list of 100 top lenders to read these 26 lenders issued a total loss 5,334 loans for approximately 1.5 billion. that is just looking at the top 100 lenders. and only and their sba loans. if the cftc is considering how actions against larger institutions will impact small-business lending. >> so, the letter that you are referring to to the ceo, mr. chairman, was sort of introducing the program supervision. that's a program that is by statute focused on the depository side and focused on depositories with $10 billion in assets or larger and their affiliates to put it into context.

and that process of supervision, which is essentially working with institutions by sending examiners to them and understanding how they operate and understand their businesses and understanding where there may be questions about their compliance with the federal law that focus is on the consumer protection, and as i said, our jurisdiction over business credit is quite limited. the main exception is in the area the implementation and as required will be an important part of our process. >> federal reserve chairman bernanke recently stated that there has been no examination about the impact of the new regulatory environment will have

on the overall economy. as the cftc has done any such study upon how of the bureau fully implemented or will affect the economy? >> mr. chairman, can you repeat the question? >> bernanke recently stated that there has been no examination about the impact of the new regulatory environment, what will have on the overall economy. and has your organization done any studies about when you are fully implemented what impact it will have on the economy? >> we are still in the process of building of our process that we've launched our supervision program, we are taking complaints from consumers on credit cards, of working diligently to the regulations focus on the regulations that the congress has directed us to adopt and implement, directed as

under the dodd-frank act and so, in the cases such as that we are doing the congress will where the congress has made judgments about the benefits of certain policies for the economy. >> one of my concerns about thus efp is when you have an agency charged with looking for problems they have a tendency to find them whether they exist or not. how will we know when we have a financial system that is free of abusive practices or what steps are in place or benchmarks exist to know if cftc has achieved its mission? >> our focus is part of the commission on working towards a market place that is free of unfair, deceptive practices. it can be challenging to

identify the full range of practices and the economy as large as ours. we are going to use all available sources of information to see where the risks to the consumers like and where the compliance risks lie and our sources of information will include as i mentioned examination function which is one of the important tools the congress has provided us and a tool that we can use to try to provide a level playing field between institutions of charters and financial service providers that compete in the same market but are not banks, and we have a research capacity that we are building as well. we have teams that are designed to be expert in particular markets are often we are hiring people have expertise in specific industries, as we plan to take information from a wide variety of sources to best understand what is going on the to be responsive and have a smart balanced and effective approach. 64. >> thank you, mr. chairman.

as i mentioned in my opening statement, with one in five entrepreneurs reportedly using home-equity loans for business purposes and nearly half of all small businesses relying on personal credit cards for capital, consumer financial products provide a critical source of capital for many small firms. how will your agency to either its oversight of the products to ensure that small businesses do not find their access to credit restricted by the new regulations? >> thank you for that question to the and we talk a bit about this in the written testimony as well. there is certainly some overlap. there are some small businesses that for some period do use personal credit and we are aware of that and as we said to address that in the testimony. i think the amount of overlap varies over time coming and what we are going to look to for the

simple in understanding that overlap is as an example to what extent small businesses are using credit cards designed for consumers to make payments and to what extent they are actually borrowing on the card, and we bring some data on that point in the testimony based on a federal reserve study and a survey by the national federation of independent businesses and we've already started to reach out to feel their organizations to make sure we to understand where this overlapped might be. ..

>> we are responsible for enforcing it, and equal credit opportunity agent prohibits discrimination both in consumer lending and in business lending, and therefore, we have to fulfill, of course, and fulfill diligently, the mandate congress gave us in that area. >> the original bill, the dodd-frank act created helping regulators understand credit conditions for women-owned and minority owned businesses and some say it is burdensome raising privacy concerns for those types of firms. how will you balance the firms

and make sure there's sound and accurate information on small business credit. >> congressman, you're referring to section 1071 of the dodd-frank act which does amend the equal credit opportunity act to collect data on small business lending, and this is potentially an important source of data to better understand demand conditions and supply conditions in the market for small business lending where data tended to be somewhat limited. we see it as a bloom to have these data as a boom boost to small business borrowers and lenders to better understand the market. now when the data collection -- nothing it free. there is some cost involved. congress has set the parameters for this data collection, but within that where we have discretion about how to do it, we are going to seek to, you know, make the most of the benefits of these data for the

public, and only impose the burdens that are necessary to achieve those benefits, and we intend to make sure that the data have, you know, have integrity and will be useful in the end, and the issue of privacy that you mentioned of course is an important consideration, a consideration that has arisen in other data collections, and those issues are important and we intend to pay attention to them. >> thank you. no further questions. >> okay. >> thank you, mr. chairman, mr. ranking member, and thank you for being here today. one of the things i continually hear from my district down in south florida is small business owners and access to credit. everything worth reacting to can be worth overreacting to with dodd-frank. do you think that we need to have regular review of some of these regulations to make sure that they are effective and efficient and not con training

as far as this relationship is with the community banks and small business owners? >> that's a good question, and the dodd-frank agent to some extent contemplates this because it does provide for significant regulations that the bureau adopts that we should be assessing the regulation within, i think, it's about five years, and so that's a statutory requirement, and one that we intend to follow dill gently. well, i'm concerned with that -- >> well, i'm concerned with that because the last report said they are freezing hiring. 70% of them said that. waiting five years for a review is not setting conditions for the growth of small businesses. can we come back and look at a semireview and include people that this could be affecting, community banks, small business owners, instead of waiting five years for a review?

>> we have a process, in fact, a statutory process, a small business regulatory and fairness act providing small businesses with the opportunity to provide input before a issue a proposal in certain circumstances. >> there was that part of dodd-frank? >> there's amendments -- dodd-frank including amendments to the flexibility act and the related to small businesses, and those amendments among other things extended to brief obligations to us where the third federal agency only to be subject to this, and that'll be one way that we get input from small businesses even before we adopted a regulation, and i think what we're trying to do is where we can go beyond the statutory requirements for public comment and regulations and a prime example of that is handling the form of federal

mortgage disclose sures. long before there was a regulation out there that would implement these reforms to the disclosures. we put initial prototype forms on our website and created a channel for consumers and a channel for industry to respond. both produced thousands of detailed comments, and the wonders of technology, we used the internet to make it easy to comment an click on parts of the form and get feedback on certain parts, and in addition, we are conducting sort of more controlled laboratory testing of the potential disclosures where we're going into a room asking individual consumers questions about it, and i think maybe for the first time for an agency in any event, we have found it very productive to include in the testers lenders and brokers. we ask them to sit down with them, test the forms with them and do round after round of the

testing and continue to allow the internet to allow thousands of others to give input. as i said in the written testimony, we have a brief of panels around the forms, and so by the time there's a final regulation, it will have received that kind of input, and then under the dodd-frank act, you know, when we get to the point of implementing these newly reformed disclosures, wait an appropriate period of time and come back and review it again. >> and so once again, i come back to the original question. you know, what i heard you say was right now that's five years. in the type of fiscal or economic situation which we find ourselves where small businesses are suffering, and i applaud you for looking for input before the input comes in, but can there be a review before the end of the five years to ensure these are working properly.

>> we can consider that. i think an important factor is when we review disclosures unless you go back and test the disclosure again and see if it's working in light of whatever changes in the market that occurred, it's a pretty extensive process. it takes months, and it can involve qualitative testing where you speak to small groups of lenders and then valid testing, something we plan to do after the initial round of qualitative testing, and that can take awhile to do correctly, to gather useful data, and when we do that, we want to do it in the most careful way, and we want to put out the results of our testing and research for people, you know, to learn from and comment on and do their own research. the process of doing good analysis on a regulation that gives you meaningful answers can take some time.

>> thank you, mr. chairman, i yield back. >> with no other questions, thank you so much for your testimony today. i really appreciate it. >> thank you. >> i want to thank associative director sokolov for being here today and answering questions about how they are trying to limit the burden of regulations on small business. i hope that they will continue to think about how small businesses will be affectedded as they begin to exercise their regulatory authority. we will continue to closely follow the impact of this the cfpb on small businesses and want to work with you to reduce the regulatory burden on our

nation's job creators. i also suggest that your staff listen to our second panel of witnesses so you can learn about the concerns of small businesses have about the cfpb. i'd like now to call the second panel of witnesses to the witness table. [inaudible conversations] >> i would now like to welcome the second panel to the hearing for the benefit of the witnesses, i'll take a moment to again explain the light system you see before you. you'll have five minutes to deliver your testimony. the light will start out as green. when you have one minute remaining, the light turns yellow, and timely red at the end of your five minutes. i ask that you try to keep it to that time limit, but i will be a

little lenient as you finish. first witness is jess sharp, director of u.s. of commerce, this organization was founded in 2007 with a mission of supporting capital markets that are the most fair, efficient, and innovative in the world. prior to becoming executive director at the center, mr. sharp was deputy standpoint to the policy and special assistant to the president on the white house domestic council. you have five minutes to present your testimony. >> thank you, mr. chairman and distinguished members of the committee. i'm the executive director of the capital markets shop at the u.s. chamber of commerce. i appreciate the opportunity to testify today on behalf of hundreds of thousands of main street businesses that the chamber remits. we support sound consumer protection regulation that have

fraudulent actors and ensure consumers have clear and precise disclosures about financial products. we want to ensure that the bureau takes a targeted approach for regulation and enforcement without making sweeping policies that impose due publictive burdenses on small businesses and prevents them from getting the credit they need to create the jobs we need in this country. i'll lay out our concerns in two general baskets. first, you know, we have concerns of small business that are subject to the cfpb's regulation and other oversight because they engage in one of the ten activities laid out in the law. they could be regulated by the bureau. all these businesses are subject to oversight by the ftc. it's important to point out these are not businesses that have been heretofore unregulated. overlap and duplication is inevitable as the outlines are

on responsibility. second, as raised here already today, cfpb makes regulation that may decrease the availability or increase the cost of forms of consumer credit to small businesses. we talked credit cards. i think home equity loans as well. there's a slew of sort of non-traditional bank lending instruments that small businesses rely on. it's troubling given the troubling environment. according to a story in the "wall street journal" in the past 16 months loan seeking businesses with less than $5 million in revenue landed bank financing. it's a tough environment and are concerned about tools taken off the table. last week, the house approved an important piece of legislation making changes to the bureau's infrastructure and operations and to ensure that the decisions are based on diverse inputs. hr13 replaces the single directer position with the

bipartisan multimember leadership team giving the agency stability and balance over the long term. we give small credit unions and banks a voice in the process allowing the financial stable oversight counsel or fsoc to override the safety and soundness. the risk of tunnel vision are real for any government regulator including the bureau. if they are not properly addressed at a structural level, agencies will over time abandoned sound regulatory principles. i want to speak next about the brief mentioned here this morning. it's an important point as already mentioned, the bureau is included on the list now of agencies that must follow it, in addition to the epa and osha. it's a very important requirement for bureau to follow in order to get small business up put up front. however, the panel process is not a perfect mechanism, and it's not necessarily enough to

ensure an independent check on the bureau's activity that affects small businesses. this committee's role is incredibly important in overseeing the bureau's work and implementation. just to mention a few of the concerns we have about how this process could play out. first the bureau itself is responsible for thesh hold determination that a proposed legislation is expected to impact with a small number of entities. the term "significant" is subject to the cfpb's discretion to define. second, the bureau does not have to adopt recommendations that are advisory and just give explanation for adopting or rejecting them. it covers the rule making process, and i think you heard the first witness describe that regulation is not always the best way to go about doing things. they can use compliance assistance, supervision, enforcement actions to essentially dictate broader

policy that are not subject to any sort of formal process where by input is taken. just to again put a fine point on it, i mean, actions speak louder than words. as mentioned here this afternoon, the bureau already does have rule makings essentially in progress, if not technically. one to merge these two mortgage forms, another to define the types of businesses that the bureau will supervise in the non-bank space, and in neither cases has the panel been put together. now, technically it's not required at any particular stage, but, you know, if we want it right from the gipping, we encourage the bureau to begin that process as soon as possible. with that, thank you for having me here, and i'm happy to answer questions. >> i would like to introduce our

next witness coming from my home state of colorado, mr. terry jones. he is from the city of pines where he resides with his wife. he has over 40 years working in the mortgage banking industry. he's testifying on behalf of the colorado lenders association where he serves as chairman of the legislative regulatory affairs committee. i'm pleased terry jones could be here today, and i look forward to your testimony. mr. jones. >> thank you very much, chairman, ranking member, and distinguished members of the subcommittee. the colorado mortgage lending association is a 56-year-old organization employing over 2500 individuals. over 75% of our members are small businesses that employee less than 25 people. in my 42 year career in mortgage lender, i've been a loan

originator, manager, entrepreneur, and a small business owner. i've always been proud to be part of an industry that helps people and families reach their dreams of home ownership. i've seen many people in the business start as loan originator and then start their own splal mortgage lending businesses. these people lived their own american dream, and in doing so, served the real estate markets and the buyers and borrowers of their local communities. the dodd-frank agent creates a superregulater for the mortgage lending industry and the cfpb. this is in addition to the oversight already in place by the states, fha, va, fannie mae, and freddy mac. they are taxed with 150 lending rules over the course of the next 18 months. it will be difficult for small mortgage lending business to keep up with so many new rules in such a short time frame. it is essential to develop an

orderly process for the rule making initiatives not only to ensure meaningful input from industry, small business, and other stake holders, but do develop clear rules that are not in conflict with those of the states or other agencies. the cfpb must have a process for providing timely, reliable guidance to the industry and prior to implementation of new rules. we believe this is a historic opportunity to set the tone for the future regulation of the mortgage industry in finalizing the ability to repay and defining mortgages as a safe harbor characterized by traditional, well under written, and properly documented loans. by pursuing a course, they can preserve the best practices and products of the industry, yet still curve the abuses of the early 2000s. if they take this approach, it's a great benefit to small

business lenders because it creates a safe harbor to rely on while making loans. if the cfpb chooseses this as a presumption, we believe the increased levels of litigation forces many small lenders out of business. the cmla believes a safe harbor defines the arena in which most loans will be made. the risk to smaller business in particular will be too great for most of them to venture outside the qualified mortgage parameters. consumers in colorado and across the country need a viable, small business mortgage lending industry to provide a competitive local alternative to the large national lenders that dominate the market place today. the cfpb is also responsible for enforcement of the safe act which requires loan officers for non-bank firms to meet education testing and financial standards while bank loan officers need only be registered. this creates an unlevel playing

field and additional costs for non-bank lenders and creates unequal protection for consumers. in addition, licensed originators can move freely to depository lenders from licensed originators, but the reverse is not true. a lender -- a loan originator working for a bank has to go through the entire licensing process in order to be able to be employed by a small business lender. we ask that the cfpb under take rule making as soon as possible to create a transitional license to allow registered loan originators to move to non-bank lenders for a limited time while they complete their requirements. it's important for the cfpb to address the compensation rule under the truth and lending act and go over the rigid requirements imposed by the fed on the ability of the small business to pay its employees

with the loan products they produce. confusing standards and lack of guidance from the fed created unusual outcomes. for example, the current rules impacts bond programs that serve low to moderate income and rural borrowers. they limit fees and can be charged to the borrowers, but the loan compensation rule specifies they have to be paid exactly the same as any other. this can cause losses on these loans and many lenders are unable to offer the programs, these affordable loan programs. we urge the bureau to clarify this and other issues with the compensation rule. we urge congress and this subcommittee to monitor the new rules and be certain they do not harm american families, small business, the mortgage market, the housing recovery, or the nation's economic recovery. i thank you very much for the opportunity to testify before you today. >> thank you.

i now want to recognize ranking member altmire. >> thank you. mr. levitin is professor at georgetown where he teaches courses in bankruptcy, commercial law, and consumer finance. he is previously served as a solar in residence at the bankruptcy institute and special counsel to the oversight panel supervising t.a.r.p.. before joining the georgetown faculty, he practiced law and served as a law clerk for the u.s. court of appeals for the third circuit. he holds a jd from harvard law school and degrees from columbia university and harvard college. >> members of the committee, good aftno