Transcripts For CSPAN2 CFPB Director Kraninger Testifies On The Agencys Semi-Annual Report To... 20240713

October 2018 and march 2019. Including rulemaking and supervisory and regulatory activities. The report provides insight into what the cfpb plants undertake in the coming work period, since stepping into a roll last december director can injure understands consumers have access to a wide range of Financial Products and services that meet their individual needs, fostering innovation and vigorously protecting consumers. Reflecting this commitment to the cfpbs mission, director crandall conducted an extensive Cross Country listening tour with the full spectrum of cfpb stakeholders during her first month on the job area director creditors conversations with consumers, industry and fellow federal and state regulators have improved engagement, informed their supervision and regulatory processes and improve Agency Transparency area in the semiannual report, director preminger also 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 10, the cfpb issued three new policies to promote innovation and reduce regulatory uncertainty. Ucthese policies include the Trial Disclosure Program policy , the 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 announced a proposal to update the mandatory underwriting provisions of its 2017 small dollar lending rule. Updating this rule is an important step towards ensuring the availability of credit that is essential to so many consumers who struggle to access or qualify for other options and basing rules on solid evidence and legal support. As the cfpb continues to move forward on this rulemaking process, i encourage cfpb to coordinate with the other financial regulators on an approach ppsmall dollar lending to create a consistent framework across all institutions in order to promote and expand small dollar lending and the credit options area in july the cfpb released an advanced notice of proposed rulemaking taking stakeholder comments on amendments to its ability to repay all five mortgage rule. Fha director columbia and director preminger noted this acute impasse exacerbates an unlevel Playing Field and that fannie and freddie should play by the same rules as everyone else. The cfpbs action are a positive step and i continue to encourage s them bureaus efforts to finda solution to the mortgage standard that provides certainty to consumers, lenders and investors alike. Last week the cfpb announced the formation of a task force that will be devoted to examining ways to modernize and harmonize federalConsumer Financial laws. Especially those pertainingto consumer credit. The Banking Committee has been significant time does 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 consumerreporting agencies. En i look forward to reviewing the cfpbs task force on federal consumer law recommendations on how to update the fcr eight so it continues to function as originally intended in a digital world. But i am greatly encouraged by many of the changes and initiatives at the cfpb under director creditors leadership , it remains clear fundamental structure must be reconsidered to make it more transparent and accountable. I continue to support transitioning the cfpb to a Bipartisan Commission from a singledirector , subjecting the cfpb to operations and providing a safety check regulators. On september 17 2019 the cfpb filed a brief in the Supreme Court, urging the court in the case of salo law versus cfpb to review the constitutionality of the bureaus leadership structure. Ive long argued that cfpbs current structure lacks sufficient accountability and look forward to the rtSupreme Court taking upreview of this case. During this hearing i look forward to hearing more about key initiatives at the cfpb, priorities in the upcoming work period and regulatory opportunities to provide widespread access to Financial Products and Services Area director preminger, i thank you for joining the committee to discuss the cfpbs activities area. Thank you misterchairman and welcome director. We created the Consumer Financial Protection Bureau to stand up to servicemembers and hardworking americans to protect them from big banks and crooked corporations. To rob them of their homes and jobs and savings. After 10 months on the job, its clear why President Trump selected you to head the cfpb. We know he can count on you to protect wall street banks and payday lenders and shady debt collectors and other companies that prey on hardworking americans. Under your leadership, under President Trumps leadership, this agency has chosen operations 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 live , cheat and steal from hardworking americans and then youve let them get away with it. The consumer Protection Bureau is supposed to protect consumers, thats your entire job, to protect consumers from predatory loans and from predatory payday loans that lead to endless cycles of debt. You instead chose to protect the interests of President Trump and his payday lending patrons. Consumers pay the price. Since august when the payday rule was scheduled to go into effect americans have paid more than 1 billion in fees to payday loan sharks. Thats 1 billion out of the pockets of consumers and its consumers without a lot of money. Theyre using payday lending obviously, 1 billion out of the pockets of consumers because agency that was supposed to look out for them decided to instead got four paydaylenders. You are protected servicemembers and their families but instead the Trump Administration that betrayed them when you stopped making sure Companies Follow the protections for servicemembers and their families area that you also could have strengthened the bureaus enforcement of fair lending laws that return hundreds of millions of dollars to victims of discrimination and of agencies versus seven years. Instead you continued President Trumps attacks on fair lending laws. Instead of protecting the bureaus office of fair lending and put a trump political appointee with a history of racist and sexist writings and we explore those in this committee before in charge of fair lending. Are now trying to repeal a 2015 rule that required lenders to report basic loan information ensure that are not discriminating. What are the results . Since you took over, the bureau has not brought a single case against a company for discriminatory lending practices, not one single case against a company for discriminatory lending practices. Last time i checked, dissemination hasnt ended in this country in trumps america. You and the Trump Administration have turned your back on student loan borrowers. The bureau could have protected the 44 million americans from the widespread mistakes and errors in mismanagement by the companies that handle their loans and have cost them thousands of dollars but again, you betrayed the people the president promised to look out for. Hearing that word