CFPB Director Richard Cordray will appear Wednesday at a hearing before the House Financial Services Committee. Several members of the committee have long been hostile to the CFPB, saying it operates with almost no oversight.
“The CFPB undoubtedly remains the single most powerful and least accountable federal agency in all of Washington,” said committee chairman Jeb Hensarling (R-Texas). “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. Consequently, Americans are losing both their financial independence and the protection of the rule of law.”
Since Cordray’s last appearance before the finance committee in September, the committee has issued two reports claiming that the CFPB has overstepped its authority on multiple occasions. According to the reports, the CFPB has spent “significant resources” in an attempt to regulate auto dealers despite the fact that federal law prohibits the agency from doing so. The reports also found that the CFPB secured a potentially “market-tipping” enforcement action against Ally Financial because of “undue leverage.”
CFPB memos regarding that enforcement action, which involved allegations of racial discrimination at Ally, proved that the agency knew its methods of proving bias were seriously flawed, according to a New York Post report on the case. However, the agency used the threat of protracted litigation to force a settlement -- and then didn't ensure the consumer relief Ally paid went to the right consumers.
“The reports also exposed the Bureau’s flawed distribution of $80 million in settlement proceeds without first verifying that recipients are eligible to receive the money,” the finance committee stated in a release. “As a result, and as internal Bureau documents admit, some white borrowers will receive settlement checks over alleged racial discrimination against African-Americans, Hispanics and Asians.”
“It defies logic for federal agencies to distribute settlement funds without first verifying the eligibility of prospective recipients, particularly when the Bureau’s case is premised upon a flawed statistical analysis,” Hensarling wrote to Attorney General Loretta Lynch when the reports were released in January.
The committee will also likely grill Cordray on the Qualified Mortgage rule.
“The rule, which addresses few of the actual risks associated with mortgage lending, has harmed consumer access and choice when it comes to mortgages by forcing many community financial institutions to downsize or shut down their mortgage operations,” the release stated.
Cordray will appear before the committee at its hearing Wednesday at 10 a.m. EST. The hearing will be livestreamed at financialservices.house.gov.
The director of the Consumer Financial Protection Bureau will face questions from lawmakers next week about whether the agency’s activities are harming consumers.