>> that's part of why we feel so strongly about having the information on which to pace this. but -- base this. but we'll continue to do that work, we'll continue to be, i think, appropriately aggressive. not unreasonable, but where people are violating the law, it's our job to make sure they're held accountable. >> you've received 122,000 complaints between july 1st of 2012 and june 30th of 2013, over half of which there about relate to mortgages. 3,800 of these complaints dealt

with our service people. i'm sure that these complaints would have gone someplace if the cfpb did not exist. i'm sure they would have gone someplace. >> maybe to you. >> probably. >> and your colleagues. >> but i'm not sure they would have received the kind of attention that they've received by virtue of the cfpb being there. and i am curious about the types of complaints, and i want to give you a chance to just talk about some of them, because we will always hear about things that don't go well. we don't hear enough about the things that you do that benefit the consumer. so this is an opportunity for you to just take a moment and tell us about some of these complaints that have been successful, where you've helped people, if you would. >> sure. and, congressman, i know you understand, the stories we hear from people are very similar. in fact, in many cases they're probably telling people in your

offices and your staff get all the time, struggling be their more badge, they didn't -- mortgage, they can't get people to answer the phone. those are some of the things we hear, and we help cut through that. we hear people who feel like they had an improper charge on their credit report. they can't get the credit reporting agency to take it off and get taken care of, that blights their credit. and we get those things fixed and get them removed. people harassed by debt collectors. debt collectors have every right to collect their money that people owe, but there are laws that say you can't call after 9 p.m., you can't harass people at their workplace, and they ask you not to, you're not supposed to do that. it's cheating and giveing you an unfair advantage over some other debt collector who abides by the law. those are the kinds of things we're addressing and dealing with every day. and, again, a number of these are being referred by your

offices, people on both sides of the aisle here, and we're happy to address these issues for all consumers, all constituents, you know, wherever the complaint comes from. and we regard it as part of our job. the other thing is we learn from it. as we get hundreds of complaints about a particular issue, then we know it's a real big problem, and we ought to address it more systematically. maybe we should write a rule about it, maybe we should wring an enforcement -- bring an enforcement action. >> thank you, mr. chairman. >> time has expired. chair now recognizes the gentleman from missouri for five minutes. >> thank you, mr. chairman. mr. cordray, let me change speeds here a little bit and talk to you about a different issue here. i sponsored an annual privacy notice bill, and you were kind enough -- i wrote you a letter with regards to that in october of this past year. you sent a letter to me and agreed that it was something that we needed to do. you supported it, and i thank you for that. it was a timely letter. and we may need your help in trying to get it pushed through

the senate. they seem to be dropping the ball on the issue over there. but in your letter you also made comment that you may need -- may be able to do this by some rulemaking authority you may have. could you elaborate on that for a moment? >> yes. and thank you for asking about that. i will say sometimes processes move kind of slowly because of different provisions in our law in terms of how we proceed. i do know internally we have been working on that issue, and i believe that there's a presentation going to be made to me fairly soon on it. i'm hopeful we can move forward and that, and one of the things i'll find from the presentation is do we think we can comprehensively address the issues you're trying to raise through your lugs. if so -- legislation, if so, you may not need the legislation. on the other hand, if you move the legislation and that resolves it, that's fine too. i don't care how we proceed, but i do think there are issues there, you've identified some of them and we're identifying others that need to be addressed and fixed, and there can be a reasonable balance struck here

that doesn't burden institutions unnecessarily in ways that don't necessarily benefit consumers. >> very good. i appreciate that. and i have finish -- with unanimous consent, i'd like to enter the letter into the record, mr. chairman. >> without objection. >> thank you. with regards to another subject, director, you know, we've -- online lending is something that's very concerning to me. a lot of it's offshore, and we need to be regulating it to make sure that it's, our consumers aren't being, you know, taken advantage of. by the same token, there's a lot of discussion right now within the fdic and doj about online lending and those sorts of things, and we've actually found people within those agencies who, because of personal bias, have tried to, basically, shut down those industries. and they have admitted such to us, and we have them on record to that effect and have had lengthy discussions with the fdic and doj. and both of them have as a