tray these days used a lot, how the president s betrayed workers in the midwest. How the president s betrayed our allies in the mideast and day after day trade workers in this country. You cited with education secretary devos and refused to examineLoan Services to make sure theyre not cheating peoples loans. I guess i should expect that consistently looks white retreat for wall street executives. Cricket corporations have no real incentive to follow the law and if they get caught they know the bureau will hit them with nothing more than a slight slap on the rest forward enough consumers. How in the world do you claim to these hardworking americans why this bureau is it protecting them connect to be sure youve done the role as bayou by the United States depicted companies, not workers. That indefensible. Thank you, director not your opportunity to make your initial statement. The floor is yours. Please proceed. Chairman, drinking member, members of the committee thank you for their y paternity to provide an update on the bureaus important work. Preventing harm to consumers is the top priority of the cfpb. We prevent harm by educating consumers to protect themselves. We prevent harm by clearing or having clear rules of the road for related entities and prevent harm by using supervision and enforcement to promote compliance with the law and prevent harm by supporting dynamic and competitive markets that provide for consumer choice. While prevention is not always possible it is the right c goal. Saving consumers from financial headaches, setback and devastation. The semi annual report in my 20itten test money provides a rundown of our activities in the first half of fiscal year 2019. A preview of more recent initiatives some of which i will take the opportunity to highlight now. First, our efforts provide clear rules of the road so the companies and consumers know what is lawful and what is not. Just last week the bureau of finalized the rule to provide needed relief to smaller lenders from collecting and reporting data under the Home Mortgage act and codified to Keep Division of economic growth, revelatory relief Consumer Protection act. Additionally last month the bureau announced policies to facilitate innovation, reduce regulatory acidity and enhance consumer choice. The bureau announced its first new action letter under the new policy. It is time to help keep funding streams open for our Nations Housing counselors who are assisted millions of americans, attain the dream of owning a home. Second, where we cannot prevent harm to consumers we use our involvement tool to hold bad actors accountable. Every case is managed by bureau attorneys seeking justice in the public interests. It is clear to the 19th we announced 22 Public Public improvement actions and settled gix previously filed lawsuits including in a Public Building Department action the bureau settled with one of the nations largest reporters forla violatig regulation see. We take action against the individual who brokered contract Offering High interest credit to veterans and took action against the student Loan Servicing company engaged in unfair practices that violated the protection act. I further, the bureaus bureaus actions in fiscal year 2019 2resulted in an order for requiring a total boater of over 770 million in consumer relief. Nearly relief. Nearly 186 million in civil money penalties. I note the figures not as a measure of the commitment but to underscore the fact that the bureau continues to appropriately utilize its an pertinent tool. Third, we continue to a culture of compliance through our supervisory tool and empower consumers through education. Earlier this year we launched an Initiative Start small, save up to help bear americans to handle an unexpected potential event. As part of this initiative we released the new savings booklet to help individuals create the path to reach their savings goals. We are looking at other innovative ways to move the on savings in america. For example the bureau partnered with h r block to study savings and tax refunds. Ck the study show that encouragement for a simple email or small incentive increase the consumers likelihood of saving a portion of their tax refunds. It also found that one in five consumers to manage of the specific savings peter continued to save eight months later. S we will continue to engage in research about what works to promote have it of savings and overall financial wellbeing. Fourth, a a few recent announcements to devastate the bureaus committed to using the tools Congress Gave us as effectively and efficiently as possible. Just last week the bureau handled its 2 million Consumer Complaint to ensure that the bureaus work continues to be informed by this input 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 consumers submission and put that data into context. Also last week i know the assessment of the task force to examine the existing legal and regulatory work with the task force making recognitions for improving Consumer Financial laws and regulations as well as enhancing consumer understanding of markets and products. We are currently expecting petitions from individuals interested in serving on the task force and welcome recognitions from numbers of progress. Just yesterday about to announce that the new private Education Loan that an important congressional mandate given specifically to that position by issuing his first in all report. The report covers two years and analyze complaints stated by consumers. The bureauu sent a signed memorandum of understanding to the department of education consistent with the statutory response ability to share consumer complete intermission. Before i close, id like to touch on one issue, clarity around the constitutionality of the bureau structure. As you are aware i joined the government in the sipping court to hear the case. This matter is in litigation so consistent with longstanding bureaucratic i will not discuss it at length. I do want to highlight a few key points. From the bureaus earliest days the constitutionality of the directors removal provision has been raised to challenge legal actions in pursuit of our mission in litigation over this question continues to cost significantly in some of our investment in military actions. I believe the dynamic will not change until constitutional caution is resolved. Either by congress or the sipping court. Questionon on this will not stop the bureau from the filling our statutory responsibilities. We will defend the actions be taken out and in the past. I thank you for this opportunity to discuss the bureaus work in the forward to your questions. Thank you, director kraninger. My first question is related to access to credit. I ask it in this credit question. It has been expressed by senator brown a concern about the level of inperson activity and i appreciate you reviewing theieie agency is enforcing the law. It seems