Text: S.Hrg. 115-348 — NOMINATIONS OF KATHLEEN LAURA KRANINGER AND KIMBERLY A. REED
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[Senate Hearing 115-348]
[From the U.S. Government Publishing Office]
S. Hrg. 115-348
NOMINATIONS OF KATHLEEN LAURA KRANINGER AND KIMBERLY A. REED
BANKING,HOUSING,AND URBAN AFFAIRS
UNITED STATES SENATE
ONE HUNDRED FIFTEENTH CONGRESS
Kathleen Laura Kraninger, of Ohio, to be Director, Bureau of Consumer
Kimberly A. Reed, of West Virginia, to be President, Export-Import Bank
JULY 19, 2018
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COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS
MIKE CRAPO, Idaho, Chairman
RICHARD C. SHELBY, Alabama SHERROD BROWN, Ohio
BOB CORKER, Tennessee JACK REED, Rhode Island
PATRICK J. TOOMEY, Pennsylvania ROBERT MENENDEZ, New Jersey
DEAN HELLER, Nevada JON TESTER, Montana
TIM SCOTT, South Carolina MARK R. WARNER, Virginia
BEN SASSE, Nebraska ELIZABETH WARREN, Massachusetts
TOM COTTON, Arkansas HEIDI HEITKAMP, North Dakota
MIKE ROUNDS, South Dakota JOE DONNELLY, Indiana
DAVID PERDUE, Georgia BRIAN SCHATZ, Hawaii
THOM TILLIS, North Carolina CHRIS VAN HOLLEN, Maryland
JOHN KENNEDY, Louisiana CATHERINE CORTEZ MASTO, Nevada
JERRY MORAN, Kansas DOUG JONES, Alabama
Gregg Richard, Staff Director
Mark Powden, Democratic Staff Director
Elad Roisman, Chief Counsel
Joe Carapiet, Senior Counsel
Kristine Johnson, Economist
Elisha Tuku, Democratic Chief Counsel
Laura Swanson, Democratic Deputy Staff Director
Corey Frayer, Democratic Professional Staff Member
Homer Carlisle, Democratic Professional Staff Member
Phil Rudd, Democratic Legislative Assistant
Dawn Ratliff, Chief Clerk
Cameron Ricker, Deputy Clerk
James Guiliano, Hearing Clerk
Shelvin Simmons, IT Director
Jim Crowell, Editor
C O N T E N T S
THURSDAY, JULY 19, 2018
Opening statement of Chairman Crapo.............................. 1
Prepared statement........................................... 54
Opening statements, comments, or prepared statements of:
Senator Brown................................................ 3
Kathleen Laura Kraninger, of Ohio, to be Director, Bureau of
Consumer Financial Protection.................................. 7
Prepared statement........................................... 55
Biographical sketch of nominee............................... 57
Responses to written questions of:
Senator Brown............................................ 84
Senator Rounds........................................... 107
Senator Menendez......................................... 108
Senator Warren........................................... 113
Senator Van Hollen....................................... 118
Senator Cortez Masto..................................... 121
Senators Brown and Warren................................ 123
Senators Brown, Reed, Menendez, Warner, Warren, Schatz,
Van Hollen, and Cortez Masto........................... 130
Senators Brown, Menendez, Warren, and Cortez Masto....... 136
Kimberly A. Reed, of West Virginia, to be President, Export-
Import Bank.................................................... 9
Prepared statement........................................... 63
Biographical sketch of nominee............................... 67
Responses to written questions of:
Senator Brown............................................ 144
Additional Material Supplied for the Record
Documents submitted in support of the nomination of Kathleen
Laura Kraninger................................................ 147
Documents submitted in support of the nomination of Kimberly A.
Letter submitted by Francis Creighton, President and CEO,
Consumer Data Industry Association............................. 178
NOMINATIONS OF KATHLEEN LAURA KRANINGER AND KIMBERLY A. REED
THURSDAY, JULY 19, 2018
Committee on Banking, Housing, and Urban Affairs,
The Committee met at 10:05 a.m., in room SD-538, Dirksen
Senate Office Building, Hon. Mike Crapo, Chairman of the
OPENING STATEMENT OF CHAIRMAN MIKE CRAPO
Chairman Crapo. This hearing will come to order.
This morning we will consider the nomination of two
individuals to serve in critical leadership roles within the
Administration. I welcome both of you, and congratulations on
your nominations to these important offices. I see friends and
family here together with you today, and I welcome them as
The nominees before us are Kathy Kraninger, to be the
Director of the Bureau of Consumer Financial Protection, and
Kimberly Reed, to be the President of the Export-Import Bank of
the United States.
These positions are critically important to protecting
consumers in the consumer financial products and services
marketplace and facilitating global trade of U.S. goods and
services. These nominees bring years of valuable experience at
nonprofits and in public service and will provide valued
leadership in carrying out the missions of their agencies.
Ms. Kraninger has had a distinguished career in public
service with exposure to a diverse set of Federal agencies, as
well as developing a particular expertise in the budget and
Since March 2017, Ms. Kraninger has served as Associate
Director for General Government at the Office of Management and
Budget where she oversees and monitors approximately $250
billion in budgetary resources for numerous Cabinet departments
and Federal agencies.
She has also served as OMB's principal policy official for
issues related to the Treasury Department, Department of
Housing and Urban Development, and Federal financial
Prior to joining OMB, she held leadership positions at the
Department of Transportation and the Department of Homeland
Security, as well as serving on the staff of several
Given her depth and diversity of public service experience,
I have the utmost confidence that she is well prepared to lead
the Bureau in enforcing Federal consumer financial laws and
protecting consumers in the financial marketplace.
Ms. Reed was considered by this Committee last year as the
nominee to serve as the First Vice President of the Export-
Import Bank, and today we consider her nomination to be its
Ms. Reed also has had a distinguished career in public
service, previously serving as Senior Advisor to former
Treasury Secretaries Paulson and Snow. In addition, she has
served on several congressional committees and has held
impressive leadership positions in the private sector. Ms. Reed
is well positioned to help move the Bank forward in a positive
With respect to Ms. Kraninger, some Senators have requested
a long list of documents, including emails, schedules,
involvement in memos, White House communications, et cetera,
relating to Ms. Kraninger's role at OMB with respect to the
Administration's ``zero tolerance policy'' and the
Administration's response to Hurricane Maria in Puerto Rico.
These requests are designed to go after certain extraneous
Administration policies that the requesters do not like and go
far beyond the practice of this Committee in document
production. Indeed, I would not expect this Administration or
any Administration to release documents related to its ongoing
deliberative process, and, furthermore, my understanding is
that Ms. Kraninger is not the custodian of these records and
has given the request for information to the White House.
As I have indicated, I do not have an expectation that the
White House or the agencies involved will provide these
documents, but that is an issue outside this nomination
The Democratic Senators of this Committee asked me to delay
this hearing today to seek these documents. I am unaware of the
Banking Committee delaying a hearing for such a reason.
To be consistent, I have followed a similar timeline as the
Committee set for then-nominee Richard Cordray in 2013. As a
reminder, the Senate received Mr. Cordray's official nomination
from the President on February 13, 2013. Approximately 1 month
later, on March 12, 2013, the Committee held a hearing to
consider Mr. Cordray's nomination and voted the nominee out of
Committee 1 week later on March 19th.
Similarly, the Senate received Ms. Kraninger's official
nomination from the President on June 20, 2018. Approximately 1
month later, we are holding this hearing. She has provided all
of the paperwork that the Banking Committee requires.
The purpose of these hearings is to provide all Senators of
this Committee the opportunity to ask any questions of this
nominee, who will be under oath.
I intend to ask Ms. Kraninger--who will be under oath--
about her role in developing policy at OMB. Other Senators will
be given the similar opportunity to question Ms. Kraninger and
also follow up with questions for the record, as we
I take the Senate's constitutional authority seriously and
am confident that Ms. Kraninger will be sufficiently vetted, as
have our previous nominees, for this Committee to provide a
recommendation to the full Senate on this nomination.
As a separate matter, many of us have experienced
frustration with the Bureau in previous years. In April 2016,
former Bureau Director Cordray testified before this Committee.
Senators on the Committee sent questions for the record that
same month. It took Director Cordray over 16 months to respond
to this Committee.
It is my hope that, if confirmed, Ms. Kraninger will be
more accountable to Senators on this Committee than Director
Cordray was, and I look forward today to a very vigorous debate
and a vote on the nominees.
OPENING STATEMENT OF SENATOR SHERROD BROWN
Senator Brown. I thank the Chair. I think the Chairman
knows that that comparison is specious, but I will get to that
in a moment. It was a very simple request that has been out
there 4 weeks, but I want to talk more about that, as I said,
in a moment.
Welcome to the nominees, especially Ms. Kraninger, who
brought her Ohio family with her. Good to see you all. And Ms.
Reed also has some Ohio ties. Nice to see you and good to see
The financial crisis started when greedy lenders lured
families into scam loans they could not afford. The whole
enterprise was designed to transfer wealth upwards--stripping
hard-earned home equity from the middle class, putting it in
the pockets of shady lenders, and with that they were
successful. And as Members of this Committee are familiar with,
I see that every day where I live in Cleveland. My wife and I
live in Zip code 44105, 5 or 6 miles from where Ms. Kraninger
grew up. My Zip code, 44105, in 2007, the first half of that
year, had more foreclosures than any Zip code in the United
States of America. And you know or should know what that does
to families and to neighborhoods.
Behind all the numbers were thousands upon thousands of
painful conversations around kitchen tables. Congress created
the Consumer Financial Protection Bureau to prevent the need
for those heartbreaking conversations ever again.
Like food inspectors, the CFPB hunts down scammers trying
to sneak toxic products back onto our kitchen tables. The
Consumer Bureau is not just a response to the last crisis. It
is one of the most important tools we have to prevent the next
Though 2008 should have served as a wake-up call for
watchdogs and CEOs, over the past 6 years, Consumer Bureau
inspectors have still found plenty rotten in the banking
From 2012 to 2017, the CFPB won $12 billion--$1,200
million, $12 billion--in relief for 29 million Americans. That
is 12 billion reasons for Wall Street to hate the CFPB.
Lucky for them, lucky for Wall Street, they were able to
install one of their own--Mick Mulvaney--to head the Bureau. He
has dropped investigations. He has reduced meaningful
settlements to slaps on the wrist. Now he wants his protege to
run the agency.
For months, I urged the Administration to nominate someone
to lead the CFPB who had a track record--a track record--of
working for consumers. Unfortunately, Ms. Kraninger has no
experience whatsoever in consumer protection.
Mr. Mulvaney argues she should be approved because of her
management and budget experience. It is hard to see how that is
enough, especially given the nominee's refusal to provide
information requested by Committee Members.
Every one of us on this side of the dais wanted this
hearing postponed until we got information about that
experience. When the nominee and I met, she said it was out of
her hands, she would try to get a response. That was over a
week ago. Still nothing. The letter was 4 weeks ago. The
response was 1 week ago. What is the Administration hiding?
If my Republican colleagues are concerned about
transparency and accountability and responsiveness, they should
note this nominee's failure to reply to a simple request about
her responsibilities in her current job--again, a request that
was submitted 4 weeks ago.
Here is what we do know. At the Office of Management and
Budget, she signed off on a $1.9 trillion tax break for
millionaires. To pay for it, she helped write a budget--she
called it an ``aspirational document'' to me--that would triple
the rent for families that are already struggling to get by.
$1.9 trillion in tax cuts, 80 percent of those tax cuts over
time go to the richest 1 percent, and this Administration, with
the approval of the designee to be head of CFPB, is willing to
triple the rates for families that are already struggling to
She has been involved in the management of one disastrous
policy after another. The botched response to hurricanes in
Puerto Rico has left American citizens--American citizens--to
fend for themselves. A housing policy that undoubtedly will
increase homelessness. The Administration's cruelest policy
yet: separating children from their parents at the border.
I hope we will know more by the end of the hearing. These
issues go to the heart of how she will handle any new job.
Management is supposed to be Ms. Kraninger's one
Nobody wants Mr. Mulvaney out of the CFPB faster than I do.
But American consumers cannot afford 5 years of someone who
stands with the bankers in the Administration and stands with
the bankers on Wall Street. We need a CFPB Director who will
sit with hardworking families at their kitchen tables.
I know my Republican colleagues are eager to move this
nominee in spite of the Administration's stonewalling. I wish
they showed a little of this kind of urgency when it comes to
the jobs that have been put at risk by the failure to have a
functional Export-Import Bank.
Ms. Reed has returned for her second appearance before the
Banking Committee. She is well qualified to lead Eximbank, and
our Committee voted overwhelmingly to support her nomination as
First Vice President last December.
There are 109 export credit agencies and credit programs
throughout the world that support foreign manufacturers, but
the U.S. has literally--has unilaterally and literally
disarmed. When it comes to helping exporters, the policy some
of our colleagues seems to be ``America Last.''
It has been 4 years since the Senate confirmed an Eximbank
nominee, leaving Eximbank partially shut down for 3 years.
American businesses have transactions worth more than $40
billion pending at the Bank. Yet there has been stonewalling
from this Committee and this Republican leadership for years.
Those deals and the resulting jobs will move overseas unless
the Bank's board is restored.
If President Trump and Republicans are serious about
helping American manufacturers after 3 years of obstruction--
there is no other word to describe it--they should urge the
Majority Leader to schedule consideration of Ms. Reed and the
other Eximbank Board members immediately.
In one sense, you brought it up at the end of your opening
statement, Mr. Chairman. I want to say one more thing. There
is, simply put, no comparison to Rich Cordray in this process.
Seven hundred 30 days passed between his nomination and his
confirmation, July 18, 2011, to July 16, 2013, almost 2 full
years. Ms. Kraninger was nominated 1 month ago. Two years-1
month comparison. Mr. Cordray--look at his qualifications: Ohio
Attorney General, Solicitor General, clerked for Supreme Court
Justice Kennedy, argued in front of the Supreme Court six
times, deep experience with consumer rights and civil rights
laws. Cordray's qualifications were never under question, but
44 Republicans signed a letter saying they would support no
one--no one--to head the agency unless we changed the law to
weaken the agency. Cordray's first nomination died in the
Senate. When he was renominated--again, even after having a
clear track record at CFPB--Republicans continued to oppose his
nomination until we defanged the CFPB. You know, that is what
Wall Street wanted, so like one bird flying off the wire, they
all fly off the wire, continue to side with Wall Street to
defang this agency.
All we ask for with Ms. Kraninger is a response to basic
questions regarding Ms. Kraninger's current job so we can
evaluate her management skills, which this nomination hangs on.
Again, it is not her work in consumer protection. It is her
management skills. Tell us more about those management skills.
Republicans held up Mr. Cordray for 2 years, demanding
changes to the law before they would even consider a
nomination, so the comparison between that process and this,
Mr. Chairman, is specious.
Chairman Crapo. Thank you, Senator Brown. Since you decided
to go into that, I will also go into a little further
discussion of the document request.
It has been described here today as a ``simple request''
that goes into Ms. Kraninger's relationship to some of these
policies. The fact is it is a document request that goes into
virtually every conceivable document related to the
deliberative process, the budgeting process, and the
implementation concerning Administration policies ranging from
immigration to hurricane relief. And now we have had the Tax
Code thrown in as well.
Ms. Kraninger is not the custodian of these documents. She
has forwarded this request to the White House. These document
requests are obviously designed to go after various policies of
the Administration with which the requesters disagree and go
far beyond any precedent of this Committee in what it requires
These requests seek to open up extensive document
production in five agencies: OMB, DOJ, DHS, Treasury, and HUD,
including also the White House itself. This is a multifaceted
battle with the President being played out in the context of
this Committee's nomination process. Indeed, I would not expect
this Administration or, frankly, any Administration to release
these types of documents related to its deliberative process.
As I said before, Ms. Kraninger has provided all documents
and information which this Committee requires of nominees, and
we will get answers from her today on the issues you said we
need to get information----
Senator Brown. One more thing. We have never really done
this before, but I am just kind of amazed by this. I am sorry,
Mr. Chairman, you have to explain the inexplicable on the part
of this Trump White House that simply will not step up on this.
If there is a claim of deliberative process, the White House
never has used that claim. They have never even responded to
the letter, let alone any details that she had been willing to
share with any of the Members with whom she met one on one,
including me. She also has not been willing, nor has the White
House, to give us an answer to the letter, even if the answer
is, ``We claim deliberative process.''
So I just do not--I hope the Committee is not going to
start acting like this, that the White House does not have to
answer letters, does not have to answer questions from Members
of the Senate, Mr. Chairman.
Chairman Crapo. Well, it is unfortunate to me that the
Committee is starting to get into these kinds of battles, too.
I am discouraged by that, and I hope that this does not change
the tenor of cooperation that we have on many other issues.
I understand the importance of this nomination. I
understand the long-term battle we have had over the CFPB and
its leadership. And the bottom line is I do not know--as I
understand, Ms. Kraninger has passed this document request on
to the White House. There are processes by which we can all
seek documents from agencies and the White House, and I assume
you are engaged in that process now that she has passed this
I do not know what their answer is going to be. I will tell
you what I think their answer will be, but I do not know what
it will be. That issue is an issue that goes beyond this
nomination process. That is my point today.
Senator Brown. I just think there is no incentive for the--
if we continue on their merry way, just like all of you on this
Committee that have spoken with justified outrage, particularly
Senator Sasse and Senator Corker, with the President's
performance on Monday night--or Monday in Moscow--or in
Helsinki, but there is never a consequence for this
Administration because we all continue to do the
Administration's--all of you continue to do the
Administration's bidding, whether it is confirmation of Ms.
Kraninger or whether it is confirming another judge or whether
it is passing another tax cut for rich people in this country.
