Transcripts For CSPAN Consumer Watchdog Director Comes Under Fire At Oversight Hearing 20170409

That accounts by wells fargo employees. This is just over three and half hours. The committee will come to order. We have a quorum here. I will begin with five minutes of opening statements. Mr. Quarter it, i know you are here at our committees invitation for statutory appearance, but i am otherwise surprised to see you here. Or have been many press reports saying that you would otherwise have returned to ohio to pursue a gubernatorial bid. Perhaps the rumors of your political aspirations are greatly exaggerated. On the other hand, im also surprised you are here, because as you are well aware the president can dismiss you at will. , you can berank removed for a cause. Either way, i believe the president is clearly justified in dismissing you. I call upon the president to do just that into doing immediately. There is no greater form of Consumer Protection than fostering competitive, innovative markets. And then also vigorously policing them for fraud and deception. A policing our markets under mr. Corduroys leadership, the success record is anything but clear. What is clear is that the agency has shown a disregard for protecting our markets it our markets. It has made credit more expensive many instances including those of moderate, middle income americans. The agency has also acted unlawfully and abused its powers. It is now finalizing the rule that would authorize access to prepaid card products for consumers who do not use traditional banking services. Credit card rates have risen significantly with many would be borrowers getting priced out of the market entirely. Many credit worthy borrowers could pay 600 more for their. Uto loan according to researchers at the university of maryland, as a result of dodd frank, middle only achievet cheaper mortgages, but they were cut out of the Mortgage Market altogether. For all the harm inflicted upon consumers, richard quartering richard quartering ordrey should be removed from office. Show that he removed reversed the law and did so. Ot with formal rulemaking hemake matters worse, attempted to apply this new rope standard retroactively. The d. C. Circuit court ruled against and in both instances. On marchreversed, 31st, he attempted to take control over direct dealer auto lending compensation. In doing so, the agencies ought to deregulate companies over which it has no statutory authorities and who are expressly exempted under the dodd frank law. To process tod the companies under the administrative procedures act. Denied market members due process, and as such he should be dismissed by our president. Go,only must mr. Cordray but this Current Agency must go as well. The market people need to be protected from fraud and deception. They do not need washington choicerampling on their and taking products for them. Today, the agency asked as legislature, prosecutor, judge, and jerry all rolled into one. Rolled into one. They represent a dagger aimed at the heart of our Central Government values. Clearly, you can be a democrat and believe in the agency, but you cannot be a democrat with a lowercase d and believe in this institution. Represents a key battle of nothing less than to protect our constitution. Power,bination of all legislative, executive, judiciary, they justly be pronounced the very definition of tyranny. This journey must and, and the peoples Constitutional Rights returned to them. Thank you very much mr. Chairman. I thank you for director co rdray for joining us once again stuck about how the Consumer Protection bureau continues to fight for americans who have been harmed by you legal, predatory schemes. I am delighted and so pleased you are here. I am so honored that you have done the work you have done for all consumers in america. I would also like to thank you for your sustained, long, strong leadership despite unyielding republican efforts to repeal your work and their desire to remove you from your position prior to the expiration of your term. The Consumer Financial Protection Bureau has successfully recovered around 12 billion for 29 Million Consumers who have been victim of predatory financial practices. In addition, the consumer arough has handled over million Consumer Complaints and worked diligently to promote clear disclosures and reduction practicesces bad committed by Financial Institutions. The Consumer Financial Protection Bureau is doing the exact job they are supposed to do, and they are doing it well. Congress recognized that americans needed a new watchdog that would swiftly and effectively crackdown on unscrupulous packages and products. The dodd frank wall street reform and the Consumer Protection act that we deliberated extensively, we created a Consumer Agency with a single director that operates independently in order to effectively serve consumers and regulate financial markets. We could not have had a better cordrayhan to director despite what you hear from republicans about the leadership structure. It is not unique. There are other federal, regulatory agencies with similar structures. These facts have not stopped republicans and some in the industry from making legal challenges to its structure. That is why, last week, i let 40 other current and former members of congress to file a brief with the d. C. Circuit court of appeals in support of the Protection Bureaus independent structure and clear constitutionality. Republicans have been clamoring to weaken, impede, and ultimately destroyed the Consumer Financial Protection Bureau since its creation. First, they did everything they could to stop a director from being appointed in the first place. Since then, they have pushed fundures to defriend de and dismantle the bureau. There are in every state who have been ripped off by Financial Institutions. Why are republicans not fighting for them and their Financial Security . I reject these attacks against the Consumer Financial Protection Bureau, and i will continue to stand up for the hardworking American Consumers that the agency protects every day. The Consumer Financial Protection Bureau is a valuable ally whose work must continue. Director cordray, i look forward to hearing your testimony. I cannot thank you enough for what you have done in the way that you have conducted yourself. The way you have allowed everyone to come in and share their concerns with you. The way you have traveled all over this country to meet with consumer groups. Legally your term does not end until july, but i would hope that this resident even know i doubt it, would have the wisdom to ask you to stay on. Yield is there any time left . Somebody else youll him sometime along the way. I guilty of. Thank you. Mr. Chairman, thank you for holding this hearing. Cordray it is great to see you again. I have known you for a long time. The mission of the Consumer Financial Protection Bureau is to protect American Consumers. When wells fargo opened thousands of fraudulent accounts, it was the Consumer Protection bureau that sounded the alarm. Mr. Chairman . Committee will come to order. The gentleman from michigan is recognized. I wonder if i may have extra time . The gentleman will have an additional 20 seconds. Thank you, mr. Chairman. The work that you have done is noted whether it is wells fargo or money tree or bridge point for education where the consumer hasau that you lead returned millions of dollars to consumers. Notation is not with some ridicule. I suppose it may be that when it comes to which side we stand on, institutions as having credible influence over this town or the people back home. The glass choose which side they are on. I am glad that in the role you have taken you have been on the side of the consumer. I thank you for the work you are doing. The time for the gentlelady and the gentleman have expired. We welcome the honorable director cordray who has previously testified for this committee. I believe you know needs he does not need further introduction. You are now recognized for five minutes to give an oral presentation of your testimony. Thank you, mr. Chairman. And thank you winky members of the committee. The Consumer Financial Protection Bureau was created to stand up for consumers and make markets work more fairly. Over the past five years, we have returned about 12 billion to consumers all over the country in every state and every district. We have imposed about 6 million worth of Civil Penalties. We put an end to the mortgage processes that led to the financial crisis and harmed so many. We are arming consumers with better resources so they can make decisions for themselves and the families. Work to give consumers a voice that matters so they can address their own concerns and report on broader patterns of abuse or concerns. Today, we have fielded more and more complaints. More more people are finding this to be helpful. Markets that work for consumers are also good for responsible businesses and the economy as a whole. Consumer lending has been ramping up in mortgages, credit cards, and auto loans. Delinquencies remain at historically. Last year, auto loans remained at historic levels. Banks are showing solid profits, and Community Banks and Credit Unions are going growing their share of the Mortgage Market. Still, more work to do to clean up the Consumer Financial marketplace. These markets are huge and touch all of us in one way or another. Years of uneven title oversight allowed a lot of bad behavior to go unchecked. As the independent consumer watchdog, we are solely focused on the job Congress Gave us of assuring these markets are fair, transparent and competitive, and consumers have access to sound Financial Products and services. I want to highlight some areas were people remain vulnerable without the Consumer Bureau to stand up for them. Create that markets in for consumers. When people are forced to deal with companies they did not choose and cannot change, they lose much of their power because they lack of freedom simply to take their business elsewhere. A prime example is Credit Reporting. If your Credit Report contains inaccurate information, you can suffer severe and lasting harm. Many people do not know what is in their Credit Report. It they do find something wrong, get his way to hard to get anybody to Pay Attention and make it right. The Consumer Bureau is the first agency to supervise his industry and the companies, and we are making steady progress to clean up these problems. We recently took Enforcement Actions against all three major Credit Bureaus for deceiving consumers. And marketing Credit Scores we are still flooding ed with complaints so more work needs to be done. Another dead in market is Debt Collection. Consumers often find it debt is sold off or outsourced to a new company. They often do not know what to do in these collectors treat them badly. We here for stories about constant harassing phone calls, relatives or employers tracked down a wrongly contacted, or even false threats of arrest of the debt is not paid. These tactics are indefensible and against the law. People deserve to be treated with dignity, whether or not they only debt. We have taken action on several fronts to address widespread abuses in Debt Collection, but my Credit Reporting gets a big problem that will take time to is properly another area performance incentives that are consumers this a prominent example is wells fargos practices that led to millions of consumers having accounts opened in their name without their knowledge. And 2013, we get was a borough we got a whistleblower tip about problems. It was causing investigation was. Conducted with federal and local partners that documented the widespread practice of secretly opening up unauthorized accounts. Completing an action with a record fine, we blew up in a scandal. We are keeping a close eye on these practices and insisting all banks and Financial Companies must carefully monitor their incentive programs to avoid such problems. Demonstrate why the Consumer Bureau is so important to protect consumers. Incentive programs cause Improper Conduct a not limited to wells fargo. They show up in overdraft in credit card addon products, where we are rooting out that practices. We will remain vigilant and crackdown of these abuses wherever we find them. Beginningtalk about or destroying the Consumer Bureau are missing the importance of the work we are doing to send a for individuals and emilys all over the country. Nobody should want to return to a system that failed us and produce a financial crisis that damaged so many lives. I look forward to answering your questions about what we have accomplished over the past year. Thank you. Thank you, mr. Cordray. I yield myself Prime Minister questions. First, i want to deal with the important subject of congressional oversight, as i trust you are well aware. Yesterday i reissued a subpoena for this congress for matters that were pending from subpoenas in the last congress that were never complied with. Some of these matters have been days, i wish82 to remind you and all personnel pb, it is unlawful to obstruct of the power of inquiry of inquiry which any inquiry or investigation is being had by either house or any committee of either house. I suspect you will find the Justice Department will no longer turn a blind eye to obstruction. As you are probably aware there is a december 21 article that appeared in the National Review dealing with cfe be an congressional oversight. Thee article it stated unwritten policy of its supervising attorneys and if one former Democratic Senate staffer was never give them what they asked for. A careern to say professional and the unit who had resisted pressure to engage in witness coaching and other unethical practices was reprimanded for insubordination and reassigned. The Inspector General investigated. They concluded the reprimand was unwarranted and the supervisors had engaged in obstruction. Mr. Cordray, does anything in this article true . Mr. Cordray i have seen that article. It is filled with hearsay an opinion. Is any of it true . Or do you deny all the assertions in the article . Mr. Cordray i dont know what all of the assertions in the article are. The ones i just quoted. Mr. Cordray i would be happy to have my staff mr. Cordray, as the fed Inspector General ever communicated with you involving a supervisor that were to that works in oversight requests . Mr. Cordray i do not im not sure to what you are referring to. You dont know the answer . Are you aware of any Inspector General inquiry of any aspect of the cfpbs handling of congressional inquiries . Mr. Cordray i dont you are unaware of any Inspector General inquiry into your handling of congressional inquiries. Is that correct . Mr. Cordray i dont always know all the inquiries the Inspector General is conducting. Im not supposed to know all the inquiries the Inspector General is conducting. The article states the Inspector General issued you a report. The findings of its investigation. Have you ever received a report from the Inspector General detailing any aspect of cfpbs handling of inquiries . Mr. Cordray i have gotten dozens of reports from the Inspector General. I try to play pay close attention. If you have ever received a report . Terribly important matter going to the foundation of our constitution and oversight. And you are unaware of any Inspector General report . Mr. Cordray you started from an article based on opinion and hearsay. There were claims made we dont provide documents. Necessary,case, if we will subpoena such. I cant believe you would be unaware of this. If you want to show me the report and refresh my memory. Is it a published report . Rep. Hensarling you say you are unaware of the report. Mr. Cordray im not sure what you are referring to. Rep. Hensarling in the time i ive remaining, mr. Director, think it has section 1071 of dodd frank requires Financial Institutions to collective report womenowned, minorityowned in Small Business credit application information. I personally dont believe the information is necessarily a great value but that is not the point. Six years ago the general counsel stated the bureau would not enforce a statute against Financial Companies until the bureau issued its rules. You have at the helm for almost five years. You have failed in your duty to prescribe a rule under section 1071. The same as true of section 1033. Two years ago, Democratic Committee members led by the Ranking Member said your unwillingness to prioritize 1071 is unacceptable. Director, can you cite any section of dodd frank that permits you to ignore mandatory yearsakings for five plus and we get engaged in discretionary rulemaking such as payday rules, arbitration rule, and the prepaid card rule . And why these are not grounds for removal for cause. Mr. Cordray im happy to address that if you want to give me a few moments do so. 1071 is a required rulemaking. There have been a number of required rulemakings, more than a dozen or so we have required to enact. At ave adopted those rules reasonable pace over time. One of those rules was updates to the Home Mortgage disclosure act, reporting and publication of the information process that involves bringing over from the Federal Reserve the operational job of actually conducting the Data Collection and publication, which is a big job. Lots of people involved with that. We make a judgment reasonable that the Small Business lending Data Collection and reporting, which has never existed before, has an operation of 40 years is something that should be in order just behind the honda rule. It is now been finalized and we are working on the Small Business lending group. That is what i can to you at this point. Rep. Hensarling i appreciate that, you have engaged in discretionary rulemaking for almost five and half years. Gonetory rulemakings have undone. Again, i think it frankly proves removal for cause grounds. I now yield. Mr. Cordray i would be happy to take your advice and move forward speedily on that rule has just as we reasonably can move. Rep. Hensarling ideal to the Ranking Member. Thank you very much, mr. Chairman. To cordray, i would like you absolutely ignore the National Review. By someone was done used to work for mr. Han anserling. You organize the bureau in a short period time. And extraordinary period of time. I do you have dealt with every aspect of organizing the Consumer Financial Protection Bureau. I trust you and i believe in you and i believe you have moved as quickly as he possibly could to implement 1071. I have no problems with it. If i dont have problems with it is a minority woman, i dont think anyone else should have any problems with it because i have not seen some of those who complain step up to the plate to deal with the problems of minorities and Small Businesses and women, etc. Lets get to some real issues on wells fargo. They would like to take the credit away from you about what you have done to deal with the fact that wells fargo created these accounts in clients names without them knowing about it. Would you please tell us what you did and how you did it . Dont let him deny what you have done and what you accomplished what the wells fargo problem. Mr. Cordray sure. I know there are people that just dont like to see any positive work from the Consumer Bureau and want to try to explain it away where they can. The wells fargo matter was a significant matter. We first began to hear about potential problems in the institution in. 2013 we received a couple of whistleblower tips. At that time it appeared to be an employeeemployer problem. It evolved over time. Obviously millions of accounts were not opened in a day. If it evolve over time. Our work also involves over time. We begin by reviewing in supervision and it became clear they were growing and significant and needed to move over to our enforcement area, which involved our own investigation, together with our partners. We worked with the l. A. City Attorneys Office. We conducted depositions of bank officials, which was the first time that was able to be done. We can tell the production of thousands of pages of documents, which was the first time was documents were able to be turned over. We were able to document and specify that there were in fact billions of deposits and credit card accounts that have been opened illegally. That this was a widespread practice involving thousands of employees. I have never seen a situation like this were more than 5000 employees were fired because of the extent of the irregularities within the