Transcripts For CSPAN2 Hearing On Consumer Financial Protection Bureau Semi-Annual Report To... 20240713

Activities. The report also provides insight into what the cfpb plans to undertake in the upcoming were period. Consumer protection is vital for the properly functioning Financial Market it is best determined by the robust quantitative analysis. Under director and Kathy Kraningers leadership ensures that they are datadriven, appropriately tailored to satisfy the obligations and based on sound evidence and legal support. Thereve been promising changes that are cfpb leadership under Kathy Kraninger but it remains abundantly clear that the fundamental structure of cfpb must be reconsidered to make it more transparent and accountab accountable. Last week the Supreme Court heard arguments for the cfpb case that examines the constitutionality of the Leadership Structure. March 2, 2020, the wall street Journal Editorial Board referred to this as a constitutional case of the year and stated that the question presented goes to the heart of the separation of powers and whether the Administrative State is accountable to the people. Its long been my position that the current stable structure lacks accountability and i look forward to the Supreme Court ruling on the case later this summer. With that in mind i continue to advocate for establishing a bipartisan board of directors to oversee cfpb subjecting to the annual process similar to other federal regulators and establishing a check for provincial regulators they spend significant time evaluating the collection protection and use of data by Government Agencies and private companies. Ive repeatedly voiced concerns about the collection of personally identifiable information especially with respect to credit card and mortgage data. February 26, the cfpb hosted a symposium on the Financial Data to determine if the Agency Action is necessary to promote consumer access to the Financial Data. I find concerning the 20 choose to share their Financial Data with a third party, they often unknowingly involved a data aggregator to facilitate the transmission of the data. They should explore ways to ensure consumer data remains protected when a shared. We need a fundamental foundational change to the data privacy laws that apply broadly across industries and ensure domestic and International Cohesion with interoperability respectively. During this hearing i look forward to hearing more about the key initiatives undertaken by the cfpb last year. The directors priorities in the upcoming were period and the legislative opportunities to encourage financial innovation and access to Financial Products and services. Thank you again for joining the committee to discuss the activities and plans. Welcome, director kraninger. I want to say a few words about the toll that its taking on the communities and Healthcare System and the entire economy when the first concern has to be for americas safety we also cant ignore the millions of americans who are losing their paychecks for Small Businesses losing customers when times get tough we come together in christ to the challenge and im confident that we can do that again. It has to mean support for those that think the countr make the t just wall street. Moments like this are a reminder of why weve created the cfpb after the last financial crisis to make sure hardworking americans have a voice in the room especially during times like this. We know that in times of crisis, wall street have armies of lobbyists who will fight to make sure we do what we need to do to stabilize the markets but most people dont have lobbyists, most people dont have that kind of power. We have to fight for them as their voice. During the first six years the bureau delivered results. They made strong rules protecting consumers from abusive practices tha practicesp the road and plunged us into banks and other corporations to make sure they were following the law and returned more than 12 billion to 29 million americans can, think of that, 12 billion to 29 million americans. Unfortunately President Trump tried to turn the Consumer Protection bureau into another agency to help the wealthy friends at the expense of the people that the agency is supposed to serve. Under the first amendment, the director saw a shift away from protecting servicemembers rooting out discrimination away from servicemembers and doing favors for private corporations at the behest of political hir hires. The protectionist of Consumer Protection under the leadership we see the clear pattern sabotaging the agencies wor ageo hold corporations accountable and cited with Companies Including scanning to argue the bureau is unconstitutional in the Supreme Court. If the Supreme Court of an agency that is supposed to keep an eye on them, the director also allowed the education secretary to block the bureau from protecting the 43 million americans with federal student loan debt. If you dont think that the director the power theres consequences and talked to the tens of thousands of teachers and nurses and firefighters in servicemembers who are paying more money in Student Loans every single month because betsy devos denied them the service they earned. She dutifully carried out the administration of assaults on civil rights protections and weekend of the roles identified discriminatory lending and dismantled the office that used to figure out the discriminatory lending practices and todays debate the era appointee with a history of writings look at the result under mulvaney and kraninger. It hasnt got a single case of discrimination, not one. They havent returned a dollar to the discrimination. Discrimination. Last october we learned in exchange for contributions from the campaign payday lenders were bragging about being able to pick up the phone and get the president s attention to fend off regulations. They havent filed any new lawsuits against the payday lenders and even with a payday lender keep 1. 3 million to volunteer to pay back the consumers ripped off and its not just payday lenders, director kraninger has gone out of her way to loo look at that collectors and other corporations keep the money they scammed from consumers. He was on his way out the door. He promised that he would hide the bad conduct and put them off without a fine. Lets be clear about what is happening here in this trump Mulvaney Kraninger america and world the ceo asked for a special favor and she gets it wells fargo is still going to cost an interest that we have seen over and over again in the washington wall street plays different roles and director kraninger continues to surround herself with appointees and a history of bigotry and hostility to consumers. She retained a mulvaney appointee that worked as the senior Legal Counsel for the hate group that wants to criminalize lgbtq people and hirehired lynne into service for number two. This is someone that failed protecting consumers and for leading up to the financial crisis world more recently at the bank i believe that the bureau sued for the same type of account fraud but we saw wall street banks, payday lenders, other corporations have allies working out for them in the white house an and on the and dn Mitch Mcconnells office. Its supposed to be an independent advocate on the side of everyone else. They returned to the Core Missions and anything else is a neglected duty. We appreciate your attendance and look forward to discussions today. I want to remind you of the fiveminute rule of the testimonies of the time for questions and remind our senators of the fiveminute over the questioning toko. With that, please begin with your statement. Ranking member brown, members of the committee, thank you for the opportunity to present the Consumer Financial Protection Bureaus