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Consumer Financial Protection Bureau Director Kathy Kraninger yesterday defended her predecessor's decision to assert greater control over the agency's fair lending office, signaling she had no plans to reverse the controversial move, Politico reported. Kraninger, making her first appearance before the House Financial Services Committee since taking over the helm of the agency in December from Mick Mulvaney, was sharply questioned by Chairwoman Maxine Waters (D-Calif.) about the move, which civil rights advocates have decried as an effort to sideline the office and curb enforcement. When Waters repeatedly asked her whether any new fair lending investigations had been opened in the three months since Kraninger took over, she demurred, saying enforcement attorneys make the decision to open any such probes. Waters was a severe critic of Mulvaney, now President Donald Trump's acting chief of staff, who ran the agency for more than a year. During his tenure, he worked to scale back the CFPB's enforcement actions, cut its budget and install political appointees in key posts. One of Mulvaney’s first steps upon taking over in late November 2017 was to shift the Office of Fair Lending into the director's office, effectively sidelining the office's Obama-era chief, Patrice Ficklin. No fair lending cases have been announced since then. That decision sparked an outcry, with the union representing CFPB employees filing a “mass grievance” complaint calling, among other things, for the bureau to put a temporary halt to the planned reorganization.

U.S. Senators Tammy Baldwin (D-Wis.) and John Cornyn (R-Texas) today introduced the bipartisan Honoring American Veterans in Extreme Need (HAVEN) Act (S. 679) to protect the economic security and well-being of veterans and their families who rely on disability benefits and may be experiencing financial hardship, according to a press release. Under current bankruptcy law, disability benefits paid by the Department of Veterans Affairs (VA) and Department of Defense (DoD) are included in the calculation of a debtor’s disposable income, increasing the portion of the debtor’s income that is subject to the reach of creditors. By contrast, bankruptcy law explicitly exempts Social Security disability benefits from this calculation. To remove this unequal treatment among various disability benefits, the HAVEN Act would exclude VA and DoD disability payments made to veterans or their dependent survivors from the monthly income calculation used for bankruptcy means tests. “Forcing our veterans and their families to dip into their disability-related benefits to pay off bankruptcy creditors dishonors their service and sacrifice. These benefits are earned, and we must do right by our veterans and protect their economic security, especially during challenging times,” said Baldwin. Cornyn added that “disabled veterans fought for their country at great cost, and they shouldn’t need to fight to protect their disability benefits from creditors during bankruptcy.” Holly Petraeus, member of ABI's Veterans' Task Force and former Assistant Director of the Consumer Financial Protection Bureau, Office of Servicemember Affairs, said that she was surprised to learn that a flaw in the Bankruptcy Code was denying disabled veterans the protections that it offered to all other Americans receiving disability income. "The HAVEN Act fixes that flaw, and I’m happy to join its many bipartisan co-sponsors as an individual sponsor of the bill,” Petraeus said. For more information on the HAVEN Act, please click here. 

To read the full bill text, please click here. 

For more on this issue, be sure to read this November ABI Journal article or listen to this special ABI podcast.

The House Financial Services Committee will hold a hearing on today at 10 a.m. EDT titled "Putting Consumers First? A Semi-Annual Review of the Consumer Financial Protection Bureau." The hearing will consider draft legislation titled the "Consumers First Act" and will hear from two panels of witnesses. Click here for a live webcast to the hearing and to view the witness list.

U.S. credit card debt hit $870 billion — the largest amount ever — as of December 2018, according to the data from the Federal Reserve. Credit card balances rose by $26 billion from the prior quarter, Bloomberg News reported. "The increase in credit card balances is consistent with seasonal patterns but marks the first time credit card balances re-touched the 2008 nominal peak," according to the report. Nearly 480 million credit cards are now in circulation — up by more than 100 million since hitting bottom after the recession a decade ago. At the end of last year, credit cards were the fourth-largest portion of consumer debt in the U.S. after mortgage, student loan and auto debt. But the quarterly increase in credit card debt was faster than the other categories. Overall debt reached a record $13.5 trillion.

The House Appropriations Subcommittee on Labor, Health and Human Services, and Related Agencies will hold a hearing today at 10:30 a.m. EDT titled "Protecting Student Borrowers: Loan Servicing Oversight." Click here for the witness list and for a link to the live webstream for today's hearing. 

Student loans in bankruptcy are an important topic that the ABI Commission on Consumer Bankruptcy is examining. The Commission will unveil its recommendations to improve the consumer bankruptcy system at ABI’s Annual Spring Meeting next month. Register here. 

The House Appropriations Subcommittee on Labor, Health and Human Services, and Related Agencies will hold a hearing tomorrow at 10:30 a.m. EDT titled "Protecting Student Borrowers: Loan Servicing Oversight." Click here for the witness list and for a link to the live webstream for tomorrow's hearing.

Argosy University, a chain of vocationally focused schools with nearly two dozen campuses nationwide, teetered on the edge of collapse yesterday after the Education Department accused it of improperly taking as much as $16 million in aid money that should have gone to students, the New York Times reported. The department revoked the eligibility of Argosy, which is owned by Dream Center Education Holdings, to receive federal student loan funds, worsening the financial problems of a chain already in dire financial shape. Last month, a federal judge in Ohio placed Argosy and several other Dream Center campuses under federal receivership, appointing an outside official to handle the chain’s finances. Taken together, those campuses enroll about 10,000 students. Soon after the receivership began, the Education Department began hearing complaints that Argosy had failed to make payments owed to students, according to a letter the agency sent yesterday to Dream Center and its receiver.