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CFPB Director Cordray endures fiery House Financial Services Committee Hearing

As the Consumer Financial Protection Bureau continues its legal battle over its constitutionality, House Republicans attacked the agency with allegations of discrimination and criticized its reaction to the Wells Fargo scandal.

In a House Financial Services Committee hearing April 5, CFPB Director Richard Cordray asserted that his agency has stood up for consumers without creating regulations that hurt consumer lending. But Chair Jeb Hensarling, R-Texas, argued that CFPB rules made credit more expensive and less available. Even worse, Hensarling argued, the CFPB abuses its powers by conducting rulemaking without due process or proper accountability.

"Not only must Mr. Cordray go, but this current CFPB must go as well," Hensarling said.

Reps. Sean Duffy, R-Wis., and Bill Huizenga, R-Mich., specifically attacked Cordray's leadership, alleging that he allowed a culture of discrimination and harassment at the agency itself. They claimed that a number of employees blew the whistle on instances of sexism, racism, intimidation and retaliation, representing irony for a bureau that examines financial companies for the same types of violations.

"You're not willing to accept the same standards that you apply to others on the outside for your own bureau," Huizenga said, citing CFPB settlements with employees who brought lawsuits.

Hensarling also chimed in, referencing a National Review piece alleging that Cordray had ignored an inspector general complaint about oversight supervisors being advised not to cooperate with internal investigations. Cordray dismissed that report as "filled with hearsay and opinion."

In a separate line of inquiry, Rep. Bruce Poliquin, R-Maine, alleged that Cordray had also used a private device to conduct government business. Cordray called the allegations "character assassination."

The harsh republican rhetoric could be part of a building effort to persuade President Donald Trump that there's reason to fire the embattled CFPB Director, which a number of Republican lawmakers have explicitly called for.

House Democrats rushed to Cordray's defense.

"I reject these misguided attacks on the consumer bureau, and I will continue to stand up for the hardworking American consumers that the agency defends every day," Ranking Member Maxine Waters, D-Calif., said.

Waters yielded some of her time to Rep. Daniel Kildee, D-Mich., who then thanked the CFPB for fining Wells Fargo Bank NA after it opened millions of unauthorized accounts. Republicans in the hearing room laughed at the suggestion that the CFPB had properly pursued Wells Fargo, prompting Chair Hensarling to gavel the room back to order.

Republicans have advanced the case that the CFPB ignored red flags in Wells Fargo's sales practices for years before finally investigating the bank in 2015. When Rep. Ann Wagner, R-Mo., fired a line of questioning at Cordray about the timeline of the CFPB's investigation, Cordray countered that the CFPB had been conducting supervisory activity before Wells Fargo informed the CFPB in May of 2015.

"You're conflating things and I don't want you to build on that in an erroneous fashion," Cordray said.

Wagner wasn't impressed, adding that when the CFPB did finally conduct an investigation, the agency did a poor job by interviewing only three of the roughly 5,300 employees fired by Wells Fargo.

"From the minimal, minimal records you've given to this committee thus far, and based on your testimony, the only conclusion to draw regarding the Wells Fargo scandal is that the CFPB was asleep at the wheel," Wagner said.

In an interview Rep Thomas MacArthur, R-N.J., said Cordray's tenure, which ends July 2018, has been marked by "overzealousness." He said the director gets to play "fact-finder, judge, jury and enforcer." But he clarified that the harsh rhetoric has less to do with Cordray himself and more to do with the broader goals of financial safety.

"I'm not interested in character assassination," MacArthur said, "he's at the end of his term. I'm just interested in having a consumer protection bureau that genuinely helps consumers and doesn't overreach."