semiannual report to congress. A year ago following my two or i established the bureaus top priority in carrying out the Important Mission convention of harm to consumers. We present by supporting dynamic and competitive markets to provide consumer choice. On a daytoday basis, educating consumers to protect themselves in the moment by having the clear rules of the road for the identities and by using superstition and enforcement to promote compliance while prevention is not always possible, its the right goal saving the consumers from financial headaches and devastation. Last week i announced three actions furthering the strategy to prevent consumer harm and i will briefly outline those actions endquotes with the agency raised. First, the bureau will launch an Advisory Opinion Program as another means to provide clear transparent rules for the road. Today the regulated entity asks questions about how the particular regulations apply to the circumstances or seek an interpretation of the regulation that entity cant ask the bureau for the regulation. They do so in a fairly responsible way. However responsive to the inquiries are generally available only to the inevitable sequester. They will provide that response to such request in the federal register and on its website so that all companies, consumer groups and the public generally. For encouraging it there are four categories of responsible conduct. Self processing, reporting, remediating and cooperating. In the violations of the Consumer Financial wall an into supervisory enforcement matters. The potential violations of the federal Consumer Financial wall increases the effectiveness of the supervisory enforcement work and ensures more consumers and more matters promptly receive financial redress for the harvesting of experience but let me be clear. We want to incentivize whistleblowers and to that end last week that they were submitted an executive legislative proposal to congress which seeks to establish an award program. The bureau envisions the program similar to those of other regulators were by whistleblowerwherebywhistleblowg original information forward to prompt the bureau to launch an investigation which culminates through the settlement of litigation which receive payment which would assist the enforcement action especially against good doctors who are not engaged in responsible business conduct and especially as it relates to fair lending violations. These three steps for what is the bureaus efforts to advance competitive consumer Financial Marketplace and prevent consumer harm than help build a culture of compliance across the industry that regulate. But they provide a few words and appears preparedness response efforts related to the coronavirus. First and foremost, we are focused on the health and safety of employees and ability to perform our Important Mission. In order to make the best decision possible in a timely manner. To have the best information from Public Health and Emergency Management officials and from the staff. Our internal working group is led by the director of security Emergency Management who reports to the chief operating officer to me and its comprised of representativetherepresentativey division and coordination by director of security is also on routine calls with fellow independent regulators so we are able to align with our peers accordingly. We are also in communication with treasury which serves as a touch point for Vice President s task force and the cdc to coordinate or operations. Collectively the financial regulators are in routine conduct of institutions and have been ensuring proper. This is a fluid situation that requires clear lines of communication and constant assessments to determine appropriate actions based on uptotheminute information in its changing dynamic we are working to ensure the health and safety of the workforce continue to protect consumers in the marketplace. And you for your time today and i look forward to your questions. Thank you. My first question is on the coronavirus in yesterday as you indicated the cfp and the fdic and Federal Reserve and the issue a jointly developed statement that mirrors the guidance. It calls on Financial Institutions to work with affected borrowers and notes they will not be subject to examine or criticism so long as they are consistent with safe and sound lending practices. They also offer support in the affected communities and will be flexible in scheduling examinations and inspections. I know youve already discussed this but i just want to say this joint statement was appropriate and make sure you keep the committee updated on these efforts. Happy to do so. Last september you informed congress that the cfp would no longer defend the constitutionality of its structure and directed them to join the department of justice petition requesting the Supreme Court to review the court of appeals ruling that upheld the constitutionality of the bureau. The Supreme Court has accepted the position of last week held the arguments on the case. After case is pending wit with r the department of justice. Recognizing the directorship and removal only for neglect of duy and malfeasance and efficiency was a limitation on the powers under the constitution. The overriding concern that i am looking to remedy and why i was incredibly encouraged by accepting the case was to get certainty and clarity. Only the Supreme Court and congress can provide certainty. The oral arguments last week as you mentioned i was there as were many others and we are paying very close attention to this. It has supported many of our Enforcement Actions in the history of the bureau and its an issue raised in litigation and its one that clarity will provide integrated help to the input and delivery of the Mission Going forward. I agree with your position and we look forward to it last year they issued a proposal to 2017 small bowl or lending rule by rescinding the writing provisions. The proposal stated that the cfpb made the determination there is a lack of evidence and legal support. In a recent speech you indicated thcfpb issues a final rule no later than april of this year. Can you please discuss why they determined it was necessary to update the small dollar lending rule and how the revised proposal would improve consumer outcomes and access to credit . As you noted the rationale of the proposed rule is around the underlining evidence in that particular rulemaking and so it is something we are considering carefully. We have received 190,000 comments in response to the proposal to rescind the provision and they are working through the comments and our final position to issue a rulemaking where at least some decisions with respect to that in april there are a number of issues that you raised that are related to this but we can do. Its evidence that there is our shortterm products in the marketplace and this is something consumers indicated a need. There are steps that the regulators can take to make sure they can offer these products to consumers that need them and the one thing we are looking at carefully his research into the disclosures. There are actions we can take potentially short of the rulemaking that was offered so i think that is something that we are very much looking at a holistic approach to this and making sure that consumers understand the product they are engaging in with the marketplace priority. My time is up and i did have another question but let me say i appreciate the approach that you are taking to ensure greater protection of consumer data. With that, senator brown. I spoke with the secretary in addition to telling me theres nothing we could have done to prevent the turmoil that we have seen in the last couple of days and said he has no plans to meet immediately in the midst of