Posted by Staff on October 02, 2015

CFPB, Dodd-Frank Harms Consumers

On Tuesday, CFPB Director Richard Cordray faced intense questioning – from committee members of both parties – particularly about the unaccountable Bureau’s efforts to unfairly pursue auto lenders and dealers, even though the Dodd-Frank Act expressly exempts dealers from the CFPB’s jurisdiction.

As Investor’s Business Daily noted in its coverage of the hearing, “Cordray confessed under grilling by House banking panel chief Jeb Hensarling that the disparate impact methodology that his agency uses…’overestimates’ racial disparities on loan pricing.”

“In short, Cordray is trying to restructure the $900 billion auto finance industry based on bad math,” said the newspaper’s editorial.

The CFPB’s disparate impact methodology was described as “downright insulting to African-Americans” by Rep. David Scott (D-GA), “for assuming last names such as Johnson, Williams or Robinson belong to black borrowers,” the Wall Street Journal reported in its article about Tuesday’s hearing.

The Bureau, a creature of Dodd-Frank, is uniquely unaccountable to hardworking taxpayers because it is not subject to the usual checks and balances that protect Americans from government overreach and abuse.

“Instead of the equal protection offered by the impartial rule of law, they are today dictated to by the arbitrary rule of regulators, and Exhibit Number One is the CFPB director,” said Chairman Hensarling (R-TX).

“Dodd-Frank and the CFPB are the prime reason the big banks are bigger and the small banks are now fewer.  This has eliminated competition, stifled innovation and given consumers fewer choices.  Dodd-Frank and the CFPB have raised prices, eliminated free checking for millions, and are cutting off access to mortgages, bank accounts and credit cards.  This tragically makes it harder for low income Americans living paycheck to paycheck to improve their lives and achieve financial independence,” Hensarling added.

Committee Approves Bipartisan Bills to Empower Consumers and Job Creators

On Wednesday, the full committee approved several bipartisan bills designed to protect consumers and help build a healthier economy.

One of the bipartisan bills approved by the committee, H.R. 1090, the Retail Investor Protection Act sponsored by Rep. Ann Wagner (R-MO), will protect Americans’ ability to choose and access investment advice.

“I'm grateful for my colleagues on the Financial Services Committee who joined me today in protecting the millions of low- and middle-income Americans from the Administration's latest power grab. Preserving access to sound investment advice for hardworking families is something I believe in and will continue to fight for, and I look forward to seeing this bipartisan bill on the House floor soon," said Rep. Wagner.

The committee also approved two bipartisan bills that will bring more accountability and transparency to the CFPB. The CFPB is perhaps the most powerful and least accountable federal agency in history – a dangerous defect that stems from how the Bureau was designed in the Dodd-Frank Act.

H.R. 957 ensures greater accountability at the CFPB by creating an independent Inspector General for the Bureau.

“The CFPB has been given broad authority and must be accountable to the American people. More than 30 other federal departments and agencies have an independent Inspector General. This bill would bring the CFPB in line with these agencies and provide the necessary oversight and transparency,” said bill sponsor Rep. Steve Stivers (R-OH).

H.R. 1266, the Financial Product Safety Commission, removes the CFPB from within the Federal Reserve System and re-establishes it as a stand-alone agency that is governed by a five-member, bipartisan commission.  All authorities and powers of the CFPB remain unchanged.

 “After months of productive conversations with my colleagues from both sides of the aisle, I’m pleased the Committee acted in a bipartisan manner to move this CFPB commission bill forward. By changing the leadership structure, we can ensure the Bureau is more accountable, transparent and shielded from the whims of political change and partisan politics,” said bill sponsor Rep. Randy Neugebauer (R-TX).

The committee approved the Burdensome Data Collection Relief Act, H.R. 414 sponsored by Rep. Bill Huizenga (R-MI).  The bill repeals a burdensome, unneeded and expensive pay ratio requirement of Dodd-Frank.