institution. We imposed we completed successfully and enforcement action with our partners, which is difficult to do and timeconsuming but was important to do quickly because that is what exposed this matter to the public and has brought lots of followon actions by other public officials. To regulators, the congress of the United States, the press, and individuals who have brought their own claims. It is an ongoing matter. We have installed a monitor at wells fargo that is continuing to make sure all consumers are being remediated properly. Including ancillary issues. That the problems are being cleaned up Going Forward and will not occur again. There is a horizontal review we are engaged in across other institutions to see a similar problems are occurring and make sure they are being cleaned up. When it issued a bulletin to put the entire industry, bank and nonbank companies on notice that any problems of this kind around incentive compensation programs, weather in Bank Accounts or credit cards or mortgages or Debt Collection or wherever, will not be tolerated and needs to be monitored carefully. That is significant work and it is ongoing. Rep. Waters the City Attorney that im referring to and you are referring to in my city of los angeles has nothing but praise for you. He has nothing but praise for you because he has never, he said come up and able to work with anyone in the way he worked with you and how you moved so quickly. Not only to follow up and to further investigate and explore, to do when you are able to do to make sure you sanctioned them with the finds and the way you did fines the way you did. Im very appreciative. My city is appreciative. The City Attorneys appreciative. Dont let anybody take credit away from the work you have done to protect the consumers from the fraud that was being perpetrated by wells fargo. Mr. Cordray are feeling is mutual for mike and his team and we look forward to working on other matters in the address they may arise. Rep. Waters i yield back. The chair recognizes the gentleman from missouri, mr. Luca meyer. Welcome, mr. Cordray. I want to ask you but the bureaus proposed minutes relating to disclosure of records information issued in august of last year. This amendment would oppose what it has to be an unprecedented gag order of individuals under you and allow for no judicial review. Recipients can you provide me with a compelling reason why the bureau needs unprecedented gag Order Authority mr. Cordray number one, i dont think it will have a farreaching effect you are describing. But let me say we have received those comments from you and your colleagues. We think they raise legitimate concerns. We are going back to the drawing board as far as what we are doing on that issue. We will produce a rule i believe appreciate. Pect and rep. Luetkemeyer i have with me a letter from the aclu of all people. October received dated 20, 2016 from their legal director. To others with regards agencies not having this prohibition. In your rule it indicates that if you look at it, the recipient of the subpoena not even be able to put that information on their website, which you can do in your website. They recite here the concern with regards to National Security interests. There is a very strict protocol that has to be observed in that situation even to be able to protect that information. Yet you are going beyond that. Again, this illumination of due process is unconstitutional. They cite that prohibition. Im very concerned about that. Withdraw theed to rule. It makes no sense. I dont know why youre going down this road. Mr. Cordray im hearing what you are saying. Its reinforcing the concerns you have raised in others have raised. I think you are legitimate concerns and we are going back to the drawing board on that. I think he will be happy to see that when it is completed. Rep. Luetkemeyer with regards to another issue, small dollar lending and access to credit. We have talked about this at length over the years and im still concerned about some of the actions your agency has taken. Is, in mying rule view, it will close businesses and leave consumers out of options. A quick part of a letter i got from john from a jonathan missouri. People who turn to obtain a loan to help solve personal finances. This is not a bad idea, its a horrible one. Please do not let this stand. My car broke down recently and i was afraid i wouldnt be a will to for the repairs. I was quickly approved to get a loan. Im glad i used these lines to get my car fixed and back on the road. Mr. Cordray, i know you think everybody concerned other , likes of credit whenever but if theuation, government decides he cant have alone, what is he going to get this . What is your solution to this . Mr. Cordray i want to be careful with what i say because this proposal was out for comment. We received over one million comments, some along the lines of what you just said and others the reverse. We are trying to work that, looking at subject. There are 14 states in the union that have no payday lending. South dakota is the most recent to join the rings because the voters in that state by 76 approved a ballot measure last fall to essentially bar payday lending in the state. That is tens of millions of americans in those states that seem to get by just fine. Thats interesting experiment you have part of the country with no payday loans and part of it that does. Rep. Luetkemeyer with all the respect, director, they are still there. They are going offshore and those are not regulated. I dont know how you get around them. There is no access, period. Increase their credit card debt, the prepaid cards. These are all things that other options but it shows in those situations they have higher credit card past dues and things like that. For immediate cash in a will is driving people into certain areas they dont want to go to. Mr. Cordray payday lending is one way to meet that need. There are many other ways to meet that need. The states that do not have payday lending, people find money other ways. Its a legitimate discussion and something we are thinking hard about. We have many, many comments on both sides of the issue. Rep. Luetkemeyer i yield back. The chair recognizes the gentlelady from new york, ms. Maloney. Rep. Maloney i would like to ask about the prepaid card will that went to effect this november. It requires minimal disclosures, limits the amount of overdraft on credit cards, and establishes a process resolving errors and customer disputes. The Prepaid Card Market is growing very quickly and it has a great deal of potential. But there are virtually no federal Consumer Protections for prepaid cards. That is why the rule coming from your agency is so important. The rule was supposed to take effect in october, 2017. But the bureau recently proposed delaying the Effective Date by six months to april 2018. It is proposed delay the bureau said the additional time would allow the bureau to evaluate concerns raised by industry participants regarding certain substantive aspects of the rule. Bureaution is, is the open to making substantial substantive changes to the prepaid rule before it goes into effect . And if the bureau is open, what aspects of the rule is the bureau open to changing . Im interested in the Disclosure Requirements and the issues that affect digital wallets. Mr. Cordray thank you. I will say two things in response. Is important to keep this in mind as some people talk about trying to overturn the rule, there will was finalized last fall but it has an implementation period for companies to work in their packaging and other things and get ready. We have now determined from what we heard that may be too short and we have put out a proposal to reopen the issue of extending the period of time for six months. Lets understand weather will come from. , most americans almost all in this room, have Bank Accounts. We have certainly go right. The right to get errors corrected, the rice to get disputes resolved. Nobody was several back those rights for those who have Bank Accounts. There are millions of americans who do not have Bank Accounts and for whom prepaid cards and prepaid accounts are increasingly satisfactory solution, but they have none of those protections. This is meant to level the Playing Field and make sure that the same protections that more privileged members of our society who have Bank Accounts have that we take for granted in our basic. Proposedid that, the to extend the Effective Date of the rule is six months and we have been hearing from industry during this time about a few issues that come up as we have been working with them to implement the rule. We have heard enough that we believe it makes sense to seek on at least two of the issues in the following rulemaking in the coming weeks and perhaps there will be others. The first relates the linking of credit cards to digital wallets capable of storing funds. The second relates to ever resolution for prepaid card 7up and registered. Both could have disclosure implications. Both we will take a serious look at and figure out how to address them. Rep. Maloney you are open to substantial changes . Mr. Cordray we are always open to hearing more from states. Consumer groups and industry about what can be done to improve the functioning of our rules. Rep. Maloney and interested in Overdraft Fees. My question is do you plan to propose a rule on Overdraft Fees before your term expires in 2018 . If so, when can we expect to see the proposed rule . Mr. Cordray as you know, and we have discussed this a number of times, overdraft is an issue that the Consumer Bureau is looking at the outset. There have been problems in the area. I think private lawsuits demonstrate certain problems that have resulted in significant resolutions. The Federal Reserve just tried to address this issue before we became an agency with its often rule. Opt in rule. There are federal it is something we have been looking at for quite some time. R wouldhen we would or n not propose a preliminary framework, which is what we need to do a Small Business review panels, i cant speak to the timing on that. It is something we would be happy to keep you and your staff posted on as we go. It is an issue that is on our minds very much. Rep. Maloney my time is expired. I wanted to hear also your safeguards to mortgage products. Time for the gentlelady has expired. The jennifer new mexico, mr. Ierce rep. Pierce the that more than one million filed. That he gotten any rough breakdown of how many of those complaints and then against Community Banks . We dont actually take her put our database any complaints. Rep. Pearce do you break it down but Rural Counties . Mr. Cordray we can break it down by state. There may be smaller divisions we can put them into if youre interested in that. I would be happy to my staff talk to your staff. Rep. Pearce have any complaints against cfpb . I hear quite frequently when i go to the district that cfpb is intrusive. They are limiting access. Have any complaints against cfpb . Mr. Cordray our database is about Consumer Complaints about the Financial Institutions. Rep. Pearce you dont track when people dont have anyone start, to start, threestar rating for yourself . I appreciate you dont track those. Mind that when you first started our discussion here was about rural. County infining luna the same category as new york city. It has eight people per square mile. Near city has 28,000 prescribed while per square mile. You have a lot of more option in new york city than you do in luna county. Everything you might do to choke off access, we where creating german is f we were creating tremendous friction. Im interested in page for. We are tailoring our first the financial decisionmaking. Thing to get all these subgroups. You did not put rural and ther it is a big part ofe. America. It is a big part of america. Mr. Cordray we have made progress there. We have changed our definition of rule twice because of comments you have made to me. Rep. Pearce my point is it took about 34, committee five years to get that changed from a member of congress. When i see you have done one million complaints, i kind of wonder about those people who are not congressman. The ones from rural areas saying you are making life difficult for us. One of the things we have discussed and he sent the lady to my office for an hour and a half with the idea of summer finance. The get people into mexico. They are making 25,000, 30,000 a year on average. They end up owning five trailer houses and that is the retirement. They sell the trailer. They take the payments. We have worked with you for over two or three years on one sentence. Just go back to what it was before you can sell five of those indicating to be a Mortgage Loan originator. No. You changed it to where you sell one and yet to be a Mortgage Loan originator. You have taken with the possibility of people having just comparing it to the transportation system. In the city your car breaks down, the go out and get on the subway. You rent a bicycle. We are interviewing for my office in las cruces right now lives 65 miles away. Theres no rent a bikes out there, know uber no uber, no cabs. If she has to go get a payday loan to fix the transmission you say, you will shut up 75 of it. I have asked you before. That guy in the oilfield trying to get through every day says what business is it of mr. Cordrays if i want to borrow 100 on monday and saturday i will pay back i get my check 120 . I guarantee you there is no one in new york city dont go out and land that 100, yet you will say you cant have financing of trailer houses, you cant have any access to payday loans, can have this. I dont think it is an oversight on page4 when you do not include rural. I dont bigots in your mindset. I know the number of Community Banks in a closed down. I know the total assault on them. They are not the ones who caused the problems in 2008. They did not. Yet you treat them like the same in the initial definition. It takes three years to unbundle that and still they are the ones complaining to me. Mr. Cordray could i have a moment to respond . Sure. Mr. Cordray what you are pointing to is the success story. It took longer than it might have every work of congress ultimately and the rule definition hasnt fixed. Its an example, maybe not perfect, of us listening and responding about digging in our heels. In terms of new mexico, we have to call centers to take complaint to run the country. One is in the area you describe. We are familiar with the area. We are happy to talk to you further about the seller financial issue. Time, time. Rep. Pearce will probably is not fixed. I appreciate your observation. That she recognizes the gentlelady from new york, miss alaskas. Valasquez. For the work you do on behalf of working families and consumers in the country, particularly on behalf of my new the people i represent. I would like to share with you in the committee some stats regarding Small Business lending practices. In terms of the most vulnerable population of the Small Business sector. Women and minorities. Disagreehy i strongly with the chairman of the committee about the section 1071. One study found them of women who sought financing, 32 received compared to 35 of men. They were more likely to receive shortterm funding with a prs from 14 to 15 or higher than men. 13 higherwomen paid Interest Rates for the same product. Ns, guaranteeda by the federal government. Women received less funding on average than men. The average being nearly 60,000 for women in over 156,000 from an. Four men. For men. They pay higher Interest Rates than on minorities. It is important to the cable to collect data so it shows us whether or not we need to come up with legislative solutions to level the Playing Field in terms lending credit accessible to every sector of the Small Business community. Mr. Cordray i find that very persuasive. I heard the chairman loud and clear and he said he wants us to move ahead play with Small Business lending rulemaking. We will respond to that oversight. Rep. Velazquez thank you. Mr. Cordray director cordray, increasingly homeowners are purchasing rooftop solar panels as a way to reduce their monthly utility bills. Unfortunately, along with the growth of the Solar Panel Market there has also been reported increases in Consumer Complaints regarding abusive or deceptive acts by solar companies, financing in marketing. What is cfpb doing to address Consumer Complaints in this industry . Mr. Cordray we have been hearing two Different Things and increasing amounts about both. The first is the sale of solar panels directly may involve abuses of consumers. There are limitations around our jurisdiction if it is a loan in connection with the sale of our retail product. That is difficult but we are talking to attorneys to try to understand who can do what on that problem. There is a separate issue that may or may not be what you are referring to which has to the socalled pace loans. One of the ways in which the solar panels are financed is that states have set up a superior priority tax lien on the property to be able to finance the Energy Efficiency changes. That creates real complexities in the Real Estate Market that we are hearing a lot about her mortgage lenders and others and we are trying to think about carefully and talk to fha and others. We are hearing the same things you are hearing i believe. Rep. Velazquez Credit Unions in new york recently approached me and expressed it is becoming increasingly difficult to provide overseas remittance due to the escalating cost of complying with the associated rules and regulations. What is the cfpb one revealing the remittances rules to make sure cost is not done of for consumers . If you find it has, how would you address that . Mr. Cordray i was going to a portion of my book because in arrears and new data that folks provided me with on the issue of remittances. Is moneyat market transfer operators rather than banks and Credit Unions. It is a market dominated by nonbank players. Talking about western union, money gram, and online products that will be disruptive in that market and perhaps beneficial to consumers like zoom and others we have seen. In terms of the Credit Unions, we did exempt by creating a threshold over more than 80 of Credit Unions from coverage under our rule. We have been talking to players and there may be more we can do on that front. That is something we will look at. We are doing a retrospective review of the remittance role rule. Time has expired. The chair recognizes the german from michigan the gentleman from michigan. Thank you director cordray. My understanding that parties with the bureau are not admitting guilt it is my understanding parties entering a Consent Decree with the bureau are not actually admitting guilt, is that correct. Typically that is not the case. I will give my perspective on it. That. Ant to establish there are Consent Orders that normally contain labeled stipulation that state, respondent agrees to the issuance of the Consent Order without admitting or denying any of the facts, findings of facts, or conclusions of law except the respondent admits the facts necessary to establish the bureaus jurisdiction over respondent and the subject matter of this action. That is . Ncluded in the Consent Decrees yes or no are those included . Myself and many others have raised this with you which i believe is that it has been a significant problem. The way that the bureau has issued their press releases around these Consent Orders, specifically virtually every one of your settlements, you dont prove any facts alleged. Your company doesnt admit to any violation of the law. Yet, in your press releases that you send out, theres regularly alleged, again, without factual basis that the Company Actually violated the law. Mr. Cordray can i give you my perspective on that . When we complete an action its because we complete a thorough investigation of the facts. We know what the facts are. The Company Knows what the facts are. Thats why they end up mr. Huizenga you dont believe any of these companies that would sign a Consent Decree would feel intimidation or the fact this could draw out for years, maybe theyre too small to fight well, city hall or the cfpb at this point . Mr. Cordray i think the main reason is we have done a thorough investigation and we know the facts and they know the facts. They dont have a leg to stand on. We document those orders in detail. It doesnt matter to me whether the company says they dont admit