2019 annual report which outlines the bureaus significant work between october 2018, and march 2019, including rulemakings and supervisor and its regulatory activities. The report also provides insight into what the cfpb plans to undertake in the coming work. Go. Since the into her role last november Kathleen Kraninger demonstrated a commitment to ensuring consumers have access to a wide range of Financial Products and services that meet individual needs, fostering innovation and vigorously protecting consumers. Reflecting this commitment to the cfpbs mission Kathleen Kraninger conducted an extensive Cross Country listening tour with a spectrum of cfpb stakeholders during her first month on the job. Kathleen kraningers conversations with consumers, industry and federal and state regulators have improved cfpb engagements, informed their supervision and regulatory processes and improved agency transparency. In the semiannual report director Kathleen Kraninger highlighted the cfpb has taken steps to strengthen the consumer marketplace by providing Financial Institutions clear rules of the road that allow them to offer consumers a range of highquality innovative and Financial Services and products. On september 10th the cfpb issued three new policies to promote innovation and reduce regulatory uncertainty. These policies include Trial Disclosure Program policy, compliance assistance sandbox policy and the no action letter policy. Each of these policies are intended to contribute to an environment that allows innovation to flourish safely and ensure that Consumer Needs are met in increasingly efficient and effective ways. Earlier this year the cfpb updated the mandatory underwriting provisions of its 2017 small dollar lending rule. Updating this rule is an important step toward ensuring the availability of credit that is essential to so many consumers who struggle to access or qualify for other options. Basing rules on solid evidence and legal support. As the cfpb continues to move forward on this rulemaking process i encourage the cfpb to coordinate with other financial regulators on an approach to small dollar lending to create a consistent framework across all institutions in order to promote and expand small dollar lending and credit options. In july the cfpb released advance notice of proposed rulemaking seeking stakeholder comment on potential amendments to its ability to repay qualified mortgage rules. Cfpb director Kathleen Kraninger noted the impasse exacerbates in a level Playing Field and fannie and freddie should play by the same rules as everyone else. Cfpb actions are a positive step and i encourage the bureaus efforts to find a permanent solution to the qualified mortgage standard that provide certainty to consumers, lenders and investors alike. Last week the cfpb announced the formation of a task force devoted to examining ways to modernize and harmonize Consumer Financial losss especially those pertaining to consumer credit. The Banking Committee has spent significant time this congress evaluating how the fair credit reporting act should operate in an increasingly Digital Economy and other firms serve a function similar to the original consumer reporting agencies. I look forward to reviewing the cfpb task force on federal Consumer Financial laws recommendations on how to update so that it continues to function as originally intended in the digital world. Im encouraged by many of the initiatives remain clear the fundamental structure must be reconsidered to make it more transparent and accountable. I support transitioning the cfpb from a Bipartisan Commission subjecting them to appropriations and providing a safety and soundness check for prudential regulators. On september 17, 2019, the department of justice filed a brief by the Supreme Court urging the court in the case to review the constitutionality of the bureaus leadership structure. I have long argued the current structure lacks sufficient accountability and look forward to the Supreme Court taking up a review of this case. During this hearing i look forward to hearing more about key initiatives in the last year. The priorities for the upcoming work period, an additional legislative or regulatory opportunity to provide widespread access to Financial Products and services. Thank you for joining the committee this morning to discuss the cfpbs activities. Welcome, nice to see you. We created the Consumer Financial Protection Bureau to stand up for students and servicemembers and hardworking americans to protect them from big banks and crooked corporations that rob them of their homes, jobs and savings. After ten month on the job it is clear why donald trump selected you to head the cfpb. You can protect against shady debt collectors and other companies that prey on hardworking americans. Under your leadership under Donald Trumps leadership this agency has chosen corporations over workers over and over again, has chosen big banks over consumers over and over again. Since you took over you and your appointees have overruled the recommendations of consumer experts and allowed crooked companies to lie, cheat and steal from hardworking americans and you let them get away with it. The consumer Protection Bureau is supposed to protect consumers, that is your entire job, to protect consumers from predatory loans and predatory payday loans that lead to endless cycles of death. You instead chose to protect the interests of donald trump and his payday lending patrons. Consumers pay the price, when the payday loan was scheduled to go into effect, americans have paid more than 1 billion in fees to payday loan sharks, 1 billion out of the pockets of consumers and consumers without a lot of money raising payday lending, 1 billion out of the pockets of consumers because the agency that was supposed to look out for them decided to instead look out for payday lenders. You could have protected Service Members and their families but instead the Trump Administration betrayed them when you stopped making sure companies followed protections for servicemembers and their families. You could have strengthened the bureaus enforcement of fair lending laws that returned hundreds of millions of dollars to victims of discrimination and agencies first 7 years. Instead you continued Donald Trumps attacks on lending laws. Instead of protecting consumers you have dismantled the bureaus office of fair lending, put a trump political appointee with a history of racist and sexist writings, we have explored those in this committee before in charge of fair lending. You are now trying to repeal a 2015 rule that required lenders to report basic loan information to ensure they are not discriminated against. Since you took over the bureau has not brought a single case against a company for discriminatory lending practices, not one single case against the company for discriminatory lending practices. Last i checked discrimination hasnt ended in this country and trumps america. You and the Trump Administration have turned your back some student loan borrowers, the bureau could have helped protect 44 million americans with Student Loans from the widespread mistakes, errors and mismanagement by the companies that handle their loans and cost them thousands of dollars but again you betrayed the people the president promised to look out for. Hearing the word betrayed these days is used a lot, the president has betrayed workers in the midwest, autoworkers in the midwest, how the president has betrayed our allies in the middle east, day after day betrayed workers in this country. He sided with betsy divorce and refused to examine federal student loan servicers to make sure they are not cheating people with Student Loans. The gao and its about education Inspector General reported the company that manages federal Student Loans wrongly denied tens of