The committee will come to order without objection. The chair is authorized to declare a recession of the committee at any time. The hearing is the annual report of the bureau of consumer for natural protection. I now recognize myself for three minutes to give an Opening Statement. Not that we need a reminder, but if theres one thing that the president ial campaigns of both parties have shown us, that the American People are indeed angry. They have a right to be angry. After seven years of obamanomics, they are suffering through a failed economic recovery. Americans are even angrier though at having their lives increasingly ruled by out of touch washington elites. Every day they see their liberties slipping away as washington grows more larger, more distant and more arrogant. As Thomas Jefferson warned, they are sending swarms of officers to harass our people. The poster child of jefferson is the cfpb. Its director, our witness is, neither elected nor accountable to the American People. Yet when it comes to Consumer Financial products, he is vested with the awesome power of the entire United States congress. This is amazing. This is frightening. This is tragic. Soon mr. Cordray will presume to decide for all americans whether he will allow them to take out small dollar loans to keep their utilities from being cut off or to keep their car on the road so they can make it to work. Soon mr. Cordray will decide whether he will permit americans to resolve contract disputes through arbitration or hand over the keys to the cfpbs Luxury Office building to the welly, p and politically corrected lobby. Mr. Cordray decided who had will be able to receive a mortgage under his qualifying mortgage rule which when fully implemented will disqualify almost onefourth of all americans who qualify for a Home Mortgage just a few years ago. All right mr. Cordray has decided that countless americans should pay more for auto loans based pond junk science and a dubious theory of inintentiunin discrimination while his agency reels from this. They have imposed fines as prove that they are protecting consumers. The bureau operates as legislature, cop on the beat, prosecutor, judge and jury all rolled into one. Fines imposed in an abusive structure tell us nothing about justice, nothing about consumer welfare, nothing. In short, congress has made mr. Cordray a dictator. When it comes to the wellbeing and liberty of american consumers, he is not a benevolent one. Congress must address this critical problem because Congress Helped create the problem. It has outsourced much of its authority to the executive branch in general and cfpb in particular and has p procompromised cheprocompromise this. Congress must reclaim its authority and reclaim it now. Theres no better place to start than the cfpb, an agency that abused its power that it never should have had in the first place. Its time to uphold our oath to the constitution. Its time to strip the cfpb of its Rule Making Authority and return it to the elected representatives of we the people. I now recognize the Ranking Member for five minutes. Thank you, mr. Chairman. Thank you director cordray for joining us again to discuss the Consumer Financial protection bureaus semiannual report to congress. The bureaus accomplishments under your leadership have helped more americans participate in a Financial System that is fair and strong. The work that do you is so important, because it means that consumers can access the Financial Products and services they need to live prosperous lives without being the risk of deceptive or abusive practices. It also means that consumers can have recourse whether they have been wronged and recoup any finances they may have lost. Those accomplishments are reflected in the 11. 2 billion you have returned to 25. 5 million americans. They are reflected in the 830,000 Consumer Complaints you have handled on issues from Debt Collection to credit reporting. They are reflected in the increased share of mortgages made to minority borrowers in recent years and the expansion of access to credit cards. Despite republican claims to the contrary. Director cordray, you are helping consumers succeed to the benefit of the entire Financial System. I would like to highlight a few of these particularly important efforts. Im encouraged by the work so far on payday lending, including soliciting input from Small Businesses on the fourth coming regulations. We need rules that will protect low income and minority communities from unreasonable loan terms and unaffordable rates, despite modest efforts by some states to curve predatory practices, most payday loans are simply used to help pay off another payday loan. We must stop this debt trap. We must fight efforts to weaken roll back or stop the cfpds yun coming rule. The bureau has led the charge against the discrimination that still exists in the auto lending industry. We should be doing all we can to prevent minority bow oborrowers overpaying on auto lyons. Too many members of congress have been misled by republican argument against the data and methodology used by the cfpb in this important work. While republicans are