their dislike of this consumer agency and do their jobs and their job is to confirm someone's qualified to head up this agency that was created under the law and is the law in this country. consumers need these protections and the banking need industry needs this kind of fair-minded kind of comprehensive way of doing its job. richard cordray's career as two supreme court justices attorney ohio solicitor director, hi zero state legislator shows he is the right person for the job at the right time for country. is time to put the consumer cop mr. chairman on the beat. >> thank you senator brown. senator hagan. >> thank you mr. chairman. we all know that the consumer financial protection bureau was a key component of the dodd-frank act and it is time to put a director in place so that the bureau can fulfill its

important mission. i appreciate you coming today and i certainly do appreciate your family being here with you. for too long, americans have fallen victim to financial abuses at the hands of auditory lenders that operate with impunity outside of consumer finance laws and away from the regulatory oversight. payday lenders took advantage of people in north carolina for many years until after considerable legislation and litigation we put a stop to the practice. i am optimistic that with a confirmed director in place at the cfpb, we can start to reign in those predatory lenders in the parts of the country where they continue to prey on american families, outside the regulatory environment. offices within the bureau have already embarked on important work and once again it is time to put a director in place to support these offices. the office of servicemembers affairs for example was set up within the bureau to ensure

military personnel and their families are educated and empowered to make better informed decisions regarding financial products and the office is already doing tremendous work. in may of this year, held a roundtable export greg in north carolina with holly petraeus, the director of that office, and mrs. petraeus and i heard directly from the men and women in uniform about the challenges that they face as consumers of financial products and the links to which the officers must go to actually protect the troops from financial abuses at the hand of predatory lenders. and i think a strong director is going to be crucial to ensure that the momentum of the office continues and can be translated at the meaning financial protections to our men and women in uniform. i'm aware that a number of concerns have been raised about the impact that the bureau will have on lending. i'm going to be particularly interested in how mr. cordray

you intend to bow and the needs of consumer protection with the need for a community financial institution to provide loans to homeowners and to the small businesses. and i'm hopeful that we can mitigate these concerns and move forward. it is time to put a director in place so that the bureau can get on with its important work. thank you mr. chairman. >> senator menendez. >> thank you mr. chairman. first of all i want to thank you for moving forward with this hearing and i want to thank attorney general cordray for accepting a nomination under very difficult circumstances and for his appearance here today. i can just tell you if i had the smile of your son and daughter i would win my election hands down all the time so i'm going to have to learn it because it does not come naturally to me. you to full smiles. however, you know consumer protection and a director of the consumer financial protection bureau are important topics but

unfortunately progress has been fleeting. progress that is some holding wall street accountable and protecting consumers. the consumer financial protection bureau officially opened its doors in july. mr. cordray was nominated days before but months before, months before my colleagues on the other side of the aisle said that they would be siding wall street and blocking any nominee. let me repeat that. any nominee from heading the consumer financial protection bureau. not only would they be blocking anyone, regardless of qualifications, and i think we might agree that we have an eminently qualified candidate here who not only receives the approval and support of consumer groups throughout the country, but the regulated industries that in fact they oversee have positive things to say about him as an individual. so not only would they block

anyone regardless of qualifications, they demand that we radically change the structure of this new consumer protection agency months before it had even opened its doors and many more months after this matter was legislatively settled. now the last time i checked in a democracy, when there is an election of the people, they choose their representatives. you have votes both in committee and on the floor and then those votes ultimately through passage of legislation passed by the president of the united states. it is a lot the land. i must want to change the dynamics of what democracy means in this country. in other words, before they even have a chance to objectively evaluate the work and the effort of the consumer financial protection bureau and despite the glowing reviews that many industry members were already giving it, my colleagues said

no, shut it down. before it had even begun its important work. so mr. chairman i'm looking forward to this hearing, which is in the pursuit of confirming someone for the chairmanship subject to existing law. now, americans may be free and are free to disagree with the law, but they are not free to disobey it. we in fact may be free to say we don't like a law that is passed, but that doesn't mean we should block it as a way in which we conduct the course of actions of this country. it seems to me that minority rights are very important, but that does not nullify majority rights as elected by the people of this country. especially when that majority particularly in the passage of this law that is the law of the

land, was the majority not just of a single party but a majority of both parties. now, a minority has a right but it does not have the right to nullify the law by virtue of its actions of insisting that it will not approve a chair regardless of that individual's capacity, regardless of that individual's intellect, regardless of that individual's ability. so mr. chairman i hope that we will be able to make some progress so that you can hold wall street accountable and finally, i have to say i have the greatest respect for my distinguished colleague and ranking republican on this committee but i just take a different point of view because when we talk about what happened in this economy, what is happening in this economy is that we had not a free market which i support, but a free-for-all market. and in that free-for-all market we are regulators we are asleep at the switch and other entities