result of those discussions and the investigations of the oversight committee, or i should say potential investigations, have given us a letter to not only us, but the industries saying that they are going to allow these industries to continue. they believe that they're worthwhile. any abuse that's been, that has taken place will stop. these are legitimate industries as long as they behave within the confines of the law. they will be allowed to continue to do so. and i would like your opinion on that, and if we could perhaps get you to also do a letter similar to that, as what they've done, to say as long as these lenders are behaving within the law, that they have every legitimate reason to be in business and providing credit to a lot of folks who can't get it. i know we had a lengthy discussion a minute ago with mr. meeks who brought this issue up as well and indicated this is a very necessary area of lending. whether you like it or not,

there's a lot of folks this is the only way they can get lending. and i think as long as they're regulated properly, it doesn't need to be out here with things like operation choke point, trying to choke it off. so could you respond? >> so i will say that much economic activity is gravitating online. that's the way of the world, it seems to be, in our society. a lot of commerce is going online. my wife orders a lot of things now online, and i do, that before we would have gone somewhere to get. it's natural that lending would gravitate there as well. there are issues, though, important law enforcement issues there, and i struggled with them when i was attorney general of ohio, and i hear from my colleagues, former colleagues that they struggle with them now. because, you know, online, the internet, you know, activity doesn't, isn't a respecter of jurisdiction, or there's nothing necessarily physical or tangible about it, can be originating in a different state but not complying with state laws here, can be originating in another country and not complying with

american laws. and i think law enforcement officials are grappling with the strategy of how to deal with that because online lenders that are legitimate and valid deserve protection against online lenders that are not complying with the same requirements they comply with. it's definitely a difficult subject and one that we've been trying to hash out and understand with state attorneys general and others. we'll continue to do that. you know, i definitely agree that there's a lot of online lending that is perfectly proper and valid and may even cut some costs over physical, in-person lending. there's also risks there, and there is a risk of being able to evade law enforcement -- >> okay. my question is would you be willing to put that in writing? >> i'd be happy -- you mentioned a letter. i'd be happy to take a look at it. >> okay. with that, i did offer for the record a copy of the letter from doj indicating their concerns and their willingness to allow these businesses to be lawfully

there. >> without objection. the time of the gentleman has expired. the chair now recognizes one of the committee's reputed most rabid seattle seahawks' fan, mr. perlmutter, from -- [laughter] >> thank the chairman, and i want to thank the gentleman from missouri -- >> a point of order, mr. president. mr. chairman. >> for the choice -- >> mr. chairman? >> for the commission of the color of his tie in support of the denver broncos. with that, i will stop breaching the decorum of this committee, and just i want everybody to know i'm united in orange against the seattle seahawks. >> we see the gentleman's cap, now he may remove it. >> mr. cordray, thank you for your testimony today, and thank you again for your fairly even-keeled testimony. i did appreciate your response to mr. pierce, because, you know, there is a lot of data out

there. and in your position whether it's gathering mortgage data or anything else, there's just a lot of data out there. we don't want it abused. you know, we've seen politicians in the past abuse it, and, you know, top of the list would be richard nixon. so i do understand your response. i understand his fear that it can be abused because it has been in the past. but there is a lot of megadata out there. and mr. royce wrought up the target corporation -- brought up the target corporation. and by wife and i are target shoppers. and she has a saying if target doesn't have it, she doesn't need it. [laughter] so, but i also use my target card, or i used my debit card in target in that period where their data was breached. so i'm one of 100 million people, apparently, or 100 million cardholders who was affected by this. , and and when i went to wells fargo and i said that i'd used

my card, they immediately took my card and switched it out for a new card can. what is cfpb's role in something like this whether there's been a major data breach that affects millions of consumers? >> we've been looking at that since this occurrence. of course, this is not, as you know, not the first occurrence of this kind, it's june one of the large -- it's just one of the largest and most stunning ones and most recent one. we have issued, in the past few days we issued a bulletin to consumers if you're one of the people that is or feels you may have victimized or affected by this, here are some steps you can take to protect yourself, the kinds of information you need to respond to the situation. there are broader issues here for the credit card industry and for retailers in terms of how they manage information. frankly, a lot of the same concerns people have raised appropriately, i think, with me about our agency today. everybody who has information is going to need to jealously

safeguard it in order to protect consumers, and there's real consumer harm that happens whether somebody steals your identity or not. even switching out your card, as you did, involves inconvenience and time and effort. you may have to change accounts and account information may cause you to miss a payment on something here or there. you know, those can cause real harm to people as well. so i think that the guidance we provided to consumers is meant to be very helpful. it's drawing, again, on some of that expert, newt central information and advice i indicated is available to your constituents, everyone here and everybody in the congress not here on our web site at consumerfinance.gov, and we urge you to take advantage of it. it's intended to help people. >> thank you. and, mr. chairman, if i could, i'd like to introduce for the record a letter that we sent to you on january 10th, a number of democrats, concerning some kind of a hearing on this breach of data. >> without objection. >> mr. cordray, i'd like to also

ask you a little bit about the qm situation. you've had a number of questions already, but what are -- because you and i have had this conversation on qm. >> yep. >> the 43% debt to income ratio. were there other ways that a lender, if it didn't fit into that 43% -- >> yep. >> -- box, were there other ways that a loan might be considered eligible under your rules? >> yes. >> what are they? >> okay. so there are actually three main boxes, and sometimes it does get misstated, and people either intentionally or unintentionally don't quite get -- any loan that has a debt to income ratio of 43% or less, which is a pretty generous number by historic standards. we used to advise people don't spend more than a third of your income on housing, and then maybe 36% was the number people used. 43 is higher than that. it's meant to be broad to provide broad area for mortgage

lending. that's one box. a second box, and this is very notable, any mortgage loan that would qualify to be purchased by any of the gses, fannie mae or freddie mac, if it qualifies as an fha loan, if it qualifies under va or jimny may, all of those are qualified mortgages. that significantly extends and covers a lot of loans that are above a 43% debt to income ratio. that's second. as long as they're in conservatorship, that's a temporary measure. allows some room, this congress may act on housing finance reform at some point. we weren't sure where that was going to go, we had to take account of that and draw that into our calculations. that's a second box, and it's very easy for a lender. you just plug it in, you get a yes or no. you don't have to sell it to fannie or freddie. third box is the small creditor provision that i mentioned before. covers thousands of community banks and credit unions. any mortgages they make if they

sell them in the secondary market to fannie or freddie covered by the second box, if they keep them in portfolio, covered by this third box. >> thank you, sir, for your testimony. i yield back. >> time of the gentleman has expired. chair now recognizes the gentleman from michigan. >> thank you, mr. chairman, i appreciate that. and, director cordray, appreciate you being here. obviously, you've heard a lot of concern, some of it a little more heated than others, but concern on both sides of the aisle, frankly, about everything from auto loans, security of the data that is being collected, qm has really sort of dominated this qualified mortgage definition. and i'd like to head a little in that direction. point out that there had been an american banker article that was entitled blacks and hispanics likely to be hurt by qualified mortgage rule reported on federal reserve. does not meet the requirements

of a debt -- [inaudible] i'm a former realtor myself. i've dealt with those. frankly, i come from an area that the median income and the median mortgage and household transaction is far below any of those major markets, like california, new york or other places that might be falling into a jumbo loan trap. but, frankly, whether it's jumbo or whether it's small loan borrowers, what we're anecdotally hearing, and it's only half funny, is that qm is quickly becoming quit mortgages. and i'm very concerned about that. for those people that are out there trying to lend, these assets, there's a real fear that there's too much of that constriction on there.

sort of the response, one of the things that was part of the original dodd-frank bill was the 3% cap on affiliated mortgages. i recognize cfpb has sought to limit the impact of the 3% cap by providing more generous, quote-unquote, points and fees allowance for loans under 100,000 but, frankly, it's not enough. that has brought me to introduce house bill 1077, also house bill 3211. my friend from new york, will meeks -- mr. meeks s co-sponsor of that. it's a bipartisan bill. we also have been working with senator vitter and senator manchin. there's a senate companion to that, 949 and 1577. based on a survey conducted by the real estate settlement providers council, the inclusion of title charges causes 60%, 60% of loans under $60,000 to fail

as qualified mortgages. these loans actually become high cost, as we were discussing early, these hopa loans because of points and fees exceed 5% of the loan amount. survey also found 45% of affiliated loans between 60 and $125,000 failed to qualify as qualified mortgages. in fact, 97% of the loans that failed as qms were under $200,000 simply due to the inclusion of title insurance on that. and if title is excluded, only 3%, 3% of those same loans would fail as qm. now, the statements by and large regulate most of, and as i have been working with people in the industry, i've had some conversations with colleagues across the, across the capitol, some who may or may not -- not to name names -- may or may not have been involved in creating your bureau. who constantly bring up title insurance. apparently, not understanding

