On March 3, 2015, Director Richard Cordray of the Consumer Financial Protection Bureau (CFPB or the Bureau) testified before the House Committee on Financial Services to deliver the CFPB's Semi-Annual Report to Congress. During his prepared testimony, Director Cordray highlighted the Bureau's recent activity in rulemaking, enforcement, and supervision. He noted that the CFPB's supervisory efforts continue to inform the Bureau's policy, rulemaking, and enforcement functions.
In response to questions from the Representatives, Director Cordray testified on a variety of topics, including:
Consumer Access to Small-Dollar Credit through Overdraft Features and Payday Loans
Ranking Member Maxine Waters (D-CA) and several other members noted the importance that short-term, small-dollar credit products play for many consumers, especially lower-income and unbanked consumers. Director Cordray agreed that these products can be helpful to consumers, but Cordray reiterated his view that these products can be "debt traps." He noted that the Bureau is examining ways to prevent unfairness without unduly burdening products and services that consumers find helpful.
Regulatory Burdens Preventing Mortgage and Auto Lending
Several Representatives noted the regulatory burden imposed on lenders, especially in the mortgage industry, through the Ability to Repay/Qualified Mortgage (QM Rule). Chairman Hensarling stated that the QM Rule has reduced the number of mortgages that can be offered. In response, Director Corday highlighted the Bureau's revisions of the QM rule to alleviate the regulatory burden on banks making mortgage loans in some situations.
Regulatory Burdens on Community Banks and Credit Unions
Representatives noted concerns regarding the regulatory burdens in general as applied to small community banks and credit unions and the need for relief from these burdens. Director Cordray agreed that small financial institutions that lend responsibly need to be treated differently. Representative Andy Barr (R-KY) discussed the QM rule and the rural bank exemptions and asked if the CFPB would support a safe-harbor for institutions that make loans and hold them in portfolio. Director Cordray explained that the Bureau is considering such safe-harbors for small institutions.
Auto Lenders and Auto Dealers
In response to queries from members about the Bureau's jurisdictional line between auto dealers and auto lenders, and about the Bureau's activities in this sector, Cordray did note that the CFPB does not have jurisdiction over auto dealers, only auto lenders.
TILA-RESPA Integrated Disclosure Rule Implementation Timelines
In response to questions from members about whether the Bureau would extend the time for implementation of the rule, especially for small businesses, Director Cordray stated that companies have had 21 months since the rule was finalized and "people should be ready" when the rule is effective.
Student Lending Practices of For-Profit Universities
Ranking Member Waters congratulated the Bureau for the debt relief obtained for students of Corinthian College, and encouraged the CFPB to continue working on student lending issues. Cordray noted the CFPB's ongoing lawsuits and continued action in this space. Representative Denny Heck (D-WA) discussed student loan complaints. Director Cordray responded that the Bureau receives complaints on all student loans. He noted that the Bureau focuses on consumer complaints as a source of information, which informs the Bureau's approach toward policy, enforcement, and development of consumer education tools. Director Cordray also noted that the number of consumer complaints regarding student loans is growing.