Today, Congresswoman Maxine Waters (D-CA), Chairwoman of the House Committee on Financial Services, gave the following opening statement at a full Committee hearing entitled, “Protecting Consumers During the Pandemic? An Examination of the Consumer Financial Protection Bureau.”
As Prepared for Delivery
I would like to welcome Director Kraninger to what I hope will be her last appearance before this Committee as CFPB Director.
Ten years after we passed the Dodd-Frank Act to end the predatory and discriminatory practices that caused the financial crisis, we find ourselves in the midst of an economic and health crisis— caused by incompetence and exacerbated by narcissism—that will once again hit the most vulnerable Americans the hardest. The scale of the crisis is unprecedented - today we learned from the Bureau of Economic Analysis that the Gross Domestic Product (GDP) decreased at an annual rate of 32.9 percent in the second quarter of 2020, which is the largest drop ever recorded.
Our consumers need a strong Consumer Bureau that provides robust protections on their behalf and holds financial institutions accountable when they commit abuses. A record number of people have filed complaints about financial institutions with the CFPB during the COVID-19 crisis.
We know that consumers are reporting major hardships in working with payday lenders, mortgage servicers, credit card companies, and the credit reporting bureaus. They are reporting long wait times, inconsistent information from consumer representatives, and a lack of follow up.
Unfortunately, our witness today, Consumer Bureau Director Kathy Kraninger, has done next to nothing of substance about any of this. Instead, she has focused the Consumer Bureau on weakening critical consumer protections, relaxing enforcement against financial institutions, and undermining the agency from the inside.
Director Kraninger, let’s review some of the harmful actions you have taken since March when the pandemic began.
You issued a final rule rolling back key safeguards for payday, car title, and installment loans, exposing consumers to high-cost, predatory loans. It is shameful to open the flood gates to predatory loan products that trap consumers in a cycle of debt at any time, but to do so during a pandemic is egregious. It is hands down the most anti-consumer action you have taken as Director, and given your record, that’s saying a lot.
You also weakened the reporting requirements under the Home Mortgage Disclosure Act (HMDA), willfully hindering the ability of the Consumer Bureau, researchers, journalists, advocates, and others to detect redlining and patterns of discrimination in mortgage lending. An investigation by Reveal News found evidence of modern day redlining in 61 metropolitan areas across the country, using the public data set you are now degrading. It is deeply irresponsible and malicious to undermine this important tool.
In addition, you have issued an advanced notice of proposed rulemaking to make substantial changes to the agency’s Qualified Mortgage rule, which is the rule implementing the standard that lenders first demonstrate that a borrower can repay a loan before signing the mortgage documents. It is unfortunately all too fitting that you would seek to undermine this standard on the 10-year anniversary of Dodd-Frank.
You may not remember the financial crisis, but I and the Members of this Committee do. We included this standard in Dodd-Frank because the proliferation of unaffordable and predatory mortgage loans was a central driver of the 2008 financial crisis and caused millions of families, and especially borrowers of color, to unfairly lose their homes.
These actions are just the latest that you have carried out to sabotage the very agency you have been entrusted with leading. Your actions are a betrayal of the consumers you are tasked with protecting. Consumers deserve better.