Saying that credit unions and small banks “had very little, really nothing to do with causing the financial crisis,'' Consumer Financial Protection Bureau Director Richard Cordray on Tuesday renewed his commitment to ensure that they don't face unnecessary additional regulatory burdens.
He told the Senate Banking Committee that credit unions and community banks are successful business models and are the institutions that are most responsive to the needs of consumers and that his bureau wants to ensure that its regulations to protect consumers don't hurt them.
He said the CFPB would create advisory panels of credit unions and community banks to provide input before the agency issues proposed rules.
Sen. Jerry Moran (R-Kan.) said other regulators have such panels, and community banks “still feel they are misunderstood.''
Banking Committee Chairman Tim Johnson (D-S.D.) praised the bureau's “outreach to stakeholders '' in the rulemaking process.
But Sen. Richard Shelby, the panel's top Republican, said the bureau hasn't sought enough public input and has “displayed a propensity to use technicalities to do what you want.''
Cordray responded to Shelby's criticism that the agency didn't create bank and credit union advisory panels before issuing its most recent rule on remittancesby explaining that the rule-writing process was started by the Federal Reserve and the CFPB took it over when it began operating last summer
In response to another question from Shelby (R-Ala.), Cordray said his bureau frequently consults with the other banking regulators and the CFPB will make a concerted effort to ensure that its regulations protect consumers while not jeopardizing the safety and soundness of financial institutions.
Cordray will have responsibility for protecting the safety and soundness of banks as a result of his membership on the FDIC Board.
Sen. Mike Johanns (R-Neb.) said he has doubts that the actions that the CFPB takes during Cordray's
tenure will be considered valid because of the constitutionally questionable nature of President Obama's recess appointment of Cordray earlier this month.
Cordray said he believed the appointment was constitutionally valid and he would perform the legal responsibilities he is required to.
The tone of the questioning was generally friendlier on the Democrat-controlled committee than it was during a similar hearing last week by a House panel, controlled by Republicans.
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