Posted by Rep. Ted Budd (R-NC) on April 25, 2017

The United States has a rich history of bank crises. In fact, we’re number two in the world, with 13 all-time, just behind France with 15, and just ahead of the United Kingdom, with 12. Our first major banking regulation law, the National Currency Act, was passed in 1863 as a response to a bank failure rate of fifty percent. Each successive crisis, the Panic of 1907, the Great Depression, the Savings and Loan Crisis of 1982, the Housing Bust of 2007 (to name a few) triggered a new wave of financial regulation. Dodd-Frank, passed in early 2010, is the latest of these waves.

There’s a saying in the military that generals spend a great deal of time fighting the last war. It strikes me, looking at the historical pattern, that this is also true of financial regulators. They pass laws and make changes based on what happened last time, but the next crisis is always based on a new systemic weakness that no one sees. Dodd-Frank builds on this history by adding major new regulations that create massive compliance costs while keeping the same problems that led to the crisis in the first place.

I came to Congress a little over four months ago. If I leave Washington having helped put through a law that will break the bailout, regulate, rinse, repeat cycle, I will consider the time away from home well spent. I serve on the Financial Services Committee, and we’re working on a bill that I think will go a long way towards stopping the bailouts, while at the same time cutting back on the Dodd-Frank red tape that’s been slowly strangling community banks.

The core of our bill, the Financial Choice Act, is relatively simple, as bank regulation goes. Under the bill, banks in essence have two options: they can live under Dodd-Frank, or they can keep a certain amount of high-quality capital on hand to cushion losses. That amount, or ratio, is around 10 percent of their total loans or investments, more than triple what the big banks had on hand pre-financial crisis. In fact, of the banks that did have a 10 percent ratio during the crisis, more than 98 percent survived. Right now most of the big banks are hovering a little above 6 percent, and requiring them to go to ten would cost them billions in foregone profits. If that means that the system as a whole is more durable and banks get out from under Dodd-Frank, then I think that’s a fair tradeoff.

Most community banks, on the other hand, are well above 10 percent. For instance, Blue Harbor Bank in my district has a ratio of 15 percent. That’s not out of the goodness of their heart–community banks know that if they fail, the federal government won’t bail them out, so they have to operate more conservatively. They don’t get to cover their bets with taxpayer funds, and as a result they’re more careful with the loans and investments they do make. At the same time, they’re hit with Dodd-Frank regulations. Even now, large banks keep lower ratios in part because of the widespread assumption that they will be bailed out in a crisis. What the 10 percent requirement of the Financial Choice act is about is levelling the playing field–treating all banks equally, large and small.

That brings me to another feature of the bill, which creates an orderly method to unwind failed financial institutions through the bankruptcy courts. Chapter 11 bankruptcy has historically been the way insolvent business are dealt with, providing a path for debtors to continue business operations and creditors to get their money back, if possible. It’s not well-designed for large financial institutions because it does not take into account the notion that the company in bankruptcy may impact the national economy, something that is true for very large banks but not for most companies.

The Financial Choice Act adds a new section to chapter 11 to allow financial regulators the opportunity to participate in the bankruptcy process, and to ensure that bankruptcy of a large bank does not cause a full-blown crisis. The benefits of having a clear process up front for unwinding big banks means that there’s a clear plan of action in case a crisis occurs, eliminating the need for bailouts.

Together, these two provisions both significantly reduce the chance of future crises, and reduce the chance of future bailouts. There is no question that our country will have its 14th financial crisis at some point in the future. We owe it to the country to do everything we can to make sure that we reduce its impact through sound regulation, so that when it does happen, big banks that take on too much risk are subject to the discipline of a well-established legal process, not a bailout.

Congressman Ted Budd serves the people of North Carolina’s 13th congressional district in the U.S. House of Representatives.

Posted by Rep. Roger Williams (R-TX) on April 25, 2017

Economists at a prominent think tank based in Washington, D.C. last week reported that a full repeal of the Dodd-Frank Wall Street Reform and Consumer Protection Act would boost the economy by one percent and generate $340 billion in federal revenue over a 10 year period.

Dodd-Frank, as it is called for short, was passed by the Democrat controlled Congress and signed into law by President Obama in 2010. At more than 2,000 pages, the law is the most sweeping financial regulation enacted since the Great Depression era.

