Cordray Pledges More Detail on CFPB Spending Plans

WASHINGTON — Consumer Financial Protection Bureau Director Richard Cordray said Wednesday that the agency intends to provide more detail to Congress and the public on its spending plans going forward.

Testifying before a House panel Wednesday, Cordray said Republican concerns about how much information the bureau has provided on its budget are fair. While the bureau's justification for its $448 million 2013 budget request is more comprehensive than it was in its first year, Cordray said, "it is not yet where we want it to be and where it will be in future years."

"I think that there is more we can provide and more that we intend to provide, and we will continue to ramp that up," Cordray said.

Republicans, however, did not appear satisfied, arguing they should have some say in those plans via the appropriations process.

Rep. Spencer Bachus, R-Ala., the chairman of the House Financial Services Committee, said the agency was designed in a way that avoids crucial oversight and accountability, primarily because it receives its funding directly through transfers from the Federal Reserve Board.

"If they spend $100 million on paperclips, we can't even say, 'Wait a minute, you can't do that, next year we're going to cut your budget,'" Bachus said of the CFPB. "No matter what they spend their budget on, we have absolutely no control."

Democrats emphasized that Congress still has significant authority to oversee the bureau's activities. Wednesday marked at least the sixth oversight hearing Congress has held on the CFPB, said Rep. Barney Frank, the committee's top Democrat.

The bureau has also undergone two audits — one by the Government Accountability Office, which gave the bureau a clean bill of health, and an independent third-party audit, which found CFPB has addressed all budgeting requirements under Dodd-Frank, Cordray said.

If the bureau did ever have to "embarrass ourselves" by explaining a $100 million expenditure for paperclips to Congress, Cordray said, "That's very meaningful oversight."

In addition to posting the audit results and its budget justification on its Web site, the bureau has also begun posting quarterly expenditure reports within 30 to 45 days of the end of each quarter — something other agencies don't do, he said.

It released a 25-page justification of its budget this week outlining plans for spending in 2013. That's double the length of the justification for fiscal year 2012, and nearly three times as long as the 9-page document released in 2011, when the bureau still had only a handful of employees and was housed in the Treasury Department.

But Rep. Randy Neugebauer, chairman of the Financial Services oversight subcommittee, said it appears the agency is still behind the curve. He said it would be difficult for Congress to measure performance against the bureau's existing budget documents.

"When I'm looking at what you're producing and what other agencies have to produce, it appears to me you all could use some beefing up in your budget planning performance," Neugabauer said.

He also asked Cordray why, when the agency needed an additional $94 million last year, it simply sent the Fed a one-page letter requesting the money, with virtually no explanation. Neugebauer suggested the bureau should publish such requests 48 hours before it asks for the funds from the Fed, with a detailed justification for why it needs them.

But Cordray countered that the actual transfer of funds is just a formality, and that the explanation of its spending is already available.

"I think the important thing is what are we spending and why," he said. "I think that the mere transfer of funds itself is less to the point than the justification for our budgets, the audits that are being done, both forward and back looking."

Democrats said Republicans were once again being too tough on the CFPB, noting that other banking regulators operate in much the same way.

Rep. Brad Miller, D-N.C., pointed out that the Office of the Comptroller of the Currency's justification for its $1 billion budget — more than double that of the CFPB's — was only 23 pages.

"Have you heard any complaints in the lack of completeness in the OCC's budget justification?" he asked.

Cordray said he had not.

Frank also said Republicans appear to have no complaints about their oversight authority over the OCC, which is also funded outside of the appropriations process.

"The Comptroller of the Currency is a very significant figure, and while he is housed in the Department of the Treasury, he is independent, very analogous to the role of the consumer bureau in the Federal Reserve," Frank said.

Democrats also noted that the 2013 budget is still nowhere near the level that the bureau could request — it is authorized to receive $597 million in 2013 and beyond, plus an additional $200 million in appropriations from Congress, if necessary. Rep. Stephen Lynch, D-Mass., also pointed out that budget is significantly less than that of the OCC, Federal Deposit Insurance Corp., and the Federal Reserve, and amounts to roughly $2 per taxpayer.

"I'd say less than $2 per year is a small price to pay for the protection they will provide," he added.