Why should the President change his behavior when there is
never a price to pay? And one price would be let us not do this
nomination until they actually give us an answer on some of
Chairman Crapo. Well, like I said, I understand the battle
that you are having with the President on many issues. I do not
agree with transporting that battle into this nomination
process, and so today we will proceed.
Would the witnesses please rise and raise your right hands,
please? Do you swear or affirm that the testimony that you are
about to give is the truth, the whole truth, and nothing but
the truth, so help you God?
Ms. Kraninger. I do.
Ms. Reed. I do.
Chairman Crapo. And, also, do you agree to appear and
testify before any duly constituted Committee of the Senate if
Ms. Kraninger. I do.
Ms. Reed. I do.
Chairman Crapo. Thank you. You may be seated.
Each of your written statements will be made a part of this
record in their entirety. Before you begin your statements, as
your turn comes, I invite you to introduce your family who are
here with you if you would like to do so. And, Ms. Kraninger,
we will start with you. You may please proceed.
TESTIMONY OF KATHLEEN LAURA KRANINGER, OF OHIO, TO BE
DIRECTOR, BUREAU OF CONSUMER FINANCIAL PROTECTION
Ms. Kraninger. Chairman Crapo, Ranking Member Brown,
Members of the Committee, thank you for the opportunity to
appear before you today. It is a privilege to be here as the
President's nominee for Director of the Bureau of Consumer
Financial Protection. I want to thank President Trump for this
honor and for the confidence he has placed in me with this
I would also like to express my deepest gratitude to my
family and friends who have joined me today. My parents, Dave
and Pat, as Senator Brown mentioned, are from Cleveland, Ohio.
My older brothers, Dave and Dan, and their families traveled
from Wisconsin and Connecticut. My younger brother, Matt, and
his family are watching online.
I am incredibly lucky to have an amazing family who has
encouraged me in every endeavor and who has taught me that with
hard work and dedication everything is possible in this country
of ours. I am also especially grateful for their steadfast
support as I have followed my call to public service and
pursued a career serving the American people.
My love for our country, its ideals and promise, drives my
commitment to public service. It sparked my interest in my
university's summer internship program where I worked for my
hometown Congressman, Senator Brown. It inspired my decision to
join the Peace Corps and serve for 2 years overseas teaching in
the former Soviet Union. There I saw firsthand the devastating
impact of communism, the economic consequences of central
planning, and the absence of free markets and the rule of law.
Following the attacks on September 11, 2001, I felt the
call even more deeply, to serve our country in a time of need.
I am very proud to have served on the leadership teams at both
the Departments of Transportation and Homeland Security during
that extraordinarily challenging time for our Nation. I have
also been honored to serve three congressional committees,
including the Senate Appropriations Committee under Senator
Shelby's leadership. In my current position as Associate
Director at the Office of Management and Budget, I have taken a
broader leadership role, and I oversee $250 billion in
budgetary resources and related policies for 7 Cabinet agencies
and 30 other Federal agencies, including the Bureau, and the
other financial regulators.
Throughout my career I have focused on implementing common-
sense solutions to complex problems and delivering real value
for the American people. While I will not prejudge and cannot
predict every decision that will come before me as Director, if
confirmed, I can assure you that I will focus solely on serving
the American people.
Congress established the Bureau of Consumer Financial
Protection ``to ensure all consumers have access to markets for
consumer financial products and services . . . that are fair,
transparent, and competitive.'' I am firmly committed to
fulfilling that congressional mandate. To do so, I will
establish four initial priorities.
First, the Bureau should be transparent and fair, ensuring
its actions empower consumers to make good choices and provide
certainty for marketplace participants. In particular, the
Bureau should make robust use of cost-benefit analysis, as
required by Congress, to facilitate competition and provide
clear rules of the road. In my experience, effective use of
notice and comment rulemaking is essential to proper balancing
of all interests. It also enables consideration of tailoring to
reduce the burden of compliance, particularly on consumers and
smaller marketplace participants.
Second, the Bureau should work closely with the other
financial regulators and the States on supervision and
enforcement. Nothing is more destructive to competitive markets
and consumer choice than fraudulent behavior. Under my
stewardship, the Bureau will take aggressive action against bad
actors who break the rules by engaging in fraud and other
Third, the Bureau must recognize its profound duty to the
American people to protect the data in its possession. Under my
leadership, the Bureau would limit data collection only to what
is required under law and is necessary to carry out its mission
and ensure that that data is protected. The issue clearly needs
more attention because consumers are unaware of the
vulnerabilities they face and unsure of what steps to take to
Fourth, the Bureau must be accountable for its actions,
including its expenditure of resources.
As a former congressional staffer, I appreciate the
important role of Congress in overseeing this agency. I value
the advice and perspectives you have shared with me in the
meetings over the past month--conversations that I welcome
going forward, should I be confirmed in this important
Thank you for your consideration.
Chairman Crapo. Thank you.
TESTIMONY OF KIMBERLY A. REED, OF WEST VIRGINIA, TO BE
PRESIDENT, EXPORT-IMPORT BANK
Ms. Reed. Chairman Crapo, Ranking Member Brown, Senators,
thank you for the opportunity to appear before you today. Thank
you as well for this Committee's favorable bipartisan vote to
advance my previous nomination to serve as First Vice President
of the Export-Import Bank of the United States. I now return to
you as the President's nominee to serve as President of
Eximbank, a position that includes serving as Chairman of the
Bank's Board of Directors. I thank President Trump for his
confidence in me to advance Eximbank's mission: creating and
supporting American jobs by facilitating the export of U.S.
goods and services.
If confirmed, I will be both the first woman and the first
West Virginian to be President and Chairman of this 84-year-old
I also appreciate the encouragement and support of the
President's National Economic Council Chairman Larry Kudlow and
diverse organizations focused on American prosperity.
I would like to recognize my father, Terry, and sister,
Ashley. I lost my mother, Janet Logue Reed, an Ohioan, to
cancer when I was 9 years old, and tomorrow would be her 70th
birthday, so I send her my love and know that she is with us.
I thank you for the encouraging and supportive individual
meetings to discuss your views and the positive impact Eximbank
has made for the workers in your States and the potential to do
more to support them. If confirmed, I will work especially hard
to maintain open lines of communication with you and the
I am grateful for the support of my home-State Senators,
Shelley Moore Capito and Joe Manchin. I would bring the
grounding of my West Virginia upbringing to Eximbank.
In 1985, Senator Capito's father, Governor Arch Moore,
bestowed upon me a golden horseshoe pin for an academic award
that I wear today. Its inscription reads: ``Montani Semper
Liberi''--``Mountaineers Are Always Free''. I believe that
freedom, in the form of free-market principles, is the best way
to foster economic opportunity for all Americans.
Throughout my 22-year career, I have embraced these
principles to make a positive difference for our Nation's
businesses and workers while also protecting the American
taxpayer. I would bring these values to Eximbank.
Still, there is room for improvement to keep America on
this road to prosperity, and Eximbank is no exception. If
confirmed, I will work to ensure that Eximbank faithfully
implements all laws and reforms enacted by Congress. I would
launch a review to ensure that Eximbank truly is the ``bank of
last resort'' and not the other way around.
There are now 109 foreign Export Credit Agencies, or ECAs,
in other countries--up from 95 when I testified before you last
November. Eximbank recently reported on ``the increasing
`weaponization' of export trade credit by the world's ECAs to
complement increasingly nationalistic trade policies--
particularly those initiated by China.'' If confirmed, I look
forward to working with the Administration and the Congress on
an aggressive response to China's unfair trade policies.
In a perfect world, there would be no ECA financing. If
confirmed, I will work with the U.S. Government and, as
appropriate, the OECD, G-20, WTO, and other forums to move
toward the ultimate goal of eliminating all ECA financing. On
that you have my pledge.
Until that goal is reached, the United States should not
unilaterally disarm in a fiercely competitive global economy.
While we negotiate, we should not place our Nation in a worse
position than our foreign counterparts. As President Trump
stated regarding export financing: ``[W]hen other countries
give it, we lose a tremendous amount of business.'' Therefore,
if the Senate confirms a Bank Board quorum, I will take
responsible steps to get Eximbank operational so America can
compete on a more level playing field. Eximbank has more than
$40 billion in pending applications supporting 250,000 U.S.
jobs. We need to keep and support these jobs in the United
States while we, at the same time, work to reform the export
subsidies of our competitors to save even more. We can do both.
Eximbank must also treat all American companies fairly,
especially small- and medium-enterprises. I would ensure that
Eximbank--working with community banks and community
development financial institutions that I am so familiar with--
helps small businesses and the agriculture sector, which is
vital to rural America.
In closing, I would like to underscore that good governance
is critical. Eximbank, which has a very low 0.4 percent default
rate, is self-sustaining because of the fees and loans it
charges to the foreign purchasers and has returned $14.6
billion to the U.S. Treasury since the year 2000. We need to
ensure that it stays that way.
Building on my time in the Congress on oversight,
investigations, and Government reform, I would focus on strong
standards of conduct, increased transparency, and sound risk
management practices. I would work with you and our Inspector
General to ensure we are doing all we can to eliminate waste,
fraud, and abuse and give better value to the taxpayer.
Thank you for your consideration. I would be pleased to
answer any questions.
Chairman Crapo. Thank you, Ms. Reed.
And I will start my questioning with you, Ms. Kraninger. As
was obvious in the opening discussions between Senator Brown
and myself, there is a desire on the part of some of the
Senators on the Committee to know what involvement you had, if
any, in certain policy decisions that have been made by the
Administration. Can you discuss to what extent, if any, you
were involved in the development of the Administration's zero
Ms. Kraninger. Senator, I appreciate the question. I had no
role in setting the zero tolerance policy, as I have said to
many Members in our meetings. I recognize the reason for the
question being asked. It is important to note that the Office
of Management and Budget has an extensive role in supporting
agencies as they implement the President's priorities and
agenda. That includes legislative proposals, regulatory
proposals, budgetary resources, and those kinds of facets of
things. So it is clear that since the beginning of the
Administration, immigration policy, border security policy
broadly has been a very detailed discussion within the
Administration. There have been myriad meetings at all levels
of the Administration that I have attended, that the Director
and Deputy Director and my staff have attended. And in addition
to that, Senator, to your note, I do believe that the
protection and preservation of the deliberative process is
critical to the ability of the Administration to develop policy
and implement policy.
I do not believe it is appropriate, frankly, or fair or
right for me to articulate the advice that I gave or to
characterize the discussion that others may have had or brought
to the table. But I can assure you and all of the Members that
in every position that I have ever held and every individual I
have supported in my career, I have given my best advice based
on the best information available at the time. And that is
certainly what I have done in the area of immigration and
border security, and I would note again I had no role in
setting the policy.
Chairman Crapo. Thank you. And the same question basically
with respect to the Administration's response to Hurricane
Maria in Puerto Rico.
Ms. Kraninger. Senator, with respect to hurricane response,
the Office of Management and Budget, including myself, as I
said, my staff, the Director, we have a role in reviewing
disaster declaration recommendations that go to the President.
So we are involved from that point. We also put together at the
Office of Management and Budget the supplemental requests that
the Administration puts forward to the Hill when they are
Obviously, last fall was a devastating hurricane season in
the Atlantic that included Puerto Rico being hit by two
hurricanes, one after the other, with Irma and Maria. So there
were devastating impacts to that. Clearly, additional resources
were needed, and the Office of Management and Budget supported
the President in putting forward those requests that Congress
considered and obviously responded to in providing the
Chairman Crapo. Well, thank you.
And, Ms. Reed, U.S. companies are increasingly challenged
by subsidized export financing from China and other foreign
Nations. Right now who is picking the winners and losers in the
global marketplace? And who, if anyone, should be?
Ms. Reed. Right now, sir, the United States is not picking
winners for the United States workers because Ex-Im is not
operational. So as I mentioned in my testimony, we have 250,000
jobs that potentially could be supported by a reported $40
billion in applications waiting for an Export-Import Bank Board
quorum. If I am confirmed, I will not pick winners and losers.
I will treat all applicants equally and fairly. That is what
the charter passed by the Congress dictates. I will uphold the
law. But I also will do all I can to help our small businesses
in this country. It is very important to me, and I have a long
track record on that.
Chairman Crapo. And I am sure you are aware that there are
a number of reforms that many are seeking to see implemented at
the Eximbank. If you are confirmed, are there reforms you will
Ms. Reed. Yes, sir. As I outlined in my testimony, I am
very dedicated to increased transparency. We also have to
protect our American company applicants from releasing their
proprietary confidential business information, but I will take
a hard look, if confirmed, at how we can do things to make what
Eximbank does more transparent.
I also believe that we need to be focused on good ethics
and, if confirmed and a quorum is confirmed, we will be
standing up a Risk Committee and be approving our Chief Ethics
Officer and Chief Risk Officer. And I also believe we really
need to take a hard look to ensure that the Bank is the bank of
last resort, and so taking a look at some tests that Eximbank
currently administers on additionality and economic impact,
take a look at those again and seek input from all the experts.
There are many diverse opinions on this, and I think it is
important as we look at reauthorization in 2019 that we take a
look at that.
Chairman Crapo. Thank you very much. My time has expired.
Senator Brown. Thank you, Mr. Chairman.
A week ago or so, Ms. Kraninger, we had a good discussion
in our office, and I appreciate your taking the time and the
conversation we had. I asked a number of questions about
tripling the rent for low-income people, about the 600 percent
interest that people more often than not pay when they get
payday loans. The Speaker of the House in Ohio resigned, as you
probably know, under a scandal about payday loans recently, the
first time in our history.
Your answer to all of those seemed to be that the market
will take care of this, and I only just suggest to you that I
do not think that philosophy recognizes how expensive it is to
be poor in this country. And I would, as I asked you and as I
asked Secretary Carson, ask that you spend 3 or 4 hours and
read the book ``Evicted'' by Matthew Desmond, because I think
it speaks--it really does speak in a way that is really
important to understand those issues better.
I have a couple of questions. Your response to the Chairman
was that you did not set policy. I understand that. That is the
term that you used in my office and in a number of other
offices, and it is the term you used twice in response to the
Chairman. You did not set policy. But you do help to execute
policy, and would you talk about--I am interested in what you
did, not what you did not do. Talk about executing policy. Talk
about what resources you moved around on the zero tolerance
policy since neither you nor the Administration will even tell
us, seem to want to tell us that in response to that letter.
Ms. Kraninger. Senator, I appreciate the question. With
respect to the zero tolerance policy, as noted, again, I will
repeat that I did not have any role in setting it. When the
Attorney General announced it, it was his prerogative to do so,
and the Department of Justice has repeatedly asserted that they
do have the resources to support their mission underneath that
policy and have done that. So the Attorney General has
Senator Brown. Well, I understand. I am sorry to interrupt,
but we have 5 minutes. I understand what you did not do. Tell
me what you did do with the zero tolerance policy.
Ms. Kraninger. So, similarly, with the Department of
Justice articulating it had sufficient resources, the
Department of Homeland Security and the Health and Human
Services Department as well, which is not under my purview, but
I am aware of some of the things they are seeking there, those
Secretaries have looked at what the resources are available
within their flexibilities provided through the appropriations
process to see what resources may be necessary to move around.
There were discussions within the Administration on those
matters, but it is the prerogative----
Senator Brown. So what did you--I understand the other
agencies. I apologize for cutting you off. But what did you
actually do in your position at OMB on that policy?
Ms. Kraninger. So, Senator, there were meetings after the
announcement of the policy as the Secretaries raised questions
about it and were looking at their own resources to try to
figure out how to support that implementation. And, again, the
Office of Management and Budget is there to support those
agencies, to ask questions, and, again, in terms of the advice
and details, it would be chilling to the deliberative process
to give you extensive details on the substance of the
discussion. I appreciate why you are asking. At the same time I
do not think that is appropriate to get into the particular
details of my advice. But I can say generally that the Office
of Management and Budget supports those agencies in analyzing
the need and looking at the appropriations law and the needs
that are made known to us.
Senator Brown. This is sort of the same nonanswer to the
letter. When we met last week, I asked you to name some
enforcement actions that Director Cordray had taken that you
support. You did not come up with any answers then. Do you have
any now as you have had a little time to think about it?
Ms. Kraninger. Senator, it was a good conversation in your
office. I appreciate you alluding to it as well, and I would
say on that point specifically, as I noted in my statement, I
do support the Bureau exercising its authority to take
enforcement matters when bad actors are operating in the
system. No one----
Senator Brown. Can you come up with an example--I am sorry
Ms. Kraninger. Sorry, Senator. Specifically--specifically
two areas that--the investigations that were launched under
Director Cordray's leadership and that were continued under the
current Administration, I can note Equifax certainly. A lot of
Members, we discussed extensively concerns about credit
reporting agencies and their practices. The Equifax fallout is
going to be something that is going to be with us for a long
time as a Nation and an issue that I know many are grappling
with. And if confirmed, I would be grappling with the steps
that need to be taken there. So that was certainly something
launched under his leadership.
And I would say, too, the Wells Fargo enforcement actions
as well. That is an area that, again, completely
Senator Brown. Even though my colleagues here said that
CFPB did not do its job, but one last question. One of the
enforcement actions that Director Cordray took was against a
company scamming 9/11 first responders. The judge in the 9/11
first responder case struck down CFPB's claims, agreeing with
the President's Supreme Court that the Bureau is
unconstitutional. Would you challenge that ruling inside of the
Ms. Kraninger. Senator----
Senator Brown. So, in other words, are you going to take
the side--I am sorry again. Are you going to take the side of
the 9/11 scammers, or are you going to take the side of those
who were scammed as you decide what to do on this court case?
Chairman Crapo. And please make your response prompt.
Ms. Kraninger. Absolutely. I am aware of the
constitutionality questions, Senator. I think they are
important, but they are not for me in this position to answer.