It was sold to the American public as a Washington crackdown on greedy Wall Street banks that put the U.S. economy into a tailspin. Crafty messaging professionals created an advertising gimmick in the title of the law itself.

But as the saying goes: You can’t judge a book by its cover.

Rightfully, at the time, the American people wanted their government to respond to an economic collapse and it did. The problem was that the action that was taken did too little to prevent history from repeating itself and too much to hurt the little guys that were in no way responsible for the Great Recession.

In our home state of Texas, since Dodd-Frank’s implementation, community banks have closed their doors and no new banks have been chartered. Considering most small businesses, which represent 99.7 percent of all U.S. businesses, rely on local lenders to expand, create jobs and conduct further research and development, Dodd-Frank has, and will continue to have, negative effects on the U.S. economy.

In a recent op-ed in The Hill newspaper, those same think-tank economists wrote, “There is good reason to believe (Dodd-Frank) may also increase the frequency and severity of recessions and may diminish innovation in the financial sector and elsewhere.” Simply, Dodd-Frank was the wrong prescription for our nation’s troubled financial sector.

That is why my colleagues and I on the House Financial Services Committee have a plan that will actually prevent a similar financial collapse from happening again while, at the same time, lessen the current overregulation of Main Street.

Our Dodd-Frank replacement, the CHOICE Act, will impose the toughest penalties in history for financial fraud and will once and for all end taxpayer funded bank bailouts.

The CHOICE Act will force more accountability on both the banks on Wall Street and on the bureaucracies in Washington that have forced unnecessary, costly compliance measures on mom-and-pop shops throughout the country. Washington’s regulators will be accountable to members of Congress, rather than being allowed to make decisions without any repercussions from American voters.

In a recent piece that I wrote with U.S. Sen. David Perdue, we said that legitimate oversight over the financial sector is important. Very few, if any, lawmakers will disagree with this sentiment.

Today, the federal government is wrongly deflecting blame to smaller financial institutions that cannot, and should not be required to, meet arbitrary compliance measures that are forcing them out of business. The CHOICE Act will correct that and actually punish bad actors who wreak havoc on the livelihoods of everyday hardworking Americans.

Williams, a Republican from Austin, serves on the Financial Services Committee in the U.S. House of Representatives. He is the vice-chair of the subcommittee on Monetary Policy and Trade.

LINK to original story. 
Posted by Rep. Scott Tipton (R-CO) on April 25, 2017

The months following the 2008 financial crisis were devastating for many Americans. Hardworking men and women lost their jobs, their savings, their pensions, and their homes. But instead of taking steps to strengthen consumer protections and bring stability to the financial system, Congress and the Obama Administration responded with the Dodd-Frank Act.

This piece of legislation and its associated financial regulations made an already complex regulatory environment even more complicated, made “too big to fail” the law of the land, and ultimately created new barriers for individuals and families seeking to better their lives.

To understand the negative impact that the Dodd-Frank Act has had on communities across the country, we must look at the effect that the law and its associated regulations have had on the U.S. gross domestic product (GDP), which is the aggregate measure of economic growth. In May 2015, the American Action Forum (AAF) estimated that Dodd-Frank would reduce GDP by $895 billion between 2016 and 2025. In 2016, the U.S. saw only 1.6 percent GDP growth, and the Congressional Budget Office has predicted long-term average GDP growth of only 2 percent.

What does this mean for the average American? The GDP is directly related to the U.S. standard of living, which is defined as the “degree of wealth and material comfort available to a person or community.” An analysis by the AAF shows that 2 percent GDP growth combined with 1 percent projected population growth translates to only 1 percent per capita GDP growth. At only 1 percent per capita GDP growth, it will take the average person roughly 70 years to double their standard of living.

This projection is startling, especially when we think about young adults who are entering the workforce in their twenties. In 2015, an analysis by the Economic Policy Institute showed that on average, young high school graduates working full-time had an annual income of $21,600. Young college graduates working full time had an average annual income of $37,300. With only 2 percent GDP growth, the average young person would have to work well into their nineties to double their income.

It doesn’t sound like we are setting our kids on a prosperous path, does it?

