has to be concerned. the proposal compensates for the shifting of authority by granting the federal trade commission streamlined, administrative procedures act, apa rulemaking authority and the ability to seek civil penalties against unfair and deceptive practices. but this is a term which has no clear definition, as well as making it unlawful to aid and abet in deceptive acts. so due to the shifting of power in the potential economic consequences of business, we must ensure effective stakeholders have a voice to the table but ultimately we need to be assured that they cfpa, the new agency will be an agency designed to do what is in the best interest of the consumers and not what is in the best interest of the bureaucrats who run it. one other concern i would have mr. chairman with the apa is it has 180 days for consideration. is this sufficient time under

the mag-moss axe rulemaking-- rulemaking requirements including a public hearing so mr. chairman as this bill moves along perhaps we might want to include some kind of public hearing as i incorporated this 180 days of consideration and with that i yield back the balance of my time. >> the chair thanks the gentleman. the chair now recognizes the gentleman from michigan, on the full committee, my friend, mr. john dingell, for five minutes for an opening statement. >> mr. chairman i thank you and i commend you for this hearing. it is a very important one. it follows on a series of events, which began with a raid on this committee by other committees and by the banking industry and by repeal of glass-steagall, which removed all of the penalties and

prohibitions against many of the illegal activities, which brought us to the current lowest state in which we find ourselves financially and economically. at the treasury department, there was an office, still in being, called the comptroller of the currency, who pushed to totally deregulate the banks. cantu unlearned the lessons which we learned during the depression. and to permit the abuses, which the commission found to be a problem. things which brought about the 1929 crash, and lo and behold the failure to learn those lessons or to preserve the protections, which the congress and the president in the 1930's put into place led to the

economic collapse which occurred in the united states in the last calendar year and this calendar year. so, the questions that we are watching very close, the questions that we will be concerned with is going to be, our consumers protected, is the federal trade commission able to continue doing the work that it does to protect consumers? in this committee is going to concern ourselves this morning with these issues and means by which to ensure improved consumer protections continue to exist with regard to financial products and services. and to see to it that the federal trade commission is able to carry out their responsibilities which in a rather contemptible fashion were

disregarded by the sec, and also by the comptroller of the currency. now, we need to know if our concern and the paws which it gives us occurs in part because of the transfer of existing authority from the federal trade commission to admitted consumer financial protection agency, an agency whose behavior we don't know, but an agency which is going to probably be composed of many could hearted people, who have brought us to this curious and the unfortunate state of affairs. i will be truthful. i have significant concerns about these plans and i will be intending to engage today's witnesses in a frank discussion about their merits. the administration, which has no fault in the events of the

deregulation and the collapse of the american economy last year in dues and consolidating all consumer protection functions related to financial products including rulemaking supervision examination and enforcements under the aegis of the news cfpa. which would receives sold rulemaking enforcement authority over consumer protection statutes such as the truth in lending act. at first glance, this strikes me as a du jour and possibly an unwarranted reassignment of the ftc's consumer protection authorities in the financial-services area. i will be looking to see whether this is so and whether in fact it is a good thing or can be justified by the administration. while comparatively small agency, it is to be observed,

the ftc has done a superb working protecting consumers and in this the country would benefit not from a diminished mandate to that agency, but rather to additional statutory authority, personnel and funding. consequently, i have more than a modest degree of skepticism regarding the administration's proposal. we in brief, i wish for witnesses to elucidate on several matters associated with the cfpa proposal. first, did the cfpa were mandated under but what authorities would be left to fcc or rather the ftc, and why would that occur? second, what latitude with the ftc have been enforcing consumer protection statutes as they relate to financial services? and what consumer protection statutes would be denigrated or dissipated under this proposal?

third, how would one characterize the level of interagency cooperation in the drafting of the administration's proposal? finally, ncpa receives proposed mandate what will become of this committee's jurisdiction over consumer protection has designated under rule ten of the house of representatives? i will welcome the witnesses responses to these and other questions in order to properly established an adequate record for additional action by the congress. if such is deemed necessary. i would ask at this time that i have unanimous consent to keep the record open, to submit a list of questions to the witnesses today, and to have those responses to the questions inserted into the record. at want to commend you mr. chairman for your courtesy and foresight in this hearing. i would conclude by a personal

note in welcoming dr. stephen calkins, secede vice president for academic personnel and professor of law in my home state of michigan. his testimony has been invaluable to my understanding of this matter and i look forward to his participation in the continuing debate on consumer financial protection, and i note mr. chairman that my wife is a member of the board of governors of that great institution, which gives me a particularly warm feeling about it. again mr. chairman i urge you and my colleagues have to be most diligent, most cautious, most careful and most dutifully suspicious of the events that we inquiry in today. thank you. >> the chair thanks the chairman emeritus. the chair wants to-- will want to put before the committee

their request and hearing no sieve objection, the request by the chairman emeritus. the chair wants to take a moment of personal-- to celebrate the chairman emeritus's birthday and to wish him a happy birthday, so we want you to know that we all wish you a very happy birthday and many, many more. [applause] >> a little more careful about celebrating his birthday is. the good news, the good news is i celebrated my 83rd birthday. the bad news is that i am 83. [laughter] i thank you mr. chairman for your courtesy and i thank my friends for their kindness and courtesy.

>> the chair now recognizes the gentleman from kentucky, mr. whitfield for ten minutes for opening statements. excuse me, i did not see mr. bartlett there. he just walked in. mr. bartlett is recognized. >> you can go ahead with mr. whitfield. he was here before me. i am fine with that. >> mr. whitfield. >> we are all very polite so thank you very much. mr. chairman, i want to thank you also for holding yet another important hearing, examining the ongoing financial crisis in ways we can help our constituents get through these difficult times and medicate future problems. secretary geithner said that this new consumer financial protection agency would have

only one mission and that is to protect consumers. it is also my understanding that this proposal would eliminate the consumer protections at the fdic, the federal reserve board, the comptroller of the currency, and the impact on the ftc, if perhaps we should explore expanding the authority of the ftc. another problem that concerns me about the proposed legislation is that there is no federal preemption of any state law that is more stringent than the federal law and anyone that is gone through a mortgage process and when they hand you the 45 pages of documents, you are going to find yourself getting more documents if you have these conflicting state laws on these consumer issues, and i think that is the real concern as well. the problem that i have most of

all is how much will this cost? every day we pick up another article in the newspaper, the growing national debt and maybe the next economic crisis. in leslie demonstrate a strong commitment to fiscal sustainability and the longer term, we will have neither financial stability nor healthy economic growth. interest payments on the debt alone last year was $452 billion. this year is expected to be $470 billion. the largest federal spending category after medicare, medicaid, social security and defense. another article today, economist declares train wreck because about control federal budget deficits. the economist talks about the real question is how much damage will greater indebtedness due to economic growth in government credit worthiness? those things may transcend what

limited additional protection consumers get from this legislation so i think we need to move cautiously, find out how much costa rica talking about here and what will the benefits be? thank you mr. chairman. >> the chair thanks the gentleman. the chair now recognizes the vice chair of the subcommittee, my friend from illinois, congressman schakowsky. >> thank you very much mr. chairman. i just came from a roundtable on women's financial literacy. clearly an important issue, but what we have found its how daunting the environment has been for anyone who even is pretty literate in financial issues. we have seen this systematic production and marketing and sales of countless financial products, including mortgages that were extremely risky even

downright dangerous for borrowers and often it was pretty hard to figure out what was what. for years, bank and nonbank lenders operated with too little oversight by government regulators and when regulation was taking place there was little focus on whether the financial products and services sold were safe for consumers. the federal trade commission, and i'm so glad it's german it's here today, is essentially the only agency with a mandate to prioritize consumers they can protect americans from unfair and deceptive practices and i commend chairman leibowitz for his renewed commitment to consumers' rights in the areas of credit and debt. however ss and minton, the ftc's jurisdiction is limited to nonbanking activities. the agency has been hampered for decades by congressman rulemaking authority and in recent years its actions were limited by the previous administration's general contempt for oversight of the private sector.

overall current regulations are insufficient and they aren't working. we can't maintain the system which reflects consumer protection for the bulk of the financial service industry. americans deserve access to honest information that will help them make educated decisions on mortgages, credit-card and bank accounts. dangerous financial products should be kept off the markets and advertisers must be held accountable for their claims. we have to move forward with these goals and i look forward to hearing today's testimony and kelly consumer financial protection agency might achieve them. thank you and i yield back. >> the chair thanks the gentlelady. the chair now recognizes the ranking member for the full committee, the humble and honorable mr. barton from texas. >> thank you. before i give my opening statement, let me amplify what you said about our chairman

emeritus, mr. dingell because some people get one year of experience and that is it, but in his case you could say that would be one year 83 times. and mr. dingell's case each year he adds to the base where he compounds and amplifies by orders of magnitude. i think you can honestly say that our friend and chairman emeritus is the most influential member of congress in our lifetime and it is such a privilege to have him on our committee. it is really fun when he is on my side. is not so much fun when he is not on my side, but even then i learned from him so hearty congratulations from the minority side to a true gentleman of the house, the conveyor and the protector of institutional viability for this body. we wish you many, many more. with regards to this hearing

mr. chairman, i would bring the members' attention to today's wall street editorials op-eds piece about a particular agency. distant title let's treat borrowers like adults. it calls into question whether there needs to be a super consumer financial protection agency which the legislation we are looking at today would empower. we accept the intentions, but people like myself have extremely strong reservations about the implementation of such an agency. what would the legislation actually accomplish that some federal agency is not already attempting to do? we would like to know what is gone so wrong with our existing protection agencies that we deem it necessary to create another brand new agency. i am a bit taken aback by the breadth of the proposed coverage this legislation of course

relates a great deal to banking and other financial institutions over which this committee unfortunately has no jurisdiction, at least not now. whenever knows about the future but it reaches beyond that. it could reach gift cards, all the other types of other institutions and the entrepreneurial activities. it does not fall strictly within our jurisdiction because it applies to banks but it is still of concern. there seems to me to be an exception that swallows the preemption rule. according to the proposal if i understand it correctly state consumer laws in general application in the state laws enacted pursuant to federal law intended to and i quote, exceeding supplement federal law will now apply to any national bank. the harvard professors credited with inspiring this all-inclusive consumer financial protection agency the need for it in her article, unsafe at any

rate, professor warner wrote we need this agency to reverse industry practices that make it difficult for consumers to understand what they are getting any financial products world. for example 30 pages of contract terms for a simple credit card or 50 lines of excessive text to explain all required disclosures. i understand that. i just cosign for my stepdaughter's new congo and austin, texas and it took one hour of signing documents some of which were documents i signed certifying that i just find the previous document. so i understand need for simplicity and the need for perhaps a review of some of the existing documents that were asked to sign but i am not sure that this agency gets there. this bill would assume that businesses and their customers are eager to pay more for such protection, maybe even a lot more because there are no limits on the burdens to either.

there are all kinds of reports this new agency could mandate, regular and special requests but there are no limits to how often the agency could require there's reports and no mandate to consider the burden placed on businesses to produce these reports. the preemption provision convey no preen shut all and one paragraph the proposal mandates all state laws are pre-empted. but only to the extent that they conflict and the legislation permits a state law to supersede federal law. the new agency determines the state law is more protected. that seems to be almost in direct opposition to the prior paragrapher. what the company is complying with the federal law but while the agency hasn't yet determined whether a state law is more protective, the attorney general believes it is in brings action against the business for a violation. is the company liable for violations without any notice? this would seem to exacerbate

the decisions, but rather by making certain the products themselves don't become the source of the trouble. i see my time is about to expire mr. chairman and i have another page and a half of written commentary that-- simply put me down as extremely doubtful about the positive impact this legislation. i think we would be better served on this committee and your subcommittee to reform existing authority clarifying the differences between existing regulatory agencies and if there is something that is really falling through the cracks try to figure out one of the existing agencies like the ftc in see if we couldn't give them explicit authority in that area that meets the needs. with that mr. chairman i yield back. >> the gentleman from texas, mr. green for two minutes for opening statements. >> mr. chairman thank you for holding this timely hearing to examine the administration's proposal to create a new agency that would consolidate and you

responsible for protection with regard to financial products and services. after the events of last to there should be no doubt congress need selected for the protect consumers with regard to financial regulation. the subcommittee's taken steps to address this by putting forth legislation h.r. 2309, consumer credit debt protection have to give the trade commission additional power to better address consumer credit issue, credit and debt issues. was widely read in the hearings with the legislation with the added authority h.r. 23 of nine would provide the tcn should take a broader and more effective role in consumer financial protection. with regard to the proposal would give the ftc the administration has addressed many of the problems that have hamstrung the commission from taking steps to implement additional financial consumer protection particularly with regard to the rulemaking process. madness demoss procedures are lengthy and cumbersome and can prevent the ftc from taking

action on problems and an efficient manner so i strongly support the provision to grant the commission has authority to conduct rulemaking authority under the administrative procedures act. the proposal follows 23 of nine granting the authority to seek civil penalties for any violations of section 5 of the ftc act which would provide a great deterrent to would-be actors. the portions that i propose would move nearly all the ftc consumer protection authority for financial practices to the newly created consumer financial protection agency. i do not disagree additional lon foresman is a good thing for consumers. my main concern is adding an foresman regime that is siphoning authority from the nation's primary consumer protection agency. and the agency is on the table of the doing the job. many consumer protection functions will be responsible for will be removed from other agencies and departments that do not have consumer protections as their primary function however this is not the case of the ftc

and i look forward to hearing from our witnesses envoy the administration believes the ftc should not continue these rules and again mr. chairman i thank you for the time and i look forward to exploring with regard to this bill and look forward to the best way to protect consumers. >> mr. pitts is recognized for two minutes for the purposes of an opening statement. >> thank you mr. chairman, thank you for holding this important hearing on the administrations proposal to create a new agency responsible for consumer protection. i think we all agree that we need strong consumer protection measures. the recent housing in credit crisis our country as states makes this abundantly clear. we must do this prudently avoiding the mistakes of the past. it seems however that proposals we have before this creates yet another divided system of regulation, making rims for gaps in oversight.