The Director has a responsibility to carry out the law as it is
written and run the agency as it is established now, and that
is my focus.
Senator Brown. Thank you.
Chairman Crapo. Senator Corker.
Senator Corker. Thank you, Mr. Chairman. And I thank both
of you for your willingness to serve.
I do want to respond to Ranking Member Brown with sincere
warmth. We came in together, and I have enjoyed serving with
you. It seems to me that what has been happening is if we do
not like something the President does--and I will take a back
seat to no one in challenging foreign policy issues, tariff
issues, with every ounce of energy that I have. But if we do
not like some of the things the President is doing, we should
then block nominees that we like.
I got a call after the Helsinki press conference, which to
me was one of the worst I have seen, from a leading Democrat--I
have shared this with some of my friends--and he said,
``Corker, you need to block the Supreme Court nominee.'' Well,
I could hit myself in the knee with a sledgehammer, too, but
why would I block someone that I generally like over something
that the President has done?
And I just want to say that, again, I take a back seat to
no one. Senator Menendez and I had a conversation about this
yesterday. But it is actually you that is doing the President's
bidding on tariffs. Senator Toomey and I tried to block this
terrible policy that is costing Americans jobs, taxing
Americans--taxing Americans--and you are actually doing his
bidding. So I could throw that right back.
And what I would like to see happen is if we could somehow
depoliticize this Bureau--I mean, it started out in a way that
was controversial under Dodd-Frank. It was the thing that kept
us from having a bipartisan bill in Dodd-Frank. It was this
agency that kept us from having a bill that would have stood
the test of time. I think we could have come to an agreement if
it were not for the way that this was set up, without a board
and dividing all of us.
So I would like to see us somehow figure out a way for this
agency to go forward. There are abuses that happen. There are
abuses that happen, and the Bureau has done some really good
things in that regard. It has also, in some cases it feels,
done some things that were somewhat political. Somewhat. I had
a good relationship with Cordray. I enjoyed working with him.
So I would like to ask our nominee, what is it that you can
do leading the Department to try to cause this whole political
atmosphere around it to diminish as its leader so that we do
not have these types of processes every time anything comes up
regarding this Bureau?
Ms. Kraninger. Thank you, Senator, for that question,
because it is obviously critical and central to the discussion
that is happening here today and has been happening for years
on the Bureau.
What I bring to this position and why I was selected by the
President for this position is precisely that: 20 years of
Government service, working for common-sense solutions across
the aisle, working with Members on both sides to support the
best outcome for the American people. And that is certainly
what I pledge. This agency clearly needs solid management to
take it forward, to become part of the financial regulatory
framework of this Nation as a mature regulator, and that is the
direction that I would like to take it, if confirmed. And I
firmly believe that we can continue to push for transparency
and accountability at the Bureau, again, to really have a clear
decision-making process that takes into account all of the
interests that are across the Nation, from consumer groups to
the financial institutions to all of you here today, to make
the best decisions and put forward the best actions for the
Senator Corker. So I am Chairman of the Foreign Relations
Committee, and there are people on our staff that are just
outstanding, finest people I have ever worked with in my life.
And they are specialists in what they do, and I call upon them
to help me in doing what I am doing.
It is my understanding that you have people like that
already at the Bureau who would be working underneath you, if
confirmed, and one of the challenges that people have put to
you is that you have not been in this area. But it is my
understanding that you have some very capable people that work
underneath that are specialists in the areas that the Bureau
would be dealing with. Is that correct?
Ms. Kraninger. Yes, Senator, it is. I very much look
forward to meeting all of them, understanding the details of
the positions that they have taken, the recommendations that
they have made, and moving the Bureau forward.
Senator Corker [presiding]. And if you would, state--I know
I have got 3 seconds left. Let me say to Ms. Reed, I enjoyed
seeing you in Uganda. I appreciate the meeting that we had in
our office. I know that Senator Toomey and others have focused
on some reforms that they would like to see take place. Many of
us for years have hoped that the Department itself would
reform. I hope that we will be able to work with you and others
to make that happen, and I thank you both for your willingness
With that, I am the stand-in Chairman, and I call on
Senator Menendez. Thank you, Mr. Chairman.
Ms. Kraninger, you have been nominated to lead the agency
that is singularly tasked with protecting American consumers
from predatory financial practices, from seniors to
servicemembers, students to homeowners. We created the Consumer
Financial Protection Bureau to be an independent cop on the
beat for American consumers.
When we met--and I appreciate you coming by--you told me
that your management experience at OMB has prepared you for
this role. So I want to ask you about that, specifically about
the Administration's response to Puerto Rico. Hurricane Maria
tragically killed thousands of people, resulted in the longest
blackout in U.S. history, and left Puerto Ricans without access
to clean water for weeks. It took FEMA only 2 weeks to send
Texas almost three times the amount of staff that it sent to
Puerto Rico more than 2 months later.
Now, I sent you a letter asking for information about your
role in Puerto Rico, and I asked for a response by this past
Monday. You failed to provide one.
As it turns out, I have emails that demonstrate your
involvement in the Trump administration's response to Hurricane
Maria, although these are not emails that you provided to us.
In my office you told me that not only were you involved in the
response to Puerto Rico through your oversight of FEMA,
Treasury, and HUD, but that you oversaw the development of
disaster aid requests to Congress.
So let me ask you here, and please provide me some brief
responses because I think factually we probably both know the
answers. In the first aid package that Congress passed after
Hurricane Maria, most of Puerto Rico's aid came in the form of
a community disaster loan that can only be forgiven at the
discretion of the Secretaries of Treasury and Homeland
Security, an unprecedented condition not applicable to Texas or
Is it true that Puerto Rico had to wait 5 months to receive
this funding? Yes or no?
Ms. Kraninger. Not exactly, Senator. The CDL loan was
actually an unprecedented amount of resources being provided
that Congress deemed appropriate, making----
Senator Menendez. Did they wait 5 months to get the money?
Ms. Kraninger. ----available $1.5 billion----
Senator Menendez. Did they wait 5 months to get the money?
Ms. Kraninger. No, Senator, I actually do not believe that
the Governor has availed himself of this option yet. At the
same time, it is an unprecedented amount of money that is
available for that----
Senator Menendez. Well, let me tell you what happened since
you seem to have a different recollection. The Administration
unjustifiably withheld the loan from Puerto Rico, arguing that
it had a cash balance at the end of 2017 and, therefore, did
not need the money. I am sure there were cash balances in Texas
In November of 2017, Puerto Rico Governor Rossello
requested $94 billion in recovery funds. In response to this
request, how much money did you request from Congress?
Ms. Kraninger. Senator, the request the Administration
submitted actually included an addendum to the letter that said
specifically additional funds would be requested.
Senator Menendez. Can you give me the dollar figure?
Ms. Kraninger. Senator, it was a specific amount for the
Disaster Relief Fund that actually applies to all the
disasters, not just----
Senator Menendez. And that amount was $44 billion----
Ms. Kraninger. ----Texas, Florida, and Puerto Rico.
Senator Menendez. ----was it not?
Ms. Kraninger. Yes, I believe that is correct. I do not
Senator Menendez. And that was to be split among Texas,
Florida, Puerto Rico, and the U.S. Virgin Islands. Is that
Ms. Kraninger. Yes, Senator. It was also the third request,
and the note was made that there would be an additional----
Senator Menendez. In November 2017's request to Congress,
you requested budget cuts to offset aid dollars provided to
Puerto Rico. In your extensive disaster management experience,
does Congress typically require offsets for supplemental
Ms. Kraninger. I am sorry, Senator. Does the Congress
Senator Menendez. Typically require offsets for
supplemental disaster funding.
Ms. Kraninger. Senator, my role specifically at OMB is
certainly to make recommendations. These are the requests that
the President is making supported by the Office of Management
Senator Menendez. Is the answer yes or no? Does Congress
typically require offsets for supplemental disaster funding?
Ms. Kraninger. It has been a common----
Senator Menendez. You and I both know the answer is no.
Ms. Kraninger. It has been a common conversation in recent
years, definitely, but again, it is the prerogative of
Senator Menendez. It is not a common conversation. The
answer is no. You should know that. You know that.
Ms. Kraninger. It is a conversation that has been had,
Senator, and I appreciate your perspective on it.
Senator Menendez. Did you--amazing. Did you advocate for
unprecedented policies that would have conditioned Puerto
Rico's receipt of disaster relief funding on the oversight of
the island's unelected and unaccountable control board?
Ms. Kraninger. Senator, as I noted earlier in other
discussions, I do not think it is appropriate to characterize
my advice. You do see what the request was that the
Administration provided to the Congress and that Congress
considered and that Congress----
Senator Menendez. In your emails you actually say that you
see a role for the board. Look, you were a significant
architect of the Trump administration's response in Puerto
Rico, which was, at best, botched and incompetent. At worst, it
reflects the Administration's most insidious views about
Hispanic Americans. Three-and-a-half million American citizens
who just happen to call Puerto Rico their home, but they are
American citizens like you and I are, faced their darkest hour,
and instead of turning to help them, you pinched pennies. And
worst of all, I think you treated them like second-class
citizens. That does not give me the faith that when you are
going to have to stand up for seniors, servicemembers,
students, homeowners against some of the biggest financial
institutions in this country that you will do that. If you
could not do it for the people of Puerto Rico, I do not know
how you are going to do it for anybody else. And they are U.S.
citizens, Ms. Kraninger.
Senator Corker. Thank you.
Senator Toomey. Thank you, Mr. Acting Chairman, and I want
to thank our two guests today for their willingness to serve.
Let me start with Ms. Reed. Thanks for coming by my office.
I appreciated the conversation that we had. And I think it is
no secret that I have been very concerned and a skeptic about
Eximbank, a skeptic about its fundamental mission. In my view,
it is by its nature intrinsically forced to subsidize--it
forces taxpayers to subsidize certain companies. It distorts
markets. It necessarily picks winners and losers by virtual of
its very activity. There have been episodes of waste and fraud
and abuse. Historically it has not been particularly responsive
to Congress. And despite all that, I was willing to vote to
confirm a quorum of board members, provided that a reformer
like Scott Garrett be leading this organization. Our pro-
Eximbank Senators preferred not to have a quorum, and so that
is where we are.
However, consistent with my interest in seeing reforms, I
was pleased with your testimony. You emphasized a number of
areas where you have committed to us that you want to pursue
reforms, but I would like to just have a specific series of
questions that I would pose to you and just give me a simple
answer as to whether or not these are areas that you would work
with us for reform.
So, specifically, will you work with me and other Members
of this Committee and the Senate to increase transparency at
the Bank to the greatest extent that is practicable without
divulging confidential business information?
Ms. Reed. Yes, sir.
Senator Toomey. Will you work with me and the Committee to
strengthen taxpayer protections against losses from deals that
Ms. Reed. Yes, sir.
Senator Toomey. Will you work with me and Members of the
Committee to improve protection for domestic companies from
economic harm that might arise from Eximbank financings with
Ms. Reed. Yes, sir.
Senator Toomey. Will you work with us to ensure that
Eximbank is not crowding out private financing options that
would otherwise be available but for Eximbank's involvement?
Ms. Reed. Yes, sir.
Senator Toomey. And will you work with me and the Committee
to crack down on bad actors, whether they are employees of the
Bank or its customers who should not be dealing with the Bank?
Ms. Reed. Yes, sir.
Senator Toomey. And will you work with all of us and the
Administration to meet the statutory requirement that we work
to reduce the reliance on ECAs globally?
Ms. Reed. Absolutely.
Senator Toomey. Great. Thank you very much.
Ms. Reed. Thank you.
Senator Toomey. Ms. Kraninger, two things. One, under the
previous regime, the CFPB occasionally engaged in imposing
policies that had the effect of being a rule without going
through the Administrative Procedures Act. They decided to use
enforcement and guidance to impose their will without following
the legal requirement that they subject such a proposal to the
scrutiny that is called for in the APA. There is one case, in
fact, where it was so egregious that the Senate acted to repeal
the rule. The indirect auto lending was exactly such a case
where a guidance was the mechanism they used to impose what
should have gone through the rulemaking process. Never did. The
Congress recognized that and has since repealed it.
My question for you: Will you commit to using the
Administrative Procedures Act when the CFPB imposes new rules?
Ms. Kraninger. Absolutely yes, Senator. It is critical to
Senator Toomey. Thank you.
Section 1071 of the Dodd-Frank Act unfortunately instructs
the Bureau to collect and compile data on small business
lending. I say ``unfortunately'' for a number of reasons, not
the least of which is this is meant to be a consumer bureau,
not a business bureau. But, nevertheless, the law says what it
says, and I understand you have to comply with the law.
My understanding is that Section 104 of S. 2155, which was
recently passed and signed into law, addresses the challenge of
overly intrusive data collection with respect to small mortgage
lending. So there is some relief built in there. But it is
narrow. It is narrow. It applies only to the small mortgage
My understanding is that Section 1071 of Dodd-Frank does
allow the Bureau to make exceptions to small business data
collection. So my question for you is: In implementing and
complying with this part of Dodd-Frank, this requirement, will
you commit to working to minimize the undue cost burden,
administrative aggravation for small business compliance with
this part of the law?
Ms. Kraninger. Senator, I can absolutely commit to you that
the law will be carried out, and the authority given to the
Bureau to tailor that narrowly is certainly something that I
will look at, and I can pledge to you I will. This is an
ongoing action that the Bureau is looking at, and it is an
area, to your point, the law requires the Bureau to act. So I
do not want to prejudge it. At the same time, I appreciate
where you are coming from, and I understand the need to limit--
Senator Toomey. And just very briefly, because I know I am
out of time, but can you confirm, do you agree with my
interpretation that 1071 is the only respect in which Dodd-
Frank mandates the Bureau to deal with small business?
Ms. Kraninger. Senator, it is very clearly one, and I have
not read all of the enumerated consumer laws. As you know,
there are many. At the same time, I absolutely believe that
there is a limited intent for the Bureau to be engaged in small
business oversight or engagement there. So that is something
that should be limited.
Senator Toomey. Thanks, Mr. Chairman.
Senator Corker. Thank you, Senator Toomey.
Senator Tester. Thank you, Senator Corker. I appreciate the
recognition. Thank you, both of you, for being here today.
I am going to start out with you, Ms. Kraninger. It is no
secret that Mr. Mulvaney is no fan of the CFPB. That aside,
would you say that he has done a good job in his role as Acting
Ms. Kraninger. Senator, I would say that the Acting
Director has focused on two priorities: one----
Senator Tester. No, no, no, no, no. Just, please, I know
how to filibuster, you know how to filibuster. Just answer the
Ms. Kraninger. I understand.
Senator Tester. Has he done a good job?
Ms. Kraninger. Senator, he is my current boss who I respect
greatly, and he has actually been focused on implementing the
law. From that standpoint, I would say yes.
Senator Tester. OK. So one of the things you had in your
four points that you were going to bring to the CFPB, I want to
focus on the second one: work closely with other regulators and
aggressively take actions against bad actors. I think that is a
noble thing to do.
Mr. Mulvaney has pulled back the payday lending rule. He
has eliminated the Office of Students and Young Consumers. He
has pulled back the prepaid accounts rule. And he has done more
things than, quite frankly, I have got fingers. OK? Did you
support him in those then? Do you think those are the right
actions to take? Because it goes, in my opinion, contrary to
your number two plank of what you are bringing to the agency.
Ms. Kraninger. I understand your interest. I will attempt
not to filibuster, Senator. I have to say that I will take
aggressive action, if I am confirmed, and I do believe that the
Acting Director, you know, has information that I do not have
Senator Tester. Do you plan on reinstating, for instance,
the payday lending rule?
Ms. Kraninger. Senator, it is under active consideration,
and from that vantage point, it is not----
Senator Tester. OK. Are you going to recommend that they
reinstate the payday lending rule?
Ms. Kraninger. I think it is important to let the process
happen on this, because it is actively under reconsideration,
and so it is not appropriate to comment. I understand your
interest in it, sir.
Senator Tester. So, look, you have probably got the votes
to get confirmed, but I have got to tell you that I have
listened to the questions that have been asked here today, and
you can answer the questions. You really can. All you have got
to do is answer them. You are going to be the head of this
agency. You are going to be leading this agency. Your
recommendations are going to count for something. And so it
would be really helpful for me to know, if I am going to vote
for you or not vote for you, where you are at--where you are
at, not the people under you.
OK. Let me ask you another one. One of the other things
that Mulvaney did is he appointed political folks to track
career folks within the agency, the same folks that you said
that you are going to be looking forward to working with. Do
you intend to keep those political folks on board within the
agency if and when you become Director of the CFPB?
Ms. Kraninger. Senator, I am going to take every staff
member individually and have a conversation with them to
understand what they have been working on and what they would
like to continue to work on. But I have not prejudged having
political or career staff continue. I think it is appropriate
to give them that opportunity to have the conversation.
Senator Tester. OK. So you oversaw the Treasury Department
in your position at OMB, correct, as one of the seven agencies
that you oversaw?
Ms. Kraninger. Yes, Senator.
Senator Tester. OK. Earlier this week, the Treasury
Department and the IRS announced that--it was one of the
swampiest decisions that I, quite frankly, have ever seen. They
have made a decision to allow for these (c)(4)s not to have to
report money that they have received, nonprofits, allowing
donations to those (c)(4)s over $5,000 not have to be reported
to the IRS. Do you agree with that decision?
Ms. Kraninger. Senator, I understand that they published
that decision. I can tell you I did not have a role in it.
Senator Tester. I know, but do you agree with that
decision? Whether you had a role or not, do you agree with that
Ms. Kraninger. Since I have not read the law in that area
and gotten into detail----
Senator Tester. So it is going to allow these organizations
not--to basically hide where they got their money. Is that OK?
