Today we receive testimony from director kathy grandeur, on october seven the issued its semi annual report, which outlined the bureau significant work between october two those 18 and russia thousand 19 including rule makings and supervisor activities. Mr. Crapo it also provides insight into what the cfpb plans to undertake in the work period. Since stepping into her role last december, director kraninger has demonstrated a commitment to making sure americans have access to a wide range of products and services to meet their needs, fostering innovation and vigorously protecting consumers. Reflecting miss, the director conducted a Cross Country listening to her with stakeholders during her first months on the job, the directors conversations with consumers industry and federal regulators have improved engagement, and formed their supervision and regulatory processes and improved Agency Transparency and in the semi annual report, the director also highlighted that they have taken steps to strengthen the consumer marketplace by providing Financial Institutions clear rules of the road that allow them to offer consumers a ridge of high quality innovative in Financial Services and products, on september 10th they issued three new policies to promote innovations and reduce regulatory uncertainty, these trials included the disclosure policy, the 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 mad in efficient ways. Earlier this year the cfpb issued a proposal of its small dollar line new rule, updating this rule is an important step to ensuring the availability of credit that is scheduled to so many consumers who struggle to access or qualify for further options, and basing rules on solid evidence and legal support. As the cfpb keeps moving forward on this rule making process, i encourage them to court with other financial regulators to smaller lending, to create a consistent framework across all institutions in order to promote and expand small dollar lending and credit options, in july the cfo pay be issued amendments to its ability to repaid qualified mortgage rule. The director and law see if they be noted this on a level Playing Field and that fanny and freddy should play by the same rules as everyone else, the sea of pvc actions are positive step and i continue to encourage the bureaus efforts to find a permanent solution for mortgages standard that provides a certainty to consumers, lenders and investors alike, last week the sea of pbo announced the formation of a task force that will be devoted to examine ways to modernize it harmonize federal consumer and financial laws, especially those pertaining to consumer credit, the Banking Committee has spent significant time evaluating how the fair Credit Reporting act should operate in an increasingly Digital Economy and other firmed serve a function similar to the consumer reporting agencies, i look forward to reviewing the task force on federal Consumer Financial laws recommendations on how to update the fc are a so that it continues to function the way it was originally intended in a digital world, though im really encouraged by many of the changes that the sea of bp, the remains clear the fundamental structure must be reconsidered to make it more transparent and accountable. I continue to support transitioning the law cfpb from a Bipartisan Commission subjecting the cfpb two appropriations and providing a safety and soundness check for credential regulators. On september 17th 2019 the department of justice and the cfpb, urging the court to review the constitutionality of the bureaus leadership structure, i have long argued that their current structure lacks sufficient accountability and look forward to the Supreme Court taking a preview of this case. During this hearing i look forward to hearing more about cognitives, the priorities for the sea of baby in the upcoming work period and additional regulatory opportunities to provide widespread access to Services Director again i thank you for joining the committee this morning to discuss the cfpb activity and plans, senator brown. Thank you mister chairman, welcome director, nice to see. You we created the Consumer Financial Protection Bureau to stand up for Service Members and hardworking americas to protect them from big big z crooked cooperations that brought them, after ten months on the job it is clear why President Trump selected you to handle this, we know he can count on you to protect wall street big z 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 cooperations over workers, has chosen a big banks over consumers over and over again, since you took over you and your appointees have overruled the recommendations of consumer experts and allowed crooked companies to lie and cheat and to steal from hardworking americans and then youve let it get away with it, the consumer Protection Bureau is supposed to protect consumers that is your entire job, to protect that from preparatory payday loans, you had said chose to protect the interest of President Trump and his payday lending patrons. Consumers pay the price since august when the payday loan was scheduled to go into effect, americans of paid more than one billion dollars in fees to payday loan sharks, that is a billion dollars out of the pockets of consumers and its consumers without a lot of money, a billion dollars out of the pockets ahead of consumers because the agency that was posed to look out for them to sighted to instead look out for a payday lenders, you also couldve protected Service Members and their families but instead of the Trump Administration had betrayed them when you stopped making sure Companies Follow the protections for Service Members and their families, you also couldve strengthen the bureaus enforcement of fair lending laws that charge hundreds of millions of dollars to victims of discrimination and of agencies for 70 years, instead you continued President Trumps attacks on fair lending laws, in fact instead of protecting consumers you have dismantled the bureaus Office Affair lending, you put a trump political appointing with racist and sexist ratings and we have so that in committee before, and you are now trying to appeal a 2015 rule that requires lenders to report basic load information to ensure they are not discriminating, what are the results since you took over the bureau has not brought a single case for discriminatory lending practices, not one single case against a company for discriminatory lending practices, lasted i checked discrimination has not ended in this country in trumps america, you have turned your backs on student loan borrowers, the bureau couldve helped protecting the americans a Student Loans with widespread mistakes and errors and mismanagement by the companies and handle their loans and have cost them thousands of dollars but again you betrayed the people the president promised to look out for, and youre hearing this road betray a lot, of the president has betrayed workers, a lot of the workers who have been betrayed by trump and day after day but aid law workers. When you cited secretary to foster said student loan. The Inspector General reported that the company that manages Student Loans wrongly denied tens of thousands of teachers, nurses, firefighters, Service Members and other dedicated Public Servants the loan forgiveness they earned, this is in my opinion and this is gao and the department of education, you protect those companies well hardworking American Families protected, i guess i shouldnt think of anything less from Companies Like yours, they have no real incentive for following a law and another bureau walton them with nothing more than a slight slap on the wrist for ripping off consumers. Director kraninger how do you explain to the