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Consumer chief Richard Cordray promises not to abuse his power

January 24, 2012|By Jim Puzzanghera
  • Richard Cordray, director of the Consumer Financial Protection Bureau, waits for the start of a House Oversight and Government Reform subcommittee hearing.
Richard Cordray, director of the Consumer Financial Protection Bureau,… (Andrew Harrer / Bloomberg )

Reporting from Washington — Richard Cordray, head of the Consumer Financial Protection Bureau, told lawmakers Tuesday that he would not abuse his power and promised that the agency would take action only against companies that break the law.

"It ... is not our intention to start going off and acting like we're some sort of mini-Congress, just doing anything we think is good and right," Cordray told members of a House Oversight and Government Reform subcommittee.

The agency would follow existing interpretation of consumer laws covering financial products and "should not be going off in some wild, new unexpected direction" that would cause confusion among banks and other firms, he said.

Republicans said they appreciated Cordray's answers during the 2 1/2-hour hearing and his openness to providing more information about the agency's plans and approach.

Facing lawmakers for the first time since his controversial recess appointment Jan. 4, Cordray tried to allay fears of congressional Republicans that the powerful new agency would add to the uncertainty felt by many businesses about Washington regulations.

Republicans and business groups have questioned the legality of President Obama's decision to install Cordray during a brief Senate recess, and lawsuits are expected challenging the appointment.

Rep. Patrick McHenry (R-N.C.), the subcommittee chair and a strong critic of the consumer bureau, said Obama's actions only increased the trepidation of financial firms about the agency.

"If having a regulator with unprecedented and ill-defined power was not enough, the administration decided to double down by bringing into question the validity of its director," McHenry said. "That's unfortunate."

Rep. Darrell Issa (R-Vista), chairman of the full committee, asked Cordray if he was taking any precautions, such as recusing himself from major decisions to make sure agency actions would not be wiped out if his appointment were invalidated by the courts.

"It's a bit of a dilemma," Cordray said. But he said he believes his appointment is valid and that the agency must move forward with the responsibilities given to it by Congress.

Democrats defended the recess appointment, which they said was required because Senate Republicans were blocking Cordray's confirmation. A group of 49 Democrats sent a letter to Obama on Tuesday thanking him for appointing Cordray.

"Despite the doomsday predictions of some of our Republican colleagues, President Obama's very sensible and timely appointment of Richard Cordray to head the CFPB has not brought about a plague of locusts or embarked the four horsemen of the apocalypse on their journey," said Rep. Luis Gutierrez (D-Ill.).

Several Republicans at the hearing pressed Cordray on how he intended to use his powers. And Rep. Frank Guinta (R-N.H.) made it clear he would have preferred the agency not exist. He asked Cordray why the agency was not adhering to Obama's freeze on government hiring.

Cordray said the agency was new and needed to hire to get working. Cordray noted that if the agency had adhered to the freeze, it would still have zero employees instead of the approximately 757 it now has.

"I wouldn't object to you being at zero," Guinta said.

But Cordray scored points with McHenry and some other lawmakers by giving a detailed answer to a question about the responsibilities of consumers in the financial marketplace. Rep. Trey Gowdy (R-S.C.) had expressed frustration during a hearing last year when former Obama administration advisor Elizabeth Warren, who helped launch the bureau, had not answered the question directly.

"People have to be responsible for their decisions," Cordray said. "The thing that the bureau can do … is make sure the decisions they’re faced with are as clear and transparent as possible ... and if they make a bad deal they'll have to live with it."

"Nobody’s going to wave a magic wand and undo personal responsibility," Cordray said.

Gowdy responded, "May the record reflect Mr. Cordray answered the question."

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