Consumer Bureau Chief Makes Her Mark as Rift Opens with Education Dept.

Trump administration appointee Kathy Kraninger acknowledged to Congress the existence of a stalemate between her Consumer Financial Protection Bureau and the Education Department that could affect the bureau’s ability to protect indebted students from loan company abuse.

In a letter to senators last month first reported on Thursday by NPR, Kraninger plowed new ground in an ongoing controversy created when Education Secretary Betsy DeVos cancelled a memorandum of understanding that allowed sharing of student loan data between the agencies because DeVos was concerned about violating privacy.

Critics among consumer groups have accused DeVos of favoring the private lending industry in her department’s handling of anti-fraud regulation of commercial student loan servicers.

"Since December 2017," Kraninger wrote in the letter, "student loan servicers have declined to produce information requested by the bureau for supervisory examinations" related to federal student loans.

NPR quoted Seth Frotman, the executive director of the nonprofit Student Borrower Protection Center, who resigned in protest from his job running the CFPB’s student loan office, saying, “It's actually quite remarkable. The head of the Consumer Financial Protection Bureau is telling the world that the secretary of Education has put in place a series of policies that are obstructing federal law enforcement officials from standing up for the millions of Americans with student debt."

The Education Department replied in a statement saying it takes privacy seriously along with the need to "protect customers' personal data." Requests for information about student loan borrowers should be made to the department, it added.

The recipients of Kraninger’s letter, Sens. Elizabeth Warren, D-Mass.; Sherrod Brown, D-Ohio; Kirsten Gillibrand, D-N.Y.; Dick Durbin, D-Ill.; and Sheldon Whitehouse, D-R.I., called the statement “disturbing” in a letter to one of the key lenders, Navient Solutions.

Kraninger, meanwhile, also made her mark on the agency this week by appointing her top deputies on May 13. They include:

• Deputy Director Brian Johnson, a former House Financial Services Committee counsel who joined the CFPB in December 2017;
• Chief Operating Officer Kate Fulton, a former Customs and Border Protection attorney adviser who joined the consumer agency in 2013;
• Senior Adviser and Counselor to the Director Yasaman Sutton, an attorney who spent 14 years at the Office of Management and Budget and the Defense and Justice departments;
• Office of Civil Rights Director Melissa Brand, an attorney and 10-year-veteran of the Equal Employment Opportunity Commission who has been CFPB’s Complaints Program Manager since 2016; and,
• Assistant Director of the Office of Servicemember Affairs Jim Rice, a 30-year Army Medical Corps veteran.

One key CFPB figure set to depart on May 31, according to a Wednesday Bloomberg news story, is Eric Blankenstein, a policy associate director overseeing the CFPB’s supervision and enforcement division. An appointee of Kraninger’s predecessor Mick Mulvaney, Blankenstein became controversial when it was revealed that he had posted racially insulting blogposts years earlier.

“What took so long?” asked a statement from Allied Progress spokesman Jeremy Funk. “For over five months, Director Kraninger tolerated the racist views of a top aide that had no business overseeing lending discrimination matters on behalf of America’s consumers.”