Congress wants CFPB to come clean on mortgage servicing settlement role
A Congressional panel Q&A with Consumer Financial Protection Bureau architect Elizabeth Warren focused on two key points — looming questions of transparency when it comes to the agency's role in the $25 billion mortgage servicing settlement and concerns over the agency's budget and expenditures. Warren also conceded several times during the hearing that she's unaware of any products in the lending space that should be banned at this time. Rep. Darrell Issa (R-Calif.), who chairs the House Committee on Oversight and Government Reform, levied the first question to Warren, saying he has concerns about documents obtained from state AGs by conservative watch dog group Judicial Watch. When the documents were released, Judicial Watch said the records showed Warren's CFPB played a much larger role than previously disclosed in helping enforcement agencies reach the mortgage servicing settlement with big banks. Warren's team has contended the agency only offered advice. On the record, Issa asked Warren, "you are not in enforcement correct? To that, Warren said she is not. Issa made the Judicial Watch disclosures the focus of his interview, pointing out to Warren that the Justice Department refused to disclose similar information on the grounds some of the disclosures related to an ongoing enforcement matter. Warren responded saying she's not in the position to speak for the Justice Department and she believes requests went to the Treasury, not the CFPB. Issa piped back saying "You are going to inherit these requests and appeals (when the CFPB goes live). I am sure the Justice Department is not going to continue defending on your behalf. These requests will speak loudly to whether or not the transparency that we all speak of is occurring." The hearing had a much more subdued tone. Rep. Patrick McHenry (R.-N.C.), who conducted a well-documented grilling of Warren a few months back, conceded today that Warren's simplified disclosure forms are in line with a legislative initiative he proposed four years ago. Having started on a positive note, McHenry asked Warren if she knows "if there are any financial products that should be outright banned from the market." To that Warren replied, "I don't know, sir, if you have a particular suggestion." McHenry replied, "I don't have a half-billion dollar budget, so I will leave that to you and the agency." Warren's budget remained a point of contention for lawmakers throughout the meeting. Rep. Jason Chaffetz (R-Utah) raised concerns saying an appropriations committee report suggested it's unclear how the CFPB will spend its money. "How do the taxpayers see what you are going to do and how you are going to do it?" Chaffetz asked. Warren replied saying five months before the launch, the agency began publishing documents and information online. "I am worried about the fine print," Chaffetz said. "we don't have the details on how you are actually going … to bring this thing forward." Warren replied saying every contract issued by CFPB is done through the ordinary competitive process. Chaffetz, however, pointed Warren to an appropriations committee report which he says describes the CFPB as being "unlike other agencies" in that it "does not define or explain the connection between its policy projections and budget resources." When asked if Congress has a right to look over the CFPB's shoulder. Warren replied, "The Congress should look over our shoulder 24 hours a day, seven days a week." When asked whether Congress should be involved in her budget, Warren said the CFPB's funding, like other banking regulators, should not be dependent on the political process. "I believe Congress should treat all banking regulators alike and not say the one that will watch out for consumers will be put through the political process." When questions over funding became heated, Rep. Jim Cooper (R-Tenn.) interrupted the hearing saying, "I think we all realize that people believe this Congress is dysfunctional. I would urge the junior members to dismiss partisan comments. I did not vote for Dodd-Frank ... , but I do not want to be a part of a committee that treated Miss Warren with more rudeness and disrespect than I have seen any other witness treated ... this is not the American way." To that Chairman Issa agreed the hearing should be civil and professional. He added, "We will be talking about an organization that Warren may or not head, but she certainly is the most knowledgeable witness." During the hearing, Democratic lawmakers re-focused the conversation back to the bureau's efforts in helping military families with foreclosure or mortgage-related issues. Towards the end of the meeting, Rep. Trey Gowdy (R-S.C.) pointed to Warren's academic writings, which showed her discussing the dangers pay day lending poses to certain consumers, including minorities. He asked pointedly, "Do you think pay day lending should be banned?" Warren responded, "We have priorities, our first priority is around the TILA/RESPA forms and we are trying to reduce regulatory burdens." When asked several times about the banning of certain financial products, Warren did not discuss any products that she believes should be banned. Towards the end, Warren said half of the CFPB budget will be supervision of institutions and the straight-forward enforcing of law, a quarter will be about consumer education and complaints, while the remaining quarter will cover everything else. Write to Kerri Panchuk.