GOP Grills Date on CFPB Governance, Policies

WASHINGTON — It may have been Raj Date's first time testifying before Congress as the interim head of the Consumer Financial Protection Bureau, but Republicans did not let him off easy.

Members of a House Financial Services Committee subcommittee grilled Date, the special advisor to the Treasury secretary on the Consumer Financial Protection Bureau, on the agency's efforts to streamline regulations, consolidate authority over consumer rules and minimize the burden on community banks. Republicans also reiterated their call for more accountability at the bureau, including the replacement of a single director with a board or commission.

"My fear is that there are simply no checks and balances," said Rep. Spencer Bachus, the chairman of the full committee. "It could easily become a loose cannon. That would be the worst case scenario, and it may not, but it's headed by a single director who answers to no one."

Bachus also pressed Date for his take on the agency's governance structure.

"My job as the special advisor is to take that structure and make it work," Date said, attempting to sidestep the issue.

But asked if he could carry out the agency's mission if it was run by a board or commission, Date responded: "It's been my experience that if you want something hard done, you really should have someone singularly accountable for it."

Much of the hearing re-fought old battles, as Democrats once again attempted to dispute the notion that the bureau is not subject to Congressional oversight. In fact, the hearing — on the CFPB's activities in its first 100 days — was the second hearing on the agency by the Financial Services oversight subcommittee.

"I look forward to many more hearings that denounce lack of oversight while we are overseeing this agency," said Rep. Barney Frank, D-Mass.

Republicans reminded Frank that the original House bill called for a commission structure while Rep. Ed Royce, R-Calif., said the real concern is that prudential regulators need to have a seat at the table to advise the bureau on safety and soundness issues.

That brought derision from Democrats, however.

"I'm sure that makes everyone in America feel so warm and fuzzy about the Congress of the United States because the prudential regulator is being defended in this fine committee here," said Rep. Luis Gutierrez, D-Ill.

Frank said that his primary objection was to legislation that would make it easier for the Financial Stability Oversight Council to overrule the bureau's regulations.

Rep. Carolyn Maloney, the subcommittee's top Democrat, praised the agency for its early work directly with members of the military and older Americans, and to streamline disclosure forms for mortgages and student loans, which were generally praised by businesses. Maloney asked Date why he thought the bureau continued to face so much resistance.

"My sense is that it's because talk is cheap," Date said. "Sometimes people are a little bit skeptical because they've heard things that sound like this before. At some level, if you don't believe what we say, look at what we do."

Some Republicans also lamented that the agency would impose unfair burdens on community banks in their districts, when they had nothing to do with the subprime lending and other deceptive practices that led to the financial crisis.

Rep. Sean Duffy, R-Wisc., asked Date to give an example of what those banks and credit unions did during the crisis. But when Date tried to explain, Duffy twice cut him off, repeating the question, "What did they do?"

To the surprise of many in the room, Rep. Spencer Bachus, the chairman of the full committee, asked Date why he thought the White House didn't nominate him for the director's job.

"I would not presume to have anything to do with something that is solely the discretion of the President of the United States," Date answered.

Rep. Shelley Moore Capito, the subcommittee chairwoman, also asked Date to talk about Bank of America's decision to charge customers a $5 monthly fee for using their debit cards. The bank announced Tuesday it would not move forward with the new fee.

Capito said her assumption — based on statements made by a B of A official last month — was that the bank had met with the CFPB before announcing the fee, and that it was determined not to be unfair, deceptive or abusive.

Date wouldn't comment on conversations with a specific institution, but said, "Financial institution management teams had ought to feel comfortable talking about what's happening with their business, plans for the business, with their regulators, at least in part to have a sense of whether something is in the confines of the law," he said.

Republicans also asked for assurances from Date that the authority to enforce consumer financial laws had been consolidated within the CFPB, and was not being duplicated by other agencies.

"What happens to the old bureaucracy?" Rep. Thaddeus McCotter, R-MI, asked.

Although many of those employees transferred to positions at the bureau, Date said he didn't have any insight into what the other regulators did with those positions.

"How can you say you consolidated the authority within this new bureaucracy if you cannot tell me that the other positions have been eliminated?" McCotter asked.

Rep. Donald Manzullo, R-Ill., asked Date to make a specific inquiry into whether officials at the Department of Housing and Urban Development were continuing to work on a project to streamline mortgage disclosure forms, which has been a hallmark of the agency's early work.

"If they're doing that, they should be reassigned somewhere else or fired," he said.