the financial and Public Health crisis that the country and the Financial Institutions and customers and employees face. You serve on the board of fdic and fsoc. Fsoc hasnt met since november. They dont plan on calling to meet in the future and you think that is a good idea . There is a meeting scheduled in march already and in addition there is extensive communication through the interagency. But considering what is out there and the loss that is quarterly you wonder what they are doing it. Would you stand up now and explain that the plan is to make sure regular americans dont end up paying the price of there are conversations happening today with the senate and house leadership on economic response. The purpose of fsoc is to preempt and predict and understand and put plans together so things wer are not happening with such chaos and at the statutthat the statute saysy should be public. You can talk about discussions and meetings with deputies but the principles have not done what they should be doing. Last year i raised concerns and you puyouve put in charge the g wall and i was critical of them. We found out they promised the bureau would settle these matters. He knew his time was coming to an end. Did you know he promised the bureau would settle the matter without finds . With the ongoing response, the buck stops with me and i can also tell you an alleged statement that is complete hearsay and the committee hasnt pushed forward. You have a reputation of being a little easy on wells fargo. Has the bureau brought in any action since last may . We have ongoing oversight of them. The answer is yo they havent thought and action. Its the largest in the nations history. Which didnt seem to affect much of their behavior. Just yesterday they sued the bank for the same type of Bank Accounts scandal as wells fargo. It was for the couple here pure code and also a deputy at the fdic he would have known about the Bank Account Investigation do you know about the scandal when you hired them . Is a longstanding Public Servants that served in the fed who was the head of regulation. You brought the action. Did you know about his role in that when you hired him . You didnt know about his role as you did . People were investigating a third of the time and you hired him. Did you know of his role, yes or no . It is confidential information with respect to the privacy right as well so happy to follow up with you with any information we could provide. You knew of his involvement. I dont know what to make of the fact. Thank you mr. Chairman. Thank you for your service and for what you do it is a difficult job. We discussed the importance of utilizing the costbenefit analysis in order for the agencys to effectively achieve intended policy outcomes. Ultimately consumers bear the cost of regulation. How do they currently utilize costbenefit analysis and how do they work this into to you. Such analysis is essential to achieve effective tailored regulations . We need to consider cost benefits whether that is qualitative in some cases are quantitative to the extent that we can and we do that in the world making efforts the impact of what they are doing to make sure that it will be beneficial to the marketplace give us examples of something that you bring them to explain how judith a half costbenefi plus costben office. One of the things we are living through is the Debt Collection will making. Consumers do want to pay their debt and its good for the society but understanding the way that collection can take place and the communication mechanisms are and what the limitation is in terms of the law that requires that. Under your leadership, i believe that the agency has made significant strides in becoming more efficient and transparent. What accomplishments or improvements to the cfp b. Are you most proud of in what areas do you believe need to be addressed . I know there are many things that pop up. Increased transparency in focus has been a focus of mine. Its something i believe we are trying to do to forecast the kind of issues we are thinking about seeking public input and the best example i have are the most challenging issues having public sympathy comes on those issues are bringing experts together live streaming. You appoint someone. The costbenefit analysis we are having at the end of april on that topic really brings people into the way that we do this and many other agencies do to see what we can incorporate into the process and what we can roll from learn from others in that area. Thank you, mr. Chair. I want to thank you and the Ranking Member and also for being here, director kraninger. In your opinion, are we in an economic emergency at this moment in . We are certainly responding to a Public Health emergency. Ive got you. Economically though do you classify this as an emergency or just a downturn in the market . We are certainly watching the response and taking calibrated action. I take my lead from this from the secretary o secretary of tre way that but you do have some stroke in this. Dont downplayed. Do you feel they are in an economic emergency . We are absolutely looking at how. The markets dropped 55 points and its down and let him in the last 13 days. Yesterday we saw the biggest drop since 2008. I was here in 2008 and was very disturbed with the folks after that moment in time who were all smart people, too that kind of surprised us. I dont think theres any surprise. A guy would b with the important principle to get together and talk is that too much to ask for when they are put out on a limb and fadeaway come if hes the person that makes the call then why do they hav we have director Everything Else . So, senator, there is a scheduled meeting. Its not set up. There isnt a date. Its not public if there is. I certainly have my staff looked and they couldnt tell me. So, i appreciate your testimony. You talked about prevention to harm consumers and ca the new ch of regulated entities and you clarify and put on a website and responsible Business Contact and what that meant with selfassessment and Self Reporting. You talk about incentives for whistleblowers which i think is great although i dont know what wawhistleblowers would come forward after they witnessed what the president did for the e last one calling him a traitor and basically treated him as a traitor. Have you done anything as hard as educating consumers . A have you done anything in that regard . Happy to talk further about that. The we have offices that focus on precisely the needs and concerns of the populations. In december i sent you a letter asking what they were doing to educate the court date monitor Service Members and college kids. In your response you pointed out to me tha veterans were colleges to the lowest but in this response you pointed out the education resource from march of 2015 in fact most of the education was from 14 and 15. Is that the material or do you have new material . Why wasnt that referenced in the letter . I remember the letter but i dont remember the detail. I thought we had updated information on the issu issue tt you raised which is information for veterans. You dont have to look very far in my position to find veterans have been scammed. We had one in montana that was homeless vets served in the military. Somebody passed you a note and maybe that helps you with the answer to that question. Lets just be honest, 2014 and 2015 is quite a while ago. Its increased from 2015 to 2018 from 19,000 to 33,000, that is a pretty specific and increased. Enforcement actions have decreased. Can you explain that . I believe it is the job we keep doing to make it to database down and make sure the complaints were known can you explain that . We take action on all the complaints that come in. I would tell you that the chairman talked