How Kathy Kraninger plans to run the Consumer Financial Protection Bureau

Kathy Kraninger, the president's nominee to head the main federal agency tasked with protecting consumers from financial abuse, failed to sway Democrats after a three-hour hearing before the Senate Banking Committee. 

Under questioning from lawmakers, Kraninger resisted being drawn out on how she planned to run the Consumer Financial Protection Bureau (redubbed the Bureau of Consumer Financial Protection by the Trump administration). Kraninger said in her opening statement that she would strive for transparency and fairness in leading the agency, which since its founding in 2010 has become a symbol of the partisan political divide on government regulation. 

But she mostly avoided direct answers when asked about the bureau's recent changes to its approach, such as pulling back on enforcement actions against financial companies.

"Credit bureaus seem most directly in Kraninger's spotlight, which suggests continued risk for Equifax, Transunion and Experian," wrote Jaret Seiberg, analyst for Cowen, in a research note. "She also suggested a continued focus on Wells Fargo and student lending, though she appears more focused on government loans than private loans."

"More politics than policy"

Kraninger, 43, was a relatively unknown mid-level bureaucrat working at the Office of Management and Budget, overseeing roughly $250 billion in federal government programs, before being nominated by President Donald Trump in June to lead the financial watchdog. 

Reactions to Kraninger's nomination have fallen along partisan lines, reflecting the differing views of the agency. Banking Committee Chairman Mike Crapo, R.-Idaho, said in the hearing that he has "utmost confidence" that Kraninger's "diversity of public service experience" prepared her to run an agency charged with protecting consumers from financial fraud. 

But Sherrod Brown, D.-Ohio, predicted Kraninger would follow the approach of Mick Mulvaney, the acting head of the CFPB, who has made the agency much friendlier toward the financial industry.

The hearing "was much more about politics than policy," Seiberg wrote. Even Democratic senators representing red states up for re-election this year, such as Sen. Heidi Heitkamp of North Dakota and Sen. Jon Tester of Montana, appeared skeptical of Kraninger's qualifications to run the agency. 

Pressed repeatedly by Tester, Kraninger said she believed that Mulvaney has done a good job leading the agency. (Mulvaney, who is also Kraninger's boss at the Office of Management and Budget (OMB), has previously called the CFPB a "joke" and said he wanted to eliminate the agency.) She sidestepped repeated questions on whether she would re-institute a rule limiting payday lenders, which Mulvaney has rolled back, and whether she would retain the political appointees Mulvaney hired.

"You got the votes to lead the agency," said Tester, visibly frustrated. "It would be really helpful to know where you're at."

History at Homeland Security

The Trump administration's policy of separating children from their parents who crossed the border illegally dominated the hearing. Kraninger previously worked at the Department of Homeland Security (DHS), which is responsible for implementing the administration's immigration policies. In her current role at OMB, she oversees budget requests at DHS and other government agencies.

In response to a question from Sen. Elizabeth Warren, D.-Massachusetts, who asked for Kraninger's opinion on the Trump child separation policy, she said, "It is not appropriate to give my opinion."

Brown also asked Kraninger about her role at OMB regarding the immigration policy. Kraninger answered that "it would be chilling to the deliberative process to give you extensive details on the substance of the discussion."

Likely to be confirmed

Kraninger's nomination enjoys the support of the financial industry and of Republicans, who hold a majority in the Senate, making it more than likely that she will be confirmed to the post. 

In the meantime, Mulvaney can continue as the CFPB's acting director until Kraninger is confirmed. If her nomination fails, the clock on Mulvey's tenure resets while the White House chooses a new nominee, meaning he will likely be overseeing the agency he sought to kill for the next year or longer.

-- The Associated Press contributed to this report