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Congressmen question work of new consumer advocate
Agency chief says small businesses a priority
Congressmen on Capitol Hill questioned President Obama's top consumer-protection advocate, Richard Cordray, about his agency's compliance with federal regulations designed to protect America's small businesses.
House Republicans argued that the Consumer Financial Protection Agency (CFPB) could impair the recovering U.S. economy and faulted the agency's own analysis that it was not.
The cost of complying with CFPB regulations, upgrading software, and employee retraining programs could divert small businesses' attention from job creation and productivity, House Republicans said, though the agency's chief threw some of the blame back at Congress itself.
House Small Business Committee Chairman Sam Graves, Missouri Republican, said in his opening statement, "There appears to be holes in the agency's assessment of the economic impact on small businesses and very little discussion of how the alternatives may reduce economic burdens."
Under the Dodd-Frank Wall Street reform law, the CFPB was given regulatory jurisdiction over financial institutions and their relationship with consumers. In an attempt to ease the regulatory burden on small businesses, Congress forced the CFPB to create small business advocacy review panels to receive input from those affected by the new regulations.
In his opening statement, Mr. Cordray said, "Small businesses are a critical growth engine for the economy and an essential source of financial services for many consumers."
"For this reason the CFPB believes that it is very important to understand the impacts of its actions on small business," he said.
Rep. Allen B. West, Florida Republican, questioned whether the CFPB's one-week notice period was enough time for business to adequately prepare their complaints on a proposed piece of regulation.
Mr. Cordray responded by saying, "In retrospect we would have preferred to have more time to prepare the panels."
However, Mr. Cordray said the agency tries to defer to Congress on setting such time frames.
Rep. Scott R. Tipton, Colorado Republican, questioned whether the 400-plus pages of regulations were overly burdensome on small businesses.
Mr. Cordray said that many documents had 200 pages of regulations and another 200 pages in guidance suggestions, something that was requested by the businesses on the panels.
"It's counterintuitive for me. I prefer to have short simple rules. But these are complicated matters. They asked for more specificity, more detail, which ultimately means more pages," Mr. Cordray said.
Mr. Cordray went on to say that providing detailed regulations and guidance was better policy. "If they can have more specificity and clarity upfront, then there will be less to argue about afterwards, less litigation, and also more certainty for them on how to proceed," he said.
The CFPB just celebrated its first anniversary and continually faces challenges from Congress over its broad regulatory powers.
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