about datadriven in his own remarks. And i agree, but im not sure that you are doing things driven by data. Thank you, mr. Chairman. Thank you for appearing before us. Between the line of questioning on the one hand and senator brown and senator tester the contrast doesnt reflect on you it reflects on us. Talking about the constitutionality of your office and pure and senator brown and senator tester were dissatisfied with some of your responses. I would say youve exercised restraint in wa the way that you responded to them. You have no reason. What did any of us do to you or your bureau, the answer is nothing. You have a fiveyear term. You told a Federal Reserve how much you want. Senator brown wanted you to talk about whether fsoc should be convened. Between you and the secretary and the president of trump, but guess what, president of trump doesnt have much say in what you do either. You could only be removed for cause. You may be the single most powerful person in the branch of the government. Because the body was designed in this way it is totally antithetical to our founding principles. If there was no word be necessary or the separation of powers to keep them in check the foundational principles of our constitution. And the cfpb turns all of those things on its head. Again i commend you for your restraint in the way you responded but when there is no reason for you for many standpoint to be that way. All the complaints that we have for the democrats have doesnt mean you are bad people but they are people. They are not angels. We are not up here either so therefore they should not be given that unfettered power that this bureau has. That is why i say i hope the Supreme Court errors in the dodd frank law to be more accountable to the American People through the elected representatives. Until then i went to raise the question on how you make sure your people are accountable. My office has been in touch with yours to encourage transparency and feedback and too often what we hear is that examiners they have an attitude they should not have are doing what they shouldnt be these institutions are understandably reluctant to speak up but is there any formal Feedback Mechanism . I had hoped i would have an answer for you. We do believe we should do surveys of institutions after an exam. Just to keep some independence from the Enforcement Division that oversees this just of institutions feel better about the anonymous nature of the feedback it will provide. But i want that feedback so we should have the prospect in the next couple of months to launch. Im glad to hear that will be in the next couple months not in years from now. But we need that in place a constitutional one confidential feedbacks you can understand what is happening in your frontlines in a systematic fashion. Thank you for your efforts on that maybe that is the next best step we can take hopefully the Supreme Court will take the step they should have taken long ago to make the bureau more accountable to the American People through our elected representatives. I am glad youre there to hold your examiners to account but we certainly know that is the case. So lets do what we should have done to make the bureau more accountable. Senator menendez. You will are reserve estimates 40 percent of americans cannot afford a 400dollar emergency expense that means 130 million americans are vulnerable to predatory financial practices in the case of coronavirus leads to loss of income or unexpected medical bill. Furthermore Financial Hardship brought on could affect a persons Credit Report and impact their ability to access credit in the future. In 2018 the cfpb performed research on the financial aspects of preparing and recovering from a Natural Disaster. What we are looking at now is a Public Health emergency more geographically dispersed but just as financially dangerous for american families. Early last month the ftc issued warnings about the coronavirus. But even through yesterday the scene on cfpb and other regulators encourage Financial Institutions to meet the needs of customers affected by the virus. The cfpb website still does not have any advice for americans on how to financially prepare or avoid the defraud when it comes as a result of the coronavirus spread. A very simple question. Will you commit to immediately develop and publish such advice so americans whose health and lives are not exploited by scam artist and fraudsters. Senator come i appreciate the question you are asking. Look to update the things that we do have to make sure we reference coronavirus appropriately. That is an excellent point. Thank you. Totally take it to heart but take into action because while general scams and frauds and advice may be worthwhile but specific elements of fraud we are beginning to see already as a result merit to the bureaus attention. I would like to follow up on the important issue so can you commit to the committee any and resolve matters still pending with wells fargo would be handled. We have a current understanding with respect to this going through the requirements to remain in the supervisory tool if we can and that merits cooperation and progress with their compliance plans and with the remediation to take the right action. You cannot make that commitment . We will continue to pursue our own responsibility. But he assured wells fargo that vendors panting would be resolved in private with the office of supervision. It seems the cfpb does intend to keep the promise to wells fargo after all because doing this in public in fact it would be preferable to secrecy. It may not lessen the gravity of his time or actions under your leadership, but to suggest we will take care of you politically doesnt create any sorts of confidence especially those who have bank debt wells fargo and have a long history so i would say to you we need assurances that you could provide the committee the cfpb political appointees are not promising these companies that they will handle any violations of the law it uncovers in private. Public scrutiny is far better if you say we will do it in private then thats a problem. Has the cfpb for those that service the one. 2 billion dollars of loans owned by the federal government . Yes we have an agreement with the department of education and are moving forward this month. So you are doing Supervisory Examinations. Yes. Starting this month. So it is a joint effort but it is your responsibility to be the Supervisory Examinations. I want to make sure have this for the record straight is that the cfpb who was doing the Supervisory Examination of the loans . Yes with respect to Consumer Financial laws and the department of education has the oversight of the contractors. I will close by saying i have raises with you the several times you have been here, we need to make sure you use the full scope of your authority including if youre not getting the direct access as what your predecessor did so i look forward to following up with yo you. I listened with interest to senator cottens message today and i have been thinking that i feel the same way that senator colin has distressed and did a nice job to share the concern that we have about the Leadership Structure within your organization. I think todays discussion especially with Ranking Members and the satisfaction they have expressed to land the ability to the argument there should be direct oversight by congress of your organization. I also recognize now before the Supreme Court you have announced your position the existing structure is not appropriate. Word you agree with that analysis . Yes senator with respect to the removal provision. I think todays hearing has come a long ways how many of us feel that way. I appreciate you being here before us today. You may remember late last year i