Vulnerable Dems side with Warren in battle over consumer bureau

Some of the Senate’s most vulnerable Democrats are siding with Sen. Elizabeth Warren (D-Mass.) in a fight with President Trump over his pick to lead the controversial Consumer Financial Protection Bureau (CFPB).

Democratic Sens. Heidi Heitkamp (N.D.) and Jon Tester (Mont.), both big GOP targets this November in states won easily by Trump in 2016, say they are opposed to supporting Kathy Kraninger’s nomination to lead the CFPB, joining forces with Warren and other liberal colleagues.

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The move carries some risk for Tester and Heitkamp as Trump and the GOP seek to tie centrists running in red states to liberal leaders in their party, including Warren.

It also suggests that moderate Democrats, after battling Warren over legislation rolling back parts of the 2010 Dodd-Frank Wall Street reform law earlier this year, are wary of another fight with the powerful senator and her allies on one of her signature issues.

The Senate Banking Committee is expected to vote on Kraninger’s nomination when the Senate reconvenes next week. Republicans quickly coalesced around Trump’s pick, an associate director at the Office of Management and Budget (OMB), and most Democrats are expected to oppose her.

Kraninger, who was nominated in June, is likely to be confirmed along party lines for a five-year term as director of the CFPB, empowering her with almost exclusive authority over the agency’s budget, regulations and enforcement actions.

Former CFPB assistant director Quyen Truong, now a partner at the law firm Stroock & Stroock & Lavan LLP, said Kraninger “could fundamentally change the way the bureau operates.”

The loudest opposition to Kraninger has come from Warren, a member of the Banking panel who is credited with designing and staffing the CFPB from when she was an adviser to former President Obama.

Aides to five other Senate Democrats on the Banking Committee, including Heitkamp and Tester, said they will vote against Kraninger. The panel’s minority has been united in its skepticism of Kraninger’s qualifications.

The OMB official has no direct experience crafting or enforcing financial regulations, and Democrats fear she will continue CFPB Acting Director Mick Mulvaney’s massive drawback of the consumer watchdog’s oversight.

“You can’t predict with certainty how Kraninger would operate as the permanent director given the lack of a record of her dealing with consumer financial protection regulation,” Truong said.

But “there’s significant speculation or assumption that she would continue along the path laid out by the acting director, based on her reporting relationship to him at OMB,” Truong added.

Democrats have also expressed concerns about Kraninger’s connection to controversial administration policies, including the family separations that stemmed from Trump’s zero-tolerance immigration policy.

“It is a moral stain that will follow you for the rest of your life,” Warren told Kraninger at her confirmation hearing in July. “And if the Senate votes to give a big promotion to you after this, then it will be a stain on the senators who do so.”

Kraninger angered Democrats when she refused to describe her role in implementing the border separation policy and relief efforts in Puerto Rico after Hurricane Maria.

On the consumer front, she also irked Democrats by declining to reveal her views on key CFPB regulations, staffing decisions and enforcement efforts.

“Your opening statement said a lot of good things that I agree with,” Tester said at the hearing. “Protecting data, accountability for actions, transparency, working closely, and holding bad actors accountable. But your answers don’t reflect those values at all.”

Heitkamp said in an Aug. 4 statement that Kraninger “doesn’t have any experience working on consumer finance issues, nor did she at any point offer any ideas to improve consumer protection or show interest in the issue at the most basic level that should be required for the job.”

Opposing Trump’s CFPB nominee will avoid a standoff with Warren, but it also could pose political risks for vulnerable incumbents like Heitkamp, Tester, and Sen. Joe Donnelly (D-Ind.), whose office did not respond to a request for comment on Kraninger’s nomination.

Still, voting against Kraninger is seen as helping moderates shore up their Democratic support.

“Heidi probably feels that she’s in a position to cast a ‘no’ vote and appease Sen. Warren without too much disruption back home,” said a former Senate aide now advocating for financial firms on K Street.

Tester, Heitkamp and Donnelly faced harsh criticism from liberals when they voted with Senate Republicans on a Dodd-Frank rollback bill.

Warren and Sen. Sherrod Brown (D-Ohio), ranking member of the Banking Committee, led the Democratic opposition to that measure, backed by the majority of their caucus and a slew of progressive groups.

Supporters of the legislation said it was a targeted effort to ease unnecessary burdens on community banks and credit unions that were unnecessarily lumped in with big Wall Street firms under the Dodd-Frank law. Liberal critics countered that the bill would do irreparable damage and risk another financial crisis akin to the one that Dodd-Frank was meant to prevent.

Democratic divisions over the bill went public, with liberals and moderates accusing each other of exaggeration and dishonesty. Tension peaked when Warren rebuked fellow Democrats by name in a fundraising email ripping the rollback effort.

The Senate passed the Dodd-Frank rollback by a wide bipartisan margin in March, the House cleared it two months later and Trump signed the bill into law on May 24, flanked by Heitkamp and more than a dozen Republicans. Tester and Donnelly were not invited to the White House photo-op.

Senate Democrats are now largely united against Kraninger, giving vulnerable moderates a chance to win back some of the progressive support they lost by voting to loosen Dodd-Frank regulations.

“They were probably dinged by some liberal organizations,” the former Senate aide said. “This offers an opportunity to course-correct from their decision to vote for reforms to Dodd-Frank.”

Republicans are eager to oust Heitkamp and Tester, but both are popular in their home states and have crossed the aisle to work with Trump frequently throughout the year.

Trump has frequently bashed Tester over opposition earlier this year to a previous Veterans’ Affairs (VA) secretary nominee, but he has also signed several of Tester’s VA-related bills, shielding the Montana Democrat somewhat from GOP attacks during his reelection campaign back home.

Meanwhile, Trump has also expressed only mild criticism for Heitkamp, and the powerful Koch donor network announced last week that it would not support her Republican challenger, Rep. Kevin Cramer.