Kraninger Testifies Before House Financial Services
After Consumer Financial Protection Bureau (CFPB) Director Kathy Kraninger testified before the Senate Banking Committee, which AFSA summarized here, she testified before the House Committee on Financial Services.
During the July 30 House hearing Democrats spent a significant portion of time voicing opposition to the CFPB’s newly finalized rule concerning small-dollar lending, which rescinded the mandatory underwriting provisions from the 2017 rule.
“You [Kraninger] issued a final rule rolling back key safeguards for payday, car title, and [high-cost] installment loans, exposing consumers to high-cost, predatory loans. It is shameful to open the flood gates to predatory loan products that trap consumers in a cycle of debt at any time, but to do so during a pandemic is egregious,” said Chairwoman Maxine Waters (D-CA) at the beginning of the hearing.
On the question raised by the Committee’s top Republican, Rep. Patrick McHenry (R-NC) of why the CFPB decided to publish its recent small-dollar lending rule, Director Kraninger insisted that the Obama-era 2017 small-dollar rule did not have a robust evidentiary and legal basis given the significant demand for small-dollar credit by consumers. Furthermore, the Director noted, the availability of small-dollar products for consumers would broaden by rescinding 2017 provisions.
The hearing also focused heavily on how credit reporting has affected consumers during the pandemic. Members from both parties, including Rep. Ann Wagner (R-MO) and Rep. Brad Sherman (D-CA), asked if the CARES Act’s credit-reporting provisions are working. The credit-scoring provision modified the Fair Credit Reporting Act to allow credit furnishers to accommodate consumers on loan payments due to COVID-related issues. The Director indicated the Bureau is actively engaged with the national credit scoring agencies and examining credit furnishers to ensure consumers are protected during the pandemic. Throughout the hearing, the Director reiterated to several Members of Congress that accurate credit reporting data is essential and a high priority at the Bureau.
Later in the hearing, Rep. Scott Tipton (R-CO) commented on the importance of allowing responsible debt collectors and consumers to communicate electronically via text message or email, especially during this pandemic. Specifically, Representative Tipton asked if the Bureau would consider allowing exemptions from E-sign Act requirements for validation notices for companies in compliance with the Fair Debt Collection Practices Act. Director Kraninger did acknowledge the CFPB has provided some flexibility in conjunction with the pandemic. However, the Director was not aware of a conflict between those two policies. Furthermore, the Director mentioned the CFPB’s intent on facilitating better two-way electronic communication between consumers and debt collectors.
In August Congress is expected to pass another relief package to combat economic effects of the pandemic, and the issues discussed in the House Financial Services Committee are likely to be debated. ASFA is continuing to work with allies and policymakers on Capitol Hill in support of the consumer finance industry.
August 5th, 2020