that this is regulated by the states. you know? those amounts of what people are having to go in and pay for their title insurance. so introducing mortgage choice act is secretly for the major players like the quicken loans and flag stars of the bank which are doing these across the notion. both are headquartered across the nation but do business in virtually all 50 states to a small firm like myself, which was a small firm that put together its own title company. not because they were trying to be out gouging consumers, not because they were trying to charge more than what the other guy down the road was going to charge for their title insurance, but for the ease and convenience of the consumers. and i know that that is one of your stated goals of the bureau. but i'm curious if you could comment on that. and then you had mentioned earlier about waiting for data. how long are we going to have to wait for that day to to -- data

to address this as well that i believe is going to show that there's been a reduction in mortgages offered? >> yep. so, again, as you say, we attempted to alleviate some of the concern about the 3% points and fees cap which was a pretty blunt instrument in the statute by providing for graduated, higher levels on loans of under 100,000. now, as you -- taking the view, and it's not clear to me exactly what we will all think a year from now, whether that should be somewhat higher, whether it should be 150 or where that should be set, that's a question. i have had discussions with bill emerson from quicken about their model which they touted and is a very efficient one-stop shopping model, and that's affiliate models can be -- he also was very frank in acknowledging there have been some affiliate abuses over the years, and we've all seen them. congress drew a line on that, we thought, and we're trying to respect that line. i think -- >> i'm sorry, the time of the

gentleman has expired. >> mr. chairman, i know my time has expired, but i would, in writing, i would like to ask how long are we going to be able to wait. we think we have evidence now after 30 days. so do we need 30 days of evidence, 60 days of evidence? because the longer we wait, the more people are going to be impacted and hurt by that. >> i haven't seen any data yet, but within a few months -- >> now the time of the gentleman has really expired. chair now recognizes the gentleman from massachusetts, mr. lynch. >> thank you, mr. chairman. i want to thank the ranking member as well, and, director cordray, appreciate your willingness to come here and help the committee with its work. just at the outset, i'd just like to say that i think you present -- well, cfpb presents far less risk to american security than, say, target or some of these credit card companies that actually have the specific data on individual consumers as opposed to the ago

regated, anonymous data that is presented to the cfpb. now, i think we all understand because of the housing crisis the need to have qualified mortgage regulations and standards. that much being said, where the line is drawn, i guess, is open to interpretation, and i guess it's a bit subjective. i am, i do share some of the concerns with my colleagues across the aisle, especially with respect to community banks and making sure that the creditworthy population has that opportunity to get a mortgage. and there is the danger, i guess, if we use this bright line, 43%, that there may be people in some of our neighborhoods -- especially communities of color -- that might not meet that bright line

test, but nevertheless, because of their individual circumstances should get a mortgage. and i'm just wondering as the previous, my previous colleague just mentioned, is there, is there some ability going forward to look at the data to see if we're boxing out some meritorious segment of the population that should be getting mortgages but are getting shut out either because of demographics or, you know, urban versus suburban versus rural? is there some opportunity here going forward to sort of tweak this in a way that we make sure that folks aren't left out? >> thank you, congressman, and i agree with you, and there will be and is opportunity to consider further those provisions and the effect they're having. and i'll just point back to when

we finalized this rule a year ago, we did not have a provision for small creditors. we added that on. that was the first very significant tweak of the rule, and it was meant to address exactly what you say. there are people who won't qualify on some sort of boxed-up metric analysis, but community banks and credit unions will work with people in their community that they know and they have the personal relationship, understand their situation will make that loan. the whole point of the small creditor exemption was to give thousands of community banks and credit unions that ability to continue to do the same kind of lending they've done that works well, that makes good judgment about the person's ability to repay. and they have that latitude under the rule. whether we've drawn all the lines in exactly the right places or whether we could move them is something that we will continue to hear from people about and listen to people about, and over the course of the year we'll start to get a sense of how this is affecting the market. and if it's affecting the market in ways that you and i think are

not what we're trying to accomplish, then we will be open to thinking further about it. we've said that many a time, and i'm happy to say it again today. >> you can see all of this hearing with richard cordray in our overnight schedule here on c-span2. we're going live to the senate now, president obama will be giving his fifth state of the union address to a joint session of congress. and senators are gathering to walk as a body over to the house for the speech. here's what we're going to see, senators will line up in the chamber, then walk through statutory hall on the way to the house side of the capitol. president obama will begin his remarks at about 9 eastern, and then after the speech here on c-span2, we'll have reaction from members of congress and in statuary hall. we'll also have the president's remarks on c-span where we'll get viewer reaction. now live to the senate chamber where harry reid, the majority leader, is speaking. the following amendments be agreed to, hagan 2702, rubio

