On April 7, 2016, US Consumer Financial Protection Bureau Director Richard Cordray presented the CFPB’s Semi-Annual Report at a hearing before the Senate Committee on Banking, Housing and Urban Affairs. Under the Dodd-Frank Wall Street Reform and Consumer Protection Act, the CFPB is required to provide to Congress an update on the CFPB’s mission, activities, accomplishments and publications since the last Semi-Annual Report, as well as certain additional information required by the Dodd-Frank Act.
As part of the hearing, Cordray also responded to questions from the Committee, including what standards FinTech companies will be held to since they are not depository institutions. Cordray noted that “it would not be appropriate for new FinTech startups to be getting an advantage in the marketplace because they are arbitraging the regulatory system, they are not complying, they’re not taking seriously what the banks and regulated institutions have to do.” While many FinTech firms hold “a lot of promise,” Cordray added that innovation isn’t always a net positive, and cited subprime mortgages as an example of what was once thought of as an innovative product.
At the hearing, Cordray also fielded questions on payday loans, arbitration agreements, prepaid cards and smallbusiness lending. The most contentious interactions involved indirect auto lending and regulation by enforcement.
Cordray’s written testimony is available at: http://www.consumerfinance.gov/newsroom/written-testimony-of-cfpbdirector-richard-cordray-before-the-senate-committee-on-banking-housing-and-urban-affairs-20160407/.
Additional coverage of the hearing is available at: http://www.banking.senate.gov/public/index.cfm/hearings?id=106BA9C4-9E02-4CF6-97F8-EEC458DB4D7C.