were not in existence to protect the consumer. we ended up with not just a great recession but on the verge of a new depression. and so, we do not want to relive that history, so that we can in fact for tech consumers and ensure that our economy can move forward and not run these tricks again. the consumer financial protection bureau is an essential part of that recognized by a majority on both sides of aisle and that is why does the law of the land and that is why they need to chairman. thank you mr. chairman. >> thank you. now for any objections of her nominee, senator shared around will introduce richard cordray. >> thank you again mr. chairman. is my honor to introduce one of the finest public servants i've ever met, richard cordray. his mother was a social worker and his father who has been legally blind since birth worked with the developmentally disabled for 43 years.

it is clear where rich cordray and his family learned about public service. as ohio attorney general he was a strong voice for ohio into struggle to stay in their homes and consumers have faced unfair practices deceptive lenders who targeted financial institutions including fannie mae, they used accounting fraud to undermine investments like pension funds and provided retirement security for teachers and janitors and secretaries. he took on unscrupulous actors and work closely with ohio's banks to create an craft effective targeted legislation to prevent banks from engaging in predatory lending. is the treasure of the county level of franklin county, state's second-largest county, home of the state capitol and at the state level as state treasury for financial literacy efforts in schools and with seniors. throughout his career as lister of ohio as law professor and attorney in private practice riches been a strong voice for his clients and for consumers. top executive of ohio fortune

500 companies proctor & gamble, limited brands, for a city american electric power strongly endorsed his nomination. to find represented is from ohio financial institutions both of whom are here today like they'll hire branko's lead and john kieslowski of the ohio credit union league are here today in support of his confirmation. steve rasmussen the ceo of nationwide insurance a fortune 500 company and a national leader in banking and mortgage products believes ritual embrace the partnerships as leader of the consumer cfpb. rich as the bipartisan support of former ohio attorney general including the current one, former republican u.s. senator mike dewine that he would win the praise of his former opponents speaks to his integrity and his professionalism. and mr. chairman i have letters that i would like to submit for the record, one signed by mike

buskirk of the ohio bankers league and one signed by steve rasmussen, the ceo of nationwide insurance, one signed by our former colleague and national hero, john glenn, all of whom are supporting this fine public servant. mr. chairman, if for no other reason we should confirm him, rich cordray was a five-time jeopardy champion. i actually tried out for jeopardy once and i didn't get through the first round. nonetheless, rich cordray is very excited about this appointment and i'm very proud to introduce my friend, terrific public servant in ohio, richard cordray. >> thank you senator brown. mr. cordray i look forward to hearing your testimony. will the nominee please rise and raise your right hand? do you swear or affirm that the

testimony you are about to give is the truth, the whole truth and nothing but the truth, so help you god? do you agree to testify before any duly constituted committee of the senate? >> yes, i i do. >> please be seated. please be assured that your written statement will be part of the record. please also note that the members of this committee may submit written questions to you for the record and you should respond to this question promptly in order for the committee to advance your nomination. mr. cordray, if you would like, please introduce your family and friends who are in attendance before beginning your statement. >> thank you mr. chairman. i will take you up on that suggestion. i'm glad to have with me today, if you like i don't need to introduce them at this point as they been commented on, my wife page and our kids, are twins

danny and holly who are 12 years old and they are excited to be here today in part because they missed a day of school i think. i also would echo senator brown and thinking the president of the ohio bankers league and the general counselor of the ohio credit union league were in the hearing today. i thank them for their help and support over the past month in the work we have done together over many years. i also want to acknowledge i believe that chairman jon leibowitz of the federal trade commission was here earlier and had to leave. commissioner julie brill of the ftc is here. they been tremendous partners to our bureau in helping us set up operations and have forged collaborative enterprise for us that i think will mark the years ahead. so there are other friends here but i won't ask the committee's patience. i am grateful for their presence. if it is appropriate at this time senator do have an opening statement. >> yes. >> okay.

thank you chairman johnson, ranking member shelby, and members of the committee. i'm honored to be here as nominee to be the director of the consumer financial protection bureau. i appreciate deeply the confidence that the president has shown in me and i thank elizabeth warren for her painstaking work to turn the bureau from an abstract idea into what is now a tangible, vibrant agency. and i'm grateful to the committee members for your courtesy to me and your advice over the past month which i have welcomed and will always welcome. let me briefly discussed, that rounded experience may help inform your consideration. as was mentioned from child of my parents taught me the value of work that seeks to improve the lives of others. my dad, frank, who is now 93 years old spent his entire career working with children and adults who have developmental disabilities. my mom, ruth, who died of cancer when i was in college was a social worker who founded the first grant program for the