joined the number of colleagues regarding reforms to the ability and the response you mention to move away from the debt to income with the new pricing threshold so coming to a more defined position how the bureau will proceed is there any misconceptions you would like to take the opportunity to correct . Thank you for the question the timeline for the proposed rulemaking that i issued publicly is may we will outline the details of the proposal the statute absolutely requires consideration of debt to income ratio as part of the underwriting decision and the ability to repay that the institution formulates during the loan process. So what we are going to propose to move away from is the dti 43 percent threshold established what makes a qualified mortgage is a safe harbor that is a little misunderstood it is still part of the consideration but we will not have that proposal or a hard limit on the 43 percent. Previously i have cosponsored legislation the insurance Regulatory Reform act to affirm that relationship with respect to the Insurance Industry does the cfpb in your opinion have the authority to regulate insurance . Definitely not the dodd frank act does not allow us to regulate state regulated insurance. Senator chester was looking for the opportunity youre providing opportunity to respond on what is going on with the coronavirus the impact on the economy so is this an emergency. I would like to give you an opportunity the way we see the response to the ongoing issues the market has fallen there are issues with supply chain competencies or capabilities of the future. In your words, can you give us, the direction you see your organization participating with regard to the current financial situation in this country and throughout the world. It clearly is a Public Health emergency with significant Economic Impact what the administration is looking da today so its something every organization has with the continuity plan and the bureau has a pandemic plan so there is continuity concern and to make sure we are getting the best possible information out and the staff is part of the Business Continuity effort to make sure we are safe and healthy as we look to continue to perform the mission that constant balances what every organization looks at and should be looking at involving updated information so there is updated sharing and guidance is regularly updated to appropriate responses. I have taken action with respect to larger events at the cfpb we have several things scheduled for this week. Now the public can join the live stream rather than coming to the building. That is something we are working through every day. My time is expired. Thank you. Its great to see you. I will start what my colleagues said to be the most powerful person is the executive you do have power i was disappointed by your last response. I do think this will be an economic crisis i am gravely concerned some of the solution sets we are talking about right now, the general tools of Interest Rate cuts, the broadbased stimulus every family and america, targeted by industries are the most recent suggestions of the payroll tax cut miss the mark it will do nothing if you have been furloughed if you are a waiter or a great tryst said a restaurant that is been shut down. We desperately need to look at those affected by the Health Restrictions quarantine another why should not be losing their job or their pay we should be looking at those industries especially around travel and hospitality and food and beverage through no fault of their own taking those healthcare recommendations and i hope we can find some Common Ground on a bipartisan basis to make sure we target relief. But a very powerful person as indicated to influence how the economic crisis will affect consumers. A number of members to take action i do think there is precedent in the case of Natural Disasters we have seen a circumstance where the short term Financial Hardships will last well beyond the effects of the National Disaster to maintain small business. My feeling is we will see that soon. We are already seeing that in the area i have looked at for a long time and urging colleagues on both sides of the aisle to look at independent contractors who have no social insurance the fall back on. And there will be some Platform Companies huber is doing a little bit talking about some benefits or some shared healthcare activity for workers that could be constrained from the coronavirus. But i do think there will be more. Every one of these workers in terms of what is immediately needed from their employers but also financial obligations to deal with. Student loans, mortgages, car payments and rent. I want to hear what specific steps you will take in the immediate coming days. For example, have you gone to the auto lenders are credit card lenders yet to talk about forbearance as these notes come do . We did issue yesterday in fact your letter cross or action to notify Financial Institutions will have supervisory flexibility for any accommodation decisions they make this is the typical stuff that we take that is similar to a disaster context with respect to Going Forward we look day today and there are conversations. Respectfully, i think your response turnaround had any level of detail to it. It seems if youre the most powerful person in the executive you should take that power and use it now i would like to see specifically what guidance you are giving the auto in credit card lenders you mentioned disaster so lets talk about that. Credit card guidance in terms of Credit Reporting relief can be granted so a Credit Reporting enterprise can identify with the trade lines they were affected by a Natural Disaster that give the Credit Bureaus to note it may have slipped to be affected by the Natural Disaster. Have you been willing to reach out to the rating agencies to use these trade lines . And if not why not . We are monitoring this day today we are in communication with industry going back and forth on this i will deafly take your recommendation under advisement Going Forward how we should deal with this. Mr. Chairman i know my time is expired but if we dont jointly get ahead of this , this will not be an event that will end on a single day. I think the American People are looking for a bipartisan on bipartisan Creative Action this is not business as usual. We need to target these and you have a remarkable amount of power to urge that forbearance from the Credit Rating agencies and for those of us who have question your commitment to these issues with this enormous power for you to act for right. Thank you mr. Chairman. Thank you you director for being here i want to explore something that senator chester started on and at least referenced. I have never been a financial regulator but i have been a regulator and the use of Self Reporting can be a wonderful tool and a wonderful incentive or could be a disincentive depending on how the Agency Responds im interested how its going for you under your leadership even with your philosophy to Self Reporting and what is the right level of response from the agency i know thats a broad question but then maybe go deeper on the followup. Last friday i re issued and strengthened the conduct bulletin as something that outlined what this means to self identify and report and then remediate and cooperate. It is fundamental to our ability to target our resources. Absolutely there are predatory lenders and bad actors have no intent with complying with the law and are ignorant of the law with the product mandate with Financial Institutions and nonbank entities to make sure we are focused where we need to be focused to have compliance Management Systems who make a mistake or a bad actor inside the institution. When they identify that and report that to us we