While most members of the committee praised the Bureau’s progress thus far, a few questioned the extent of its authority and the implications of some of its actions.
The hearing opened with comments from Sen. Jeff Merkley (D-Oregon) speaking on behalf of Senate Banking Committee Chairman Tim Johnson (D-South Dakota) who was absent. “Today is September 13, two days short of the four-year anniversary of the collapse of Lehman Brothers and the monumental efforts that started thereafter to prevent our financial system and with it our entire economy from collapsing,” he stated.
“No matter how you slice it, consumer protection failures were at the heart of the last financial crisis,” Merkley read from Johnson’s statement.
Cordray summarized the agency’s efforts to “promote a fair, transparent, and competitive consumer financial marketplace.”
He said the agency has received 72,297 consumer complaints thus far, noting that complaints have ramped up over the past year and the largest category of complaints deals with mortgages.
Sen. Richard Shelby (R-Alabama) expressed strong concerns that the Bureau was overstepping its bounds, ignoring or reversing congressional statutes.
Cordray is “completely immune from congressional oversight,” Shelby said, “except we’re allowed to ask him questions.”
Shelby also expressed concern that some of the rules set forth by the CFPB create undue challenges on smaller banks, putting them at a competitive disadvantage.
Cordray explained that the Bureau has created both a community bank advisory council and a credit union advisory council to hear concerns from smaller institutions and remain cognizant of how regulatory actions impact them.
Additionally, Cordray stated, “We do have the authority to exempt smaller institutions from rules that don’t necessarily apply to them.”
“Small providers did not create the problems that led to the financial crisis,” he said.
Cordray also received questioning regarding the long-contested qualified residential mortgage rule that would require a 20 percent down payment.
Cordray insisted that the CFPB’s proposal will not include this stipulation as it “would not make sense for the market.”
Since its launch, DS News magazine has positioned itself at the forefront of an
evolving industry. Always current with the most up-to-date
default servicing news, DSNews.com keeps you informed through daily Web casts,
community forums, and a wide range of industry resources.