Transcripts For CSPAN2 Key Capitol Hill Hearings 20240622

You know section 342 that created the office and part of the thing that we have struggled with is the whole reporting authority and the standards for reporting back what those federal regulation officers are doing. Do you have any insight on the program . I think it is important for countries to take a look at their own debt. And its time for us to look in the mirror and address our own problems, including the 18 trillion in debt that we have accumulated at this time. The Federal Reserve has employed and i will say exceptionally accommodated monastery Monetary Policy to spur Economic Growth, but we are now nearly seven years out with the federal funds rate still at the down. The quantitative easing have made it much easier and certainly has solve our longterm debt problem. And both you and your predecessor have argued that the fiscal reform is important over the long term. However, you also stated that the fiscal prudence can be ignored in the short term does not hamper the economic recovery. So it has now been seven years and we can no longer say that we are looking at the shortterm. Like my predecessor i believe that this is a nation facing a serious debt problem in the years ahead. At the moment mainly because of congressional actions and those have succeeded in lowering the deficit to the point where the next several years the debt to gdp ratio was stable, but over time the cbo projections as the population ages and especially if Health Care Costs rise it has been historically typical in the country will face an unsustainable debt path in which the debt to gdp ratio rises and that requires further actions that is mainly related to retirement programs and Social Security and even more important, the medicare and Health Care Costs trends. So we have known about this for decades and there remains a need for action on this front. There does remain a need and this includes reports on some of the consequences with growing federal debt is comes from the longterm budget out lead. Things like lower income, pressure for larger tax increases or spending cuts, reduced ability to respond to domestic problems and a greater chance of a fiscal crisis. Are the things that you all consider at the Federal Reserve with regard to Monetary Policy . I agree with the consequences that you just read to me. And ultimately when we see those things being manifested the consequences in the years ahead if the deficit becomes very large, it will put pressure on the economy, not right now, but in future years, it will likely cause i was to have fire higher levels of Interest Rates that we otherwise would have, diminish levels and productivity growth in this economy, we would have to go and offset those forces by having a tighter Monetary Policy and we are not in that the tuition in a particularly leading to a great greater chance of fiscal crisis, is this something that we discuss what we are looking at his Systemic Risk reign. I have not been part of this discussion but it obviously is a significant issue for the longterm. When we get to the longterm . After seven years am adding a trillion dollars in debt over the last handful of years when did we we get to the longterm . The economy is recovering i am pleased by the progress, as i indicated my colleagues and i think that if the economy progresses as we expect, we will probably began to raise Interest Rates this year and that takes us to the longterm. How does that affect the current . Two ways higher Interest Rates will raise the cost of servicing the debt but a stronger economy will cause us to raise all that we are among the leaders in terms of how we are doing economically, and other countries are now pursuing the same kinds of monetary policies that weve put into place earlier, which anyway is an endorsement of their their effectiveness. Its hard to borrow money for Small Businesses. I can tell you banks are having are more compliance officers and loan officers. That takes money out of the system to loan to people like me, to hire people and to create jobs. We had cordray enforcement estimated slowdown this doddfrank legislation because a lot of it is not completed. Because we are losing so many banks and Credit Unions and he said no we are going to go 100 , take a look at it. That is a bad policy. You stated the Community Banks shouldnt face the same scrutiny as bigger banks. You said that today and i agree. I heard you say in 2014 i heard you say you said i had to Community Bankers in my office just yesterday, from what you said come and i heard today from Community Bankers say what do i do. We say the right thing but what do we do . They are fearful of things that can happen of what they may not do. What would you tell these people . We talk a good game but we dont come through. Were trying to make clear our supervisory expectations and work carefully with them to know what rules and regulations apply and how, and what dont and to try to shield them from many of the things that larger banks have to is very, very. I hope you understand. I yield. The gentlemans time has expired. Now recognize the gentleman from maine. Thank you mr. Chair. Thank you, chair yellen, for being here. Appreciate it very much. Everybody wants the same thing. We want more jobs, higher paying jobs. Im a Business Owner like other folks in this room adult talking to other Business Owners because they grow our economy and create opportunities for kids. If youre in my district and talking to owners of the paper mill or business they say the same thing, that theyre spending so much time and so much money to comply with government regulations that they cant afford to grow their business and hire more workers. At the Competitive Enterprise Institute calculates that the cost of business in america in one year to comply with just federal government regulations is 1. 