[Update 1: Includes NAFCU rebuttal to Cordray's remarks on credit unions.]
The director of the Consumer Financial Protection Bureau, the nation’s most powerful financial services regulator, provided a semi-annual update to the House Financial Services Committee this morning.
So how are things going at the CFPB?
Short answer: The American hate-hate relationship with lenders appears to be growing.
In fact, consumer complaints against lenders and servicers are nearing half a million complaints.
This is so bad, Cordray is reporting that the CFPB is working to improve consumer access to the database, by making it easier and simpler for consumers to complain.
As of September 30, 2015, the database passed 465,000.
The semi-annual report covers April to September 2015. During that time, the CFPB reported $5.8 billion in consumer relief. There is also $153 million in civil money penalties.
The growing number of complaints, however, is not a concern for the esteemed members of Congress. However, identifying and eliminating discrimination in lending became the clear, preferred topic of conversation.
The representatives grilled the director on discrimination in auto loans and payday lending. No less than 5 representatives used their time to grandstand on lending discrimination, basically asking no pertinent questions and talking down to the director.
The issue remains totally unidentified and vastly unresolved. However, Representative Sean Duffy (R-WI) did accuse Cordray of discrimination within the ranks of the CFPB itself.
"You pay African Americans $16k less than white employees,” Duffy charged.
One particular, peculiar moment, however came when Rep. Steven Stivers (R-Ohio) passed along his progeny’s t-shirt, which is in a toddler’s size. Stivers then asked Cordray to put it on in order to exemplify restrictive regulatory burden.
Cordray declined, and used credit unions as a clear benefactor of CFPB regulations, despite the claims of the two largest trade groups representing the market.
Indeed, just this morning, the National Association of Federal Credit Unions released President and CEO Dan Berger's letter to House Financial Services Committee Chairman Jeb Hensarling (R-Texas) in advance of the scheduled seminannual report.
In the letter, Berger wrote, "Unfortunately, many of our concerns about the increased regulatory burdens that credit unions would face under the CFPB have proven true."
"As expected, the breadth and pace of the CFPB’s rulemaking is troublesome, and the unprecedented new compliance burden placed on credit unions has been immense," he added.
This is a stance Director Cordray clearly disagrees with. Cordray said press releases from credit union trade groups often don't reflect economic facts.
“Credit union membership hit an all-time high,” during this semiannual timeframe, Cordray told Stivers. This data “is not consistent with ‘killing the credit unions’,” Cordray added.
Cordray said credit unions are gaining market share, especially in mortgages, at the expense of the big banks.
The NAFCU rebuts that Cordray is the one who is flinging inaccuracies.
“The assertion that credit unions are not being negatively affected by the tidal wave of overregulation arising from CFPB and Dodd-Frank could not be more wrong,” Berger said. “Director Cordray’s denial that the tide of regulation is not contributing to the continued trend of credit unions being forced to cut back on member services, merge or go out of business flies in the face of facts.”
Since the second quarter of 2010, we have lost over 1,350 federally-insured credit unions, 96% of which were smaller institutions below $100 million in assets, the NAFCU added in a statement.
The final nugget of relevance to mortgage finance professionals came from Rep. Bradley Sherman (D-Calif.) who asked Cordray to extend the hold harmless period of the Know Before You Owe provision, aka TRID.
Cordray wouldn't agree or disagree to do so, adding the conversation with the mortgage industry in this regard remains ongoing.