Finance Column » Your Money This Week » Congress hears Cordray with 1 ear

Congress hears Cordray with 1 ear

By Mark Hamrick ·
Tuesday, April 23, 2013
Posted 12 pm ET

For some, what members of Congress don't do is more noteworthy than what they actually do.

How the two chambers are handling their oversight of the Consumer Financial Protection Bureau has become a study in those contrasts.

The CFPB, created through the landmark Dodd-Frank legislation arising from the financial crisis, has become a focal point of bipartisan discord, a corollary to much of what goes on in the House and Senate. Republicans insist that the structure of the CFPB should be changed and have zeroed in on President Barack Obama's recess appointment of Director Richard Cordray, which they claim is not legitimate.

Because of the controversy over the recess appointment, the Republican-controlled House has disinvited Cordray from the CFPB's regularly scheduled testimony.

Senate panel Q&A

The Senate Banking Committee, led by Chairman Tim Johnson, D-S.D., forged ahead today, holding a hearing to hear from Corday. At the same time, the CFPB released its third semiannual report to Congress. "The CFPB has made significant progress in protecting consumers, including students, service members and older Americans," Johnson said, and he noted that the bureau has "obtained $425 million of consumer refunds."

In his statement, the panel's leading Republican, Mike Crapo of Idaho, said, "I continue to believe the recess appointment is unconstitutional," indicating the GOP will continue to keep Cordray's confirmation from coming up for a vote in the Democrat-led Senate. Crapo said, "I firmly believe that if the structure of the agency were changed, then it would become more open and transparent."

Warren: GOP doesn't want a "watchdog"

Returning to the Senate for the first time since the Boston bombings, Elizabeth Warren, D-Mass., said that Republicans are holding the appointment "hostage," having fought unsuccessfully to keep Dodd-Frank from becoming law. She said the dispute is "about a minority that don't want a watchdog" monitoring large banks.

During his testimony, Cordray said the CFPB gained authority at the beginning of the year to supervise debt collectors. He said that its supervisory program has also been expanded to cover "larger credit reporting companies." In the second half of 2012, the agency worked with the Education Department to make recommendations to Congress on reforms to the market for private student debt, put at about $150 billion by the CFPB.

Most complaints about mortgages

The 114-page written report says the bureau received approximately 91,000 consumer complaints in 2012. Of those, half involved mortgages. Twenty percent involved credit cards, 17 percent were related to bank accounts and services, while the remainder included student and consumer loans and credit reporting. Cordray said that complaints about credit cards are falling, which he linked to Congress' 2009 passage of the Credit Card Accountability, Responsibility and Disclosure Act.


Several lawmakers questioned Cordray about privacy concerns involving the agency's data collection, including consumer complaints. He told them that the data are made anonymous, so that it cannot be traced to single individuals. Mike Johanns, R-Neb., said Americans might find it "creepy" that such information is collected. Cordray suggested that he cannot prevent people from "misunderstanding" what the agency is doing but that collection of data is important to devise appropriate regulations and oversight.

Corday said large companies, including banks, "have more data on you than you have about yourself, including me, Richard Cordray."

House panel refuses Cordray appearance

In the Republican-dominated House, Jeb Hensarling, R-Texas, and chairman of the Financial Services Committee, issued a statement late Monday saying that the panel "cannot legally accept testimony" from Cordray "until he is validly appointed as the bureau's director." At issue is a federal appeals court ruling, which found invalid Obama's recess appointments to the National Labor Relations Board. Cordray's recess appointment was made in a similar fashion.

At the same time, Hensarling's statement says, "The committee intends to continue to conduct rigorous oversight of the CFPB's activities." Whatever it does, it will be without hearing from the man who runs the agency.

Follow me on Twitter @hamrickisms.

Bankrate wants to hear from you and encourages comments. We ask that you stay on topic, respect other people's opinions, and avoid profanity, offensive statements, and illegal content. Please keep in mind that we reserve the right to (but are not obligated to) edit or delete your comments. Please avoid posting private or confidential information, and also keep in mind that anything you post may be disclosed, published, transmitted or reused.

By submitting a post, you agree to be bound by Bankrate's terms of use. Please refer to Bankrate's privacy policy for more information regarding Bankrate's privacy practices.