Senators grill Cordray on CFPB structure, budget

Consumer Financial Protection Bureau Director Richard Cordray faced intense grilling from U.S. Senators as lawmakers considered him for a second leadership term Tuesday.

Initially, the president appointed Cordray during a series of recess appointments, bypassing Senate confirmation.

Cordray faces a more difficult process today. Decisions by federal courts could nullify the president’s previous recess appointments, making a Senate confirmation the only safe and certain bet.

But it’s not just Cordray who caught heat during the Senate Banking Committee hearing, the CFPB as an agency maintains opponents. At Tuesday’s hearing, Cordray was questioned on the agency’s current appropriations and oversight structure, the validity of its funding and the potential for Cordray to lose control of the agency’s funds if his appointment is invalidated.

Sen. Pat Toomey, R-Pa., specifically questioned Cordray on the CFPB’s budget, demanding answers as to why the agency spent more than half of its budget — $150 million for fiscal year 2012 — in contracts alone.

“We have a right to probe into this type of information, so we can tell our taxpayers that their money is being spent wisely,” Toomey stated. 

Cordray defended the budget, saying many CFPB expenditures tie back to the agency’s need to repay the Treasury for its investments in the bureau.

“We have published details about our specific contracts and will be happy to provide that to this committee as well as any other committee,” Cordray said.

Many panel members sought the middle ground, crediting the bureau for tackling consumer issues.

The CFPB received positive recognition from the banking industry in its handling of the qualified mortgage rule, Sen. Jack Reed, D-RI, pointed out.

He added, QM “reinforces a notion that you function as a way to provide a level playing field for the market so traditional banking institutions aren’t under pressure.”

Sen. Elizabeth Warren, D-Mass., targeted her fellow senators, warning them a delay in Cordray’s confirmation is nothing more than a “filibuster threat” against the director and “an attempt to weaken the agency.”

Warren, who created the bureau, suggested the focus should be more on helping individuals struggling with mortgages rather than just on the large banks.

“You have earned your nomination, Director Cordray,” Warren said.

The only lingering question is whether that nomination will evolve into a confirmed second term for the director.

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