now, the competitive enterprise institute calculates that the cost of business in america in one year to comply with just federal government

regulation is $1.9 trillion to 1.9 trillion. these businesses pass on the cost of these regulations in the price of there products. families are spending about 15,000 a year for businesses to comply with government regulation. i am sure that we can agree mr. chair, the businesses need to be fairly regulated. but when those regulations are killing jobs that is just not right. several years ago in aa highly partisan vote with very little republican support for 2300 page .-dot frank bill was passed and since then they're have been mountains and mountains of regulations and rules designed to smother our financial services industry. one part of dodd frank is a great concern of mine the too big to fail regulation. now, when f soc is trying to

determine what bank and other nonfinancial institution should be designated too big to fail it means that the taxpayers we will have to step in and bail them out. we all no they're is a huge difference. they handle their retirement the retirement savings for millions of americans with no systemic risk to the economy. the former director of the nonpartisan progression -- nonpartisan congressional budget office's calculates that if asset managers have to comply with too big to fail regulations with no systemic risk imposed to the market will drive up the cost of there operation to the extent with a long-term a return that they can generate millions of

americans in this country who are saving for the retirement date by about 25%. i don't no about you but where i come from 25% is a lot of money. can't we agree, chair yellen, right now that it agree, cherry yellen right now that it just does not make sense for non-bank financial institutions that pose no systemic risk to the market like asset managers should escape this .-dot frank regulation that penalizes savers. >> well, the fs oc is charged with attempting to identify's address to the financial stability of our country and they issued a public notice indicating what there going to do is to look at particular activities. >> they are stillstill looking at it. >> not the fans, but asset

management activity. >> okay. >> that could pose risk. >> i appreciate it. there's a looking at it. i was like to switch. you stated on a number stated in our number of occasions that you are concerned about unsustainable deficit spending in this country and how it might impact economic growth and job creation. everybody knows that to run a family budget or small business that you cannot spend more than you take in for a long time combine to make up the difference without getting into trouble , but that is exactly what congress is done. we have some folks who come before our committee including sec. of the treasury, of $500 billion deficit is no big deal. i disagreedeal. i disagree with that kind of that you do, too. i can tell you that high levels of public debt caused by long periods of deficit spending can do great damage

to the economy because we need to pay the interest on a rising debt and therefore are not able to spend it to build roads and bridges and educate our kids.kids. this year we're spending about $230 billion in interest payments on that debt. in ten years it is projected to be 800 billion, one that we pay to defend our country. can we not agree it is about time you help us and congress get its act together when it comes to reducing deficit spending and that is. >> i could indicate my concern with the sustainability of that debt to assets. >> and i hope you use your influence in his time. >> time. time. the time of the gentleman is expired. the chair wishes to inform the remaining members of the chair anticipate clearing two more members in the queue.

at that time i anticipate adjourning the hearing. the challenge from arkansas is recognized. >> thank the chairman. thank you for being here. a couple of items i wanted to bring. talkedtalked about banking availability and the harvard study that everyone has read one out of five counties counties particularly rural counties no longer have a physical presence of the bank. a branch of a national bank cannot even the presence of a commercial bank's which is concerning. two things i want to call to your attention that relate to merger approval issues. one i think the index which was adopted in the 60s has bank mergers became subject to the antitrust rules discriminate against rural areas. the idea of using a county

designation and using deposit as the sole member of indicia for what a business is a trade area is interact. i can give you many examples of this, but i would invite the board and staff to reconsider how to do bank mergers not based on foreign deposits only, not based on the index but particularly in rural counties. secondly is the issue of comment letters of mergers. mergers between bank holding companies, if there is no comment 5060 approval5060 approval process. if they give one but that extends to 206 days for approval which reduces efficiency, productivity command i would like to see the board adopted a knew approach on, letters and distinguish between real comment letters and just promotional fishing expedition, letters and let

the reserve banks have more power and not forcing the board of governors approval. i will write you about this. i would like you to comment on labor force participation because my reading of the cohorts that you referenced a minute ago by the younger people have dropped out of the labor force. people working more than ever before. i take issue with your comment. if you go back and look at those numbers will find it is younger people being forced out or not having the opportunity to participate in labor. >> i agree with you that younger cohorts of retirees are working more than there parents and grandparents did. that is absolutely true. it.