say we will favorably consider that in the action and supervision and enforcement around that and true cooperation even just to identify the issue may not be a violation it does not have to concede it is a violation and having the dialogue and bringing that forward in a constructive way so that any harm consumers can be helped and can be addressed. That is the kind of behavior we are trying to encourage my forces very dedicated team. We are adding to the ranks to make sure they understand that it is ongoing training efforts with very positive things from institutions as i interact with them and talk to them about this. That prompted me to ask the question is at the senator asked you had an interesting dialogue with relation to enforcement action versus complaints. I think he was drawing a distinction or a correlation the more complaints there are the more enforcement action ought to be in with this gotcha reaction at least within the organization but just to wrap up on your thoughts and philosophy but the role of a regulator with regard to enforcement action versus helping the lenders be complian compliant. I know sometimes that can be tricky but how you treat Self Reporting means more than the training if you continue to have that type of cooperation. Absolutely senator, i agree. Ive outlined the mission as a continuum on at the start with consumers we have to educate them so they know what to expect and getting clear rules in place with guidance mechanisms for those that are not trying to comply to go back and forth with interpretation issues also engaged through the supervisory process and then a very important tool although blunt and use it effectively to make sure we are incentivizing the right behavior in the marketplace and going after those who are bad actors in the system because that hurts everyone in the competitive marketplace. Very well said im considering we have this interesting debate on the creation of completely unaccountable blank check selffunded regulatory agencies its nice somebody has that balance in the role. Thank you mr. Chairman. Director thank you for being here i will follow up with a conversation about payday lenders do think any that are predatory . I would say there are entities in every Single Market that are operating. Lets talk about payday lenders if you identify one is predatory what action do you take . We do have enforcement tools with ongoing investigations and those corners of our market including that space. So word do you take action against the predatory lender and what would you do. And that evidence to build it is remediation that does take different forms. And with that consumer penalty and i agree with that many of us are worried of the predatory lenders and then to be financially vulnerable. And the critics of your decision of the small dollar that lenders with debt and income and spending habits do you agree with that . The rule that is in question stipulated very specific means by which that would be adopted. And that it is pending litigation. And put through to be sound legitimate and. With those comments we have received back. At some point in time you have to make a decision and with a lawsuit for those in favor to keep the rule and those are continued as well. This is the pending decision but in april the will have some more information about all of this. You are still waiting to go through the comments so the ability to repay to look at in general . This is ongoing. You havent made a decision one way or the other. Correct. You said as a member of the fdic in the current position. Is this true as a board member you voted in november 2019 for proposed rule that word eviscerate state law caps on the Interest Rates on loans and allow unregulated predatory payday lending across the nation . Or otherwise transitioned it would carry forward. So they dont have any affect at that point in time. There are limited circumstances and other cases where that would be the case as it gets more complicated but in its simplest terms, yes. Theres been a lot of talk about the lack of enforcement. Youve had this conversation as well. I understand the Consumer Financial Protection Bureau hasnt examined federal Student Loan Services for compliance within two years. I understand that betsy devos has refused to allow federal Student Loan Services to provide the beer with access to bart over information is that correct . I send letters back to congress on this, that is correct but i did tell senator menendez earlier that we had an agreement and we are going to move forward with respect to a federal portfolio servicer. Thank you for being here. I want to associate myself i remember telling the then director his heart rate was about four or five many people come over th for the committeesm sure they are more concerned with the fact of the matter is to do what you want to do. I for one think youre doing a good job that i think that there are fundamental problems within entity that iwith anentity thate congressional oversight actions are thank you for your patience. Im not sure i would have been quite as patient. I have a question you sent us a letter back in january and one of the passages you were talking about moving away from the pricing approach as well as the mechanism. Can you expand a little bit more on what that means . We will issue a proposed rule in may with respect to the first part of that and looking at something a little bit later than that because we are still working through it. It outlines what this means with respect to the ability to pay and there are things a lender can consider including debt to income ratio in that decision. It issued its rulemaking. Particularly as applied to the states called market in the specific underwriting actions and how you determined the ability to repay went beyond the statute and how limiting that was and also with respect to the qualified mortgage debt to income ratio threshold set at 43 they set their own rules and there are many hundreds of thousands of otherwise wouldnt have a home whose debt to income ratio is higher than 43 given to the mitigating factors. That didnt seem to be the right threshold its still a back and forth so there is no final decision but the proposal we are looking to finalize will rely instant on the pricing threshold so the difference there thats the part we are looking at the comments on ambush of the threshold be but its still very much part of the process. At the end of the day of allowing it to expire and moving to this new mechanism is one that may be a basically the rule for anybody underwriting a mortgage. With respect to the patch, though i made it very clear that his as intended. Thank you. I have one more question here about the balancing access to credit with Consumer Protection. I was wondering are you engaging as it seeks to strike a balance . Talking about balancing access with Consumer Protection. It seems im doing a bad job putting together my thoughts. How do you allow access to credit protecting consumers having appropriate Consumer Protections and basically the discussion we had big been worried on the one hand if we do not strike the balance theres an entire segment of the population that will be under banked and i think if we overreach on some of these things we will make everybody feel like they are being protectors of the consumers at the end of the day. Ive seen this in North Carolina there will be people that are going towards funding mechanisms that are far worse than a regulated regimen under your control. Youve articulated it well it is a balance that nee we need to lk at and for disclosure again is a typical means of protection at something that we look at as a first action making sure consumers have the information they need for themselves thats something weve got