thousands of teachers, nurses, firefighters, servicemembers and other dedicated Public Servants loan forgiveness they earned, this isnt my opinion, this is gao in the department of education Inspector General. You have protected those companies while hardworking American Families paid the price. I guess i should expect nothing less from an administration that consistently looks like a retreat for wall street executives. Under your leadership crooked corporations have no real incentive to follow the law. If they get caught they know they will be hit with nothing but a slight slap on the wrist for ripping off consumers. How in the world do you explain to these hardworking americans why this bureau isnt protecting them . You have done the role asked of you by the presence of the united states, you protected companies, not workers, not consumers and that is an defensible. Thank you. It is now your opportunity to make your initial statement, the floor is yours, please proceed. Members of the committee, thank you for the opportunity to provide an update on the bureaus important work. Preventing harm to consumers is the top priority of the cfpb. We prevent harms by educating consumers to protect themselves, prevent harm by clearing, by having clear rules of the road for regulated entities. We prevent harm by using supervision and enforcement to promote compliance with the law and prevent harm by supporting dynamic and competitive markets that provide consumer choice. While prevention is not always possible that is the right goal. Saving consumers from financial headaches, setbacks and devastation. The semiannual report in my written testimony provide a rundown of activities in the first half of fiscal year 2019 and a preview of more recent initiatives several of which i will take the opportunity to highlight now. First our efforts to provide clear rules of the road to companies and consumers to know what is lawful and what is not. Just last week the bureau finalized a rule that provided needed relief to smaller lenders from collecting and reporting data under the Home Mortgage disclosure act and codified the key provision of the economic growth, regulatory release and Consumer Protection act. Additionally last month the bureau announced policies that facilitate innovation, reduce regulatory uncertainty and enhance consumer choice. The bureau announced its first no action letter and to the new policy. It is designed to keep funding streams open for our Nations Housing counselors who assisted millions of americans to the dream of owning a home. Second, where we cannot prevent harm to consumers we use our enforcement tool to hold bad actors accountable. Every cases managed by Bureau Attorney seeking justice in the public interest. In fiscal year 2019 we announced look Enforcement Actions and settled 6 previously filed lawsuits including public fair lending enforcement action the bureau settled with one of the nations largest reporters for violating regulations. We took action against individuals who brokered contracts offering highinterest credit to veterans and took action against student Loan Servicing company that engaged in unfair practices that violated the Consumer Protection act. Further the bureaus actions in fiscal year 2019 resulted in orders requiring 777 million in consumer relief and nearly 186 million in civil money penalties. I note these figures not as a measure of accomplishment but to wonderscore that the bureau continues to utilize its enforcement tool. Third, we continue to promote a culture of compliance through our supervisory tool and empower consumers through education. Earlier this year we launched an initiative to help prepare americans to handle an unexpected financial event. As part of this initiative we release the new savings booklet to reach their savings goals. We are looking at other innovative ways to move the needle on savings in america. The bureau partnered with h r block, the savings of tax refunds. The study shooting courage went through a simple email or small incentive increase the consumers likelihood with the funds. It also found one in 5 consumers took advantage of the specific savings feature, continue to save eight month later. We will continue to engage in research about what works to promote savings and Financial Wellbeing. I have a few recent announcements to demonstrate the bureau is committed to using the tools Congress Gave us as effectively and efficiently as possible. Last week the bureau handled its 2 millionth Consumer Complaint. To ensure the bureaus were continues to be informed by this and put i announced last month we will continue the publication of the Consumer Complaint database. In addition we will be enhancing the database by providing new tools and graphics to analyze consumer submissions and putting the data into context. Also last week i announced the establishment of task force to examine the existing legal and regulatory framework. The task force will make recommendations for improving Consumer Financial laws and regulations as well as enhancing consumer understanding of markets and products. We are accepting applications for individuals who are interested in serving on the task force and recommendations for members of congress. Last yesterday, two days ago i am proud to announce the new private Education Loan met an important congressional mandate given specifically to that position by issuing its first annual report. The report covers two years and analyzes complaints submitted by consumers. The bureau assigned a memorandum of understanding to the department of education consistent with statutory responsibility to share Consumer Complaint education. Before i close i would like to touch on one final issue, clarity around the constitutionality of the bureau structure. I joined the government as recent brief. This matter is in litigation. I would like to highlight a few key points. The constitutionality of the directors removal provision was raised, challenge legal actions by the bureau in pursuit of our mission. Litigation and some of our enforcement and regulatory actions. I believe this dynamic will not change until the constitutional question is resolved either by congress or the Supreme Court. My position on this question will not stop the bureau from fulfilling our statutory responsibilities. We will defend the actions the bureau takes now and in the past. Thank you for the opportunity to discuss the bureaus work and look forward to your questions. My first question is related to credit. I ask in this context. It has been expressed by senator brown, a concern about the level of enforcement activity and i appreciate your reviewing the agency is enforcing the law. It seems to me in addition to stopping bad actors from harming consumers. An important thing to do to protect and strengthen consumers is to increase their access to safe credit. Can you discuss whether that is one of the important objectives you have and how you would seek to achieve it . The access to credit is part of the mission of the bureau comes into play in. Frank under invasion in particular associating invasion and access. We have to be thoughtful and judicious and deliberate in rulemaking activities to consider the implications on access to credit, the actions that we take and there are a number of areas we are being thoughtful about that. I would highlight the innovation policy because that is an area where we are seeking more innovation from the industry and others who have ideas about how we can reach those individuals in our society and bring them into Financial Services that are going to help them build their Financial Wellbeing so that is an opportunity we had a symposium on, we engaged in work on that and we look forward to continuing products and services. We have both discussed this a little bit but i would like you to