9 trillion. 1. 9 trillion. These businesses pass on the cost of these regulations in the price other products. So our families are spending about 15,000 a year for businesses to comply with government regulations. Im sure we can agree that businesses need to be fairly regulated and predictably regulated but when those are killing jobs thats just not right. Several years ago with the highly partisan vote with very little republican support the 2300 page doddfrank bill was passed. And since then there have been mounds and mounds of regulations and rules that are starting to smother a Financial Services industry. And one part of doddfrank is a great concern of mine is the too big to fail regulation. Now, when fsoc is trying to identify what banks, and not Financial Institutions and Asset Managers should be designated as too big to fail it means that the taxpayers if they fail to step in and bail them out. Now, we all know that theres a huge difference, chair yellen between large all kinds of chemicals going to our economy and Asset Managers, mutual funds, Pension Fund Managers that have the Retirement Savings for millions of americans. With no Systemic Risk to the economy. Now, the former director of the Nonpartisan Congressional Budget Office calculates that if Asset Managers have to comply with these too big to fail regulations with no Systemic Risk posed to the market it will drive up the cost of their operations to the extent with a longterm rates that are returned that they can generate for millions of americans in this country who are saving for their retirement will be deemed by about 25 to i dont know about you but where i come from 25 is a lot of money. Can we agree, chair yellen, right now that it just doesnt make any sense for nonbank Financial Institutions that both no Systemic Risk to the market like Asset Managers, they should escape the doddfrank regulations that penalizes our sabers . Well, fsoc is charged with attempting to identify threats to the Financial Stability of our country and issued a Public Notice indicating what theyre going to do is to look out particular activities okay not firms, but Asset Management activity that could pose risk so that thats the focus. Id like to switch gears if i can in my remaining minute. You stated on a number of occasions you are concerned about unsustainable deficit spending in this country from how it might impact Economic Growth and job creation, and i agree. Everybody knows who is one of the Family Budget or Small Business you can spend more than you taken for longer to time our to make up the difference without getting into trouble thats exactly what congress has done and thats why we have an 18 trillion national debt. We have some folks who come before our Committee Concluding secretary of the treasury mr. Luke who was here a few weeks ago instead 500 billion annual deficit, no big deal because its only 3 of our gdp. I disagree under that you do. Our state treasurer i was state treasurer treasurer in me and treasurer in me and i do love of the public debt caused by the hundreds of deficit spending can do great damage to our economy because we need to pay the interest on the rising debt, therefore, were not able to spend to build roads and bridges and educate our kids. This year were spending about 230 billion Interest Payment on the debt, and continues its projected to be 800 billion more than we paid to defend our country. Cant we agree that it is about time you help us and Congress Gets its act together what comes reducing our deficit spending at our get . I can indicate my concern with the sustainability of the debt path that the United States is on and i hope you use user input in this town to make sure the gentlemans time has expired. The chair wishes to inform the remaining members of the chair anticipates climbing to more members in the queue. The gentleman from arkansas and the gentleman from oklahoma mr. Lucas. At the point i anticipate adjourning figuring. The gentleman from arkansas is recognized. Thank you, chairman. Chair yellen, thanks for being here today very much. A couple of items i want to bring. Mr. Peck talked about banking faa bill and the harvard study that has read the last few months, so you see one out of five accountants typically Rural Counties no longer have a physical presence of a bank. Not a branch or even the presence of a commercial bank. I think thats concerning speaks to this point. And two things on the item i want to call to your attention that relates to merger approval issues at the fed. One is better than all index but i think of think the earth and all index which was adopted back in the 60s is bank mergers became subject to the antitrust rules, discriminate against rural areas but i think the idea of using county designations and using deposit as the sole member of indeed sheffer what business is a trader he is incorrect. I can give you many examples of this but i would invite the board staff to reconsider how to do bank mergers, not based on deposits oco not based on the index, typically Rural Counties. Cycle is the you should comment letters on mergers. Mergers between Banks Holding companies, if theres no comment yet the 56 day approval process. If they get one comment a letter that extends to 206 days for approval which reduces efficiency, reduces part to the ofup and up like to see the board adopt a new approach on letters interest in which between real comment letters from junk these connected to the merger and just promotional fishing expedition comment letters of the reserve banks have more power and a forced board of governors approval. Im going to write you about this. Even need to comment on it. I would like you