House Financial Services Committee Chairman Jeb Hensarling began yesterday’s 2016 Semi-Annual Reports of the CFPB hearing by calling for bureau Director Richard Cordray’s termination.
“As you are well aware, the president, under the PHH case, can dismiss you at will, under Dodd Frank you can be removed for cause. Either way, I believe that president is clearly justified in dismissing you,” Hansarling said. “I call upon the president — yet again — to do just that, and to do it immediately.”
The chairman’s opening remarks set the tone for often-heated hearing — which lasted more than five hours — with many members expressing dislike for the CFPB’s regulatory oversight.
“Under Mr. Cordray’s leadership, the CFPB has shown an utter disregard for protecting our markets, and has made credit more expensive and less available in many instances — this is particularly true in low or moderate income Americans,” Hensarling said. “What is also clear is that under Mr. Cordray’s leadership, the CFPB has acted unlawfully, routinely denied market participants due process, and abused its powers.”
For example, credit worthy borrowers could pay almost $600 more for their auto loans due to CFPB’s auto lending guidance, he added.
Cordray repeatedly defended the bureau throughout the hearing, particularly within auto finance, when questioned about enforcement actions taken in regard to disparate impact.
“Many people would like to think that discrimination is a thing of the past, that it’s a vestige of the past, and we have found some instances of discrimination — some of them significant — and we have taken action, where appropriate,” Cordray said.
Not all members were contentious, Congressman Wm. Lacy Clay, for example, praised the regulatory enforcement the CFPB has enacted.
“I noted in your supervisory report that mortgage companies and auto loan companies continue to charge higher interest rates to African Americans and Hispanics than to non-Hispanic white borrowers,” Clay said. “In the case of Ally, for auto loans, it was about $80 million in damages has already been recovered, and I would hope that my friends on the other side of the aisle would understand that this has severe financial impact for African American and Hispanic families.”
Compliments, while well-intended, “just means ‘keep doing what you’re doing,’” Cordray said, which is a good message, but the bureau doesn’t learn quite as much from those, than it does from criticism.
“Frankly, it’s the critical things they [the public] say that are the most helpful, because they tell us where we should think about doing something differently,” he added.