wiesel dfx subdivided regulation at fannie mae and freddie mac were to regulators meant less regulation, not more. the proposed new agency would also have the authority to set prices rather than allowing cost to be determined by consumers and the marketplace. everything from atm fees to check overdraft fees and late payment fees for credit cards would fall under the purview of this new agency. instead of adding layers of bureaucracy to financial regulation and intervening in the marketplace, things we have tried in the past, we should work to bring transparency and consumer choice to our markets for consumer financial protection is a world the coal. unfortunately increasing the layers of bureaucracy in the financial industry has not protected consumers in the past and i see no reason why it will this time around.

again, we all desire effective and efficient enforcement of consumer protection laws. it is my hope that this committee moves forward in a wise thing careful manner with the increased transparency in consumer choice as their primary goals. i look forward to hearing from our distinguished witnesses. thank you and the yield back. >> the chair now recognizes the gentleman from texas, mr. gonzalez, for two minutes for the purposes of an opening statement. the chair now recognizes the gentleman-- the gentlelady from california, ms. matsui for ten minutes. >> thank you mr. chairman and thank you for calling today's hearing. i applaud your leadership and address of this issue and i would also like to thank the witnesses for joining us today. in today's economic recession many families in my district of sacrament for struggling to make ends meet. i have heard stories of people struggling to keep their homes, their jobs in the way of life.

california and in particular my constituents in sacramento have been greatly impacted by the economic crisis. many of my constituents were and continue to be victims of predatory homan lending, unfair credit card practices, payday loans and other forms of unscrupulous business practices. just recently the president signed into law credit-card reform legislation to regulate unfair credit card practices. the eniz hardly tribe the companies are trying to find ways to raise credit card interest rates and fees on consumers. struggling homeowners seeking assistance to keep their homes to continue to be tricked into contacting scam artist, who just so happen to be the same that steered homeowners in to sub-prime loans. this is occurring is job losses mount, foreclosures rise and americans are increasingly turning to other forms of credit to make ends meet. it is clear that consumers and not being properly protected from unfair and deceptive

financial practices. when is enough enough? the president's proposal to create a new financial consumer protection agency could be the answer the american consumers are seeking, but it must be done in a thoughtful way to ensure consumers are protected from fraudulent activity. we must make sure any new agency has real authority and just as much fight-- bike as it has far. consumers need to feel can protective. right now is clear they do not. i thank you mr. chairman for holding this important hearing and i look forward to working with you and the committee on this issue moving forward and the yield back the balance of my time. >> the chair thanks the gentlelady. the chair now recognizes the gentleman from nebraska, mr. terry for five minutes. >> i think the fundamental premise of this bill is that the

ftc, the entity in charge of protecting consumers, is evidently been in a dismal failure. i don't agree with that premise. i think the issue should be how do we make sure that the ftc is properly empowered to protect consumers, and that should be what we are working for as opposed to the stripping away with every jurisdiction we have over protecting consumers and creating some monolithic new government agency in place of what already exists, so i am very skeptical of this process, or this bill and i look forward to hearing from our witnesses so we can determine if fec is capable of doing what they have been doing and whether or not this bill is even necessary so i yield back.

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>> not only cost someone to almt the homeless but cost some one to attempt to take their own life. at the age of 86, ms. balk was given a 30 year mortgage on the house she already owned and for an amount greater than the value of her house. let me say that again, at the age of 86 she was given a 30 year mortgage on the house she already own for an amount greater than the value of her house. the stand for years later ms. polk probably of no surprise to the person who sold the mortgage began to have trouble making her payments and her house fell into foreclosure. feeling trapped and without options, ms. polk shot herself rather than lose the house she lived in for 40 years. no one ever should be in ms. polk's position. now with our chance in honor of ms. polk and countless other americans who found themselves the unfortunate owners of

financial products with indecipherable terms, smoke in the light provisions and gotcha fees to truly support strong consumer protection. i look forward to hearing from the panel about how we make sure we provide the needed protection, and i yield back. >> the chair thinks the gentlelady and the chair now recognizes the gentleman from georgia, dr. pingree for two minutes. >> mr. chairman, thank you for calling the hearing and a welcome back john leibowitz and honorable barr, assistant secretary of the financial institutions. i associate my remarks with what the gentleman from nebraska on our side just said, mr. terry. here we are, creating a whole new federal government bureaucracy when we have one already that is doing a heck of a job as it certainly seems to

me and i think most members on this panel. so the question becomes, you know, y -- y to use a medical expression throw the baby out with the bath water if the ftc is doing the right and proper job and the proper oversight and all of a sudden we come in and spend more federal dollars as the gentleman from kentucky was talking about earlier, about creating a whole new federal barack receipts. so again, i'm happy to hear from the witnesses and maybe they can explain that and maybe they can explain that. but i think this is something we need to look at very carefully as we just continue to create one more instead of creating one more government rockers the at a time when we are running billions of dollars of deficit year after year and with that, mr. chairman, i will yield back.

>> the chair recognizes the gentle lady from florida, castor for five minutes. >> thank you, chairman rush for holding this hearing on the obama administration for the consideration of the agency. last congress in the wake of widespread concerns about toxic lead in paint on children's plays and other toxic consumer product the subcommittee strengthened the consumer product safety commission. last year as the economy plunged, there were some analogous terms being used to describe some of the mortgage and investment products. we heard about toxic assets, poisoning banks' balance sheets and toxic mortgage products leaving millions of neighbors facing foreclosure. predatory lenders wreak havoc on my community in the the subsequent significant decline

in property values has affected millions in my home state and unfortunately consumers could not count on state oversight of these mortgage brokers in my home state they just turned a blind eye and i recommend the miami herald expos say that the documented how many convicted felons entered into the subprime mortgages loan marketing business. so this financial crisis has taught us that in order to maintain a healthy economy effective regulation must focus on protecting consumers from unfair lending practices. the ftc has enforcement authority to go after only non-depository lending institutions that deal on a fairly with their borrowers, but the abuses that led financial crisis spread deep into the banking system. so in light of the need for more effective regulation of all lending institutions depository

and non-depository the obama administration has rightly proposed a reorganization. and i think all of us can agree that regulation of financial institutions must be improved to better protect consumers. however, we must be aware not only the impact of granting authority to a new consumer financial protection agency, but also the consequences to consumers that the changes that have been proposed to the ftc. the administration's proposal would reshape the ftc by shifting authority over consumer credit, but also streamlining its rulemaking process and allowing it to assess civil penalties on bad actors. so i look forward to your testimony on what this new ftc might look like and how its ability to achieve its mandate of consumer protection will be affected. i yield back. >> the chair now recognizes the gentleman from louisiana,

mr. scalise for two minutes. >> thank you, mr. chairman. i want to thank you and the ranking member for having this hearing. the administration is proposing another authority. we know there's been bad actors in the system that ticket and each of the consumers and contributed to the economic crisis unfortunately many of the problems that brought on today's financial crisis are not even being addressed in this bill. the proposed legislation doesn't address the real bad actors in our financial systems. fannie mae and freddie mac and other institutions that engage in such a prime lending and relaxing standards to encourage more people to take out loans they could not afford. those warning signs were brought before congress for gears yet many of the same people in this administration and the leadership in this congress or the same people who oppose the reforms that would have prevented this financial crisis from happening in the first place. this proposed agency represents step in the federal government trying to run all aspects of our lives. the government is running banks

and car companies with disastrous results. the so-called stimulus bill which spends $787 billion of money we don't have is not being recognized even by this administration by a failure that didn't create jobs promised. there are even some in the administration floating their reckless idea of another spending bill since the last one didn't work. scores of experts predict this administration's cap and trade energy tax will cost millions of jobs while increasing electricity rates on american families. we are debating a bill that proposes government takeover of health care which has been tried and failed in other countries to the point sick people with means in those countries come here to get health care because government run health care leads to rationing everywhere it's been tried. now we have this bill to create a consumer start treaty enough is enough. let's fix the problems that exist and make reference to federal agencies causing these problems, rather than adding another layer of government bureaucracy that simply covers up the causes of the problem while punishing those who play

by the rules. i look forward to the comments from today's panel and would like to hear how the administration's plan impact the ftc. in the testimony mr. leibowitz spoke on the matters which begs why the need a new agency with sweeping new powers and spends more money that we don't have. i yield back. >> the chair now recognizes the gentle lady from colorado, ms. degette thank the chair thanks the gentle lady and recognizes the gentleman from ohio for two minutes. the chair thinks the gentleman. the chair recognizes now the gentleman from north carolina, mr. butterfield for two minutes. >> thank you for holding this hearing and i especially want to thank the witnesses for their testimony. mr. chairman i hope this hearing will provide an opportunity for the committee to address concerns we have about the proposed agency particularly the loss of jurisdiction on the part

of the federal trade commission. now my colleagues are right mr. chairman, there are many actors to blame for the current state of our economy. unscrupulous subprime mortgages lenders and speculators in the lack of effective oversight have contributed to the financial meltdown. deep concern and rightfully so is regulatory patchwork of federal agencies charged with regulating all aspects of financial institutions. for example depository institutions such as banks and credit unions are overseen by different agencies. conversely, all non-depository institutions are overseen by one agency, and that is the ftc. the ftc has done a good job, and i think we can all agree on that on regulating these players and i am concerned that reducing ftc oversight is part of the creation of the consumer financial protection agency may do more harm than good. while i am pleased the at and attrition proposal seeks to strengthen the ftc rule making

and enforcement abilities in areas of related to financial products, i believe it is extremely important the ftc maintains strong on depository institution of recite. the administration's proposed agency would seek to achieve four important objectives aimed at bolstering consumer confidence in financial the institutions and transactions. and these objectives include ensuring consumer education and understanding of these financial products and better protection of consumers -- better protecting consumers from unfair deceptive practices and discrimination. ensuring financial consumer services operate fairly. making certain that underserved communities like my district have increased access to financial services. these excellent objectives and i strongly support the goals of the proposed agencies, but i want to be certain that the creation of a new regulatory agency will not place undue and

unnecessary strains and burdens on existing federal regulatory frameworks that may still be capable of meeting the same goals and objectives and so mr. chairman this hearing today is vitally important and i look forward to hearing the testimony of the witnesses and thank you for the time. >> the chair thinks the gentleman and sees no other members who have opening statements. now it is my pleasure to introduce a panel one. this is a to panel hearing and panel one consists of the honorable michael barr, who is the assistant secretary for the financial institutions at the department of treasury. we want to welcome mr. barr back to this committee once again. and also joining him at the witness table is someone who is very familiar to the subcommittee, the honorable john leibowitz, the chairman of the chief federal trade commission and chairman leibowitz, we

certainly welcome you back again to this subcommittee. it is the practice of the subcommittee to swear in the witness is so i would ask each of you to stand and raise your right hand. do you solemnly swear to tell the truth, the whole truth and nothing but the truth? what the record reflect that the witnesses have answered in the affirmative. now, we want to recognize beginning with mr. barr the witnesses for an opening statement. you have five minutes or there about for your opening statement. >> mr. barr, you are recognized. >> thank you, mr. chairman and thank ranking member donner fitch for providing me the opportunity to testify about president obama's proposal to establish a financial regulatory

