July 15, 2015

Sen. 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”

July 15, 2015 

Director Cordray, welcome back to the Committee. Next week marks the 5 year anniversary of the Wall Street Reform Act, which created the Consumer Financial Protection Bureau. 

The financial crisis – the worst this country has seen since the Great Depression – exposed many weaknesses in our financial regulatory system.  One of the most troubling weaknesses before the crisis was that no one was looking out for consumers. 

Consumers were steered into mortgages they couldn’t afford, often with terms that were not disclosed, such as high fees, abusive payment structures, and sudden interest rate increases.

Five million Americans lost their homes in foreclosure.  In Ohio alone, half a million homes were foreclosed upon between 2006 and 2011.  At the height of the crisis in 2009, 1 in 3 Ohioans with mortgages were underwater and 1 in every 6 mortgage holders was 30 days delinquent or in foreclosure.

Though the banking regulators were supposed to be enforcing consumer financial laws, too often they were looking elsewhere.  A number of industries developed in the shadows with no clear federal oversight. 

More importantly, no federal regulator was expressly tasked with ensuring that consumers were treated fairly in their financial transactions. 

We created the CFPB to fill this void: to make sure that never again would consumers be an afterthought in our nation’s financial system. 

The CFPB opened its doors just shy of four years ago.  In those four years, the CFPB has proved over and over that its creation was one of the big success stories of Wall Street Reform. 

It has returned $10.1 billion to the pockets of 17 million consumers.  It has fined countless companies for egregious consumer abuses, including credit card companies secretly adding on unwanted products, phone companies cramming fees onto consumers’ bills, or mortgage servicers and lenders illegally foreclosing on homeowners and servicemembers. 

The agency has also served as an important place where consumers can turn: over 650,000 consumers have filed a complaint with the Bureau.

The CFPB is to be commended for these successes. But the ongoing enforcement actions show us that its work is not done.

Just last week, the CFPB, 47 states, and DC took action against a bank for illegally robo-signing court documents and selling “zombie” credit card debt, or debt that had already been cleared. 

Today I will introduce a bill that will address zombie debt, along with several of my colleagues, and I hope that the CFPB will continue to address this issue. 

Last week, the Federal Reserve published numbers showing that consumer borrowing is at a record high – $3.4 trillion, led by steady increases in student loans, auto loans, and credit card loans.  However, as consumers take on more debt, the opportunity for risky behavior increases. 

I look forward to hearing from Director Cordray on what the CFPB views as areas to watch in the consumer market and what the CFPB will focus on going forward. 

I also look forward to hearing when Director Cordray expects to finalize rules on payday and installment loans, auto title loans, prepaid cards, overdraft and debt collection. 

We have seen in state after state that predatory lenders are nimble – as soon as a state passes legislation to rein them in, the lenders morph into something else.  In 2008, Ohio enacted a short-term lender law with strong, bipartisan support. 

However, this victory was short-lived: payday lenders evade this law by registering as mortgage lenders or by adding fees.

This creativity at the state level necessitates continued vigilance by the CFPB, and I hope that the CFPB’s rule governing short-term loans closes these loopholes.

Much of the CFPB’s most important work has centered on mortgage regulation. The agency’s ability to repay rules ensure that consumers are not trapped in mortgages that they cannot afford.  The CFPB’s rule to streamline forms will help consumers understand what is happening at the closing table.

All of these actions speak for themselves as to why this agency is so important to our nation’s consumers. 

Yet, opponents continue to work to undermine the agency – by weakening its independence or changing its structure.  Lately, there have been attempts to chip away at actions the agency has taken on arbitration and small-dollar loans.  They have argued the agency should not be able to collect data – data about markets that were formerly non-transparent and unregulated. 

I will continue to fight all of these attempts to destabilize the CFPB.  Our consumers deserve a strong watchdog that can do its job independently, and it’s my job to make sure that happens.