Cordray engages Senators with 1st CFPB report

COLUMBUS, Ohio (CGE) - Richard Cordray, a former Ohio attorney general whose recess appointment by President Obama to head the Consumer Finance Protection Bureau (CFPB) is being challenged mostly by Republicans as unconstitutional, engaged senate banking committee senators Tuesday, when he delivered the first semi-annual report for an agency built to protect consumers from unfair, fraudulent, deceitful or misleading financial products.

 

Members of the committee, chaired by Sen. Tim Johnson (D-SD), took their tun in lobbing questions to Cordray, who again handled them with ease by exhiting his expertise in a wide variety of areas and demonstrating a thoughtful professional demeanor that seemed to defuse some of his toughest critics, among them ranking Member Alabama Sen. Richard Shelby, who while he roared again about the unchecked powers of the agency, purred in his exchanges with Cordray himself.

 

 

When asked by Sen. Daniel Akaka (D-HI) whether a board would be more accountable than an individual, Cordray responded with an answer that may have mollified Sen. Shelby's outspoken opposition to both the CFPB and to the position of director.

 

"I'm responsible to you...the agency is held accountable in law in a number of ways...there's no passing the buck, you pass the laws, we are responsible to you for how we carry out those laws...we will listen closely to you so you know what we are doing and can have input into what we're doing."

 

 

Nominated last July and appointed by President Obama in early January, at a time when Congress used a technicality to claim it was in session when in reality it wasn't, Cordray said he's working for the protection of American consumers. Before he lost the 2010 election to former U.S. Republican Sen. Mike DeWine, Cordray already had amassed a respectable track record of reclaiming money that financial Titans like AIG, Bank of America and others at the center of the financial meltdown on Wall Street had taken from state pension systems, among other funds on whose behalf he litigated. 

 

"I'm was deeply engaged in consumer finance issues as Ohio Attorney General," he said from a hearing room in the Dirksen Senate Building. Cordray said consumers don't want special favors, "just a fair shake," and that he and his staff are working to build a "consumer agency that actually works for consumers." 

 

 

By virtue of his position, Cordray now sits on the board for the Federal Deposit Insurance Commission, formed in 1933 to protect money deposited into an FDIC-insured bank in the event it goes out of business. This seat, he said, gives him another way to cross breed his agency with other regulators involved with banks and other financial institutions.

 

Cordray, 52 years of age, told committee members, "The American way is for reasonable businesses to be upfront with their customers...it's good for business and it's good for economy. Invoking the spirit of President Ronald Reagan, Cordray quoted the "The Gipper" saying. "Free men engaged in free enterprise builds a better nation, with more and better goods and services, but free enterprise is not a hunting license..."

 

 

Given the "thicket" of rules and regulations Cordray told senators the CFPB has inherited, he appeared to disarm most senators who expressed that his position reports to no one, when he said he thinks he and his agency report to them. Another positive for Cordray was in an audit performed by the General Accounting Office, which he proudly declared was "clean and strong." 

 

He acknowledge that among his big duties this year is rule making, especially for rules Congress had assigned to the CFPB to complete this year. Cordray said more than once, when asked when rules would be done, he didn't have definite dates. He reported that, to gather information, the CFPB has already conducted four meeting in four cities, one of them Cleveland, where people could speak their mind and tell their stories. 

 

Agency inspectors will go on site at lenders, he said, to examine the "books and ask tough questions" and if need be, "we won't hesitate to use enforcement action to right a wrong."

 

To increase greater levels of transparency, accessibility, speed, accuracy, feedback and so on, Cordray said the agency will push the envelope on using technology to engage more people in more ways on more subjects related to the agency's mission.

 

Special advisory committees focused on community banks and credit unions will be able to speak directly to him, he said, telling senators that the credit unions and community banks didn't have anything to do with the meltdown on Wall Street, which triggered the great recession that peaked in 2008 and has been steadily improving over the last 22 quarters since then.

 

 

Some topics senators asked questions about were whether the cloak of protection the Federal Reserve and FDIC offer to privileged documents would be accepted by the CFPB, his plans for regulating prepaid cards, whether he would set pricing for financial products, and his views on financial literacy.

 

On financial literacy, something central to the purpose of the CFPB, Cordray had a chance to shine a limelight on Ohio, which passed a law during his years as state treasurer following the 2006 elections that now require high school students to take a financial literacy course before they can graduate.

 

"It is a good model for the nation," Cordray said.