to comment on Labor Force Participation rate because my reading of the cohorts that you reference a macro action is younger people are who have dropped out of the labor force. People over 55 are working more than ever before and i would take issue with your point that its those of us in the baby boom generation retiring. I think you to go back and look at those numbers you find the actual young people being forced out, or not having the opportunity to participate in the labor. So i agree with you that younger cohorts are working more than their parents and grandparents did, thats absolutely true. Its just that there is such a substantial drop off in Labor Force Participation when people retire that when you look at the joint effect of an aging population more people in each bracket where they do retire, but the working more is only an offset. Its not the same order of magnitude as the demographic effect of the aging. I dont disagree with what you said about that. But we changed subjects and go back to secretary lew when he was your here talked about the factors including Technology Regulation and competition in reducing liquid in the market. He said the Business Models and Risk Appetite of traditional brokerdealers have changed with some reducing their securities inventory and in certain cases exiting certain markets. Notwithstanding the october study chairman Malcolm Bauer also had a roundtable last week in which a participant from the market, j. P. Morgan are blue stated in the treasury market neubauer usability of 500 million trade and not have a moving market. Now is down to 192 billion. Even in the treasury the most liquid market we have significantly reduced liquidity. And in the fsoc report on page 68 the primary dealer Securities Holdings shows since the crash and since the doddfrank a Treasure Holdings have gone up to high levels in all other categories corporate and even Agency Securities have dropped, which implies to me people are Holding Treasure holding liquidity and not making a market in that. I really think regulation is being shortchanged. Id like you to comment on basel, the liquidity ruled our working together that are causing a lack of liquidity. Im not ruling out the possibility that regulations could play a role here. Its simply we have not been able to understand there are lots of different factors and we need to look at it more to sort out just whats going on and what a difference influences are. Im not ruling that out. Chair now recognizes the gentleman from oklahoma. Turn one. I appreciate your indulgence at the end of the. Chair, i would admit in an expeditious fashion. As you and i discussed before my part of the country is very economically dependent on the oil and gas industry. I am hearing concerns from those were involved in Energy Lending about regulatory pressure on the treatment of energy loans crude oil in the ground proven reserves during this current period of low pricing. Im concerned if banks have less flexibility and it was linking to these companies in the sector that and a cumulative impact of all the factors as the move toward the of the year could result in loans potential being defaulted on our bankruptcy filings. It would be devastatingly destructive. Saw it just ask that we be understanunderstan ding of the nature of those proven barrels in the ground. Second question, or second observation of the question. The last time we were together before this committee we discussed but also three leverage ratio come and i appreciate your response and addressing the matter of on ballot sheet accounting treatment. Id like to go further today and specifically talk about the basel leverage ratio next into offbalancesheet exposures that are not driven by accounting rules. And in this offbalancesheet context, why is customer margin collected by a bank affiliated member of a clearinghouse of being treated as something the banks can leverage . When congress very explicitly required that such margin the segregated away from the banks own resources. And for the benefit of my colleagues i suspect we are probably talking a couple hundred, 200 million, these big numbers, 200 billion in resources any given day. Could you enlighten us on that chair, please speak with the leverage ratio was meant to be a very simple nonrisk base measure that pertains to all assets that are carried on a banks balance sheet. And that includes derivative transactions. Its not clear that for Many Companies to leverage ration is whats binding rather riskbased capital standards in many cases. But this is something we are having a look at. I recognize its a concern. Its something that the Basel Committee is discussing and trying to gather Additional Information on what impact its having. And it is something that is very useful to put on the agenda that we will have a closer look at. Thats all i can ask is that you work with our friends at cfpb and one regulator friends come up with a sensible approach. 