FSC Chair Asks "Who Will Protect Consumers From the CFPB?"

The Director of the Consumer FinancialrnProtection Bureau (CFPB) finally got to present the Bureau’s third Semi-AnnualrnReport to the House Financial Services Committee (FSC) today, five months afterrnit was first issued, but the committee’s chair made it clear the Bureau isrnstill on his watch list. </p

Director Richard Cordray told the FSCrnthat the report, published on April 23, illustrates the way his bureau is usingrnthe tools Congress has provided it to empower consumers and promote a fair,rntransparent, and competitive marketplace for consumer finance.  “We have taken steps,” he said, “to improvernthe workings of markets, particularly those in which consumers cannot chooserntheir financial service providers.</p

CFPB gained authority at the first ofrnthe year to regulate debt collectors and also expanded its supervision torninclude the larger credit reporting companies. rnCordray said that credit reports have a profound impact on people’srnlives but that previously the companies controlling the credit data were notrnsubject to federal supervision and consumers often struggled to get problemsrnsolved and errors corrected.  With thesernadditions to its portfolio the Bureau can now evaluate whether federal consumerrnlaws are being followed throughout the process, from credit origination throughrndebt collection.</p

The Bureau’s first enforcement actionsrnwere taken during the reporting period which covered July 1 to December 31,rn2012.  These actions were against creditrncard companies and secured $425 million in relief for 6 million customers.  In the second half of 2012 CFPB also tackledrnissues in the private student loan market and made recommendations for reforms.</p

Cordray said his agency had alsornaddressed more than 130,000 consumer complaints and adopted new mortgagernregulations mandated by the Dodd-Frank Act. rnThe Ability-to-Repay rule followsrnthe simple principle that lendersrnshould offer consumers mortgages they canrnafford to pay back.rn</p

Neither Cordray nor any other seniorrnofficial of CFPB had been permitted by the Financial Services Committee torntestify about the Semi-Annual Report at the time it was issued.  As reported in MND atrnthe time, Committee Chair Jeb Hensarling (R-TX) used a recent court ruling onrnthe legitimacy of interim presidential appointments made on the same day as thernDirector’s interim appointment to question the legitimacy of any work done byrnthe Bureau during his tenure.  After arntwo-year delay the Senate finally confirmed Cordray this summer.  </p

Hensarling referred in passing to therndated nature of Cordray’s testimony before issuing a harsh general critique ofrnthe Bureau’s legal structure and authority. rnHe called it “arguably the single most powerful and least accountable</bFederal agency in the history of America." Saying that it is an agency thatrndemands rigorous oversight Hensarling warned it will undoubtedly demand numerousrncongressional hearings and inquiries, "So again not only do we welcome thernDirector today," he said, "but we look forward to welcoming you to our hearingrnroom for many further appearances before us."</p