July 15, 2015

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

WASHINGTON, DC – Wednesday, July 15, 2015 – 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.  
“Today, the Committee will hear from Richard Cordray, the Director of the Bureau of Consumer Financial Protection.
“The Bureau has grown to over 1,450 employees and has been very active since Director Cordray’s last testimony before the Committee.
“Among other things, it has recently expanded enforcement actions to cover telecom companies and broadened its authority over the auto finance industry.
“These actions, like others undertaken by the Bureau since its formation, have not been without controversy.  Many would say that some of them go beyond what Congress envisioned in Dodd-Frank.
“For instance, the Bureau’s regulation of auto lending now involves over 30 non-bank lenders not previously subject to its supervision.  This move has been called into question given the specific exemption for auto dealers in Dodd-Frank.
“In addition to concerns with recent regulatory actions, issues remain with the Bureau’s lack of accountability. 
“This has been demonstrated by concerns with the Bureau’s budgeting process, including the rising costs of renovation for the CFPB’s new headquarters.  
“According to the Federal Reserve Inspector General, the estimated cost of actual renovation increased from $40 million in February of 2012 to $145 million in December of 2013 – this is over three-and-a-half times the initial estimate.  The Inspector General estimated that the total cost is now closer to $216 million.
“Furthermore, the Administration has yet to explain who approved the renovation and what happened to the documentation involved.
“Unfortunately, Congress does not have control over how the Bureau spends its funds because the CFPB operates outside of the appropriations process.  Even the Federal Reserve, which funds the CFPB from its earnings, does not control the Bureau’s budget.
“Because Congress cannot tighten the financial reins when budgeting issues arise, the Bureau’s current structure makes meaningful Congressional oversight very difficult.
“So-called independence is one reason cited by the authors of Dodd-Frank for the Bureau’s structure.  But, other independent agencies, such as the SEC, the CFTC, the FTC, and the CPSC are all subject to the appropriations process.
“Additionally, the Bureau does not even have its own Office of Inspector General, relying instead on the Inspector General of the Federal Reserve.
“Some of us have urged the adoption of specific reforms to make the Bureau more accountable and transparent.
“By putting the Bureau through the appropriations process and establishing a board of directors, it would resemble other independent agencies and provide Congress with the ability to conduct meaningful oversight.
“Unfortunately, calls for reform have been rejected in past Congresses.
“Therefore, the only remaining oversight tool available to Congress is to hold hearings and hope that any concerns expressed will be addressed.
“Director Cordray, it would be like giving you the authority to implement Federal consumer financial laws but withholding the authority to enforce them.
“I think you would agree, that would make you highly ineffective as an agency charged with implementing our consumer financial laws.
“Congressional oversight of the Bureau is critical now more than ever because of the CFPB’s growing reach over the practices of individuals and companies in the financial sector. 
“For the time being, we will conduct hearings and submit respectful requests that may, or may not be addressed. 
“I am confident, however, that the time will come when we reassert our constitutional prerogative that the supporters of Dodd-Frank sacrificed five years ago in the name of bureaucratic independence.
“Only then will the Bureau be truly accountable to the people’s representatives.”