Under the leadership of Chairman Jeb Hensarling, the Financial Services Committee has developed the Financial CHOICE – creating hope and opportunity for investors, consumers, and entrepreneurs – Act to help jumpstart our economy and create more jobs and opportunities for families and individuals across the country.

Among the many provisions included in the Financial CHOICE Act is my bill, the Taking Account of Institutions with Low Operation Risk (TAILOR) Act. The TAILOR Act will help reform one-size-fits-all regulations and restore job creation on Main Street by ensuring community banks in Colorado aren’t regulated the same way as the big banks on Wall Street.

Additional provisions in the CHOICE Act:

  • Impose some of the toughest penalties in history for financial fraud;
  • Prevent another tax-payer bailout by requiring greater capital reserves for any financial institution seeking relief from onerous regulations;
  • Reduce obstacles for small businesses seeking credit and capital in order to promote job creation;
  • Roll back regulatory taxes that are restricting families’ access to financial services like free checking accounts.

It is well past time that Congress remedy the consequences of Dodd-Frank and our overly complicated financial regulatory system. The Financial CHOICE Act will help individuals and families say goodbye to the policies that are holding them back, and I’m looking forward to delivering these important reforms to Coloradans and all Americans.  

Posted by Rep. Mia Love on April 25, 2017

Eight years ago, the nation experienced the worst financial crisis in 80 years, which cost millions of Americans their savings, their homes, and their jobs. The response – one that was well-intended, but overly broad -- expanded the federal government’s footprint in our lives and inadvertently left us more vulnerable to the next crisis.

Since the passage of the Dodd-Frank Act in 2010, regulators have promulgated thousands of pages of regulations, saddling America’s banks with compliance costs that have reduced the services they can offer and increased the fees they charge. 

The average American now pays $118 per year in checking fees and the account balances needed to qualify for free-checking have tripled, from $250 to $750. As a result, approximately 1 million people – mainly low-income families – have joined the ranks of the unbanked.

Meanwhile, we continue to hear the stories of small banks having to hire more compliance officers than lending officers – and even buckling under the weight of new regulations.

According to FDIC data, since 2010, more than 2300 community banks have either closed or been forced to merge, at a rate of 60 per quarter – and 16 percent of our remaining community banks have stopped or plan to stop making mortgages as a result of Dodd-Frank. Fewer banks means diminished access to capital – the capital needed to launch a new business, expand an existing business, or buy a home. 

It is no coincidence that economic growth has been an anemic 2.2 percent since 2010 – the worst post-recession recovery on record. A return to the healthy growth rate of 3.5 percent annually that the U.S. economy enjoyed for a half a century following World War II would mean more jobs, more opportunity, and higher wages.

That’s why House Republicans, led by Jeb Hensarling (R-Texas), chairman of the House Financial Services Committee, on which I’m proud to serve, have introduced the Creating Hope and Opportunity for Investors, Consumers, and Entrepreneurs (CHOICE) Act. 

This common sense alternative to Dodd-Frank represents a fundamental break from the overregulation and micro-management of banks by Washington bureaucrats in favor of strong capital and the freedom to serve the financial needs of American households and businesses.

The CHOICE Act rests on the following sound principles:

· Every American must be afforded the opportunity to achieve financial independence.

· Consumers must be protected from financial fraud, but also from the loss of economic liberty.

· Taxpayer bailouts of financial institutions must end and no company must ever be considered too-big-to-fail.

· Economic growth for all must be revitalized through competitive, transparent, and innovative capital markets.

· Simplicity must replace complexity, because complexity can be gamed by the well-connected or abused by the powerful.

· Both Wall Street and Washington must be held accountable, and the financial futures of Americans should not be subject to the political environment.

Pursuant to these basic principles, the CHOICE Act’s foundation is the understanding that plentiful bank capital is the cornerstone of a strong, healthy, and resilient financial system ready to effectively and reliably fuel the financial needs of a robust economy.

The CHOICE Act offers the nation’s banks a choice: in exchange for holding capital amounting to at least 10 percent of their total assets – a ratio significantly higher than what is currently required – banks would be exempted from the Dodd-Frank regulatory regime as well as a number of other regulatory burdens that pre-date Dodd-Frank. 

