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U.S. Chamber Calls for Checks and Balances at the CFPB
Before Any Confirmation, Hirschmann Urges Senate to Question Cordray on Powers of New Agency
WASHINGTON D.C.—The U.S. Chamber of Commerce called on the Administration today to make the Consumer Financial Protection Bureau (CFPB) accountable to Congess and urged the Senate to seek clear answers from Richard Cordray about how he would use the powers of the bureau if he is confirmed as its first director.
“The CFPB’s structure makes its director one of the most unaccountable officials Washington has ever seen,” said David Hirschmann, president and CEO of the Chamber’s Center for Capital Markets Competitiveness. “The director is the only Senate-confirmed position at this new federal agency, putting unprecedented powers to regulate a large part of our economy in the hands of a single individual with virtually no checks and balances. Congress must use this confirmation process as an opportunity to get clear answers on how the new $500 million agency will work."
“Richard Cordray has been with the bureau almost from the beginning and based on some of the positions the agency has taken, we have deep concerns about how he would use its new broad powers," Hirschmann said. "We have seen efforts to regulate the mortgage industry through enforcement settlements rather than by engaging in a deliberative, fair, transparent rulemaking. There have also been indications of a preference toward a case-by-case approach to interagency coordination as opposed to a clear, up-front division of responsibilities with other regulators. We also have concerns about how the new agency will preserve consumer choice and access to credit for small businesses. We will need to understand where Mr. Cordray stands on these issues.”
Since the enactment of the Dodd-Frank Act, the Chamber has expressed serious concerns about the CFPB’s unprecedented concentration of power in a single director. The Chamber has strongly advocated for the bureau to be led by a five-member bipartisan commission to ensure political and policy balance and for it to be subject to the annual appropriations process.
Unlike most other federal agencies, the CFPB concentrates powers in the hand of the director. The director is the bureau’s only Senate confirmed position and once confirmed cannot even be removed by the President, except for cause. The agency’s budget is not subject to review or approval by either the President or the Congress. And it is specifically exempted from having to coordinate its rules with other agencies, including the White House, to ensure consistency with other regulations.
“There is no disagreement about the need to protect consumers by providing them with clearer disclosure and by finding and punishing fraud,” said Hirschmann. “But an unaccountable agency with broad enforcement powers could do serious damage to the credit markets at a time when small business lending is still reeling. American businesses and consumers still don’t have any answers about how this new agency will operate, whom it will seek to regulate or how it will coordinate its activities with other regulators.”
Since its inception in 2007, the Center for Capital Markets Competitiveness has led a bipartisan effort to modernize and strengthen the outmoded regulatory systems that have governed our capital markets. The CCMC is committed to working aggressively with the administration, Congress, and global leaders to implement reforms to strengthen the economy, restore investor confidence, and ensure well-functioning capital markets.
The U.S. Chamber of Commerce is the world’s largest business federation representing the interests of more than 3 million businesses of all sizes, sectors, and regions, as well as state and local chambers and industry associations.