A group of attorneys general (AGs) from twenty-one states, the District of Columbia, and Puerto Rico has sent a letter to CFPB Director Kraninger requesting that the CFPB immediately withdraw its guidance regarding credit reporting during the COVID-19 pandemic and “resum[e] vigorous oversight of consumer reporting agencies and enforcement of the FCRA.”

The AGs have two objections to the guidance.  First, they claim that the CFPB suggests in the guidance that it will not enforce the CARES Act provision that requires lenders to continue reporting loans as current if they are subject to a forbearance or other accommodation, as long as the loans were current before the accommodation was made.  Second, they claim that the CFPB also suggests that it will no longer take enforcement or supervisory actions against consumer reporting agencies (CRAs) for failing to investigate consumer disputes in a timely fashion.  The AGs assert that they “will not hesitate to enforce the FCRA’s deadlines against companies that fail to comply with the law.” 

The AGs’ claims regarding what the CFPB’s suggests in the guidance mischaracterizes what the CFPB actually stated.  With regard to the CARES Act provision on credit reporting, the CFPB stated that it “expects furnishers to comply with the CARES Act and will work with furnishers as needed to help them do so.”  With regard to investigating disputes, the Bureau stated that, in evaluating FCRA compliance as a result of the pandemic, it “will consider a consumer reporting agency’s or furnisher’s individual circumstances and does not intend to cite in an examination or bring an enforcement action against a consumer reporting agency or furnisher making good faith efforts to investigate disputes as quickly as possible, even if dispute investigations take longer than the statutory framework.”

Contrary to the AGs’ mischaracterizations, there is no suggestion by the CFPB in the guidance that it does not intend to enforce the CARES Act’s credit reporting provision.  There is also no suggestion by the CFPB that it will no longer take enforcement or supervisory actions against furnishers or CRAs for not meeting dispute investigation deadlines.  Rather, the CFPB has made clear that it does intend to take action against furnishers and CRAs that take longer than the statutory timeframes to investigate a dispute and will not do so only where, in light of a furnisher’s or a CRA’s individual circumstances, the furnisher or CRA made good faith efforts to investigate the dispute as quickly as possible.





CFPB Director Kathy Kraninger is scheduled to appear before the Senate Banking Committee tomorrow, March 10, at hearing entitled “The Consumer Financial Protection Bureau’s Semi-Annual Report to Congress.”  The Bureau’s Fall 2019 Semi-Annual Report was issued last month.

We would expect the topics about which Senators question Director Kraninger to include the Bureau’s plans for finalizing its proposal to rescind the ability-to-repay provisions of its final payday lending rule and its proposed debt collection rule.




Last Monday, the CFPB announced that it had entered into a new Memorandum of Understanding with the Department of Education to replace the MOU that was terminated by the ED effective October 1, 2017.  The new MOU, which is effective as of January 31, 2020, is limited to the handling of student loan complaints.  The announcement was followed by Director Kraninger’s appearance before the House Financial Services Committee last Thursday.  At the hearing, Director Kraninger told lawmakers that the agencies were negotiating a second MOU to address supervision.

The new MOU allocates the handling of student loan borrower complaints between the CFPB and ED as follows:

  • A borrower attempting to submit a complaint to the Bureau via its website about the origination of a federal student loan will be directed by the Bureau to contact the ED and the Bureau will provide the ED with complaints of this type submitted through the Bureau’s website or another channel.
  • A borrower attempting to submit a complaint to the ED via its website that is related to a private student loan will be directed by the ED to contact the Bureau and the ED will provide the Bureau with complaints of this type submitted through the ED’s website or another channel.
  • The Bureau will accept and process complaints related to private student loans and the servicing of federal student loans, including providing the complaints to servicers and providers servicers’ responses to borrowers.  The ED will have “near real-time access” to complaints about federal student loans through the use of functionality currently being developed by the Bureau “to share complaint analytical tools via its secure Government Portal.”  This functionality “aims to provide government users with search functionality similar to that used by Bureau staff to enhance data sharing and coordination efforts.”
  • If either the Bureau or the ED receives a complaint about federal and private student loans, the agency that receives the complaint will share it with the other agency and the Bureau and the ED will work to determine an efficient process to discuss and track such complaints and collaborate when possible to attempt to resolve the complaint.
  • For complaints regarding the servicing of federal student loans with “program issues,” the ED is responsible for resolving the program issues, attempting to resolve such complaints, and as appropriate, will discuss such issues with the Bureau “regarding the impact, if any, on Federal consumer financial law.”
  • For complaints regarding the servicing of federal student loans with “Federal consumer financial law issues,” the ED will collaborate with the Bureau and the Bureau is responsible for providing the ED with “expertise, analysis, and recommendations regarding resolution consistent with Federal consumer financial laws.”  The ED is responsible for attempting to resolve such complaints informally with the Bureau’s input.
  • For complaints regarding private student loans with “Federal consumer financial law issues,” the Bureau is responsible for attempting to resolve such complaints informally, and as appropriate, will discuss issues with the ED “regarding products offered by, or on the premises of, Institutions of Higher Education or other issues that may impact Federal programs overseen by ED.”

