GOP WARNS AGENCY CHIEF ON WELLS

House Repub­li­cans say con­sumer bu­reau has not com­plied with re­quest for bank’s files.

Los Angeles Times - - BUSINESS - By James Ru­fus Koren

House Repub­li­cans this week threat­ened Richard Cor­dray, the em­bat­tled di­rec­tor of the Con­sumer Fi­nan­cial Pro­tec­tion Bu­reau, with con­tempt of Congress, say­ing his agency has not com­plied with a de­mand to pro­vide doc­u­ments re­lated to Wells Fargo & Co.’s unau­tho­rized ac­counts scan­dal.

In a staff re­port re­leased Tues­day, just days be­fore Thurs­day's crucial House vote on a bill that would weaken the CFPB, GOP mem­bers of the House Fi­nan­cial Ser­vices Com­mit­tee ac­cused the agency of fail­ing to re­spond to re­quests for doc­u­ments, in­clud­ing an April sub­poena re­lated to the bu­reau’s in­ves­ti­ga­tion of Wells Fargo.

Staff for the Sub­com­mit­tee on Over­sight and In­ves­ti­ga­tions wrote that the in­ves­ti­ga­tion of the bank — and of reg­u­la­tors’ ac­tions in the years be­fore the bank’s prac­tice of open­ing unau­tho­rized ac­counts was ex­posed — has been stymied by the lack of co­op­er­a­tion.

“Due to CFPB Di­rec­tor Richard Cor­dray’s fail­ure to honor his le­gal obli­ga­tion to pro­duce all records re­spon­sive to the com­mit­tee’s sub­poena, the com­mit­tee’s Wells Fargo in­ves­ti­ga­tion is at an im­passe,” the re­port states. “Com­mit­tee staff rec­om­mends that the chair­man takes steps, up to and in­clud­ing pre­par­ing for pos­si­ble con­tempt pro­ceed­ings against Di­rec­tor Cor­dray should they prove neces-

sary.”

A CFPB spokesman said the agency is re­view­ing the re­port and has tried to be re­spon­sive.

“The CFPB has pro­duced more than 57,000 pages of ma­te­ri­als thus far in re­sponse to the com­mit­tee’s doc­u­ment re­quests. We con­tinue to stand ready to work with the com­mit­tee staff to sat­isfy its over­sight pro­cesses,” the spokesman said in an emailed state­ment.

Rep. Max­ine Wa­ters (DLos An­ge­les), the rank­ing Demo­crat on the Fi­nan­cial Ser­vices Com­mit­tee, called the re­port just the lat­est Re­pub­li­can at­tack on the fi­nan­cial reg­u­la­tor.

“Repub­li­cans have been clam­or­ing to weaken, im­pede, and ul­ti­mately de­stroy the con­sumer bu­reau since its cre­ation,” Wa­ters said in a state­ment Thurs­day. “The con­sumer bu­reau charged Wells Fargo with a record $100-mil­lion fine for open­ing fake ac­counts and yet, com­mit­tee Repub­li­cans haven’t done any­thing to hold Wells Fargo ac­count­able.”

Repub­li­cans, and in par­tic­u­lar Rep. Jeb Hen­sar­ling, the Texas con­ser­va­tive who chairs the House Fi­nan­cial Ser­vices com­mit­tee, have been fierce op­po­nents of the bu­reau. On Thurs­day, they voted over­whelm­ingly in fa­vor of Hen­sar­ling’s Fi­nan­cial Choice Act, a bill that would weaken the bu­reau and roll back el­e­ments of the post-cri­sis Dodd-Frank Wall Street Re­form and Con­sumer Pro­tec­tion Act.

The bill now moves to the Se­nate. It would al­low the bu­reau’s chief to be ter­mi­nated by the pres­i­dent at will. Cur­rently, Cor­dray can be fired only for “in­ef­fi­ciency, ne­glect of duty or malfea­sance in of­fice.”

All but one House Re­pub­li­can sup­ported the bill, and no Democrats voted in fa­vor of it.

In at­tack­ing the CFPB for an al­leged lack of co­op­er­a­tion, the re­port hews to a GOP or­tho­doxy: that the CFPB’s di­rec­tor is too pow­er­ful and that its pow­ers should be curbed. In a state­ment last year, Hen­sar­ling called the bu­reau “ar­guably the most pow­er­ful and least ac­count­able Wash­ing­ton bu­reau­cracy in Amer­i­can his­tory.”

Jeff Emer­son, a com­mit­tee spokesman, said the CFPB has not given the com­mit­tee any in­ter­nal agency doc­u­ments and in­stead has pro­vided doc­u­ments al­ready avail­able from ei­ther Wells Fargo or other reg­u­la­tory agen­cies.

“The CFPB gen­er­ally doesn’t want to pro­duce any­thing that we don’t al­ready have — most no­tably their in­ter­nal records,” Emer­son said. “Does Di­rec­tor Cor­dray have some­thing to hide?”

Yet the re­port also seems to sug­gest that the CFPB, at least in the case of Wells Fargo, was a do-noth­ing agency, one that levied a huge fine against the bank but oth­er­wise had lit­tle in­volve­ment in the in­ves­ti­ga­tion. The re­port’s ti­tle is “Was the ‘Cop on the Beat?’ ”

In Septem­ber, Wells Fargo agreed to pay $185 mil­lion — $100 mil­lion of it to the CFPB — to set­tle in­ves­ti­ga­tions into its sales prac­tices. Though the bank did not ad­mit le­gal wrong­do­ing, it ac­knowl­edged that its em­ploy­ees had opened mil­lions of po­ten­tially unau­tho­rized ac­counts and that it had fired 5,300 work­ers over that prac­tice.

The bank’s open­ing of unau­tho­rized ac­counts was first un­cov­ered by a 2013 Los An­ge­les Times in­ves­ti­ga­tion.

Last year’s deal with reg­u­la­tors set­tled a law­suit filed in 2015 by Los An­ge­les City Atty. Mike Feuer and in­ves­ti­ga­tions by the CFPB and the Of­fice of the Comptroller of the Cur­rency, a fed­eral bank reg­u­la­tor.

Repub­li­cans have said it ap­pears the CFPB did not start look­ing into Wells Fargo’s prac­tices un­til af­ter Feuer’s suit was filed, though Cor­dray has said the bu­reau was look­ing into the mat­ter be­fore that.

The sub­com­mit­tee re­port said it ap­pears the bu­reau had lit­tle to do with the in­ves­ti­ga­tion and “re­lied sig­nif­i­cantly” on the other two agen­cies. The re­port went on to sug­gest that Cor­dray may have taken too much credit for the bu­reau’s role.

Feuer called the sub­com­mit­tee re­port “baloney,” say­ing the CFPB was a key player in push­ing for fines, penal­ties and cus­tomer resti­tu­tion in the Wells Fargo case.

Ron Sachs CNP/Sipa USA

REPUB­LI­CANS have threat­ened CFPB Di­rec­tor Richard Cor­dray with con­tempt of Congress.

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