Commentary

Barbs Fly In D.C. Over Cordray's CFPB

The world of political spin is unlike marketing as we know it in that it seems to rely exclusively on blood-roiling bluster and bravado to retain current customers rather than in enticing trial from consumers loyal to another brand with well-reasoned features-and-benefits arguments.

Case in point: Rep. Jeb Hensarling (R-Texas), chair of the House Financial Services Committee, yesterday said he would no longer pay heed to Richard Cordray, who was appointed by president Barack Obama to head the Consumer Financial Protection Bureau during a congressional recess last year because Congress was not really adjourned, as Peter Schroeder recounts in a post on The Hill. It apparently just stepped away for a moment and “absent contrary guidance from the United States Supreme Court,” Hensarling wrote to Cordray, “you do not meet the statutory requirements of a validly serving director of the CFPB and cannot be recognized as such.” 

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Or, as Talking Points Memo’s Brian Beutler observes, “House Republicans are now expressing their opposition to the new Consumer Financial Protection Bureau by stomping their feet and taking all their toys home.” 

Hensarling sees it differently, of course. “No other regulator has more influence over the daily financial lives of Americans,” he said in declaring that he would not let Cordray testify before his committee, as is required by law. He will, however, be more than happy to exercise his committee’s oversight over the bureau -- presuming it can’t get rid of it altogether, as Sen. Mitch McConnell (R-Ky.) and others would like -- by grilling underlings.

Cordray was permitted to give his semi-annual report to the Senate Banking Committee yesterday, however. He predictably found himself on the defensive over the agency’s collecting anonymous data on more than 10 million consumers “to gain greater insight into consumer behavior and the financial marketplace,” as Danielle Douglas puts it in the Washington Post. “The agency said it intends to use the information as the basis for all of its work, including writing rules, litigating enforcement actions and promoting financial literacy.”

But Republications on the committee laced into the very idea of data mining by the government. “To many people, this is going to sound downright creepy,” Sen. Mike Johanns (R-Neb.) said. “People are going to be bothered by the fact that there’s this federal agency that’s collecting data.”

Rather than respond to the shocking revelations that the government is collecting data, if anonymously, Sen. Elizabeth Warren (D-Mass.) “defended the bureau she helped build while serving in the Obama administration, saying the critiques were a partisan smokescreen,” writesFiscal Times’ Josh Boak. “GOP senators are ‘determined to hold your nomination hostage,’ Warren told Cordray. ‘This is about a minority that doesn’t want a watchdog that will keep an eye on big banks, to make sure they don’t cheat their customers,’ she said.”

Again, that’s not quite the way Hensarling positions it.

“How is it fair to American consumers that one unelected, unaccountable bureaucrat in Washington has the power to decide what kind of mortgage, car loan or credit card they can or cannot have?” Hensarling asked.

“Chairman Hensarling has made a political move to attempt to call the agency into question, but the fact is the agency is out there protecting the public,” says Ed Mierzwinski, consumer program director at the U.S. Public Interest Research Group, tells the Los Angeles Times’ Jim Puzzanghera.

Meanwhile, the CFPB issued a report today warning that “said high-cost, short-term loans often trap borrowers in a cycle of debt,” Reuters reports. In calling for more protection for consumers, it said: “Based upon the facts uncovered through our ongoing work in this area, the CFPB expects to use its authorities to provide such protections.”

“In a briefing for journalists, Cordray said the bureau found disturbing patterns when it looked at a sample of about 15 million loans in 33 states -- in particular, evidence that a majority of the loans went to borrowers whose behavior belied the industry's claims that it largely helps consumers with occasional cash-flow problems,” Jeff Gelles writes in the Philadelphia Inquirer.

Overblown claims. Imagine that.

 

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