To avail themselves of the CHOICE option, most big banks would have to raise a significant amount of capital. Community banks, by contrast, are already generally well-capitalized and would have to raise little to no capital in order to shed constricting regulations.

The financial system is the economy’s cardiovascular system, circulating the lifeblood of capital and credit to our businesses and families.

To achieve the rates of economic growth that hard-working American families need and deserve, we need a financial system that is strong, resilient, and innovative.

The CHOICE Act will bring us closer to that goal.

Congresswoman Love represents Utah's 4th District.

Posted by on April 23, 2017

The economic downturn in 2008 cost Michiganians their jobs, families their savings, and some even their homes. In response to this seismic event, Democrats in Congress passed and President Obama signed the Dodd-Frank Wall Street Reform and Consumer Protection Act into law. According to its supporters, Dodd-Frank was a panacea of regulatory solutions that would end “too big to fail” and prevent a future financial crisis.

In reality, Dodd-Frank has made it even more difficult for struggling families across Michigan to secure a future for themselves and for their children.

First, Dodd-Frank did not end the notion that certain banks are “too big to fail.” Instead, it enshrined it. Today, hardworking taxpayers continue to be on the hook for Wall Street’s poor business decisions thanks to Dodd-Frank’s bailout fund. Secondly, since Dodd-Frank was enacted, the largest banks are even bigger while the small banks are fewer. Community financial institutions that had nothing to do with the crisis are being strangled by overly burdensome regulations that were intended for massive banks. But we need our community and midsize regional financial institutions to be able to lend to consumers and small businesses so they can innovate, invest and create jobs.

To restore economic opportunity to hardworking families, I am working with my colleagues on the financial services committee to introduce the Financial CHOICE Act. This commonsense legislation will protect consumers by restoring accountability, ending taxpayer bailouts, and providing regulatory relief for community financial institutions.

At the center of this legislation is accountability. It requires strong capitalization standards for banks and imposes the toughest penalties in history to protect consumers from financial fraud. The Financial CHOICE Act also holds Washington bureaucrats accountable to the American people by placing the regulators themselves under Congressional Appropriations.

Since Dodd-Frank passed in 2010, big banks have gotten bigger and small banks have disappeared at an alarming rate. The Financial CHOICE Act protects taxpayers by eliminating “too big to fail” labels once and for all. Instead, we repeal this self-fulfilling prophecy and require failing institutions to liquidate through a streamlined bankruptcy without depending on taxpayer dollars.

Dodd-Frank created a one-size fits all regulatory structure that treats community banks the same as Wall Street Banks. Unlike some of the largest banks, community financial institutions across Michigan can’t afford to hire hundreds of lawyers and compliance officers to sort through Dodd-Frank’s red tape. These regulatory costs are passed on to consumers in the form of increased fees, fewer products and services, and more limited credit options. The Financial CHOICE Act eliminates this one-size-fits-all regulation by providing commonsense relief that allows community banks and credit unions to utilize their resources for lending and meeting the needs of their customers.

This bill will protect taxpayers and consumers from anti-growth Dodd-Frank regulations, and help hardworking Michiganians achieve financial independence.

Rep. Bill Huizenga, R-Holland, represents Michigan’s 2nd Congressional district, and chairs the House Financial Services’ Subcommittee on Capital Markets, Securities & Investment.

