Between a Rock and a Hard Place: A Recent Hearing on Capitol Hill Shows Exactly What Kind of Political Dilemma the Consumer Financial Protection Bureau (CFPB) Finds Itself Caught In

By Sichelman, Lew | Mortgage Banking, May 2015 | Go to article overview

Between a Rock and a Hard Place: A Recent Hearing on Capitol Hill Shows Exactly What Kind of Political Dilemma the Consumer Financial Protection Bureau (CFPB) Finds Itself Caught In


Sichelman, Lew, Mortgage Banking


Well, "caught" is perhaps too strong a word, because to hear Rep. JEB HENSARLING (R-Texas) tell it, the CFPB is the most unfettered, out-of-control federal agency ever.

At the hearing before the House Financial Services Committee in early March, Chairman Hensarling said in his opening remarks: "The CFPB has unbridled, discretionary power not only to make [financial services] less available and more expensive, but to absolutely take them away."

The committee chairman also said: "The bureau is fundamentally unaccountable to the president since the director can only be removed for cause. Fundamentally unaccountable to Congress because the bureau's funding is not subject to appropriations. Fundamentally unaccountable to the courts because Dodd-Frank [Wall Street Reform and Consumer Protection Act] requires courts to grant the CFPB deference regarding its interpretation of federal consumer financial law. Thus, the bureau regrettably remains unaccountable to the American people. That is why we need the CFPB on budget and led by a bipartisan commission; mere testimony is not the equivalent to accountability."

But from the other side of the aisle, Rep. MAXINE WATERS (D-California) had a decidedly different view.

The committee's ranking minority member, Rep. Waters praised the CFPB's track record and highlighted the numerous ways Republicans have tried to reign in the bureau.

"Taking their strategy from Wall Street, predatory lenders and other bad actors in our financial system, the Republicans on this committee have advanced countless measures that would undermine the CFPB's ability to protect consumers from deceptive marketing, unlawful debt collection, lending discrimination, illegal fees and other unscrupulous activity," she said. "This includes legislation to destabilize CFPB's leadership, end its autonomy and tie its independent funding to the whims of the congressional appropriations process."

On to the Federal Housing Finance Agency (FHFA), whose director, MEL WATT, said in early March that the Home Affordable Refinance Program (HARP) can't go on ad infinitum.

The program was introduced in 2009 to help underwater and near-underwater homeowners refinance their mortgages. PLARP, which benefits homeowners whose mortgage payments are current but don't have enough equity to refinance, is scheduled to run its course in December.

"HARP was put in place to deal with people who got burned during a meltdown period," Watt told reporters following an FHFA outreach program in Newark, New Jersey on March 4. "So I don't think in the long term you can think about extending the deadline and extending it because it wasn't designed to do that."

The former North Carolina lawmaker added: "When you ask, 'Is that the new normal?,' my answer to that is no--because when we look at more recent lending practices, there shouldn't be a need for these kinds of programs. You're still going to have people default, but not at the level that resulted from the meltdown."

At a Goldman Sachs Housing Finance Conference the following day in New York, Watt turned his attention to the common securitization platform (CSP) and the single security that will result. …

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