The House Financial Services Committee heard the semi-annual report from Richard Cordray, director of the Consumer Financial Protection Bureau, on Tuesday morning.
The bulk of the hearing was dominated by paeans from Democrats and attacks from Republicans, and most of the questions were the usual speeches-written-as-questions, but it did touch on the impending implementation of the TILA/RESPA Integrated Disclosure rule.
When Cordray last appeared in front of the committee in March, committee members emphasized the need for reforms to make the CFPB accountable and transparent.
“The CFPB undoubtedly remains the single most powerful and least accountable Federal agency in all of Washington,” Chairman Jeb Hensarling, R-Texas, said at the March hearing. “When it comes to the credit cards, auto loans, and mortgages of hardworking taxpayers the CFPB has unbridled, discretionary power not only to make those less available and more expensive, but to absolutely take them away."
Later Tuesday, the Housing and Insurance Subcommittee holds a related hearing entitled that will focus on various regulatory standards being promulgated by both state insurance supervisors and the federal government.
Much of the discussion Tuesday morning focused on auto loans and payday lending, but some mortgage issues, including the implementation of the TILA/RESPA Integrated Disclosure rule that takes effect Oct. 3, and the Home Mortgage Disclosure Act data use.
“As we continue our work, consumer financial markets are showing increasing signs of health. For example, the latest Home Mortgage Disclosure Act data, released by federal agencies last week, shows increasing numbers of consumers are taking out mortgages,” Cordray said. “In 2014, the first year of our new mortgage rules, mortgage originations for owner-occupied home purchases increased between four and five percent. The upward trend appears to have accelerated over the first half of this year."
And while we saw some continuing consolidation in parts of the mortgage market, there is no evidence of the decline some predicted.
“As consumers gain more confidence, lenders are responding and credit standards are becoming less tight across all these markets. Consumers appear to be carrying their debt burdens more effectively, which has contributed to the fact that the delinquency rate in each of these markets is at or near record lows,” he said. “These are all positive trends for the consumer financial marketplace and very much aligned with the bureau’s mission.”
Cordray testified that to date, the bureau’s enforcement activity resulted in more than $11 billion in relief for over 25 million consumers.
Asked about whether the CFPB will implement a formal “hold harmless” grace period for lenders dealing with the onerous requirements of the TRID rule, Cordray demurred.
He said the CFPB will have an informal grace period “for some period of months, I’m not going to be specific here … will be diagnostic not punitive.”
Hensarling said that despite the CFPB’s claims, the bureau has done more harm than good for consumers and businesses.
“This committee recently concluded a series of hearings to examine the impact of the Dodd-Frank Act in the five years since it became law. The hearings clearly revealed how the law in numerous ways has harmed consumers and low income Americans,” Hensarling said.
Hensarling charged that 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,” Hensarling said. “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,” he said. “Regrettably, still more harmful consequences are just over the horizon.
My problem is not with this one man, but with the insidious belief among Washington elites that low income Americans cannot be trusted with freedom, cannot be trusted to make good decisions for themselves, so Washington must do it for them. It is insulting, degrading and an affront to social justice.”
Congresswoman Maxine Waters, D-Calif., ranking member of the Financial Services panel, defended Cordray and the CFPB.
“It is unfortunate, however, that rather than working to encourage good behavior in our markets and support American consumers, opponents on this Committee continue to promote measures to eliminate or weaken the bureau,” she said. “They’ve perpetuated false narratives of an agency that is unaccountable and lacks transparency, despite the record number of times you’ve made yourself available to Congress and the many checks and balances on the Bureau contained in Dodd-Frank."
"And they continue to support and amplify industry challenges to the CFPB’s constitutionality in court, with little to no success,” Waters concluded.