Senate Holds CFPB Hearing on Cordray Nomination

The Senate Banking Committee held its first hearing on the nomination of Richard Cordray as Consumer Financial Protection Bureau (CFPB) director on Tuesday. Cordray is the current CFPB assistant director for enforcement and has served as both Ohio’s attorney general and treasurer. This hearing comes as the current structure of the CFPB remains contentious, with over 40 Senators refusing to confirm a director without changes first being made.

Having come online July 22 without the installation of a director, the Bureau cannot take on the new authority and oversight as originally laid out.

Some in Congress feel the current structure makes the bureau and its director too powerful and have worked to pass legislation which would help curb these powers. Proposals have included creating a commission rather than a single CFPB director, allowing the Financial Stability Oversight Council to overturn CFPB rules or regulations with a simple majority, and changing certain operational and funding elements. Legislation making those changes passed the House in late July with a bipartisan vote. The fate of similar legislation in the Senate, however, is questionable.

Those leading the hearing clearly had very different visions, with committee chair Tim Johnson (D-SD) looking for a speedy confirmation so that the Bureau can begin fully operating and ranking member Richard Shelby (R-AL) wanting to see fundamental changes to the bureau prior to the installation of a director.

Next steps in the confirmation process remain in the hands of the Senate as the both sides wrangle to move forward on their own terms.

Suits Against Banks Grow
On Friday, the Federal Housing Finance Agency (FHFA) filed new suits over the nearly $200 billion in mortgage-backed securities bought by Fannie Mae and Freddie Mac that went bad. While the amount sought in each case has not been disclosed, there have been 17 banks named in the suits, as well as key individuals at some institutions.

Those named in the suits have largely claimed that Fannie Mae and Freddie Mac were aware of the risks involved with purchasing such securities and that losses were not caused by fraud but by the falling housing market.

These suits come on the heels of the recent move by the National Credit Union Administration (NCUA) to recover the billions in losses to corporate credit unions by filing suits against several major banks.

NWCUA Drafts Response to CUSO Proposal
The Northwest Credit Union Association (NWCUA) is currently drafting a response to the NCUA on its recent proposal requiring new reporting regulations for Credit Union Service Organizations (CUSO) and their subsidiaries and is looking for member input.

The NCUA currently has the authority to inspect the books and records of some CUSOs, but that authority is not universal. And while the agency previously had temporary statutory authority to examine CUSOs leading up to Y2K, that authority expired in 2001 and has not been reinstated by Congress.

This proposal has caused extreme concern regarding the NCUA overstepping its authority, the ever-increasingcosts and concerns related to compliance, and the potential stifling of innovation in needed CUSO services.

Read the full NWCUA summary here. If you would like to offer comments on this proposal, please click here.

 

Questions? Contact Director of Regulatory Advocacy Jaycee Winn: 503.350.2209, jwinn@nwcua.org.

Posted in NCUA, NWCUA.