highlight this. It is difficult to access they can participate in is safe. And there is a strong and robust available to them. Certainly that is an important part of our job, competitive, fair, transparent markets do support that for consumers and that is part of the mission we are given more specifically. Something we can talk about his alternative data and the opportunity to look at that in underwriting. The bureau did issue an action letter under its prior policy to a Company Called upstart. A lot of information on how upstart has used alternative data on employment education information to again make those kinds of determinations and provide greater access to credit and we issue the head of fair lending and head of innovation talked about the opportunity that Companies Like upstarts are providing to individuals and brings them in for products and that is something we will continue to do. This option of Innovative Technologies and processes has the clear potential to improve these efficiencies and cost of providing Financial Services to a wider spectrum of consumers but lack of regulatory certainty and clear guidance regarding the use of new technology and Consumer Engagement can stifle the development and innovative practices. Can you describe how the recent policy guidance regarding this disclosure and compliance and no action letter, the Compliance Program can have, can help our firms that do provide services get Greater Regulatory clarity and enhance litigation . One of the premises of those policies is encouraging these Innovative Companies and entities to come forward with their ideas. It is something that is challenging to do. A company entering this space does not have the same history of regulatory engagement as traditional institutions do. Coming forward to ask questions, to look for ways to be compliant with Consumer Financial Protection Laws is what they are trying to do and what we are trying to promote is that conversation with those entities. There is an opportunity with child disclosure policy to get better information to consumers, simple information to consumers at the right time since they have what they need to make the best decisions for themselves, and looking forward to traditional Financial Institutions coming forward with great ideas in that space, the sandbox as well, how effective the products are that are beneficial to consumers as part of the application process is raising benefits and risks to consumers and that is what applicants have to articulate and go back and forth on. Thank you, mister chairman. Is it reasonable to consider, is it reasonable to consider a payday loan that allows consumers to pay back as little as 1 . I am sorry. Are you asking about an Interest Rate . I ask that because the answer is selfevident but this chart shows youve led scammers and shady debt collectors pay 1 or less of the amount they owe. This cfl a paid 1. 1 to consumers, howard law paid 7, 100ths of 1 of the debt they owed on the scale they made and mckennan paid 2 10 of 1 so you gave these corporations a huge discount of what they owed to hardworking americans they cheated. Why do they take why do they working families dont deserve the treatment. Thank you for giving me more context. It is led by Bureau Attorneys, the opening decision of that case, and inside the agency over whether to consider. There are opportunity cost with decisions which we have taken in many cases under leadership. You can answer this for the next 5 minutes. When it is consumers who are hurt and scammers, the little bit of money they get. What message does this send. Not only do they get nothing close to restitution but the message it sends to other scammers that they have a friend in the white house and a friend at cmp be, and with 9 11 scammers and other corporations that it is unconstitutional. What i ask about the constitutionality, you testified as director, it was not your position to decide whether it was constitutional. You said im aware of the constitutional questions and it is important. It is not irresponsible it is carry out the line as written, that is my focus. Based on this testimony of surprised when you send a letter to congress that i decided bureau should adopt the bureau justices you that the removal provision is unconstitutional. If someone commits to do one thing and it is another, is that lying to congress . I was aware of the constitutional question from the moment of my nomination, we discussed it at the hearing during my confirmation process and it was not a decision i had to take at that time and i still firmly believe in terms of settling this question. It is for the Supreme Court and congress to settle it. At the same time the executive branch and all of us as executive Branch Officials to uphold the constitution, and in the face of this petition to the Supreme Court in this case, in my position that the bureau would take. That is the decision that is outlined it speaks your credibility as a public official that came into this committee and said that you wouldnt speak on issues of constitutionality and you did which reflect on some other things you may have said over time. I went to turn to the public loan forgiveness, congress designed a program to help hardworking americans who take jobs we hope they take to serve this country, it is clear the management of this program has been a train wreck. Fewer than 1 of workers have received the loan forgiveness they earned. The cfpb has done nothing for more than two years about it. Will you commit to an enforcement investigation that is supposed to deal with Student Loans . I take seriously the responsibilities we have to all consumers and particularly the students. There was an ombudsman who was already issued his first annual report. We have engaged the department of education to work through to have the federal Government Agencies united in the understanding of our responsibilities of how to move forward so moving forward on what is statutorily required and moving forward on other areas including how we carry out our responsibilities as larger participants. I hope so but nothing fundamental has happened, still 1 of workers received the loan forgiveness as they serve the public as we asked them to do in a federal contractor using taxpayer dollars for federal Student Loans. Will you protect people trying to pay off your Student Loans or will you protect betsy divorce . I will carry out my statutory response ability to protect consumers. Thanks, mister chairman. The Judiciary Committee i recognize myself. Since you were sworn in i believe the bureau has done an impressive job putting forward policies that not only provide important Consumer Protections but certainty and clarity to regulated entities. We need both. Under your leadership you made significant strides in becoming more efficient and transparent and i want to commend you for that. What have you seen the most improvement and what areas continue to be addressed, the cfpb looking at potential ways to modernize and more consumers moved to utilize Digital Technology what are the technologies you are facing . Schroeder you going down and how do you get there . We are committed to transparency, and promote the discourse, reasonable people will disagree on a number of topics and trying to look at proposed rulemakings and request information to bring that in. Having symposia to talk through the more challenging topics, one on the definition of abusiveness, one on the Economic Analysis factors and Small Business lending and responsibilities under 1071 doddfrank. We are going to continue to engage in the kind of discourse in this area to move forward. Im excited about that opportunity to provide the bureau and congress, ideas from experts in this area where we should modernize the laws and regulations to address the digital age we find ourselves in. That