WEBVTT - Kraninger on Bank Regulations, CFPB, Crypto 0:00:11.640 --> 0:00:15.040 Hello, and welcome to the Votes in Verdicts podcast hosted 0:00:15.040 --> 0:00:18.920 by the litigation and policy team at Bloomberg Intelligence, the 0:00:19.000 --> 0:00:24.200 investment research platform of Bloomberg LP. Bloomberg Intelligence has five 0:00:24.280 --> 0:00:28.040 hundred analysts and strategists working across the globe and focused 0:00:28.080 --> 0:00:31.920 on all major markets. Our coverage includes over two thousand 0:00:31.920 --> 0:00:34.800 equities and credits, and we have outlooks on more than 0:00:34.880 --> 0:00:39.000 ninety industries and one hundred market indices, currencies and commodities. 0:00:39.600 --> 0:00:44.040 This podcast series examines the intersection of business policy and law. 0:00:44.479 --> 0:00:49.319 I'm Elliott Stein, an analyst with Bloomberg Intelligence covering financials litigation, and. 0:00:49.320 --> 0:00:51.199 My name is Nathan Dean, and I'm an analyst with 0:00:51.200 --> 0:00:53.360 Bloomberg Intelligence covering financials policy. 0:00:53.640 --> 0:00:57.080 We are delighted today to have our guest Kathy Kraininger, 0:00:57.280 --> 0:01:02.280 CEO of the Florida Bankers Association. Prior to that role, 0:01:02.360 --> 0:01:06.319 she was VP of Regulatory Affairs for Solidus Labs, where 0:01:06.360 --> 0:01:10.920 she built the fintech Startups global policy and engagement strategy, 0:01:11.400 --> 0:01:14.520 and before that, she was Director of the Consumer Financial 0:01:14.560 --> 0:01:18.960 Protection Bureau, better known as the CFPB from twenty eighteen 0:01:19.040 --> 0:01:23.000 to twenty twenty one. Previous government service has also included 0:01:23.040 --> 0:01:26.200 being an Associate Director in the Office of Management and 0:01:26.240 --> 0:01:30.559 Budget the OMB from twenty seventeen to twenty eighteen, serving 0:01:30.600 --> 0:01:32.920 in the Peace Corps in Ukraine from nineteen ninety seven 0:01:33.000 --> 0:01:37.279 to nineteen ninety eight, and in turning for Representative Shared Brown, 0:01:37.319 --> 0:01:40.360 who is now, of course, a US Senator from Ohio. 0:01:40.880 --> 0:01:44.199 So with all that, Kathy Kraminger, welcome to the Votes 0:01:44.200 --> 0:01:45.240 and Verdicts podcast. 0:01:45.360 --> 0:01:47.960 Thank you so much, Elliott Nathan. Fantastic to be with 0:01:48.040 --> 0:01:48.400 you today. 0:01:48.680 --> 0:01:52.000 So our first question that we ask of all our 0:01:52.080 --> 0:01:55.120 guests is about their history. You know, I just mentioned 0:01:55.480 --> 0:01:58.919 the highlights of your official bio. It's obviously very impressive, 0:01:59.480 --> 0:02:01.639 but we'd love to know a little bit more about 0:02:01.640 --> 0:02:03.600 how you got to where you are, what took you 0:02:03.640 --> 0:02:06.760 into government service, and more recently, what took you to 0:02:06.840 --> 0:02:08.440 the Florida Bankers Association. 0:02:09.720 --> 0:02:11.800 Yea happy, happy to give you a bit of the 0:02:11.880 --> 0:02:15.480 rundown of that circuitous route that I took, largely through 0:02:15.520 --> 0:02:19.320 government service, and it really came from a love of 0:02:19.600 --> 0:02:22.840 policy and a love of Washington, d C. I'll say 0:02:22.840 --> 0:02:27.360 these days that sounds very naive and nice, I guess quaint, 0:02:27.840 --> 0:02:30.840 but I really always loved Washington and I said, you know, 0:02:30.880 --> 0:02:32.920 if I could work in the US capital, if I 0:02:32.919 --> 0:02:35.760 could work for the American people and do good for. 0:02:35.760 --> 0:02:38.680 The country, you know, that's all worthwhile. 0:02:39.320 --> 0:02:42.200 And so I feel very blessed that I had that career. 0:02:42.240 --> 0:02:45.440 I went to Washington, d C. Following my Peace Corps service, 0:02:45.480 --> 0:02:49.320 as you mentioned, and worked at the Department of Transportation. 