attempting to protect lenders, the bureau has fined banks and captive lenders such as toyota, honda and Fifth Third Bank for discriminatory practices. In the months since his last report, the bureau has won against a for Profit College that deceived students into taking out expensive, private loans and engaging in illegal Debt Collection practices. As you know, i worked on this issue my entire career. Just recently, the department of education announced a proposal to ban mandatory arbitration in student lending. I hope the bureau will follow in their footsteps by offering this protection not only to students but also to americans that have found these unfair clauses in their credit cards prepaid cards Bank Accounts and mobile phone contracts. Despite a successful track record of helping consumers whether looking to buy a car, own a home or attend college, republicans have turned the cfbp into a political punching bag, attempting to undermine its work at every turn. This tactic is at odds with the publics support for the cfpb and the bureaeabureaus efforts remain accountable and transparent. The cfpb has testified 59 times before Congress Since it was created, issued more than 40 reports on its activities in the last year alone and provided tens of thousands of documents in response to a never ending list of republican fishing expeditions. Director cordray, im thankful for the work that you are doing. I look forward to hearing your testimony on how the bureau continues to help consumers and improve our economy. Thank you so much. And i yield back the balance of my time. The chair now recognizes the gentleman from texas, chairman of the Financial Institution subcommittee for two minutes. Thank you, mr. Chairman. Today i want to use this Opening Statement to address an issue that director cordray actually raised himself in speaking before the consumer branchers Association Conference a couple of weeks ago. The director highlighted the virtues of bringing market changing Enforcement Actions instead of going through a transparent and formalized rule making process. So some call this practice regulation by enforcement. He critiqued his critics saying their concerns were misguided. After hearing the comments, i feel it necessary to respond. Businesses of all sizes deserve certainty from the largest Financial Institution to the title lender, Regulatory Risk drives up cost and stunts economic growth. Federal agencies that are authorized to enforce federal l law act appropriately when they take act to hold unlawful actors accountable. When a federal Agency BringsEnforcement Actions instead of undertaking rule making with the purpose of changing the market behavior, it begins to look like a deliberate evasion of Public Notice and comment. Public notice and comment is crucial check on the regular tore require overreach and abuse of regulatory power. Not only does it allow public to provide unique Business Insight into the marketplace, but it diversifies and balances the Decision Making. At the cfpb this point is all the more important given the agencys structure, a single unelected individual who can ut lateral laterally authorize agency action. This is most obvious and concerning in the Auto Industry market. In the midst of significant public and congressional pushback, the bureaus policies, it chose to strong arm lenders into changing practices through media driven enforcement headlines. It chose do this instead of allowing a transparent and process driven bin public comment. Some say that the proposed purposely evaded public dialogue. Unfortunately, this example highlights the problem with regulation by enforcement. It allows regulators to exert Regulatory Authority outside of transparent and structured process. It provides an opportunity for Regulatory Overreach and abuse. Further, it inserts significant Regulatory Risk into the business of our main street job creators. The director told Consumer Bankers association, when you push back, we welcome your input. Director should expect continued and aggressive congressional push back to continue his regulation by enforcement. Time of the gentleman has expired. Today we welcome the testimony of the of the honorable richard cordray. Director cordray, your written statement will be made a part of the record. You are now recognized to give an oral presentation of your testimony. Thank you. Thank you, mr. Chairman, Ranking Member waters, members of the committee for the opportunity to testify today about the Consumer Financial protection bureaus semiannual report to congress. I appreciate our continued dialogue as we Work Together to strength our Financial System and ensure it serve s con assumers, businesses and the foundation of the american economy. As we continue to build this new agency, we make progress on our core responsibilities to exist supervisory oversight over the largest banks and nonbank financial companies. To enforce the Consumer Financial laws enacted by the congress. Our analytical approach to riskbased supervision is leading to more consumer friendly changes at the Financial Institutions. Were making progress on leveling the playing field. During this reporting period, our supervisory actions resulted in Financial Institutions providing more than 95 million in relief to over 177,000 consumers. Our Enforcement Actions are based on careful and thur raw investigations. Most have identified deceptive practices by the parties involved. During this reporting period, the orders entered led to approximately 5. 