How Will the CFPB Function Under Richard Cordray?
Subcommittee Chairman Patrick McHenry Opening Statement
The American public deserves consumer protection regulations that discourage and discipline financial fraud and ensure consumers are entitled to clear, succinct, and honest disclosures about financial products.
But that is not sufficient enough for a robust marketplace.
Since the onset of the financial crisis, Members of Congress have heard from businesses of all sizes that markets also need certainty. In this regard, the CFPB has failed the test.
Since Dodd-Frank was enacted 18 months ago, the role, agenda and authority of the CFPB have increased uncertainty in U.S. markets, not lessened it. This restricts access to credit.
In May of last year, this Subcommittee hosted then-special advisor for the CFPB, Elizabeth Warren, in an effort to perform its oversight responsibilities and allow the American public to clearly understand the Bureau's operations, accountability to U.S. taxpayers, and beliefs about its authority and limits.
At the time, Ms. Warren's answers to congressional questions were fuzzy at best, leaving Members and market participants unsure of the Bureau's areas of focus and the duplicative role when establishing rules with existing federal regulators.
As a result, countless experts continued to raise serious questions about the Bureau's structure and broad discretionary powers on our economy and credit markets.
While conflicting opinions about federal regulators are not new, the fact of the matter is that the operations and authority of the CFPB still remain a mystery to Congress and the American public.
For the last year and a half, interim figureheads for the Bureau have skillfully dodged congressional inquiries about the regulator's operations and powers. In this subcommittee, for example, Ms. Warren could not answer a simple question about the definition of "abusive" from Congressman Gowdy. I hope that Mr. Cordray will be willing to engage in that conversation today.
With such immense power over financial products left to the interpretation of a single, unelected and unaccountable bureaucrat, Republicans in this body and in the Senate have called for meaningful changes to the structure of the CFPB.
Unfortunately the President decided against compromise. If having a regulator with unprecedented and ill-defined power was not enough, the Administration decided to double down by bringing into question the validity of its director.
The fact that White House lawyers must continue to justify the president's decision to waive 200 years of precedent jeopardizes the sanctity of the Bureau's operations and is unfair to Mr. Cordray, the Bureau, and most importantly, the American public.
The irony for this to occur to the CFPB, self-proclaimed as "the most constrained and most accountable agency in government," is chilling.
Nonetheless, now that Mr. Cordray, despite an appointment that is constitutionally questionable, has stated his intention to assume full powers as head of the CFPB, this Subcommittee believes it is time that he deliver definitive responses about how he will implement and enforce the unparalleled powers of his new office.
As daily headlines proclaim Mr. Cordray's latest authorities and targets, it is vital that this Subcommittee stand committed to its mission of producing an efficient and effective government that works for the people and their livelihood.
Simple questions about the CFPB's annual budget of roughly half a billion dollars of taxpayer funds, dictated by a single individual, to its vast authority over the United States economy remain unanswered and warrant persistent congressional oversight.
I am interested in hearing from Mr. Cordray about his thoughts on what he believes to be the CFPB's new regulatory authority, promoting private sector jobs in a robust credit market, and assuring Congress that he –along with the Bureau – will adhere to political independence in the face of an unfortunate politicized appointment.
Will you disclose your regulatory agenda for the year?
Will you focus on products with even handed enforcement, regardless of who is offering it?
Will you get input from small businesses and the regulated community?
I thank Mr. Cordray for attending today's hearing and look forward to his testimony.