0:02:49.720 --> 0:02:53.639 Had a fantastic really first boss in a full time 0:02:53.720 --> 0:02:58.799 role forgetting my internship, but working for Secretary Normanetta, who 0:02:58.800 --> 0:03:03.520 was the Democrat in in the Bush cabinet, and nine 0:03:03.560 --> 0:03:05.840 to eleven, of course happened. It changed everything that we 0:03:05.840 --> 0:03:08.720 were working on. One day we're talking about whether and 0:03:08.760 --> 0:03:11.520 how Mexican trucks should enter the United States, and the 0:03:11.520 --> 0:03:15.560 next day we're talking about, you know, obviously how planes 0:03:15.600 --> 0:03:18.520 fly into buildings, and what we need to do to 0:03:18.560 --> 0:03:24.040 further secure aviation and all transportation and immigration borders. You know, 0:03:24.360 --> 0:03:27.120 the rest of it is now history with the stand 0:03:27.200 --> 0:03:30.160 up of DHS that I was involved in in TSA. 0:03:30.639 --> 0:03:33.480 So I really do feel very blessed to have been 0:03:34.040 --> 0:03:37.400 engaged in really what were the big public policy issues 0:03:37.440 --> 0:03:40.360 at the time and looking to solve them. Moving through 0:03:40.400 --> 0:03:42.680 homeland security and a lot of the things that I 0:03:42.720 --> 0:03:48.160 worked on there, including infrastructure protection and cyber and disaster response. 0:03:48.600 --> 0:03:51.400 Of course, we had major hurricanes we responded to also 0:03:51.440 --> 0:03:53.960 over the last two decades that I had a role 0:03:54.040 --> 0:03:57.280 at least in the policy and funding side on. But 0:03:57.520 --> 0:04:01.120 a lot of that got me introduced into and actually 0:04:01.200 --> 0:04:05.400 financial crime enforcement too, got me introduced into financial services 0:04:05.480 --> 0:04:07.480 and the conversations that were happening there. 0:04:07.840 --> 0:04:13.080 Certainly the financial crisis and the creation of the. 0:04:13.040 --> 0:04:16.480 CFPB, A lot of that came out of that. And 0:04:16.520 --> 0:04:19.400 so as you look at moving into my time in 0:04:19.440 --> 0:04:22.560 the Trump administration, when I was at OMB, I was 0:04:22.600 --> 0:04:27.839 involved with the Economic Policy team from that vantage point, 0:04:27.880 --> 0:04:31.599 talking about housing finance, talking about where we should go 0:04:31.680 --> 0:04:35.360 on a lot of exciting regulatory reform arenas. We had 0:04:35.400 --> 0:04:40.480 the opportunity in that administration to replace the CFPB director, 0:04:41.080 --> 0:04:45.080 and you can imagine that as the President was looking 0:04:45.120 --> 0:04:46.520 around and there are a lot of things that he 0:04:46.640 --> 0:04:49.160 likes to do that are going to surprise people. There 0:04:49.200 --> 0:04:52.719 were Republicans who basically said the agency should not exist, 0:04:52.760 --> 0:04:54.400 and they would go into. 0:04:55.760 --> 0:04:58.640 To really neuter it, I suppose you could say, in 0:04:58.680 --> 0:05:00.480 a nice way, uh. 0:05:00.520 --> 0:05:02.760 And then on the other side, it was you know, 0:05:02.800 --> 0:05:06.159 who's going to run the agency. It has a legal responsibility. 0:05:06.240 --> 0:05:09.000 You know, we want to you know, surprise people and 0:05:09.040 --> 0:05:11.479 put in a Republican that is going to govern and 0:05:11.520 --> 0:05:12.200 follow the law. 0:05:12.880 --> 0:05:15.039 And so that is how my nomination came to be. 0:05:15.760 --> 0:05:18.200 And that was my you know, last service in government 0:05:19.320 --> 0:05:24.039 and leaving the CFPB, I had the chance to say, 0:05:24.040 --> 0:05:25.560 you know, I want I want to help start building, 0:05:25.640 --> 0:05:28.880 build a business, understand what was happening internationally, which is 0:05:28.880 --> 0:05:31.960 how I ended up at Solidus Labs. And then I 0:05:32.000 --> 0:05:35.760 also said, you know, it wasn't scaling fast enough. I 0:05:35.800 --> 0:05:38.479 also have a lot of my history in you know, 0:05:38.520 --> 0:05:40.800 how do we build an organization, how do we scale, 0:05:40.800 --> 0:05:43.000 how do we take things to the next level. And 0:05:43.080 --> 0:05:45.600 so I still am a huge