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Cordray testifies to Senate Banking Committee

Posted in CFPB General

Director Cordray was the only witness at the Senate Banking Committee’s hearing yesterday on the CFPB’s fourth Semi-Annual Report to Congress.  As a Committee member observed, Director Cordray’s appearance represented his first before the Committee since his July confirmation by the Senate as CFPB Director.  

Like the Committee’s April hearing on the CFPB’s third Semi-Annual Report, a significant portion of yesterday’s hearing focused on the CFPB’s data collection activities and followed a familiar script—Republican members raising privacy concerns and Mr. Cordray defending the CFPB’s activities as necessary to fulfill the Bureau’s market monitoring and Congressional reporting obligations.  Any change in the CFPB’s data collection activities seems unlikely to occur before the General Accountability Office reports the results of the audit that the GAO agreed to conduct of those activities in response to a request from Republican Senator Crapo, the Committee’s Ranking Member.

Outside of the data collection arena, Director Cordray’s testimony did include the following noteworthy comments: 

  • While not conceding that the CFPB was wrong to issue a guidance bulletin on auto finance fair lending rather than engage in rulemaking, Mr. Cordray did state that he “agreed with some of the criticism.”  He indicated that he “would like to have a little more openness and transparency” and that the purpose of the CFPB’s auto finance forum scheduled for tomorrow is to “make sure we are engaging with key stakeholders.”
  • Mr. Cordray repeated statements he has previously made that the CFPB will not be expecting compliance “perfection” when the CFPB’s new mortgage rules become effective in January 2014.  He indicated that “in the early months,” the CFPB will instead be looking for ”good faith efforts” by companies to come into compliance.  When pressed by Republican Senator Coburn about what was meant by “early months,” Director Cordray was unwilling to provide any specificity but stated only that it meant “several months” beyond January.
  • In his questioning of Mr. Cordray, Democratic Senator Brown promoted his sponsorship of S.B. 635, which would amend Gramm-Leach-Bliley to eliminate the requirement for a company to send annual privacy notices when there has been no change in the company’s privacy policy.  Mr. Cordray indicated that the CFPB is planning to move ahead “in the fairly near future” to eliminate the requirement through rulemaking and will do so in the absence of legislative action.
  • Mr. Cordray indicated that a drafting team consisting of representatives from the CFPB, FTC and other agencies is “close” to issuing proposed changes to Military Loan Act regulations implementing recent MLA amendments.  However, he did not provide any specifics on the proposal’s likely content.  (MLA regulations impose a 36% rate cap on “consumer credit,” which as currently defined, only includes tax refund loans and certain closed-end payday and auto title loans made to active duty armed forces members and their dependents, and prohibits certain terms in such loans.  Industry trade groups have expressed opposition to expanding the scope of the “consumer credit” definition.)
  • Mr. Cordray was unwilling to provide a timetable for when the CFPB expects to issue proposed prepaid card regulations.  However, based on his comments about needed consumer protections, it seems highly likely that the CFPB’s proposal will seek to extend much of Regulation E to prepaid cards, particularly disclosure and error resolution requirements.     
  • Mr. Cordray indicated that the CFPB’s supervisory staff is currently only at 80% of the CFPB’s target for being fully staffed. 

The archived webcast of the hearing can be viewed on the Committee’s website.