The federal Consumer Financial Protection Bureau turned a year old on July 21, but lawmakers didn't take it easy on the agency's top executive during a recent hearing.
Republican officials on the House Oversight and Government Reform subcommittee recently grilled CFPB director Richard Cordray over what they called his agency's inability to improve lending conditions since the end of the recession, according to a report from the news site Politico. In particular, they said that the recession has been over for some time, but many Americans are still having considerable difficulty obtaining new mortgages or small business loans.
Cordray defended the agency by pointing out that many of the lending rules it has been trying to put in place since gaining full regulatory power late last July have not yet been finalized, and until they are, there is little the agency can do to engender more lending efforts, the report said. In fact, he noted that banks' lack of desire to extend large amounts of credit to consumers spring from the effects of the recession, not any fear of regulatory oversight from the CFPB.
He further noted the agency is proceeding with a considerable amount of caution on all rules so as not to negatively affect smaller banks' bottom lines, the report said. The CFPB has come under a considerable amount of fire from those in the industry and some lawmakers as a result of the perceived effects its regulatory efforts would have on smaller institutions. Cordray and his agency have had to perform a bit of a balancing act in trying to both put forth rules that will encourage more economic growth while simultaneously preventing another downturn.
"You can't look at what happened in 2007 and 2008 without realizing that we need common-sense reforms," Cordray told the lawmakers, according to the site. "The notion that everything is fine and we should just get the government out of the way does not square with the facts."
Republicans have preferred a different system for running the CFPB - having it headed by a small panel of lawmakers and experts, rather than a central head - since the agency was created as part of the Dodd-Frank Act in 2010. Already, it has had a significant impact on lending in a number of fields after initially concentrating only on protections for credit cards.