A group of 83 different consumer advocacy groups have written a letter to Kathleen Kraninger, the director of the Consumer Financial Protection Bureau, urging her not to move forward with a proposed reorganization of the agency’s enforcement unit, saying it will “drastically weaken its authority, independence, and ultimately, effectiveness, leaving consumers vulnerable and defenseless.” Moving forward, the changes will “dramatically weaken” the CFPB’s ability to hold “small financial firms accountable for violating the law, especially payday lenders and debt collectors.”
The CFPB announced the reorganization last month. It followed seven months of discussions and was aimed at eliminating the “arguing” that goes on within the Bureau’s Office of Supervision, Enforcement, and Fair Lending over which organizations to examine and investigate. Under the new structure, final decisions on supervision and enforcement matters will be made by a team that had previously dealt only with supervision policy, called the Office of Supervision Policy.
Critics of the proposal, which now include the 83 different consumer advocacy groups, have been highly critical of it and the likely impact it will have on companies regulated by the CFPB. Because small financial firms, like debt collectors, are not examined by CFPB supervisors, “violations by these institutions could go undetected,” the advocacy groups claim in their letter.
The consumer groups also criticized the timing of the announcement, not because Kraninger may find herself out of a job if former Vice President Joe Biden wins the White House, as was suggested by Sen. Sherrod Brown [D-Ohio], in his letter criticizing the changes, but because the country is in the middle of a pandemic.
“We have written to you numerous times during this pandemic to urge you use your enforcement, supervisory, and regulatory authority to protect consumers, but this misguided proposal will do just the opposite,” they wrote. “We strongly oppose the reorganization and respectfully ask you to abandon its implementation.”