to me that 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. Could you discuss whether that is one of the important objectives that you have and how you would seek to achieve that . Thank you, sen. Access to Credit Credit is part of the mission of the bureau and it comes into play in. Dot frank under innovation and soliciting innovation and access. Its an important part of what e do and we do have to be supple and judicious and deliberate in our will making activities to consider the indications on access to credit. The actions we take and there are a number of areas where we are beatable about that. The highlight innovation policies because that clearly is an area where we are taking more innovation from the industry from Financial Technology companies and from others who have ideas about how we can reach those under bank and in our society and bring them into Financial Services that are going to help them build their financial wellbeing. That virginity is something weve had symposium on and engaged in work on that induced the court to continued products and services coming forward to talk about how they can do that. Thank you. I guess weve already discussed this but id like to highlight again one of the most important things we can do for those who are not the date and find it difficult to access credit is to make sure the Credit System that they can participate in is safe and that it is strong and robust available to them. Could you comment further on the importance of that . Yes, certainly. Thats an important part of th that. That competitive, fair, transparent market to promote that for consumers and that is part of the mission we are iln getting. I think one thing i can talk about is alternative data and the opportunity to look at that in underwriting at the bureau did issue one action under prior policy to accommodate called upstart and since had how upstart has used alternative data both employment education information to again make those determinations and provide greater access to credit and we did issue a blog recently or head of fair lending and head of innovation talked about their virginity that Companies Like upstart are providing to individuals who are on bank and under banked to bring them in at tuesday for products and that is something we will continue to do. Thank you. The adoption of Innovative Technology is impressivee and hs a clear potential to improve the ease, efficiency and cost of providing Financial Services to a wider spectrum of consumers as he discussed. A lack of a literary certainty and clear guidance regarding the use of new Financial Technology and methods of Consumer Engagement can cycle the development and integration d of innovative practices. Can you describe how the cfpbs recent policyy regarding with te sandbox Closure Program and compliance of the no action letter in the Compliance Program can have and help our firms that do provide services get Greater Regulatory and enhance financial observation. One of the premises of that policy is certainly encouraging some of these Innovative Companies and entities to come forward with their ideas and it is something that is challenging to do and a company entering the space does not have the same history of regulatory engagement as traditional institutions do s forward to ask questions to look for ways to be compliant with Consumer Financial Protection Laws iste what theyre trying to do and what were trying to promote is with thosesation energies and a real opportunity with the trial disclosure to get better information to consumers symbol information to consumers at the right time so they have what they need to make the best decision for themselves and looking forward to even traditional Financial Institutions coming forward with great ideas in that space. In the sandbox as well there will be backandforth overgo hw effective the products are and what the opportunities are that are beneficial to consumers and part of the allocation process is raisingng benefits and risk o consumers and that is what applicants will have to articulate to us and go back and forth on. Thank you. Senator brown. Thank you mr. Chairman. It is reasonable to consider or is it is it considered a payday role loan that lets them get into financial trouble to pay back as little as 1 of that loan . Im sorry, are you asking about an Interest Rate . I asked that because i know the answer is selfevident. His chart shows that you let scammers and shady debt collectors pay 1 or less of the amount they oh and this cfl 8. 1. 1 of the amount they owed to consumers and howard law paid 71 hundredths of a of the debt they owed in the scam they made in mckinnon paid 2 10 of 1 . He gave these gave these corporations scammers huge discount of what they owed to hardworking americans who they cheated so why is it that these cameras take advantage of servicemembers or seniors or students that deserve Debt Forgiveness but working families dont deserve the same treatment . Thank you for giving more more context on that question, senator. As you know, every case is fact and circumstance pacific led by bureau attorneys in terms of the opening decision of that case, closing decision of the case and recommendation and the discourse that we have inside the agency over whether to sue or settle. There are certainly opportunity cost they are with our decisions to do sue which weve taken in many cases underer my leadershi. You can answer this for the next five minutes but when the settlement or when the consumers are hurt and scammers that benefit the little bit of money they get what message does that send you its not only these consumers get nothing close to restitution but the message it sends to other h scammers that they have a friend in the white house and friend at the cfpb. During your confirmation i raise duconcerns that you sided with 9 11 scammers and other corporations to argue that cfpb is unconstitutional but dear mother that conversation . I do, sir. Good. Thank you. St you testified as director it was not proposition to decide whether cfpb was constitutional. He said and im calling, im aware the constitutional question and i think there are important but not for me in this position to answer and the director has response ability to carry out the laws and run the agency and that is my focus to run the agency. Based on the testimony of surprise went a few weeks ago he sent a letter to congress stating i have decided the bureau should adopt the permit of justice view that the for clause removal vision is unconstitutional. If someone comes to congress and commits to do one thing and does another is that lying to congress connect. Senator i was where where im usually of the constitutional question of my nomination and we discussed it at the hearing during my constitutional process and it certainly is not a decision i had to take at thatt time and i still firmly believe that in terms of settling this