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While most banks have stayed mum about Richard Corday's recess appointment, Citigroup weighed in with its analysis in a blog post Wednesday.
January 11 -
For all the talk about legal challenges to the recess appointment of Richard Cordray as director of the Consumer Financial Protection Bureau, the American Financial Services Association, which represents nonbank consumer lenders, has no intention of stepping into the fray.
January 10 -
Peggy Twohig, the head of nonbank supervision for the CFPB, says the nonbank supervision team is working to assess risk in the market and identify which companies will be subject to exams.
January 6 -
Richard Cordray, the bureau's first director, said Thursday that the CFPB will begin exercising its new authority to regulate nonbanks starting today, despite doubts from the industry about its authority.
January 5 -
When President Obama installed Richard Cordray as director of the CFPB through a recess appointment Wednesday, he set the stage for a legal showdown over the bureau's authority that could take years to resolve.
January 4
WASHINGTON — Consumer Financial Protection Bureau Director Richard Cordray said Thursday that he planned to cooperate and coordinate with the U.S. Chamber of Commerce, and urged its members to embrace the bureau. In the wake of Cordray's recess appointment last week, industry observers have pegged the Chamber as the most likely to file a lawsuit challenging the bureau's legal authority. But Chamber President Tom Donahue said at a press conference Thursday that while he was "disappointed" with the president's action, the organization has no immediate plans to sue the agency.
At a pen-and-pad briefing with reporters on Thursday, meanwhile, Cordray said he spoke with Donahue this week and understands the Chamber's concerns.
"I think this bureau should be embraced by the Chamber because we will be not only protecting consumers, but we will be supporting honest and responsible businesses — which is what the vast majority of their businesses are — who will be better off in the marketplace when they're protected against the fraudulent, disreputable competitors," Cordray said. "To have even-handed rules of the road that everyone lives under will be a good thing."
"So we anticipate further cooperation, coordination, with the Chamber," he added.
The former Ohio attorney general said he has been a member of his local Chamber of Commerce in Grove City, Ohio, for more than 20 years, and represented the Chamber on occasion when he was a lawyer in private practice.
"They know all that, so they know that I understand in many ways their perspective," Cordray said.
Cordray said he and Donahue are in frequent communication, and intends to reach out aggressively to businesses as he did when he was the state treasurer and attorney general in Ohio, where he established business advisory groups to consult on issues.
Businesses have just been through one of the worst experiences of their lifetime with the financial meltdown, credit crunch and ensuing recession, he said.
"If anything they should understand that that's a good argument for reasonable rules of the road so that that kind of adversity, which has upset a lot of business, their plans, their hopes, their aspirations, will never happen again," he said.
But so far, the Chamber hasn't seen it that way.
"This controversial appointment is unprecedented, constitutionally questionable, and puts the authority of the director and the validity of the bureau's work in legal jeopardy," Donahue said in a statement issued after the appointment last week.
It's important to protect consumers from predatory lending and fraud in the marketplace, Donahue said in the statement, but "under its current structure, the CFPB is rife with uncertainty and has the potential to harm our economy and job creation."
The Chamber's members include a number of nonbanks who will be subject to the bureau's supervision — and in some cases, to federal oversight — for the first time, now that the bureau has a permanent director.
Some Republicans and financial industry representatives have said it's not clear that the bureau actually has authority to supervise nonbanks — or to exercise any of its new authorities under Dodd-Frank — because the recess appointment may not be valid. Their argument: that the Senate was not actually in recess when the appointment was made.
The White House has defended the president's decision, and on Thursday the Justice Department
Observers expect that the issue will ultimately end up in court, and it's only a matter of time before someone files a lawsuit challenging the bureau's authority.
Lawyers on both sides of the issue have acknowledged another potential problem: language in Dodd-Frank that confers full authority to the bureau only when it has a Senate-confirmed director.
Asked how the bureau interprets its authority given the statutory language, Cordray said it hasn't arrived at a legal interpretation.
"That's going to be left to others to deal with," he said. "It is my understanding the language is common to many statutes, and it's really kind of a closed question."
Cordray said he hasn't made a visit to Capitol Hill since his appointment — both the House and the Senate are still in recess — but has reached out by phone to leaders from both parties in both chambers.
"I had told many of them in the process when I met with them or spoke with them as I was a nominee that they would have my personal commitment that if I became director that I would give them the information and input that they would need to know what we were doing and be able to keep apprised of the work of the bureau," he said. "And I intend to follow through on that commitment, and I have conveyed that message broadly."
Cordray's first press conference also touched on a number of other subjects, including the bureau's plans to regulate nonbanks, its timetable for issuing new regulations, its authority to share information with state regulators and Cordray's own rhetoric in the past week on cracking down on bad actors in the financial markets.
"I have not intended for our rhetoric to be either strong or weak or heavy or light," Cordray said. "I'm trying to be very matter-of-fact — we have a job to do, we're going to do our job."
Cordray reiterated that the bureau is moving ahead with its new authority despite potential legal challenges. It launched its nonbank supervision program last Thursday, one day after Cordray's appointment, and it issued new exam guidance for mortgage originators to supplement its supervision manual for banks and nonbanks.
Cordray also backed away from comments made last year by Raj Date that the CFPB planned to issue a rule on qualified mortgages this year. Speaking at American Banker's Regulatory Symposium in September, Date said the bureau planned to issue a final rule requiring a lender to verify a borrower's ability to repay in early 2012.
But Cordray said he "can't really anticipate at this time" when the final rule will be issued, but said the bureau intends to "operate very carefully" when it comes to rulemaking.
"We've seen rules, including some rules under Dodd-Frank, upset by the courts when they weren't satisfied by the process the was used," he said. "That's the least efficient thing for all concerned. So we're going to do our job, do our job well, and as timely as we can complete it, we will."
Cordray also acknowledged that banks have had some concern about the bureau's plans to share information with other regulators and state law enforcement officials. He said he would be willing to support changes to banking law that allows banks to provide information to the CFPB without waiving their attorney-client privilege, and opening those records up to potential subpoena.
"If the banks want to get us listed in the statute, we would welcome that," he said. "It would put this issue entirely to rest. I think it would be an uncontroversial provision and I don't think anyone would be opposed to that."
