Patrick McHenryChairman

Washington, February 6, 2020 -

Today, the House Committee on Financial Services is holding its semi-annual hearing with Consumer Financial Protection Bureau (CFPB) Director Kathleen Kraninger. Republicans will discuss recent actions taken by the Bureau to improve transparency, clarify supervision and enforcement standards, and encourage the responsible use of alternative data in underwriting. Republican Members will also discuss their concerns, as laid out in a recent amicus brief, that the structure of the CFPB violates Article II of the U.S. Constitution.

Watch Republican Leader of the House Financial Services Committee, Patrick McHenry’s (NC-10), opening remarks here.

Ranking Member McHenry’s opening remarks as delivered:

“Thank you, Director Kraninger for being here today.

“I would like to first say thank you for your commitment to an open process, to fairness, to the rule of law. I think this is a long time coming for this Bureau, though the structure is still a very poor one as a result of Dodd-Frank, thank you for trying to clear this up as best you can, given the circumstances.

“Since Dodd-Frank’s enactment, Republicans have expressed serious concern over the structure of the CFPB – that remains. Our concerns are driven by the fear that Congress has created one of the most powerful, unaccountable, and unconstitutional bureaucracies ever. 

“Our concerns are driven by the funding scheme – which comes only from the Fed without oversight of Congress. A lack of an inspector general who is solely focused on the Bureau’s activity and focused on eliminating waste, fraud and abuse wherever it may be.

“Our concerns are driven by a Director who can only be removed by the President for cause.

“Those things remain.

“We saw the disastrous results of this unaccountable agency’s actions first-hand. And that was under former Director Cordray’s regime, the limitless, unaccountable, authority bestowed upon the director resulted in small businesses, community banks, and others being bullied through arbitrary enforcement actions. Pure, arbitrary enforcement actions.  Unilateral enforcement actions that were the modus operandi for the Bureau under the previous leadership.

“However, under new leadership, under this director’s leadership, they have made necessary and appropriate changes to the way the Bureau functions. That is good.

“For example, the Bureau finally provided a long-needed clarification for the abusiveness standard in its supervision and enforcement work. Dodd-Frank added the word “abusive” to enforcement authority to the existing statute of “unfair and deceptive acts and practices” which we call UDAAP.

“While there are statutory definitions for “unfair” and “deceptive,” until recently, the Bureau was working under a vague and fluid definition for “abusive.” That’s problematic. It’s problematic for those people you regulate. The policy clarification that you’ve brought forward is helpful. That clarity will help focus future cases, and future actions by the Bureau around something that is quantifiable.

“In addition, I support the federal financial regulatory agencies’ effort to address and expand the use of alternative data in underwriting. I know there are also consumer protection concerns with changing underwriting standards. We debated this on the House floor just last week in fact.

“I share the view that regulators should ensure that firms understand their responsibility to use alternative sources of data in a manner consistent with consumer protection law.

“Finally, I want to commend the Bureau on its recent announcement to work with the Department of Education to help student borrowers, particularly those borrowers who are having problems in the process. Working together to better support students is a win-win for the student and for the agencies, and the taxpayer.

“But the fact remains, while we’ve seen more transparency over the last several years than we have since the inception of the Bureau, the structure of this agency still alarms me. It’s run by a single individual with no real oversight or accountability. I am grateful that you’re here today for your annual testimony. I am hopeful that you will follow and comply with the rule of law, and I am grateful that you have. But I understand the structure is so limited in terms of what we can do to have oversight of your Bureau. So, I wish you well, I hope you comply with the law, and I hope that you continue to follow the structure as best you can.

“And so, with that, I look forward to the questions.”

Learn more about today’s hearing here.