is a positive thing. In terms of modernization efforts how we are looking at how this applies particularly to electronic disclosures. The rulemaking agenda has not been increased yet but we are looking at credit card arena and tackling this in the Debt Collection rule thinking about how we can get simpler, clear in formation on a complex set of laws. The better the consumer is going to be. How important is it for financial regulators to create that to innovation and what impact do you see, for proposed policies on offering products and services. As i spoke a little bit about disclosures, the trial disclosure too bringing information to consumers, having it be simple and clear, providing clear direction to industries, that is what we are trying to do through the innovation policies and other rulemaking efforts and guidance efforts. With those clear rules everyone understands and can innovate and grow and provide services. That is what we work through. Is it better to have an informed consumer . They make a decision. That is a key part of the responsibility as an agency, education was part of the purview and something we are working hard to build. I want to get in a cost benefit analysis. We discussed the role of costbenefit analysis in the bureau and everywhere else. Your organization utilized economists and Economic Analysis in its overall operations including the rulemaking process. It is cost and benefit. That is critically important to me and part of this discussion with the public to actually outline those costs and benefits. That should be important to everybody. I agree and it is something we are committed to. Im excited i have a new head of the office of research. They have the responsibility currently for doing that Economic Analysis to support our rulemaking and costbenefit analysis should be part of our processes and decisions and that is something im working to weigh into the process. Doesnt mean the high dollar amount is the only basis for any decision but talking about benefits and costs and weighing them and trying to quantify them is important. Last time you were here before the committee we discussed the severe problems in the Public Service Loan Forgiveness Program, a Program Congress put in place to allow Public Workers like firefighters and military Service Members to have Student Loans forgiven if they make payments for ten years but 99 out of every hundred Public Servants who apply for debt service are rejected. According to a recent report coming in 2018 the cfpb launched an effort to find out why the program is failing our Public Servants but secretary d devos seems to have stonewalled those efforts. Is it true that in response to a letter from senator warren and myself you confess that, quote, since december 2017 Student Loan Services have declined to produce information requested by the bureau for Supervisory Examinations related to loans held by the departmentbased on Department Guidance . That was in the letter. Is it also true the bureau submitted a Supervisory Examination request to the department of education in january 2019 of this year . Since then the department of education failed to respond to the cfpb request as disclosed in a june letter to senator murray and congresswoman delauro . If i could get additional contact. We will get to additional context but that is a true statement . Yes. Secretary devos has made it clear she prioritizes loan servicers over teachers and Public Workers but you dont have to follow her lead. Your predecessor make more veiny was able to examine federal Student Loan Services despite her opposition. When he faced similar obstruction by the department he followed the recommendation of career enforcement attorneys and sought a court order to compel some of the largest Student Loan Services to turn over documents to the bureau. These Actions Prove the cfpb can still work to protect federal student borrowers despite the irresponsible actions of secretarycdevos. Why has your leadership failed to use its tools to conduct proper oversight . I believe it behooves the federal government to act in a more united manner that would be better for consumers. It will be more consistent. I have met with secretary devos, i hired the ombudsman moving forward with the mo you that is statutory only required to share the information and we are already discussing how to move forward in an effective way. If we can work in cooperation that is great but let me read you what the department of education said 48 hours ago, quote, the department of education is charged with overseeing the federal student aid portfolio. The cfpb is charged with the private student loan industry. If you are waiting for the department of education to give you permission to oversee the Public Service Loan Forgiveness Program you are disappointed and Public Servants will pay a price. Why dont you do what your predecessor did . Why wont you commit to reinstating the oversight and enforcement of these loans . We are absolutely doing exams of private Education Loans and working with the department of education on the federal student Loan Portfolio to make sure federal Consumer Protection laws which are the purview of this agency are followed and that is something we will continue to work through. It hasnt worked so far. They havent cooperated with you, they stonewalled you every step of the way and made it clear in a statement 48 hours ago they only believe you have jurisdiction over private student loan industry and not theirs. Who is going to get here are Public Servants who deserve to have the opportunity to have loan forgiveness as part of their service and i urge you to do it your predecessor did and use the enforcement capabilities you have. Let me ask you, on Residential Mortgage loans originated in 2018, the bureau estimates 16 or 1 million loans benefited from the patch. I understand you will allow it to just lapse. How is it you are going to ensure that if you dont take steps to offer the type of financing that is currently available how can you describe the steps the bureau will take to prevent the patchs exploration without causing a major disruption to the Housing Market in the overall economy . A smooth transition is what i am committed to. I put that in the advance notice of opposed rulemaking and recognizing that the patch was set to expire in january 2021 we are starting the process very early and we sought comment on how long an extension would be necessary to support transition and we are looking at comments back on that now and i will be making a decision in terms of a next step in proposed rulemaking process. I hope you can commit that your final rule will provide the same opportunity for folks to get into a home as currently available particularly people of color have experienced benefit on the patch and have shown they are credit worthy borrowers that should not be denied to be because we want to end the patch without the ability to keep that opportunity available. Thank you, mister chairman. Thank you, mister acting chairman, thanks for joining us and i want to commend you on the work you have been doing and i want to pursue the line of questioning senator menendez raised. I always have been under the view that it is inappropriate and unfair to outsource the definition of qm to the gses and underwriting standards that occur in a black box. Along is the ability to repay rule is on the books it seems to me we need a qualified mortgage definition that is simple, fair, straightforward and entirely unambiguous. One of the ways it seems to me we could move in that direction is to make it clear that a depository institution that keeps mortgage on its books has every incentive to make it be repaid. I believe banks like to get their money back, that aligns the interests of a borrower that is affordable to the borrower. The legislation we