hardworking americans why this bureau is and protecting them . To be sure you have done the role asked of you by the president of the united states, you have predicted companies not workers, not consumers, that is indefensible. Thank you. Director kraninger now youre opportunity to make your initial statement, the floor is yours, please proceed. Members of the committee thank you for the opportunity to provide an update on the bureaus imported more, preventing harm to consumers is the top priority of the cfpb, we prevent tire by educating consumers to protect themselves, we prevent car by hearing they have been clear rules of the road, we prevent hard by using the supervision and enforcement to prove much compliance with the law and i prevent harm by supporting dynamic and competitive markets that provide for consumer choice. While prevention is not always possible, it is the radical, saving consumers from financial headaches, setback, and devastation. The semiannual report, my return testimony has a rundown of the activities in the first half of 2019 and a preview of more recent initiative some of which i will take the opportunity to highlight right now. First our efforts to provide clear rules of the road so that companies and consumers know what is lawful and what is not, just last week the bureau finalized a rule for relief for collecting and reporting data under the home closure act and has a key provision of the economic growth, regulatory relief, and protection act. Additionally last month the bureau announced policies to facilitate innovation, reduce regulatory uncertainty in advance consumer choice, the bureau also enhanced its first no action letter under now policies, it is designed to help keep funding streams open for a Nations Housing counselors who have assisted millions of americans attending the dream in a voting a home. Second where we cannot prevent harm for consumers we want bad actors to be accountable, every case is managed by a bureau of attorneys and seeking justice. In 2019 we announced 20 to public enforcement announcements and we are in a public fair lending announcement settled with the largest reporters for violating regulations, sea and we went against high credit interest and we took action against companies that engage in unfair practices that violated the protection act, further the bureaus actions in fiscal year 2019 resulted in orders requiring 770 Million Dollars in consumer relief and nearly 180 Million Dollars in civil money penalties, i know these figures not as a measure of accomplishment but to underscore the fact that the bureau continues to appropriately utilize its enforcement tool, third we continue to promote a culture of compliance through our supervisory rule and empower consumers through education, earlier this year we launched an initiative, start small and save up, to help repair americans to handle unexpected financial events. As part of this initiative we released a new savings booklets to help individuals create their path to saving goals, we are looking at other innovative ways to move the needle on saving in america, the partner with hr blocks to study savings, encouragement through a simple email or a small incentive include helped with tax, it also found that one and five consumers who took advantage of these specific saving feature continue to save eight months later, we will continue to engage in research about what works to promote a habit a saving an overall wellbeing, fourth a have a few recent announcements to demonstrate our commitment to do this as effectively and efficiently as possible, just last week the bureau had its 2 million Consumer Complaint, to ensure that there continue to be informed by this input i announced that we will continue the publication of the Consumer Complaint database, in addition we will be enhancing the database by providing new tools and graphics to analyze consumer submissions and putting that data into context, also last week i announced the establishment of task force to check on the regulatory framework, they will make recommendations for improving Consumer Financial laws and regulations as well as enhancing consumer understanding of markets and products, we are currently accepting applications who want to serve on the task force, just yesterday im proud to announce, just two days ago the new private Education Loan mad unemployment congressional mandate given specifically announcing his first annual report, the report covers two years and analyze his complaints submitted by consumers, the euro also has a memorandum of understanding to the department of education, consistent with its responsibility to share consumer complained information, before i close id like to touch on one final issue, clarity around the constitutionality of the structure as you are aware a joined the recent brief in the Supreme Court to hear the case of the law, this matter and litigation is consistent with Longstanding Bureau practice, im not going to discuss it at length but i do want to highlight a few key points, from the bureaus earliest days the constitutionality for the removal provision has been raised to challenge legal action in pursuit of our mission, litigation over this question continues to cause significant delays in some of our enforcement and regulatory actions, i believe this dynamic will not change until the constitutional question is resolved either by congress or the Supreme Court, my position on this question will not stop the bureau from fulfilling our statutory responsibilities, we will continue to defend the actions that the bureau takes now it has taken in the past. Again i thank you for this opportunity to discuss the bureaus work and look for it to your questions. Thank you director kraninger, my first question is related to access to credit, i ask it in this context, its already been expressed by senator brown concerned about the level of enforcement activity and i appreciate you reviewing that the 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 save credit, can you discuss whether that is one of the important objectives that you have and how you would seek to achieve them. Thank you senator, the access to credit is part of the mission of the borough, it comes into play under innovation for access, it is an important part of what we do, we do have to be thoughtful and judicious in our rulemaking activities to consider the implications on access to credit, of the actions that we take and there are certainly a number of areas where we are be thoughtful about that, i would highlight the innovation policies because that clearly is an area where we are seeking more innovation from the industry, from Financial Technology companies and others who have ideas about how we can reach those under baked and unbaked individuals in our society and bring them into Financial Services that are going to help them build their financial ability wellbeing, so we have had a symposium on and, we are engaged on some work and we look forward to continued products and services coming forward to talk about how they can do that. Well thank you, i guess we have already both discussed is a little bit but id like to highlight, one of the most important things we can do for those who are not banks and find it difficult to access credit is to make sure that the Credit System that they can participate in then it is safe and that it is strong and robust, available to them, can you comment a little bit farther on the importance of that. Yes certainly is an important part, competitive, fair transparent markets to promote that for consumers and that is part of the mission we were given, i think one of the things that i can talk a little bit more about is alternative data, the opportunity to look at that in