The actions taken by the Consumer Financial Protection Bureau’s (CFPB) during its relatively short tenure have already made the case for its reform, according to a senator at the U.S. Senate Committee on Banking, Housing, and Urban Affairs hearing, “Holding the CFPB Accountable: Review of the First Semi-Annual Report.”
At the hearing, CFPB director Richard Cordray gave a brief testimony on his agency’s Semi-Annual Report, but not before getting a verbal drubbing from Senator Richard Shelby (R-Ala.) regarding the CFPB’s oversight—or lack thereof—so far.
The CFPB, as designed by the Dodd-Frank Act, is without proper checks and balances, and with President Obama’s recess appointment, Cordray now has “unfettered power” over the bureau, Shelby said.
“If he so chooses, he does not have to answer to anyone. This is not a choice any bureaucrat should have,” said the Republican senator.
Shelby went on to comment on the size of the agency which stands at nearly 800 staff members, with plans to hire as many as 1,000 employees by the end of the year.
Things are not getting better, just bigger—and more unaccountable,” he said. “It’s only getting worse under democratic rule. The CFPB is the most recent iteration of the same problem… it ignores consumers while advancing its own special interests. It operates behind a facade of accountability, but practices unchecked. The Bureau’s short history has only made the case for reform more compelling.”
Cordray gave a brief testimony during the hearing, in which he listed a “key objective” of making sure both banks and their nonbank competitors receive the “evenhanded oversight necessary to promote a fair and open marketplace.”
CFPB supervisors will be going on-site, Cordray said in his testimony, to examine banks’ books, ask “tough” questions, and “fix the problems we uncover.”
Committee Chairman Sen. Tim Johnson (D-S.D.) asked Cordray what actions could be taken to minimize the impact of regulations without compromising the safety of consumers.
“We promised that we would work to reduce the burden of our work on community banks and credit unions, who had very little or nothing to do with the financial crisis,” Cordray answered. “We want to encourage that kind of model, and we are going to create a special advisory panel of community banks to raise concerns and inform us about what we’re doing and how what we’re doing affects them. We’ve pledged to do the same with credit unions, and we’re going to be mindful of that with all of our rulemakings.”
He added that the Bureau is willing to consider protecting community banks and credit unions that fall beneath a certain threshold, and said they would take this approach “wherever it’s possible.”
Verbal sparring between parties regarding Cordray’s appointment continued, with some Republicans still protesting Obama’s decision and mentioning the possibility of lawsuits to contest the appointment. Senator Sherrod Brown (D-Ohio), however, told his fellow senators to put the issue aside and talk about what the Bureau can do.
In response to questions about his accountability, Cordray said he answers to Congress, and as the sole director, he is accountable for the bureau’s decisions.
“There’s no passing the buck,” he said.
Written by Alyssa Gerace