Ms. Kraninger. Senator, I think they looked at the law and
the requirements and came forward with the policy decision.
Senator Tester. OK. So let me ask you this: The number one
thing that you are going to bring to the Bureau is transparency
and accountability. Can you tell me how that decision, just
sitting on the outside looking in, whether you have oversight
of that agency or not, the Treasury Department, how you could
actually say, ``You know, I do not have an opinion on it,''
when it deals exclusively with transparency?
Ms. Kraninger. And, Senator, I can tell you at the Bureau
that I am committed to that.
Senator Tester. So let me ask--I am not even going to ask.
I am just going to make a statement. I liked your document that
you gave us that was your opening statement. It said a lot of
good things that I agree with: protecting data, we could get
into Equifax, I am not sure we would get any answers.
Accountability for actions, I like that. Transparency, working
closely, holding bad actors--but, by the way, your answers did
not reflect those values at all.
Thank you, Mr. Chairman.
Chairman Crapo [presiding]. Senator Tillis.
Senator Tillis. Well, welcome. Before I get into some of
the questions primarily toward Ms. Kraninger, Ms. Reed, I want
to talk a little bit about what we--thanks to both of you for
coming to the office, but I want to talk a little bit about why
I believe the Eximbank needs to become functioning again. I
think that you in your opening testimony talked about an
increased number of equivalent agencies in the global markets.
I for one think that we have got to get away from this
either/or proposition with Eximbank and start talking about the
reality that if we do not have this in our toolkit, when we are
competing in the global markets, that we disable ourselves much
the same way a State would get out of economic incentives. Do
you agree with that?
Ms. Reed. Yes, sir.
Senator Tillis. Do you also agree that there may be things
that could make the Eximbank less politicized if we worked on
improving that but for the involvement of the Ex-Im Bank, the
transaction would not necessarily go the positive way? And can
I get your commitment to come back either to my office or
before this Committee to tell us what that would look like so
that hopefully we can get to a better place and better
certainty for the long-term interest of the Eximbank?
Ms. Reed. Absolutely.
Senator Tillis. Thank you. Thank you for your service. I
look forward to supporting your nomination.
Ms. Kraninger, there are a lot of people that asked a lot
of questions and gave you a limited amount of time to answer.
Are there any things that you would like to respond to here
before I ask you a couple of questions?
Ms. Kraninger. Thank you, Senator, for that opportunity. I
recognize that Senator Tester wanted to hear a little bit more
about my views. I can certainly talk about the challenges with
the payday lending arena.
I do take the point of the conversation that I have had
with Senator Brown on the challenges for hardworking Americans
out there, and I think what would be helpful is continued
competition in the small dollar lending space. So I would say
that Comptroller Otting's action in trying to work with
traditional banks to bring additional products and services to
the market is something that would be useful. But I certainly--
it is a difficult position to be in because it is on the
regulatory docket for the agency. I know that. And it is
something that cannot be prejudged, and so I respect the
process there. But I certainly have spent some time looking at
this issue and look forward to further getting into it.
Senator Tillis. I think in the opening testimony the
Ranking Member talked about folks on our side of the aisle who
have been working hard to defang the CFPB, and I am one of
those because I think if you look up ``defang'' in the
dictionary, it has something to do with taking the fangs out of
a snake to make it less poisonous or less threatening. And in
my opinion, the CFPB has a great title--Consumer Financial
Protection Bureau, or the new title now--but the reality is I
think that it is the first agency of its kind that is not
accountable, arguably, to anybody, because after you get
confirmed, for a period of time, just like your predecessor,
you do not even really answer to the President. You certainly
do not answer to the Congress.
When Mick Mulvaney, Director Mulvaney, was here, I was
struck by his goal of trying to convince us that they should be
an agency that is more accountable to the President. Do you or
do you not share Director Mulvaney's view that this is an
agency that is sort of unlike anyone with great power and not
accountability and that that is not good for any area of
Ms. Kraninger. Clearly, Senator, the Congress through the
Dodd-Frank Act gave the Bureau incredible powers and incredible
independence from both the President and the Congress in its
structure. I have noted that my focus is on running the agency
as Congress established it, but certainly working with Members
of Congress, I am very open to changes in that structure that
will make the agency more accountable and more transparent.
Senator Tillis. Well, for those who are not going to
support your nomination, I for one think that this is a great
time for us to come together and actually move that
accountability and funding back into Congress so that they
could actually have some say, because the fact of the matter is
you, like Mick Mulvaney, do not really have to care--but for
maybe your interest in democracy and respect for Congress, you
do not have to care one bit about our opinions about your
activities. And unless we get to a point where it is
accountable, becomes accountable to Congress, that is going to
continue. And I for one hope that you go out there and you work
on clawing back regulations that on the surface look like they
are passed for protection of the consumer, but in many cases
they are harmful ultimately to the consumer, either in terms of
cost or access to capital.
I look forward to supporting your nomination. I also
welcome your family and friends here. The nominees are going
just fine, and I look forward to supporting both of you on the
Chairman Crapo. Senator Warner.
Senator Warner. Thank you, Mr. Chairman. And I want to say
welcome to the witnesses. Ms. Reed, I look forward to
supporting you. You are a lucky witness this morning since your
colleague is receiving most of the attention.
I am sorry Senator Corker is no longer here. I was here at
the start of Dodd-Frank and CFPB. Senator Corker and I worked
very, very closely together. If my memory serves, the original
proposals around CFPB were to set it up as more of a
traditional agency with traditional oversight. But it was then
some Members of the minority's position that they did not want
to create a new box, a new entity, so it was put in this, I
agree, rather unique framework inside the Fed with that certain
funding stream. But I think the history would demonstrate that
that was how the rather unique aspects of the CFPB came to be.
Ms. Kraninger, I want to drill down in a couple specific
areas. I think in every aspect of the CFPB work, it needs to
make sure that you use data to analyze problems and really make
data-driven decisions rather than agenda-driven decisions.
Senator Warren and I submitted a comment to the CFPB expressing
our deep concern about Director Mulvaney's skepticism of data
collection by the CFPB, and I think he has expressed an ongoing
hostility toward data collection and the use of data. As an
example, he froze collection of personal data for nearly 6
months, got rid of a planned survey on debt collection
disclosures. And I am deeply concerned that one of your four
priorities was to limit data collection to what is ``needed and
required by law.'' And I know as well--and I have been somebody
who has favored cost-benefit analysis, but how do you do a
cost-benefit analysis that is going to be accurate and adhere
to fact-based if you are not able to do appropriate data
collection to influence your decision? How can we be assured
that it is then not going to be a political-driven agenda
rather than a data-based agenda?
Ms. Kraninger. Senator, I appreciate the question. I am
absolutely committed to data-driven decision making, and should
I be confirmed, that would be a focal point at the Bureau. I
take your point, but I think again, to the extent that it is
supporting that decision making, the data collection would be
needed and required.
I also think it is important to distinguish here between
the data that comes through the requests for information that
are out to the public. There are a number of sources of
evidence that come beyond the entities that the Bureau is
supervising directly, and so ensuring that consumer groups have
the opportunity to respond, to provide information, using the
benefit of a lot of the academics that are there, looking at
Senator Warner. I would just simply say, though, that if we
are going to do a rulemaking on debt collection practices
without talking to those people who have been targets,
customers, consumers, users of those debt collection services,
I do not know how you can reach a conclusion.
Now, I come and can live with the Ranking Member and many
on this side. We do not always agree. I generally come with a
pro-business bias. I have been in business longer than
politics. But I have got to tell you, I think the power in most
business-consumer relationships has shifted away from the
consumer toward business. And I see this particularly, as we
discussed a little bit, in the circumstances around the credit
reporting agencies. You and I have no option to choose to be
customers or not of credit reporting agencies. And I am very
concerned not only in credit reporting but as we move into
increased areas around social media and elsewhere, I am not
sure that even a relatively informed consumer can simply sign
away all of their rights with this growing imbalance where the
business has all the information, all the data, all the tech
tools, and you are stuck with a ``Click here, I agree,'' in
print that no one could read, or even if you could read, you
could not necessarily understand.
Are you concerned about this imbalance between business'
ability to collect consumers' data knowingly, and oftentimes
unknowingly? And what do you think the CFPB should do to help
protect consumers in this growing arena?
Ms. Kraninger. Senator, I appreciate the question and
enjoyed the conversation that we had. Specific to the credit
reporting agencies, just to take that, because that is a
critical area where the Bureau is spending a significant amount
of time, I look forward to the results of the Equifax
investigation to understand what is happening there, to look at
what the Bureau staff has found in terms of the concerns, and I
do think that the customer relationship there is really between
the agencies and the financial institutions. So ensuring that
the consumer is protected in that situation and that they are
really limiting the information they are collecting to what is
appropriate and that they are protecting it and that the
consumer has a measure of control and involvement in that going
forward is certainly something that makes sense to me. And I
look forward to getting into that more with the Federal Trade
Commission and the Bureau staff, if confirmed.
Senator Warner. My time has expired. But, Mr. Chairman, I
just wanted to note for the record I appreciate your interest
in this subject, the fact that we have had a couple of
hearings. I have got to tell you, if this Committee takes up
any other legislative activities this year, it is going to be
my intent to make sure that credit reporting, appropriate guard
rules and the fact that it is a year after Equifax and still
nothing has happened, that is going to be at the top of my
priority list, and I hope we will be able to work together.
Chairman Crapo. It is a high priority for me, too, as well
as data collection in general, as I have discussed with several
of you, and I hope that we can prioritize that and make
Senator Warren. Thank you, Mr. Chairman.
So one thing consumers need in a CFPB Director is someone
who is willing to stand up to powerful people on behalf of
those who do not have power. And that is why I want to focus on
the Trump administration's child separation policy.
Since March of 2017, you have been the head of the General
Government Programs at the Office of Management and Budget. Is
that right, Ms. Kraninger?
Ms. Kraninger. That is correct.
Senator Warren. It is an important job. The General
Government Programs Division at OMB is in charge of overseeing
both the Department of Japanese and the Department of Homeland
Security. Is that right?
Ms. Kraninger. Yes, Senator.
Senator Warren. And according to the disclosures you
submitted to this Committee, you ``serve as OMB's principal
policy official'' for issues related to the departments and
agencies you oversee. Is that right?
Ms. Kraninger. Yes, Senator.
Senator Warren. So the Justice Department and Homeland
Security are the two agencies most responsible for taking
children away from their parents at the border, and you oversee
policy issues at both agencies. But for a month now, you have
refused to respond to Ranking Member Brown's and my request for
information for documents relating to your role in child
separations. And when we met in my office last week, you
refused over and over to give me a straight answer about your
So today you have given a very lawyerly and limited answer.
You are dodging. The answers have also been contradictory. You
have said you have no role in setting the policy, but you also
cannot describe the advice you gave on the policy, which means
it raises a question, which is that you had no role or you had
a role and you cannot describe it.
So I am going to ask you again under oath: Were you
involved in any way in developing or implementing the policies
that led this Administration to take thousands of children away
from their parents at the border?
Ms. Kraninger. Senator, I had no role in setting the
policy. As we discussed, I was unaware----
Senator Warren. Please answer my question. It was
developing or implementing.
Ms. Kraninger. I had no role in developing it in terms of
its announcement by the Attorney General, so I was not aware of
Senator Warren. So you did not help the Attorney General
announce it, but otherwise, did you help develop or implement
Ms. Kraninger. Subsequent to the Attorney General's
announcement, there were meetings within the Administration on
the general topic of the implementation, and, again, the Office
of Management and Budget does actually participate----
Senator Warren. So is that a yes?
Ms. Kraninger. ----in those meetings.
Senator Warren. You were involved? That is a yes?
Ms. Kraninger. Senator, again, I do not want to
characterize the advice, as I noted----
Senator Warren. Well, Ms. Kraninger, I am asking you a
pretty straightforward yes or no question, and I will remind
you you are under oath, and lying to Congress is a crime. I
will also remind you that many of the documents I have
requested about your role in this policy could eventually
become public under the Freedom of Information Act.
So let me ask again the specific question: Were you
involved in developing or implementing the policies that led to
children being taken away from their parents at the border?
Ms. Kraninger. Senator, it is difficult to separate the
Senator Warren. I will take that as a yes then.
Ms. Kraninger. ----and so as I said, I will not
characterize the advice that was provided on the analysis or
Senator Warren. I am not asking you to characterize. I
asked you a simple yes or no question. According to reports, in
some cases the Trump administration is not sure which children
belong to which parents. As of Monday, the Administration had
not identified the parents of 71 separated children, which
means right now they cannot be reunited.
DHS is the agency that took parents away from their young
children. Did you work with DHS to create a plan for eventually
reuniting these children with their parents?
Ms. Kraninger. Senator, again, I cannot characterize my
advice, but as we also discussed, since I was nominated to this
Senator Warren. I asked just did you----
Ms. Kraninger. ----I have not been involved----
Senator Warren. ----work with them on a plan. I did not ask
what the plan was, what advice you gave. Did you work with them
on a plan to reunite these children who were taken away from
Ms. Kraninger. I understand the question, Senator, but it
becomes a slippery slope in terms of characterizing the advice
that was provided or the analysis or the questions that were
Senator Warren. No, it is not a slippery slope----
Ms. Kraninger. ----I do not want to characterize any of
Senator Warren. You do not want to characterize because you
do not want to admit that you had something to do with this.
You know, this was a policy that was designed to traumatize
children and families as a way of scaring them away from the
border, even if they were seeking asylum, even if they were
fleeing death threats, gang violence, rape, domestic abuse.
White House Chief of Staff Kelly said that the whole point
of this was ``to be a tough deterrent.'' The American Academy
of Pediatrics says that being separated from their parents for
weeks or months can cause these children irreparable, lifelong
physical and psychological harm. Do you think that purposefully
inflicting that on innocent children is immoral?
Chairman Crapo. And please make your answer brief.
Ms. Kraninger. Senator, I think there are many
heartbreaking stories that appear in the news every day from
the conversation we had about American families, hardworking,
who are affected by----
Senator Warren. It is a simple yes or no question. Do you
believe that it is immoral to set up a plan whose deliberate
intent is to inflict harm on children?
Ms. Kraninger. Senator, it is not appropriate for me to
provide my personal opinion and internal deliberations and
discussions on this matter.
Senator Warren. Almost every Member of this Committee,
Democrat and Republican, has denounced this policy. Even
President Trump, when he signed the Executive order ending
child separation, said, and I will quote: ``I did not like the
sight or the feeling of families being separated.'' But you
cannot have an opinion on this? You know, I went to the border
last month. I met a mother who was torn away from her 7-year-
old little boy in the middle of the night. She could not stop
crying. All she could say over and over and over is, ``I never
even had a chance to say goodbye.'' She had not seen her little
boy for weeks. She had no idea where he was.
You see the videos of some of these children being returned
to their parents after long separations. They are dazed. They
are unsmiling. They are dirty. It is like the life has been
sucked out of them. These are innocent children who may be
scarred forever by this policy. It is fundamentally immoral,
and you--you--were part of it, Ms. Kraninger. It is a moral
stain that will follow you for the rest of your life. And if
the Senate votes to give a big promotion to you after this,
then it is a stain on the Senators who do so.
Chairman Crapo. Senator Cortez Masto--oh, excuse me. I
apologize. I did not see Senator Moran come in. Senator Moran.
Senator Moran. I think Senator Rounds is first.
Chairman Crapo. Oh, excuse me. Senator Rounds.
Senator Rounds. Thank you, Mr. Chairman.
Mr. Chairman, what I would like to do is, once we have got
the noise cleared up here, we will turn around and we will go
back and ask some questions of both of our two witnesses. Thank
Let me just begin with Ms. Reed. Your role coming in as a
chairperson is to make certain that this particular
institution, this Bank, is capable of competing with other
similar type institutions from around the country and providing
services so that we can again properly export to other
countries. I think some people think that that is
inappropriate, that a Government would provide a service. I do
not. I think that is appropriate that we be competitive. Can
you share very briefly your thoughts with regard to the
appropriateness of competing with other countries and providing
our businesses with that same type of service so they can
Ms. Reed. Absolutely, sir. Thank you. As I mentioned in my
opening statement, if we are not at the table, we are
unilaterally disarmed, and our competitors will take those jobs
that should be U.S. jobs through their own ECA programs. And I
want to be sure in this time when we have 109 other ECAs
competing against the United States that we are there. I think
that is so important.
I know that the Export-Import Bank has a very specific
role. It is a tool in the toolbox. Dan Runde with the Center
for Strategic and International Studies (CSIS) published an op-
ed in The Hill earlier this week, and he lays out the world of
China; you know, they are using their Export-Import bank, along
with many other tools, to be present through their Belt and
Road policy all around the world. And we need to be there not
only for economic security but also because we need to be there
for national security reasons. The President says economic
security is national security, and so Ex-Im is part of that.
But we need to be there for our workers. I want our workers
having these jobs.
Senator Rounds. You know, I was very pleased with the
response that you gave to Senator Toomey. I think Senator
Toomey had expressed concerns that the Eximbank has in the past
picked winners and losers. I was very happy to hear you comment
on the fact that you will work with us to make certain that
some of those things that may have occurred in the past with
regard to picking winners and losers would not be in the
future, so thank you for that. I appreciate that.
Ms. Kraninger, first of all, let me just--I understand that
sometimes we run out of time here, and there are some things
which we, as Senators, we try to get a lot of questions in in a
short period of time. But sometimes that also means that we do
not give you the opportunity to clearly lay out your thoughts
and to answer questions. I think that has occurred today. And,
in fact, you have been the object so that individuals here that
have disagreements with the Administration's policies and their
attempts to enforce border security and so forth, and they have
used you as the object. I would like to give you an opportunity
to perhaps more fully answer any questions that you think you
may not have had the opportunity to answer with regard to any
of your activity at OMB and the responsibilities that you had
at OMB, recognizing that it may in many cases just simply be to
Would you like to share with us a little bit, perhaps more
fully answer the questions that some other Members really were
interested in but probably did not have enough time to allow
you to answer?