passed, declared the safe harbor for institutions that keeps the loan on their books provided there less than 10 billion in size. I am of the view that an 11 billion bank would like to be repaid. My suggestion, one place to look and you have the discretion and authority to do this with your definition of qm would be to allow the qm patch to apply to any institution to keep the mortgage on its books and i am wondering what your reaction is to that. Thank you for raising it. In advance notice of rulemaking that we should we in fact raised this idea and sought comment on it recognizing 2155 did include that concept and yes, the risk calculus is the entities that are intending to keep those loans in portfolio, you anticipated that they would be doing that in a manner they expect to get their investment back so i am very interested in the comments on that topic. I would urge you to consider that seriously. You have done some work on the payday role in pursuing constructive changes. One that im not sure you are focused on is the scope of the rule, specifically Financial Institutions that are concerned that the scope may capture products that were never intended to be captured including interest only in a brokerage account. I dont think anybody thought of that as a payday loan that might be captured under the old definition or shortterm bridge loans that assist customers in sequential real estate transactions. I dont think anybody thought of that is a payday role. As you evaluate reforming the payday rule could you address the issue of the scope and whether you intend to tighten up the scope. I am familiar with the concerns you are raising here now. The bureau has received a petition to reconsider or address issues with the payment provision with the underwriting requirements. We have a responsibility to respond to that within a year of it being sent to us. It is on the place, the priority was reconsideration of the underwriting provisions but we have to respond to these concerns. It is important to look at that as well. A quick complement on your fiscal management of the department. There is a cap on spending as a function of Federal Reserve revenue which in the past seemed to be viewed as a floor and youve not taken that approach and i commend you for that. Section 1031 of the doddfrank act gives the bureau Unprecedented Authority to take and force protection against those who are engaged in unfair deceptive or abusive acts, abusive is not defined in the statute, and any law that defines abusive and is subjective term. Steps to provide a clear definition what have would constitute abusive . Ms. Kraninger senator, thank you. The definition in the statute is precisely something that we have talked about. We had a symposium on this topic and brought experts together to talk about whether further definition is necessary or useful to the process. The only place that we really provided additional definition is an Enforcement Actions which have also been quite rare. This is something that is a decision before me to whether we should put more guidance out there a what next steps we should take so there will be news on that in the nottoodistant future. Thank you. I want to thank the chairman and ranking them for the strength and want to thank you for being here today, ms. Kraninger. Going back to the payday situation, is there are you doing oversight of r payday lenders now or are you waiting for the rule to be we when or where are you at in the process . We absolutely continue to engage in investigations as well as supervision of payday lenders. How many actions have you brought against payday lenders in the last year . There is at least one, but it dont member off the top of my head. We can get it h for the record. Do you think agency is adequately doing its job as far as enforcement on payday lenders at this moment in time . I can assure you that we are vigorously enforcing the law in many areas, including this one. Okay. Soso tell me about the thought behind eliminating the office of students and young consumers. We do continue to have a section for students and that is, now has four Staff Members in it. Itsha about to have five. So we have continued commitment to that. So you still have that office . It is called a aio section. This getsse into i think semants but yes, theres still a group of people focused so it was renamed. Compare this to how many people do you have in that office . There were five total and they were speedily say number . Under the private Education Loan ombudsman. With six people doing this. What kind of action are you saying and that areas t far as protecting students . Theres a lot of different activity. Im getting into the organizationalal chart, that really the Students Office of focus on education activities. We do have examiners who are examining student lenders as well. The point is here, the name of your agency is Consumer Financial Protection Bureau, and with student at coming out in unbelievable amounts. Ice to get credit card apps for my kids you are now middleaged all the time. There are people out there preying on them. Theres no doubt about it. I just hope you are very aggressive in protecting these folks. Because once they get into debt as a young person, theyre going to be poor for the rest of the lives whether they have a degree or not. Hopefully you are putting a focus on that. I hope youn do. I want to go back a little bit to the question on the Student Loans, on the Public Service Loan Forgiveness Program. Secretary devos prohibited Student Loan Services from sharing informationg from you, with you, correct . With respect to the federal student Loan Portfolio. How about with respect to the Public Service Loan Forgiveness Program . Didnt she not say you could not get that information, she didnt want the services to give that information . With the network folder, yes. Theres a question there that ii very much would like to settle, because we do have will making of course that gives the bureau the abilitype to supervise large up to spent in that space. But if you dont have information actually hard to do much, isnt it . Its hard to engage in our exams which i think is really about promoting compliant. The point is, and you told senator menendez that you wanted to rather Work Together then use the carrot instead of the stick, so to speak. If you dont have that information, you cant do anything, right . There are other actions that we can take. That the big what is the services. If you dont have that information, you can take other action but the truth is if you really want to get to the point youin have to have that information, correct . To engage in what our productive examinations, yes. So the question is, there are checks and balances in government. This is one of those checks and balances. You are a Law Enforcement agency, to enforce the law. We have a program here that by the way and Rural America is critically important. Its probably just as important in urban america will be a Public Servants who spentye ten years of the life living up to itss program. They make 120 ontime payments ontime payments and where the secretaryy doesnt get was going on because shes got more money than everybody in this room combined. So the point is, if you dont get after it, these people sacrifice tenures of the life and its a real people will go into Public Service, they will go into government service, they will go into nonprofit service, which plays a really important i dont need to tell you this. You know this. So why not go after it and get it . When you have a situation where 1 get qualified, something ot that doesnt smell right. One important distinction i should make is that 30 when it applies to the Public Service Loan Forgiveness Program, the bureaus responsibility is compliance with federal consume financial protection law. The department