it is just that there is such a substantial drop-off in labor force participation when people retire that when you look at the joint effect of an aging population where people in age brackets where they do retire that the working more is only an offset, not the same order of magnitude as the demographic. i do not disagree with what you said about that. >> let me change subjects and go back to liquidity. sec. lou when he was your talked about the factors including technology regulation and competition that reducing liquidity in the market. the business models and risk appetite of traditional broker-dealer's changed with some broker-dealers reducing they're security inventories and in some cases exiting certain markets. notwithstanding the october

study the chairman also have a roundtable last week in which a participant from the market stated that in the treasury market you could be able to do a $500 million trade and not have a big ask spread move. now is down to $192 million. there is some indication of the most is some indication of the most liquid market we have significantly being reduced and in the f sockf sock report on page 68 the primary dealer of securities holdings shows since the crash and implementation of dodd frank treasury holdings have gone up to high levels and all other categories, corporate and even agency securities have dropped which implies to me that people are holding treasuries, holding liquidity and not making a market. i think regulation is being shortchanged and i would

like you to comment. >> ii am not ruling out the possibility that regulations could play a role. simply we have not been able to understand. there are lots of different factors and we need to look at it more to sort out just what is going on and what the different influences are i am not ruling out out. >> the chair now recognizes the gentleman from oklahoma. >> thank you command i appreciate your indulgence. i we will try to move in an expeditious fashion. an observation. my part of the country is economically dependent upon the oil and gas industry. i have heard concerns about regulatory pressure on the treatment of energy loans. crudecrude oil and the ground proven reserves and during this current time i

am concerned that banks have less flexibility in dealing with lending. in the cumulative impact of all the factors is moved toward the end of the year could result in loans potentially being defaulted upon or bankruptcy filings devastatingly destructive to the domestic energy industry i asked that we be understanding of the nature of those proven burros on the ground. second question or observation of a question, last time we were together for this committee we discussed the basil three leverage ratio rule as related to the treatment of segregated markets, and i appreciated your response. i would like to go further and specifically talk about the basil leverage ratio extending to off-balance-sheet exposure is that are not driven by counting rules. in this

off-balance-sheet context why his customer market elected by a bank affiliated member require that such margin be segregated away from the banks own resources and for the benefit of my colleagues i suspect we're talking a couple hundred 200 million -- we use big numbers. $200numbers. $200 billion and resources on any given day. enlighten us a little bit on that. >> the leverage ratio is meant to be a simple, non- risk-based measure that pertains to all assets carried on a bank balance sheet and that includes derivative transaction. it is not clear that for many companies leverage ratio is what is binding risk-based capital standards in many casescases, but this is something where we are having a look.

i recognize it is a concern for something that the basel committee is discussing and trying to gather additional information on what impact it is having and it is something that is very useful to put on the agenda that we we will have a close look at. >> that is all i can ask that you work with our friends at the cftc and no one and regulator friends to come up with aa sensible approach to a hundred billion dollars that cannot be touched by the bank but yet they have to have extra resources to cover. it seems like the net effect would be more cost and strain on those trying to use the resource. i appreciate your comment and i yield back.

>> the gentleman yields back. i want to thank you for your testimony. pursuant to earlier discussion with the court avenue back soon separate and apart from your humphrey hawkins appearances. without objection all members have five and legislative days within two and submit additional written questions for the witness to the chair which we will be forward to the witness response. i asked that the chair respond as promptly as able. without objection all members we will have five and legislative days within which to submit extraneous materials' for inclusion in the record. this hearing stands adjourned. [inaudible conversations] >> janet yellin: houseyellin john house lawmakers the economy we will be ready for interest-rate hike before the end of the year. back on capitol hill tomorrow for more testimony testimony, this time before the senate banking committee at 2:30 p.m. eastern on "chasing" three.

>> state hero who had its wants his political career. >> in the mid-1940s if you had asked who is a bright, shining star in american politics on a national scale gov., sen., governor, senator, perhaps president. a lot of people would have said ed prichard of kentucky one of those people who worked in the white house in his early 20s seemed destined for great things and then came back to kentucky in the 1940s was indicted1940s, was indicted for stuffing a ballot box forward to prison. and so the incredible promise find out. >> we also visit ashland the former home was speaker of the house senator and

secretary of state henry clay. >> the mansion is a unique situation. clay's original home had to be torn down and rebuilt fell into disrepair and cannot be saved. he rebuilt in the original foundation. what we have is a home that is essentially a five-part federal style home with italian details architectural elements and an added layer of aesthetic details added by henry clay's granddaughter and great-granddaughter. >> see all the programs from lexington sunday evening at 630 eastern and and sunday afternoon at 2:00 o'clock on american history tv. >> head of the consumer financial protection bureau testify today on capitol hill about his agency's semiannual report released

