Senate Hearing on CFPB Focuses on Data Collection and Supervision

Consumer Financial Protection Bureau (CFPB) Director Richard Cordray was on Capitol Hill Monday testifying before the Senate Committee on Banking, Housing, and Urban Affairs. The hearing was to discuss the CFPB’s semi-annual oversight report to Congress.

In brief remarks at the opening of the hearing, Cordray echoed much of the introduction included in last month’s FDCPA report to Congress. On the topic of debt collection, Cordray noted yesterday:

We have taken steps to improve the workings of markets – particularly those in which consumers cannot choose their financial service providers.

One such market is debt collection. Concerned about system-wide problems that pose risks to consumers, we gained authority at the beginning of the year to supervise debt collectors. The debt collectors covered by our supervisory authority account for over 60 percent of the industry’s annual receipts in that market. Bad actors in this market are a detriment to consumers and to every debt collector that operates lawfully.

We also expanded our supervision program to include the larger credit reporting companies…As a result, the Bureau can now evaluate whether federal consumer laws are being followed throughout the process, from credit origination through debt collection.

After his remarks, the Senators on the Committee were each given time to ask specific questions of Cordray. Sen. Mike Crapo (R-Idaho), the Ranking Member of the Committee, wasted no time in following up on a recent news report that the Bureau will be purchasing and collecting data on millions of American consumers.

Cordray defended the effort noting that, “big banks know more about you than you know yourself.” He said that it is imperative that the Bureau keeps up with the data big banks are collecting, noting that the agency will be using the same data sources as the financial institutions. While several Senators broached privacy concerns, Cordray noted that the data is anonymized, unlike the data used by banks.

There was another question about the Bureau’s recently-released consumer complaints database as it relates to data collection, but Cordray largely discussed the analysis of the complaints so far.

In true passive-aggressive Senate style, at least two members of the Committee got a chance to voice their concerns in the ongoing battle over Cordray’s recess appointment. In his opening remarks, Crapo spent the majority of his time voicing (re-voicing, actually) his objection to President Obama’s use of the recess appointment to install Cordray. Later in questioning, Sen. Elizabeth Warren (D-Mass.) took the opportunity to defend the appointment and the job Cordray has done so far. There’s some history there.

Crapo then went back to the data collection process, apparently ignoring all of Cordray’s answers to his previous questions on the matter. He wanted to know if the CFPB had conducted a legal review of the data collection plan, which Cordray noted was embedded in the law itself that created the CFPB.