development he disabled in ohio. at the same time she was doing all the things that a mother does to raise three pretty rambunctious boys. over the past 20 years, through my work in state and local government, i became deeply engaged in consumer finance issues and i developed the deep resolve to address these issues that i found to be so basic to our community. working with troubled taxpayers i quickly learned there was no one-size-fits-all solution as you seek to help people who just want to do the right thing and when necessary to thwart those who would take advantage of others. on a friday of issues i sought to find new partners and we frankly experimented with new approaches. seeing the struggles people had to make basic financial decisions a group of people and i pushed her legislature successfully to pass a new law requiring high school students to receive personal finance education before they graduate. we been implemented that law by developing a curricula and

training hundreds of teachers. as we saw the foreclosure crisis wreaking havoc in many neighborhoods, and i saw this in early 2004 in 2005, i saw subdivisions where a dozen foreclosures rector the dreams of every resident in the subdivision. we created to save our homes task force that brought together businesses and banks, nonprofits and government to combine their perspectives to assist people who are just frantic not to lose their homes. as state treasurer continued work on financial literacy issues and foreclosure prevention now on the state level. i also notice that we had a neglected low-interest lending program to help small businesses create jobs and to help farmers access to affordable credit in our room at communities. we revive that program, sought to expand it, and reached out to community banks to work with them to understand how we could make the program accessible and usable for them. over the time i was treasurer we

pumped hundreds of millions of dollars in low-interest lending into our communities especially the smaller towns where community banks are the economic backbone of those communities. all of this work reinforced for me how imaginative strategies can benefit both businesses and consumers who have many interests in common. immediately before coming to the bureau's chief of enforcement i served as ohio's attorney general. in that role i worked with law enforcement, police and sheriffs throughout the state. i represented a pension systems in the courts and i and i'm i and forced the state consumer protection laws. my main objectives in consumer protection in particular were to help empower people to make better informed financial decisions for themselves and their families and to stop the scams and fraud that not only cheat consumers would also undercut law-abiding businesses. at every stage of this work, i believe and i believe today that law enforcement which is

even-handed, fair and reasonable, not only protect consumers but it also supports what i call the honest business in two key ways. first, the businesses that she can gain a significant unfair advantage and law enforcement protects the honest businesses against the cheaters. second, keeping the marketplace clean is crucial to giving consumers the confidence they need to encourage to participate in that market. at the consumer bureau i found congress has given us a broad range of tools to address these issues including research reports, rulemaking, enforcement, market guidance and consumer education. congress also gave us the critical ability to examine large banks and non-bank so the participants in the same market would be subject to the same roles rules in the same burdens and to resolve compliance issues in many instances more quickly and effectively without resorting to litigation. i am also i think convinced that we will find many out entities

to streamline regulations and disclosures. for example our project is already working to combine the mortgage disclosure forms under overlapping mortgage laws. in order to make the cost risk and responsibilities of home loan clear to consumers but at the same time reducing the paperwork durden for lenders, that is a true win-win. i believe that we will find that same sweet spot as we reviewed now the thicket of regulations we have inherited from other federal agencies. enclosing chairman johnson, ranking member shelby and members of the committee i appreciate your consideration. if i were to be confirmed as the first director of the consumer financial protection bureau i can promise you we would have one person accountable to you for how we carry out the laws that you the congress enacts and that i will always be keenly interested in your thoughts about our work. thank you again and i appreciate the opportunity to answer any questions you may have. >> thank you.

without a director in place, cfpb will not be able to exercise its examination and enforcement over non-bank financial by private student lenders and credit bureaus. do you agree that this authority is essential to level the playing field between responsible small community banks and their non-bank competitors? >> i do, senator, mr. chairman. i think it is one of the key principles that was embodied in this new law and i can tell you i remember a conversation i had with the community banker in ohio. this would have been around 2007 when i was a state treasurer talking to me about the fact that people were coming in seeking loans that were not feasible. they were not sustainable loans, and when he would tell the customers that, he would see them go down the street to unlicensed unregulated

unscrupulous lenders who would make those loans even though those loans were destined to fail. so our good community banks and credit unions because of the imbalance in the market were losing market share by upholding their standards. and then of course it was that imbalance in the mortgage lending that led to that was so terrible, liars loans, no document loans. people en masse gail falsifying income and occupation that led to impart the financial crisis and now the community banks of separate his second double whammy which is credit has dried up and it is very difficult for them to maintain their operations. one of the things that we absolutely will not do at the bureau at lease under my leadership is to impose further burdens on the community banks and credit unions who as i said from working with them and recognizing how we had to overhaul programs to make them accessible to them so they could use them have different constraints. they have different abilities to comply with excessive

