Consumer Finance Insights
April 26, 2017

CFPB Director Cordray Testifies Before House Financial Services Committee

On April 5, 2017, Consumer Financial Protection Bureau (CFPB) Director Richard Cordray testified before the U.S. House of Representatives Financial Services Committee to present the CFPB’s semi-annual report, which is available here.  The hearing was unsurprisingly divisive among members of Congress.  Chairman Jeb Hensarling (R-TX) set the tone during his opening statement, remarking, “I believe the President is clearly justified in dismissing you and I call upon the President–yet again–to do just that, and to do it immediately.”

Ranking member Congresswoman Maxine Waters (D-CA) came to Director Cordray’s defense: “I am so honored that you have done the work that you have done for all the consumers in America.  I would also like to thank you for your sustained, long, strong leadership despite Republican efforts to impede your work and their unfounded desire to remove you from your position prior to the expiration of your term.”

Director Cordray faced questions and challenges on a wide array of issues including the PHH case (on which LenderLaw Watch has reported extensively), Property Assessed Clean Energy loans, the TILA-RESPA Integrated Disclosure “Know Before You Owe” Rule, the Prepaid Card Rule, the Home Mortgage Disclosure Act, Wells Fargo’s sales practices, credit unions, community banks, service-members and veterans issues, algorithms FinTech companies use to underwrite loans, student loan debt, auto lending, digital wallets, captive mortgage insurance, the issuing of civil investigative demands, CFPB advisory opinions, the timing of CFPB rule making, the Financial Stability Oversight Council’s oversight of the CFPB, and discrimination claims made by employees against the CFPB.

Congresswoman Ann Wagner (R-MO) provided some of the more aggressive challenges to the CFPB’s investigation into Wells Fargo’s sales practices.  (LenderLaw Watch previously reported on the record fine imposed on Wells Fargo by the CFPB for its sales practices here.)  Congresswoman Wagner asserted, “The only conclusion … to draw from the Wells Fargo scandal is that the CFPB was asleep at the wheel!  Asleep at the wheel, Director Cordray, under your leadership!  Your investigation into this matter was far from independent and comprehensive, sir.”  Congressman Michael Capuano (D-MA) defended the CFPB’s investigation into Wells Fargo’s sales practices, and yielded his time to Director Cordray to substantively respond to the Congresswoman’s accusations, which he fervently denied.

Other inquiries into the CFPB were less contentious.  Congressman Bill Posey (R-FL) encouraged the CFPB to issue more advisory opinions to assist entities under its jurisdiction, and to publish those opinions on its website.  Director Cordray stated that he is not opposed to the approach, but that the CFPB has limited resources to do so.

Director Cordray appeared alarmed by Congressman Patrick McHenry’s (R-NC) questions concerning the possibility of insider trading involving CFPB employees immediately prior to the filing of the CFPB v. Navient lawsuit.  It was unclear whether Congressman McHenry believes that CFPB employees executed improper trades, or provided information to third parties who executed such trades.  In any event, Director Cordray expressed his desire to learn more about the issue and committed to fully cooperating with investigations of these trades, should such investigations occur.

Director Cordray’s prepared testimony is available here, and archived video of the hearing is available here.

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