WASHINGTON (AP) — The government's new consumer finance
watchdog agency is prepared to sue companies that offer unfair or deceptive
mortgages and credit cards, its director said Tuesday.
Addressing a congressional panel, Consumer Financial
Protection Bureau Director Richard Cordray defended his appointment to the post
and assured critics that the agency will work with financial companies whenever
possible.
But "we will not hesitate to use enforcement actions to
right a wrong," Cordray told the Republican-controlled subcommittee of the
House Oversight Committee.
Cordray was addressing Congress for the first time since his
recess appointment by President Barack Obama earlier this month. He faces
questions about the bureau's actions and the legitimacy of his appointment.
Republicans call the appointment illegal because they say
the Senate technically was not in recess. Republicans were holding minutes-long
sessions during their vacation to prevent the President from making any
appointments.
The CFPB might lack credibility in part because it is run by
a director whose "appointment was constitutionally questionable,"
said Rep. Patrick McHenry, R-N.C., chairman of the subcommittee.
McHenry is a major beneficiary of political donations from
the payday lending industry, which will face much tighter oversight because of
Cordray's appointment.
Cordray said that he is aware of objections to his
appointment, but "I'm in the job, it's an important job, it's a big job,
it commands all of my time and attention, and all I can do is try to carry out
the responsibilities."
Oversight Committee Chairman Darrell Issa, R-Calif., asked
whether the agency has made plans for what to do it Cordray's nomination is
invalidated by a legal appeal.
"We have to carry out the intent of that law,"
Cordray replied. "Either we do or we don't. It seems to me that the right
answer is that we do."
The CFPB is required by law to create boards of community
bankers and small businesses that can give input on rules that it is writing.
Cordray said it is considering creating additional groups for others affected
by its actions.
He also tried to allay fears that the agency will
haphazardly ban products, such as payday loans, that carry high fees but are
used by many consumers.
"I don't look at these issues in terms of banning
products," Cordray said. "Nobody's going to wave a magic wand and
undo personal responsibility" for financial decisions. He said that was
one reason why the bureau is responsible for improving the government's
financial literacy programs.
Senate Republicans had refused to confirm Cordray because
many opposed the creation of the agency. They argued that it will add
unnecessary regulation, increase costs for lenders and prevent people and
businesses from getting loans. The GOP caucus pledged to block any nominee
until the powers of the director were reduced.
The White House justified the recess appointment by saying
that Republicans were holding up Cordray's nomination to paralyze the agency.
The CFPB was required to have a permanent director before it could start
policing non-bank financial companies, such as mortgage servicers and payday
lenders.
Defenders of the CFPB say that it is needed to patch gaps in
oversight that made the mortgage bubble possible. Consumer-protection
responsibility was spread between offices in several financial regulators, but
none had protecting consumers as a primary mission.
Officials from the team that set up the agency, including
Elizabeth Warren, now running for Senate from Massachusetts, had testified
before Congress 11 times since the agency was created under the financial
overhaul law in July 2010.
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Follow Daniel Wagner at www.twitter.com/wagnerreports.
Copyright 2012 The
Associated Press.