Richard Cordray is appearing before a House Financial Services subcommittee at this hour, and I’m not available to watch the testimony. However, I do have Cordray’s written testimony, which he will presumably deliver in a truncated form. It’s pretty good, actually. I especially like how Cordray frames his mission as protecting honest businesses.
Second, the Consumer Bureau will benefit honest businesses by leveling the playing field and ensuring that financial institutions play by the same set of rules. In the run-up to the financial crisis, nonbank firms generally were not subject to the federal supervision that applied to banks. Some of these unsupervised entities led a race to the bottom in lending standards that hurt responsible businesses, including community banks and credit unions, and greatly harmed consumers. With a Director now in place, the Bureau can work to level the playing field on which our nation’s financial institutions will innovate and compete.
Honest businesses want to compete in a market where buyers understand the terms of the deal and can compare possible alternatives. These firms work to win market share based on fair competition and excellent customer service, not through deception or fraud. The Consumer Bureau can help responsible businesses by ensuring that everyone competing in the marketplace follows the same set of fair and reasonable rules.
It’s a hard position to argue against. By saying that you oppose the CFPB, you simultaneously oppose keeping the playing field level for honest businesses so they can compete on price and quality rather than how many times they can trick their customers.
Cordray goes on to describe the work done by CFPB to date, including bank and nonbank supervision; the Know Before You Owe program designed to generate short, transparent statements for consumers on financial products like mortgages and credit card statements (this is already having a good impact; my credit card statement, with disclosures mandated by the recent credit card reform bill, and a pre-emptive response to CFPB’s prototype, is massively easier to read now); regulatory streamlining; and advanced on dealing with financial products for servicemembers and older Americans. Cordray gets incredibly granular in the written statement with respect to staff levels and budgets, and it’s hard to claim after this that the CFPB is helmed by an “unaccountable czar” with powers beyond the reach of Congress. The Government Accountability Office already delivered a clean audit to the bureau for FY 2011, the first of annual independent audits on their budget and operations. He closes with this:
Chairman McHenry, Ranking Member Quigley, and members of the Subcommittee, thank you again for inviting me to testify today about the Consumer Bureau. I have great appreciation for the important role of oversight. I believe that the Bureau must be an active participant in the congressional oversight process, and that meaningful oversight will help build public confidence in the Bureau. I welcome the opportunity to discuss the activities of the Bureau and update you on our efforts to protect consumers and improve consumer financial markets.
Surely Patrick McHenry will ignore this and grill Cordray on his wild, unaccountable activities. But that may not fly given Cordray’s diligence here. If I find out that anything interesting happens at today’s hearing I’ll update.