House Financial Services Committee Has Held More Than Sixty Hearings Targeting the Consumer Financial Protection Bureau with False Attacks
WASHINGTON, D.C. – In advance of today’s 10:00 a.m. EDT hearing of the House Financial Services Committee featuring Consumer Financial Protection Bureau (CFPB) Director Richard Cordray, Allied Progress released the following statement and a preemptive fact check countering the same tired falsehoods that Wall Street interests and Republicans in Congress have lodged against Cordray and the CFPB for years:
“Republicans came to power claiming they would ‘drain the swamp’ but all they’ve done is open the floodgates. Their attacks against the Consumer Financial Protection Bureau are a prime example,” said Karl Frisch, executive director of Allied Progress.
He continued, “I have little doubt that today we will hear many tired, false claims about regulations and the impact the CFPB has had on small businesses, but the truth is, the CFPB has put billions of dollars back into the pockets of hard-working Americans and held Wall Street accountable for their reckless and harmful actions. The numbers don’t lie. Under Director Cordray’s leadership, the CFPB has returned nearly $12 billion to 27 million Americans who have been wronged by credit card companies, payday lenders, debt collectors, and other predatory financial industries.”
“The CFPB is an important tool to protect everyday Americans, and our Representatives should be working to strengthen it, not tear it apart,” he concluded.
To speak with Karl Frisch about the CFPB or today’s hearing, please contact Mike Czin at 202-286-7654 or firstname.lastname@example.org.
Falsehoods will fly at Financial Services Committee hearing on the CFPB. Arm yourself with the facts.
FALSEHOOD: CFPB regulations have made it so banks can’t lend money.
- FACT: Banks are highly profitable and lending is chugging along. The FDIC confirmed in its latest annual report that lending is chugging along and banks are highly profitable [“FDIC Quarterly Banking Profile, Fourth Quarter 2016,” Federal Deposit Insurance Corporation website ,accessed April 4, 2017.]
- FACT: The issue of small business lending is one of demand, not supply. Various authorities, among them Federal Reserve Chair Janet Yellen and centrist think tank Third Way, have made clear that demand, not supply, is the problem for small business lending. [Kate Rogers, “Why Small Businesses Don’t Want a Loan,” CNBC, February 26, 2015; and David Brown and Emily Liner, To Grow New Businesses, Improve Access to Credit, Third Way, September 20, 2016, accessed April 4, 2017.]
- FACT: Banking lobbyists are bragging about all the loans they’re making to small businesses. The American Bankers Association brags about all loans that banks are making to small businesses. [American Bankers Association, America’s Banks Social Media Guide, (2017): 6, accessed April 4, 2017.]
- FACT: Small businesses rank lending at the bottom of a list of business-related problems. The National Federation of Independent Businesses surveyed “small-business owners to evaluate seventy-five business-related problems” and lending was near the bottom of the list with access to long-term credit ranking 69 (down from 56 in 2012) and access to short term credit ranking 70 (down from 58 in 2012). [Committee on Financial Services Subcommittee on Financial Institutions and Consumer Credit, “Testimony of Ms. Holly Wade, Director of Research and Policy Analysis,” on behalf of the National Federation of Independent Businesses, March 28, 2017]
FALSEHOOD: The CFPB Is one of the only agencies that does not answer to Congress. Managers do whatever they want with our tax dollars because they answer to no one.
- FACT: The CFPB doesn’t cost taxpayers a dime because it is funded through the Federal Reserve. The CFPB is funded by the Federal Reserve and is therefore not subject to the congressional appropriations process. “Republicans and Democrats on Capitol Hill continue to fight over whether the new Consumer Financial Protection Bureau should be subject to the congressional appropriations process—that is, whether Congress should directly control how much money the fledgling agency can spend each year. In the meantime, the CFPB funds itself through a bank account at the New York Fed. Under the Dodd-Frank law, the CFPB gets its money from transfers from the Federal Reserve System, up to specific caps set by the law. The Fed can’t turn down requests under that cap.” The Federal Reserve is self-financed through the income on securities such as government bonds, so it does not cost the taxpayers anything. [Victoria McGrane, “Consumer Bureau Gets Its Money From NY Fed Account,” Wall Street Journal, February 15, 2013; and Karen Weise, “Republican Attacks on a CFPB Office Renovation Don’t Add Up,” Bloomberg, July 16, 2014.]
- FACT: Congress has held “more than sixty hearings about the [CFPB] on a wide range of its activities.” “The [House Financial Services Committee] has held more than sixty hearings about the [CFPB] on a wide range of its activities, including its rule-making authority, data-collection practices, and spending.” [Ese Olumhense, “President Trump May Get Ability to Fire Consumer Financial Protection Bureau Chief,” Fox6Now (Milwaukee, WI), March 21, 2017.]
- FACT: Congress already has meaningful oversight of the CFPB budget. Cordray pointed out that the fact that Congress can hold hearings to examine the CFPB budget is meaningful oversight. “. . . Cordray pointed out that Congress is permitted to hold hearings to examine the budget of the bureau, and said that oversight would make it impossible to spend frivolously. ‘The notion that we would spend $100 million on paper clips and it wouldn’t matter, that we can be brought up here in front of you and have to answer for that publicly and embarrass ourselves if it turns out we were engaged in frivolous expenditures, that is very meaningful oversight,’” according to Cordray. [Ronald D. Orol, “Republicans: CFPB’s Funding ‘Recipe for Disaster,” Market Watch, February 15, 2012.]