question, as i said in my opening statement, its for the Supreme Court in progress to settle it. The executive branch and all of us officials have a responsibility to uphold the constitution. And in the face of this petition to the Supreme Court in this particular case it did come to me for a decision on my position in a position to be would take. That is the decision that is outlined in our it speaks to your credibility as a public official that came into this committee and said he would not speak on issues of constitutionality and then you. Did. To meet the reflects on other may have thatom overtime. I want to turn back to the Public Service loan forgiveness. Congress designed the program to help hard working americans who take jobs that we hope they take to serve this country and serve their their communities and its clear the management of this company or program under the company has been a complete train wreck and fewer than 1 of workers, fewer than 1 of workers have received the loan forgiveness they earned in the cfpb has done nothing for this two years about it. Will you commit to the public theyll open in a Position Company that is supposed to manage the american Student Loans . Senator i take take very seriously the response ability we have to all consumers and particularly to students. We do have that rest on sunday and i hired as i said i would do private Education Loan omnibus and issued its first in what report and we have engaged the permit of education to work through what i think is the best outcome for consumers and that is to have the federal Government Agency i invited any understanding of our respective Response Police and how we move forward. They are to report on the mou that is statutorily required and moving forward on other areas including how we will carry out our response bodies of the larger participant. I hope so but nothing but mental has happened that is still 1 of workers received the loan forgiveness they have heard as they serve the public as we asked them to do. Keep in mind via is a federal contractor using federal taxpayer dollars to manage loans. Will you protect people trying to pay p off their student loan . Or will you protect secretary devos and this company connect. I will carry out my statutory responsibility to protect consumers i. I recognize myself. Doctor kraninger, since you were sworn in the bureau has done an impressive job of putting forward policies that not only provide important Consumer Protections, which is in the forefront here, but also certainty and clarity to regulate entities. We need both. I believe under your leadership you made significant strides in becoming more efficient and transparent and i want to commend you for that. Now, during your time as director in what areas of the bureaus operations have have you seen the most improvement and what areas do you feel continue to be addressed . L along those lines, cfpb has announced its looking at potential ways to modernize federal Consumer Financial loss. It is more consumers and that is all of us moved to utilize Digital Technology and what are some of the t challenges you are facing back how do you get there . Im particularly proud of our commitment to transparency and to promote the discourse. Reasonable people will disagree over a number of topicsic and trying to push forward again with advanced notice proposal rule makings and request for information to bring the public into the discussion we are considering making actions has been important in having symposium to talk through the more challengingmo topics. We had one on the definition of abusiveness and one on the Economic Analysis factors and another coming up on Small Business lending. Our Response Police under 1071, dodd frank. These are all things we are doing very well and will continue to do engage in that discourse and work with all the stakeholders in this areas to move forward. Andmentioned the Task Force Im excited about that opportunity to provide the bureau in the congress with ideas from experts in this area as to where we should go to help modernize the laws and Relations Digital age we find ourselves in. Thats a positive thing. In terms of art modernization efforts we are looking at how this applies in a number of contacts, particularly for electronic disclosures. The ball will making agenda has not been released yet but we will look at credit card arena and we are tackling this in the Debt Collection rule thinking about how weca can get simpler clearer information to consumers in what is a complex set of laws, frankly. How important is it for the financial chelators to create a Regulatory Environment that is conducive to innovation and also what impact do you foresee through your job here proposed policies that would help on firms offering new products and services . Thats important to the marketplace. And excited about the invasion policies and as i spoke out as closures and trial disclosures, bringing information to consumers at the right time and r r having it be simple and clear and providing clear direction to industry that is what were trying to do both to the innovation policy and other rulemaking efforts and guidance efforts. With those clear rules again everyone understands and can innovate and grow to provide services that consumers need and want. An that is something we will continue to work our way throu through. Isnt it very important to have an informed consumer . In other words, they understand what they are doing when they make a decision. Yes, sen. Thats a key part of our response ability. Education was part of our purview and were working hard to build. I want to get into costbenefit analysis. Last time he came before this committee we discussed right the role of cost benefit analysis at the bureau and everywhere else. How can your organization utilize economist and Economic Analysis in its overall operation including in the rulemaking process . Weigh the cost and benefits. Senator as you know thats critically important to me part of this discussion the public to outline those costs and benefits and quantify them. That should be important to everybody. I agree, sir. I im excited i had a new head at the office of research. They have the response ability currently for doing that Economic Analysis to support our rulemaking and costbenefit malysis should be part of all prr processes and decision and that is something im working to way into the process. Doesnt mean the hard dollar amount when we can quantify is the only basis for any decision by talking about benefits and costs and weighing them and trying to quantify is important. Thank you. My time is up. Mean director, last time you were here before the committee you and i discussed the severe problems in the Public Service Loan Forgiveness Program. This is a program that congress put into place to allow Public Workers like teachers, firefighters and military Service Members to have their Student Loans