>> homeland security secretary janet napolitano testifying about the relationship between homeland security and immigration policy. she was asked about the boston bombers, and the saudi student onlily questioned. you can see the entire hearing tonight on c-span. >> several media outlets reported that two individuals responsible for the tragic bombings were immigrants from chechneya. before the brothers came -- became the focus of the investigation, authorities questioned a saudi student who reportedly was on a terrorist watch list. i sent a letter to you this morning asking for answers to

questions about the bombers and how they enter acted with your agency. i trust you would promptly responsible, given the impact that's could have on the immigration debate. with regard to the saudi student, was he on a watch list? and if so, how did he obtain student vees visa? >> he was not on a watch list. what happened is this student wag -- when you back it out, in the wrong place at the wrong time. he was never a subject, never even really a person of interest. because he was being interviewed, he was at that point put on a watch list, and then when it was quickly determined he had nothing to do with the bombing, the wash listing status was removed. >> okay. in regard to the older brother of the two people, was your department aware of his travels to russia? and if you weren't, the reason.

>> the travel in 2012 you're referring to. >> yeah. >> yes, the system pinged when he was leaving the united states. by the time he returned, all investigations had been -- the matter had been closed. >> is it true his identity document did not match his airline ticket, and if so, why did tsa miss the discrepancy? >> there was a mismatch there by the way, the bill will help with this because it requires that passports be electronically readable as opposed to having to be manually input. it really does a good job of getting human error to the extent it exists, out of the process. but even with the misspelling, under the current system there are redundancies, and so the system did ping when he was leaving the united states.

>> the head of the consumer financial protection bureau says his agency has no interest in accessing personal financial data on individual consumers. richard cordray was responding to questions from republicans on the senate banking committee, and was recently renominated to lead the bureau. this is an hour and 40 minutes. >> good morning. i call this hearing to order. we have reviewed the cfp b's semi annual report and are here today to conduct regular oversight. this includes making sure that the agency continues to fulfill its mission of protecting

consumers and inpouring -- empowering them to make responsible financial decisions and ensuring all access to financial services are all addressed. director cordray, welcome back to the committee. i know you share my commitment to transparency and accountability. in fact this is the 32nd time a cfpb official has appeared before congress in just over two years. and your 13th appears. your agency's engagement witch both consumers and industry representatives has been widely praised. the cfpb has made significant progress in protecting consumers, including students,

service members, and older meshes. for example, the cfpb has developed a number of tools relevant to student learning, including the financial aid shopping sheet that will help students make the best choices as they pursue their dreams. and since the cfpb opened its doors, it's obtained $445 million of consumer refund. that is $425 million back into the hands of harmed consumers, and back into the economy. earlier this year the cfpb finalized rules to strengthen mortgage standards. this includes the ability to -- the provision which requires lenders to make a good-faith effort to determine if the

borrower can make his or her payments. this have been generally well-received by consumer and industry groups alike and i applaud the care the cfpb undertook in writing this rule. however, we must ensure that these rules do not have adverse impact on -- including rural areas. i look forward to hearing from director cordray on how this rule will impact rural lehning, which is an important issue in south dakota. finally, director cordray, your comments about reducing regulatory burden on community banks and credit unions. continue to be interested in your plans to make sure that we strike the right balance addressing consumers and

addressing concerns smiler institutions may have. you have proven day in and day out that you are well-qualified for the position. even any colleagues across the aisle concede this point. i hope we can provide the market the certainty it needs in consumers deserve by confirming you quickly. thank you for your service. i look forward to our ongoing work with you. with that, i will turn to ranking member. >> thank you. mr. chairman, the semi annual briefing by the consumer financial protection bureau was very important to us to gain insight into what the agency is doing. as i've consistently stated in past hearings we still have concerns with the structural nature of the agenciful we continue to seek a change from the sole directorship to a

board-like structure. it's also essential that the agency be part of the appropriations process. and finally, we believe that the prudential banking regulators so have a formal input into the bureau's actions, where those actions affect safety and soundness. and with regard to the president's recent appointment to the cfpb last year my decision has unchanged. i believe it was unconstitutional. recently agency officials pointed out they have testified more 30 times before congress in the past few years. and while this does give congress an opportunity to hear directly from agency officials and is appreciated, it does not necessarily facilitate the in depth discussion of issues and concerns we need. just last week, bloomberg ran a lengthy article citing the cfpb has allocated more than $20 million for collecting and tracking customer credit card and spending habits for more than 10 mental.

the size of this data complexion the amount of money being spent by the agency are a cause of concern for me. and should be for those americans whose credit cards, checking accounts, and other financial data are being sent mom to the cfpb. last month, i specifically asked the agency about this data collection, but the responses i received downplayed the nature and extent of it. for example, asked, how many consumer accounts the cfpb is monitoring. and the agency declined to provide that information. now we learn from the press it is 10 million accounts, and perhaps even more. this lack of cantor and transparency of what the agency is doing and how it intends to use initials financial data is troubling elm bureau is founded to watch out for american consumers, not to watch them. given the cfpb's inspector general was identified data problems, how can he consumer be

ensured this information is indeed safe? with regard to regulatory role, it -- especially our small and community banks that often have just a handful of employees in january alone, the bureau finalized over 2,500 pages of new rules relate together mortgages through seven different rulemakings. i'm concerned that without strong cost benefit analysis and input from small business panels in craft rules, even well-intention rules could make consumer credit more expensive and less affordable. that's why at two separate hearings last year i encouraged the cfpb to conduct a small business panel on the proposed qualified mortgage proposal to try to minimize inintendded consequences. many community bankers now warn that despite limited exemptions for smaller enconstitutions they

will no longer offer any mortgages outside the qm criteria, which will reticket their able to meet the mortgage needed of the communes they serve. another issue has been identified by the ombudsman who recommended the cpfb needed to review and clarify the role of enforcement attorneys who attend supervisory exams. i look forward to hearing from you about how you plan to address the community bank concerns with the qm rule and how they're implementing the only only ombudsman's recommendations. and whether the bureau was concern about the effect the presence of attorneys may have on the integrity of the examination process i firm i believe if the structure of the agency were changed, then it would become more open and transparent and many of these issues would not need to be raised by members of congress. it's my hope that the congress will move quickly to address and

pass these reforms. so that the bureau can do what it was designed to do, and that is to protect the american consumer. thank you, mr. chairman. >> thank you, senator crapo. any other members who wish to make a brief opening statement? >> i want to remind that the record will be open for the next ten days, for opening statements and any other materials you'd like to submit. mr. richard cordray is director of consumer financial protection bureau. welcome back to the committee, director cordray. you may begin your testimony. ranking member crapo and member office the committee, thank you for invoting me to testify about the semi annual report of the consumer financial protection bureau my colleagues and i are always happy to testify before the congress, and ranking member, i hope to have a chance to address each of the

issues you raised in turn if that requires several rounds of questioning i'm happy to do it. i think there are good answers to all of those issues that you raised. born out of the worst financial crisis since the great depression the consumer bureau is the nation's first federal agency whose sole focus is protecting consumers in the financial marketplace. we're dedicated to improving the lives of everyday americans and restoring trust in consumer financial markets. the semi annual report embodies or work over the last since months of 2012. the report illustrates the ways we're using the tools congress provided to empower consumers and promote a fair, transparent, and competitive marketplace for consumer finance. we have taken steps to improve the working marks, particularly those in which consumers cannot choose they're financial service providers. one such markes debt collection, concern about systemwide problem that pose recollections to consumers we gained authority to

supervise debt checkers directly bad actors in this market are detriment to consumers and to every debt collector that dot operate lawfully. we also expanded our supervision program to include the larger credit reporting companies. credit reports have a profound impact on people's lives. previously these companies were not subject to any federal supervision, and consumers often struggled to get errors resolved. in addition to our new supervision program we began handling consumer complaints about credit reporting issues. all of which will open a clear window into the actual operations operations operations operations of these companies. the bureau can now follow whether laws are being followed from credit origination to debt collection, by identifying problems and rooting them out early we're working to try to minimize consumer harm. our report also encompasses the

bureau's first enforcement actions against credit card companies that deceived consumers inch some cases the companies targeted economically vulnerable consumers with low credit scores and low credit limits. we were able to secure $425 million in relief for six million consumers and imposed penalties on the company to deter such activity in the future. these actions will senior as a warning signal for anyone who seeks to profit by misleading consumers inch the second half of 2012 we tackled issues in the market for private student loan debt which currently totals $150 billion outstanding. the studies detail the struggles students and recent graduates are experiencing. together with the education secretary we made recommendations to congress on common sense reform to ensure the risky underwriting practices of the past are not repeated. the work i'm discussing here today is merely a snapshot of our efforts on behalf of consumers. we're also addressing consumer complaints on a growing number

of financial products and services, totally more 130,000 to date. we've adopted comprehensive new mortgage regulation, spanning irresponsible lending practices. our ability to repay rule, the qualified mortgage rule, follows the simple principle that len lenders should offer consumer mortgages they can actually afford to pay back. we have conducted outreach on issues to older americans, students, service members, and others, and what we heard from them has guided the direction of our work. each day, we take another step in pursuit of our creating a consumer market place where customers can see prices and risk up front and easily make product compare sons in which no one can build a business model around unlawful practices and that works well for individual consumers, responsible businesses and the economy as a whole. we'll continue to persist in this work and we appreciator oversight. as always, i'll be glad to answer your questions.

thank you. >> thank you very much for your testimony as we begin questions. i will ask the clerk to put five minutes on the clock for each member. director cordray, in both the cfpbs servicing role and -- you provide allowances for rural areas and community banks. i've heard from several constituents that it's a threshold for real lending by small banks and credit unions. how will those rules impact lending in rural or underserved areas and what choo be done to address these -- what should be done to address the concerns. more specifically, how did you select the threshold for defining small services? >> thank you, mr. chairman. one of the objectives congress

set for us, one over the things that requires us to do if a every new regulation, in addition to assessing costs and benefits, is to assess impacts on smaller providers, and also rural areas. so that's something that we paid close attention to with the qualified mortgage cruel the servicing rule as you mentioned. that led to us write provisions into the rule that are specific and special to smaller providers, and community banks. to recognize the role they play in some of the more challenging areas to underwrite loans, such as rural areas and underserved areas. we provided a special provision for smaller institutions, has been repo posed and will be finalized shortly to recognize if they're holding loans and portfolio and they're operating according to their traditional underwriting models, those are good loans and sound lending

that we want to encourage. we took the only proposal that was produced by the federal reserve, which had a narrow definition of rural, which would have covered 2% of the population, and we expand that tremendously to almost 10% of the population. we have heard further comments since to suggest that we could have written that even bigger. that is something we're looking at and thinking about as we get more comments even after the rule has been finalized. on the servicing rule, we originally proposed an exemption for small are services. many of whom have very few foreclosure, many of whom have a high touch customer model which is something we want to encourage. we originally proposed an exemption for those that service a thousand loans or fewer, after receiving comments from smaller providers and we had a small business review panel on that rule. we end up expanding that to

those who service up to 5,000 mortgages. and that covers, we estimate, 98% of the smaller providers. they're exempt from significant portion office the rule. so we're trying to be careful sensitive to not having a one size fits all approach and recognizing that smaller lenders, particularly in rural areas, are of interest to congress, of interest to the market and of interest consumers. >> director cordray, as you know, outstanding student loan debt now exceeds $1 trillion. the cfpb recently acted on how to make student loans repayment more affordable. what is going to be done next with regard to student lending and what do you view as the biggest risks in this market? >> so, several things, mr. chairman. thank you for the question.

