Continued partisan attempts to undermine the CFPB victimize mortgage consumers

by Broderick Perkins

(4/29/2013) - It's bad enough the Consumer Financial Protection Bureau's (CFPB) director is under fire for his appointment, which some members of Congress say is unconstitutional.

You can't run a consumer-protection regulatory agency without a director who has the ability to oversee writing and enforcing rules to stop financial industry sharks from ripping at the throats of consumers.

Other members of Congress are also questioning CFPB's new National Mortgage Database (NMB) tool, specifically designed to help weed out the kind of miscreant behavior that helped trash the economy and give rise to the CFPB - behavior that continues today.

Rather than go after the culprits who helped bring down the housing market and the economy, partisan politics has continued efforts to muzzle the nation's first ever watchdog for consumers' financial rights.

The latest salvos in the ongoing attack on an Obama Administration program finds mortgage consumers caught in the crosshairs.

Cordray's appointment deemed unconstitutional

Instead of taking a more timely and open-to-negotiations approach to the dispute surrounding the appointment of CFPB director Richard Cordray, Rep. Jeb Hensarling (R-Texas), chair of the House Committee on Financial Services, issued a 12th-hour, no-room-for-negotiations statement of refusal to hear Cordray's recent semi-annual CFPB report.

A day before Cordray was allowed to testify before the Senate Committee on Banking, Housing and Urban Affairs, Rep. Hensarling proclaimed Cordray "President Obama's unconstitionally appointed czar."

"By law, the Financial Services Committee — which I chair - can only receive testimony from a director who is appointed in accordance with the Constitution and the law. That is why I announced this week that the committee will continue to conduct rigorous oversight of the CFPB, but we will not recognize President Obama's unconstitutional appointment," wrote Hensarling.

While Cordray's appointment is certainly questionable, it has not been deemed unconstitutional by any court in the land - unless Hensarling has become a new federal court.

Earlier this year, a Washington, D.C. federal appeals court ruled that other Obama appointments were invalid.

In the Noel Canning vs. National Labor Relations Board (NLRB) case ruling, the court only examined the recess appointments of three labor relations board members, all appointed Jan. 4, during a three-day Senate break at the height of the fiscal cliff fiasco. Richard Cordray, appointed on the same day as director of the CFPB, was not specifically named in the opinion.

Rather than hear what the CFPB has accomplished or even open a case specifically on Cordray's appointment, Hensarling effectively decided to filibuster himself and his committee members from hearing anything about CFPB's progress, efforts and issues at hand.

In an example of do-nothing governing, Hensarling effectively left himself and committee members in the dark about an issue he and his committee members have sworn to oversee.

National Mortgage Database attacked

Like it or not, until a court specifically rules otherwise, Cordray is the CFPB director and when he delivered his report to the more receptive Senate committee, that was pretty clear, though not without more partisan politics.

Senators on the right questioned the CFPB's National Mortgage Database on the grounds that it invaded the privacy of mortgage consumers and gave the government private data on the behavior of individuals - as if that doesn't already happen.

The database is a joint effort by the CFPB and the Federal Housing Finance Agency (FHFA) to collect information spanning the life of a mortgage loan from origination through servicing.

The database includes a variety of borrower characteristics, including borrowers' financial and credit profiles; mortgage products and terms; the types of property purchased and refinanced and the ongoing payment histories of the loans.

CFPB says consumers complain about mortgages more than any other financial service.

As Cordray was forced to repeat during the Senate committee hearing, consumers' personal and private information is not included and it will be impossible to personally identify a mortgage consumer with database information.

Cordray promised that his agency is not pulling a Big Brother on mortgage consumers, but gathering data to determine how mortgages affect consumers.

To put it another way, you can't write rules if you don't know what rules are necessary.

And more rules, perhaps greater enforcement of rules, are sorely needed.

CFPB recently announced a round of seven new mortgage regulations taking effect next year.

In part, the rules codify, with federal law, the National Mortgage Settlement (NMS).

NMS was designed to stop institutionalized abusive lender and servicer behavior spawned by the mortgage crisis.

CFPB rules are also designed to prevent future occurrences of abusive lender behavior that helped originate the mortgage crisis and the subsequent Great Recession.

Together, the regulatory overhaul of the mortgage industry will attempt to both prevent another financial services-caused economic meltdown and protect consumers who still get in trouble with their mortgage.

Those are good things for mortgage-abuse beleaguered consumers, maybe not so much for lenders and servicers.

As recently as April 2013, research revealed mortgage lenders and servicers were still taking consumers to the cleaners with outlawed behavior.

"An analysis ... reveals that homeowners continue to face a plethora of servicing problems, many of which were supposed to fixed by the NMS," according to the California Reinvestment Coalition's "Chasm Between Words and Deeds IX: Bank Violations Hurt Hardest Hit Communities."

Previous studies reported the same kind of abusive behavior occurred just as the lenders and servicers were agreeing to the NMS.

Sure, go after Cordray's appointment with the same fair and sensible approach used to question the NLRB appointments. It's just silly for professional lawmakers to cover their ears and run off to their offices proclaiming "the Constitution made me do it."

And legislators who don't like the CFPB's approach to rule making ought to offer alternatives, instead of feigning consumer privacy concerns by grilling an agency director for performing the tasks federal law, nay, constitutional law, mandates.

Partisan bickering is doing nothing to prevent another American economic crash heard around the world.

Legislators who want to the economy running on all cylinders should be about giving consumers the rights and protections they need to have the confidence necessary to spend without fear.

That's what will fuel economic growth.

Also as important, given the reports that show lenders and servicers continue abusive behavior, more regulatory enforcement is sorely needed.

CFPB should do its job as the watchdog it was designed to be.

Legislators should do their job as they were elected to do.