regulation. the regulatory failures allow dangerous consumer financial products and toxic financial instruments to infiltrate the market place. before dodd-frank, consumer financial protection responsibilities were scattered across seven different agencies. unscrupulous lenders were able to take a vantage of consumers by a son and faulty fraudulent and deceptive financial products. this reckless lending place and the financial system and directly contributed to the mortgage meltdown. while today we may have the benefit of hindsight, some alarms well in advance of the crisis. in 2007 before the onset of the crisis professor elizabeth warren recognized that there was a serious problem, quote, nearly every product sold in america has passed the six safety regulations well in advance of reaching she observed. but credit products by comparison are regulated by a

patchwork of state and federal law that failed to adopt, adapt to changing market this was designed to address these regulatory shortcomings just like the consumer protection protect consumers against exploiting posters, the new agency will protect consumers against faulty mortgages. one of the cfpb's strengths is its accountability. the cfpb has kept the budget, is actions are subject to a veto by the financial stability of the council like other agencies. another is the focus on the comical, to shut this sector which is in the most responsible for victimizing consumers. these will for the first time be held to the same standards as banks and credit unions. i were number one priority on this committee must be ensuring

that we never have a repeat of the financial crisis and that it is a strong step in the right direction. the cfpb has herb one early praise even from the financial industry groups that were initially to support it, but both the ica and dva proved the bureau or the transport and accessible rulemaking process. on that point i ask unanimous consent that the may 19th 2011 article from the american banker titled, quote, new cfpb mortgage disclosures win praise for content and process be submitted for this is important given the cfpb mandate to increase transparency and the consumer lending market i'm confident cfpb can continue to build on the early success in both consumers and businesses will be stronger for it. it is critical that the cfpb be implemented and set forth in the dodd-frank act. thank you mr. chairman, and i yield back.

>> i thank the ranking member. but members will have seven days for material for the record. and. all witnesses will be sworn in before they testify and if you stand and raise your right hand and repeat after me. the you solemnly swear or affirm the testimony you're about to give will be the truth, the whole truth and nothing but the truth? the record will indicate the witness answered in the affirmative. our first panel of the sole witness is mazie elizabeth warren who serves as the assistant to the president and special lead advisor to the secretary treasury for the consumer financial protection bureau at the u.s. department of treasury and so we have a system

of rights and with one minute remaining you will get the yellow light and five minutes to your opening statement or summarize your opening statement and we move forward with questions thereafter. you are recognized for five minutes. >> thank you, ranking member quickly and ranking member of the subcommittee for inviting me to testify about the work of the consumer financial protection bureau. two and a half years ago i came to washington to serve congress as the chair of the t.a.r.p. congressional oversight panel. i developed a keen appreciation for the role of oversight and i respect careful oversight work. for today's hearing, i've prepared ten pages of written testimony to document our startup effort and that supplements the 34 pages of testimony that i provided for the subcommittee on financial institutions and consumer credit in march. in my testimony, i discussed the

consumer bureau straightforward mission to make prices and risks squier and cut down on the fine print so customers can make straight up comparisons among financial products so they can compare two or three or four credit cards or free or for mortgages before they actually sign on the dotted line. that's what congress created the consumer agency to do. and that is what we are already doing. last week after months of consultation with borrowers and lenders and their representatives, we started testing a prototype of the mortgage shopping sheet. eventually the result of this process will be a simple streamlined mortgage disclosure to replace the long dirt, more complicated and more board and some forms that are now required by law. in this process we've taken another step. something pretty much on

president in the regulatory world. we have invited everyone in the door early before the cake is baked. we are months away from the formal rulemaking but we believe that by opening up our process and getting help from the people affected by these rules we will be more likely to produce something that works right. we have posted early versions of the form on the web site, www.consumerfinance.gov. come and see us there, and we asked people to let us know what they think. so far a lot of people have been willing to help. within hours after our posting of the new forms we had more than 20,000 visits to our website. the reaction to the forum has been almost unanimously favorable. the article that congress and quickly referred to in the american banker was headlined

new cfpb disclosures when praise for content and process a lot of different people have been supportive throughout this process. the consumer federation of america and the american enterprise institute. the u.s. financial-services roundtable have all been supported. the draft forms are not perfect. we only at the beginning. but the process really matters. it's an example of how a new federal agency can shed some of the old bureaucratic attitudes and develop ideas and approaches that serve both consumers and businesses. mr. chairman, the title of this hearing is who watches the watchman. the answer can be found in a single word. everyone. at the consumer agency we aren't just talking about transparency and openness, we are living it right now. we are building an agency that

involves american families, small banks, credit unions and other financial service providers and our work from the ground up. recently there have been many overblown claims about the nature of the consumer agency's power. critics claim cfpb is, quote, the most powerful regulatory agency that's ever been put together and that it is, quote, the most powerful agency ever created. the consumer agency isn't the strongest of the banking regulator. much less the most powerful agency ever created. those kind of claims just disregard the significant limits on the consumer bureau authority, the long debates over these issues more than a year ago and the very meaningful oversight that congress imposes on the bureau's functioning. those claims also ignore the

intensity with which large and powerful interests watch everything we do and make certain that their views are carefully considered. most importantly, those claims ignore what we are doing, building an agency in plain sight with help from good people across this country. together, we can create a fair system that works for families and works for the community banks, for the credit unions and for the other financial landstuhl tuitions that want to serve those families honestly and openly. thank you for inviting me here today, and i look forward to your question. >> thank you for your testimony, and i recognize myself for five minutes. if the president makes you the cfpb's first director through the recess appointment, would you accept?

yes or no would be fine. yes or no would be fine. >> it is up to the president of the united states under dodd-frank to make a nomination. it would not be appropriate for anyone to be speculating. >> as assistant for consumer financial protection, you're advising the president about the nomination for this bureau, are you not? >> congressman, i tried to help the president in any way i can on the nomination process. >> have you recommended anyone? >> congressman, i tried to help the president -- >> if you don't want an answer that's fine. reclaiming my time. you don't want to answer and that's fine. all i would call if you would look at the screen we have a power point presentation. now, when all i last asked you questions before the march 16th house financial service committee meeting hearing, you

respond -- i asked about your role in the mortgage solnit issue and the cfpb's roll and you said, quote, we have been asked for advice and wherever we can be helpful, we are not only glad to be helpful, we are proud to be helpful. as you see this document dated february 14 the month before you answer that question and gave that answer. are you familiar with this document? are you familiar with it yes or no? >> i haven't seen the rest of the pages but i assume that what this document is is a document that was initially prepared for internal discussions with the secretary of the treasury. >> at the bottom left corner it says draft confidential. are you familiar with that? >> yes, congressman, i am. >> second slide.

the second slide indicates the cfpb is pushing for a significant policy change. for a slight. this quote indicates the cfpb is leading the charge to persuade other regulators to punitive penalties. if you look at the fourth slide it is apparent that the cfpb is pushing a policy proposal called the principal reduction mandate. is that something that the cfpb is pushing? >> if you want to ask about our participation -- >> i'm going to get to that. i ask a question if you can respond to my question i would appreciate that. >> congressman, we've been giving or a device when we are asked for a vice. we've done so proudly unenthusiastically. >> if your so proud and enthusiastic about your advocacy and advice, why didn't you express that before the committee when i asked you your involvement in the settlement issue?

>> congressman, the quote said exactly that, and i believe it says i was proud to give that advice, and i felt there was -- >> let me give you the full quote. when the treasury came to me and said we would like your advice, i was glad to. >> glad to, right. >> ag miller -- >> was there more -- >> who was attorney general miller? >> i believe attorney-general miller is the attorney general for the status on the web. >> it is different than a device to the treasury secretary which is part of your job title. and advice to the president, is it not? >> i'm sorry, is what different? the attorney general? >> you said you're providing advice to the treasury secretary, and in your sworn testimony. and what is now apparent is you are providing advice to the attorney general of iowa. is that correct?

>> congressman, the secretary of the treasury asked for advice and we gave advice. we also gave advice at his instruction. we gave advice to other federal agencies and we gave advice where we were asked. >> mortgage settlement talks, would you disclose the meetings that you have had about this with the mortgage settlement talks? >> congressman, i believe that my calendar is an open book. we've been posting my calendar since last october, last november i can't remember. >> so it would entail when you have discussions about the market settlement cracks >> i can see my calendar is an open book. we planning my time. it's on the altar of the treasury and you're also providing advice to other governmental agencies.

>> congressman -- >> you can use the word, a number of times, ms. warren, simply asking a very simple question. pledge your providing a device to. senate congressman, there was a question on this from -- >> i know, i'm asking you a question different than that, ms. warren. answer my question. are you giving advice to any governmental agency outside of treasury and the president. yes or no? >> let me read the letter said almost two months ago. >> i am asking a yes or no question. >> we have provided to the federal and state officials regarding a potential settlement surfacing settlement. in doing so, we have been an active participant in the interagency discussions, sharing our analysis and recommendations in support of a resolution that would hold accountable any servicers that violate the law. we sent this letter nearly two

months ago. we've not heard back from her or anyone else so far as i know in the house of representatives or in congress. this is a statement. >> i certainly appreciate your statement. one final question. have you been at meetings with the department of justice regarding the march summit issue. >> we've given device to the department of justice when asked. as we say we provide -- dak i now recognize --. >> nseries when someone accuses anyone of law and to congress, so let's look back through this. first as was mentioned a definition of advice somehow it will magically appear. if not, random house defines it as an opinion or a recommendation offered as a guide to action. so, professor, you were asked to provide advice by another agency

involved in these negotiations. >> congressman, yes we did. >> did you provide options for how the federal government might proceed in those negotiations? >> congressman, that is what we try to do is give advice as we sit here, shared our analysis and recommendation. that is what we are trying to do. >> did you talk directly with private parties to those negotiations? >> congressman braley it is not our job to negotiate on behalf of the federal agencies. that undertaking is led by the department of justice and the federal level. what we have done is try to be helpful to those regulators who are trying to hold those who broke the law accountable for their actions. >> if the department of justice in said taking their advice, that would give some qualities

or reference to how good your advice was, correct? >> congressman, what they ultimately decide onshore will be a mix of many things. i hope we have given good advice. let me say this as clearly as i can, congressman, this is ever job, and we are trying to do ever job and that is to be helpful to other agencies to work with other agencies trying to hold those who break the law accountable for their misdeeds. as to make unfortunately many of these entities that you would be regulating what could be the new agency would be a mortgage servicing companies that have made it to breaking the law. the had been foreclosed on u.s. service members and their families for example that they have been charged in and they've perpetuated fraud, perpetrated a fraud on the courts.

you are aware of those admissions as well; correct? >> yes, congressman, i am aware now the office of the comptroller of the currency, the office of thrift supervision, the federal deposit insurance corporation and the federal reserve bank have all found serious widespread deficiencies. they have sound of violations of local law, state law and federal law that have damaged families, damaged mortgage markets and that have damaged the entire economy. >> sort of a david and goliath discussion but it flips on its side to in extent being accused of being an all powerful monolithic but your budget is probably going to be about 1% of what the agencies have been charged in just credit card penalties and overdraft penalties. so i guess the question is how are you going to keep up with them? >> i think that is a tough question.