of education is responsible for the programs. Ive got it. But you have the responsibility to put pressure on it. One last question. I think it is refer anybody in this administration to talk about whats constitutional and whats unconstitutional. When weha have a president that publicly invites other countries to influence our elections. Thank you. Thank you, senator shelby. Thank you for being here. I also do what you think you for keeping the Consumer Complaint database public. Database public. I am looking at your report and f you look at the consumer daytonabase, at least what you identify here, it shows that in figure one, credit or consumer reporting, Debt Collection and mortgages are the most complained about consumer Financial Products and ervices. I appreciate this because this tells us where really, for purposes of enforcement, where we need to really focus our resources and efforts. Mr. Mast i do want to talk ms. Masto i do want to talk about one in particular. Its known as Asset Recovery associates. I bring that up because i noticed you have a press release dated august 28, 2019. That the bureau settled with Asset Recovery assets. In 2012 i was the attorney general of the state of nevada. In 2012 the state of nevada borrowed this Debt Collection from operating in our state and collecting any more debts from nevada because they were so egregious and in fact in your Settlement Agreement, you heit highlight really the concerns you highlight really the oncerns we have in nevada. Since january 1, the company threatened consumers with legal action, including threats to File Lawsuits against consumers, file leans on consumers houses, garnish Consumers Bank accounts or wages and cause consumers to be arrested, all actions that responded, had no intention of taking the company also represented to consumes that are Company Employees are attorneys. When in fact they do not even employ attorneys. And the companies threatened that consumers credit reports will be negatively affected when responding or the company does not even engage in any credit reporting to any consumer reporting agencies about any consumer accounts. I mean, they are just the worst of the worst. So agriege owls. You entered in a Settlement Agreement with them. You were enforcing action against them and i appreciate that. Ut heres my question. Im concerned about the level of restitution for consumers and the oversight that needs to follow through. So i have a couple of questions with respect to that. With your indulgence here. I noticed that for purposes of restitutio i noticed that for purposes of restitution for consumers, the restitution amount was 36,800. And im curious how that came about. Why that amount. The amount in that case in particular i believe represents the number of consumers who have complained and the Funds Associated with that. So thats complained to who . Complained to the company and complained to the bureau. You are basing the restitution amount of the number of people the complained you, along with those that may have complained to the company and are taking the companies word for it that the complaint to the company, is that right . This is really about when he comes to trying to quantify consumer harm, identify consumers who have been harmed believe me i know heres my concern. In the Settlement Agreement, stipulation of consent with the company youre basically letting the company determined and tell you the data and actually identify the affected consumers and tell you they are. They ever touched or did business with, to identify that the settlement exists and if they had a complaint to identify it. Not only that, you allowed the company itself to make be the one that is the arbiter of who decides the information that is being shared. Quite honestly, what we have norm i done is have independent normally done is have independent administrators or somebody come in so theres an independence to it. You do have an enforcement person. I understand in this complaint that youve identified somebody that is particularly responsible for this. And im trying to find and im trying to find the consent agreement here. Who is that person that will have that oversight . It is the director of enforcement. Its typically name in the consent orders. Im not sure at the time the Enforcement Directorate is who . Care peterson. Soas she is the 11 oversight and make the determination working with this company yes. Inou terms of compliance with te consent order. My concern is relying on telling you as a data to identify affected consumers. That to me doesnt even make senseme as somebody who enforced and protected consumers. But the second thing is you have a monetary penalty of 200 as a civil penalty. Where did that come from and how to identify excuse me, 200,000. As you will know because you done a lot of work in this area as well, when it comes to the decision whether to sue or settle, when it comes to the fact the settlement must be negotiated there are a lot of factors that get weighed, including the building to pay of the entity. We could certainly have made the decision to litigate this particular case but thatat does not mean that the outcome would be any better for consumers or for justice if we had two or three years in litigation with three or four attorneys tied up for that time. And then therefore we still couldnt get any money out of a company that had no money speakers typically what we do Law Enforcement if there is a determination of civil penalty its based on the number of violations that have occurred, based on impact with the consumer. I didnt hear that from whatt yu said. And medicated but with the entity can pay. Has nothing to do with that. Clearly, this is the egregious, and your role is to enforce. Its not only to hold them accountable in violation of existing laws but at the same time to protect consumers and provide restitution and not allowing the individual defendant to actually make a determination of the rule, the affected people are in continue to conduct without any for the oversight or penalty. 200,000, the cost of doing business. Because im going to make so much more and well continue down the same path. Thats my concern. I think what im hearing today is the lack of enforcement and the lack of holding their feet to the fire and holding them accountable, theyre just going to any business is going to say, this is just the cost of doing business and im going to incorporate it in that cost because im making good money. Im attack the lumps as they come ill take the lumps as they come. Thats my concern. I would love to have further discussion with your Enforcement Division and talking with your attorneys as we address this moving forward. Because it is be a issue across this country, Debt Collection, as you identify in your own public database, it is a problem for so many people across this country. It is a problem for so many people across this country, so thank you. Thank you. Senator cotton . Thank you for your parents are today. I want too speak about accountability. We hear a lot about that with companies but, of course, it runs of ways, accountability of our government to our people. Company. That has dealt with the cfpb. Consumer compliance is an ever growing process and it should be treated as such. Why does the bureau not acknowledge issues that are selfidentified and selfcorrected that fall outside of an exam period and the company be given credit for properly managing risk . Instead of being treated in their examinations as not even corrected. In fact in one instance, the company had made significant progress and the examiners were told not to put anything positive in the report by their supervisors offsite at the cfpb. I have to say, ive heard other reports about higherups at the cfpb telling rank and file examiners to exclude positive information or