LINK to original story in The Detroit News 

Posted by Committee on Financial Services on April 12, 2017

By Chairman Jeb Hensarling and Rep. Roger Williams

Few Americans are familiar with the Consumer Financial Protection Bureau, but it is the most powerful and least accountable Washington bureaucracy in history and a perfect example of the political left’s dangerous belief that the ends always justify the means.
While the agency has an important mission, it was purposefully designed by Democrats to evade checks and balances that apply to other regulatory agencies, including those responsible for consumer and investor protection. Its bizarre, unique and defective design is exactly why a panel of federal judges ruled that the CFPB is structurally unconstitutional.
In its present form, the agency is an affront to the Constitution, to checks and balances and to due process. This is why we support the Financial CHOICE Act, legislation that changes the CFPB from an unconstitutional agency of unelected bureaucrats into a constitutional and accountable civil enforcement agency that enforces consumer protection laws written by Congress.
The CFPB’s current director, Richard Cordray, recklessly ignores the due process protections that have been deeply rooted in our American legal system for centuries. This abuse may generate headlines, but it does not achieve justice. The Dodd-Frank Act grants him incredibly broad powers to regulate consumer credit products, yet Cordray continues to ignore the law and the intent of Congress by making end-runs around existing laws.
In the legal decision that declared the agency’s structure unconstitutional, the court found that Cordray unilaterally reinterpreted the law and then essentially created his own law after the fact. In addition, the court said Cordray ignored the statute of limitations to justify imposing a huge fine on an American business. This is an outrageous violation of due process rights.
Another example of the agency’s violation of due process relates to its use of “unfair, deceptive or abusive acts and practices,” or UDAAP, authority. Citing the largely undefined and amorphous UDAAP is CFPB’s go-to claim, leaving plenty of wiggle room for the director to decide what the law says and means. The agency could provide clarity by writing rules to define UDAAP further, but refuses. Thus, CFPB deprives legally operating businesses of the information they need to follow the law when developing new products and services that benefit consumers. Given that Cordray was already found to have ignored legal protections in order to impose a multi-million-dollar fine on a company, clearly this UDAAP authority is a legitimate cause of concern.
Republicans and Democrats agree that the laws on the books must be enforced. Where we disagree is over whether unelected bureaucrats should have the power to write new laws. As currently structured, the CFPB has virtually unlimited power to do just that — and is harming consumers with higher costs and less access to financial products and services as it does.
The changes we seek through the Financial CHOICE Act will truly make the CFPB the “cop on the beat” its supporters claim they want. Cops don’t write the laws; they investigate and enforce the laws — and they don’t serve as cop on the beat, judge, jury and Congress all rolled into one.
It would be far easier to secure criminal convictions if the Constitution didn’t require probable cause for warrants or protect Americans against unreasonable search and seizure, but few would argue that justice would be served. In the same way, the success of the CFPB must be judged both on how it protects consumers and on whether it follows the Constitution.
In this debate, we must also remember that true consumer protection puts power in the hands of consumers, not Washington bureaucrats. True consumer protection promotes competition and choice and ensures that consumers have access to transparent and innovative markets that are vigorously policed for fraud and deception. In fact, the Financial CHOICE Act contains the toughest penalties in history for those who commit financial fraud, insider trading and deception. Our plan toughens penalties — not out of some ideological or poll-driven war against “Wall Street” — but to better protect consumers, restore checks and balances, defend due process and strengthen our markets.
Posted by Committee on Financial Services on April 10, 2017

By Congressman French Hill (R-AR) 

Washington, D.C.'s idea of government may have changed, but the American people's has not. This is a significant observation I have made since returning to Washington after living and working for 25 years in central Arkansas.

In Washington, accountability has gone from a focal point of governance to a relative afterthought.

The rest of America doesn't approve of Washington's dismissal of accountability. When I'm home in Arkansas, I haven't met very many people--if any--who have told me they don't agree with the idea that our government needs to be accountable to the people; likewise, I haven't met many people who said they disapprove of our constitutional system of checks and balances.

Yet inside "the Beltway" of our federal government, there is this inexplicable movement to enshrine anti-accountability policies and agencies into law. When I was a young Senate staffer in the 1980s, accountability was a fully and wholly bipartisan endeavor. In 2017, now even accountability can have a partisan taste to it, or at least that is what the battle over the Consumer Financial Protection Bureau (CFPB) has shown.

The CFPB has become arguably the least accountable government agency.

The director can be fired only for "inefficiency, neglect of duty, or malfeasance," and because the CFPB is an independent agency located within the Fed--which also amazingly has no authority over the agency--and is not subject to the appropriations process, neither the administration nor Congress has a say over the CFPB's actions.

Last September, a federal appeals court ruled CFPB's organizational structure unconstitutional and said that its unelected director "enjoys more unilateral authority than any other officer in any of the three branches of government of the U.S. government, other than the president."

Consumer protection is of the utmost importance, and prior to the creation of the CFPB, the government at both the state and local level had extensive consumer-protection laws and regulations in place and agencies fully tasked with their enforcement. And never in my long community banking career did I see a financial regulator shirk their consumer protection responsibility.

