Advertisement
Business

House Republicans threaten consumer watchdog with contempt of Congress

Richard Cordray, director of the Consumer Financial Protection Bureau, testifies on Sept. 20, 2016 b
Richard Cordray, director of the Consumer Financial Protection Bureau, testifies about Wells Fargo at a Senate committee hearing in September.
(Ron Sachs / TNS)

House Republicans this week threatened Richard Cordray, the embattled director of the Consumer Financial Protection Bureau, with contempt of Congress, saying his agency has not complied with a demand to provide documents related to Wells Fargo & Co.’s unauthorized accounts scandal.

In a staff report released Tuesday, just days before Thursday’s crucial House vote on a bill that would weaken the CFPB, GOP members of the House Financial Services Committee accused the agency of failing to respond to requests for documents, including an April subpoena related to the bureau’s investigation of Wells Fargo.

Staff for the Subcommittee on Oversight and Investigations wrote that the investigation of the bank — and of regulators’ actions in the years before the bank’s practice of opening unauthorized accounts was exposed — has been stymied by the lack of cooperation.

“Due to CFPB Director Richard Cordray’s failure to honor his legal obligation to produce all records responsive to the committee’s subpoena, the committee’s Wells Fargo investigation is at an impasse,” the report states. “Committee staff recommends that the chairman takes steps, up to and including preparing for possible contempt proceedings against Director Cordray should they prove necessary.”

Advertisement

A CFPB spokesman said the agency is reviewing the report and has tried to be responsive.

“The CFPB has produced more than 57,000 pages of materials thus far in response to the committee’s document requests. We continue to stand ready to work with the committee staff to satisfy its oversight processes,” the spokesman said in an emailed statement.

Rep. Maxine Waters (D-Los Angeles), the ranking Democrat on the Financial Services Committee, called the report just the latest Republican attack on the financial regulator.

“Republicans have been clamoring to weaken, impede, and ultimately destroy the consumer bureau since its creation,” Waters said in a statement Thursday. “The consumer bureau charged Wells Fargo with a record $100-million fine for opening fake accounts and yet, committee Republicans haven’t done anything to hold Wells Fargo accountable. This report is an insult to the millions of Americans who were harmed by Wells Fargo.”

Advertisement

Republicans, and in particular Rep. Jeb Hensarling, the Texas conservative who chairs the House Financial Services committee, have been fierce opponents of the bureau. On Thursday, they voted overwhelmingly in favor of Hensarling’s Financial Choice Act, a bill that would weaken the bureau and roll back elements of the post-crisis Dodd-Frank Wall Street Reform and Consumer Protection Act.

The bill now moves to the Senate, where it faces an uncertain future. It would allow the bureau’s chief to be terminated by the president at will. Currently, Cordray only can be fired for “inefficiency, neglect of duty or malfeasance in office.”

All but one House Republican supported the bill, and no Democrats voted in favor of it.

In attacking the CFPB for an alleged lack of cooperation, the report hews to a Republican orthodoxy: that the CFPB’s director is too powerful and that its powers should be curbed. In a statement last year, Hensarling called the bureau “arguably the most powerful and least accountable Washington bureaucracy in American history.”

Jeff Emerson, a committee spokesman, said the CFPB has not given the committee any internal agency documents and instead has provided documents already available from either Wells Fargo or other regulatory agencies.

“The CFPB generally doesn’t want to produce anything that we don’t already have — most notably their internal records,” Emerson said. “Does Director Cordray have something to hide?”

Yet the report also seems to suggest that the CFPB, at least in the case of Wells Fargo, was a do-nothing agency, one that levied a huge fine against the bank but otherwise had little involvement in the investigation. The report’s title is “Was the ‘Cop on the Beat?’ ”

In September, Wells Fargo agreed to pay $185 million — $100 million of it to the CFPB — to settle investigations into its sales practices. Though the bank did not admit legal wrongdoing, it acknowledged that its employees had opened millions of potentially unauthorized accounts and that it had fired 5,300 workers over that practice.

Advertisement

The bank’s opening of unauthorized accounts was first uncovered by a 2013 Los Angeles Times investigation.

Last year’s deal with regulators settled a lawsuit filed in 2015 by Los Angeles City Atty. Mike Feuer and investigations by the CFPB and the Office of the Comptroller of the Currency, a federal bank regulator.

Republicans have said it appears the CFPB did not start looking into Wells Fargo’s practices until after Feuer’s suit was filed, though Cordray has said the bureau was looking into the matter before that.

The subcommittee report said it appears the bureau had little to do with the investigation and “relied significantly” on the other two agencies. The report went on to suggest that Cordray may have taken too much credit for the bureau’s role.

“The records currently available to the committee raise important questions about whether Director Cordray has made misleading claims about the work the CFPB did to discover and investigate Wells Fargo’s consumer banking sales practices, or took credit for work that was performed by others,” the report said.

Feuer called the subcommittee report “baloney,” saying the CFPB was a key player in pushing for fines, penalties and customer restitution in the Wells Fargo case.

“Without the CFPB, thousands of consumers from coast to coast would not have gotten relief, especially since my office has no jurisdiction outside California,” he said. “But House Republicans struggling to find a rationale for emasculating the CFPB contort the bureau’s work with my office into a failing.”

james.koren@latimes.com

Advertisement

Follow me: @jrkoren


Advertisement