Richard Cordray, the Consumer Financial Protection Bureau's normally unflappable director, reacted angrily Tuesday to suggestions by lawmakers that he and his agency do not care about borrowers who purchase manufactured housing.
The incident occurred during a marathon four-hour session in which Cordray fielded questions from members of the House Financial Services Committee that ranged from the effect of new mortgage rules on credit availability to the cost of renovations at the agency's headquarters. As they have been on the past several occasions when Cordray testified, many of the questions from House Republicans during the hearing were highly critical, with some appearing openly hostile.
Rep. Stevan Pearce, R-N.M., said the CFPB's rules on a "qualified mortgage" and restrictions on high-cost loans would largely exclude manufactured housing—and then accused Cordray of purposely trying to oppress lower-income families.
"Fifty percent of the homes in New Mexico are trailer houses. And now then, because of that [rule], almost all of our lenders are out of that market," Pearce said. "You're going to choke down the rural small areas, the areas that don't fit your definition of what's really right for people to live in. It is a war on the poor that is being conducted by you and this administration. It is one where the low-income suffer the most, they don't have other options."
Pearce added: "I find your testimony today to be diminishing, demeaning to people that are suffering the most. I wish that you would change the rules instead of coming here and giving lip service."
The New Mexico Republican also suggested that data collection undertaken by the CFPB could be passed onto political campaigns.
"But I will say that the collection of data like you're collecting has tremendous value in political campaigns and I worry that there might just be someone down the system who might release that information," Pearce said.
At that point, Cordray appeared to have had enough.
"That is some of the most offensive comments that I have heard from this committee," Cordray said. "You're being blunt with me, and I'll be blunt with you. I expect courtesies from this committee of reasonable discussion."
Cordray objected to "the completely unfounded suggestion that we are using data for political campaigns—that you have not a shred of evidence for."
He added, "The notion that I am being condescending in talking about manufactured housing because, as a fact, I have friends and family members who have lived and live in manufactured housing—I don't begin to understand where you're coming from on that."
However, Cordray said the CFPB is taking the issue "seriously" and closely watching the rule's effect on manufactured housing market for potential changes.
"I do recognize that in parts of America, this is the premier alternative for putting a roof over people's head and giving them a chance," he said. "But to the extent that there's any modification or change that needs to be made in that to make sure that this market can work, we're all ears and we will continue to be all ears—both to the members of this committee and also to those in the industry and consumers who are affected by the rule."
It was not the only tense moment for Cordray. House Financial Services Committee Chairman Jeb Hensarling used his time to suggest the CFPB was engaging in an old-fashion boondoggle by spending millions to refurbish old office space.
"Apparently your renovation cost is now $483 per square foot, which is triple—triple—the typical Washington, D.C., luxury commercial class, a luxury renovation rate of $150 per square feet," Hensarling said. "You are spending more per square foot than the Trump World Tower which came in a $334 per square feet…What on God's green earth is going on here?"
Cordray noted that the space is leased from the Office of the Comptroller of the Currency (which inherited it from the now defunct Office of Thrift Supervision) and that the money spent to renovate it was being used to make the building "serviceable for years to come."
Coming to Cordray's defense, Rep. Maxine Waters, the committee's top Democrat, apologized for Hensarling "and his 'I got you' politics."
Cordray spent much of the rest of the hearing discussing the impact of the QM rule, including how it will affect nonprofit lenders like Habitat for Humanity. The nonprofit's Charlotte, N.C., branch recently raised concerns before lawmakers on how the new rules would restrict their lending despite provisions that the CFPB added for them last year.
The nonprofit lenders "still don't feel like they're on firm ground in terms of the rules to be able to move forward with their programs, and give themselves a level of comfort that they can move forward the way that they've conducted business in the past, which is working with families individually," said Rep. Shelley Moore Capito, R-W.Va.
Cordray noted that he talked with Habitat for Humanity's CEO Jonathan Reckford on Monday to discuss new issues that have arisen since the CFPB made some amendments for nonprofits last year.
"We have been working to figure out how we can address those concerns through any further activity," Cordray said. "We can respond during the course of this year."
Beyond mortgages, Cordray said he was also open to adjustments to a controversial bulletin targeting indirect auto dealers issued last March. The bulletin said auto lenders would be on the hook for unintentional discrimination if data shows their partnering dealer offers higher rates to minorities. Some lawmakers have joined industry advocates in arguing that the CFPB's warning could lead dealers and lenders to a flat-rate system. While Cordray has heavily disagreed with this notion, he signaled the agency may revisit the issue.
"It doesn't mean that" the CFPB wants only a flat-fee system, Cordray said. "We're making our best judgment at the time. But if there's new information, and it turns out that there's something that occurs to us, and is brought to our attention that we didn't understand or appreciate at the time, we're open to making changes…I don't know that we know all the mechanisms yet that would be satisfactory. And we are open to auto lenders, and others, bringing those to our attention."
Cordray also shared concerns with some lawmakers over nonbank products like payday loans as well as prepaid cards in light of T-Mobile's recent announcement that it would offer reloadable cards to consumers.
Mobile banking and prepaid cards "poses challenges to a regulatory systems that is built on a more physical notion…so it's something that we're both trying to be very aware of, trying to stay on top of," Cordray said. "And also recognize we're going to need to work with other regulators if we're going to be effective in this space and probably, we'll need help from Congress."