The massive amounts of raw consumer data the CFPB collects, its foray into areas it was specifically prohibited from regulating including auto lending and the practice of law, and the lavish renovation of its leased headquarters--which is costing taxpayers over $200 million--only underscore the need for intensive accountability and transparency.

But as the evolution of Washington has gone, none of that matters; only messaging matters. Defenders of CFPB essentially argue that with an agency named for consumer financial protection, how could it be anything but a good steward of consumer needs and protections? We don't apply that standard to any other agency in government; having a consumer-friendly name doesn't absolve it from the necessity of standard congressional oversight.

When you pull back the curtain on this perceived irreproachable agency, you see something much uglier than its name might suggest.

But the worst part about the CFPB is that the agency's practices are actually harming consumers. By limiting, eliminating, or increasing costs on products that financial institutions can offer, the CFPB's practices are growing the ranks of unbanked and underbanked Americans. The Dodd-Frank Act and CFPB policies have increased the price of basic banking services and reduced the availability of short-term credit options for low-income Americans, continuing to push them into more expensive--and potentially unregulated--credit options. To illustrate this, before Dodd Frank, 75 percent of consumers could find "free checking." By 2015, just 37 percent of banks offer true "free checking."

CFPB's "Ability to Repay" and "Qualified Mortgage" rules also have made it more difficult for low- and middle-income borrowers to qualify for a mortgage, with some community banks exiting residential lending altogether due to the complexity and burdens of the rules. The "Know Before You Owe" rule, despite its name, has continued to cause consumer confusion and costly delays in the closing process, not to mention the billions of dollars the real estate industry spends in implementing the rule--resources that could have been extended as credit or directed toward product innovation.

Under the leadership of Chairman Jeb Hensarling, the House Financial Services Committee has proposed the Financial CHOICE Act, which will help increase consumer choice and access to affordable credit and capital for all Americans.

One of the main pillars of the CHOICE Act is to bring accountability back to Washington regulators, including the CFPB. The CHOICE Act will provide structural reforms to the CFPB, including making it subject to appropriations and requiring comprehensive cost-benefit analysis for rule-makings.

By creating checks and balances for CFPB, the CHOICE Act will make it more accountable to Congress and the American people so that it can effectively do the job it was designed to do--protect consumers.


Rep. French Hill represents Arkansas' 2nd Congressional District.
Posted by Financial Services Committee on April 06, 2017

The CFPB began an investigation into Wells Fargo only after the bank contacted the agency and the Los Angeles city attorney had filed a civil complaint, according to documents released by the House Financial Services Committee.

Documents released by Chairman Jeb Hensarling included a May 8, 2015, letter from the CFPB to Wells in which the bureau says news reports in the Los Angeles Times and the city complaint have raised “significant concerns and questions” about Wells Fargo’s sales practices.

The letter, signed by CFPB regional director Edwin Chow, asked Wells for details on its sales practices and urged the bank not to destroy any documents.

“What a coincidence,” said Rep. Ann Wagner. “The CFPB was asleep at the wheel.”

Richard Cordray defended the agency during his semi-annual appearance before the committee today.

“We had had previous indications that there had been problems at Wells Fargo,” he said. “It wasn’t the L.A. Times article that tipped us off.”

Posted by on April 06, 2017

Los Angeles Times – Republicans Attack Consumer Financial Watchdog as They Push For His Firing

Part of the GOP attack focused on the Wells Fargo case as they argued the watchdog agency “was asleep at the wheel” in identifying that the bank was creating unauthorized accounts and only got involved after the Los Angeles Times and Los Angeles City Attorney Feuer had uncovered the problems.

Politico Pro – CFPB Was Late to Wells Fargo Probe, Letters Suggest

The CFPB began an investigation into Wells Fargo only after the bank contacted the agency and the Los Angeles city attorney had filed a civil complaint, according to documents released by the House Financial Services Committee.

Documents released by Chairman Jeb Hensarling included a May 8, 2015 letter from the CFPB to Wells in which the bureau says news reports in the Los Angeles Times and the city complaint have raised “significant concerns and questions” about Wells Fargo’s sales practices.

