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Testimony of Richard Cordray Before the U.S. House of Representatives Committee on Financial Services

Testimony of Richard Cordray
Director of the Consumer Financial Protection Bureau
Before the United States House of Representatives
Committee on Financial Services
Subcommittee on Oversight and Investigations

February 15, 2012

The Budget of the Consumer Financial Protection Bureau

Chairman Neugebauer, Ranking Member Capuano, and members of the Subcommittee, thank you for this opportunity to testify on the Consumer Financial Protection Bureau’s budget.

Before I became Director, I promised Members of Congress in both chambers and on both sides of the aisle that I would be accountable to you for how the Consumer Bureau carries out the laws you enact. I said that I would always welcome your thoughts about our work, and I stand by that commitment. This is the 14th time that we have testified before either the House or the Senate, and my colleagues and I look forward to continuing to work with you to provide the kind of oversight that allows you to understand the work we are doing and that helps us improve our performance.

We are committed to fulfilling our statutory responsibilities and delivering value to American consumers. This means being accountable and using our resources wisely and carefully. As you know, the Consumer Bureau is funded through transfers from the Federal Reserve. Under the Dodd-Frank Wall Street Reform and Consumer Protection Act, the cap on those transfers for fiscal year 2011 was 10 percent of the Federal Reserve’s 2009 operating expenses, or $498 million. As this was our start-up year, we did not use all of our available funds – in fact we used only $123 million — but we got underway and continue to build toward a steady state that will allow us to accomplish the objectives set forth in the laws enacted by you, the Congress.

The Government Accountability Office rendered an unqualified “clean” audit of our financial statements, and an additional independent, third-party audit found that the Consumer Bureau addressed all relevant budgeting requirements under Dodd-Frank. Because we are committed to transparency, we have posted our budget justification, our financial statements, the GAO audit , and the independent audit on our website at We invite you to look at these documents and will be glad to answer any questions you may have about them.

Now that we completed our statutory transition period and have become a full-fledged independent agency with the legal responsibility to protect American consumers in the financial marketplace, our expenditures have naturally increased. As you can see in our budget justification , however, our budget estimates remain considerably below our budget cap at $356 million for 2012 and $448 million for 2013. At this time, we have no plans to ask Congress for any further appropriations, as we are authorized to do by law.

While our budget is small relative to the other banking agencies, our mission is critical. Our budget is a means to an important end – to make life better for American consumers. Much is at stake. Consumer finance is a big part of the American economy, and it bears heavily on all of our lives. Mortgages allow people to buy homes and spread the payments over many years. Student loans give people with talent and ambition access to higher education. Credit cards are a convenient means of accessing money to make purchases. Products like these can help people achieve their dreams. But as we have seen in recent years, they also can create dangers and pitfalls if they are misused or misunderstood.

In state and local government I was deeply engaged in consumer finance issues. I saw good people struggling with debt they could not afford. Sometimes people made bad decisions. Sometimes an unexpected event – like a loved one getting sick or a family member losing a job – overwhelmed even the most careful planning. Still other times, unscrupulous businesses obscured loan terms or engaged in outright fraud, harming unsuspecting consumers and even ruining lives and devastating communities.

I am sure each of you hears every day from friends, neighbors, and constituents who have these kinds of stories to tell. They are not looking for special favors. They just want a fair shake, and a chance to get back on track toward achieving the American Dream. They deserve a consumer financial system that actually works for consumers. Accomplishing our mission will take time. But we are already taking important steps to improve the lives of consumers.

One of our main objectives is to make sure the costs and risks of financial products are clear. People make their own decisions, and nobody can or should try to do that for them. But it is the American way for responsible businesses to be straightforward and upfront with their customers, giving them all the information they need to make informed decisions. That is good for honest businesses and good for the overall economy. I saw a quote which embodies this view: “Free men engaged in free enterprise build better nations with more and better goods and services, higher wages and higher standards of living for more people. But free enterprise is not a hunting license.” That was Governor Ronald Reagan in 1970. I agree with what he said, and it is a view shared by those I work with at the Consumer Bureau.

So another key objective is making sure banks and nonbanks get the evenhanded oversight needed to promote a fair marketplace. Our supervisors are going on-site to examine their books, ask tough questions, and fix problems we uncover. Under the laws Congress enacted, and with a director in place, we can now do this across all markets for consumer financial products and services.

The Consumer Bureau will also make clear that violating the law has consequences. Through our field examiners, direct contact with consumers and businesses, and highly skilled researchers, we have many ways to learn facts about what is happening in the marketplace. We will use all the tools available in our effort to ensure everyone follows the rules of the road. Where we can cooperate with financial institutions to do that, we will; but when necessary, we will not hesitate to use enforcement actions to uphold the law and right a wrong.

We are listening closely to consumers and the businesses that serve them. We do this through our website,, where people tell us their personal stories. We also get out of Washington regularly to hear from people first-hand. We have held town hall meetings in Philadelphia, Minneapolis, and Cleveland, and we held our first field hearing in Birmingham. We hope you will join us at these events when we come to your communities.

Thank you. I look forward to your questions.