last month showing of euros actions resulted in financial institutions providing $114 million in her address to more than 700,000 consumers. the senate banking committee hearing is two hours. [inaudible conversations] [inaudible conversations] >> the committee will come to order. today the committee will here from richard cordray. 1,460 and has been very active since the last

testimony before his committee. among other things it has recently expanded enforcement actions to cover telecom companies and broad authority over the automotive finance industry. these actions have not been without controversy. many would say some of them go beyond what congress envisioned. for instance, the bureaus regulation now involves over 30 non-bank lenders not previously subject. this move has been called into question given the specific exemption for auto dealers. in addition to concerns of recent regulatory actions issues remain the bureaus lack of accountability. this has been demonstrated

by concerns with the bureaus budget process including the rising cost of renovation or the cfp be knew headquarters according to the federal reserve inspector general the estimated cost of actual renovation increased from $40 million in february of 2012 to 145 million in december 13. this is over three and a half times the initial estimate's. theestimate's. the inspector general also estimated that the total cost is now closer to $216 million. the administration has yet to explain who approve the renovation and what happened to the documentation. unfortunately, congress does not have control over how the bureaus spends its funds because the cfp be operates outside of the appropriations process. even the federal reserve for which funds the cfp be from its earnings is not control the bureaus budget because congress cannot tightly financial reins when

budgeting issues arise. the bureaus current structure makes meaningful congressional oversight very difficult. so-called independence is one reason cited by the authors of dodd frank in the bureau structure, but other independent agencies such as the securities and exchange commission the cftc, the ftc, and the and the cpsc are all subject to the appropriations process. additionally theadditionally the bureau does not even have its own office of inspector general relying instead on the inspector general of the federal reserve. some of us have adopted specific reforms. putting the bureau through the appropriations process and establishing a board of directors would resemble other independent agencies and provide congress with the ability to conduct meaningful oversight. unfortunately calls for reform of the rejected.

therefore the only remaining oversight tool available is the holdto hold hearings and hope that any concerns expressed perhaps would be addressed. it would be like giving you the authority to implement federal consumer financial loss as the withholding the authority to enforce the. you would agree that that would make you highly ineffective as an agency charged with implementing consumer financial was. congressional oversight is critical now more than ever because the cfp be growing reach over the practices of individuals and companies in the financial sector. for the time being we will conduct hearings and submit respectful requests that may or may not be addressed's. i am confidenti am confident

that i confident the time will come when we will reassert our constitutional prerogative. only then the bureau be truly accountable to the people's representatives. >> thank you. director: to the senate banking committee. next week marks the five-week anniversary of wall street reform act. financial crisis, never should we forget the worst this country has seen since the great depression exposed many weaknesses in our financial regulatory system. one of the most troubling was that no one was looking out for consumers. student mortgages they could not afford at terms that were not disclosed, high fees, abusive payment structure, sudden interest-rate increases. 5 million americans lost their home in foreclosure. my state alone half a million homes were foreclosed upon the height

of the crisis in 2,091 and three ohioans were underwater. one in every six was at least 30 days delinquent. the banking regulators were supposed to be enforcing consumer financial loss and too often looked elsewhere. the number of industries developed in the shallow. more importantly no federal regulator was expressly tasked with ensuring that consumers are treated fairly. we created the cfp be to fill this would make sure that never again what consumers be an afterthought in our nation'snation's financial system. they opened they're doors just shy of four years ago. they have proven over and over the creation was one of the big success stories.

as the chairman speaks i think it is important to note that the cfp be has returned $10 billion to the pockets of 17 million consumers and has find countless companies for egregious consumer abuses including credit card companies secretly adding on unwanted products telephone companies cramming fees on the consumers bills and mortgage servicers and lenders illegally foreclosing on homeowners and servicemembers. the agencies serve as an important place where consumers can turn over 650,000 complaints filed. cfp be is to be commended for successes and ongoing enforcement actions. just last week 47 states and the district of columbia took action against the bank for illegally row for signing court documents and selling zombie credit card debt or death that has already been cleared. i want to introduce aa bill that we will address zombie debt while several of my colleagues and hope that cfp

be we will continue to address this issue. the fed. the federal was numbers showing the consumer borrowing is at a record high. 3.4 thousand billion dollars led by steady increases in student loans, auto loans credit card loans as consumers take on more debt the opportunity for risky behavior increases. increases.increases. i look forward to hearing from the director what is viewed as areas to watch in the consumer market and with this agency we will do moving forward. we have seen in state after state the predatory lenders are normal. it's iowa enacted a short-term the new line

short-lived. continued vigilance. i hope thati hope that the rules governing short-term loans close loopholes. canada for the rule to streamline forms this opponents continue to work to undermine the agency taken on arbitration.

