U.S. Markets open in 6 hrs 59 mins

Elizabeth Warren torches consumer protection head for not protecting consumers

Aarthi Swaminathan
Finance Writer

Senator Elizabeth Warren (D-Mass.) delivered a scathing attack on the Consumer Financial Protection Bureau (CFPB) on Tuesday, describing current and former directors Kathy Kraninger and Mick Mulvaney as having turned their backs on consumers — and allowing loan providers to ‘steal’ from consumers.

“Student loans, lending discrimination, credit reporting companies, debt collectors… It seems pretty clear to me that you stopped enforcing the laws designed to protect consumers,” Warren told Kraninger. “Money returned to consumers as a result of the CFPB’s lawsuits has slowed to a trickle.”

Sen. Elizabeth Warren speaks to CFPB Director Kathy Kraninger. (Screenshot: Yahoo Finance)

CFPB’s current director Kraninger appeared in front of the Senate Banking Committee to deliver the agency’s Semi-Annual Report to Congress.

“You are supposed to be the cop on the beat,” Warren added. “But you are only watching out for the crooks who are cheating American consumers. If you had any decency, you’d either do your job or resign.”

Warren — who spearheaded the creation of the CFPB after the 2008 Financial Crisis — acknowledged that the CFPB still brings some cases against predatory loan providers, but even then “the settlements [the CFPB has] secured from the companies average about 1/25th the size of the ones that [former CFPB director] Rich Cordray got. ...

That’s hundreds of millions of dollars that companies stole from consumers and that you are permitting them to keep.”

‘Declined to levels that are… nonexistent’

Warren’s comments come on the back of a new report by the nonprofit Consumer Federation of America (CFA), which condemned the agency and singled out a steep decline in productivity since the Trump administration.

The report — which analyzed “every public enforcement action since the inception of the CFPB through the first three months of Director Kathleen Kraninger’s term in office” — found that under Mulvaney and Kraninger in particular, the agency had been culled.

The number of cases that the CFPB took on — to enforce action against bad actors — has decreased since its peak in 2015. (Source: Consumer Federation of America).

“Enforcement activity at the CFPB has declined to levels that are either nonexistent or significantly below that of the prior Administration,” the report stated.

In a statement, the CFA asserted that “it is simply unacceptable for a consumer protection agency to turn its back on consumers that have been harmed by their financial institution’s deceit.”

The Bureaus’ near-term policy trajectory is unlikely to change

Despite the hearing amounting to a heated rebuke of the CFPB’s current inaction, one analyst said that he didn’t see much changing anytime soon.

“The tangible impact on the policymaking process is limited given the Bureau’s structure and legislative realities,” Compass Point Research & Trading’s Isaac Boltansky wrote in a note.

He added: “Ultimately, CFPB Director Kraninger’s appearance before the Senate Banking Committee will produce headlines and sound bites, but the Bureaus’ near-term policy trajectory is unlikely to change.”

Kathy Kraninger, director of the Consumer Financial Protection Bureau, takes questions from the House Financial Services Committee's biannual review of the CFPB, on Capitol Hill in Washington, Thursday, March 7, 2019. (Photo credit: AP Photo/J. Scott Applewhite)

CFPB’s Kraninger was also chastised last week as well when she met with House Representatives.

In her opening comments, Committee on Financial Services Chairman Maxine Waters told Kraninger that “Congressional Republicans have done everything they can to stymie the consumer bureau’s good work and the Trump administration has undertaken a sustained effort to destroy the agency.”

Seth Frotman, a former top student loan official at the CFPB — who had also testified to the committee — added: “The last 15 months at the bureau have been plagued with inaction and incompetence… they have prioritized the wishes of the most powerful companies in America over the needs of the very people they were tasked by Congress to protect.”

Aarthi is a writer for Yahoo Finance. Follow her on Twitter @aarthiswami.

Read more:

Follow Yahoo Finance on Twitter, Facebook, Instagram, Flipboard, LinkedIn, YouTube, and reddit.