By Katalina M. Bianco, J.D.
The House Financial Services Committee held a full committee hearing with Consumer Financial Protection Bureau Director Richard Cordray on the bureau’s sixth semi-annual report to Congress, but the focus of Committee Chair Jeb Hensarling (R-Texas) was not on the report itself but on what he sees as the failings of the bureau.
In his opening remarks, Hensarling said that Americans are losing their financial independence as well as the protection of the rule of law because of the CFPB’s lack of accountability. He argued that the bureau is unaccountable to the president because the director can only be removed for cause. The bureau, he blasted, is fundamentally unaccountable to Congress because its funding is not subject to appropriations and unaccountable to the courts because the Dodd-Frank Act “requires courts to grant the CFPB deference regarding its interpretation of Federal consumer financial law.”
The chair further stated that the bureau’s QMs (qualified mortgages) stands for “Quitting Mortgages” because community banks find they can no longer offer mortgages to “many of their deserving customers.” He also alluded to the bureau’s stance on overdraft protection, quoting a constituent as saying, “I wish to keep my overdraft protection. I should have the right to choose.” Hensarling’s position is that “true consumer protection empowers consumers and respects their economic freedoms to make important informed choices free from government interference and fiat.”
Cordray testified on the contents of the bureau’s semi-annual report, outlining the CFPB’s efforts to achieve its mission “to stand on the side of consumers and ensure they are treated fairly in the financial marketplace.” He said the bureau is restoring people’s trust in consumer financial markets through fair rules, consistent oversight, appropriate law enforcement, and broad-based consumer engagement
The bureau director highlighted the CFPB’s accomplishments in his testimony and spoke of the bureau’s Office of Consumer Response, which has accepted more than 540,000 consumer complaints. However, the bureau director’s testimony was met with questioning by Representative Scott Tipton (R-Colo) who wanted to know about what the lawmaker termed “millions in unaccountable spending” on management consulting contracts. Cordray responded by pointing out that the bureau had to be built from the ground up over the last several years as it had started “as an agency from nothing.” He offered to meet with Tipton’s staff to provide details on the bureau’s expenditures.
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