The Consumer Financial Protection Bureau's semi-annual report to Congress highlighted some of the bureau's new responsibilities, including taking on authority over large collection agencies and credit-reporting firms.
CFPB Director Richard Cordray delivered the testimony to the Senate Banking Committee on Tuesday.
“The debt collectors covered by our supervisory authority account for over 60% of the industry’s annual receipts in those markets,” Cordray said. “Bad actors in this market are a detriment to consumers and to every debt collector that operates lawfully.”
The CFPB in October finalized the rule for supervising larger debt collection firms after discussing the proposed rule for the bulk of the year. The bureau now supervises firms with more than "$10 million in annual receipts resulting from consumer debt collection" after the rule went into effect on Jan. 2. Receipts are defined as "total income" plus “cost of goods sold” and not amounts collected for another party.
The larger credit-reporting companies previously were not subject to any federal supervision, and consumers often struggled to resolve errors, Cordray said. Now, the bureau can evaluate whether federal consumer laws are being followed throughout the process, “from credit origination through debt collection.”
The CFPB’s first enforcement actions were against credit card companies that deceived and misled consumers, he said.
“In some cases, the companies targeted economically vulnerable consumers with low credit scores and low credit limits,” Cordray added.
The CFPB also has adopted new mortgage regulations banning “irresponsible lending practices that helped bring about the recent financial crisis,” he said.
Cordray said the bureau has reached out to a cross-section of American consumers, including older Americans, students, military service members and others - “and what we heard from them has guided the direction of our work.”
Cordray, meanwhile, will not be testifying before a House panel, despite his Senate testimony. House Financial Services Committee Chairman Jeb Hensarling (R-Texas) said bureau Director Richard Cordray was not legally appointed to the position and therefore the panel cannot accept his testimony.
It is the latest salvo in an ongoing battle by top Republicans against the bureau, which was created in 2010.
Hensarling, who took over as committee chairman in January, is an outspoken critic of the CFPB, a centerpiece of the 2010 Dodd-Frank financial reform law that Hensarling and every other House Republican opposed.