Wall Street Journal – Republicans Blast CFPB, Alleging Slow Start to Wells Fargo Probe

The documents unveiled Wednesday showed Wells Fargo notified the CFPB on May 4, 2015, that it had received a civil complaint from the Los Angeles city attorney’s office and that the Los Angeles Times was planning to report on the complaint the following day.  On May 8, the CFPB told the bank that it was initiating a supervisory review, saying the materials received from the bank “raised significant concerns and questions about Wells Fargo’s consumer financial services sales practices.”

On March 3, 2016, the CFPB informed Wells Fargo that it had decided to initiate an enforcement process, a day after the bank started settlement negotiations with Los Angeles officials.

CNN Money – House Republican: President Trump, Fire CFPB Director Richard Cordray

Ann Wagner, head of the panel's oversight subcommittee, painted the CFPB as a latecomer in uncovering Wells Fargo's fraudulent sales practices. She repeatedly pressed Cordray to specify about when he prompted the agency's staff to begin its investigation of the San Francisco-based bank, suggesting the agency was "asleep at the wheel" until press reports emerged.

Other GOP lawmakers, including Sean Duffy and Hensarling, also chastised Cordray for failing to reply to dozens of subpoena requests, including one tied to Ally Financial for discriminatory pricing in the lender's auto loans, and for not certifying compliance with lawmakers' requests.

Morning Consult – Republicans Build Case Against CFPB’s Cordray, Cite Wells Fargo Scandal

Congressional Republicans on Wednesday ramped up their criticism of Consumer Financial Protection Bureau Director Richard Cordray, citing previously undisclosed documents they say contradict his timeline of the agency’s investigation of Wells Fargo & Co.’s consumer fraud scandal.

Wagner’s questioning focused on a previously undisclosed letter dated May 8, 2015, where the CFPB referred to an earlier civil complaint by the Los Angeles city attorney and a Los Angeles Times news story about Wells Fargo’s fake accounts.  That letter, she said, shows that the CFPB failed to take a leading role in addressing Wells Fargo’s issues.

The Hill – GOP Makes Case for Firing Consumer Bureau Chief

Republicans spent the more than five hours of the hearing making the case for Cordray’s dismissal.  They argued that Cordray’s CFPB routinely overstepped legal and jurisdictional boundaries and prized flashy, expensive fines over consumer freedom.

Multiple Republicans argued that the CFPB ignored signs of fraud at Wells Fargo before fining the bank more than $180 million last September for opening more than 2 million unauthorized accounts.

Reuters – U.S. Consumer Financial Protection Chief Defends Agency Before Congress

Republicans claimed the agency failed to detect wrongdoing at Wells Fargo & Co, relying on outside investigators and news reports to point out widespread problems with improper account creation.

“The CFPB was asleep at the wheel!” said Ann Wagner, a Missouri Republican.  The earliest the committee could determine the CFPB began to examine Wells Fargo was in May 2015, after the bank notified the regulator that the Los Angeles City Attorney was already pursuing a civil case, she said.

Yet the CFPB was front and center in September 2016 when the high-profile $185 million multi-agency settlement was announced.

HousingWire – Tensions Reach Boiling Point at CFPB Director Cordray’s Hearing

This semiannual hearing happened in the midst of controversy around the bureau and Cordray’s position.

Rep. Sean Duffy, R-Wisc., interrogated Cordray on his tenure at the CFPB, bringing up the fact that Cordray has already been at the bureau for five years and three months…meaning he will actually serve longer than his five-year term, which officially ends in July 2018.

Credit Union Times – Hensarling to Cordray: You Should Be Fired

He said that under Cordray’s direction, the CFPB has shown an “utter disregard” for protecting markets and has made credit more expensive.

“For conducting unlawful activities, abusing his authority and denying market participants due process, Richard Cordray should be dismissed by our President,” the chairman said.

USA Today – Alarm Raised Over ‘Suspicious Trading’ in Navient Shares

A congressional panel has found signs of “suspicious trading” in the stock of the nation’s largest student loan servicing company before the firm was hit with a federal lawsuit that might have sent shares plunging…Rep. Patrick McHenry, R-N.C., the vice chairman of the House Financial Services Committee, made the disclosure during a politically-charged session on the performance of the Consumer Financial Protection Bureau.