forgiven if they make payments for ten years. Ninetynine out of every 100 Public Servants who apply for Debt Forgiveness are rejected. According to a to a recent npr report in 2018 cfpb wants to never to find out why the program is failing our Public Servants. Secretary devos to permit education seems to have successfully stonewalled those efforts. Is it true that in response to a letter from senator warren in myself, you can7, test quotes, december 2017 Student Loan Services have declined to produce information requested by the bureau of supervisory examinations related to loans held by the permit based on earth the Department Guidance . Yes, sen. That was in the letter. Is it also true the bureaus amended an examination request to the department of education in january of 2019 of this year and since then the department of education failed to respond to the cfpbs request as disclosed by the department in the june letter to senator murray and carlos women [inaudible] senator, yes. If i could add additional context. We will get to context but thats a true statement. Direct connect. Secretary devos are sedentary of education has made it abundantly clear that she prioritizes Long Services over teachers and Public Workers. You dont have to follow her lead. In fact, your predecessor, nick maldini, wasas still able still able to examine federal Student Loan Services despite her opposition. When he faced similar obstruction by the department he followed the recognition of career in freshman 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 s student borrowers despite the responsible actions of secretary devos. Why has the bureau, under your leadership thus far, failed, failed to use all the tools at its disposalo including seeking court orders to conduct proper oversight . Senator i believe it behooves the federal government to act in a more united manner that will be better for consumers and certainly will be more consistent and i have met with secretary devos and i hired the private Education Loan offices and removing with what is statutorily required to prevent that and we discussed how to move forward in an effective way to make sure i agree it can work incorporation thats great but let me meet you at the department of education said 48 hours ago. And i quote, the department of education is charged with overseeing the federal student aid report partly of the cfpb is inarged with oversight of 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 will be disappointed. P our Public Servants will pay . A price. Why dont you deal with your predecessor and wife when you commit to me and stating the oversight and enforcement of these loans . Senator, we are absolutely doing exams a private Education Loans in working with apartment of education on the federal student Loan Portfolio to make sure that federal Consumer Protection laws which are the purview of this agency are followed. That is something we will continue to work through. Has not worked so far but they have not worked with you so far. They stonewalled you every step of the way animated clear in the statement 48 hours ago they believe you only have jurisdiction over private student loan industry and not theirs. Who will get hurt 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 when your predecessor dead in using the enforcement capabilities that you have. Ch let me quickly ask you on the queue and patch which has provided over roughly 6 million Residential Mortgage loans maiginated in 2018 the bureau estimates roughly 1 million bones benefited from the queue and hatch. I understand you will allow it to just lapse but how is it that you will 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 hatches expiration without pausing causing a major disruption to the Housing Market in our. Verall economy back senator, a smooth transition is what im made it to i put that in the advanced rulemaking and recognizing that the patch was set to expire and generate 2021. We are starting this process very early and we sought comments on how long of an extension would be necessary to support transition and we are looking at the comments back on that now and ill make a decision in terms of next step in a proposed rule making process. I hope you can commit that your final rule will provide the same opportunity for folks to get intoeo a home as currently available, particularly people of color have experienced the benefit on the patch and have shown they are creditworthy borrowers and should not be denied simply because they are ending the patch without the ability to keep that opportunity available. Thank you. Thank you. Thank you for joining us and i want to commend you for the constructive work i thank you have been doing. I want to pursue the line of questioning that senator menendez raised in respect to the queue and patch. I always have been under the view that its been inappropriate and unfair for the cfpb to outsource queue and to the gses and their underwriting standards which are in a black box and as the ability to payroll is on the books seems to me we need a qualified mortgage definition that is simple, fair, straightforward andgh entirely n ambiguous. One of the ways, it it seems to me, we can move in thaton direction is to make it clear that the depository institution that keeps the mortgage on its books has every incentive that is alone that can be repaid. Im of the view that banks like to get their money back when they make a loan and that aligns withnterest of the lender the interests of the borrower to have a loan that is affordable to the borrower. We acknowledge that in the legislative we passed, 2155, declared that there would be automatic safe harbor for any Financial Institution that keeps the loan on their books provided that they are less than 10 billion in size. Il im of the view that an 11 billiondollar would also like to be repaid. It is moneyback. So, my suggestion is one place to look and i thank you have the discretion and authority to do this with your definition of q and m would be to allow the queue and the patch to apply to any institution that keeps the mortgage on their books. Im wondering what your reaction would be. Thank you senator for raising that. In that advance notice for proposed rulemaking we raised this idea sought comments on it 2155 didng that include that concept and that yes, the risk calculus in the entities is intending to keep those loans in portfolio and you would anticipate as you noted that they were doing that in a manner that they thought they would get their investment back in time interested in the comments we get back on that topic. I would urge you to consider that seriously. You also did work on the payday rule and you are pursuing constructive changes. One im not sure you are focused on and its a question but is the scope of the rulesc, and specifically Financial Institutions that are concerned that the scope may capture products that were