selfidentified problems and corrections. Is it the case that examiners inside the bureau are isnt is it the case that examis inside the bureau are being told by supervisor at a a higher lel not to include positive information in their reviews and their examinationon report . I am not aware of any specific instances of that. I cannc tell you it would be contrary to my direction. We have empowered the frontline examiners to conduct exams in accord with their training and that would include certainly a factual providing what have what they saw and observe, positive or negative, that is something i absolutely expect. If you specifics on this and take a timeframe, i would absolutely like to pursue it. So it is your direction that your examiners are out on the front line of thero company shod include positive information and reports as old . It is important that they actually report on their own observations and information that they have observed. What is the bureaus policy on nonsystemic selfidentified problems that are also been corrected through self corrective action . That is something i am encouraging. Again this is a massive ecosystem with a lot of players in it. Enforcement should be a last resort and what would try to do is encourage legitimate Financial Services provider pro comply with the law. Does self issues where they are providing their own corrective action and thats best for consumers too. Theyll get restitution much faster and we have then again a system that is operating and functioning properly. So thats something i encourage. We are looking at ways to make sure that these policies are codified and clear. I have a new head of supervision enforcement and fair lending who just started this week. He knows many of these things are things that i would like to see he knows that many of these things are things that i would like to see us pursue in the coming months. Thank you. Bigink theres obviously a difference between an isolated problem at an institution identifies and corrects versus systemic problems. Agency tr government agency. Reminds me of a story that bob gates told about the early days of the Obama Administration, when he was something of a fish out of water, being a holdover from the bush administration. They had the usual tensions that exist between white house staff and cabinet secretaries, they had to sub in at the white house in the early days to resolve them. And bob gates, the wise man of the group, told the white house staff that they were very important, they understand the president. Someone went back to his campaign for the senate, but they couldnt implement decisions. So they needed the cabinet officials to be involved in the Decision Making process. They said he heard laughter behind him. He turned around to cabinet officials. I dont know what all of are you laughing about, because today, even though its a saturday, someone in your organization somewhere is doing something that you disapprove of, that is probably immore and may be illegal. The point being that in institutions as large as a cabinet or the cfpb, theres almost always the possibility of someone doing something wrong. As bob gates showed repeatedly in the department of defense, you want to try to stop isolated individual cases of wrongdoing and certainly have systems in place to stop systemic wrongdoing. But even more important is when you find those cases of wrongdoing, that you take corrective action immediately to stop them. We want to encourage private institutions to do that. We also want the cfpb we want to encourage private institutions to do that. We also want the cfpb do have an opportunity to do that for any examiners that are not doing whats consistent with your guidance as well. So, appreciate your time. Senator smith. Thank you very much, mr. Chair. Good morning. Basis he again. Good t morning. I like to followup on what i understand are some questions some of my colleagues asked a little earlier on the Public Service Loan Forgiveness Program. Program. Something overly concerned about. Theres a minnesota story that was, shes actually a plaintiff in the afd lawsuit against the Department Around this issue purchase a Public School teacher in brainard and she likes likee others were told by her services that she was on track and making qualifying payments even when that was not the case, and that Incorrect Information was provided her and not addressed until years later and gauche meet all sorts of life decisions based on that that information. And so here is what i want to try to understand a little bit better. Le so thats cfpb and the department of education had an information sharing agreement, correct . Yes. On complaints in particular, and then there was a separate one on, frankly as im sitting here now, im forgetting what second m. O. U. l anyway, we will get back to specifically on the second m. O. U. Because it didnt get a slice each of the point i know about but those were to make in the past that are no more. And are you pursuing efforts to reestablish that information sharing agreement with the department of education . Yes. In fact, two days ago the private Education Loan ombudsman to thets signed copy of the complaint m. O. U. That isor in te doddfrank act, statutory responsible that we have that that oversight and we very much hope to execute that imminently. We are engaged in conversations around how we can Work Together in particular to make sure that the bureau has the ability to enforce Consumer Financial Protection Laws through its larger participant ruled. Its one thing to share information and its another thing for the bureau to use its Investigative Authority and ability to supervise and examine whats happening in order to put a stop to what we see as, by some reports, organizations can Loan Services that are denying upfo to 99 of applications for loan forgiveness. So tell me how youur pursuing tt part of this, not on information sharing but also the need for supervision and examination. Yes. I do believe its important. Again, the bureau issued a a larger participant role in the student Loan Servicing space. Entities engaged in federal Student Loans, as well as private Student Loans. I believe whats best for consumers is for the department of education and the cfpb to come together and determine what the best way to support, you know, the functioning of their programs and their Program Management oversight and their contract management oversight responsibilities, and our ability to enforce Consumer Financial protection law. And those who things can coexist and thats the path that were none terms of our conversation. Ms. Smith really your role is to be focused on Consumer Protection. And their role i understand what youre saying. But you also have two different roles, would you agree . Ms. Kraninger yes. Smith myth smith and do you see ms. Smith and do you see that part of that role is to go in, and just like you might as a bank examiner, for example, that you go in and try to ferret out where things are not working right, rather than just waiting for to find out after the fact that something isnt working right. Ms. Kraninger absolutely, yes. When it comes to Consumer Financial protection law. Ms. Smith ok. Thank you. I have a minute more. Id look to like to follow up on a question when you were before the committee in march i asked about. I asked you about a proposal that the bureau had published in 2017 to directly obtain data from a variety of entities in the student loan industry from big banks, to the loan service providers. And this went to the o. M. B. For routine review. And at the time you said you were looking into that to try to figure out where it stands. And could you just do you have an update for me on that . Ms. Kraninger yes, i do. The conditions have really changed since, in particular because the department of education is