200 billion, that cant be touched i the banks but yet they have to have extra resources to cover. This seems like the net effect would be more cost and more spent on those trying to use the resources so i appreciate your comments. With that, mr. Chairman, out of character i yield back. The gentleman gives back. Chair yellen, i want to thank you for your testimony today before the committee. Pursue a door under discussion we look forward to having you back soon, separate and apart from your humphreyhawkins appearance of the members will have five legislative sandwiches but additional written questions for the witness or the chair which will be forwarded to the witness our our response to our ask the chair you please respond is probably as you are able. Without objection all members while five legislative days within which to submit extraneous materials to the chair for inclusion in the record. This hearing stands adjourned. [inaudible conversations] Richard Cordray testified yesterday on capitol hill about his agencies semi annual report. The report released last month shows that he was actions resulted in Financial Institutions providing 114 million in redress to more than 700,000 consumers. This hearing is to ours. [inaudible conversations] the committee will come to order. Today is they will hear from [ina Richard Cordray and director of the bureau of Consumer Financialommitteeill protections. The bureau has grown to over 1450 employees and has been active since director cordray last testimony before this committee. Among other things it has raised expand Enforcement Actions to cover Telecom Companies and broaden its authority over the auto finance testimon industry. Thin these actionsgs like otherspanies undertaken by the bureau since its formation have not been without contmoroversy. Acti many would say some of them go beyond what congress envisioned in doddfrank. Say somethem for instance, the bureaussioned. Regulation of otto ending now involves over 30 nonbank bank lenders lenders not previously subject. This move has been called into question given the specific exemption for auto dealers. In addition to concerns of recent regulatory actions issues remain the bureaus lack of accountability. This has been demonstrated by concerns with the bureaus budget process including the rising cost of renovation or the cfp be knew headquarters according to the Federal Reserve Inspector General the estimated cost of actual renovation increased from 40 million in february of 2012 to 145 million in december 13. This is over three and a half times the initial estimates. Theestimates. The Inspector General also estimated that the total cost is now closer to 216 million. The administration has yet to explain who approve the renovation and what happened to the documentation. Unfortunately, congress does not have control over how the bureaus spends its funds because the cfp be operates outside of the appropriations process. Even the Federal Reserve for which funds the cfp be from its earnings is not control the bureaus budget because congress cannot tightly financial reins when Budgeting Issues arise. The bureaus current structure makes meaningful congressional oversight very difficult. Socalled independence is one reason cited by the authors of dodd frank in the bureau structure, but other independent agencies such as the securities and Exchange Commission the cftc, the ftc, and the and the cpsc are all subject to the appropriations process. Additionally theadditionally the bureau does not even have its own office of Inspector General relying instead on the Inspector General of the Federal Reserve. Some of us have adopted specific reforms. Putting the bureau through the appropriations process and establishing a board of directors would resemble other independent agencies and provide congress with the ability to conduct meaningful oversight. Unfortunately calls for reform of the rejected. Therefore the only remaining oversight tool available is the holdto hold hearings and hope that any concerns expressed perhaps would be addressed. It would be like giving you the authority to implement federal Consumer Financial loss as the withholding the authority to enforce the. You would agree that that would make you highly ineffective as an Agency Charged with implementing Consumer Financial was. Congressional oversight is critical now more than ever because the cfp be growing reach over the practices of individuals and companies in the financial sector. For the time being we will conduct hearings and submit respectful requests that may or may not be addresseds. I am confidenti am confident that i confident the time will come when we will reassert our constitutional prerogative. Only then the bureau be truly accountable to the peoples representatives. Thank you. Director to the Senate Banking committee. Next week marks the fiveweek anniversary of wall street reform act. Financial crisis, never should we forget the worst this country has seen since the Great Depression exposed many weaknesses in our financial regulatory system. One of the most troubling was that no one was looking out for consumers. Student mortgages they could not afford at terms that were not disclosed, high fees, abusive payment structure, sudden interestrate increases. 5 million americans lost their home in foreclosure. My state alone half a million homes were foreclosed upon the height of the crisis in 2,091 and three ohioans were underwater. One in every six was at least 30 days delinquent. The banking regulators were supposed to be enforcing Consumer Financial loss and too often looked elsewhere. The number of industries developed in the shallow. More importantly no federal regulator was expressly tasked with ensuring that consumers are treated fairly. We created the cfp be to fill this would make sure that never again what consumers be an afterthought in our nationsnations financial system. They opened theyre doors just shy of four years ago. They have proven over and over the creation was one of the big success stories. As the chairman speaks i think it is important to note that the cfp be has returned 10 billion to the pockets of 17 Million Consumers and has find countless companies for egregious consumer abuses including Credit Card Companies secretly adding on unwanted products Telephone Companies cramming fees on the consumers bills and mortgage servicers and lenders illegally foreclosing on homeowners and servicemembers. The agencies serve as an important place where consumers can turn over 650,000 complaints filed. Cfp be is to be commended for successes and ongoing Enforcement Actions. Just last week 47 states and the district of columbia took action against the bank for illegally row for signing Court Documents and selling zombie Credit Card Debt or death that has already been cleared. I want to introduce aa bill that we will address zombie debt while several of my colleagues and hope that cfp be we will continue to address this issue. The fed. The federal was numbers showing the consumer borrowing is at a record high. 3. 