House Republicans used a July 14 hearing to accuse those setting up the new Consumer Financial Protection Bureau of not disclosing enough information and for not spelling out what financial products it plans to target for increased scrutiny.
“At the core of our mandate is the prevention of waste, fraud and abuse in the federal bureaucracy, and there is no question that improved efforts to combat deceptive practices in the financial sector are needed. Neither is there a reason why the administration should avoid a candid, transparent account to Congress about its policy and practices in this regard,” House Oversight and Government Reform Committee Chairman Darrell Issa, said.
Elizabeth Warren, who has been leading the set up of the CFPB, said her staff has been responsive to inquiries and the bureau will be transparent about its finances and its contacts with individuals. She said that they would protect consumers by expanding disclosure requirements and doesn’t expect to ban certain financial products or take measures to raise compliance costs.
Rep. Ann Marie Buerkle (R-N.Y.) said that in light of high unemployment rate, she is concerned that any actions by the CFPB would raise compliance costs and cause companies to cut back on their hiring even more.
Warren responded that one of the bureau’s first efforts will be to combine the disclosure forms required by the Real Estate Settlements Act (RESPA) and the Truth in Lending Act (TILA). This will make the process simpler for consumers and cheaper for financial institutions. She noted that the bureau has worked with banks and credit unions in its efforts.
Buerkle then asked if the bureau will “never ever” make rules or policies that raise compliance costs. Warren said the bureau’s work on RESPA and TILA will be a template for future efforts.
Rep. Patrick McHenry (R-N.C.) asked if the bureau saw any financial products it thought were so harmful that they should be banned.
Warren replied, “No, do you have a suggestion?”
McHenry said, “No, I don’t have a half a billion dollar budget or 400 people working for me.”
Rep. Trey Gowdy (R-S.C.) asked whether payday lenders, whose practices Warren has criticized should be banned.
Warren replied that the bureau will have the responsibility to regulate those lenders and it has have a wide range of tools available to improve the products.
Democrats on the panel said the bureau was needed because of numerous instances in which military personnel and others had been preyed on by unscrupulous financial institutions.
Rep. Jim Cooper (D-Tenn.), who noted that he opposed last year’s financial overhaul bill that created the bureau, criticized the tone of the hearing.
He said there have been “partisan food fights” that isn’t an example of good governance. Cooper said that Warren had been “treated with rudeness and disrespect by some committee members.”
Warren’s testimony occurred one week before the bureau begins formal operation. It will be enforcing regulations currently enforced by seven government agencies, including the NCUA. President Obama hasn’t yet named a permanent director of the CFPB.