Ms. Kraninger. Thank you, Senator. I appreciate that
opportunity. The Office of Management and Budget is truly a
unique organization in the Government because it has such a
broad reach into all of the activities across Government. It is
kind of a microcosm. And my portfolio is the broadest. So the
level of engagement that I have in any particular issue or with
any particular department or agency does vary substantially. So
the question with respect to the IRS rule, I was aware of it
happening. I know that my staff reviewed it. But, again, I did
not have a role in developing that.
With respect to the response to, again, the horrible
disasters last fall, because there was clear need for
additional resources, the Office of Management and Budget was
very engaged. And, in addition, with respect to Puerto Rico,
the Treasury Department had a deep role working with the
Government, with the oversight board that was established by
Congress to look at the future of Puerto Rico. And so that is
something that, again, there have been many meetings on.
I would also like to note that there are many hardworking
men and women across the Administration, at the State level, in
the private and nonprofit sectors that were very engaged in the
hurricane response. And so it is an honor to support them and
look at the resource needs that were brought forward and to
submit to Congress the resources that we believe were fully
justified and for Congress to consider that.
Senator Rounds. Let me just--and I know my time has
expired, but I would ask the Chairman for just a little
leniency after the last questions that were asked, just to
clarify this. You are responsible for over $250 billion in
budgetary resources for 7 Cabinet departments and 30 other
Federal agencies, including the Treasury Department, Department
of Housing and Urban Development, the Bureau, and all of the
financial regulators. You also serve as OMB's principal policy
official for issues related to those departments and the
I just get the sense that somehow with the huge number of
items that are in front of you, how much do you get into the
specific details? And do you have the opportunity to come back
in and say, ``Wait a minute, I disagree with a particular
policy, I can stop it, or I can change it''? Or do you offer
Chairman Crapo. And, again, please keep your remarks brief.
Ms. Kraninger. Thank you, Senator. It is definitely an
opportunity to offer advice. The involvement level really does
vary substantially based on the President's priorities, the
Director's priorities, the agency heads' priorities, how much
authority they have on their own.
Senator Rounds. One last item on it. Is your advice always
Ms. Kraninger. Senator, I wish that it were, but, no, my
advice is not always taken. At the same time, I am also
fallible. But I offer my best advice based on the information
Senator Rounds. Thank you.
Ms. Kraninger. Thank you.
Senator Rounds. Thank you, Mr. Chairman.
Chairman Crapo. Thank you.
Senator Schatz. Thank you, Mr. Chairman. Thank you, Ms.
Kraninger and Ms. Reed. Thank you for your willingness to
I just want to follow up on the line of questioning around
family separation. I understand you cannot characterize the
advice you gave, but I am wondering if we can get some sense of
what categories they were in. Was it legal advice? Was it
compliance advice? Was it advice related to execution? Because
I think if--I am not sure I agree with you about deliberative
product. I am not sure I agree with you about the sort of vague
assertion of--I do not know if it is privilege that you are
asserting or a personal judgment that you are making or on the
advice of counsel, and maybe we can get into that. But let us
set that aside for a moment. I think it is fair for us to know
kind of broadly what you did, not how you advised people, not
how you executed, but were you advising on implementation? Were
you advising on compliance? Were you providing legal counsel?
Were you providing political advice? Can you just characterize
what you were doing?
Ms. Kraninger. So, Senator, with respect to the Office of
Management and Budget's role, which does characterize my role,
the Director's role, myriad meetings talking about the agencies
as they were executing the policy, and we do have at OMB a role
for providing perspective on the budgetary resources necessary,
any regulatory issues to be addressed----
Senator Schatz. Why the third person here? Like, ``we have
a role''? Every time we ask you about what you did, you say,
``OMB has a role,'' and then it becomes this kind of
description of this faraway bureaucrat. It was you, and I am
just asking you so that we can establish a little trust. You
can just sort of characterize what you talked about, not to
describe the contents of what you talked about but, broadly,
were you giving legal advice? Were you giving political advice?
Let us start with that. Were you giving legal advice?
Ms. Kraninger. Senator, if I could respond to the point you
are making because it goes to the heart of the matter. My
conversation with Senator Rounds, the reason why I am saying
the Office of Management and Budget is because, as Senator
Warren and I discussed in her office, I am responsible for my
Senator Schatz. No. I get that.
Ms. Kraninger. So I do have staff involvement. I am also
providing advice to the Director----
Senator Schatz. Ms. Kraninger, I do not have a lot of
Ms. Kraninger. I am sorry, Senator.
Senator Schatz. Did you give legal advice?
Ms. Kraninger. Senator, it is not appropriate for me to
give legal advice, really. It is the purview of the Office of
Management and Budget to weigh in on regulations, budgetary
resources, those kinds of things.
Senator Schatz. Weighing in on regulations, what does that
Ms. Kraninger. So, for example, anything that involves data
collection, requires notice under the Privacy Act, whether it
is a system of records, notice, submission, or a data
Senator Schatz. So compliance--can you just please, like
rather than me playing 20 Questions with you, can you please
try to characterize your role in this without running afoul of
whatever principle that you articulated earlier, and in as
simple and personal terms as we can get to where you can say,
``This is basically what I did for them. Now I am not going to
tell you exactly how I advised them or how I''--``or get into
deliberative product.'' I understand your position on that. But
can you not characterize anything more than OMB generally does
this and that would apply to this situation, too?
Ms. Kraninger. Senator, I have said that I had no role in
setting the policy----
Senator Schatz. Yeah, I got that.
Ms. Kraninger. ----and that there----
Senator Schatz. So what did you do?
Ms. Kraninger. ----had been--there were a number of
meetings on immigration and border security policy, writ large,
that I participated in, that I supported the Director and the
Deputy Director in their participation, and that my staff
participated in and then came back and told me the nature of--
Senator Schatz. I have to tell you----
Ms. Kraninger. ----the discussion.
Senator Schatz. ----I do not do hearings so I can put a
clip up on YouTube. I do not operate that way. And I am trying
to get an answer from you, and I just cannot. And it is
maddening because this is not a trivial aspect of your basic
qualifications for the job. You are coming in and asserting
that you are a manager, and you cannot characterize anything
that you are doing as a manager.
Let me ask you one final question. Is your position, which
is that that would get into deliberate product, is that on the
advice of counsel?
Ms. Kraninger. Senator, the documents that were requested
in the letter is something that I have shared with the
appropriate officials, and that includes the Office of
Management and Budget General Counsel.
Senator Schatz. OK. But did counsel give you advice and
tell you not to answer these questions?
Ms. Kraninger. Senator, we certainly had a lot of
preparation for this hearing and discussion about the right
Senator Schatz. Yeah, so did----
Ms. Kraninger. ----but I will say----
Senator Schatz. Did you get legal advice?
Ms. Kraninger. ----my answers are my own.
Senator Schatz. Did you get legal advice?
Ms. Kraninger. Not per se legal advice, sir. I am not
asserting privilege. It is not for me to do that certainly in
this position, but I am saying that I want to preserve the
deliberative process and that that is an important thing to
preserve, similar to conversations that many of you have had or
I have had with Senators that I have worked with. It is
important to keep those discussions----
Senator Schatz. And is that your personal judgment or is
that the--is that on the basis of advice from either the GC or
from the White House?
Ms. Kraninger. Senator, it is fair to say that there were
discussions in preparation for this process that I did have
others weigh in in terms of giving me advice on how to respond.
But my responses are my own.
Senator Schatz. Thank you.
Chairman Crapo. Senator Moran.
Senator Moran. Mr. Chairman, thank you very much. Thanks to
both of our nominees for being with us today. I look forward to
working with both of you should you be confirmed in the
capacities that you have been nominated to fill.
Ms. Kraninger, I would start with you. I want to let you
know how much I appreciate the working relationship that you
and I have had in your capacity here on the
Appropriations Committee in the U.S. Senate as well as your
work at the Office of Management and Budget and indicate to you
that I appreciate the diligence with which you have pursued my
inquiries and issues that I raised in both of those capacities.
The thoughtful and articulate way that you communicated with me
about responses and the lack of partisanship in the issues that
we were dealing with was clearly demonstrated to me, and I am
grateful for your professional approach to the way that you
conducted your work, at least in the experience that I have had
with you over the last several years during my time as United
My observation about the hearing today on your nomination
reminds me of the first piece of legislation that I introduced
as a United States Senator related to financial services and
banking, and that was, among other things, the belief that this
entity should be governed by a board. While there seems to be
relish in having the opportunity to question you as a potential
Director of the Consumer Financial Protection Bureau, maybe we
would enjoy it if we had three or four or five more
opportunities to do so in having other people confirmed. And
the point, said somewhat with a smile, that we would want to go
through this four more times, but the point I would make is
there is a diversity of views on this Committee and in this
country about the role of a Consumer Financial Protection
Bureau. I am of the view that Republicans made a significant
error, at least in some, in saying we are going to repeal Dodd-
Frank and end its reign, and the reaction, unfortunate
reaction, to that was many Democrats who said, ``You are not
going to touch the issues associated with Dodd-Frank.'' So we
put ourselves in corners that then caused us to be unable to
solve problems that clearly existed as a result of the passage
of Dodd-Frank with two sides saying, ``We are going to do this,
and we are not going to let you do this.'' It did not allow us
to find a middle ground in very many instances, at least until
recently, in which we could make some improvements or changes
One of the changes that I have long promoted is that a
board or a commission that would oversee a Consumer Financial
Protection Bureau would make sense. I am not going to ask you
your opinion about that, but I would raise this with my
colleagues to suggest not only would it give us the opportunity
to have more input with those who would be in charge, members
of that commission of the Consumer Financial Protection Bureau,
but it would also allow us to better reflect and perhaps avoid
the swings that may occur from one Administration to another in
the approach that we have had--the approach that CFPB has had
in regard to the regulatory world of protecting consumers.
I would indicate that it would be valuable to me--and I
would allow you to respond to this, but it would be valuable to
me to confirm what I would expect you to confirm, that you will
operate in your capacity, if confirmed, in a very transparent
and open way so that Members of Congress have a better
opportunity to influence and to make points to you that I
sometimes I felt I had with one of your predecessors in his
Administration, his directorship of the Bureau. And I would
also make the point that those who are being regulated could
user greater transparency because I think in too many instances
rulemaking was not accomplished and, therefore, the rules were
unknown, and you became--what was the rules of the road became
known only once there was an enforcement action.
And so I would give you the opportunity to confirm to me,
first of all, how you would operate in a transparent way with
me and my colleagues as Members of the U.S. Senate, and,
second, if you have thoughts about how we make certain that
those who you are regulating know what the regulations are
before they suffer the enforcement action that often resulted
in a fine.
Ms. Kraninger. Absolutely, Senator. Thank you so much for
your comments and for your perspective on this. I completely
agree that the Bureau--it is a priority for the Bureau to be
transparent and accountable, that I am committed to working
with members of both sides of the aisle in Congress to move the
Bureau forward in that kind of manner. And in terms of the, you
know, so-called regulation by enforcement that many have been
concerned about in terms of the prior approach to the Bureau, I
completely agree that it is critical to have clear rules so
that the lenders and creditors and the consumers themselves
know what the rules are and that they are not somehow told
after the fact that they broke a rule they were not even aware
of or that it had somehow changed without any proper notice and
comment process to really understand the impacts and the
opportunity to tailor, as I have discussed with many other
Members. So I completely agree that that is not appropriate and
is something that I would not engage in.
Senator Moran. I appreciate your response. And, Ms. Reed, I
have run out of time. I would tell you I look forward to
working with you. I have been on the Banking Committee long
enough to remember the days in which you would have been a
controversial nominee, and I am glad to see that Eximbank is
back in a position in which we can move forward and protecting
the competitive interests in a global economy of United States
businesses but, more importantly, those who work for United
States businesses. Thank you, ma'am.
Chairman Crapo. Senator Cortez Masto.
Senator Cortez Masto. Thank you. Welcome. Congratulations
on both your nominations. And let me just say thank you to both
of you for taking the time to visit with me and answer my
questions. I really appreciate that. Welcome to your family as
Ms. Kraninger, I am going to start with you, and these are
similar to some of the questions that we had together when you
were willing to meet with me. But let me just start with this:
I have heard you say time and again today in response to all of
my colleagues' questioning that your intent is to ensure the
Bureau is transparent and accountable. But my concern is based
on the questioning and the answers that you have given today.
We cannot even get you to be transparent and accountable about
the work you are doing at the OMB, the current job that you
have. That is funded by taxpayer dollars; that should be
transparent to the public. So I have concerns that if you
cannot even tell us what you are doing on a day-to-day basis,
how can we trust that you are going to carry that over to the
But let me follow up with this: Mick Mulvaney said that
State regulators and Attorneys General should play an active
role in enforcing consumer protection laws in the banking
industry. However, as a former Attorney General myself, I know
that AGs cannot be the only cop on the beat. The CFPB has been
vital in uncovering widespread and massive fraud and holding
those companies accountable, and they are the first stop in the
States to protect consumers.
That is your role as well, my understanding from the
statutes that I read and what you have said today in your
statement. And let me give you an example of where the CFPB was
instrumental for us, the States. Wells Fargo, as you well know,
their actions affected 3.5 million people nationwide, including
121,000 in Nevada alone. After an investigation by the CFPB,
Wells Fargo paid a $500 million penalty.
Can you enumerate the powers that the CFPB has that State
AGs or State regulators do not?
Ms. Kraninger. Senator, certainly as we discussed in your
office, I appreciate your perspective and experience in this
area. The partnership with the State regulators is essential, I
believe, to the point that you noted, the States have been
engaged in the enforcement----
Senator Cortez Masto. Why do you think it is essential?
Ms. Kraninger. I am sorry?
Senator Cortez Masto. Why do you believe it is essential?
Ms. Kraninger. Certainly because the law actually
stipulates that, and I think that is important, though. They
existed prior to the Bureau and were engaged in this activity
prior to the Bureau's existence. And the statute specifically
calls out that important coordination role, whether it is with
enforcement actions or----
Senator Cortez Masto. Well, let me just say as somebody
that relied on the CFPB, because I will tell you, in the State
of Nevada, the regulators were not there when the crisis
occurred. Nobody stopped it. Nobody was working to prevent it.
But when the CFPB was created, they were the watchdog
nationally to work with the States and the States' AGs, and I
will tell you the CFPB has a national view of the issues, and
it is not limited by State preemption laws. It is key to what
happens across this country when we are looking to consumer
financial protection to work with the States.
Let me ask you this: Without a strong Federal regulator,
how do you anticipate States will be able to uncover and put
together patterns of wrongdoing, potential wrongdoing across
Ms. Kraninger. Senator, I am committed to carrying out the
responsibilities of the Bureau under the law, which does
include working with the States to look for those kinds of
things, to work with them closely on enforcement matters and
give them that national perspective. We talked about the
information sharing that is vital between the Bureau and the
State Attorneys General and the regulators, and certainly I am
committed to sharing that appropriate information with them to
support their efforts and looking at the right opportunity for
the Bureau to step in from a national standpoint.
Senator Cortez Masto. So outside of serving as a partner
for State regulators and AGs--rules issued by the CFPB can also
be enforced by State AGs--do you support empowering the AGs by
issuing rules through the CFPB?
Ms. Kraninger. I believe it is an essential responsibility
of the Bureau to engage in the rulemaking activities, setting
clear rules. The example of debt collection----
Senator Cortez Masto. So that is a yes?
Ms. Kraninger. Yes, Senator.
Senator Cortez Masto. Thank you. A matter deeply important
to me is that every American has the right to a day in court
and that the justice system works for everyone, no matter their
race, their class, their creed, where you come from, or who you
Let me ask you this: Have you ever signed a contract with a
financial firm that included a mandatory arbitration clause?
Ms. Kraninger. Senator, I believe that I probably have
through credit card companies----
Senator Cortez Masto. Ms. Kraninger, you are a lawyer. Did
you read the mandatory arbitration clause before you signed it?
Ms. Kraninger. As a lawyer, I do try to read those things,
and I have actually read them in the past.
Senator Cortez Masto. Were you aware that you were forgoing
your right to sue when you signed the contract?
Ms. Kraninger. Senator, I certainly was aware of what the
clauses were that were in the contract. I cannot assure you
that that is what was there, but I----
Senator Cortez Masto. Do you believe that ordinary
Americans page through and read the fine print of these
contracts and know that they are signing away their rights?
Ms. Kraninger. I am guessing that many of them do not, and
I think that is why the model disclosures responsibility of the
Bureau in statute is important and understanding that the
Bureau has a role in looking at those things.
Senator Cortez Masto. Do you support the CFPB's mandatory
Ms. Kraninger. Senator, Congress certainly acted through
the Congressional Review Act to preclude that rule from going
forward. So from that standpoint, it is addressed in that
manner. I think----
Senator Cortez Masto. Do you believe all consumers have a
right to their day in court?
Ms. Kraninger. Senator, I believe through contract
relationships and in general there are opportunities for
consumers to take action, including coming to the Bureau and
submitting their complaints.
Senator Cortez Masto. Have you ever investigated a bank or
payday lender or credit card company?
Ms. Kraninger. Senator, I have supported investigations in
many of my roles. I believe actually in terms of financial
crimes that the Secret Service oversees and Homeland Security
Investigations oversees--there has been some involvement with
Senator Cortez Masto. But personally you have never been
involved in a prosecution or investigation?
Ms. Kraninger. Not of financial institutions directly, no,
Senator Cortez Masto. Have you ever brought a legal action
and as counsel formulated a case against a bank, payday lender,
or credit card company?