but, i believe the consumer financial protection agency is well crafted so that we are going to be able to make a significant difference we are going to be an effective cop on the beach and have responsibility in the area of doing research and as our new mortgage project shows, doing what we can to make sure that our rules or streamlined and efficient and effective. we will have responsibilities in supervision and enforcement. in fact, about half of the regiment will go to the enforcement. we will have three sons of the bodies of a consumer complaint to hear from americans around the country when they have problems with credit providers and we will have a responsibility for financial and education. we've got a lot to do. but the good part is i think those things work together, work in concert. we have a real opportunity here to make the price is clear, to give families the opportunity to

compare one product with two or three others and when that happens markets can start to work on behalf of american families. >> in the end of we have is our good name. is their anything else you'd like to say about allegations made? >> congressmen, all i can say is it is an honor to be here to try to set up an agency that is designed to be a voice for american families. they've been shut out of the process for far too long. this most recent crisis was a consequence of substantial -- >> my time is expired. you can finish your thought and we will move to the next question. >> thank you. dalia appreciate it. i must say this most recent crisis started one of lousy mortgage at a time. if we had if consumer financial protection bureau in place, we could have avoided a love of the pain we have gone through in the last two and a half years. >> thank the ranking member and with that, you are recognized

for five minutes. >> thank you mr. chairman for calling this hearing and thank you to ms word and for being here today. thank you. >> thank you. >> the dodd-frank bill that passed includes sweeping reform in the regulation oversight of the financial industry. and while lit made many changes, it completely ignored and you just alluded to this in your last comment it completely ignored fannie mae and freddie mac whose business practices late to massive losses and tax payers bailouts. instead of addressing the problems created by the appointees, dodd-frank sought to increase the level of government regulation with the new regulatory body, the consumer financial protection bureau. the thing that concerns me about this new regulatory body is the house doesn't get to approve the director, and even worse, it appears that the administration is going to install political appointees using a recess

appointment process. this takes away from the senate and the house and in an opportunity to question and to do what they should be doing as elected representatives. my question today has to do with the salaries of the folks who are going to work in this consumer finance bureau. a quick look at your web site lists job openings that you are seeking to fulfill in d.c. and three other cities, chicago, new york and san francisco. after a close look at these openings, i found that the starting salaries with the cfpb or in most cases 60 to 90% higher than the equivalent list on the federal government website. so my question to you, my first question to you is given the absolute fiscal constraints that this nation faces, the deficit and the debt that this country is trying to grapple with and

trying to get this country back on a fiscal sanity course, how do you justify that kind of experience between a government worker verses the folks who are going to be hired by your regulatory agency? >> , chris wollman, i really appreciate your question and concern in this area. you know, when you talk about the structure for the consumer financial protection bureau, i know that you are aware that this new bureau is designed to pick up consumer laws and consumer responsibilities that have been scattered among the different agencies. none of the agency's focusing on consumer practices and consumer products. this is important in the context of the most recent financial crisis. the reason so many people across this country are unemployed, so many millions of families leaving their home and others have lost their savings and that is the question of what kind of

regulatory structure do we want including what kind of pay structure, and i think that your right to raise this. dodd-frank was very careful and thoughtful in its point, and that was to say in effect the office of the comptroller of the currency, the principal banking regulator and the country is paid at one level -- >> if i could interrupt because as you know we only have five minutes. let me just give you an example. there is ten positions and it's the consumer response policy and procedure analyst starting salary range for that position is 72,000 in your regulatory body. the top salary ranges from $149,000. now the gse equivalent is the gs9. the federal government to gaea's naim starts at 41,000 the top salary is 54,000. my question to you is why are these folks getting paid such an exorbitant amount more than someone in the federal

government system and you're not answering my question, you're going around. >> i'm sorry, congressman, i'm trying to get at the context about the law seven dodd-frank, the banking regulators that exist today, the federal reserve bank, the office of the comptroller, the currency, the office of thrift supervision, the fdic, those banking regulators are paid on a different pace scale, and the reason they are pete on a different piece scale in part it's because they are bank regulators in the competition for the job include people who are in the financial-services industry. we will never be able to be like the financial industry pay, but this was congress's judgment -- this is a government agency, this is not the private sector, and we, the congress, we, the government need to be accountable to the american people will some come to this

government agency and makes starting salaries $72,000 in the range of 149,000. >> the time is expired. >> i think this regulatory body has questions to answer regarding the huge disparity in the federal jobs versus the job's salary that you're offering. i yield back. thank you. >> i now recognize the full committee ranking member mr. cummings of maryland for five minutes. >> [inaudible] >> we will start over right now. hold on one second. >> thank you. >> first of all let me say this, i don't care what happens in this hearing today, i don't care what is said, i am begging you to keep the fire. i've got this constituents have lost so much and they don't even know how they lost, and we need you, we've really desperately

need your passion, your concern, and thank you for synchronizing your conscience with your conduct and i just want you to know that. now, you know, one of the things that is some significant, one of the things that you are doing for us and part of your mission is to protect consumers from unfair, deceptive or abusive acts or practices and from discrimination every single member of congress has got people whether they know it or not to have suffered and who have lost, and like i said, some of them don't even know what they lost and how they lost, and so, you know, professor warren, a ranking member quigley said something i agree with. he said the situation is like david and goliath. let me ask the consumer resources appeared to be compared to the fees generated by banks that you're supposed to regulate. according to the firm to consumers paid more than $20 billion. that is our constituents and credit card penalties in 2009.

the senior consumers paid more than $38 billion an overdraft fees. our constituents. so that's about $59,000,000,000.1 year, and that's just some of the fee that the generated. professor warren, your budget that the bureau will be capped at about $600 million; is the right? kimmage yes, sir it is. >> now let me show you a chart. if my math is correct the consumer bureau's budget is only 1%, which mature comedy of my george? don't -- get my chart. the consumer gura's budget is only about 1% of the amount banks generate just from late fees and overdraft fees. i have to ask you how when the world would you be able to compete against this goliath when he or so mismatched? >> congressman from it is a good and fair question, but i want to

say this, i think in the creation of the consumer financial protection bureau, congress needs to become a very smart moves and one of the key is we have the capacity of the consumer agency to drive towards making the price squier, the risk squier, making it easy, not 111 pages of documentation and fine print, but making it easy for families to compare one product to another. ultimately believe that this is a real partners for the agency, would be families all over the country. if they've got clear and simple information in front of them, if they can really make apples to apples comparisons they will be able to turn this market around so that those providers, those community banks, those credit unions, those providers who in good faith are willing to get out there and compete in the

marketplace. they are willing to offer the most valuable list price or they are willing to offer a good customer service that allows people in. but those will be the providers who will flourish in consumer credit. ultimately serving families. so i believe we can do this. .. >> does any other bank regulator have that kind of requirement? >> no, congressman, they do not.

>> you are not looking too much like a goliath. to issue regulations, you have to make findings and consult with other banking regulators, is that right? >> yes, sir, it is. >> i understand the banks want to protect their fees just like the oil companies in the gulf want to protect the profits. as i said, we had a hearing this morning on oil, we can no go back to the era of inadequate protection. i want to thank you for everything that you are going. i want to thank your star for everything they are doing. there are people in any district who applaud, and stay on the battlefield. >> thank you, sir. >> gentleman's time has expired. now recognized mr. giunta of new hampshire for five minutes. >> thank you, mr. chair. thank you, mrs. warren for being here today. i hope this couldn't have to be

described as a battlefield. i would like to see a more productive manner in which we could solve the mission's problems. i do have some questions, though, about the formation of the entity, and the need for it's existence and how it plans to operate. i'm sure you could depreciate that some members of congress have questions given the unique nature of the entity. the first question that i want to ask is can you quickly describe how unique this is in comparison to other bank regulator organizations in terms of who you have overseeing you? >> well, like the occ, we have a single director. unlike the occ, any rule that coming out of the consumer financial protection bureau has been overruled by a group of over regulators.

i'm trying to think, i'm the occ we have rulemaking authority, and subject to administrative authority. unlike the occ, we are subject to the acronym is abrifa, the small business panels that we have to bring in panels to be able to go through the impact on small businesses. we have required to do cost benefit analyses. we're required to consult with the other banking regulators before we issue rules. i think it's fair to say that our charter is written very much in mind with the notion that we are there to be cooperative with the other banking regulators, at least to work with them. we are -- trying to think. we are -- oh, we have a research

function that is somewhat different than the other regulators. >> is it -- can you tell me why there's a necessity for a five year fixed term when i don't believe anyone else in history has had that period of time as an appointment? >> congressman, i think, many terms are five-year, fix the terms. it's my understanding that the -- >> but those have -- >> the head of the office of controller of the currency finished his five year term last august. and sheila bear -- i'm sorry -- >> those entities are at the discretion of congress. you are excluded. >> no, that's not the rule. there is no banking regulator

that is subject to the political process or appropriations. all are funded independently, indeed, all of the other banking regulators, not the consumer agency, but all of the other banking regulators are able to set their own funding levels. so, for example, if the office of the controller of the currency decides they need more money to run exams or they need more money to engage in their other activities, they up the assessment on banks and simply raise more money. there's no oversight from congress in that process. >> so do you have an idea of what your budget is going to be? >> the tap on our budget is set at just under $600 million. >> right. >> the actual budget, i actually have brought with me, because i knew that you wanted to do oversight on this. and our estimates for fiscal year 2011 are $143 million, and

our estimate for fiscal year 2012 is $3 -- i'm sorry, $329 million. so at least as best as we can project in the next two years, we will be substantially under the caps that are set by congress in the dodd-frank act. >> and of the seven separate agencies that you are going to assume author over, do you plan on hiring from those agencies? >> congressman, we have already begun the process of hiring some people. i believe it's the case from each of -- i think it's the case from each of the federal agencies. we have certainly been in talks with all seven agencies. we have been very -- >> the gentleman's time has expired. please finish your answer. >> we have lucky to have detailees from each of the federal agencies help us in the

stand up process and we've gone through an interview process. i would be glad to describe it in more detail. but i understand i'm on passed time. >> i would just state to the chairman, the reason that i'm asking that question is earlier, the witness had stated if this -- if this entity it existed, we wouldn't have the financial meltdown that we had had. if we would hire people from the other agencies who were doing this in the oversight. >> thank you, i recognize mr. maloney of new york for five minutes. >> thank you. thank you very much. i truly believe the title of this hearing today, and really the gop efforts in general should be let's pretend the financial crisis never happened. let's forget that 15 trillion families lost household wealth in america, that our financial

community was brought to its knees and had to be bailed out by the american taxpayer, and in response to this crisis, overwhelming support from the american people, we created the cfpp, it is producted and urgently needed and would be allowed to go into operation as planned by the bill that was signed into law by president obama. now the cfpb fills a gaping hole in our regulatory framework. this is a body that will focus completely and totally on consumer financial protection. too often consumer protection was a second thought, a third thought, or not even thought about at all. so you came out with abusive and anti-competitive practices and credit cards, subprime loans that had a agree of probability

of throwing american families out on the street and hurting our financial system, so this was put in place to help the overall economy and to help consumers. and all of the efforts so far have been to dismantle, disrupt, delay, and not allow the agency to go into effect. there was an astonishing abuse of power of confirmation power in the senate, 44 senators signed a letter that said we will not allow this agency to go into effect or for you to confirm a director unless you pass bills that will destroy it. that will make it meaningless, that will make it ineffective, that's what -- not what the confirmation process is supposed to be. it's literally holding the entire government hostage to their demands on dismantling this program. and i would say that there is a

lot of unfounded concern about lack of oversight on this agency. i would argue that the oversight and balance of power over this agency is greater than any other agency and the entire federal government. with audits and requirements and the unprecedented ability of another agency, the financial stability oversight council, to over rule the decisions made by the cfpb. no other -- i don't believe any other government agency has that ability to overrule another agency. would you comment on that, dr. warren? >> yes, congresswoman. so far as i know, there is no agency anywhere in the federal government who's rulings once arrived at through the full process, through hearings, through fact finding, all the way through, could actually be

overruled by a group of other agencies. i -- it is unpress sented. >> so how many other banking regulators can be overruled? can banking regulators be overruled with say a faulty mortgage product? can they be overruled? >> no congresswoman, right now there is no banking regulator who can be overruled. >> and could you go through and outline some of the oversight and really constraints. no other agency has their budget capped, i don't believe. >> i appreciate your bringing up the question of budget. because i think it's so important here, congresswoman. as congress has known since the middle of the 1800s, when they made the decision in the establishment of the first bank

regulators outside of the political process, we knew we wanted some that were not glancing over their shoulders as they walked in now, walked into trillion dollar financial institutions to try to do supervision or enforcement. they are not glancing over their shoulders wondering if something they do is something they say will create problems and inside lobbying efforts against the agency next time around in the political process. this agency, as a result, they are all set up determine their own funding. not just that they are out of the political process, they decide the number of dollars they get. the consumers agency is capped. if we need more money for supervision, but we are capped. there's only a certain amount of

money that comes to the agency to carry out the funks before we would be forced to go into the political process. >> io thank you for your testimony and hard work. my time has expired. i would say those who want to gut the agency, want to lead consumers prey to unscrupulous mortgage effort. i believe the agency is important. we should allow it to go forward. thank you. >> mr. giunta from south carolina. >> thank you. first question is from a business of mine in south carolina. what steps will you take to make sure the complaints received by the bureau are legitimate and not merely gripes against the company when the consumer decides they don't want to live with the terms? >> congressman, i'm glad you asked about the complaint system.

it's one the most significant features, i think, of the new consumer agency. what we are planning to do with it is instead of having sort of a general complaint line, we are really trying to develop more effective complaint resolution in the consumers agency on a product by product basis. so, for example, we will be starting with credit cards. and what we're hoping to do is we're working on setting up a hotline and form online for people who have had problems with their credit card issuers, and they believe perhaps there have been violations of law and want to get in touch with the new consumer agency. >> will the complaints be made public? because i think you'll agree with me, unfounded and unsubstantiated complaints have an effect on the accused. >> so what we'll be doing, and i really want to give a shout out here to the largest credit cards

companies who are working with us right now on a way that as soon as we receive a complaint, that can go directly to the credit card company. they can help us understand whether the complaint has merit, they have the opportunity to try to resolve it with the customer, keeping us in the loop. >> is that just for credit cards companies, or all financial service providessers? >> so here's what i want to make clear. as we build this. >> i only have five minutes. i'm not trying to cut you off, there are other things i'd like to ask. >> fair enough. i'm trying to give you a picture. >> are the complaints public? >> congressman, i've tried to describe the process for one product. we're trying to get the product right. we've had a lot of cooperation from the credit card company. i'm probably not asking very artfully. are the complaints public yes or no? >> there is no answer -- >> are any of the complaints

public? >> congressman, we don't have any complaints yet. we are trying to build a system -- >> so you do have the discretion to keep the complaints nonpublic if you like. >> what we're trying to do is work with the industry to find a complaint system that work for americans families and works for those who are providing them services. we're in the middle of the process. this is part of the stand up. we are glass to hear you from, your constituents, and hear from everyone else, we're in open door on this. >> thank you. i will encourage them to participate. i want to ask you about some of the definitions. i saw in a definition for abusive. materially interferes with the ability of a consumer to understand the temple of condition of a consumers financial product or service. that suggests to me some interferences are immaterial. is that what you meant? >> congressman, i believe the

language you are quoting is out of the dodd-frank. it's congress' intention. i believe, i don't have a copy. >> will you not be the one enforcing that? >> congressman, this is the guidance that congress is giving. >> i'm asking you are some interferences immaterial. >> congressman, we will go through the process of interpreting the language that congress has given us. >> i don't mean for that to be a trick question. are some interferences material? because material modified interference. >> congressman, i want to clear about this. it's statutory language that you are asking. there's a process in place for the consumer bureau. you don't want me standing here shooting from the hip about how i might want to interpret individual language. >> let me ask you about the second one. it also defines it as unreasonable advantage, or the

consumers lack of understanding. are there some instances we are taking advantage of consumers lack of understanding or reasonable? >> congressman, this is the language that congress has adopted in the dodd-frank act. ultimately, it will fall to this bureau through a lengthy process to interpret this on a case by case basis. i believe it would be irresponsible for me to stand here and pop off about how i would interpret particular words. >> do you believe there's a duty to educate or a duty to learn on behalf of the consumers? >> i believe that consumers want to learn. >> that's a different question. i didn't ask if they wanted to. do you believe there's a duty to do it since the law itself says consumers inability to protect his own interest. do you believe there's a duty to educate yourself? >> congressman, we have as part

of our responsibility undertaking consumers financial education. we embrace it. >> is that a yes? >> we are going to help consumers by giving them product where prices are clear, where risking are clear, where they can make comparisons. >> is there a duty to educate yourself? yes or no. >> i believe that an empowered consumer is a consumer who can not only protect himself or herself, but one who can change the market. >> mr. chairman, i give up. >> thank you. we have two votes on the house floor with two additional members and not enough time for them to ask questions. we are going to recess until the second vote is casts. we'll come back over here as quickly as possible and have the final members ask their questions and the committees in recess until we return.

[inaudible conversations] [inaudible conversations] >> originally the hearing was at 2:00. are you not able to stay for these? >> congressman, when you ask to change the time four times in the last 12 hours, including waking people up at home last night to change the time again -- >> mr. warren, let me be direct. i never made a single phone call about this. be very clear about what you are saying. we have two additional members, we have eight munns -- minutes remaining on the floor to vote. if you won't stay around for the questions, we're going to stay around and finish it out. >> congressman -- >> i never heard that you had to leave at 2:15. >> congressman, you might want to have a conversation with your staff. when they asked to move the hearing, the only way i could

leave at 2:15 for a meeting at 2:30. >> all right. we are going for questions now. you are recognized for five minutes. >> thank you, mr. chairman. i want to say for the record that apologize to the witness, dr. warren for the rude and disrespectful behavior of the chair. the snarky comments about the senate race and questioning of your veracity when there is documented evidence that you were being truthful, this hearing is about impugning you because people are afraid of you and your ability to communicate the threats to our consumers and the threats to our constituents, and possibly very, very effective ways to combat them. i think in one respect, i congratulation you for instilling such fear in the committee, majority side, and

somes aspects or segments because they understand how effective that you are in getting the message out there are better ways to do things. that being said, one the major questions that's being asked here is whether there's a need for your agency, or the agency that you conceived in light of the fact that there are seven-related agencies all of whom have some authority in this area. these seven agencies have been around for some time. during the time at the seven agencies have been around, have financial products and disclosures statements and so forth gotten easier to understand, has the type gotten bigger, have that shrunk, or gotten much more incomprehensible? >> congressman, during the time the agencies had been around, i believe that financial products have become more complicated and much more heavily laidened with fine print that make it impossible for consumers to compare risks and costs.

>> in respect to that the question that mr. buerkle asked, regarding the comparison salaries. would you take take -- be willio sec -- speculate on the average salary for people in the credit cards and major corporations, compared to what the consumers financial protection bureau would be paying? >> congressman, i couldn't begin to speculate on the difference between the salaries of the government officials who will be hired into the new consumers agency to try to oversee the market and the salaries of those who are writing the financial products, particularly for the wall street companies. i respect, though, sir, this is a large differential. >> i suspect you are right. i'm going to yield back the balance of my time in a second, so that we can get out of here. i just want to say that the question of accountability --

>> as the gentleman would yield, mr. issa went to vote, he's coming back to ask, mr. walsh went to vote, he's coming back. we'll give you 20 additional seconds for my interpretation. >> that's quite art. it involves the hearing of your agency. id like to spent a few seconds talking about what accountability there has been in terms of the credit card companies, mortgage writers, over the last decade or so. that's where the accountability has been. so the consumers have no way to hold those companies accountable. >> congressman, we have seen very little accountability among the largest financial services providers, and among the largely unregulated financial services, both before the crash of 2008 and after the crash of 2008. and i just want to point out that it had been really hard on american families. it's been hard on them directly

when they have gotten their feet tangled in credit card agreements in payday loans that were deceptive. it's been hard on them when they thought they were doing seasonsable thing on mortgages. it's also been hard on others in the economy. people who did nothing to get involved, but who lost their jobs. people who see the companies and small businesses. their markets have tied -- dried up. it's been hard on members of community that workday in and day out to be the relationship benders and who are getting crushed in the financial turn around that was not their fault. the problem have gone everywhere. the problem of lack of accountability is one that is squarely on the industry. this consumers agency is going to do it's best to help turn that around. >> i congratulation you on your work and thank for your service.

>> would the gentleman yield? >> my understand that your staff agreement about her appearance today, the agreement was that she would be available for this committee one hour. if she accompanied your late breaking request, made by your staff at 9 p.m. that she appear at an earlier time than previously scheduled you would allow her to leave one hour after that at 2:15 p.m. in keeping with the agreement. it is 2:15 now. she kept her side of the bargain. now it's time for you to keep yours. mr. chairman, out of respect for professor warren's schedule and the professionallability she showed to accommodate, you should now dismiss the witness and get on with the remainder of the hearing. in fairness. we were here. >> i certainly appreciate it. in reaction to you as ranking member, the original agreement was that we would have a 2 p.m. hearing in order to accommodate votes which we expected to be at

1:30. knowing that the professor is very busy, we don't want to keep witnesses while we recess to go vote. we changed the time in anticipation of the vote. rather than gavel in and have opening statements and go to vote and come back 30 minutes later and have an hour of questions, rather than do that, we've tried to work with the witness in exchanging of e-mails, your staffer, your government affairs staffer talked to mr. holier on the committee staff and asked for confirmation on this. he called you up, the government relation head did not respond to your e-mail called you up and said i'll do my best to get you out of there. we need to accommodate people's questions. that's where we are today. mr. cummings, i understand and i certainly appreciate -- >> i want to make it -- i know you sound like you have already decided. just this one quick thing, peter to my staff changed the time on

us a few times. and they bent over backwards, moved things around from 1:15 to 2:15. she needed to get out of here by 2:15. and peter mchenry and his staff knew this. >> peter howler, you said? >> i just want to make it clear. i know you are going to do what you got to do. out of respect for ms. warren, she has her own limitations. she's trying to protect our constituents, yours and mine, big time. >> i understand. i would respond to the ranking member that the date of this hearing was chosen by ms. warren. we worked with her and her staff diligently and gave them a number of options, they came back with different options, we accommodated those options in context for a hearing room, we are here to have the former chairman unvailing of a picture in the main committee room. that's an accommodate. number two, we accommodated her

schedule. that's why it's on this date. furthermore, i'm skipping this vote, as you are, to have this debate, rather than simply allow for a few additional minutes. >> i'm going to get my vote in. but the only thing i'm saying is that at the rate we are going, it looks like she'll be here what until about 20 of. and -- >> actually, i anticipate the two members will have five minutes a piece. as the gentleman knows, i kept folks to the five minutes time frame today. so with that, i'm not trying to cause you problems, ms. warren, we are trying to accommodate folks. if i wanted to stick around, we're going to have two more members with questions and we'll see you off. >> congressman, you are causing problems. we had an agreement for a later hearing. your staffed asked us to move around so that we had to change everything on my schedule to try to accommodate your time. >> i appreciate that.

the original hearings was 2:00. >> i would be out of here at 2:15 because there are other things scheduled at 2:30. >> that was a request. but we moved the hearing to get the questions in. >> congressman, you told us one thing -- >> i did not tell you anything. >> we have no one here to ask questions, mr. chairman. we have no one here to ask questions. >> i have other obligations i committed to based on the representations of your staff. and we accommodated you to rearrange our schedule. >> look, ms. warren, it is a simple question. your staff had a request. my staff said we're trying to accommodate you. we're going to get you out of here in ten minutes. >> congressman, we had an agreement. >> we had an agreement for the time the hearing would occur -- >> no -- >> you asked it -- >> simply this is not the case. this is not the case. >> mr. chairman, you just did something that i am trying to be

cordial here, but you just accused of lady of lying. i think you need to clear this up with their staff. they have moved this thing around 50 million times. she has to go to another hearing. >> not to another hearing, a meeting. >> i would be happy to ask questions for the record. we're glad to answer them and they will be the matter of the public record. >> i certainly appreciate that. i've tried to accommodate you. i wanted to be clear this was on the record. there was no agreement about departure time. i want to make sure the ranking member that i didn't make those representations. i have confirmed with my staff before the thing started, the reason why we moved the times so that she wouldn't have to wait during a vote in the middle of the hearing. with that, i understand your

frustration. i ask you to see my side of this thing as well. we thought we had you for more time. i thought i had you for more time. with that, if the gentleman will simmer. >> no, no, i'm cool. i want to make sure she's treated fairly. >> i understand. we've had more debate than actually the questions remaining. with that, you know, ms. warren, i appreciate your service to our government. i do. and, you know, i was just trying to get on the record a few of these things that we've seen counter to my questions of you back in march of this year. it is informative and constructive for this committee on the construct of this enormous bureau that you are constructing. so that's why congress wants to have this oversight. i thank you for your testimony. i'll dismiss you now and i will ask the two members that are not being given the opportunity to ask questions to submit theirs for the record.

i would ask you to turn around those questions as quickly as i possibly could. >> thank you, congressman. >> miss chairman, thank you. >> thank you. we're going to recess and come back for votes on the second panel. [inaudible conversations] [inaudible conversations] [inaudible conversations]

[inaudible conversations] >> we'll come back to order. foundation professor at george mason unundation professor at ge mason university. dr. david s. evans is the chairman of the local economists group and lecturer at the chicago law school. mr. adam j. is a associate professor at law at the university of law center. mr. andrew pincus is a partner at mayer, brown, and rowe. with that, raise your right hand. do you solemnly swear the testimony will be the truth, the

whole truth, and nothing through the truth? all right. have a seat. the record will reflect that all witnesses answered in the affirmative. in order to facilitate discussion, if you can -- your written statement will be admissible to the record. you can simply summarize simple five minutes. at one minute, you'll get the yellow light which helps you. i would love to hear your testimony. mr. zywicki, we'll start with you, sir. >> thank you, mr. chairman. it's a pressure to be here today. i wasn't strongly in favor of regulatory reform, dealing with consumers financial production and that sort of thing. i think that we've been much in need of regulatory form, steam lining and that sort of thing. so this day, i remain

disappointed we squandered a golden opportunity to create new useful safeguards for consumers that would promote consumers choice and protection. instead, what i think is we've created a monster of an agency that is going to reduce access to credit, increase the cost of credit, and ironically, have the unintended consequence of probably exposing more consumers to fraud and abuse when it comes to lending products. the truth and lending act was three pages long. now it's grown to thousands and thousands of pages. we've seen regulatory enactment over time. and in particular, years of class action litigation, heavy handed regulation have larded up the current system with a lot of counterproductive regulation. unfortunately, this isn't going to change that. this bureau is the most powerful and unaccountable bureaucracy

that i've ever been aware of. it is an independent agency within another independent agency inside the federal reserve. it maybe the most powerful that's ever been considered by most to be constitutional. it has the power to reach every single credit card payday loan mortgage in america. it has the potential to impact small businesses that use consumer credit and personal credit in the operation. yet an agency with this kind of power presided over by one person with no effective external oversight, a completely unreviewed and unreviewable budget, and really no checks on them expect for this lose check by the f sock. history tells us what happens when we give bureaucrats this much unaccountable power to regulate the economy. this superregulator is something we haven't seen since the nixon administration.

there's a good reason why we haven't seen that since the nixon administration. we know what happens when we give this sort of unaccountable power to a bureaucrat to make decision for consumers as to what kind of products they are allowed to have and the terms of those products are going to be. it is as i mention a one person commission. i think it seems obvious that this should be a commission rather than a one person sort of thing. i also agree with the proposal to reduce the 2/3 supermajority oversight to simple majority rule for oversight. following that or perhaps in addition to that, i think this should be formally required to under go some sort of external review by oira or someone else, rather than what i take to be the really toothless cost-benefit analysis that's included here. we saw -- and the reason we haven't seen this since the nixon administration, we saw what happened when we give this kind of unaccountable power to bureaucrats.

we saw a generation of economic stagnation, stifled innovation, declining american competitiveness, and the like. and it's completely predictable, this is what happens to bureaucracies when they lack the feedback and account. you get tunnel mission, mission creep, and you get the pet hobby horses of whoever the person running the organization is the one that sets the priorities. this is -- what we learned from the experience and the harm of the american economy, we need accountable, oversight, and transparency in the process. why doesn't that matter? because over regulation by the body could inflict huge harm on the american any. it will -- it will raise cost and reduce access to credit. i'm not familiar with any theory that says that increasing the cost of a business could cause prices to go down. and it will increase the cost and reduce access to credit. and what we've learned over time, you simply cannot wish

away the need for credit. if somebody needs $500 to repair their transmission, they need $500 to repair the transmission to get to work on monday. what should be done i lay out in my statement which is the model here is the federal trade commission, a multimember commission with internal checks and balances. one reason that independent agencies typically are not subject to ira review is because they are commissions that have an internal process. this agency will not be subject to any budget oversight, it is not a multimember commission, it is not subject to external review or anybody else. and i think this needs to be fundamentally reviewed. >> thank you for your testimony, mr. zywicki. dr. evans, you have five minutes. >> chairman and members of the subcommittee, thank you for asking me to testify. shortly after the u.s. department of the treasury

proposed the act, professor john reichs from george mason and i started studying and the rational being put forward for it. early last year we published an intend to study. based on the research, i'm quite concerned the board could make it harder. just because someone puts the words consumers protection in the title of administrative agency doesn't mean that's what it's going to do. there are two reasons in my view to believe that the cfpb could become an anti-lending and borrowing bureau that could harm consumers and ultimately reduce economic growth. the first is that there's an anti-borrowing bias. professor warren wrote in 2008 and laid out the rational and agenda in some detail. she claimed that consumers

aren't rational, consumers make lots of mistakes, and consumers end up in the end borrowing too much. professors wrote an article that proposed very inclusive government regulation for financial services. that including requiring to offer clean vanilla products as the default. the treasury was involved in drafting and professor was just appointed to assistance director r for research. we have reviewed the foundations based on the writers of the people behind the creation. the view that people don't really know what they are doing when they borrow money and we need to protect consumers from themselves has been part of the code. unfortunately, a week from the writings that have provided the foundation for the new agency, there's little recognition of the fact that consumers lending has really improved the lives of millions of people and spur job

growth in the country. now the cfpb has the tools to put the agenda described in the foundational papers into effect. that's the second reason i'm concerned. this newing a -- new agency can ban the products. it's left up to the discretion of the head of the cfpb. the few agency can steer towards offering the products, by either banning products that don't confirm to the cfpb's view, our making it legally risky for lenders to deviate too far from the product. i understand that plain vanilla was excised. through the fines, the cfpb has the means to place a heavy thumb on consumers lending products that consumers and small businesses would willingly consume and financial services would willingly offer. there's no dispute that some

lenders act very badly and we need consumer protection. the proponents of the cfpb have made real contribution, i think, to the understanding of some of the problems and some of the possible solutions. i have a lot of respect for their passion and their intellect. but regulation needs to be based on the balance view of the benefits, as well as the cost of lending and borrowing. most consumers are responsible, and most consumers and small businesses don't get into trouble. other the last several decades, the fraction of consumers loan debts that banks have had to write off with 1.5 to 3.0%, and consumers loans rose during the recent recessions. they are not coming back down. most lenders provides products that people want and people benefit from. there are serious risk to the economy. let me just focus on one of them. between 1992 and 2005, brand new small businesses generated an average of three million a year.

access to consumer credit can make or break. many of them use personal credit cards for financing. it's some of the greatest companies, google, for example, had to max out the credit cards to stay afloat in the early days. over time, the heavy regulatory thumb could therefor pose a drag on employment and economic growth. in closing, i council the subcommittee to ensure the cfpb ha leadership that's balanced and recognized the great value that lending products provide for consumers and small businesses, as well as the occasional problems. i'd also suggest that congress peep watch to ensure it doesn't become the anti-lending and borrowing bureau and harm the consumers it was put in power to protect. thank you very much. >> thank you. you are recognized for five minutes. >> mr. chairman, mchenry, ranking member quigley, i'm adam

levitin, my research focused on consumers finance and regulation. i'm not here representing financial interest or plea the interest of bank. instead, i'm here as an expert on consumers finance and scholar who's concerned with the financial security of the american families. i'm happy to discuss the regulatory structure and how it come come come come -- come pairs with other bank. -- compares with the other bank. i would note the cfpd is required to do a cost benefit analysis on the financial products. i'm also happy to make the case as i do in the written testimony, the cfpb is more accountable than any other bank regulator, period. it's important that we all be honest. this hearing really isn't about improving, or ensuring there is sufficient oversight. those would both be laudable goals. but the cfpb hasn't gotten up in running.

by all accounts, the transition team, led by professor warren is doing an outstanding job. there's nothing that suggests there's an oversight problem. instead, the hearing is part of the attempt to hobble and render it ineffective, because there aren't the votes to kill it off. this is about politics, not oversight. there's no clear proof of this than the written testimony, mr. pincus on my left, on behalf of the chamber of commerce. he has expressed concern that it leaves it uncial. it's the phenomenal of a regulatory agency advancing the interest it regulates, rather than the public interest. the typical is the oil industry capturing the mineral management, or wall street capturing regulators like the occ or fed. as representative put it, walk and the regulators are there to serve the banks. this leaves me wondering, who do they fear will capture? is it the well finance consumers

groups that have shown themselves to be the terror of capital hill? middle class citizens, military families, seniors, i'm quite complexed. i find it strange to express concerned about capture. regulatory capture is the significant mode of operation. perhaps the chamber worries it won't be able to capture and won't be the lap dog of wall street, but will be a real financial watchdog. the chamber is sounding the alarm reveals the various reform proposals for what they really are. naked attempts to gut the cfpb and render it in effective because there aren't the votes to kill it. that's the same reason some members of the subcommittee want to put it under the process. if you don't have votes, you can starve it to death by playing hostage with the federal budget. let's be frank about what the hearing is about. this is about banks versus families. the issue presented is whether congress cares more about increasing the profits or

protecting the financial security of american families. which is more important, banking or families? turning to the so-called reform proposals, one word to reduce the single with a five-person commission. to put differently, the bill proposes paying five people to do one person's job. that's government waste. by having five people do one person's job, accountability is diminished and leadership becomes uneffective. it gets set by the commissioners, rather than the analysis of the issue at hand. there's little evidence that it provides a meaningful check. if a single director is good enough for the occ, it's good enough for the cfpb. if a single director is good for an agency that protects large banks, it's good enough for an agency that protects american families. another proposal would lower the threshold to veto the makers. it would require a veto if that it inconsistent with bank,

safety, and soundness. bank safety and soundness is technical term. it means profitability. let me repeat that, it means bank profitability. a bank can only be safe and sound if it is profitable. the consumers protection is often at lagger heads with bank profits. the only reason to engage in predator lending, for example, is because it's profitable. it's not done out of spite or malice. what this means that any pfc would be inconsistent with safety and soundness. both the credit card act of 2009 and title 14 of the dodd-frank act could not be implemented because they could affect bank and thus be inconsistent be bank safety and soundness. congress accomplishes to protect american families, not maximize bank profits. let's let the cfpb do it's job. >> thank you. mr. pincus, you are recognized

for five minutes. >> thank you, mr. chairman, members of the subcommittee, thank you for the opportunity to testify for the subcommittee today on behalf of the chamber of commerce and with hundreds and thousands of businesses at the chamber that the chamber represents. let me at the outset protect mr. levitin's misperception about what the chamber's long help position has been. through the debate over dodd-frank, the chamber made clear it strongly supported sound consumers protection and enhanced consumers protection at the federal level. the chamber businesses just like consumers have a strong interest in a marketplace that's free of fraud and free of other deceptive and exploitive practices so that businesses can compete. businesses just like consumers don't like predator practices that hurt consumers. at the same time, what is essential is to ensure that regulation does not impose duplicative and unjustified

burdens. they unjustifiably convert resources to complying with rules that are necessary. in this context that mr. zywicki has mentioned, they prevent small businesses from obtaining the credit they need, and the jobs that our economy needs. because the well documented fact is that small business credit is often consumers credit. and misguided regulation of consumers credit that shrinks it's availability will shrink the credit that is the life blood of all businesses in the country. the chamber actually looks forward to working with the consumers financial protection bureau and has already had several productive meetings with some of the people that have been designated to take rolls. but the chamber is concerned that the bureau's structure will make it impossible to achieve the goals that have been set out for it. first of all, i think it's important to make clear at the

outset, given some of the earlier testimony that the plain fact is that dodd-frank sets up for the bureaus an unprecedented structure that consolidated more power in the director than in the head of any other agency that regulates private individuals and entities. i just want to repeat that again. it concentrates more power in a single person than any over federal agency head of an agency that regulates private individuals andante sis. -- individuals andante sis. -- and entities. let me talk about why it's so and address some of the comparisons put on the table earlier. first of all, we are familiar with the basic model like the agency. they are headed by a single individual, secretary, or head of the fda, one individual, but two important characteristics. one individual who served at the pleasure of the president. the president has total power to fire that person if he or she

disagrees with the president's policy views, or all of the executive agencies, the appreciations process is there and congress reviews the appropriations. now we do have independent agencies. the structure for independent agencies virtually uniformly throughout the government as if they are head by a multimember bipartisan commission who members serve for fixed term. there's a built in compromise there. yes, it's true. the president doesn't have the unfettered power to fire a member of the ftc or the fcc. but neither does one of those people have all of the power to run the agencies who need a majority. there's a built in check on the power of any one of those individuals who have protection against the president's discretionary firing. second of all, for most all of those agencies, there's still the operations process oversight to ensure that there's a second check on what they are doing through the people and representative in the house and in the senate. the bureau, of course, is headed

by a single director who serves for a fixed term and with respect to whom the president is limited in his ability to fire him accept for cause, and there's in appropriations oversight. it is those three things coming together, single person, limitation on the president's power to fire accept for cause, and no appropriations oversight that makes this different than any other agency. i want to address the occ comparison, because that has been floated earlier again in the hearing. the occ controller is someone who is subject to firing at the discretion of the president. so again critical difference in the checks and balances that exist with respect to that agency and the agency here and as i detail in my testimony, secretary of treasury also commerces authority over the controller. finally two quick points. first of all, the question of

the f sock review of regulations and whether that's unique. i've served in the executive branch, the ira -- i'm sorry, mr. chairman, i'm running over a little bit. the oira process brings all of the executive agencies around the table to reach a compromise about the united view on what it should be. second of all, i'd be happy to talk about the regulatory point. but suffice it to say, that the banks are not the only special interest in this debate. there are lots of special interests. and the question is how do we create a structure that makes sure that the resulting rules are the public interest and not the product of one special interest or another. thank you, mr. chairman. >> thank you, mr. pincus. thank you for your testimony. i thank all of you for waiting and being here. and i understand that the congressional schedule tends to lengthen thing. mr. levitin, you mention in your

testimony -- you mention occ as a app comparison to the cfpb. and ms. warren's testimony, she also mentions that as the appropriate comparison. why do you believe that to be the case? >> one the primary reasons that we separate -- that congress separated consumer finance from bank safety and soundness was that it found they did not work well together. safety and soundness always took the foremost position and consumers protection ended up being subordinating. >> i understand, you are talking about the previous congress. and congress intent on the law and the structure of dodd-frank and cfpb in particular. what in particular -- why is occ the appropriate comparison? >> because occ is the strongest of the federal bank regulator. and if we want to have a bank

regulator, that's able to act sufficiently and decisively to protect american families, we want a structure that works like occ. occ has been a structure. we want a structure like that. >> okay. you speak that these commissions, the commission structure is not ideal. why? >> when you have a commission structure, unfortunately -- two reasons. first of all, just with any commission structure, you end up often having just simply horse trading among the commissioners. commissioners have their pet issues as professor entry wick k -- zywicki pointed out, and sometimes it's based on political tradeoff, rather than what is the right resolution of the issue. >> you are saying this to congress. >> i'm saying -- certainly because congress is a different structure. >> what is your second point? >> i think that's an important distinction. the congress is a political agency meant to do that. we do not of our regulatory agencies operating that way. >> okay. and your second point. >> the second point is that when

you are dealing with -- is that the traditional model of a five-person agency, don't have this always, most cases no more than three members can be from any other party. the problem is when you apply that partisan division to consumers financial protection, it doesn't work. :

arnall trade commission for a long time has authority over some pockets of consumer protection, and what we see is the ftc is the model of how this should be done. which is that it has an internal deliver this process, where they can discuss the policy trade-off. too much consumer protection can be harmful to consumers. >> why is that? >> we can make the rate to zero if we said you can't get a mortgage. and -- >> would that be? what impact would that be? >> they would have to save up and get cash before they can buy a home. >> in their property is what you're saying? >> exactly. so there's a trade-off then -- there is a trade-off between two good things, consumer protection and consumer choice, competition

and lower prices if you raise prices consumers get less. as and give the panel agrees yes or no there are trade-offs. just as outlined. dr. evans? >> yes or no? >> yes. >> there are trade-offs. >> okay. >> go ahead. >> elaborating on the ftc is what we see is the ftc through the collaborative five member process comes up with a way of doing this. we also cftc that there is an internal check of competition, consumer choice on one side of the agency, consumer protection on the other side of the agency. and when i'd think about this -- the ftc nobody has ever said that the ftc is incompetent because they've got an agency. i never saw trading with respect to these sorts of things. what i saw was a deliberative process that internal checks and balances that way all of the considerations here. and when i think about this what i think is that i was at the

ftc. i know a lot of people worked at the ftc, and if people had said that consumers would be better off, we just took the consumer protection bureau of the ftc and spun it off and just let it sioux whoever it wanted to without any consideration of the other sort of things people would think you lost your mind. that is the model. that is the model of consumer financial protection bureau would be the sec consumer protection division standing alone. and that would be a disaster. >> my time is expired. mr. quigley of illinois is recognized for five minutes. >> thank you again, mr. chairman. professor, obviously a significant part of this agency's mission is to help level the playing field between the larger lenders and smaller lenders such as credit unions and the small community banks in the district.

do published i believe this report in december, 2009, in which you made the point, quote, the federal regulation and the consumer credit -- of the consumer marketplace would result in both safer and more affordable products. specifically mentioned the issue of in complete price competition. this makes it very difficult if not impossible for consumers to comparison shop for products based on total cost. would you explain the concept of the income. price competition and the effect it has on the off-price market? >> sure. i want to start by saying i think the consumer financial protection bureau could end up being a major source for -- could end up benefiting community banking and credit unions by leveling the competition plainfield in the financial services. that within financial services there are economies of scale that especially in areas where a credit card and a debit card

there are economies of scale, the financial and institutions cannot match. having the consumer financial protection bureau encourage more transparent products where consumers are able to compare apples to apples, where they don't have to try to guess what is it going to cost me to use this credit card over the course of figure they can know if i use this card this will be the cost and for use this card this will be the cost and i can make a comparison just like the grocery store and i can look at unit prices and make an informed comparison like that i can make sure i choose the right product and that lets smaller financial institutions to offer good products and good services to be able to compete fairly because they don't have to compete with hidden price terms. their price terms are up front and and part of the price terms are the excellent service and often they have to compete with large financial institutions that have the incentive to be able to hide the price terms in small print and makes it hard to

figure of what is it going to cost to use this product? >> you're talking about including a transparency? >> very much. >> how do you do that? what are the steps and how is it so the everyday person can find what you're talking about? >> i think first and foremost a focus on the disclosure of information. the way that we have on consumer protection in the united states is the truth lending act focused primarily on disclosure, and you try to improve the disclosure as the cfpb has already started to do with reconciling the state settlement procedures act, truth in lending act for the mortgages, started doing that with credit cards to play let down to devotee page agreement and that you and i can look out and read in plan english and we don't have to be a lawyer to understand. >> is there some other place that you think makes sense to disclose so it's not just in the net or is it some online possibility? >> that's one of the possibilities, and that this is

not clear what the right answer is. part of it the task before the cfpb is going to be to figure out what is the optimal way to do this. i expect the cfpb will consider among other things rather have an online -- you know, enabling online comparisons as to the way you might compare cars or something would be an option. >> you're best guess on how the market reacts to these requirements? >> if i were a large financial the institution it made money by hiring the price terms i wouldn't like this. i would be -- i would want to stop and kill off this agency. but if i were a small financial constitution where my calling card was an excellent customer service and straightforward honest product i would increase this wholeheartedly. >> i don't fault them for making profits. i just think it's something that the market always should encourage and that is the competitive aspect of transparency allows.

>> so i like to think that embraces the marketing opportunity. as you said, of the car tax, some people are advertising we make this easy for you to know what you're actually body when you buy this car. i would like to think they would embrace it at some point recognizing the cost in the competitive quality that would bring to bear against them in some respects. >> transparency is the consumer's best friend. >> thank you. i yield back. >> i recognize myself for five minutes. >> dr. evans? you mentioned that your concern as thus efp would put in place an anticredit policy. can you explain why that would be, why would we have an agency with an anticredit, and high borrowing, and high lending policy?

>> the philosophy of the people behind the consumer financial protection bureau is really that there are some fundamental problems in the market. there is a belief that consumers don't know what you're doing, consumers like a lot of mistakes and what you need is a super nanny in effect to be telling consumers what they should be doing. how does that happen? you tell the financial institutions what kind of products they should design, what products they should offer to consumers. if you look at the writings of a lot of the people involved in the agency, there is a tendency on their part to basically believe that a borrowing money is not a great thing and consumers get sucked into borrowing too much. how do you react to that with an agency with those believes? you put policies in place to make it more difficult for banks to lend money to consumers and put policies in place, and one of the things that has been suggested by some of the backers

of the cfpb is basically the sticky opt out policies where you basically tell the financial institution that they have to tell consumers that this is the product that they have to give you and make it very difficult for the finance of institutions to look at consumer take another product. we need to lend money to the consumer. if i might elaborate just a little bit and respond to the professor's points, i think history tells us that the notion that this regulatory agency is going to lower prices to consumers, the massive regulatory agency is going to lower the prices to consumers and increase competition i think is extraordinarily naive. and if you look at the facts, we have had an experiment with the card at and what have we seen as a result of the card act? one of the results of the card act in the marketplace is prices have gone up for consumers and it has been more difficult for

consumers to get credit. why is that? because one of the thing the card act does and i'm not saying it doesn't do good things but one of the things the card act does is it makes it difficult for financial institutions to price risk. it's simply not the case that credit is like a car or a toaster. the difference is that when a bank extends credit to mr. zywicki or warren or me the chances are each one of us has different risk characteristics and the bank has to figure out a way to price that. the car deck in that particular legislation is difficult to do, and one of the consequences of that is banks have to basically increase their prices and reduce the availability of the price. the other examples of a river town recently of course, and we don't know how this is going to play out is by a debit card infantry. based on the work i've done i think it's pretty clear from how the market has already operated

that it is going to have a very clear effect on the marketplace. it's going to increase the price that consumers had. i simply don't think that it's possible that this regulatory agency is going to result in lower prices for consumers. i just don't think there's a lot of experience and history that is comported with that particular view. the availability of the fsox to overruled levels of the cfpb. ms. warren says that it's basically it weakens agency and the regulatory agency because you have to get seven out of ten excluding the director, seven out of nine members to vote and the limitation on that ruling is they don't have a systemic provided systemic risk to the american financial system. so that means it could be eliminate particular businesses and business lines, and fsox wouldn't have the ability to overrule it. why is, mr. pincus, you

mentioned this about fsoc, why is the fsoc not a powerful tool to overrule cfpb rules? >> for bulk of the reasons you mentioned, mr. chairman, the supermajority requirement is very unlikely to match. the standard that is to be applied threatens the entire u.s. financial system and incredibly high standard. second of all, the process that is employed, typically the way that agencies discuss proposed regulation if there is a process before the rule is issued to your issues its rule and if somebody doesn't like it can start what will be a very public process to overrule and there will be an obvious reason why absent something that someone of so cataclysmic is impossible to think about. nobody's going to want to do that. >> thank you for your testimony and i yield to mr. cummings for five minutes. >> i was sitting and listening to you, dr. evans, and you and

mr. pincus has been helping us think about the song entitled get rich or by trying, and the reason why i say that is that i want to do everything in my power to protect my constituents who are suffering every day, and the constituents of chairman mchenry and others. and we need to -- we need to -- i don't want us to throw a hour hands and say we can't protect consumers, because we can do it and we can do it effectively and efficiently and ensure that is when you're talking about, trying to get to that. you may have had a disconnect on the people that i see everyday who pay the high bank fees and have been messed over and over again and go to work on the early bus at 5:30 in the

morning. the scrub people's floors and operate the elevators and then pay these high fees. one of the reasons located in the areas pay loans borrowers throughout the district. people who read them appliances that they could buy a. that's why we need this protection at, and we all need to make it work because the american people are paying for this and they deserve to be protected and they need protection. professor, you published a paper in 2009 high of the critique of evans and the right study of the consumer financial protection agency act which was a critique of a study by david evans who is one of the guest panelists today and joshua right that among other things the act from the section of the dodd-frank

consumer bureau could increase interest rates and reduce the jobs. you explained that their report was just the latest sony, and i'm going to quote you, don't want them to think i'm saying this about them , quote, the latest sony lobby statistics to come out of the banking industry, and of the quote. and pointed out that the study was funded by the american bankers association. is that correct? did you do that? >> it is correct, and my particular objection in that paper is that it tried to estimate the increase in the cost of credit due to the creation of the cfpa and cfpb and the methodology is this, and you'll see the very obvious methodology that here's another piece of legislation dealing with interstate bank regulation, and one study found that resulted in an increase of cost of credit of x basis points. therefore, the cfpb will result in an increase in the cost of

credit of x times some number eight pulled out of the air and it was simply to just take a multiplier and applied that multiplier to in an opposite study and say that's going to be the effect of the cfpb. i was rather shocked because dr. evans has produced excellent academic work previously and this was just very surprising to see. >> let me ask one other question and i will get you dr. evans -- no, you go ahead because i want to be fair to you. >> with all due respect, professor levitin hasn't done any research, he just testified concerning what's going to happen to prices based on absolutely nothing. when pressed to say what's going to happen to interest rates and so forth, the reaction, and a quote from his testimony just earlier, is speculative, we don't really know. what george and i, the professor and i, tried to do was a study. was not based on evidence, but the particular study that

professor levitin has pointed to is actually an analog. the best analog we could find, not a perfect analogue, best analog we could find something comparable to the cfpb. it provided a baseline for the imposition of credit in the economy. that particular study that professor levitin just referred to showed that another regulatory bill, and as a result of the state restrictions on banking and credit and so forth left with 80 basis point increase in interest rates. that's when you typically get with regulations. we did a comparison of the cfpb, and we made the point that cfpb will allow a greater set of regulatory restrictions on lending. we took that -- >> i have to cut you off because i have to give him a chance to respond. >> a ttp basis points and multiplied by two or three or some number yanked out of the air. >> that isn't scholarship to

yank a number of the air and say this was 80 basis points therefore cfpb is keen to be 160 to 82 can't do that. its 80 basis points we just don't know that. we have to give it the chance before we find out. >> i see that my time is expired. >> thank you, mr. chairman. >> i recognize mr. genser for five minutes. >> dr. evans, the deeply number out of the air? >> if you read the paper and if you look at our response to professor levitin, which we can certainly make available, we use that as a baseline of 80 basis points, and we have been very careful language and have that this is the best we can do given the available evidence, and we gave the reader an explanation as to why they should consider multiples of 80 basis points, twice that or three times that based on a very lengthy analysis that we did in the paper, pages and pages of explaining why the

cfpa, why the cfpb has the power and the likelihood particularly of the earlier version of the legislation to increase interest rates. again, with all due respect to professor levitin come he has produced absolutely nothing on this topic. the notion that we are engaging in this exercise of crating the massive agency and the best we can get is we will just have to see. for me that is not good enough. >> thank you for that testimony. i would concur that it's not good enough for congress either or shouldn't be good enough for the congress either. this is not a notion -- this issue is to win portend for us to estimate how to solve the problem. i think all members of congress want to solve the problem, but i have failed to see how this agency will correct the actions that led up to what you had

talked about that builds up to this. so the one question i would have for you know, i think that you had made some statements that if the cfpb had existed from to the listened for 2008 but this could have been averted, it may not have occurred. i heard that testimony earlier in the first panel as well. so my question would be even though this entity is supposedly going to have some responsibilities of other entities that should have prevented or should have maybe suggested that this was going to occur and we could have put some stopgap measures in place can you tell me what exactly this agency will do in the next 12 months to ensure that this would not happen again?

>> well conagra's already took care of the first steps itself in the dodd-frank act undertook a major reform of the more emerging markets including a requirement that for the nonqualified mortgages which is a term that regulators are going to have to find that lenders will have to verify and the ability to repay it seems like an obvious first step and i'm glad congress to get and it's very important to note the major step forward with the cfpb is changing the regulatory architecture. previously when bank safety and soundness was yoked together with consumer protection, consumer protection always ended up being the subordinating mission and entities like the comptroller of the currency would routinely turn a blind eye to predatory lending practices because they were profitable and they didn't want to stop the music of the party.

the cfpb doesn't have the bank profitability mission. it isn't passed of maximizing bank profitability. therefore it's an agency that is incentivized to make sure that there is good consumer protection. >> wasn't that good consumer protection? didn't exist in these other agencies? >> of the missions were not to have bank profitability >> sure they were committing safety and soundness and a bank that isn't profitable isn't safe and sound. >> so you're saying their sole focus was bank profitability. there was nothing, no protections, no concern, no issue with respect to the consumer? >> virtually none and i can give you examples. the federal reserve cut the power under the equity protection act, home owners protection to pass a regulation that would have occurred in the worst abuses of some prime lending. it didn't act for over -- >> what fannie and freddie fallen to the category that you're referring to?

>> friday and fanny are a complicated story. the problem in the home lending market from the private label securitization area, and that's been spilled over into fannie and freddie. fannie and freddie were of government agencies, not tasked with consumer protection and ofio was in the past with consumer protection either. >> i know my time is expired. thank you, mr. chairman. >> the ranking member mr. quigley is recognized for five minutes. >> thank you, mr. temmins. dr. evans, mr. speaker to, i appreciate the disagreement here. our judicial system is built on zealous advocates disagreeing because from that we like to think that we move towards the truth. so, towards that end, while i recognize we are not going to hold hands and sing kumbaya all its good to see this warm and fuzzy moment. dr. evans, the professor's comments about transparency

while he may disagree with much of what this agency is about, would you talk about how transparency might help this industry and if you agree with part of the transparency might improve things from the consumer point of view that you would be unhappy with destroying competition. >> that's a fair question and i appreciate it. let me take that as start by saying that i am certainly not suggesting there are not problems to be solved. there's a ton of problems in the lending industry and lots of problems consumers have faced and i would be the last person to deny that there's a set of problems that some agency needs to deal with. one of the things this beneficial for consumers they're subject to qualifications is transparency. it's not a good thing when banks hide the ball. it's not a good thing when when

consumers are tricked into doing things and it's the case some members of the financial industry that affected badly. i'm the last person to suggest that everything is okay and that there are no problems. so i am in favor of consumer protection, consumer financial protection. i think this agency could do lots of good things. the one qualification i guess the thing that i would really like to get across is as with many things, we have to have a perspective on the marketplace. and by and large, this is an industry that does a lot of great things. it helps the people in the district in of lots of ways, and we just have to have the perspective that while there are bad things going on and we need to take care of it is also an industry that does a great deal of good for consumers and small businesses, and the regulation

that we have for this industry needs to be conscious of both the bad things that were going on but it also needs to really recognize that the bad things are often exceptions and that there are lots of good things that we need to make sure we don't harm. >> so what do suggest that the bad things you talked about are in large part undertaken by what was the shadow banking industry? >> when this bill was being discussed many of the largest financial institutions were supportive of the -- they were not for this agency. but they were certainly for somebody going after the problems from what was deemed the shadow banking industry. if you want to use a different term that's fine. >> nope. i am hesitating here because one of the things professor levitin

and i agree on is one of the financial institutions engaged in practices and when a great thing for consumers. there are elements of the financial industry whether it's shoving and so forth and issues should be appropriately dealt with. so i don't want to draw this dividing line between the big financial institutions and the shadow financial institutions because the shadow financial institutions while we think of them as charging very high prices they are also meeting the consumer need for people that are able to get loans from the large financial institutions could have a need that needs to be served. a sudden i don't want to suggest that there are problems there but we also have to recognize because we say pay lender about what all pay lenders are doing bad things and not helping consumers. >> welcome i appreciate your

candor and i would suggest to all of the witnesses here that can draw helps us get to the truth in the end because there will be another day and another issue in the other bill. and in the end but we are all trying to resolve all our constituents. so, dr. evans, that helps, and i yield back. i now recognize you for five minutes. >> i want to follow-up with mr. zywicki and mr. pincus on a couple of quick items. first, mr. zywicki, look, i understand the notion of appropriate consumer protection. i think most of us do. i think all of us probably agree that there is either redundancies' or even in some circumstances additional burdens and some regulatory requirements. i think some of us would even agree with this philosophy or notion of the cfpb. i of great concerns about the structure, great concerns about the ultimate power that can be

provided to this one individual and to the individuals within this organization. i have a serious concern about the funding of the agency and the lack of the ability for this agency to be called in front of congress and i think those are concerns of anybody in congress should have because ultimately people in this country are going to rely on congress to make sure that the right things are being done. so my question to you would be in two parts. can you talk about how this agency is structured it some of the problems we should consider or see in the future, and second, what alternatives do exist or can exist rather than the structure that we have that has been outlined in dodd-frank? ..

congressional oversight, all those sorts of things make the agency much better. an agency that lacks all of that is prone to tunnel vision and naval base in and that sort of thing and losing its way. i would strongly urge that this be reformulated along the lines of the ftc. fundamentally this is the right thing here. the ftc is wrong, and i don't think anybody thinks the ftc is wrong. >> can you explain, why does the cfpb not have a commission to back why doesn't it have a commission to act as s in just

the other commissions are not necessary? >> if this is right and all the other ones are wrong, and that just doesn't seem possible. this this is how we are supposed to set up a consumer protection and i guess you need to wipe out the ftc which has been here since 1914 and replace it with the director rather than a commission. it is not analogous. it is safety and soundness. accounting. it doesn't do a broad scale policy analysis for the sort of things we have here. let me give an example if i may. i agree totally with mr. cummings about his concerns with respect to access to credit. if you think of the combination of cfpb, the durbin amendment, the credit-card act, we are going to drive may be a million consumers out of the mainstream banking system. cfpb by increasing the regulatory burdens here is going to drive more consumers out of the mainstream banking system, put them exactly in the hands of the paid lenders and check caches and everybody else.

we have seen this. the payday lending migrates online. on why they lending. people migrate to pawnshops. we're talking about the situation where when you go in with good intentions you end up hurting the people you intend to help, and that is what i am concerned is going to happen. >> to follow up a little bit, i don't know that you heard earlier testimony, but i have some concerns about the sec versus the ftd. i believe there are clear differences between the two. could you talk a little bit about the differences between the sec and a cfpd in terms of oversight? >> the clearest difference is that the comptroller serves it the pleasure of the president and the director doesn't. the director can only be dismissed for the five inefficiency, neglected duty or malfeasance. much more restrictive standards. in terms of the checks of the elected officials, much less of

a check. and within the treasury department the secretary does also have some ability to oversee what the controller does. again, the statute completely clears the federal reserve with zero with respect to but the director does. those are the key differences, i think. >> i appreciate that because that is completely different and testimony we heard earlier today. earlier today we heard that they are similar if not identical. i would agree with you the primary function of responsibility and how you can be hired and how you can be fired is paramount to the job that you are expected to complete. i think the chairman for the time. >> the vice chair. i appreciate that. mr. cummings is recognized for five minutes. >> i'm listening to all of this. you know, it is so easy to

forget how we got here. you know, we can have testimony over the past. talk about , this is to tell us, don't concentrate on what she don't have. concentrate on what you do have. i have been listening. and i'm just trying to, you know, thinking about $20 billion in credit-card penalty fees, $38 billion in overdraft fees. i'm trying to figure out where we think this money comes from the redid is coming from regular, everyday citizens. in fact, i heard what you said about, you know, the fact that these are people who will review

a washing machine for $75 a month when you could possibly by one for $350. they're doing a service. and one of the things that was talked about today is trying to give people information. i think information is power. i really do. but it is powerful when you use a. in some kind of way in this country we have got to get to the point where we don't let lodi and lady who go down the tubes. some kind of where we have to get there. you know what, you're going to always have. i live in the inner city of baltimore. i see it every day. they don't have the big, fancy

cars. they may have a car that is fiver six years old. they are making extremely high car payments. they are paying extremely high rent for what they're getting. they pay the most for the food, and the food is not very good. then -- and they are constantly digging into a whole that is deeper and deeper while the folks, a lot of the folks to get these fees move out into the suburbs, in to the men since. then these folks who are getting about 530 in the morning and paying all these fees to people who use they are doing them a great favor, they can do for their children taught take care of their children the way they would like to or even close. they find themselves in generational cycles going down

instead of going up. that's why i go to every graduation i can get to and the people to get an education. you're going to widen the gap between the haves and have-nots. the people who don't have been the most. they're the ones in most instances that it royally screwed. so i'm just here representing my constituents, trying to make sure that we have a way out of this. so this organization, the cfpb was not established for just something fancy. you know, to be able to say we did something. we want to be sure. i don't think we have one republican vote. we want to make sure we did something to take care of all of our constituents. i don't care where they live. the question becomes how do you

take this and make it well so that those people don't keep going in a downward cycle, so that because they cannot afford the things that they need because they just paid $20 billion in credit-card penalty fees if they can get a credit card. $30 billion in overdrafts feast. so how do we make it work? you guys of the geniuses. you're the gurus. what do you say to my deciduous? if they have a television. >> i personally have a lot of sympathy for your constituents and i understand the problems that they face. i wish i could tell you that i

was here today and give you the solution to all the problems that you have laid out. i think all of us would like to solve them. i guess the one thing i would say many to just put a little bit of perspective on it is if you go 20 years ago many of your constituents who now have credit cards probably wouldn't have been able to get them. one of the things that has happened over the last 20 years is more socially and economically disadvantaged people have been able to get credit cards. there have been able to get bank accounts. that has actually help them out. one of the areas that i work done quite a bit, congressman, coming not recently bought a long time ago is minority business. i'm sure you have minority business. >> a lot. >> i'm sure you have a lot. one of the problems that face 20 years ago is if they wanted to get financing on their credit cards if 20 years ago, 15 years ago that would have had great difficulty doing that. there are now able to do that.