4 thousand billion dollars led by steady increases in student loans, auto loans credit card loans as consumers take on more debt the opportunity for risky behavior increases. Increases. Increases. I look forward to hearing from the director what is viewed as areas to watch in the Consumer Market and with this agency we will do moving forward. We have seen in state after state the predatory lenders are normal. Its iowa enacted a shortterm the new line shortlived. Continued vigilance. I hope thati hope that the rules governing shortterm loans close loopholes. Canada for the rule to streamline forms this opponents continue to work to undermine the agency taken on arbitration. I we will continue to fight. Our consumers deserve a strong watchdog. It is our job to make sure that happens. Without objection ii would like to enter into the record statements welcome to the committee. Ciat we taked very seriously the oversight that we get from congress. Engthen these hearings are from the Senate Banking committee which are required by lstaw,em are important oversight for us. Reiterat we listen carefully to what isght we said and we take it to heart as and are i we go about our work. Next week marks five years since the passage of the doddfrank wall street reform and Consumer Protection act has been noted and it is for your since the Consumer Bureau opened its doorshe National Congress created this agency in response to th se refo financial crisis with theince purpose and so focus on protecting consumers in the financial marketplace. We understand our responsibility to stand on the side of consumers and ensure that theyour are treated fairly. Of consume through fair rules, consistent oversight, appropriate enforcement of the law and broadbased Consumer Engagement the Consumer Bureau is working to restore Peoples Trust and confidence in the market these are everyday Financial Products and services. To date figures enforcement activity has resulted in more than 10. 1 billion in relief for over 17 Million Consumers. Our supervisor actions have resulted in Financial Institutions correcting many subpar and illegal practices and providing almost 200 million in redress to over 1. 6 Million Consumers. We have handled more than 650,000 complaints a matter that is a particularly important to us from consumers that address all matters of Financial Products and services. These consumers are your constituents in each of your states. For example one excerpt of the complaint narrative from a Service Never in alabama reads we open an account that we paid as agreed into we became unable to pay the full amount. We made an agreement to pay a lesser amount per month and kept paying. The company got a judgment against us while i was training for i was not served with the judgment prior to quarter after that i was informed of it when my wages began to be garnished. Weve asked to have this issue takes. We have in to vegas coupling nearly 25,000 over the past 11 years for a catcher lovesick computer hutch, table and chairs but the furniture has not lasted, however the payments and ruin continue. We need assistance as we tried every other step possible to fix this without a. Another excerpt from a consumer in my home state of ohio and Ranking Member some state reads, i liked it and agree to reduce rate payment plan with a Student Loan Service or. In addition to being charged incorrect Interest Rates, my Monthly Payment was incorrectly allocated which resulted in late fees. After speaking with Customer Service representatives and they call time of ours no resolution has been reached. These are the stories that motivate us in our work. In this our most recent semiannual report to congress and the president we describe figures efforts to achieve provide a mission on behalf of consumers including those in your home states and my. During the timeframe covered by this report with help secure orders for millions of dollars. Along with over 30 to 9 in civil money penalties. For example, we took action against a country for illegal Debt Collection practices that resulted in 2. 5 million in relief for servicemembers. We stopped an illegal kickback scheme for Marketing Services which resulted in 11. 1 million in redress for wrong consumers. We worked with the department of education took in 489. 480 million. During the reporting great figure issued a number of proposed infidels. We issued a final rule to reduce burdens on industry by promoting effective privacy disclosures from Financial Institutions to their customers. In november 2014 to bureau issued a notice of proposed rulemaking to provide strong consumer affection for the first time for prepaid cards and accounts that have no such protections. Indecent 2014 we issued a proposal to clarify provisions of its Mortgage Servicing growth in genuine 2015 we propose for the changes to some of our mortgage rules to facilitate mortgage lending by small creditors, particularly those in rural and underserved areas. This would increase the number of Financial Institutions able to offer certain types of mortgages in rural or underserved areas and help small creditors are just their Business Practices to comply with the new rules. As a datadriven institution we have published several reports during this reporting period that highlight important topics in Consumer Finance such as medical