Coinciding with Kathleen Kraninger telling the Senate Banking Committee this week how she would oversee the regulator as its new director, the Consumer Financial Protection Bureau outlined the head of a new division — the Office of Innovation.
Acting director Mick Mulvaney announced that he has selected Paul Watkins to run the recently created Office of Innovation, which is designed to focus on encouraging consumer-friendly innovation. Mulvaney stressed that innovation is now a key priority for the bureau as work that was being done under Project Catalyst will be transitioned to this new office.
Mulvaney explained the CFPB intends to fulfill its statutory mandate to promote competition, innovation and consumer access within financial services. To achieve this goal, the new office will focus on creating policies to facilitate innovation, engaging with entrepreneurs and regulators, and reviewing outdated or unnecessary regulations.
“I am delighted that Paul Watkins is bringing his deep expertise, track record of protecting consumers and commitment to innovation to the bureau,” Mulvaney said.
“I am confident that, under his leadership, the Office of Innovation will make significant progress in creating an environment where companies can advance new products and services without being unduly restricted by red tape that belongs in the 20th century,” Mulvaney continued.
Watkins comes to the CFPB from the office of the Arizona attorney general, where he was in charge of the office’s fintech initiatives. He managed the FinTech Regulatory Sandbox, the first state fintech sandbox in the country, which allows a company limited access to the marketplace in exchange for relaxing some regulations.
Watkins was also the chief counsel for the civil litigation division. In that role, he managed the state’s litigation in areas such as consumer fraud, antitrust and civil rights.
Previously, Watkins practiced at Covington & Burling LLP in San Francisco and Simpson and Thacher & Bartlett LLP in Palo Alto, Calif.
FinTech innovation is the focus of the Automotive Intelligence Summit, which begins on Tuesday in Raleigh, N.C. There is still time to register and attend by going to www.autointelsummit.com.
Kraninger on Capitol Hill
Roughly a month after she was nominated by President Trump to be the next director of the CFPB, Kathy Kraninger testified in front of the Senate Banking Committee, outlining what she described as four initial priorities should lawmakers confirm her for the post.
If approved by the Senate, Kraninger would be transitioning from leadership positions previously held within the Office of Management and Budget, Department of Transportation and Department of Homeland Security, as well as three separate Congressional committees.
“First, the bureau should be fair and transparent, ensuring its actions empower consumers to make good choices and provide certainty for market participants,” Kraninger began. “In particular, the bureau should make robust use of cost benefit analysis, as required by Congress, to facilitate competition and provide clear rules of the road. In my experience, effective use of notice and comment rulemaking is essential for ensuring the proper balancing of all interests. It also enables consideration of tailoring to reduce the burden of compliance, particularly on consumers and smaller marketplace participants.
“Second, the bureau should work closely with the other financial regulators and the states on supervision and enforcement. Nothing is more destructive to competitive markets and consumer choice than fraudulent behavior,” she continued. “Under my stewardship, the bureau will take aggressive action against bad actors who break the rules by engaging in fraud and other illegal activity.
“Third, the bureau must recognize its profound duty to the American people to protect sensitive information in its possession,” Kraninger added. “Under my leadership, the bureau would limit data collection to what is needed and required under law and ensure that data is protected. This issue clearly needs more attention, particularly because many consumers are unaware of the vulnerabilities or unsure of what actions to take to protect themselves.
“And, fourth, the bureau must be accountable to the American people for its actions, including its expenditure of resources,” she went on to say.
In her opening remarks, Kraninger mentioned that while attending college in her native Ohio, she served an internship for Sen. Sherrod Brown while he was still a member of the House. Brown now is the ranking member of the Senate Banking Committee and highly questions whether Kraninger is fit to lead the CFPB.
“For months, I urged the administration to nominate someone to lead the CFPB who had a track record of working for consumers. Unfortunately, Ms. Kraninger has no experience whatsoever in consumer protection,” Brown said in his opening remarks during the hearing. “Mr. Mulvaney argues she should be approved because of her management and budget experience. It is hard to see how that is enough, especially given the nominee’s refusal to provide information requested by committee members.
Every one of us on this side of the dais wanted this hearing postponed until we got information about that experience,” Brown continued. “When the nominee and I met, she said it was out of her hands and would try to get a response. That was over a week ago. Still nothing. What are they hiding?
“Here is what we do know. At the Office of Management and Budget, she signed off on a $1.9 trillion tax break for millionaires. To pay for it, she helped write a budget that would triple the rent for families that are already struggling to get by,” Brown went on to say.
“She has been involved in the management of one disastrous policy after another. … Management is supposed to be Ms. Kraninger’s one qualification,” Brown added. “Nobody wants Mr. Mulvaney out of the CFPB faster than I do. But American consumers can’t afford five years of someone who stands with the bankers in this administration and on Wall Street. We need a CFPB director who will sit with hardworking families at their kitchen tables.”