never intended to be captured including, for instance, interest only lines of credit backed by securities in a brokerage account. I dont think anybody thought of that as a payday loan but it might be captured under the old definition or shortterm bridge loans that have customers are in sequential real estate transactions. Again, i dont dont think anyone thought of that as a payday rule. So, as you eat out weight performing the payday rule could you address the issue of scope and whether you intend to tighten up that scope . Thank you. Im familiar with the concerns that you are raising now in fact, the bureau has received a petition to reconsider or address issues of the payment provisions of the many 17 rule in addition to our consideration of the 27 underwriting requirements so that is something that is on our radar and we have a response ability to run to that position within a year of it being sent to us so it is on the priority it was in fact the reconsideration of the underwriting provision that we look at and respond to these concerns. That is important to look at that as well. We quickly, quick complement complement on your fiscal management of the department and there is a cap on spending is a function of Federal Reserve avenue which in the past seem to be viewed as a floor a and the u. S. Not taking that approach. I commend you for that. Last point, section section 1031 of the dodd frank act gives the bureau Unprecedented Authority to take enforcement action against those it deems to be engaged in an equal, unfair, deceptive or abusive acts as im sure you are aware abusive is not defined in the statute nor am i aware of any precedent in related law that defines abuse and me as an inherently extremely subjective term. Do you intend to take steps to provide a clear definition of what would constitute abusive . Senator thank you. The definition in in the statute is precisely something that we have talked about with a symposium on this topic brought experts to talk about whether further definition is necessary or useful to the process and you noted the only place that we have really provided additional definition is an enforcement action that has also been quite rare. This is something that is decision before me as to whether we should put more guidance out there or next steps we should take so there will be news on that in and near distant future. Thank you. Thank you, senator shelby. I want to thank the chairman and remember remember for the theory for being here today. Mrs. Kraninger, went back to the payday situation. Are you doing oversight of payday lenders now or are you waiting for the world to be rewritten or where are you at in the process . We 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 senator but i dont remember of the top of my head. So, do you think the agency is adequately doing his job as far as enforcement on payday lenders at this point in time . I can assure you we are vigorously enforcing the law in many areas and including this one. Okay. So, tell me about the thought behind illuminating the office of students and young consumers. Senator we we do continue to have a section for students and that is now has four Staff Members in it and about to have five. We have a continued commitment to that. So you still have that office . It is called a section. It gets into a little semantics but yeah, there is still a group of people compare this to how many people in that office . There were five total same number of staffing right now we have six people doing this between the omnibus and what action are using in that area as far as venting students . There is a lot of different activities getting into the organizational chart the Students Office is focused on education activities. We do have examiners who are examining student lenders as well. The point is name your agency could Consumer Financial Protection Bureau and students coming out with unbelievable amounts and i still get credit card apps for my children who are middleaged all the time so there are people praying on them in no doubt about it but i hope you are very aggressive i in protecting these folks because e get into debt as a young person there liable for the rest of their lives whether they have a degree or not. Hopefully youre putting the focus on that. I hope you do. I want to go back a little bit to senator menendez question on the Public Service Loan Forgiveness Program. Secretary divorce they prohibited Student Loans for sharing information from you or with you, correct . With respect to the federal student Loan Portfolio. How about with respect to tht Public Service Loan Forgiveness Program . Did she not say he cannot give that information and the services to give you that information . Within that prayerfully aside inms iis a questionnaire that very much would like to settle because we do have you will making that is the bureau to supervise other participants. If you dont have the information its hard to do mu much. It is hard to engage in our exams which i think is about promoting so, the point is and he told senator menendez you wanted or were would rather Work Together and use the carrot instead of the sick, so so to speak, but if you dont have that information you cant do anything. There are actions we can take. But the big one is the service. If you dont have that information will take action but the truth is you have toru have that information to get to the point. To engage in what are productive examinations you do. Yes. So the questions are there checks and balances in government this is one of those checks and balances you are a Law Enforcement agency to enforce the law and we have a program here that, by the way in rural america, is important just as important in urban america where we have Public Servants who spent ten years of their life living up to this program to make 120 anti payments and a secretary who does not get what is going on because shes got more money than everybody in this room combined. The point is if you dont get after it these people sacrifice ten years of their life and its a people will not go into Public Service or Government Service or Nonprofit Service which by the way playsn an important i dont need to tell you this. Why not go after it where 1 get qualified something out there does not smell right. One important distinction i should make is that clearly when it applies to the Public Center Loan Forgiveness Program the bureaus responsibility is compliance with Consumer Financial Protection Laws and the apartment of education i got it. But you have the ability to your agency to put pressure and one last thing i will be quiet. I think it is rich for anybody in this administration to talk about what is constitutional and unconstitutional. We have a president that publicly invites other countries to influence our elections. Thank you, mr. Chairman. Thank you, senator shelby. Take you for being here and i do want to