Close

Are you in compliance?

Don't miss out! Sign up today for our weekly newsletters and stay abreast of important GRC-related information and news.

House Republicans double down on CFPB contempt charges

Joe Mont | August 9, 2017

Republicans on the House Financial Services Committee are escalating their efforts to initiate contempt proceedings against Consumer Financial Protection Bureau Director Richard Cordray.

Cordray, they say, repeatedly ignored a committee subpoena for documentation on the Bureau’s effort to ban mandatory arbitration agreements. Those allegations are detailed in a recently released report that concludes contempt charges are justified.

Mandatory arbitration clauses typically state that either the company or the consumer can require that disputes between them be resolved by privately appointed arbitrators, except for individual cases brought in small claims court. The CFPB’s recent rule, restores consumers’ right to file or join group lawsuits. The rule includes specific language that companies will need to use if they include an arbitration clause in a new contract.

On July 20, Republicans on the House Financial Services Committee introduced a resolution of disapproval to nullify the “controversial rule,” arguing that it “benefits class action trial attorneys at the expense of consumers.” A House vote passed a bill to remove and halt the regulation. The Senate has yet to approve the measure.

Adding fuel to the fire, Rep. Jeb Hensarling, the Texas Republican who heads the House Financial Services Committee, threatened Cordray with Congressional contempt charges if he moved forward with it.

Hensarling is challenging Corday’s authority by asking President Trump to fire him. The reasons cited: alleged ineptitude on investigating unauthorized accounts created by sales teams at Wells Fargo; allegedly lying to Congress about the effectiveness of those investigations; and that the director has violated the Hatch Act for reportedly running for governor of Ohio while still employed by a federal agency.

On April 20, 2016, the Committee requested records, drafts, and data from the CFPB relating to its pre-dispute arbitration rulemaking. What the Bureau delivered, despite promises of “rolling production” was “admittedly far from complete,” the report says. “It included only a handful of records responsive to the [request].”

The CFPB has argued that it met data and document demands to the best of its ability and in accordance with relevancy to the rule.

The big questions: will Republicans act on their contempt charge, and will those accusations be sufficient for President Donald Trump to remove Corday “for cause.”