nor deny. Does anybody doubt that wells fargo had the problem that we mr. Huizenga wait a minute. You are an attorney and you say it doesnt matter what they sign . A legal document with the cfpb . Mr. Cordray it doesnt matter to the truth of the facts. Mr. Huizenga would they sign Consent Orders that they lie . Mr. Cordray what it does matter to you said it wasnt factual. You said it wasnt factual. Id like you to answer my question. Mr. Cordray where this matters is whether facts are allowed for followon lawsuits by plaintiffs attorneys. I dont feel its my job for it to happen to them. My job is to conclude the investigation lay out the facts , that they are. The company can dispute it or not as they please. But the facts are the facts. They are made public. Mr. Huizenga maybe we can put it in slightly different terms here. Several employees have filed claims of racial and sexual discrimination in retaliation with the bureaus office of equal opportunity and the equal Employment Opportunity commission. The eeoc. You have settled some of these cases, including one with a whistleblower who has testified before our committee, mr. Chairman, without id like to enter into the record one of those settlements which is dated october of 2014 if we could do that. Mr. Hensarling without objection. Mr. Huizenga using your standard, the fact you settled these cases means that you and your managers are guilty of racial and sexual discrimination, correct . Mr. Cordray i dont agree. Mr. Huizenga you said it doesnt matter what it says. The facts supersede what the paper says. Mr. Cordray there is a Consent Order that is entered which has specific facts in it. Thats a different issue. Rep. Huizenga director cordray using your own standard you , settled claims and thereby admit to your crimes but you wont fire the managers responsible for that. Mr. Cordray thats not correct. When we get complaints and grievances we look to resolve those through whatever process we can. Mediation we use quite a bit. Rep. Huizenga youre saying sometimes signing an agreement doesnt mean youre guilty. Mr. Cordray no, no. Mr. Huizenga youre either guilty of the things you just settled or the other people who you have forced into settlement agreements might not be guilty of what you charge them. Mr. Cordray a public Consent Order is an order entered by either the bureau or the court. Mr. Huizenga for remediation. Mr. Cordray and independently authorized order thats distinct from a settlement agreement. Mr. Huizenga heres the simple fact, whats good for the goose is good for the gander. You are not willing to accept the same standard that you apply to others for the outside mr. Hensarling the time of the gentleman has expired. The time of the gentleman has expired. The chair now recognizes the gentleman from new york, mr. Meeks. Mr. Meeks thank you, mr. Chairman. Let me first thank you, we voted 62 times previously on the Affordable Care act only to find out that many of my colleagues when it came to time when they were in power they realized that many of their constituents benefited from the Affordable Care act. And you, sir, have now, i think, testified before congress over 62 times. I think that your responsiveness to congress and who you are responsive to is consumers. They ask about accountability. Is it in fact your accountability to the consumers of america . Mr. Cordray i believe its to the public, yes. Every member of the public is a consumer. Mr. Meeks prior to the establishment of the cfpb, do you know of any such agency that would be reflective of the responsible directly to the public or consumers, the corporations, the banks they have their they are responsible as they tell me to their stockholders, which is the limited crew, and to their corporate board. Who is responsible to the American Public, the American People . Mr. Cordray i think this congress did a good thing in 2010 and its very important to have an independent watchdog looking out for consumers standing on their side, making sure they are treated fairly in the financial marketplace where its typically not a fair fight when they are in a struggle with a large Financial Company. Rep. Meeks in fact, when we had the greatest financial crises since the great depression, the fact of the matter was because nobody was out there watching out for the consumer, many of the no doc loans and bad products is what brought this country down, is that not correct . Mr. Cordray you know what that meant . That meant lots of people lost their jobs who had nothing to do with any of this. Lots of people lost their homes , billions of people, and we all lost significant retirement savings. We all suffered because of that failure on the part of the regulatory system. Mr. Meeks the fact of the matter is those people who lost their homes and jobs, etc. , they were not just minorities. They were not just people from urban america, not just people from rural america, not just people from the eats, west, north, south, they were not just democrats. They were democrats and republicans. Is that not correct . They all fit within the group. Mr. Cordray thats correct. Ill give a great example. Maybe some people got irresponsible Mortgage Loans, maybe they should have known better maybe they were , defrauded. In that subdivision if there were 10 foreclosures, everybody else in the subdivision, even though they had fine mortgages and were ok initially, was going to get hurt because their home values were going to plummet and they were going to be innocent bystanders. It happened to many, many millions of americans from all walks of life, of all backgrounds, of all origins. Mr. Meeks this is not a battle youre not there just to represent minorities or urban america, you are there making sure there are solutions for consumers wherever they be, no matter who they are, you are the one agency that we have now to make sure that the American Public has someone that has their back, thats whose back you have, right . The American Public. The average everyday mary and joe . Mr. Cordray thats our job. It is a big job. We try to do it the best we can. When we dont get it right we look to fix it. Mr. Meeks you got something called the Consumer Complaint ortal, is that correct . Mr. Cordray we do. Mr. Meeks how many people have responded to your Consumer Complaint board, if you are not doing your job, you are only get a few complaints, right, because everybody else must be accountable. If you get rid of this bureau and you, must be accountability somewhere, so must be only a few people are complaining to you, is that correct . Mr. Cordray well, thats not the way it seems to be working. We have had over a million complaints so far. They are coming at rate of 25,000 to 30,000 a month. People have you know what this is like. Think about your mothers, fathers, sisters, brothers, sons and daughters they have issues. They arent sure how to fix them. Its a big distant Financial Company that may or may not be responsive to their concerns, to have a place to turn to, to come to this Consumer Bureau, to say the complaint in their own voice and make sure well work with the company to get it fixed and get relief in many instances. Thats really important for people. Its a good thing. Its something that we should want to preserve and its very important. Mr. Meeks i would say, its fair to say, because i have looked at some of the people, some come from nebraska, texas, new york. So there have to be democrats and republicans and independents and people who dont vote at all, there is no litmus test that utilizes that, correct . Mr. Cordray we get complaints referred to us from congressional offices in all districts across the country. Democrat, republican. Doesnt matter. Were just trying to work on behalf of consumers. We welcome those and encourage mr. Meeks i would say every member of congress, democrat or republican, we should say thank you. Thank you for helping our constituents on a regular basis. Without you they wouldnt have anybody. Mr. Hensarling time of the gentleman has expired. The chair recognizes the gentleman from wisconsin, mr. Duffy, chairman of our housing and insurance subcommittee. Mr. Duffy thank you, mr. Chairman. How long have you been the director of the cfpb . Mr. Cordray i first went into that position in january of 2012. Mr. Duffy five years, three months, right . Mr. Cordray thats right. Time flies when youre having fun. Mr. Duffy the original intent of the congress, a bill written by exclusively democrats and doddfrank, had the intent the director would serve for how long . Mr. Cordray i wasnt here then. I understand there were some republicans mr. Duffy the answer was intent of the director serve for five years. Not five years and three months. Not six years and six months. But five years. Mr. Cordray i dont think so. Thats not what the statute says. Mr. Duffy when we look at your tenure, youre were you brought in and it was found under the Supreme Court that the nlrb would apply to you as well. So you were brought in unconstitutionally by the president and reappointed which will then give you a time frame to the middle of next year, is that fair to say . Mr. Cordray thats one perspective on the matter. Mr. Duffy you werent appointed unconstitutionally is that your position . Mr. Cordray i dont know that i have ever been ruled on that. I would accept that the noel cannon case is the holding of the u. S. Supreme court and we accept it and respect it certainly as people do. Mr. Duffy you are over the fiveyear time period which would give you great cause to say listen, i have done my five years, im going to comply with the spirit of my party and intent of the law, im going to step down. You have chosen not to do that. Mr. Cordray could i mr. Duffy ill give you a chance to respond. As i look at the p. H. H. Case discussing whether the president has the authority to remove you or serve at his pleasure or you have to be removed for cause, the cfpb has appealed that case which means you prefer the standard that you be removed for cause. My question for you is, would you prefer that the president , again were going to note your political aspirations in ohio, that well walkthrough the racism, the sexism, walkthrough the intimidation and retaliation, all the things that we did on an Oversight Committee and more, do that very publicly to have you removed for cause, or do you think its easier to go i have done my five years, ill step down and go . Whats the better way for you, politically, whats the best way . Mr. Cordray to go back to your previous point. I was nominated by the president and confirmed by the senate on a significant bipartisan vote in july of 2013 to serve a fiveyear term. Thats what the statute provides for. And thats where were right now. The phh case you noted is pending. Its an interesting constitutional set of arguments thats being presented there. And the court will sort it out. Mr. Duffy i would prefer we do this publicly. You have a rotting agency. We brought in women and minorities who have talked about the bureau and how they treat women and africanamerican women. Im sorry. I would be happy to have that public conversation because, guess what, i think democrats even ohio would be aghast at what has happened at the cfpb. Do you believe that 25 Million People are a lot of people . 25 million mr. Cordray i was trying to respond and missed your question. Mr. Duffy 25 Million People a pretty good chunk of folks . Mr. Cordray 25 Million People are a good clunk of folks. I would agree. Mr. Duffy this side of the aisle and this committee collectively we represent 25 Million People right here. And as the chairman pointed out, we have sent you subpoenas for years and you failed to comply with those subpoenas. Mr. Cordray i dont agree with that. Mr. Duffy on occasion when do you comply, you dont certify that you have complied with our request. Other agencies certify that they have complied with the subpoena thats come from congress, but not the cfpb. Mr. Cordray i dont know what youre referring to. Mr. Duffy have you complied with our subpoena in regard to the ally case that goes back to 2015 . Mr. Cordray i believe we have complied with all of your subpoenas. Mr. Duffy have you complied with our ally subpoena . Mr. Cordray i believe we have. Mr. Duffy have you certified . Have you certified you have complied . Mr. Cordray let me say mr. Duffy have you certified you complied . Mr. Cordray im not sure what youre referring to. Mr. Duffy we have a certification requirement in our subpoena you certify your compliance. Have you certified the 25 Million People we represent, you have complied with our subpoena, yes or no . Mr. Cordray if thats an issue for you mr. Duffy have you certified our compliance with our subpoena . You come in and said you complied. Have you certified the subpoena . Mr. Cordray at the end of last year, we understood mr. Duffy you havent certified compliance with any of our subpoenas. Mr. Hensarling time of the gentleman has expired. Mr. Cordray could i respond for 30 seconds . Mr. Hensarling a brief response. Mr. Cordray my understanding is that in response to that subpoena we supplied yet more documents and we were engaged in discussion was staff and at the end of last year, staff said that they would engage in further discussions with us and they thought that would mr. Hensarling the time of the gentleman has expired much the chair recognizes the gentleman from california, mr. Sherman. Mr. Sherman mr. Cordray, thank you for your service. I want associate myself with the Ranking Members praise of you. Except for the part, perhaps, where she posited the possibility that donald trump would appoint you for another term. Nothing other than that could diminish the high esteem that i have for you. We have up behind you on the board the trade deficit statistics. I know that we didnt have quite as big trade deficit last month as expected but that was a quirk because of the Chinese New Year and some interruption in shipments. Mr. Cordray, we have the know before you owe mortgage disclosures that resulted in transparency for consumers, better accountability, Financial Institution but ongoing compliance issues remain costing time and money for consumers and for the industry. When will the latest proposed rule be finalized, and do you plan to issue any Additional Guidance clarifying this rule that could be relied upon the industry as implementation continues . Mr. Cordray its apparently not appropriate for us to comment on timing of rule making since they are pending. These are issues like judicial opinions. They are done when they are done. Im not sure what to tell you there. Mr. Sherman you understand the socioutility of being done as expeditiously as you can be . Mr. Cordray i always do and im sometimes disappointed at how slowly the federal Government Works even though im trying to be there and make it work faster, yes. Mr. Sherman we have these pace loans which are Home Improvement loans for alternate energy but they are structure part of the property tax bill. Are you sure your agency they are basically Home Improvement loans, cant expert jurisdiction in this area . Mr. Cordray its a pretty complicated subject is what i have learned because in the states where those exist typically the state legislature has passed state laws that provide for priority liens which involves the government in both the making and collection of those loans and thats a very significant complicating factor for us. Its something that we have a team of people looking at and trying to work through were hearing now about it to be concerned. Mr. Sherman i would hope your legal staff would work with us. I hope this is an area Home Improvement loans is an area you ought to be involved in. If you need mr. Cordray Home Improvement loans were involved in. This is where there is government tax liens passed by state law. Mr. Sherman this is a special, super duper Home Improvement loan. If you need legislation i hope that we would work with you on this. Studies have shown in some geographic areas its possible to determine the identity of nearly 100 of the borrowers using the data that lenders are required to collect and report by the Home Mortgage disclosure act. This is despite the fact that that act is supposedly provides for anonymous data in its final form. The revised and greatly expanded hmda rule is slated to become effective january 1 of next year and includes many highly Sensitive Data points, including the borrowers credit score. The bureau has stated in its final rule that it would propose a balancing test to determine which of many data points would be redisclosed to the public. Whats your timeline i realize another timeline question for that process . And what does the cfpb plan to protect highly sensitive consumer data like the borrowers salary or credit score from being publicly disclosed . Mr. Cordray im very well aware of that issue. Its something were wrestling with. We do not want to be increasing the redisclosure possibility for consumers. And its something were working on and were mindful of the fact that although people would be reporting starting in january, that was a mandatory rule that congress required, we need to give guidance about the privacy aspects of this. Were very sensitive to it. I dont have a time frame for you, but were well aware how these things fit together. Let me just urge you come up use your authority for these roles with establishing Financial Institutions. Everybody has to go to wells fargo then you end up with fake accounts. We are trying to go where we can, that is a shared sentiment on both sides. That is something we hear. Misery ntlelady from will be recognized for an additional five minutes. Missouri. Mr. Director i thank you for appearing here today, with widespread failure in Consumer Protection that happened at wells fargo over a number of firedwhich wells fargo 5300 employees for all of these deposits. Without the customers knowledge or consent. Despite deceiving more than occ, thiscords, the evidence has seen no that the cfp be had an Ongoing Investigation related to wells 8 2015. Ior to may this is after wells fargo and and filed a civil 5000 daysthat over the original article was broken at wells fargo. There is a binder just to your right sir, it has a seal. Could you graphicallys . To your right sir. If you dont care to take a binder, inside it there are documents, im going to be referencing them. Perhaps you would like to reference them as well. I would like the record to reflect that the gentleman has decided to ignore the binder. I would like you to keep your answers very short sir. Recall when you first read the l. A. Times article . I dont know when i first read the article. Did you instructors staff . Go against the l. A. Times article. We had been indicated there have been from the wells fargo. Did you instruct them yes or no . It was not the l. A. Times article. Time, wheneclaim my they first initiated this on may 8 2015 . Exhibit one in the binary you decide that to look at is a inter that is up for review, 2016 from edwin chow an employee of yours. Where he indicates to wells initiated the cfp be its supervisory review of wells fargo rectus is. I may 8, i would like to enter this letter into the hearing. They did aying that supervisory review on may 8 yes or no. We engage in supervisor activity at that time. Chp had 3, 2016, the decided to enforce this. That is the key point that i want to make sure you are clear on. According to the rules am i entitled to any of the documents . I would really like copies of those. Will be provided to all members. I was wondering if i could get copies to all of the members. Members may request copies and they will be provided to members after this. May i get the documents now . Mr. Hensarling apparently they are being provided to you as we speak. Start the clock again. The gentlelady is once again recognized. Mrs. Wagner are you denying cfpb initiated supervisory review of making, yes or no . A minute ago mr. Chairman. Mr. Hensarling the gentlelady will suspend. For what purpose does the gentleman from missouri seek recognition . I will have to see these documents, too. The gentlewoman has raised some interesting points and i think that the documents should be shared with us. Ms. Waters why dont we give the documents to all the members over here . Mr. Hensarling they will be provided in a timely fashion. They are not violating any Committee Rules. Think so far what the gentlelady has alluded to is also put on to the committee screens. The gentlelady from