supporter of that company 0:05:45.680 --> 0:05:48.279 and and you know, want to see them do well 0:05:48.720 --> 0:05:52.440 and excited to see progress in the regulation of the 0:05:52.440 --> 0:05:57.560 crypto markets. It was a great opportunity to come to Florida, 0:05:58.160 --> 0:06:01.840 really and it was part of my decision making process too, 0:06:01.839 --> 0:06:03.320 to say am I going to be in Washington for 0:06:03.320 --> 0:06:04.680 the rest of my life or am I going to 0:06:04.720 --> 0:06:05.760 go venture out? 0:06:06.640 --> 0:06:08.239 So I did, in fact do that. 0:06:09.960 --> 0:06:14.919 In taking this job, but I'm following a long time CEO, 0:06:15.080 --> 0:06:17.880 So twenty six years Alex Sanchez was here in Florida 0:06:18.760 --> 0:06:22.000 and really looking at the changes that have been happening 0:06:22.480 --> 0:06:27.280 for the banking industry, and that the opportunity to remind people, frankly, 0:06:27.360 --> 0:06:31.960 why banks are so important in their communities and putting 0:06:32.000 --> 0:06:35.600 customers and communities first and foremost in terms of how 0:06:35.640 --> 0:06:39.520 we talk about the real impact of the policy process 0:06:39.720 --> 0:06:43.000 on these institutions. It's not about the impact on the 0:06:43.040 --> 0:06:44.000 banks themselves. 0:06:44.040 --> 0:06:45.080 It's how that. 0:06:45.000 --> 0:06:50.360 Changes the services and products and support that banks can 0:06:50.400 --> 0:06:53.480 give to their communities and to their customers. So being 0:06:53.520 --> 0:06:56.200 at the forefront of that is definitely where we are 0:06:56.600 --> 0:07:01.160 as FBA and as really associations represent bankers. 0:07:01.640 --> 0:07:04.120 So you talked about how much you love Washington as 0:07:04.120 --> 0:07:07.960 we currently film this or it's currently ninety seven degrees 0:07:08.040 --> 0:07:10.880 with thunderstorms. So I would love to talk about your 0:07:10.920 --> 0:07:12.800 time in Florida because that's where I wish I was 0:07:12.880 --> 0:07:16.400 right now. So you know, as you have been at 0:07:16.400 --> 0:07:20.240 the Florida Bankers Association, what are the highest priorities for 0:07:20.280 --> 0:07:22.560 you in the organization that you see over the next year. 0:07:24.040 --> 0:07:29.760 So, certainly the regulatory environment is huge. We are seeing 0:07:29.960 --> 0:07:35.160 what is aptly called the tsunami of regulatory changes coming 0:07:35.200 --> 0:07:38.840 out of every agency in Washington, and frankly a trend 0:07:38.840 --> 0:07:42.400 that is migrating into the States too, as the States 0:07:42.400 --> 0:07:45.640 are taking you know, political postures and saying, you know, 0:07:45.760 --> 0:07:48.960 is this the industry that we want to see or 0:07:49.000 --> 0:07:52.800 is this how we want to see business operate? So 0:07:53.320 --> 0:07:58.160 those dynamics are real, and as I said before, that 0:07:58.240 --> 0:08:01.840 impacts communities, That impacts real people, That impacts the type 0:08:01.880 --> 0:08:07.360 of credit products and support and risks that banks can 0:08:07.440 --> 0:08:10.240 take when they know their communities and know their customers, 0:08:10.800 --> 0:08:13.720 but they have to justify that to regulators, and those 0:08:13.760 --> 0:08:17.560 regulators are looking for a standard credit box and saying, 0:08:17.720 --> 0:08:21.400 you know, afterward, you know that Monday morning quarterback role 0:08:21.480 --> 0:08:24.400 is always a much nicer place to be to come 0:08:24.440 --> 0:08:27.240 in afterwards and say like, well, how did you approve this? 0:08:27.400 --> 0:08:30.520 But not approve that? And that's the role we're in 0:08:30.640 --> 0:08:34.320 in many respects. We're turning banking into a commodity and 0:08:34.400 --> 0:08:38.480 turning it into, you know, something that is cookie cutter 0:08:38.960 --> 0:08:43.240 or a utility, and that is definitely not what made 0:08:44.080 --> 0:08:48.520 these institutions really serve their communities and help small businesses. 