Mulvaney’s ‘Indispensable’ Aide Could Guide CFPB’s New Chief

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By Evan Weinberger

A former aide to one of the Consumer Financial Protection Bureau’s fiercest critics could drive policy decisions at the agency if President Donald Trump’s nominee Kathy Kraninger becomes director.

If confirmed by the Senate, Kraninger would enter the CFPB with wide experience in setting budgets but little exposure to financial regulation.

That’s where Brian Johnson, a former aide to House Financial Services Committee Chairman Jeb Hensarling (R-Texas), comes in. Johnson was named the CFPB’s acting deputy director July 9 following a seven-month stint as senior adviser to acting Director Mick Mulvaney.

“At least until Kraninger gets her feet wet and becomes more knowledgeable about consumer financial services and the workings of the bureau, Johnson will de facto manage the bureau,” Alan Kaplinsky, the co-chair of Ballard Spahr LLP’s consumer financial services group, told Bloomberg Law in an Aug. 1 email.

Kraninger has had decades of experience in domestic security and budget issues, including her current role as an associate director at the Office of Management and Budget. Her resume does not include any prior work on financial regulatory issues or much direct experience with the bureau.

Johnson has been in charge of many of the CFPB’s day-to-day operations because Mulvaney splits his attention between the bureau and his full-time job as OMB director, according to people with knowledge of the situation.

Mulvaney called Johnson an “indispensable advisor” who knows the CFPB “like the back of his hand” when he announced his promotion in July.

Both Johnson and the CFPB declined to comment for this story.

From the Halls of Congress

Johnson’s previous work for Hensarling could give some clues about where the CFPB under Kraninger will go on rulemaking and enforcement.

A guiding principle for him “has been that the bureau should stay within the parameters of Dodd Frank, no more and no less,” Charles Washburn, the co-chair of Manatt Phelps & Phillips LLP’s consumer financial services practice, said in an Aug. 1 email to Bloomberg Law.

During Mulvaney and Johnson’s tenure, that has meant reconsidering the bureau’s payday lending rule, reviewing enforcement actions started under former CFPB Director Richard Cordray, and reviewing the results of a series of requests for information about all of the bureau’s operations.

Critics have said many of those moves reflect the priorities of the House Financial Services Committee, where Hensarling and other Republicans routinely chastised Cordray.

During his time at the committee, Johnson helped craft legislation that would have restructured the CFPB and curtailed many of its current regulatory, supervisory, and enforcement powers. Johnson also had a hand in writing bills that were ultimately signed into law that altered mortgage servicing and other bureau regulations.

Johnson, who earned economics and law degrees from the University of Virginia, also previously worked for Ohio Attorney General Mike DeWine, another Cordray antagonist. Cordray lost his job as Ohio’s attorney general to DeWine in a close 2010 election and is facing off against DeWine in Ohio’s governor’s race this year.

Dems Worried

Johnson is one of about 10 political appointees Mulvaney brought into the bureau since he took over from Cordray in November.

Democrats on the Senate Banking Committee have raised concerns about Johnson’s experience with Hensarling, and the impact it could have on the bureau if Kraninger takes over.

Among a series of questions submitted to Kraninger after her July 19 confirmation hearing, Democrats including Sens. Sherrod Brown of Ohio and Elizabeth Warren of Massachusetts asked the nominee for director specifically about her potential interactions with Johnson.

The senators noted that Johnson was on the Financial Services Committee’s staff when it released a report calling the CFPB’s use of disparate impact to enforce the Equal Credit Opportunity Act “controversial” and “not cognizable” under the law. They then asked Kraninger whether she would consult with Johnson on that issue.

She didn’t say no.

“If confirmed, I will have a detailed conversation with the relevant staff on this topic, to better understand the positions the bureau has taken in the past on this issue, and the status of any litigation on the issue,” Kraninger wrote back, according to documents released Aug. 1.

Mulvaney’s Priorities Enacted

There’s been no indication that committee Republicans will join Democrats in opposing the Kraninger nomination. Sen. Richard Shelby (R-Ala.) told Bloomberg Law on Aug. 1 that he supports Kraninger and hopes the banking committee will advance the nomination when the Senate returns from its two-week recess the week of Aug. 13.

Having Kraninger in place to slash the CFPB’s budget — she described a Trump administration proposal to cut the bureau’s fiscal 2019 budget by 23 percent as “opportunities for efficiencies” — and Johnson to reshape its regulatory and enforcement priorities could provide a way for Mulvaney to exert influence at the bureau even after he leaves.

And that is just one more worry that consumer advocates have about Kraninger as her confirmation process rolls on.

“There’s no information we have now that would indicate that there would be a counterpoint to what we’ve seen so far as business as usual under Mick Mulvaney and Brian Johnson,” Scott Astrada, the federal advocacy director at the Center for Responsible Lending, told Bloomberg Law on July 31.

To contact the reporter on this story: Evan Weinberger in New York at

To contact the editor responsible for this story: Michael Ferullo at

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