>> also, due to schedule and cost overruns, i mentioned the olmsted lock and dam, it is built to replace their aging locks 52 and 53. how much of this funding increase the olmsted is going to rehabilitate locke's 52 and 53? wendy think if you, the major rehabilitation will occur? >> what i would say mr. chairman, we really, for olmsted

to move forward we need a 900 to fix. if it doesn't move forward they will continue to do the work that we're doing to maintain lock 52 and -- >> i fully understand that. i'm going to get to the 902 in the second but my question is, what are we allocating towards locks 52 and 53? because my understanding is they need to stay operational, it's eight or so years away from completing the olmsted project. so i'm wondering is that part of the allocation for olmsted to facilitate the rehabilitation of locks 52 and 53, or is that in addition? >> that's not, that cost is just for olmsted. the maintenance of locks 52 and 53 in separate. i would have to get that figure for you. >> okay. appreciate that.

also, on the 902 fixes, that will be needed in 2013. and how many 902 fixes are there for fy 13 and fy '14? >> i think the total is about 30 but i would have to follow what. it's roughly about 30. >> we would like to have a list for that and also i think the amount, the dollar amounts since we're working on the wrda bill, in order to put all this together we have to get a handle on that. also, wrda 2007 congress authorized an independent peer review for some of the projects. how long do these readers typically take and which to they typically cost on these the reviews? any idea on that? >> it really depends on the size of the project, the magnitude and the level of difficulty.

i really can't put a number on it that would be a typical number, or a cost. we try to work these as rapidly as we can, and it just varies between the projects. >> do you want to comment? >> in our report to congress last year i believe it was on a highway implement it since 2007, we spent about $8.2 million on i believe it was 29 independent external peer reviews. and as the general said, it varies from project to project but that gives us a look at what has happened since 2007. >> okay. general, also the harbor maintenance trust fund for fiscal year 2013, salaries, administered cost and overhead, you know, you probably will

enter us today that hope you can get back to us about the money that is generating in the trust fund, how much of it is allocated for administered cost overhead and also for fy 2014? >> i will follow-up. >> okay. another question. secretary darcy, the water worries -- the waterways -- department of defense, can you give us an update of when we can expect those apartments? >> the charter has been renewed. we got that word the beginning of this week, and we're waiting the selection of the members. been in contact with secretary y of defense's office and i'm hoping that within the next couple of weeks we will be able to get those appointed made. >> i think it's important we have that in place. at least it's a good soundboard the communications back and forth within the core and the stakeholders, and hopefully we can make things work a little better.

mr. bishop? >> thank you, mr. chairman. and appreciated very much this hearing and i appreciate very much the testimony of eyewitnesses. and want to add to what mr. garamendi says. i want to thank the corps for the work you do under at times some dirty trying circumstances, thank you very much. at the risk of being irreverent, my summary of both this hearing and the current state of affairs with respect to the court is we've met the enemy and it is us, and the us in this case is congress. we are constantly asking you to do more, constantly wringing our hands that you're not doing more or doing the things we want you to do. and yet we are giving you less. we are proposing phantom solutions to real-world problems. the earmark ban prevent you from

going forward on the 23 chief reports that are completed for which we have expended taxpayer money. the earmark ban prevent you from acting on the 30 some projects for which we hit the 902 caps, for which we spent a great deal of taxpayer money. so i just a much hope we now have a very clear understanding of what we need to do. and again, i want to thank chairman gibbs and chairman shuster for these sessions and the stakeholders session. i think they've been enormously valuable. we know what we need to do in terms of the work that needs to get done, but we also now know what we need to do as a congress if we really want to see it get done. so i very much hope that this committee has always had a very clear, bipartisan, problem-solving approach. and i hope we can summon that approach in this circumstance to see to it that we give the corps the resources it needs to have

in order to get the work done that we all agree has to get done. with that, mr. chairman, i will yield back. thank you. >> okay, mr. thier monday, question? >> in my our comments i had intended to not only think secretary darcy but also general bostick, and the men and women in your organization, particularly the kernel in california, sacramento. it's a pleasure to work with him and his staff. i would like to hear from you, perhaps in writing or subsequent meeting how we could change the systems, some of which are law, some of which are procedures, that in practice forced sometime by the court to be more quick, eliminating unnecessary steps and other elements that slow down the process.

i know that much of that is, again, here. it's our appropriation process and the lack of continuity that i talked about before. but i think i would like to engage in a discussion with the corps about how we could change perhaps the three by three effort as a way of accomplishing that. if so, further detail on how to make that more than just an experiment, but make it a reality. and your perspective on our work, on how our processes make it difficult, and in some cases impossible, for you to carry out your tasks. so i put that out there, and then look forward to a detailed discussion about that. >> i think it would be a good conversation to have, congressman. >> thank you. >> thank you for the compliments on the kernel. he's been doing a great job, other commanders and other

level answering the call of duty, but we look forward to having that discussion as well. >> in that recall -- regard, i recalled the flood of 86 and the girl at the time who i despair, i can't recall his name, came to the community of walnut grove where i lived where we had a flood underway, and we said, well, if we can build a short levy about a quarter-mile of a leading we could save the city, a town, hardly a city. and he said, let me see. he went back, took out his book and said, here's the section. what do we need to do ask and he called to contractors who happened to be nearby and he said, gentlemen, i want a bit. i want to raise this levy five feet and i want it done in one week. give me a bit. so the to contractors when all is said no, no, no. you are over there, you're over there. they came back with a bit on the back of an envelope. he took the low bid. been a to contractors got together and they did it. and they saved the small town.

i appreciate the corps. thank you. >> thank you. >> thank you. i just want to make a couple closing remarks. as we work on the water resource develop and act as a comment referred to as wrda, this committee and the full committee with chairman shuster, as was reference to earlier we have held a lot of listing sessions with the stakeholders and roundtables. you know, common theme, ranking member bishop mentioned some of it. we know there needs to be more additional resources. but we also know there's things we can do on the cost side. one thing that's come up a lot is all the studies that you're required to do and study and study it some more. so hopefully i think this wrda bill will be heavy on the policy side where we can hopefully do some reforms to lower the costs, streamline the projects, be a little more efficient and put a process to we don't having cost

the least. because when you have delays it adds to the cost as we all know. adults of things that we can do, work on local sponsors, how we can do it better. you know, it just amazes me. i've had the mayor of the city of miami, florida, an officer a few weeks ago. they are ready to do the project down there, getting ready for the bigger ships come from the panama canal but they can't move forward without the authorization -- authorization. things we can do. there's also frustration i think a lot of us is we look at the president's budget and a mentioned in my opening statement, you know, these initiatives is a great initiative. we can't wait initiative, great initiative. but we need to make sure that we're making those capital investments in those assets that due to the economic return, they grow our economy, keep us

competitive. i know have environmental issues and we have to address them, but we're looking at more than four times on the construction budget for eco-restoration projects. that's concerning because if we fall behind, continue to fall behind and lose this battle with our foreign competition, there will be less dollars in the big picture for everything. and its own port we make these investments in our physical assets and our ports. such as want to leave it at that and we look forward to working for you, working with you and also give my thanks to all the people at the army corps for all the work they do. sometimes it's very technical work and can be dangerous work at sometimes, but they are dedicated to i meet with colonels from the districts and the jobs of generals in the region, and we all got the same thing we want to get done, is to

make sure that we get the economy growing create jobs and our maritime transportation system and flood control is what it needs to be. and that's what the american people expect. thank you for being here today, secretary and general, and this concludes this hearing of the subcommittee. [inaudible conversations] learn more with a 2013 congressional directory. contact information, district maps and th assigns the for each member of the house and senate. also, cabinet members, supreme court justices and the new government. a director is $12.95 for shipping and handling at c-span.org/shop. in a few moments the head of the consumer financial protection bureau testifies on capitol hi

hill. and a little more than an hour and a half, the pentagon briefing on mission and objectives of the defensive research project agency known as darpa including the cybersecurity and counterterrorism. >> at least one wrote there were two battles, and they were fought on consecutive days. may 2 and a third. may 2 he said was the battle of the generals. it was a day of maneuvering and minimal casualty. may 3 was a battle of the soldiers, and that was a battle of no more movement or maneuvers. it was a day where no more guile, just flat out brawl. share might an overwhelming casualties. about 75% of all the losses that

occurred would occur in just five hours. >> with his troops outnumbered more than two to one, the battle of chancellorsville maybe robert e. lee's greatest victory. more saturday at 10 p.m. eastern on c-span threes american history tv. >> the head of the consumer financial protection bureau told members of congress this week that his agency has no interest in accessing personal data on individual consumers. mr. cordray presented the bureau's report to the senate banking committee. this is a little more than an hour and a half. >> good morning. i call this hearing to order. and we have reviewed the cfpb's