0:08:48.559 --> 0:08:50.239 So I think that that whole. 0:08:50.000 --> 0:08:54.320 Regulatory environment and the conversation and pushback you're seeing is 0:08:54.360 --> 0:08:59.000 fundamentally about what community support should look like. So that's 0:08:59.040 --> 0:09:01.840 issue number one by far. I'd say the second one 0:09:01.880 --> 0:09:05.200 is also the next generation. We are very much pushing 0:09:05.280 --> 0:09:09.040 for making sure that people understand. 0:09:08.559 --> 0:09:10.880 What opportunities there are in banking. 0:09:11.120 --> 0:09:15.280 And helping, you know, shape that as an opportunity for people, 0:09:15.320 --> 0:09:18.200 particularly as I said, in Florida, and there's there are 0:09:18.200 --> 0:09:20.320 a lot of things happening in Florida that are positive 0:09:20.360 --> 0:09:20.760 for sure. 0:09:20.960 --> 0:09:22.840 Well, Elliott and I both came up out of the 0:09:22.840 --> 0:09:24.720 banking world, so we will join you and say that 0:09:24.720 --> 0:09:28.199 if anybody's listening, join the banks. Don't go to tech 0:09:28.400 --> 0:09:31.200 or healthcare or anything. You know, we love the banks too. 0:09:31.320 --> 0:09:33.760 So I'd like to talk a little bit about the 0:09:33.800 --> 0:09:37.760 Basle three endgame. You know, this is a Federal Reserve 0:09:37.880 --> 0:09:42.880 ftic OCC proposal which under the proposed language, could increase 0:09:42.960 --> 0:09:45.880 capital requirements for the regional banks around five to six percent, 0:09:46.160 --> 0:09:49.440 the g SIPs, the Bank of Americas, the JP, Morgan's 0:09:49.480 --> 0:09:53.120 and so forth, the up to nineteen percent. We've seen 0:09:53.200 --> 0:09:56.000 reporting that the FED is going to have broad and 0:09:56.080 --> 0:09:59.160 material changes and that these overall capital requirements are coming down. 0:09:59.480 --> 0:10:01.560 But one of the things that I've also been very 0:10:01.600 --> 0:10:04.520 struck as we go through this process is that there's 0:10:04.559 --> 0:10:08.480 been a lot of outreach for from community banks and 0:10:08.520 --> 0:10:12.360 from small banks and small businesses on why the Bosle 0:10:12.400 --> 0:10:17.719 three endgame would ultimately hurt them. So does Florida? Does 0:10:17.760 --> 0:10:20.960 the Florida Bankers Association stand anywhere on the proposal? And 0:10:21.480 --> 0:10:24.560 if so, should the proposal drastically changing? If you know, 0:10:24.559 --> 0:10:26.480 should there even be a reproposal at this point? 0:10:26.840 --> 0:10:30.520 So I will say yes, absolutely, it is. Basle three 0:10:30.600 --> 0:10:33.800 endgame is part of that. And I think one of 0:10:33.800 --> 0:10:36.559 the things that I've been most encouraged by in terms 0:10:36.600 --> 0:10:40.320 of the way the associations in Washington at the state 0:10:40.440 --> 0:10:45.120 level have approached this. We have the US Chamber, State 0:10:45.240 --> 0:10:48.720 Chambers to the Florida Chamber and local chambers of commerce 0:10:49.160 --> 0:10:52.320 that are right there with us fighting on on Basle 0:10:52.360 --> 0:10:55.839 three endgame. And you've got you know, I can't remember, frankly, 0:10:55.880 --> 0:10:57.440 if it was a Super Bowl I tend to like 0:10:57.480 --> 0:10:58.960 to fact check, but I think it was a Super 0:10:59.000 --> 0:11:02.120 Bowl commercial frankly out puzzile free endgame. So you get 0:11:02.120 --> 0:11:06.960 to what is a very arcane regulatory capital requirement note 0:11:07.160 --> 0:11:11.520 as you noted, and mixing it with that, so it 0:11:11.559 --> 0:11:15.360 has reached common vernacular and understanding that this is not 0:11:15.480 --> 0:11:17.720 just about how much capital the banks have to hold. 0:11:18.200 --> 0:11:21.480 It is about what really that lending environment looks like 0:11:21.559 --> 0:11:25.360 and what impact that has again on businesses of all 0:11:25.400 --> 0:11:28.560 sizes and their ability of these institutions to support and 0:11:28.600 --> 0:11:31.280 serve them, which means it has an impact on employment, 0:11:31.320 --> 0:11:32.920 it has an impact on the economy. 