regulations that is something we will not do on my watch. we can exempt them and due to tier regulation and we can listen closely to their concerns which i will do. >> when i was in south dakota this past month i heard a lot of concerns from small community banks and credit unions about the cfpb and the regulatory burden. mr. cordray can you elaborate if you are confirmed, how do you propose to have the cfpb address this concern? >> mr. chairman we have heard the same concerns directly and i will say that i've heard those concerns over and over again from the senators on this committee and those who have taken the time to meet with me. so it is impressed upon me how important this is for us to get this right. i will refer again to my own experience and i work closely with larger banks and community banks in our low-interest lending program easy convenient way for us to it mr. the program

was passed all the money it to the large banks. the harder way was to sit down and work with community banks and understand they needed a form that could be filled out in 30 minutes or less. we put it on line and we gave them the decision and, as within 72 hours to turn around time and we met that standard and that made it possible for them to work with us. so they are a different character. they thrive on customer relationships. they thrive on their knowledge of the community. if they can have a level playing field to compete they will do very well. one thing that we will not do, we don't examine those institutions of 10 billion in assets or less. we don't enforce the law against them under the new statute. we do have regulatory power but again through exemptions into tier regulation and through listening closely to their concerns which is something i did with this treasure and attorney general, we will be able to take account of those burdens and avoid heaping more difficulties on our community banks. >> as we have discussed, there

are mechanisms in place to make the director accountable. as director, what steps would you take to ensure accountability? >> mr. chairman there chairman there are a number of interlocking pieces in the law that create accountability for the bureau. i can also say that from my own experience and the most important thing in any federal independent agency is to follow the law and follow it carefully and follow it closely. that includes rule make in, that we comply with the requirement that we consider costs and burdens carefully before we embark on any rulemaking. it means that we should be attentive to legislative oversight, which i have been is the state executive official at the state level and would be here and it means that we pay close attention to audits. i found that to be a very useful tool in the offices i've had it. every out -- every office had claims against it and we in each case we cleaned it up at the

cfpb we will take a rotted obligations very seriously and i found the internal audit make sure the policies you have don't just gather dust on the shelf but they are lived in practice by the agency. that is something i commit to as well. >> senator shelby. >> mr. chairman i yield to senator corchran. >> thank you mr. chairman and thank you ranking member. i have been on recess and went when to 60 events or so and a little bit shocked coming back into the banking committee which is typically been very nonpartisan. here, the spewing that i have heard from almost everyone on the other side of the dais, it got to tell you i'm a little shocked by that and some of the half-truths and mistruths and untrue stedman stated. the fact is the only two people that i'm aware of on this dais that were directly involved in the negotiations to create this

consumer agency are sitting on the this side of the dais. an absolute fact. the only two people that i'm aware of sitting at this dais today that negotiate day after day after day to create this organization are sitting on this side of the dais so i'm a little shocked at some of the comments that have been made and actually disappointed at the rancor i hear. the fact is that what we have talked about and you and i talked about this in the office, is the fact that the only way any of this oversight council can challenge something that the head of this agency puts in place is it that threatens the stability of the financial system, which is a pretty big hurdle. the chairman of this committee compare this to the fcc and the dic and the fed all of which are either commissions or bob wards. therefore they have people who

help the executive imprudent rulemaking. so i am stunned at the untruths that have been stated today and the partisan nature in which they have been relayed. and i am sorry that you are caught up in olive this. i know that you and i talked in our office about the fact that almost all of this could go away if the administration would just sit down and put appropriate checks and balances in place. i talked to mrs. warren about this, and i talked with you about this. and i'm wondering how those conversations went between you and the administration, regarding the cumbre station that we had in the possibility of actually just having some degree of check and balance for this new position that you hope to hold. >> senator, and i appreciate the opportunity to meet with you and hear your concerns first-hand as well as today at the hearing.

i did convey the substance of the conversations back to the administration. i have not sought to inject myself into the legislative discussions that may be between the congress and the president. my job at the bureau has been as you know chief of enforcement and our role there is to take the laws that congress has enacted, whatever they may be and to enforce them to the letter and that is what we are trying to do. we are trying to do that very carefully. i think the initial inspector general report on the bureau were good and suggesting we did in fact identify all of our required mandates under the law, that we have begun implementing those in a sensible way and we have communicated broadly to our stakeholders and to other agencies which goes in part to your question about the financial stability oversight council. we are required by law to communicate and consult with our fellow banking agencies.

we would be a very poor example of government at work if we did not take that very seriously. i would hope and expect that concerns they may have about our work and concerns we may have about their work are things that we will discuss regularly, that we will work those issues out for me to let disagreements as i am sure will occur from time to time and it would never be necessary to actually invoke some sort of super process to override our rules. if they talk to us about their legitimate concerns that a rule might threaten the safety and soundness of the banking system we should take that to heart. we should think very carefully about what we are doing and we should work toward a consensus. i think that is what we will do. >> with the agency though be not independent if it had a ward? would that make it not an independent board? >> i think senator that different independent age and ceasar structured in different ways. the currency has had a single director for 100 years and congress has blessed that.

