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Prepared Opening Statement of CFPB Director Richard Cordray Before the House Committee on Financial Services

Washington, D.C.

Thank you Chairman Hensarling, Ranking Member Waters, and Members of the Committee. I am reporting today on our work over the past year. The Consumer Financial Protection Bureau was created to stand up for consumers and make financial markets work more fairly. Over the past five years, we have returned almost $12 billion to 29 million consumers and imposed about $600 million in civil penalties. We put in place strong safeguards against reckless mortgage practices that led to the financial crisis that hurt so many people. We are arming consumers with unbiased information and resources so they can make better-informed decisions for themselves and their families. Our complaint system gives consumers a voice that matters, so they can address their own concerns and report on broader patterns of problems or abuse. To date, we have fielded over 1.1 million complaints, so more and more people are finding this option to be worthwhile. These are just some of the ways we are standing up for consumers.

Markets that work for consumers are also good for responsible businesses and the economy as a whole. Consumer lending has been ramping up in mortgages, credit cards, and auto loans, and delinquencies remain at historic lows. Last year, auto sales reached record levels, and consumer spending has been leading the recovery for the past four years, growing faster than GDP. Banks are showing solid profits, and community banks and credit unions are growing their share of the mortgage market.

Still, we know we have much more to do to clean up the consumer financial marketplace. These markets are huge, and they touch all of us in one way or another. Years of uneven federal oversight on behalf of consumers allowed a lot of bad behavior to go unchecked. As the independent consumer watchdog, we are solely focused on the job Congress gave us of assuring that these markets are fair, transparent, and competitive and consumers have access to sound financial products and services. Today, I want to highlight some areas where people remain vulnerable without the Consumer Bureau to stand up for them.

The first area is markets that create frustrating and harmful “dead ends” for consumers. When people are forced to deal with companies they did not choose and cannot change, they lose much of their power because they lack the freedom simply to take their business elsewhere. A prime example is credit reporting. If your credit report contains inaccurate information, you can suffer severe and lasting harm. Yet many people do not know what is in their credit report and if they do find something wrong, it is way too hard to get anyone to pay attention and make it right. The Consumer Bureau is the first federal agency to supervise this industry and the companies that supply the credit information, and we are making steady progress to clean up these problems. We also recently took enforcement actions against all three major credit bureaus for deceiving consumers in marketing credit scores. But we are still flooded with credit reporting complaints, so clearly more work remains to be done.

Another dead-end market for consumers is debt collection. Consumers often find their debt is sold off or its collection is outsourced to some new company. They often do not know what to do when these collectors treat them badly. We hear horror stories about constant harassing phone calls, relatives or employers tracked down and wrongly contacted, or even false threats of arrest if the debt is not paid. These tactics are indefensible and against the law. People deserve to be treated with dignity, whether or not they owe a debt. We have taken action on several fronts to address widespread abuses in debt collection, but like credit reporting, it is a big problem that will take time to fix properly.

Another area of focus is financial performance incentives which encourage results that hurt consumers. This systemic issue spans all markets and products. A prominent example is Wells Fargo’s practices that led to millions of consumers having accounts opened in their name without their knowledge. In 2013, the Consumer Bureau got a whistleblower tip about pressure to meet aggressive cross-selling goals and problems it was causing. The investigation we conducted with our federal and local partners documented the widespread practice of secretly opening up unauthorized accounts. By completing a public enforcement action with a record fine, we blew open a scandal whose far-reaching effects are being felt across financial markets to this day. We are keeping a close eye on these practices and insisting that all banks and financial companies must carefully monitor their incentive programs to avoid such problems.

Issues like this demonstrate why the Consumer Bureau is so important to protect consumers. And incentive programs that cause improper conduct are not limited to Wells Fargo; they show up in areas like overdraft and credit card add-on products, where we are rooting out bad practices and getting money back to consumers. We will remain vigilant and crack down on these abuses wherever we find them.

Those who talk about weakening the Consumer Bureau are missing the importance of the work we are doing to stand up for individuals and families all over this country. Nobody should want to return to a system that failed us and produced a financial crisis that damaged so many lives.

I look forward to answering your questions about what we have accomplished over the past year.

The Consumer Financial Protection Bureau is a 21st century agency that implements and enforces Federal consumer financial law and ensures that markets for consumer financial products are fair, transparent, and competitive. For more information, visit