0:11:33.280 --> 0:11:34.280 We just saw a. 0:11:35.679 --> 0:11:38.400 I think it was PwC, but a study that was 0:11:38.480 --> 0:11:42.400 just done in the last couple of days on exactly this, saying, look, 0:11:42.440 --> 0:11:45.680 this is this regulation, if it were implemented, would have 0:11:45.760 --> 0:11:49.080 a massive impact on the economy and on GDP in fact, 0:11:49.480 --> 0:11:53.079 so you get to things that just don't make sense fundamentally. 0:11:53.160 --> 0:11:57.040 So yes, we're opposed to it as it was proposed 0:11:57.640 --> 0:11:59.880 and think there is a better way to go about this, 0:12:00.520 --> 0:12:03.080 And in fact, it sounds like with all of the 0:12:03.120 --> 0:12:06.880 pushback that particularly the Federal Reserve has been, you know, 0:12:07.000 --> 0:12:08.920 leading the charge on this and thinking about it. 0:12:08.960 --> 0:12:11.160 Though it is a. 0:12:10.360 --> 0:12:14.840 Multi agency banking regulation, there are going to be pretty 0:12:14.840 --> 0:12:18.120 significant changes to it, and that means it's going to 0:12:18.200 --> 0:12:20.880 have to be a reproposal, and it also sounds like 0:12:20.880 --> 0:12:22.920 they're slowing things down a little bit in terms of 0:12:22.920 --> 0:12:27.439 not rushing this next iteration out. So I would say 0:12:27.840 --> 0:12:30.520 I am personally at least hopeful that this gets to 0:12:30.559 --> 0:12:31.199 a better place. 0:12:32.040 --> 0:12:36.960 So, you know, assuming the rule gets watered down once finalized, 0:12:37.000 --> 0:12:40.079 whether it's you know, via a reproposal or a finalization 0:12:40.200 --> 0:12:43.839 of the current proposal, but assuming it gets watered down, 0:12:44.960 --> 0:12:47.160 do you think there's any chance that it gets watered 0:12:47.200 --> 0:12:51.760 down so much that that industry doesn't sue the government 0:12:51.800 --> 0:12:55.160 over it, or do you think, you know litigation is inevitable. 0:12:56.520 --> 0:12:59.480 Well, you know, I certainly wouldn't want to opine on 0:12:59.559 --> 0:13:02.600 that a bitter early to do that. I do think 0:13:02.640 --> 0:13:04.839 there's going to be a reproposal. All directions seem to 0:13:04.880 --> 0:13:08.480 point to that. So giving them that opportunity to say, yes, 0:13:08.559 --> 0:13:12.400 there are enough changes from that last proposal that it's 0:13:12.440 --> 0:13:15.680 worth going to comment again. I'm guessing your listeners tend 0:13:15.720 --> 0:13:17.880 to know that process, but it is an important one 0:13:17.880 --> 0:13:20.000 because if you change enough, you can't go final and 0:13:20.040 --> 0:13:24.040 so there is a much longer tail now on when 0:13:24.120 --> 0:13:28.200 that can be finalized and another comment period. So I 0:13:28.240 --> 0:13:31.000 see all of that as definitely positive and would say 0:13:31.040 --> 0:13:33.720 we should reserve judgment on litigation. 0:13:33.800 --> 0:13:35.800 It's not and you both know this too. 0:13:36.200 --> 0:13:39.480 It is not an easy decision to decide to litigate 0:13:40.080 --> 0:13:43.520 and sue your regulator and your primary regulator. It's not 0:13:43.679 --> 0:13:47.319 something that the banking industry has tended to do very frequently. 0:13:47.640 --> 0:13:49.240 And I will say in the last two years you 0:13:49.280 --> 0:13:51.040 see a lot, or the last three years, you see 0:13:51.040 --> 0:13:53.280 a lot of it, and I think with good reason. 