WASHINGTON The new House Financial Services Committee Chairman, an ardent opponent of the Consumer Financial Protection Bureau, questioned the legality of the fledgling agency this afternoon, even while promising Congressional review of new mortgage rules issued by the agency this morning.
“These types of one-size fits all’ solutions always always are fraught with unintended consequences,” said Rep. Jeb Hensarling, R-Texas. “After all, government regulations and policies that strong-armed, incented and cajoled financial institutions into loaning money to people to buy homes they couldn’t afford are a major reason why we had the financial crisis to begin with. Ironically, now we have government regulations attempting to tell financial institutions not to do what the government was telling them to do before.”
Hensarling, one of the leading congressional critics of the new consumer agency, noted that the appointment of CFPB Director Richard Cordray is still under legal challenge by a group of Republican congressmen and a Texas bank, leaving the possibility that the director’s actions could be overturned and found to be illegal. “Rather than bringing greater certainty to the marketplace, every decision made by the CFPB will therefore be under a cloud,” said Hensarling. “All could be overturned because the CFPB director’s appointment is possibly unconstitutional, unlawful or both.
The new mortgage rules will require credit unions and all mortgage lenders to determine a borrower’s ability to repay before approving a loan and sets new standards for selling mortgages on the secondary market.
Hensarling pledged close scrutiny of the new rules. “As the Financial Services Committee examines this and other mortgage rules, we will look to see how they will impact a community financial institution’s ability to compete and offer sustainable, affordable mortgages, or whether they will cause a further consolidation toward our nation’s perceived too big to fail’ banks. We will also examine the extent to which these rules impact a qualified consumer’s ability to access credit, particularly for consumers in small and rural markets,” he stated.