that come arbitration agreement reverse mortgages and consumer perspectives on Credit Scores and credit reports. We released a know before you owegomortgage to get to help encourage consumers to shop for mortgages and better understand how to go about the important task of buying a home. In the years to come with afford to continue to go to congress as a vision of an agency that is dedicated to cultivating a Consumer Financial market place a some transparency, responsible practices, sound innovation and excellent Customer Service. Thank you for the opportunity to testify today, mr. Chairman. I look forward to your questions. Thank you. Erector quarter he said that you are accountable to congress. However, you get to determine your budget and how to spend it. Neither congress nor the fed can tell you how to allocate taxpayers money. Many members of congress have expressed strong disapproval of the bureaus costly Building Renovations which include a waterfall and a fourstory glass staircase and now stands at more than 3. 5 times of the original estimate. Has this disapproval by people cost you to change your renovation plans in any way . And if so, tell us what changes you made, if any. To answer to the question. First on the overall of the can build an oversight we are accountable to this congress in numerous ways that are in our statue. The gao does a regular audit of our expenses and expenditures each year which is not common to federal agencies. We are subject to an independent audit also by our statue. Hi were subject to reviews by our Inspector General which haveindepend been figures. Im required by law to tesla in front of this committee, thats where the congress put the required jurisdiction and it seemed b appropriate, in your vigorousight oversight twice year and house Financial Services Committee Twice a year. We have numerous other accountability mechanisms as well and like the other banking agencies we are not subject to the appropriations process. It would be hard if we were different. As to the building project that has been overhyped and misrepresented. The building cost has remained static from before we took on this building in the office of supervision performed an audit that saw that the building was in disrepair and needed an overall if it would remain a productive government asset. The Construction Cost has been steady and between 95 and 120 million. We recently that the contracts through competitive build and they came in and of the budget. The managing the program which feels appropriate to me. They have feltthey have felt then stated that this is an appropriate government renovation project. That is my understanding of that issue. Thank you. Yesterday the bureau announced the settlement of an enforcement action against american on the finance Corporation One of the nations largest auto lenders. Honda must substantially reduced or eliminated entirely the ability of auto dealers to raise or lower the finance rate offered to consumers. A recent american banker article quoted stating that the bureau is seeking to accomplish the significant limitation of deal of discretion. Considering that auto dealers or explicitly exempted from jurisdiction to how can this be seen as anything other than a backdoor effort to regulate auto dealers which were basically exempt from the fight back. Three things. We and the Justice Department were not alone in enforcing the equal credit opportunity act. We resolve the matter yesterday. I would commend them that they have taken farreaching steps to constrain the discretionary markup which we think has lead toled to discrimination for the consumers. It was industry leadership and i commend them. In terms of of our responsibility we have been careful to observe line that was not an obvious or logical line but to say that the Consumer Bureau has jurisdiction over islanders but not auto dealers. We feel that means the law has spoken clearly we have clearly can only have a responsibility to address any issue of discrimination by the news but not to use. Have made the ideological but it is the line that we have and have taken our responsibility seriously and have a partner in this work and we Work Together to address issues. Issues. That has been appropriate but i am willing to here mores. We arewe are simply looking to enforce the law and do it accurately and appropriately the bureau released an outline of its proposed plans. Every state regulates or outright prohibits payday lending. If you have it could you provide the analysis . s. In our statute theyre were four issues that were explicitly given full jurisdiction to the Consumer Bureau home mortgagemortgage origination, Mortgage Servicing, pay evening approaches. Scrutiny of upwards of 15 million loans most comprehensive work that has ever been done. We will we concluded that the problem of debt traps are rollovers was a significant problem for consumers who are in the small dollar loan market. Representation that this was a product that people get alone repay it and giving out. What we found was well over half of the loans are repeat loans for people are living our lives of 4500 percent interest which is the issue we are working and working to address. We recognize theyre is the mantra that credit. That is the dilemma were trying to confront. Before i begin would like to comment on recent attempts to undermine the Consumer Bureau. Similar attempts have been made in the senate. The argument is clearly designed to cripple the bureau and set up for nomination after another. Were the only committee and the support that is yet to hold the hearing. By contrast in 2007 we were in the 7th year of the Bush Administration and democrats are in the majority this committee at three nomination hearings. Important jobs open waiting for