With the season for political differences being in full swing, it is certainly no secret that there are plenty of politicians and government types who don’t always see eye-to-eye. Governmental battles are sometimes minor skirmishes, and sometimes they bloom into outright battles. There seems to be a battle brewing – one that has been brewing for some time now – between some key Republican leaders and the Consumer Financial Protection Bureau. Of course, the upcoming presidential election could very well decide the ultimate fate of the CFPB, but in the meantime, the CFPB is being targeted by conservatives.
Lawmakers from the House got into it recently with CFPB director Richard Cordray. These lawmakers made accusations about the bureau going over the line in its efforts to regulate industries, like payday lending and to crackdown on alleged discrimination in the auto lending market.
According to Republican Representative from Texas, and chairman of the House Financial Services Committee Jeb Hensarling, “Congress has made Mr. Cordray a dictator. And when it comes to the well-being and liberty of American consumers, he is not a particularly benevolent one.”
Republicans kept the pressure on Cordray about a number of different topics. These hot topics included the proposal of new federal standards on the payday lending industry. The bureau introduced an outline of their new proposal last year, prior to sending it out for input from the small business review panel. At one point it was hinted at that the proposed rule would come out as early as February, but now there are delays that are expected.
Committee members voiced their concerns about how the new regulations would usurp the power of state laws that already govern the payday lending industry.
Representative Randy Neugebauer said, “At issue are roughly 38 states that allow these products to be offered in some form and the federal pre-emption that will occur if your rule goes forward as outlined.”
Mr. Cordray attempted to let accusations roll off his back, saying, “… whatever we do in this area will coexist with state law.”
Republicans were also wary of the CFPB’s attempts to possibly put limitations on the use of mandatory arbitration clauses in some financial contracts, which could stop American consumers from taking part in class action lawsuits.
The CFPB released an outline of the proposal in October that they would like the small business review panel to take a look at, after publishing a report on this topic back in March of 2015. Michigan Republican Representative Bill Huizenga said, “The report was criticized by a number of academics and industry for completely ignoring major pieces of data.” The Representative went on to state that over 80 members of Congress requested for the study to be reopen last summer.
Still, though, Cordray continued to make excuses for his bureau’s actions. He mentioned that the Dodd-Frank financial bill gave direct orders for the CFPB to look into this issue. Cordray said, “Our report has been widely recognized as the single most comprehensive and informative report on this issue ever done. Congress asked us to do a broad, comprehensive study – we spent three years on it. We’re now moving ahead with Congress’s direction to engage in policy intervention based on that.”
Members of the Committee also had some pretty stern words to say about the Consumer Financial Protection Bureau’s work in investigating unintended instances of discrimination in the auto lending industry. They did their best to raise serious doubts about the stats and methods the bureau used to pinpoint cases of supposed discrimination in legal actions they took against Ally Financial, Toyota Motor Credit and other lenders.