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Sparks fly as House GOP grills Cordray on CFPB

Compares National Mortgage Database to NSA spying

They pulled off the kid gloves and the boxing gloves at the House Financial Services Committee, going full-on bare-knuckle and then even brass knuckles on the Consumer Financial Protection Bureau and its director, who was there to give his semi-annual report to Congress.

Any pretense from previous hearings seemed to have been cast aside as Republicans and Democrats fired direct broadsides – Republicans targeting the CFPB, and the Democrats targeting Republicans.

The hearing was more of a grilling than CFPB director Richard Cordray got last week before the Senate Banking Committee, which was uncharacteristically heated.

Majority Republican members accused the agency of the worst kinds of operational and financial mismanagement, collecting private personal data on U.S. citizens, for being on non-transparent and for a culture of discrimination at the CFPB. Also in the mix was the now $185 million renovation the CFPB is undertaking on an office building it does not own, a renovation that costs more than the actual building itself.

House Financial Services Committee Chairman Jeb Hensarling, R-Texas, launched the opening salvo.

“Properly designed, the CFPB is capable of great good on behalf of consumers.  It is also capable of great harm,” Hensarling said. “In just three years, the CFPB has grown into an unaccountable federal leviathan of nearly 1,400 employees with over a half billion dollar budget and the unrestrained power to dictate which Americans can receive credit and which Americas cannot. Knowledgeable Americas are rightfully alarmed as the threat and the harm begins to mount.”

Hensarling said the CFPB as constituted hobbles businesses at a time when the economic is stalling out.

“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,” Hensarling said. “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.”

U.S. Rep. Maxine Waters, D-Calif., the ranking Democrat on the committee, immediately jumped to the CFPB’s defense.

Waters said that House Republicans want to bog the CFPB down with burdensome regulations, paperwork and accountability requirements – ironically, this is what Republicans say the CFPB imposes on private businesses.

“Republicans have been hard at work – drafting and passing burdensome legislation that would gut your agency and its ability to stand up for our nation’s consumers. In the past six months, Republicans have advanced a number of these harmful measures through this committee – and this House – that would undermine the CFPB’s ability to protect consumers from deceptive marketing, unlawful debt collection, lending discrimination, illegal fees and other prohibited activity,” Waters said. 

“I’m disappointed that a package to destabilize CFPB’s leadership, end its autonomy, and tie its funding to the whims of the Congressional appropriations process made its way through the House of Representatives,” she said. “If enacted into law, we would be one step closer to Republicans’ goal of ending the CFPB’s ability to protect all consumers – including students, seniors, families and service members. It saddens me that my colleagues on the other side of the aisle have aligned themselves with Wall Street, predatory lenders and other bad actors in our financial system at the expense of protecting consumers.”

Republicans were particularly concerned about the CFPB’s collection of data for its National Mortgage Database on consumers including names, Social Security numbers, IP addresses, GPS coordinates, phone numbers, addresses, religious faith and political affiliation, education and employment records, and other personal data.

“…The joint database project by the CFPB and the FHFA will undeniably collect personally identifiable information on millions of Americans in the National Mortgage Database. I’m not speaking merely of names, addresses and phone numbers – though the database will certainly include those – but shockingly also people’s Social Security numbers, their race, religion, personal financial information, and even the GPS coordinates of their homes,” Hensarling said. “A breach of this database could cause untold harm to consumers by the very agency that purports to protect them.”

Hensarling didn’t hold back in condemning the National Mortgage Database.

“Without a doubt, this National Mortgage Database is an unwarranted and shocking intrusion into the privacy of American citizens. It is a database I would fully expect to see in either Russia or China, but I’m appalled to see it in the United States of America,” he said. 

Click below for the rest of the story.

Cordray said personal information that the bureau will collect for the database will have some of that personal data removed, but only after the CFPB has collected the data.

"I’m not sure who’s going to win the race on collecting the most data, the NSA or your agency," said Rep. Randy Neugebauer, R-Texas.

Democrats joined Republicans in a show of bipartisan concern over CFPB data collection on American citizens.

“I don’t mind you collecting the data for your purposes, but I would object incredibly strongly to having it shared beyond those parameters and honestly, why do you want to keep it over time? I understand you would keep the results, but why keep the individual data?” asked Rep. Michael E. Capuano, D-Massachusetts, who supports the agency but doesn’t trust its data collection efforts.

Citing the $185 million renovation the CFPB has undertaken on the building it does not own, Hensarling wanted to know if Cordray thought that was an appropriate use of taxpayer money.

“We have also learned since Director Cordray’s last appearance the CFPB is incurring even more costs on its building renovation.  What was then going to cost an estimated $145 million is now costing at least $184 million, according to information provided by the Bureau itself,” Hensarling said.  “That’s $30 million more than the building is even worth – a building, we must remember, that the CFPB does not even own.  This is what happens, I believe, when an agency is essentially unaccountable to the people.”

Hensarling said he has not seen the building the CFPB is working on.

“Come see the building,” Cordray responded. “It’s a dump.”

“Apparently it won’t be a dump after you finish,” Hensarling replied.

Incredibly, Cordray said that even after the $185 million cost for the renovation, the building the CFPB will call home will be “Good, but not optimal.”

In his operational report, Cordray said that the Consumer Financial Protection Bureau has aided in efforts to refund more than $4.3 billion to consumers who fell victim to various violations of consumer financial protection laws over the past five years.

Cordray reported that 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 told the House committee.

Cordray reported on the CFPB’s actions since January.

“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,” he said. “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.’” 

The latest in a series of hearings on discrimination at the CFPB is scheduled for 1 p.m. E.T. Wednesday.  A subpoenaed CFPB employee will testify before Congress this week about a “culture of intimidation and retaliation” at the agency and raise allegations of mistreatment in the workplace — including that he was referred to as an “F-ing foreigner” by someone in management, according to information from the committee.

Ali Naraghi, an examiner with the division of supervision, fair lending and enforcement for the CFPB’s Southeast region, is one of two witnesses set to appear before the House Financial Services Oversight Subcommittee.

 “The most appalling development that has occurred since Director Cordray’s last appearance here:  independently corroborated reports of widespread discrimination and abuse of employees at the CFPB,” Hensarling said. “Not merely virtual discrimination, not merely theoretical discrimination or statistical discrimination but appalling acts of actual discrimination. Since these allegations first came to light, this committee has served as a virtual trauma unit for employees who have come forward to report discrimination, retaliation and other apparent violations of law at the CFPB.” 

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