Senate Democrats on Tuesday attacked Consumer Financial Protection Bureau Director Kathy Kraninger for her decision to reopen a rule on payday lending and accused her of doing a favor for an industry they have criticized for years.
“You are opening the door to bad actors,” said Sen. Chris Van Hollen, D-Md, during a Senate Banking Committee hearing. “You’re just going to give a big payday to payday lenders.”
“If you had any decency, you’d either do your job or resign,” added Sen. Elizabeth Warren, D-Mass., who is running for president in 2020.
The CFPB said last month it would reopen a portion of a rule aimed at making small-dollar, high-interest rate lenders prove that their customers can repay the cost of their loans.
The rule was finalized after years of drafting, as well as unusually intense lobbying from industry and consumer advocates on opposing sides. The CFPB received over 1 million public comments during its draft period.
Kraninger defended her decision to reconsider it by noting that a judge already halted enforcement of the rule on a temporary basis. That was the result of a lawsuit from a high-interest rate lender against the bureau over the way that rule was drafted.
“We’re in litigation actively so the rule has been stayed,” said Kraninger, who added that she still wanted to go after “bad actors” in the industry.
But Democrats weren’t buying it.
“I think you made a dreadful error in rescinding the payday lending rules,” said Sen. Mark Warner, D-Va. “I believe this was a politically driven decision, and I am deeply concerned by your decision.”
When announcing the bureau’s decision to reconsider the rule, senior bureau staff told reporters that they were worried it relied too heavily on findings from one academic study and invited comments to the rule that provided additional data on the subject.
Consumer activists decried the proposal as a move to gut the rule, a sentiment several Democratic senators shared Tuesday. Kraninger was pressed at the hearing on an analysis from the bureau finding that the payday and installment lending industry would take in over $7 billion more per year if that portion of the rule were rescinded.
