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Senate Confirms Kraninger as CFPB Director

This afternoon, by a vote of 50-49, the Senate confirmed Kathy Kraninger as CFPB Director.

Pursuant to the Dodd-Frank Act, the CFPB Director has a five-year term.  The approximate 12 months during which Mick Mulvaney has served as Acting Director since former Director Cordray’s resignation last November does not count against Ms. Kraninger’s five-year term.  As a result, Ms. Kraninger could serve as Director for approximately three years of the next four-year Presidential term that begins in January 2021 even if a Democratic President is elected.

There is, however, a “wildcard” that could potentially shorten Ms. Kraninger’s tenure, namely the ongoing litigation challenging the CFPB’s constitutionality.  In September 2018, a petition for certiorari was filed in the U.S. Supreme Court by State National Bank of Big Spring which, together with two D.C. area non-profit organizations that also joined in the petition, had brought one of the first lawsuits challenging the CFPB’s constitutionality.  Following the D.C. Circuit’s en banc PHH decision that held the CFPB’s structure is constitutional, the D.C. Circuit, based on PHH, summarily affirmed the district court’s judgment entered against the plaintiffs.  The issue of the CFPB’s constitutionality is also currently pending in two circuit courts–the Second Circuit in the RD Legal Funding case and the Fifth Circuit in the All American Check Cashing case.  In all of these cases, the CFPB’s constitutionality has been challenged based on its single-director-removable-only-for-cause structure.

These cases create a strong likelihood of this issue coming before the Supreme Court in the next year or so.  If the CFPB’s structure is found to be unconstitutional and severing Dodd-Frank’s for-cause removal provision is determined to be the appropriate remedy (as the D.C. Circuit determined in its PHH panel decision), a Democratic President might have the ability to remove Ms. Kraninger without cause before the end of her five-year term.

Copyright © by Ballard Spahr LLP

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About this Author

Barbara S. Mishkin, Ballard Spahr, Philadelphia, Deceptive Practices Lawyer, Fair Debt Collection Practices Act, Gramm Leach Bliley
Of Counsel

Barbara Mishkin focuses on consumer compliance and banking law. The federal laws with which Ms. Mishkin has dealt extensively include the Truth in Lending Act, Equal Credit Opportunity Act, Real Estate Settlement Procedures Act, Fair Credit Reporting Act, Fair Debt Collection Practices Act, and Gramm-Leach-Bliley Act. She also has significant experience with state usury and lender licensing laws, as well as state laws prohibiting unfair and deceptive acts and practices.

American Bar Association, member, Consumer Financial Services Committee;...

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