underwriting the bureau did issue an action letter under its private policy to a Company Called upstart and we have since had a lot of information on how upstart has used alternative data both employment education information to again make those kinds of determinations and provide greater access to credit and we did issue a blog and are head of innovation talked about the opportunity that Companies Like absurd are providing two individuals who are unbaked or under bait and bring them in and that is something we will continue to do. And the adoption of Innovative Technologies and processes by financial initiatives has a way of improving the cost for a wider spectrum of consumers that we have been discussing but a lack of regulatory certainty and clear guidance regarding the use of a Financial Technology and method of Consumer Engagement can stifle the engagement and the immigration and can you describe how the recent policy it is with this disclosure Sandbox Program and the compliance of the no action letter, the compliance Standby Program can have our health our firms that do provide services get Greater Regulatory clarity and enhance financial innovation. One of the policies it is certainly encouraging some of these Innovative Companies to come forward with their ideas, it is something that is challenging to do, again accompany entering this space does not have the same history of regulatory engagement as traditional institutions do and so coming forward to ask questions, to look for ways to be compliant with Consumer Financial Protection Laws that is what theyre trying to do and thats what were trying to promote is that conversation with those entities, there is a real opportunity with trial disclosure policy i believe to get better information to consumers, simple information to consumers at the right time so they have what they need to make the best decision for themselves and really looking forward to traditional Financial Institutions coming forward with some great ideas in that space the sand box as well, theres gonna be a lot of back and forth over how effective the products are and what the opportunities are that are beneficial to consumers, part of the application process is raising both the benefits and the risk to consumers and that is what the applicants will have to articulate to us and go back and forth on. Thank you senator brown. Thank you mister chairman, its reasonable to consider, is a reasonable to consider a payday role that allow consumers to pay back as well as 1 as of alone. Are you asking about an Interest Rate . I asked that because the answer is self evident but this chart shows that youve lets cameras and shady debt collectors pay 1 or even less of the amount say oh, this see f l. A. Paid one, percent how are law paid seventh 100th of a present that the day they owe and the scam. And we can paid two tenths of 1 , so you gave these corporations a huge discount of what they owed to hardworking americans who they cheated, why is it that scammers can take advantage of super members and students and working families dont deserve the same treatment. Thank you for giving me more context on that question, as you know every case is circumstance specific its led by bureau attorneys in terms of the opening decision and closing decision of that case, the recommendation and the discourse that we have inside the agency over whether to sue or settle, there are certainly opportunity costs there with our decisions to sue which we have taken in many cases under my leadership and prior leadership. When the settlement, when it is consumers that are hurt and scammers that benefit the little bit of money they get, what message does it stand . Its not only these consumers get nothing close, its the message it sends to other scammers that they have a friend in the white house and they have a friend at the cfpb. During your confirmation i raised consumers with 9 11 scammers and argued that the cfpb is unconstitutional. To remember that conversation . I do. So when i asked you about the constitutionality you said as director it was not your position to decide cfpb was constitutional, you said im aware of the constitutional question and i think they are important but they are not for me in this position to answer as director to carry out the laws, its established now and its my focused, based on this testimony i was surprised when a few weeks ago you sent a letter to congress stating, i have decided that the borough should adopt the department of justice view that the forecast removal provision is on prop unconstitutional. So if they commit to do one thing and then does another, is that just lying to congress . Senator i was aware obviously about the constitutional question from the moment of my nomination, we discussed it at the hearing during my confirmation process and it certainly was not a decision that i had to take at that time and i still firmly believe that in terms of settling this question as i said in my Opening Statement it is for the Supreme Court and congress to settle it. At the same time the executive branch and all executive Branch Officials have a responsibility to uphold the constitution, in the face of this petition to the Supreme Court in this particular case it did come to me for in fact a decision on my position and a decision that the bureau would take, that is a decision outlined in our mission. I think it speaks to your credibility as youre public official i came into this committee and said that you wouldnt speak on issues of constitutionality and then you did, watch reflects on other things you may have said over time. I want to turn to the Public Service loan forgiveness, congress designed a program to help hard work americans we hope they take to help serve their country and community, its clear that the management of this program under the company feel has been a train wreck, fewer than 1 of workers have received a loan forgiveness they have earned. The cfpb has done nothing for more than two years about it, will you commit to the public that you will open an enforcement investigation of that is supposed to manage these american Student Loans. Senator i take very seriously the responsibilities we have to all consumers in particular this students, we do have that responsibility, i hired as i said i would in private Education Loan, who has already issued his first annual report, we have a gauge the department of education to work through what i think is hopefully going to be the best outcome for consumers and that is to have the federal Government Agencies united in the understanding of our respective responsibilities and how were going to move forward, so moving forward on this, that is statutory required and other areas including how we will carry out our responsibilities. I hope so but nothing fundamental has happened, still 1 of workers receive the forgiveness loan and it is a federal contractor using taxpayer dollars to manage federal student loan, so i will ask again, will you protect people try and a payoff their Student Loans where youre going to protect secretary device in his company . I will carry out my statutory responsibility to protect consumers. Thank you mister chairman. Director kraninger since you swore in the bureau has done an impressive job that put policies it only provide important Consumer Protections which is in the forefront here but also certainty and clarity to regulated entities, i believe that under your leadership you have made a lot of significant rides in becoming more efficient and transparent and i want to commend you for that, now during your time as director and wet areas under the bureaus operations have you seen the most improvement and what areas do you feel need to be addressed, along those lines