Chairman Crapo. And, Ms. Kraninger, please be brief.
Ms. Kraninger. No, Senator, I have not.
Senator Cortez Masto. Thank you. I see my time is up. Thank
you both for being here. I will tell you, Ms. Kraninger, I do
as well have concerns about someone without the experience to
lead a Consumer Financial Protection Bureau, 1,600 employees, a
billion dollars--or, excuse me, millions of dollars in budget
that is looking out for the best interests of consumers when it
comes to financial products. I have concerns about what I have
heard from you today as being the right person with the right
experience to lead.
Let me also say, Ms. Reed, I look forward to supporting
your nomination. Thank you.
Chairman Crapo. Senator Reed.
Senator Reed. Well, thank you very much, Mr. Chairman.
Thank you both for your willingness to serve.
Ms. Kraninger, I assume you are familiar with the Military
Lending Act, so if a servicemember would prefer to go to court
to enforce his or her rights, instead of being forced into
arbitration, do you think that servicemember's choice should be
Ms. Kraninger. Yes, Senator, to the extent, again, it is
provided under the law.
Senator Reed. The Military Lending Act has been recently
strengthened by the Department of Defense with new regulations
to close loopholes and to prevent unscrupulous lenders from
preying upon servicemembers, men and women. And having in my
earlier days been an executive officer in a company, I have
seen this firsthand.
So do you support the stronger MLA rules? And if confirmed,
will you enforce them to the fullest extent possible?
Ms. Kraninger. Senator, I am absolutely committed to
enforcing the law.
Senator Reed. The rulemaking pointed out that one of the
impacts on servicemembers in their military careers is the
financial instability caused by being exploited, and that
affects their performance. So the Military Lending Act, I am
very concerned about and involved in. It just helps our
One of the things that I think that we had to accept was
the limit on interest charged to an individual servicemember is
36 percent. Do you think that is too high given the current
market rates, which even for credit products are about 16
Ms. Kraninger. Senator, certainly the rate varies
associated with what the product is and what the risks are
available. I support competition in the marketplace such that
servicemembers and others have the opportunity to avail
themselves of different options in the market based on what
their financial needs are.
Senator Reed. The question, I think, is that we statutorily
set the rate, the top rate at 36 percent. But given current
rates in the market, which are roughly 16 percent for the
return on the Dow Jones, my view is I think we should be able
to lower those rates. So would you be supportive of legislation
that would lower those rates?
Ms. Kraninger. Senator, I appreciate where you are coming
from and the question, but I do think it depends on what the
product is and what the conditions and terms are. There are
various products in the marketplace. Certainly when it comes to
short dollar lending options that are, it differs greatly from
the credit card products or other products in the market.
Senator Reed. Well, I would hope that we could work, my
colleagues and I, to lower that interest rate to make it more
competitive to what is available in the market for most
products, regardless of how long the duration.
Did you or anyone with whom you work at OMB on Homeland
Security or Justice Department issues ever refer to the
Administration's policy of separating immigrant families at the
border as a ``deterrent''?
Ms. Kraninger. Senator, I am not sure that--that may have
been in public comments by individuals, but I am not sure.
Senator Reed. Have you ever used that? Have you ever heard
anyone discussing it when they discussed the issue?
Ms. Kraninger. Senator, recognizing that in 2014 that was
something that was discussed and the courts actually ruled on
that, that was determined at least in, I believe, the Southern
District of California as not appropriate. So I appreciate
where you are coming from on----
Senator Reed. Do you feel it is not appropriate right now
and right here?
Ms. Kraninger. Senator, these are very difficult,
challenging issues. A sovereign Nation should defend its
borders, I believe, and at the same time there are a lot of
circumstances from people around the world with which----
Senator Reed. Let me ask a simple question. Do you think
separating children from their parents is a way to deter border
Ms. Kraninger. Senator, again, I do not want to talk about
Senator Reed. You do not want to talk about it, but I am
asking you a question.
Ms. Kraninger. Yes, I understand----
Senator Reed. So would you like to be responsive?
Ms. Kraninger. I am sorry. I do not want to characterize
the internal conversations that----
Senator Reed. I am asking what you feel, ma'am.
Ms. Kraninger. I understand, Senator, but it does go down
the road of advice and personal opinion----
Senator Reed. It goes down the road to your values and your
judgment and those things that we look for when we evaluate
someone who is going to lead the CFPB. That is where it goes
down the road to. And you do not want to go down that road, so
I would suspect that you probably have done that or you feel
that way. Do you feel that way?
Ms. Kraninger. Senator, I do not believe my personal
opinions or feelings on this issue are the appropriate line of
discussion. I understand why you are asking. I do believe that
there are--certainly I have been to many places in the world. I
have spent time in Guatemala. I served in the Peace Corps. I
understand the country that we have today is an amazing country
where we have many freedoms that others in the world do not.
And I certainly appreciate that this is a place where people
would like to come to enjoy those freedoms.
Senator Reed. So I only can assume that you, in fact, used
the term ``deterrent'' and did not object to it and feel that
is the appropriate policy consideration. Thank you very much.
Chairman Crapo. Senator Heitkamp.
Senator Heitkamp. Thank you. First, thanks to my colleagues
who are letting me go ahead of them. I am greatly appreciative,
and I do not know what it is going to cost me at the end of the
day, but I am pretty sure it is a big favor coming their way.
Ms. Reed, I want to again encourage the Chairman to move
this nomination. He knows how diligent we have been working to
get the Eximbank up and running. I want to say where I
appreciate Senator Toomey's concerns, I do not want to
associate myself with the characterizations that he made about
the Eximbank. I think it has been a tragedy, and I am glad you
are moving forward, and I want to encourage the Chairman to
move enough of these nominees now forward with Majority Leader
McConnell to get the Eximbank up and running. And so,
obviously, great credentials. We liked you the last time you
were here. I think you are perfect for this job. Good luck, and
we want to do everything we can to get you across the finish
Ms. Kraninger, I just have a series of yes-or-no questions,
and it is not about morality or anything else. It is about your
experience. And I do not want equivocation, just yes or no, if
we can do that.
Have you ever worked at a bank or a credit union?
Ms. Kraninger. Senator, I have not and like----
Senator Heitkamp. OK.
Ms. Kraninger. ----many other----
Senator Heitkamp. Have you ever had oversight or regulated
a bank or a credit union?
Ms. Kraninger. No, Senator, I have not, like many----
Senator Heitkamp. OK. Have you ever been responsible for
oversight or leadership in supervising payday lenders?
Ms. Kraninger. No, Senator, I have not, like many other----
Senator Heitkamp. Have you had experience working with
credit bureaus, insurance companies, debt collectors, and
student loan processors?
Ms. Kraninger. Senator, in a professional capacity, like
many other nominees, I have not had direct experience with
Senator Heitkamp. OK. Have you had any final decision-
making responsibility for enforcing State or Federal consumer
Ms. Kraninger. Senator, again, like many other nominees
approaching different positions, I have not had direct----
Senator Heitkamp. So the answer is no.
Ms. Kraninger. ----experience in that.
Senator Heitkamp. Have you had any experience under the
Equal Credit Opportunity Act, any final responsibilities for
Ms. Kraninger. Senator, I have not, but I have certainly
made myself familiar----
Senator Heitkamp. Truth in lending----
Ms. Kraninger. ----with these--with these acts and the
responsibilities of the Bureau----
Senator Heitkamp. Have you ever worked or volunteered your
time on matters related to consumer protection?
Ms. Kraninger. No, Senator, I do not believe that I have. I
have certainly volunteered my time----
Senator Heitkamp. Have you ever worked on financial
literacy or volunteered your time to promote financial
literacy, especially for youth?
Ms. Kraninger. Yes, Senator, I actually have done that.
Senator Heitkamp. OK.
Ms. Kraninger. I have some experience in working with
individuals on that, particularly when I was in college, we did
have a program to promote financial literacy and----
Senator Heitkamp. And what did you do to--what was your
involvement in that program?
Ms. Kraninger. Working a little bit on curriculum in the
Senator Heitkamp. Good.
Ms. Kraninger. So it is something that is definitely
important to the roles and responsibilities I would be taking
on as Director.
Senator Heitkamp. Do you have a Ph.D. or Master's degree in
economics or finance?
Ms. Kraninger. Like many other nominees in these positions,
no, I do not.
Senator Heitkamp. While you were in law school, what
classes did you take regarding consumer protection?
Ms. Kraninger. Senator, it was a long time ago, so I do not
remember every class I took, but I certainly did take the
Senator Heitkamp. But you remember what you did in college
relative to financial literacy, so----
Ms. Kraninger. Well, the Administrative Procedures Act was
certainly something that I studied extensively. I took a class
in privacy law. I did take a class in other--cybersecurity law
actually, as a matter of fact. Those are all relevant to the
discussions that we are having here today, as well as
corporations, which I know was required of every individual in
the program that I took.
Senator Heitkamp. OK. Thank you.
I think the point that I am trying to make is this is a
highly technical job, and, you know, simply having the skill
sets of a law degree and having some familiarity with the
operation of the Administrative Agencies Practice Act I think
gets us to a point where we have to judge--I mean, I am not
asking you about morality. I am not asking you about anything.
I am just asking you about your core competencies here for the
job that you have been nominated for.
And so I think, obviously, you are highly competent and a
trained professional. I just think that maybe we ought to have
somebody who understands kind of the--who has had experience,
as Senator Cortez Masto talked about, with the crisis, has had
experience in dealing with people who have--and has empathy.
And I think, you know, to Senator Reed's point, you know, it
may seem irrelevant, but this is a job where literally people
are on the edge, where they do not know if they are going to
make payroll, they do not know if they are going to be able to
put food on the table. And we want somebody in that job who not
only has core competency but some empathy.
So I thank you so much, and my time is up, and, again,
thank you to my colleagues.
Chairman Crapo. Thank you.
Senator Van Hollen.
Senator Van Hollen. Thank you, Mr. Chairman. I thank both
of you for your testimony here today.
Just to follow up, Ms. Kraninger, on some of these
questions, because I understood some of the concerns you
expressed about not getting too deeply into the internal
deliberations and advice you offered. I understood that part.
But now you are going to be heading up an independent agency,
right? This is an independent agency, is it not?
Ms. Kraninger. Yes, Senator, it is.
Senator Van Hollen. And it is not that you are going to be
in a line position simply enforcing the policy from above. You
are going to play a key role in developing policy as the head
of an independent agency. And so I do believe your personal
views on a range of issues are important in that context. And I
was not here for all the questioning of Senator Warren. I heard
Senator Reed's question. And is it your position that you are
not going to answer the question about whether or not you
personally supported the policy of family separation,
separating kids from their parents? What is your personal view
on that policy?
Ms. Kraninger. Senator, I appreciate greatly the questions
that you are raising and am happy to discuss qualifications and
my judgment. I have certainly always given my best advice to
every person that I have worked for in my career, and that is
very important to me, as well as keeping that advice and
Senator Van Hollen. I think the difference here, as I said,
it is one thing to not share openly advice that you are giving
within the Administration. But given the fact that you are now
going to head an independent agency where your views and
positions will definitely inform a lot of the actions that you
will take, I do think it is troubling that you will not share
that information with the Committee.
Let me ask you about the Office of Fair Lending and Equal
Opportunity, because in our State of Maryland, like so many
other places in the country, we have had a bad history of
discrimination in lending in many places. There was a case
against Wells Fargo in Baltimore a little more than 10 years
ago. There have been other cases where it was established that
they discriminated against African Americans and people of
Do you agree this is a continuing problem that we have to
face in this country, fighting discrimination in lending?
Ms. Kraninger. Yes, Senator, I do. I think it is incredibly
unfortunate. Discrimination should have no place in society,
much less the markets. But it certainly exists.
Senator Van Hollen. And one of the things that was
established when the CFPB was established was the Office of
Fair Lending and Equal Opportunity, as I mentioned, and one of
the first things that Acting Director Mulvaney did was he moved
the enforcement authorities for fair housing out of that
office. Would you be willing to put those enforcement
authorities back into the Office of Fair Lending and Equal
Ms. Kraninger. Senator, I can assure you that enforcing the
fair lending laws is a critical responsibility. Whether it
happens in the Division of Supervision or whether it happens in
a reconstituted Fair Lending Office, it is definitely something
that I can commit to you that I will look at and review freshly
and talking to the staff that are there and understanding how
their responsibilities have changed in this change. Looking
fresh at the organization is something I will do.
Senator Van Hollen. You know, I think it was rightfully
interpreted at the time as weakening the authority, because the
idea was the folks who were paying close attention every day
and doing the supervising are probably in the best position to
do the enforcement. And having the enforcement authority
obviously helps them in terms of getting the attention of the
folks that they are overseeing.
The same with the Office of Student Lending. As you know,
Acting Director Mulvaney abolished the Office of Student
Lending. That is not to mean there are not efforts going on in
student lending, but would you be willing to reestablish that
given the fact that we have students who have trillions of debt
and in many cases there are also issues with respect to their
contract, their loan contracts? As you know, there are a number
of lawsuits going on. So would you be willing to reestablish
that office given the centrality of that issue?
Ms. Kraninger. Senator, I agree with you that student
lending is an important issue. It is certainly something
Congress is looking at, and there have been a lot of changes in
that under the law in recent years. At the same time, I want to
note that I will absolutely review the structure of the
organization, and I will certainly consider that with an open
Senator Van Hollen. The last thing I will ask regarding the
child separation policy, you know there has been a court
decision ordering the Administration to reunite these children
with their parents within a certain period of time. The
Administration has missed those deadlines. There is a resource
issue. And in your capacity at OMB, I hope you will work with--
as you go through this process here, I hope you will work with
us to get a supplemental appropriation, because I am hearing
there was an article in Politico the other day saying that the
Administration was planning on taking resources from other
parts of the Department of Education to pay the costs of
complying with the court order, and I think that we would be
better served if we find those resources to meet this court
order without robbing another part of the Department of
Are you familiar with that issue, and can you work with us
on that as your nomination continues to work its way through
Ms. Kraninger. Senator, I am not. It must be within the
Department of Health and Human Services, which is not my area--
Senator Van Hollen. Did I say Department of Education?
Ms. Kraninger. Yes, Senator. That is OK.
Senator Van Hollen. I am sorry. I apologize. You are right,
Health and Human Services.
Ms. Kraninger. It must be within the Health and Human
Services, which is not in my purview. But I am happy to take
your concerns back.
Senator Van Hollen. Thank you.
Chairman Crapo. Thank you.
Senator Jones. Thank you, Mr. Chairman. Thank you for this
hearing. And to our nominees, I apologize for being in and out.
Schedules get kind of crazy sometimes, so I do apologize.
Ms. Kraninger, I want to follow up a little bit on a couple
of things. I know that Director Mulvaney and I think you have
talked about getting back to the statutory mission of the
agency, which I appreciate. But one of the missions, one of the
objectives is that consumers are to be protected from unfair,
deceptive, or abusive acts and practices and from
discrimination. For millions and millions of Americans, that
last clause may be the most important, particularly people of
Folks these days, someone can look just like I do, which
would be really said, to be honest with you, but they can look
like I do, have the same credit, have the same income, have the
same profession, and yet another person who has a different
skin color would get offered a different financial product.
And so I want to ask, first, do you plan on making fair
lending a priority if you are confirmed?
Ms. Kraninger. Senator, I think it is abhorrent that
discrimination exists in society and in the markets, and I am
committed to enforcing the law, absolutely, to address any of
the issues that we find in that area.
Senator Jones. Great. Well, thank you for that.
Now, discrimination today takes a lot of different forms.
It is not like some of the old days where you see the white and
colored signs on water fountains or restrooms. It can be a lot
more subtle, and sometimes it does not even have the actual
intent but can have the disparate impact on a group.
So I would like to get your thought on how you will view
cases and whether or not you will use disparate impact in
looking at the broader section of a minority group and whether
that would come into play and what your feelings are about
disparate impact uses, because that is used a lot in a lot of
legal cases that I have been involved in over time, because you
cannot always prove the specific intent. How do you feel about
disparate impact on the use of--in your CFPB cases?
Ms. Kraninger. Senator, I appreciate the question, and I
appreciate the point that you are raising, because, yes, in
many cases this could be a more subtle action. I think there
are a few things that the Bureau can do in this area. Certainly
in terms of working through the supervision process, to your
point, if there is no intent, this is something that can be
At the same time, with respect to court cases and
enforcement actions, as you are well aware, the arguments about
disparate impact are very complicated, and it is a challenging
area, legally speaking. So I can commit to you that, should I
be confirmed in this position, when I get to the Bureau, I will
have a detailed conversation with the staff on this area to
understand what positions the Bureau has taken in the past on
this issue, and what the status of litigation is on the issue,
and take the appropriate actions to ensure that we are
promoting fair lending.
Senator Jones. Well, I think they have used it in the past
and used it somewhat successfully, but Director Mulvaney has
said he wants to get away from it. Would you be willing to take
another look at using disparate impact on an entire community,
whether or not there is a sign that says, ``We are not going to
give this person a loan because they are black or Asian''? But
if it is affecting a broad swath of minority consumers, would
you be willing to take a look at using the disparate impact
theory to try to help resolve some issues of discrimination?
Ms. Kraninger. Senator, I will commit to you in
establishing clear rules and making sure that they are enforced
that I will look at this issue, absolutely.
Senator Jones. I am not sure if that is a yes or a no. I am
going to take it as a yes. But I would like to go back to a
little bit--I was here for Senator Tester's comments, and I was
a little bit--and we talked about this the other day. I
appreciate your coming in and talking to me about the payday
lending rules that have been worked back.