i'm not suggesting that you're at the constituents don't have the problems that need to be solved. i guess i would like to a persuades you a little bit a some of these financial services products whether bank accounts and debit cards or credit cards while there may be aspects of it that you see is bad, i would like to persuade you that there is an aspect of has actually been pretty good for your constituents and that is actually getting better over time. my wife is from baltimore and she will be emmys and i go home until her that you compared me to anything involving representative. [laughter] >> my time is up. >> we will do a final round. recognized for five minutes. >> thank you very much. i happen to in the last month the so visit beach st. schools in the inner city of manchester and new hampshire. many people think of new hampshire, as in any city, the home to an inner city, but it

has many in the cities, many neighborhoods that are inner-city. happen to be mayor for four years and have great compassion for those who are financially and socially challenged in this society. so i'd think it is imperative and important for us to make sure that we have rules in place that allow a level playing field and allow any individual if he or she chooses to succeed in life. i am often reminded of some of the kids that go to the the boys and girls club in my home town of manchester, new hampshire. where they started, where they are today. and brought to the part of the family of constituents and committee members who feel very strongly that it is our responsibility as americans to lead by example, to ensure that

the american dream is alive and well and that anyone who wants a part of the american dream can reach for that american dream. so i guess my question would be this. if there was an alternative that you would suggest with hands that type of america that i kate co-sponsor with the gentleman from baltimore, and i would be happy to do it because i have respect for him. i've watched him surf with passion and compassion, and i admire his approach. i want to be part of the solution. so if there was a piece of legislation that congress could embrace in a bipartisan way to make that american dream whether it is in baltimore or manchester come true what would it be? >> i certainly think

incrementally the things that are on the table, i endorse all those to be the sort of thing. what i would urge this panel to think about coming forward because said cfpb will likely turn out to be a failure. if it's not, if these accountability issues are not fixed it will run off the rails and be a job killer. it will raise the cost of credit and everything else and it will hurt the people it is specifically intended to help. so hopefully that will -- it's unfortunate, but i think that is entirely predictable. i think that should make people reexamine that. i think there is an urgent need and a greater opportunity for new approach to consumer finance protection. we talk about the difference between market reenforcing regulation in one hand and market replacing regulation on the other. i am all for savvy regulation that makes use of technology, harnessing the power of competition and consumer choice, a lot of the things that this

agency might to mike a simplified mortgage disclosure form would be great. going back and paring back some of the mountains of jaunt that has been attached to the truth in lending act would be great. my concern is that in order to bring about the heightened competition and consumer choice, doing things like creating a open ended standards of liability like the ability to sue somebody for an abusive product that cause somebody in washington thinks the somebody out there is too stupid to be held to understand the products of their purchasing not based on anything that i can tell, that's not going to help people, and we know, the concern i have is both for middle-class people to have choice and competition. i'm concerned about lower income people who already have very limited credit options. if we have something that takes away options, that's not a very good way of making those

people's lives better off, and we know this even just from regulating pay lending. when you get rid of payday lending, what happens? evictions, bounced checks. utilities seven off. they all go up in a situation like that. so i think that the desire for washington bureaucrats to think that they know better about how consumers and people live their lives i think is a folly, and i would think that we would want to go in a completely different direction toward competition and consumer choice. >> thank you and i yield back to the chairman. >> the ranking member is recognized for five minutes. >> thank you. i wanted thank the gentleman from new hampshire for his kind words. thank you. i'm trying to figure out, where do we -- you were talking, dr. evans, about helping folks

with minority contractors. one of the things i noticed is that when we pull together minority contractors, and is not just minority contractors but others to. one of the things they talked about is in light of all of the problems we have been experiencing with the economy just being able to get, to get credit. opportunities, but they couldn't even get a lot of credit. a lot of credit was canceled dvina. you know, for some of these small firms that 10000-credit, i'm sure you well know. people working with minority contractors, that is like working with the million dollars just to get from payday to payday and whatever else. and i was wondering, again, i was just thinking to myself, this other question, you know, a lot of the organizations now that has spending a lot of energy and effort in this

holding of financial literacy, and i'm just wondering, you know, how much that plays into the various cities try to find a solution. i am wondering how much value that has. i do believe that sometimes people don't know how to handle money. some folks don't know. they just have never been taught. and balancing checkbooks. many of you guys, you know, bouncing a check. i remember one summer it told me once bankers have something. if people stop bouncing checks that would be out of business. but the key was exaggerating a little bit, but that's a lot of money. what happens is a bounce one. because that one bounces you have a whole series. the next thing you know you're bouncing all the way around the world. so i'm just wondering, you know, there are certain part of it.

for its personal responsibility. but as my mom used to say, there's nothing like a person who don't know what they don't know. i was just wondering how significant of all that you think that plays in trying to help. i no there are some people that may be informed and just don't have the resources. there are other people. maybe if they were taught at an early age that a penny saved is a penny -- well how that goes. in good shape. so i was just wondering. >> ask an economist whether we ought to have more economic instruction in schools. >> that's right. >> yes. we absolutely should. >> do you think it helps? >> i do. i actually think it's not enough construction in the school system's. how finances work, how the economy works.

and i think probably that is something that adam and i probably agree on. getting more of that in society but in the school system and in society would be a good thing. i know that's one of the things that the cfpb is supposed to be doing. i would applaud them for doing this. that would be helpful for the constituents and helpful, friendly, for a lot of people. if i could quickly comment on the first part of the remarks concerning the minority contractors, i hear you. the last few years that have the line of credit canceled. it's a very tough time the last few years for small businesses. "we need to do in order to fix the problem is we need to get money flowing to small businesses to get them moving again. you know, this probably isn't the right opportunity to go into all the reasons why they aren't getting it, but one tough problem is some of the capitol

requirements that banks and in particular community banks have as you probably know, community banks are one of the major sources of lending for small businesses. there are a multitude of problems that think minority and other small businesses face at this point that we could probably give some attention to. >> briefly. first to address the construction of the capital's small businesses. in smarm -- important to note that happened before any new federal regulation went into place. it started in the fall of 2000. really the fall of 2008 in particular, and that was the result of a lack of regulation, not caused by regulation, and we need to keep that in mind. as far as financial literacy, it's hard to argue against it. the evidence is not really convincing. there is a real good evidence that it works, and if you stop and think about it, of course it doesn't. you know, i think i'm pretty financially literate, and i

guarantee you that there are a lot of lawyers. the contract forms that i will not understand. and they are paid very well to do with and i know that because i used to be paid to do that. >> the gentleman's time has expired. recognize myself to the final five minutes. boohoo that is by far the most shocking thing that i have heard here today, that financial literacy does not matter. that is insane. with all due respect i would tell you that if i look of the form and say is too complex for me to understand how will sign it. and is the skepticism that an additional bit of financial literacy, and not trying to attack you. the point is that financial literacy isn't going to fix everything. been i would accept that. >> unfortunately not everyone is a skeptical as you are. i wish that was the case.

this is a financial literacy. skepticism. >> maybe we steep -- to skepticism. skeptical american public. i do want to ask a few questions that i want to better understand. the headline of this hearing was is watching the watchman. let's get back to that. i don't want to lose sight of this. ms. warner earlier today. hyping the american people have a lot of questions about this piro. people that are providing credit, those that are accessing credit, those that hope to borrow, those that are trying to have a business providing some level of lending, short term, long term, whatever it may be have a lot of questions. is very clear that ms. warren is not intent on being very

forthright about her ideas for this bill. and so that is why we have an expert panel. in terms of inspector general's. it could it be helpful to have a special inspector general? >> yes. >> dr. evans. >> yes. >> i would need to think about that issue. i'm happy to submit written comments. >> i appreciate that. >> i think i would like to think about it. the fed inspector general has that job now. i think the question you're asking is should this be a more focused focus. >> what would you think of that? >> at the guts to talk to my client before i get back to you. >> a smart man. a cost-benefit analysis. we have an enormous swath of our government, the greater portion required to actually do a solid

cost-benefit analysis. a lot of oversight. do you think it will be appropriate and helpful that the cfpb the subject back. >> absolutely. yes. >> why? >> independent agencies are typically not suggested. the reason is because the multi member commission's. the basically substitute that accountability and that internal delivered a process where you essentially go through a cost-benefit analysis like we did in the federal trade commission. ..

is not in the rate at the time and expert on. my impression is that being done very well anywhere? >> i would concur with dr. evans that it's a bit of a disaster in the ends up being a cost analysis on the cost benefit analysis. i would note the cfpb statute itself requires a cost-benefit analysis and if the cfpb analysis is not a good it can be challenged in court, and so it already had that bacon. i'm not sure that it does anything except create an obstacle for government action

>> i think would be great. i think what it does is bring external writer to the cost-benefit analysis but also brings other policy voices to the table. one of the values of the process is it's not just the agency that is opposing the rule. it's the whole government gets a chance to have input, and that's what you want in an area where you've got such conflicting not necessarily conflicting but a multitude of policy interests. >> thank you. to the point of cost-benefit analysis is required for the cfpb for smaller institutions. it's not across-the-board is my understanding. >> my understanding is that for under the cfpb unfair deceptive and abusive practices that it is included but, you know, we've got to look at the statute. >> i believe it's a sort of internal cost benefit analysis review for the small business.

>> one problem is all the things we are talking about only apply to rules and what ms. warren said the and other agencies such as the cftc basically set standards through the enforcement actions and so i think another whole area of important discussion is where an enforcement position gets taken either through settlement or whatever becomes something that's prevailed on what is the check on that as something that than a legitimate business is going to say i'd better start complying with this even though it's one action i could be next. >> that's one of my questions of ms. warren is the relationship in the mortgage settlement. it's clear they were not intent on communicating very much of what they're doing. and their agencies and even up and running. it's a great concern there are not internal controls in this agency and there is a balanced approach would have had a board overseas. even like ms. warren's original proposal to be quite frank about

it. whether there would be internal debate or bristling with rule maker rather and wondered sector simply doing it. the additional thing that is clear from today is that the cfpb will neither increase access to credit nor reduce the cost of credit. that is for certain, and i think there is a wide agreement on that. i would also say that the current special assistant, the assistant to the president and assistant to the treasury secretary ms. warren has been calling the shots and organizing the bureau. it's been a rather less than a transparent operation if we can be very direct about her answers were less than forthcoming and raise more questions than they actually provide answers, that is what we have learned over the course of the last three hours

in this committee room. i certainly appreciate this panel's testimony. thank you for waiting for the afternoon and thank you for your forthrightness and willingness to sort of engaged in this discussion because it's enormously important not simply to policy makers in washington, not simply to academics or business folks but to the small business person who hopes the small person and a mother of my colleagues terms who wants to start this. my dad wanted to start a business out of the garage and he started that business on a credit card. something he told me to never do except for that business but put five kids through college, put a roof over our head and an opportunity. so i want to make sure people have access to credit whether it is a person is trying to make it to the next paycheck or the person who has an aspirational

goal of employing people and growing this economy. that is what it was all about. we can have a debate how you achieve it, but this cfpb is not the construct to make that more available and achieve greater opportunities for those individuals that we care so much about. thank you for your testimony and i certainly appreciate your willingness to be here today. this meeting is adjourned. [inaudible conversations]

[inaudible conversations]

at this ten minute briefing jean steinberg announced the u.s. government is imposing sanctions on seven foreign companies believed to have been supporting iran's nuclear program.

on seven foreign entities around sanctions after 1996 as the comprehensive iran accountability act of 2010. for their activities in support of iran energy sector. the companies are petrochemical company international, oyster group, speedy ship, tank or pacific, singapore, israel, associated monaco and venezuela. all these companies had engaged in activities to supply petroleum products including direct supply gasoline related products as well as the provision of the product tanker to the islamic republic of the shipping lines and into the designated by the united states and the european union for its role supporting iran's proliferation activities.

