U.S. Senator Richard Shelby (R-Ala.), ranking Republican on the Committee on Banking, Housing and Urban Affairs, today made the following statement at a hearing on the Consumer Financial Protection Bureau's (CFPB) semi-annual report to Congress:
"Thank you, Mr. Chairman.
"Today, the Committee will hear from Richard Cordray, the Director of the Bureau of Consumer Financial Protection. The majority has titled this hearing "Holding the CFPB Accountable.' Nevertheless, Mr. Cordray appears before us, as always, completely immune from congressional oversight, except, of course, we are permitted to ask him questions.
"Such questions are especially important now because the Bureau's activities in its first year likely foreshadow its activities in the years to come. Of particular interest is how the Bureau has exercised its authority. For example, recently the Bureau issued a proposed rule on mortgage disclosures. Buried deep within its 1,100 pages, the Bureau expressed concern over a particular disclosure required by Dodd-Frank. The Bureau said that it found that the new disclosure "would be difficult to calculate and explain to consumers, would not likely be helpful to consumers, and may distract consumers from more important disclosures.' In response to this finding, the Bureau is considering exempting companies from complying with this requirement.
"This problematic statute, however, raises a more fundamental question about how the Bureau will address statutes it determines to be harmful to consumers. In this case, the Bureau could ask Congress to amend the statute. Instead, the Bureau has interpreted its exemptive authority so broadly that it believes it can just ignore the statute. Congress needs to clearly understand the bounds of this authority as interpreted by Mr. Cordray. After all, if the Bureau can easily ignore a statute, it raises the more serious question of whether Congress or the Bureau has the final say over what the law is.
"Today, I would also like to know more about the limitations on the Bureau's spending authority. Dodd-Frank granted the Bureau the power to set its own budget and spending priorities without any Congressional oversight.
"In addition to the funds that it receives from the Federal Reserve, the Bureau also controls the money in its Victims Relief Fund. Under Dodd-Frank, the Bureau is authorized to disburse any money paid into the Fund that is not paid to victims. Dodd-Frank only requires that such money be used for "the purpose of consumer education and financial literacy programs.'
"This is just another way that the Bureau is structured differently than other banking regulators. The OCC, FDIC and the Federal Reserve do not have such a slush fund. Instead, they turn over the civil penalties they collect to the Treasury.
"Accordingly, I would like to know how the Bureau will decide how the money in the fund will be allocated and whether such uses comply with the mandate of Dodd Frank. Unfortunately, without significant reform, there is little Congress can do even if the Bureau misallocates these funds. Until that time comes, it appears that the most we can hope for is a hearing and the opportunity to ask questions.
"Thank you, Mr. Chairman."