thank you for keeping the Consumer Complaint database public. I appreciate that and i know its important not just prosperous policymakers for what you do in the general public as well and for so many others out there. I am looking at your reports and if you look at the consumer if l database the complaints you identify here it shows that figure one credit for consumer reporting Debt Collection and mortgages are the most complained about consumer Financial Products and services. You show credit 39 of Debt Collections and 24 . This house is where for purposes of enforcement where we need to focus our resources and efforts and i do want to talk about a Debt Collection company known as Asset Recovery associates. Bring that up because i noticed you have a press release dated august 28, 2019 that the bureau settled with Asset Recovery assets and let me put this in her specter. In 2012i was atty. General general of the state of nevada and in 2012 nevada part this Debt Collection from operating in our state and collecting anymore debts from the data because they were so egregious and in fact, in your Settlement Agreement you highlight the concerns we had in the data and to them you will see the number of complaints online but since january one, 2013 which you identified in your consent agreement the company for consumers with legal actions including threats to File Lawsuits against consumers, file liens liens on consumers houses, garnish Consumers Bank accounts or wages cause consumers to be arrested with actions that responded they have no intention of taking and the company also represented to consumers that Company Employees are attorneys when in fact, they do not even employ attorneys and the companies threatened that consumers credit reports would be negatively affected when responding to the company does not engage in credit reporting to any consumer reporting agencies about consumer accounts. They are the worst of the worst and so egregious that you entered into a Settlement Agreement with them were forcing action against them and i appreciate that but heres my question. Im concerned about the monetary penalties and the level of restitution for the consumers and the oversight that needs to follow through. I have a couple questions with respect to that with your indulgence here. I noticed that for purposes of restitution for consumers the restitution amount was 36800. Im curiousi how that came abot and why that amount . The amount in that case in particular, i believe, reference the number of consumers who complained and the Funds Associated with that so complained to who . Complaint to the company into the bureau. So, youre basing the restitution amount on the number of people they complain to you and are they aware they you existed to complain too long with those that may have complained to the company and your taking the companys word for it that the complaint to the company, am i right connect. This is about when it comes to trying to quantify consumer harm, identify consumers who have i know, we did it all the time as attorney general but heres my concern with in this Settlement Agreement and stipulation consentth are basically letting the company determine intel use the data and identify the consumers and tell you who they are. Instead of mandating the company sent a letter to every consumer that they ever touched or did business with 20 to five that this settlement existed in if they had a complaint to identify it. Not only but he allows the company itself to make or be the ones that are the arbiter of who decides the information that is being shared. Quite honestly, what we we have normally done is have independent administrators who come into theirs and independence to it but you do have an enforcement person. I understand in this complaint you identified somebody that is particularly responsible for this and im trying to find the consent agreement here. Who is that person that will have that oversight . Dir. Of enforcement is typically named in the consent orders. Im not sure at the time, i believe director is to connect. Cara peterson. So she will have the oversight. Yes, and compliance with the consent order. You rely on what theyre telling you is the data to identify consumers and that to me does not make sense as someone who enforces 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 did you identify the 200,000 . Senator as you will know because you done work in this area as well, when it comes to the decision whether to sue or settle and when it comes to the apex that the settlement must be negotiated there are factors that get weighed including the ability to pay of the entity. We could certainly have made the decision to litigate this particular case but that did 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. Therefore we still cannot get money out of that typically will be due and lawenforcement is that there is a civil penalty is based on the number of violations that have occurred based on the impact with the consumer. I do not care that. And mitigated by what they can pay. That has nothing to do with that. Clearly, this is egregious and your role is to enforce and not only to hold them accountable in violation of existing laws but at the same time to protect consumers and provide restitution and not allow the individual defendant to make a determination of the rules and the affect people and continue the contract without further oversight or penalty. Youve given them the ability to say im going to adas cost of 20000 which is the cost of doing business and will continue down the same path. Thats my concern. I think what imm hearing from today is the lack of enforcement and the lack of holding their feet to the fire including the cannibal they will any business will sayf the cost of doing business and i will incorporate it into that cost because im making good money and uptake films as they compete thats a a problem and that is my concern. I agree. As we address this moving forward it is anue issue across this country. Debt collection as you identify in your own public debatess is a problem for so many people across the country. Thank you. Thank you. Senator cotton. Thank you mrs. Kraninger for your appearance today. I want to speak about accountability. We hear about that familiesou ad the credibility runs both ways. Accountability of government are people but the following is a quote from official in Arkansas Company that is dealt with cfp be. Consumer compliance is an evergreen process and should be treated as such. Why does the bureau and acknowledge issues that are self identified and self corrected outside of a period in the Company Became credit for properly managing risk. Instead of being treated in their examinations is not even corrected. In fact, in one instance the company made significant progress in the onsite examiners were told not to put anything positive in the report by their supervisors by the cfpb. I