Tuesday, October 04, 2011

Sen. Sherrod Brown Sees Cordray Confirmation Vote Likely This Week, Sen. Corker Abjures Personality-Based CFPB

In his opening statement at hearings on consumer protection, Senator Sherrod Brown (D-Ohio), Chair of the Financial Institutions and Consumer Protection subcommittee, said that he looks forward to a vote Thursday in the full Senate Banking Committee on the nomination of Richard Cordray to be the Director of the Consumer Financial Protection Bureau. Senator Brown also said that the Bureau can be a tool to help middle class consumers.

In his brief opening statement, Subcommittee Ranking Member, Senator Bob Corker (R-TN) said that the CFPB should not be personality-based. The Bureau should not be dependent on one person, a Director. Rather, the CFPB should be institutionalized, said Sen. Corker, adding that the Bureau can be most effective with the proper institutional checks and balances. Later in the hearings, Senator Corker said that it is unlikely that there will be a single Director for the CFPB until there are appropriate checks and balances for the Bureau. Senator Corker said that he has reached out to the Administration on this issue.

In her prepared statement, Professor Katherine Porter of UC-Irvine Law school said that an energetic consumer financial protection regulator is needed and that efforts to reconfigure the CFPB are misguided. Professor Porter urged the committee to move forward and confirm a Director for the Bureau so that the CFPB can begin its effective and important work.

Douglas Fecher, CEO, Wright-Patterson Federal Credit Union, stated that CFPB Director-nominee Richard Cordray has outstanding qualifications and understands the unique role credit unions play in the lives of consumers While concerned about an additional layer of regulation, Mr. Fecher supports the goals of the Bureau, specifically the need to address the unregulated status of financial entities, such as payday lenders.

Ida Rademacher, Vice President for Policy and Research, Corporation for Enterprise Development also urged the committee to confirm a Director for the Bureau, noting that without a confirmed Director the CFPB is limited in regulating payday lenders and other non-bank financial entities. But G. Michael Flores, President, Bretton Woods, Inc., said that the Bureau should be accountable to Congress and the CFPB Director should report to a Board that would have industry representatives serving on the Board.

A Banking Committee staff memo prepared for the hearings noted that the CFPB has authority to write rules for financial products under laws like the Truth-in-Lending Act, and under its new unfair, deceptive, and abusive acts and practices authority provided in Dodd-Frank. The CFPB may not exercise its “abusive” authority until a Director is confirmed. The staff memo also observed that the CFPB has supervision, examination, and enforcement authority over banks with more than $10 billion, over all mortgage market participants, pay day lenders and private student lenders, and other larger non-banks based upon criteria as defined by CFPB rules. The CFPB cannot exercise its authority over non-banks until a Director is confirmed.