The House Financial Services Committee cannot legally accept testimony from Richard Cordray on the Consumer Financial Protection Bureau's (CFPB) semi-annual report until he is validly appointed as the bureau's director, said Rep. Jeb Hensarling (R-TX), the committee's chairman. However, the committee will continue to conduct rigorous oversight of the CFPB.
To date, the Senate has not confirmed any nominee to be the CFPB director. While President Obama purported to appoint Richard Cordray to the position on January 4, 2012, a unanimous federal appeals court ruling on January 25, 2013 found that the process by which Cordray was appointed was constitutionally invalid.
"The court's unanimous ruling makes it clear that there is no legally-appointed director of the CFPB at this time," said Chairman Hensarling. "By law, the committee can receive this testimony only from a director who is appointed in accordance with the Constitution and the Dodd-Frank Act, which created the bureau."
In a letter to Meredith Fuchs, the CFPB's associate director and general counsel, on Monday, Chairman Hensarling said the Financial Services Committee "stands ready to accept the testimony of the director of the CFPB on the semi-annual report as soon as an individual validly holds this position. Until then, the committee intends to continue to conduct rigorous oversight of the CFPB's activities, and will expect the CFPB's cooperation in those efforts, including making other employees available to testify at committee hearings and responding fully to committee requests for documents and information."
In fact, on Monday the committee called two CFPB officials to testify at a hearing in May on the agency's new Qualified Mortgage rule.
Chairman Hensarling also sent a letter on Monday to Cordray, noting the federal appeals court ruling and requirements under Dodd-Frank that specify the CFPB director must be appointed with the advice and consent of the Senate. "Absent contrary guidance from the United States Supreme Court, you do not meet the statutory requirements of a validly-serving director of the CFPB, and cannot be recognized as such," Hensarling wrote.
Chairman Hensarling and many others in Congress have sought to make changes to the CFPB's structure that would make the bureau accountable.
"Hardworking taxpayers expect and deserve accountability and oversight of all government agencies, especially one like the CFPB which directly affects every American household. The American people have the right to know how this government agency operates and what it plans to do with its half-billion dollar budget every year," said Chairman Hensarling.
"No other regulator has more influence over the daily financial lives of Americans," he continued. "Dodd-Frank gives the CFPB director the power to decide what financial products and services will -- and will not -- be available to American consumers and how much they will have to pay for them. 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? No bureaucrat should have so much control over the financial destiny of Americans, particularly one who is completely insulated from the types of checks and balances that apply to other government agencies."
The CFPB is controlled by a single individual who cannot be fired for poor performance and who exercises sole control over the agency, its hiring and its budget. The CFPB is within the Federal Reserve System making it beyond presidential supervision, yet the Federal Reserve is barred from involvement in its activities. The CFPB director can spend hundreds of millions of dollars each year, but with no oversight from Congress.
"The director has more power over the CFPB than the President of the United States has over the White House," said Chairman Hensarling.
In order to make the CFPB accountable, Chairman Hensarling and others have called for the bureau to be placed under a bipartisan commission and to make it subject to the appropriations process, which are typical checks and balances for federal agencies. The Chairman noted that a bipartisan commission to run the CFPB is exactly what President Obama and Dodd-Frank authors former Rep. Barney Frank and former Sen. Chris Dodd originally proposed. Elizabeth Warren, now a senator from Massachusetts and the person credited with the idea of the CFPB, originally called for the consumer protection agency to be governed by a bipartisan board.