The MOU provides that the agencies will meet at least quarterly “to discuss observations about the nature of complaints received, characteristics of borrowers, and available information about resolution of complaints, as well as analysis and recommendations.”

At the House hearing, Director Kraninger came under fire from Democratic Committee members regarding the CFPB’s supervision of federal student loan servicers.  Since December 2017, based on ED guidance, servicers of certain federal student loans have declined to produce information requested by the Bureau’s examiners.  (Last month, Democratic Senators Sherrod Brown and Robert Mendez, both members of the Senate Banking Committee, sent a letter to Director Kraninger criticizing the Bureau’s failure to resume examinations of federal student loan servicers.)  As reported by American Banker, Director Kraninger told lawmakers at the House hearing that the CFPB and ED are working on a joint examination plan for federal student loan servicers under which the CFPB would examine for compliance with federal consumer financial laws and the ED would examine for contractual compliance.  She also indicated that the agencies were negotiating a second MOU that would detail the new supervision process and indicated that she expected that MOU to be in place by year-end.



On Wednesday, February 5, the House Financial Services Committee will hold the first part of a two-part hearing on “rent-a-bank” structures. The hearing is titled “Rent-A-Bank Schemes and New Debt Traps: Assessing Efforts to Evade State Consumer Protections and Interest Rate Caps.”  (Part Two is scheduled for February 26.)

The Committee Memorandum for Part One discusses the relevant case law, including Marquette and Madden, and the OCC’s and FDIC’s proposals to undo Madden.  It also discusses H.R. 5050, the “Veterans and Consumers Fair Credit Act,” which would establish a 36% nationwide rate cap for consumer loans.  (The Committee has not yet acted on the bill.)

The scheduled witnesses for Part One are:

  • Monique Limón, Chair, Banking & Finance Committee, California State Assembly
  • Graciela Aponte-Diaz, Director of Federal Campaigns, Center for Responsible Lending
  • Creola Johnson, Professor, The Ohio State University Moritz College of Law
  • Lauren Saunders, Associate Director, National Consumer Law Center
  • Brian Knight, Director and Senior Research Fellow, Program on Innovation and Governance, Mercatus Center at George Mason University

On Thursday, February 6, Director Kraninger is scheduled to testify before the House Financial Services Committee at a hearing titled, “Protecting Consumers or Allowing Consumer Abuse? A Semi-Annual Review of the Consumer Financial Protection Bureau.”  Since such a “semi-annual review” is typically associated with the release of a CFPB semi-annual report and the Fall 2018 semi-annual report was issued last February, it seems likely that the hearing was scheduled with the expectation that the CFPB will release its Fall 2019 semi-annual report before the hearing.  We would expect Director Kraninger to be the target of strong criticism from Democratic Committee members regarding, among other issues, the Bureau’s enforcement of fair lending laws under Director Kraninger’s leadership and its proposal to eliminate the final payday loan rule’s ability-to-repay requirement.


On January 31, the University of Utah S.J. Quinney College of Law will hold a program, “Consumer Protection in the Trump Administration,” at which CFPB Director Kathy Kraninger will deliver remarks.  The program, which is part of the University’s 2020 Law and Biomedicine Colloquium, is free and open to the public.

Director Kraninger will be responding to questions from Professor Chris Peterson of S.J. Quinney College of Law and from members of the audience.  Professor Peterson served as Special Counsel for Enforcement Policy and Strategy in the CFPB’s Office of Enforcement from 2012 to 2014 and since 2018, has served as Financial Services Director and Senior Fellow of the Consumer Federation of America.  He has authored several Consumer Federation of America reports critical of the Bureau’s policies under the Trump Administration.  Those reports include Dormant: The Consumer Financial Protection Bureau’s Law Enforcement Program in Decline (March 12, 2019) and Missing in Action? Consumer Financial Protection Bureau Supervision and the Military Lending Act (November 1, 2018).




CFPB Director Kraninger has rejected the argument made by Equitable Acceptance Corp (EAC) that because the Bureau’s structure is unconstitutional, the civil investigative demand it received from the Bureau should be set aside or at least modified to stay the CID’s response deadlines pending the U.S. Supreme Court’s decision in Seila Law.