semiannual report and are here today to conduct regular oversight of the cfpb. this includes making sure that the agency continues to fulfill its mission of protecting consumers and empowering them to make responsible financial decisions, promoting fair competition and industry, and ensuring full access to financial services for all americans. director cordray, welcome back to the committee. i know you share my commitment to transparency and accountability. in fact, this is the 32nd time that a cfpb official has appeared before congress in just over two years, and your 13th of parents. rightly so, your agencies outreach and engagement with

both consumers and industry representatives has been widely praised. the cfpb has made significant progress in protecting consumers, including students, servicemembers, and older americans. for example, the cfpb has developed a number of tools related to student lending, including the financial and shopping sheet, that will help students make the best choices as they pursue their dreams. and since the cfpb opened its doors, it has obtained $445 million of consumer refunds. that is $425 million back into the hands of harmed consumers and back into the economy. earlier this year the cfpb finalize rules to strengthen

mortgage standards. this includes the ability to repay provision, which requires lenders to make a good-faith effort to determine whether a borrower can make his or her payments. these have been generally well received by can and industry groups alike. and i applaud they care the cfpb undertook inviting these rules. however, ensure that these rules do not have adverse impacts on lending in underserved areas, including rural areas. i look forward to hearing from director cordray on how this role will impact were lending, which is an important issue for many in south dakota. finally, director cordray, you have made comments about reducing regulatory burden on

community banks and credit unions. i continue to be interested in your plans to make sure that rural -- that rules strike the right balance, protecting consumers while addressing legitimate concerns smaller institutions may have. you have proven day in and day out that you are well-qualified for your position. even my colleagues across the aisle concede this point. i hope we can provide the market the certainty it needs and consumers the cop on the beat they deserve by confirming you quickly. thank you for your service, and i look forward to your ongoing -- to our ongoing work with you. with that, i will turn to ranking member crapo. >> thank you, mr. chairman, and thank you, mr. cordray, for being with us or today. i appreciate it. mr. chairman, the semiannual briefing by the consumer financial protection bureau was

very important to us to gain insight into what the agency is doing. as i consistently stated in past hearings we still have concerns of the constructional nature of the agency. we continue to seek a change from the sole directorship to a board like structure. it is also essential that the agency be a part of the appropriations process, and finally we believe that they prudential banking regulator should have a formal input into the bureau's action. where those actions affect safety and soundness. and with regard to the president -- my opinion has not changed. i continue to believe recess appointed was unconstitutional. recently, agency officials have pointed out that it has led more 30 times before congress in the past two years. while this does give congress an opportunity to directly from agency officials, and appreciate the comment is unnecessary facilitate the in depth discussion of the specific issues and concerns that we

need. just last week, bloomberg ran a lengthy article citing that the cfpb has allocated more than $20 million to collecting and tracking customer credit card and spending habits for more than 10 million americans. the size of this data collection and 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 monthly 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, i asked how many consumer accounts cpb is monitored him at the agency declined to provide that information. now we learn from the press that is 10 million accounts and perhaps even more. this lack of candor and transparency of what the agency is doing and how it intends to use this personal financial data is troubling.

the bureau was found with a mission to watch out for american consumers, not to watch them. given that the cfpb's inspector general has already identified data security issues at the bureau, how can the consumer reassured that this information is indeed safe? with regard to its revelatory world in the past few years figure has issued numerous new rulemaking resulting in significant cumulative burden for affected institutions, especially our small and community banks that often have just a handful of employees. in january of own the bureau finalized over 2500 pages of new rules relating to mortgages through seven different rulemaking's. i'm concerned that without strong cost-benefit analysis and input from small business panels and crafting rules, even well intentioned 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 panels on the proposed qualified mortgage approval to try to minimize unintended consequences. many communities -- energy bankers now one that despite limited few exemptions for smaller institutions they will no longer offer any mortgages outside the cuban criteria which will restrict the ability to meet the mortgage needs of the communities they serve. another issue has been identified by the agency's own ombudsman recommended the cpb needed to review and clarify the role of enforcement attorneys to attend supervisory exams. i look forward hearing from you, mr. corker, about how you plan to address the community banks concerned with the qm rule and how the cpb is opening the overall all muslims recommendation. specifically apply care how the feabureau is handling the examination concern raised by the ombudsman as well as whether the peer is concerned about the effect of the sheer presence of enforcement of attorneys may

have on the integrity of the examination process. i firmly believe if the structure of the agency were changed they would become more open and transparent in 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 that the bureau can do what it was designed to do, that is to protect the american consumer. thank you, mr. chairman. >> thank you, senator crapo. are there any other members who wish to make a brief opening statement? ii want to remind my colleagues at the record will be open for the next seven days for opening statements and any other material you would like to submit. mr. richard cordray as director of the consumer financial protection bureau, welcome back to the committee, director cordray. you may begin your testimony.

>> ranking member crapo and members of the committee, thank you for inviting me to testify today about the semiannual report of the consumer financial protection bureau. my colleagues and i are always happy to testify before the congress, and ranking member, i would hope to have a chance to address each of the issues you raised them if the request of rounds of questions i would have to do. i think there are good answers to all of those issues that you raise. 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 are dedicated to improving the lives of everyday americans and to restoring trust in consumer financial markets. the semi-annual report we are discussing today embodies our work over the last six months of 2012. the report illustrates the ways we are using the tools congress has provided us to empower consumers and promote a fair, transparent, and competitive marketplace for consumer finance. we have taken steps to improve the workings of markets particularly those in which

consumers cannot choose their financial service providers. one such market is debt collection. concerned about system-wide problems that pose risks to consumers, we gained authority at the beginning of the year to supervise debt collectors. the debt collectors covered by our supervisory authority account for over 60% of the industry's annual receipts in that market. bad actors in this market are a detriment to consumers and to every debt collector that operates 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 of these companies. as a result, the bureau can now evaluate whether federal consumer laws are being followed throughout the process, from

credit origination through debt collection. by identifying problems and rooting them out early, we are working to minimize consumer harm. our report also encompasses the bureau's first enforcement actions, which were against credit card companies that deceived and misled consumers. in 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 6 million consumers, and we also imposed penalties on the companies to deter such activity in the future. these actions will serve as a warning signal for anyone who seeks to profit by deceiving or misleading consumers. in the second half of 2012, we also tackled issues in the market for private student loan debt, which currently totals about $150 billion. our studies detailed the struggles students and recent graduates are experiencing in that market. together with education secretary arne duncan, we made recommendations to congress on

common-sense reforms to ensure that the risky underwriting practices of the past are not repeated. the work i have discussed here today is merely a snapshot of our efforts on behalf of consumers. we also are addressing consumer complaints on a growing number of financial products and services, totaling more than 130,000 to date. we have adopted comprehensive new mortgage regulations banning irresponsible lending practices that helped bring about the recent financial crisis. our ability-to-repay rule follows the simple principle that lenders should offer consumers mortgages they can afford to pay back. we have actively conducted outreach on various 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 vision to create a consumer financial marketplace where customers can see prices and risks up front and easily make product comparisons; 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 will continue to persist in this work and we appreciate your oversight. as always, i will be glad to answer your questions. thank you. >> thank you very much for your testimony here as we begin questions i will ask the clerk to put five minutes on the clock for each member. director cordray, in both the cpb's servicing role and to enroll come you provide allowances for rural areas and community banks. i've heard from several constituents the threshold for rural lending will lending by small banks and credit unions. how will those rules impact lending in rural or --

[inaudible] -- and what have you done to address these concerns? what specifically, how did you select 5000 low threshold for defining small services? >> thank you, mr. chairman it one of the objectives congress set forth from one of the things it requires us to do with every new regulation in addition to assessing costs and benefits is to assist impacts on smaller providers and also rural areas. so that's something that we pay close attention to with the qualified mortgage rule and the servicing role as you mentioned. that led us to write provisions into the rule that a specific and special the smaller providers and community banks, to recognize the role that they play in some of the more challenging areas to underwrite loans such as rural areas underserved areas. we provided a special provision

for smaller institutions that has been repurposing will be finalized shortly to recognize that if they're holding loans in portfolio and they are operating according to their traditional underwriting models, those are good loans and that's good lending and sound lending that we want to encourage. .. >> which is something we want to encourage and, frankly, is a model to the larger servicers. 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 as senator crapo mentioned on that rule, we ended up expanding that to those who service up to 5,000 mortgages. and that covers, we estimate, about 98% of the smaller providers. they're exempt from significant portions of that rule. so we're trying to be careful and sensitive to not having a one size fits all approach and to recognizing that smaller lenders, particularly in rural areas, are of interest to congress, they're of interest to the market, and they're of interest to consumers. >> director cordray, as you know, outstanding student loan debt now exceeds $1 trillion. the cfpb recently asked for suggestions to -- on how to make student loan repayment more

affordable. what does the bureau plan to do next with regard to student lending, and what d 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 bureau and for our ombudsman of students which is a position congress created if the bureau. several thing, and i'll try to move through them quickly and happy to have you follow up as you wish. first of all, for those who are undertaking the decision whether to go to college and how to pay for higher education now, we've created new tools, financial aid shopping sheet that you mentioned. that's all been folded into a broader paying for college among july that's on our web site, and we're rolling out to guidance counselors, teachers, parents and young people themselves across the country right now as they're beginning to make these financial decisions for the coming year. second, we have just put out a rule to be able to supervise student loan servicers, many of

whom may be suffering some of the problems mortgage suffers had suffered, and we will be actively examining them to make sure they're complying with the law. on the proposal you mentioned that we put out to gather thoughts and ideas from the public about what could be done about the existing student loan problem which is burden the economy as the federal reserves has rex niced -- recognized in the past month 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 of the government and, of course, the department of education to see whacking -- what can be done to address this problem. it's a work in progress. >> senator crapo.