0:13:53.760 --> 0:13:55.800 Like you know, we've talked about this on this podcast 0:13:55.800 --> 0:13:57.760 many times, so we're sort of in this perfect storm 0:13:57.840 --> 0:14:01.679 right now where you have very aggressive value and at 0:14:01.760 --> 0:14:04.600 least a federal judiciary who is, you know, skeptical of 0:14:04.600 --> 0:14:09.480 government overreached. So thus the many lawsuits, speaking of which 0:14:09.520 --> 0:14:11.440 I want to ask you a little bit about your 0:14:11.520 --> 0:14:14.679 time at the CFPB, where you were director from twenty 0:14:14.720 --> 0:14:18.000 eighteen to twenty twenty one. You were there as the 0:14:18.040 --> 0:14:20.560 sale of law case was won in through the courts 0:14:21.360 --> 0:14:24.200 and eventually reached the Supreme Court. And for those who 0:14:24.240 --> 0:14:26.640 don't know or don't remember, the issue in sale a 0:14:26.720 --> 0:14:29.280 law or some pronounced it seal a law, I pronounced 0:14:29.280 --> 0:14:32.040 it sale a law was whether the president could fire 0:14:32.160 --> 0:14:36.200 the CFPB director at will or not. The Supreme Court 0:14:36.280 --> 0:14:39.680 ultimately held in June of twenty twenty that the president 0:14:39.720 --> 0:14:43.080 could indeed fire the CFPB director at will before the 0:14:43.120 --> 0:14:46.640 director's five year term ended, and that you know, the 0:14:46.680 --> 0:14:50.240 president didn't need cause to remove the CFPB director. And 0:14:50.400 --> 0:14:53.880 the result, of course, was that the CFPB director then 0:14:53.920 --> 0:14:58.040 became less independent from the president more aligned with the 0:14:58.080 --> 0:15:01.280 political priorities of you know, whoever the president was at 0:15:01.280 --> 0:15:05.000 that time. If I recall, the CFPB originally took the 0:15:05.000 --> 0:15:08.960 position that the four cause removal restriction in Dodd Frank 0:15:09.360 --> 0:15:13.400 was fine, it was constitutional. Under your tenure, the CFPB's 0:15:13.440 --> 0:15:16.480 position changed, I believe, and in the Supreme Court, the 0:15:16.520 --> 0:15:20.600 cfb's official position was that the four cause removal restriction 0:15:20.760 --> 0:15:23.640 was unconstitutional and the president should be able to fire 0:15:24.080 --> 0:15:27.840 the CFPB director at will. I'd love to know your thoughts, 0:15:29.000 --> 0:15:30.640 you know, on why you think it's important that the 0:15:30.640 --> 0:15:33.920 president should be able to fire the CFPB director at will. 0:15:34.000 --> 0:15:38.400 It ultimately that decision ultimately wound up in you know, 0:15:38.440 --> 0:15:41.040 your removal from the agency when President Biden. 0:15:40.800 --> 0:15:43.320 Came in, Yes, which is certainly the outcome that we 0:15:43.400 --> 0:15:47.520 knew was possible. Given a presidential election year, but one 0:15:47.840 --> 0:15:49.720 that certainly I thought was the right decision. 0:15:50.040 --> 0:15:51.360 Look that that four. 0:15:51.280 --> 0:15:57.400 Cause terminology is frankly, you look at some of the 0:15:57.440 --> 0:16:01.320 dynamics happening politically today and you could just eviscerate someone 0:16:01.520 --> 0:16:03.800 if you want to come up with or debate what 0:16:03.840 --> 0:16:07.480 the cause truly is and and really tear somebody to shreds. 0:16:08.040 --> 0:16:10.680 I did not see that as productive. So I would 0:16:10.680 --> 0:16:12.760 say there are some who argued that there was the 0:16:12.800 --> 0:16:15.560 ability to remove regardless, but you you'd literally do it 0:16:15.600 --> 0:16:20.760 by destroying a person's reputation and having perhaps uh you know, 0:16:20.840 --> 0:16:22.760 some some a lot of different ways to do it 0:16:22.800 --> 0:16:25.520 at any rate. So it really came down to was 0:16:25.560 --> 0:16:28.200 that meaningful or not meaningful in terms of some kind 0:16:28.200 --> 0:16:31.480 of limitation and if if there needs to be the 0:16:31.520 --> 0:16:33.920 appointment of a CFPB director, of course that is the 0:16:33.960 --> 0:16:36.440 purview of the president. So you get to the right 0:16:36.480 --> 0:16:39.400 to a point, but not the right to remove. 