“Unfortunately, committee staff has learned of suspicious trading activity for the Navient Corporation the morning before the announcement of CFPB’s enforcement action,” McHenry said.  The disclosure came after McHenry asked CFPB Director Richard Cordray if he know of “any confidential leaks” that “led to insider trading.”

Boston Herald – House GOP Turns Up Heat on Elizabeth Warren’s Consumer Bureau

Hensarling and other lawmakers accused Cordray of failed leadership at an agency they said stifles business and is slow to respond to actual wrongdoing. The hearing comes as a federal appellate court in Washington reconsiders a ruling last year that the structure of the agency —­ which is headed by a director who can only be removed by the president for cause — is unconstitutional.

“You have a rotting agency,” said Rep. Sean Duffy, R-Wisc., referring to 2014 congressional testimony by CFPB employees claiming racial and sex discrimination and retaliation.

Rep. Ann Wagner, R-Mo., angrily accused Cordray of dragging his feet in probing claims of fraudulent practices at Wells Fargo, which resulted in the bank paying $185 million in fines last year. She noted that the CFPB’s involvement came after news reports and a separate probe by Los Angeles officials.

“The CFPB was asleep at the wheel — asleep at the wheel, Director Cordray — under your leadership!” Wagner said.


Posted by on April 03, 2017
Independent Journal Review
By: Richard Berman

Washington, D.C. is known for many things: Majestic monuments, smoky steakhouses, and wasteful bureaucracy at its worst. From the Environmental Protection Agency's crippling regulations to the Pentagon's $125 billion boondoggle, the swamp is full of critters. But no government agency is creepier or crawlier than the Consumer Financial Protection Bureau (CFPB).

It starts with the CFPB's structure. Normally, government agencies like the State Department and Environmental Protection Agency are overseen by Congress, which determines funding levels and monitors agency leadership for any red flags. Not so with the CFPB.

Created by the Dodd-Frank financial law in 2010, the agency receives its annual funding automatically as a portion of the Federal Reserve's budget, leaving Congress out of the appropriations process. Its director, Richard Cordray (pictured above), is a White House appointee who can only be fired by the president for cause, such as malfeasance or negligence.

Don't just take it from me. The Department of Justice (DOJ) recently filed court papers asking a federal appeals court to order the restructuring of the CFPB. The DOJ argues that the agency’s structure comes into a separation-of-powers issue, since Cordray isn’t sufficiently answerable to the president. In the DOJ’s words: “There is a greater risk that an independent agency headed by a single person will engage in extreme departures from the president’s executive policy.” The Justice Department also argued that the president should be able to fire Cordray at will.

Last year, the U.S. Court of Appeals for the District of Columbia Circuit described the CFPB as “unconstitutionally structured” and a “gross departure from settled historical practice.” The appellate court similarly ruled that Director Cordray possesses too much power. The agency's lack of accountability is so unprecedented that, this month, the House Financial Services Committee held a hearing called “The Bureau of Consumer Financial Protection’s Unconstitutional Design."

Then there's the politics. In 2016, the CFPB sent $16 million to GMMB - a Democratic consulting firm - to publicize the agency’s marketing materials. Jim Margolis, a senior partner for GMMB, served as a senior adviser to President Obama and Hillary Clinton’s 2016 campaign. Contracting almost exclusively through Margolis’ firm, the CFPB’s advertising spending represents 2.5 percent of its annual budget - eclipsing the Food and Drug Administration’s 2 percent annual budget. (Most federal departments and agencies spend less than 1 percent of their budgets on advertising.)

The eight-figure marketing budget makes you wonder: Why do most Americans know nothing about the CFPB? In a recent national telephone survey, 81 percent of respondents claimed they they didn't even know enough about the agency to form an opinion about it. Even Rohit Chopra, a former CFPB assistant director, admits that the agency doesn’t have “the most effective PR strategy.”

But the CFPB marches on, retaining Democratic consultants. Agency staffers are clearly on board: According to a review of Federal Election Commission data, 100 percent of campaign contributions made by the agency’s employees went to Democratic candidates in 2016. Consequently, the CFPB is tied for the country’s most politically biased federal entity - alongside the National Endowment for the Humanities, National Transportation Safety Board, and Peace Corps. Even the Obama administration’s Justice Department was more diverse in its political makeup.

The swamp has no need for rogue bureaucracies. Let's drain it.