missouri is recognized. Mrs. Wagner could i have my time restored, mr. Chairman, please. Mr. Hensarling the time was stopped. Mrs. Wagner did the cfpb notify wells fargo that it had decided to refer this matter to enforcement . Yes or no. Mr. Cordray yes. When that happened it had been mrs. Wagner are you denying they represented in writing it referred this matter to enforcement on march 3, 2016, is that correct . Mr. Cordray let me clarify this for you. Mrs. Wagner my time is limited and i have a lot of questions. Mr. Cordray the letter dated march 3 is a point at which we have decided that the matter has risen to a level where its no longer supervisory matter mrs. Wagner did the cfpb refer this matter to endorsement around the same time that the l. A. City attorney began settlement negotiation was wells fargo. Mr. Cordray thats not what we initiated work. Mrs. Wagner what an amazing coincidence. You referred this to enforcement on march 3, 2016. The l. A. City attorney referred it on march 2, 2016. What an amazing coincidence. Mr. Cordray these arent coincidences. Were in contact with local officials mrs. Wagner reclaiming my time. The first request, first request director cordray, did the cfpb first request wells fargo delay destruction of its records on may 8, 2015 . Mr. Cordray say that again. Mrs. Wagner did the cfpb first request that wells fargo delay the destruction of records related to its branch sales practice on may 8, 2015 . Mr. Cordray consistent with the fact it had graduated into an enforcement action. Mrs. Wagner the letter from the cfpb, i would like to enter as exhibit 3. You do not deny that the cfpbs first requested on may 8, 2015, that wells fargos delay the destruction of records pertaining to its branch sails practices . Yes or no. Mr. Cordray thats just a reminder of obligations that exist under the law. Mrs. Wagner yes or no . Mr. Cordray thats a reminder of the obligations that already exist mrs. Wagner was it the first time the cfpb made this request to wells fargo, why didnt the cfpb produce those records to this Committee Given the fact such records would be responsive to the committees record request of september 15, 2016, which is exhibit 5, mr. Chairman, i would like to have this in your binder mr. Hensarling without objection. Mr. Cordray im sorry. We have given you documents and if there are more documents you want, were happy mrs. Wagner we have been asking for documents as everyone on this side of the aisle have referenced for hundreds ever days, sir. And you are in woeful compliance. Mr. Cordray if there are documents you dont have, happy to try to provide them. Mrs. Wagner did the cfpb first request on may 8, 2015, that wells fargo produce items such as sales practice policies and actions taken by the bank regarding fraudulent sales practices at the bank, yes or no . Mr. Cordray those are the compelled production of documents. Mrs. Wagner yes or no, sir. Mr. Cordray yes. Mrs. Wagner you do not deny the cfpbs first, first requested that wells fargo produce this information on may 8, 2015. Mr. Cordray thats not correct. And youre conflating things. Mrs. Wagner let me move on. If youre saying the first time youre saying this isnt the first time the cfpb requested this information, why didnt the cfpb produce those records to this committee . Seeing that such records would be responsive to the committees request of september 6, 2016, which is exhibit 5 thats been put in. Did the cfpb ever contact wells fargo about its fraudulent branch sales practices before wells fargo informed the cfpb on may 4, 2015 . Yes or no. Mr. Cordray we had had supervisory activity prior to that time and subsequent to that time mrs. Wagner i take that as a yes. Are you aware the earliest correspondence you have produced is the edwin letter of may 8, 2015 . Mr. Cordray there was supervisory activity prior to that time. Mrs. Wagner is this the earliest correspondent between the cfpb and wells fargo pertaining to the practices . Mr. Cordray i dont know exactly. Mrs. Wagner did the cfpb depose or interview only three wells fargo employees in connection with the fraud lent accounts . Mr. Cordray they took the only depositions that occurred in the case. Mrs. Wagner were they three . Were they three, sir is that correct . That is correct, then. Yes. Wow. You tell cfpbs investigation both independent and comprehensive. Director cordray, only interviewing three employees for such widespread cases of fraudulent practices where 5,300 employees were fired does not seem very comprehensive to me, sir. In your letter to this committee on september 23, 2016, you indicate that bureau staff first became aware of some related issues around wells fargo. This was well over a year before either initiating a supervisory review or containing the bank about a fraudulent practice, sir. Its most concerning. I dont have much time left. Im going to close here, sir. Mr. Cordray you dont want to give me a chance to respond, thats ok. Mrs. Wagner from the minimal, minimal records you have given to this committee thus far and based on your testimony, the only conclusion there is to draw regarding the wells fargo scandal is that the cfpb was asleep at the wheel, asleep at the wheel, director cordray, under your leadership, and that your investigation in this matter was far from independent and comprehensive, sir. You have claimed the cfpb was created to root out this kind of widespread consumer arm, but the l. A. Times, o. C. C. , l. A. City attorney all got there before you did, sir. I encourage you mr. Hensarling the time of the gentlelady has expired. The chair now recognizes the gentleman from massachusetts, mr. Capuano. Mr. Capuano thank you, mr. Chair. Mr. Cordray, boy, they really hate you, dont they . Mr. Cordray dont give credit for anything good we do. I understand that. Part of the game. Mr. Capuano i think im into the bizarro world. We called the agency a rotting agency. First they complained you enforced too much. Now we just heard a 10minute rant you didnt enforce enough. And bizarro of all bizarros the people on the other side of the aisle have become the sole and perfect defenders of workers rights, womens rights, and minority rights. Unbelievable. Well stay here longer because eventually theyll be in favor of the Health Care Law and all the other good things of america. Mr. Cordray, we have had many interactions sometimes i disagree with you, sometimes the agency. And i would love to sit here and talk about those things, lets be honest. You and your agency are here 62 times not to have the typical oversight thats our responsibility but to beat the hell out of you and make sure we get rid of this agency. Thats why were here. That being the case, a thoughtful presentation here is really not called for. With that, since nobody on that side of the aisle seems to want to give you the opportunity to actually address a misleading question based on wrong facts, i will let you 3 1 2 minutes to address. Which one of the most ridiculous assertions that were just made would you like to address . Mr. Cordray im sorry that the previous questioner has left the room. Mr. Capuano they werent going to listen to you anyway. Mr. Cordray let me recap the events. We had the first whistleblower tips in the middle of 2013 before the l. A. Times story. Although i will say that was a splendid piece of investigative reporting. And investigative reporting often aids Government Law enforcement investigations and did so here. As well as followup stories by the l. A. Times. At the time there were issues around whether employees were being abused by the employer, whether they were being held to unrealistic sales goals and the like. Over time, this problem migrated into something bigger. And our look at it migrated into something bigger as the problem itself evolved. We were engaged in supervisory activity through 2014. And in 2015, and at that point as the congresswoman noted, the matter had become serious enough and clear enough that it migrated and was graduated into an enforcement action. Thats a very serious matter. And it involved taking depositions. We didnt need to take hundreds of depositions here. We took three key depositions that had not been able to be taken in the case because of restrictions, evidentiary restrictions on what the l. A. City Attorneys Office could do. They shared with us information from other interviews they had. We didnt need to duplicate that work. We also compelled the production of documents from wells fargo that were very significant to detailing and documenting and nobody denies this. We established it through this joint investigation. And it is clear no one denies that millions of accounts were opened illegally, improperly, in the name of consumers who didnt know a thing about it, and were often hurt by it in terms of costing them fees or affected their Credit Reports or the like. We worked with the l. A. City Attorneys Office and brought the o. C. C. Into a joint work with the l. A. City Attorneys Office. And we resolved the matter. Not just on the basis of the boundaries of california, which is what the l. A. City attorney could have done, but nationwide. And with broad injunctive relief that this will not happen again at wells fargo. And because its a public enforcement action and all the facts are detailed, when the congresswoman talks about 5,300 employees fired and millions of accounts opened, we know that because of the public enforcement action. Thats what broke this matter opened. Nobody was talking about it before then. That is leading to the entire industry taking a look and being more careful about whether they are engaging in any of the same kind of fraudulent practices toward their own customers. So this will have cleaned this up throughout the entire industry and put everyone on notice that this is a very serious matter. Its not to be taken lightly. You cant just put out these sales goals and say you should meet them and well turn a blind eye to how you meet them, even if it violates the law f we establish that principle there will be a lot of problems avoided in the future and less work for the Consumer Bureau and ill be glad of it. Mr. Capuano with that i yield the committee back eight seconds. Mr. Hensarling the gentleman yields back. The chair now recognizes the gentleman from kentucky, mr. Barr, chairman of our Monetary Policy and trade subcommittee. Mr. Barr director cordray, in response to my friend mr. Capuano from massachusetts, i think you said this is just, quote, part of the game. Let me tell you whats not a game. Whats not a game is your agency denying Vital Financial Services to Service Members serving abroad from my commonwealth in communicating with their families back home. As you may know let me ask you the question. As you may know, the bureau has issued regulations on international remittances, and in kentucky we have a number of military bases, fort knox, fort campbell, the National Guard headquarters is located in my district. Credit unions are no longer offering their members this product. Heres why. Give a real life story from a constituent. Fort Knox Federal Credit Union has members across the world and they have discontinued offering this much needed service due to fear of not being client after 100 remittances a year. Can you imagine for this credit union it doesnt take long to reach 100 when you have over 85,000 members. Many of whom are deployed overseas. Mr. Cordray i see that. Mr. Barr when the kentucky credit union contacted you about the rule and unintended consequences it is reported to me your comment was, no, this is the intended consequence. And that you were not concerned about these mr. Cordray i dont know about that. Mr. Barr now having to pay much higher fees to remit funds to their families because their credit union cant comply with this onerous regulation. Why wont you provide relief to Service Members and their families . Mr. Cordray so were doing a lot of great work for Service Members and their families. I would be happy to detail it if given a chance. In terms of remittances in particular, are you aware of who required there to be that rule . Mr. Barr im telling you mr. Cordray congress required that rule. Were merely following the law. Mr. Barr i reclaim my time. The bureau has the correction to provide the relief to these Credit Unions who are no longer able to deal with a workable rule that would alou these remittances and have priced these members out of their credit union as a result these Credit Unions will no longer able to provide. I want you to revisit that. Thats a request of you to revisit that rule to provide relief to these services. Mr. Cordray we would have the discretion to do that if congress provided it in the law. It is not in the law. Mr. Barr once again, i think the bureau is taking an overly restrictive view of your add certainly you exercise a whole lot of discretion to take away Financial Services and product from the American People. I think you could probably revisit this and id love to continue that conversation. Let me move on to another problem. Mr. Cordray well be glad to continue that mr. Barr in march of 2015 you testified before this committee and said you needed data showing the cfpb rules related to quote high cost loans were constraining the manufactured housing market. According to Home Mortgage disclosure act data, manufactured Housing Loans from 50,000 to 75,000 have decreased by about 14 as a result of your regulation. There is clear data mr. Cordray from whom . Mr. Barr Home Mortgage disclosure act. The governments data is telling you that manufactured housing credit is down because of your regulations. Why in the world when we have an Affordable Housing crisis, when many rural americans struggling in kentucky and elsewhere need access to Affordable Housing. Why dont you provide relief to working americans to need access to manufactured housing credit when the governments own data is telling you that your regulations are hurting lowincome americans . Mr. Cordray i dont think the Government Data says that. The Government Data doesnt ascribe causation. So there are a lot of reasons why this could be. But i would be happy to follow up. I know this is a point of particular importance to you and to other members of the committee and we have talked about it before. And be glad to talk about it further. Mr. Barr i think we should. You have the discretion to stop these rules that are contributing to the Affordable Housing crisis and making it harder for americans, particularly in rural areas, to afford manufactured homes. Finally on october 7, 2016, the office of advocacy of u. S. Small business administration, another Government Agency, submit add comment letter to the bureau related to your proposed rule regarding consumer loans. The comments pointed out that the Economic Impact of the proposed rule on small entities and consumers would be greater than indicated in the bureaus analysis pursuant to the regulatory flexibility act. This is corroborated by my own constituents, Small Businesses, who say this process was a joke. They went and told you they were going to go out of business and you ignored them. So you have our constituents saying they are going out of business because of your rule. And another Government Agency saying that thats true. And you are ignoring it. Mr. Cordray not at all. We were not ignoring that. The reason we have that process and hear from everyone is to hear what they say and process and digest it and analyze it. Just dont we dont agree with every single thing people say to us, often they are saying conflicting things. Mr. Hensarling the time of the gentleman has expired. Mr. Cordray be glad to follow up with your office on these points. Mr. Hensarling the time of the gentleman has expired. The chair now recognizes the gentleman from missouri, mr. Clay, Ranking Member of our Financial Institution subcommittee. Mr. Clay thank you, mr. Chairman. Thank you, director, for being here. I really dont know where to start today. My neighbor from missouri, mrs. Wagner, sounded as though she was sounding the alarm that you had done something wrong and that she was in defense of wells fargo. Me and my friend from wisconsin, mr. Duffy, brings up the issue of race. Lets focus on race first. I noted in your semiannual report that Mortgage Companies and Auto Loan Companies continue to charge higher Interest Rates to africanamericans and hispanic borrowers than to Nonhispanic White borrowers. In the case of p. N. C. , 35 million has already been recovered to the injured. Given back to the injured. As well as ally, auto loans with about 80 million in damages already recovered. I would hope my friends on the other side of the aisle would understand that this has severe Financial Impact to africanamerican, hispanic family that prevents them from Building Wealth for their family. It keeps them in a hole. And so i want to commend cfpb for finding these atrocities and making these companies pay. And thats part of why you were created. I appreciate the job you do. Can you speak to that and what youre finding in these industries . Mr. Cordray sure. Let me start this by correcting the record on one point on p. N. C. The discrimination there was by national citibank. P. N. C. Took them over but they werent responsible for that. They helped us clean it up. The point you are making is we think really important a lot of people would like to think discrimination is a think of the past. Its a vestige of the past. We have found ongoing instances of discrimination, some significant, some of them involving redlining, which a lot of people want to think it was a practice went out of fashion decades ago, but we found it hasnt. And we have taken action where that was appropriate. And where the evidence demonstrates that action is needed. And what is this about . Its about making sure that people are treated fairly and equally in the financial marketplace where they live so much of their lives. That they are seeking a mortgage that they are going to be able to get credit and be charged the same Interest Rate they would if they had a different ethnic background or racial or skin color. Thats an american principle. But it requires enforcing the law to make it happen and stick. It makes people uncomfortable. Some of the law in this area is complicated. I will grant that. We try to work through it as best we can. The u. S. Supreme court reinforced the validity of that law two years ago in the inclusive communitys decision. We do our best to faithfully follow all of those decisions. But its important work. Our office of fair lending and equal opportunity does that work on a daily basis. They have encountered obstacles at times in doing that work, but they have been splendid in persevering and getting justice for americans in so many circumstances. Im very proud of their work. Mr. Clay im proud of the work you do also. Just out of curiosity i notice that you describe some your Public Meetings and Community Round tables with stakeholders like Community Banks and Credit Unions, do you get many complaints from the public about the creation and existence of the cfpb . Have you gotten many of those . Mr. Cordray no, dont think so. We do hear everybody comes before us in a variety of forms and we encourage that. And they all have Different Things to say. Some of them are complimentary and some are critical. We try to listen to them all. Frankly its the critical things they say that are often the most helpful because they tell us where we should think about doing something differently. The complimentary things we love to hear them when people are willing to say them, but that just means keep doing what youre doing, which is a good message. We dont learn quite as much from that. So we do try to be very accessible. And i think nobody can complain about the fact that they cant get their voice heard at the Consumer Financial Protection Bureau. Thats the way it should be. Mr. Clay it seems to be pretty effective looking at the chart on the screen, it looks like people from all around the country participate in bringing their complaints to you. My time is up. Thank you. Mr. Hensarling time of the gentleman has expired. The chair recognizes the gentleman from california, mr. Royce, chairman of the House Foreign Affairs committee. Mr. Royce thank you. Director cordray, mr. Luetkemeyer raised concerns along the same line that i have here. One of the things in particular that im concerned about is the largely unchecked power that the cfpb has to issue these civil