it's been an active area for the buyer row and our ombudsman of students which the congress created in the pure row. several things and i'll try to move through them quickly. first of all, for those who are undertaking the decision whether to go college how to pay for higher education now, we've created new tools, a shopping sheet you mend, folded into a broader paying for college modual on our web site and we're roll ought to guidance counselors, teacher and parents and young people across the country as they're beginning to make financial decisions for the coming year. second, we have just put out a rule to be able to supervise student loan services. many of whom may be suffering some of the same problems that mortgage servicers suffered as we hear from consumers around the country, and we will be actively and directly examining them to make sure they're complying with the law. on the proposal you mentioned we

put out to gather thoughts and ideas from the public about what could be done about the existing student loan problem, which is burdening the economy as the federal reserve has recognized in the past months, and is slowing down housing purchases and car purchases and other things. we have received a tremendous amount of interest. we had over 28,000 comments submitted on that proposal, and we're going through those and we're working with a number of other entities, including treasury and other parts parts e government to see what can be done to help address the problem. it's a work in progress. >> senator crapo. >> thank you, mr. chairman. i want to talk about the data collection history i raised in my opening statement i indicated it appears that the agency's collecting data on at least 10 million americans.

in the grand wiley act congress allowed consumers to opt out of having their personal information shared with third parties. shouldn't the consumers be giving the opportunity to opt out of the information being shared with the federal government as part of to the data collection efforts? >> thank you for the question, ranking member crapo. the story i read as well, in bloomberg misunderstood a number of things. big data is the cutting edge of analysis and research right now in every field that involves analytics in this country. ibm, the big banks, every company that deals with the public, is gathering and crunching as much data as they can. i've seen figures that 90% of the data that exists in the world was created in the last

two years. so, this is happening in the private sector. it is the way of the worldful the big banks know more about you than you know about yourself, and me, too as a consumer. the notion that the regulators wouldn't keep up with them in trying to do our job of overseeing them, i think would be quite misguided. what are we doing in terms of gathering data? i want to stress that the data we're talking about is an anonymous. it is not personally identifiable information. so the notion we're taking individual consumers or invading their privacy i think is quite wrong. many of the data sources we're accessing are commercial data sources that many intents are buying and selling the data in order to be able to analyze what it shows about the market. so that goes our credit card data, which comes from argos, a source used by a number of other leg regulators and by companies

themselves. the national mortgage database we're putting together is all about having the data to be able to do the things congress requires us to do. you talk to me about frequently. you want us to do careful cost best interest analysis. want do that without good data, and for the mortgage rules we found that we need to develop a national mortgage a database so the data is even better in the future. congress cozy to us write reports. we have a report due on the card act and what the effect has been. cannot write a report like that and have it be meaningful and helpful to the congress unless we analyze the data to see what the actual consequences have been. so that's the work we're doing. it is important for us to have data so we can analyze and it we're not depending on statistic institutions what they think. that's not a proper role and the data is anonymous. not been going to you or me particularly but consumers

generally, but it's helpful and essential to us to do our work. >> i appreciate that response. let's talk about the anonymousity. bloomberg article talk about collecting and storing the enormous opt of data the agency is collecting. even if the dat tase not personally identifiable to the agency isn't it possible for the cfpb to hire contract are to dig into this information and obtain personally identifiable information? >> i don't know that would be possible or. no it's not what we're doing and not what we're going to be doing. we have no interest in how to -- -- watching consumersle we have an interest in understanding how financial products are affecting consumers and do the very meticulous cost

benefit analysis you want us to do as we write rules weevil have an interest in making sure the studies and reports congress is asking us to do help inflame your policy decision which is are the law we follow on sound grounds and we can see overtime whether the objectives you're trying to achieve are being achieved. that's the work we're doing. >> i understand your point about the fact that collection on dat tase occurs at phenomenal rates in the private sector. i am, and i think many americans are concerned about that as well, and the notion that the government needs to keep up with the big data trend is one that i understand your point in terms of wanting to be able to regulate those in the private sector who are themselves collecting this data. but seems to me there's a huge issue here about whether the federal government should now be getting in a big way into the kind of data collection you're talking about. i see my time is up. i'll come back this and we can discuss it further. >> i look forward to that. >> center.

-- senator. >> thank you very much, mr. chairman, and thank you for your testimony and your leadership of the cfpb. i want to first ask, following up on the data questions, specifically about the complaints database and can you share a little bit about -- first i believe that there nor names attached to it. who complained about what. it's anonymous, but gives you -- gives everyone a sense of what consumers are most concerned about, and if that is correct, can you confirm it's anonymous, and what are the three concerns you see coming out of the database? >> thank you for the question. the database of consumer complaints, which is something that i think people are gradually getting used to, is auntil goes -- analogous for what has been done for years by the ntsb and has led to

improvement in auto safety and the auto companies embrace it. it's analogous to what the consumer product safety commission is doing make sure the public is aware of hazards in lead and toys and other things we weren't aware of 20 years ago but are probably better off now to know about and be able to protect ore children. so, similarly here, what we're doing is, as we receive complaints, we scrub the complaints, we remove any duplicates. we verify that there is a customer relationship between the complainant and the complaint institution being complained about. we do make that data anonymous. something we're very careful about. required by law to be careful about it but i think it would bring the agency into disrepute if we were not careful about it. there's a growing amount of information that yields. our consumer complaint database

when we broadened it a month ago we had 90,000 complaints. they're added day by day now. maybe closer to 100,000. nothing novel around the world in the unite kingdom their financial services authority has been publishing complaints, data, about banks for years. and the most recent six month period they published 3.4 million complaints about the banks. >> i'm at worried about running out of time. what are the three or four top issues from the database. >> first of all, frankly, your office could probably tell us the same thing. tremendous concern about mortgage service and tremendous number of complaintness that area and a lot of consumer harm. credit card complaints i would say what it's actually showed us, somewhat prizing so me -- before the card act this was a very controversial area for the public. complaints are down, i believe, and it's showing better work by

the companies. more careful attention to what the card act now requires and that i think our report later this year will show there's been real progress made there an interesting one for us and fairly new, and too preliminary to have much conclusions yet to draw, are credit reporting complains. people generally are not aware how significant an affect on their lives their credit reports have, but those that are have found in a variety of errors. having trouble getting the errors corrected, and we're starting to hear about it as we started taking the complaints this year. so, this is information that is illuminating to us as we do our work. we think, as a result, at it illuminating to companies how they can better improve their processes, and i think it's illuminate though public, who has a right to know this information and to make assessments cardboardingly. so i -- accordingly, and we should have more information rather than less. >> thank you, and since you

mentioned the mortgage servicing continuing to be an area of significant consumer concern, and certainly i still see that through our case work. some of the issues raised in servicing are foreclosure mitigation, discussions to try to make sure that there's clear communications and all options haveton pursued, and the dual track, which still exists to a degree, and any insights on the aspects of mortgage servicing that are particularly still troubling to consumers? >> senator, i think it's frustrating to me, i'm sure to you and your colleagues, it is still the case -- maybe less so, and some services have clearly improved and others have yet to improve -- still some fundamental blockling, tackling, lost paperwork, people not asking the phone, not getting a single point of contact

promised. the dual tracking is a great concern. the notion that somebody is working with you with the left hand and trying to get your loan modified while with the right handmany unbeknownst to you, they're proceeding to a foreclosure and undermining the work you think you're accomplishing. that's very aggravating to people. the new rules we made that will good into effect in january apply across the entire market, both to services that our banks and the services that are nonbanks. never before been the case met face-to-face with the top executives from all of the large self-s, top self dozen, so let them know this was coming and the important of this and to take this seriously, and not to wait, and i think i -- i would hope that over team your offices and our bureau will hear less been these kind of complaints, but right now they remain very significant. >> thank you very much. >> senator. >> thank you, mr. chairman.

let me follow up on senator crapo's questions about data collection. where do you go to get the dat? >> i would folk cause on three different areas. credit card data, which is critical for us to have in order to prepare the card act study that congress required -- >> right. do you go to visa or master card? >> on the credit card data -- different answer for different categories -- and i'm reading from notes my staff prepared for me -- that we have typically been collecting this data through argos. that is a known collector of data. it's used by any number of institutions and by other regulators, and so we're following very well plowed ground in assessing that data. >> so they go to visa or master card or whoever?

>> or issuers themselves, myth be like wells fargo or bank of america or jp morgan chase or anyone who issues cards. >> so there's two others. where else would you go to get the data? >> so the other two areas -- the national mortgage database we're going to be creating together with the fhfa is essential because we found the mortgage data that exists is not as good as it should be. loan origination data is often decoupled from loan performance data and there are holes in the data so it's not necessarily representative of the entire market. that made it somewhat challenging for us as we went to write those rules. and we did a pause on the qm rule where we intent got more data -- able to north data from fhfa they were vert coop different with us. and then we put out for more

comments because we were going to be using new data that had not surfaced before so we made sure the process was full and complete. but that data is being gathered over time. in real time. on mortgages going forward, and it will provide a much more representative sample of what the mortgage market is doing, so we see the problems in real-time, which we could not do very well over the last decade, and helped the crisis. >> one more place. >> the third category is credit records, and in that case we have been buying the data from the same source the federal reserve bank of new york has been buying data from for a number of years. they have used that data for a number of years to publish their report, quarterly report that is widely quoted, on house hold debt and credit. so we're following their lead in terms of this is good data on credit reporting and is going to

help us have the insight to protect consumers and understand whether laws are being followed and what the effect on consumers is from different practices. >> so individuals' payment performance, whatever, whatever, is the basis upon which this mega data is created, obviously. so, somehow some way the government is getting control of information about how people pay their mortgage or their credit card bill or whatever. >> but i think it's an important difference and i want to stress it. if by that you mean we're getting information about whether richard cordray is paying his mortgage and when and and how, that's not the way they data works. what we're get information about is consumers -- how their mortgage performs over time but

it's an anonymous. i do not have hack -- access to data about you or movers. but you have to have data about consumers if you understand what is going on in the consumer marketplace. you want us to write rules where we have special assessment of costs and benefits. if we don't have data and information on the markets we can't do our job. and i think you would be quite dissatisfied with us and rightly so. >> i'm out of time. but here's what i would say to you. to many people. this is going to sound downright creepy to be honest with you. it is. and i just think people are going to be bothered by the fact that there's this federal agency that is collecting data on the behavior of people like you and me and everybody else, paying off a mortgage, who is paying credit card bills every month.

i think it's a very uncomfortable situation for your agency. >> i think if people want to misunderstand that, it's somehow following them individually and invading their privacy and tracking their personal lives, that's not what it is. we have to have information about what is going on in the markets. what is going on is an aggregate of consumer beaver, consumer performance, consumer harm, consumer benefit. if you don't have any information to do this work, then basically you're a know-nothing and not going to be able to do the work intel you would rightly be critical of us if we just operated based on speculation and didn't make an effort to ground our policy judgments in such information as is widely available, and widely used, and anonymous, very importantly. anonymous. >> thank you very much, mr. chairman. thank you director cordray.

let me raise an issue that i think you and your colleagues that are looking of our military are aware of and that there is are military personnel who cannot immediately get on-post housing. they apply, might take months as the list goes -- and the meantime the enter into a rental contract, and in some states there is a severe penalty for breaking the contract. there are other states i'm aware of that actually have state rules that says if you're going on post, then the landlord cannot impose a penalty. can you comment on how you're trying to deal with this? because for many military personnel, this is a real serious issue. >> thank you, senator. and i would say that there's several different housing issues for service members, both active duty and they're families, and reservists that we have

encounters. we have brought back accounts from folks on basesment one of them was the permanent change of station orders and you're familiar with it and we worked with the department of defense and others to address last year the department of treasury to qualify that as a hardship from the hamp program. you're racing another great exam how there can be a general consumer problem, the issue of tenants who are renting who can be affected by some of these problems that -- great example is when congress dealt with the fact that tenants can be ousted from their place they're living because the landlord is foreclosed upon even though the tenant may not know anything about that and they fine their belongings on the street. for the military, again, this particular instance has to do -- can do with change of station ordered or can do with, as you

say, trying to improve your housing for lesser cost. so, if congress is going to lock that issue, we'd be happy to supply the experience that we have seen from around the country. that of, of course, a judgment for you all to make but it's another outstanding example how you can have general consumer issues ask then translate them into the military context but they are sharpened or aggravated the the situation of service member whose often have limited choice -- they have to obey orders and go where they're told and be there when they're supposed to be there. >> well, we'd appreciate working with you. if it requires legislation, my sense is we would have support on both sides. because it has a huge impact on personnel. they could move from expensive rental quarters to on, post housing, more convient, ate, and you point out another dimension,

sometimes it's not just getting on-base housing, but the fleet moves and they have to pay a penalty. let me turn to another subject. looking at the recent semi annual report, disappointed to see your comments about the confusion persists about the process for obtaining loan modification. i don't have to tell you because we spend a few sessions under the leadership of chairman johnson, talking about the big deal, modification deal, and now we found even some people who were owed checks, the checks bounced. so can you generally comment about what you're seeing and what you can do to help in this modification issue? >> i think most importantly, and as congress directed us to do, we have adopted new rules that are pretty comprehensive for the mortgage servicing market. they'll take effect in january, and i think the companies -- i know the companies are already at work implementing them now.