“We are all concerned about creating more jobs in our various congressional districts.  And instead of companies being forced to spend millions of dollars trying to comply with a regulatory mandate for which the SEC was unable to quantify any benefits to shareholders, shouldn’t these burdensome costs be used by manufacturers, retailers and other public companies for much-needed investment and job creation and hiring of new employees” said Rep. Huizenga.

Legislation requiring the National Credit Union Administration (NCUA) to conduct a study of the appropriate capital requirements for federal and state credit unions also passed the committee on Wednesday.  In January the NCUA issued a revised risk-based capital proposed rule for credit unions.  The bill’s sponsor, Rep. Stephen Fincher (R-TN), said it “would ensure the cost of this [NCUA] proposal is vetted relative to its impact on lending.”


Rep. Ann Wagner |  Wagner financial services bill, opposed by Obama, passes House committee

Rep. Ann Wagner's Retail Investor Protection Act passed the House Financial Services Committee Wednesday, setting up a vote in the full House of Representatives on an issue that the Obama administration has taken an opposing position.

Weekend Must Reads

Wall Street Journal |  Elizabeth Warren’s Intellectual Purge

President Obama has let Elizabeth Warren veto presidential appointments, and the power rush seems to have gone to her head. Now the Massachusetts Senator has forced the resignation of a Brookings Institution economist because he dared to report that new financial regulations will cost investors.

The Hill |
 CFPB should be bipartisan commission

From the very beginning, Sen. Warren (D-Mass.) and other supporters intended to structure what is now the Consumer Financial Protection Bureau as a bipartisan commission. Unfortunately, the dedication to a consumer agency led by a diverse board or commission did not last, and the CFPB that Congress created is headed by a single director. In this regard, the new CFPB is unlike most financial regulators in Washington, including the Federal Reserve Board, Federal Deposit Insurance Corp., Securities and Exchange Commission, and National Credit Union Administration.

Wall Street Journal |  The Jack Kemp Model for Republicans

Jack Kemp never became president, but the country desperately needs a leader like him now. When Kemp died in 2009, two themes dominated tributes to his career as a star quarterback, congressman, cabinet secretary and candidate for vice president and president. Conservatives called him one of the most influential politicians of the 20th century who never made it to the White House. He was “among the most important Congressmen in U.S. history,” as a Wall Street Journal editorial put it. Liberals declared that the Republican Party needed, but didn’t have, a Kemp: a leader who cared about the poor, who wanted to make the GOP attractive to minorities and working-class voters, who never went negative and regularly worked across party lines.

Investors Business Daily
CFPB Admits Using Bad Math To Restructure $900 Bil Auto Finance Industry

After accusing the ninth-largest bank auto lender of discriminating against minorities, the president's consumer watchdog admits his analysis is less than perfect.

Still, according to Monday's federal order, Cincinnati-based Fifth Third Bank will have to make $18 million in restitution for allegedly marking up loans for blacks and Latinos.

It will also have to cap the interest rates it charges customers, which Consumer Financial Protection Bureau chief Richard Cordray called "a significant step toward protecting consumers from discrimination."

Yet on Tuesday, as the ink was still drying on the settlement, Cordray confessed under grilling by House banking panel chief Jeb Hensarling that the disparate impact methodology that his agency uses to determine lending bias "overestimates" racial disparities in loan pricing.

    On the Horizon 

October 8, 2015 9:00 a.m.
Full Committee Hearing
“The Future of Housing in America: 50 Years of HUD and its impact on Federal Housing Policy.”

October 9, 2015 9:15 a.m.
Monetary Policy and Trade Subcommittee Hearing
"The Future of Multilateral Development Banks"

  In the News

Politico Pro |  House panel approves bill to block Labor Department's fiduciary rule

Wall Street Journal | Questions About Leak at Federal Reserve Escalate to Insider-Trading Probe

American Banker |  Some House Democrats Defect in Battle Over CFPB

Politico Pro |  House to vote next week on bill delaying CFPB enforcement of TRID rule

Washington Examiner |  GOP seeks to rein in Obama's finance bureau

Politico Pro |  CFPB's Cordray faces heat over auto lending, consumer data at House hearing

Wall Street Journal |  CFPB Head Defends Regulator’s Work Before Lawmakers

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