Kraninger, who led the bureau through the final stages of the debt collection rulemaking, is expected to be succeeded by Biden’s nominee, former CFPB assistant director Rohit Chopra. The CFPB’s Deputy Director, Tom Pahl, who could have been an interim director, retired Jan. 19.
1/20/2021 15:00
In a post on her Twitter feed Wednesday, Kathy Kraninger announced her resignation as director of the Consumer Financial Protection Bureau, stating, “As requested by the Biden administration, today I resigned as director of the CFPB. I am proud of all we accomplished on behalf of consumers. It has been an honor to lead the agency during these challenging times.”
Kraninger recently completed the second year of what would have been a five-year term at the bureau, ACA previously reported. Deputy Director Tom Pahl retired Jan. 19, American Banker reports.
“ACA appreciates Kraninger’s time and dedication to working with the accounts receivable management (ARM) industry and consumers,” said ACA CEO Mark Neeb.
ACA is also ready to work with new leadership at the bureau under the Biden administration.
The news of Kraninger’s resignation and Pahl’s retirement comes as Biden is expected to officially nominate Rohit Chopra, a member of the Federal Trade Commission and former CFPB assistant director and student loan ombudsman, soon.
Biden announced Chopra as his pick to lead the CFPB Jan. 18, ACA previously reported.
What happens next in Chopra’s nomination process and where his priorities will lie as far as debt collection regulations remain to be seen.
Some media reports say he could serve as CFPB director even during his confirmation process with the U.S. Senate. Other legal scholars have argued that is not in line with the Federal Vacancies Reform Act.
Jenny Lee, a partner at the law firm Arent Fox and a former CFPB enforcement attorney, told American Banker that “because Chopra is currently a commissioner at the Federal Trade Commission and already Senate-confirmed, he can serve on an interim basis as head of the consumer bureau.” (A subscription may be required to view the American Banker article.)
The last time there was a shift in leadership at the bureau—pre-Seila Law—the matter went to court. Former CFPB Director Richard Cordray resigned in November 2017 and Mick Mulvaney, at the time in charge of the Office of Management and Budget, was appointed by President Donald Trump as interim director, ACA previously reported.
However, before he left, Cordray promoted Leandra English from chief of staff at the bureau to deputy director, meaning—under the Dodd-Frank Act—she would step in as interim director.
English also led Biden’s agency review team to select the new CFPB director.
A senior official at the CFPB may also step into the acting director role while Chopra’s nomination process plays out.
Update: What We Know About Rohit Chopra
Chopra served with the CFPB during the Obama administration and under Cordray’s leadership.
Politico reports that during his term at the FTC Chopra “has pushed the agency to be more skeptical of private equity buyers and more aggressive in using its rulemaking powers to rein in businesses.”
According to the article, Chopra is likely to first focus on enforcing fair lending laws, payday lending and building case law on “abusive acts or practices” under the Dodd-Frank Act at the CFPB.
When it comes to the debt collection rule, which takes effect on Nov. 30, 2021, it is unknown where that stands on Chopra’s priority list.
Chopra referenced his comments on the CFPB’s proposed debt collection rule and student loans in his testimony during a September 2019 House Financial Services Committee hearing focused on debt collection legislation.
“When it comes to the companies that collect student loan payments, consumers have little to no market power. Loan servicers and debt collectors work on behalf of lenders and creditors, not on behalf of borrowers,” Chopra said in his testimony. “Despite the wide availability of affordable repayment plans, there are more than nine million borrowers in default on their student loans, with many more in severe delinquency. Student loan default deeply affects Americans of all ages. As the industry’s primary regulator, the CFPB must ensure that any rulemaking keeps student loan borrowers in mind.”
Lucy Morris, a partner with ACA member firm Hudson Cook LLP in Washington, D.C., worked with Chopra on the implementation team that started up the bureau in 2010, she reports in an article on the firm’s website.
“I anticipate that he will be at least as aggressive as former Director Cordray, if not more, in seeking to expansively use the bureau's tools, including law enforcement and rulemaking,” Morris said in the article. “I (also) anticipate that CFPB priorities under Chopra will include student loan servicing, credit discrimination, mortgage servicing, debt collection, credit reporting, and small dollar lending.
The 50/50 split between Democrats and Republicans in the U.S. Senate following two Democrat wins in the Georgia runoffs also presents uncertainty for the timing of Chopra’s confirmation. The nomination will first be considered in the Committee on Banking, Housing and Urban Affairs led by Chairman U.S. Sen. Sherrod Brown, D-Ohio, and next be considered by the full Senate if he is approved at the committee level after a hearing.
The 50/50 split in the Senate could mean there would need to be a tiebreaker vote from Vice President Kamala Harris, but the Senate has not yet indicated whether there will be a power-sharing agreement because of the 50/50 split, which could determine in part how committee work is conducted. The National Review recently reported on how a split between Republicans and Democrats in the Senate could impact decisions.
While Biden has selected Chopra as his choice to lead the bureau, it is unknown how quickly his official nomination will advance in the Senate.
ACA will continue to follow this story and provide updates for members.