the ccf pbo has announced it is looking at protective ways to modernize financial loans, more consumers move to Digital Technology what are some of the challenges that youre facing, what road are you going down and how do you get there . Thank you senator, i am particularly proud of our commitment to transparency and to promote the discourse, reasonable people will disagree over a number of topics and trying to push forward again advance notice and proposed rule makers and request for information to bring the public into the discussion as we are considering real making actions has been important, having symposium to talk through some of the most challenging topics that weve had, line on me the definition of abuse, one on the Economic Analysis factors, we have another coming up on Small Business lending in our responsibilities, so those are all things that i think we are doing very well and we will continue to do and engage in that kind of discourse and work with all of this stakeholders in this area to move forward, you mention the task force and im also excited about that opportunity to provide both the bureau and Congress Perhaps ideas from experts in this area as to where we should go to help modernize the laws and regulations to address the digital age that we find ourselves in, that is also a positive thing and i think in terms of our modernization efforts we are looking at how this applies in a number of context, particularly to electronic disclosures, the fall rulemaking engine it hasnt been released but we are gonna be looking at credit card arena, we are tackling some of this in a Debt Collection rule, just thinking about how we can get simpler, clear information to consumers and what is a complex set of laws frankly. How important is it for the financial regulators to create Regulatory Environment that is conducive to innovation and also what impact do you foresee through your job here and proposed policies on firms offering new products and services, that is very important to the marketplace. Im excited about the innovation policies and as i spoke a little bit about disclosures, about the trial disclosure policies again bree information to consumers at the right time and having it be simple and clear, providing clear direction to industry as you noted that is what we are trying to do through the innovation policies and other rule making efforts and guidance efforts. With those clear rules again everyone understands and can innovate and grow and provide the services that consumers need and want so that is something that we are going to continue to work our way through. Isnt it very important how inform the consumer is, and other words they understand what theyre doing when they make a decision. Yes senator that is a key part of our responsibility as an agency, education is part of our purview and we are working hard to build it. I want to get a cost benefit analysis last time before you came before this committee we discuss the role of cross benefit analysis at the bureau and everywhere else, how can your organization utilize and Economic Analysis and its overall operations including, so its way cost and benefits. Senator you know its critically important to me and part of the discussion with the public to outline the cost beneficial. It should be important to everyone. I agree certain something we are committed to, im excited that we have a new head of the office of research and they have the responsibility currently for doing that Economic Analysis to support our rulemaking and cost benefit analysis should be part of all of our processes and decisions and that is something i am working to weigh into the process, doesnt mean the higher dollar amount that we can qualify is the only basis for any decision but talking about benefits and cost and weighing them and trying to quantify them is important. Thank you my times. Up director last time you were here before they committee you and i discuss the severe problems in the Public Service Loan Forgiveness Program and this is a program that congress put in 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, but 99 out of every hundred Public Servants to apply for this are rejected, according to a recent and pr reports the cfo bibi launched an effort to find out why it is failing, but secretary Devos Department of education seems to have successfully stonewall those efforts, is a true that in response to a letter from senator warren and myself you confessed out quote, since december 2015 Student Loan Services have declined to produce information requested by the bureau for supervisor examinations related to loans by the department based under departments guidance. Yes senator that was in the letter. Is it also true that the bureau had a Supervisory Examination request in january 2019 of this year and since then the department of education failed to respond to the cfpb request as disclosed by the department in that june letter to senator murray and congresswoman to laura. Senator yes, if i could give a little context. We will get to additional context, that is a true statement, correct . Yes senator. Secretary devos the secretary of education made it clear that she prioritizes alone services over teenagers and Public Workers but you dont have to follow her lead. In fact your predecessor was still able to examine Loan Services despite devices opposition, when he faced similar obstruction by the department who follow the recommendation of career enforcement internees in saw a court order to compel some of the largest Student Loan Services to turn over documents to the bureau, these Actions Prove that the cfpb can still work to protect student borrows despite the actions of secretary devos. Why has the bureau under your leadership thus far failed to use all the tools at its disposal including seeking court horses to conduct proper oversight . Senator i believe that it behooves the federal government to act in a more united manner thats gonna be better for consumers and more consistent, i have met with secretary davos, i hire the private Education Loan operator, and we have a way to share complaints information, we are also discussing how to move forward in an effective way to make sure that we are overseeing i agree if we can work in cooperation that is, great but let me just read you what the department of education said 48 hours to go, i quote. The department of education is charged with overseeing the federal aid portfolio, the cfpb is charged with oversight of the private student loan industry, so if youre waiting for the department of education to give you permission to oversee the Public Service Forgiveness Program youre gonna be disappointed, and our Public Servants are gonna be surprised. Why dont you reinstate the oversight and enforcement of these laws . Senator we are absolutely doing exams of Education Loans and we are working with the department 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 and that is something that we will continue to work through. Well it hasnt worked so far, they havent cooperated with you at all, they stonewall you every step of the way and they made a very clear in the statement 48 hours ago that they only believe they have jurisdiction over private student loan industry, so who is going to get her . Public servants who deserve to have the opportunity of loan forgiveness as part of their service, i urge you to do what your predecessor did and use the enforcement capabilities that you have, let me quickly ask you on the un patch that has provided roughly 6 million Residential Mortgage loans originated in 2018, the bureau estimates out roughly one six or 1 million loans benefit from the patch, i understand that you are going to allow it to lapse, how is it that youre going