I guess what concerns me a little bit in our meeting and
then with Senator Tester, you had talked about a respect for
the process and the rulemaking process. But the payday lending
rule went through a 5-year process. It went through a lot of
comments, I mean thousands if not tens of thousands or a
million. I do not know exactly how many, but it was a ton for a
5-year process. It got finalized, and then Director Mulvaney on
his own decided to walk that back and start that process all
And so I am a little bit concerned that we are now
respecting a process that has not been respected before. And I
would like for you to comment on that and what you plan on
doing with consumers, because it is a huge issue in my State. I
mean, 250,000 people took out 2 million loans. That is an
average of eight of these loans per person. And it is a huge
process. It is really hurting these people a lot.
So I would like to get a little bit better clarity when you
are talking about respecting a process that is already going
on. What do you mean with the consumer lending right now?
Ms. Kraninger. And, Senator, I truly appreciated your time,
and I recognize it is a difficult issue in many States. They
have taken different actions for a myriad of reasons, whether
it is authority or, you know, willingness, frankly, on payday
What I mean in terms of the process is that the Acting
Director has announced the reconsideration of that rule, and
from that standpoint the basis for that reconsideration and
what aspects are being reconsidered is not something that I am
privy to, nor has it been discussed publicly. And so that is
the process that is ongoing within the Bureau right now under
Senator Jones. All right. That is all the time I have.
Thank you, Mr. Chairman.
Chairman Crapo. Senator Donnelly.
Senator Donnelly. Thank you, Mr. Chairman. I want to thank
the witnesses and your families.
I am a strong supporter of the Export-Import Bank, our
country's export credit agency. It helps American businesses
export goods and services and compete in our global
marketplace. The Eximbank does not cost taxpayers dime. In
fact, it has returned billions to the Treasury. It protects and
creates countless jobs across the country.
In Indiana, since 2012 the Eximbank has directly helped 84
Hoosier companies, including 63 small businesses, to export
more than $2 billion in goods and services overseas. In 2015 I
worked with Senator Heitkamp and a bipartisan group of
colleagues to end a 6-month shutdown of the Bank and enact a
Unfortunately, Eximbank is still not running at full steam
because it lacks the three-fifths board membership required to
obtain a quorum and approve transactions over $10 million. As a
result, there is a backlog of $42 billion in deals representing
250,000 jobs stuck in a pipeline awaiting approval. We need a
fully operating Export-Import Bank now more than ever.
While the U.S. has handcuffed its own export credit agency
in recent years, our international competitors have
significantly increased their efforts. There are at least 85
foreign export credit agencies aggressively supporting their
own domestic industries. Countries like China, Brazil, and
India are doubling down on their export credit agencies. Not
only that, but current trade policies are damaging the foreign
markets our Hoosier farmers and manufacturers have spent
Our exporters were already at a disadvantage from a
weakened Eximbank, and now trade policy is making it worse. To
grow and maintain a strong economy, we need to send American
goods, Indiana goods, all over the world. Our businesses
deserve a level playing field with their foreign competitors.
Policymakers should make it easier, not harder, for businesses
to do that.
Ms. Reed, these are fairly simple questions. You do not
have to go into a long explanation on them. Do you agree
foreign countries are aggressively investing in their own
export credit agencies in order to boost their domestic
Ms. Reed. Yes.
Senator Donnelly. Do you agree the U.S. is hurting itself
by not having a fully functioning Eximbank when its competitors
are increasing resources for their export credit agencies?
Ms. Reed. Yes, I do.
Senator Donnelly. Do you agree Eximbank helps Hoosier
businesses like manufacturers and farmers develop foreign
markets for U.S. goods and services?
Senator Reed. Absolutely.
Senator Donnelly. Just months ago, this Committee approved
Ms. Reed's nomination for Eximbank Vice President with an
overwhelming 22-3 vote. Now she has been nominated as President
of Eximbank. I encourage that confirmation as soon as possible
to bring fresh leadership. Hopefully her confirmation will be
followed by fellow board nominees, and we can allow the
Eximbank to return to full strength for the first time in
several years, creating more American jobs again. A strong
Eximbank bank boosts exports, creates jobs, and returns money
to our taxpayers.
Ms. Kraninger, 2 months ago, under Director Mulvaney's
leadership, the CFPB announced it would eliminate its student
loan office and merge it into another office. Ms. Kraninger, I
do not know of an area where young people in my State have
incurred more debt than in the area of student loans. For many
of them, it has prevented them from being able to buy homes,
being able to buy cars, being able to fully participate in our
country and our economy.
A recent report found 60 percent of Indiana's college
graduates leave with student loan debt, and the average is
$29,000 per student. I saw your answer to Mr. Van Hollen before
about reinstating the student loan office. I am a strong
supporter of that. You are going to review that. I would urge
you very, very much to do that.
What are your plans for protecting student borrowers?
Ms. Kraninger. Senator, this is an important issue, and
certainly under the law the Bureau was provided the
responsibility for looking at private student loans.
Senator Donnelly. Well, now that they have closed down the
office, what are your plans? You said you would take a look at
reopening it. What specific plans do you have right now in
regards to student loans?
Ms. Kraninger. So, Senator, there is the position of the
private student loan ombudsman that was created in the statute,
the position that still exists. So certainly a first-order
issue is going to be sit down with the individuals in that
office to understand the activities that they have ongoing.
I appreciate the priority you are placing in this, and it
is certainly something I want to understand better. At the same
time, with the Federal role in student lending, both in
origination--with 92 percent of the originations today
happening at the Department of Education and with their efforts
to actually bring servicing into the Department of Education, I
think that is another area that I can tell you is a priority.
It is sitting down with the officials at the Department of
Education to talk through what their efforts are there, where
the Bureau can be helpful, and what role the Bureau can play
Senator Donnelly. Well, for many of our young people, not
only in my State, they are looking to you for help because
interest rates are--if you look at the interest rate on a house
and on a student loan--and, obviously, they are different
products. But you have young people paying incredibly high
interest rates who look and feel they may never get out from
under this burden that they have and they will never be able to
buy a home and they will never be able to buy a car. And that
is an extraordinarily discouraging situation for people across
One other question I want to ask. Mr. Mulvaney once called
the CFPB a ``joke'' in a sad, sick kind of way. Do you share
Ms. Kraninger. Senator, Director Mulvaney has certainly
responded to those comments. I can tell you that I support----
Senator Donnelly. I am asking you--yeah.
Ms. Kraninger. I support the Bureau as it was established
in Congress and the roles and responsibilities it was given.
Senator Donnelly. But what I asked you is did you think it
was a sad, sick joke, the way it was being run?
Chairman Crapo. I thought that was a good answer.
Ms. Kraninger. Senator, again, I support the Bureau's
mission and look forward to, if confirmed, vigorously----
Senator Donnelly. Well, this is simply a yes or no. It is
like, ``Do you like peanut butter or not?'' Do you think it was
a sad, sick joke the way it was being run or not?
Ms. Kraninger. Senator, those are not words I would use,
and I believe the Director has responded to those comments
Senator Donnelly. Thank you very much.
Thanks, Mr. Chairman.
Chairman Crapo. Thank you, Senator Donnelly.
We have had a request by several Members of the Committee
for a second round. I will agree to that, although we will hold
it to 5 minutes. The Senators have been taking quite a bit of
liberty today, and we are well past the time that we should
have allocated--or that we have----
Senator Donnelly. I did not take much liberty, Mr.
Chairman Crapo. I will accept your comment, Senator
Donnelly. So we will do that, and, Senator Brown, I would turn
Senator Brown. Thanks, Mr. Chairman.
Ms. Kraninger, you talked a lot about accountability and
transparency at the CFPB. When you submitted paperwork to this
Committee, you had to disclose any campaign contributions from
the last 8 year above $500, correct?
Ms. Kraninger. Yes, Senator, I believe that is--I do not
have the form in front of me, but I believe that was the
Senator Brown. Well, you did not make a $500 donation to
Governor Kasich's Presidential campaign, but you made two
separate $250 donations. You did not disclose that, correct?
Ms. Kraninger. I believe--again, I did disclose exactly
what was requested by the Committee, Senator. I do not remember
the exact facts. I do not have the paper in front of me. If you
do--to note that it was above $500, and I----
Senator Brown. I do not believe what you just said was
true. Well, let me ask again. Did you disclose--you did not
disclose the contributions to Mitt Romney's campaign that were
under the $500 threshold but were more than $600 total. So two
contributions, you did not think that qualified for what you
Ms. Kraninger. Senator, I believe there was a time period.
Again, I do not have the documents in front of me. If you have
them, I would be happy----
Senator Brown. We do, and you made contributions to Kasich.
You made contributions to Jeb Bush. Do you know of--that should
have been disclosed under law--or under the rules of this
Committee. Did you make any other donations to the 2016
Ms. Kraninger. Senator, I believe those are the only two
that I did make, yes.
Senator Brown. OK. You did not answer in that first round
my question on whether you would appeal the 9/11 scammer case.
You said you would implement the law. Who decides whether to
appeal or not?
Ms. Kraninger. Senator, I am not familiar with the details
of where that case is. I certainly appreciate the
Senator Brown. But who decides whether to appeal a case or
not at the CFPB?
Ms. Kraninger. The Director does have the authority to
determine these things. At the same time, if a case is actually
headed to the Supreme Court, the Bureau does not have
independent representation authority to take everything to----
Senator Brown. So do you plan to defend the agency in this
case, on the scammer 9/11 case?
Ms. Kraninger. Senator, without the benefit of being inside
the Bureau to understand the positions and litigation strategy
that was taken, that is a very challenging question to answer,
and I do not want to prejudge that either. The opportunity to
speak with the General Counsel to understand the positions that
they have taken, to understand the conversations that they may
have had with the Department of Justice, given the fact that
the Bureau cannot represent itself before the Supreme Court is
something that I would certainly undertake should I be
Senator Brown. Not long ago--I think it was in May--
Director Mulvaney teamed up with a group of payday lenders to
sue the CFPB, the agency he claimed to be leading and to delay
its payday rule. You are a lawyer. Do you think agencies should
sue themselves to prevent consumer protections from being
Ms. Kraninger. Senator, I think that the responsibility is
clear in the statute for the Director to carry out the law and
manage the Bureau appropriately, and that is certainly what I
would pledge to do. And I would certainly pledge to work with
all of you in carrying out those responsibilities.
Senator Brown. Do you think it is proper for an agency to
sue--for an agency chief to sue itself, to sue himself,
Ms. Kraninger. Senator, I am not familiar with the details
or the internal deliberation that may have led----
Senator Brown. No, I think you must know about--it is not a
question of internal deliberations. Do you think it is proper
for the head of an agency to sue that--to team up with outside
interests, whether you generally are pro-payday lenders, as
Mulvaney from his travels and his exhortations and his
political contributions certainly would--but whether or not you
are close to or supportive of an interest group, do you think
it is proper for an agency to join outside interest groups--an
agency chief to sue that agency?
Ms. Kraninger. Senator, being unfamiliar with the specific
facts that you are articulating here, I do not know the basis
for the decision. But I----
Senator Brown. I am sorry----
Ms. Kraninger. ----will tell you, Senator, that it is--it
would certainly be unusual. It would certainly be----
Senator Brown. That was not my--I appreciate your agility
and facileness. That was not my question commenting on that
case. I am saying: Do you think it is proper for an agency
chief to join--you are a lawyer, I am not, so maybe you are at
an advantage here. But is it proper for an agency chief to join
an outside interest group to sue the agency itself?
Ms. Kraninger. It is certainly unusual. I----
Senator Brown. Thank you. I know it is--we have established
that it is unusual. We know that. You do not know the
specifics; at least you say you do not know the specifics of
the case. That is fine, too. Is it proper for an agency chief
to sue its own agency with or on behalf of an interest group
that has business in front of that agency?
Ms. Kraninger. Senator, I can tell you that I come to this
position without any particular special interest other than
serving the American people, and I----
Senator Brown. Can't you just say, ``No, it is not
Ms. Kraninger. I do not know the details----
Senator Brown. Or, ``Yes, it is proper''?
Ms. Kraninger. ----Senator. I do not----
Senator Brown. Or, ``No, I will never go it,'' or, ``Yes,
maybe I will do it''?
Ms. Kraninger. Senator, it is unusual, and I am sure,
again, there are reasons that that action may have been taken
that I am not privy to. But, again, I certainly pledge to you
that I will carry out the duties and responsibilities of this
position to the best of my ability.
Chairman Crapo. Senator Warren.
Senator Warren. Thank you, Mr. Chairman.
All right. So you do not have any experience in consumer
finance or consumer protection, no qualifications at all.
Evidently the one thing that you have done in your career is
work on President Trump's 2019 fiscal year budget request for
the CFPB, and the Trump administration has used that, now
claiming that this gives some insight into how you would run
the agency. So this is an ``Are you qualified?'' question that,
at least according to the Trump administration, should be
directly in your area of supposed expertise.
Now, let us go through it. To be clear, the CFPB sets its
own budget, so the budget you proposed had no actual effect on
the agency. Is that right?
Ms. Kraninger. That is correct.
Senator Warren. And on top of that, the budget you set for
the CFPB is a single top-line number. It does not break down
how the CFPB would adjust its spending to reach that number. Is
Ms. Kraninger. That is correct.
Senator Warren. Good. So you are the budget expert. Let us
talk about how the CFPB would meet the budget that you drafted.
Your budget for 2019 calls for a 23-percent cut relative to the
CFPB's proposed 2019 budget. That is about a $147 million cut.
CFPB's number one expense representing more than half of its
total cost is compensation and benefits of its employees. Other
than the Director and the dozen new political appointees that
Mick Mulvaney has brought to the agency, every other CFPB
employee is a civil servant.
So in order to achieve the 23-percent cut you have
proposed, would you fire civil servants?
Ms. Kraninger. Senator, first let me clarify that it is the
President's budget request and not mine. Certainly I did
support its development.
Senator Warren. Can we just do this--we are going to be
held tight on time. Would you fire civil servants? Is that your
Ms. Kraninger. Senator, to your point, in fiscal year 2017,
53 percent of the funds that were utilized under Director
Cordray were for salaries and benefits of people, and so----
Senator Warren. So are you saying--can you just give me a
yes or no? Will you fire civil servants?
Ms. Kraninger. Senator, there are laws in place certainly
that protect civil servants, and----
Senator Warren. So is the answer no?
Ms. Kraninger. The answer is that 53 percent with salaries
and benefits, which does leave a significant amount of funds
Senator Warren. So will you fire civil servants--Mr.
Chairman, I am going to ask for extra time if we are going to
keep playing this game. It is a straightforward--will you fire
civil servants? That is not hard. This is your area of
expertise, your budget that you put forward. Do you contemplate
firing civil servants to meet your $147 million cut? Yes? No?
Ms. Kraninger. Again, Senator, it is not my budget. It is
the President's budget.
Senator Warren. Then does the President's budget as drawn
up by you and offered as your expertise for this job
contemplate firing civil service employees?
Ms. Kraninger. Senator, the proposal to Congress is what
the President's budget reflects, and it was a decision on the
debt and deficit situation. That was certainly the focal point
Senator Warren. In other words, we are just playing dodge
ball here. If you are not going to fire civil servants, then
let us see how you are going to try to make this up.
Let me try another one. The next largest set of
expenditures for outside contracts, a big chunk goes to
maintaining the agency's cybersecurity. Do you plan on reducing
Ms. Kraninger. So 31 percent of the funds in fiscal year
2017 was for outside contractor services. That certainly is a
big part of----
Senator Warren. Could we please stop playing dodge ball. Do
you plan to cut expenditures? The next biggest investment is on
cybersecurity. Do you plan to cut on cybersecurity?
Ms. Kraninger. Senator, I do believe that that other
contract services line is something that really does need to be
Senator Warren. Do you plan to cut on cybersecurity? It is
the next biggest line.
Ms. Kraninger. Senator, cybersecurity and IT investment are
certainly important to the organization's carrying out----
Senator Warren. So is that a no, you will not cut?
Ms. Kraninger. I think it is something that needs to be
examined, absolutely. Every line item does.
Senator Warren. Does that mean cut or not cut?
Ms. Kraninger. Senator, without being inside the Bureau and
going through line by line----
Senator Warren. So you might cut cybersecurity?
Ms. Kraninger. There could be opportunity----
Senator Warren. OK.
Ms. Kraninger. ----within contracts in any area----
Senator Warren. So the next largest expense is travel
costs. As I assume you know, most of the agency's travel cost
is because the agency sends examiners to visit the financial
companies that they supervise so they can actually make sure
that they are complying with the law. That supervision is
required by Dodd-Frank. Would you cut back on examinations and
supervision in order to achieve the 23-percent cut you need to
Ms. Kraninger. Senator, looking at travel I think is a
legitimate consideration. At the same time----
Senator Warren. Recognizing that this is travel to go
enforce the law at the banks, you would cut that back?
Ms. Kraninger. I think looking at the travel and looking at
the efficient distribution of staff is certainly something that
Senator Warren. So you are thinking cutting back so we do
not send as many people out to enforce.
You know, I just want to be clear on this. Even if you got
travel cost to zero, you would not be anyplace close to what
you put forward as the proposed budget. So where is the $147
million, the 23-percent cut, coming from? Can you just tell me
where the areas are you plan to cut that is going to get us
Chairman Crapo. And please keep your response brief.
Ms. Kraninger. Senator, this was the President's budget
request, and I pledge to you that I will look at every line
item within the Bureau's budget----
Senator Warren. No, you do not----
Ms. Kraninger. ----should I be confirmed.
Senator Warren. ----get to dance away from this by saying
it is the President's budget. The President has offered you up
as saying this is your expertise. Your one piece of consumer
protection expertise is you put together a budget for the CFPB.
So what I want to know is you proposed a 23-percent cut, $147
million. Give me some ideas about how you actually would make a
$147 million cut at that agency?
Chairman Crapo. Please respond briefly.
