A suggested title if they ever make a movie about the GOP’s many attacks on the Consumer Financial Protection Bureau: “The Neverending Story.”
As you read this, the CFPB — in conservative crosshairs since its inception—is under vigorous attack on numerous fronts. A legal appeal continues to challenge its constitutionality. The Financial CHOICE Act, up for a vote before the House of Representatives on Thursday, seeks to overhaul (and, critics say, weaken the agency).
The latest salvo: contempt allegations that may serve as a prelude for giving President Donald J. Trump the “for cause” reason to fire Director Richard Cordray in accordance with the Dodd-Frank Act.
The latest bad news for the agency and its leadership is a 15-page report commissioned and prepared by the Republican majority of the House Committee on Financial Service’s Subcommittee on Oversight and Investigations. It was made public on June 6.
The backdrop to concerns identified in the report were revelations that since at least May 2001 thousands of Wells Fargo & Company employees had been engaged in the practice of defrauding customers by opening millions of unneeded, and at times, unauthorized bank accounts.
The House Financial Services Committee “immediately began a comprehensive investigation of this matter to answer two critical questions: how and why Wells Fargo allowed these fraudulent activities to occur at a disturbing scale across the Bank for well over a decade; and whether or not federal financial regulators were effective in detecting and remedying Wells Fargo’s fraudulent branch sale practices,” the report says.
As a part of its investigation, the Committee sought records and information on Sept. 16, 2016, from Wells Fargo, the Office of the Comptroller of the Currency, and the Consumer Financial Protection Bureau.
Wells Fargo and the OCC have cooperated in full with the investigation, the report says: “Among other things, they promptly produced sensitive and confidential internal records relating to Wells Fargo’s branch sales practices requested by the Committee.”
“The CFPB, however, has not cooperated with the Committee’s investigation,” it adds. “In response to the Committee’s records request, the CFPB did not produce a single internal record related to its Wells Fargo branch sales practice investigation.”
Over the course of six months, the CFPB only produced 1,010 pages of records, comprised almost entirely of documents easily obtainable from Wells Fargo or the OCC. “Faced with six months of the CFPB’s refusal to voluntarily comply with its records request, the Committee subpoenaed the records from the [Bureau] on April 4, 2017, and gave it four additional weeks to produce those records,” the report says. “The CFPB’s response to this legally binding subpoena was to produce records that Wells Fargo had already produced.”
“Due to CFPB Director Richard Cordray’s failure to honor his legal obligation to produce all records responsive to the Committee’s Subpoena, the Committee’s Wells Fargo investigation is at an impasse,” the report adds. “Key questions remain unanswered. For example, the Committee cannot substantiate Director Cordray’s Congressional testimony on the current record.”
Cordray, for example, testified before the Committee that the CFPB had engaged in supervisory activity regarding Wells Fargo’s branch sales practices prior to May 18, 2015. “No records before the Committee corroborate this claim,” the report says. “Indeed, the only records before the Committee—those produced by the OCC and Wells Fargo—call it into question.”
Similarly, Director Cordray also testified before the Committee that the CFPB’s Wells Fargo investigation was “independent and comprehensive,” but “records produced by Wells Fargo and the OCC raise questions regarding this claim.”
“In light of the foregoing, Committee Staff recommends that the Chairman takes steps, up to and including preparing for possible contempt proceedings against Director Cordray should they prove necessary, to enforce the Committee’s Subpoena in order to obtain the records and information necessary to complete the Committee’s Wells Fargo investigation,” the report says.