Senators lob insults at heated hearing on consumer agency

Senators lob insults at heated hearing on consumer agency
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A Senate Banking Committee hearing on the effects of financial regulation Tuesday spiraled into a heated showdown between senators over the tone and content of the debate.

The hearing focused on the Consumer Financial Protection Bureau’s (CFPB) impact on banking and lending two days before the agency’s director, Richard Cordray, is set to testify before the Banking Committee. 

While Republicans claimed the CFPB’s overzealous regulation and haphazard enforcement was starving off small institutions and slowing lending, Democrats countered that the economy was stronger under the agency’s watch and that evidence doesn’t back up Republican claims.

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“I don’t even know where to start,” said Sen. Sherrod BrownSherrod Campbell BrownOnly four Dem senators have endorsed 2020 candidates Budowsky: 2020 Dems should debate on Fox Overnight Health Care: How 2020 Dems want to overhaul health care | Brooklyn parents sue over measles vaccination mandate | Measles outbreak nears record MORE (D-Ohio), the committee’s ranking Democrat. “I’ve been on this committee for almost 10 years and I’ve never heard such unsubstantiated claims.”

CFPB critics claimed the agency was imposing “the will of Washington” on consumers instead of letting them make their own informed choices. That, they claimed, was driving Americans toward risky products from payday lenders and check cashers, and away from the shrinking amount of community banks and credit unions.

“It remains one of the least accountable agencies with the most power,” said Chairman Richard Shelby (R-Ala.), and “I do not believe they should be used as a substitute for an individual's independent — yes, independent — judgement.”

Along with the CFPB’s regulations on mortgage providers, critics pointed to the agency’s pending rules on arbitration clauses, which shield companies from consumer litigation, and payday lending debt prevention. They also took issue with the CFPB’s action against auto lenders it believed to be shunning minority customers.

“The CFPB could have found a swifter, more effective path for consumers and credit providers if they engaged with lenders, auto dealers and the American public on a more sensible regulatory approach,” said David Hirschmann, president and CEO of the U.S. Chamber of Commerce Center for Capital Markets Competitiveness.

Democrats countered that the negative impacts of CFPB enforcement were overstated. While Sen. Dean HellerDean Arthur HellerTrump suggests Heller lost reelection bid because he was 'hostile' during 2016 presidential campaign Trump picks ex-oil lobbyist David Bernhardt for Interior secretary Oregon Dem top recipient of 2018 marijuana industry money, study finds MORE (R-Nev.) said that his state has half as many community banks and credit unions as it did five years ago, Sen. Jeff MerkleyJeffrey (Jeff) Alan MerkleyOnly four Dem senators have endorsed 2020 candidates More than 30 Senate Dems ask Trump to reconsider Central American aid cuts Long-shot goal of nixing Electoral College picks up steam MORE (D-Ore.) said mortgage and car lending had increased nationally over three straight years.

“The system is working really well and people are getting fair loans,” said Merkley. “If you’re going to make the arguments, at least know the facts.”

There was a brief moment of comity between Sen. Tim ScottTimothy (Tim) Eugene ScottGOP senators dismiss Booker reparations proposal On The Money — Presented by Job Creators Network — GOP senators urge Trump not to nominate Cain | Treasury expected to miss Dem deadline on Trump tax returns | Party divisions force Dems to scrap budget vote | House passes IRS reform bill GOP senators urge Trump not to pick Cain for Fed MORE (R-S.C.) and Rev. Willie Gable Jr., chairman of the National Baptist Convention USA’s Housing and Economic Development Commission. Despite disagreeing on CFPB’s impact, they bonded over expanding opportunities for minorities through smart financial regulation, rebuking the bluster of the hearing and larger debate.

“I am disappointed in the tone. I’m concerned that when viewers watch this at home, that they’re missing the point,” said Scott, who joked that Sen. Elizabeth WarrenElizabeth Ann WarrenJulián Castro: Trump should be impeached for trying to obstruct justice 'in very concrete ways' Poll: Biden tops Sanders nationally Pete Buttigieg: 'God doesn't have a political party' MORE (D-Mass.) would “tear what I said to pieces.” 

Warren instead aimed her fire at witness Leonard Chanin, a former CFPB and Federal Reserve official who now advises financial firms on regulation. Warren said that Chanin and his Fed colleagues ignored signs the of the 2008 mortgage crisis and that she regretted hiring him when she was staffing up the CFPB before her Senate career.

“I was told that even though you played a key role in blowing up the economy, I needed to hire you,” Warren said. “We needed to keep you all around because you were the only ones who really understood the mistakes that were made.

"Of all the people who might be called on to advise Congress about how to weigh the costs and benefits of consumer regulations, I am surprised that my Republican colleagues would choose a witness who might have one of the worst track records in history on this issue,” added Warren.