regularly. They want to target one segment and if we do that with a broad brush then we run the risk of taking a segment of the population out of any sort of Financial Network that provides the ability t to give them the capital they need. I understand if you dont have cash to a certain segment of society they are not going to be able to do their job, not going to be able to pay their bill or have the opportunity living on the 90 day notes. Thank you mr. Chairman. Welcome, director in your plans to address the need we have the policies fo were literally just about every single employee. It includes situational work and a provision we can work through to meet the current circumstances as well. On the need to use your persuasive abilities but also your authorities with respect to forbearance by Credit Card Companies and others with respect to consumers who are going to see their debt go up and not be able to pay the debt and credit cards because they are out of work i hope in the coming days yo it will take even more aggressive action because that could obviously turn a lot of households upside down. We know 40 are for red db2 400 away from going under water and will not be able to make the payments, car payment, mortgage payment, those kind of things. So i really hope that we will have a comprehensive response. What we turn to student debt. In the next couple days we may have a vote with respect to the administrations overturning borrowers defense rule which is designed to protect students who were effectively defrauded by student loan agencies. I was glad to hear finally it is long overdue and you entered it in this with the department of education and i hope that you will keep us posted on what actions you are actually taking. As you know its been a great frustration to many of us that this has taken so long. You got rid of the old one that had been placed during the Previous Administration and finally reinstated this new one and i think you will see a lot of members on the committee actively watching to see how that iitis implemented. Another area student debt is an area of credit cards and debit cards and as you know years ago Congress Passed the card act but essentially prohibited colleges from teaming up with Credit Card Companies and comarketing the credit cards that really serious rates. But debit cards were not included and there was a study done by the cfp during the Previous Administration. It surfaced through the request and pointed out that wells fargo which has been in the news lately has been charging excessive amounts for debit card so are you using your authority today to address that issue of potentially abusive practices by the debit card space aimed at students on campuses. Im aware of the report that you are referencing. You noted the card act didnt address any debit card issues associated with this area but i can assure you that we absolutely are using our enforcement power to take any action that we deem necessary in any area of predatory lending so im happy to take any particular circumstancparticularcircumstane of. We take it from every source of information we can. We are continually looking at the card act and making sure that is happening as well so it is an ongoing effort. So you agree that its in the scope of the jurisdiction if there were fraudulent or predatory debit card practices going on on campus they believe that iit is within your jurisdi. Yes. Thank you mr. Chairman. Thank you mr. Chairman. I am a veteran that served 26 years. Ive always said there is a special place in hell for people that prey upon the military and veterans. The last time the office of Service Members say they published an annual report was january of 2019. Can you tell me what trend you are seeing related to the military since then and when can we see the next report . We are working to finalize the next report and the complaints from Service Members including with the department of defense to make sure we are constantly assessing what information Service Members are facing and veterans are facing in the marketplace and looking at the actions we can take certainly including any Enforcement Actions we should take so we have ongoing efforts in many of those areas. In terms of the complaints we have received, there are some one respects to student Loan Servicing and understanding different processes are not so in that respect members are similar to the student population generally so there are things we are working through on that front. On the addon products in the auto loan context that is not going to be highlighted in this country but because we think theres been some clarification on that particular issue thats happened in the last year. I know there was a third highlight in that report but they highlight the ones that are the most prevalent and what they are doing about them. I want to make sure that there are appropriate financial protections for those in the military family the last thing they need to worry about is being preyed upon congress should codify into the wall. If we were to pass this legislation how would that impact your posture specifically for the Supervisory Authority . I sent explicitly calling for that Authority Given the Supervisory Authority is different in the statute from the enforcement authority, that is something that determined we do not have the ability to do. How to better protect veterans and military . It would enable us to make that an effort in to get back to my push to prevent harm in the tool that we have helps institutions comply and it is a faster ability to engage with an entity than the enforcement tool which does take time to show that investigation. Do you believe that its the best agency and enforcement . With respect to the nonbank entities because they can do this with respect to banks and credit unions. If you had that authority that would allow the bureau to work with other agencies and to protect. They had the ability to do the rulemaking separate from. A lot of the military lending act will come from the department of defense but we have other areas we can certainly declare the issues of rulemaking as needed. Are there any downsides from passing this and making it clear that you have the authority . I certainly dont see a downside to congress providing clarity where it is clear everyone would like us to act. And i dont have the authority today. Im planning on leaving them with legislation to give the authorities we can protect my fellow servicemen and women and veterans and get you the give ye authority you need to protect them. Thank you. Thank you mr. Chairman. I want to return to the questions the senator asked because you and i talked about this. It is a huge problem in alabama the average payday borrower takes out the phones a year and i have a concern i want to make sure that people have the ability to get cash and access. Like him we had these 90 day notes but my guess is neither his dad or mine had to pay 300 to 400 interest on those notes and my guess is they also either had to put up some collateral or there was some indication that they would ultimately have the ability to repay that 90 day note to pay interest or do whatever so im concerned that the up dated who doesnt require lenders. To me that seems like a nobrainer that looking at the ability to pay a bone is integral to whether or not to give the loan in the first place. There could be other factors that explain for me why this is even under discussion that that wouldnt be something every payday lender should be looking at . I can tell you that the rule stipulated specifically held that underwriting would be done and had an impact on the availability of credit in general to the consumers that was dramatic and spiritual. Im trying to understand how dramatic and substantial because it