fhfa is a single director. other agencies to have the board. it can work both ways, but the congress created us and gave us a director. we are trying to implement that law. it is difficult not having a director in place as the chairman mentioned, level playing field. .. >> again, it's a standard that doesn't apply to any other

agency. it's not inappropriate i don't think because we'll be consulting regularly in the examination fungs and as they do safety and soundness regulation. ic the two are -- i think the two are largely in harmony, and makes sense as we go together in doing work. that makes sense to me. >> i do hope we'll continue to work on this. i still do not understand why the administration will not work in some way to solve this, nor will they allow this to be the lightning rod this did not have to be when there was large support for consumer protection agency. let me move to you for one moment. first of all, i've had a pleasant meeting with you and i complement you on your family. one of the things we talked about in our office was the fact it's not typical to have sort of a political activist in state party politics announce to be

head of a national organization. typically, you pick people who had experiences in that regard, and when we -- that's not the case with you, and, again, you seem like an outstanding individual in many ways. >> thank you. >> you had announced you. ed to run for governor of ohio which makes it more odd. typically, we don't have regulators come up here running agencies that can make rules over the entire financial system, "that might be able to make a name for themselves in doing so when their goal is to go back to their home state and run for governor." you indicated that's not the case now, but i wonder if you could speak to that because if you can imagine epsz in the way this -- especially in the way this organization is set up that creates question marks and flags. >> yes, and i appreciate the opportunity to address that squarely. i said that last year before i came to work at the new consumer bureau. i can tell you, senator, i have no plans to run for any

political office. i am understanding that the work of the federal independent agency and law enforcement work in particular must be completely resolved to politics. the two do not mix. that's how i approach my job. >> how do you feel about late fees on credit mortgages? >> when i was the treasurer of ohio, they were presenting rules and regulations to curve some of the practices that had come up with late feings, and i supported those changes in the rules which eventually were adopted by congress in the cart act which i think was a good set of reforms in the credit card industry. one of the jobs of the bureau will be to monitor in compliance with the new laws, and we had a conference this year which we found interestingly that compliance was good with the new laws, and it had not restricted credit, and did not seem to be

raising the price of credit for people, and those seemed to be sound and sensible reforms that congress adopted. >> so you're not concerned about people who pay their bills on time having fees higher because of people who don't pay their bills on time, and while you're answering that, just strategic defaults in general, i mean, it's an environment in this country where we encourage people on economic grounds, self-interest grounds, to default. i mean, we have agencies of government that now are encouraging that. do any of those final thicks concern you, especially someone whose going to be in major ways overseeing big parts of this. >> they do, senator, and i think that's part of the balance that has to be drown with any of these regulations. i have credit cards. i try to pay them on time. i don't want to pay additional fees beyond what i have to. i do not want to be billed for the problems of others.

i also think that the credit card practices reformed by the cart act have been good reforms. i think congress acted wisely there, and we'll be attempting to ensure that that law is being followed as congress enacted it, so i guess that's my attitude towards the issue. >> chairman's been generous, thank you. i might have a second round, thank you for your testimony and thank you for bringing your family. >> thank you, sir. >> senator reid. >> thank you, mr. chairman, and thank you for your willingness to serve in a difficult time and in a very challenging office. you also served as the state treasurer in ohio. >> that's correct. i did, yes. >> so you come to this job with multiple skills. one is an attorney general who had to go out and protect people, but two, essentially those chief financial manager of

the state of ohio, and so i have to say, and you can elaborate, you are certainly aware of not only aware of but sensitive to some of the legitimate concerns of the banking industry about the predictability, about the soundness of financial institutions, about the needs that they have. is that fair to say? >> i think i am, senator. as you mentioned, i was state and county treasurer. it was a aaa rated county, an unusual thing in american local government finances, but most notably is the tenure as treasurer at the state was the time leading up to the financial cry cigs -- crisis. it was 2007 and 2008, one of the most difficult times to mooning and safeguard public funds that we've seen in my lifetime. we were careful and conservative in investing the public's money, how we safeguarded the money. we suffered no losses when i was state treasurer including the

local government fund which was not true of a number of states around the country. i'm proud of that, but i also think that work gave me a very close working relationship with banks in ohio because they partnered with us on a lot of work we did to manage the state's finances, both of custodians, debt management, and the like both large and small banks, so it gave me a good working sense of their operations, of their concerns. i created a banking advisory counsel when i was state treasurer and carried toward the same approach as attorney general so we'd meet regularly, i heard theirw3 concerns e and they talked to me about whatever issues were on their mind. i think that's the accessibility i tried to foster, and i would bring that to the bureau, but i do have that background, and i think it's part of what may be would be kept in mind in assessing my qualifications. >> one office within your purview is the servicemen's

