U.S. Sen. Sherrod Brown (D-OH) – ranking member of the U.S. Senate Committee on Banking, Housing, and Urban Affairs, Sen. Brian Schatz (D-HI), Sen. Elizabeth Warren (D-MA), Sen. Dick Durbin (D-IL) and Sen. Tina Smith (D-MN) today sent a letter to the Consumer Financial Protection Bureau (CFPB) after Director Kraninger defended the CFPB’s rulemaking process for the Payday Rule. The Senators again urged the agency to halt work on the current Payday Rule and restart the rulemaking process. The Senators previously sent a letter to Director Kraninger following press reports that extensively detail improper interference and manipulation of the rulemaking process for the Payday Rule by CFPB political appointees.

“Your response provides a gross misrepresentation of the corrupting role of CFPB political appointees described in the memorandum,” the Senators wrote. “It also strengthens the case that, from the outset, you and Mr. Mulvaney had predetermined that you would repeal the 2017 Payday Rule and its protections for consumers—and that to do so, you were willing to find evidence in support of your conclusion even if that meant ignoring any research, data, or legal analysis that did not support this outcome.”

Brown has long pushed the CFPB to return to its core mission of helping consumers. Last week Senator Brown joined Senator Jones and other Senators in calling for the CFPB’s Inspector General to commence a formal investigation into the CFPB’s rulemaking process for the new Payday Rule and determine whether the CFPB misled Congress about that process. Recently he urged the CFPB to do more to help consumers during the pandemic.

A copy of the letter appears here and below:

The Honorable Kathleen Kraninger

Director

Consumer Financial Protection CFPB

Dear Director Kraninger:

We write regarding your attempts to defend the corrupt, flawed rulemaking process and actions by the Administration’s political appointees concerning a new Consumer Financial Protection Bureau (CFPB) Payday Rule. We wrote you on May 4, 2020, about an internal memorandum by a senior CFPB career employee that describes persistent, repeated interference and attempts by CFPB political appointees to manipulate or misinterpret economic research for the payday rulemaking.[1] That memorandum provided specific details, identifying individuals, dates, and misconduct that appears to violate the Administrative Procedure Act’s requirements for agency rulemakings.[2]

In light of these disturbing revelations, we asked you to halt work on the current Payday Rule and restart the rulemaking process. Additionally, members of Congress from both the Senate and the House of Representatives have asked the CFPB’s Inspector General to commence a formal investigation into the CFPB’s rulemaking process for the new Payday Rule and whether the CFPB misled Congress about that process.[3] 

Your dismissive response to the serious, extensive, and well-documented charges in the memorandum is alarming.[4] You did not address any of the specific misconduct recounted in our May 4, 2020 letter, or the more extensive misconduct described in the memorandum. Instead, you attempted to recast this conduct as simply “views and ideas competing for consideration,” “informed debate and sometimes friction,” and “rigorous policy evaluation.”[5]

Your response provides a gross misrepresentation of the corrupting role of CFPB political appointees described in the memorandum. “[I]gnoring the majority of the available research, and handpicking studies that support a specific conclusion,” as described in the memorandum,[6] is not “ideas competing for consideration.” Political appointees pushing career staff to “ignore” research and analysis because a political appointee “doesn’t agree with them,” as described in the memorandum,[7] is not “informed debate.” And relying on study findings that are contradicted by the underlying data or studies written by industry-funded researchers, as described in the memorandum,[8] is not “rigorous policy evaluation.” None of this conduct should make you “proud.”

Your response suggests you condone the conduct of the political appointees who worked under you and during Mr. Mulvaney’s tenure as acting Director. It also strengthens the case that, from the outset, you and Mr. Mulvaney had predetermined that you would repeal the 2017 Payday Rule and its protections for consumers—and that to do so, you were willing to find evidence in support of your conclusion even if that meant ignoring any research, data, or legal analysis that did not support this outcome.

As you note in your letter, ultimately you will determine whether to proceed with the issuance of a final Payday Rule. We ask that you restart the rulemaking or, at a minimum, delay issuing a final Payday Rule until the allegations of political interference, manipulation of research, and other conduct that appears to violate the Administrative Procedures Act have been investigated by the CFPB’s Inspector General. Moving forward with this rule does not meet your so-called commitment to a “rigorous policy evaluation,” nor could such a rule withstand judicial scrutiny.

Sincerely,

 

###



[4] May 18, 2020 Letter from Dir. Kraninger to Sen. Brown and other Senators, attached hereto.

[5] Id.

[6] See Bureau Memo Timeline at 1/10/19.

[7] Id. at 5/21/19.

[8] Id. at 9/25/18 (“Mann’s memo(s) showing his assertions are contradicted by his data) and 5/16/19 (same); 2/25/19 (discussing payday lending lawyer writing academic studies); see also https://www.washingtonpost.com/business/2019/02/25/how-payday-lending-industry-insider-tilted-academic-research-its-favor/.