agency charged with just one job, looking out for consumers across the financial services landscape. as secretary geithner has said protecting consumers is important in its own right and also central to safeguarding our financial system as a whole. we must restore honesty and integrity to our financial system. that is why president obama personally feels so strongly about creating this new consumer financial protection agency. i understand the committee's concerns that have been expressed today with respect to boundary issues, jurisdictional issues and the role of the ftc. i think as we work together on those issues it's important to keep in mind the central goal we all share, having won agency for one marketplace with one mission, protecting consumers. the new agency will have the authority and resources it needs to set consistently high standards for banks and non-bank

financial providers alike. to put the and to regulatory arbitrage, to put an end to on regulated corners of the financial system that inevitably weaken standards across the board. this agency will be accountable for its admission yet independent. it will have a wide range of tools to promote transparency, simplicity and fairness. it will act in a balanced and are considering cost as well as benefits in a way to protect consumers from abuse while ensuring acts to innovative responsible financial services. it will be able to reduce regulatory burden while helping consumers. for example by creating one simple mortgage disclosure form for all consumers to use. it will not set prices for any service. the federal government has failed today in its most basic regulatory responsibility, utterly failed to protect

consumers. the deep financial crisis that we are still, let me emphasize, that we are still in today revealed the alarming failure of our existing regime to protect responsible consumers keep the playing field level for responsible providers. instead of leadership and accountability we've had a fragmented system of regulation designed for failure. bank and non-bank financial service providers compete vigorously in the same consumer markets but are subject to two different uncoordinated regimes. one based on examination and supervision, the other after the fact investigation and enforcement. less responsible actors are willing to gamble that the ftc and states lack resources to detect and investigate them. this puts enormous pressure on banks, thrifts and credit unions to lower their standards to compete and of their regulators to let them. and no financial provider should be forced to choose between

keeping market shares and treating consumers fairly. this is precisely what happened in the mortgage market. independent mortgage companies pedaled risky mortgages to borrowers who couldn't handle them to compete banks and thrifts and affiliate's relaxed standards on underwriting and sales and regulators were slow to act. the consequences for homeowners were devastating and the economy is still paying the price. fragmented regulation facilitated abuse of credit cards, trucks and tracks enabled banks to advertise selectively low annual percentage rates to grab market share and boosting come. other banks couldn't compete if they offered fair credit cards with transparent pricing and consumers ended up with retroactive rate hikes and on fair terms of the list goes on and on. a credit unions and community banks with st for credit products struggle to compete with less scrupulous providers who appear to offer a good deal and then pulled the switch on the consumer.

our federal agencies do not currently have the mission structures and authorities said to effective consumer protection and consumer financial markets. the ftc has no jurisdiction over banks and it doesn't have the supervisory examination authority to detect and prevent problems before they spread throughout the market. mr. chairman, i see i will be significantly over my time. could i take several additional minutes? >> yes, you only get their belts of your testimony. >> bank regulators have supervisory power over banks but the primary mission is to insure banks are safe and sound and not to protect consumers. consumer protection supervision is never going to share with safety and soundness. tinkering with consumer protection mandates or authorities of existing agencies cannot solve these structural problems. we need a structural solution. we need one agency for one

marketplace with one mission, to protect consumers of financial products and services and the authority to achieve that mission. that's the agency we are proposing to create. the cf p.a. will have the sole mission of protecting consumers. it will write rules, supervise institutions, examine them and lead enforcement efforts for the whole marketplace. the implications for our proposal for consumer protection and competition are enormous. the proposal will bring higher and more consistent standards, stronger faster responses to problems, a level playing field for all providers and more efficient regulation. our proposal gives the agency the power to strengthen mortgage regulation across lenders and brokers. it can strengthen disclosure, make it easier for consumers to choose a simple products come prevent lenders from paying a yield spread premiums that pay

brokers or if they deliver loans higher than consumers qualify for. the employment credit card protection and update as markets change and they would sit high national standards for licensing bonding monitoring of all non-bank financial-services providers. let me say the ftc is a good agency. the chairman and i are good friends. our legislation does not affect the jurisdiction of the ftc over the vast array of non-financial markets and actually strengthens its ability to police those markets. to increase the ftc ability to protect consumers we proposed ftc be able to adopt rules to prohibit unfair or deceptive acts or practices with standard notice and comment rulemaking to obtain some penalties when companies act in an unfair and deceptive way and to pursue those who substantially aid and the providers that could mitt the coconut deceptive practices.

the at the station also supports increased resources for the ftc said consumers can be better protected across the markets. as for financial markets the ftc would continue to have authority under the ftc act to pursue financial fraud without delay including on foreclosure rescue and loan modification scams. the ftc would retain authority for writing rules under the telemarketing sales at and continent responsibility for enforcing them over financial products and services and the ftc would remain primary authority in the area from bank entities. in addition the ftc would have backstop authority to enforce the same consumer statutes it can enforce today. under that authority the ftc or bank regulator code if it becomes aware of a possible law violation referred to the new agency and if the new agency doesn't act take action itself. the same referral requirement will apply to the bank regulators and is designed to ensure consistent federal

approach to interpreting and enforcing consumer protection statutes. finally, let me just say this, it is time to put consumer protection responsibility and an agency with a focused mission and comprehensive jurisdiction over all financial service providers, banks and nonbanks alike. it is time for a level playing field for all financial service providers. it is a time for an agency that consumers and their elected representatives can hold fully accountable and responsible for consumer protection and all financial sectors, and it is also long past time for a stronger ftc. the president's legislation fulfills these needs. thank you for the opportunity to discuss the proposal. the additional time you've graciously given me and i will be happy to answer any questions at the conclusion of the opening statements.

>> mr. chairman? i would like to make a unanimous consent that the gentleman from the ftc have nine minutes. [inaudible] >> the chairman of the ftc will take whatever time he needs >> we are having a little problem with the microphone. chairman rush, ranking member hillebrand, miss schakowsky, i appreciate the opportunity to be here to discuss pre-consumer protection of regulatory reform and putting president obama as far reaching proposal to enhance consumer protection through the creation of a new consumer financial protection agency, the cpa. as all of us in this room know and as many of you on the panel articulated as mr. barr also articulated the need for reform has become as painfully clear

the stress the consumers are experiencing in these difficult economic times from the failure of regulation. all of loss on the commission supports the president's goal of elevating consumer protection although some of us have different views as to the best means to that. thank you. although some of us have different views as to the best means to the end. from my part, this initiative which enhances resources and authority for the ftc and creates the cf p.a. is clearly preferable to the status quo. in any case, the commission will continue to vigorously protect consumers of financial services while this proposal was under discussion -- [inaudible] cfpa if it is enacted is ramping up. beyond that we look for to working collaborative lee with the new agency. thank you. now i feel like i'm at a press conference. in the last five years we've brought more than 100 financial

consumer protection cases and recovered nearly half a billion dollars the last decade for consumers. since i last testified to the eckert testified before the subcommittee in late march with continued aggressively pursuing financial printers bringing 14 new cases in the area. in fact, today we are announcing distribution of additional $8 million in consumer redress the deceived by mortgage origination fees. on june 1st using the new epa rulemaking authority that you gave in the omnibus appropriations bill, we began a rulemaking addressing modification and foreclosure rescue scams which has become as all of you know all too common recently and also addressing the entire life cycle, advertising, and origination, appraisals and servicing simply put, this work will help ensure consumers are not ripped off by bogus mortgages or false advertising. mr. chairman, president on emphasized the importance of

giving the ftc tools and increased resources, the ones we need to stop practices that harm consumers and violate the law. first the proposal grows the agency getting the staff that we need to do the job that you all want us to do. currently we have over a 1150, down from about 1800 that we had in the early 1980's despite a considerable growth in the u.s. population, and in our own responsibilities including enforcing stan, do not call, the childrens' on-line privacy protection act, the gramm-leach-bliley and others. second, the proposal provides ftc with a p.a. notice and comment rulemaking used by virtually every other agency in the federal government. it would strengthen the ability to address widespread problems more quickly. third, the proposal authorizes the ftc to obtain civil penalties for violations of section 5 of the ftc act. this new power we believe would

help the tours, would be violators and help consumers, help protect consumers more effectively. i think something like 47 state attorneys general have authority and by the refining authority was proposed by caspar weinberger when he was the chairman of the federal trade commission under president nixon in the early 1970's. finally, the proposal authorizes the ftc to go after those who aid others to violate the law. we also urge congress as you consider the legislation to give ftc and cfpa of the ability to bring civil penalty actions on our own which would put both of us on equal footing with other consumer protection agencies like the sec and cftc and not make us have to currently as we do wait for the justice department to clear a were going forward. now we expect that as with any bold and complex new initiative, clarifications will be worked out as the legislative process moves forward but from my

perspective is the president's goal of streamlining the system for protecting consumers from financial abuse is more than commendable and eliminating the balkanization of consumer protection oversight over and on banks and banks as mr. barr has eluded to install double and a critical. we do have some concerns however about the draft legislation or the legislation in its -- as it was an initially drafted although i am optimistic we can work these out as a legislative process moves forward so for example the proposal states the ftc would have backstop authority but the draft legislation imposes a review period that could require us to wait 120 days before filing certain cases. we also believe it would be helpful to make definitions of the proposal terms such as credit and financial activity clear and let me tell you why with an example. so, suppose the ftc finds a telemarketer making illegal calls to millions of consumers on the do not call registry

urging them to purchase something like that that's the credit cards which are i wouldn't say perce legal but almost always -- let's say often illegal and suppose a payment processor participated. it is critical we be able to bring action against all of the malefactors expeditiously but it's not clear under this draft whether we would have jurisdiction over the telemarketer offering of financial products or the payment processor, and if so whether the 120 day waiting period would come into play. now we have made much progress with treasury on several boundary issues and we are continuing to make progress. but getting this right and allowing us to put in an immediate halt to harmful practices is crucially important. having said that, with the kennedy involved in writing legislation i am confident this important initiative will be considered, discussed, clarified and refined with all open issues resolved in favor of american

consumers. we understand under the proposal rulemaking authority and primary enforcement responsibility for financial products and services would go to the new agency but we will continue to aggressively enforce the laws as a cop on the beat where necessary as well as each and every other consumer protection law within jurisdiction we look forward to working with the administration and congress to reach a plan that protects the consumers and i thank you for your time. i'd be happy to answer questions. >> the chair thinks the gentleman, the chairman of the ftc and the chair now recognizes himself for five minutes. for the purposes of questioning the witnesses. with the continuation of the financial crisis we see more and more scare markets predawn desperate consumers seeking to reduce their debts and keep

their homes out of foreclosure or from selling their homes at a loss. and i am concerned about this proposal in that this new agency would not do enough in the short term because we all know that it takes some time for a new agency to rev up to get going, to get running. another option the administration might have considered is proposing that the ftc take on this essential role by increasing the staff and authority it's conceivable ftc could be taking on these issues within weeks or months rather

than years. mr. barr, did the administration consider other options other than creating a new agency? >> yes, mr. rush. let me just say, mr. chairman, that with respect to the transition issues, our view is the ftc should act aggressively as is doing now under the chairman's leadership to continue to enforce the law, to be a cop on the beat, be quite aggressive in this area. and we are at the same time that we are creating the new agency pushing on all of the existing agencies working closely with them to do everything we can under existing authority. so i don't think there's any sense anybody thinks we should slow down. rather the opposite. with respect to other options that the administration stood a wide range of options with respect for consumer protection and basic view was that the

existing system was fundamentally broken and we needed a quite large significant change to create one agency whose job was protecting consumers across the financial services marketplace. i think that the chairman is deeply aware of the ways in which consumers have been abused and neglected for quite a long time and the existing structure is inadequate to meet the needs and our strong view the president personally strong view was that we needed a new financial agency with that core mission that was strong and could achieve the goal i think the chairman articulated so eloquently in the open remarks. >> chairman of leibowitz, during this deal becoming law and

implementing this new creation actually taking place, let's not put a lot more pressure on the ftc. do you have the resources and personnel? how is the ftc focusing on this? >> i would say during the period what durham regulation enacted we are going to work closely with the new agency. i think the per covert transfers between six and 24 months depending how quickly they are ready to ramp up we are going to continue to bring cases. i do think -- -- i do think that going forward, you know, we could use more resources and we've talked about this before in hearings, and i do think even after the agency is created,

assuming it is, that it would be useful for us to have, current authority so that if we are going after, you know, the bad guys don't always act in silence as mr. barton nose and most of you know, sometimes they're violating the do not call rule and violating the regulations see or regulation e which would go over 2 feet new agency. and so, i think it's important going forward when there is ongoing consumer harm we are able to sort of jump over the kind of legislative -- the new legislative fence to help consumers and not have to wait 120 days. i think we are working through a lot of these issues making a lot of progress between the staff and ourselves. >> the chair now recognizes the ranking member for five minutes. >> thanks, mr. chairman and welcome. i am pleased to see you today.

