WASHINGTON — The political fight between the Consumer Financial Protection Bureau and the Republicans on the House Financial Services Committee reached new heights on Friday.
Staff for Chairman Jeb Hensarling, R-Tex., and Rep. Anne Wagner, R-Mo., who heads the subcommittee on oversight, released a report saying that CFPB Director Richard Cordray has ignored subpoenas for information about the CFPB’s efforts to craft a rule regulating arbitration agreements. The report concludes that Cordray should be held in contempt of Congress, which could have civil ramifications.
The report was a signal that the panel may pursue a contempt charge, but left that decision up to Hensarling to pursue. It appeared to be a threat at Cordray, who is widely rumored to be stepping down soon to run for governor of Ohio. The report may also bolster Republican support to use the Congressional Review Act to nullify the arbitration rule.
Republicans view the rule, which limits the use of mandatory arbitration clauses, as a giveaway to trial lawyers, who tend to donate heavily to Democratic candidates. The GOP pointed to a CFPB study of arbitration agreements that found that consumers generally receive more compensation through arbitration than through class-action lawsuits.
The panel report Friday said that the CFPB has yet to fully comply with a subpoena issued in April of last year.
But CFPB spokeswoman Jennifer Howard said the bureau has been compliant with the committee’s requests.
“We have been working diligently to comply with the Committee’s oversight on a number of fronts,” Howard said in a statement. “On this particular matter, we have produced thousands of pages of documents thus far, and by next week we will have completely responded to one of the two” specific issues that the panel report cites in its conclusion that Cordray is in contempt of Congress.
One of those issues relates to CFPB correspondence with the trial bar lobbying group American Association of Justice and four other legal associations while drafting the arbitration rule. The other request is for communications between CFPB employees who were developing the rule.
“We will continue our efforts to understand how we can respond to the Committee in a satisfactory manner,” Howard said.
Some consumer groups suggested that Republicans were attempting to obtain documents that could be used in litigation.
"The committee is trying to conduct extrajudicial discovery for a coming bank-lobby lawsuit against the arbitration rule," said Brian Simmonds Marshall, policy counsel for Americans for Financial Reform.
Rep. Maxine Waters, the top Democrat on the committee, said the charges against Cordray are "entirely baseless and there are no grounds at all for them to hold the director in contempt."