>> thank you, mr. chairman. i want to talk, first of all, mr. cordray, about the data collection issue that i raised in my opening statement. as i indicated, it appears that the agency's collecting data on at least ten million americans. in the graham-leech-bliley act, congress allowed consumers to opted out. shouldn't they be given the opportunity to opt out with having their financial information shared with the government as part of the cfpb's data collection efforts? >> so thank you for the question, ranking member crapo, the story that i had read as pell in bloomberg, i think, misunderstood what the cfpb is doing, and i'm happy to clear that up. >> please do. >> first of all, big data is the cutting edge of analysis 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 world. 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. now, what are we doing in terms of gathering data? first of all, i want to stress the data we're talking about is anonymized, it is not personal identifiable information about individuals, so the notion that we're tracking individual consumers or somehow invading their privacy, i think, is quite wrong. many of the data sources that we're accessing are commercial data sources that many entities

are buying and selling the data in order to be able to analyze what it shows about the markets. so that goes to our credit card data which comes from argas which is a source used by other regulators as well as companies themselves. the national and mortgage database that we're putting together is all about having the data to be able to do the things congress requires me to do and that you talk to me about frequently. you want us to do careful cost benefit analysis. we can't do that without good data. and we found that we need to develop a national mortgage database so that data is even better in the future. congress asks us to write reports. we have a report due later this year on what the effects of the card act has been. we cannot write a report like that and have it be meaningful and helpful to the congress unless we can analyze the data to see what the actual consequences have been. so that's the work we're doing. it is important for us of the day that so we can analyze it --

data so we can analyze it. and, again, the data is typically anonymized. it does not go to you or me in particular, but it goes to consumers generally. but it's quite helpful and really essential to us to do our work. >> i appreciate that response. let's talk about the anonymity issue first. >> yep. >> again, my understanding from the bloomberg article is that the cfpb has led a number of different contracts to different private sector entities to collect and store these, this enormous amount of data that the agency's collecting. even if the data collected is not personally identifiable to the agency, isn't it possible for the cfpb to hire contractors to dig into this data and obtain personally identifiable information? >> i don't know that that would be possible or not, senator. it certainly is not what we're doing and not what we're going to be doing. we have no interest in -- how

did you phrase it -- watching consumers. we do have an interest in understanding how products and services are affecting consumers. we have an interest in being able to do the kind of me tick lues cost benefit analysis you want us to do as we write rules so we can get them right. we have an interest in making sure the studies and reports congress is asking us to do to help you form decisions are on sound grounds and that we can see over time whether the object is you're trying to achieve are being achieved. that's the work we're doing. >> well, i understand your point about the fact collection of data is occurring at phenomenal rates in the private sector. i, and i think many americans, are concerned about that as well. and the notion that the government needs to deep 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 it seems to me that 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 to this in another round, and we can discuss it further. >> i look forward to that. thank you. >> senator merkley. >> thank you very much, mr. chair, and thank you so much for your testimony and your leadership of the cfpb. i wanted to, first, ask following up on the data question specifically about the complaints database. and can you share a little bit about, first, i believe that there are no maims attached to it -- names attached to it, that it's anonymous, but that it gives you kind of -- it gives everyone a sense of what consumers are most concerned about. and if that is correct, can you confirm that it's anonymous and, second, what are the top three or four concerns that you see coming out of that database? >> thank you for the question, senator. the database of consumer complaints which is something

that i think people are garage garage -- gradually getting use to is analogous to what's been done for 40 years by the national highway traffic safety administration and has led to tremendous improvements in auto safety, and the auto companies now embrace it, although they did not at first. it's also analogous to what the cfpb is doing, types of things we weren't aware of 20 years ago but are probably better off now to be able to know about and protect our 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 complaint and the institution being complainted about. it is not personally identifiable information, it's something we're very careful about.

we're required by law to be careful about it but also i, frankly, think it would bring the agency into disrepute if we were not careful about it. i think at point our consumer complaint database when we broadened it a month ago, we had 90,000 cumulative complaints. they're added day by day now, maybe closer to 100,000. nothing novel around the world. in the united kingdom, tear financial services authority -- their financial services authority has been publishing complaint data about banks for years. in the most recent six month period, they published 3.4 million plawnlts about the banks. >> i'm a little worried about running out of time, so what are the three or four top issues, insights that have come from the database? >> first of all, and, frankly, your office could tell us the same thing. tremendous concern about mortgage servicing and tremendous number of complaints in that area and a lot of consumer harm. credit card complaints i would

say what it's actually showed us somewhat surprising to we because i remember before the card act this was a very controversial area for the public. the complaints are down, i believe, and it's showing better work by the companies, more careful anticipation to what the card act now requires, and i think our report this year will show there's been real progress there. an interesting one for us and fairly new and too preliminary for us of to have much conclusions to draw are credit reporting complaints. people generally are not aware of how significant an effect on their lives their credit reports have, but those that are have found a variety of errors, they are having trouble getting those corrected, and we're starting to hear about it as we started taking those complaints earlier this year. so this is information that is illuminating to us as we go about doing our work. we think as a result it's illuminating to companies about how they can better improve their processes. and i think it's illuminating to

the public who has a right to know this information and to make assessments accordingly. i think it's good all around, and we should have-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, the calls our case work team gets, some of the issues that have been raised in servicing are foreclosure mitigation, discussions to try to make sure there's clear communication and all options have been pursued and the dual track which still exists to a degree. but any insights on the aspects of mortgage servicing that are particularly still troubling to consumers? >> senator, i think it's frustrating, it's frustrating to me, i'm sure it's frustrating to you and your colleagues that it is still the case -- maybe less so, and some servicers have

clearly improved and others have yet to improve -- there's still some fundamentals blocking and tackling, lost paperwork, people not answering the phone, not getting the single point of contact that's been promised. but i would say that 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 hand maybe unbeknownst to you they're proceeding to a foreclosure and undermining the work that you think you're accomplishing. that's very aggravating to people. the new rules that we've devised that are going to go into effect in january are going to make a significant difference in this respect, and they apply across the entire market, both the servicers that are banks and nonbanks. that's never before been the case. we met face to face with the top executives from all of the large servicers top several dozen last year to let them know this was coming, to let them know the importance of this and to take this seriously and not to wait, and i think -- i would hope that

over time your offices and our bureau will hear less about these kind of complaints, but right now they remain very significant. >> thank you very much. >> senator johanns. >> thank you, mr. chairman. let me follow up on senator crapo's questions about data collection. >> uh-huh. >> where do can you go to get the data? >> so i would focus on three different areas. credit card data, which is critical for us to have in order to do things like prepare the card act that congress has required -- >> right. but do you go to visa or mastercard? >> typically on the credit card data, and it's a different answer for different categories, and i'm reading from notes that my staff prepared for me, that we have typically been collecting this data through argas. that is a known collector of data.

