Consumer advocates raised big concerns this week about the two top officials the Trump administration has appointed to protect Americans from fraud, claiming one has no related experience and that the other won’t be able to go after companies like Equifax, Facebook, Amazon and Verizon because of his work in the private sector.
On Thursday, in a party-line vote, the Senate confirmed Kathy Kraninger to head the Consumer Financial Protection Bureau. Democrats fear she will undercut the agency, which was put in place after the financial crisis to make sure banks and lenders don’t cheat consumers. “Kathy Kraninger has no consumer protection or financial regulation experience. We expect her to simply follow Mick Mulvaney’s playbook,” said Ethan Lutz, a consumer fellow at the left-leaning watchdog group US PIRG.
- Kraninger worked under Mulvaney at the Office of Management and Budget. Democrats have criticized Mulvaney for not going after bad actors as aggressively as they would like. The agency’s student loan ombudsman, Seth Frotman, quit in protest earlier this year, claiming that “consumers no longer have a strong, independent consumer bureau on their side.”Read MoreMassachusetts Democratic Sen. Elizabeth Warren, who helped create the agency, said Kraninger’s confirmation was “another punch in the gut to America’s hard-working families.” Republican lawmakers have repeatedly argued that the consumer bureau has too much power and that its first director, Richard Cordray, overstepped his boundaries. “Kathy is well prepared to lead the bureau in enforcing federal consumer financial laws, protecting consumers’ sensitive personal financial information and increasing its transparency and accountability,” Idaho Republican Sen. Mike Crapo tweeted on Thursday.Senator wants to punish tech CEOs with jail time when companies violate privacyThe CFPB is charged with protecting consumers against unfair, deceptive or fraudulent practices at banks and financial institutions, but its jurisdiction sometimes overlaps with that of the FTC — which oversees a wide variety of businesses. Also on Thursday, Washington-based consumer advocacy group Public Citizen released documents that show that Andrew Smith, director of the FTC’s bureau of consumer protection, will have to recuse himself from all matters concerning 120 companies — two of which are currently under investigation by the agency. “I have written ethics agreements for White House officials and I have never seen a list of conflicts so vast across so many industries,” said Remington Gregg, counsel for civil justice and consumer rights at Public Citizen. Smith came from the law firm of Covington and Burling, where he co-chaired the financial services practice group. He also served as a staff attorney at the FTC earlier in his career.Smith said in an interview with CNN the conflicts of interest will not hurt the effectiveness of the FTC’s consumer bureau. “It absolutely affects my job, we take recusals very seriously. But it doesn’t affect the agency. The work for consumers continues,” he told CNN. In the cases in which Smith can’t participate, FTC investigators will deal with his his two deputy directors, both career staffers who have been at the commission for 20 years, he said. Smith added that he is currently recused from the investigations into Equifax and Facebook, but none of the 50 cases currently in litigation. The FTC launched an investigation into Equifax last year after a data breach exposed the personal information of more than 143 million Americans, including their names, social security numbers, addresses, birth dates. It started looking into Facebook’s privacy practices earlier this year. Smith is walled off from hearing anything about those ongoing investigations. Consumer advocates and Democrats first raised concerns about Smith’s business ties when he was nominated for the job last spring. He was approved by the other commissioners in a 3-2 party-line vote.
- “The director should be our quarterback on the agency’s top priorities. But, I fear our quarterback will be spending too much time on the sidelines,” wrote Democratic Commissioner Rohit Chopra in a statement made at the time.But Smith had the backing of FTC Chairman Joseph Simons, who called him “one of our country’s best and most experienced consumer protection lawyers.”