mr. leibowitz, welcome back to the committee. i know you've been here a number of times already and probably will be more in the future. i think you are -- reaction to that statement given the fact the ftc -- >> not breeding contempt here. >> not at all. >> looker, if you read through ever written testimony you can sort of see it is a complex matrix within the commission about what we support and what we don't. i do think from our perspective

if you create this, from my perspective if you create this agency and you also get more resources and authority of the perspective of consumers they will be getting a better deal because we will be able -- we will continue to have a backstop authority with financial -- with respect to financial matters and we will be able to concentrate and do more for consumers. as you know because we've talked about this and spent a lot of time -- >> but if i may, we are losing jurisdiction? >> we would be losing jurisdiction -- >> and how does that deal with your to missions of insuring competition and providing consumer protection? >> i would say of the competition side we wouldn't be losing jurisdiction. we would retain that jurisdiction on to the consumer protection side we would be losing jurisdiction to this new agency that this new agency would be another cop on the beat protecting consumers, and then

we would also be losing personnel. we have -- we have already lost a few personnel i would say -- >> it does seem to me you are getting more money and authority to do less. >> we will do more, we will what really well. it isn't a question of moving to a government -- our guys have worked very hard and have been commended for always supporting high on effectiveness and quality of work. and we will do more in the areas where we have -- while retaining back up authority of the proposal goes through we will do more in the other areas and there is plenty to do. >> thank you. mr. barr, welcome to the subcommittee. you know, during, and russia during the height of communism, it was often talked about the fact there wasn't a lot of food on the shelves, and when you go into stores you might be able to get a loaf of bread but if you

wanted sourdough you probably have to have the standard loaf. if you want it rolls you got a loaf of bread. if you wanted something else you got a loaf of bread. tell me how -- explain to me how you are now doing the same thing in the credit markets and the name of consumer protection. >> thank you very much for that terrific question. i was smiling because you were describing the sable i spent some time in poland and had this an experience where you go to the store and there's nothing and you can actually literally go hungry. this has nothing to do with that. literally nothing to do with that -- >> -- in the credit markets, because that's -- that's the question i would like answered. >> the agency is in no way pursuing that kind command and control model. it is and no way pursuing price setting. it isn't saying you can't offer

certain products. under the legislation -- >> i understand the reason for looking at this because we have all experienced this financial crisis, but doesn't this end up providing consumers with less choice and driving up the cost of credit for consumers? >> with respect, sir, our view is it doesn't. it continues to provide for financial innovation. consumers can get access to whatever services providers want to offer. our basic approach is to improve disclosure, reduce regulatory burden for example by merging prespa authorities and you can have one simple mortgage format time of disclosure -- >> with their existing authorities that have and should and could deal with the current crisis that we are in? doesn't the added restrictions and regulations that you're going to be putting on the credit industry will drive up the cost of credit to consumers?

>> i think that the better judgment again with respect is the current system we've had, the status quo on consumer protection laws a dismal failure and i think we have evidence all a round of that. our evidence was both for banks and nonbanks, for consumers and households the system failed. if you talk to ensure you do community bankers who had to compete against unregulated providers who were sucked into offering products -- >> leaning against the large banks for t.a.r.p. mauney. thank you mr. chair, i yield back. >> the chair recognizes the gently from illinois, the vice chair, ms. schakowsky. >> thank you. mr. barr, could you describe how we potentially but have been in a different situation today had this agency been in existence as the current problems started to

enroll? >> yes. i think we would have been and could have been in a fundamentally different situation if we had an agency that could set the rules of the road for everybody to follow. if we had an eight agency that could say you can't get paid more for offering risky or higher-priced more confusing product than a basic product. if we had a rule that said mortgage brokers you have a duty of care you have to do best execution for mortgage so you can't offer the mortgage that's the best deal for the broker were supposed to offer a market that's the best deal for the consumer. if we had a duty that said mortgage brokers have to have skin in the game they need to be paid over time, securitization trust have to have skin in the games are you don't have a system where all of the bad mortgages are made up front and eventually sold to the investor at the other end with nobody in the chain having responsibility, nobody having any of their own capital at risk.

so we could have had a fundamental change, fundamentally different situation of which consumers were protected at the front and and the system was protected all the way through. >> and you are singing without any change in legislation beyond the creation of this agency that you would have the authorities than under the bill, which i haven't read thoroughly, you would have been able to have done all those things? >> yes. this agency would be granted authority to do all the things i just described. >> did you want to comment on that? >> i would just say one of the things that's critical here is a p.a. rulemaking authority and under the new proposal they will be able to do it for mullen bank as well as bank related financial instruments and mortgages and so, in the omnibus you gave for which we are very grateful, apa rule making for nonbank mortgages and we are quite look at that and do i

think a very, very good rule. and mr. rush, you have legislation that would expand the jurisdiction a little bit more, but it is only within the context of non-bank issued financial instruments, so 20 years ago, we did a lot of matters relating to credit cards. and all the credit cards are now virtually every credit card is issued by a bank. we have no jurisdiction there so i think that is a critical of the vantage from the consumer perspective of the what this new agency might do. >> let me just say that while i absolutely in theory think pulling it all together in one place is a good idea, but, you know, we have seen and the startup of the department of homeland security lots of difficulties in making -- pulling it all together and making it happen. the creation of a director of national intelligence.

certainly in that case many of us on the intelligence committee see a large bureaucracy itself developing. and, you know, have some problems with the coordination that was actually supposed to happen. how can we be assured that this will achieve its goal, and achieve it in a timely way and not just be another bureaucracy? >> thank you very much. again, i think our agencies that have the authority now should aggressively use those authorities. those authorities are inadequate to the basic task, the structure of the system was a dismal failure. we need to do this -- we need to take this action. the the gestation has pipelines for revision. the treasury has responsibility to make sure that transition had been effectively. you can come see me and see secretary tietmeyer -- geithner.

you can make sure we are held responsible. >> the chair recognizes mr. stern's from florida. -- before mr. chairman. mr. chairman, we have had a loss of hearings on privacy in this committee, and when i was the chairman of the committee we had many hearings on privacy and i think my concern is if we transfer some of the federal trade commission privacy at work to this new cfpa, particularly in light of all of the expertise you have and you have been a leading agency for all these years, and including financial privacy as well as identity theft, information security so with that in mind, what do you feel about this transfer?

>> i guess i would make a couple of points, this committee and you have been leaders on privacy related issues. we will be transferring over a lot of balls, we hope to keep a backstop authority that is, current and of course this is the beginning of the legislative process -- >> i understand. >> i see a lot of agreement on this committee on ways to go forward. on -- negative -- the way that we've read the legislation it is unclear whether data security will stay with us mr. barr proposed, the reading the proposed statute will move forward is it will keep issues like that and i think that's very important. >> so identity that you keep? >> i think we would keep identity theft. >> and financial privacy? >> financial privacy i think moves to the new agency. that is to some extent up to do. i think we would keep the safeguards will under gramm-leach-bliley but a lot of

this has to be worked through, during the transition period we will keep doing this and have backstop authority. and i should turn this over to mr. barr, one of the true architects of plan. >> when you're seeing today is some of this is still up for negotiation? >> these boundary issues that you have raised the same concerns when we got the legislation of the end of last week but it seems being resolved on some of these altria shears in favor of retaining jurisdiction by the existing commission and i assume that is if this legislation moves over that is what this committee would be most interested in but let me turn it over to mr. barr. >> to add to that the chairman is correct with respect to data security issues, identity theft if she is, safeguard red flags, all of that but stay at the ftc and the parallel authority for that at the banking agencies. but the front end privacy notice that has to do with disclosure

would fit in the new disclosure regime of the new consumer protection agency. >> let's see internet privacy, would that be part of the -- would that remain the federal trade commission? >> again, with the aspect of the financial side of the disclosure would be unified with the disclosure regime at the new financial agency. all the data security identity theft and related issues would remain at the ftc and the parallel authorities with respect to banks. >> if you're thinking about spam, spy where, we keep all of those. there might be some issues about whether we are going after a malefactor or a group of malefactors and one of them is on the other side of the core new agencies fence. right now there's 120 day waiting period, which we are a little concerned about from the perspective of consumers but the

original point sort of a variety of issues including sort of the core privacy issues we do we will be keeping and retaining jurisdiction. >> well, i think, mr. barr, where you should realize with all the expertise of the federal trade commission we are starting a new agency here. you know, i would think as many have pointed out on this side we are worried about a new federal agency particularly when you have an agency that has the expertise. i take the bill says the cost of this new development of this new agency is such as necessary. is there any more affinity information on the cost would be for this new federal agency? >> i don't at this time have an overall cost estimate for the agency or size estimate for the agency. it's something we are working on and we will work with the appropriate committees on and with zero -- obm.

the agency will be pulling in staff and resources from the existing agencies and additionally having new resources required i would be happy to continue to work with you on that question. >> can you talk about the resources the agencies will need besides having identified any of the resources? >> we have begun the process of identifying the number of individuals and the other resources the agency would need but we arnold at a place now i could get even a reasonable estimate of that. what additional measures beyond the transfer authorities would be required is something we are working quite hard on. >> i will just close. mr. chairman, you might think as a subcommittee chair scintilla of the expertise for this is already on the federal trade commission and this is a new agency, you might -- particularly in your jurisdiction here i think we have got to move carefully as mr. dingell pointed out a

developed a new agency they don't know how much they are going to spend or what resources they are going to need, and also they are going to be taking on expertise for areas they know nothing about that the federal trade commission has years on, so i just wondered you as a chairman want to be very careful and cautious about endorsing this agency without some more hearings and try to get the stakeholders year perhaps more than we have on the witness to try to get into the discussion, so thank you mr. chairman. >> the chair thinks the gentleman and observed there is a jolt going on on the floor. there are three votes. we should delete the committee hearing until after the votes are concluded and then return and i am not sure when the

witnesses time commitments are but it would be very important you return i would say within 15 minutes after the last thing this subcommittee will reconvene subcommittee. is that all right? >> yes, mr. chairman. [inaudible conversations] [inaudible conversations]

[inaudible conversations] >> the subcommittee will reconvene. the chair recognizes the fact there might be members of the subcommittee who did not have an opportunity to ask questions of our witnesses and before we recess. i am very cognizant of the

witness's time and would take this time to go into a second round of questioning and there are members to come in who have not asked questions in the first round then the chair will call on their questioning to seven minutes. so, with that the chair recognizes himself for five minutes, for two minutes of additional questioning. >> in describing the proposed regulatory reform of the department of the treasury stated clearly that, and i quote, the ftc should retain while dealing with the financial market, and of quote. despite this assurance the proposed language appears to weaken ftc authority in this

area. the ftc would retain their authority to enforce against unfair and deceptive acts and practices using the ftc act. however, the ftc couldn't add any statutory claims such as the truth in lending act or the equal credit opportunity act to a complaint referring the case and we to 120 days for the agency to decide if it wants to take the case. the chairman of leibowitz, let me ask you how would this impact ftc ability to pursue financial fraud? the ftc pursue one part of the case while another is under consideration and cfpa or would you expect it would simply not bother with additional claims?

what ftc cases be weakened if they only rely on ftc act claims >> i think, mr. chairman, that's a great question and keeping in mind we are at the beginning of the legislative process, not near the end of the legislative process. those are questions i think this committee will want to think through as the legislation proceeds forward. last week we brought a bunch of cases which we called operation shortchanged, and it was about -- it was about scams hitting people and economic distress. and a lot of those were basically fraud claims under the ftc act. but one of them involved the the electronic funds transfer act and i think it is reg e.

reg e would go to the new agency, and so, this what sort of invoked to parts of your questions or two components to your question one of which is what we have to wait 120 days to bring this case while there is ongoing harm? and then the second issue is really what is the nature of our backup authority, and i want to say mr. barr and i have been working with our staffs very productively. i worked on the hill for 13 years and never wrote a piece of legislation for my boss that didn't change as it went forward. so i think these are precisely the questions that we worry about at the ftc. we want to make sure and i know mr. barr does, too, that as effective as it can be for the consumers that all of us represent, and -- and so it think it's important to focus on

this. >> it seems the ftc more than consumers would benefit more if the ftc didn't have to solely rely on the so-called backdrop of authority. do you agree with that? >> i will turn the microphone over to mr. barr and a second but from our perspective is the back drop authority is deceived, and we have backup authority involving the ftc and the cftc which we used rarely only when needed, but here, sort of a couple of points. one is as the transition is happening, if this legislation is created, you want, you know -- certainly even after a very good lawyers are transferred and attorneys and jurisdiction, you know, it's going to take a while for this agency as mr. barr

knows better than anyone, and i believe they're going to want us involved using backup authority probably more earlier than later. we understand they will be -- they will have primary jurisdiction here, but i feel it's very important that the backup authority be robust so that we can sort of help out, and also so that we have these cases that involve malefactors that don't fit into the older new silos that we can effectively go forward and stop ongoing part involving consumers. ..