us to act changing the governance. The agency in his tracks and leave consumers without a federal watchdog would. Out on budgets buildings on the bike question, i was encouraged to see this release was study on forced arbitration. Ii am concerned but not surprised at the bureau found know evidence. Three outthree out of four did not even no they were subject to arbitration clause. Sent a letter urging we will make them forced arbitration and consumer contracts. What is the bureaus thinking . Thank you Ranking Member. All i can say is i was pleased to have the opportunity to be confirmed by this. It took a while but ultimately it was a strong and i appreciated the care with which the senate considered. I cannot speak to the owners. We did issue and arbitration report. The congress required us to do that as part of the dodd frank act. Congress did a couple things they 1st said that they were going to ban outright any sort of arbitration clauses pre dispute arbitration clauses. A significant shift away from the permissive attitude to the federal arbitration act that developed. They also said that as to the rest of Consumer Financial products and services they require the bureau perform a study and report to congress on the potential effects of arbitration. We did that carefully and deliberately. Take a deliberately. Take a couple years of research, a significant report to the areas. We did issue that report earlier this year. The statue says is having done that cant perform that task it was them for the bureau to consider what might be done consistent with Public Interest and consistent with the results of the study to either modify or address predispute arbitration agreements for other consumerthe Consumer Financial products and services. We have determined having digested our own study and got a great deal of feedback from industry and others that we we will be moving and rulemaking and we will be in due course convening a Small Business review panel has the 1st step in considering what actions to take. That is where it stands. Thank you. We heard from banks about issues related to court nations of exams. The Inspector General reported it has not found duplication of regulators oversight responsibility. I would like to talk about your examination for the value of your examination for what you are doing to improve coordination particularly of smaller institutions so that because the exams cannot be costly to them and we want to make sure theyre is not duplication. This is an area of real focus and one where we have made a tremendous amount of progress. If you asked me that question in 2012 we were only minimally staffed up for probably have a veritable we needed. The coordination was not as good as we would have liked to be. At this time the coordination has become quite good not perfect but quite good. In particular we coordinate with the conference of state bank supervisors. And weand we have done numerous coordinate exams and share information with them back and forth consistently. With the other federal Banking Industries which is also quite important somewhat distinct from our Consumer Protection authority, the law mandates we collaborate, share drafts of examination reports mandates that as we go about proposing rules they have a lot of insight and input into those rules command i think that that has improved enormously. Not to saynot to say that i do not still here isolated instances now and then where it feels to me the coordination could be better but certainly the leadership at those agencies, the Federal Reserve have been committed to collaborating an understanding that we have distinct but related rules that need to be integrated so that institutions do notto not have to face what i regard as an unfair situation. Then they wouldthen they were not no how to proceed. I do not think were hearing that. I tell institutions all the time, let us no about your complaints that we can fix them. Theyre has been tremendous progress. Thank you, mr. Chairman. As you know, recently we have been debating the question of whether the nsa should be allowed to access telephone records of americans. I have been concerned about asset data collection. Last congress i asked that the cfp be the Collection Program be reviewed by the Government Accountability office. That report established that the cfp be has an ongoing collection of the 600 million credit card being evaluated. 29 million mortgages andfive and a half million student loans. Is that in the ballpark . I would certainly agree with the figure set forth. They did a careful evaluation of us. As you no in several places they prohibit the cfp be. The cfp the claims it is not doing so because it is not collecting certain things like the name,name Social Security number and address. Could you tell me what data points are not being collected . You mentioned the fact that we have developed a credit card database is july Consumer Credit panel and all of those areas this informations is significant as you noted the personally identifiable information account number is not included in any of that material. It is actually pretty uninteresting data. Instead it gives us a sense a pattern of Consumer Protection consumer abuse, Consumer Service in the industry which is what were looking for. It is not about what you want i do. And you and i have had this conversation before. Before. One of the concerns i have is that it is easy to say the data has been doing and not wise for ananonymized. It is also relatively easy did the anonymizing. We found that just the dates and locations for purchases are enough to identify about 90 percent of the people in a credit card data set. The information cannot be be anonymized . It is not easy to do and would take time and effort. I do not see that it would