they should have come as no surprise. these problems have been surfaced and publicized not for months put years. they're common across the industry, and yet they're galling because they affect individuals and lead to bad result fort individuals. they lead to people losing their homes can most precious thing that people possess, and upsets they're personal finances tremendously. so i think that our rules will make a big difference. we're already also examining mortgage servicers on site and looking at whether and how they're complying with the law. and some of them are doing a decent job. many of them have problems and many of them it's going to require corrections and compliance and perhaps enforcement action as needed. but we're now in a position as this new bureau that didn't exist before, to examine the institutions directly to ensure they're complying with the new regular layings, which went

beyond what congress required but was necessary to address the scope of the problems, and to enforce the law as needed. to bring them into shape. which is long overdue. >> going forward, you're going to have a much better process and procedure and -- but we have a whole category of americans still caught up in the old system, and you -- let me ask you a question. nonrhetorical. you are not involved with the federal reserve and this settlement that proposed to modify mortgages and compensate people for illegal foreclosures. were you involved at all? >> no, we were not involved. i will say that at the time all of that gap to unfold i started as attorney general of ohio, and we were -- we did see the problems, the robo signing and all the rest. i then joined the pure row and we had the transition period

where we were not yet an independent agency. but our role in this, which is a going forward role, not so much looking back -- i want to stress when i saying going fireworks everybody who is caught up in this situation, as soon as our rules take effect, are governed by the rules. doesn't matter that the mortgage was in issue two, three, five, eight years ago. the examinations that we're in process right now are examining the problems right now. other processes that are looking back to things from self years -- several years ago, that's a different issue. but for us the present and the future is the agenda congress has given us and we're going to be aggressive about trying to fix the problems itch also want to just mention, thank you for the efforts you made and your colleagues on the changeness the military lending act you have been inquiring how at it coming to implement those. it's coming well. we're working with multiple agencies, including the

department of defense, and i think we'll implement those changes in the law in the manner which congress intended. >> thank you. senator shelby. >> mr. cordray, good morning. the financial stability oversight council, of which cfpb is a member, was given broad authority to eliminate market expectations that any american firms too big to fail. do you agree that as a member of fsoc, that you have a responsibility to contribute to these discussions and help identify threats to our financial system? >> that is a responsibility congress has given me by law. >> you believe you have that responsibility. >> i do. >> do you believe that all systemic risks have been contained and too big to fail

expectations that large institutions will not be allowed to fail has ended or still assessing threats? >> my perspective on this is sort of limited and more recent. i was not here in washington and not directly involved in the events of the financial crisis. i was the treasurer of ohio at the time, overseeing billion office dollars in public financeses. but what is clear from my work thus far, tremendous work is in progress, tremendous strides have been made, and the framework is both there and being put in place more specifically to address those threats to the system. >> do you basically support limiting the size of banks as proposed by senator brown and senator vitter? >> i think that a policy call for the congress. my job under the law is to examine those banks for compliance with consumer protection laws. and that's what we're focused on

doing. whatever structure congress would impose or influence in the banking industry, we'll adapt to that and do our job. we do have four trillion dollar banking institutions that are challenging institutions, multiple product lines, and we are pretty much continuous in our presence, supervising them, but i would say we're focused on doing our work and i think those debates will obviously proceed and you al will make your judgmented and we'll follow them. >> do you believe we should, and you , should eliminate as much as possible systemic risks? >> i think we should do our best to minimize systemic risk. dope know you can eliminate it entirely but you can certainly, by being conscious of it, be

more prepared, and that minimizes the risk, and from there, you do the best you can. i will say that the wisdom of congress in the laws of placing me as representative of my bureau on the f stock, which is the body, the veto of regular las vegases if they strongly disagreed with them, think has been very helpful to me in understanding the perspective of the body and having a chance to work together with my kole -- colleagues so i can understand their point of view and they can see and understand the work we're trying to do that congress has tasked us with. >> last congress i asked the inspectors general of the number of financial regulators to review the economic analysis performed by the agencies under their supervision. the ig's report is back that to the extent economic analysis is performed, it is often focused on cleans cost -- compliance cost rather than looking at the effect the rules have on

economic growth and job creation. determining compliance costs is critically important. we know that. but at it just one component of the overall economic impact. do you believe it's important for regulators to understand the macroeconomic impact of rulemaking activities? >> i do, and for us that's been in particular understanding the effects on access to credit. and the effects on smaller providers and larger providers. but i would go back to my discussion with senators crapo and -- we can't do the work if we don't have the information on which to make the judgments, but i think it's critical for us to do that, senator, yes. >> dodd frank expressly requires that cfpb to evaluate the cost and benefit of any proposed rule. you're familiar with that. >> yes. >> if your economic analysis determines that a rule's cost outweighs its benefit, do you think the rule should still be

implemented, rewritten, withdrawn? re-debated or what? >> my sense of why congress tells us to do analysis of things like benefits, costs, impacts on smaller providers, impacts on access to credit in rural areas, is because congress intends, and i think has made it very clear, we should take into account our judgments about that in deciding whether to proceed with a rule or how to write the rule. maybe a rule in one form would have negative impacts there, but if you modify it a bit, it's going to improve. so, our specific provision is 10.2022 of title ten of dodd-frank and specifies how to go about this. it does require information and data in order to do the work properly, but i think that the -- if congress has required

us to do a particular rule, and we found that the costs and benefits were troublesome, then we can try to write the rule somewhat differently, but obviously within the confines that congress gave us and we can always come back and talk to you all about it. that would be the troublesome area. but where he have discretion, costs and benefits should guide our policy judgments. >> in addition to analysis, which you need data and everything, we understand that. a good judgment. you need objectivity of the whole situation, do you not? >> youd in try to have that. i try to have that. i hope that we do. i think one way we can get there is by listening closely and being very accessible to all viewpoints, to using the processes that congress gives us as much as congress has done so, so do the analysis, do the notice and comment rulemaking where people have access to us. in our case, where appropriate,

where the law requires to do the panels which we found useful to us. al of those things -- obviously the processes are provided to try to improve our rulemaking so we don't go off the rails and do something that is detrimental 0 to the economy or consumerred. i don't want to do that. want to carry out the task from congress to best of our ability, i want you to be proud of what we have done it reflects what you intended and if it doesn't, i'll hear from you. >> senator brown. >> mr. cordray, nice to see you again. welcome back to our committee. you're here at least twice a year. we've talked about many of these things that never in our history has someone been in any way held

hostage, a qualified nominee of the president, bus -- because a significant number of the senate, pretty much all of one party, don't like the structure of the agency or wish the agency didn't exist. i guess this is the second anytime height -- you were the first anytime history a year or so good. senator mcconnell said the other day if he had his way we wouldn't have this agency at all. want to talk about accountability. they lay this at the feet of the issue of accountability. understanding that there is an veto over what you do, understanding, unlike most people that -- in the agencies you come -- you issue a report and come to this congress, at least twice a year, versus if you went through the normal administrative procedure act, make that contrast for me, your accountability as this agency is set up, as the qfpb is set up, versus that kind of

accountability that other similar agencies might have. >> so, senator, think we're all account enable very fundamental respects. we're all accountable to the congress, which can chapping the law and has provided the law we're required to implement faithfully. we are all subject to court oversight. if we adopt a rule, there's specific processes we have to follow and the courts can look over our shoulder and make sure we did that. they can also review the rules for substance, and then we're subject to oversight by the congress directly as in hearings of this sort. now, in that regard, the bureau is special. there were special concerns about the bureau and it showed up in special structural constraints on the bureau. number one, we are unique among the federal agenciness that-under rules can be subject to a veto by other agencies, even aside from also potentially being reviewed and overturned if

appropriate by the courts. we are subject to a gao audit of our finances as opposed to in general most agency of the department, the dao audit is of the federal government as a whole, not their specific finances. we're subject to an independent audit annually of our operations. that's, again, not something that is done at other agencies. i'm happy to say that those audits have been clean audits to date, even as we're building up and trying build the agency as well as perform our duties. we are subject, unlike the other banking city, hard budget cap and told if we need additional money we can come to congress for an appropriation so we are quasi-appropriated. we're required to produce a semi annual report and to testify twice a year in front of the senate banking committee as an oversight, and also the house services committee as an oversight. on that report. and i want the senators not to

underestimate yourselves. this is meaningful oversight. when it sit here and have to answer your questions it's not just fun and games for me. take it very serious limit i'm account teen you, and if i can't answer your questions and respond to your concerns in a way that is persuasive to you, then i have a problem and an issue and it's meaningful for me. there are many ways in which the bureau is specifically constrained beyond other agencies. we accept that. we're doing our best to do our work within that. and frankly, don't mind having strong oversight. helps me make sure i can sleep at night that we're for most part, i hope, doing the right things. >> i don't think too many of us thought this was fun and games for you to come in front of these committees. i want to follow up on my last minute or so on senator johnson's question.the private student loan market.

we've done -- the recent report by the student loan ombudsman has been important. held a hearing examining this issue last year. ... to the will to examine this janet long servicers, the ones

who are dealing with the outstanding student allowance and a very good and the right information to people or processing loads properly or not we hear a lot of complaints about that. we will be aggressive going in and making sure things are being handled correctly for the airport right. the whole student loan problem should be of deep concern to this body. these are young people should care a great deal about with ambition and aspirations and dreams getting saddled with debt they don't understand often and they tell us that they did they wish they'd known the difference between a private student loan under federal student loans and is holding an action making them unable to rise and succeed and become leaders in our society and is a significant problem and will be doing everything we can to address at the bureau.

>> senator warren. >> thank you, mr. chairman. thank you america member. i want to say this is my first full day back in the united state senate as the attacks on boston and many of my colleagues, the staff, members of the press, members of the public have held austin in your prayers for the last week and on behalf of myself, on behalf of the people of boston, i want to say thank you very much. it's been a hard week but the people of boston are fighters and stronger will get through it. he thank you, all. director cordray, for more than a year, the minority has been trying to block nominations, we open the debate resolved three years ago. for three years ago they tried to kill the agency and the last that though three years ago.

then they start to become the agency. they lost that fight because they didn't have the vote. and today they know they still don't have the votes to undercut the agency, said they are determined to hold your nomination hostage. it seems pretty clear what's going on here. this is the qualifications or performance. your work has been praised by consumer groups and industry groups. this is about a minority that doesn't want a watchdog that will keep an eye on big banks to make sure they don't cheat their customers. now why would advance to their friends not like the consumer agency? a look at the things you've done in the last couple of years. you've recovered half a billion dollars for consumers who are charged by credit card companies. you've created a complaint says john that has handled 91,000 complaints last year alone. you built a tool to help

students and their families compared to cost of college, what you were just talking about. they have better information will never make making a financial commitment. he put together a tough as nails office to look out for servicemembers and military families and help protect them from financial predators, including health servicemembers whose homes were legally foreclosed upon and you issued new mortgage rules widely praised as balanced and fair and clamping down on the kinds of sleazy practices that cost millions of dollars. that's an extraordinary set of accomplishment for an agency that's only been around for a few years. and i think it explains why does the agency is so important. i commend you in your work. particularly if the laws protect

consumers to make sure that the yanks follow the rules. that's really important. you parity proven the consumer agency aspect is that you can be fair and be tough, but before your current position, you were the head of enforcement at the consumer financial protection bureau and the attorney general for the state of ohio. so you know more than just about anyone else about strong enforcement of the law. so when you're asked variance as head of enforcement at cfpb and attorney general for ohio, and ordered to enforce the law, how import is that you have adequate resources come adequate from an inadequate information? >> i would say all of those

things are essential. i think if you don't have the information come you don't know what to do. if you have the information but don't have the resources come you know what to do, but you can't do it. you also have to have the will to understand and be motivated by the desired results, which is people need to understand they have to obey the law. as i used to say when i was attorney general of ohio and i feel the same way now, nobody is so high and mighty that they are above the law and nobody is so undistinguished that the law doesn't apply deeply with everyone else. has been the strength of the american society and system for more than 200 years and we have to make sure we maintain it and that is part of my responsibility and part of the congress' responsibility and you pass the laws are supposed to enforce the laws within our jurisdiction.

they take it very seriously. i actually work closely with criminal law enforcement police, sheriffs, prosecutors as attorney general of ohio and it is a very importune responsibility to keep faith with the american people that we not only have a democratic system, but a rule of law and is maintained. >> thank you very much, director tran three. i appreciate the work you are doing and you're out there to make sure the large financial institutions don't treat a sign as a cost of business, but actually change their behavior and consumers are entering a level playing field and have a real chance in these markets. i appreciate that. did you announce a thing? for out of time. >> when he took a particular situation where there's violation of law, there's four pieces as i see it from the standpoint of the spiro. actually, there's five.

making sure what is done is not done in the future, stopping up whether it's banning someone from the marketplace for a period of time, both of which we have done. restitution to consumers so they are made whole for the honda was done them because it only occurred because of a violation of the law. penalties can be imposed on restitution isn't enough to teach the lesson and see to what people are deterred from doing this in a future, that they don't feel i got caught this time. finally, cases for criminal referrals would be appropriate and they want to be careful about that, but there are cases of that sort. >> thank you rematch. i'm glad you fighting on behalf of consumers. there are those of us who will be fighting on your behalf and this little agency. >> appreciate that.

>> will go briefly to a sector on the questions. director cordray, i i understand the cfpb is conducting exams larger institutions in coordination with federal or state regulatory is. what steps does the cfpb take with the information request are well coordinated with other non-duplicative? >> thank you, mr. chairman. this is an area where the bureau has done well and i will just say that in part because of the bureau got underway, there was a point made to bring people and it came from estate government background, the name hearing thinking of someone like myself from attorney general office. so we have had terrific relation

ships with the conference of state banking superintendents. we have collaborated closely with them. there has been a process of coordination and information sharing with them. at last count i believe we had 61 -- we have agreements with 61 different banking and financial service agencies in 49 states. some states have multiple agencies and i think that relationship is good. they could now been on ice and suffers tax. we branch or resources to the problems and i've been really pleased that their attitude towards working with us and our attitude towards working with them. >> with regard to community banks that are not subject to the cfpb examination authority, what measures have you taken to

ensure that sure roles are clearly interpreted? are there potential regulators doing their exams? does the cfpb continue the small entity compliance guides as has been done twice already? on the other mortgage rules. >> thank you, mr. chairman. i've got about three different answers to that question. on the small entity compliance guides, this is something we take seriously and we been told this over and over by small institutions in the trade associations that represent them like a cba and that means taking their rules, initially mentioned 2500 pages of rules issued in january. that's 2500 pages of taxpayers a lot of that is preamble,

cost-benefit analysis. what a translator for several hundred pages of rules and the sir congress direct this to do. nonetheless, i don't think people enjoy reading the federal register. we have been translating those into plain english and compliance guides. what you need to know, which you need to do is becoming a standard on every rule that we publish and we are doing web video. some people like the information that way. in terms of making sure our regulations are administered and examined in a spirit in which they are intended, we work closely three body have never heard of before called the federal financial institutions examination council, where we will take the lead on writing a first draft of what the

examination work with the click around these rules and collaborating with other agencies to get that in place and to publish its transparency institutions. they have a right to expect that and a mandate. i was surprised to hear the other day that we're going to have the examination modules or whatever you would call them, ready by june of this year, even though rules don't take place. that's the warp speed and will help us make server on the same page. if institutions have reactions or think we are not getting something right, they have a chance to have been on that. since we don't them in the community banks, i made it a point to create the community advisory council so we hear directly from them until it would otherwise is that day to

day and that's very hopeful to us. >> senator crapo. >> thank you, mr. chairman. mr. cordray comes back to the issues we were talking about before. i want to phrase it characterized the question of the statement because they do understand your point about having data and cost-benefit analysis and achieve the right balance in regulation. i understand we have a dynamic developing in the world with regard to what is called big data in terms of the phenomenal rate of collection of data of people going on in the private sector. >> it's the way of the world. >> it is and it's happening. that being said, there are some serious and go questions that need to be answered as well as

dealt with in terms of the way the federal government involves itself in the entire process at all. just a couple of observations. nobody in the private sector has the right or power the federal government has to force the release of information. my understand is due not just cursing the data we talk about from collectors but in the examination process and other aspects of the collection, banks, other financial institutions are required to provide data that they couldn't be required to provide by private sector operator. so the power of government is put behind the data collection effort as i understand. i was going to accent it at the end. willfully get us to a much fuller explanation of where we are going here.

in another context under graham leach bliley as i mentioned in many other interactions between financial institutions of their customers, there is an opt-out right, which does not exist in the functions currently undertaken by the cfpb. the bottom line is i see it as although i understand the need to collect data, i'm concerned about the heavy-handed power being brought behind new data collection after. in one of my first questions coming indicated you weren't sure whether the cfpb or some other contract or could go into the data in reconstructing a way that was not itemize. i am very concerned about that and now we have a government agency potentially capable of getting that information that is

currently anonymize, but we have to take the word of the agency that consumers have to take the word of a private sector, people that buy cell phones from our work with on the internet or what have you and are not collecting information and an individual specific fashion. people don't have a higher level of confidence that's not happening and i don't have a high level of confidence that it's not possible to get access on a specific basis. for all these reasons, i simply ask you this question and make a suggestion. how does the cfpb addenda and internal legal analysis about the whole data collection process? what i'm getting at here is dodd-frank clearly prohibits the cfpb from identifiable information and of all the

pieces of information the cfpb is collecting right now could be utilized to engage in personal identification, perhaps that could violate the law. more specifically, it would be helpful to know what potential is there. i'm actually relying right now on this question. on a bloomberg article, that's the extent to which i know about what is happening. i think it would be helpful for us to know exactly how this data is being collected, not just who's contracted or in the examination process, but how it is collected and how it might be used in the ultimate conclusion could be reached and that is whether his collection is in violation of the dodd-frank prohibition if you'd like to comment. >> i would senator, thank you. >> i will try to give the only medium audience there, but there's a number of pieces in

the question. it's not correct under the law but the bureau cannot collect personally identifiable information with someone significantly, they put their name and address. the issue under the law is we are not supposed to disclose information and we been very careful not to do that to violate people's privacy in that regard. i want to go back to what you said and a lot of what you laid out is the fair line of inquiry and something i think i share your concern and if i was looking from the outside of the government, i share the concern as well. first of all, in terms of force collection of data, that is for the most part not what the was doing. the credit card data we can't, we buy that. many people find that is a really common thing. no new ground the bureau is probably not that.

the credit reporting data we buy from the same source as the federal reserve bank of new york has been buying for years been using to develop reports that have been insightful and credit reporting and credit in the economy. there are times as we examine his two shows, we have to begin by giving up a sign of data the institution to calibrate what exactly is going on there. are they complying with the law? what are they doing. there have been times we need information to do our job. the institution is doing our job. these are reasonable differences in viewpoints that have to get worked out as we were together and for the most part they do. i think you have fair issues you are raising. i would like to get to a specific answer to your question about whether the data could be

somehow reverse engineered in a way that affects individual privacy. it gathers the same information using that, which they have been doing for years. it is new to the bureau, but not new to the process. i'd also like to have a chance -- offers staff spent time with your staff to dig into these issues to understand in more detail with some of your concerns are. happy to do that with colleagues as well or their staff. i think what we do as an agency is trying to gather the kind of information we need to do our job the way you would expect us to do it, careful cost-benefit analysis, which we can't do without sufficient information. to do the reports that will be credible and give you a basis for going forward in making judgments about things like a

card act, which would give you part this year and how that is implemented and what some of the issues are factual and normative. he required us to do that. can't do it without data and information. that is all were trying to do is to do our job. if there's concerns about how the information is handled, or dr. general looks at these things. the gao audit look at our recommendations. we want to be an open book. if there's concerns, we ought to address them. >> my time is obviously a, so i can't continue this here, but i would like to ask you to take seriously their quest of an internal legal analysis that is shared about all the details about this project is operating for this operation is undertaken.

and how it fits with the requirements of dodd-frank. >> you tell us what you want to look at it to you. >> thank you. >> senator hagan. >> thank you, mr. chairman. director cordray, as i said, always a pleasure to see you and i feel like we see you quite a bit. thank you for the job you are doing. i want to associate myself with chairman johnson's question about the role definition. i also heard question that is about the definition. i was surprised to see a north carolina several counties labeled mongrel, especially the northeastern part of our state. i appreciate the cfpb what cannot this and taken a hard look at this issue of non-rural designation. but i want to talk about financial literacy.

i have always been a huge supporter of teaching financial literacy to our student in grades six through 12 or even earlier. as we discussed in the past, i've introduce legislation in congress when i was in a state senate i made a mandatory requirement that we teach financial literacy. it certainly hasn't done as strong as i would prefer and i keep saying this is not rocket science, we just don't teach it. so later this week i serve on the health education labor and pensions committee and now chair the subcommittee for families and children and will be having a hearing titled the economic importance of financial literacy education for students. can you talk about what the cfpb is doing to improve financial literacy through the consumer

education and engagement division in the office of financial education. and talk about it and what improvement you see taking place. >> thank you for the question, senator. this has been a personal passion and it's hard to come face-to-face with these issues and see how they affect individuals and households cannot be passionate about the subject. when i was a local official in ohio in a state official. as a local official i had to deal with real estate taxes and the perception that people are and some of them don't want to take their responsibility seriously. people are victims of either bad luck or bad decisions or poor choices, but often just bad fortune. every day people die of families across the united states. u.s. hope it's not your family but if someone's family or someone gets injured where they

can work with a marriage falls apart and there's a divorce and out to households with used to be one and arguing over the assets. what i saw was in office instances, issues or worse by the fact they didn't understand decisions they were making. they keenly felt self-consciousness of not knowing what they were necessarily doing or recognizing later in a bad choice the mortgage or the student loan. one of the things we have to do is fundamental for us to not be much more aggressive in the coming year in using the bully pulpit and pushing on collaborating officials around the country. we have to make available to them the tools so they can learn more how to handle personal

finances. you can't have a free market economy, which is millions and millions of americans and which they are capable of making sound decisions for themselves. we don't want how this society where where people make decisions and several years later tell your story line as they do every day and how they regret the decision they made in a state known the difference between a private student federal loan they wouldn't have done what they did, but now they are stuck with it. it's a tragedy would not consciously teach young people how to handle themselves when they go to vote. they may not listen, they may not do it, but the fact regarding teacher is a scandal. in ohio i worked for the same thing. would have required mature to have what you said about me and how much is it. we had visitors on the subject

