Today, U.S. Representative Ed Royce (R-Calif.) questioned Mr. Richard Cordray, Director of the Consumer Financial Protection Bureau (CFPB), on the CFPB's authority to tailor rulemaking for community financial institutions during a House Financial Services Committee hearing entitled “The Semi-Annual Report of the Bureau of Consumer Financial Protection.”
"On the question of ‘exemptive authority,’ as it applies to your ability to exempt community banks and credit unions from rulemakings, you argued in a recent speech that it was ‘not plausible’ for you to ‘use such authority to override Congress’s own judgment on such a broad-based policy matter.’ As you know Section 1022 of the Dodd-Frank Act gave the CFPB the authority to adapt regulations by allowing it to exempt ‘any class’ of entity from its rulemakings. Just this week, 329 Members of this House wrote to you, it was Mr. Stiver’s letter actually, to tailor regulations for community banks and credit unions, citing Section 1022 exemptive authority specifically. Do you believe that Section 1022 gives you the ability to tailor regulations for community financial institutions? Does a letter from over three-quarters of Congress change your view of Congressional intent?" asked Rep. Royce.
"We have routinely tailored our rules to take account of different circumstances of small lenders as opposed to large lenders. We did that with our mortgage origination rule, we did it with our mortgage servicing rule, we did it with our remittance rule. We will continue to do it where appropriate. Second, I always attempt to be responsive to letters from Members of Congress. I was, in a more humble station, a Member of the State Legislature in Ohio. I have understood the legislative role, and I respect it," replied Director Cordray.
"Both of the major credit union trade associations have said publicly that they sought a broad exemption from regulation or oversight of any kind when Dodd-Frank was being debated. In both cases, apparently, it was rejected by the Congress. It wasn't written into law. What was written in was differential treatment of banks under $10 billion and credit unions under $10 billion in assets, as compared to those above. We've gone beyond that, and at times have provided special dispensations or special provisions for smaller creditors, often those of $2 billion in assets or below. We'll continue to do that where we find that to be appropriate on the facts. But in terms of a broad overwriting of what Congress made a judgement about in that statute, which was not to simply exempt all credit unions from everything having to do with consumer protection, I feel that Congress has spoken on that," concluded Director Cordray.
Watch Rep. Royce's questioning of Director Cordray here or by clicking on the image below: