The Director of the Consumer Financial Protection Bureau (CFPB) finally got to present the Bureau's third Semi-Annual Report to the House Financial Services Committee (FSC) today, five months after it was first issued, but the committee's chair made it clear the Bureau is still on his watch list.

Director Richard Cordray told the FSC that the report, published on April 23, illustrates the way his bureau is using the tools Congress has provided it to empower consumers and promote a fair, transparent, and competitive marketplace for consumer finance.  "We have taken steps," he said, "to improve the workings of markets, particularly those in which consumers cannot choose their financial service providers.

CFPB gained authority at the first of the year to regulate debt collectors and also expanded its supervision to include the larger credit reporting companies.  Cordray said that credit reports have a profound impact on people's lives but that previously the companies controlling the credit data were not subject to federal supervision and consumers often struggled to get problems solved and errors corrected.  With these additions to its portfolio the Bureau can now evaluate whether federal consumer laws are being followed throughout the process, from credit origination through debt collection.

The Bureau's first enforcement actions were taken during the reporting period which covered July 1 to December 31, 2012.  These actions were against credit card companies and secured $425 million in relief for 6 million customers.  In the second half of 2012 CFPB also tackled issues in the private student loan market and made recommendations for reforms.

Cordray said his agency had also addressed more than 130,000 consumer complaints and adopted new mortgage regulations mandated by the Dodd-Frank Act.  The Ability-to-Repay rule follows the simple principle that lenders should offer consumers mortgages they can afford to pay back.

Neither Cordray nor any other senior official of CFPB had been permitted by the Financial Services Committee to testify about the Semi-Annual Report at the time it was issued.  As reported in MND at the time, Committee Chair Jeb Hensarling (R-TX) used a recent court ruling on the legitimacy of interim presidential appointments made on the same day as the Director's interim appointment to question the legitimacy of any work done by the Bureau during his tenure.  After a two-year delay the Senate finally confirmed Cordray this summer. 

Hensarling referred in passing to the dated nature of Cordray's testimony before issuing a harsh general critique of the Bureau's legal structure and authority.  He called it "arguably the single most powerful and least accountable Federal agency in the history of America." Saying that it is an agency that demands rigorous oversight Hensarling warned it will undoubtedly demand numerous congressional hearings and inquiries, "So again not only do we welcome the Director today," he said, "but we look forward to welcoming you to our hearing room for many further appearances before us."

The Chairman said CFPB was designed to operate outside the usual system of checks and balances that applies to almost every other government agency.  It is effectively unaccountable to Congress because it is exempted from the budgetary and appropriations process.  It is unaccountable to the Executive Branch because the director can only be removed from office for cause.  It is also uniquely unaccountable to the courts under Dodd-Frank which mandates that in any disagreement with another agency the court must give deference to CFPB under the Chevron Doctrine.

The Chairman asks, "All of this does beg the question:  who will protect consumers from the Consumer Financial Protection Bureau?