that's going to be a six week thing folded in to some other class, which is something, better than not being. we have to take this seriously. they mandate teaching of government so people can be good citizens. we have a basic understanding of finance and a recognition of certain decisions in your life. what you do for education and getting us right is not a casual matter is something we plan to be a trusted source for people to at this decision says they're doing right now. i could talk for 20 minutes about those and what if he didn't stop me. it's not a partisan issue. it's not something republicans or democrats. this is home economics and its basics have been able to operate

on your own and we all know as i was psyched to put it, brothers and sisters, sons and daughters, nephews, nieces are not as well equipped as they should be to me have the responsibility for that. >> i think he should take the bully pulpit music. i've seen so many people that have gotten into so much trouble because they weren't educated. they were very, very smart people, but they didn't understand the dynamics and they don't understand that. it can make it to increase your net worth, but not to build up with many matera items at the end of day are not of value. i hope i was doing a good job of making decisions about the them

save in the throes of the crisis of 2007, 2008. and i've seen in the right of savings. by the right insurance? and i getting that right? do we understand enough about credit reports? a lot of things are complicated for people and us at the bureau is reducing the complexity that's a big part of what we're trying to do a simplification and transparency of these decisions and building more capability to have tools and people make their own decisions for themselves. it's not the nanny state deciding what you do with your mortgage. you're the one that has to live with it. >> i believe my time is up. >> mr. chairman, thank thank yoy much. mr. cordray, thank you for being here. about a year ago the cfpb could

face litigation at the fund loans by auto dealers later found to be discriminatory. it's a huge component of our economy. the number is about a billion dollars. i don't have an opinion at this point about whether the finding is right or not. tell me about the analysis done to arrive at that conclusion. do you have the methodology of the decision available? if so, what would you share the process later in my office. >> the issue of interact out of london that we address in a very general way with political analysis that leads to a legal conclusion about any particular

instance. you go around the country and the senate lenders and borrowers get the legal point being made, which is straightforward that if you are a lender and set up a lending program and that evolves third parties make decisions in the program, but you are the one monday in the money coming to remain responsible for complying with the federal law. if you set up a lending program as a bank lender of mortgages so some are made directly by employees or brokers or others, you remain responsible for your program and you have to comply with the law. we were hearing from some folks who did think that was necessarily so, that if there's a third party involved it

becomes their responsibility and not the one gracious possibility. we'd be happy to share the legal analysis to your staff into the. >> is just political analysis. >> a bulletin we put out. the mac you indicated cost-benefit analysis and that would come later their actions. if we were to write regulations there would be cross unfit of our statue. if undertaken actions, that's a different issue. it's a matter of investigating the facts, setting them against the law. that is the thought process with e. >> okay, that answers my question. thank you, mr. chairman. >> senator warren. >> thank you, mr. chairman.

director cordray, i understand the consumer financial protection bureau required by dodd-frank to complete a study of mandatory arbitration. is that right? >> it is. >> when you anticipate they'll be finished? >> is one of the things congress has specifically required of us, a task congress has given us. they tend to take priority over tasks we give ourselves. i would say we are already in process, while in process and putting together that study. but congress that in our statute is two things. they said we were to do a study of arbitration as it affects consumer financial products and services and causes as they know you know and type says what to

my lending contracts and sent and spread in the last couple decades certainly. if we are going to adopt policy regulations are some provisions about arbitration clauses of that sort affecting consumers, it should be based on the result of a study. you could argue this is the same thing to do a cost benefit analysis. here they were much more specific. they said to a full, and to try to understand how proceedings differ from court proceedings, what rights they give and may take away, what results have gotten there. is it reflective of the merits of the issues? other procedural biases to make it difficult for consumers and he pays, et cetera and that can vary.

started at carefully and then do pablo see. i would estimate and i hate to estimate dates because then people hold me to it. but i feel quite sure we will have some analysis of publicly this year, whether we'll all be publicly i'm not sure, but we are trying to be careful and we know there's a lot riding because then it will be consideration of policy after. >> i am looking forward to this idea soon as you can. i know you set up consumer complaint process and that it hasn't quite innovative features. you've also made it a quite transparent process. i wonder if you could tell us what you set up at the consumer bureau and what you found, with the response of the banks had

been and how this information is being used. >> i actually think we are tracking a precedent that has existed now for 40 years, the national highway administration. they started publishing data in the early 70s and was resisted strenuously by the auto companies at the time. it is going to fall if people knew how safe or unsafe vehicles were. fast forward 40 years later and that is standard. it is except day. it is consumers making decisions in the basis for companies looking more carefully at their own operations and recalls of products that are questioned and has been a success. we were focusing for the auto

companies think it's make their products better and minimize litigation risk, which is another way to save money to pay attention to how customers are treated. it's the same thing in the financial services area. we get complaints. we are taking a range of subjects, mortgages, credit cards, auto loans, student loans, credit reports, remittance transfers and is sometimes not clear what happened last week in what's happening next week. out of that data, we are publishing and that means we find it valuable in our work. it's informative to us, so we think it will be permitted. how can i improve? that's the competitive dynamic we want to foster.

thirdly, for consumers to have have the information and potentially make decisions. maybe somebody will use the database and start reading financial products as is done with cars on auto safety. is likely would be done with the consumer product safety commission is they put information on which toys and household products, cribs, toasters are safe. this is the information if i'm a member of the public and the members of the public are the ones who showed him to run our government. i would want to have that information. i'd want them to share with me. if i can find benefit, i would expect them to share with me. >> director cordray, let me just ask him you talk about the effects on the market overall. but for consumers who file complaints, those are then forwarded.

have some people got money back? >> mini. by no means all. sometimes it's valid, sometimes it's not. sometimes it's based on a misunderstanding of facts or law. millions of dollars have been returned to consumers who are consumer response mine. they want us to make a change to stress this. they often gave nonmonetary abilities. if you get something where you don't have to call for another three months to get that sick in your bank account, that's very satisfying. we've had many instances and the modest matters that would've been able to resolve has been very satisfied array. there is somewhat not been able to resolve and i apologize for those, but we do our best as i know your stats to your best and

that's what our job is. >> thank you, mr. chairman. >> outturn for a brief statement. >> thank you, mr. chairman. this is not going to be questioned because we'll get together with you on the issues we did. first of all, we didn't get into the question in my opening statement, which are talked about, so submit those questions if you would respond them. i think we may have a disagreement or a different understanding as to what the dodd-frank statute requires. as i read that promises to be or may authorities under this paragraph to obtain providers participating in financial services market for purposes of analyzing identifiable information of consumers. those are the words of the statute. by the way, it talks about

voluntary information. i would like to get with you and we will do that and urge you to provide the information as well as legal analysis about the department's process here that can help us address these issues. >> we would like to put your mind at ease on that. what you read is part of the statute. there were other ways in which the bureau gets personally identifiable information, such as when people file consumer complaints. >> those are voluntary by the consumer. the >> voracity is just a hassle. it means we have to make sure it is properly handled and we have to devote time and attention to making sure his handled the way every other agency has to handle

it. what is insightful to us as the anonymous information that tells us about consumer harm, consumer benefit and that's the information we need. we don't want to know about you personally. >> i trust that is exactly what you're all about. i don't think the assurance that the agency is really what were trying to achieve here. >> understood. we'll be happy to work through that to your satisfaction. >> mr. cordray, i thank you for your testimony and leadership. this hearing is adjourned. [inaudible conversations]

>> the museum is not to help the visitor relive the first eight years of the 21st century. the museum explains the decision-making process that i went through as president and we hope the new xeon inspires people to serve their country in some way. we really didn't want to be a school. they wanted to be detained. i don't know if there's a lesson there. i do know senate when in a different direction apart from the museum component from which programs would emerge.

>> a senate judiciary subcommittee held a hearing tuesday on the constitutionality of the obama administration, using drugs to target terror suspects overseas. this has included u.s. military officials, constitutional law professors and again the activist whose villages had by a stream to strike causing civilian tragedies. [inaudible conversations] >> return of the subcommittee on the civil rights and human rights will come to order. today's hearing is entitled drone wars, the counterterrorism institutions of killing.

senator cruises on its way from another hearing. there are conflicting schedules we face here. this is the first-ever public hearing in the senate to address the use of drones and targeted killing. we are pleased to have such a large audience for today's hearing that demonstrates the importance and timeliness of this issue. thank you to those hearing person, those watching live on c-span and is following a hearing on twitter and facebook you stand the hash type drone wars. the rules of the semiprivate outbursts, popular demonstrations of any kind. please be mindful of the service as we conduct this hearing. there's so much interest in today's hearing. we have another larger room to accommodate overflow cloud. baking soda to 26 and dirksen. at the out back on what you

senators leahy and grassley. chairman and ranking member for pressing the justice department to provide the committee with the justice department's memos and targeted killing of americans. the department provided members to the committee. i've had an opportunity to review them in advance of today's hearing. as we discussed today, this is a positive step. i still believe the justice department should provide the committee on the targeted killing and make public the analysis of those memos without rebelling and intelligent sources or methods. i would like to take a moment to acknowledge that colleague and friend, barbara lee of california has joined us today. we spoke recently on the phone about the drones. thank you for being here.

i ask unanimous consent to include in the record a statement from senator brandt hall of kentucky during the filibuster john brennan's nomination on the senate floor i invited senator paul to testify at today's hearing. he couldn't make it because of the conflict, but he has submitted a written statement. but that objection will be added to the record. will provide opening remarks and turn to senator cruz for his opening statement. the constitution bestows upon the president of the united states the unique responsibility and title of commander-in-chief and with that title comes the responsibility to protect and defend america from foreign and domestic enemies. to accomplish this goal, the president has a military that is the best in the world. best trained, best equipped and most effective. while the tactics and tools by military are ever evolving, one

thing must remain constant. ours is a democratic society where the rule of law prevails. the president must exercise his authority as commander-in-chief within the framework established by the constitution and laws passed by congress. even as president obama command the military with the most sophisticated weapons known to man, including but the nice train three, his authority is grounded in words more than 200 years ago and are called to shine. if times over the course of history at the rule has been all used, when this occurs, challenges america's moral authority standing in the world. this potential for abuse is a stark reminder of congress' responsibility to authorize the use of force only in narrow circumstances and conduct vigorous oversight was authorized. a heated battle in the instinct

to defend can create moral, legal and constitutional challenges. we can all recall the controversy threatened use of torture in a previous administration. torture, though clearly illegal under domestic and international law was rationalized at that time based on the superb reading her work in terrorism. today's subject, targeted killing of combatants in contrast to torture is always in part of warfare and areas of active hostility. in recent years it has employed more frequently away from traditional battlefield. the use of drugs has made targeted killing more efficient and less costly in terms of american blood and treasure. there are however long-term consequences, especially when airstrikes kill innocent civilians. @manning the national security are concerned we may undermine

our counterterrorism efforts if we do not carefully measure benefits and costs of targeted killing. this administration has not claimed the authority like the criminal prohibition on torture. instead, the administration has attempted to ground its use of the statute. the 2001 congressional authorization to use military force and officials like attorney general eric holder and cia director john brennan have acknowledged the strikes strength and deliver speeches explaining legal and policy positions. in my view, more transparency thing is to maintain support of the american people and international community. for example, the administration should provide more information of its legal authority to engage in the checks and balances involved in u.s. drug strikes. the administration must work to

address serious challenging questions hotly debated as we meet. what is the constitutional justification for targeted killing? what to protections extend overseas before his targeted and killed by a train to strike. in the conflict with al qaeda is it legal to use drones not just in war zones like afghanistan, but also target terror suspects in places where the u.s. is not involved in active combat such as somalia and yemen. what is the legal definition of a combatant in the conflict with al qaeda and who qualifies as for susan may 001 a ums. should the u.s. lead an effort to create an international legal regime? what moral and legal responsibility does the united

states have to acknowledge his role and make amends for inadvertent destruction loss of life when missiles kill or injure innocent people. these are questions that will be explored at the serious hearing. speaking re-signing, president obama said one of the things that got to do is but a vehicle architecture in place during a congressional help in order to do that, to make sure not only am i reined in, but any president is reigned in. i agree on the need for transparent framework for targeted killing. i want to know for the record my disappointment the administration declined to testify at today's hearings. i hope in future hearings will have the opportunity to work closely. i will not recognize that colleague, senator cruz of the subcommittee. >> thank you, mr. chairman. are they to begin by thanking the chairman for holding this

hearing on this important topic. a big thank you to the witnesses for joining us today and i'd like to echo the concerns of chairman raised in the disappointment the obama administration declined to send a witness, particularly after the hearing was delayed for one week in order to accommodate his schedule. i'm hopeful they provide witnesses at subsequent hearings. drones art technology. they can be used for good purposes or for ill. the real scope of this hearing and the concern is on the scope of federal power and in particular the scope of power to engage in targeted killings. the obama administration has for some time advocated a drastic expansion of federal power in many, many contexts.

indeed on april 9, i released a report that detailed six different instances in which the obama administration has gone before the court advocating broad federal power in six different times to a supreme court has unanimously rejected the view of federal power and has instead concluded unanimously that federal power is more circumscribed than this administration recognizes. indeed, federal overreach is what was at the heart of the march 6 filibuster by senator brand paul, which i was quite proud to participate in a significant manner. that day began with a hearing before the full committee, were attorney general holder testified. at the time i took the opportunity to ask attorney general holder if he believed

the constitutional of the united states government to kill u.s. citizens on u.s. soil if that individual did not pose an imminent threat. the attorney general declined to answer and instead responded he did not believe it would be appropriate to do so. and i paraphrase here we should rest confident the administration would not choose to do so. it was not a question of propriety. the chief legal officer of the united states asking that the united states had a legal position on whether the constitution allows to kill u.s. citizen if the individual does not pose an imminent threat. three times he declined to answer and simply stated it

would be a perv react. but he would not say whether or not it would be constitutional. finally after the third time he went back inside when he set an appropriate, what he meant was unconstitutional. that served later as a predicate for the 13 hour filibuster that occurred. one after another came to the floor of the senate to insist on basic constitutional limits on the authority of the federal government. let me be clear the authority of the federal government and the protection of the constitution should not be a bipartisan matter. the statement from the attorney general that we should trust the federal government to do what is superb or it in my view is predicated on the notion we do not trust those in power be they

democrats or republicans and the bill of rights exists regardless of who happens to be in power. that 13 hour filibuster did something remarkable. americans became fixated by c-span. i would suggest fixated by c-span is not a phrase that exists ordinarily in the american language. we saw thousands upon thousands of americans speaking out for liberty for limiting the authority of the federal government should take the lives on u.s. soil. as a consequence we saw the next day the administration do what it had declined to do for many weeks, which is acknowledge in writing the constitution does not allow u.s. citizens to be killed in the circumstances. in my view, we need greater protections and i hope congress

will make very clear limits on federal power and i hope this panel of witnesses will share your wisdom and expertise on the appropriate boundaries under the constitution and the appropriate statutory boundaries congress should consider. thank you. >> thank you, senator cruz. and the outset i want to thank senator cruz and his staff are working with in my staff to develop a witness list for today's hearing. you will hear a wide range of points of view. while the witnesses please rise and raise their right hands to be sworn? you swear or affirm the testimony about to give before the subcommittee will be the truth, the whole truth and nothing at the truth so help you god? thank you. but the record reflect the witnesses have answered in the affirmative. the first witness will be retired general james

cartwright. general cartwright serves and defense policy studies at the center for strategic and international studies. general cartwright retired on september 1, 2011 after a 40 year career in the u.s. marine corps. among other positions served under two presidents as vice chairman of the four joint chiefs of staff and the second highest military officer. he was commander of u.s. strategic command. general cartwright said at the university abaya air command, naval war college and the massachusetts institute of technology and is a native of rockford, illinois. general cartwright, thank you for your service and for joining us today. you're right in saying it will be entered into the record in your opportunity to testify, please. >> thank you, senator durbin and senator cruz and other distinguished members. it is an honor and pleasure to testify before this committee. thank you for inviting me.

in the time allotted, would like to address three questions central to the topic of this hearing. first, we continue with policies as they relate to targeted killings on the use of armed remotely piloted aircraft? that is to defeat terrorists and demolished burkett is a shame? ever to come identify, locate and demolished along with organizations. three, deny sponsorship of the support and sanctuary to terrorists. for, diminish underlying conditions terrorists seek to exploit outfits, defend u.s. citizens and interests at home and abroad under both the domestic and international law regarding national self-defense. i support this mission and policy. second, under what authority and accountability framework would now say the united states are we to operate? intelligence often referred to as title 50, military often

referred to as 10 clandestine activities. law-enforcement or some other framework? is the framework robust enough to provide appropriate direction, oversight and accountability? to dod framework requires strict orders to the national command authority, secretary of defense and accountability. ..

should remain available to the president, adjusted to ensure they're effective for this particular mission. >> lastly. up under what conditions are arms remotely pilots aircraft an appropriate way to carry athlete mission. the u.s. has employed bombers, cruise missiles and special operation forces. improvements in technology and memer generals of armed remotely piloted aircraft have provided a significant. prompt in our ability to find, fix, and target in this mission area. they're not perfect. they can be improved. no other capability we have today is better suited to condition duct this mission. improvements in sensors and weapons that reduce the

potential for collateral damage should be pursued. finally, and in summary, my recommendations to the panel and the committee, one, review and address as appropriate the framework for direction, oversight, and accountability, and i have a long piece on this in my written testimony. if it is to be covert, it should be conducted by the intelligence community. if it's clan kess citizen, it should be conducted by the military and training will need to be adjusted. improve and remotely -- improve the reremote piloted aircrafts to better align their capabilities with the desired effect. i am concern we may have seeded some of our moral high ground in this endeavor. while i continue to support the objective, i commend to the committee for its consideration the recommendations in my written and oral statement. thank you mr. chairman.

>> thank you, general cartwright, our next witness is professor brooks, a weekly columnist on national accurate issues. previously professor brooks served as counselor to the undersecretary of defense for policy, where she founded the defense department as rule of law and human tearaire policy, and she was marshal scholar in yale law school. professor brooks, the floor is yours. >> thank you, senator. i mitted 20 pages of written testimony but much like c-span people don'ter to what law professors write as riveting, so i'm going to focus on the brooder rule of law issues i believe are raced not by drone as such but by u.s. targeted killing policies. in the context of the traditional battle feat, i think as we know and have already said, drone does not present any

new legal rule of law issues. it's in the context of places such as somalia yemen, outside of traditional so-called hot batfields we were s suddenly presented by significant problems, to the point where the u.s. use of targeted killing policy as currently understood appears to both challenge the legal frameworks that exist and potentially dangerously undermine the rule of law. not because of some conspiracy or lack of concern but i think year just faced with a situation where the fit between the law and theliale framework we have and the situation on the ground isn't very good anymore. so the idea of the rule of law, as you and senator cruz both said, is to protect people from the arbitrary exercise of government power. in order circumstances we know that means the government can't come and take your property or your liberty or kill you without some sort of due process, and similarly, we believe the government can't use force to

kill someone in the borders of another state without that state's con accident without appropriate judicial process. obviously there are situations where ordinary rules don't apply. such as in wars in the context of wars, armed conflicts, the law of armed conflict tells us it's acceptable to kill, whether by slingshot, gun, or drone. the problem here is that we have two different bodies of law which have radically different rules concerning due process and they of force by the state, and the law we call this -- one being a fancy latin term to talk about special law applying in special circumstances -- in this case armed conflicts dish and the other, the general law at applies, ordinary peacetime. that's not necessarily a problem to have two radically different sets of rules that apply in different situations. it's not necessarily a problem as long as we're clear on how we know the difference between when

one set of rules applies and when the other set of rules apply. now on the traditional battlefield it's clear come. you have uniformed soldiers and objective journalist saying there's a large-scale armed conflict. on the other hand once 2010 off the traditional battlefield, week looking as an enemy such as degraphically disbursed globalized terrorist organizations it comes very hard to say here is where the can armed conference is and isn't, here what's come want tenant and not a come -- come want tenant -- conbatant. no one in the executive branch knows who makes the decision, who the combatant and it's not like world war ii, and the information in the process are classified so it's very hard to get a grip on what basis we're

make anything decisions. that means our core rule of law questions in which we figure out how we know what body applies are unanswered. what's the criteria for determining who is a combatant or affiliate of al qaeda? where is the war? does law of armed combat travel anywhere a combatant travels? what about sovereignty issues? does it matter if the state doesn't consent. if the state is unwilling or unable to take appropriate action. who makes the decisions. what is the chain of command? what are the mechanisms to ensure we dent have abuses. this is a deep problem. i don't think it's a problem of lack of good faith on the problem of officials. this is a problem, when we have armed conflict and it gets squishy much we can talk about world war ii and right now what is going on with al qaeda, that is not a term thats useful

knee. what it means in practice is we just lose any principled means of categorizing a targeted killing should we call them lawful targeting of combatant? lawful under war no problem. or should we call their murder, extra judicial kills as many human right have asserted. don't have a bases anymore. i worry about the precedence we're setting for other less scrupulous states such as russia, china, and et cetera. all of this i can talk about in more detail during the question period. i think what it comes down to, senators, is that right now we have executive branch making a claim it has the right to kill anyone, anywhere on earth, at any time, for secret reasons based on secret evidence in a secret process undertaken by unidentified officials. that frightens me. i don't doubt their good faith but that's not the rule of law also we know it in my statement

submitted for the record i do suggest a number of reforms that might improve our ability to ensure oversight and accountability. i don't have time to discuss them out in but i hope we will address those issues later, and i'll leave you with this final thought for now. which is that i believe that it is absolutely possible to make a plausible legal argument justifying each and every u.s. drone strike. but to me this just suggests we're working with a set of legal concepts that have outlived their usefulness. i if law exists to restrain unfettered power, the question is not whether u.s. targeted killingings are all legal. the real question is do we want to live na world in which the u.s. government's justification for killing is so infin natalie malleable. thank you very much. >> thank you, professor brooks. professor somin? at the george mason law school.

make sure your microphone is on. second, if there are serious legal and policy issues that arise with a problem of ensuring we're actually choosing the right target and confining drone

strikes to miami who are terrorist leaders or terrorists of some kind as opposed toen in people unduly caught in the cross fire. so, by its very nature in a war, targeted killing in my view, is a legitimate tactic, and in the current conflict between the united states and al qaeda and its affiliates is a war as authorized by the authorization for the use of military force established in 2001, at various times the president been, congress, and the supreme court have all recognized the current conflict qualifies as a war. and certainly in many past wars combatants have legitimately resorted to targeted killing, for example in world war ii, the united states targeted a japanese admiral, if it is legal and morely permissible to use targeted killing against uniformed military officers, surely the same applies to terrorist terrorist leaders.

