WASHINGTON — Despite Republican claims to the contrary, the Consumer Financial Protection Bureau is accountable to lawmakers and the American public, Director Richard Cordray is expected to tell the Senate Banking Committee on Tuesday.
In remarks prepared for what is likely to be a contentious nomination hearing, Cordray outlined the steps his agency has taken since he was recess appointed by President Obama in January of last year, including targeting nonbank lenders.
That included ensuring the CFPB is answerable to policymakers. Republicans have charged that the agency is too powerful and does not face adequate oversight either from Congress or fellow regulators.
"I resolved to do everything in my power to make the Bureau accountable to American consumers, to American businesses, and to the Congress," Cordray said in his prepared remarks. "As the economy recovers, we want people to know they now have a new agency standing on their side, looking out for their interests, to help restore their confidence in the consumer financial marketplace. So far, even though our work is still in its early stages, we have been busy addressing some of the most critical problems."
Cordray is expected to testify along with Mary Jo White, President Obama's nominee to chair the Securities and Exchange Commission, before the Senate Banking Committee.
Republicans have so far refused to even consider Cordray's nomination until structural changes are made at the CFPB, including replacing its single director with a five member board and subjecting it to the Congressional appropriations process.
Although Obama recess appointed Cordray, his position is in legal jeopardy after a D.C. appeals court ruled earlier this year that three other appointments made at the same time are invalid.
Cordray has largely tried to ignore the controversy and instead focused on building up the CFPB. The agency recently released several mortgage rules, including a requirement that lenders ensure borrowers have the ability to repay a loan and defining a class of ultra-safe loans known as "qualified mortgages."
The CFPB is also overseeing the credit card industry, debt collectors, payday lenders and the student loan market.
Still, some business industry leaders continue to call for structural change.
"Reform would not strip the CFPB of its authority, or mandate, to protect consumers and go after bad actors in the financial services market," wrote Bruce Josten, the executive vice president of the U.S. Chamber of Commerce, in a letter to Sens. Tim Johnson and Michael Crapo on Monday. "Rather, reform would help ensure that the CFPB carefully considers policy and spending tradeoffs, and takes a rigorous, sensible approach in its work."
The hearing will give a chance for Republicans to echo that view, and also defenders, such as Sen. Elizabeth Warren, who founded the agency, to dispute it.
"While I know that people had concern at its outset that CFPB would be an overly aggressive regulator, I don't know how anyone could have that concern now," said Warren at a Credit Union National Association conference in Washington two weeks ago. "Rich has been providing balance, creating space for credit unions and other small financial institutions to run their businesses and serve their customers without drowning them in regulations."
Cordray did not discuss the structure of the CFPB in his prepared remarks as he continued to focus his testimony solely on what the agency has done in recent years.
"Our essential work is to serve and protect consumers — our mothers and fathers, sisters and brothers, sons and daughters — all the people of this country who rely every day on the markets for consumer finance," Cordray said. "They deserve a fair shake, and they deserve to have this agency standing on their side to make sure they are treated fairly."