fears led now by petraeus, and can you comment on your views of importance? many of us think it's contribute cam because -- critical because they are employees of the government, far from home, and their ability to connect with a local attorney general or state's attorney is limited, and, you know, this goes back about 35-plus years. i can recall how they were victims of many consumer fraud, and now i'm hearing because of the internet, it's even worse and even more difficult for local authorities to deal with it, but now we have a federal office, so you might comment on that. >> yes, thank you, senator. i had some awareness of the issues when i was highway attorney general, we had a pro bono group to provide advice to soldier service members deployed often on short notice and to their families, but since coming to the bureau, i learned a lot,

and i expect to continue to learn a lot, and most of what i learned was from mrs. petraeus, a colleague of mine. she's taught us all, i think, about the special needs of service members, deployments, and how that creates hardships for her families. she, herself, talk about her and her husband moved 23 times in 36 years over his long and distinguished career, but also the fact that they are now finding that if you have consumer finance issues as a citizen, they are bad enough and tough enough you might face bankruptcy. as a service member, you can lose your security clearance. you may not be able to do the job you're trained for. that's not good for the service member, the military, or for the country. they are serious issues. she brings them to our attention. we met with all branches of the service to begin to coordinate on enforcing the law to protect

service members and the special needs around military basis, a mag innocent for financial predators, and we're excited about it, hope to deliver for those service members someone to stand on their side, and i hope that's one of the marked successes of the new bureau. >> thank you very much. thank you, mr. chairman. >> senator shelby. >> i have no questions. i have an observation. eni joyed -- [inaudible] you have a good background, i do like the smiles, but your talk is a big substance of debate here. that's going to have to be resolved before we remove this nomination further, and i discussed that with you in the office, and i think senator corker did too, but i want to join senator corker for the record, mr. chairman, senator

corker and i were very involved in the banking regulation. we had advocated a consumer agency. we wanted accountability within it, and we still do. thank you, mr. chairman. >> senator brown. >> thank you, mr. chairman. i appreciate senator shelby's comments because that's really the point that during this whole process that senator corker and senator shelby, senator dodd, and others were in the midst of negotiation to work out legislation. that's what we do around here. many, many elements of the consumer part of the bill entitled to, and senator corker, you worked with elizabeth warren were done with major concessions on both sides. there's things senator shelby supported, and i thought were too large, and we need to find a way to do something. we tried on the senate floor,

lost -- >> [inaudible] >> and so, you know, that's what happens here. you win some, you lose some, but i guess i'm puzzled by senator corker's comments about accessive partisanship here because we wrote the bill, passed with some republican votes, over 60 votes, but there was certainly consistent and frequent republican input, much of which was accepted in this bill. i understand in the end you didn't vote for the legislation, but it passed by both houses, signed by the president, and i go back to what the senate historian told me that never have we seen in this senate a party saying no to confirming putting people in place to rub an agency because the one party, minority party, a large minority, is opposed to parts of the law, so we're going to just take our bowl and go home and call it partisanship. i just don't quite understand that. i think in the end, the question

is as richard qualified to for this position, and i don't think anybody's made the case that he isn't, and most of the us made the case he is. it's a pretty strong cation. -- case. you know, i hear that sort of the unaccountability question that this is -- one senator said it's an unaccountable consumer protection zaire, and i want to one through and get your comments, and i'll speak for a couple minutes walking through this. what i think the bill does about the so-called unaccountable rule making process, and i'll give a couple examples on each. before proposing the law, if there's a consumer disclosure involved, the paperwork reduction act requires you to seek the review and clearance of omb. you must consider the potential benefits and costs to consumers and financial service providers, consult with banking regulators and other agencies affecting the rules. 24 is before proposing the

rule. there's a significant economic impact, follow the enforcement fairness act. you must under the regulatory flexibility act, prepare an initial flex abilities analysis. when proposing the rule, the way i read the law, is give public notice to proposed rules, give the opportunity to comment, consult with the appropriate banking agencies pursuant to the regulatory flexibility act, conduct a final regulatory flexibility analysis. after the rule is finalized, again, this is not unaccountable to me, but after the rule is finalized, if any member of the council objects to regulation, they can petition -- the member agency objects can petition the fsoc to get it removed. they can stay or set aside regulation passed pursuant to the review acts. the senate and gao under dodd-frank requires the cfpb to

review orders within five years of enaboutment to address the rule's effectiveness. is your understanding somewhere of that of the whole process of accountability and statutory requirements you'd face as directer, and i'll ask other questions with an answer regimely if you would to the private party of an opportunity to challenge, that one of your regulations in court, what recourse only does the president have? can the president remove a run away director because he or she is unhappy with the directer's ideology or direction or rule making or whatever, and are these checks similar to those that apply to other agencies? i'd like you to spell that out for us, general. >> all right. that was several questions, senator. i'll do my best to address them. first of all, with any independent agency, the leadership of the consumer bureau like every other agency is not subject to direct removal by the president as are cabinet departments.