to ensure that if you dont take steps to offer the type of financing that is currently available, how can you describe the steps that the bureaus gonna take to prevent this expiration without causing a major disruption to the Housing Market and our economy . Senator a smooth transition is what i am committed to i put that in the advance notice and recognizing that the patch was set to expire and you said to expire in 2021, we are starting this process very early and we sought to comment on how long of an extension would be necessary to support a transition and we are looking at the comments back on that now and ill be making a decision in terms of next step in a verbose rulemaking process. I hope you cant commit that your final rule will provide the same opportunity for folks to get into a home as currently available, particularly people of color have experienced the benefit of a patch and have shown that they are credit where borrowers they should not be tonight simply because you want to add the patch without the ability to keep that opportunity available, thank you chairman. Thank you acting chairman and director kraninger, thanks for joining us, i want to commend you on some of the constructive work that youve been doing at the cfpb, i also wanted to pursue the line of questioning that senator menendez raised it on the patch, i always have been on the view that it is been inappropriate and unfair for the cfpb outsource the definition of qm and their standards that occur in a black box, as long as the ability for payrolls on the books we need a qualified mortgage definition that is simple, fair, straightforward and entirely unambiguous, so one of the ways it seems to me we could move in that direction is to make it clear that the institution that keeps the mortgage on its books has every incentives to keep alone that is repaired, i am on the view that beings like to get their money back and then the lines the interest of the lender with the interest of a borrower to have a loan that is affordable to the borrower, we acknowledge that in the legislation though you patched 20 1 55, and its clear that there would be an automatic qm safe harbor for any institution that keeps alone on their books provided that they are less than ten billion dollars in size. Time of the view that of the 11 billion dollar bank would like to be repaid, to get its money back rather than not get its money back. So my suggestion is one place to look and i think you have the discretion and authority to do this with your definition of qm would be allow it to apply to any institution they keep it on its toes, i want your reaction on that . Thank you senator for raising, it and that advance notice and proposal that we issued, we in fact raise this idea and sought comment on it, recognizing that 20 1 55 did include that concept and that yes the risk calculus of the entities that are intending to keep those loans in portfolio you wouldnt hand as you noted be doing that in a manner that they would expect to get their investment back and so i am very interested in the comments we get back on that tom topics. So youve also done some work on the payroll and i think the you are pursuing some constructive changes and one that im not sure you are focused on and its a question is the scope of the rule and specifically there are Financial Institutions that are concerned that the scope may capture products that were never intended to be captured, including interest on the lines of credit that are backed by security. I dont think anybody really thought of that is a payday loan but it might be captured under the old definition, or a short term bridge loans that have customers in sequential real estate and i dont think anyone thought of that is a payday roll so as you evaluate the payday rule could you address the issue of the scope and whether you intend to tighten up that scope . Thank you i am familiar with the concerns you are raising, the bureau has received a petition to reconsider or address issues with the payment provisions of the 2017 rule and in addition to our consideration of our 2017 underwriting requirements so that is something that a least is on our radar and we have a responsibility to respond to that petition within a year of it being sent to us, so it is on the plate a priority was the consideration of the underwriting considerations but we will have to look at that and respond to these concerns. Yeah i think it is important to look at that as well and a quick complement on your fiscal management of the department, there is a cap on spending as a function of Federal Reserve revenue which in the past seemed to be viewed as a floor and you have clearly not taken that approach, i commend you for that. Last point section 10 31 of the doddfrank act gives a bureau and President Authority to take enforcement action for means that are engaged in unfair, or deceptive, or abusive acts as im sure you are aware, abusive is not defined in the statute or am i aware of any precedent in related law that defines abusive, it seems a very subjective term. Do you intend to take steps to provide a clear definition of what would constitution constitute the word abusive . Thank you the deaths in the statute is something we talked, about we had a symposium about it and talked about whether a further definition is necessary or useful to the process, the only place we have really provided additional definitions is an enforcement action and it has also been quite rare, so this is something that is a decision before me as to whether we should put mark guidance out there or what next steps we should take, so they will be used on that in the not too distant future. Thank you. Thank you senator shelby and i want to thank the chairman and Ranking Member and i want to thank you for being here today, miss kraninger, so going back to the paydays situation, are you doing oversight of payday lenders now or you waiting for the rule to be right ready . We are continuing to engage and investigations as well as supervision of payday lenders. So how many actions have you brought against payday lenders in the last year . There is at least one but i dont remember off the top of my head. So do you think the agency is adequately doing its job as far as enforcement on payday lenders at this moment of time . I can ensure you that we are vigorously enforcing the law in many areas, including this one. Okay so tell me about the thought of eliminating the office of students and young consumers . Senator we do you continue to have a section for students and that now has four Staff Members in it and it is about to have five and so we have a continued commitment to that. So you still have that office . It is called a section and you get into a little semantics, but yes there still a group of people focused on this. Compare this to how many people do you have in that office . There were five total. They were under the private Education Office men, so now we have six people doing this between this and the Students Office. What kind of action are you seeing as far as protecting students . There is a lot of different activities, but really the Students Office is focused on education activities, we do have examiners who are examining student lenders as well. So the point is name we are agency and we have student debt coming out, i still get credit card apps for my kids were now middle aged all the time so there are people out there, i hope that you are very aggressive in protecting these folks because once they get into debt they could be in this for the rest of their lives whether they have a degree or, not so hopefully you are putting a focus on that and i hope you do, i want to go back a little bit to senator menendez question on student loan and the