investigative demands or c. I. D. s, to inquire about a companys activity and whats unusual here, i think, is that the cfpb is not required to possess evidence of wrongdoing before initiating a probe. I wanted to talk to you about that. I think as he was making this argument basically, companies deserve due process. They deserve the ability to appeal to a body other than the c. F. P. B. Itself. And i think companies deserve the assurance that the agency will objectively review any petition or set aside or limit a c. I. D. In terms of my questions, im interested in your Selection Process for c. I. D. s. Do you look at this number of complaints they come up in the database. Is that how you do it . And specifically if a company has zero complaints, or has been proactively taking steps to address concerns, would you launch an investigation under that situation . Mr. Cordray let me just say you talked for a minute and 40 seconds and i agreed with everything you said. Everything you said, including companies have the right to due process. They do under our constitution. We do not open investigations where there is no evidence of wrongdoing. That would be a waste of our time. Mr. Royce let me explain the only reason i want to interject. I want to ask an additional question, but there are examples where you had an investigation without complaints. Mr. Cordray but we would have some sort of evidence of wrongdoing or some reasonable basis. Mr. Royce im explaining. Without any complaints. Mr. Cordray that can be appealed to the courts and some have been appealed to the courts. Mr. Royce im pointing out you opened up the investigations without any complaints. When you make the decision to initiate a probe, you refer to the company as a target. Do you think that type of language creates an adversarial posture at the outset or presumes wrongdoing . Mr. Cordray we changed that very early on. We talk about companies as subjects because we dont want to prejudge. Let me also say its important to know, we have opened a number of investigations that we later closed because we did not find enough basis to proceed. We do that. Were willing to do that. I tell our lawyers dont be disappointed. You looked at it and there wasnt anything and thats the right outcome. Dont feel like you wasted your time. You did the right thing there. There has to be a reasonable basis for thinking that something is amiss before we would open an investigation at all. And a court courts can and have checked us on that if they think we didnt get that right. Mr. Royce right. In your opinion. But that is, again, with zero complaints. Some of these cases. Now let me go to a company that visited my office recently. Which explained that as part of the initial inquiry in the c. I. D. Process, the second question they were asked was about their annual revenue. Why is such a question relevant to the initial inquiry . Mr. Cordray it could go to scope, trying to figure out how big the problem is. If its a small problem, small institution, its probably not the right expenditure of resources by the bureau. If its a smaller part of a larger institution, it could look like a larger problem. These are things you try to make your best judgment. Mr. Royce i want to explain how it seems to smaller institutions. Mr. Cordray its not how it was intended. Mr. Royce let me explain how it seems. It seems to them like a car mechanic in National Lampoons vacation. Give you this example. Mr. Cordray i have listed examples myself. Mr. Royce when Clark Griswold asks how much is the bill for repair . He responds, how much you got . That for many of these Smaller Companies is the way they view it. And we need to restore, i think, some balance or sanity in the process, right. Let me close with this. An investigation or examination is not supposed to be a gotcha moment or a hold up. Im just explaining in terms of Many Companies in cases where there was zero complaints their feeling about the attitude when somebody comes in and says youre a target. Mr. Cordray ten seconds . Zero complaints is one bit of evidence. There may be other bits of evidence that point in another direction. The other thing is sometimes when were asking about resources its because we would limit any kind of penalty based on their ability to repay because we dont want to send that company out of business. Mr. Hensarling the time of the gentleman has expired. Pursuant to clause d4 of Committee Rule three, the gentleman from massachusetts, mr. Lynch, will be recognized for additional five minutes upon the conclusion of the time allotted to him under the fiveminute rule. The gentleman is now recognized. Mr. Lynch thank you, mr. Chairman. Mr. Cordray, thank you very much for your hard work and attention. Im up here, sir. Changed my seat. Trying to confuse you. Do you need a couple more seconds to finish your thought on that . I know you were speaking mr. Cordray i dont think so. I think congressman royce and i mr. Lynch i do want to revisit the old wells fargo scenario for a second. According to my records you testified before the Senate Banking committee and your testimony was that you had received whistleblower complaints regarding fraudulent accounts being opened up. And that was in, i believe, july of 2013. Mr. Cordray correct. Mr. Lynch the expose written the l. A. Times wasnt until december, six months later. Mr. Cordray it detailed certain aspects of the situation, but again important to understand the situation itself unfolded over time. There werent millions of accounts opened in a single day. This was a practice that started in a very limited way and then maybe spread to other employees and then spread through the grapevine that this is the way you can make your bonuses. It expounded became exponential over time. So as the problem evolved, and i look at it evolved, thats why anybody can look back and say you should have known everything on day one. Everything wasnt even happening on day one. So thats kind of a misplaced criticism, i think. Mr. Lynch there was an active effort by wells fargo to conceal this. They had originally, if im correct, back in 2011, fired hundreds of employees allegedly for opening fraudulent accounts back in 2011. Mr. Cordray the timing on the firings is not entirely clear. There was a suggestion there was a same pace of firings all along. I think the firings accelerated later in the process because the problem became greater and the awareness of the problem became higher. But we do not think that the company came forward in a responsible way to let the regulators know about anything that they were seeing. And as i said, some of it occurred and magnified later on. Mr. Lynch i do appreciate it was the cfpb that made that a global settlement. Mr. Cordray i would say working together with our partners. The l. A. City Attorneys Office brought things to the table that were critical. The o. C. C. Brought things to the table that were helpful. And i think the cfpb brought things to the table that were essential in making this a National Resolution with injunctive relief to make sure they stopped it Going Forward and didnt just throw some money at it and go on about their business. Mr. Lynch i want to shift attention now to our veterans and Service Members. Ironically this president , president trump, when he came into office put a hiring freeze on in the federal government. A lot of people dont realize that the federal government is the largest single employer of veterans in this country. We have 632,000 veterans that work for the federal government, and of that 632,000 veterans who work for the federal government, 143,000 of those veterans have a disability rating of 30 or greater. So im very proud of the federal governments willingness, eagerness to hire our veterans. The problem is that with the president s hiring freeze, we block, we block these kids coming back from iraq and afghanistan from going to work at the v. A. , at d. O. D. , d. O. D. Is the single Largest Department in terms of hiring our veterans. So with the situation we got right now, with these young veterans coming home after multiple tours of duty, i was in camp leather neck in afghanistan a while back, and i had a chance to chat with a Rifle Company there and one of the young fellows told me that this was his seventh tour of duty. We got these veterans coming home after multiple tours of duty, we have an elevated suicide rate among our returning veterans. Very tough situation. Substance abuse. Another what do we do . What do we do to welcome our Veterans Home . We put a hiring freeze at the largest employer of returning veterans so they cant come back and go to work. Coming back and transitioning to civilian life, that job is critical. Thats the difference maker. So when i hear members here talk about youre not doing enough as a federal agency to take care of our Service Members, and i know that i had a young veteran in my office last week trying to go to work at the federal government and he cant get a job because of the hiring freeze, it just not only is it unfair, but it is hypocritical of what were doing today. I have a bill, h. R. 1001, that would wave the ban on hiring for the federal government as respect returning veterans. Basically what the bill would do was as the largest employer of veterans, it would exempt any qualified veteran, any qualified veteran one of the veterans i had a couple weeks ago was a radiologist, so they have been trained well within the military, it would allow any qualified veteran to go to work in spite of the fact of having the president s freeze on hiring within the federal government. I think its the right thing to do. But i am still waiting for republican cosponsors. Im still waiting for some republican cosponsors. Got a mess of democrats on the bill with me, but i would love to get some republican support because i know, i know my brothers and sisters across the aisle agree with me on this issue. I know they do. I know they do. Im certain of it. What i wanted you to do we have more than three minutes here, i want to hear what we are doing at the office with Member Services for our military militaryand our active and their families. , iant you to take the time know you have a 25 year veteran who is running that services program. I get hiring remarks on my veterans, i have a ton of veterans in my district. He gets high marks from them. I would like you to talk about that for what you do on behalf of Service Members. Thank you. First of all, that is a very powerful point you made. That they federal government blocked hiring veterans. I had not heard that before. We have been told that is a temporary freeze or they are considering what to do in relation for the next couple of months. That is a powerful point to make for returning veterans having access to jobs. Across the entire federal government. In terms of Service Members we do have that from congress it is an the statute. We have embraced it with enthusiasm. Polly petraeus said that up for the first five years or so and did an extraordinary job. Helpingeft a legacy of veterans and helping their families have an understanding of financial matters. Us deal with specific problems such as people who had to change duty orders are not able to sell their home during the financial crisis they were given different treatment because we made it clear that they were in a difficult situation. That is just an example. With the allotment system, it set up backf in the 60s to pay your bills. You do not necessarily need for that purpose. It was being used by predatory lenders to make sure they have leverage over military are ours. Like to say that the new head of the office came to us from the pentagon. We worked out some of those issues there. He is first rate, he is having us think about the entire military life cycle. We are working on delayed entry which is where we have Service Members go into these financial issues. There are a lot of 18 or 19yearold kids. Position from home, there is a guaranteed paycheck. They are borrowing from predatory lenders. They are giving them a foundation for this. There is also veterans coming out for this thing with enormous challenges. We are doing a lot of good work with this testimony from the military in the senate recently with a talked about how they have not expert cancer with this. Time of the gentleman has expired. The lesson you are here last time you were here we discussed legislation about creating an advisory position process. A process that exists in many other executive agencies. With a particular detail view of regulation there has been a response into the inquiry. The companies would cover the opinions soing the that they have a better opinion of how to comply with the law. Sense aretisan common looking for clarity, particularly, whatever you would like to call it. They sought to undermine the , he supervised thousands of positions. That wildly inflated number is just as absurd as the policy that was created. Theas so restrictive that agency only issued three letters per year. Off is enough that shutting for the policy. You on theuestion limited policy you said that it was a fair one question and you intended to do more and did more than three letters. I was also told you created a no action letter policy. With the spirit of the bill you are talking about people getting their questions answered and to have some clear followers. It has been over that year when no action was finalized how many letters has Census Bureau issued . I thank you again for digging into this issue. Something we are continuing to struggle with. We actually respond to peoples request for advice in three different ways. Ok . From people in the industry who what to know how they can comply with this. They want to know if they can do it one way or another. We get hundreds of calls per week, certainly a steady stream of calls per year. Those,ur best to answer one way we deal with this, if anyone would like to print the doubt it would take all of the time we have. It is not specific to that institution, they may be wanted to note that, they go to the rulemaking process so that we can clarify our rules. It has not been dozens but hundreds of different issues. It is clunky, it takes time. Thatkes resources, we do and we are willing to do that it is not always the best answer although sometimes it is a good answer. We have soft like that ended right now. Is what you are describing with the no action letter. Than ibeen a lot harder thought to get that done in the bureau. It has not yet generated a lot it is not maybe working right. I do not know what to make of that. I am not hostile to the advisory position, when i was attorney general we issued over 100 a year. Has any request been denied . , i dont think so. Some people have decided that it is not the best approach or they get their questions answered and they are dissatisfied with those remarks. Or we are using rulemaking to amend the rules. I am on the website and im trying to search for this, i am finding nothing at all. I would think we have provide easily accessible certainty. I would say to you that we not been able to master that. Help inerhaps use some working with congress to work that out. The time of the gentleman has expired. The chair recognizes the gentleman from georgia. I just want to say that the first thing is thank you. Yours is a difficult job, it is probably the most challenging job in washington quite honestly. Probably not best. Am perfectly anxious to say a few words about this. People need to know that this is a free enterprise, it is a free Financial System, we live in a free system you are free to do good and you are free to do bad. That is why we need organizations like yours that are in the middle to separate from the shaft. I also want to thank your staff for working with me and my office. We have had our differences, these are dealt with in a way to elements,t those particularly of the low income and poor people. They are taking advantage of some of those unsavory characters. Just love the book of p samls. Blessed is the man, blessed are the poor. The lord will be with him. In his time of trouble. , theord will deliver him lord will preserve him and keep him alive and he will be blessed. And on the earth. Since i have been working with you, you and i share the common bond of caring for. We got to working together and you came up with an excellent program. That needs to be known. The clause for those mortgages, we also came up with the gametion that the cfp be gave for creditors. I want to commend you for that work. I also want to join your work on it. Concern isy deep something i found out was yours. That in thisnd out immensely complicated and competitive Financial System that the poor, that those of the low income are not being taken advantage of. That there is not a seat at the table, i appreciate you for having an opened mind. With that in mind, what steps are you taking in your rulemaking now to make sure that we are not putting an unfair a d wait on them . What are you doing to make sure that the Credit Unions and the small banks, even predatory lenders, what are you doing to make sure that your rulemaking is not putting any unfair burden on them . Those thank you for comments and the question. It is a daily concern at the bureau for a how our rules apply. Mortgageases under our rules or meet remittance rules. Omitted thousands of committee banks in this instance, we recognize and i agree with them when they tell me, they cannot bear the same burden of ruless rules as the larger institutions. Subject to Community Norms can write and i have talked about this. That is something that we are trying to do all of the time. We are also open to hearing input from any of you, these valuable. Hearings our when you tell us about it it matters. The card rule is important in this respect, Many Americans have banking accounts, there are many who do not. They are shut out of that system, this card can make all of the difference. They can transact safely, but you have to carry cash around and they can have the basic objections, it feels to me like an injustice. The time of the gentleman has expired. The chair of the bureau recognizes the gentleman. For you aware of any confidential leaks that led to Insider Trading . Are you aware of any confidential leaks from within that has led to Insider Trading . That i amt do believe aware of any. I am careful when i served as a law clerk i know you are versed in this. Unfortunately staff learned of suspicious trading activity for the navvy corporation the morning of the enforcement action. Are you aware of this unusual trading activity . I have not. I would be very concerned about this and would like to learn more. This you arely on not aware of any suspicious trading activity or market activity connected with any cfpb actions. The first i have heard concerns, if there is any basis i would like to know what we can do to make sure that love that is happening. We just saw the Federal Reserve chair having to step down it is not the first in a time this thing has happened. Has anyone been investigated for Insider Trading . Not that i am aware of. You would be willing to cooperate with an investigation . I would. I thought you would be getting at a different point. Maybe some kind of information leaked out or if you are wondering about my employees. They would be barred from doing anything to affect the company that was under their purview. We have good ethics lawyers who are very good in this regard. Bureaus focal operation of the Securities Exchange commission and the department of justice if there was an investigation . I would not. Reallyk you for that, it is a twofold question, insider doingg and your employees that themselves, all of that is the sharing of confidential information. I think just any can of trading stock, any company that you are involved with doing work on or had any information on. That would be illegal regardless time. Ield the rest of my i would be glad to follow up with you if there is something we should know. Toi would like to go back followup from a man from michigan. Showiew of the records that there has been 180 one Enforcement Actions in the history of the bureau does that sound right to you to mark it is close to 200 out. Shows that those Enforcement Actions that forehead been adjudicated and the rest have ended in settlement agreements. Does that sound right . Wethat is a partial picture have a lot of matters pending in the court. And he very quickly. A lot of these are Consent Orders. I am trying to find one where the