be worthwhile. I have no interest. Personally identifiable information is only a problem to us doing our work it creates issues that we try to avoid as much as possible so to avoid making extra work. Just to get clear my understanding is you are collecting data on about 80 or 90 percent of all credit cards that. In all other areas we do sampling. And that we will we do not. This is consistent with other agency treatment. Because of time i we will move on. Okay. Okay. I do believe the protection is not adequate. Happy to speak to you personally. The last question, the paperwork reduction act was designed to ensure the greatest possible Public Benefit and maximize the utility of information collected, maintained, used, shared, and disseminated and shared command disseminated and to improve the quality and user information decisionmaking. It is my understanding each of the 1022 orders issued to date the orders to collect this data has been sense to fewer than Nine Companies to avoid the review of the request by the office of management and budget. Can you tell me how many times the cfp be has utilized the exception for reviewing data request by sending requests to fewer than Ten Companies . We have utilized this several times and gone to the full process. That process. That is one way of characterizing. Another is as were seeking data if we can limit the number of institutions that we do not have to burden other institutions i assume that is what you would like us to do. Rather than seeking data from hundreds of institutions if we can get a representative sample that is easier for us and for institutions. Clarified, and maybe you can do it in aa written response. I would like to no the exact data. Half of all of the Data Requests how many have with the omb review . We will get you to that. Fair enough. Thank you very much mr. Chairman. Military Consumer Protection day. Fittingly you should be here i will speak personally. One of the proper achievements of the affairs in your organization. Thank you for all you are doing. The basic Legal Protection for these Young Americans because back to the civil war. Enforcement is scattered about. The department of justice has several authority and action, banking regulators condoning collect. The enforcement is blacks and you pointed out last week when you get a report which indicated servicemembers continue to report difficulty obtaining there servicemembers civil relief act. Going back a long time ago. Prior existing debt and they are not getting. I have put legislation in as background. If congress were to enact this legislation how would they be equipped . I think it stands to reason that there are more cops on the beach to protect our troops in terms of potential abuses are problems and Financial Products and services which for them are a distraction from there ability to focus on there job which is defending and protecting all of us which would be a helpful thing. A helpful thing. I no that the congress a couple of years ago did provide Enforcement Authority to the Consumer Bureau. I thoughti thought that was a positive step forward. We work with partners. Particularly the department of justice but they only have so many resources. If thereresources. If there is ever an area we should be training in focusing resources it is making sure servicemembers are treated appropriately and fairly in the financial marketplace so that they do not have to worry about problems. Thank you. You made reference the military lending act passed for the fiscal year 2,007 National Defense act. It gives you a authority but puts the burden on the department of defense to create the framework, the rules and regulations. They are trying to do that again. Thereagain. Theyre were a series of regulations that were wellintentioned but did not really fully address some of the problems. Can you briefly explain how these members remain vulnerable today in anticipation of rules that we will be forthcoming . I particularly appreciate that you have at a constant and sharp focus on these issues and have seen tonight the progress moves along. Their close to having a knew se the difficulty is about the military lending act passed in 2007 there was a set of rules meant to implement it but they were too narrow and too easily circumvented. Very much the problem senator brown pointed out earlier of people being able to swim around some of the otherwise wellintentioned rules and you still can see website after website of online lenders offering loans for servicemembers at triple digit percentages and some of them 400, 500, 600 . They are calling perfectly legal under the current set of rules which is why congress as understand it has directed that this be redone. The department of defense has taken that very safely and again acted with great speed and addressing it. And avoid very shortly we will have a new set of rules and servicemembers will have new important protections that a publisher that server years ago. Thank you very much. Again, we all write fully appreciative of the service and we said it repeatedly but if the rights cant be adequate protected, then the rhetoric is nice but its better to have access to the rules and protections. I want to thank you for that. In preparing for testimony today, a number of members of this committee can speak to this person from the own expense of service so i think its quite important. Thank you very much. Senator vitter. Thank you, mr. Chairman and thank you, mr. Cordray. Like a lot of members and a lot of citizens, i am really concerned about the vast amounts of data that cfpb collects on all citizens related to financial transactions. Allow any citizen to see what personally identifiable information that cfp be has collected at least once a year. Would you support that . Wwor