student Loan Forgiveness Program, secretary devos prohibited Student Loan Services for sharing information with you correct . Whether respect to the federal student Loan Portfolio. And how about with respect to the Public Service Loan Forgiveness Program, did she not say to not give that information or sheinone the services to give you that information . Within that portfolio yes there is a question there that i very much would like to settle because we do have a rulemaking of course that gives the bureau the ability to supervise large participates in that. But if you dont have the information its really hard isnt it . Its hard to engage in our exams which i think is really about promoting compliance. So the point is, you told senator menendez that you would rather Work Together then use the carrot instead of the steak so to speak, but the fact is if you dont have that information you cant do anything, right . There are other actions that we can take. But the big one is the service, if you dont have that information you can take other action but if you really want to get to the point you have to have that information, correct . To engage in what our productive examinations, yes. So the question is there are checks and balances in government, this is one of those checks and balances, you are a Law Enforcement agency to enforce the law, we have a program here that by the way and rule america is very important, it probably is just as important and rule america urban america where people spend ten years of their lives in this program and make payments and we have a secretary who doesnt get whats going on because she has more money than everybody in this room combined, so the point is, if you dont get after it these people sacrifice ten years of their lives and it is a real, people wont go into Public Service or government service, they wont go into non profit service, which by the way plays an important attorney to tell you, this you know this. So why not go after it and get it when you have a situation where 1 get qualified, something out there doesnt smell right. What important distinction is that clearly when it applies to the Forgiveness Program, the bureaus responsibility is compliant with federal financial protection law, the department of education is responsible for having that program at secluded. But you have the ability to put pressure, one lasting in the not be quiet, i think it is rich for anybody in this administration to talk about what is constitutional and what is unconstitutional when we have a president that publicly invites other countries to influence our elections. Thank you for being, here i do want to thank you for being the Consumer Complaint database public, i appreciate that and i know its important not just for us as policy makers but for what you do to the general public in so many others out there, i am looking at your report and if you look at the consumer database, at least the complaints are you identify here it shows that and figure one, credit consumer reporting, in Debt Collection and mortgages are the most complain about products and services and you show that it is 39 and dead collection at 24 , so i appreciate this because it tells us where, purposes of enforcement where we need to really focus our resources and efforts, i do want to talk about one in particular, Debt Collection company, its known as Asset Recovery associates and i bring that up because i noticed you have a press release stated august 2019 that the bureau celebrated, let me put this in perspective, in 2012 i was the attorney general for the state of nevada, and it borrowed this Data Collection from operating in our state and collecting anymore stats from nevada because they were so egregious and in fact in your Settlement Agreement you highlight really the concerns that we had a nevada and you just google them and you will see the number of complaints online, but since at least january 1st 2015 which you identify and your consent agreement the company threatened consumers with legal action, including threats to File Lawsuits against consumers, file on consumers houses, thank you counsel and wages and cause consumers to be arrested, all actions that had no intention of taking the company also represented to consumers that company and the company threat in that consumers Credit Report will be negatively affected when the company does not even engage in Credit Reporting to any agencies about consumer accounts, i mean they are the worst of the worst, so egregious, you entered and a Settlement Agreement and you are and forcing action against them but here is my question, im concerned about the monetary penalty and the level of restitution for the consumers and the oversight that needs to fall through, i have a few questions, with your indulgence here. I noticed that for a purpose of restitutions for consumers, the restitution amount was 36,800 dollars, im curious how that came about, why that amount . The amount in that case in particular i believe represents a number of consumers who complained and the Funds Associated with that. Complain to . Who complained to the company and complain to the bureau. So youre basing the restitutions on the number of people that complain to you and are aware that you existed to complain to you along with those that may have complained to the company and youre taking the Companies Work for that they come into the company, is that right . This is really about when it comes to quantify consumer harm, identify consumers that are harmed. Believe me i know, we did it all the time, here is my concern because in this Settlement Agreement, youre basically letting the company and tell you the data and actually identify affected consumer, and set of mandate that the company sent a letter to every consumer that they ever touched or did business with two identify that this settlement existed and then if they hadnt complained to identify it, not only that you allow the company itself to be the one whos the arbiter of who decides the information that is being shared, quite honestly what we have normally done is had independent administrators or someone come in so there is an independence to it, but you do have an enforcement person, and i understand in this complaint that you have identified somebody who is particularly responsible for this and im trying to find the consent agreement, who is the person who has had oversight . Its the director of enforcement, its named in the consent orders, im not sure at the time, i believe the enforcement director is . Two kitty peterson. So she will have the oversight, and make the determination. So my concern is youre relying on what they are telling you as the data to affected consumers, that doesnt make sense as someone you and force, but the second thing is you have a monetary penalty of 20 dollars as a civil penalty, where did that come from and how did you identify the 200,000 dollars . So senator as you well now because youve done a lot of work in this area as well, when it comes to the decision whether to sue or settle and when it comes to the fact that the settlement must be negotiated there are a lot of 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 does not mean that the outcome would be any better for consumers or for justice if we had two or three years of litigation with three or four attorneys timed up for that time period and therefore we still couldnt get any money from the company that didnt have money to provide. So if there is a determination of civil penalty its based on the number of melanin violations that have occurred based on the impact for the consumer, i didnt hear that from what you said. It has nothing to do with that, clearly, this is egregious your role is to enforce, not only