it would be perverse if terrorist deserved greater immunity from targeting than that enjoyed by uniformed military officers. in addition, i think it's not inherently legal or problematic to target american citizens in such situations so long as those american citizens are also combatants in the relevant war. the supreme court in the 2004 holmdy doings has recognize sometimes u.s. citizens qualify as enemy combatants. although the use of targeted killings, whether by drone or other weapons, is not inherently legal or inherently unethical, the issue of choosing targets raises serious issues. in the war on terror we face an adversary that does not wear a uniform and doesn't have a clear command structure and have the it's often difficult to tell who

is a legitimate target and who is not. this state of affairs raises two possible problems. first, sometimes we might inadvertently or recklessly target an innocent person. second, and worse, the possibility exists that the government could deliberately target someone who is innocent because perhaps they're a critic of the government or otherwise aattracted the ire of leading government officials. this is particularly problematic from a constitutional point of view if there is abuse of targeting of an american citizen, doing that would violate the due process clause of the fifth amendment, which prevents the government from depriving people of life, liberty can and property without the due process of law. two aspects of current policy raise serious questions whether we're doing enough to ensure that we're choosing only legitimate targets. one is the sheer number of targeted killings, which include hundreds or thousands of people, and studies by various people,

including mr. berg jin suggest that only a few of those killed were seniored a it could leaders. the department of justice memo released states it is permissible target american citizens who are, quote, senior operational leaders of al qaeda, and who pose an imminent threat, but it doesn't say anything about how much evidence we need to have before we can determine that someone really is a senior al qaeda leader or which official makes the determination. in my written testimony i discussion in more detail possible solutions to these problems. one i thing tee serves serious considerationes the establishment of an independent court to review potential targeted killing objectives and ensure they're backed by sufficient evidence. could be similar to the court currently used to authorize

surveillance and wire tapping within the united states. whatever solution we opt for, it's probably not a perfect system that avoid all mitch stake. we should look for a system that permits legitimate military operations to go forward and also provides a check on what might otherwise be the uncontrolled and arbitrary power of the executive to order killing, particularly those targeted at u.s. citizens. i thank you the subcommittee and look forward to your questions. thank you very much. >> thank you, professor. we will now hear from colonel martha mcsaly. she was the first woman in u.s. history to fly a fighter jet, command a fighter squadron in come bat. she earned a bronze star. colonel mcsally is the chief of current operations in africa where she held build the targeting attempt. she was assigned the the saudi arabia air operations center when the president's drone was

first used for reconnaissance and air straiks. she was also a legislative fellow live senator kyl. she was added to the payable at the request of our friend and colleague, senator lindsey graham. thank you for serving our country. the fliers you. >> thank you mr. chairman, ranking member cruz and the distinguished members of the sub emptyee. i come you from an operational point of view and i will speak in generalities at the unclassified level on my military experience related to universe remotely pilot aircraft. i use that term because that is part of the challenge. there's a campaign by al qaeda going on against us and the word drone has a connotation that we have these autonomous vehicles flying around and striking at will without a whole lot of scrutiny and oversight to them. the military does use the term

remotely piloted aircraft to explain and try to paint the picture that it actually take tuesday hundred individuals to keep one of these aircraft airborne for a 24-hour orbit and that 200 individuals includes the operators, the intelligence personnel, the maintenance personnel, the equipment people, the lawyers, and also part of the process, you have literally hundreds of other personnel that are involved in the process on the military side. when you're actually conducting one of these operations. so i'll use the term rpa throughout my testimony and that is one point to make in my written testimony, i explain that i think this issue is very important and there are very legitimate questions that need to be asked for the oversight roles we have, as when we're choosing if it is legal to use lethal force for targeted killings and if it is a good counterterrorism strategy to use that force. those questions are legitimate

and need to be asked and that oversight has got to be tightened up. there's been way too much vagueness and lack of clarity even in the information that's come out of the chain of command related to their legal argument and strategy on that matter. i believe there is -- should be separated into three questions. is it legal? is it good strategy? and then the third question is, if we have decided we want too use lethal force, because it is legal and good strategy in the counterterrorism 0 arena, then what platform should we use? i will be focusing on discussing that platform and then the process that we go through. it would be surprising that perhaps a pilot would be advocating for the universe of remotely pilots aircraft, but in the course of my 22 years in the military, extensively working with remotely piloted aircraft for a variety of different means, and when we're on the regular battlefield you often have a lieutenant pilot and airman first class on the ground

making decisions to use lethal force with potential strategic consequences. if they hit the wrong target and they're collateral damage there's great level of potential issues related to that wrong decision. when you're talking about the use of remotely piloted aircraft you have what i believe is unprecedented level of persistence, oversight, and precision if you're choosing to use that as a platform. your other choices are fighter aircraft, cruise missiles, seals, artillery, and other means of using lethal force. but when you're using remotely piloted air craft, often times because the numbers of issues that have to come together and line up to include positive identification, geographic location, collateral damage assessment, friendly force dedon flix and other communications that need to happen it's offer not practical because the targets are fleeting to use these other assets. as an example you wouldn't want

to have to wait and launch firefighters from a certain base, tim olympic cleaners while the stars are all lining up in a very fleeting moment that could basically -- those conditions could not be met in the next moment. if if you have a remotely piloted aircraft overhead as the conditions are lining up and the process that has a great deal of extraordinary scrutiny, you have the chain of command watching, the intelligence analysts watching, the lawyer sitting side-by-side with you and you can wait until the moment that you have identified the positive identification and all the criteria has been met and you can also abort at the last minute. if you launch a cruise missile for a lethal strike, usually 30 minute office planning, 30 minutes time of flight, and then often times you cannot divert the missile as an example. so remotely piloted aircraft gives us the highest level of scrutiny and oversight and

persistence and precision if you're deciding to have a lethal strike. i look forward to the questions and discussion on this matter, and also at the unclassified level the process we go through in the military to achieve the different criteria before we're actually cleared for the strikes. >> thank you, colonel mcsally. our next witness is peter berg yen, mr. berg enes director of the national securities programs, best-selling authors widely publishized journalist. he is cnn's national security analyst and has worked as ans a junction lecturer at the ken school, and at the john hopkins school of advanced international studeys. holds an ma from new college, oxford university. please proceed. >> thank you, mr. chairman, and senator cruz, and other members of the committee for the privilege of testifying. we at the new america foundation basically have been collecting

data on cia drone strikes for the past three or four years, and i'm not a lawyer but my presentation will really be about kind of what has been happening in the drone program and here are the main points. under president obama there's been 307 drone strikes in pakistan. six times more than pressure pressure did in his four -- president bush did in his two terms in office. the total number of deaths in pakistan we calculate between 2,000 to 2,300 roughly. the drone program in pakistan has changed in 2010. there were 122 don't strikes. over time it has decreased and that's for a series of reasons. there's been a significant pushback from the statement department about are we losing the wider war in pakistan? it's a price of a successful drone program is angering 180 million pakistanize, a country with nuclear weapons, that's a large price to pay and there's a nor discriminating program in pakistan as a result

of the constitution. the cia has the ability to more or less override state department objections but the larger discussion has been won by the state department, and also increasing come congressional overheating, more -- over sight, and more discussion, and the supreme court justice brandeis a long time ago said sunlight is the best disinfectant. there are -- you have seen a decline in pakistan, and same time in yemen, only wing drone strike in yemen under president george w. bush, there were 46 last year under president obama. we calculate there were 4600 casualties. al of those but four took place under president obama. who are the targets arizona

professor indicated? militant leaders are not really being killed in the great number. we calculate only 2% of the total number of casual advertise are people you would term leaders. and so that is an interesting development. what was initially started, i thing, as a program that would target high level members of al qaeda, has in a sense deinvolved, particularly in pakistan forks a counterinsurgency air force and you can say that's good or bad, but it's a fact that is happening. where are the targets in pakistan? that'sy al qaeda network are located. what is in the civilian casualty rate? we found it has declined significantly over time. initially in the 2006 it was almost 2%. -- 100%. now today confirmed civilian casualties we calculate 2%. we also add an unknown category

of 9% because sometimes at not clear if somebody is a civilian or militant, everybody dresses the same. and that member is revved to in a press account as a tribesman could be either a taliban or civilian. we're fining a very significant decrease in the number of civilian casualties. all sort office reasons. -- sorts of reason. one is drone is -- there is maller pay loads, better intelligence, president obama has taken a more direct role in adjudicating potential strikes where there might be a civilian character. so we -- civilian casualties. we're not the only group that look at this issue. there's the london based bureau for investigative journalism. we're all fining roughly the same thing. the civilian casualty rate in 2012 is quite low, and ben amerson, the unitees nation's special -- went to pakistan recently and had an interesting

discussion with pakistani lawmakers and officials. they said to him that there were 400 civilian casualties in pakistan, which is close to the number we actually think is correct. and this is the first sort of official acknowledgment in pakistan at least on background, the civilian casualty rate is lower than said in the pakistani press. what is the impact? the best impact is osama bin laden himself in the documents recovered he was very concerned about the drone program. the amount of damage it was inflicting on his group. was suggesting al qaeda should decamp to eastern afghanistan which is mountainous and would be hard for american drones to see what is going on, and suggested moving to qatar, away from the tribal region. so it is having an impact, and just to reinforce what the -- 70 countries have don'ts, three of

them have armed drones we know of. it's very -- to the chinese are very close to being able to arm their drones. you can easily imagine a situation where china deploys drone against spratsists, using the same rational we used against al qaeda or the taliban who we think to be terrorists. >> thank you very much, mr. bergen. our last witness on the panel has made a personal sacrifice be with us. he is aemie youth activist free lance writer and journalist, has co-haired several youth initiatives in yemen. he works for a grassroots youth run foundation aimed at instructingemie youth in public dialogue of we the assist on a u.s. state department scholarship he studied in the u.s. during high school, attended the american university in beirut and graduated with a degree in public policy last

year. i hope i pronounced your name close to correct. thank you for traveling from yemen to join us today. we're looking forward to your testimony. please proceed. >> thank you, chairman. ranking men member, for inviting me. i am from a remote village mountain in yemen. just six days ago my village was struck by an american drone in an attack that terrified the region's poor farmers. it's my village but america has helped me grow up and become what i am today. i come from a family that lives off the fruits and livestock we raise on our farms. my father's income rarely exceeded $200. he learned to read late in his life, and my mother never did. my mother, however, has -- i am who i am today because the u.s. state department supported my education. i spent a year living with an

american family and attended an american high school that was one of the best periods in my life. i learn about american culture, and participated in halloween. but the most exceptional is an experience coming -- the most exceptional experience was coming to know one into ended up being like a father to me. a member of the u.s. air force. most of my year was spent with him and his family. he came to the mosque with me and i went to church with him, and he became my best friend in america. i went to the u.s. as an ambassador for yemen, and i came back to yemen as an ambassador of the u.s. i could never have done that the same hand that took my life and take it from miserable to promising one, would also drone my village. my understanding is that a man was the target of the drone strike. many people know the man and the

government could have easily found and arrested him. he was a -- was we known to local governments and they could have captured him if the u.s. told them to do so. in the west, what the village -- was best on my stories about my own experiences. the friendships and values i experience and describe to the villagers have them understand the america i know and that i love. now, however, when they think of america, they think of the terror they feel from the drones that hover over their heads, ready to fire missiles at any time. what a violent militants had previously failed to achieve, one drone strike accomplished in an instant. that is now an intense anger against this. this is not an isolate incident.

the drone strikes are the face of america to many yemenize. i have spoken to many vic victims of u.s. drone strikes, like a mother who had to identify her innocent 18 years old sob's body through a video and stranger cell phone. or the father who held his four and six-year-old children as they died in his arms. i spoke with one of the tribal leaders present in 2009 at the place where the u.s. cruise missiles targeted the village. more than 40 civilians were killed, including four pregnant women. the tribal leader and others tried to rescue the victims, but the bodies were so decimated that it was impossible to differentiate between who were the children, women, and their animals. some of these innocent people were buried in the same grave as

their animals. in my testimony i provided detail about the human cost of this and other drone strikes, based on an interview i have conducted. i have a personal experience of fear -- of the fear they cause. late last year i was in a town with an american journalist. i heard the buzz. the local people we were interviewing told us that based on their past experiences, the thing hovering above us was an american drone. my heart sank. i felt helpless. the first time i had truly feared for my life, or for an innocent friend's life in yemen i couldn't help but think that the drone operator just might be my american friend with whom had the warmest and deepest relationship. i was torn between this great country that i love and the drone above my head that did not differentiate between me and some ill tenants. it was one of -- militants.

