Republicans attack consumer financial watchdog as they push for his firing
The chairman of a powerful House committee welcomed the nation’s top consumer financial watchdog to a hearing Wednesday by expressing surprise he showed up, and hoped he never does so again.
The nearly five hours of questioning that followed marked a new level of hostility in the sharply partisan battle over a controversial agency.
“I believe the president is clearly justified in dismissing you and I call upon the president … to do just that, and to do it immediately,” Rep. Jeb Hensarling (R-Texas) told Richard Cordray, director of the Consumer Financial Protection Bureau.
Republicans on the House Financial Services Committee addressed Cordray like prosecutors as they targeted the head of an independent agency they have opposed since its creation in 2010 and which played a key role in sanctioning Wells Fargo & Co. for its fake accounts scandal.
Part of the GOP attack focused on the Wells Fargo case as they argued the watchdog agency “was asleep at the wheel” in identifying that the bank was creating unauthorized accounts and only got involved after the Los Angeles Times and Los Angeles City Atty Feuer had uncovered the problems.
Cordray, one of the highest-profile remaining appointees by President Obama, faced a withering attack in his first congressional appearance since President Trump’s inauguration.
The bureau has angered Republicans and many financial sector players by creating a public database of consumer complaints that identifies companies, enacting regulations placing new restrictions on mortgages and other products, as well as taking high-profile enforcement actions that led to billions of dollars in refunds and penalties.
Cordray, a Democrat, gave no ground. He often frustrated Republicans by dodging yes or no questions, complaining at one point of “character assassination,” and offered no indication that he would resign before his five-year term ends in July 2018.
One lawmaker during the lengthy and contentious hearing even threatened Cordray with embarrassing public hearings about alleged bureau wrongdoing if he didn’t quit.
“What’s a better way to do this for you?” asked Rep. Sean Duffy (R-Wis.)
Democrats came to the defense of Cordray and an agency that is a key piece of Obama’s legacy.
“Boy, they really hate you, don’t they?” Rep. Michael Capuano (D-Mass.) told Cordray, saying his numerous appearances before the Republican-controlled panel were designed “to beat the hell out of you and to make sure we get rid of the agency.”
The hearing came as Cordray and the bureau are in the midst of a high-stakes legal battle over the constitutional right of the president to deal with heads of independent agencies.
Hensarling, the bureau’s leading critic, ripped into Cordray by first suggesting he was using the regulatory job to launch a campaign for Ohio governor.
Noting that Cordray had been invited to testify, Hensarling said, “I’m otherwise surprised to see you here in that, as you well know, there have been many press reports saying that you would have otherwise returned to Ohio to pursue a gubernatorial bid.
“Perhaps the rumors of your political aspirations are greatly exaggerated,” Hensarling said.
Then he made his case that Cordray should be fired and the bureau’s authority should be reduced because it has restricted consumer access to credit by limiting products available to them, such as payday loans. Hensarling also criticized the way Cordray has treated businesses the agency oversees.
“For conducting unlawful activities, abusing his authority and denying market participants due process, Richard Cordray should be dismissed by our president,” Hensarling said. “Not only must Mr. Cordray go, but this current CFPB must go as well.”
Hensarling is among several Republicans who have called for Trump to fire Cordray. And after Trump’s inauguration, the Justice Department switched sides and told a federal court that Trump should be able to fire him at will.
A panel of the U.S. Court of Appeals for the District of Columbia ruled in October that the bureau’s structure violated the Constitution’s separation of powers because it limited the president’s authority.
The court said the solution was to strike down the law’s “for cause” provision, meaning that the president could remove the consumer bureau’s director for any reason, as with other executive branch appointees. The bureau appealed the ruling to the full court. The case was brought by PHH Corp., a New Jersey mortgage services company.
White House Press Secretary Sean Spicer said in February that the bureau was “an unaccountable and unconstitutional new agency that does not adequately protect consumers.” But Trump has yet to try to fire him.
Rep. Maxine Waters (D-Los Angeles) accused Republicans of “misguided attacks.” She noted that the bureau, which oversees mortgages, credit cards and other consumer financial products, has recovered nearly $12 billion for 29 million consumers.
“Republicans have been clamoring to weaken, impede, and ultimately destroy the consumer bureau since its creation,” Waters told Cordray. “I would hope this president, even though I doubt it, would have the wisdom to ask you to stay on.”
Some of the money recovered for consumers came from Wells Fargo’s agreement to pay $185 million to settle investigations by the bureau, Feuer and the Office of the Comptroller of the Currency.
The settlement came after aggressive sales quotas led employees at the San Francisco bank to open as many as 2 million accounts without customers’ consent in a scandal first made public by the Los Angeles Times in December 2013.
Rep. Ann Wagner (R-Mo.) said the bureau failed to start an investigation of Wells Fargo until 2015.
“The only conclusion there is to draw regarding the Wells Fargo scandal is the CFPB was asleep at the wheel,” she said. “The L.A. Times, the [comptroller’s office] and the L.A. city attorney all got there before you did, Mr. Cordray.”
Cordray reiterated past statements that the bureau was tipped off by whistle-blower tips in mid-2013, before The Times article appeared, “although I would say that was a splendid piece of investigative reporting.”
“They don’t want to give us any credit for anything we do,” Cordray told Capuano about the bureau’s critics.
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12:35 p.m.: This article was updated to note the hearing lasted nearly five hours.
This article originally was published at 11:40 a.m.