In her decision and order denying EAC’s petition to set aside or modify the CID, Director Kraninger stated that the Bureau “has consistently taken the position that the administrative process set out in the Bureau’s statute and regulations for petitioning to modify or set aside a CID is not the proper forum for raising and adjudicating challenges to the constitutionality of the Bureau’s statute.”  She also stated that should the Bureau seek a court order to compel compliance with the CID, EAC could raise its constitutional challenge as a defense before the district court.

Director Kraninger also rejected EAC’s argument that the CID was overly burdensome, stating that EAC had not established that it “meaningfully pursued” that objection with the Bureau’s enforcement staff during the meet-and-confer process.  While directing EAC to comply in full with the CID within 10 days of her order, Director Kraninger indicated that EAC “is welcome to engage with Bureau staff about any specific suggestions for modifying the CID…which may be adopted by the Assistant Director for Enforcement or Deputy Enforcement Director, as appropriate.”




CFPB Director Kraninger was the sole witness at a House Financial Services Committee hearing yesterday on the Bureau’s Spring 2019 semi-annual report and at a Senate Banking Committee hearing today on the report.

At the House hearing, Director Kraninger came under harsh criticism from Democratic members, with one member reportedly calling Ms. Kraninger “absolutely worthless.”  A primary focus of Democratic members was the CFPB’s settlements earlier this year such as those with Sterling Jewelers and NDG Financial in which the companies were not required to pay any redress to consumers.  The Democrats’ perspective is perhaps best summarized by the title of a 333-page report issued by the Committee’s majority staff to coincide with the hearing —“Settling for Nothing: How Kraninger’s CFPB Leaves Consumers High and Dry.”  The report discusses what it describes as appointments made by the Trump administration “to accomplish its goal of reining in the Consumer Bureau” and the handling of the settlements by such appointees.

At the Senate hearing, Democratic members also leveled harsh (but more civil) criticism at Director Kraninger, focusing on the Bureau’s supervision of student loan servicers and its proposed revisions to its final payday/auto title/high-rate installment loan rule (Payday Rule).  With regard to student loan servicers, several Democratic members voiced concern about the number of borrowers seeking loan forgiveness under the federal public service forgiveness program that have been rejected by the Department of Education.  These members called on the CFPB to respond more aggressively to the refusal of federal student loan servicers to provide information to CFPB examiners based on ED direction (including taking legal action against ED).

With regard to the Payday Rule, Democratic members raised questions about the Bureau’s evidentiary support for its proposed rescission of the Payday Rule’s ability-to-repay (ATR) provisions.  One Democratic member pressed Director Kraninger as to why the CFPB has not, despite indicating in its court filings that the Bureau did not believe there was a reason to delay the effective date of the Payday Rule’s payment provisions, sought to lift the stay of the August 19, 2019 compliance date for the payment provisions entered by the Texas federal district court hearing the lawsuit filed by two trade groups challenging the Payday Rule.  (The court also stayed the lawsuit and the compliance date for the ATR provisions.)  Director Kraninger indicated the CFPB had not done so because the trade groups were also challenging the Bureau’s constitutionality in their lawsuit.  She noted that the Bureau has yet to rule on a petition it has received to revisit the payment provisions and has one year to do so.  (Presumably Director Kraninger was referring to the rulemaking petition mentioned in the Supplementary Information to its proposal that seeks an exemption from the payment provisions for debit payments.)

With regard to the Bureau’s announcement that it would no longer defend its constitutionality in the appellate courts or the Supreme Court, Director Kraninger provided no insights into the rationale for the Bureau’s change in position other than to say that she believed there was a need for the Supreme Court to resolve the long-standing constitutional question.

Finally, in response to a question from a Republican member about the Bureau’s plans for providing clarity as to what is an abusive practice for purposes of the Dodd-Frank UDAAP prohibition, Director Kraninger stated that there would be news “in the not too distant future.”

Republican members of both committees were generally complimentary of Director Kraninger’s leadership, pointing to the Bureau’s innovation policies and Taskforce on Federal Consumer Financial Law as examples of praiseworthy initiatives.

CFPB recently issued its Spring 2019 Semi-Annual Report to Congress covering the period October 1, 2018 through March 31, 2019.

The report represents the CFPB’s second semi-annual report under Director Kraninger’s leadership.  Like the first semi-annual report issued under her leadership, and in contrast to those issued under Mr. Cordray’s leadership, the new report does not contain any aggregate numbers for how much consumers obtained in consumer relief and how much was assessed in civil money penalties in supervisory and enforcement actions during the period covered by the report.

The new report indicates that the Bureau had 1,452 employees as of March 31, 2019, representing a decrease of 58 employees from the number of employees as of September 31, 2018 (which was 1,510 employees).  As compared with the number of employees as of March 31, 2017 (which was 1,689 employees), the number of employees as of March 31, 2019 represents a reduction of 237 employees (14 percent decrease) over the two-year period.