it was one of the most difficult feelings i ever encountered. i felt the same way when my village was droned. thank you for this hearing. i believe when americans know how much pain and suffering the u.s. air strikes have caused and how much they are harming efforts to win hearts, minds, and ground in yemen, and hearts and mines of the yemenie people they will reject this devastating targeted killing program. thank you. >> thank you, sir. [applause] >> general car writhe in a recent speech before the chicago council on global affairs you noted your concerns about potential reaction to targeted strikes. in that speech you've said, if you're trying to kill your way to a solution no matter how precise you are, you're going to upset people even if they're not

targeted. general stanley mcchrystal stated the resentment created by american use of unmanned strikes is greater than the average american appreciates. our testimony provides chilling example how these strikes can undermine our efforts to win the hearts and minds of the very people we're relying on to provide us intelligence and be our alis. are we trading short-term tactical success of killing individual targets for their long-term strategic failure by sowing widespread discontent and anger? >> senator, i can't talk to specific operations. >> i understand. >> but i am worried that we have lost the moral high ground for much of the reasons the witnesses have talk about, and that some element of transparency, in process, in decisionmaking, in the understanding not just of those who actually make decisions, but

of the people of this country, and the people of the countries that we are working in. is going to be essential to find our way back to that moral high ground. i believe that if people understand what the options are and the choices are and that they're reviewed and they're basically, as we do in our judicial system, in an adversarial way, looked at with a very jaundiced eye about whether we want to proceed or not to proceed. that we can move in a direction thats far better than where we are today, but i believe that in several areas around the world, the drone -- current drone policies have left news -- left us in a position where we are engendering more problems than we're solving. >> wouldn't you also, i'm sure, acknowledge that because of the classified nature of information that is being used to target, and protecting the sources and methods which we're using to find that information, makes transparency, if not

challenging, impossible? >> i would say challenging but not impossible. in other words, it is not necessary to provide the secret sauce, to provide an understanding of what you're doing what you're doing, how you're making the decisions, and why they are necessary and that you reviewed alternative choices in that decision process. i think that's the important part to get out. i don't disagree that, again, as i said in my testimony, that the policy we're following in the global war or terror is the policy i support but it's the means and methods we have to take a look at and reflect on. >> professor brooks, just looking down the panel to see who might have been near 2001 to cast the vote on the authorization for the use of military force. i can remember there were two votesment one relative to the invasion of iraq, and 23 of us voted in the negative. then the second vote, which we considered to be the direct

answer to 9/11, for the invasion of afghanistan. the direct assault on al qaeda, virtually all members of the senate voted in favor of that. i believe all of them did, if i'm not mistaken. at the time, though, i don't think there's a single senator who would say that they envisioned 12 years later that we would be ending the longest war in our history, and that we had created an authorization for an ongoing war-like effort against al qaeda operatives and their associates. so i guess my question to you is, whether or not the aumf, the authorization for use of military force, is adequate to the task of protecting america when we're still menaced and terrorized by those who would do us evil? and whether or not there needs to be a revisit of that aumf to determine whether it should be stronger or more specific.

>> senator durbin, i would be left-hand side to urge congress to repeal the 2001aumf. i think the president already has ample power as the commander in chief and the chief executive of the united states to use military force when it is necessary to protect the united states from an imminent threat and imminent and grave. they emphasize the word imminent and graham in the absence of authorization to use military force we would very likely see the executive branch perceive itself as constrained to do a more careful analysis of the importance of using military force, particularly in context where it's killing in a foreign country that raises sovereignty issues. i share my colleague's view there is nothing inherently wrong about the use of targeted killing as a counterterrorism tool or in the context of armed conflict. i do think we have gotten well cronk as you suggest, what

the -- well beyond, what you suggest, the drafters could ever have imagined. as we have stretched it from al qaeda and the actual language of the authorization, which focused square eye then those with responsibility for 9/11, and preventing future attack us such as that on the united states. those it has shifted to those who are further down the chain, lower level militants and suspected militants and also shifted to focusing on organizations that it's not that clear would fit that aumf definition, such -- in terms of any capables, capacity, and inclination to focus on the united states. >> i guess what i'm driving at is this. i think definition of our enemy in that aumf, as al qaeda and associates, could certainly be challenged today in terms of

terrorism threats to the united states. i think that some have gone far afield from the original al kauai thread but still are realistic threats. so the definition of our enemy, our enemy combatant, would have to be carefully considered in that context. but secondly, i would think that we now are challenged to define the battlefield, and where we can engage in targeted killing, and what it takes to authorize to us go into somalia, yemen, pakistan, afghanistan, or nations in africa. where is that battlefield? seems like it can change almost on a daily basis and still be a threat to the united states. i would say, having been through this debate -- my time is about up -- having been through this debate over the authority and responsibility of the come to declare war that our founding fathers could have envisioned what we're facing today in

trying to keep this country safe. senator cruz? >> thank you, mr. chairman. i'd like to take the opportunity to welcome and thank senator grassley, who is the ranking member on the full committee, for joining us at this important subcommittee hearing, and with unanimous consent i would like to offer senator grassley the opportunity to ask his questions before i ask mine. >> i will waive my turn. >> i appreciate each of the witnesses coming here and presenting very learned and very provocative testimony on this critical issue. i'd like to begin by posing to each of you the hypothetical that i posed to attorney general holder. because it seems to me on the question of what is the permissible use of legal force, there are ends of the spectrum that are relatively easy to

answer and then there are areas in the middle that raise far more complicated legal questions. seems to me that there is no serious question that, if a foreign national is overseas and is actively taking up arms against the united states, that lethal force can and probably should be used against that foreign national in those circumstances. likewise, it seems clear to me that the answer to the hypothetical i posed to the attorney general is simple and straightforward and that hypothetical was, if the united states citizen is on u.s. soil, and we have intelligence to suggest that that individual is terrorist, is involved with al qaeda, but at that moment that individual poses no imminent threat, indeed if that u.s. citizen is sitting on u.s. soil at a cafe in northern virginia. ...

to send a representative because the last time the attorney general was here come he was quite reluctant to post the answer that all six of you just gave. it seems to me there are many difficult questions about the

use of drones and our current policy and using them offers ease. there are strategic questions, using a drone to take out a terrorist or a validator of al qaeda is necessarily the individual not be apprehended, interrogated. we would didn't know actual intelligence that we will not be able to prevent acts of terror in the future. and of course with the drums strike, the risk is such that if the individual is not who we think it is, there is no process to correct that this date. that being said the ambit of this committee is the constitution and that's the principle focus of this hearing. so i would like to ask a question of professor brooks and professor somin but on the

question of the constitution's parameters if we agree with the extends i request a meeting in the area and i want to suggest for possible criteria and get those of your thoughts as to how each of those criteria impact the constitutional question. pictures to see individual that is the target of the drums straight. whether that individual is a permanent resident or rather that is a foreign national. the possible criteria that is relevant to the inquiry is the location. is that individual on u.s. soil? or seven visual overs these? a third possible criterion is whether that individual is actively affiliated with a foreign hostile force such as al qaeda and a fourth possible criteria is whether that

individual poses an imminent threat of violence. one of the concerns i have about a white paper that was released to nbc is the definition of eminent threat that this administration has put forward is exceedingly broad. i would ask both professor brooks and professor somin to address relevance of those criteria into the extent imminent threat is important, how should it be designed so that it is a relevant qualifier? >> thank you, senator. i think these are perfectly reasonable criteria. the administration is the best that has similar criteria. the devil is in the details as he suggests. you can save someone needs to

criteria of being a member of a foreign course picking up arms against the united states or something like that, they become targetable. no one will disagree with that on broad principles. the trouble is who decides what constitutes evidence, but if you make a mistake and so forth. pitcher was for other criteria. no one will disagree that the united states has the authority and the president has the inherent authority to use military force in the context of a threat of an imminent or serious attack but as you suggest the term mmn says cotton 30 squishy and the administration legal memos we've seen so far. that is why it would highlight not so much the criteria and the abstract, that transparency obviously was concerned to ensure oversight and

accountability. one of the thing i would add a sunni we have a additional question, but we also have a broader rule of law question. in the declaration of independence, they spoke of inalienable rights that all men have it today we talk about human rights. the fact that someone is not a u.s. citizen while it does mean they to not have a specific attractions obviously should not make us care less about their records in the event they are wrongly targeted. while i am fully confident in the administration making their very best efforts to prevent abuse than error, i don't know that's a firm foundation for thinking about the rule of law more generally in the future. >> thank you very much for the

question. each of the four points you raise are potentially important different situations. let me give a few thoughts and each of them. one is whether the individual is a u.s. citizen or for a natural. a u.s. citizen can potentially be an enemy combatant in the war and that is to care for her illegitimate target acs. there are special constitutional problems with u.s. citizens were doing that might be a violation of the fifth amendment letter it applies to foreign nationals outside u.s. soil. even if it does not, targeting an innocent civilian is illegal under various domestic and international law but the constitutional issues might be different. your second criterion you raise is more covert and written testimony. there's a reasonable distinction

drawn between terrorists located in areas with the government is supporting the terrorists are don't have meaningful control over what's going on versus countries where there's a rule of law and legitimately resort to work and that that government and apprehending people by peaceful means without resorting to lethal force in the first instance. third, it does make a significant difference whether the individual in question is affiliated with al qaeda or rather an independent operator is affiliated with an unconnected group. the use of military force doesn't give the president the authority for any and all hostile groups. it is limited to those nations, organizations that is authorized, committed or aided the terrorist attacks occurred in september 11, 2001.

it seems to me while we are at war listed in the au and that's not all of the interest groups to the extent the targeting has gone beyond that level, the laws of war may not apply and does make a difference in one of the things i urge this congress consider not abolishing the au amass for clarifying to workgroups beyond those listed are legitimate targets. the question of eminent threat is for groups within target even if they are not an imminent threat for people not carried how imminent the threat they pose is an important issue and one we can address in more detail later. i don't want to take it to much

time. >> thank you very much. before recognizing senator frank income i ask and to address statement by senator leahy. but that objection will be answered. senator franken. >> i want to thank chairman for holding this important hearing. obviously drone strikes have changed the way we give rise to local opposition and public debate. you know we are dealing the new strange territory when senator cruz and i have the same questions. imminent unshared imminence was one i talked about were seems really broad, too, senator. i think this discussion is important, which is why i believe legal justification for these strikes that need to be

made public and foreign. i went to the room and looked at some of these memos and after reviewing them, i do not understand why the expert redactor's at the department of justice couldn't have struck that the national security information, the sources and met ed that need to be redacted and made the legal analysis by the hurt i was disappointed the administration did not send a witness today, as was the chairman and ranking member. i have long argued the department should not a secret law and should make all of the office of legal counsel's opinion is available the public. transparency and accountability are important, especially for an issue is sent to those.

i am also troubled this hasn't been released in conference, all the memos relating to the targeted killings. anyway, as far as targeting the question the ranking member ask him and this is not my question that came from another senator and he has an authorized me to ask you associate. i could be a secret agent, too. but this just in terms of targeting u.s. citizen by we had a situation embossed and where we had a guy and i hold in a boat and fraud count had

explosives. they did send a robot to go when i take off over the boat. but isn't it possible we could see a situation in which we might want to take that person out in a different way as odd as that is for me to ask. anybody have an opinion on not? the attorney general answered, senators pose question is a westernized drone on american soil. eric holder said no. does anyone have an opinion on not? >> there are hypo inside the

united states, so other means by which we can approach the situation safely and ensure if the last act as for the individual to put their hands in the air that they would not revoke the right of the individual to give out. to be in the case of a drone is not firmly something -- >> we would only resort to that obviously. this is may be arguing angels on the head of depends on the font. >> the only i would say is it's very to distinguish the kind of weapon and legal framework. he was then released by remotely piloted is a weapon. we have clear rules about when police can use lethal force. as long as we have clear legal framework, the lethal force is

irrelevant what means you use. the problem is not the drone hypothetically as do something else. it is whether we have to abide by the normal rule or whether we are in a law of war environment as professor somin said you can target an enemy while he's sleeping based on the status, not his activities. >> since we are talking about the method we use them are talking about low back, mr. mr. bergen and ms. al-muslimi testimony. this can argue ms. brooks or mr. berk