Some of the most contentious moments in the hearing came when Kraninger was questioned by progressive Democrats newly elected in the 2018 midterms.
Rep. Katie Porter, D-Calif., a law professor who studied under Sen. Elizabeth Warren, D-Mass., peppered Kraninger with questions over whether she understood the calculation of an annual percentage rate as a measure of pricing for a small-dollar loan.
“Can you please explain to this committee the difference between an interest rate and an APR?” Porter said. While looking up the definition, Porter added, “I’ll be happy to send you a copy of the textbook that I wrote.”
“My concern is whether you know well, ma’am, because you are the one responsible for making sure that American consumers know well when they take out loans,” she said. Porter then described a scenario of a low-income borrower needing a $200 loan for a term of two weeks, with $20 origination fee and a 10% interest rate. “Ballpark, what is the APR?”
Kraninger responded: “I understand where you’re getting. At the end of the day, the issue is certainly when you actually are able to repay that loan, and whether or not you take out an additional loan.” She added later, “This is not a math exercise though. This is a policy conversation … .”
But that explanation did not satisfy Porter. “I take that as to a ‘no’ that you cannot do the calculation, but I am particularly concerned about this, given that you cannot even correctly define the APR,” she said.
Later, Alexandria Ocasio-Cortez, another freshman lawmaker, took issue with the CFPB for missing an October deadline for an annual report summarizing consumer complaints from student loan borrowers.
Kraninger said the law requires the report be submitted by the agency’s private student loan ombudsman, but that that position is currently unfilled.
“When do you think we’ll be able to get that report?” Ocasio-Cortez said.
“It is going to take a little bit of time,” Kraninger replied.
Ocasio-Cortez added: “So no hard time commitment on when we’ll get a five-month-overdue report.”