Politicians from both sides of the aisle scrutinized the Consumer Financial Protections Bureau, while some Republicans called for the bureau to be restructured, during a hearing at the House Financial Services Committee in Washington, D.C., yesterday, according to a published report.
CFPB Director Richard Cordray appeared before the committee to submit testimony for his semi-annual report to Congress. Cordray is the bureau’s first director, a position he’s held since Jan. 4, 2014.
During the hearing, Rep. Randy Neugebauer (R-Texas), chairman of the financial services subcommittee on financial institutions and consumer credit, announced plans to introduce the “first of several bills” aimed at replacing the CFPB’s director position with a “bipartisan, five-member commission appointed by the president,” according to the report.
“Today, we are approaching the five-year anniversary of the Dodd-Frank Act, which created the CFPB,” Neugebauer said. “Unfortunately, since its creation, I see an agency that has yet to prove it can function in a sustainable manner. Its actions have demonstrated a lack of transparency and lack of accountability. It has demonstrated it is susceptible to political influence – bringing into question its independence.”
Replacing the CFPB director position with a board would introduce a “balanced and consultative process into the bureau decision-making,” Neugebauer told the committee.
“Many have forgotten that Sen. Elizabeth Warren, our former colleague Barney Frank, and even the President originally supported a board leadership structure,” he said.
During the hearing, House Financial Services Committee Chairman Jeb Hensarling (R-Texas) also questioned the CFPB’s lack of accountability. The director, he said, can only be removed “for cause,” rendering the position unaccountable to the president. The CFPB’s findings are not subject to appropriations, making it unaccountable to Congress, and Dodd–Frank requires that courts grant the bureau deference in its interpretation of federal financial consumer law, also rendering it unaccountable to the public. In the interest of the consumer, he concluded, the bureau should be on budget and run by a bipartisan committee.
“The CFPB undoubtedly remains the single most powerful and least accountable federal agency in all of Washington,” Hensarling said. “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.”
At the opposite end of the political spectrum, Maxine Waters (D-Calif.) praised the CFPB’s track record, and accused republicans of trying to advance legislation that would “undermine the agency’s ability to shield consumers from duplicitous financial practices, end its autonomy, dismantle its leadership and bog down operations with countless requests for documents,” according to the report.
In written remarks, Cordray himself defended the CFPB’s efforts to safeguard consumer rights, and said that “to date, we have helped secure orders through enforcement actions for more than $5.3 billion in relief to more than 15 million consumers who fell victim to various violations of federal consumer financial laws.”
Within auto finance, consumers filed 3,496 vehicle loan-or-lease-related complaints with the CFPB in 2014, 230 of which were settled by the lender with monetary resolutions.