Kathy who...?

That was a common response from financial services lobbyists and Republican and Democratic banking staffers on Capitol Hill to President Donald Trump’s pick to run a controversial consumer finance watchdog.

Kathy Kraninger, a little-known official who has worked for the White House’s Office of Management and Budget since March 2017, was named on Saturday to succeed her boss Mick Mulvaney as director of the Consumer Financial Protection Bureau.

The CFPB is one of the most politically divisive agencies in Washington, hailed as a regulatory crown jewel by Democrats and maligned by Republicans as a bastion of government overreach and waste.

Created by the 2010 Dodd-Frank financial reform law, the bureau says it “makes sure banks, lenders and other financial companies treat you fairly.” Its jurisdiction covers a wide range of financial services marketed to everyday Americans, including including mortgages, credit cards, student loans and payday loans.

Warren’s Creation
Kraninger’s likely to face a tough Senate confirmation process over who should lead the agency that Democrat Senator Elizabeth Warren is credited for creating in the wake of the financial crisis to protect consumers from financial abuse.

“It could all come down to her performance before the Senate Banking Committee,” said Isaac Boltansky, an analyst at Compass Point. “The political complexities of the Bureau will ensure a barbarous confirmation process.”

Some Republican opposition is predicted, along with more united pushback from Democrats. Still, the GOP-controlled Senate bolsters Kraninger’s prospect of getting the 51 votes needed to get confirmed.

Progressive groups called Kraninger’s selection a political stunt and a placeholder to ensure that Mulvaney, whose been temporarily running the CFPB part time since November, stays in the job longer.

“The CFPB needs a director with a strong record of commitment to protecting consumers in the financial services marketplace,” said Lisa Donner, executive director, Americans for Financial Reform. “This nomination aims to keep the CFPB hobbled.”

The CFPB, Washington’s Flashpoint Financial Regulator: QuickTake Q&A

Karl Frisch, executive director of Allied Progress, a consumer watchdog group, said the selection “looks like nothing more than a desperate attempt by Mick Mulvaney to maintain his grip.” He described Kraninger’s relevant experience as “basically non-existent.”

Kraninger specialized in homeland security issues before joining the OMB and previously worked on budget issues in the House and Senate on Capitol Hill. At the White House her duties have included overseeing budget issues for all financial services regulators --experience the White House credits as key credentials for the job at CFPB.

Still, in financial services circles, not much is known about the Georgetown Law School graduate. Bank lobbyists and congressional staffers confessed they hadn’t heard of her, and had to google her name when they learned she might get the job, said people familiar with the matter.

Kraninger isn’t without fans. “Her experience at OMB alongside Acting CFPB Director Mick Mulvaney, along with her years of work on Capitol Hill and in the executive branch, would serve her well in this important position,” Rob Nichols, president of the American Bankers Association, said in an emailed statement. “We look forward to learning more about her views on specific regulatory issues during the confirmation process.”

Rejected Candidates
The White House interviewed candidates for months before it opted for Kraninger, people familiar with the process said.

Others on the list included Darrell Issa, the Republican congressman from California, and J. Mark McWatters, who was tapped by Trump last year to run the National Credit Union Administration. McWatters had the backing of administration officials and finance executives, people familiar with the matter said. Todd Zywicki, a professor at George Mason University’s Antonin Scalia Law School, who’d been critical of the CFPB in testimony to Congress, was also considered, the people said.

Ultimately, the White House opted for someone with government management experience and who was perceived to have the chops to rein in what conservatives have long complained is “excessive spending” at the agency.

Budget Axe
Cost-cutting has been one of Mulvaney’s top priorities; he sliced $200 million out of the CFPB budget this year and plans to reducing next year’s budget by 20 percent. Yet the cost-cutting isn’t mandated by Congressional appropriations targets -- the agency’s budget comes from a fund within the Federal Reserve.

Staffers for key Democratic lawmakers who will vote on Kraninger’s nomination questioned her credentials and, like watchdog Frisch, wondered if her selection was designed to keep Mulvaney in the job as long as possible.

Kraninger may even face a tough time getting unified Republican support because she lacks a track record defending GOP views about the agency, according to some analysts. Some said the White House may eventually be forced to withdraw her nomination.

“It would be exactly like the Bush administration’s try at Harriet Miers for the Supreme Court and would end the same way,” said J.W. Verret, professor of banking law at Scalia Law School, referring to the former White House counsel whose nomination to the top court by George W. Bush in 2005 was pulled in the face of tepid support.

“Republican opposition is building,” said Verret, a colleague of passed-over candidate Zywicki. Verret said he’s leading a group of conservative thinkers which plans to tell the Senate Banking Committee in a letter that Kraninger is unqualified.

This article was provided by Bloomberg News.