seems if they cannot pay it back they will be caught in this circle of debt so how does this have an impact on the folks so they can ultimately pay this back without having to take out another loan from another in a blender. It was a complete turning over of the industry and reducing the number should be in my head but roughly 70 of the availability with respect to branches that was the assessment of the impact with access to the small dollar loan. Several years ago the regulators issued guidance that was taken to heart by banks that they shouldnt provide small buffer products and so in my estimation that is another part of the problem because we want them too provide the kind of credit consumers are seeking a. I forget what it stands for but theyve been looking to update and so what i would like to see is encouraging competition with products by responsible Service Providers the bottom line is making sure the consumers understand the products we are seeking to meet their own needs and enforcement. Its the backstop. If you dont have the regulation that requires them to look at whether or not you can ever pay this back, how are you going to enforce something you are not even beginning to regulate in the first place . Im sorry but im having a hard time with everything youre saying because it seemed like we are just getting the payday lending is b spiraling people in tibet. Im having a hard time with this and understanding why that isnt even a consideration and im not sure youve answered why its not a consideration. Senator, this is a proposed rescinding that is in front of me now so i cant give you a full articulation of a decision on that because its an ongoing rulemaking process. Ever since ive been in the senate since january of 2018, whewhen bothwhen will that be fu can give me that information . We are going to assess and make the decision whether that be a final rule or other players in april, so very soon. I will have other questions. I want to ask if there seems to be no housing discrimination anymore which i think is great because theyre so enforcement action i do have questions about that for the record im very disappointed that you do not exercise the supervisory responsibility over payday lenders. I do think you have the authority under your leadership to chang change the places i bee your predecessor made it clear he had that authority. As you know the problem stated in writing the Department Released the full spectrum of tools including Supervisory Examinations contributed to the industry education and have strong interest in protecting soldiers, sailors, airmen and marines. Even your own analysis states and i quote again one possible reading of the statur stature wd allow the bureau to seek to uncover and remedy violations in the course of exercising its authority so youre going agency concluded that there is a reading of the statute that would allow you to do this content you ignore that and instead you ask the different legislation which in the context isnt a plea for the Supervisory Authority it is a version you dont have to supervise which i find very disappointing. If we are going to pursue legislation, and i believ then t we should extend the benefit which is a 36 interest to all americans and why many of us on a bipartisan basis support this credit act. This is the strong legislation supported by significant Coalition Including iraq and afghanistan the United States committee on domestic justice developments of i do think they have the authority and it is a great disappointment. I would respectfully disagree. I know that they have had the conversation and i do want the authority to do this. I do not believe that i have it. Your own analysis by your own Legal Department is that there is an interpretation to give you the authority. Has this ever been challenged in court . Is it not a good indication that even the people that are subject to object or dont have the legal footing to object . Spin that it is a slippery slope and i have the responsibility to determine where the authority lies and as i noted to you the possible reading would lead to many other interpretations that would b be i think problematic d detrimental. This would protect men and women that are protecting us from being abused by lenders and i would hope that they would reconsider. That concludes all the senators, senator brown has asked for an additional five minutes. Thank you for staying around a little bit longer. I want to followup on something thafollow up on somethingthat yi asked about taking public action against wells fargo i think you used the word hearsay. You referenced this finding and said they did that which was a true statement but then it was before you were director. You have been tough on them so we hope that people consider that. You will consider that. Let me ask a couple of questions. We created the cfpb because too many other agencies were not protecting consumers and there may be no better example of that than what people asked about the department of education undersecretary devos. She has rules to protect student borrowers and shut down investigations of abuse and fraud by forprofit colleges and was held in contempt by a federal court the last two years from doing its job to protect more than 43 million student borrowers. Why would you do such a thing . Did it in the interest to speak with one voice and have an agreement with respect to how they carry out its responsibility for ensuring compliance with the financial wall and the department of education has a very real role they are contractors, servicers, the contract provisions that they have to oversee. Weve asked you many times weve not expanded this and use it for a year and id like to ask you whatever you are going t they wo on these exams you would disclose to us with a specific plan for. I dont understand why you think you need permission from betsy devos so my request of you is to tell us that you wouldve the public about this entire process with a timetable on this joint exam that you talked about. I pledge that we will share what we can publicly as i am doing today. As you know the supervisory process is confidential. And it should be to be effective, so we have to balance those interests but i was very clear in wanting to make sure you knew we were carrying out the responsibility. I think that a year from now we might be having the same conversations. So prove me wrong. In addition to influence the bureau to help defend Debt Relief Company that the bureau sued that cheated consumers well in excess of 100 million. These are the people that you selected competitive process are not, is it true that two Board Members have such close ties they need a federal waiver to participate . We wanted the foremost experts on law and i believe we have found that. These are five individuals. That referees and industry because again they are individuals that have experienced the laws and regulations how they apply in those trade associations with the Advisory Committee members to bring in the best information that we can to move forward. In terms of the wall street viewpoints but you asked for the waivers. You personally gave them the waivers. Your office did the criticism of you your dissatisfaction is that its always to slanted toward the most privileged Interest Groups this just plays more to that perception to make it clear to me your a lot of us you are not here to carry out the message to protect consumers but here to carry out to protect the agenda of the megabanks and those Interest Groups. For senators who wish to submit questions for the record they are due by march 17 please respond as probably as you can. Thank you for your service man for being here with us today the hearing is adjourned. [inaudible conversations] [inaudible conversations]