Kraninger asks for explicit MLA enforcement authority

Consumer Financial Protection Bureau Director Kathleen Kraninger has asked Congress to grant the CFPB clear authority to supervise for compliance with the Military Lending Act.

Consumer Financial Protection Bureau Director Kathleen Kraninger has asked Congress to grant the CFPB clear authority to supervise for compliance with the Military Lending Act.

Under Kraninger’s predecessor, the agency had halted routine supervisory examinations for MLA compliance in August 2018. Acting Director Mick Mulvaney said that “proactive oversight is not explicitly laid out in the legislation” for the bureau to oversee financial firms for MLA compliance.

The move drew pushback from consumer advocates, lawmakers, the Defense Department and major groups representing military service members. The move was a stark departure from the bureau’s approach under previous director Richard Cordray, an Obama appointee.

The bureau would continue responding to individual complaints filed by consumers regarding MLA violations, Mulvaney said. Such investigations occur after violations are reported, however, and can take months.

Confirmed as director in December, Kraninger has changed course from several of Mulvaney’s plans, including halting an in-progress renaming of the agency which would have cost millions.

“The bureau is committed to the financial well-being of America’s service members. This commitment includes ensuring that lenders subject to our jurisdiction comply with the Military Lending Act so our service members and their families are provided with the protections of that law,” Kraninger said. “That’s why I have asked Congress to explicitly grant the Bureau authority to conduct examinations specifically intended to review compliance with the MLA.”

The requested authority would complement the work the bureau currently does to enforce the MLA, Kraninger said.

The CFPB transmitted a legislative proposal to the speaker of the U.S. House of Representatives and the vice president in his capacity as president of the U.S. Senate, and shared copies with the chairs and ranking members of the Senate Committee on Banking, Housing, and Urban Affairs and the House Committee on Financial Services.

Enacted in 2006, the MLA initially applied to a narrow range of loans before being expanded in 2015 to a greater variety of loans, all subject to a 36 percent annual percentage interest rate cap for active-duty military members and their dependents.