my understanding is congress sets up agencies in ma matter to keep agencies close to congress. our job is to enact and carry out the laws enacted by congress and we are subject to your oversight in doing so. the long list of restrictions and or process io dance laid out in terms of rule making by the bureau was pretty comprehensive. i was trying to take notes as you went. i'd also say for us in particular, one thing i want to emphasize is i think we have a real opportunity here inheriting many regulations from other agencies that we did not help to write and that in the aggregate may have created undo burdens as there was a fever for disclosure over the last 30 years and it was to the point where it was so confusing they didn't help consumers, but posed burdens on lenders. there's an opportunity to streamline and cut that back. that's something that will be a priority for me if i'm the director of this bureau.

we also are subject to oversight, you asked, by the courts. the dc circuit court of appeals recently rendered a pretty -- i would say tough decision on rule making by federal agencies in terms of making sure that the agencies do a careful korst benefit of every rule and not just conclude and then rationalize after the fact. that's something we'll take to heart of the work we do at the agency, but there's a number of checks similar to those of other agencies, and there's some checks on the bureau imposed in the law that are in addition or new compared to other agencies, but we'll live with them all. our job is to carry out laws enacted by congress, and we intend to do that by the letter. >> senator schumer. >> thank you, mr. chairman, and thank you, mr. cordre.

i was one of the original sponsors after ten years of trying to get very simple legislation, credit card disclosure legislation or get the fed actually to require that there be disclosure of what credit card interest rates are, and i joust got basic that they are busy with other things. kind of thing. that's why i feel this agency is necessary. none of the other agencies put the consumer at the top of the list. it's not their mission. the fed's the safety and soundness. an independent agency had a great deal of appeal to me, and that's why i was a strong advocate of it. it's an agency designed to finally put consumers first. it's under attack even before it's fully on its feet. i don't want to go back to the old days by going to the fed or another agency saying the consumer needs reasonable protection which i was asking with credit cards, we've gone beyond that. the simple adam smith

disclosure. no one knew the interest rates when they signed up for celt cards and the fed interest was sporadic, and i like the fed in general, but not in this area. they were not very good, and so here we have an attack that is sort of not in the ordinary, it's extrough ordinary where two sides make an argument, seek support from their colleagues, and put it to the vote. that's the ordinary. we fought battles last year, consumers won in part because people experienced what i did, but now that the consumer protection -- now that consumer protection has become the law of the land with its own agency to guard it, some of our colleagues want to reopen last year's debate because they couldn't win it through the ordinary legislative process. they promised to block this nomination or any nomination until they get their way. it is hijacking the legislative

process. you have a legislative battle. you lose, and then you say i'm not appointing anybody because i lost the battle. it's not how things should work around here. let's ask this fair question. while consumers don't win, many of the abuses we saw leading up to the financial crisis will be allowed to continue and the new cop on the beat for consumers will be forced to stand down. seniors don't win. they will be vulnerable to reverse mortgages and the cftb has to fight with one hand bind their back to protect them. service members don't win. they will be at the mercy of private lenders and debt collectors and the cfpb will not help, and banks that play by the rules don't win. they will be forced to compete with unscrupulous lenders, unregulated mortgage servicers, all the people who created the good part of this financial crisis because they were unregulated will remain

unregulated while many of the banking institutions that are regulated will still be abiding by the rulings. no doubt, that's why the ohio banker's league supporting your confirmation, so in short, without a director, the cfpb has the least authority where it needs it the most. we should not relitigate the existence of the cfpb. we should be here to debate the qualifications of him to lead the cfpb, a question answered easily i think in the affirmative. a few quick questions. first, now, senator shelby met with you, and he said that, and that's to his credit. how many of the other 43 who signed the letter saying they'd block the nomination met with you or ask you questions before they signed the letter? >> well, senator, i was not a nominee at that time so i don't know they would have known to seek me out to ask me any questions then.

