You can watch the Cordray Senate confirmation hearing live, by clicking here. Coverage begins in just a few minutes.

We’ll remember this when our critics start hammering us for having an “abusive” product. From the American Banker story we just posted:

“One could argue that … financial institutions with strong or successful marketing plans always look out for the best interests of consumers, because those are the products that are going to be the most successful over time, those that are good for consumers,” Fischer said. “If you develop those types of products, price them appropriately, you’re going to do very well.”

We believe that CFSA’s Best Practices should be considered as a blueprint for responsible lending, and can be adopted for most short-term financial products. Provisions include: Full disclosure of fees, truthful advertising, right to rescind, appropriate collection practices, including no criminal action, and a requirement to be licensed in each state where the company does business.

More specifically, CFSA Best Practice #3:

A member will not advertise the payday advance service in any false, misleading, or deceptive manner, and will promote only the responsible use of the payday advance service.

‘Abusive’, that’s the 7-letter word that has all financial institutions on edge. At least when it comes to the CFPB and how it regulates the financial services industry. But what does it mean, and how is it different from practices that are unfair and deceptive, which are already banned? According to American Banker’s Kate Davidson, more than a year after the law’s passage, bank lawyers and Bureau officials still can’t say for sure.

“I’ve always said it’s like pornography: I’ll know it when I see it,” said Jeffrey Taft, a partner with Mayer Brown LLP. “It’s hard for you to define it. I think it will be virtually impossible for the bureau to really come out with concrete guidelines.”

So what authority does the CFPB have under Dodd-Frank?

Under Dodd-Frank, the bureau cannot declare an act or practice abusive unless it: “materially interferes with the ability of a consumer to understand a term or condition of a consumer financial product or service; or takes unreasonable advantage of a lack of understanding on the part of the consumer of the material risks, costs, or conditions of the product or service; the inability of the consumer to protect the interests of the consumer in selecting or using a consumer financial product or service; or the reasonable reliance by the consumer on a covered person to act in the interests of the consumer.”

The Catch 22:

“It creates a knife edge,” said Jo Ann Barefoot, the co-chairman of Treliant Risk Advisors. “What happens if you decide that you think that certain loans are unsuitable for proportionately more minority borrowers, or more women or more elderly, then you could be charged with not being liberal enough in your lending.”

“We’re getting used to political gridlock in Washington.”

Richard Cordray, President Obama’s pick to run the CFPB, will be going before the Senate Banking Committee at 2:30 p.m. EST today. A flurry of stories came through this morning, some touting Cordray’s promises of cooperation.

According to the Associated Press, in remarks prepared for the hearing, Cordray said his experience as former Ohio attorney general taught him that litigation can be slow, costly, and unnecessarily acrimonious. He said he would use lawsuits “judiciously,” and noted that the bureau has other powers to resolve problems, including issuing rules, writing reports and examining large banks and many nonbank institutions.

In a bid to reach out to Republicans, Cordray also said that if confirmed, “I promise that you will have one person who will always be accountable to you for how we are carrying out the laws laid down by Congress and I will be eager to hear your thoughts about how we should do our work.”

Here’s a look at what’s on the docket for today’s hearing:

Panel 1

• Ms. Patricia M. Loui
  to be a Member of the Board of Directors
  Export-Import Bank of the United States, Hawaii
• Mr. Larry W. Walther
  to be a Member of the Board of Directors
  Export-Import Bank of the United States

Panel 2

• Honorable Richard Cordray
  to be Director
  Bureau of Consumer Financial Protection

It appears that the CFPB’s new credit card complaint system is experiencing hiccups in routing some complaints to banks, according to Bloomberg.

The month-old complaint response system has failed to properly route all inquiries, a problem bureau spokeswoman Jen Howard said the agency will resolve “within a matter of weeks.” Howard didn’t say how many complaints have been held up.

Continued coverage from Bloomberg’s story:

Some banks found that their volume of complaints dropped as the bureau’s system failed to work properly, said Richard Hunt, head of the Consumer Bankers Association. The banks were concerned they might be blamed for unanswered queries, he said.

“If you’re a bank, you don’t know there has been a complaint unless the CFPB tells you,” Hunt said in an interview.

Warren Stephens, CEO of Stephens Inc. (a company that is an annual presenter at our Annual Meeting every year), discussed the impact of regs and rules out of Dodd-Frank and how they could impact access to credit in a recent WSJ op-ed.

“The Consumer Finance Protection Bureau has restricted—and will further restrict in the future, I believe—credit availability to people on the lower end of the credit rankings. Without access to properly priced loans, these people will not be able to buy the goods they need and want. This lack of credit will further depress demand and production.”

Stephens discusses the importance of “middle market” private and public companies, and how they are key to rebuilding our economy. Companies like our very own CFSA Members are of the 100,000 in ‘Middle America’ and who contribute to the revenues between $25 million and $1 billion. And like Stephens says, as part of Middle America, our Members contribute to the 40 percent of the U.S. GDP and the 32 million jobs.

Turns out it’s not just “traditional” financial products that the CFPB may be monitoring, but even Facebook games and other social networking sites like FarmVille and Second Life could come under the new Bureau’s purview.

According to Credit.com, the American Bankers Association wrote a letter to the CFPB, asking the Bureau to consider regulating virtual currencies.

“We understand that in some instances virtual currencies, which were initially developed to help individuals manage virtual credits earned through online games, have also been used to pay developers of applications, and their use can be expected to expand even further,” the ABA wrote.

Raj Date, acting dead of the CFPB will be keynoting the American Banker Regulatory Symposium to be held in Washington on September 20.

American Banker is pulling out all the stops. Here are others that are expected to speak at the event: Martin Gruenberg, acting chairman of the FDIC; John Walsh, acting Comptroller of the Currency; Thomas Hoenig, president of the Federal Reserve Bank of Kansas City; Rep. Barney Frank, D-Mass., ranking member of the House Financial Services Committee; Sen. Jack Reed, D-R.I., chairman of the Senate Banking Subcommittee; and Rep. Shelley Moore Capito, R-W.Va., who serves on the house financial services committee.

American Forces Press Service put a story out yesterday touting Military Line, an organization “protecting servicemembers and their families from financial pitfalls such as payday lenders,” the article says. The program’s mission, according to Brenda Linnington, director of the Better Business Bureau Military Line, is to increase military members’ financial literacy through information, education, and outreach — both online and on the ground.

“I’d like Military Line to serve as a bridge between the civilian and military communities,” said Linnington, an Army veteran and the wife of an active-duty Army officer. She took on the job in January after the former director, Holly Petraeus, left to head the Consumer Financial Protection Bureau’s Office of Servicemember Affairs.

Just as a reminder, in response to articles earlier in the year, CFSA put out the following statement: “We are surprised to learn that military financial counselors are reporting that some payday lenders may be making loans in violation of the terms and rates imposed by law. We are certain that no reputable payday lenders, especially among the 50 percent of the industry represented by this association, make illegal loans.”

CFSA member companies do not market or provide two-week payday advance loans to the military.