CFPB director Mick Mulvaney is preparing to hand the reins to Kathleen Kraninger. While her nomination process grows contentious, Mulvaney is leaving his mark on the agency, creating an Office of Innovation and launching a regulatory sandbox.
On Thursday, the Senate Committee on Banking, Housing, and Urban Affairs held a confirmation hearing for Kathleen Kraninger to become director of the Consumer Financial Protection Bureau (CFPB). President Trump nominated her for the position in June. Kraninger, whose qualifications have come under fire, presently serves as associate director for general government within the Office of Management and Budget (OMB), which, coincidentally, is led by the CFPB’s current acting director, Mick Mulvaney.
Readers may remember that since November 2017, Mulvaney has held leadership roles for both the OMB and CFPB. Although his dual responsibilities were the subject of much legal dispute (and remain controversial), a judge allowed him to hold the positions concurrently. Mulvaney’s tenure at the CFPB has been marked by bouts of hostility. Last month, after he was chastised by members of the CFPB’s Consumer Advisory Board for apparently canceling legally mandated meetings, Mulvaney effectively fired the entire board.
In what are likely Mulvaney’s last days at the CFPB, he has made a series of unusual moves for the agency, indicating a FinTech focus. On Wednesday, Mulvaney appointed attorney Paul Watkins as head of the agency’s newly created Office of Innovation. Previously, Watkins oversaw FinTech initiatives for the office of the attorney general of Arizona, including a regulatory sandbox.
The CFPB’s Office of Innovation will reportedly examine blockchain technology and cryptocurrencies, as well as peer-to-peer lending and private currencies. This future focus shouldn’t be altogether surprising, as Mulvaney, along with Representative Jared Polis (D-CO), created the bipartisan Congressional Blockchain Caucus in September 2016. At the time, Mulvaney, a Republican, had represented South Carolina’s fifth district. ETHNews reported when the caucus was re-launched in February 2017.
On Wednesday, Mulvaney also disclosed that the CFPB has begun its own regulatory sandbox, which will be led by Watkins, according to the Wall Street Journal.
In October 2017, ETHNews reported on the UK Financial Conduct Authority’s report on a similar sandbox. At that time, the FCA found that firms working with distributed ledger technology faced “pronounced” difficulties in obtaining banking services.
As the CFPB becomes increasingly politicized, it will be interesting to see whether FinTech advancement remains part of the agency’s long-term strategy.
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