Embattled Cordray Defends CFPB as House Prepares to Neuter It

Embattled Cordray Defends CFPB as House Prepares to Neuter It
June 1, 2017 Marketing GrafWebCUSO

As the House prepares to consider legislation to drastically cut his power, CFPB Director Richard Cordray said Wednesday that his agency has succeeded in protecting consumers and disputed assertions it has hampered financial institutions in serving consumers.

“We are less than six years old, but we have consistently gotten results,” Corday said at the People and Places conference in Arlington, Va. The conference was co-sponsored by several community revitalization and racial equity groups.

He said the agency has recovered billions of dollars for consumers and has instituted strong safeguards to ensure that the reckless mortgage practices that caused the financial crisis cannot occur again.

“And we are giving consumers a voice, so they can address their own concerns and report on broader patterns of problems or abuse,” Cordray said.

Cordray said that some “doomsayers” contend that new rules are killing banks and restricting credit.

“On the contrary, these common-sense rules of the road are promoting access to more responsible and safer credit,” he said, adding that banks remain profitable and community banks and credit unions are obtaining a higher share of the mortgage business.

Cordray also said the agency has tailored its rules based on the size of a financial institution—an assertion disputed by credit union officials.

Cordray’s defense comes as the House prepares to consider the Financial CHOICE Act, legislation sponsored by House Financial Services Chairman Jeb Hensarling (R-Texas). The legislation would eliminate the CFPB’s supervisory powers and transform it into a law enforcement agency. It would prohibit the agency from issuing final rules governing mandatory arbitration agreements and payday lending. And it would make the agency subject to the annual appropriations process.

The House Rules Committee is expected to meet next week to set the parameters for debate on the bill—the last step before it goes to the House floor.

Cordray never mentioned the legislative effort, but it is clear his remarks were tailored to address his critics.

Cordray said that his agency has established an on-going relationship with financial institutions. “This steady relationship with banks and other large financial companies means that we maintain a constant pressure on them to be mindful of their responsibilities,” he said. “They know that someone can be looking over their shoulder at any time to see and understand exactly how they are treating consumers.

Cordray defended the CFPB’s use of its powers to take action based on Unfair, Deceptive or Abusive Acts or Practices.

He said that in enforcement actions, roughly 90% involved deception and about 50% involved unfairness, adding that it is clear that many cases involved both.

Congressional Republicans and credit union officials have criticized the agency for not having established guidelines based on its UDAAP powers.

Cordray also defended the CFPB’s consumer complaint data base, saying that the agency does not publicize a complaint if a company says it cannot confirm a commercial relationship with the person filing the complaint.

He said the agency has built sufficient safeguards into its complaint database.