0:16:39.840 --> 0:16:41.080 And so it does get. 0:16:41.400 --> 0:16:43.960 You know, from a practical standpoint, some of those things 0:16:44.000 --> 0:16:46.760 were things that we thought about and considered and looking 0:16:46.800 --> 0:16:50.240 in general at you know, what what exactly makes an 0:16:50.280 --> 0:16:53.440 independent agency? We could have a lot of conversation about 0:16:53.440 --> 0:16:56.760 that as a lawyer myself. Whether there are any truly 0:16:56.800 --> 0:16:59.640 independent agencies and what that actually means and whether that 0:17:00.280 --> 0:17:03.880 was foreseen in the Constitution at all is also an interesting, 0:17:05.240 --> 0:17:09.720 you know, process for lawyers to debate. But my personal 0:17:09.760 --> 0:17:11.680 belief was that it really. 0:17:11.480 --> 0:17:12.560 Did not make any sense. 0:17:12.560 --> 0:17:14.720 And as we looked at the law and the history here, 0:17:14.720 --> 0:17:17.199 as I said, the appointment, the ability to appoint, but 0:17:17.280 --> 0:17:19.879 not remove the ability or remove for cause, But what 0:17:20.240 --> 0:17:23.080 does that really mean if you're practically talking about it 0:17:23.400 --> 0:17:25.440 that in some respects it got to be a distinction 0:17:25.520 --> 0:17:29.880 without a difference. And I believe too that the president 0:17:29.880 --> 0:17:33.600 should have the right to actually appoint he was elected 0:17:33.640 --> 0:17:38.160 by the public. That is not and by our process 0:17:38.200 --> 0:17:41.879 with the Electoral College. It's not that agency heads should 0:17:41.920 --> 0:17:46.320 just be able to live on and operate outside of 0:17:46.440 --> 0:17:50.080 that elected process. So that's also part of this. But 0:17:50.640 --> 0:17:55.160 when we looked at really the decision that the CFPP 0:17:55.240 --> 0:17:57.880 had taken in the past, I get it. The law 0:17:58.000 --> 0:18:02.040 was passed and signed by democratic You had Democrats in 0:18:02.080 --> 0:18:06.200 that role and they were looking to uphold that congressional action. 0:18:07.320 --> 0:18:09.919 We came in with a different posture and perspective on it. 0:18:09.960 --> 0:18:12.560 So it the position made sense to me in terms 0:18:12.600 --> 0:18:15.199 of changing what had been the agency's position based on 0:18:15.800 --> 0:18:19.000 you know, looking at the Constitution and being a constitutional officer. 0:18:19.720 --> 0:18:23.120 It was absolutely an odd situation to be sitting there 0:18:23.520 --> 0:18:26.040 listening to oral arguments inside the Supreme Court when they 0:18:26.040 --> 0:18:28.200 were talking about my job and my. 0:18:28.240 --> 0:18:29.719 Name even came up a few times. 0:18:29.720 --> 0:18:33.199 So those things that was that was definitely a surreal experience. 0:18:33.640 --> 0:18:37.240 And as you noted, it is how you know, the 0:18:37.240 --> 0:18:41.280 President was able to ask for my resignation and I resigned. 0:18:41.520 --> 0:18:44.479 In fact, I was very prepared to resign, recognizing that 0:18:44.480 --> 0:18:46.280 that was what was going to happen. But I do 0:18:46.320 --> 0:18:49.280 think it the president should have the ability to put 0:18:49.280 --> 0:18:53.040 the team around him in these agencies or again in 0:18:53.080 --> 0:18:54.400 the future, around her. 0:18:55.119 --> 0:18:57.240 So that that's an important, I think. 0:18:58.720 --> 0:19:01.919 Message to send and it and it is definitely the 0:19:01.960 --> 0:19:04.760 direction that that seems to be going with other agencies too. 0:19:05.440 --> 0:19:09.000 I was at that argument as well. And but but 0:19:09.040 --> 0:19:12.120 I'm wondering, you know, we had, uh, we had Mark 0:19:12.119 --> 0:19:15.760 Calabria on on this podcast a few weeks ago, who 0:19:15.920 --> 0:19:19.480 former director of the f HF a similar issue with him, 0:19:19.480 --> 0:19:23.080 and in fact, you know, he talked about how the 0:19:23.400 --> 0:19:26.280 case that affected the fh F HF A director was 0:19:26.320 --> 0:19:29.560 Collins versus Yellen, and he was, you know, uh wait, 0:19:29.680 --> 0:19:32.600 he was refreshing the Supreme Court website just like I do, 0:19:32.880 --> 0:19:34.920 you know, waiting for your decision, and he was waiting 0:19:34.960 --> 0:19:37.119 for the Collins decision, and ultimately it came out and 0:19:37.119 --> 0:19:40.480 then he got, you know, asked to resign. But I'm 0:19:40.480 --> 