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FSC Majority | Week in Review
Posted by Staff on June 20, 2014
Committee Seeks Accountability at the CFPB

On Tuesday, the full committee held a hearing with Director Richard Cordray to receive the fifth Semi-Annual Report of the Consumer Financial Protection Bureau. 

"Since Director Cordray last appeared before our committee in January, we have learned much. First, we have learned in the first quarter of this year we actually had negative economic growth of one percent. And when you speak to practically any small businessperson, any community banker they will tell you the sheer weight, volume, complexity of the regulatory red tape burden is one of the primary reasons that they cannot expand and hire more people," said Chairman Jeb Hensarling (R-TX).

Chairman Hensarling and Members of the committee addressed further troubling issues at the Bureau and highlighted the need for accountability at the CFPB.

"These disturbing developments once again demonstrate, I believe conclusively, why there must be substantial structural reform at the CFPB.  Consumers deserve accountability – not only from Wall Street but they deserve it from Washington, too.  Yet, by design the CFPB remains arguably the least accountable Washington bureaucracy in the history of America and it shows.  This must change," Chairman Hensarling said.

Subcommittee Hears Testimony from Subpoenaed CFPB Witnesses

The House Financial Services Oversight and Investigations Subcommittee heard testimony this week from two more whistleblowers as part of its ongoing investigation into discrimination and retaliation at the CFPB.

“CFPB’s funding and structure afford Congress an extremely limited ability to influence the Bureau’s operations and policies, and yet these allegations of discrimination and retaliation at the CFPB underscores the significant need for greater Congressional oversight of the CFPB,” said Subcommittee Chairman Patrick McHenry (R-NC).

The whistleblowers -- CFPB Examiner Ali Naraghi and former Bureau employee Kevin Williams – asked to be subpoenaed in order to guard against further retaliation by the Bureau.

Naraghi and Williams described a hostile work environment at the CFPB.

“After being subjected to disparate treatment, I asked my management in May 2012 about the reason for being treated like this,” said Naraghi. “Management responded that they did not like me asking questions about the reason behind orders and what my rights may be, and how I raised questions about certain aspects of CFPB management practices.”

“They proceeded to make my professional and personal life a living hell by repeated retaliation and creating a hostile work environment,” Naraghi added.

Williams told the Subcommittee of similar discrimination and retaliation.  “Sadly, instead of the positive, modern government agency I had expected, my experience at the CFPB was reminiscent of past eras of injustice, cronyism, discrimination, and retaliation,” he said.

Committee Passes TRIA Reform and FSOC Accountability and Transparency Bills

The House Financial Services Committee on Friday passed 3 bills, to bring much needed reforms to the Terrorism Risk Insurance Act (TRIA) and much needed transparency and accountability to the Financial Stability Oversight Council (FSOC).

"I remind all that TRIA, when originally envisioned, was meant to be a transitional program.  Let me quote from the statute: “The purpose of this title is to establish a temporary Federal program that provides for a transparent system of shared public and private compensation… and allow for a transitional period for the private markets to stabilize ….” Yet here we are discussing the third reauthorization. If passed, TRIA, a temporary program, would be in existence for nearly 20 years," said Chairman Jeb Hensarling (R-TX).

The Chairman called for accountability and transparency at FSOC, "an agency that has no discernible standard by which to designate these non-bank firms. They operate in a complete secretive and opaque fashion. They themselves can create systemic risk in our economy," he said.

"The two bills we will consider today, one will bring more transparency and an open process; the other will simply call a one-year “timeout” so that Congress has a chance to assess this work.  Again, there has been great concern by Members on both sides of the aisle. I think these are reasonable bills to begin to address an incredibly important issue before our committee. I urge Members on both sides of the aisle to support
all the legislation before us," Hensarling added.


MEMBER SPOTLIGHT

Rep. Ed Royce | Rep. Royce Presses Cordray at Financial Services Committee Hearing 

Rep. Ed Royce (R-CA) said at Tuesday's full committee hearing that the CFPB "appears to be making policy without obtaining public input. This trend is a cause for concern, as the lack of public input during policy formulation often leads to unintended consequences including regulatory confusion and less consumer choice."

Weekend Must Reads


Washington Times | Examiner Editorial: Federal agency can't hide exploding cost of refurbishing its HQ

The truth is, as the Examiner's Richard Pollock has exhaustively reported using the bureau's own numbers and those of the General Services Administration, the cost of the CFPB's headquarters renovation has exploded. Many of the reasons behind the skyrocketing renovation costs ought to be, as Johanns accurately put it, “embarrassing” for Cordray. The projected cost total of $55 million came from the Office of Thrift Supervision, the previous occupant of the CFPB's headquarters. Members of the House Financial Services Committee have also demanded but not received answers for several years on why that total has more than doubled to $139 million.

Wall Street Journal The Asset-Rich, Income-Poor Economy

The Fed's extraordinary tools are far more potent in goosing balance-sheet wealth than spurring real income growth. The most recent employment report reveals the troubling story for Main Street. While 217,000 jobs were created in May, incomes for most Americans remain under stress, with only modest improvements in hours worked and average hourly earnings.
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