it is 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 mastercard or whoever? >> or issuers themselves. might be like wells far bow or bank of america -- wells fargo or jpmorgan chase, any who issue cards. >> okay, so you mentioned three. there's two others. where else would you go to get the data? >> the national mortgage data way that we're going to be creating together with the fhfa is because what we found is the mortgage data 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 that 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 went and got more data. we were able to get more data from fhfa. they were very cooperative and collaborative with us and helped us on that. and ten we put out for more comment pause we were going -- because we were going to be using new data that had not surfaced before s so we made sure it was processed and complete. that data is being gathered over time in realtime on mortgages going forward, and it will provide a much more representative sample of what the mortgage market is doing so that we see the problems in realtime which we could not do very well over the last decade, and it helped lead to the crisis. >> and you -- one more place you mentioned. >> so the third category has to do with credit records. and in that case we have been buying the data from the same source that the federal reserve bank of new york has been buying day -- data from for a number of

years to publish their quarterly report that's widely reported on household debit and credit. so, again, we're following their lead in terms of this is good data on credit reporting, and it's going to help us to have the insights to help protect consumers and understand whether laws are being followed and what the effect on consumers is of different practices. >> so individuals' payment performance, whatever, whatever is the basis upon which this megadata is created, obviously. so somehow, some way the government is getting control of information about how people pay their mortgage or their credit carding bill or whatever. credit card bill or whatever. >> but i think this is 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 how, that's not the way the data works. what we're getting information about is consumers, you know, how their mortgage performs over time. but it's anonymized. it is not -- i do not have access to data about you or about myself. it is anonymized consumer data. but you have of the day that about consumers if you're going to -- data about consumers if you're going to understand what's going on in the consumer marketplace. there's no two ways about it. you all want us to write rules. if we don't have data and information, we can't do that. we can't do our job. and i think you would be quite dissatisfied with us and rightly so. >> i'm out of time already, mr. cordray, but here is 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's collecting data on the behavior of people like you and me and everybody else who's paying off a mortgage, who's 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, that it's somehow following them individually and somehow invading their privacy and tracking into their personal lives, that's not what it is. we have to have information about what's going on in these markets. what goes on in the markets is an aggregate of consumer behavior, consumer performance, consumer harm, consumer benefit. be you don't have any information to do this work, then basically you a know-nothing, and you're not going to be able to do the work well. and i think you would rightly be critical of us if we just operated on speculation and didn't make an effort to ground our policy judgments in such information as is widely

available and widely used and anonymized, very importantly. anonymized. >> senator reed. >> well, thank you very much, mr. chairman, and thank you, director cordray. let me raise an issue that's i think you and your colleagues that are looking after our military are aware of, and that is there are military personnel who cannot immediately get on-post housing. they apply, it might take months as the list goes, reaches them. and in the meantime they've entered 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 laws 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 there are several different housing issues for service members, both active duty and tear -- their families and reservists that we have encountered as holly petraeus, our service director for military affairs has been around the country and talked to and brought back accounts from folks on the bases. one was the permanent change of stations orders problem, and i know you're very familiar with it. we worked with the department of defense and others to address last year, department of treasury to qualify that as a hardship for the hamp program. what you're raising is another great example of how there can be a general consumer problem, the issue of tenants who are renting who can be affected by some of these problems. a great example is when congress dealt with the fact that tenants can be ousted from their place

where they're living because the landlord is foreclosed upon even though the tenant knows nothing about that, it comes without warning and they find their belongings on the street. for the military, this can do with change of station orders or, as you say, trying to improve your housing for lesser cost. so if congress is going to look at that issue, we'd be happy to supply the experience that we have seen from around the country. that's, of course, a judgment for you all to make. but i would say it's another outstanding example of how you can have general consumer issues. and then you translate them into the military context, and they still are general issues, but they often are sharpened or aggravated by service members who often have limited choice about, you know, they have to obey orders, they have to go where they've today, and they have to be there when they're supposed to be there. >> well, we'd appreciate working with you. if it requires legislation, my sense is that there'd be

southern -- support on both sides for this because it has a huge impact on personnel. they could move from expensive rental quarters to on-post housing, more convenient, etc. and as you point out another dimension, sometimes it's not just getting on-post housing, it's a complete change of station, and they go and they have to pay a penalty. and i'd like to work with you on this. let me turn to another subject matter. looking at the recent semiannual report it was disappointing to see your comments about the confusion persists around the process and requires for obtaining mortgage loan modifications. i don't have to tell you, because we spent a few sessions under leadership of chairman johnson, talking about this, the big deal, the modification deal. and now we've found just recently even some of the people who were owed checks, the checks bounced. so can you generally comment on what you're seeing and what you can do to help with this modification issue? >> so 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. frankly, they should have come as no surprise. these problems have been surfaced and publicized not for months, but for years. they're pretty common across the industry, and yet they're galling because they effect individuals, they lead to bad results for individuals, they lead to people losing their homes which is the most precious thing that people possess, and it upsets their personal finances tremendously. so i think that our rules will make a big difference. we're also already underway 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 have problems and it's going to require corrections and

compliance and perhaps enforcement actions as needed. but we are now in a position as this new bureau that, you know, didn't exist before to examine the institutions directly, to insure that they're complying with the new regulations which went beyond what congress required but was mess to address the scope -- necessary to address the scope of the problems and to enforce the law as needed to bring them into shape which is long overdue. >> now, going forward you going to have a much better process and procedure, but we have a whole category of americans that are still caught up in the old system. >> yep. >> and you -- let me ask a question, nonrhetorical, is that you are not involved with the occ 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 at the time all of that began 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 joaned the bureau -- joined the bureau, and we had a transition period where we were not yet an ip tent agency. -- independent agency. but our role in this which is a going forward role, not so much looking backward. but i want to stress, everybody who's caught up in this situation as soon as our rules take effect are governed by those rules. i doesn't matter that the mortgage was entered into three or five or eight years ago. and the examinations that we're in process right now are examining the process right now. other processes that are looking back to things from several years ago, that's a different issue. but for us the present and the future is very much the agenda congress has given us, and we're going to be aggressive about trying to fix these problems. i also wanted to mention and just thank you for the effort

you made and your colleagues on the changes in the military lending act. i know you and your staff have been inquiring of us how it's coming to implement those. it's coming well. we're working with multiple agencies including, of course, centrally the department of defense, and i think we will implement those changes in the law in the manner in which congress intended. >> thank you very much. thank you, mr. chairman. >> senator shelby. >> thank you. mr. cordray, good morning. >> good morning. >> the financial stability oversight council of which cfpb director, and you're the director now, is a member was given broad authority to eliminate market expectations that any american financial firm is too big to fail. you're very familiar with this. 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's a responsibility congress as given me by law, yes. >> so you believe you have that responsibility. >> i believe i do, yes. >> do you believe all systemic risks have been contained and too big to fail expectations that large institutions will not be allowed to fail have ended? or still is there some threats out there? >> well, 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 billions of dollars in prick finances. but -- public finances. but what i will say that is clear to me from my work on the fsoc so far, tremendous strides have been made, and i think the framework is both there and being put in place more specificically to address those threats to the system. >> do you support limiting the size of banks as proposed by

senator brown and senator vitter? >> so i think that's a policy call for the congress. i mean, 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 will anticipate to that and do -- adapt to that and do our job. we do have $4 -- four trillion dollar banking institutions that are in multiple product line, and we are pretty much continuous in our presence supervising them. but i would say that we're focused on doing our work, and i think those legislative debates will obviously proceed, and you all will make your judgments, and we will follow them. >> do you basically believe that we should and you should as an insider eliminate as much as

possible systemic risk? >> i think we should do our best to minimize systemic risk. i don't know that you can eliminate it spirally, but i -- entirely, but i think 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 law of placing me as representative, my bureau, on the fsoc which is, of course, the body that could veto our regulations if they strongly disagreed with them i think has been very helpful to me in understanding the perspective of that body and having the chance to work together with my colleagues so that 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 igs reported back that to the extent economic an us is performed, it is often focused on compliance costs rather than looking at the effects the rules will have on economic growth and job creation. a determining compliance cost is critically important, we know that, but it's 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 johanns. we can't have that understanding. we can't do that work if we don't have the information on which to make those judgments. but i do think it's critical for us to do that, senator, yes. >> dodd-frank expressly required the cfpb to evaluate the costs

and benefits of any proposed rule. you're familiar with that, i know. >> yes. >> if your economic analysis determines that a rule's costs outweigh its benefits, do you think the rule should still be implemented, rewritten, withdrawn? redebateed or what? >> so my sense of why congress tells us to do analysis of things like benefits, costs, impacts on smaller providers, impacts on access to credit, rural areas is because congress intends and i think has made it very clear that we should take into account our judgments about that in to doing whether to proceed with a rule or how to write that rule. maybe that a rule in one form would have negative impacts there, but if you modify it a bit, then it improves. so our specific provision is 1022 of title x of dodd-frank,

and it specifies how we're to go about this. et does, again, require information and data in order to do that work properly. but i think that the dilemma we might find is if congress has required us to do a particular rule and we found that the costs and benefits, you know, were troublesome, then we can try to write the rule somewhat differently but, obviously, within the confines that congress gave us, or we could always come back and talk to you all about it. that would be a troublesome be area. but where we have discretion, the costs and benefits are something that i think should definitely guide our policy judgments. >> but in addition to analysis which you need data and everything, we understand that to make a good judgment, you need objectivity of the whole situation, do you not? >> you need to try to have that. i rye to have that. i hope that we do. i think one way we can get there is by listening closely and being 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 a lot of access to us. in our case where appropriate, where the law requires us to do, brief panels which we have found useful to us. all of those things, obviously, the processes are provided, i assume, to try to improve our rulemaking so we don't go off the rails and do something detrimental to the economy or to consumers. and i have no desire to do that. i want to carry out the task congress has given us to the best of our ability. i want you all to feel when you look and see what we've done that you can be proud of what we've done, and it reasonably reflects what your intentions were, and if it doesn't, i know i'm going to hear from you. >> thank you. thank you, mr. chairman. >> senator brown. >> mr. cordray, it's nice to see you again. welcome back in front of our committee.

