Brown, Warren Request Answers From CFPB Director Regarding Federal Consumer Law Taskforce
Director Kraninger Selected Payday Lender, Wall Street Bank, Industry Interest Representatives for Task Force
WASHINGTON, DC –
U.S. Senators Sherrod Brown (D-OH), Ranking Member of the Senate Banking,
Housing, and Urban Affairs Committee, and Elizabeth Warren (D-MA), Ranking
member of the Financial Institutions and Consumer Protection Subcommittee,
wrote a letter to Consumer Financial Protection Bureau (CFPB) Director Kathleen
Kraninger requesting answers regarding the
Taskforce’s formation, composition, and the selected Taskforce members’
conflicts-of-interests. Instead of selecting a diverse group of professionals
to provide CFPB with objective recommendations, Director Kraninger stacked the
Taskforce with representatives of payday lenders, Wall Street banks, and other
“Indeed, the members you selected make clear that the
Taskforce is just a pretext to gut regulations and protections for consumers,” the
Senators wrote. “The pro-industry, deregulatory makeup of the Taskforce is
no accident. It is our understanding that the Bureau rejected at least five
qualified consumer finance experts with substantial research, scholarship, and
record of public and academic service through a hiring process that was not
fair, credible, or transparent.” A copy of the
Senators’ letter to Ms. Kraninger can be found below and HERE: February 5, 2020 The
Honorable Kathleen KraningerDirectorConsumer
Financial Protection Bureau1700
G Street, NWWashington,
D.C. 20552 Dear
Director Kraninger: We
write regarding the process by which you selected the members of the Consumer
Financial Protection Bureau’s (Bureau) Taskforce on Federal Consumer Law
(Taskforce). The Bureau has stated that the Taskforce is intended to provide
recommendations on how to harmonize, modernize, and update federal consumer
financial laws and regulations. But instead of selecting a diverse group of
professionals to provide you with objective recommendations, you stacked the
Taskforce with representatives of payday lenders, Wall Street banks, and other
industry interests. Indeed,
the members you selected make clear that the Taskforce is just a pretext to gut
regulations and protections for consumers. Todd Zywicki, whom you selected to
Chair the Taskforce, has called the Bureau a “tragic failure” and has argued that the 2008
financial crisis was “not a crisis of consumer protection.”
He has been a director of Global Economics Group, a consulting firm hired by
Visa, Bank of America, and Citigroup to influence the Bureau and other
regulatory agencies. Mr.
Zywicki also was paid $500 an hour to help defend Morgan Drexen, a debt relief
company, from a Bureau investigation.
That company eventually shut down after it was caught fabricating evidence, but
not before it had scammed consumers out of more than $130 million. The
Taskforce’s other members have also made their money representing payday
lenders, banks, and other regulated industries:·
Howard Beales has been described by the Wall
Street Journal as “an academic whose studies have been used by a tobacco
company and consumer-goods makers to fight federal regulations.” Like Mr. Zywicki, Mr. Beales also
works for a consulting firm where he sells his “expertise” to industry. He recently provided an “expert”
opinion on behalf of a payday lender that the Bureau had sued, arguing that
payday loans with interest rates of up to 448 percent
were “beneficial to consumers.” ·
Since retiring from the Federal Reserve Board,
Thomas Durkin has partnered with Mr. Zywicki to pen articles and op-eds
advocating for the rollback of financial regulation and in favor of payday
loans, or as he called them, “legal, high-cost” credit options. ·
Jean Noonan traded in her work at the Federal
Trade Commission to work as an attorney at a corporate law firm that represents
payday lenders that the Bureau has investigated or sued for ripping off
William MacLeod also traded in his FTC
experience to work at a law firm where he defends corporations from government
investigations, and, in his words, has “resolutely fought against onerous
pro-industry, deregulatory makeup of the Taskforce is no accident. It is our
understanding that the Bureau rejected at least five qualified consumer finance
experts with substantial research, scholarship, and record of public and
academic service through a hiring process that was not fair, credible, or
understand that of these five consumer finance experts, the Bureau only
interviewed two applicants. During one interview, an applicant directly asked,
but the Bureau could not state, whether the position was as a volunteer
(typical for an advisory committee position) or as Bureau employee. Another
applicant reported that they were subject to hostile questioning by Christopher
Muffarige, one of your political appointees, to determine their stance on
deregulation. That applicant complained to both you and the Bureau ombudsman
that the questions were inappropriate and that “[n]othing in the announcement
indicated that applicants’ views on deregulation were a criterion.” To date, you have not responded to
that letter. By
contrast, the Bureau appears to have bent the rules for the Taskforce members
it did select. In addition, it appears that the Bureau may have set up the
Taskforce to evade the Federal Advisory Commission Act, 5 U.S.C. App., which
Congress enacted to ensure that advisory committees are “objective and
accessible to the public,” and which also allow for dissenting opinions. Based
on significant concerns about the Taskforce’s formation, composition, and the
selected Taskforce members’ conflicts-of-interest, we question the legitimacy
of this Taskforce and any of its future recommendations or conclusions. We ask
that you immediately suspend the Taskforce and provide answers to the following
questions by February 19, 2020:1.
Is the Taskforce subject to the Federal Advisory
Commission Act? If not, why did you set up the Taskforce to fall outside of the
Federal Advisory Commission Act?2.
Are Taskforce members volunteers, contractors,
or government employees?3.
What is the statute or regulation under which
Taskforce members were appointed or employed?4.
If a government employee, provide the following
information (as reflected on SF-50, Notification of Personnel Action):a.
What is the Legal Authority for the hiring
What is the Position Title and Number (7)?c.
What is the Pay Plan (8)?d.
What is the Occupational Code (9)?e.
What is the Grade or Level (10)?f.
What is the Step or Rate (11)?g.
What is the Total Salary (12)? h.
What is the Tenure (24)?i.
What is the Work Schedule (32)?j.
What is the Part-Time Hours Per Biweekly Pay
What is the Position Occupied (34)?l.
What is the FLSA Category (35)?m.
What is the Duty Station (39)?5.
Are Taskforce members retaining, or allowed to
retain, outside employment? If so, state any limitations to their outside
employment and how are they documented.6.
Will Taskforce members receive compensation? If
so, state their compensation.7.
Were there any ethics determinations to treat
Taskforce members as Special Government Employees? If yes:a.
Who or what entity made that determination?b.
What is the Bureau’s good faith basis for
believing that Taskforce members will not work more than 130 days in a 365-day
Has the Bureau provided ethics waivers to any
Taskforce Members? If so, please state whether the waivers are under: a.
18 U.S.C. § 208(b)(1);b.
18 U.S.C. § 208(b)(3);c.
Executive Order 13770;d.
An authorization under 5 C.F.R. § 2635.502(d);
Produce the financial disclosures and ethics
waivers for all Taskforce members.10.
Has the Bureau consulted with the Office of
Government Ethics on waivers for Taskforce members? 11.
For each Taskforce member, state the date and
location of their interview and identify the Bureau employees who interviewed
Did the Bureau conduct structured interviews of
Taskforce applicants, and if so, did the Bureau maintain the grades and any
interview notes taken by Bureau employees conducting the interviews? Thank
you for your attention to this important matter. We look forward to your
U.S. Senator ###
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