i will turn that over to mr. barb but i do know one person i know who is on detail is a fabulous attorney and really cares about consumer protection and also-- >> what you turn it over to mr. barr. thank you. >> mr. barr what he begin with that last question and then you can respond to the other question. >> i would be happy to address the broader point. we have on our staff a terrific

attorney from the ftc who is, run detail and is going to be a permanent employee at the treasury department working on consumer issues. with respect to the broader sets of questions, i would just say first and foremost, the chairman and i are happy to work closely together and are committed to working closely together on these sensitive issues. on financial fraud, it is clear from the president's proposal that would not in any way diminish the ftc's ability to take on financial fraud cases as is indicated in the white paper and in the legislation. the ftc would retain its authority and its duty to bring financial fraud cases without delay. with respect to coordination, there are many issues the agencies will want to coordinate on. p1 hundred and 20 day measure is

not like the existing authorities the ftc uses where it is the primary entities doing enforcement. this isn't a proposal that kicks in if the ftc is doing its work and finds a problem, it can let the new agency know, the consumer agency know about it. it does not the way as the ftc does today, wait until it is gone through its investigation, gone to the whole charging process and got it all ready and then referred to the justice department. it is totally unlike that. it is a chance for the ftc to know about an agency about a problem it sees so it is a fundamentally different mechanism. we are committed to being sure that in no way delays in the financial fraud cases, and with respect to the transition issues, the ftc and the agencies will have large transition issues. we are committed to working

those through and as i mentioned, to representative schakowsky, the treasury is responsible for ensuring that transition happens smoothly and you can hold us accountable for that. >> my time is concluded. now, mr. radanovich is recognized. >> thanks mr. chairman and welcome back. mr. lieberman-- leibowitz, excuse me. uncertainty is one of the key factors behind the perpetuation of our current economic crisis and granting a new and unknown regulatory agency with this broad scope of power plays is a dangerous, could place the dangerous level of uncertainty into the financial markets. do you think that might be better to have an experienced regulator such as the ftc with a long entrusted history of working with business at the helm with these new powers?

>> as you know i am very fond of the federal trade commission, as you are. i would say this. as you know i testified here a few months ago that we thought we could do the consumer protection mission involving predatory financial instruments. the proposal that has been developed though is one that is broader than that. it has, it has bank examiner components. it has, it has compliance compliance so those are not things that record compensated. you know, again we are an independent agency and so, when you willed into whatever you tell us we are going to do, and beyond that, i just want to come back to my initial point which is based on what we have seen in this marketplace and the restrictions we have operated under, i do think that with

these issues worked through it and i believe they will be, i do think that having a, that having this new agency in the ftc both going after on fairness, deception, fraud, it is considerably preferable to the status quo. >> we agree on that. i think the issue is how you go about it. let's say though that meeting with the bankers in my district back home, they are afraid of this and i think that is the uncertainty question it is a legitimate question. and if it does bring the specter of increased regulatory management over the industry, not that something has to be done in order to get, to state the correct mistakes of the last year, but what is it going to do to the industry's willingness to get out there and unfreeze liquidity like we are all wanting them to? >> if i could just add to german

leibowitz's comment on that. i think the keener factory is this agency would have all the supervisory and example-- authority and not just with respect to banks but also with respect to non-bank competitors and those banks so i understand that many banks are worried about the scope of the new consumer financial protection agency and i appreciate those concerns. i think the additional upside for them is that they are non-bank competitors will have the same high standard that they need to meet, the same level playing field, the same consistent rules so community bank and credit unions as some have to worry. >> that tells me you are just broadening the uncertainty to include the entire financial markets. >> no, i think what we are able to do sir. >> it seems the uncertainty is being broadened, that this not answer the question about the uncertainty and that the banks

are afraid of this kind of legislation. >> i think what we are able to do is create a high consistence, clear standard. we are able to reduce regulatory burden in many cases. for example including-- and don't help consumers. we need a single uniform, simple standard for disclosure. >> i suggest that you need to convince the banks because they are the ones that are expressing the real concern. if i may mr. barr i do have a second question and that is president obama has stated a streamlined system will provide better oversight and less costly, will be less costly for regulated institutions but the preemption statutes in the bill create a floor rather than a ceiling for state regulation. does not mean we are looking at 51 different versions of this thing by giving the preemption statutes to the state and how does that-- does not not

conflict with president obama's statement that we are looking at a streamlined system? >> as you know the states have long played an important role in consumer protection. i think one of the up sides of living in our country is we have independent states. >> they have not had preemptive status in this situation before. >> that have not been able to apply state laws in some context to national banks, but they certainly have been very active in the consumer area across lots of different products and services in the past. >> do you think it leads to 51 different versions of this? >> i think we are much more likely to see a high standard of the national level. i think it is very rare if you set a good high standard, you'll find it very rare for states to go off on their own way but sometimes states are right. sometimes states protect consumers in innovative ways in our view is we shouldn't block the state's ability to do with the state's bank when their

judgment is right. >> thank you mr. chairman. >> chair thanks the witnesses and i want to thank you for-- the chairman recognizes dr. gingrey for seven minutes for the purposes of questioning. >> mr. chairman, thank you for your generosity of time. i am sorry i missed the first round and i appreciate your letting me answer questions. i did want to ask secretary barr, in your testimony you indicated that we need only one agency charged with protecting consumers from financial products and services. as one of the principal architects of the administration plan in the proposed consumer financial protection agency you lay out a very broad and sweeping change that will fundamentally change a number of government entities, of course including the ftc. however, while this is still in the early stages there are some concerns held by members, including me, that an overly

broad new regulatory agency will have the same effective hitting a nail with a sledgehammer. these efforts under the guise of uniformity i feel there may be some different standard set for industries with them as proposed agency. for example, i have heard that some suggestions that small banks should be exempt from some or all the rules written by the proposed agency. in the draft legislation contains exempted authority based on asset size. is it the administration's plan to apply different consumer protections the pentagon with direct customer transaction with a small or large bank and furthermore, if you intend to carve out small institutions, what other types a rules would they be exempted from and what is the policy reason for carving out these institutions? >> thank you very much for that set of questions.

i do think that our proposal does involve sweeping change. sleeping change that in our judgment is essential to protect consumers. our old system is fundamentally broken and we do need fundamental reform. with respect to smaller institutions, we don't expect to see, and would not expect the small banks and big banks would have different rules of disclosure but you may see differences in say, dissemination or supervision there would be in the big institutions as we do today on site. there are examiners on-site you around. you would want that for small banks and you may see differences like that but not differences in the basic standards affecting consumers to be uniform across the board. so, if you walk into a bank or walk into a credit union or walk into a big bank or go tear independent mortgage broker or you go to an independent mortgage companies get the same

simple mortgage disclosure so consumers can understand what they are getting. >> chairman leibowitz, as you outlined in your testimony, there will be a number of changes to the ftc as a result of the consumer financial protection agency if that becomes law. many responsibilities will be pulled from the current jurisdiction of the ftc and be given to this new agency. with all of these proposed changes, what then will be the role of the ftc and this new landscape and how much of that new role will be duplicative of this proposed agency? you guys have been doing a good job. you know, we are appreciative of that. >> and we appreciate and are heartened by what you said about our agency. i think we do a good job. could commissioners who are also committed. you know, we will still have all of their competition authority,

our antitrust authority. we will continue to do all of the other things we do whether it is fraud, or privacy outside of the financial context, or you know, advertising and marketing practices and then we will continue to stay involved here. i think especially during the transition period and hopefully beyond, with concurrent jurisdiction. look, there are as we know in this room and as you guys know better than anybody else, there are lot of bad actors out there who are trying to rip off the american consumers so by growing the federal ability to go after these malefactors, you know, that can only help the playing field. what we do with the ftc and we do it really well, but it is a sort of triage, right? we look at different cases,

potential cases and as we are going to an investigation and see which one can we best leverage. which ones are the greatest harm to the greatest number of people? which are the ones that might make better, a change that case law for example and we are always making decisions based on sort of the lack of resources that we have. we just try to do the best job we can. >> let me reclaim my time for just a second because i want to ask you one other question. we don't disagree with the need for oversight, but it seems to me in this current financial crisis we are in and all of these bad loans and toxic assets and all of that, that the oversight got really heavy after the horse had already left the barn, so that is kind of a concerned and as always, the concern that the oversight becomes too much so restrictive after the fact that these

institutions particularly for small banks and lending institutions can't function, and i certainly see this across my district in privately held banks, smaller banks that-- the oversight should have been steady and consistent and it always should be but yet, when some catastrophe occurs because somebody was not minding the store, then all of a sudden the oversight comes down on these institutions to the point that all of a sudden they go out of business and it hurts the local community. but, let me just ask you in the little bit of time i have got left. you mentioned to us with the ftc would be able to continue to do. what percentage of what you currently do is that? does that represent 50% of your current responsibilities, 25%? are you losing more than 50% of what you currently are charged?

>> i think it would be more like-- if i think in terms of resources, i will get back to you with, i will get back to what their response but i would say it is more like, it is more like five to 10% of what we do and of course that has been an area as you know that we have been concentrating on more and more because it is very important to american consumers, many of whom are suffering, almost all of them suffering from-- >> i would appreciate it. i think it is important we know that in mr. chairman thank you for your patience and generosity and i thank the witnesses. >> again the chair thanks the witnesses for the use of their time and you were very generous to us in your time, and we want you to know that you have contributed significantly to this process and we are better off because you testified today and helped us move along on this

new proposal, and so we will be in touch with you in the future, and the chair wants you to know that we will-- we give members 72 hours to ask questions in writing and that he will respond to them within a reasonable amount of time, the chair would appreciate it. thank you so very much. >> thank you mr. chairman. [inaudible conversations] >> the chair welcomes the second

panel to the desk and to this hearing. the chair apologizes for the inconvenience that he might have had to endure while we were on the floor voting, and the chair is very respectful and appreciative of the fact that you have come from far and wide to be here to testify. i want to introduce our witnesses and i will begin on my left. mrs. gail gillibrand is a senior attorney in manager for the financial services campaign for the consumers union. seated next to her is mr. stephen calkins, "esquire." he is associate vice president for academic personnel and professor of law at wayne state university. next to him is mr. prentis cox

who is an associate clinical professor of law at the university of minnesota, and seated next to mr. cox is ms. rachel barkow and ms. barkow is a professor of law ed kunar-- new york university school of law and last but not least, the gentleman with the smiling face next to her is the minister chris stinebert. mr. stinebert is the president and ceo of american financial services association. we again want to thank you and welcome you to this committee hearing. it is in the practice of this committee that we swear in witnesses so will you please rise and raise your right hand. to you solemnly swear to tell the truth, the whole truth and nothing but the truth?