FALSEHOOD: CFPB managers pay themselves huge salaries.
- FACT: The CFPB compensates employees in line with Federal Reserve employees, as required by law. The CFPB is required by law to compensate employees in line with the Federal Reserve Board’s average salary for employees with similar skills and experience. “The CFPB responded to the revelations by noting the Dodd-Frank bill, which created the agency itself in 2011, requires that compensation be comparable to Federal Reserve employees. ‘CFPB’s pay design and pay setting methodology places our employees in line with the Federal Reserve Board’s average salary for employees with similar skills and experience,’ spokeswoman Michelle Person told The Daily Caller. . . . Consumer protection expert Alan Kaplinsky told The DC the high compensation of CFPB employees is nothing unusual. ‘I have no quarrel whatsoever with the CFPB’s salary structure,’ said Kaplinsky, chair of the Consumer Financial Services Group. ‘They need to pay the salaries they do in order to attract top-notch talent.’” [Charles Rollet, “Lavish Salaries Defended by New Government Agency,” Daily Caller, July 19, 2013.]
- FACT: CFPB employee salaries are in line with other federal banking regulators, and far less than the FDIC.
[Matt Levine, “Are Bank Regulators Overpaid?,” Bloomberg, April 22, 2014.]
FALSEHOOD: The CFPB is using our tax dollars to build a lavish DC office.
- FACT: The CFPB renovation is not costing taxpayers a dime. The renovation for the CFPB will cost xaxpayers “precisely zero” since it’s paid for by the Federal Reserve which “is self-financed, largely with income on securities such as government bonds.” “Republicans have cast the project as a misuse of public dollars in a time of tight budgets. “The CFPB is funded by the Federal Reserve, which happens to be taxpayer money,” [Rep. Jeb] Hensarling said in a February speech that denounced the renovation. But the Federal Reserve is self-financed, largely with income on securities such as government bonds, so the amount Congress needs to set aside for the office redo is precisely zero.” [Karen Weise, “Republican Attacks on CFPB Office Renovation Don’t Add Up,” Bloomberg, July 10, 2014.]
- FACT: Cost of the renovation is in line with other government renovation projects. The GOP estimated that the CFPB headquarters renovation would cost $216 million but “their numbers don’t add up.” Republicans “say their calculations show the renovation will cost $215.8 million, or $590 per square foot—more than double the CFPB estimate, and more than it cost per square foot to construct the lavish Bellagio Hotel and Casino in Las Vegas. These figures were picked up by newspapers and conservative websites, which ran them under headlines like ‘Elizabeth Warren’s Brainchild Builds HQ Costlier Than Trump Tower.’ There’s just one hitch: Their numbers don’t add up.” The Inspector General of the Federal Reserve estimated the cost of the renovations at $145.1 million which has since been scaled down. Furthermore, the store notes the GSA has said the costs are in line with other government renovation projects and the CFPB followed proper contracting procedures. [Karen Weise, “Republican Attacks on CFPB Office Renovation Don’t Add Up,” Bloomberg, July 10, 2014.]
FALSEHOOD: Trump can fire CFPB Director Richard Cordray with or without cause.
- FACT: This isn’t his reality show. Trump can’t just fire Cordray. Like other financial regulators, the CFPB director serves for a fixed term. On July 16, 2013, the Senate voted 66-34 across party lines to confirm Richard Cordray to a five-year term as director of the CFPB. The law permits the president to remove the director only “for inefficiency, neglect of duty, or malfeasance in office.” While a panel of three federal judges recently ruled 2-1 that the president can fire the director of the CFPB without cause, that decision broke with eight decades of precedent and has since been vacated. It will now be heard by the full D.C. Circuit. [Henry B. Hogue, Marc Labonte, and Baird Webel, “Independence of Federal Financial Regulators,” Congressional Research Service February 24, 2014; S. Senate Roll Call Vote on Nomination Number PN157, Confirmation of Richard Cordray, of Ohio, to be Director of the Bureau of Consumer Financial Protection, July 16, 2013, U.S. Senate.gov website; “PN157—Richard Cordray—Bureau of Consumer Financial Protection, Confirmation,” July 16, 2013, Congress.gov website; and Establishment of the Bureau of Consumer Financial Protection, 12 USC § 5491(2010); PHH, et al. v. Consumer Financial Protection Bureau, No. 15-1177, Doc. No. 1646917 (D.C. Cir. 2016); Brian Simmonds Marshall, “An Easy Case: Why a Federal Appeals Court Should Reject a Constitutional Challenge to the CFPB,” American Constitution Society Blog, April 11, 2016; and U.S. Court of Appeals, April 12, 2016.]
- FACT: There is not cause to dismiss CFPB Director Cordray. Under Director Cordray’s leadership, the CFPB has provided nearly $12 billion in relief to 27 million Americans in its first five years. On his watch, the CFPB has also successfully resolved more than ninety enforcement cases against both big banks and small-time fraudsters. [Consumer Financial Protection Bureau, “Factsheet: Enforcing Federal Consumer Protection Laws,” July 13, 2016; and Ben White and Andrew Hanna, “The Permanent Crisis in Banking,” Politico, October 6, 2016.]
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Allied Progress is a nationwide, progressive advocacy organization that uses hard-hitting research and creative campaigns to hold Wall Street and powerful special interests accountable. Since launching in 2015, the organization has led high-profile campaigns on several issues including reforming the payday lending industry and exposing the those working to cripple the Consumer Financial Protection Bureau (CFPB).