April 07, 2016

Brown Opening Statement at Hearing on CFPB Semi-Annual Report to Congress

WASHINGTON, D.C. — U.S. Sen. Sherrod Brown (D-OH) – ranking member of the U.S. Senate Committee on Banking, Housing, and Urban Affairs – released the following opening statement, as prepared for delivery, at today’s hearing on the Consumer Financial Protection Bureau’s semi-annual report to Congress.

Brown’s remarks, as prepared for delivery, follow.

Senator Sherrod Brown - Opening Statement
Hearing: “The Consumer Financial Protection Bureau’s Semi-Annual Report to Congress”
April 7, 2016

Thank you, Chairman Shelby for holding this important hearing.

Today’s hearing is one example of how the CFPB is accountable to Congress and the public. The law requires the Director to be available twice a year to testify before this committee.

The CFPB is subject to three separate annual audits and the banking agencies have unprecedented authority to veto CFPB rules that threaten safety and soundness or financial stability.

Yet the CFPB’s existence continues to be attacked with false arguments that it lacks accountability.

The industry continues to fight the CFPB’s existence and its actions, most recently by trying unsuccessfully to attach riders to end-of-the-year funding legislation. One of these riders would require a commission of Senate-confirmed members. 

Since the Senate has yet to confirm a single nominee from this committee this Congress, the purpose of such a rider is obvious – to turn the CFPB into ideological roadkill.

At Tuesday’s hearing on consumer finance rules we heard from three witnesses representing the financial industry and only one witness representing everyday Americans.

The business witnesses claimed the CFPB is hurting the people it is supposed to help. 

But bipartisan polling shows that 3 in 4 voters support the agency. Just this morning, the Committee received petitions from hundreds of thousands of Americans supporting the CFPB.

I see that many of you are in this room today, and I thank you for showing your support.

The CFPB has been a strong watchdog for consumers since it started just 5 years ago – the agency has obtained $11.2 billion in relief for 25 million people.

Nearly 1 million people, including 25,755 in Ohio, submitted complaints to the agency about their problems with mortgages, student loans, credit reports, debt collection, or bank accounts.

We saw in the crisis that the regulators ignored their consumer protection duties and did not have enough authority to act.

They focused on the financial industry’s soundness and ignored the plight of consumers.  

In my view, these are complementary, not competing responsibilities.  If people are treated fairly, the financial system is far less likely to run off the rails.

A former Fed official claimed on Tuesday that it didn’t have evidence to act against predatory lending.  But it is a fact that foreclosures in my home of Cuyahoga County doubled from 1995 to 2000.  They doubled again by 2006. 

And local officials begged the Fed to act in 2001. The same story played out across the country.

Prior to the CFPB, there was no centralized place for individuals to file complaints about consumer financial products.

There was no centralized place for Congress to determine what consumers were experiencing in the marketplace.

There was no centralized place for regulators to determine when a financial product had become so abusive that Americans all across the country would file complaints about it.

Today we have that place.  The CFPB has exposed bad behavior by financial companies that previously had no federal regulator, such as credit reporting, student loan servicing, and auto finance. And we finally have strong mortgage rules and disclosures designed for the people who have to pay the mortgage.

But more is needed. The Bureau is working on rules to regulate prepaid cards, debt collection, arbitration, and payday loans.

The payday loan market is a prime example. States have fought predatory lending, with mixed results. In Ohio, the legislature enacted a 28% rate cap in 2008. The industry then attempted to repeal the cap through a ballot initiative – but 64% of Ohioan voters defeated it notwithstanding a more than 40 to 1 campaign spending advantage for the payday lenders.

Despite this clear mandate from the state legislature and the voters, payday is flourishing in Ohio. Payday and car title lenders take more than $502 million in loan fees from Ohio consumers annually, with triple digit interest rates.

I hope the CFPB will finish these rules soon. The costs of delay demand it. 

I look forward to hearing from Director Cordray about the CFPB’s priorities. I understand this is the 61st time the CFPB has testified to Congress.

I hope that we can focus on substantive issues in this hearing before allowing you to get back to your full-time job of protecting consumers.