hold am accountable a violation of existing laws but to protect consumers and provide restitution and not allowing the individual defended to actually make a determination of the rules, who the affected people are and continue the conduct without any oversight or penalty. What they have basically done and what you have given them as the ability to say im is gone away this cost of 200,000 dollars, the cost of doing business because all make more and we will continue down the same path, that is my concern and i think what im hearing today is the lack of enforcement and the lack of holding their feet to the fire and holding them accountable, any business is going to say, this is just the cost of doing business and im gonna incorporate that cause cars are making good money, ill take the lumps as they come, that is a problem for purposes of enforcement and that is my concern. I would love to have further conversation with your Enforcement Division and talking with your attorneys as we addresses moving forward because it is an issue across the country, Debt Collection in your own public database its a problem for so many people across this country, so thank you. Thank you mrs. Kraninger for your appearance, i want to speak about accountability, we hear a lot about that when companies have enforcement, accountability to our, people the following is a quote from an official in an Arkansas Company that has dealt with the cfpb. Consumer compliance is a process, why does the bureau does not acknowledge issues that our self identified and the company be given credit for probably managing risk instead of being treated in their examinations is not even corrected and in fact in one instance the company had made significant progress and the examiners were told not to put anything positive in a report by the supervisors offsite at the cfpb, i have to say ive heard other reports of higher ups telling examiners to exclude positive information or self identify problems, is it the case sat examiners inside the bureau are being told by supervisors at a higher level not to include positive information and their views and their examination reports . Senator im not aware of any specific instances and i can tell you be contradictory to my direction, we have empowered examiners to conduct examine courage with their training and a factual that is something i absolutely expected if you have specifics on this and particularly a timeframe i would absolutely love to pursue it. So it is your direction that you are examiners should include positive information and reports as well . It is important that they report on their own observational and any information that they have observed. What is the bureaus policy on non systemic self identified problems that are also been corrected for self corrective action . That is something i am encouraging, again this is a massive ecosystem with a lot of players and it, enforcement should be a last resort and what we are trying to do is encourage legitimate Financial Providers to comply with the law, and so doing that means they have a compliance Management System that does itself identify issues where they are providing corrective action and that is best for consumers to, they will get restitution much faster and we have then again a system that is operating in functioning properly, that is something i encourage, we are looking at ways to make sure that these policies are codified and clear, ive anew head of supervision and fair lending who started this weekend so he knows that many of these things are things i want to see pursued in the coming months. I think there is obviously a big difference between an isolated problem that an institution identifies and correct forces a systemic problem, that is true and a private company and a government agency, it reminds me of a story that bob gates told about the early days of the obama days, where something official of water being different and tensions between cabinet staff that were in the white house in the early days to resolve them and bob gates is the wise man of the group until the white house staff that it was important to back the campaign of the senate but they couldnt implement the decision so they needed the cabinet officials to be involved in the decisionmaking process in implementing, it they said they heard some laughter and they turn to Campaign Officials and said i dont know what all you are laughing about because today even though it is a saturday someone in your organization somewhere is doing something that you disapprove of, that is probably a moral and maybe illegal, the point being that in institutions as large as the cabinet or cfpb, there is almost always the possibility of someone doing something wrong, and as bob gates showed repeatedly you want to stop individual cases of wrongdoing and stop systemic wrongdoing but even more important is when you find those cases that you take corrective action and really to stop them. We want to encourage private institution to do that and we want to cfpb do that for any ones that are not consistent with your guidance as well, appreciate your time. Thank you very much mister chair, good morning and i see you again. Good morning. I would like to follow up on what you understand as some questions that my colleagues asked a little earlier, the Public Service loan forgiveness in program, selling a very concerned about, there is a minnesota story that was, shes actually a plaintive in the lawsuit against the Department Around this issue, shes a Public School teacher and she like so many others were told by her services that she was on track and making qualifying payments when that was not the case and that is Incorrect Information was provided to her and not addressed until years later, and she made all sorts of life decisions based on that about information, so heres what i want to try to understand a little bit better, the cfpb and department of education hadnt information sharing agreement, correct . Yes. On complaints in particular and in there was a separate one on frankly as im sitting here now we will get back to you because it didnt get precisely to the point that i know youre asking about, but 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, the private Education Loan can send a sign copied of the complaints that are in the act that we have it, and we very much hope to execute that imminently and then we are engaged in conversations around how we can Work Together in particular to make sure the bureau has the ability to enforce Consumer Financial Protection Laws through its larger participant role. Its one thing to share information its another thing for the bureau to use its Investigative Authority and ability to supervise and examine what is happening in order to put a stop to what we see, by some reports organization, Loan Services and are denying up to 99 of applications for a loan forgiveness, so tell me how you are pursuing that part of this, not only the information sharing but also the need for supervision and examination. Yes i do believe its important, we do have a responsibility and ability to examine a both at these against federal Student Loans as well as federal. Its important for them to come together and determine the best way to support functioning of their programs and their management oversight and our ability to enforce Consumer Financial protection law, those two things can coexist and that is the path that we are on in terms of our conversations. So really your role is to be focused on Consumer Protection and their role, i understand what youre saying but you also have to different roles you would agree . Yes. Do you see that part of that role is to go in and just like you might as a Bank Examiner to try to ferret out when things