WASHINGTON - CFPB Director Richard Cordray will appear before the House Financial Services Committee next week to report on the Bureau’s activities and face questions from lawmakers about the harm those activities cause consumers.
“The CFPB undoubtedly remains the single most powerful and least accountable Federal agency in all of Washington. When it comes to the credit cards, auto loans and mortgages of hardworking taxpayers, the CFPB has unbridled, discretionary power not only to make those less available and more expensive, but to absolutely take them away. Consequently, Americans are losing both their financial independence and the protection of the rule of law,” said Chairman Jeb Hensarling (R-TX).
Since Cordray’s last appearance before the committee in September 2015, the committee has issued two staff reports detailing how the CFPB spent significant resources attempting to regulate automobile dealers, despite the fact that federal law explicitly prohibits the CFPB from regulating those businesses.
The two staff reports used internal CFPB documents to reveal that the Bureau was able to secure its potentially “market-tipping” enforcement action against Ally Financial and its Ally Bank subsidiary because of “undue leverage” – the company needed Washington regulators’ approval for a broader restructuring of its business. The reports also exposed the Bureau’s flawed distribution of $80 million in settlement proceeds without first verifying that recipients are eligible to receive the money. As a result, and as internal Bureau documents admit, some white borrowers will receive settlement checks over alleged racial discrimination against African-Americans, Hispanics and Asians.
Following release of the two committee staff reports, the former CEO of Ally Financial said the Obama Administration abused its power by holding the bank’s business hostage in order to coerce the settlement.
Also since Cordray’s last appearance before the committee, the Bureau has moved forward with plans to propose regulations that will harm consumers by taking away their right to access small dollar, short-term loans. In addition to harming consumers, the Bureau’s rule will undermine state and tribal sovereignty. All 50 states and many Federally-recognized Indian tribes already have the authority to regulate small dollar, short-term loans. To date, the Bureau has been unable to point to any specific state as deficient in law or authority to protect its consumers directly.
The Bureau’s foray into regulation of small dollar, short-term loans follows its regulation of the mortgage market by way of its Qualified Mortgage (QM) rule. The rule, which addresses few of the actual risks associated with mortgage lending, has harmed consumer access and choice when it comes to mortgages by forcing many community financial institutions to downsize or shut down their mortgage operations.
Next week’s hearing will take place on Wednesday, March 16 at 10:00 A.M. in room 2128 of the Rayburn House Office Building. Additional information and a livestream of the hearing can be found at financialservices.house.gov.