and how the Bureau is implementing the CARES Act related to consumer credit and data reporting.
Committee Democrats, including Ranking Member Sen. Sherrod Brown (D-OH), were critical of the CFPB’s handling of the small-dollar rulemaking process. Director Kraninger staunchly defended the CFPB’s final decision: “Looking at the evidence that was there, promoting competition and enabling consumers to understand the products that are available to them is due in part to where we are today.” Furthermore, the CFPB found that the 2017 rule would reduce access to credit by 70%.
Before the CFPB issued its final small-dollar lending rule, Democrat members of the Senate Banking Committee called for the CFPB’s Inspector General to launch a formal investigation into the Bureau’s rulemaking process. But during opening remarks, Banking Committee Chairman, Sen. Mike Crapo (R-ID), also defended the CFPB’s conclusion, “The changes made by the 2020 Small Dollar Loan final rule carefully balances ensuring the widespread availability of credit to all Americans while preserving strong protection for all consumers.”
In addition to discussing the small-dollar lending rule, committee members raised issues on credit reporting. The CARES Act includes a credit reporting provision for consumers affected by the COVID-19 pandemic. Specifically, the provision requires companies that furnish information to credit reporting agencies to provide accommodation for consumers if they are unable to make their scheduled loan payments. Director Kraninger mentioned during the hearing that the CFBP is working with the credit agencies to provide guidance to credit furnishers.
Sen. Tim Scott (R-SC) mentioned his concerns about credit suppression and potential market distortion if credit history is erased indefinitely, possibly limiting access to credit for individuals. Director Kraninger agreed with Senator Scott’s assessment and reiterated that accurate credit scoring is important.
In Senator Scott’s final note during the hearing, he urged the CFBP not to issue any new rules requiring credit market participants to suppress or delete credit data that would make it harder for creditworthy borrowers in the future.
As Congress debates the next pandemic relief package and other legislative vehicles, AFSA continues to advocate the benefits of access to credit and the importance of accurate credit information.
July 30th, 2020