engaged in its nextgen modernization. So as ive talked to the staff at the bureau, they assessed that the Data Collection as it was submitted to o. M. B. , it isnt really relevant today. Given those changes. And so what were looking at now is what makes sense Going Forward and were certainly going to be talking to the department of education about that. But we have left that but we have left that data request at omb just pending our discussion and decisions about it or pull itnd back, or what opportunities that are for datahi collection in ths area. When do you think you will move c forward then . I certainly hope by the time im next time back is that i can have it update for you specifically where were going to go with this. I look forward to the update. I think its important. Thank you. Thank you, mr. Chair. Thank you. Senator bennet home. Thank you, mr. Chairman. When you are here in march, you and i had a conversation about the Trump Administrations efforts to weaken the payday protection p rules that were put in place by the Obama Administration to protect consumers against unscrupulous practices by payday lenders. As you know that obama rule at two components. It had had the payments component, the payments provision, and the other tovision on the ability repay. Ho that whole rule was challenged in court andee the state has ben opposed by the courts. You follow this, right . Yes, sir. As i understand the position of the bureau, you do not think theres any reason to maintain this day on the payment provisions of theof obama rule,s that correct . I would tell you that our filing speaks to that point. One of the claims raised by the other party is in the constitution structure of the bureau. That is a. Significant matter that is part of i would note that the court knows that as well. I think thats part of the basis for thehe continued stay. But my understanding, i got a document here that you sent to the committee explaining the bureaus position in this case and essentially the bureau said theres no b legal basis to stae a compliant state for the payment provisions, isnt that right . Yes, specifically on the merit. Given that the position you take it in court, will you file a motion to lift the stay in order to allow this important provision to go forward . Will you do that . I am deathly looking at that and note that thats an option. Ist do think the constitutional structure question is a significant one and one, again, that has been raised and was outline in our filing. Im just reading from what you have written, the bureau has written, where you disagree about the need for the stay on the payments provision. So given that thats your position, why are you still looking at the option of filing a motion to lift the stay . Why dont you just filed a motion . Because as i said, in the same filing you are looking at we did note that the constitutional structure question is a significant one in the case, and that something that the judge is ostensibly weighing . I understand hes weighing that but as read your own motion, the bureau does not think theres any reason for delaying this provision and so i justst dont know why youre not using your authority and prerogative to file a a motiono lift the state s so we can put this provision in place. At the hearing back in march, we looked at the analysis that the bureau put forward, that sort of proclaimed that the changes would save the payday lending industry between 7. 3 billion and 7. 7 billion on an annual basis and that that was money that was now coming out of the pockets of consumers. Right . These are consumers who would have been protected by the obamaera rule, but are no longer protected. So moneys that consumers would have been would have saved because of protection from unscrupulous practices are now going to the industry. As ive looked back on how you went about the revision of the rule, i was struck by the fact that the bureau did not present any new research in defense of the change. That original rule protecting consumers had been based on Research Showing the harm and harm done to consumers. Can you tell us today what new can you tell us today what new research the bureau developed in proposing the change to the rule, a change that would cause 7. 7 billion lost to consumers . A few things in response. One is certainly at the full record from the prior rulemaking and from our current rulemaking, the experiences of the states in terms of the laws that they are past and experience that theyve had, and there is some Newer Research that is available. Is before me now. I know i will certainly defend our proposal, but at the same time note that a final decision has not been made in this issue. With respect to Additional Data that we took into account in the proposal, it is fundamentally about the legal and factual basis that the first rule was based on. Legally there was we do have the discretionary ability to undertake rulemaking related to unfair, deceptive or abusive acts or practices. So that was the basis of that rule. It is my judgment that that is something that we should undertake very thoughtfully and judiciously because there are other affects on consumers and other affects on the markets. So the availability of credit and the question too of the 7 billion, the question for each of those consumers individually is what their next best alternative actually was. Whether that is the inability to pay a utility bill, the inability to repair a car, the next order effects that come as a result of that. Those are the things that i would posit at least as considerations when that is proposed as merely something that is a loss to consumers. The question is what else happened in their lives individually and what did the access to that and to that credit afford. I would also note this is an area of the market where there are many challenges. We h we have taken and continue to take Enforcement Actions against entities that are engaged in illegall activity. That will continue, and that is certainly a challenge in this space. Well, im listening to your answer and i would just note that i dont think you mentioned the new research that justified the change to this rule that protects consumers. So i would welcome any information you can present to this committee. Im glad youre still we doing this. I really hope you will not take the steps that you seem to be headed to take him which in my view would significantly harm consumers to the tune of 7. 7 billion, according to the estimate of the analysis by the bureau. So thank you, mr. Chairman. Thank you. All right. Then that concludes the question for todays hearing. Again, we want to thank you, director kraninger, for coming today. I know there were a couple of senators who hope to get back with her schedules just are not letting that happen so know youre likely to get some additional questions. And for senators who wish to submit a questions for the rec, those questions are due to the committee by thursday, october 24. We ask that you respond to those questions as probably as you can. And again, we thank you for being here, and appreciate the good work you are doing. Thank you, senator. This hearing is adjourned. [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] go get a a camera, go get a microphone and will start filming a produce the best video that you can possibly produce. Visit studentcam. Org for more information today. Cspans campaign 2020 coverage continues. Today at 6 p. M. Live on cspan. Up next and House Appropriations panel looks at funding for for a new nasa prom to send humans back to the moon. Nasa administrator Jim Bridenstine and the agencies acting associate administrator for human exploration of space took questions about potential cost of a moon mission which would be the first since 1970s 1970s
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