2704, king 2705, blunt 2698, and the amended text be considered as original text for the purpose of further amendment. the only other amendments in order be the following -- reed of rhode island, 2703; coburn, 2697; merkley, 2709; heller, 2700; whitehouse, 2706; toomey, 2707, which is a substitute; and gillibrand, 2708. that no second-degree amendments be in order to any of the amendments prior to votes in relation to the amendments, that it be in order for senator toomey to modify his amendment with the text of rubio 2704 and hagan 2702. that there be 30 minutes of debate equally divided on each amendment or motion to waive a budget point of order, if made, that there be up to an hour of general debate on the bill equally divided between the proponents and opponents, that amendments in this agreement must be offered prior to 3:00 p.m. on wednesday, january 29.

that's tomorrow. that it be in order for senator crapo or designee to raise a point of order against the bill, that if such a point of order is raised, senator menendez or designee be recognized to move to waive the point of order that. upon the use or yielding back of that time, the senate proceed to the vote on the -- proceed to the vote on the motion to waive, if made; that if the motion to waive is agreed to, the senate proceed to votes in relation to the amendments in the order listed. that upon disposition of the amendments, the bill be read a third time, the senate proceed to vote on passage of the bill, as amended. mr. reid: mr. president, crapo would offer a budget point of order. if he decides to, that's what it would be. the presiding officer: is there objection?

mr. mcconnell: mr. president? the presiding officer: the republican leader. mr. mcconnell: reserving the right to object and i will not be objecting. this is a good step in the direction of getting the senate back to a process under which amendments are allowed and voted on by both sides. i want to particularly thank senator isakson for his hard work on this. obviously i do not object. the presiding officer: without objection.

the presiding officer: the senate will be in order. the senate proceed to the hall of the house of representatives to receive a message from the president of the united states.

>> as you can see, senators are

beginning their walk from the senate chambers through century hall to the house side of the capitol where they'll join members of the house to hear president obama speak. a look outside the capitol, a bit of history. the shortest state of the union speech was only 1,089 words given by george washington in 1790. and william taft gave the longest state of the union in 1910, it was 27,651 words. as we head into statuary hall. knox thok. [inaudible conversations]

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[inaudible conversations] >> overlooking statuary hall as senators and pages make their way into the house chambers for president obama's fifth state of union speech. it's a tradition now for guests to sit with the first lady. this year the guests will include survivors of the boston marathon bombing, a fire chief from an oklahoma city affected by a tornado, and the first nba player to come out as openly gay.

[inaudible conversations] [inaudible conversations] >> from here in statuary hall, we're heading to the house floor now. watching senators join members of congress in the house chamber. they'll be taking seats by

party, as they do when each of the bodies meets separately. we see there vice president biden and house speaker john boehner. [inaudible conversations] [inaudible conversations]

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>> the joint session will come to order. the chair appoints as members of the committee on the part of the house to escort the president of the united states into the chamber. the gentleman from virginia, mr. cantor, the gentleman from california, mr. mccarthy, the gentleman from oregon, mr. walden, the gentleman from oklahoma, mr. lankford, the gentlewoman from kansas, ms. jenkins, the gentlewoman from north carolina, ms. fox, the gentlewoman from california, ms. pelosi, the gentleman from maryland, mr. hoyer, the gentleman from south carolina, mr. clyburn, the gentleman from california, mr. becerra, the gentleman from new york, mr. crowley, the gentleman from new york, mr. 's reel, and the -- israel, and the

gentlewoman from connecticut, ms. delahr row. >> the president appoints the following senators as members of the committee on the part of the senate to escort the president to have united states into the house chamber. the senator from nevada, mr. reid. the senator from illinois, mr. durbin. the senator from new york, mr. schumer. the senator from washington, ms. murray. the senator from colorado, mr. bennett. the senator from michigan, ms. stabenow. the senator from alaska, mr. begich. the senator from kentucky, mr. mcconnell. the senator from texas, mr. cornyn. the senator from south dakota, mr. thune. the senator from missouri, mr. blunt. and the senator from wyoming, mr. barrasso. >> the members of the escort committee are exit through the chamber doors through the lobby.

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[ inaudible conversation] >> the acting dean of the court. applause ]

>> mr. speaker, the chief justice and the >> mr. speaker, the chief justice and the justice of the supreme court. [ applause ]

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