0:19:43.439 wondering if you think it varies, you know, whether your 0:19:43.520 --> 0:19:45.960 view changes depending on the agency. I mean, he was 0:19:46.000 --> 0:19:49.400 of the view that the f hif a director should 0:19:49.520 --> 0:19:52.880 be should be independent, should not be terminable at will. 0:19:53.040 --> 0:19:54.879 You know, one of the arguments is that it provides 0:19:54.920 --> 0:19:59.159 for more continuity in terms of policies. But you know, 0:19:59.359 --> 0:20:01.919 I was wondering what your thoughts on are on that. 0:20:03.000 --> 0:20:04.600 Yeah, I won't I won't get in too much of 0:20:04.640 --> 0:20:06.680 an argument with Mark over that. He is a good 0:20:06.680 --> 0:20:13.000 friend and he actually supported his senators in writing the 0:20:13.119 --> 0:20:18.280 law that created FHFA too, so he felt he certainly 0:20:18.320 --> 0:20:21.639 felt some affinity to Hara end upholding Congress's purview and 0:20:21.680 --> 0:20:24.280 setting it up, and so I appreciate where he was. 0:20:24.200 --> 0:20:25.080 Coming from on that. 0:20:25.200 --> 0:20:28.840 But but I think that you know, you get to 0:20:30.560 --> 0:20:34.000 if the agency head is the way to maintain consistent policy, 0:20:34.040 --> 0:20:36.199 I think we're we're talking about other challenges that we 0:20:36.280 --> 0:20:39.080 have as a society. I frankly think that there is 0:20:39.160 --> 0:20:41.800 way too much pendulum swinging, you know, in all of 0:20:41.840 --> 0:20:45.320 these processes. If we are are looking and I don't 0:20:45.320 --> 0:20:47.919 think it's what the American people want, and it's certainly 0:20:47.960 --> 0:20:50.679 not the way I tried to govern. But if you 0:20:50.760 --> 0:20:54.080 want literally to see things go from from you know, 0:20:54.359 --> 0:20:57.280 everybody putting one set of policies into place, and then 0:20:57.560 --> 0:21:00.879 every four years you're literally undoing what the last you know, 0:21:00.960 --> 0:21:04.600 administration did completely and try to put in your own policies. 0:21:05.040 --> 0:21:06.880 That is not going to be good for our economy. 0:21:06.880 --> 0:21:09.760 It's not good for business, and it's definitely then therefore 0:21:09.800 --> 0:21:12.960 not good for the American consumer and American people. So 0:21:13.440 --> 0:21:15.960 I think there is probably some other things that we 0:21:15.960 --> 0:21:19.560 should talk about in terms of how you bring stability 0:21:19.600 --> 0:21:23.439 and consistency of philosophy into how you govern. 0:21:24.800 --> 0:21:27.080 I want to ask you about, you know, the most 0:21:27.680 --> 0:21:33.119 current litigation challenging the CFPB's existence really had to do 0:21:33.240 --> 0:21:35.919 with how it's funded, because it's not you know, funded 0:21:35.960 --> 0:21:40.320 out of the normal congressional appropriations process, and its funding 0:21:40.359 --> 0:21:44.760 comes out of the Federal Reserve. You know, obviously the 0:21:44.800 --> 0:21:49.800 Supreme Court decided that in May it upheld the current 0:21:49.840 --> 0:21:56.320 funding mechanism. But now there's rumblings of new arguments challenging 0:21:56.720 --> 0:22:00.600 the funding mechanism based on you know, what the term 0:22:00.720 --> 0:22:03.600 earnings means in Dodd Frank and you know that the 0:22:03.640 --> 0:22:05.639 funding has to come out of its earnings. But the 0:22:05.720 --> 0:22:09.879 argument is that because the FED hasn't been profitable since 0:22:10.040 --> 0:22:13.800 like twenty twenty two, it doesn't have earnings, and you know, 0:22:13.840 --> 0:22:16.200 there's a dispute as to what that term actually means. 0:22:16.480 --> 0:22:19.000 I'm curious your thoughts on this whole issue. Is it 0:22:19.119 --> 0:22:25.040 time for industry groups to stop challenging the cispb's you know, existence, 0:22:25.040 --> 0:22:28.359 whether it's in terms of its funding or its constitutional structure. 0:22:29.240 --> 0:22:31.439 Is it time to move on and focus on other things? 0:22:31.720 --> 0:22:33.120