Cordray grilled over CFPB practices, budget and overreach
Fifth annual report to Congress is a rough ride for director
The Consumer Financial Protection Bureau has aided in efforts to refund more than $3.8 billion to consumers who fell victim to various violations of consumer financial protection laws over the past fiver years, the director of the CFPB reported to Congress Tuesday in his fifth Semi-Annual Report to Congress and the President.
But if Richard Cordray was looking for a unanimously warm welcome from the Democrat-controlled Senate Banking Committee, he didn’t get it.
Cordray answered as good as he got for the most part and stayed cool and nonplussed, slipping mainly on questions about CFPB spending as he faced extended questions from both sides.
Members raised repeated questions and made statements of concern about CFPB practices in collecting private personal data on U.S. citizens, on transparency and discrimination in the bureau, on CFPB overreach, and other controversies, even as some members also lauded the accomplishments that Cordray reported.
Cordray said that all Americans should be concerned about personal data collection by government agencies and private companies, but defended the CFPB’s data collection despite concerns the data can be backtracked to individual citizens and their personal financial information.
“The public should be concerned about this,” Cordray said.
The committee also discussed concerns with Cordray about student debt, which is in part blamed for the slow pace of Millennials purchasing their first homes.
Sen. Mike Johanns, R-Nebraska, read a lengthy, flowery, Home & Gardens house porn-like description of the now $185 million renovation the CFPB is undertaking on an office building it does not own. (This amount has grown from an estimate in spring of $145 million.)
Other senators questioned the spending and budget of the CFPB, which resists Congressional oversight.
Cordray said there never was any expectation the CFPB headquarters renovation would only cost $55 million.
“The notion this has tripled in cost is a fiction by the Washington Examiner,” Cordray said. “We don’t own the building but the notion we are building some kind of palace is ridiculous.”
Cordray said he does not know the square footage of the building, nor does he have anyone on staff with the experience to oversee and audit a $185 million commercial renovation project. He did admit the flowery architect’s marketing copy about the CFPB building is embarrassing to him.
In his operational report, Cordray said the bureau has levied more than $141 million in fines, all of which has gone into an agency run fund, which goes to CFPB education programs or in some cases to direct reparation to consumers.
“Through fair rules, consistent oversight, appropriate enforcement of the law, and broad-based consumer engagement, the Bureau is helping to restore American families’ trust in consumer financial markets, to protect American consumers from improper conduct, and to ensure access to fair, competitive, and transparent markets.” Cordray said in prepared remarks.
Cordray cited a list of the bureau’s efforts in going after loan servicers, payday lenders, and the practice of robo-signing court documents and discriminatory loan pricing.
“And we partnered with 49 states in bringing an action against the nation’s largest nonbank mortgage loan servicer for misconduct at every stage of the mortgage servicing process,” he said.
CFPB supervisory work contributed to a recent enforcement action resulting in a refund of approximately $727 million to 1.9 million consumers for illegal practices related to credit card add-on products, Cordray reported. “In addition to this public enforcement action, recent nonpublic supervisory actions and self-reported violations have resulted in more than $70 million in remediation for over 775,000 consumers.”
In January, mortgage rules that the Bureau issued to implement provisions of the Dodd-Frank Act took effect, establishing new protections for homebuyers and homeowners – the QM rule.
“During the reporting period, we also issued another major mortgage rule mandated by the Dodd-Frank Act: a final rule to consolidate and improve federal mortgage disclosures under the Truth in Lending Act and the Real Estate Settlement Procedures Act, which we have called ‘Know Before You Owe,’” Cordray said. “We also issued an Advance Notice of Proposed Rulemaking on debt collection, asking the public in-depth questions about a range of issues relating to the debt collection market, which is the Bureau’s most frequent source of consumer complaints.”
In closing, Senate Banking Committee ranking minority member Sen. Mike Crapo, R-Idaho, questioned Cordray about what, if any, role the CFPB has in the controversial Operation Check Point operation, where federal regulators are leaning on banks that do business with those deemed politically unpalatable by Eric Holder’s Justice Department, including ammunition manufacturers, payday lenders, and even adult entertainment and media companies.
The full text of Cordray’s prepared remarks can be read here.