For Cordray, This Ain't Jeopardy!
The confirmation of the Bureau’s Director is the only check Congress has over the new Consumer Financial Protection Bureau (CFPB). Despite claims to the contrary by the agency’s defenders, the CFPB is the only Federal agency with a single, fully independent Director who has direct access to funding without Congressional approval.
This unique and ill-advised structure makes today’s hearing particularly important, and we hope the Senate Banking Committee will take this critical opportunity to press for stronger checks and balances for the Bureau and to get some answers about how the Bureau will operate.
We know Richard Cordray, nominee to be the director, did well as a five-time Jeopardy! champion providing questions to the answers. Today at his nomination hearing, he needs to flip things around and provide answers to some key questions.
- Who is covered? The CFPB must clarify what kinds of Main Street companies—which are already subject to regulation by other federal and state regulators—will have to answer to the CFPB.
- Will there be overlapping regulations? The CFPB must explain how they will draw bright jurisdictional lines to avoid tripping over other regulatory agencies, for example the FTC, and prudential regulators, to avoid subjecting companies to two sets of standards.
- Who and how will new and existing regulations be enforced? The CFPB, the state Attorneys General, and other state agencies must lay out a clear plan for preventing an inconsistent, 51 flavors enforcement approach. Also the CFPB must clarify how they will exercise its authority with respect to pre-Dodd-Frank consumer statutes after the transfer date, in particular the status of existing “guidance”
- Who will answer businesses’ questions about the system? The CFPB must establish a process for resolving conflicts among the regulatory players to ensure that legitimate businesses can get clear, definitive compliance guidance in one stop.
- How will the CFPB ensure new regulations do not harm the financial system? The CFPB must establish a clear process for incorporating input from prudential regulators so that the Bureau’s positions or regulations— or those of the FTC, state AGs or state regulators —do not imperil the safety and soundness of financial institutions, or of the entire financial system.
- Will they restrict access to credit and become an impediment to economic growth? The CFPB must clarify how it will carry out its responsibilities without drying up the credit that small businesses need to grow and create new jobs.
- What does “abusive standard” mean? The CFPB must clarify the meaning of the new statutory authority to act against “abusive” acts or practices, and how that authority differs from the traditional “unfair and deceptive acts and practices” authority.
- How will they collect data differently from the FTC? The CFPB must clarify how it is setting up its consumer complaint database to avoid taking in inaccurate data and to enable comparison with data contained in the FTC’s database.
- Will the CFPB engage in excessive litigation or promulgate regulations that will have the effect of increasing litigation? The CFPB has the ability to engage in a huge amount of enforcement activity. The CFPB must not farm out this authority to outside contingency fee lawyers nor should it allow the state AG and regulatory communities to do so either. Furthermore, it should not engage in promulgating rules and regulations that would increase the amount of litigation in our already over-heated legal system.
Some measure of uncertainty is understandable with a new agency, and full resolution of these issues may some time, but we’ve been waiting for more than a year for answers to these basic questions. We hope that today’s hearing will give Congress and the business community a better understanding of the Bureau’s intentions and their specific plans for protecting consumers without stifling economic growth and job creation.