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"Burn It to the Ground"
It’s hard to know what’s happening with the Consumer Financial Protection Bureau. It appears the agency under President Donald Trump is being dismantled. A U.S. Court of Appeals sided with Acting Director Russell Vought in a lawsuit brought by the CFPB’s union when he tried to eliminate 90% of the staff. Most recently, the agency filed a motion indicating that it didn’t plan to tap the Federal Reserve for funds, leaving the CFPB with enough dollars to operate through Dec. 31. The White House nominated a new director this week for Senate confirmation, an aide to Vought, implying that Vought would remain in control for now.
The agency, which supervises banks and credit unions above $10 billion in assets for consumer protection, has been a source of controversy since its creation under the Dodd-Frank Act in 2010. Kathy Kraninger, the former director of the CFPB under the first Trump administration who is now CEO of the Florida Bankers Association, said Republicans then wanted to “burn it to the ground.” Speaking at the Banking and Finance Symposium at the University of Mississippi last week, she made it clear she was on the side of bankers. “None of you are in the business of trying to harm your customers,” she said. Kraninger said former President Joe Biden’s administration had gone beyond the statutory powers of the agency and saddled banks with onerous fines even when they fixed a problem.
But the current situation leaves a lot of uncertainty. Bankers have an easier time complying when they know the rules of the game. Brian Gardner, the chief Washington policy strategist for Stifel Financial Corp., also spoke at the conference. He compared the current regulatory environment to a football game. In years past, the skirmishes were all at the 40-yard line. Now they’re goal line to goal line.
The last three presidential elections have yielded a succession of one-term presidencies, where each administration attempts to dismantle the legacy of the prior one but doesn’t have time to make its priorities durable. The current regulatory environment is generally a positive for banks. But “you have to keep in mind the good days don’t always last forever,” Gardner said.
• Naomi Snyder, editor-in-chief for Bank Director
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