April 07, 2016

Shelby Opening Statement on the CFPB’s Semi-Annual Report to Congress

WASHINGTON, DC – Thursday, April 7, 2016 – U.S. Senator Richard Shelby (R-Ala.), Chairman of the United States Senate Committee on Banking, Housing, and Urban Affairs, today delivered opening remarks during a full committee hearing on “The Consumer Financial Protection Bureau’s Semi-Annual Report to Congress.”

The text of Chairman Shelby’s remarks, as prepared, is below.  
“On Tuesday, the Committee heard testimony from private-sector experts on consumer finance regulation.  We heard a number of concerns regarding the Bureau’s actions in areas such as indirect auto lending, arbitration, the consumer complaint database, and small-dollar, short-term lending.
“We also heard broader critiques of the Bureau’s approach to regulating, including its use of enforcement actions to set market standards rather than the rulemaking process.
“There was also concern expressed regarding the Bureau’s current structure and the lack of accountability inherent in it.  I have said many times that regulatory independence should never mean independence from accountability or vigorous congressional oversight.
“Unfortunately, the drafters of Dodd-Frank immunized the Bureau from any meaningful congressional influence leaving it free to engage in questionable practices and unreasonable expansions of its jurisdiction.
“The only effective restraint available now resides in the courts.  Fortunately, this week a federal Court of Appeals has directed the CFPB to defend the Constitutionality of its structure.
“This particular case follows what is now becoming a string of court decisions criticizing or striking down this Administration’s implementation of Dodd-Frank provisions – including the FSOC’s so-called systemically-important designation of MetLife, the SEC’s cost-benefit analysis, and the SEC’s conflict minerals rule. 

“I believe that future legal challenges will lead to the invalidation of many parts of Dodd-Frank.  This is what happens when a 2,300-page bill is forced through Congress without sufficient process, and before the lessons of the financial crisis were fully understood.
“Congress did not even wait for the Financial Crisis Inquiry Commission’s work to be completed or its report to be released before it passed Dodd-Frank and created the CFPB.

“While the Committee held a number of hearings in the lead up to the passage of Dodd-Frank, I can assure you that the thousands of pages of text were being drafted or were already drafted well before we ever had a single hearing.
“We often hear about the importance of data and data-driven decision making at our hearings.  I would like to highlight once again my concerns about the striking lack of data and data-driven decision making that produced the law we now know as Dodd-Frank.
“It still strikes me as stunning that this Committee approved this massive piece of a legislation without deposing a single market participant.
“The Committee didn’t subpoena a single document from a single person or financial institution.  And, we are now starting to see the results of this partisan, uninformed effort.
“There is now growing concern that, despite the Bureau’s mission, its rules and regulations actually restrict access to credit, increase costs, and deny financial products to the consumers who need them.
“Last year’s survey by the Federal Reserve found that 47 percent of U.S. households are unable to come up with $400 in emergency funds without selling something, going into credit card debt, or using a short-term loan.
“By targeting some of these products in its rulemakings, the Bureau may be blocking access to the very financial services many Americans may need in a crisis.
“Consumer protection should not mean limiting a consumers’ options by substituting the Bureau’s judgment for the consumers’.
“Today we will hear from CFPB Director Richard Cordray so that we can have what we hope will be a productive discussion on these important topics and concerns.”