WASHINGTON–Richard Cordray defended the CFPB against strong criticism from Republican senators during a hearing last week, and even cited credit union membership as one indication it is not hurting the economy.
While the senators said the agency is stifling credit markets through unaccountable actions, Corday responded that the CFPB has cracked down on discrimination in lending and on predatory lenders, and has not limited access to financial products.
“I don’t want to be viewed as some happy talker who see the glass half-full when there’s just a few drops in it,” Cordray was quoted by The Hill as saying during testimony. But “we see credit beginning to expand again in the mortgage market and the credit card market.”
According to The Hill, Republicans have been critical of the CFPB’s action on indirect auto lenders after it claimed they discriminated against minority customers with unfair borrowing prices. The agency settled for more than $300 million in restitution funds for borrowers identified through zip codes and last names to see if they were among the customers “disparately impacted” by the practice.
Republicans said the CFPB acted based on flimsy evidence, the Hill reported.
“It’s my understanding that the lender can’t discriminate on the basis of race, because the race of the customer is unknown to them,” Chairman Richard Shelby (R-AL) was quoted by The Hill as saying. “Some believe that y’all are after money instead of justice. What do you make of that?”
The Hill reported that Cordray countered that the CFPB was simply enforcing the law and following its mandate from Congress, and the actions based on disparate impact — or unintentional discrimination — have been upheld by the Supreme Court.
Republicans also criticized the CFPB as too quick to penalize banks and lenders without first going through a rulemaking process. “This would be a posterchild for rulemaking as opposed to an enforcement action,” Shelby was quoted as saying.
Cordray responded by saying it has sent a clear signal to industry members who could be engaged in the same illegal activity.
Moreover, Cordray said indications in mortgage issuances, credit union memberships and auto loans since the Bureau was created in 2011 are indications it has not hurt consumer choice, The Hill reported.