CFPB Monitor News Guidance Perspectives of CFPB | Ballard Spahr Law Firm Blog

Director Cordray gives wide-ranging testimony to House Financial Services Committee

Posted in Arbitration, CFPB Enforcement, CFPB General, CFPB Rulemaking, Credit Reports

Although the House Financial Service Committee’s hearing last Thursday was entitled
“The Semi-Annual Report of the Consumer Financial Protection Bureau,” the contents of the report received little mention from committee members.  Instead, committee members questioned Director Cordray, the sole hearing witness, on a wide range of topics.  Highlights include the following:

  • The CFPB’s data collection efforts continued to be a major focus of questions from Republican committee members.  Republicans were highly critical of the CFPB’s failure to provide responses to questions about such efforts asked of Steven Antonakes when he appeared before the committee on July 9.  According to Director Cordray, the CFPB will be providing those responses within days.  (Mr. Antonakes, who appeared before the committee in his capacity as Acting Deputy Director, was recently named permanent Deputy Director.)
  • There have been charges by industry that the CFPB’s data collection efforts do not comply with the Dodd-Frank Act because the CFPB has not issued a rule or order requiring companies to provide the information it has been demanding.  Section 1022 allows the CFPB “to gather information from time to time regarding the organization, business conduct, markets, and activities of covered persons and service providers” by using various methods, including requiring banks and other “covered persons and service providers participating in consumer financial services markets to file with the Bureau, under oath or otherwise, in such form and within such reasonable period of time as the Bureau may prescribe by rule or order, annual or special reports, or answers in writing to specific questions.”  As did Mr. Antonakes in his testimony to the committee, Director Cordray indicated that the CFPB was not using Section 1022 to obtain market monitoring information.  However, Director Cordray did note that the CFPB recently used Section 1022 to issue an order directing financial institutions to provide templates of their consumer agreements in connection with the CFPB’s arbitration study.  Based on information we have learned, the CFPB, at a minimum, is requesting checking account agreements.
  • The Washington Examiner reported recently that the U.S Bankruptcy Trustee for the bankruptcy district that covers Florida and Georgia had asked a bankruptcy judge to require Morgan Drexen (the company that sued the CFPB in Washington, D.C. and then was sued by the CFPB in CA) to produce millions of bankruptcy files involving consumers from across the country.  The article suggested that the CFPB might be improperly using the Trustee’s office to obtain access to these documents as part of its data collection efforts.  Republican Congressman Bachus appeared to be alluding to this report in a question asking Director Cordray if it would violate Dodd-Frank if the CFPB received 5 million bankruptcy files from a Trustee and they contained personally identifiable information (PII).  Director Cordray asserted that the CFPB is permitted to obtain PII in connection with enforcement actions.
  • Director Cordray was asked why the transfers the CFPB has requested so far from the Fed have exceeded its expenses by approximately $135 million.  He attributed this to the start up nature of the agency and indicated that future transfer requests would line up more closely with expenses.
  • Director Cordray seemed to struggle a bit in responding to a question asking what the CFPB has done to eliminate outdated regulations.  Observing that the CFPB looks to see what in existing rules can be “peeled out” when adopting new rules on a particular topic, the only concrete examples of “streamlining” he could offer were the elimination of the Regulation E ATM fee sticker requirement and a proposal under consideration to eliminate the Regulation P (Gramm-Leach-Bliley Act) requirement to provide an annual privacy notice when there has been no change in a company’s privacy policy.
  • Director Cordray indicated the CFPB is looking at credit reporting issues relating to medical debts and observed that legislative action might be necessary in this area.  Medical debt was the subject of testimony from another CFPB official at a recent Senate Banking Committee hearing.  For reasons we have noted, the CFPB has very limited authority to address debt collection by medical providers.
  • Director Cordray would not provide a timetable for when the CFPB expects to propose rules to implement the Dodd-Frank amendments to the Equal Credit Opportunity Act that require financial institutions to collect and maintain certain data in connection with credit applications made by women- or minority-owned businesses and small businesses.  He indicated that the CFPB will be looking at how such rules might intersect with the rules it will be developing to implement the Home Mortgage Disclosure Act’s expanded data collection requirements.
  • Congressman Bachus labeled the CFPB’s response to the June 2013 letter from 35 Republican House members raising questions about the CFPB’s indirect auto finance guidance “general” and indicated he would be sending a follow up letter requesting more details.  (We commented that the response raised more questions than it answered.)