your at least twice-a-year visits. we've talked about many of these things that never in our history has someone been with in many ways held hostage a qualified nominee of the president because a significant number of members 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 time in history. the nurse time in history -- the first time in history a year or so ago, senator mcconnell said if he had his way, we wouldn't have this agency at all. i want to talk about accountability, because they lay this all at the feet of accountability. understanding that there is an fsoc veto over what you do, understanding unlike most people that, in the agencies that you come, you issue a report and come to this congress at least twice a year versus if you went through the normal

administrative procedures, procedure act. make that contrast for me. your accountability as this agen is set up, as the cfpb is set up versus that kind of accountability that other similar agencies might have. >> so, senate, i think we're all accountable in very fundamental respects. i think we're all accountable to the congress which can, of course, always change the law and has proviewedded the law that we are -- provided the law that we are required to implement faithfully. we're all summit to court oversight -- subject to court oversight. if we adopt rules, 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. i mean, 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 agencies in that our 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 agencies and departments the gao audit is of the federal government as a whole, not specific to their 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 each as we're building up and trying to build the agency as well as perform our duties. we are subject unlike the other banking agencies to a hard budget cap and then told that if we need additional money, we can come to congress for an appropriation, so we're sort of quasiappropriated as it is. we're required to produce a

semiannual report and to testify, therefore, twice a year in front of the senate banking committee as an oversight and also the house financial services committee. as an oversight. on that report. and i, i want the senators not to underestimate yourselves. this is meaningful oversight. when i sit here and have to answer your questions, it's not just fun and games for me. this is, i take it very seriously. i'm accountable to 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 a meaningful issue for me. so 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, i don't mind having strong oversight. it helps me make sure that i can sleep at night, that we're, for the most part i hope, doing the right things. >> thanks. i don't think too many others thought this was fun and games

for you to come in the front of these committees. [laughter] not the first term of phrase that came to mind. i w folwup lt minute or so on senator john zune's concerns about -- johnson's concerns about this private student loan market. we've done -- the recent report by the student loan ombudsman has been important. my subcommittee, as you know, held a hearing examining this issue last year. how will your new supervision of large private student loan servicers address some of the concerns described in these reports and these hearings? >> i think, first of all, it's a meaningful change, senator, to have an agency that goes in and examines very specifically for compliance with the law in an area. it means the institution has to be on their toes, and it means we have direct access to the information we need to assess whether the laws are being followed. and that already changes attention and heightens consciousness and, i believe, changes behavior in these institutions, the examination

function itself. on the private student loans, we also now be, as i said, we put in place the mechanism to be able to now examine the student loan servicers, the ones who are actually dealing with the outstanding student loans and either getting the right information to people or not, either processing these loans properly or not, and we do hear a lot of complaints about that, so we'll be aggressive about that, about going in and making sure that things are being handled correctly or if they're not, that they're put right. but it's a -- the whole student loan problem is the problem should be a deep concern to this body. these are young people that we should care a great deal about. their the ones with ambition and aspiration and dreams, and they're getting saddled with debt that they don't understand often, and they tell us that later, that they wish they'd known the difference between a private student loan and a federal student loan. and it's holding them back, and it's making them unable to rise

and succeed and become leaders in our society, and it's a senate problem. and we're going -- significant problem. and we're going to be doing everything we can to address it at the bureau. >> senator warren. >> thank you, mr. chairman. thank you, ranking member. i just want to say this is my first full day back in the united states senate since the attacks on boston and that many here, many of my colleagues, the staff, members of the press, members of the public have held boston in your prayers for the week. and on behalf of myself, on behalf of the people of the city of boston, i want to say thank you very much, you know, it's been a hard week, but the people of boston are fighter, and we're strong, and we will get through this. thank you all. director cordray, for more than a year now the minority in the senate has been trying to block your nomination, trying to reopen a debate that was

resolved three years ago. for three years they tried to kill that agency, and they lost that vote three years ago. then they fought to weaken the agency. they lost that fight because they didn't have the votes, and today they know they still don't have the votes to undercut the agency. so they are determined to hold your nomination hostage. it seems pretty clear what's going on here. this isn't about your qualifications or your performance, your work has been praised by both consumer groups and by industry groups. this is about a minority that doesn't want a watchdog that will keep an eye on the big banks to make sure they don't cheat their customers. now, why would big banks and their friends not like the consumer agency? you know, i take a look at a few of the things you've done in just the last couple of years. you've recovered nearly half a billion dollars for consumers who were tricked by big credit

card companies, you created a complaint system that has handled 91,000 complaints last year alone, you built a tool to help students and their families compare the costs of college, what you were just talking about, so they have better information when they're making a big financial commitment, you've put together a tough-as-nails office to look out for service members and military families and help protect them from financial predators including helping service members whose homes were illegally foreclosed upon, and you issued new mortgage rules that have been widely praised as balanced and fair and that are clamping down on the kinds of sleazy practices that cost millions of families their homes. now, that's an extraordinary set of accomplishments for an agency that's only been around for a few years. and i think it explains why this

agency so important. i commend you in your work. um, i think that enforce bement of the law -- enforcement of the law, particularly the laws to protect consumers to make sure that big banks follow the rules, i think that's really important. and, director cordray, you've already proven that the consumer agency is independent and effective, that you can be father and be tough -- be fair and be tough. but before your current position you were the head of enforcement at the consumer financial protection bureau, and before that the attorney general for the state of ohio. so you know more than just about anyone else about strong enforcement of the laws. so in your experience as head of enforcement at cfpb and as attorney general for ohio, in order to enforce the law effectively how important is it that you have adequate

resources, adequate funding and adequate information? >> i would say all of those things are essential. i think if you, if you don't have the information, you don't know what to do. if you have the information but you don't have the resources, you know what to do, but you can't do it. and i think you also have to have the will to understand and be motivated by the desired result which is people need to understand that they have to obey the law. and 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're above the law, and nobody is so undistinguished that the law doesn't apply to them equally with even else. and that's a bedrock of our society. it's been a strength of the american society for and american system for more than 200 years. and we have to make sure that we maintain it.

and that's part of my responsibility at this bureau, and it's part of the congress' responsibility as well. you pass the laws, we're supposed to enforce the laws within our jurisdiction. i take it very seriously. to me, it's a calling. i actually work closely with criminal law enforcement; police, sheriffs, prosecutors as attorney general of ohio. and it's a very important responsibility to keep faith with the american people that we not only have a democratic system, but we have a rule of law, and it's maintained. >> thank you very much, director cordray. i appreciate the work that you're doing and that you're out there to make sure that these large financial institutions don't just treat a fine as a cost of doing business, but that they actually change their behavior and that consumers are entering a level playing field, and they have a real chance in these markets. i appreciate that. did you want to add something

more? we're out of time, but -- >> i would just say when you're dealing with a particular situation whether there's been a violation of law, there's sort of four pieces as i see it from the standpoint of this bureau. actually, there's five. there's making sure that what's being done is not done in the future, stopping it whether it's injunctive relief or banning someone from the marketplace for a period of time, both of which we have done. it means restitution to consumers so that they're as much as possible made whole for the harm that was done them that should not have occurred because it only curred because of a violation of the law. there are penalties that can be imposed when restitution isn't enough to sort of teach the lesson and see to it that people are deterred from doing this in the future, that they don't just feel like i get caught this time, but when i get away with it, it doesn't cost me anything. and i think, finally, there are cases where criminal referrals would be appropriate. and we want to be careful about that, but there are going to be cases of that sort. >> good.

thank you very much, director cordray. i'm glad you're out there fighting on behalf of consumers, and there will be those of you who will be fighting on your behalf and on behalf of this little agency. >> i appreciate that. >> we'll go briefly to a second round of questions. director cordray, i understand that the cfpb is conducting exams of larger institutions in coordination with other federal or state regulators. what steps does the cfpb take to insure that the exams' information request are well coordinated with other regulators and not duplicative? >> thank you, mr. chairman. this is an area where i think the bureau has done very well, and i'll just say that. and i think it's in part because as the bureau got underway, there was a point made to bring some people in who came from a state, government background.

