Chairman Hensarling’s Opening Statement at Hearing on CFPB
Chairman shares constituent stories on how CFPB regulations are harming low and moderate income Americans.
January 28, 2014 -
Financial Services Committee Chairman Jeb Hensarling (R-TX) delivered the following opening statement at today's full committee hearing on the CFPB:
This morning we welcome back Mr. Richard Cordray, director of the CFPB for one of his two statutory semi-annual appearances before our committee. It is an important appearance because by design, the CFPB is perhaps the single most powerful and least accountable Federal agency in all of Washington and demands rigorous oversight.
First, let’s speak of it’s power.
When it comes to the credit cards, auto loans and mortgages of hardworking taxpayers, the CFPB has unbridled, discretionary power not only to make them less available and more expensive, but to absolutely take them away. This is not the rule of law, it is the rule of rulers and the rulers are unaccountable. The Bureau is fundamentally unaccountable to the president since the director can only be removed for cause. Fundamentally unaccountable to Congress because the bureau’s funding is not subject to appropriations. Fundamentally unaccountable to the courts because Dodd-Frank requires courts to grant the CFPB deference regarding its interpretation of Federal consumer financial law. Thus, the Bureau regrettably remains unaccountable to the American people.
The American people deserve better. They now have witnessed a failed stimulus plan, trillions of dollars of unsustainable debt that we can witness on the monitors, revelations of NSA domestic data collection and a broken promise of “if you like your health insurance, you can keep it.” The American people rightfully demand accountability from this administration.
Therefore, our committee took common-sense steps in November to make the Bureau more accountable and transparent when we passed six bills that reform the CFPB’s flawed structure, such as replacing its single, unaccountable director with a bipartisan board, putting Bureau employees on the civil service pay scale, introducing a safety and soundness check on its regulations, and giving American citizens greater control over their personal financial data that the Bureau is collecting and maintaining on them at this time.
Our Committee took another modest step towards greater accountability for the CFPB when we announced that the Committee’s website now offers an easy way for the American people to let us know how the Bureau’s work affects them – good or bad. And since many citizens today justifiably fear reprisals when it comes to speaking their mind about big government agencies, citizens’ stories and comments will be treated confidentially on request.
We are already hearing numerous feedback concerning the harmful impact on consumers of the Bureau’s Qualified Mortgage rule, which went into effect just days ago.
Let me share a couple of those messages with you. One from Doyle Cooper, a small town banker of Royse City, Texas. He used our website and gave us permission to quote him:
“The results of Dodd-Frank and the CFPB continue to be a burden on us each and every day…We have just this past week decided to suspend any and all mortgage products. We know our customers and their businesses but yet we are being asked to use a one-size-fits-all underwriting criteria to allow the loan to be a [Qualified Mortgage]…The customers in our community have come to rely on us to help their dreams happen and now we are being forced to say ‘No, we can no longer help you.’”
Another small town community banker wrote in to say about the QM Rule: “[The] bank has had to exit this line of business [mortgage lending]. The bank cannot find a way to generate these small balance loans in a profitable manner under the existing regulatory environment. I can’t tell you the number of times we have had to tell our good low-to-moderate income customers that we can no longer loan them the money to purchase a home to live in.”
One more story from a small town community banker out west. The community bank, due to the QM Rule, discontinued making owner occupied home loans. The baker said, “[A] typical customer is one without a credit score but whom we have known all his or her life and have made many personal loans to them over the years. Often these are Hispanic customers (60% of our population) and many are more stable than so-called ‘qualifying secondary market individuals’ who simply are over-leveraged.”
The CFPB has a very important mission. Properly designed and led, it is capable of great good. But stories like these dramatically show the very real harm that the CFPB can inflict on low and moderate income Americans.
We can all imagine a brighter day with abundant economic opportunity for all, competitive markets, and where consumers’ freedom to choose is respected. A day when these consumers are protected not only from deceptive practices and fraudulent claims that may come from Wall Street, but they are protected from the power grabs and excesses of Washington as well. Until that day comes, this committee will do everything in its power to hold the CFPB accountable to the American people.