have to say ive heard other reports about higherups telling breaking file examiners to exclude positive information or self identifiedel problems and corrections. Is it the case that examiners inside the bureau are being told by supervisors at a higher level not to include positive information in their reviews in their examination reports . Senator im not aware of any specific instances and i can tell you itin would be contraryo my direction. Weve empowered the following examiners to conduct exams in accord with their training and now it includes certainly a factual providing of what they saw and observed, positive or negative. That is something i absolutely expect. If you have specifics, particularly particularly a timeframe, i would like to pursue it. So, it is your direction that your examiners on the frontline should include positive information in reports, as well . Its important they report on their own observations and the information they have observed. What is the bureaus policy. On non systemic self identified problems that alsoo been corrected through self corrective action . That is something im encouraging. Again, and the massive ecosystem with a lot of players in it enforcement should be a last wsort of what were trying to do is encourage legitimate Financial Services providers to comply with the law and in so doing i mean they have the compliance Management System that does help identify issues where they are providing their own cracked of action andfu that is best for consumers, too. They they get restitution much better and we have again a system that is operating and functioning properly so that is something i encouraged. We are looking at ways to ensure the policies are codified in clear. I have a new head of supervision enforcement with fair lending that started this week and he knows that these things are things i would like to see us pursue. There is rbc a big difference between an isolated problem that it institution identifies and corrects between a systemic problem. That is two and a private company and Government Agency. It reminds me of a story about the early days of the Obama Administration where he was something of a fish out of water with a holdover of the Bush Administration and they had the usual tensions that exist and bob dates becomes the wisemen of the group and tells the whiteout staff they are important and somewhat went back to his fimpaign but they cannot implement decisions so they need the cabinet officials to be involved in the decisionmaking process to admit that they heard laughter behind and they turned to the cabinet officials and that i dont know what you laughing about because even though today is saturday someone in your organization somewhere is doing something that you disapprove of it is probably immoral and may be illegal but the point being institutions that as large as the cabinet or cfpb the sum is always the possibility of someone doing something wrong. As bob said repeatedly in the department of defense do you want to stop isolated individual cases of wrongdoing and certainly stop systemic wrongdoing but even more important when you find the cases of wrongdoing take active action immediately to stop them. We want to encourage private institutions to do that and want cfpb to have the opportunity to do that for any examiners they are not doing that is consistent with their guidance as well. We appreciate your time. Senator smith. Good morning. Nice to see you again. Mi id like to follow up on what i understand are questions that my colleagues asked earlier on the Public Service loan forgiveness per gram. It is something im concerned about. There is a minnesota story that was shes a plaintiff in the af t lawsuit against the department against this issue in a Public School teacher in brainerd and she and others were told by her services that shee was on track to make qualified payments for the pls even when that was not the case and that Incorrect Information was provided or not addressed until years later and she made life decisions based on that that information. Im curious to understand. The cfpb is prominent of education had information sharing agreement. Cracked . Yes. On complaints in particular and then there was a separate one sitting here now and forgetting anyway, well get back to that specifically because thats the point i know youre asking about those were two in the past that are no more. Are you pursuing efforts to reestablish that information sharing agreement with the department of education . Yes. So, in fact, fact, todays go to private education signed letter in the dodd frank letter statutory that we have that ammo you send that over sign and very much hope to execute that ngimminently and then we are engaged in conversations around how we can Work Together in particular to make sure the bureau has the ability to force Consumer Financial Protection Laws through participant role. Its one thing to shared information and another thing for the bureau to use its Investigative Authority and ability to supervise and examini what is happening in order to put a stop to what we see as by some reports organizations Loan Services denying up to any 90 of loan forgiveness applications so how do you pursue that part of this, not only information sharing but also the need for supervision and examination . Yes, i do believe supported. The bureau issued a larger role in the student Loan Servicing space so we do have a response ability and ability to examine both entities engaged in federal Student Loans as well as privatl Student Loans. What is best for consumers is for the apartment of education and cfpb to come together and determine what the best way to support the functioning of their programs and Program Management oversight and contract management oversight as possibilities and our ability to force Consumer Financial protection lock in those two things can coexistre and that is the path we are on in terms of our conversation. Your role is to be focused on Consumer Protection and their role i understand what you are saying is that you have two different roles. Yes. Do you see that part of tht role is to go in just like a Bank Examiner you go in and try to ferret out where things are not working right rather than r iting to find out after the fact that something isnt working right. Absolutely yes. When he comes to Consumer Protection peninsula. Thank you. I have one minuterc more than likely follow up on a question when you were before committee in march i asked about, i asked about a proposal the bureau had published in 2017 to directly obtain data from a variety of entities in the student loan jdustries and this went to the omb for routine review. At the time he said were looking into that to figure out where it stands and could you have an update we leave the last part of the spanking hearing and can watch this and all are covered at cspan. Org. The senate is is about to gavel in and