let the record reflect that all of the witnesses responded in the affirmative. now is my privilege to allow you and to recognize you for five minutes for an opening statement, so ms. hillenbrand we will start with you. turn your microphone on and put it close to you please. >> thank you chairman rash, ranking member radanovich and members of the committee. consumers union is the nonprofit "consumer reports" but the mission is to test and empower consumers and that is the role of which i appear before you today. my written testimony was joined by consumer organizations. consumer groups want and consumers in the u.s. need a strong consumer financial protection agency, a robust federal trade commission and a strong role for states and consumer protection and financial services. we believe those goals are entirely consistent with one

another. mickle is a better financial services marketplace and better government and financial services oversight. we have to face it, the current system doesn't work. it is not delivering products or encouraging products that are understandable to the consumers to use them or meet the reasonable expectations created in the sales process for guns did we have got to banking, multiple regulators even when those providers are competing directly for the same consumer. we have long delays for regulatory action and we don't have much of open public enforcement except by the ftc. and finally we have abusive features and products that are squeezing their way through the holes in the existing law and the existing regulatory scheme. i believe the job of government is to serve the people. we are not here to talk about government. we are here to talk about better government and financial services oversight. spreading to their system is not

designed to the job. it is spread out over six more agencies with the hodgepodge of rules and statues. and how much enforcement a provider receives depends in part on his regulator is. that is not a system designed to match the realities of today's market. we want to give the federal government a new job in the financial-services marketplace and that is to promote a fare as well as inefficient financial services market. to watch for the market to prevent harms is the start to develop a guy come from the great state of california with the option arm in some of the other products that have gone terribly sideways were pioneered and you can only wonder some one have been watching those markets more closely with a that would have spread around the country. the mandate of the cfpa is to promote transparency, simplicity , fairness with accountability and access. notice i say promote. it is a different job for much the federal government has set

before but this cfpa we have the opportunity for an agency that has an obligation to get information, to learn about the market, to watch that market and to make a conscious decision about what needs to be regulated and what doesn't in which regulatory tools to use and to apply those tools evenly no matter who is providing a product. with the cfpa we could get one agency to watch over the market, fest directing responses, one agency that is responsible to you and to me when things go wrong and one place for your constituents to go instead of the alphabet soup they have no figuring out who to complain to and who to get relief from. the cfpa model is one federal rule maker but multiple enforcers and that brings me to the incredibly important continuing role of the ftc. i would like to disclose i was once a summer law intern at the ftc. long grecco then could be possibly-- the ftc keeps its and

enforcement authority, keeps that section 5 authority with a simple, regardless of the topic, with a simple consultation that can be had at the staff level. it keeps its authority with respect to all the statute it now has what that referral process and i think it is important to know that is a referrer and wade process but they are not waiting for a yes or no. what this cfpa does not take on the case the ftc thinks these to be broddick and still bring that case. we have made a recommendation in the testimony that the statute should allow the cfpa to waive that notice or to shorten it by individual case, by type or category of kasem by agency, so that they can work these things out where there is common, the telemarketer case for the. we also are recommending to you that the ftc be given the authority to be a secondary regulator with respect to

enforcing the cfpa rules, not in writing them but in forcing them. the ftc does this jurisdiction to write an unfair deceptive practices rules in financial services but that does not been a world they have been able to use widely in the last couple of decades since the credit practices went into effect in the 80s. they keep all of them enforcement and of course it will be made stronger with the aiding and abetting enforcement. we believe this is the only way to put competing products under the same set of rules. i am conscious of your time and they do want to say that i think it is very important what the ftc does right now in the recession. it is very important what the ftc will continue to do after the transfer of authority and the cases where there is overlapping enforcement and will be extremely important what the ftc does with its additional authority. there are a lot of things the nafisi can do wright to help consumers who are suffering from

the recession including cleaning the problem with reporting airs, the market is beginning to do under the authority you gave it, the market modification foreclosured debt collection. all of those things will remain extremely pardon. i would be happy to take questions. thank you. >> thank you very much. you are recognized for five minutes. >> will you pull the mic closer tea please? >> is the alright? it is not on. >> push the button. a special thanks for the technological advice here. chairman rush, ranking member radanovich, members of the subcommittee thank you for inviting me here to testify about this import matter. the proposed legislation what effect sweeping changes in the federal trade commission. the keyç to the bill is in the definitions and they are written extremely broadly. applying those definitions and working your way through the

bill, you find that the bill would transfer out of a federal trade commission much of the work that the federal trade commission now does, giving those responsibilities to the new agency and giving it the exclusive authority to prescribe rules and issue guidance with respect to much of what the bureau of consumer protection does. if you take the ftc's most recent annual report for 2009, and turned to consumer protection and start reading what they have been doing, sub-prime credit, mortgage servicing, foreclosure rescue, a mortgage advertising, debt collection, payday lending, operation clean sweep, operation telephony, the marketing case, payment systems, nationwide connections case, global marketing case and so on and so forth, prepaid phone cards, on matter after matter after matter

of what they have been doing, i read the bill as saying that all of that would be transferred to the new agency. in short we would have major change. indeed, if you read the bill carefully he would find even some of the antitrust responsibility of the commission would be transferred. i assume that is a mistake but that is how it is currently written. now, why have this sweeping changes and let the federal trade commission does? it might make sense that the federal trade commission was a bad agency that was doing that work but is he will have spoken so eloquently this morning, the federal trade commission is a good agency that has been doing good work. it has unique bipartisan structure. it compliance consumer protection in competition to bring the best from both perspective to bear on problems and it has been doing important work for consumers including in the world of credit for a very, very long time. transferring responsibility from the federal trade commission to

another agency obviously create some pretty significant risks and my recommendation to you is to proceed with great caution to weigh those risks, to decide whether they are really worth running and certainly if they are to work very hard to try to minimize those risks because the bill as written would make major changes and you need to be very careful to make sure that all of this makes sense. thanks very much and i'm happy to answer questions when the time comes. >> thank you. mr. cox, you are recognized for five minutes. >> thank you mr. chairman and ranking member radanovich. abuses of consumer finance products were a disaster for millions of consumers before anyone recognize them because we had a financial crisis. a disaster. a previous testimony about someone committing suicide, i have sat with people whose

families have committed suicide after i work with them. millions of people experience this. our federal regulatory system did not respond to this. it was dominant-- dominatedzv by the needs of the lenders and sellers and not by what was happening on the ground. it is often said that no one could have seen this. the people who were working with the victims of sub-prime lending and were talking to people who reflected the experience of those people as well as the others who were subject to the abuses of consumer product finances absolutely knew what was going on in we were screaming at the top of our lungs and no one was listening. it was predictable and it was preventable. the consumer finance protection agency offers the first open generations. certainly in my adult lifetime working on these issues. for an agency with sufficient power and focus on consumer protection issues, to seriously address these problems, it gets

it right in terms of its model. it sets of the unified rule making process. it is not about whether the ftc was good or bad. it is about the fragmentation of authority and a lack of perspective in a unified rulemaking. it gets it right in setting a floor and allowing innovation where innovation should occur which is in the state regulatorç system. and a couple that with an open enforcement system. it allows the enforcement of those clear, unified rules to occur in multiple places and their two reasons you want that. the first is that you compare the proper enforcementç agency, public enforcement agency with the problem at hand. if you have got a problem that just occurred in indiana, the indiana attorney general is the right place to do it. it certainly won't get taken care of if you allow the federal agency. it the indiana attorney general-- secondly, the agencies

like the ftc and state attorney generals often will bring violations of rules and-- ancillary which was what chairman lieberowitz was saying, because things don't come up in neat silos so unopened public enforcement model which is what this bill has by allowing the federal trade commission and other federal agencies to enforce the rules and state and attorney generals to enforce the rules and it enhances and enforcement. i will make two quick comments, one about the details of the enforcement mechanisms and the other about the rulemaking investigative authority. the open enforcement mechanisms in the bill are excellent, however i agree completely with chairman leibowitz that the 120 days restrictions on the ftc is way too cumbersome. we it needs to be streamlined and made more efficient. secondly, and this i think is a very important one, in the bill, the ftc is given the authority

to enforce federal consumer credit laws but not the regulations passed by the cfpa privacied fda regulations over time will become much more important then the consumer credit regulations. it is really critical that the ftc get the authority to enforce the regulations that are passed by the cfpa. there's also a consulting power in there. a requirementok and that is correct, and i hope on an informal basis the agency takes account of the fact that the ftc, which enforces unfair and-- gains a particular type of experience in understanding that is vital, vital to setting those rules. secondly, the state ag's have authority but that mechanism for remedies needs to beç clarified because right now the section 1055 powers, it is unclear whether those are bootstrapped into the enforcement.

finally, in its rulemaking authority the news cfpa desperately needs detailed and express and clear invested tory powers. otherwise, the data that is brought to bear on what the rules are will be data held by the industry that the cfpa simply does not have access to so it is critical that the cfpa have the investigative powers of it they can get the rules right the first time. i really appreciate the opportunity to be at this historic hearing in which the congress great luck in making this project work. >> thank you very much. ms. barkow. >> thank you mr. chairman, ranking member radanovich, thank you for inviting me to testify. i am honored to have the opportunity to discuss this piece of legislation. the linchpin of the financial protection agency act is of course the agency creates so whether this act will succeed or fail and its mission to protect consumers will depend entirely on whether the agency creates will succeed or fail.

i analyzed the structure and powers of the proposed cfpa to determine if it is then defined inq the most effective way to achieve its stated statutory mission. i take the position on the merits of that mission or whether there is the need for a new agency to regulate this field. ratta my focus is on whether the cfpa has been designed as effectively as it can be. i would like to make six brief suggestions and observations about the design of the cfpa. my first recommendation and the most important is to add a provision to this act that would limit the cfpa board to more more than three members of the same political party. unlike virtually all other legislation that governs multimember independent agencies including the ftc, the sec in consumer products they decommissioned the cfpa act as it is currently written does not require political balance. there is a wealth of empirical studies that are demonstrating that a group comprised solely of ideological like-minded people

tends toward extreme decision-making and without a provision in the act requiring partisan balance the cfpa is likely to change positions from one extreme to another with each new presidential administration. this is unhealthy for the regulation of any market and certainly the consumer financial products market. political balance requirement can serve as a stabilizing force. and medish nabel asra crème mckinley to dissenting opinions which is valuable for letting congress and the public at the agency goes in an extreme direction one way or another. >> cannot suggest amending the requirement as a have pa consult with banking agencies and any other relevant agencies before passing rules to make sure those rules will be consistent with the provincial market or systemic objectives of the agencies being consulted. because this consultation requirements suites broccoli covering every agency and related fields and anything of any importance to those agencies this process is likely to dramatically to lay the promulgation of cfpa rules.

this is the kind of requirement that aids industry participants and tiny agency rules for years so unless congress is of the few the legal uncertainty is outweighed by the benefits of this provision i suggest making clear that consultation is at the discretion of the cfpa and not subject to judicial review. third, i advise modifying the statute of limitations provision to begin running from the time the cfpa discovers a violation and not from the time of violation has occurred because violations by sophisticated interests are not discovered for years in many cases. this provision might hamper the cfpa in its enforcement efforts. fourth, i recommend including a limitation on the ability of cfpa board members to practice before the cfpa for a time after their service on the board has expired. this research will limit the affects caused by having the revolving door between agencies and the industries that they regulate. fifth i would like to highlight

the protection act that i think will be critical to achieving the lawn enforcement objectives and that is section 1042 of the act which allows the state attorneys general to enforce provisions. state ag plausive demonstrated that they can be effective law enforcement partners and i think this is particularly true in the area of consumer protection were agency is a significant risk. i would like to alert the subcommittee is attention to the fact it is unclear from the fact as it is written whether this cfpa will be subject to presidential directives and oversight including review by the office of information and regulatory affairs. there is language in the act that suggest this is actually going to be an executive agency and will be subject to this kind of oversight. congress minton for this cfpa to be part of the oversight process but if not the act would need to be rewritten to make clear the cfpa is an independent agency for purposes of a review. i take no position on whether not the agency should be subject to this review but because it is a fundamental question i know

for you it is currently unclear in the legislation. thank you for allowing me to testify and share my thoughts on this proposed legislation and i would be happy to lead to questions. >> thank you for this opportunity to speak with you today. i am very glad to hear that this is a fur step and hopefully which will be long process because as many have expressed here today there's certainly some concerns about this issue and we hope that they are will continue to be somewhat of a cautious approach as we go forward. on the american family-- has been around for 100 years and we represent the around 30% of all consumer credit in the u.s.. with members in the market, credit card, auto and personal installment loans. first and foremost, we support

strong financial consumer protection regulations. just because we have concerns going forward about the current agency does not mean that the industry and the association is not committed to strum consumer protection regulation. we believe in the consistent enforcement of existing consumer protection laws by government regulators would have greatly lessened the harmful impact the current crisis has the consumers answered lee on our economy. many members are regulated primarily at the state level in subject to a patchwork of requirements. we firmly believe the consumer protections should be uniform in every state. therefore we support strong national consumer protection standards that allow members to meet their consumer protection obligation in an efficient and cost-effective manner. in addition, strong national consumer protection standards

will provide a benefit to consumers only to the extent that they are consistent with sound potential regulation. consumer protections that threaten the safety and soundness of financial service providers offers no-- i don't. we believe consumersko will be better served by a regulatory structure of four potential and consumer protection regulations are housed within a single regulator. congress tried to separate these two intertwining functions with the gse's. when it became apparent that the situation was unavoidable congress brought the two regulatory functions that under a single regulator and for good reason. we urge congress to support a regulatory structure that does not separate safety and soundness from consumer protection. the authority proposed in the

new agency is breathtaking in both its scope and its effect. it would cover many entities and persons who have little or no involvement in the activities leading to the current economic crisis. without any demonstrated need, many unsuspecting persons will be swept into a web of scrutiny and reporting requirements that yield little in the way the consumer protection. but much in the way of increased cost for consumers. attorneys, accountants, consumer reporting agencies, auto dealers, title cos among others will find themselves subject to review with no evidence that they behaved unfairly. financial service providers will find increasingly difficult to plan for risk as virtually any practice or product other than prescribed standard, a plain vanilla products could be labeled as the unfair or

