Consumer Financial Bureau Needs Accountability, American Bankers Association Tells Congress

Notwithstanding President Obama’s recess appointment of Richard Cordray to head the Consumer Financial Protection Bureau, Congress is considering ways to alter the Bureau's structure, which had been established in Dodd-Frank. Today, the American Bankers Association testified before the House Subcommittee on Financial Institutions and Consumer Credit, addressing measures that the ABA says would increase accountability at the Bureau. 

ABA Chief Operating Officer Michael J. Hunter testified that the Bureau “will play a pivotal role in setting new rules that will affect access and availability of consumer financial products.” Hunter added that, “We strongly support an effective mechanism of checks and balances for the Bureau, and we applaud congressional efforts to achieve this goal.”
 
Hunter testified that H.R. 1355 would move the Bureau under Treasury, subjecting it to the appropriations process.  He noted two key questions:  how to assure accountability of decisions and appropriate limits on the Bureau’s power, and how to assure that the Bureau’s use of funds, whether provided by its current source – the Federal Reserve – or through appropriations, are used effectively and disclosed fully.
 
Hunter testified that there are many ways to increase accountability.  For one thing, legislation to create a five member board for the Bureau was approved by the House last year, and Hunter said that the ABA believes that “such a structural change would provide an effective check and balance.”  According to Hunter, “[a]s the law is currently written, the Bureau’s director has sole authority to decide the direction and parameters of the consumer financial product market.  This vests far too much power in one person to fundamentally alter the financial choices available to customers.” 
 
Hunter closed his testimony by examining H.R. 3871, legislation intended to clarify the protection of confidential information for the Bureau.
 
“While the Bureau has expressed its willingness to address this issue through regulation, ABA believes it is appropriate to add certainty by enacting the same, express rules regarding privilege of information for the Bureau as those already established for other federal banking supervisors,” Hunter said.