CFPB under fire for relationship with White House, approach to abuse investigations

Richard Cordray

The Consumer Financial Protection Bureau came under attack recently for its approach to alleged abuse investigations and its relationship with the Obama administration.

Rep. Patrick McHenry (R-N.C.) sent a letter to CFPB Director Richard Cordray requesting information regarding how senior agency officials cooperate with the Obama administration. The letter follows media reports that CFPB officials were working jointly with the White House on policy creation rather operating as an independent federal regulator.

“Although employees of other independent agencies meet with White House staff members and such meetings are not per se inappropriate, the frequency of the CFPB’s visits and the CFPB’s coordinated public events with the White House could suggest that the bureau’s regulatory actions are indirectly shaped by these interactions,” McHenry said, according to The Wall Street Journal.

Additionally, the watchdog consumer agency has also come under fire for vagueness in defining abuses of financial laws.

David Hirschmann, the president and CEO of the U.S. Chamber of Commerce’s Center for Capital Markets Competitiveness, also issued a letter to Cordray, saying that the CFPB failed to provide clarity regarding the language of its enforcement limits. Hirschmann requested that the CFPB issue a statement defining “abusive” conduct as it relates to the consumer financial market, according to MortgageOrb.

“You have said on a number of occasions that legitimate businesses have nothing to fear from the CFPB, provided they play by the rules,” Hirschmann said, MortgageOrb reports. “Our concern, however, is that in many cases, those rules remain ambiguous because terms are undefined, and the regulatory and supervisory processes are overlapping and inconsistent.”

Hirschmann said that the presence of CFPB examination teams “transforms the examination process from the cooperative exchange of information that has been the hallmark of federal bank examinations into an adversarial process overseen by the lawyers on both sides that inevitably will be less informative and less productive in terms of promoting candid consultations that will enhance compliance,” according to MortgageOrb.

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