The House Committee on Small Business released responses to questions asked of Richard Cordray, the director of the Consumer Financial Protection Bureau, following testimony at an Aug. 1 hearing.
After the hearing, the committee submitted questions to Cordray to be answered for the record. Many of the questions focused on the agency’s Truth in Lending Act and Real Estate Settlement Procedures Act, both of which seek to simplify and enhance transparency in mortgage disclosures.
The CFPB estimated that the new disclosure forms would result in a one-time cost of more than $100 million. The committee asked Cordray who was responsible for the cost and whether businesses may pass some costs to consumers.
“This figure is an estimate of the direct costs to creditors, mortgage brokers and settlement agents,” Cordray said. “The bureau does not believe that adoption of the integrated disclosures would impose any direct costs on consumers. However…consumers may bear some of the costs of the new disclosures if covered persons pass through some or all of the costs that would be imposed on them. The Bureau estimates that any increased costs to consumers per origination would be small…”
The committee further asked Cordray about the agency’s Small Business Advocacy Review panels, particularly about the evolution of the panels and lessons learned from the first three panels held by the CFPB.
“We believe that the open discussion, between the [small entity representatives] themselves and with the representatives of the bureau, [Small Business Administration] and [Office of Management and Budget], gave the SERs a better understanding of the proposed regulations, while providing the Bureau with a greater appreciation of the costs and benefits of the proposals under consideration,” Cordray said. “We also learned that including SERs who represented diverse subsets of consumers, businesses and parts of the country enabled an open exchange of different and sometimes conflicting perspectives. Such robust discussion yielded comprehensive and insightful feedback.”
Cordray said that the CFPB has 12 Ph.D. level staff economists, half of whom are responsible for analyzing the costs and benefits associated with agency regulations. Additionally, Cordray said that the bureau consults with small businesses and trade associations to assist in estimating the costs associated with each regulation.