After spending part of this week in Phoenix at the annual conference hosted by the Consumer Bankers Association, Consumer Financial Protection Bureau director Richard Cordray will be back on Capitol Hill on Wednesday for his next appearance in front of the U.S. House Financial Services Committee.

Since Cordray’s last appearance before the committee back in September, the committee has issued two staff reports detailing what members believe is how the CFPB spent “significant” resources attempting to regulate dealers, “despite the fact that federal law explicitly prohibits the CFPB from regulating those businesses.”

The committee recapped that its two staff reports used internal CFPB documents to reveal that the bureau was able to secure its potentially “market-tipping” enforcement action against Ally Financial and its Ally Bank subsidiary because of “undue leverage” — the company needed Washington regulators’ approval for a broader restructuring of its business. 

Lawmakers also mentioned the reports also exposed the bureau’s “flawed” distribution of $80 million in settlement proceeds without first verifying that recipients are eligible to receive the money.  As a result, and as internal bureau documents admit, some white borrowers will receive settlement checks over alleged racial discrimination against African-Americans, Hispanics and Asians.

Following release of the two committee staff reports, an online report also indicated the former chief executive officer of Ally Financial said the Obama administration abused its power by holding the bank’s business hostage in order “to coerce” the settlement.

“The CFPB undoubtedly remains the single most powerful and least accountable federal agency in all of Washington,” said Rep. Jeb Hensarling, the committee chairman and a Republican from Texas.

“When it comes to the credit cards, auto loans and mortgages of hardworking taxpayers, the CFPB has unbridled, discretionary power not only to make those less available and more expensive, but to absolutely take them away,” Hensarling continued. “Consequently, Americans are losing both their financial independence and the protection of the rule of law.”

Cordray at CBA event

Cordray told the annual gathering of bankers about how much has changed at the CFPB since he last appeared at their event; most notably the increased examination responsibilities over bank and non-bank institutions.

“Many of your comments over the years have raised the bar for our efforts, and we have been quite open to iterating our processes accordingly,” Cordray said in prepared remarks.

“As a result, our supervision tool has now grown into a rigorous, data-driven program based on sound analytics,” he continued. “Our processes have become more thoughtful, more complete, more consistent, more transparent, and more prompt. Our dialogue with CBA and others has materially assisted these objectives.”

Cordray quickly moved on to a subject the bureau recently addressed — how the CFPB handles complaints it receives and the ways banks and finance companies can respond.

Certainly the CBA has never been a fan of our public consumer complaint database. Some of your feedback has led to adjustments, as you know. Others have not, but we are always listening,” Cordray said.

“Despite all of that lively debate back and forth, your member institutions have very much caught the spirit of the whole enterprise,” he continued. “Companies have come to realize that if they are going to make sure they are treating their customers fairly, it is not enough to rely solely on their own subjective impressions. Instead, they have to listen closely to what consumers are telling them, think carefully about what they are hearing, and act accordingly.”

The head of the CFPB did called it a “great operational success” where finance companies and other institutions worked with the bureau to improve the automated portal system of processing complaints.

“They have responded to the complaints in a timely and consistent manner, which often leads to relief and explanations for the consumer,” Cordray said. “They have recognized our emphasis on prioritizing our complaint data in our supervision and enforcement work. They have increasingly embraced our advice to analyze and address the patterns revealed both by our consumer complaint data and by their own customer complaint data, as a guide to changing business practices that consumers find harmful.

“We even have seen them using the public database to research complaints made about others in the same markets, which is valuable information that is not available from any other sources,” he added.

During what Cordray indicated to be the remainder this year and into next year, he noted the CFPB’s rulemaking agenda will remain “quite active.” One of the areas of focus, according to Cordray, is debt collection, including the practices of third-party debt collectors, first-party creditors, debt sellers, and debt buyers.

Cordray wrapped up his comments during the CBA’s event by praising members of the association.

“In closing, let me say that consumer bankers are in a position to do much to enhance and improve life for all Americans,” Cordray said. “When you serve your customers well, and perform effectively in ensuring compliance with the law, you make a huge difference for the positive trajectory of this country.

“We all recognize that life, liberty, and the pursuit of happiness are integral elements of our national creed,” he continued. “But without a solid financial foundation, this pursuit can be frustrating and even fruitless for so many people. Knowing how to manage the ways and means of our lives instills a sense of control, ownership, and peace of mind that adds up to financial well-being.”