8 billion in relief for consume erdz victimized by violations of the law. These consumers are located in every one of your districts nationwide. Were also working to provide tools and information to develop practical skills and help people under the choices they will make to manage the ways and means of their lives. Our ask resource provides guidance in response to inquiries across consumer finance. Our major moment in time decision tools include paying for college, owning a home and planning for retirement. We have developed Aid Partnership with the Financial Services round table to Work Together on Financial Education in the schools, in the workplace and on behalf of Older Americans which is productive. Listening and responding to consumers is central to our mission. We refine the capabilities of our office to receive, process and facilitate responses to Consumer Complaints. Including those referred to us by your offices. We also continue to expand our public Consumer Complaint database which updates nightly and is populated by over half a million complaints from consumers about the broad range of Consumer Financial products and services. We marked a milestone for Consumer Empowerment when we began to public narratives which allow people to share in their own words their experiences in the Consumer Financial marketplace. Reasonable regulations are essential to protect consumers from hardful practices and ensure Consumer Financial markets operate in a fair and competitive manner. We focused our efforts on promoting functional markets such as the Mortgage Market in particular where consumer can shot for Financial Products and services and are not subject to unfair, deceptive or abusive acts or practices. During this reporting period, we issued several rules or request for information. To support industry compliance with our rules, we published plain language compliance guides and other resources to aid in the implementation. Were also seeking to streamline modernize and harmonize financial regulations that we have inherited from other agencies. Over this reporting period, the bureau continued to expand efforts to support and protect consumers in the financial marketplace. Recent data indicate that sound Consumer Protections in our major markets are strengthening them for consumers and providers alike. The Mortgage Market has been expanded briskly for two years now. Since our major rules took affect. The credit card market is greatly improved with strong Consumer Protections, better industry performance and increasing consumer satisfaction. The auto lending market is supporting report sales of cars and trucks to meet consumer demand. The growing sense of consumers that the markets can actually work for them without fear of tricks and traps and other predatory conduct is stoking their confidence and restoring trust. These developments reflect well on the work being done by the Consumer Bureau and taken as a whole they are making contributions to the continued gradual recovery in the american economy. Mr. Chairman, Ranking Member waters and members of the committee, thank you again for the opportunity to testify today and to discuss all the work were doing on behalf of consumers. We will continue to listen closely to all of our stakeholders and we will attend carefully to your oversight in order to ensure that all americans can be assured fair treatment in the Consumer Financial marketplace. I look forward to your questions. Chair now recognizes himself for five minutes for questions. Director cordray, as you are well aware in late 2013, the bu bureau entered into this. At the time, ally had an important yet unrelated Application Pending before the Federal Reserve to become a Financial Holding company. On february 21st of this year, michael carpenter, former ceo said the charges were trumped up, that your bureau brought against ally. He went on to say that ally had been quote unquote strongarmed and that the cfpb knew they had tremendous leverage over us, unquote. Mr. Cordray, isnt it true that you and senior staff in the office of fair lending knew ally was seeking to achieve Financial HoldingCompany Status prior to the settlement . I read the interview with mr. Carpenter who is no longer just a simple yes or no question. Were you aware, were you not aware of the pending application prior to the Consent Order . We had pursued this investigation against ally for well over a year before ally themselves mr. Cordray, its a simple question or no question. We had pursued this investigation for more than a year before ally brought that to our attention. So you were aware. Thats the answer to the question. Isnt it true that senior staff in the office of fair lending were in discussion in the Federal Reserve and fdic on how cfpbs determination of an eco