i myself came from a state government background, but here i'm thinking not of someone like myself from the attorney general's office although that's important and relevant, but people who with came from a state background, banking financial services background. so we have had terrific relationships with the csbs, the conference of state banking superintendents, we have collaborated closely with them. there have been matters where we've worked directly with them. there has been a process of coordination and information sharing with them. at last count i believe we have agreements with 61 different banking and service agencies within 49 states. some states have multiple agencies, and i think that that relationship is good. we lean on them in some respects. they can now lean on us in some respects. we bring joint resources to the problems and i've been really pleased with their attitude

toward working with us and us with them. >> with regard to community banks and credit unions that are not subject to the cfpb's examination authority, what measures have you taken to insure that your rules are clearly interpreted by the prudential regulators during their exams? does the cfpb plan to continue releasing small entity compliance guides as has been done twice already? may we expect to see more guides on the rules? >> with so thank you, mr. chairman. i've got about three different answers to that question. i'll try to go fast. this is something we take very seriously, and we know it's important, and we've been told this over and over by both smaller institutions and the trade organizations that represent them like icba and cuna. that means taking our rules --

senator crapo initially are mentioned 25,000 pages, 2500 pages of rules issued in january. that's 2500 pages of text. a lot of that is preamble, a lot is cost benefit analysis. i think when you actually translate it into the federal register, it was less than 100 pages of rules, and these were seven major mortgage rules congress asked us to do. we have been translating those into plain grand jury and compliance guides; what you need to know, what you need to do. that's becoming a standard for us on every rule we publish, and we're doing web and video things. some people like to get the information that way and a variety of things. in terms of making sure that our regulations, we work with a body

called ffiec where we are taking the lead on writing a first draft of what the examination work would look like around these rules and hen collaborating with the other -- and then collaborating with the other agencies to get that in place and to publish it so it's transparent to institutions. i think it's only fair to them, and they have a right to expect that and demand it. we're actually, i was surprised to hear the other day, we're well on track that we're going to have i think the examination modules or whatever you would call them ready by i think june of this year even though the rules don't take effect until next january. that's light warp speed for an interagency group like that, and it will help us make sure that we're on the same page, and as we publish them if institutions have reactions or think we're not getting something quite right, they'll have a chance to enter in on that.

finally, since we don't actually examine the smaller credit unions and community banks, i created a council so we do hear directly from them and fill in what otherwise is a gap in not having that data day, hands-on with them. thag been very insightful for our work. >> senator crapo. >> thank you very much, mr. chairman. mr. cordray, i'm going to go right back to the issues we were talking about before. i want to phrase with a statement first because i do understand your point about effective cost benefit analysis and achieving the right balance in regulation. and i do understand that we have a dynamic in the world in terms of the financial rate of collection of data -- phenomenal rate of collection of data about people going on in the private sector. >> [inaudible]

the way of the world. >> it is, and it's happening. that being said, i think there are serious questions that need to be answered as well as dealt with in terms of the way the federal government involves itself in this process, if at all. just a couple of observations. nobody in the private sector has the right or the power that the federal government has to force the release of information. my understanding is that you're not just purchasing the day we're talking about from -- data we're talking about from private collectors, but that in the examination process and in other aspects of the collection banks, other financial institutions are being required to provide data that they couldn't be required to provide by a private sector operator. so in other words, the power of the government is being put behind this data collection effort as i understand it.

just let me go on -- >> okay. >> hopefully get us to a much fuller explanation of how and where we are going here. in another context under graham-leech-bliley as i mentioned and if many of the interactions between financial institutions and their a customers there is an opt-out right which does not appear to exist in the functions that are currently being undertaken by the cfpb. and the bottom line here as i see it is that although i understand the need to collect data, i'm very concerned about the heavy hand and the power of the government being brought behind a phenomenally new, big data collection effort. in your response to my first, one of my first questions on this, you indicated that you weren't sure whether the cfpb or whether some other actor, some other contractor could go back into this data and reconstruct it in a way that was not

anonymized. i actually am very concerned about that, and now we have of a government agency that is potentially capable, i think, of getting that kind of information that is currently anonymized, but we just have to take the word of the agency like consumers today have to take the word of private sector people that they are buying their cell phones from or working with on the internet or what have you that they're not collecting this information in an individual, specific fashion. and, frankly, people don't have a high level of confidence that's not happening, and i don't have a high level of confidence that it's not possible for the agency to get access to this information on a specific basis. so for all of these reasons about the data collection that's being undertaken, i simply can ask you this question and then make the this suggestion: have, has the cfpb done an internal legal analysis about this whole data collection process, and what i'm getting at here is that

dodd-frank clearly prohibits the cfpb from collecting personally identifiable information. and if all of the pieces of information that the cfpb is collecting right now could be utilized to engage in personal identification, then perhaps that could violate the law. but more specifically, it would be helpful to know what steps, what potential is there. i'm actually relying right now on this question on a bloomberg article. that that's the extent to which i know, we know as the public about what's happening. so i think it would be very helpful for us to know exactly how this data's being collected, not just who's being contracted to collect it or whether it's being collected in examination process, but how it might be used. and then i think the ultimate conclusion should be reached, and that is whether its collection is in violation of the dodd-frank prohibition.

if you'd like to comment please. >> many i would, senator, thank you. ranking member crapo, a long question, and i'll try to give you only a medium-long answer, but there's a number of pieces this that question. 23r5u8, i don't think -- first of all, i don't think it is correct, it's not correct under the law that the bureau cannot collect personally identifiable information. when somebody submits a complaint to us, they put their name and address. the issue under the law is we're not supposed to disclose personally identifiable information, and we've been very careful not to do that and not to violate people's privacy in that regard. but i want to go back to what you said and i think, frankly, a lot of what you just laid out is a very fair line of inquiry, and it's something that i think i share your concern, and if i were not, if i were looking from the outside government, i'd have a concern as well. in terms of forced collection of data, that's -- for the most part -- not what the bureau's doing. as i mentioned, the credit card

data we get from argas, we buy that. many people pie that. that's not a special thing, no new ground the bureau ising on that -- plowing on that. we're buying it from the same source that the banks have been buying for years and using on their reports on credit reporting in the economy. there are times where as we examine institutions we have to begin by getting a baseline of data from the institution in order to then calibrate what exactly is going on there, are they complying with the law, what are they doing? i think there may be times, there clearly have been times where we think we need a certain amount of information to do our job. the institution may feel like we're asking for more information than we need to do our job. i think those are reasonable differences of viewpoint that have to get worked out as we work together, and i think for the most part they do. but i would say this, i think

that you have fair issues you're raising. i would want to have the chance to have our staff get you a very specific answer to your question about whether the anonymized data could be somehow reverse engineered in a way that effects somebody's individual privacy. i do think that's not an issue. if it were, it would have been an issue with other agencies gathering that information and using it can they've been doing for years. it's new to the bureau but not new to the process. but i'd also like to have a chance to -- i'll have our staff spend time with your staff to dig into some of these issues to try and understand in more detail what your concerns are. happy to do that with your colleagues as well or their staffs. i want the dispel any concern on the front. i think what we're doing as an agency is we're trying to gather the kind of information we need to do our job the way you would expect us to do it, to be able to do careful cost benefit

analysis which we can't do without sufficient information, to do the kind of reports for congress that you expect from us that will be credible and give you a basis going forward making policy making judgments about things like the card act which we're going to give you a report later this year on how that has been implemented and some of the issues with that both factual and perhaps normative. and you've required us to do that. can't do it without data and information. so, again, that's all we're trying to do is to do our job. if there are concerns about some of the details about how that information is handled, our inspector general looks at these things. the gao audits look at our operations. you all are free to look at them. we want to be an open book, and if there are concerns, then we want to try to address them. >> well, thank you. my time is, obviously, up. and so i can't continue with this here, but i would like to continue this with you, and i'd like to ask you to take seriously the request that i make that there be an internal

legal analysis that is shared with us about all the details of how in the project is operating -- how this project is operating or this operation is being undertaken and how it fits with the requirements of dodd-frank. >> you tell us what you want, sir, and we'll get it to you. >> thank you. >> yep. >> senator -- [inaudible] >> thank you, mr. chairman. and, director cordray, as i said at the beginning of the hearing, it's always a pleasure to see you, and i feel like we see you quite a bit. thank you for the job you're doing. i want to associate myself with chairman johnson's question about the rural definition. and i've also heard questions and concerns about this definition. i was surprised to see in north carolina several counties labeled nonrural, especially in the northeastern part of our state which is quite rural. and they are camden county and -- [inaudible] county. and i appreciate the cfpb