are not working right rather than waiting to find out after the fact that something isnt working right. Absolutely, when it comes to Consumer Financial protection law. Okay thank you, i have a minute more i would like to follow up on a question that i think we knew before the committee, i asked about a proposal that the bureau had published in 2017 to directly obtain data from a variety of entities in the student loan industry from big banks to service providers, this way into the omb for routine review and you said youre looking into that to figure out where it stands, do you have an update for me on that . Yes they do, the conditions have really changed since in particular because the department of education is engaged in its next generation modernization, as i have talked to the staff at the bureau they assess that the Data Collection as it was submitted to omb isnt really relevant given the changes, so what were looking at now is the changes going forward, we will be talking to the department of education about that but we have left that data request at omb pending our discussions to amended or pull it back, what opportunities there are four Data Collection in this area. So when you think you will move forward then . I certainly hope by the time i am back here i can have an update for you. Well i look forward to that update, i think it is important. Thank you. Thank you mister chairman, welcome director kraninger. When you are here in march you and i had a conversation about the Trump Administrations efforts to weekend the payday protection rules that were put in place by the Obama Administration to protect consumers against unscrupulous practices by a payday lenders, as you know that obama rule had two components, had the payment component, the payments provision and the other provision on the ability to repay, that rule was challenged in court and it is been imposed by the courts, you follow this, right . Yes sir. As i understand, the position of the bureau, you do not think there is any reason to maintain the stay on the payment provisions of the obama, rule is that correct . I will tell you senator that are filing speaks to that point, one of the claims raised by the other party is the constitutional structure of the bureau, that is a significant matter that is part of, i would, the court knows that as well so i think thats a part of the bases for the continued stay. But my understanding, i have a documents here that you stand to the committee explaining the bureaus position in this case, essentially the bureau said there is no legal basis for the provisions, is that right . So my question is given that is the position you are taking in court, will you file a motion to lift this day in order to allow this important provision to go forward, will you do . That senator i am definitely looking at that in how it is an option, i do think the constitutional structure in question is a significant one and one that has been raised, it was outlined in our filing. Im just reading from what you have written in, the bureau has written where you disagree with the need for this day on the payments provision, so given and that is your position, why are you still looking at the option of filing a motion, why dont you just filed a motion . Because as i said in that same file that you are looking at, we didnt know that the constitutional structure question is a significant one and that is something that the judges is ostensibly laying, but as i read your own motion, the bureau does not think there is any reason for delaying this provision and so i just dont know why youre not using your authority and prerogative to lift this day so we can release this, let me ask you about the ability to repay protections, the hearing back in march, we looked at the analysis that the bureau put forward that sort of proclaimed that the changes would save the payday lending industry between 7. 3 and 7. 7 billion dollars on an annual basis and that that was money that was now coming out of the pockets of consumers, right . These are consumers i wouldve been protected by the obama era rule and are no longer protected, so money that consumers would have been saved because of protection from unscrupulous practices are now going to the industry, as i have looked back on how you went about the revision of the rule i was struck by the fact that the bureau to not present any new research in defense of the change, the original role protecting consumers had been based on Research Showing the harm done to consumers, can you tell us today what new research the euro developed in proposing the change, a change that would cost 7. 7 billion dollar loss to consumers. Senator, a few things in response, wind it is certainly that the full record from the prior rule making incur and, won the experience of the states and terms of the laws that they have passed and the experience they have had and there is some new research that is, available we will take all that into account and the decision is before me, now so i know that i will certainly defend our proposal but at the same time note that the final decision has not been made in this issue, with respect to Additional Data that we took into account in the proposal. It is fundamentally about what the first rule was based on, legally there was a we do have the discretion will ability to undertake rule macon, related to unfair or deceptive or abuse of acts or practices, that was the basis of the rule and it is my judgment that it is something that we should undertake very thoughtfully and judiciously because there are other on consumers and markets, so the ability of credit and the question to the seven billion dollars, the question of each other consumers individually is what their best alternative was, whether that was the inability to pay utility bills, the inability to repair a car. The next order effects that come as a result of that and so those are the things that i would pause it as least as considerations when i was said it was a loss to consumers. The question is what else happened in their lives individually and what access to that credit afford. I would also note that this is an area of the market where there are many challenges, we have taken and we will continue to take Enforcement Actions against entities that are engaged in illegal activity, that will continue, that is certainly a challenge in the space. While im listening to your answer and i would just note, i dont think you mentioned the new research that justified the change to this rule that protects consumers, i would welcome any information that you can present this committee, im glad you are still reviewing this and i really hope you will take this steps that you seem to be heading to take which in my view would significantly harm consumers to the tune of 7. 7 billion dollars according to the estimate of the analysis by the bureau, so thank you mister chairman. Thank you. All right that concludes the questioning for todays hearing, again we want to thank you director kraninger for coming today, i know there were a couple senators that would hope to get back with their schedules, so i know youre likely to get some additional questions and four senators who went to submit questions for the record, those are due to the committee by thursday october 31st, we asked director that you respond as promptly as you can, again we thank you for being here and appreciate the good work that you are doing. Thank you senator. This hearing is adjourned. A look at the fiscal conditions, that shows Revenue Growth stalling in fiscal year 20, 18 speakers include local officials from michigan, Southern California and new york city, this is an hour and a half. Because
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