abusive. innovation will be discouraged. given the vast scope of the proposed agency's authority, its funding needs are also staggering. the proposal seems to fund the cfpa by assessing fees on persons and entities it regulates, including many that would not expect to be covered currently. there is no doubt that any assessment of financial service products will be passed on eventually to consumers. that direct, the unavoidable result will be an increase in the cost and availability of credit. most afsa members are regulated by the ftc which has a proven record of enhancing consumer protection. it has addressed the economic crisis into ways. furs by using the enforcement authority to pursue bad actors in the financial-services industry and second, by setting

federal policy for guidance and public comment. numerous examples are listed in our written testimony biting conclusion afsa believes the ftc has done an excellent job in enforcing consumer protection laws and is best suited to continue that world going forward. weep aleve the administrations coal can be achieved with the justice to the current regulatory structure and the result would be more efficient, less costly and certainly more effective. to that end we have two specific suggestions. one, make current and future consumer-protection rules apply to all financial services providers. congress can insure that all federal consumer protection laws and regulations apply with equal force to all providers of financial services with respect to similar cases of products and services. these laws should include strong national standards that pre-empts state laws and permit all americans to enjoy a

consistent level of services and access with respect to financial products and services. we have heard again and again today, as you have in 50 different states that can exceed or meet or exceed the current laws, that this is not the occasion. we are just going to wind up with 51 as he stated mr. chairman, 51 different rules that these people will have to follow and number two pursue a regulatory structure that does not separate the viability of the companies that offer them. all provincial agency should work together to coordinate consumer protection regulation for financial products and services with the gold that regulations be preemptive, consistent and uniform. if we don't have that we are not going to make headway. thank you for your time. >> the chair thanks the witnesses and the chair now recognizes himself for five

minutes for questioning. according to the administration's proposals, proposal weather, the state will and forced the statutes and rules being transferred to the new agency right away. in contrast, the sepses-- ftc will be required to provide in this efta with notice of proposed action and this has been stated earlier with 120 days for this defeat-- to determine if they will take a case before they take any action. this applies to the very rules and laws currently in force by the ftc. mr. calkins, in your testimony, he suggested this would prevent the ftc from ever investigating or taking action in these areas.

can you explain and expound upon that please? >> when i read the bill, i said then tried to think about what life would be like under the new legislation and the 120 day rule. wet with the ftc to? and, as i thought about it i read the bill. i read where the bill says, quote, all consumer protection functions of the federal trade commission are transferred to the other agency. so, who at the ftc is going to be doing the work to find that there is a violation that they wish to use the 120 day rule to develop? maybe the ftc will go out and

develop new resources to do this because that makes sense, and i don't think that makes sense because the whole point of the bill it appears is to transfer a large part of what the ftc does to this new agency. let's talk about the 120 day rules. what we have experienced with the ftc in the department of justice, with the ftc can ask the justice department to bring a civil penalty action, 45 days then. the reality is that the ftc, although i am not sure they would admit it, goes out of its way to avoid using that authority. it is a lot more effective and efficient for the commission to go directly to court, bring an action, take action against the wrong door, stop a fraud, stuff the harming get really, so they use the authority they can use by themselves in time and again they don't go to the department

of justice. i think that 120 day authority will be very rarely used in the new world. it is really were in case we have a new agency that is so opposed to enforcing these rules that in ftc might come along and try to develop some sort of alternative world as a backstop but i think that the world that i see would have the ftc using this authority very, very rarely and they just do not think that is the vision contemplated by the bill as written. >> does any other witness want to chime in here? is their shared skepticism on the part of the other witnesses? ms. barkow,. >> it does seem like 120 days would be the equivalent of a

lifetime in this kind of industry, what you are talking about. >> if it was 60 days, would that make a real difference? >> that i would leave to the ftc to decide that the fact that they are worried about the 120 days speaks volumes. >> anyone else want to chime in here on this? >> cfe likud some of the discussion that occurred earlier when they are talking about the number of days but perhaps more importantly look at the actual structure. if they have taken so many of the personnel, the team has been taken from the ftc and is now part of the new agency and yet they are supposed to maintain the backstop or the back up in these areas, but the team is gone. as mr. caulkins suggested, all they can do is go out and rehired new experts that your suppose to be the backup. it does not sound like a very good system to me. >> ms. hillebrand.

>> thank you mr. chairman. under the one rove riding and forsen modeled we wanted to be as easy as possible to bring the cases to enforce the cfp rules. the commission recommends a short time we would want to look at that very seriously. we think a waiver process could help there. the commission in the cfpa could agree that this kind of case, we don't need to know in advance of these other cases when a shorter period. >> filcher's time is up in the chair recognizes the ranking member, mr. radanovich. >> mr. calkins, the proposed legislation provides a coverage entity to include those who provide tax planning, financial and other related advisory services or provide educational courses and instructional materials to consumers. pbs often runs such a programming on tv for their audiences as to financial cable stations and radio stations. with these entities be covered

persons under the proposed legislation in your opinion? >> certainly there is a risk that they would be covered persons. certainly the commission would have to think about whether it is required to transfer responsibility for all of those and very important, even if they are not covered entities today, the new agency has authority to define for itself additional activities that it would have jurisdiction over. and so, even if the ftc didn't have to transfer authority today, they might have to transfer authority a year from now for the definitions of gotten change. >> thank you mr. calkins. i want you to comment on a prior statement about the ftc's bipartisanship in the way conducts its activities. can you elaborate on that and how the lack of bipartisanship might hinder the cfpa ability to carry out what is now the ftc's mission? >> well, the ftc i thinkb[j)s

credibility with congress, with theuñ states, with the it operates in a bipartisan way. the commissionersçófáiyñ try toy consensus. they tried to take the actions that make thet somebody wants to go out on a limb in the wild and crazy to the left of the right. there is someone from the other side to hold them back and as noted before, ms. barkow when you have people going to far, dissents can be filed, and did succeed in developing a shared understanding of the sensible way to proceed and then as presidents come and go, there exists some continuity and that continuity i think adds credibility to the agency's operations and really helped makew3çñió#okmk it into=zñ ae agency. >> thank you.

ms. barkow would you care to respond to that? >> i agree completely and the whole idea of the regulatory agency which they think is part of the coal in this legislation is to have that kind of consensus generating form of norms that transcend any particular president shalev ministries and so you don't have instability that comes with every new administration and sweeping changes one way or the other. you have the stablest agency that has membership from both parties. i think it is proven to be effective and it is hard to understand why do you would have a malton member agency here that does not have that mix of political views. why not just then have a single member? >> thank you very much. mr. stinebert, i want to ask you about the uncertainty in the financial markets in this massive shift from the response of the creation of consumer protection. your bird's-eye view on the industry, how would would react to something like this. and the level of uncertainty

that it might bring into the markets where it uncertainty is, we are trying to do everything to avoid the uncertainty. would you comment on that please? >> some might argue this is the perfect time to do something like this and i think it is absolutely the worst time. we are from unleasing stability in the financial markets. we are starting to see some recovery. we are starting to see investors come back into the marketplace which eventually investors have. and in europe and the u.s. we are starting to see it come back. this does introduce a whole level of uncertainty back into the whole of reno because people are now going to stand back and wait and see what goes on, whether there is additional liabilities or requirements and regulations on these entities, so yes i do agree that it is going to bring a new level of uncertainty to the marketplace that the worst possible time. >> can you describe a scenario

where the duplicative regulatory authorities allowed by this act might actually prevent consumers from access to the valuable financial-services? this is the state preemption issue where you have 51 different-- >> right now it is set up been basically a floor or a standard that states will have to exceed. some will make a judgment, whether what the state is trying to do is meeting or exceeding. i'm assuming this would be the new agency but of the determination is made by them that exceed did of course anything that they would do to exceed would be permitted, so i think you have seen it in many other instances. i will give you the most recent. the new safe act, the licensing for residential mortgage originators. you basically have up there in the implementation of that law 50 different standards that

everyone is trying to meet and each of them, many of them exceeding the federal guidelines. so people regulated at the state level will have to register in multiple states as originators are going to have to follow many different laws. >> thank you very much. thank you mr. chairman. >> the chair now recognizes the gentleman from massachusetts, mr. sarbanes. i am sorry. >> we are trying to get to massachusetts. thank you mr. chairman. i appreciate the hearing. mr. stinebert he said this is absolutely the wrong time. what would be a good time? >> well, i think when you go back and there is plenty of history to point fingers at what was the cause of the sub-prime mortgage crisis and currently economic crisis but i don't think he would get anybody that

would predict that whatever is done here today, that you could control every bubble that is going to occur in the future. most economists would agree that yes this bubble is a housing bubble before it was a tech bubble and before that it was a savings and loan bubble. you cannot have government totally controlling financial markets unless they can totally control potential bubbles unless you totally stymie innovation and all you have is a vanilla, plain vanilla standard product felled there. i don't think that is good for consumers that we are trying to protect here. >> i agree with that. i don't think you connect government totally controlling every single financial dimension in the market. i don't think you can do that. i don't think this tries to do that. i think what this tries to do is provide some oversight and direction and rules of the road

so that people stop driving off the road. not only because in the view of alan greenspan that causes the drivers to crash and hurt themselves, but because they have run over hundreds of thousands of innocent bystanders in the process. ..

but certainly in a transitional phase, predators have a lot of opportunities will to make mischief, and i think the discussion about the 120 days kind of points to some of this anxiety. but i would like anyone who would care -- i would like to hear you respond to the idea of some kind of special initiatives or task force or consciousness during this transition we need to be paying attention to maybe it is a limited set of activities or potential mischief but there's got to be a special focus on that so we don't make the transition saying we've got to get regulatory structure in place but while the mean time that happened a lot more people

got hurt, and i say this because there is a lot of money that is flowing right now, tax payer money into the financial infrastructure and many of the same players that to good vantage of people over the last few years are thinking creatively of ways to take it vantage of them again. bye access of somebody's dollars. sprigg dee dee koza speak to that issue how we can not be caught napping during the transition we can start with you. >> i believe you were asking the right question, there will be a danger per gooding the transition. there's a couple things and i don't have the whole answer. the work the ftc does right now up to the date of the transition will be important. it could be two years after enactment.

if they are enacted to give the ftc will get a rule making improvements right away and can get some of these rules that have been back blocked because the limitations on its power moving and and to place that will help certainly to put those into place. we do need to be paying attention to the new problems developing. one that brings me in particular is a new form of zombie debt where no one's got the paperwork. someone just as a list saying you owe this amount. that might come out of mortgage modifications are post mortgage dispositions. so there are new issues, a lot of old issues. the more we can get the ftc to do now before the transfer i think the better shape it will be in, but we will have to watch for that, yes. the other thing is there isn't going to be enough enforcement resources. moving people from where they are over from the different agencies isn't going to give enough enforcement staff for the whole country. the ftc worked very hard and said they had cases over five years. if you talk to any state in the

country they will tell you 100 cases, we can bring that in my state tomorrow. there's more need than the number of people in place to do the surface of the federal level. >> yes, sir. >> i think you need to break your question, this is a great question, to parts. one is more scam activities and i think this congress effectively delegated the ftc charged to go after foreclosure rescue scams where a lot of mortgage brokers were moving and loan modifications games and that kind of thing. that kind of activity is clearly sufficient to regulate and the additional authority has recently given help. you break that from traditional and large-scale sale of products such as mortgages, etc., and i think in that area the credit markets are so beaten down that i think that this agency would be up and running effectively to get ahead of the new product. >> that's helpful.