the sanctions on iran is to pressure to the international obligations. in the struggle to secure the resources it needs for the energy sector iran has resorted to deceptive practices to the state sanctions. this administration is the first to impose sanctions on confirms has been working aggressively to prevent iran from developing its energy sector. iran uses revenues from its energy sector to fund the nuclear program as well as to mask the items. today's actions as further pressure on iran to comply with its international obligations. under the iran sanctions that the sector has the authority to on a case by case basis. accordingly different sanctions has been sought for each entity from the provisions on certain types of government assistance to broad sanctions on property transactions with the u.s.. in some cases him to shut down the activities of the target firms. in hudna in all cases we fix and

the transactions in detail that have made judgments about our actions on the global energy market. for example, in the case the sanctions we have will cut off access to the u.s. government contracts, u.s. import/export and licenses to control technologies. the sanctions will not have the skill to the united states or other markets and will not affect the operations in the subsidiaries. the expanding nuclear program the department of state has spent considerable time and effort to discourage companies from doing business with iran and sectors. the fact the september of last year you may recall i held a similar briefing to announce we have secured the withdrawal of foreign major international oil companies owned by shell from projects in iran. and in october 2010 we secured the withdrawal of a fifth major oil company in patronis project in iran. the impact of these withdrawals

cost iran hundreds of millions of dollars. in the refined petroleum sector we seen any indications that shipments of refined petroleum have dropped significantly since the passage of cisada. some reports indicate that imports and some months of drought over 60%. iran has lost millions in petrol to the potential revenue by converting the petrochemical plants to produce gasoline to make up for their dramatic short fall in gasoline imports. in addition the state department has also convinced the jet fuel suppliers in 17 cities in europe and asia to which iranair flies to stop providing fuel. these firms have been joined by the scores of other companies working in a variety of sectors that have recognized the risk of doing business with iran are just too high in light of its continuing efforts in its nuclear program and its support of terrorism. when azeri we have imposed and will continue to impose sanctions against firms that cannot sanction elected to the come as we demonstrated with the

sanctions after the oil firms and the seven more companies we have to the list today. by imposing the sanctions we're sending a clear message to companies around the world. those who continue to irresponsibly support girons's energy sector or help facilitate it on's efforts to evade u.s. sanctions will face significant consequences. additionally, in a separate action, the united states today is imposing sanctions on 16 foreign entities -- individuals pursue it to the iran, north korea, syria and non-proliferation act, sometimes known as seen by for their activities in the support of wmd or missile programs. these include companies, three chinese entities and one chinese official, to build a rose entities, five iranians entities, one iranian individual, one north korean and to become a to syrian entities and one venezuelan entities. these entities were sanctioned for the transfer to hoard

acquisition from north korea, syria, iran of goods, services or technologies controlled under various export control regime or otherwise have the potential to make a material contribution to the development of wmd workers or ballistic missile systems. the majority of the entities or individuals or sanctioned because of proliferation activity involving iran. we've also worked diligently with our foreign partners in order to urge them to be felt their own sanctions measures. in addition, to the four u.n. security council resolutions imposing blinder to the combined and obligations of states to implement sanctions against iran, the e.u., japan, south korea, canada, norway, switzerland, and australia have also imposed robust autonomous sanctions against iran. as a result, there's an international consensus to raise the cost of iran's refusal to meet its international nuclear obligations, and these are not the end of our efforts. we continue to review reports of sanctions will activity, engaging with foreign governments and evaluating a declining u.s. sanctions laws. let me to give you of your questions. >> just on the pdvsa whitcomb

use it that you had considered the effect of the oil market before making a decision. can you say how you arrived at that conclusion and a little bit more about what pdvsa was doing specifically to assist iran speed at -- >> well, i think that with respect to the impact of these, we consulted closely with the economic agencies, including doe and other economic agencies. and in terms of the specific methodologies, you may want to ask that when we have some experts here -- i think the d.o.t. will be purchased putting in a call later. so i can give -- the can give you a little bit more detail of the methodology that they used. in terms of pdvsa's activities, these were sales and purchases of refined petroleum products, which are specifically covered by the act. >> can you discuss the specific case of israel's from? >> it seems odd that they would be involved in a trade with iran. >> again, i think we -- in terms of the specific activities, we've got a fact sheet -- is

that out now -- in terms of what the specific -- >> we will be handed out at the end. >> the income it was for trade in petroleum product, and this was a company that engages in this kind of trade. estimate just one more. could you discuss the state of the play these of these iran and the p5 plus one talks? the have sent a letter to the europeans to be are we any closer to seeing the talks? are the sanctions pushing them towards this point? >> well, i think it's clear that the letter that the setback was not responsive to what we feel this -- the necessary willingness of them to engage directly on the issues concerned. they talked in very general terms about cooperative matters, and it's very clear to us though -- the president has said that we are prepared to engage on other issues with iran, the core is a real commitment for them to address nuclear program, and we did not see that in the letter that was sent to cathy asthon. so it's very clear that's why we are continuing to pursue these

measures, both ourselves and with others, because i think we need to continue to keep the pressure on. this clearly had an input on their economy. at what point that will cause them to take become a different decisions obviously is something we have to watch carefully, but it is the reason for us to make sure that we are very clear both in terms of our application of the sanctions law we and our diplomatic engagement with others, that we are going to continue to push this until and unless the iranians to get different position. okay. thank you very much. appreciate your time.

the senate foreign relations committee met today to consider the nomination of william burns to be deputy secretary of state. he would replace james steinberg

who has served in the state department number two post since january, to thousand nine. mr. burns entered the foreign service in 1982, and is currently under secretary of state for political affairs. he previously served as the u.s. ambassador to russia and jordan. topics during this hearing included the military operations in libya, peace talks in the middle east and sanctions against iran. the senator john kerry chairs the panel. it's a little over an hour. >> investor, so many titles. deputy secretary of state shortly burns here. has been nominated by the president to serve as deputy secretary of state the position jim steinberg has been filling a lead. mr. secretary, we are really happy that you're a company that

i know lisa and your two daughters elizabeth and sarah were happy to welcome you. we hope that you are not missing work or school or anything to critical but we are really happy to have you here. and may i thank you as well as the secretary for service to the country, the hours, the days of the trips, the long time away from home, all the things that public service and involved and are demanding and taxing of families and if your family is anything like my family, on a missed a few plays and games and things here and there. so we say thank you to you on behalf of everybody. we know ambassador slash secretary burns very, very well. both in his current job as undersecretary state political affairs as well as the prior positions which he has a bully filled including the ambassador to russia and assistant secretary of state for the near east affairs.

they're really is not an exaggeration to say that secretary burns has been at the center at the toughest issues in the time over the course the last years he's brought a steady hand, responsible leadership, thoughtful analysis, multiple crises and challenges and he will need all of his talent and skills and experience in his new job. we are as we know at a really important transitional moment in history, one of those moments that you get every so often. i can't recall another era since the fall of the berlin wall has fraught with peril and uncertainty as well as presenting such great potential. we've been inspired by the people in tunisia and egypt who called peacefully for freedom and dignity and manage to change their government as the most

impossible to predict manner. we've been moved also by the courageous uprising in libya where people are defiantly fighting the authoritarian dictator whose time in office is long since expired. but we also watched with trepidation as a brutal crackdown that takes place in syria which threatens to spiral out of control and lead to even more civilian killings. and that's just the middle east. we can't overlook cover foreign policy challenges and other parts of the world. this committee is currently holding a series of hearings on how to deal with our engagement in afghanistan and pakistan. we spend approximately $120 billion in pakistan this year alone, and that affects our ability to deal with other things across the planet. on the broader horizon we face

significant economic and political challenges not only from china, india, brazil, but from emerging powers like indonesia and turkey as well. indeed, we understand now better than ever how our national security and our economic security are intercollegiate linked. in europe, we see how the economic crises risk destabilizing governments and decorating political divisions. all in all, the idea of the oil bipolar world is no longer catch phrase. it's a very real phenomena with direct implications for the united states and our foreign policy. our budget constraints force painful trade-offs. we can no longer afford to be the world's first responder whenever a crisis arises. yet we also yet we also cannot withdraw from the world. without the international lawyers budget in afghanistan the war will be undermined and fragile progress in iraq will be jeopardized not to mention

hundreds of other efforts that we are engaged in or around the globe. this budget also provides vital humanitarian assistance. it fights ponder and discourage of hiv/aids and tuberculosis in poor countries around the world and helps to show people the real values and aspirations of americans. it prevents the spread of cholera in haiti, distributes food to refugees in northern kenya and finances shelter for flood victims in pakistan and to use your experience and expertise to be a powerful voice and defense in these kind of efforts and the president's budget programs and i can't think of anybody with bitter experience from a career in the diplomacy in foreign policy with greater authority and credibility on the hill. so thank you for your dedication

to the public service and your willingness to help lead the department of state through a very divisive period of foreign policy. senator lugar? >> it is a privilege to join you in welcoming the ambassador burns once again to the foreign relations committee. this is a point of personal privilege would mention the ambassador burns is a good friend. i was thrilled with the nomination it brings back wonderful memories in moscow, and even if i can take it further to his dad general burns who is a part of the white house situation of sam nunn and me in the first trip to the passage of the lugar of legislation to russia and belarus and on that first trip try to think through what the implication of the acts were, but the united states could do physically. so it's marvelous patriotic

family is represented once again today and we are so delighted that you have accepted this new challenge. we've often benefited from your analysis on some of the most important issues facing the united states. in the outstanding trustees see the deputy secretary but likewise and that would be the first foreign service officer to serve as the deputy secretary in nearly 30 years in your nomination is a testament not only to the individual talent but to the commitment and the surface of many career officers who serve the nation every day in the dangerous and challenging circumstances around the world. ambassador burns has a deep base of experience in the middle east from critical to the united states as we forge new relationships with governments in the region. responded transformational defense. i appreciate as i mentioned his time as ambassador to russia is

a thorough understanding of nuclear arms control issues, security council dynamics, energy issues, other global conditions that bear heavily on the united states security and our relationship with russia. when deputy secretary was before the committee last november, i stressed the importance of making our foreign policy less reactive and promoting management of the state department that doesn't lose sight of global priorities. the committee worked to promote a more strategic approach to the american diplomacy. we have attempted to ensure this financial resource are efficiently utilized in support of the national objectives and the policy choices must be subject to the same analysis. there is limited and with within any administration to advance foreign policy priorities. while the crisis of the moment may garner attention lasting relationships and effective diplomacy, require hard work each day as the department of

state manages the shifting sands of the red spring and the complex transactions from the military to the civilian engagement in afghanistan and iraq is not in the opportunity to make strategic long-term gains related in the non-proliferation energy security and international trade. it is incumbent on the deputy secretary to ensure the strategic revision is maintained in the department. i look forward to today's discussion and many future conversations with the nominee as we worked at the american interest in the security of the bald and i think you for holding this hearing mr. chairman. >> thank you very much, senator lugar. secretary burns, as you know, we are happy to place your formal testimony in the record, and will be there as if read in foley and we appreciate probably just a summary if that is

amenable to you, and we are happy to look forward to your testimony. >> yes, thank you very much and i promise i will be brief. mr. chairman, ranking member lugar, members of the committee, it truly is an honor to appear before you today as president obama's nominee to become deputy secretary of state. i'm grateful to the president and sector clinton for their confidence in me and in our diplomatic service in which i proudly served for 29 years. if confirmed, i will do my best to live up to their trust and work closely with all of you on this committee as i have throughout my career. i'd like to begin by expressing deep appreciation to my family, to my wife, lisa and our daughters lizzie and sarah. as and so many foreign service families around the world, your love and sacrifice are a very large part of why i am here today. i can never repay them adequately. this is the fifth time that i have appeared before this committee for confirmation.

i approach this challenge with considerable few devotee, great respect for jim steinberg and all those who've come before me with an abiding commitment to public service with faith in the power of the copyright diplomacy in the pursuit of american interest in human freedoms and with few illusions about the complicated world around us. it is a world with no shortage of troubles but also plenty of opportunities for creative and determined american leadership. it is a world which faces the dangers of weapons of mass destruction, and resolve regional and sectarian conflict, extremist violence and terrorism, global economic dislocation and trans national health energy and environmental concerns. it is a vision for dr. or essentials in crafting relations with the merchant and resurgent powers and deepening of their stake in global institutions and a stable international system. it is a world in which other

people and other societies will inevitably have their own realities model is identical to ours, but does it mean that we have to accept those perspectives or agree with them or indulgent and? it does mean that understanding them as the starting point for sensible policy. it is a world in which there is still no substitute for setting careful priorities in the application of american power and purpose, having clear goals and a connecting me and to ends. but it is also a world in which the part of iraq's heavily endeavor generosity of spirit can open the door to profound advances from supporting universal aspirations to promoting global health security. we have our share of problems, but it is a mistake to underestimate our enduring strength and capacity to do big and difficult things. that capacity will be tested in the months and years ahead. it will be tested across the

middle east where revolutions which are only just beginning and consequential sergel border if 1980 - for your and eurasia. will be tested across asia and the pacific in many respects the most dynamic and significant with the rise of china, the growth of the partnership with india, the strengthening of our time is in southeast asia and the deepening of the relationships with traditional allies like japan and south korea all enormously important. it will be tested in different ways in europe where nato remains the strongest link in the chain of oversees security partnerships where they constitute 30% of the global economy for turkey is an official part of the intersection of several crucial regions. and whether we set up relations with russia has produced tangible results despite lingering differences.

it will be tested in afghanistan and pakistan where success against bin laden brings us to an important and extraordinarily challenging crossroads. it will be tested in africa soon to be a continent of a billion people nearly half born since 1995 and will be tested in our own hemisphere with a 50th anniversary of the alliance progress this year is a fitting moment to focus more of our diplomatic energy and attention closer to home and with countries like brazil and colombia which i think they did last week to hold great promise. mr. chairman, i look forward if confirmed to doing all i can to help president obama and clinton made all these tests. i will work hard with my friends and colleagues and other agencies to promote an effective policy process. i will work hard with all of you to ensure the closest possible cooperation with congress. i will also work hard