this agency is properly designed and prepared, whether the funding stream is appropriate and verifiable. : certainly the last year to the building up. the american people do not understand all the history that goes into your preparation for

this and i believe today is an opportunity for us all to get a better understanding of that. additionally, the definition of consumer financial products protection is one that people don't understand. quite frankly, it may apply to payday loans at that wasn't the basis for dodd-frank. dodd-frank was about making sure that we never again had a meltdown because certain types of credit instruments were unsafe, unsound, poorly documented and ultimately worth less than they were intended to. but it is clear today that we will be dealing with an agency that will be far larger. the budget for next year is estimated to be larger than the two largest consumer protection agencies presently in existence combined. it's a lot of money. additionally, the authority of this agency is extremely broad.

today we also will ask some important questions and this committee has been dedicated to along with the financial services committee for some time. the federal reserve is not transparent. the federal reserve does resist any kind of congressional oversight and considers it unreasonable interference. there have been limited, and i repeat very limited, ability to get transparency in some cases related to the financial bailout from the federal reserve. it is likely that without specific and documented ability to have guaranteed transparency and legitimate oversight, that this subagency independent as it might either fully funded and accountable to the federal reserve may well become an agency that well-intended is not well understood or transparence to congress or to the american

people. these concerns and others will be voiced here today. we are delighted to have a witness who more than anyone absolutely understands the intention of her agency. often you have used the term cop on the beach. oddly enough, we use it here too. today we will ask the questions that will include does the cop on the beat have district attorney overseeing the cop on the beat? is there in fact a defense counsel available to check on the cop on the beat? is there an independent judge of the cop on the beat? is there there a court of appeals and by the way if i'm accused of by the cop on the beat can i get an attorney paid for by the state? these and other questions are important because we are not talking in the case of your oversight, about only large international banks. we may be talking about a small

organization formed for the purpose of one financial instrument potentially finding that product in disfavor with the large banks who complained that product is in someway deceptive. i have no problem with the idea that will be looked into your entity. i do have a question about whether or not that small company will have their day in court and their ability not to be in financial ruin if in order to save their company they must disagree with your determination. that in many other issues we will be concerned with. lastly, there is a concept of individual liberty. one of the concerns that the chair has and i believe many members of the committee have is at what point do the american people have a right to say, i want to be informed. i want to be rejected by being

informed but quite frankly, i want something which you may not want me to have. in america, unless it is incredibly dangerous to others, or may cause harm to society, generally we let people have what they want even if we don't want them to have it. we could use many examples. i will quit with adult beverages. under dodd-frank, the cfpb will have the power to regulate all consumer financial products and to prohibit the ones it deems unfair or abusive. today, i hope we will be able to understand what's under dodd-frank descoped needed by that language and others. i appreciate again you are being here and i yield to the ranking member for his opening statement. >> thank you very much mr. chairman and thank you professor warren for being here

today. at today's hearing we have a fundamental difference of opinion about what we believe is important and who we are here to serve. the difference can be distilled into one simple question, whose side are we on? on one hand, a homeowner who has been illegally evicted, foreclosed on and charged inflated fees? they include thousands of u.s. military servicemembers and servicemembers and their families who lost their homes who were charged millions of dollars illegally and were subjected to other abuses and violations of federal law. the chairman asked a question about someone having a day in court and facing financial ruin. they do not necessarily have their day in court if they have faced financial ruin. many of the servicemembers are

deployed overseas. their credit has been impaired and their security clearances had been suspended. while they are fighting to defend our nation abroad, they are also fighting their banks back home. professor warren is on the side of the servicemembers, these homeowners, and their families. holly petraeus the wife of general david petraeus is now working at the bureau as the head of the office of servicemember of fairs to educate servicemembers and banks about their legal rights and obligations. they have joined with our nations top uniform lawyers to judge advocate general to protect silver servicemembers from the predatory practices of these banks. it to back them on the side of servicemembers and other homeowners across the country who have been the victims of these illegal, and i emphasize it legal, actions. in my opinion none of our troops fighting overseas in iraq or

afghanistan or anywhere else should also have to fight their banks back home just to keep a roof over their heads of their loved ones. and by the way a number of these actions have already been admitted to live the banks. over the past six months i have urged this committee to conduct a thorough, thorough bipartisan investigation of the systemic abuses. initially we had positive signs. on february 11 we formally adopted the committee's oversight plan, the blueprint for our investigative priorities. as part of that plan we voted unanimously to investigate, and i quote wrongful foreclosures and other abuses by mortgage servicing companies and of quote. we also held a bipartisan meeting in baltimore where we heard heartwrenching testimony from a disabled veteran who suffered abuses at the hands of

a mortgage servicing company including an illegal eviction. it is a hearing of the testimony that the committee has done nothing. i asked the chairman to join me in sending document requests to the top 10 mortgage servicers, but he declined. so i sent to myself. i asked the chairman to invite jpmorgan to testify about their illegal foreclosures against servicemembers, but he declined. some mortgage servicers refuse to provide even a single response or document, not a single syllable, as the chairman but he declined. instead of conducting a bipartisan investigation to help servicemembers and other homeowners, he has trained his eyes and sites on professor warren. who is trying to protect these very same families. so that they may have in his words, their day in court so that they might not face

financial ruin. ironically it appears that the majority single criticism of professor warren is that she is somehow being too hard on these mortgage banks. professor warren has now been summoned to testify before the committee not once, but twice. the committee has demanded that she produce a massive range of documents all while the mortgage banks are given a pass. so, let me end with my original question. whose side are we on? the side of servicemembers risking their lives and their safety? or on the side of other homeowners and their families or the side of the banks that are committing violations against these folks and these are violations that they have admitted to. i hope we can come together and work with a common purpose to do what this committee has the

opportunity to do best. to help aliens of american families improve their lives by demanding accountability and compliance with the law. i have often said to my constituents we have one life to live. this is no dress rehearsal and guess what? this is life. i do believe professor warren is doing her very best to make sure that every american has the very best life that they can and with that mr. chairman i yield back. >> the gentleman yields back. we now recognize the chairman of the subcommittee on t.a.r.p. and financial services bailout of public and private programs, mr. mchenry for his opening statement. >> any unused time you may yield on our side -- i've recognize the gentleman. >> thank you. the economic health of the united states remains fragile. unemployment numbers continue to

be unacceptably high while small businesses struggle to access credit and family struggle to simply pay their bills. with that in mind this committee remains committed to examine the economic trade-offs of current and proposed regulations and to find the limits of regulators in an effort to put this country back on the path to growth and prosperity. in the spirit of this process the house oversight committee again welcomes professor warren, who is let the formation of the consumer financial protection bureau set to launch on july 21. although the cfpb is not directly subject to congressional appropriations i hope that our witness will be forthcoming to congress and the mecca public about his processes, decisions and budget today and for years to come. it is not a secret that the activity and formation of the cfpb has been controversial. numerous questions regarding the scope of the cfpb's activities in the mortgage settlement case and the bureau's regulatory

limits remain unanswered. with cfpb cfpb's inauguration next week, it is imperative that professor warren explain to this committee and to the american people the specifics regarding activities of the consumer protection agency as of today and it's defined authority to regulate access to credit. we all agree that protections are needed. in fact one of the cfpb's first initiatives is nearly identical to the mortgage disclosures and publication act that i introduced along with democratic congressman grain of texas. it is a bipartisan piece of legislation, so that is a positive. with that said the majority rules and regulations coming from the cfpb will not be based on bipartisan ideas and will never require a vote. that is a concern. they will be conducted by a single regulator, a single director who be given authority

to author the terms for access to credit for the american consumers and small businesses with meager oversight and will be left outside the window of congressional appropriations. to make matters worse, professor warren has continued to evade questions about the types of financial products that the cfpb would ban or restrict. businesses and investors are sitting on the sidelines due to a regulatory and economic uncertainty. there are many questions left unanswered. what will the cfpb do? how will it proceed and what are the costs incurred by the american consumers for these regulations, because there will be costs. professor warren's evasive nonanswers only further contribute to the climate of tepid investments and slow job growth. i fear that the actions by the cfpb that limit access to credit and increase its cost will only further damage a struggling economy. the only clear thing about the

cfpb and its current form is that it will have extraordinary reach and control over individual consumer decisions while having an unparalleled lack of oversight and accountability by the american people. as professor warren continues to work to stand up the cfpb by next week, it is the oversight committees obligation to continue to ask questions of the bureau to be clear about its regulatory limits and proposals to restrict access to credit. i look forward to addressing these issues and many others today with ms. warren and i:ms. warren for returning and being here today and answering members questions. and with that mr. chairman i would yield the balance of my time back to you. >> thank you and i won't use your further opening statement that i would like to answer the ranking member's inquiry. as you know, we held a field hearing in baltimore on the

mortgage crisis and we hope the hearings held here are not somehow waited greater than those held in their own district with your mayor and your governor. for the same fact-finding. the time of the committee is limited. we are trying to do things which in this case financial services should be the lead. if they are not, we certainly want to make sure that we fill in any of the gaps. ritually i said we were not going to let this go. we are not going to let this go. we are going to continue to look at those abuses where there is a government nexus or whether we believe this committee can make a difference. i want to reiterate, nothing has changed from february until now and i would hope the gentleman would realize that i am happy to continue working on specific opportunities in the case of the mortgage industry. in your opening statement you did say illegal etc.. if we already know something is

illegal, if in fact it is already known and prosecution or corrections are being made, then it is appropriate for this committee to say what more do we need to do and if the answer is nothing more they are compared to other areas where people are not admitting or not, in fact known to have been wrong we are going to choose to vote for those who are hiding behind the fail if we didn't do it, we are not wrong. i would hope that both of us would always put our investigations first on those who are saying there is nothing wrong or a government agency. and again i will join with the ranking member at any time if we see a wrong that is not being righted and we can help make right. i look forward to working with him. i recognize mr. tierney for his opening statement. >> thank you mr. chairman. professor warren let me welcome in thank you for your dedication to the american consumer. i think you are doing an

excellent job. the cost of a lack of regulation certainly is clear to all of us and culminated in the recession we have been suffering through for some time. it is amazing that some people in both branches of this legislature seem to be attacking entities set up to be the champion of the american consumer and the taxpayer. some seem bent on sabotaging dodd-frank, consumer taxpayer protections in order to cover for the wall street banks who most america believe wrecked our economy, got a taxpayer bailout sometimes too, felt nothing of value for america except for financial recs that ended up soaking the american public. it there has been too little legal, moral or financial reckoning by these wrongdoers and frankly the lack of accountability of ms. greed and misdeeds is stunning. i want to add some comments to reiterate what the ranking member talked about in terms of foreclosure abuses that hit

servicemembers particularly hard. this is one thing this committee can continue because it is an ongoing matter. as the rank member of the national security subcommittee understand that readiness can certainly be affected by troops who startled to deal with issues.com when that includes negative credit report security clearances that are suspended and worst of all losing their homes due to the illegal actions by banks. mr. chairman i would like to enter into the record a report compiled by the democratic staff entitled fighting on the homefront, the growing problem of illegal foreclosures against u.s. servicemembers. the report describes in detail but systemic nature of these problems particular troubling is the spit abuses are already illegal. congress acted with servicemembers civil relief act to protect our men and women in uniform against foreclosures without court orders and against inflated fees. this report finds when initial foreclosures began surfacing the banks downplayed these problems. thousands were identified and it became clear the problems were more widespread.

this year three banks were forced to pay multi-million dollar settlements related to these abuses. largest was jpmorgan. at first it announced it would pay $2 billion but it ended up paying $56 billion to settle claims by active duty military personnel. the justice department officials also condemned the actions of the bank of america. this is what they said in a quote, the bank failed to protect and respect the rights of our servicemembers, fail to comply with clearly mandated procedures and foreclosed against homeowners who are valiantly serving our nation. i want to tank a professor warren and holly petraeus who have been working hard on this issue at the bureau. since these are so much more widespread than originally thought however, i believe a conference for investigation by this committee is needed and with that i yield to mr. quigley for the balance of my time. >> thank you, thank you mr. chairman and professor warren. with due respect i fear that this hearing is focused on

issues which detract from the obvious task at hand, helping professor warren and others in our attempts to avoid another economic catastrophe caused in large part by unregulated greed. on one hand we are trying to balance things here and we are balancing an unknown entity. the greatest economic downturn since the depression caused by this lack of regulation and concerns about what an agency is going to do who is full of facts doesn't go into place until later this month. so if we balance that i think the american public recognizes the real concern out there is what we have gone through, what we are still experiencing because of those problems and how to face them rather than some extraordinary concern about an agency which really hasn't done anything yet. to challenge those concerns that we have faced so far. like any agency, the cfpb needs

vigilant oversight from congress but we should not obstruct the agency from carrying out the intent of dodd-frank. as millions of americans are still suffering the consequences of housing and financial crisis, which was caused by weak or nonexistent regulations, we all here have the beauty of hindsight about what took place but let's remember what professor elizabeth warren said in 2007. nearly every product sold in america has to pass basic passed basic safety regulations well and dance of reaching store shelves that credit products by comparison are regulated by a patchwork of state and federal laws that have failed to adapt to changing markets. the cfpb was explicitly designed to address these regulatory shortcomings. just like the consumer product safety commission protects consumers against exploding toasters this agency will protect consumers against faulty mortgages. one key strength of the cfpb is to focus on the shadow financial

services sector and that should you focus today instead of concerns about what we might do. these unregulated matters will for the first time be held to the same standards of tanks and credit unions. this should be our number one priority and i:miss warrant for for her efforts so far and in the future. >> i thank the gentleman. members will have seven days to submit opening statements for extraneous material for the record. >> mr. chairman i have a motion? mr. chairman and listening to your statement a few moments ago and since the key focus of today's hearing is the abuses by a mortgage servicers house rule 11, the committee authorized subpoenas to document five mortgage servicing companies that have not been responsive and by the way mr. chairman you said that there were some that haven't knitted wrongdoing. the five we are talking about

have not admitted wrongdoing. and i think it would be appropriate based upon what we have done in other cases just like you said. we want to make certain things a priority of those things we need to continue to look into. i think this is an appropriate situation for us to look into. >> i thank the gentleman. at a hearing only motions for subpoenas related to that hearing can be considered in order. for witnesses. however, we will take the motion and work with the ranking member on a business meeting for it could be in order. >> they tell us that under rule 11 this motion is in order and it must be recognized. >> under committee and house rules, we noticed business of the committee differently than hearings. today we have not noticed any business of the committee, so although members would be advised that if a witness had not shown up a subpoena could be

in order an order to compel that witness. no what that business would be appropriate. i will work with the ranking member to notice a business meeting so that it would be. of the next business meeting including the markup of a post office it would be ordinarily in order for that. >> i thank the gentleman. >> mr. chairman i would like to appeal the ruling of the chair. [inaudible conversations] the gentleman insists on his motion. we will take a five-minute recess.

[inaudible conversations] >> the hearing will come back to order. mr. tierney, i've consulted with the house parliamentarian and he informs me that under hearing procedures, which is throughout the 800 pages at page 802 and beyond of the house rule 11, which you have referenced, if you look at hearing procedures what it says is it goes through paragraph 5 of what is in order and it is not included in what you have asked and then paragraph 6 says, except as provided in paragraph 5, the chair shall receive and the committee shall dispose of requests to subpoena individual individual -- sorry, additional witnesses. do you have an additional witness? >> yes, sir. if you look at the subpoenas we are moving the subpoenas to the

custodians of the records of the five banks. >> what would that have to do with today's hearing? >> it is additional witnesses for the hearing that has been noticed the. >> the ranking members notice is germane. >> no, no, but let's get to the first question. is says witnesses. your subpoenas for documents. >> the custodian of the records. >> it is for documents. >> for the custodian of the records to bring it in. it is for documents. >> will the chairman yield? >> i've been through this a few thousand times in my life and i don't know about you but the subpoena is to the custodian of the record for the documents. the custodian is to produce the document. >> i want to understand your subpoena. what you want is 10 executives to be here with documents? >> i don't know if they are executives are not. i want the custodian of the record. >> so you don't want documents.

you just want the custodian? >> what part of the english language don't you understand? that person will be the custodian of those records and is the appropriate person to produce them as a witness under oath in front of this committee. that is what the subpoenas are for. >> i appreciate that. >> additionally,. >> mr. chairman? >> go ahead. >> mr. chairman since there is question as to what our motion is all about, mr. tierney is absolutely correct. we are talking about the custodian of the records and we are not talking about 10 or 12 banks. we are talking about five banks and we are talking about the five banks where the minority requested information and these banks did not provide us mr. chairman with one syllable of information. the relevance is mr. chairman,

we have before us professor elizabeth warren and her bureau, the bureau that she has been putting together and is working so hard on. part of their task is to look at mortgage issues and he said a little bit earlier that with regard to financial services, they are doing the same thing. they have basically been tasked with looking at things prospectively mr. chairman. we are looking at them from a historical standpoint. and so, that is what it is all about. >> i appreciate the gentleman's comment. additionally the parliamentarian informed me that an appeal of the ruling of the chair, although in order, is not immediately potable under the rules. so, we will continue this hearing and it is my intention before the end of the hearing to hold a vote on your appeal of the ruling of the chair.

and with that. >> parliamentarian requirements. >> just one quick question. based upon your understanding of the parliamentary rules, will we have an opportunity to debate our motion? do you follow me? and other words. >> the in appeal is not debatable. >> so basically we will not have an opportunity. >> it certainly is debatable. and appeal of the ruling of the chair is debatable. if we get the germane is on the motion made by the ranking member and i'm happy to do it now the like. >> i have set it aside for later. the parliamentary office of the house is available to all members. we will have plenty of time. we will have plenty of time for you to check on what they just told me and with that i just

have one quick question. mr. chairman rule five -- you shall take reasonable steps to notify members as to when that vote will be held. according to this rule isu provide all members -- before holding a pending vote on the motion. >> will not happen before 10:40. >> at this point. >> parliamentary inquiry mr. chairman? >> i appreciate you being here. pursuant to committee rules all witnesses will be sworn before testifying. please rise and raise your right hand. >> mr. chairman i want a parliamentary procedure, please? >> do you solemnly swear or affirm the testimony you are about to give will be the truth, the whole truth and nothing but the truth? thank you. >> mr. chairman? >> the witnesses answered in the affirmative. professor warren. >> mr. chairman?

>> we have a number of items which are pending. i want to and will allow you to go through your full opening statement before we deal with this unrelated to today. >> parliamentary. >> your opening statement is in the record in its totality and what we will do is not look at the clock carefully. obviously if you have additional items we want to hear them and today is about hearing what you have today and with that the gentlelady is recognized. >> thank you chairman nye said, ranking member comings and members of the committee for inviting me to testify about the consumer financial protection bureau. we appreciate the committees important oversight role in welcoming opportunity to respond to your interest in how the bureau is being organized and operating. let me begin by ensuring the

committee that at cfpb we are working nonstop to build an effective organization. with the goal of making consumer financial markets work better for consumers and work better for financial services providers. we want to make prices clear and we want consumers to be able to compare two or three credit cards board two or three three mortgages head-to-head. we are opposed to complicated forms and fine print. we believe they do not help consumers and they do not work for responsible lenders who are happy to have their products compared head-to-head in a competitive market. at the end of the day, we think every consumer should have the basic information that they need to answer two basic questions. can i afford this and this is the best deal i can get? that is how markets are supposed to work and that is where this new agency is headed. we have all seen the

consequences of a regulatory system in which no single regulator has the authority and the comprehensive tools necessary to ensure that consumer financial markets work for american families are go for years, we have seen the growth of fine print of complex terms, fine print that makes it almost impossible for consumers to know what they are really getting into before they sign on the dotted line. we have also witnessed an explosion of high risk credit consumer lending among largely unregulated companies such as payday and car title lenders and we have seen the economy driven to the brink of collapse by sub-prime lenders pedaling high risk mortgages to people who couldn't possibly repay them. as a country, we are all paying a high price for a broken consumer credit system.

the cfpb will increase accountability in government. under the old system seven different federal agencies had bits and pieces of consumer financial protection, but no one had the authority and and the conference of tools necessary to monitor whether prices and risks were clear and to ensure the consumer financial markets work for american families. in the wake of the worst financial disaster since the great depression, the dodd-frank at reformed this flawed regulatory structure by placing consumer financial responsibility squarely on the cfpb so it can be directly accountable both to congress and to the american people for getting the job done. in my written testimony, i described in detail our achievements in standing up to nuke consumer financial bureau. we have made significant progress in our efforts to

combine to complicated mortgage disclosure document into documents into a single short form. we are laying the groundwork to supervise non-bank lenders which will give better protection for all families and help level the playing field between banks and other kinds of lenders. we are setting up our offices of servicemember affairs under the very strong leadership of holly petraeus. we have put the basic building blocks in place for a functioning agency, hiring approximately 400 employees with diverse backgrounds. we have people who are coming to us from financial services, consumer advocacy, community banking, government service, private legal practice and regulatory compliance. and we have kept stakeholders informed every step along the way. i have talked directly with community bankers in all 50 states.

i have spoken with literally dozens and dozens of credit unions and credit officials. i have also spoken with big banking executives with trade associations, with government watchdog groups and the consumer advocates across the country. i am pleased to report that our various initiatives on improving mortgages and supervising non-bank credit businesses and setting up a strong military service office has received widespread support from both individuals and groups across this country. in my written testimony, i also described in detail the steps congress has taken to provide meaningful oversight over the cfpb and to make sure that it remains accountable both to congress and to the american people. i appreciate the opportunity to discuss that oversight today. so, without chairman isayah, ranking member comings, members

of the committee thank you again for inviting me to testify about the consumer financial protection bureau. as we prepare this agency to begin its various responsibilities, we appreciate the important oversight role of the committee and we thank you for your interest. >> i:the gentlelady. without i will recognize myself for five minutes for a first round of questioning. as you know i'm not on financial services and i never have been so i'm going to try to just do some business of the committee that i'm not particularly interested in although both you and i use the term cop on the beat. i received from kim wallace and your legislative affairs department, received a rather interesting response to our document request which actually actually -- okay.

and we are going to leave you with a copy but i think he works through treasury. >> i am sorry. he doesn't work for me. he is the secretary of the treasury. >> the documents we requested, we requested from you and what we will do is we will give you a copy of this to take back. we don't mind that we need to work through document request. we have gotten about 300 pages from what we asked for. the gentleman said they were full ominous but we only received about 300 pages, most of the public. but some of the documents we requested department of justice has concerns about records that may implicate the equities. the department has advised us to disclose some of these records would adversely impact law-enforcement efforts. now just for you professor warren, you are not in law-enforcement.

you are not involved. he wouldn't be involved in these criminal investigations at this time by your agency, would you? >> no congressman, mr. chairman, i am sorry but i'm afraid there may be a little bit of confusion here and i want to make sure we don't get down the wrong path here. i believe there are requests from the department of treasury. >> well the problem is that we put it to the agency that is the custodian of your records. let me go through a couple more and then again we are going to have you take these with them because come july, 21st. >> a week from today you are going to inherit these things. during this intervening period for requests that come in from thompson west and from judicial watch, and they have been apparently pretty inadequate, so

inadequate that judicial watch is appealing the cfpb's search for productive records, stating that it was an abuse of disclosure. the problem is, they received, professor, they received these documents. actually that is their letter. and professor warren. they received documents that look like this and when you take over and have a department under your control, what i would like to let you know is that when someone redact something so you don't know what was redacted, you don't even know what needs come from what request but that is considered excess under foia. you have to find a way to make sure that when you deliver a paper with nothing on it if you are able to tell those who asked what that is responsive to.

and literally, it is a judicial watch. what they received word -- they received not as many pages as they should have but received countless pages like this. in the case of judicial watch, they had given them the information that justice on your behalf wouldn't give them. so they had two pieces of paper. they have the one that is responsive and they can see why they have a right to it and then they have a black page. so a week from today you are going to inherit an agency where you are going to have a claim by number of transparency groups who are saying hey we have got the document on redacted. you redacted it over treasury so much so that he violated the law. that is going to be one of the first things on your table. like i say i'm going to give them to you today. my question to you is will you please address them immediately and report back to us on how you you have resolved

inconsistencies between what state a.g.'s under their foia laws thought they had to give and what justice on your behalf didn't give? please. >> yes, mr. chairman. i have never seen this, but i do understand mr. chairman we will do our best here but i'm not sure i can explain or will be in a position to speak for the justice department. >> actually what i'm asking you to do is you are going to inherit those requests and those appeals. >> yes, sir. >> you can resolve those appeals by having your own foia people go back through document requests and fully complied or you will inherit the appeal. i'm sure justice is not going to continue defending on your behalf their bad decisions, so what i would like to know is will you look at them immediately because these foia requests i think are going to speak pretty loudly to whether or not the transparency that you speak of, that we speak of, is actually occurring and sometimes the best example is of

transparency is do you give all you can give when foia requests come in asking for it or do you hide kind every possible redaction? foia officials have a considerable amount between what the law absolutely requires they put out in which this case judicial watch having unredacted forms is saying treasure really has violated the law. and what is full and complete and transparent and you could give out a saying we are going to give all we can? your agency is not being a law-enforcement agency, not dealing with current criminal activities as a general rule hopefully we'll be able to give more, not less. please. >> i'm afraid i'm just a little lost in the conversation because i'm not sure what the foia request is for and i have not seen it. >> it is related to your activities during the lead-up to the formation. >> but i'm not sure which documents you would be talking about or what the subject matter is or whether it is the subject matter which the justice

department has indicated it has some interest. we have many activities and i will say, sir, we have had a lot of foia requests and i believe we have answered foia requests. we have hired people who understand foia and it is my understanding we have been putting out a lot of documents from foia, most of which the justice department has no interest in one way or another because they do not involve an ongoing law-enforcement matter. i am sorry, sir. >> i just want to be respectful of the time. speier name is not geiger, is it? is that? >> no, sir. >> the request is talking about, the chairman is talking about is dated february 2011 and address to timothy geithner. i don't want to be the press to get confused. and to get the implication that we are trying to hold that documents. you didn't try to hold back

anything from this committee, did you? >> no, sir. >> very well. professor one you've recently came to baltimore for a town hall meeting where many of my constituents were able to learn about the bureau and share with you their issues and be heard from a veteran who was illegally foreclosed on and a retired steelworker who was tricked by a phony debt consolidation company. these are real people who work hard, play by the rules and expect others to do the same. and by the way we have a constituents with chairman issa in every single member of this committee the same kind of people that i guess you have seen all over the country. what struck me most about the town hall meeting however was the overwhelming excitement. i don't know if you know is that they literally had to turn people away. several local papers said they were treated like a rock star and i don't know about that but they said it. how do you see our constituents and how if you've been moving around to get together as a

nation? can you tell us about that briefly because i have a number of questions i want to ask you? >> i can congressman cummings and i appreciate being given a brief opportunity to do this. one of the most exciting parts about the new financial bureau has been to be able to spend time talking to americans around the country. these are americans of all political persuasions and races who say this is a chance to see government work for me. this is a chance to have somebody on my site. this is a chance to have a voice and a world in which it is all run by big companies who want to drown me in fine print and tricks and traps and surprises that always keep me down. i think we have a real chance with this agency and it is a chance not only to help markets work better but a chance really to restore hope for many americans. >> what i heard from folks is

that they said basically what you just said, they are just glad that they have somebody looking out for them. they said the banks are doing of good -- okay. they are making record profits. sadly so many of them are drowning. let me ask you about the mortgage abuses. on april 13, 2011, the office of control of the currency federal reserve and the federal department -- issued a report finding widespread problems in the working mortgage servicing companies. let me read the major winding. the weaknesses that each service or individually or collectively resulted in unsafe and unsound practices are violations and violations of federal law and state law requirements. the results elevated the agencies concerned that widespread risks may be can -- presented to consumers, communities and various market participants in the overall mortgage markets.

the servicers included in this review represent or the the than two-thirds of the service markets. that's thus the agencies consider problems within this report to have widespread consequences or the national housing market and borrowers. professor warren, these are massive and systemic weaknesses. when the bureau is up and running what role will it play in addressing them? >> well, i think the best way to understand it is that we will be on the front lines in the question is, what kind of mortgages get fed into the system on the very front and? is it possible to use mortgages to surprise people, to trick people, to drown than them and turns that no one understands of the consumers are neither able to ask the question can i afford this and is this the best deal i can get? our job is to be there on the front and and we are taking enormous strides in that direction right now, to make sure that in the first instance

mortgagor's are clear. people can tell what they can afford and they can shop in a competitive marketplace. it is also our job to be there throughout the process, including at the end in mortgage servicing. if there are problems all the way through the fault is it -- foreclosure to make sure that the large financial institutions that handle these transactions are complying with the love. that will be our job, sir. >> with respect to servicemembers the report found cases in which foreclosure should not have been preceded including against borrowers who are covered by the servicemembers civil relief act however this review is based on only a sampling of a relatively small number to address these widespread abuses the agencies initiated an action against all 14 banks. they directed a the conference overview of all affected homeowners to identify the war were set up financially harmed. professor warren and will be know the full extent of this

problem this year or next year? do you know? >> congressman, do not. i rely on sheila bair and her most recent testimony who pointed out even with this read really do not yet know the full extent of the problem. >> and it is pretty bad? >> yes. >> thank you very much. >> i now recognize myself for five minutes. in investors business daily, a report on july 8 at the justice department has an investigation ongoing about bias banks, about lending and minority communities and i was wondering, you he would have been an adviser to the justice before under your testimony, and regarding the mortgage issue, the mortgage servers or issue. so i wanted to know if you are serving as an adviser for this investigation? >> the secretary of the treasury asks us to get involved in

mortgage servicing issues. >> you a party testified about that but i was wondering about this bias bank investigation that has been reported in "the new york times" in investors business daily? >> he has not asked us to be involved in that. i don't believe. >> now in terms of, in terms of, in my opinion the financial terms need to be accurately and correctly disclosed and individuals can make their decisions based on whether or not they would like to purchase the product. for instance the one mortgage disclosure issue you mentioned in your testimony that you mentioned before that i mentioned in my opening statement. i think that is positive. i think it gives individuals the terms that they need and it is very similar to the legislation that i put forward a couple of years ago. so now, disclosure i think is an important piece in all of this. do you agree? >> yes sir, i do.

>> now in terms of what you see for the cfpb. do you think your actions mainly pertain to enhancing disclosures do you think that is going to be the core work of the cfpb? >> well, i think the best way to understand it is that there are multiple tools available in order to try to promote a functioning market and there is no doubt that no market functions if people don't have meaningful and adequate disclosure. but i never want to back away from a significant part of what we will do with the supervision and enforcement. more than half of our resources will go to supervision and enforcement over financial institutions to make sure that there is a cop on the beat and making sure everyone is following the rules and that includes both banks and non-banks. if you will forgive me i would also add to that just because they think of this in terms of

the areas where we work. we also have a significant responsibility on consumer financial education. we are required by dodd-frank to do that and we will be doing that. >> do you think in terms of financial products now, do you see a financial product that is so complex that disclosure wouldn't be a remedy? >> it is a good and interesting question congressman mchenry. i recall sitting in the house financial services during long testimony in the question came up about banning products. and i remember that in england, the then president of the american bankers association said yes, there are certain products that should be banned. i am a be believer in disclosure, meaningful disclosure and i would like -- at least like to start with the

concept of let's get out there and try some real disclosure, put some real power into the hands of consumers and see if we can't get these markets working. i believe in markets. >> do you see a finished product out there today that needs to be eliminated? >> i don't know of one, sir. but if you had a particular suggestion you would like me to take a look at. and there may be others. >> i don't have a half million dollar budget so i would leave it to you. that is why i thought you would have some ideas on that. now in terms of enforcement mechanisms with cfpb beyond disclosure, do you think those enforcement mechanisms would prescribe terms going forward, meaning setting interest rates and fee structures? >> sir, i think what enforcement mechanisms are about are making

sure that the laws are properly enforced and it is done as i understand it both through supervision and through direct enforcement. that is, if it can't be worked out otherwise, suing banks that they don't follow the law or suing non-bank financial institutions if they don't follow the law. >> what would the remedy be if they change their practice is going forward in a way as you describe? for instance in the mortgage disclosure issue we are talking about, the mortgage settlement issue, that is a significant piece of that prescribing terms going forward. >> yes, sir. that would be new regulation. it would replace the older complicated more complex regulations that require higher regulatory costs for the financial institutions and probably produce a whole lot less value for consumers. and what we are going to do now and i think what we have god is something that is both cheaper for mortgage originators, for

banks and usually community banks and credit unions to issue and produces more value for consumers. it is a form and they will be required to follow the form. just like under current law only it would be an easier and we think more effective form. >> mr. maloney is recognized for five minutes. the minority presented the list and i'm reading a list. if the gentlelady wants to --. >> thank you very much and welcome professor warren. i would like to ask you, after we went through the great recession and almost had the great depression in which $18 trillion in personal wealth in this country was lost, would you say there was an overwhelming consensus that reforms were needed to

present -- repent another crisis and that the cfpb and i would say the credit card bill of rights which i authored, were and are protections from consumers? >> yes, maam i would. >> do you think that the cfpb has already carefully and urgently needed and should be free to protect consumers as intended and go into effect on july 21? >> yes, maam. i do. >> what has concerned me deeply not only on this committee but the financial services committee on which i serve is the number of questions against you, because people have asked you for advice. i thought the freedom of speech was in our constitution and a fundamental right for our country. you have been described as a leading consumer specialists, adviser. is it unusual for, well you are

an adviser to the president now and to sacred terry geithner but is it unusual for other members of government and congress members, the a.g., state city councilmembers, other professord captains of industry or managers of energies come as it unusual for them to call you a nasty for advice advice? >> congresswoman, i have been giving advice for a very long time. i hope it has been valuable, but i have always been willing to answer and have always been willing to talk to people. >> you don't have a vote on anything right now. you are just basically putting in place an agency that the president has asked you to put this agency in place. so you basically don't have any power to force anyone to do anything. >> yes maam, that is right. >> but you can't answer the phone and you can give advice.

>> i would say that is a basic american fundamental principle and one that should be protected for every person, and especially professors and academics that are leading specialists in the areas. if you talk about oversight, you talk about transparency. the last thing we want to do is say people can't give advice. would you say that is a fair statement? ..

likely pay a price for her leadership to the cfpb and it talks about what the cfpb -- with the candu on july 21. do what they can do is they don't have a comparably very. but they can do is write and enforce the rules already in place from the ftc and hired another 13 agencies. what is interesting to me is that they can't, which would be beneficial to placing on a level playing field and they cannot assign which nonbeing should be supervised aviation sea. they cannot mnr and for us us against the non-bangs. and we know it was the unregulated, and they get to the other subprime mortgages, with the credit default swaps, highly

leveraged derivatives that led us to this crisis. so not allowing the leader to cut many djs according to the american banker with the harmful to the financial and petitions of our country, particularly for the database. could you elaborate on that? >> congressman, i would just say that i think when the consumer agency has its direct their finance its powers ready to go, fully operational would be a very good thing. i would like to also comment on the ranking members for statement. i have for seconds. my time has expired. my goodness. i just got to say 160 servicemembers were foreclosed on unfairly according to the department of justice may feel on the merit we should look at this information for the abuse

to the american military. >> your time is expired. mr. chaffetz is recognized for five minutes. >> committee was quoted as saying the point indications the dedicated transparency and accountability was number forthcoming at how plans to spend taxpayer money. also like to say in the absence of the fine print, the committee cannot discern what the consumer financial protection plans to do or how much will cost. give your agency is about to open up in a week, how do the taxpayers -- how do we see what you're going to do and how you're going to do it? the mac well, congressman, we started five minutes before your city that were supposed to go live building a website, try to put as much information out there as possible. >> on the website, mckenna so limited. i want to get very specific about the budget you put

forward. in this document, it is just had my items. the two biggest finance their full-time permanent positions followed by personal benefits accounts for $225 million in expenses. third item is contractual services that is a very specific number. where is the detail about what you're going to do and how you're going to do it? how do you find a great event number and i are going to work in a sufficiency? e.u. policy at specificity. looking for the document, transparency and how you're actually going to do that. >> congressman, let atreides at two levels can you tell me if it's helpful. the first level is described in a big fence where we will be spending money on the consumer financial protection. >> i'm worried about the fine print. the appropriations committee, oversight committee, we don't have details of how you're actually going to work and i can put this forward.

let me read, for instance -- go ahead. >> so also, congressman and i'm afraid i'm talking on the name, but every contract issued by the consumer protection bureau is done i see no through the ordinary competitive process when appropriate to procurement. >> and fans that does contracts come up for an to mrs. directly from house appropriations. the consumer financial protection board does not describe the relationship between object is in the budgetary resources. performance measures are cause for significant proposals affect obligations and if i his tenure. and the relationship to the current year budget year or the budgetary effect to work with strategic planning or investment in information technology. how do we get the details of all this information? you obviously retype my number based on something, but you seem

to be hiding the details of how you came up at those numbers. >> no one is hiding anything. we publish all contracts and a special place they publish. >> in attacking a contracts. on your website -- i'm worried about the first in albuquerque during provo, utah. how to defend the makeup of these numbers and details as the appropriations committee suggested? i doubt the public and cd very. >> you want to go to debbie debbie w..u.s.a. spending.gov. it will list the type of contract cannot be wordy and the amount of the contract. >> what about all these other items? matches the contracts trade performance measures and the budgetary resources, weirdly kind of information? it's none of the website can break other agencies. to make congressman, it's process, for example, of developing mensheviks and we are

not yet standing as an agency. as soon as we are sad outcome we put as much on this. >> and in mexico this? p. mackey said to have this many standout. are you telling me this will be available next week? >> congressman, do until the promise because i'm not sure how many things you read. i'm not familiar with the document you're reading. >> you're not familiar with the appropriations report? >> the budget justification is dramatically different than any other agency moving inquiry. >> i'm sorry, congressman. this is our document. i think you're reading from something else. >> you were given a document to the appropriations committee. the appropriations committee said that unlike other agencies and the stability of the things they are normally seen as

members of the oversight committee and all of that is access. >> congressman, mr. chairman, could we get a copy of this document to look at it so we can understand the question? >> shourie. >> iosco s., is there a risk of steaming from the appropriations committee? >> that's my understanding, yes. this committee is also asking the same serta transparency. >> congressman, case would be great to come back and preview and work with you in order to find something that is adequately transparent oath to congress and the american people. >> my time is expired, but he hoped the information beyond the website. >> ms. norton for five minutes. >> mr. tierney for five minutes. >> this is stunning. i really have to say this whole display of being concerned about a consumer group is somebody

might be standing up to protect the consumer contact player as opposed to the blanks. this is not to transparent to sabotage. >> with the gentleman yield? >> i won't. i only have five minutes and it probably will be too cool over is today. we have no concern here about responding to subpoenas to the banks, showing documents to their foreclosure and the servicemen and women acting in asking us and peered for going around, around, around year. i think the abysmal record is pretty well chronicled. i have over 100 cases in my office alone. the loose documents, unresponsive, give conflicting guidance, refuse to process payments, false negative credit reporting. all of that is going on in it's terrible for people generally. but it's even more terrible than they do with respect to service

members deployed overseas. i went to rescue a particular case of captain kenneth gonzalez in the united states army. he was deployed to iraq as a lieutenant from december 2002 december 2010. his bank, chase, toad catching gonzalez's fight to slip its payments by using money orders, so she did it. they chased out to process the payment and they submitted inaccurate negative reports to the credit bureaus, which then affected and badly impacted catching gonzalez security clearance while he was still deployed. the military surgery to help him, but described the uphill battle she had won a protein e-mail. to be honest, i've not been able to do anything of this climate. i'm talking with clerks and the customer service section, which i've sent in four separate times.

i've been given a tip on every time and been told the processes 40 to 72 hours. i've left voice messages or to supervisors. basically you need to talk with a human being to listen to the facts of the case and understand the need to make a rate. professor warren, if this jack officer can't get a reaction, how do we expect people overseas in iraq and afghanistan will get some response? >> i think you put your finger on the problem, congressman. these systems are not designed to be responsive. >> cheeseheads clear views of pack affairs. they then charge catching gonzalez fees when they finally admitted they were wrong on the whole process try to help them unwind. so how often a mortgage services initiating and fee collections, whatever and then charge morpheus at the back and, how

often does that go on? >> congressman, we do not know. there is no public information on that. >> well, this is far from unique i think everybody on both sides have had these kinds of complaints coming in for constituents. some adults and people people in the service and that's why it's critical we get the documents the ranking member has subpoenaed and asked the committee to subpoena and go through and thoroughly investigate all these legalities no service member should spend his or her personal time in iraq or afghanistan trying to unwind customer service mistakes from the bank that just doesn't do the job they should do, nor should their families be of the. thank you. i yield back. >> there have been a number of

settlements. i want to applaud the gentleman's work, but there were a number of settlements with countrywide, particularly with service members where they refined well over $20 million for foreclosing and during the service members families out on the street while they were serving in iraq. i have read those documents and i asked permission to put them in the record to support the fine work of mr. tierney and also to say that we can talk about substance, process, appropriation, but we at the investigative committee and i believe we should follow what they subpoena or with voluntary action, the leadership the ranking member is put forward to look at the bottom of this. recently, holly petraeus was heading up a special division for the military, testified in the senate and also on the very

extreme problem. i yield back, thank you. >> ms. merkel is recognized for five minutes. >> thank you and thank you for being here today. we called it turned should keep this sale, the many that will be working in your new department and the concern that salaries were anywhere from 10 to 40% higher the federal sale reasons. if they'll issue a set for employees are not subject are consistent with the federal salaries that you have the autonomy to set your own salaries and the concern in this economy that may be a little more liberty than we would like for the american taxpayers dollars. but i just want to talk a couple issues here. first of all, we've heard about the servicemen and women in the particular issue with chase bank. that issue is already declared illegal. so i'm trying to understand, we

all agree in this body, when this is a bipartisan issue that our men and women should be protected and when they are overseas serving this nation. but this action they chased jason 30 deemed illegal. we've heard the county waited 30 a settlement. how do we justify this $500 million department if that's the gist of what we're talking about. >> congresswoman, i would put it this way. we know about specific abuses that it's come to light that were brought to life by the press, not government investigation and window at three specific mortgage servicers who publicly admitted to wrongdoing and engaged in a voluntary settlement. >> again, we are such a short period of time. that was in your department. you're not up and running yet

that shed light on this abuses to the military. >> the question at the u.s. is at the consumer agency may be helpful. we are there to be an ongoing monitor. we've only talked to three mortgage servicers here so far. but he put it this way. we set up the office of servicemember affairs back in january, one of the first groups reorganize. shortly after that, press reports came out about illegal foreclosures. just to give you an idea, holly petraeus with 25 servicers asking them to review their practices and we heard back from half of the servicers. >> thank you. i don't wish to cut you off, but i know we've handled this issue up front. i do want to talk to that a couple issues. number one, this past week the jobs numbers came out and they were horrific. as you know, 18,000 jobs.

my concern is what you're going to do will continue to hurt job growth in this country. i'd like to know from you specifically, to intend to raise compliance cost for the cost of credit for consumers? >> congresswoman, i should say returning to make prices clear that we're trying to make it easy for families to compare products. i don't think that's going to cost people jobs. i think it likely makes them a little more secure. in the case specifically of compliance cost, our first initiative is the one that congressman mchenry also taught to bow. congress and the regulatory agencies have been working for 15 years. >> again, i watch my time clicking away. do you intend to raise compliance fund companies which will further have the unemployment and difficulties

are companies and small business owners are facing in this economy? >> congresswoman, i'm sorry. >> it is say no. we are to have an example of overdoing, lowers compliance costs. that's why it's been embraced by the american bankers association, the independent community bankers association, by the credit union. it's been embraced by bankers and mortgage originators across the country. >> you don't intend to raise compliance costs. >> were trying to lower costs for them. >> never ever? >> right now what we're trying to do is line up overdoing is a prototype for a firework. we are working closely with community banks, working closely with credit unions. >> thank you. one last question he talked in your testimony and it concerns me that the conception that the mortgage and credit consumer

world is fraught with tricks and traps they think was your word. if that's the case and you're sitting here saying that this world is wrong with all these issues and this goes back to the chairman's question, what is it that you intend to the end? what is that you intend to change? as the world is filled with trips and traps, what is it you intend to change? >> congresswoman, and a think the ending is the right way were talking about. make the prices clear, risks clear, but on the fine print says possible for consumers to compare one product to two or three others. but then why do you need the power to $500 million budget? i yield back. >> the witness may answer the question. >> congresswoman, we need a budget because these are very

large and powerful financial institutions who hire armies of lawyers to define financial products that can't be read as ordinary american families. we need some pushback. with the voice of the customer, the american family. >> thank you, mr. chairman. i do want to welcome mr. warren and indicate that i had staff and they informed me they are in line with all banking regulatory agencies. i want to go back to this report into the bicameral forum. in december it was set up foreign because this committee should be trying to find out whether were found law-enforcement amounts to a dramatic problem that needs further investigation.

how did petraeus, the head of the office of servicemember affairs appear at this bicameral form? and he was asked whether the case at the time she had heard were isolated or more typical. let me read you what he said. she recalled a national guard saying to me that every time her husband was activated in here tonight debated three times, she had to go through an extended fight to get the interest rate reduction. send the paperwork. we don't have a record on that. send it again, send it again. have you heard similar accounts? >> yes, ma'am, i have. >> i want to ask you about what you think that cfpb could do because we know it's not charged

with enforcing the service. it's fair to ask what would be the role of the cfpb and covering and doing something about these kinds of abuses and what our servicemembers are just not happen again and again. >> thank you. if i can, i'll give a two-part answer. the first part is last week the consumer financial protection bureau led by holly petraeus signed in understanding what the judge advocates general of other services and it was for how we can cooperate. and between the two of us, use our resource is more effectively to protect servicemembers. we had already been well into the process of working with the department of defense.

and this is just a more formally collagen documented that process anything will change a strong relationship going forward. they also want to say a second thing within the consumer agency and that is what it means to have a strong leader, what it means to make a servicemember affairs firm in central in this organization. and that is, we started reaching out. holly petraeus and i went together to chart based in san antonio. we've been to other places. she's been on their own. she's opened up a website. >> are faster, this is just the kind of thing we hope you would be doing. like to ask you about the kinds of complaints that you expect to receive first when you come online on july 21st. have you anticipated what kind of complaints are like you to

come to the forefront and you expect a servicemember complaints to be among them? >> we have reason to believe this because we've are deep in out to servicemembers and servicemember families and actually are an active communication with many families and many of those he servicemember families. we anticipate this'll be a significant part of our time of our workload at the consumer financial protection bureau. >> yes, ma'am. >> point of order. is there any reason not to numb the disposition of the subpoena motion that was going to be addressed at 10:40? >> feature announced it would not happen before 1040. >> away the closer approximation? and fairness of the members on both sides, it would nice to

have some idea when that might occur. >> a chair with have a 30 minute notice, which was the ranking member's request in the chair will now announce still have it 30 minute head start before the vote happens. with that, dr. danger they is recognized for five minutes. >> thank you, mr. chairman. i have a pretty simple question. i represent tennessee and often sit on the agricultural committee. i was just curious to know your take on an issue central to including tendency for farmers in general. title x and the sub to act in the cfpb states that the farm credit administration will inform all regulated by the farm credit administration in that

good cfpb will have no authority to exercise any enforcement powers under the thought frank at with respect to persons regulated. solicit your interpretation that the cfpb has any enforcement authority over institutions regulated by the fda? >> .or desjarlais, and this is obviously a question of what lawyers all about. the language is granted and have been briefed on this. i i think he used the word person. and then there's a question about whether that covers institutions, entities, which are different from persons in this. and so, as i understand it, the lawyers are out trying to just train to work the series of there aren't any gaps or overlaps. that's my understanding at this point, sir. >> i'm not sure i fully understood your answer. is he your interpretation the

cfpb has enforcement authority over institutions regulated by the fda? >> congressman, i just have to back out. the statutory language he used to refer to persons your question referred to institutions than what the lawyers are trying to figure out for multiple authorities here. how is it really get appropriate coverage, which is what we all want them to carry out congress as well? so i think there's a little bit of statutory interpretation question. which is trained to work through it in a reasonable way. we want to make sure we carry out the intent of congress. >> what we tell me farmers? >> because of the language in this particular part of the statue, the lawyers work right now. >> that'll be very comforting to them. >> assert the understand that,

sir. as you know nearly half the small businesses use credit cards on the first sunday. can you commit that none of cfpb's regulations will remove financing possibilities for these? >> congressman come you have done a very important question as to read the note, it is consumer credit that we do consumer financial protection bureau. and as you also know because i said it probably every chance i get, don't worry about trying to make price clear and was cleared in go down fine print so people can make real comparisons. i've actually a small business groups reach out to be a solid business individuals would like to know they are going to have coverage and they'll have the same kind of protection about clarity in pricing and clarity in risk then not fine print if they're using a credit card to try to start a small business. i think this is going to be real

challenge because we have a constrained authority and the consumer financial protection bureau. >> it will be a struggle to determine whether sees her personal views or business? >> what i'm saying is the way dodd-frank was established, it is clear we cannot beat down the fine print in the case of consumer credit cards, but in the case of business credit cards, our authority is limited. >> book would be a situation where there's a credit card with a 20% entry straight any step in and say no come you can't have that? >> congressman, it is clear we are not in the business of establishing laws. congress spoke unambiguously with another part to the statue, but that part is pretty unambiguous comment pretty clear. >> okay, so small businesses will have access to credit.

>> i went to see it this way. small businesses are struggling. the access to credit as a whole lot of issues. but in terms of what we're doing here at the financial protection bureau, we're hoping to make things better for all those good people out there trying to start businesses and that it will be good for them if they know prices, risks, not too much fine print. >> thank you, professor warner. >> i think the gentlemen. we now recognize the gentleman from missouri, mr. clay. >> thank you, mr. chairman. before i go into the question, let me state this is one of the most incredible committee areas that i've ever intended in this committee because the two sides are so far apart. i just can't hope to give you two examples of abusive that crack for an agency like this

euro. one, it is the area that i represent in north st. louis county, where homeowners, middle-class african-american homeowners were steered into high-cost predatory loans. if you look at a map of the foreclosure in my community, it is evident that they were scared and that the predators took advantage of that. in the second example -- and let me say, you know, to my colleague, petrie to send these standing up for the men and women who wear our uniform bravely, who bravely defend this country. if you don't think this is an abuse, then i have a bridge to sell you. you know, illegal foreclosures against u.s. service members is

a growing problem. multiple markets servicing company has conceded that they violated servicemembers civil relief act. they illegally foreclosed on servicemembers and charged fees in excess of the maximum amount allowed under the law. we have only begun to understand the scope of these problems. in april, four federal agencies that regulate services issued a report defending critical weaknesses. they initiate enforcement actions against 14 banks and direct a comprehensive review to identify borrowers who have been financially harmed in to provide remediation. and it's good these agencies are on the job, but this high race is one of the reasons why we need the consumer financial protection bureau, to protect

consumers from unfair, to set didn't abusive financial practices. and what if we don't understand that, then i don't know what we can do about that. but it's good the agencies were to enforce the law after the fact, that consumers especially, active-duty service members shouldn't have to go through an illegal foreclosure in the first place. think about it. a servicemembers stationed overseas, fighting for their country, risking their life, love back your family is losing their homes illegally. no one should have to endure that. professor warren, i understand you organize an office a server member affairs with cfpb. can you please explain the role of the cfpb and protect the rights of servicemembers and their families?

>> yes, sir. when we sat at the consumer financial protection bureau, one of the first pieces we try to put in place when they got to office of servicemember affairs. ali petraeus i believe is that over, but it could be impossible to find that. she had come to see me about what she thought were terrible abuses going on to military families. and she said to me, you now have this consumer agency and you can do something about this. i must say for a small woman, she is very foresaw. and i listened to her and took lots of notes notes and share thoughts of very specific instances of what she was concerned about and very specific recommendations for what they could do. so about a week went by and

invited her to come back. and we talked a second time she had even more ideas. and that's when i realized we had found her later for the off of servicemember affairs. and i made her an offer and she came to work for us. and that's really how i want to describe this. this office started with someone fully on the ground who understands what's happening to military families. she herself comes from a military family from generation to military service people and she has seen that firsthand. shafran describes she's even lived. she was there from the beginning in the office that we have this agency will be responsible for identifying what going on, dealing with servicemembers, family to get caught and trapped and for helping change putting a cop on the beat to make sure

those dealing with military servicemembers are following the law. >> chair now recognizes the gentleman from south carolina. >> thank you, mr. chairman. the financial products safety commission could develop new wants regulatory responses. some terms may be banned altogether, while others might be permitted only with clear disclosure. so you don't support legislative micromanaging. what about legislative micromanaging? >> i'm sorry, congressman. >> is a quote from an article you wrote. three of legislative micromanaging. the question to you is what is legislative micromanaging because to me as a euphemism for oversight. >> i'm sorry, congressman. i did forget they're not sure the context is.

>> context is in the democracy journal and it is the first published notion that we have a agency similar to the one you are going to head in a week and you wrote an article is free of legislative micromanaging, financial products safety commission could develop new wants regulatory responses. my question to you is, legislative micromanaging is a euphemism for oversight. >> actually, i think this goes to the point that congressman mchenry raised and that was the question you may recall of trying to figure out how to find complicated, perjury, i regulatory compliance costs, very little value to the consumers. for more than 15 years committed

various regulatory agencies have been negotiating to bring this together and that congressman mchenry said, there have been multiple from congress to do it. >> my question is for general but not. my question is, what is the role for congressional oversight? you don't like legislative micromanaging. some of us think that's oversight. so you can see the congress has the authority and should have the authority for students to hypothetically set the budget for your agency. if that iker managing oversight? been a congressman, trained to respond to your question what i was trying to point out is that it was an example of how difficult it is for congress to get an appropriate nuanced response to a specific problem. in this case it was combining to form to what we've been able to do with consumer agencies

because agencies operate differently is that we've had community banks, credit unions, been able to put up multiple iterations of the forums. we've been able to adjust, able to consult with groups in ways that is not possible in the legislative process. >> would the gentleman yield? >> i think mr. gowdy is really happy. he's asking does congress overwrites the cover shoulder and second-guessing your funding or your actions. i haven't heard an answer. >> i'm sorry. let me give straightforward is the question as they can. buy direct testimony is of course we need to be responsible to congress. congress to look over our shoulder 21st day, seven days a week. i was trying to explain with the

passage came from what i thought the passage meant. >> made the record reflect did not go when to your answer this burning and on the nuance. so i'll ask a less nuanced question. what about congressional involvement in your budget? is that micromanaging the words that oversight? >> congressman, i think it is neither. that is a big policy and political decision. as you know, not one banking regulator in the history of the united states has ever had its funding to the political process. >> you agree congress should not be responsible for setting the budget for your agency? the neck of the congress should treat banking regulators alike cannot say the one that trusts watch out for consumers is going to be put through the political process and subject to lobbying. >> you did mention oversight in your statement in the

distinguished element of maryland for whom i have great regard used the term illegal seven times. it's been used an additional five times since mr. cummings used it. in case you what kind needs is a form of oversight. these are illegal, why isn't eric holder sitting with unix anybody's done? why do we need your agency if they're already illegal? >> congressman, is the real question about whether there is an adequate investigation into -- >> would it be done with respect to attorney general holder and a 90 plus united states attorneys, most appointed by this administration. would it be done to crucial them to do their jobs? i've heard the word illegal and that has a specific meaning to me. if it's illegal, would it be done to the shoulder prosecutors to do something about it? >> congressman, that's what we did what we got involved in mortgage settlement and were so

sharply criticized for having advised the department of justice and our sister agencies as they are trained to work through holding responsible. >> you are criticized for criminal prosecution? >> congressman, we were criticized for trying -- >> by whom? .me. >> congressman mchenry. >> i'm going to let congress made kelly speak for himself. but i hear the term illegal, which i have her 12 times as burning, i want to know why they are our criminal prosecutions, why we need an agency in department of justice can't do it. >> gentleman's time has expired. the gentleman, mr. cooper. >> had another question for the witness. i witness. i do have a comment for junior

members of the committee and the sides of the aisle. i think all of us realize that this congress has viewed as dysfunctional and i would submit this committee is also viewed as dysfunctional in this alleged hearing is one of the reasons why. it's too easy generates into a food fight and doesn't have to be this way. in fact come a few years ago in congress who was not this way. i would urge the junior members of the committee to resist the partisan talking points that enable people on both sides of the aisle to walk in here, read a question, make a partisan hack, look like were smart and then leave it. that's not good governance, regardless of which party is in charge. i didn't vote for dodd-frank. it had many good features, it has some less good features. but i do not want to be part of

the committee, at least at the subcommittee level treating this war and with more and disrespect than i've ever seen seen the committee witness treated. that is not the american way. now, some of us come here get so used to the food fight that we wanted to continue and to probably score brownie points if you make parties and eight. you might even get on a better committee. well, congratulations. you will not assault the problem. i would suggest to the chairman and ranking member but often times the seminar format is much more to cover much of our educational done this sort of partisan charade we continue to engage in with hearings like this. i would urge members to read these words -- one of her books.

i've only read the income trust. your constituents back home should read this book. your bankers back home should read this book. then there'd be a lot less hatred and discord is, a lot less finger because this lady is trying to do the right thing and we'll recognize that consumers often times get the short end of stick. i've tried to refinance a home mortgage several times to take advantage of record low interest rates and the paperwork is lizard. i went to a very good law school and it's almost impossible for lawyers to understand. ms. warren has pointed out agencies have taken over a decade to try to simplify a couple forms in the infield. what is this committee done to simplify some of the forms? nothing. so isn't it time for a new

approach? isn't it time for fresh thinking, to give consumers a break and also acknowledge that congress is sometimes captured by vested interests. sometimes that happens and we need to resist that. i literature members, particularly junior members who are not entrenched in bad habit to consider new and fresh approaches and saw some of these problems all bankers are bad people were falling into a right here it is going to be the judgment of this committee, that of the nation. it doesn't have to be this way. we can be civil to each other. we can be informed, we can resist the partisan talking points. but i'm not saying that sort of behavior. at least so far. so let's try to do better than let's be civil to witnesses like

ms. warren and focus on the substance because i've actually heard very little substance here today. there are better ways to solve our problems and i hope this committee will be part of those. >> with the gentleman yield? >> i'd be delighted. >> we've worked together for a long time and i join the two and one this hearing and any talking points in any member, junior or senior to be about our oversight. i do agree with you on the simplification. patrick mchenry offered a bill a number of years going continues to support it. i hope all of us understand our jurisdiction here is limited. we are here to discuss whether dodd-frank got it right for the organization, whether professor warren is now seen to teens which are poorly defined that he is working on 400 employees

whether financial services need to revisit with authority and so on. we will in fact be an organization. i've said this hearing will be about civil behavior for professor warren for life understanding. i understand what the chime in full agreement. >> mr. chairman, a civil discussion would be a marked improvement pitcher arrived at the financial service commitment. here we have two hearings with ms. warren for her agency to set in. a lot of people are rushing to conclusions here. sometimes that is the only exercise they get.

it's unfortunate -- >> one of the things we really do love. >> as intricate as a partisan punching bag before having a chance to serve. >> let's give all american citizens the benefit of the doubt. >> we now go to mr. kelley for five minutes. >> thank you, mr. chairman. in my previous life -- to my previous life, i am the bill business. the bill credit is so critical that look to your background. you really have an impressive background and advice of the of the people inseminate aims. the availability of credit is one of those things and i know automobiles come up quite often and sometimes i regarded as predatory. how would your agency work had

been? how is that going to work? >> you help me if i'm not in the right place. automobile loans in particular you know that you initiated that either mobiles in the consumer agency, congress made that distinction in dodd-frank. and so, the place where we are focused is really about consumers need to know what the crisis is than what risk is, and they need to be less fine print that they really had a shot at comparing strata three mortgages, free credit card agreements. they can actually look at those.

my own view is that is that that actually. i know it's happening. >> i think oftentimes i go to a lender and guide them through the process. i think there's a lot of good advice and over the years you've given good advice to people. the amount of money from the likes of time and the amount of. what i want to hear from you because this is critical is i'm looking that the american taxpayer is actually a cosigner to those peanuts for a body that

governs the sellers. collected by them, governs them, for less money in the actually find that there's a cosigner, the co-borrower. and i guess i'm a little intrigued. the emphasis is on credit availability, how much money you can buy or and rightly so that banks put it feeling is that where. i find that kind of amusing because in my world a ceiling mean something is published and you can't go beyond. lending institutions have ever kind to put a saint on what you come by or in what you can't go beyond. now are involved in this measure on these loans.

that didn't really matter. we continue to visit because he been so reckless. you put is here to there are many ways besides people. i i know right now the consumers are the most important part of it what to protect these people because i noticed in your testimony you did same economy be driven to the brink of collapse and their predatory companies above were doing to the economy. i think we should be expanding your role to taking a look at what this body is doing to not alter the future and our children and grandchildren, but also the president. you have great experience in this. this amount of money we pay as

interest is artificially low right now. this document and great. set of holding hands, they'll be growing as though the site. i know you have a couple seconds left. how much are these consumers to cosign for. >> the one thing is i am very with creditors putting things in the future. but i do want to say and expect to meet those 100 cents on the dollar. >> that's why you actually have a beacon score that tracks your history and what your revenues are. that's a big part of what you're allowed to borrow. thank you for your time. >> thank you at the gentleman's time has expired.

>> thank you, mr. chairman. it's great to see her again and the opportunity to as many of the questions i would ask them not going to repeat them. one of the things i was curious about is in the republican budget that passed the house, the so-called grand plan for medicare and for those people under 55 years old or medicaid would no longer exist our citizens who can reach 65 would be given some kind of payment in some form to go shop for insurance in the private insurance market. would you envision that might be a go at some point in cfpb that insurance contracts would be subjected to the same scrutiny in terms of clarity and transparency that other

financial documents would be quite >> congressman, i think there is some very real concerns about the difficulty consumers have regained insurance contracts and it raises the issues will be dealing with in the consumer protection bureau over other kinds of contracts that are unreadable. but right now, congress has put a very clear curve in place. we have a lane were supposed to send and. i think i just explained that about consumer credit, consumer credit products can issue enough consumer credit reporting and we are not to stray into insurance and where not to stray into investment products. and for right now that's exactly what will be doing. >> certainly a tank whatever progress he has made in making sure that financial were

understandable and transparent may serve as a good model for other areas of the economy. >> i certainly hope that's the case. i also want to see a piece of the consumer agencies are here to an oversight and you give me a chance talk about the agency and the things that's going to do, we have a research division in their agency. in fact, it's called research markets and row writing. we combined it all together. and we are building a robust research team. smart and very diversified in terms of approaches to have to think about research. a significant part of what we do is look at what it takes to take complicated ideas and get them into something that really work day in and day out for american families. that research will be available to everyone and i hope it will be useful in places beyond input

stations in consumer credit. >> and the remainder of my time, had the privilege of sitting in on a foreign senator rockefeller connected with holly petraeus and a couple of servicemen who had been subject to these incredibly unscrupulous practices. one of them is chief warrant officer charles pickett in the wisdom helicopter pilot in the army national guard flying missions in operation iraqi freedom. while he was on duty, bank of america attempted to foreclose on his home -- actually they ended up foreclosing four times. one of those times his daughter came home from school and found the eviction notice come a foreclosure notice posted on the door. so he is here -- he was current on his mortgage, which was -- adds insult to injury. and here he is flying missions in iraq, trying to spend his spare time on the phone with

banks, trying to clear this up, was unable to do so and finally hired a lawyer familiar with the servicemen so the relief that and that lawyer took seven different times train to find somebody, for different people before he could finally stop the foreclosure procedure, which was totally unjustified. so in terms of what we've been discussing earlier in the incredibly good positive effort to holly petraeus is making for the cfpb, you certainly think it would be appropriate if this committee would use it subpoena power and oversight responsibilities to make sure that we have all the information possible to make sure people like g4 not so take it not abused in this way in the future. if you have any comment on that i have 20 seconds left. >> i had to say in that very short period of time, i think it's easy to put out a site where real implications are that

these financial misdeeds on military readiness. the number one reason for losing the security clearance and the united states now is problem over credit, servicemembers deployed abroad have talked to us multiple times about what it means -- excuse me -- but it used to find work on two fronts, one in a foreign location when back at home. this is wrong. >> i thank the gentleman. the gentleman from new hampshire . >> thank you, mr. chairman. thank you very much professor warren for being here today. i was listening to the questions and testimony and part of the responsibility we have in this committee, relative to this particular hearing is stated in

the paperwork that we all received today. i just want to read from the conclusion but it says so were all clear about what we should be doing. .. teds >> i wanted to talk to you a little bit about the -- excuse

me, may 24th -- i wanted to talk to you a little bit about the structure and what i think is a little bit unprecedented. you said there's no banking regulator, all are funded independently, and indeed, ology the other banking regulator, not the consumer agency, but all the other regulators can set their own funding levels. >> uh-huh. >> i don't disagree with the comments in regards to the fed, fdic, the occ, but i think there's distinctions and differences between those entities and this one. could you clarify for me if you think that there's any difference in terms of oversight and relative to the appropriations process. >> i'm sorry, congressman. i don't know what you're driving at. i'm -- i don't mean to be

unhelpful, i just don't know what you're driving at. >> okay. well, let me read your comment again. on may 24th, the hearing we had, you stated there's no banking regulator subject to the political process or to appropriations. i was making the point that there's a distinction between this agency and others relative to power and authority. can you comment on that and whether you think you are treated as every other banking regulator or if there are differences between you and other agencies. >> well, i -- i hope this is responsive, but please, if it's not, stop me. in terms of funding, yes, we are different. we have capped funding, other banking regulators, for example, the occ, determines funding levels and assesses financial institutions for them. the fdic follows those similar

structure. the fed, of course; gets its money in yet o different way. as i said in my statement, there are limits on our funding if we want funding above the cap provided in the statute. we must come back to congress and ask congress for an additional appropriation. that's what's provided in dodd-frank, and we would be permitted to do that, but it means we have to come back into the appropriations process, and as i understand it, the other bank regulators do not go into the appropriations process in order to get their funding. >> would it be fair to say that the cbpb is different in the sense that with respect to the director position, it is subject to removal only for cause and it therefore exempted from

presidential control? >> i -- i would have to go back and look at the statute again, congressman. i think -- >> my concern is this. it appears as though there are some unintended power or powers that are vested in this particular position, and that's where i would like to clarify because the concern i would have is an individual, i'm not talking you personally, but the individual who would oversee this agency would appear to have greater powers and authorities simply by the fact that it is treated differently than other banking regulators or agencies. >> i see. i think i understand the question. yes, there are differences. the consumer agency is the only agency that is subject to a veto by other agencies. there is no other agency subject

to that kind of oversight. there's no other agency, banking agency, as far as i know, agency anywhere whose rules and regulations can be thrown out by a vote of other agencies, so, yes, there is a difference. the consumer agency operates under a unique constraint that is not there for others. >> okay. thank you. my time expired. >> i thank the gentleman. we go to the gentleman from illinois. >> thank you. >> sorry, i didn't see you on the last round. >> that's okay, mr. chairman. good morning, ms. warren. >> good morning. >> as to mr. cooper's comments, it's appropriate occasionally to catch ourselves at the hearing and see if we are keeping the proper quorum and respect. i'm reminded that

cross-examination can be contentious, but there's a respect due to the court as there is a respect due here to the witnesses. now, it is incumbent upon the witnesses to answer questions forthrightly, and when they are not doing that, it's fair for the member to push them along. i respectfully suggest that both sides on occasion pushed the envelope and appeared to be disrespectful to the process and the witnesses. i think mr. cooper's point is well taken, and if we could all move in that direction, we would be a better body overall. ms. warren, salaries of your employees have been discussed, and i recognize they don't necessarily come straight from the taxpayers, but they are still important. the concern i have is really towards the other end, and that is you're ability to attract qualified employees because you're really looking for folks who have the same knowledge set of people you're regulating.

i understand that in 2009, the average salary for the back office folks at hedge funds is about $300,000. just the sheer volume of workers on the banking side and the salary, my concern isn't so much how much your folks are making. it's your ability to attract qualified workers and keep them to get the experience they need to do the work you're supposed to do. is this a challenge you see as a real problem at this point? >> yes, congressman, it is a serious challenge. i just want to be sure we're clear on the record since it came up earlier. we don't set our own salaries. they are set by federal statute, and we have exactly the same salary base as the fed, as the occ, as the other banking regulators. we're in a system. it's what dodd-frank requires, and we're following the law in terms of the salaries we set,

but there is a serious problem now in the regulation of financial services, and that is i want to put it this way -- we have been genuinely blessed at the consumer protection bureau with people coming to the agency who are incredibly smart and who have the opportunity to make lots more money somewhere else, but they truly hear l call of public service. they see an opportunity to make a real difference in a marketplace that they know sometimes from firsthand experience is badly broken. i worry how long we will be able to keep those people when the siren song of money from elsewhere continues to play, but it is where we are, and i say today as much as i worry about this as a long-term problem, i am proud of every single person who has come to work for the

federal consumer protection bureau. >> how much is the institutional memory given the complexities of the new world of finance and learning how systems operate. by the time people are experienced enough to do this competitively, they are really worth a lot more because of their experience with you. >> that's -- that is a very fair point, congressman. we're doing a lot of training. i want to put it this way. we invest in our people. we spend a lot of time with them on education in a formal sense. we spend a lot of time in education in an informal sense. that is, working across groups, running lots and lots of what we call lunch and learns around different topics. we think that every time we make an employee at the consumer protection bureau smarter, it's good for the bureau and to the benefit of the american people, but i recognize it makes them a lot more attractive to people with more money. >> again, for the record, i have no problem with someone smart enough to go into the financial world and make a good living,

but given this is a new complex world, i'm concerned there's not a balance here of equal experience and understanding so that the american public is not cheated, but i appreciate what your workers are doing and what you do. thank you, i yield back. >> thank you, sir. >> did you want to add -- >> no. >> okay. we now recognize the gentleman from florida, mr. ross, for five minutes. >> thank you, mr. chairman. acknowledging in your position where a lot of it is administrative, you have to testify before congress. i'm grateful to you for doing this. i know it's not the most enjoyable part of the day, but i understand it's necessary, and i do realize while we are not philosophically aligned, i'm grateful for your continued participation today, and to that end, i want to ask questions specifically to regard what i think is one of the most important powers of the dodd-frank act in section 1031

giving the cfpc the authority to ban products, consumer or practice, they deem unfair, deceptive, or abusive. do you agree? >> yes, sir. >> to that end, back on may 24th with the hearing, you were asked a question as to how you would distinguish between abusive practice and non-abusive practices of the financial institutions, and the reason for that, of course, is that now it's in effect for a year, we're looking to make sure consumers as well as companies know what to look for what they will be deemed to be abusive or not abusive product or services to the market, and not that we've had a year, i want to ask you, again, because i believe you're response in may was that we will go through the process of interpret #ing the language -- interpreting the language congress gave us. i don't think that's quite where we want to be and need to know. i want to ask you again specifically, can you name any product, service, or transaction not already illegal that is

unfair, deceptive, or abusive within the meaning of the dodd-frank act. >> congressman, we have not been in effect for a year. >> you have a week to go. >> next thursday. >> yes, ma'am, that's darn close. >> all right. >> give you 51 weeks. >> we have not been in effect -- >> you had the opportunity to understand the act. please answer this. do you know of any product not already illegal that is unfair, deceptive, or abusive? >> i can recall no product. >> any discussions with the team of any such products or how to identify the products? >> i have not had a discussion with my team about a particular product, no, sir. >> don't you think that's an important thing, though? it's the power to ban, to ban, to stop the marketing of a certain product. don't you think that's something you and your team should be addressing going into the first year next year? >> congressman, i appreciate the advice, but actually no.

i think that what we should be doing is concentrating on the places where we can best make changes in the market place, and that's, for example, in our team of respite form. >> it's okay that we remove the power? >> congressman -- >> i'm being respectful, ma'am. i'm from the south. >> i think the point is we're starting work in the places that where for example, congressman mchenry suggested was an important place to start where we can -- >> we empowered you through the dad-frank act and you have not begin it consideration? is it safe to say there's no products you know of that are unfair, deceptive or abusive within the meaning of the act? >> congressman, i'm trying to describe -- >> no -- >> we have priorities, and our first priority in terms of rule making is around the respite forms, trying to reduce regulatory burdens at the same

time that we're trying to increase the understanding for consumers so they can make good product choices. >> professor with respect to time, i'll yield my time so that you may answer other questions. >> thank you, sir. >> payday lenders have a bad reputation of taking advantage of people. no one should be expected to be treated well by them. do you know who said that? >> probably me. >> so that would be one group that should be banned. >> congressman, there's a lot of space between banning a product and making a product clearer to consumers. >> but not including capping the interest rate? you don't have the power to do that. >> the statute is un-- >> you do not think payday lending should be banned? >> the statute is unambiguous. we have no authority to engage in usury caps. >> my question is do you think payday lending should be

banned? >> congressman, payday lending is one of the areas that will be under our jurisdiction. >> do you think it should be banned, professor warren? >> congressman -- >> you just said, no one should be -- should expect to be treated well by them. you also -- you also said sub prime lending payday loans and a host of predatory high interest loan targeting minority neighborhoods should be called legally sanctioned corporate plans to steal from minorities. that sounds like a wonderful thing to ban. should they be banned? >> or to make better. we have a whole agency, and we have a whole process to work on this. we have a lot of different tools available at the consumer financial protection bureau. one of the advantages we have is that it is possible to work on multiple fronts at once. >> so with respect to -- >> mr. chairman, i call for regular order. excuse me, i apologize, but the time expired which is why i was

gaveling. we go to the gentle lady from california. >> thank you, mr. chairman, and thank you, professor warren. i was at that hearing on may 24th, and was shocked by the way you were treated. a number of us members wrote to the subcommittee chairman and asked him to apologize to you, and i was curious whether or not he has extended an apology to you. >> no, ma'am. >> well, on behalf of the members that found that conduct absolutely beyond the pail in terms of professional conduct of members of congress, please accept my apology for that behavior. we spent a great deal of time today on a number of issues that are probably premature because you are yet not operational, but this committee just recently had a hearing on the department of education's regulations that they are going to impose on

for-profit schools, universities and colleges, that, you know, provide not only an education, but also do have financing through the federal government, through pell grants and the like. one of these for-profit colleges, kaplin university, says, "e-learning modules tells recruiters how to face, fear, uncertainty, and doubt in the sales process with regard to competitors' offeringings and teaches them to overcome objections ones may raise to signing an agreement. the document states this was created within the computer hardware industry and used as emotions to influence perception or beliefs. the technique is effective when prospects introduce the need to examine other online schools." this is particularly targeted, again, at our military.

that coupled with the fact that not only are we talking about a few incidents of military members typically abroad who have been fore closed on, but jp morgan who fore closed on 4,000 members of the active duty military, made refunds, and paid a $56 million fine. wells fargo admitted to $55,000. now, back in january, i joined -- asked a number of colleagues to join in a letter to mr. beer -- benanke and john walsh asking them to audit the banks. i have not yet heard from any of them, and yet to my surprise and delight, you've already undertaken to do this within the consumer protection bureau. my question to you is will you

also look at this issue as it relates to military service members? >> yes, ma'am, we will. starting next week on thursday, july 121 -- 21st, we'll receive transferred authorities from the other agencies that have been responsible before for the consumer laws coming to the agency, and we will be in the largest financial institutions engaining in on the ground superviolation of whether or not they are following the law as regards to different consumer financial products. remember, i want to be clear about our approach, we are not safety and soundness supervisors. we are there to examine consumer products and examine to see whether or not the financial

institutions have put appropriate procedures in place to assure that they are following the law and that they are, in fact, carrying out the procedures and are in compliance with the law. that will be our job. we will be there. we will be cops on the beat to do that starting next week. >> now, as i understand it, not only can these financial institutions not fore close on military service members, but they cannot forge more than a 6% interest rate. will you be looking at that issue as well? >> congressman, a caveat here. it is the department of defense and not the consumer financial protection bureau that is specifically responsible for the enforcement of the service -- of members civil relief act, and so what we are -- our statutory part is around truth and lending and other parts of the statutes for consumer financial protection, but we will be working closely over a long

period of time with the department of defense to gather appropriate information through different channels and to be able to work with them in a way that makes -- makes us understand the problems better and makes sure there is more vigorous enforcement of current laws. >> thank you. my time has expired. >> i thank the gentlelady. we now recognize the gentleman from oklahoma, mr. langford. >> glad you could be here. you're a fellow oklahomaian, and thank you for being here. >> thank you. >> let me bounce questions off of you as far as the structure that's coming up. you mentioned several times that the authority is coming over july 21st to the agency from the other agencies, fdic, wherever it may be, do you know as power

is transferred, that agency is downsizing as you ramp up? i know it's not your agency, but have you heard that they are downsizing to accommodate for the transfer of authority? >> yes, sir, we have. indeed there's been -- if -- >> sure. >> there's been a lot of trying to coordinate with the agencies. we've done some recruiting from these agencies. you know, there's some good on the ground people. >> right. >> who currently work at the fed -- >> there's people -- those agencies downsize as you ramp up? >> yes, sir. >> okay. let me follow through on a couple things. you had great emphasis on the payday lenders, mentioned that as well. do you see a difference between engaging with a payday lender and a community bank specifically? the big banks are tagged all the time, just community banks. do you see a difference between payday lenders and community banks as far as regulating them? >> yes, i do.

>> is there a difference in the way the two are handles and how the agency deals with payday lenders and community banks? >> yes, sir, there will be. >> dodd-frank has 100 rules this year to be added to community banks between now and december 31st, 100 rules to implement on that. do you anticipate another series of rules on top of those coming down on community banks from the new consumer federal protection bureau? >> just want to say on the hundred, it's not hundred for the consumer agency. >> that's what i'm saying, there's already 100 from dodd frank, not from you. there's a hundred already from dodd frank, when y'all stand up, is there more coming through? >> the one that we have teed upright now is this respa combination trying to reduce the paperwork origination or something. i will say, sir, because i think it's relevant.

when we first started the process, the idea to put that first came from the community banks, and i asked them at many points along the line, i know there's other changes, and i know it costs every time forms are changed. is this something you want to go forward with, and they have said yes. we also have this as one of our very early rule making obligations will be around payday lenders, but, of course, i should say -- not payday lender, but other non-bank lenders, because payday automatically cover the large participant, but, of course, that doesn't affect the community bank over their competitive environment. >> the concern is right now they have a lot of rules that they are trying to put into place, and you know well, community banking, that's not a large bank with a new york head quarters. it's 12 people in a small town in oklahoma trying to implement 100 rules and how to do it.

it's overwhelming. it's not the size of the riewlg, but the stack of all the rules coming down on them. what i'm asking you is in the days ahead, make sure that's coordinated that they are not just saying we added 20 new rules to them, and at the same time occ added 20, fdic added 100, and they are getting overwhelmed. make sure that's coordinated so there's a free flow of credit going on. you made a statement that one of my community bankers informed me on that there may be an examine two years on the banks from the -- from your bureau. do you anticipate also engaging as a bank examiner role, not for safety and soundness, but as an audit of the bank from your agency? >> i'm sorry, sir, that's for the 111th largest institutions,

not the community banks. we are not the supervisor for the community bank. >> but as far as engaging and being another person on the ground for them will not be? >> they've run out of chairs for that stuff. >> they absolutely have. >> yes. >> just about every week there's an auditor sitting there. they might as well have an office for the federal government. do you have a concern with the authority given to the specific director to kind of determine products and services that are unfair, that the next director has that same authority to undo what you do on that? >> i think we overstate the power of the director. there's a whole process in place for this that starts with research, starts with community outrage, that goes into analysis of markets that have cost and benefit. there's a big process in an agency before we get to a place where any rule, whatever it's on, can be issued.

i started to say earlier just to give an idea about how the agency functions. half the entire budget and our fte will be about supervision and enforcement. supervision of the largest institutions and supervisions of the nonbank financial institutions, and straightforward enforcing the law. about a quarter is around consumer education which we have not talked about much today, and consumer complaint, and the last quarter has to cover everything else. writing rules is just one piece of how we can help make this market work better for american families. i've given you our first priorities. that's where we intend to go, and we want to do that in conjunction with community banks all around the country. >> thank you. >> the gentleman's time expired. >> thank you, sir. >> i want to announce that when we complete with professor warren, we'll take a recess between 10-15 minutes.

i estimate that that will occur within about 20 minutes based on the number of members here, and i don't think i can accurately give everyone a half hour notice, but my intention is to, in fact, allow us to work through professor warren's completion, dismiss our witness, and we'll take a recess if not more than 15 minutes, and then reconvene for the vote related to the earlier motion so i hope everyone's comfortable with that. if people feel they need a half hour notice, they have it, but depending upon people coming back, they may choose to then ask questions so they actually could make it longer, but i want to make sure that you've been very kind with your time and answers. hopefully we've been kind back that we get through it and you can get on with your day and us with our procedures. with that, i recognize the gentleman from jirs for five -- virginia for five minutes. >> thank you, mr. chairman. i welcome professor warren, and

it's good to see you again. let me ask you a question. the agency, you are representing here today, the consumer federal protection bureau was created how? >> by congress. >> i know, but i mean, in a piece of legislation? >> oh, yes, the dodd-frank act, sorry, sir. >> did that agent pass with overwhelming bipartisan support? >> no, sir. it passed, and i believe there don't- there was some believe it was overwhelming. >> how is -- tell us about the governance of the board. >> well, it's set up to have oversight in terms of its money. its budget is set up outside the political process like other banking regulators so that it receives a capped amount of

money from the fed -- >> but actually i'm asking more about the actual governance. are you appointed by the president? >> oh, i apologize. >> that's all right. >> i currently am the special adviser to the secretary of the treasury for standing up the consumer agency. there will be a nominee for the president of the united states, and there will be advice and concept presumably from the senate on that nominee. >> are there other members of the board also appointed and subject to confirmation? >> that's the only senate confirmable or presidential appointment in the consumer finance. >> and on a bipartisan basis in the other body, is there indication they are willing and receptive to the idea of such appointment and ready to act on it? >> i have in a letter that says 44 senators will block any nominee to head up the consumer

protection bureau unless the bureau is substantially changed. >> from the dodd-frank legislation? >> yes, sir. >> which passed into law, but not with much of a bipartisan vote as you indicated? >> yes, sir. >> mr. chairman, i just want to say i listened carefully with attention to our colleague and friend from tennessee admonishing this community, especially the junior members of the committee for lack of civility and partisanship. with all republic, the tone of partisanship and civility is not set by the junior members of the committee, but by the senior members of the committee. the other ones at the end of the day who make the rules, enforce the rules, and engage in certain practices or not, and frankly, while i also regret how you were treated before the sub committee of this committee, professor warren, i think the issue was of

civility towards you begs the question. what we're really up against is a relentless attack on the creation of your bureau of the -- of the legislation that created that bureau even to the point of blocking any nominee every single republican in the senate signed that letter you referenced saying they will move to block any no , nominee of the president's. if we can't win legislatively, we'll use other mechanisms to be sure the mandate is not enforced and that you really can't do your job. i wish the problem were just one of civility, it goes far deeper than that. it is, in fact, a political attempt to prevent the protection of consumers, the legislation foresaw and tried to create a framework for. i deeply regret that because i

believe you can provide visionary leadership, and i regreat that one party decided that make that a partisan issue rather than try to come together and find commonground. with that, i yield back. >> yes, i will yield to the ranking member. >> thank you very much. i just want to add on to what the gentleman just said. i'll associate myself with his words. there's no doubt that you bring to this agency something that is so very, very important, and that is passion, and i say to my children, i say to them, if you can take what you believe to be your purpose in life and then match it up with a job, then you are truly blessed, and you bring that passion competence and integrity, and we really do appreciate you. in case i don't have a chance to

say that again, on the record, i want to make that very, very clear. >> the time expired. >> hi, ms. warren. i'm one of the junior members too and i'm from the private sector. i'm a dentistment some of this makes a lot of sense to me, but i also come with a different set of eye sights too is that when you're at the dance, it always takes two parties to dance, and that there's problems not just from the private sector in wrong doing, but also from government, and that's why i have a different eyesight. i'm also from arizona, so just to give you some perspective, so the way i look at things and the way i see things is that legislation when it comes into new existence is not always perfect, and so what we're strapping here with -- straining here with, and me as one of them, is was that legislation crafted right? did it have the proper checks and balances? i think, hope, and extend that's what the tenor is there is that

question, and when you don't get an answer to a question, it just creates more question. i hope you understand, okay? with that being said, i heard you talk to mr. gahdi that no product to be banned. okay. i thought i heard that you didn't say any product should be banned. >> no, congressman, i hope what a said is that i've been in hearings before, the president of the american bankers association has been asked products that should be ban. he said yes, i said the way to go is start with much clearer disclosure. it's not appropriate to take any tool off the table. >> well -- >> here's what happened. >> i love where you're going with that. >> good. >> i'd love to see it work in, this is a new agency with breath of powers. with that being said, i mean, would you endorse repealing the specific power of dodd-frank to that degree that you could not ban any specific item?

>> no, congressman. >> you wouldn't? >> no. >> the language of that power of that law is perfect? >> well, congressman, i wouldn't repeal the giving the agency the powers that dodd-frank has begin it. you know, i think what we ought to do is get out there and get started on behalf of the american people. >> i'm a businessman too, and the last job numbers i saw are policemenning, and authority -- plummeting, and that's because of the uncertainty we have in here and one individual controlling an agency dictating products creates uncertainty. you can see me, as a businessman, don't like that; right? >> actually, i do have a little problem with why you wouldn't like that because where we start, and we've made clear our initial regulatory actions with the help of the consumer, with the community banks is that we're actually going to change the law in a way that reduces the regulatory burden for these

community banks at the same time that increases the ability of customers to read and understand the mortgage. you -- >> i love where you're going. i'm going to interpret, not being rude -- >> oh, no. >> just have little time here. i'm from arizona, and you gave answers that you had outreach and a lot of support from a lot of per specttives, can you dell me which banks those are, the community banks? >> sure. >> on what product -- >> larger -- the oklahoma bankers association -- probably 25 bankers on the very first day i was in office, they were here visiting from oklahoma. >> you have letters of support from all of those? >> well, i've got larger is the leader. i don't know how each one feels. >> we talked about the housing market. do you agree arizona is one the epicenters with a problem of

mortgages and home crisis, would you say? >> there's terrible problems on mortgage foreclosures. >> give me an example of groups you reached out to in arizona. if there's a problem like this, you'd reach out and have support in arizona. can you tell me specifically and throw a couple community banks in if you could. >> congressman, i talked with community bankers in all 50 states including bankers in arizona, but i'm afraid i'm not good enough to remember. >> i'd love to know who they are, and why i ask is we have outreach, i'm from the poorest districts in the country with lots of veterans, native americans, a lot of senior citizens, a lot of folks that -- this agency is really easy in my district because there are no choices. you cannot refinance your house. right now most people are living not paying the mortgages, and the banks are not putting it on the list baa it can't take it as

another hit not fine from my standpoint in district one. any banks that have been contacted in my district from you, and i want to know who they are that we would find out the list from you if we could. thank you. >> the former chairman is recognized for five minutes. >> thank you very much. let me begin by saying i've heard some of my colleagues, you know, their concern about the salary of your workers. i applaud you for really paying wages that you can keep people to be able to do the job that needs to be done. looking back, some of our problems have been because we wouldn't pay people with oversight responsibility the way we should have paid them, and

that led to the problems. i do believe that. i have not done any research on it, but i do think that's an issue. at least you have the up sight and understanding to pay people so you are able to hold on to them to be able to do the job that needs to be done to bring about the confidence that needs to happen in order for us to move forward from this point on. i want to go on record saying i salute you, you know, for doing that, and, of course, i was in afghanistan not too long ago, and i had an opportunity to talk to many of the soldiers, and their real concern was about the fact that they were having difficulty maintaining their home, and they gave me stories like, for instance, that they were stationed one place, transferred them out, and then, of course, they had a house there, and now they are moving again, and what can we do?

how could you be helpful to us? that was the outcry that was coming from many, many of the soldiers as we talked, walked, in afghanistan, and to me, i think that we have an obligation and responsibility to do something about it. what suggestions do you have? >> well, congressman, i will start by saying you're really showing how we are all paying a price for a broken consumer credit system that letting things get as far out of control as they got in 2005 and 2005, 2006, 2007, 2008, and now we pay. at a minimum what we can look on at the federal consumer protection bureau is getting service members and veterans a place to come, a place that we can at least get a better understanding of what's wrong to

work with the department of defense to make sure the service members' release agent is fully and fairly enforced and other tools available to us like truth in lending are also fully and fairly enforced, and to make this issue a national priority in america. we've done a lot to heal other segments in the economy, but we have not focused on the impact of our service members of a broken credit market, and we must do better. >> i really appreciate you focusing on it, and let me thank you, professor warren, and mrs. petraeus for your help of bringing accountability to the banks that unlawfully fore closed on service members. i wanted to say that. on july 6, 2011, it was announced that the consumer financial protection bureau and the judge advocates bureau of

the army, coast guard, air force, and navy took steps towards helping families; is that right? >> yes, sir. >> one important aspect of this has to be education, but another aspect has to be enforcement where mrs. petraeus appeared on tuesday emphasizing this -- here is what she said, let me go repeat -- "you can have the laws in place, but if the people on the other end of the phone are not aware of them or are not applying them properly, then it is not going to work." what is your reaction? >> i think that is absolutely certain, congressman. she speaks truth on this. you know, one of the things i want to say about the consumer bureau, i'll say it again quickly.

half of all our money, our employees, eventually will be in supervision and enforcement, not in trying to change rules, but in making sure that the law is enforced. a quarter of our people will be in financial education and consumer come pliant dealing right on the ground with families, and the remaining quarter will be about research, rule writing, about the other things it takes to keep an agency functioning. we believe in enforcement at the consumer agency, yes, sir. >> let me say this and i'll yield back, mr. chairman. you know, i'm excited about this agency, and, of course, you are law firming it on my -- launching it on my birthday. >> oh, delighted to hear that. happy birthday, sir. [laughter] >> the subcommittee chair is recognized for five minutes. >> thank you, mr. chairman and appreciate you holding the hearing and thank you,

mrs. warren for your patience as we interact with you in your past and current service to our foal low citizens -- fellow citizens. i don't want to be repetitive so i'll try not to be and i'll plan to focus in areas that deal with the subcommittee chair which is government organization, efficiency, financial management, and i chaired it four years past with mr. towns who was chair and i was ranking member, and then i was chair, and he was ranking member. i want to get into structure of the bureau and in the area of financial management. >> yes. >> in reading through your testimony, i know you're standing up a new bureau, a lot of hiring decisions, and part of your testimony's commitment to accountability and transparency and seeking comments and critiques, whether it's comments or critique, it's meant to be helpful, and in your testimony you talk about how you're

hiring, general counsel, information technology, procurement, general resources, and an area not mentioned specifically there is financial management and chief financial officer, and i guess if you could give me an update first, i know there was a request for resumés in essence for cfo. i think that closed in late june, where we stand on getting a cfo in place given how i see the importance of that position. >> right. and i'm glad you asked about this because this is very important, and in the start up phase, we had to lean on treasury to make sure that we were following every letter of the law and the spirit of the law, and in doing this appropriately. would you permit me the littlest diversion? you can stop me obviously. i want to start with coo. as the way i understand this is it becomes more important. what we did for the chief operating officer at the bureau,

the person panel -- >> the director head; correct? >> we hired someone who has been the head of a very large financial institution. she has been responsible for a budget, has been the person who signed off on a budget, i may get the numbers wrong, but i believe it's over a billion dollars. she's been responsible for the management of tens of thousands of people. we hired her. she had not had government experience which what she had was private sector experience and keeping up with every nickel making sure it was well spent. we have a acting chief financial officer who has really been terrific and who has worked not only to make sure we have the appropriate internal procedures, but treasury and their existing officer, and i should say has worked with the inspector general for treasury and the inspector general with the feds so that we were getting external review of how we set the

procedures up. >> you mentioned the ceo is in line of where i want to follow up and glad to hear there's a person in that position and hopefully someone with equal caliber to be in the cfo permanent position. >> yes, sir. >> one concern is one on the alignment is emphasizing that direct access in a major corporation, any cfo has to be directly tied to the ceo, to the director of the whole bureau. is delineating within the organization it's good to have a good coo, but make a clear structurally that cfo reports to the director because of the importance of financial management. we're talking hundreds of millions of back salaries or fees and dollars, and ultimately they will be handling. >> the organization chart set up now is that the cfo reports directly to the coo who in turn reports to the director.

>> i encourage -- it's because of your new organization. when we set up the department of homeland security under secretary and management, but we had a dual report with a cfo reporting there, but added set up going directly so is acceptability a message throughout the agency that cfo has direct access to the director, does go to the coo, but we want to make sure it's sending a message, and it does relate to the issue that i know -- i don't want to be repetitive -- but the budget justification issues and how much is being allocated to the operation and internal control here at the base level, the ground level setting up strong internal controls so when you're into the audits by gao, you know, your financial reports -- you're not playing catch up because you didn't have good systems in place. i talk about internal controls over and over and over so some suggestions in that area of financial management, i hope

you'll take to heart as you move forward. >> thank you very much, congressman. thank you. >> mr. davis for five minutes. >> thank you very much, mr. chairman, and thank you, professor warren, for your service to the country, for your patience, and for being here with us this morning. when you appeared the last time, and let me just say that i believe that consumer protection, consumer education is one of the most valuable functions that our government can perform for its citizenry, and when you appeared here last time on may 24, the title of the hearingfuls "who's watching the watchman," but i think a better question is who is watching the banks? i wonder if the committee as a whole is ever going to watch the entities that admitted that they need watching.

the -- this committee has now summoned you twice to appear before us. we've sent a massive document request seeking all manner of e-mail, reports, and other items. at the same time, we have not brought the mortgage services in even one time to answer for their conduct. we've asked jp morgan that they be inviolated to -- invited to testify, but the chairman did not agree to that question nor has the committee made a single document request to a mortgage servicer the entire year. ii won't ask you to weigh in on this, but it seems pretty obvious that our priorities are somewhat backwards. here's what i will ask you about. on july of the 11th, "newsweek qts published an article called

"the million dollar bank type." it notes that some find the same financial institutions are spending vast amounts of time and money to impede the dodd-frank act and the consumer bureau from becoming fully operational and effective. as a matter of fact, i will read from that article, states that jp morgan chase is on track to spend $7 million this year on lobbyists. wells fargo, which spend $5 million last year, spent $1.9 million on lobbying in just the first quarter of this year. none of that includes the millions in campaign contributions the banks and trade associations are pouring into the conference of those members of congress who sit on the relevant committees responsible for financial

reform, especially those willing to take on dodd-frank in the article. professor warren, these are the same two institutions that publicly admitted to wrong doing in state and federal mortgage servicer investigations. is that not correct? >> yes, sir. >> as i understand it, jp morgan admitted to overcharging thousands of active duty military personnel millions of dollars in fees and interest charges in violation of the service members civil relief act; is that correct? >> yes, sir. >> and wells fargo admitted to 55,000 foreclosure proceedings. i guess my question is do you think this kind of action and activity has anything to do with what has been their opposition

to your agency becoming fully operational and carrying out its duties and functions? >> congressman, it was a hard fight to get this agency passed into law, but i thought once it had passed, and it had become the law, that this kind of fighting would be over at least for awhile, and we would have a chance to get on with protecting families. obviously, i did not fully understand the politics of the situation. >> well, let me just thank you again for your service because i believe that this agency is designed to function in the public interest, and that you have demonstrated throughout your career that you are a public interest oriented individual, and that's exactly what you will do. i thank you very much. i appreciate your service.

thank you, mr. chairman. i yield back the balance of my time. >> thank you, sir. >> i thank the gentleman. professor, you've been very kind with your time. would you like a short break before we do the last few, or -- >> if we have a few more to go, can i just be excused for three minutes 1234 >> absolutely. >> we'll take a five minute recess. >> thank you. [inaudible conversations] hearing will come back to order. professor warren, we're down to just the last few. the ranking member and i agreed that we will conclude by approximately one o'clock. you will be dismissed, and then we'll talk other matters. that may be a very short thank you and good-bye.

i thank you in advance for your participation. i've tried to let the clock run so you get full answers. hopefully i've never cut you off. this has been the kind of hearing, at least as to your participation, that we strive for, and we appreciate you're being here. with that, we recognize the gentleman from florida for his round of questioning. >> thank you, mr. chairman, and i also want to thank you for being here and your testimony, not once, not twice, but a third time, and so i appreciate that very much, and i want to move into another area a little bit and maybe you can help me understand a few things, and just to be clear, i opposed legislation. i don't support the legislation. if my comments appear to some to be political in nature, it's because i don't trust what it is that we are doing, so just want to put that on the table on the

offset. let me ask you this, start with this -- are you still actively cam paping for your -- campaigning for your professorred settlement? >> congressman, you mean in the morning servicer, where the mortgage servicers -- >> yes. >> this is an effort that is led by the department of justice -- >> no, but -- all right, are you still actively campaigning for your preferred settlements? >> i still -- no, congressman, but i'm not -- i just want to be careful about the premise here. i'm not sure what kind of campaign i've ever had, but -- >> well, haven't you been, i mean, isn't there's a preferred settlement option that you think is right and vice president you been out -- haven't you been out kind of campaigning around the country for that? >> around the country? >> yeah, the country. >> a settlement for mortgage servicers? no, sir, i don't think so.

>> so you haven't been come paining? >> well -- >> have you or haven't you? >> congressman, i don't understand what you mean. >> okay. have you been engaged in trying to convince people that your point of view is right in a settlement? >> congressman, i'm always engaged in trying to persuade people my point of view is right. >> okay, but have you been doing that with attorney generals around the country or private -- the private industries, banks -- >> i don't think i had a conversation with anyone in private about mortgage settlements for months -- >> but you have stated that you -- that these are negotiations with the private parties and are entirely directed by the department of justice by the states attorney generals and by other federal agencies? >> congressman, i think if i'm following the same thing, the