He also reiterated his pledge to set up advisory committees of credit unions and community banks so that the agency understands the impact of its regulations on those institutions.

McHenry asked Cordray what the top items on the bureau's regulatory agenda are. Cordray said the bureau is required by Congress to combine the disclosure forms of the Truth in Lending Act and Real Estate Settlement Procedures Act, and it plans to release a proposed form this summer.

Rep. Darrell Issa (R-Calif.), who chairs the Oversight and Government Reform committee, asked Cordray whether he has taken steps to ensure that the agency's efforts won't be in vain if there is successful litigation challenging the constitutionality of President Obama's recess appointment of him.

Cordray said, "I will give it some thought," but added that he won't refrain from taking actions out of fear of an unfavorable legal decision.

Rep. Frank Guinta (R-N.H.) asked whether the questions surrounding his appointment might cause some financial institutions to question the legitimacy of the agency's actions.

Cordray said now that he is in the job all that he can do is to carry out his responsibilities in a way that is transparent and accountable.

He declined to say whether he agreed with the comment of Warren, who conceived and set up the CFPB, that it was most constrained and accountable federal agency.

However, he noted that the bureau is the only agency that can have its decisions overturned by another entity, and it is the only independent financial regulator that has to go to Congress if it wants to increase its budget.

In addition, he pointed out that that Congress put several regulatory constraints on the CFPB. These include not being able to set interest rates on credit cards or other financial products and not being able to set prices for financial products.

Several Democrats said the presence of Cordray at the CFPB will enable it to regulate nonbank entities and level the playing field for banks and credit unions.

Rep. Mike Quigley, the top Democrat on the subcommittee, said that "leveling the playing field, especially for community banks" should be a top priority.

Cordray told Quigley (D-Ill.) that regulating nonbank entities was the first thing he did when taking office and that a more level playing field "would have helped community banks and credit unions in the run up to the financial crisis." 

Rep. Peter Welch (D-Vt.) praised the CFPB's commitment to streamlining regulations.

He asked if Cordray agreed with his belief that "simple and clear beats complex and confusing."

Cordray said he did.

In his opening statement, Cordray noted that he strongly believes in free markets and free enterprise but quoted a 1970 comment by then-California Gov. Ronald Reagan that "free enterprise is not a hunting license."  

Alabama Payday Hearing 

Credit union worries about excessive regulation emanating from the Consumer Financial Protection Bureau were directed last week to the head of the agency, Richard Cordray, who met with Alabama executives in Birmingham at the agency's first field hearing.

The hour-long session, which followed a formal hearing on payday lending held in the Birmingham-Jefferson Convention Complex, gave Alabama CEOs, as one exec put it, "a chance once again to have the agency hear our concern that we not get another stifling layer of consumer regulation." 

In more formal comment, the League of Southeastern Credit Unions stressed that "it is important that credit unions speak out now" to the agency director and his staff whose chief mission was to hear testimony on the payday lending  in a state that has witnessed a Birmingham moratorium on new outlets, now numbering more than 1,000 in the state.

"The Birmingham hearing provided credit unions a great opportunity to talk directly to Director Cordray," said Patrick La Pine, president/CEO of the league which helped organize the session.

Testifying at the CFPB hearing, which drew 400 leaders from credit unions, banks and other providers, was Daryl McMinn, vice president of operations at the $536 million Listerhill CU of Muscle Shoals, who pleaded with CFPB to "let credit unions provide vital services to consumers without heavy regulation tying our hands." 

Listerhill offers short-term loans on a break-even basis, he said, but has already proved to serve a needy segment of the market.

"We can't provide these kinds of loans if we don't have the flexibility to offer them," he added. McMinn stressed the need for Listerhill and other CUs to have "the creative capacity to offer such products down the road."

"I think the message we wanted to send to Cordray is that 'we are the good guys with the white hats' and a cadre of new regulations will simply harm that goal," said Merrill Mann, president/CEO of the $2 billion APCO Employees CU of Birmingham, Ala., and a participant in the meeting with Cordray.