company admitted to wrongdoing, do you have records of Consent Orders or settlement agreements where they company has been admitting to run doing . I had gave my perspective on this earlier, i understand that i am asking a simple question. Has there been an admission of guilt . In the site and reviewing these incorrectly, do you have records it is not that simple of an issue. Can we start with either a yes or no . Do you have in your possession Consent Orders where the i would be happy to have my staff followup. Are you unaware . When we do orders we played an investigation. Youre avoiding a simple question. Either you do not know the answer or the answer is yes or no. Do you have them in your possession . Im here at the committee, i dont know. I will get you answers on that. I will say, when we issue orders , one of the paragraphs of the order, the order details what we found in our investigation can i just for a moment . That stands as the law of what happened. I didnt do it, but it speaks for itself. I understand that prevent exactly the same thing you did a nice stations of the generational discrimination. The time of the gentleman has expired. The chair were now recognizes the gentleman from missouri, the Ranking Member of the housing and insurance subcommittee. Thank you, mr. Chairman. I also want to express that they definitions were in fact change, and marshall missouri, three houston banks icame to me complaining have a letter from the president expressing appreciation before the real change. Talk about financial technologies. We are not going to be able to hold back progress that will happen, there is nothing we can do, perhaps nothing we should try to do. Course is that with each new technology we have new challenges. Shown theve algorithms were not necessarily unbiased, but they can be biased. Small businesses are trying to loans, is there something that the Consumer Protections bureau can do to algorithms arese not used exclusively to the detriment of minorities . Excellent question. I know we just had an exchange of correspondence on this. ,et me go to your first point the world definition issues to get cleared up. Maybe take longer than it should, maybe we were too narrow to begin with. We worked with the congress on it. If people are still hovering concern about that world definition i would be happy to deal with any particular institutions. Think its an solid session. The congress because you matter on that. Some tech issues you are raising , we have put out a request for information because we are very interested in these issues around the data that is used to underwrite loans. There are new opportunities to look at different data, we are not imprisoned within the narrow clients of the old Credit Reporting system which often was and only counted your housing if you had a mortgage because that was a loan, credit. If you paid rent faithfully for 20 years they give you no credit at all for that on your Credit Report. It was like it didnt exist. Like the rightel answer. The algorithms being used and other methods being used pose risks, they also create opportunity, and we have put out a request for information to hear from both sides, that is there are two that are open, this one may be open until may. We want to hear what the risks are, the issues you raise with this, how they can be mitigated, and we want to think about whether this might open up a box for more americans. We get a report a notable oforts that got a lot interest on the fact that there are 45 million americans that are essentially credit invisible. Data dont have enough to offer active. Dit or it is an 45 million americans are shut out and they cant get loans, cant have opportunities for loans. Accessin favor of credit. The issue here is whether there are other ways to look at other data and underwrite these loans so that more people could and many of them are in minority communities were disadvantaged communities that they could be really understood more fully to be good credit risks. At the same time that could pose risks and we want to be careful about that. Are embarked on an inquiry of exactly the kind that i think you are interested in. We will be glad to keep you posted on that as we go. Where there have just heard on will hear a lot from people by midmay. Furtherl spawn conversations and possible actions i would guess. Depending on what we hear. He probably wont have time to respond to this but im becoming increasingly concerned looking at this and people watch your behind you, they look we are having a problem that i think its going to eventually explode. Right now theres 1. 3 billion in defaults. I dont have a chance to go further, but its a big problem. Over 3000 Student Loans defaulting everyday. That is 28 and hour. Its one of her 28 seconds. Thank you. The gentleman time is expired. Would you like to respond . Work with the new Administrations Department of just as we and work with the Prior Department of education on those issues. We are open to having further productive dialogue and action around that problem. Its significant. Its not just young people many Older Americans actually of Student Loans, either for their children or grandchildren. Its a broadening concern throughout our society. Thank you. The charity that is the gentleman from illinois for five minutes. Thank you director for being here. I want to followup on my bipartisan comments on bipartisan work to get your thoughts on Student Loans, specifically student loan disclosure. To your knowledge is there any other form of some consumer loans other than federal Student Loans, consumer loans but did not required to disclose the annual Percentage Rate before issuance . Are asking you are asking if there any art consumer loans but dont disclose annual rates before issuance . That is typically required by statute other than under the truth and lending act. Theyre making assumptions here saying, i dont want to we are doing it in a bipartisan way. Would you agree that parents of Student Loans including those issued by the federal government would benefit from the disclosure of the annual Percentage Rate when making the decision to assume Student Loan Debt . Viewsple have different on that. I will just site, it typically required by statute when we did testing with consumers on consumers our forms, were quite confused by that. Looking live on to the next thing, and we agreement a person way that transparency is important. Not everybody agrees. Staff reports we have alleged that the purpose of your activities was to regulate auto dealer conversations, over which you have no jurisdiction under the dodd frank act, and it cannot have been more clear than that. He was always testified to the effect of saying that you are only addressing lenders and that you are careful not to step over that line. We now know that this answers hogwash. Nono. Mr. E have your documents director. Wants to enter into the record documents and dated july 9, 2012 titled, notes from the auto finance discrimination working be hacked ed a behalf of my Bank Supervision by kelly griese. This document has not been previously released by this committee. A detailed summary of a second ever meeting of a special working group but together to this document, the working group was cherry by parties the document describes the preliminary , it says and is quote, to figure what to do to prevent disparate impact. The thought is that we should unlimited dealer markup. So mr. Director there you have it, notwithstanding your prayer testimony the operating behind all of your agencies in direct auto efforts from the beginning has been to quote, eliminate dealer markup. Mr. Director, arent you will learn failure agency land to regulate dealer conversation in clear violation of the law . Think there are several things that are not correct about that account. Cor we haver never taken any enforcementec of supervisor activity configurationt. Weve been careful to observe that one. We have responsibility over auto lenders. We have is the windows had to feel is that responsibility when in fact dealers often work together. Let me move on i only have a minute and a half left. To the other bureau documents on may 20, 2013, you held a meeting with your senior staff in preparation for which a briefing memorandum was circulated staying, the meanings purpose was to quote continued discussion around a settlement that would and all day discriminatory practice by limiting markup at many auto dealers. Do you recall this memorandum question mark the dealer markup is part of lenders we did provide it to your staff ahead of the hearing to help you refresh your recollection. We also released a public as part of our staff report in 2015. At the time your bureau was pursuing a Consent Order with your allies is that right . Pursued and concluded it with ally. Documents sayreau that on october 7, 2013, a draft decision memorandum states the center ally and proposed action informing of this committee. Likely onction was january 15, 2013. Your bureau reached its indirect lending sediment with its of president unprecedented leverage over ally. Ellie had an Application Pending status of a Financial Holding company. Its a notice of of its intent to bring action on january 15, 2013. Ally would have to invest its carrance and used remarketing operations of the Federal Reserve did not approve its application for holding companies. The fdic was conducting a Community Reinvestment review of ally. Showingdress it your bureau was fully aware of the applications of this. Theres real problems here. Using authority at a time to force auto dealers to push an agenda. My time has expired a yield back. If i could kind can i . Please. When we bring an action we took the result on appropriate terms. The institution will not resolve it and sometimes they are. That is a choice they make, thats a decision that they make. That involvedion dealerships. We have never brought an action against dealerships that are not buy here pay here, that is not within our jurisdiction. Is an unfortunate thing in this market that lender and dealer programs intersect. It bothers me that using power to force against the time is expired the chair recognizes the judgment from illinois. Thank you, 54 during today director. It has been too long since youve been before this committee. Too. Have missed you, i was on the Financial Services committee both at the end of the financial collapse of the bush of menstruation and the dodd frank bill to ensure families have never had undergo this sort of catastrophe again. The catastrophe was caused by collapsetaneously of all three legs of our Financial System, the collapse of republican Monetary Policy, fiscal policy and regulatory policy. If you look more closely at regulatory failures that led to this, there were two parts, the wall street collapse driven by largely inadequate think capital uirements, and huge sheets unregulated derivative exposures. More important to the middle class was the part driven by inadequate Consumer Protection, housing bubble, that the capitalized the middle class and injected trillions of dollars in questionable mortgages into our Financial System and ultimately destabilize it. As a result of that the average American Family lost over 100,000 and millions of americans lost their jobs. During the debate over the dodd frank act, we considered whether the agency should be headed by a single director, obviously that debate continues. No matter how this debate turns out there should be no debate for the see of tb, has been just a tremendous victory for the American Consumer and a victory for the longterm Financial Stability of this country. Previous question i brought up, your work is intact which was intended to make the mainland of my questioning. I just want to comment, that his at itsent regulation best. When you are looking around the corner future threats that will destabilize the Financial System in the u. S. And future threats to consumer safety. The fact that you are looking ahead of the curve on that is just an indication of the high quality of the operation you have set up. Thank you for that. There has been a lot of discussion in the previous questioning about Community Banks and small Community Banks are under stress. Its important that we not stress the financial that america has been under for decades and, frankly is likely to continue. It is due to fundamental longterm Economic Trends and it breaks my heart, and i do not know an easy solution for it. We should not confuse the stress of smalltown america and the stress of small Financial Institutions, with the need to adequately regulate them. But does just just as much damage is done to someone in a rural area with their subject to financial abuse. I did not a seat see a big difference when displayed the number of complaints you have had from rural states to urban states. Think you can a comfortable number of complaints per person from either area. I think you have to keep your eyes open. So thank you for that. There is a trend that has been important in trying to ensure the survival of small Community Banks for which there is a lot on both sides of the aisle, thats because the economy of scale for Cyber Defense and everything else, Small Committee banks are using thirdparty data systems. Opportunity for less regulation on them when the data can be extracted and a standardized way from the thirdparty data lenders, and there are two things. I have heard from some of the banks that there are difficulties in the data sharing between federal and state regulators. Theres duplication of inspections. Something rising some positive improvement can be made to take evangelism economies of scale. Extraction ata so they can be verified using thirdparty vendors. We have started to put more examination in our processes. We also work with state bank. Upervisors theyre helpful to us and we try to be helpful to them. Try to share a lot of information. To the extent that was true in the past think it is less true now, you think we are difficulties in sharing information. I know from the State Government site before the conference. What i would say is, we are also now starting to look directly at some of these large Technologies Service providers to the bank and Credit Unions understanding that going to look at the bank or credit union may be less useful than looking at operations that supply the state function. For hundreds or even thousands of its two shoes. If we can make sure they get it right, that it is not much easier for the bank or credit union to know theyre getting it right. That becomes a technology issue. The gentlemans time is expired. A recognize myself for five minutes. Mr. Director one of the things i think is impressive about regulations, our country has been the statebased system of insurance regulation. With regards to capital requirements, great making, and Consumer Protections, our statebased system of regulation of insurance has been somewhat successful and i would say, probably a model throughout the world. Would you agree under. Think they have no jurisdiction over insurance . Correct is a basic matter. Mortgage insurance with the Mortgage Market can be relevant. Specifically with regards to proposed operation rule which takento broadens goats, Life Insurance policies that would require arbitration with regard to the credit on whole life policies. Is that not overreaching . I think if we were trying to the lifeomething for insurance interesting that would be overreaching. Isthe contract of insurance in and of itself the policy, without the contract there would be no insurance without withoutfor about value there would be no loan. Any loan taken against it would be offset from the proceeds of this insurance. I may not be capturing the nuance but i generally agree, insurance is regulated at the state level typically end is downsized for the cf tv. Agree that the proposed arbitration row but not apply for Life Insurance policies . Generally us. Whether there is some sort of issues here and not entirely sure i think thats right. Free of where anything else going on to regulate insurance . Again, mortgage Insurance Point is cut it was part of mortgage transaction their issues there around disclosures and the like. The phh case has to do with capital Richards Program that we believe violated the rest the statute. The company disagrees, thats in front of the courts, they will decide. This is not part of our insurance. It is in some countries, not the United States. Some see of aviation not participate in that. With their issues we should know about got it. Let me ask you something with regards to payday lending. This is been quite an industry that has been regulated by some states, some states regulated, somehow a lot. Some dont have regulation at all. Youe a proposed rule received many comments. Analyzing this comments is a big job. We think about the remaking this concern is that essentially annihilates this particular supply of credit being used by millions of americans every day. What is the recourse, specifically, here is a request comment sent to jackson, officer said secretary from a lady in florida. She says im a single parent, lately there been issues with my support payments, payment card on time. Another necessities they are in need of. The cash advance helps me. I can only borrow what i can pay back and i have a steady job. These new jobs take place this would place me in a Financial Hardship so i cant get a loan to a date bank or other lender. How would you respond if the payday lending industry was a limited by way of roofing . A number of these discussions with your banking supervisor for florida, greg speare, a very capable strong regulator. This is a demand driven industry that requires supply. The proposal here was an effort we may not have gotten thatght to make sure people could get access to a loan when they need it. But they would get trapped in the cycle of eight, 10, 12 loans. Again, the role effectively eliminates this particular industry, where else to go . They go online, overseas, to a loan shark . We are not eliminating the demand. You are right. Its absolutely fair and good question. Again, the notably point tears their 14 states in which these loans are outlawed, thats something the bureau is proposing. It is true of 14 states. There other credit products that they access including palm loans loans, advances, or other things. Any particular harm these are the kind of hard issues. Take an i ask you to look state of florida, theyve done a good job. My time is expired the chernow recognizes the gentleman from maryland. Thank you mr. Chairman. Your you director, for exceptional public service. The job you done across the last several years has been a very difficult job, considering some of the opposition you have received, obviously, and considering the scale of the undertaking you had to assume. It has been an important job and i think you have done it to a remarkably high standard. I applaud you. I hope you do stay on. If that doesnt happen i am sure you will be incredibly in whatever field of endeavor you choose in the future. Want to start thanking you for your service. Thats very kind coming up in just say, the socalled opposition does not bother me. I always hope that i can be persuasive and we can see eye to eye. Criticism is fine, criticism we can learn from. I try to do that. Its a hard job because there are all these markets and difficult issues. And had stand up to these agencies. I applaud you to work of the agency has been terrific. Marvinto ask you about pierpont what policy question which is, one area i worked honest trying to create nonprofit Financial Institutions, banks. They are not technically allowed that sheng regulations can understand where regulars feel this way, they would like to see banks make profit. Have capital and make safer and more sustainable it seems to me in some of these markets that have been underserved by traditional Financial Services, where unfortunately, consumers are citizens in those markets really do have to turn to some of these Financial Products that we know in trap them. If we could create a mechanism for philanthropists, they do it substantially through investing and all that kind of housing, Financial Literacy programs, through a overwriting a place where they are trying to help these people who have largely been left behind. Anyones Financial Life is a bank. So many of these people are on bank. Seems to me if we could create Banking Institutions that have a the Church Normal kind of levels, and