talking, looking at this and taking a hard line, a hard look at this issue of nonrural designation. but i want to talk to you about financial literacy. i've always been a huge supporter of teaching financial literacy to our students in the grades 6-12 or even earlier. and as we've discussed in the past, i introduced legislation in the state government in north carolina. it certainly hasn't been as strong as i would prefer, and i think 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 am now chairing a subcommittee for families and children, and we'll actually 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 and the office of financial education? and talk about it and then what improvement you see taking place. >> thank you for the question, senator. this has also been a personal passion of mine, and i think it's hard to come face to face with these issues and see how they effect individuals and households and not be passionate about in the subject. when i was a local official in ohio and then a state official, as a local official i had to deal with folks who were delinquent on their real estate taxes, and, you know, there's a perception among the public that people who don't pay on time are deadbeats, and some of them are, and some of them just don't want to take the responsibility seriously. but for the most part that's not the case. people are victims of bad luck or poor decisions or poor

choices. but often just bad fortune. every day people die in families across the united states. you always hope it's not your family, but it's somebody's family. or somebody getted injured where they can't d gets injured where they can't work, or the marriage falls apart, and there's a divorce, and now there's two households where there used to be one and maybe arguing over the assets. all these things disrupt people's lives. what i saw was in all those instances issues were made worse by the fact that people didn't really understand, and they knew they didn't understand a lot of the financial decisions they were making. and they keenly felt the self-consciousness of not knowing what they were necessarily doing or recognizing a year later that they made a bad choice about that mortgage or about, about that student loan. and i think that one of the things we absolutely have to do as a bureau, it is fundamental for us, and i'm going to be much more aggressive in the coming year in using the bully pulpit and pushing on and collaborating

with officials around the country. we have to teach people and make available to them the tools so that they can learn more about how to handle their personal finances. i just -- you can't have a free market economy with individual decision making by millions and millions of americans in which they aren't capable of making sound decisions for themselves. and we don't want to have a society where people make decisions and several years later come to tell our storyline and talk about how they regret the decision they had made, and if they had known the difference between a private student loan and a federal loan, they wouldn't have made the decision they did. but now they're stuck with us. it's a tragedy that we would not consciously teach young people how to handle themselves. they may not listen, they may not do it, but the tact that -- the fact that, as you say, we don't even teach it, it's a scandal. in ohio i worked for the same

thing. we have a requirement of personal finance education before you graduate. that was a struggle. the next struggle is how much is it. i'm told just yesterd we had visitors in on the subject, a woman from the university of cincinnati that in many districts that's going to be just a six week thing folded in to some orr class which is something. it's better than nothing. and six weeks is certainly better than zero. but we have to take this seriously. we mandate teaching of history, we mandate teaching of government so people can be good citizens. we also have to mandate a basic understanding of finance and a recognition there are going to be certain decisions you'll come across in your life that will be life changing. what you do about that mortgage, what you do about trying to pay for education and getting those right is really not a casual matter, and it's something we plan to be a trusted source for the resources for people to try to grapple with those decisions as we're doing right now with our paying for college module. i'm sorry, i could talk for 20

minutes about this and would if you didn't stop me. i think it's not a partisan issue. you know, this was home economics in the old days, and it's just basics of being able to operate on your own, and we all know as i always like to put it brothers and sisters, sons and daughters, you know, cousins, nephews, nieces that, you know, are not as well equipped as they should be. and we have a responsibility for that. >> well, i think you should take the bully pulpit and really use it, because i can see your passion. i have it, too, because i've seen so many people that have gotten into so much trouble pause they simply went -- because they simply weren't educated. and they're very, very smart people, but they didn't understand the dynamics. and primarily they don't understand debt. debt can be very good to increase your net worth but not to build up with many material items that at the end of the day are not of value. >> it's complicated for people,

let's face it. it used to say when i was the state treasurer of ohio and i was responsible for billions of dollars of public funds and i hoped i was doing a good job at making decisions about keeping them safe, this is in the throes of crisis of 2007-'8, frankly, there's many things i wish i knew more about. am i saving the right amount of savings toward retirement? is do i have the right balance of insurance on my car or home or life? am i getting that right? you know, do we understand enough about our credit reports? you know, there are just a lot of things that are complicated for people. and for us at the bureau it's about reducing the complexity. that's a big part of what we're trying to do. know before you owe and the kind of transparency of these decisions. and then building more capability among people and giving them the ability to have tools and, of course, people will make their own decisions for themselves. not going to be some nanny state decide what you do with your mortgage. you're the one that's going to have to live with us it.

>> i believe my time is up. thank you. >> senator more rap. >> mr. chairman, thank you very much. mr. cordray, thank you for being here. about a month ago the cfpb released a statement stating that u.s. lenders could face litigation if they fund loans made by auto dealers that are later found to be discriminatory. a huge component of our economy. i think the number's about $90 billion. i'd be interested in knowing, i don't have an opinion at this point about whether the finding is right or not, but tell me about the analysis that was done to arrive at that conclusion. do you have the methodology of this decision available? and if so, what would you be able to share with that process either today or later with me in my office? >> thank you, senator, for the question. so the issue of indirect auto lending is one that at this point we address in a very

general way with a legal analysis that leads to a legal conclusion. it's not yet a factual conclusion about any particular instance, although there is a lot to be heard about this area as you go around the country and listen to people both lenders and borrowers both. the legal point we made which i think is straightforward is that if you're a lender and you set up a lending program and that program involves third parties making some decisions in the program but it's your program, you're the one lending the money, then you remain responsible under federal law for complying with the federal law. same in the mortgage field. if you set up a lending program as a, say a bank lender of mortgages and you set it up so that some of the loans are made directly by your employees and some are made indirectly by brokers or others, you remain responsible for your program, and you have to comply with the law.

i think it was a fairly straight toward point, but we were hearing from some folks who didn't think that was necessarily so. somehow if there's a third party involved that somehow becomes entirely their responsibility and not the render's responsibility -- lender's responsibility. i don't think that's right. we'd be happy to share legal analysis with your staff separately if you'd like. >> so at this point it was just the legal an us is the -- analysis -- >> it was a bulletin we put out. >> and you indicated earlier about a cost benefit analysis. that would come later in determining whether or not there are enforcement actions or regulations to be written? >> if we were to write regulations, and that's a possibility, there would be cost benefit analysis as required by 1022 of our statute to have to do. be we're undertaking -- if we're undertaking enforcement actions, it's a matter of investigating the facts, setting them against the law, something i know you're very familiar with. so that's what that process would be.

>> um, okay. that answers my question. thank you very much. >> thank you, sir. of. >> thank you, mr. chairman. >> senator warren. >> thank you, mr. chairman. director cordray, i understand that the consumer financial protection bureau is required by dodd-frank to complete a study of mandatory arbitration, is that right? >> it is, yes. >> when do you anticipate you're going to have of that finished? -- to have that finished? >> i don't know that i can give you a specific date, but it's one of the things that is, congress has specific specifically required of us, so when we set our priorities, it is tasks congress has given us tend to take priority over tasks we have given ourselves. i would say we are already in process, well in process in putting together that study. what congress said if our statute -- in our statute is to things. they said that we should, we were to, we were to do a study

of arbitration as it affects crr financial products -- consumer financial products and services, and there are arbitration clauses as i know you know in a number of different types of consumer lending contracts, and it's something that has spread in the last couple of decades certainly. and then if we're going to adopt policy, regulations or some provision about what to do about arbitrationing clauses of that sort affecting consumers, it should be based on the results of our study. so, you know, you could argue this is the same kind of thing congress says do a cost benefit analysis. here they were much more specific. today said do a full study. really look at this, really dig into it, try to understand how arbitration proceedings differ from court proceedings, what kind of rights they give to consumers, what kind of rights they may take away, what kind of results are gotten there, is that a fair system, is it reflective of the merits of the

issues, or are there systematic procedural biases that make it difficult for the consumers to get through, who pays for the arbitration, etc. , and that can vary. .. would be consideration of policy following immediately after. >> i appreciate you take this seriously, and i'm looking forward to studies as soon as you can possibly get it out. i want to ask you about one other thing. i know you set up a consumer complaint process and it has some quite innovative features. you've also made it quite

transparent process. i wonder if you could tell us just a little bit about what you set up at the consumer bureau, and what you found, what the response of banks has been, and how this information is being used? >> i actually think we are tracking a precedent that has existed now for about 40 years, which is the national highway traffic safety administration. they started publishing data on auto safety back in the early 70s. and it was resisted strenuously by the auto companies at the time. the sky was going to fall. people actually knew how safe or unsafe their vehicles were. fast forward almost 40 years later now, and that is standard. it is accepted. it has become the basis for consumers making decisions. it's been the basis for companies thinking and looking more carefully at their own

operations and doing recalls of products that are questioned. and it has been i think a success. i have seen discussion in the last year or two as we're focusing on our work here that the auto companies now not only accepted, they embrace it. they think it is made their products better. it is minimized litigation risk which is another what they can save companies money to pay attention to other customers are being treated. so i think it's the same thing in the financial services area. so we get complaints, we're taking them on a range of subjects now, an increasing range of issues, mortgages, credit cards, auto loans, student loans, bank accounts, now credit reports, soon remains, transfers made. sometimes not clear what happened last week in what's happening next week, and out of that data we are publishing it, and that means, we find available in our work.

