During what can be described as a very partisan hearing before the House Financial Services Committee, Richard Cordray, director of the Consumer Financial Protection Bureau, discussed the agency’s stance on mandatory arbitration and laid out a timeline for several rules the regulator is working on, without mentioning a proposed debt collection rule.
When asked for a timeline on the rules that the CFPB is planning to issue this year, Cordray mentioned rules governing prepaid debit cards and the mortgage servicing process. He did not mention a rule the CFPB is said to be working on governing the debt collection industry. The rule was originally proposed more than two years ago and the process has inched along as other priorities at the CFPB have apparently taken precedence.
“We are under way with other rulemakings, but I’m not going to guess when they will be completed,” Cordray said during the three-hour hearing.
While being questioned about whether the bureau regulates through enforcement, the CFPB’s recent ruling against Encore Credit was brought up and Cordray was asked whether the agency was holding Encore to an arbitrary rule, since the debt collection rule has not been issued yet.
“We may issue a rule several years down the road, or next year, whenever it will be,” Cordray said.
Cordray was also blindsided by an accusation from Re. Jeb Hensarling [R-Texas], the chairman of the House Financial Services Committee. A day after he vowed legislation that would overhaul the Dodd-Frank Consumer Protection Act – the law that created the CFPB – Rep. Hensarling said he had data that indicated black employees of the CFPB are paid $16,000 less than white employees. Cordray said that without looking at the data to make sure that pay bands and titles were taken into consideration, he could not comment about the claim.
Members of the committee took turns slamming the CFPB for not being transparent enough, for not being forthcoming enough, and for not providing enough information. Multiple Republican members of the committee grilled Cordray on the CFPB’s stance on arbitration – the agency is considering banning them on consumer lending products – while most Democratic members took their allotted five minutes to thank Cordray and the bureau for its actions in protecting consumers.