their operations were further supported by philanthropic dollars coming from that community so they could add that layer of Financial Literacy, so they could go into markets with opportunity for opportunities arent available that would actually create an alternative for these citizens and some of these markets. But they cant do it right now, there been efforts to do it but its been hard. I am interested in your thoughts on it as a matter of Public Policy do you think it is an interesting correction for us to be thinking about come across i dont want to stress to think about appropriate regulation, but also stimulating more prudent fair Financial Services some of these communities were so desperately need them. Interesting question. Background give a sophisticated perspective on these kinds of issues. We do not steal with the setting up or licensing or structure with Credit Unions which are nonprofit Financial Institutions. They do tremendous good work across his country on behalf of their members. Often in rural communities. Then we have the cbf eyes, which have a peculiar focus more along the lines of what you described. They do tremendous good work and they get support and have the support that they need. I would say those things are very helpful. We also have been trying to think about in these markets, and it goes to the questions congressman scott was asking earlier about, what about those shut out of the Banking System, out of the Credit System . We provide access for them, is impossible possible to do that on a responsible basis . Prepaid accounts are one way if they have the right protections. Also i would say that safe accounts banks and Credit Unions that do not necessarily involved overdraft or that kind of risk, many banks and Credit Unions are offering those accounts, and theyre getting a lot of take up especially among millennials who worried about these kind of things. It is an ongoing problem in america. How do you open more opportunity in more places for people dont necessarily share the same opportunities as others . We do not think alike think our lives are bounded by our sip code that we come from whether in education or anything else. With their ways we can help on that we want to do so, we are glad to work on both sides of the aisle. Your idea might be a good one, i just know enough to say one way or the other. Chernow recognizes the gentleman from north carolina. Good afternoon. Who is here to congratulation on the national championship. Thank you. It was a great day. Us one who has its responsibilities and oversight through article one. I have my response notice to the taxpayers of my district and this country. Knowing that i realized that your appointment as director, given the dodds frank frank bill gives you unlimited power. Basically unchecked, you are not responsible to us except come twice a year for a few hours. I take that very seriously and i hope you see that. Thank you. Essentially get your budget from the fence, theres really no budget. Nores essentially accountability, the president cap fire you accept some egregious fraud or abuse. Id like to ask you a few questions. Gao conducted a study recently Advertising Public Relations funds that were stiff. You, butis known by you are the big winner in terms of percentage overall spent from your budget. Spending on what . Advertising. This is an amount equal to about 2. 5 , a significant amount of money. There were some some other agency that came close to you, greater than the department of defense. I would like to ask you, do feel like your agency is more important than the department of defense, whose objective is to recruit i certainly dont. By the way we read that report differently. There are 10t that agencies of the federal government to do 90 95 of advertising, we are not one of those. We devote a small percentage of our budget marketing. I must say, the studies showed that you spend more than any other agency. Your budget had 20 million for advertising, that went to one firm, mmb. This is a wellknown progressive advertising firm, they advertise for the obama administration. I dont know anything about that. He was a senior partner for and Senior Advisor for president obama and senior Media Advisor for the Clinton Campaign in 2016. The you feelxt, like i do not have anything to do with making those awards that, thats done through Competitive Bidding and the proper process. Thats about 3 of your budget. Your advertising budget was 20 million, a huge amount. Just happen to be that you are relying with a very progressive, known group. Does this reflect that you are biased, or does it really mean that your message is fundamentally progressive as democrat aspect didnt know anything about that until he read articles making that point. Again these are worded competitively. I dont even know who these people are. Not trying to make an award to some crony if thats the implication. Around, almost all the contracts of the federal may have helped someone i dont know who they are we do Competitive Bidding. Is a lot youve not been familiar with that weve brought to your tension many times we have to take that in balance. Of what any double other agency spends on advertising, a record that we have. Substantial portion of this of course goes to one firm. Do feel like theres any impropriety in this . That marketing is consistent with our statutory making tools and Resources Available for americans which can only happen if there were them. We do little of it compared to what the private sector does. To understand the concerns we have in terms of alignments with progressive groups that are very , that would be her supporter 4 we are a smaller Contracting Agency than most, but you could look across all of our contracts and you could see who they are and you might get i dont know what the picture of the, were just trying to do our job the best we can. We dont do favors for people. The chernow recognizes the gentleman from texas. Thank you for appearing, i would remind persons that you agency first and only with the Single Mission of protecting consumers. You are it. There is nothing like you in the United States and i say you mean the agency itself. Theres nothing like this in the United States. Some of us would be grateful that you exist, may be others who would differ. But you are the only agency with this purpose. Succeeded, the empirical evidence indicates that you have succeeded, billions of dollars returned to consumers by one estimate, 12 billion or more. Havings of complaints been filed but you have found over one million complaints that you processed one way or another. As i listen to my colleagues, one might think that you are the culprit. That, you are the entity that persecuted and possibly prosecuted. Lets talk about wells fargo for example. That some ofargo the 2 million, depending on whos counting, 2 million accounts without authorization, not the Consumer Protection bureau. That has beenargo , penalized, on a 185 million. Colleagues one would think that it was the Consumer Protections. , the agency that is there to protect consumers, that is the culprit. It is wells fargo quite frankly that ought to have somebody prosecuted. But today date has anybody been prosecuted for what happened . Im not aware of any charges, although i believe the number of different agencies and prosecutors at Different Levels of the government have said that they have opened investigations so i do not know where those think investigations ought to be opened and i think somebody out to be prosecuted. We cant have a circumstance where you that millions of counts without authorization, and the guy at the top gets the golden parachute and he is outcome of the people at the bottom, the entrylevel employees may end up holding the bag, prosecuted. My hope is that some of these people in upper management will be prosecuted. At leastnce is there for prosecution. There may not be a conviction that there is probable cause. Im going to write the Justice Department, asked the Justice Department to investigate for the purposes of prosecuting purpose persons who committed crimes. Wells fargo is a good company otherwise. I am not a guy who thinks that wells fargo ought to go out of business because they have made some mistakes. Just as i think my colleagues ought not to put the cfp cft be out of business because of the new few mistakes that may have been made. The judiciary makes mistakes. Of my listen to some constituents and their complaints about the judiciary a, you would think the whole judiciary is a fiasco. Nobody wants to put the judiciary out of business. We want to see a judiciary continue to function, to function we want to see it continue. I cannot understand to be honest with you, why people would want to eliminate the first and only agency with the mission of protecting consumers. That is your soul mission, protecting consumers. I want to compliment you for standing your ground, standing your ground against the odds. 2. 3 million per day being spent against the cfp be. Two point million to per day. You still stand. Were youve had to come and testify and you still stand. People trying to sue you to get you out of office and you still stand. Standingent you for for consumers and a want to give you just a few seconds if you would to say a few things about why you are standing. Stubbornness i guess. We saw what things were like that led up to the financial crisis. When were talking about Community Banks and Credit Unions, nothing kills them faster than i financial crisis the blows of the economy and bunch of them go out of business, that happened in 2008, 2000 nine, and 2010, and every time we have a crisis going all the way back to the depression. The chernow recognize the man from pennsylvania. Good afternoon. I would like to ask you questions about the Civil Penalties on. This committee has been trying to understand how they go about uncompensated victims eligible for payments and assessing the extent of damages for which the victims should be compensated. The cfpincredibly has been less than forthcoming and work on response to inquiries. The Global Solutions case is a good example of this. The cfp be settled with tcf, a deft settlement payment processor, over its alleged involvement in the collection of illegal service fees. Its important to note that gcs is a Service Provider for Debt Settlement companies and nodded Debt Settlement company itself that wouldve had a direct relationship with consumers. Iny reached an agreement august 2014, requiring the firm to pay 6 billion to consumers and 1 million Civil Penalties. Denyshifted not admit nor the allegations in the complaints. Allocated 107. 9 million from the Civil Penalty Fund to compensate eligible victims of the Debt Settlement firms that contract with gcs for eligible uncompensated harm. In one Million Dollars from gps, the backend Service Provider for Debt Settlement companies, and his first over 100 million to a legend victims of the actual Settlement Companies that wouldve had a relationship with consumers. For allegedlyible charging the illegal to consumers . There were a number of companies that use Global Client solutions as essentially their mechanism for succeeding ripping off thousands and thousands of consumers across the country. It depends on how much awareness and conscious disregard gcs with had. Document that the bureau provides to this committee that was 280 of those that release companies that use gtf allegedly charged unlawful fees to more than 66,000 consumers. Of these 200 companies, how many of them to build accountable . What im saying is. Companiesy of the 200 charging the upfront fees as the cfp be held accountable . In some instances we go after both. Were any of the 208 Companies Held accountable . Most of them are flybynight and go in and out of business. How many of the 208 were held accountable . That are fraudulent go in and out of business, or using in this case are all of them out of business . I dont know. On what basis did the cfp be ermined there was 100 79. 9 107. 9 million damages for customers of these 208 firms . Elevates her records for Global Client solutions because they were the middleman if you will, in these transactions. Theyre the ones who had Certain Records that can be looked at. One of the problems of many fraudulent schemes is, they are records, theykeep are trying to work people off. Its difficult to identify who the victims are and know how much they lost. In this case you had a payment was makingcompany all this happen for these sketchy how you get to a fairly small amount with tcf, 1 million, to more than 100 million allegation to allegedly victims . Thats the beauty of this game. Of whose scheme . You took 1 million from gcs, 100 million to consumers. Could i laid out . You have a lot of ripoff artists superbly talk to each other and to realize they can use Global Client solutions to be there backoffice. Globals you get 1 billion from gcs. Is the cfp be a piggy bank . Theres a story if you give me a chance to tell it. Would you be offended by characterization of a cfp be as a piggy bank . Thats not a relevant question. All these people who worked off of these fraudulent artists never get their money back. Except that we can use the Civil Penalty Fund to get their money back. Weve requested records relating to this from you months ago. So reluctant to provide records to congress about a major allocation, one hunter Million Dollars . I dont know that we are. Im happy to work with you to give you all the records you want. We are following up on that because we have knock on the records. The time of the gentleman has expired, the chair recognizes the gentleman from minnesota. Please continue. Have people who worked off to the tune of 109 million. Global Client Solutions was the mechanism for making that happen, they never had that. The only way to compensate these victims is to go to our Civil Penalty Fund which is what we are doing. That means people in your district making money back because they get that they get cheated out. Isnt that a good thing . Theres a church that has been flipping around behind you and on the sides. For every dollar your agency gives get four dollars turn to consumers. Think americans would say this is awesome. A lot of members would say its a great of congress would say its great. I can see how people wouldnt see that is good news. They might he looking at that money is money that could have been returned to big financial interest and they are upset. They are not getting that money that they could be getting. Your agency returned what, other billion dollars plus to consumers . Thats my understanding yes. Spent,everyone dollar mother and four dollars was back in to consumers pockets. But we are fighting about today is, some people think why should i go back to regular americans when it could be going into huge Financial Firms and be divided up in Stock Options for dividends or bonuses . I believe thats what we are fighting about. I cant get 2008 out of my mind. Had bedlam and pandemonium around here. There was a week when it looked as though the whole Financial System might collapse. I think we had unemployment spiking in some areas as high as 15, 16 . Ive heard as much a 17 trillion lost, banks one of the business, businesses out of business, all types of trouble going on. Neighborhoods being hollowed we did not have this level of outrage express against you, its way higher than any derision that some of these companies that have ripped off people ever had to experience. We with had at least half of this umbrage and outrage directed at citi mortgage, wells fargo, experience, trans union, master credit, the list goes on. I just think for people watching, we need to know that much of what is happening is theater. Its not about any of this stuff, is a cfp be helping regular people and diverting money into the pockets of ordinary working americans reform huge financial interests. I monitor the underside. Members of congress are supposed to be working in the public interest. Not the private game. Thats not what congress is supposed to do. Its shocking. Someone from this committees the cfp be exact unlawfully come routinely denied Market Participants to process and abuse of powers. Me tell you theres a whole lot of companies that affected unlawfully and routinely denied Market Access to regular working americans. I dont see any hate being thrown on them. And yet here we go, and Agency Deciding to correct Justice System to american americans, with scorn the freight and center. The me ask you this. Do you believe the cfp be is helping regular americans is it rebalancing some of the that we have seen accruing in this economy . Www. Cspan. Org i know we are because that is what they tell us. People give to get help and get problems resolved often come back and tell us about it and thank us for it. I know that congressional offices are referring us complaints and we are helping work through those. Thats good. The other thing i would say, when you say that return of the investment we have gone four dollars back to consumers, people in the public. For every dollar spent on us, its for more than that, thats what we got for things to happen to them in the past. In each of those instances we do not just look at what happened in the past, we stop them from doing it in the future. That means over the next. Of time they will save that for dollars they otherwise would have lost and it will be on and in perpetuity. Thats a great return on investment. The people who think in those terms would recognize the value of the Consumer Bureau and will look to support it. I hope to change minds. I want to thank you for the work youre doing, i want storage not to be discouraged by the misbehavior you have seen, and to let you know that you are doing a great service. The chair recognizes the chair tournament from texas. Thank you chairman, director. Im going to forgo opening remarks that it might have this afternoon and get right down to business. I think you know by now about that im still a car dealer in texas. I know you have an extensive background yes. We have talked about this numerous times. After lifting listening to some of my testimony, i am encouraged to think you do not have much respect for my profession. I will get back to that. But i make to quick comments. He said there are no protections on prepaid cards. That is false. All funds restored at Bank Partners institutions, major prepaid providers, then you said the rule is about leveling the Playing Field. Why create a different Regulatory Regime for checking accounts . Et me move on when the shark some complaints on prepaid cards. I chose mytexas, prepaid card i believe i should have the right to decide to use Services Like overdraft protection and repurchase cushion. Cfp bemake sure the rules allow me to choose features that are best for me. Just that,card is mind. The government needs to stop trying to control everything and everybody trade our country sure is turning its back on its people. Christina joshua, texas. Overdraft is needed to help me get from paycheck to paycheck. Why is the fedal government getting involved in my personal banking decisions . Finally, leave my car loan. Are not, these the car does,ut its about what you are doing. Let me say this. We have got a lot of comments from those kind of people, let me show you read here that all of these are comments just like the ones you just heard from. From hardworking americans who actually benefit from people prepaid cards and they should some familiar to you. These were filed to really test during the rule making process, you apparently didnt listen to them and crated your onesizefitsall rule of prepaid accounts for the 67 million americans who have turned to prepaid cards are accounts for their financial needs. This does not solve the problem it just creates a bigger one. But finished the new can comment. Lets go back to those complaints. When this rose issued, approximately one million complaints were received by the cfp be. 6000 have to do with prepaid cars. Of those 6000, 1 were related to overdraft. Here represents. 006 3 of prepaid companions related to these issues represents. 