i we will continue to fight. our consumers deserve a strong watchdog. it is our job to make sure that happens. >> without objection ii would like to enter into the record statements welcome to the committee.

we appreciate your continued oversight and leadership is work together to strengthen our financial system and ensure it serves consumers responsible business is a long-term foundations of the american economy's. i reiterate that we take seriously the oversight we get from congress. hearings are required by law and are important oversight. oversight. listen carefully and take it to heart as we go about our work. next week marks five years since the passage of the dodd frank wall street reform as has been noted and it is for years since the open their doors. we understand our responsibility to stand on the side of consumers and ensure they are treated fairly. through fair rules consistent oversight appropriate enforcement, and broad-based consumer engagement the consumer bureaubureau is working to

restore people's trust and confidence. to date the bureau enforcement activity has resulted in more than 10.1 billion in relief. our supervisory actions have resulted in financial institutions correcting subpar and illegal practices and providing was 200 million in redress. we have now handled more than 650,000 complaints. a manner that is particularly important from consumers that address all matters of financial products and services. these consumers are your constituents. one excerpt of a complaint narrative from a servicemember reads only open an account paid as agreed until he became unable to pay made an agreement to pay a lesser amount of paying via allotment. the company get a judgment. i was not served with the judgment. i was informed

when my wages begin to be garnished. we asked to have position fix. if it is continually 25,000 over the last 11 years for couch: seized computer hurts, table, and fairs. the furniture is, and chairs. the furniture is not lasted but the payments everyone does. we need assistance. another excerpt i elected and agreed to a reduced repayment plan with the student loan servicer. in addition to being charged incorrect interest rates my monthly payment was incorrectly allocated's. after speaking with customer service representatives and the call time of hours no resolution has been reached. these are the stories that motivate us not work. in this most recent report to congress is the bureau's efforts to achieve a vital mission including those in your home state of mind. we have helped secure orders for millions of dollars in the along with over

32 million in civil money penalties. we took action against a company for illegal debt collection practices resulted in to a half million in relief and stopped and illegal kickback scheme for marketing services which resulted in 11.1 million in redress and work with the department of education to obtain 480 million in debt relief wrong. during the reporting time the bureau issued a number of proposed and final rules. we issued a fire holds reduce burdens on industry for promoting more effective privacy disclosures. the bureau issued a notice of proposed rulemaking for the 1st time. in december 2014 the bureau issued a proposal to clarify

provisions. in january the bureau proposed further changes to facilitate mortgage lending my small creditors. this we will increase the number of financial institutions able to offer certain types of mortgages and help small creditors adjust business practices to apply. the consumer bureau published several reports such as medical that arbitration agreement, reverse mortgage and consumer perspective on credit scores and credit reports. we released a knew noble four-year-old ordinance q it will help consumers better understand. we look forward to continuing to fulfill

congress's vision is an agency dedicated to cultivating a consumer financial protection marketplace. thank you for the opportunity to testify and i look forward to your questions. >> thank you. director, you have said many times you are accountable to congress. the congress or the fed can tell you how to allocate money. many members of congress have expressed disapproval of the bureau'sbureau's costly building renovations which include a waterfall and four-story glass staircase and now spans more than three and a half times the original estimate. has this causedhas this caused you to achieve remission plans? >> to answer to that question. the overall issue we are accountable in numerous

ways. the gal is a regular order of expenses and expenditures each year which is not common. they are subject to an independent audit subject to reviews by inspector general which have been vigorous. required by law to testify in front of this committee. vigorous in your oversight. we have numerous other accountability mechanisms as well and like the other banking agencies we are not subject to the appropriations process. it would be hard if we were different. as to the building project that has been overhyped and misrepresented. the building cost has remained static from before we took on this building in the office of supervision performed an audit tha that the building

was in disrepair and needed an overall if it would remain a productive government asset. the construction cost has been steady and between 95 and $120 million. we recently that the contracts through competitive build and they came in and of the budget. the managing the program which feels appropriate to me. they have feltthey have felt then stated that this is an appropriate government renovation project. that is my understanding of that issue. >> thank you. yesterday the bureau announced the settlement of an enforcement action against american on the finance corporation one of the nation's largest auto lenders. honda must substantially reduced or eliminated entirely the ability of auto

dealers to raise or lower the finance rate offered to consumers. a recent american banker article quoted stating that the bureau is seeking to accomplish the significant limitation of deal of discretion. considering that auto dealers or explicitly exempted from jurisdiction to how can this be seen as anything other than a backdoor effort to regulate auto dealers which were basically exempt from the fight back. >> three things. we and the justice department were not alone in enforcing the equal credit opportunity act. we resolve the matter yesterday. i would commend them that they have taken far-reaching steps to constrain the discretionary markup which we think has lead toled to discrimination for the consumers.

