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Republicans Say Warren Misstated CFPB Role in Mortgage Talks

U.S. Representative Spencer Bachus asked White House adviser Elizabeth Warren whether she’d like to clarify or correct March 16 testimony about foreclosure settlement talks between the Consumer Financial Protection Bureau and state attorneys general.

Bachus, the Alabama Republican who leads the House Financial Services Committee, made the offer to Warren, who has been charged with setting up the bureau, in a letter today.

Bachus suggested that her remarks to Congress conflicted with a Feb. 14 presentation the CFPB made to Iowa Attorney General Tom Miller. A seven-page PowerPoint document prepared for the presentation was released earlier this week. According to the document, a CFPB analysis concluded that a $5 billion penalty would be “too low,” and banks could afford more.

“The recently disclosed documents suggest that rather than merely dispensing advice to those involved in negotiating the settlement, the CFPB was actually its primary architect,” Bachus and Representative Shelley Moore Capito, a West Virginia Republican who leads a Financial Services subcommittee, wrote in the letter sent today.

Jen Howard, a spokeswoman for the Consumer Financial Protection bureau, said in an e-mailed statement that the agency “provided advice to various officials involved in the mortgage servicing law enforcement matter.”

‘Not Everyone Agrees’

“She is aware that not everyone agrees with that advice or how to address the serious deficiencies at some of the nation’s largest mortgage servicing firms,” Howard said in the statement, referring to Warren.

Capito said in an e-mailed statement that the letter gives Warren a chance to correct the record. “Many of my colleagues and I are concerned that the CFPB may have acted inappropriately,” Capito said.

At the March 16 hearing, Warren emphasized that it “would not be right” to comment on the negotiations since they are a law enforcement matter.

In one exchange during the hearing, Bachus asked whether Treasury Secretary Timothy F. Geithner sought Warren’s input on “how to structure” the settlement. Warren responded that Geither had “asked for advice about the ongoing problem we have with the mortgage servicers.”

Geithner told eight members of Congress in a March 15 letter that he had invited officials from the consumer bureau to “advise” on how to design mortgage servicing standards.

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