thank you very much. >> the chair will extend to the members additional time, for one additional question. the chair recognizes himself for one additional question. i want to get back to this area of concurrent enforcement. are there any risks or downside to consumers or industry with this whole idea of, current enforcement between two agencies? can you predict or look into a crystal ball and tell us what you see in terms of downsize or harms to the industry or

consumers regarding this whole area of concurring in force at? anybody want to jump -- mr. stinebert? >> i will give it a try to go first. one of the whole thing is i think the agency being proposed is supposed to do is have single source responsibility. and you take enforcement and break that among current enforcement agencies and then you have a new agency that's supposed to share some type of tool enforcement. it doesn't sound practical to me. we think that enforcement should continue to stay with existing agencies. now, to your question, congressman, about the timing and you mentioned the speed limit and people watching, people going down the road. i think that -- i don't think anybody the regulations or the speed limits were in place, but up until several years ago that

perhaps the regulations were in place but the enforcement and the oversight was not. but i think if you look today and all of these agencies, whether it be the ftc or the other agencies in washington, i think everybody has their radar guns out and are certainly looking issues as well as credit and lending issues in general. i done think there's ever been a focus in this syria like there is today. and so, to that respect i think that going back to your question, mr. chair man, i think that it's very important. i think most important that there be continued responsibility between safety and soundness and viability of those companies and consumer protection. and i think it is on why is to separate the two entirely. i mean, we have gone through the

good example with the gse of trying to do that and find out why that doesn't work and it would be very simple if that agency that is just concerned about consumer protection can make everything so safe that it's not really good for the companies offering those products or for the consumers themselves. there's always going to be risk in this industry that defines what it is and i don't think you can eliminate that entirely. >> i think it's a really good question and i would say i don't think it is so much risk as long as the rules are clear so long as you have the one agency setting rules and what it is companies have to do. the fact that there would be multiple enforcers of the rules is less disconcerting because you have clear standards and everyone would know what they are and you essentially have this more cops on so that's when you could have states helping

out, you would just be getting more manpower but the rules would be clear so the success would depend upon what kind of rules and up being produced from the process and i guess i would say that's why it works to have all the states can police medicaid fraud for example and it's not a risk because everybody really important for the agency that created to have clear rules and if they see enforcement action that looks like it's not in the spirit of those rules the act as it's written if the state ag brings it the cf p.a. could intervene and they could step in to that action that's a bad interpretation or it is a bad enforcement action, so i think it is okay to have multiple law enforcers and probably necessary because there are not enough resources for all of the fraud that's out there. >> ms. gillibrand. >> i have to think about your question to remember there are

six authorities, it's just thinking agencies haven't used that open public enforcement model to bring cases with the vigor and approach the ftc has used so we already do have concurrent enforcement and the downside has been that many of the agencies of the ftc that have enforcement authorities also have other obligations tied to the industry they regulate. at least with concurrent enforcement with the cfpa and ftc. >> mr. chairman i think that concurrent enforcement authority could work, but i worry that there is too much attention to the ftc as an enforcer. i prepare for this over the weekend when the website was down so i was reduced to the documents i happened to already own. i owned a 2004 annual report. it happened to be in my files.

i opened it up to consumer protection where the ftc is a good list of the range of activities in which the agency engages and that is part of what makes it a success. consumer protection policy. one, research and reports. number two, hearings and workshops. three, advocacy. number four, amicus briefs. five, consumer and business education and outreach. the ftc is not just a cop on the beach. it is an agency that has economists that the does competition that does consumer protection and eustis a whole range of tools to develop expertise to identify problems and to craft solutions. and if a huge part of what the ftc does as a matter of subject

matter is transfer eight out and if the new agency has the exclusive authority to give guidance in this way than we have lost a great deal of what the ftc does and i think the consumers would be the worse for it. >> chairman russia think the industry has to arguments about the concurrent authority and problems. the first since it is too much enforcement but as ms. hillebrand said someone who spent years making prayer lists commodore list is longer than you will ever get, and the problem with this bubble was certainly wasn't bostick wasn't too much enforcement. the second problem which is much more subtle is inconsistency and enforcement policy and ms. barkow appropriately says if the rules are clear enough certainly we will solve the problem and i would further say the cfpa has given sufficient authority to make sure it is happening in a uniform way but

there is a second response to the inconsistency which is like rulemakings where i agree you want a unified rule maker, when it comes to enforcement this is what regulatory competition actually works because you are competing to be a better enforcer as opposed to competing for a race to the bottom so the people with a charter review which was a serious problem in creating the situation. and when you compete to do better you are aware if you don't do it and somebody else and forces your rule in a situation you might get embarrassed, madoff, sec, that when you have competitive you have a market that essentially forces public entities to be aware of that that actually works and when it comes to the authority i just want to say it's so important state attorneys general, and i'm putting myself on the back because i was part of a group who did this we were the only ones out there screaming about and bringing these cases. the ftc was saying it's great because they were going after

different actors but we did one taste where we got half a billion back with subprime mortgages household followed by another case where there were 300 mollyann and i felt that was too little and i left by then. this was a problem if you were on the ground you saw it. it was this girl. these people were out of control. the state agencies were able to enforce because they had a different enforcement agenda sitting at a different place, regulatory competition works in terms of the open enforcement model. >> the chair now recognizes mr. radanovich. >> i appreciate everybody's testimony but mr. cox, what i thought i heard is that we need multiple agencies having to do the same job to make sure that the people are doing our job, and that, to become is a recipe for wasted spending. but i do want to ask a question about -- i believe it was ms. sutton here earlier talked

about a situation where an 84-year-old woman who owned her place free and clear was duped into a 30 year mortgage. i would like to know whether there was family involved putting her up to that and that happened for reasons that wouldn't have anything to do with this current financial crisis. but it happened to represent california, the epicenter of mortgages frequently the number one county in the nation where mortgage defaults and foreclosures have happened, so i have a great appreciation for what is happening and we had tells about one particular non-english speaking people that were talked into a home of the needed to do is come and sign the papers once they got there they were jammed with points and fees they knew absolutely nothing about and were put into an uncomfortable situation, signed the mortgage papers, later lost the house so i'm curious to know after we have

spent in reaction to this financial crisis anywhere between 800 to $1.5 trillion to stimulate the economy we get a rise in the unemployment rate that we are supposed to drop with all that spending i'm a little leery of broad sweeping reactions to the problems we are in, so how does something like this -- and i would offer that to you, mr. cox and mr. stinebert and anyone else that wants to respond, how would that help the person -- i'm not sure about the sutton case. i want to know if the family put that up, the poor and elderly person to the situation that my situation in modesto california within on english-speaking person was jammed into the loans and the shyster put points on there and they quickly sold the mortgage to somebody else and this guy was washing his hands and out of there. how this broad sweeping change your talking about prevent something like that from

happening and at what cost? any more so than is currently on the books to prevent. >> thank you, ranking member radanovich. i will respond to that by also responding to mr. stinebert's, and we all agree the enforcement was a problem. we don't all agree on that and here is the problem had to parts if you want to break into its grossest problem. the first was the type of product is being sold they were simply too high risk, too complex and way too aggressively sold for average consumers to work through all the problems and understand all the costs and consequences and context. for instance, the great held up at the time as the great financial innovation, the payment option arm was sold so aggressively on its benefits but its risks were not clear to the

average consumer, you know, the kind of thing i could have sold her on if i was an evil person without informing her of the risk so there is a product regulation problem that existed here. the fed if you read the fed's papers during this time and put them next to the industry papers you could change the titles and couldn't tell the difference. there was one type of thinking that needs to change. the second problem was a fraud problem. the fraud problem got so far out of control i've never seen anything like it. you know, if you were talking to the people and solve this going on if you talk to the workers in these agencies, etc. and these companies selling these things fraud was so rampant in this industry that was almost a separate problem from the product regulation and so we also had a lack of enforcement particularly the federal level on fraud, but we fundamentally had a product regulation. i hope that response.

>> mr. stinebert? >> commenting back to mr. cox's earlier discussion whether we should have multiple regulators is a good thing. i asked you if you are a business and have multiple regulators, two and three regulators is competition regular entity and the costs that are involved so the ftc is in your office one week and having your staff gather everything and the next week another regulator is there. i can see where there might be some contention where that is good but you won't have businesses that anyone that operates a business small profit or a large business which think multiple regulators and enforcers coming into your office this is necessarily a good thing because in all of those costs are eventually passed on to consumers. these do not happen in vacuums.

yes there are predictions that need to be in place and you are absolutely right about that -- you can overdo a process. we want to have a process that protects consumers but is efficient for everyone involved. it's efficient for the safety and soundness and viability of the companies being regulated as well as good for the consumers that are buying their products, and i think that that's an important thing. thank you, mr. chairman. >> the chair recognizes the chair emeritus, mr. dingell. >> i think you for your courtesy. this question to gail hillebrand and mr. cox, what authority will remain in the ftc to protect the

consumers after the administration's plan has been adopted if it is adopted in its current form? >> thank you chairman emeritus. the ftc remains all of its authority to bring section 5 enforcement subject only to a staff level consultation discussion -- >> so it loses that authority? >> the ftc retains, i'm willing to give a list of things it retains. it retains a section 5 authority, it retains the authority to bring cases under statutes and rules that the alphabet soup, the efta, so on. it retains -- those are big things it retains. it also retains its broad authority. there are financial services and then there are people who tell lies and say sign up with me and give me your social secure the number and checking account number and you will never see me again. those folks are not selling financial services, they retain

authority and we have recommended it also be given the same kind of backstop authority that it now has currently and would have under the proposal for the existing consumer statutes with respect to enforcement of the cfpa rules that isn't yet in the proposal. >> what would it louis? what would ftc louis? what jurisdiction but it louis? >> the ftc would lose jurisdiction that has been difficult to use, which important but difficult to use, which is its authority to develop unfair and deceptive practices rules in the financial-services area. i'm sure you're aware the last time it was used was in the practices will which came into effect in the mid 1980's. >> why should that be taken away from ftc? >> if we were looking at just the ftc there would be no reason to take it away but the problem would be -- >> there's no reason to take away? >> i'm not quite finished.

>> let's just go a wee bit further, and explain to me why we should give it to some of those good hearted folks who've led the fight for the repeal of glass steagall, who left financial-services and left this glorious mess we have in the form of probably the biggest depression this country has had since 1929, now why should we do that? >> authority to agency that can make one set of rules that applies to the bank provider and then on big provider. if the ftc -- >> i have no objection to taking care of the bank regulatory agencies. let them -- let them create them and let them do their thing. but why wouldn't we bought the honest men and women at the ftc looking over their shoulder and

why wouldn't we want them looking over their shoulder of those good hearted banks and financial folks and nba up in new york that created this mess? now, help me, why wouldn't we want that? >> we definitely want oversight, somebody that can look over the -- >> the ftc keeping an eye on those people? >> we like the idea of an agency that can look at everybody and not just the nonbank providers and we think the best way to do that -- >> what about the banks that are going to be engaging in all kind of things? they are going to be engaging real-estate, they are going to be engaging in issuing the bonds securities, they are going to be engaged and all kinds of wonderful activities on derivatives which are gambling devices. so why shouldn't the ftc retain its continued -- its continuing

and ancient jurisdiction over keeping honest man honest and mabey occasionally catching a rascal, why should we take that away from the ftc? >> mr. chairman emeritus i suggest it's because -- >> why shouldn't we just leave ftc as it is and let these other folks go about their nefarious business under the kind of weak minded regulation that the treasury has traditionally given to these institutions? >> we are absolutely in favor of -- >> you're speaking here for the consumers. i'm trying to figure out do you really understand the consumer's needs or are you engaged in perhaps disregarding the consumers because these other folks have done a better job of telling what a wonderful job

they are going to do after they have gone about not one but two depressions. >> i'm looking from the point of view of the ordinary person trying to get a mortgage and they want to know -- the consumer doesn't think it is prescott, field practices -- >> but it's just the wrong question, answer my question, please. >> the answer is we think -- >> why should we not -- why should we not keep ftc in its traditional jurisdiction of protecting consumers? when i was a boy, roosevelt tried to give ftc jurisdiction over the stock market, and you can't imagine the outrage that this generated and new york because they were scared to death of the federal trade commission which is under jurisdiction. we keep modest. and we find as soon as the sec got away from this committee all of a sudden it became a wholly

owned subsidiary of the securities industry and the banking industry. now why should we sanctified that by stripping the consumers of the one remaining protection which they have, the ftc in favor of getting it to eight dee dee to a congregation of folks known to be influenced by some of the worst scoundrels in our society? >> are you ready for my answer? we believe we need to put it in one place so that the non-banks aren't sitting don't regulate us because the banks can still do that, the banks are saying don't regulate us because they can still do that. >> we don't mind having this agency that would be created by the administration's proposal to do that. what we want is to have the ftc so as to sort of watch over these people and let them know that there are honest men and women watching them so that

rascals are diminished and consumers are protected. what's wrong with that? >> i think we have the same goal and a different perspective how to get their. >> so are you telling me that you like the idea of having the ftc continue its jurisdiction when all these other folks go about their nefarious business? >> we have endorsed full retention of ftc enforcement authority that we think we have to have all the rules in one place. >> we've talked about what ftc is going to lose. and you're apparently advocating a losing it. i am not of a view that maybe we want ftc to lose the jurisdiction and maybe we want ftc to be around to sort of provide a minor dampening of the riss county that is one continue to occur in the industry. what is your objection to that? >> we believe it is unique to

put the rules -- >> in your words what is -- speegap will making in one place so it is clear whose job it is and then you can hold them accountable. >> de a range that one-stop shopping when they moved this whole thing across the hall and since then the whole financial services industry, the united states has had to be bailed out to the amount of $700 billion. which was confiscated by mr. paulson who came from the industry, and which has done nothing but enriched the same rascals the costed trouble and has not only enriched those rascals but has given something new to think about, and that is it has seen to it that they have had the funds to pay the same scoundrels that made the mess enormous bonus amo