>> how about subsequently? >> since nominated, there's an effort to meet with each member of the banking committee. i have not reached out beyond the banking committee at this point, although i hope to do so in the near future. >> how many meetings? >> a number of meetings. >> thanks, okay. i read a little bit about your background this morning, learned you got your first job at mcdonald's. what did you do, and how much did you earn? [laughter] >> i was a hamburger flipper, although it seems like the manager's always nominated me to clean the parking lot whenever it rained. [laughter] >> hope you used different tools for each job. [laughter] and how does a kid from grove city, ohio who worked at mcdonald's earn scholarships to michigan state, oxford university, and the university of chicago law school? >> i worked hard in school, had really terrific teachers, and i think i was fortunate. >> and timely, last question,

what has it meant to you that mike dewine who defeated you last year? >> attorney general and i have maintained a friendly relationship in what was a tough election. i think that's to his credit, and i hope mine, and i appreciate what he had to say about me very much. >> let me conclude, mr. chairman. his background and experience shows he's the een tone of the public servant, and it's not only bad for consumers if the nomination is hijacked, but it's bad for the country if he's treated as a pawn in a cynical washington game, so i hope you're here, the colleagues change their minds having met you and seen the quality you show as a nominee. thank you, mr. chairman. >> senator menendez. >> well, thank you, mr. chairman. mr. attorney general, you seem to have a strong record on

consumer protection issues, and you've been endorsed by several consumer advocates, but you've been endorsed by ohio businesses and bankers as well, is that not fair to say? >> i have been, yes, senator. >> now, as a matter of fact, mr. michael van jbuskirk wrote a letter saying, "while i retain reservations about the cfpb's structure, i believe mr. cordray would be an able directer. he's bright and committed to the public good, and while we differ on decisions, the consistency is there in reaching decisions. he's open to ideas and moreover a he reaches out to a flow of information to bring him better insight." while mr. van buskirk may

disagree with you on some matters, he still recognizes your qualifications to lead; is that not correct? >> i don't want to speak for anyone else, senator, but my relationship with the banker's league, i have been open to hearing from them about their concerns and i think that listening to those concerns maid me do a better job of state treasurer and state general. >> i appreciate the modesty, but can't you deduct from the letter there's an endorsement of your capability to do the job even if there's disagreement about what the agency's about? >> i think that i've come to respect my public service and understand i try to be honest and straightforward and do the right thing. sometimes it's difficult to know what the right thing is, but by getting broad advice and input from a lot of sources including the bankers and businesses that i work with, i have found it makes for better decision micking. >> have my colleagues on the

other side of the aisle, to your knowledge, called into question your qualifications for this position? >> i don't know of that, senator. >> okay. your meetings with my colleagues on the other side of the aisle have any called into question your qualifications? >> we had good cordial meetings in which there was frank exchange of views, and i listened carefully to all senators, and i hope i will always be able to develop that reputation, and i think it makes my job easier and work better if i listen closely to what you all have to say. >> let me try again. [laughter] did anyone say, i have problems with your qualifications to do this job? >> they have not. >> all right, thank you. so let me ask you, i understand my colleague, senator brown, has gone through all the checks and

balances that some believe don't exist, but, in fact, there's a large number of them. let me ask you this. isn't it true, or maybe you can righten me if i'm wrong about this, that without a director, the consumer financial protection bureau does have soup vise ri authority over large banks and the ability to enforce existing banking laws, but it will not have soup viz ri -- supervisory authority for non-bank financial service providers such as payday lenders. >> senators, it's one of the current difficulties without a confirmed director, the bureau is widely agreed inherited full powers over the large banks, but there's considerable difficulty about what powers we have over some of the non-bank entities competes in the same market with them, and i'm haunted with them by that conversation i menaced earlier where they talked about what it meant for them that only part of the market was

regulated, and they were consistently losing market share to the unscrupulous, unlicensed, unregulated who did not play by the same rules or meet the same standards, and that's something i hope we do not repeat. >> so, in other words, there's an uneven and unbalanced playing field where community banks have to abide by the rules, but the competitors like private student loan lenders and payday lenders do not have to? >> that's the unfortunate situation. >> it seems community banks think that's unfair. furthermore, without a director, the bureau cannot protect students from exploitive student loans, protect seniors from deeply financial -- deceptive financial products market thed by nonbanks and protect the troops from products of non-bank lenders. how is that fir for those banks that play by the rules and yet could lose business to competitors who do not have to play by the same set of rules?

>> i think it's not fair, and it's not wise as a regulatory approach. i talked in my opening statement about law enforcement that is even handed, fair, and reasonable by putting them under the same rules, they can then compete and the good consumer businesses that base their business on customer service and customer delivery like our good community banks and credit unions i think will prosper. >> thank you, mr. chairman. >> thank you, mr. cordray for your testimony today and for your willingness to serve our nation. i ask that all members of the committee submit questions for the record by close of business on friday, september 9, and mr. cordray, please submit answers to these questions in order for the committee to advance your nomination. this hearing is adjourned. [inaudible conversations]