The U.S. House of Representatives Financial Services Committee met on Wednesday April 5, 2017 to discuss the Consumer Financial Protection Bureau’s (CFPB) Semi-Annual Report with CFPB Director Richard Cordray. The hearing comes at a contentious time between Congressional Republicans and the CFPB. Rep. Jeb Hensarling (R- TX), Chairman of the House Financial Services Committee, began opening statements by stressing Director Cordray should be fired by President Trump, either at will or for cause stemming from abuses of Director Cordray’s statutory authority under the Dodd-Frank Act of 2010. Rep. Hensarling zeroed in on current litigation between the CFPB and PHH Mortgage Corp., where the D.C. Circuit Court previously ruled the single independent director structure of the agency is unconstitutional.

As committee members from both sides of the aisle were given a chance to question Director Cordray, topics included the agency’s gag order authority, the prepaid card rule, seller financing of home purchases, remittances, deceptive practices in the marketing and sales of solar panels, the different needs of rural and urban consumers, and the proposed small dollar rule. Committee Republicans were especially condemnatory of the CFPB’s proposed rule on installment lending. Rep. Hensarling reminded Director Cordray that consumers “don’t need Washington elites […] picking their financial products for them.” Rep. Steve Pierce (R- NM) added that shutting down 75% of lenders, as the proposed rule is believed to impair, could have drastic negative impacts on rural districts where credit options are already severely limited.

Rep. Sean Duffy (R- WI) questioned Director Cordray extensively about the constitutionality of his appointment at the CFPB. At issue is the constitutionality of a number of appointments made by the Obama administration during a recess of Congress. In 2014, the D.C. Circuit Court ruled that the recess appointments of a number of National Labor Relations Board members were unconstitutional, since the recess was not a sufficient length to justify the unconfirmed appointments. Although Director Cordray’s appointment at the same time was not litigated, many Congressional Republicans feel he too was appointed unconstitutionally. Despite federal court rulings and evidence presented by Rep. Duffy at the hearing, Director Cordray maintained the validity of his appointment to the leadership position at CFPB.

While Director Cordray spent much of the hearing defending the agency’s rulemaking, enforcement actions, and response to Congressional inquiries, he also took the opportunity to highlight some of the strengths and successes of the fledgling agency. He noted the CFPB’s consistent response rate via interaction with businesses and rulemaking to the over 1.1 million consumer complaints fielded by its database in the past five years. Director Cordray also touted advances in fair debt collection and explained the agency’s efforts in prosecuting Wells Fargo last year for the fraudlent opening of customer bank accounts, a massive undertaking that resulted in the firing of 5,300 Wells Fargo employees and a $185 million fine by the CFPB.

The future leadership, authority, and structure of the CFPB is currently being debated in Congress, the Trump administration, and federal courts.

Watch the full hearing here:

Read the memo briefing House Financial Services Committee Members here

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