018 of all complaints. You can see from this chart we disclosure complaints and overdraft complaints are almost invisible. A few questions. Did the cfp be based in prepaid role of complaints received . Yes or no. You said before prepaid issues are covered or not, banks are but prepaid issues or not. A big part of this remaking was putting them on a level Playing Field. That is what it was responding to. Would you consider it the comments you received . Yes. Did you study Consumer Attitudes and overdrafts, specifically those that actually is that feature . I dont recall all the things covered in field study but i would be glad to get back to you on that. Sure you noticed, i have introduced a cra that would pull back on this disastrous rule. The congressman typical say, the bureau has attempted to distract congress from doing their work by delaying the row for six months. You talked about that. Im here to tell you that i would not be distracted, this is wrong. I will continue to fight for those who live on an economic margin. I will fight for the mother who needs an extra 25 today to buy food for the week and the family who needs 100 for a simple car repair. Those consumers will be heard. Have a form right here, i want to ask you a quick question. Can the bureau decided someone has been discriminated against a stone account number . Now. Point of privilege if i could . The suggestion was that i dont have respect for card no point of privilege. Mr. Director, there is another member on this side of the ios suspects may be willing to give you time. At chair recognizes the gentleman from florida. Congressman williams, i have a lot of respect for on dealers, i work with them closely and ohio was attorney general. Financial crisis and a lot of them were teetering trade we went to the gm bankruptcy, to the chrysler bankruptcy. There were a lot of dealers who would lose their dealerships and i thought for extra arbitration to get a lot of them saved. The auto dealers know the work i did on their behalf, i work closely with them and handling complaints, giving them chance to handle them before he took actions against them. You can talk to my friends in ohio and they would tell you that i do have respect for you and your profession and all of them. That doesnt mean we dont have a job to do here and try to do it faithfully. The final point, and the prepaid rule, it is also often described as a 1700 page rule, not correct. Its 26 pages. Ix of them are forms to follow i dont want that to be best described. Thank you. Thank you. I want to thank you mr. Chairman, i appreciate your kindness. I want to think the Ranking Member to bring for bringing us together. Want to thank you director. I have only been a member of congress for three months now and my observation is that you might be one of the most disliked people in washington, d. C. By the majority, new and ministration, lobbyists, moneychangers, foreclosure artists. Anyone in the been straight business of taking a buck from the poor and working families, people who can least afford it. I hope you wear that with pride, sir. Im proud of you. And your hard work into moral compass. This country are continuing to go through difficult times and what you and your department do is very important to them. As a former attorney general myself i understand being a consumer advocate, fighting for them, fighting for somebody like you in a position you have. When i was governor of florida, tallahassee did not like me a whole lot. But thats ok. The constitution says we are a government of the people by the people and for the people. So when i would meet people as publics Department Store in my state or as a local cbs cvs or mcdonalds which i dont go to, more so a subway, turkey. A lot of wholewheat. Itsk to you because important to do that to stay in touch with them and understand what is of importance to them. Curious, all of us would do well to remember that jesus through the moneychangers out of the temple. Not the other way around. One to talk about Small Businesses, particularly minority and womenowned small district, which is my hometown of st. Petersburg, florida, but also includes clearwater and redington shores, twice its musicalitys believe it or not. Upveling around where i grew , it is predominately minority. Last fall i heard a similar refrain. Mom and pop businesses could not get access to capital. If Small Business lending is restricted in the primarily black neighborhood that i serve, it needs to be fixed. By the grace of god i got on this committee and this committee has at the opportunity in one way or another to give those people who i love and they they pay me to represent them. That is one thing i love about this job. Your title is what you do. You are a representative. This is not just an economic issue. It is an economically developing area and it is an issue of fairness. A black barbershop should not have to go to a payday lender to finance payrolls and operations but over and over again in the course of last fall, i heard stories from people like the black barbershop owner who wanted to expand and every institution he went to told him no. And the same thing happened to and africanamerican owner of a restaurant in the st. Petersburg area. They wanted to the entrepreneurial and every time they went to a bank they said no. The time for the gentleman from florida has expired. A mr. Chairman i have unanimous consent request that these two levers i have here be made a part of the herring the main Street Alliance on the way the dodd frank and the cfp the chairman recognizes that the gentleman from maine mr. Palaquin. Th coordinator has had a direct contact with special Interest Groups. Im concerned about any cozy relationships your people have. Im sure you share that same concern. That is not a fair description. Thats not what the emails a show, sir. There is a direct correlation between your staff and outside groups. I want to move on, thats what the record shows. You have a law degree and who are a attorney. I am. You are aware of the federal records act that bars any federal Government Employee from private electronic communication device like a cell phone or email or text to conduct official business and love within 20 days of reporting that communication is housed in a official platform. Have you heard of that law, third . Yes. Through freedom of information requests, we know that you and about a dozen of your senior managers have or ratherprivate communication on private devices to conduct official business ch circumvents of the law in less you have reported this. Can you guarantee right now that you have applied to the long. This is a trumped up issue brought about by special Interest Groups who made requests. You can look at the record of the bureau and find that our government business this is a personal issue you are raising. Can you guarantee that neither you nor anybody at the be has he used personal have used personal communication devices and have fully complied with the federal records act . This is a trumped up issue. Is it there were ever incidental the time the time belongs to the gentleman from maine. False,his accusation is can you guarantee a few have complied with the law and the folks that work with you comply to the law and the aspect i just mentioned. This is a trumped up issue. If there were ever incidences where devices were used because of the area was dead or something at that time and not to conduct a government business in any substantive way. Mr. Chairman if you could reset the clock for another minute or so the gentleman from maine may proceed. Cordray, do you still use a private email to conduct a business . There have been incidental incidences where the Government Library was unavailable for some reason. What government business was conducted . My next question is, you were probably aware that this committee and also folks on the oversight and investigations have sent you a letter asking you for all of the emails and phone messages that you have used and you just on a private communication device. Are you fully in compliance with this letter . We respond to all requests and we will. This is a trumped up issue. I have been in this job for more than five years and i conduct all sorts of government business over time. It is in the system. I would like to know from you what the government business was conducted. All the private communication to you had from government business are on the record and you have made sure all this communication is fully housed on a Government Official platform. Im considering that as a yes. We understand the government records act and make full effort to comply with it. Anything else is just a character assassination. There is no character assassination here. Heres the problem. You dont report to anybody. Questionsre to ask and you tell us to pound sand. The chernow recognizes the gentleman from new jersey. Can youary the please 11 eight 11 rate on the Consumer Fraud he found in this instance . You have a company that engages in structural settlement that targeted First Responders to the 9 11 attack who ended up getting money from the federal government and the structural went aftercompany them and offer them ones that were misleading and deceptive. They did the same for nfl players who were concussion victims and got some sort of a. Ettlement we have brought an action to pursue release for those consumers to make sure that they we thinkred the money was wrongfully taken from them. Own cases we work on our and some cases we work with partners. We are working with the new York Attorney Generals Office and having a very productive investigation of those issues. Thank you very much. Esther chairman, i healed my time. Chernow recognizes the gentleman from colorado, mr. Tipton. Thank you very much, mr. Chairman. Do you agree with the decision to delay for six months the rule and we have introduced legislation to delay that for a year moving forward because of potential problems with the rule that in dealing with this with part of the announcement, the bureau said it will be evaluating concerns with stances with substantial aspects to it. In regard to digital wallets as a substantial aspect of it, were there any others . Mr. Cordray what happens when we finalize a rule is the market does not stay still. What are the other aspects you are looking at . Mr. Cordray things can change. We say close in touch with the other industries. Here the linking of credit cards into digital wallet is something we recognize. That i mentioned had to do with error resolution for prepaid cards that it not been registered. It is causing some concern. Some of the companies that did not relax that beforehand what other one . There could be others depending on what were seeing. Earlier when you are talking to congressman sherman in terms down, process, i wrote it we want to move as fast as possible. The American Action forum said rulemaking pace takes 190 days to compete dust to complete. Do you believe that the bureau can complete a thorough analysis of Public Comments and concerns in that timeframe . Mr. Cordray it depends on the rule. Some roles are straightforward and can be done quickly. Some are not straightforward at all. I heard the chairman say he wants us to move faster on the 271 Small Business rule. Sometimes we are too fast and sometimes we are too slow. You are comfortable you are doing it in a sensible way . Mr. Cordray i think were trying to do all of our rulemaking in a sensible way. Weve had to go back and rework them. Is interesting because you hold and there are appropriate areas to do that, accountability and transparency, however American Action forum noted that you issued 13 corrections on 49 rules that have been sampled. This is a 25 error rate effectively. In the private sector would you be satisfied with a 25 error rate . Mr. Cordray i think error rate is it too strong a term. There are things that could change after rulemaking is finalized. Should we refuse to admit we should make a change is to be stubborn. It is good that when we learn more, it is good to go back and change things. If we had stubbornly stood on the first definition of rural, we would be hurting people and it would not come out right. Cases that have been overruled. We have the north dakota case. Courts have ruled against your standing on a variety of cases. Wherenow we have to cases courts have ruled against us on various things and a couple of those are on appeal but we dont get everything right. We do our best. We tried to be very careful. Sometimes you have hard issues and courts disagree with you. As you have noted, you had 1. 3 million Public Comments on the proposed rule on small dollar loans. How are you waiting those . It is not just numbers and comments, it is what they have to say. Were supposed to take them on that merit and i think numbers and comments can show intensity around an issue. I think all that comes into play. And if you have other thoughts about how we should handle it, i would be glad to hear them because it is a hard issue. You get constituent calls, right . The time for the gentleman has expired. The chernow recognizes the gentlelady from utah. I would like to talk a little bit about checks and. I believe especially in todays environment need to do everything we possibly can to make sure we have checks and balances so that the American People are not subject to the political environment. What i would like to explore is the extent to which the bureau is subject to them or not subject to them. It is often noted that one of the few checks and balance on the bureau is in the hands of the financials ability oversight council. And they can veto financial regulations by the bureau . That is correct. Can add stop because Enforcement Actions fstop veto Enforcement Actions . Stock and others have the ability to veto operations. Can they veto the investigations if they find it to be arbitrary . They cannot do a lot of things. The bureauseto guidance . No. Fsockhere anything that could veto other than your regulations. Vetoe only thing fsoc can is final regulations and they and less of the regulations would put the safety and the soundness of the United States Banking System at risk. Mr. Cordray that is what congress it did in the law. I got you, dont worry. That sets the bar extraordinarily high for fsoc to take action. Ever vetoed any action the bureau has taken . They have not. Fsoc let me get this straight. Let me get this straight. If any of the men and women behind you decide theyre going to be part of a Banking Institution and their community or they decide they have their own business that they have put all of their money into that they have exhausted all of their savings and they want to go to a Banking Institution to expand or good credit whether it is to get a mortgage and their institution is being investigated, supervised, find by the cf pb, they have to know where to turn and less of the final rules find their taking down the whole Financial System of the ninth six government United States government . What is the recourse . So you have no ability to find or investigate any Financial Institutions . So what you do does not affect the American People and their ability to get credit . No, that doesnt follow. What i was saying is we dont have the ability to find or enforce. What im trying to say is that the ability you have to understand what the bureau does actually affect the ability for the American People to get access to credit, to be able to go out and achieve their dreams. And to be able to access responsible credit. Just take you out of the picture, for instance. Lets think about this current president actually putting someone else in your position. Listen, should the American People not be concerned that your agency can spend hundreds of millions of dollars each federalployees 1500 bureaucrats to have the power to impact the personal finances of everything america of every single american and is not accountable to anyone . You mentioned that you enjoyed more unilateral authority than other offices and you take that responsibility very seriously. Who is to expect who is to protect the consumer from the director of the can they were financial Protection Bureau . The time for the gentlelady has expired. The chair wishes to inform members that there is currently a vote pending on the floor. We will call on one more member mr. Phil from arkansas. We will recess and then reconvene. Mr. Zalman ande mr. Trott. The chernow yielded to the gentleman from arkansas. From a number of Community Banks across my state of arkansas and no single mortgage regulation has been more vexing than complying with oweknow before you disclosures regulation. And your testimony this morning, you assert that the bureau writes clear rules of the road and in your report you also noted mr. Cordray i would say we try to write clear rules of the road. Your rules the release today also say that under the revised rule you attempt to ensure smooth and ontime closing but in addition to hearing from the Community Bankers ive also heard from consumers who have seen delay, frustration and increase cost. One issue is of this issue of the disclosures of themselves. A basic disclosure regulation of this sort may have a question that the bureau intensive to ask. Does of the rule required both the consumer and the seller to receive a closing disclosure . To receive an answer the Community Bank must go to the bureau website, click the question index link which leads you to edit webpages that they issue for visiting, you are now leaving the server. Users then been can then download and 11 page document. I will note that this document does not appear to be on the cf pb letterhead and uses a completely different fonts and scheme. Having done this at the user must find a heading on page six that says general questions. Click another link and then find question 12 which is 38 minutes and 37 seconds into the recording of a webinar that was conducted on april 12 of 26 feet. Of 2016. Give thee user can answer, they must enter their name, company, city, state, telephone number and female. If the user is a bank, savings they must enter the information to get the answer to this takes a question. Here,e where im going would you say this sounds like clear rules of the road . Is what you just said is all correct i would say that does not sound as userfriendly as either you or i would like. I agree, mr. Director. Pb issueant the cf written rules like the Internal Revenue service does. The irs has a great report about how to get written answers and written guidance from the agency. Webinars are not legally binding. They are not that helpful to compliance departments or general councils. If we write things down more people criticize how many pages of stuff there is. Ive got that the but through the commission mr. Cordray Everyone Wants something to be written down and went to total up is a lot for people to read. The triddwhen does rule become effective . 2015. Rdray october of dear for what the original Effective Date was going to be . Do you remember what the original Effective Date was going to be . Do you know why it was delayed . Mr. Cordray it was have had to be delayed about 10 days because of the bureau did not file a piece of paperwork it should have filed with the congress and we decided if were going to back it up anyway we should back it up a ways into the school year because that would help the industry in their compliance. It wasare correct delayed two months because you failed to review the congressional review act. What would be the consequences of a banker or title ages event did not follow the disclosure process . Mr. Cordray we said for the first prolonged period that we would only be interested in substantial efforts of making goodfaith to comply with the rule. An individual instance or just a few instances of noncompliance, we talk to the other agencies and the right answer would the to help them correct that and not make a big deal out of it. My time is expired, mr. Chairman. Thank you. Votes are pending on the floor. The committee will now reset pending completion of votes on the floor. The committee now stands in recess. Are we in recess . Ok. Announcer cspans washington journal. Live every day with the news and policy issues that impact you. Coming up monday morning, we discussed a federal ruling on of ebt Workplace Discrimination and an author will talk about his book the unholy trinity blocking the left assault on life, marriage and gender. And we will talk about the complexity of the tax code. Join the discussion. Next marilyn senator ben cardin talks about his work on targeting Global Anticorruption efforts. He also talks about president trumps Business Holdings and whether they present conflict of interest for the u. S. Foreignpolicy agenda. Senator cardin is the top democrat on the Foreign Relations to many. This is an hour. [app