Consumer Financial Protection Bureau Director Richard Cordray defended the agency’s enforcement practices as House Republicans are preparing to pass a bill that would significantly scale back its powers.
Among other changes, the Financial Choice Act (H.R. 10), scheduled for House floor consideration the week of June 5, would strip the bureau’s authority to go after “unfair, deceptive, or abusive” practices.
That authority has been politically divisive. Congressional Republicans who back the Choice Act have criticized the CFPB for not specifically defining “abusive” and for using that ambiguity to regulate using enforcement.
“It is abusive to take unreasonable advantage of people’s lack of understanding or inability to protect themselves,” Cordray said May 31 at a community development conference in Arlington, Va.
“In the enforcement actions where we have alleged unfair, deceptive, or abusive acts or practices, roughly 90 percent involved deception and roughly 50 percent involved unfairness,” Cordray added.
Cordray also advocated more generally for the use of enforcement actions to set standards for conduct in the industry.
“We are speaking to every institution in that market by setting the expectations they must meet in their own compliance work to avoid similar violations, right away and without excuses,” he said.
The defense is unlikely to sway House Republicans, who have for years fiercely criticized the bureau.
“Perhaps most emblematic of the Bureau’s counterproductive approach to consumer financial product regulation is its opaque and iterative practice of regulation by enforcement,” House Financial Services Committee Republicans said in a summary of the Choice Act.
In addition to the enforcement rollback, the Choice Act would lessen the CFPB’s supervisory authority, prevent publication of its consumer complaint database, bring it under congressional appropriations, and make its director removable at will by the president.
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