it's informative to us so we think will be informative to companies. they can look at their competitors, who is doing better than i am, why are they doing better, how can i prove? that's the kind of dynamic we want to foster. and thirdly, for consumers to be able to have this information and look at it, potentially make decisions on the. maybe somebody will use the database since dark rating financial products as is done with cars on auto safety. as i think likely will be done over time with the consumer product safety commission as they put out information on which toys and other household products, cribs, toasters, you name it, are safe. this is the kind of information on the consumer and i'm a member of the public, and the members of the public really are the ones who should and do run our government, not us. i would want to have that information. i wouldn't want my officials to order. i would want them to share with me. if i can find some benefit in it, then i would expect them to share it with the.

>> i know i'm out of time but let me add, you talk about the effects on the market overall but for individual consumers to file complaints, those complaints are then forwarded to the financial institutions. has some people gotten moneyback? >> many. by no means, no -- not all. sometimes it's out, sometimes it's not. but there have been many situations. millions of dollars have been returned to consumers through our consumer response line. and notably and more important, this is something that companies want us to make a change and we did to stress this. they often give nonmonetary relief. you can't put a price tag on it but if you get something cleared up in your credit report where you don't have to keep calling for another three months to get the thing fixed on your bank account, that's really for people and very satisfying to them. so we've had many instances of both of those. we've had a lot of matters referred to as by members of

congress and members of this panel that we been able to resolve, and i think it's been very satisfactory. i know there are some we've not been able to resolve and i apologize for that, but we do our best just as i know you and your staff does their best to people and that's part of what our job is. >> thank you, mr. chairman. >> i will turn to senator crapo for a brief statement. >> thank you, mr. chairman. i just want to follow up, trained for this will be a question because we will get together with you afterwards. first of all, we didn't get into a number of the questions that raised an opening statement which we talked about so i was a bit those questions to you if you would respond to them. >> sure will. >> i think we may be disagreement or a different understanding at least as to what the dodd-frank statute requires. as i read it, and i'm reading the statute on this is the bureau may not use its authorities under this paragraph to obtai obtain records from cot purses and service providers

participating in consumer financial services markets for purposes of gathering or analyzing the personally identifiable financial information of consumers. so those are the exact words of the statute. by we, in other parts of the statute parts of the statute leading up to that it talks about voluntary information being provided by consumers and so i can refer to my opt out suggesting. i would like to get with you, and we will do that, and urge you to provide the kind of information as well as legal analysis about the departments process is here that can help us address some of these issues. >> we will survey do that. we would like to put your mind at ease on the. i do think would you read is absolutely. there are other ways in which the bureau gets tersely identifiable identity such as for example, when people file their consumer complaint. >> but that's a voluntary action by the consumer spill we are not really interested in personally

identifying information. for us it's just a hassle. it means we have to make sure that it is being properly handled, that it's not been disclosed, that we have to devote a lot of time and attention to guarding it carefully and making sure it is handled the way every other agency under federal law has to handle it. was insightful to us is the on the minds situation that tells us about consumer behavior, consumer harm, consumer benefits. that's the information we need. we don't really want to know about you personally. >> and i trust that is exactly what you're all about but i don't think just the assurance of the agency that they're not interested in it is really what we're trying to achieve. >> understood. we we happy to work through that to your satisfaction. >> mr. cordray, i thank you for your testimony today and for your leadership on this important agency at this hearing is adjourned. [inaudible conversations]

>> coming up and about five minutes we will go live to u.s. capitol for a briefing on immigration legislation with the chair of the house judiciary committee, republican bob goodlatte, and also immigration border security subcommittee chair. the center for the past week has been debating a proposal unveiled by a bipartisan group of senators known as the gang of eight. that plan includes the pathway to citizenship for 11 million unauthorized immigrants and it tightens security along the nation's southwest border. that is coming up in about five minutes. we will have a life or you hear on c-span2. the u.s. senate gavels in at 9:30 a.m. they will begin with an hour of

morning business. senators will recess at 10:30 for an all senate briefing. when they return there will be more work on a bill allowing states to require out as the retailers to collect sales tax on items sold to the residents. harry reid is hoping to finish work on the bill before the senate starts a weeklong recess next week. a vote to end debates could happen tomorrow and less senators can agree to vote sooner. live coverage when they gaveled in at 30 a.m. eastern on c-span2. >> the dedication ceremony for the george bush presidential library and museum on the campus of southern methodist university happens this market president obama and the first lady will be there. president obama will join for former u.s. presidents, jimmy carter, george h.w. bush, bill clinton and george bush for the similar. all will be seated on state and will make remarks. we will have live coverage of that beginning at 11 a.m. eastern on our companion network c-span3. recently we talked to the former

president about the library. >> what's your job? >> oversee all the operations of the library and museum so it's been a fantastic job the last four years helping design the building, helping design the museum, hiring a wonderful staff, all the archives and artifacts. another we're getting ready to open, overseeing operations of the museum, research and offer education programs. a lot of responsibilities with that job. >> later this month you will take this over from a. explain what that means. >> up to this point i've been working with our private bush foundation as a work to design the building, constructed because of stupid. we've moved all the archives and artifacts. our staff numbers are in there now but on april 25 on dedication day this building is official given over to the national archives. >> when historians come here, what will they take the way, what will they learn, what is a

double to them? how does it all come together? >> it's a very rich archives. we have 70 million pages just a paper record from the bush white house. add on top of that we have about 80 terabytes of electronic information including over 200 million e-mails which totals about a million pages if you were to print them out which we'd never will. we have run 42000 artifacts and a vast range of audio and visual interest as well. overcome those materials are processed and made it able to researchers. >> how do you sort through all that? >> you have a great processing plenty to think what should we process first, where should priorities be, what can we open? early on, that type of thing. working with our staff, working with our colleagues in washington, working with the president and his office the kind of setting those priorities and starting to nibble away at this vast amount of information we have. >> you are no stranger to this. you have done a couple other presidential libraries. what you take away, how do you

apply that to the bush library? >> when i start at the reagan library many years ago i did know what presidential library for. i learned quickly to love the libraries. i've really wanted to try -- i was at the central office of the president's library for a while and our job was to oversee and advocate for the libraries around the country. it taught me what worked and sometimes what did the work within the presidential library system. so i tried to apply those lessons in terms of how we deal with the archives come what kind of programming we do, how we think about museum operations, all those types of things. particularly and we think about partnerships as well. those are very important to us. >> so what works, what doesn't work? >> the biggest thing that works is getting a great staff. secondly, establishing those partnerships to making sure your partnership with your foundation is excellent, that you find good community partners to work with. here we have southern methodist university, fantastic partner. those are things that really work and i want to apply here

and make the bush library the best there is. >> can students come to? is this open to the general public? >> it will be open to the public on may 1. we will open the museum on that day. we will open the research room. some numbers of record will be open on may 1. january 2014 all the records can be requested through the freedom of information act but we want to open someone materials early so when we open this building will also open the research room and have some pictures open at that point. >> as the president has poured out his the first true internet president, using e-mail and assets -- after the website. how does that change the dynamics of research and archive and collect all the material? >> it's a major change. thankfully the national archives thought about the archives thought about thi the sacred whs called an electronics records archive. all the information from the bush white house was ingested in a system at the end of his in

administration. it's our job to go through it to process it. it's a vast amount of information. 80 terabytes. so the quantity of our e-mails alone equals more than every other presidential library collection combined across the country. you have a real challenge in terms of quantity for processing. i never meant to complaint about it. it's a great resource for students and scholars going down the road to understand the issues, the events of the bush administration. these electronic records will be a tremendous resource for everyone. >> are we still learning things about past presidents like roosevelt and reagan that were not made of able to the public which gives you a sense of what this bush library winning 20, 30, 40 years down the road? >> the unfolding of that record adds to the understand how the administration, a president come a time in history. i'm a believer in archives of the raw materials history. as you study more you give our interpretations of it and more things open then you see all the levels of an event or an issue or development. so i'm a real bele