Ms. Kraninger. Senator, I believe there are opportunities
for efficiency and consideration, and it may involve, frankly,
spending funds on other activities that are underfunded. So I
pledge to you that I will look carefully at the budget of the
Senator Warren. So let us just be clear----
Chairman Crapo. Senator----
Senator Warren. ----I want to be clear on this. She has
dodged around this for this entire question, line of questions.
The one thing you have done in your career that is related to
the CFPB is to come up with a budget number, and the budget
number simply does not add up. You cannot explain how that
agency can do its work if it has a 23-percent budget cut that
you put together and the Trump administration offers as your
expertise. The only thing you can come up with is, well, maybe
you will cut travel, which means there will be less
enforcement. And I know that will make bank lenders happy,
payday lenders happy, but it does not reflect any knowledge of
the CFPB or any commitment to the CFPB's central mission of
trying to protect consumers and level the playing field.
Chairman Crapo. Senator Tillis.
Senator Tillis. Ms. Kraninger, a lot of people have tried
to boil complex subjects down into simple yes-no answers. There
is only one that I heard that I felt like we deserved a yes-or-
no answer, and that was from Senator Donnelly. Do you or do you
not like peanut butter?
Ms. Kraninger. Senator, I like peanut butter.
Senator Tillis. Because outside of that question, I think
it is absurd for anybody up here to say that this was nothing
more than the sort of ``gotcha'' tactics that some Members use
to try and, well, support their narrative.
Now, I want to get on OMB. First off, how big is the CFPB?
How many employees?
Ms. Kraninger. There are about 1,600 employees at the CFPB.
Senator Tillis. Do you think that within that employee base
that you have a few economists and finance experts and people
that have worked for credit agencies or worked for business
lending or, you know, any number of financial fields?
Ms. Kraninger. Yes, Senator, they have a wide variety of
skill sets and expertise that is being brought to bear.
Senator Tillis. So you as the manager, would you actually
see yourself getting up in the morning, coming in early, and
writing out the policies or directing the affairs of the agency
and the priorities?
Ms. Kraninger. Senator, it is certainly the latter,
directing the priorities and expecting the staff to put forward
the policies that align.
Senator Tillis. Thank you. How big was the scope of your
portfolio--or how big is the scope of your portfolio at OMB
with respect to the whole of the Administration?
Ms. Kraninger. It is roughly a fifth of the total
Government, $250 billion in resources, 37 agencies.
Senator Tillis. So you have a lot of time in your day--I
was in research and development early in my career in the 1980s
up in Boston, and I was a product manager. So when we were
formulating a technology policy, I would bring R&D, I would
bring manufacturing, I would bring finance, I would bring
marketing together. It was the scientists that worked under my
matrix supervision who came up with the ideas. And then it was
these other organizations to figure out the complexities, the
pipes, all that you needed to do to actually pay for it,
Would you kind of consider that to be an analog to your
role in the Office of Budget and management, not formulating
policy but implementing it?
Ms. Kraninger. Yes, Senator, that certainly is the case,
and with a wide variety of staff and variety of topics.
Senator Tillis. Which is why I find it remarkable that
anybody would suggest that you were actively engaged in the
formulation of the policy on child separations. You have
certain--if you take a look at child separations, it is
something I know a lot about because I proposed--I love the
passion here about solving the child separation problem. I
would like to see that rhetoric go from this Senate Committee
to the floor where we have a solution. And I will be talking
about it on the floor a little bit later today, because I
sometimes wonder whether or not people really want to solve
this problem, or if they want to use it to come here and
pretend that only the President can solve the problem. It is
the Congress that can solve that problem, and once we pass that
bill, in your current capacity, we would expect you to figure
out how to implement the policy.
It is frustrating to me to see the passion expressed about
certain issues in this Committee and an absolute vacuum in the
chamber where we can actually produce a result. This, by the
way, is not leading up to a yes-no question. But can you tell
me just a little bit more about, again, on a day-to-day basis,
to what extent in your entire tenure in office at OMB that you
have ever been actively engaged in crafting the policy choices?
Ms. Kraninger. Senator, that is a very fair question. In
terms of what generally comes before the Office of Management
and Budget, it is what the agencies are formulating. They put
forward what their leadership would like to pursue, or they
have received direction from the President about activities
that they should undertake, and they are formulating the manner
and how to address what the President's priorities are and what
he has asked of them. And then we are supporting that effort.
Senator Tillis. So, again, first off, I want to
congratulate you on your nominations, and for the family
members, thank you all for being here. I know that these
hearings can be somewhat troubling, but you should never forget
the fact that these two nominees have had very distinguished
careers and are very deserving of the nominations, and you all
should be proud of it. Again, I just want to say I hope that
the focus on child separations that I saw in this room
translate to people who want to solve the problem. We are down
to what I consider to be very minor differences. If people look
at it and within their hearts they truly want to keep families
together, Congress needs to fix this problem. You did not craft
the legislation. You were trying to determine how to implement
the policy. And we should put a mirror on the Members of the
U.S. Senate and say, ``Why aren't you fixing this problem?''
Thank you, Mr. Chairman.
Chairman Crapo. Thank you, Senator Tillis. That does
conclude the questioning. For Senators wishing to submit
questions for the record, those questions are due in 1 week, on
Tuesday, July 24. We ask both nominees to respond to these
questions by Tuesday, July 31, so that we can vote that week on
We thank you both for joining the Committee today. As
Senator Tillis indicated, sometimes these Committee hearings
get intense. We appreciate you being willing to come forward
and put yourselves forward for service to the country.
With that, this hearing is adjourned.
[Whereupon, at 12:42 p.m., the hearing was adjourned.]
[Prepared statements, biographical sketches of nominees,
responses to written questions, and additional material
supplied for the record follow:]
PREPARED STATEMENT OF CHAIRMAN MIKE CRAPO
This morning, we will consider the nomination of two individuals to
serve in critical leadership roles within the Administration.
I welcome both of you. Congratulations on your nominations to these
I see friends and family behind you and I welcome them here today,
The nominees before us are Kathy Kraninger, to be Director of the
Bureau of Consumer Financial Protection and Kimberly Reed, to be
President of the Export-Import Bank of the United States.
These positions are critically important to protecting consumers in
the consumer financial products and services marketplace, and
facilitating global trade of U.S. goods and services.
These nominees bring years of valuable experience at nonprofits and
in public service, and will provide valued leadership in carrying out
the missions of their agencies.
Ms. Kraninger has had a distinguished career in public service with
exposure to a diverse set of Federal agencies, as well as developing a
particular expertise in the budget and appropriations processes.
Since March 2017, Ms. Kraninger has served as Associate Director
for General Government at the Office of Management and Budget where she
oversees and monitors approximately $250 billion in budgetary resources
for numerous Cabinet departments and Federal agencies.
She has also served as OMB's principal policy official for issues
related to the Treasury Department, Department of Housing and Urban
Development, and Federal financial regulators.
Prior to joining OMB, she held leadership positions at the
Department of Transportation and the Department of Homeland Security,
as well as serving on the staff of several congressional committees.
Given her depth and diversity of public service experience, I have
the utmost confidence that she is well-prepared to lead the Bureau in
enforcing Federal consumer financial laws and protecting consumers in
the financial marketplace.
Ms. Reed was considered by this Committee last year as the nominee
to serve as the First Vice President of the Export-Import Bank, and
today we consider her nomination to be its President.
Ms. Reed also has had a distinguished career in public service,
previously serving as Senior Advisor to former Treasury Secretaries
Paulson and Snow.
In addition, she has served on several Congressional committees,
and has held impressive leadership positions in the private sector.
Ms. Reed is well-positioned to help move the Bank forward in a
With respect to Ms. Kraninger, some senators have requested a long
list of documents, including, emails, schedules, involvement in memos,
White House communications, etc., relating to Ms. Kraninger's role at
OMB with respect to the Administration's ``Zero Tolerance Policy'' and
the Administration's response to Hurricane Maria in Puerto Rico.
These requests are designed to go after certain extraneous
Administration policies that the requesters do not like, and go far
beyond the practice of this Committee's document production.
Indeed, I would not expect this Administration or any
Administration to release documents related to an ongoing deliberative
Further, my understanding is that Ms. Kraninger is not the
custodian of the records and has given the request for information to
the White House.
The Democratic senators of this Committee asked me to delay this
hearing until after the documents had been provided.
I am unaware of the Banking Committee delaying a hearing for such a
To be consistent, I have followed a similar timeline as the
Committee set for then-nominee Richard Cordray in 2013.
As a reminder, the Senate received Mr. Cordray's official
nomination from the President on February 13, 2013.
Approximately 1 month later, on March 12, 2013, the Committee held
a hearing to consider Mr. Cordray's nomination and voted the nominee
out of Committee 1 week later on March 19.
Similarly, the Senate received Ms. Kraninger's official nomination
from the President on June 20, 2018.
Approximately 1 month later, we are holding this hearing.
She has provided all of the paperwork that the Banking Committee
The purpose of these hearings is to provide all senators of this
Committee the opportunity to ask any questions of this nominee, who
will be under oath.
I intend to ask Ms. Kraninger--again, who will be under oath--about
her role in developing policy at OMB.
Other senators will be given the similar opportunity to question
Ms. Kraninger, and to also follow up with questions for the record, as
we traditionally do.
I take the Senate's Constitutional authority seriously, and am
confident that Ms. Kraninger will be sufficiently vetted, as have our
previous nominees, for this Committee to provide a recommendation to
the full Senate on this nomination.
As a separate matter, many of us have experienced frustration with
the Bureau in previous years.
In April 2016, former Bureau Director Cordray testified before this
Senators on the Committee sent questions for the record that same
It took Director Cordray over 16 months to respond to this
It is my hope that, if confirmed, Ms. Kraninger will be more
accountable to senators on this Committee than Director Cordray was.
I look forward to a vigorous debate and vote on the nominees.
PREPARED STATEMENT OF KATHLEEN LAURA KRANINGER
To be Director, Bureau of Consumer Financial Protection
July 19, 2018
Chairman Crapo, Ranking Member Brown, Members of the Committee,
thank you for the opportunity to appear before you today. It is a
privilege to be here as the President's nominee for Director of the
Bureau of Consumer Financial Protection. I want to thank President
Trump for this honor and for the confidence he has placed in me with
I'd also like to express my deepest gratitude to my family and
friends who have joined me today. In particular--my parents, Dave and
Pat, are here from Cleveland, Ohio. My older brothers, Dave and Dan,
and their families traveled from Wisconsin and Connecticut. My younger
brother, Matt, and his family are watching online.
I am incredibly lucky to have an amazing family who encouraged me
in every endeavor and taught me that with hard work and dedication,
anything is possible in this great country of ours. I am especially
grateful for their steadfast support as I have followed my call to
public service and pursued a career serving the American people.
My love for our country, its ideals and promise, drives my
commitment to public service. It sparked my interest in my university's
summer internship program where I worked for my hometown Congressman,
now Senator Brown. It inspired my decision to join the Peace Corps and
volunteer for 2 years teaching in the former Soviet Union. There I saw
firsthand the devastating impact of communism, the economic
consequences of central planning, and the absence of free markets and
the rule of law.
Following the attacks on September 11th, 2001, I felt the call even
more deeply, to help our country in a time of need. I'm very proud to
have served on the leadership team at both the Departments of
Transportation and Homeland Security during that extraordinarily
challenging time. I have also been honored to serve three separate
Congressional committees, including the Senate Appropriations Committee
under Senator Shelby's leadership. In my current position as Associate
Director at the Office of Management and Budget, I have had the
opportunity to take a broader leadership role--overseeing $250 billion
in budgetary resources and related policies for 7 Cabinet departments
and 30 other Federal agencies, including the Bureau as well as the
other financial regulators.
Throughout my career, I have focused on implementing common-sense
solutions to complex problems and delivering real value for the
American people. While I will not prejudge and cannot predict every
decision that will come before me as Director, if confirmed, I can
assure you that I will focus solely on serving the American people.
Congress established the Bureau of Consumer Financial Protection
``to ensure all consumers have access to markets for consumer financial
products and services . . . that are fair, transparent, and
competitive.'' I am firmly committed to satisfying this Congressional
mandate. To do so, I would establish four initial priorities.
First, the Bureau should be fair and transparent, ensuring its
actions empower consumers to make good choices and provide certainty
for market participants. In particular, the Bureau should make robust
use of cost benefit analysis, as required by Congress, to facilitate
competition and provide clear rules of the road. In my experience,
effective use of notice and comment rulemaking is essential for
ensuring the proper balancing of all interests. It also enables
consideration of tailoring to reduce the burden of compliance,
particularly on consumers and smaller marketplace participants.
Second, the Bureau should work closely with the other financial
regulators and the States on supervision and enforcement. Nothing is
more destructive to competitive markets and consumer choice than
fraudulent behavior. Under my stewardship, the Bureau will take
aggressive action against bad actors who break the rules by engaging in
fraud and other illegal activity.
Third, the Bureau must recognize its profound duty to the American
people to protect sensitive information in its possession. Under my
leadership, the Bureau would limit data collection to what is needed
and required under law and ensure that data is protected. This issue
clearly needs more attention, particularly because many consumers are
unaware of the vulnerabilities or unsure of what actions to take to
And, fourth, the Bureau must be accountable to the American people
for its actions, including its expenditure of resources.
As a former Congressional staffer, I appreciate the important role
Congress plays in overseeing this agency. I value the advice and
perspectives you shared during our meetings over the past month--
conversations that I welcome going forward, should I be confirmed in
this important position.
Thank you for your consideration.
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PREPARED STATEMENT OF KIMBERLY A. REED
To be President, Export-Import Bank
July 19, 2018
Chairman Crapo, Ranking Member Brown, Senators, thank you for the
opportunity to appear before you today.
Thank you as well for this Committee's favorable bipartisan vote to
advance my previous nomination to serve as First Vice President of the
Export-Import Bank of the United States (ExIm, Bank).
I now return to you as the President's nominee to serve as
President of ExIm, a position that includes serving as Chairman of the
Bank's Board of Directors. I thank President Trump for his confidence
in me to advance ExIm's mission: creating and supporting American jobs
by facilitating the export of U.S. goods and services.
If confirmed, I will be both the first woman and the first West
Virginian to be President and Chairman of this 84-year-old institution.
I also appreciate the encouragement and support of the President's
National Economic Council Chairman Larry Kudlow and diverse
organizations focused on American prosperity.
I would like to recognize and thank my father Terry and sister
Ashley. I lost my mother, Janet Logue Reed, to cancer when I was 9
years old, and tomorrow would be her 70th birthday, so I send her my
love and know that she is with us.
I thank you for the encouraging and supportive individual meetings
to discuss your views and the positive impact ExIm has made for the
workers in your states, and the potential to do more to support them.
If confirmed, I will work especially hard to maintain open lines of
communication with you.
I am grateful for the support of my home-State Senators Shelley
Moore Capito and Joe Manchin. I would bring the grounding of my West
Virginia upbringing to ExIm. In 1985, Senator Capito's father, Governor
Arch Moore, bestowed upon me a golden horseshoe pin for an academic
award that I wear today. Its inscription reads: ``Montani Semper
Liberi''--``Mountaineers are Always Free.''
I believe that freedom, in the form of free-market principles, is
the best way to foster economic opportunity for all Americans.
Throughout my 22 year career, I have embraced these principles to make
a positive difference for our Nation's businesses and workers while
also protecting the American taxpayer. I would bring these values to
Still, there is room for improvement to keep America on this road
to prosperity, and ExIm is no exception. If confirmed, I will work to
ensure that ExIm faithfully implements all laws and reforms enacted by
the Congress. I would launch a review to ensure that ExIm truly is the
``bank of last resort'' and not the other way around.
There are now 109 foreign Export Credit Agencies (ECAs) in other
countries--up from 95 when I testified before you last November. (See
Attachment.) ExIm recently reported on ``the increasing `weaponization'
of export trade credit by the world's ECAs to complement increasingly
nationalistic trade policies--particularly those initiated by China.''
If confirmed, I look forward to working with the Administration and the
Congress on an aggressive response to China's unfair trade policies.
In a perfect world, there would be no ECA financing. If confirmed,
I will work with the U.S. Government and, as appropriate, the OECD,
G20, WTO, and other forums to move towards the ultimate goal of
eliminating all ECA financing. On that you have my pledge.
Until that goal is reached, the United States should not
unilaterally disarm in a fiercely competitive global economy. While we
negotiate, we should not place our Nation in a worse position than our
foreign counterparts. As President Trump stated regarding export
financing: ``[W]hen other countries give it, we lose a tremendous
amount of business.''
Therefore, if the Senate confirms a Bank Board quorum, I will take
responsible steps to get ExIm operational so America can compete on a
more level playing field. ExIm has more than $40 billion in pending
applications supporting 250,000 U.S. jobs. We need to keep and support
these jobs in the United States while we, at the same time, work to
reform the export subsidies of our competitors to save even more. We
can do both.
ExIm also must treat all American companies fairly, especially
small- and medium-enterprises. I would ensure that ExIm--working with
community banks and community development financial institutions that I
am so familiar with--helps small businesses and the agriculture sector,
which is vital to rural America.
In closing, I would like to underscore that good governance is
critical. ExIm, which has a very low 0.4 percent default rate, is self
sustaining because of the fees and loans it charges to the foreign
purchasers, and has returned $14.6 billion to the U.S. Treasury since
2000. We need to ensure that it stays that way.
Building on my time working for the Congress on oversight,
investigations, and Government reform, I would focus on strong
standards of conduct, increased transparency, and sound risk management
practices. I would work with you and our Inspector General to ensure we
are doing all we can to eliminate waste, fraud, and abuse and give
better value to the taxpayer.
Thank you for your consideration. I would be pleased to answer any
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