In addition to discussing ongoing or past developments that we have covered in previous blog posts, the report includes the following noteworthy information:

  • As it did in its Spring 2019 rulemaking agenda issued in May 2019, the CFPB states that it plans to resume pre-rulemaking activities to implement Section 1071 of the Dodd- Frank Act “within the next year.”  Section 1071 amended the ECOA to require financial institutions to collect and maintain certain data in connection with credit applications made by women- or minority-owned businesses and small businesses.  Such data includes the race, sex, and ethnicity of the principal owners of the business.  The Bureau also states that it plans to conduct a symposium on small business data collection in November 2019.
  • The Bureau’s Fair Lending Supervision program initiated 10 supervisory events during the period covered by the report, 3 less than the number of such events initiated during the period covered by the prior semi-annual report.  The most frequently cited violations involved HMDA data collection and reporting requirements and ECOA record retention requirements.  As compared with that period, it also issued fewer matters requiring attention or memoranda of understanding. In addition, the Bureau provided supervisory recommendations “relating to supervisory concerns related to weak or nonexistent fair lending risk assessments and/or fair lending training.”
  • During the period covered by the report, the Bureau did not initiate or complete any fair lending enforcement actions and did not refer any ECOA matters to the DOJ. (In the prior annual report, the CFPB indicated that from October 1, 2017 through September 30, 2018, it did not initiate any fair lending public enforcement actions and did not refer any ECOA matters to the DOJ.)

Director Kraninger is scheduled to testify twice this week regarding the new semi-annual report.   As we reported, on Thursday, October 17, the Senate Banking Committee will hold a hearing on the semi-annual report.

In addition, on Wednesday, October 16, the House Financial Services Committee will hold a hearing, “Who Is Standing Up for Consumers? A Semi-Annual Review of the Consumer Financial Protection Bureau.”  According to the Committee Memorandum, the hearing will also consider the following bills:

  • The Fair Lending for All Act, H.R. 166.  The bill would create an Office of Fair Lending Testing within the Bureau and amend the ECOA to cover discrimination based on sexual orientation and gender identity, add criminal penalties for ECOA violations, and provide for personal liability of executive officers and directors.
  • Empowering States to Protect Seniors from Bad Actors Act.  The bill would amend the CFPA to address funding for senior investor protection.


Two Democratic Senators have sent a letter to CFPB Director Kraninger and Education Secretary DeVos asking the regulators to explain what roadblocks are preventing the CFPB and ED from entering into a new memorandum of understanding to replace the MOU between the agencies that the ED terminated in 2017.

In their letter, the Senators indicated that the agencies have disagreed about the reason for the MOU’s termination and have provided conflicting information to Congress regarding the CFPB’s efforts to reestablish the MOU.  With regard to why the MOU was terminated, the Senators referenced written responses submitted by an ED representative for the record of a Senate hearing.  In the responses, the ED indicated that the primary reason for the termination was that the CFPB stopped sending complaints about federal student loans to the ED.  The Senators cited statements from former Director Cordray and Director Kraninger that were inconsistent with the ED’s claim that the CFPB was not sending complaints to the ED.

With regard to the CFPB’s efforts to reestablish the MOU, the Senators referenced a letter sent by Director Kraninger to Senator Elizabeth Warren in April 2019 in which Director Kraninger noted that the Bureau is statutorily mandated to have an MOU with the ED and called it “a priority for us at the Bureau to make progress on a new MOU.”  They once again referenced the written responses submitted by an ED representative for the record of a Senate hearing to show conflicting information from the ED, specifically the ED’s statement that the CFPB had not formally attempted to reestablish an MOU.

The Senators asked the CFPB and ED to provide a written explanation of: the basis for the MOU’s termination; whether there has been an attempt to reestablish the MOU; what issues still need to be resolved to reestablish the MOU; and an expected timeline for reestablishing the MOU.  The Senators strongly encouraged the agencies “to reestablish the MOU immediately.”




To mark the first six months of Kathy Kraninger’s tenure as CFPB Director, the CFPB issued a press release providing highlights of the Bureau’s activities during that period.

The activities highlighted are those in the areas of consumer financial education, supervision, enforcement, and rulemaking.  The takeaway from the press release is that the Bureau continues to be very active under Director Kraninger’s leadership.  While the CFPB has reduced the number of investigations it is handling, it has not, as certain consumer advocates claim, abdicated its responsibility to enforce clear violations of the law that have harmed consumers.

In particular, we applaud Director Kraninger for the many CFPB financial education initiatives that are taking place under her leadership.  It has been our long-standing view that the CFPB’s initiatives to fulfill its Dodd-Frank mandates to improve the financial literacy of American consumers and protect older Americans from financial exploitation are deserving of industry support.