it was industry leadership and i commend them. in terms of of our responsibility we have been careful to observe line that was not an obvious or logical line but to say that the consumer bureau has jurisdiction over islanders but not auto dealers. we feel that means the law has spoken clearly we have clearly can only have a responsibility to address any issue of discrimination by the news but not to use. have made the ideological but it is the line that we have and have taken our responsibility seriously and have a partner in this work and we work together to address issues.issues. that has been appropriate but i am willing to here more's. we arewe are simply looking to enforce the law and do it accurately and appropriately

>> the bureau released an outline of its proposed plans. every state regulates or outright prohibits payday lending. if you have it could you provide the analysis? 's. >> in our statute they're were four issues that were explicitly given full jurisdiction to the consumer bureau home mortgagemortgage origination, mortgage servicing, pay evening approaches. scrutiny of upwards of 15 million loans most

comprehensive work that has ever been done. we will we concluded that the problem of debt traps are rollovers was a significant problem for consumers who are in the small dollar loan market. representation that this was a product that people get alone repay it and giving out. what we found was well over half of the loans are repeat loans for people are living our lives of 4500 percent interest which is the issue we are working and working to address. we recognize they're is the mantra that credit. that is the dilemma we're trying to confront.

>> before i begin would like to comment on recent attempts to undermine the consumer bureau. similar attempts have been made in the senate. the argument is clearly designed to cripple the bureau and set up for nomination after another. we're the only committee and the support that is yet to hold the hearing. by contrast in 2007 we were in the 7th year of the bush administration and democrats are in the majority this committee at three nomination hearings. important jobs open waiting

for us to act changing the governance. the agency in his tracks and leave consumers without a federal watchdog would.out on budgets buildings on the bike question, i was encouraged to see this release was study on forced arbitration. ii am concerned but not surprised at the bureau found know evidence. three outthree out of four did not even no they were subject to arbitration clause. sent a letter urging we will make them forced arbitration

and consumer contracts. what is the bureau's thinking? >> thank you ranking member. all i can say is i was pleased to have the opportunity to be confirmed by this. it took a while but ultimately it was a strong and i appreciated the care with which the senate considered. i cannot speak to the owners. we did issue and arbitration report. the congress required us to do that as part of the dodd frank act. congress did a couple things they 1st said that they were going to ban outright any sort of arbitration clauses pre- dispute arbitration clauses.

a significant shift away from the permissive attitude to the federal arbitration act that developed. they also said that as to the rest of consumer financial products and services they require the bureau perform a study and report to congress on the potential effects of arbitration. we did that carefully and deliberately. take a deliberately. take a couple years of research, a significant report to the areas. we did issue that report earlier this year. the statue says is having done that can't perform that task it was them for the bureau to consider what might be done consistent with public interest and consistent with the results of the study to either modify or address

pre-dispute arbitration agreements for other consumerthe consumer financial products and services. we have determined having digested our own study and got a great deal of feedback from industry and others that we we will be moving and rule-making and we will be in due course convening a small business review panel has the 1st step in considering what actions to take. that is where it stands. >> thank you. we heard from banks about issues related to court nations of exams. the inspector general reported it has not found duplication of regulators oversight responsibility. i would like to talk about your examination for the value of your examination for what you are doing to improve coordination particularly of smaller institutions so that because the exams cannot be costly to them and we want to make sure they're is not duplication.

>> this is an area of real focus and one where we have made a tremendous amount of progress. if you asked me that question in 2012 we were only minimally staffed up for probably have a veritable we needed. the coordination was not as good as we would have liked to be. at this time the coordination has become quite good not perfect but quite good. in particular we coordinate with the conference of state bank supervisors. and weand we have done numerous coordinate exams and share information with them back and forth consistently. with the other federal banking industries which is also quite important somewhat distinct from our consumer protection

authority, the law mandates we collaborate, share drafts of examination reports mandates that as we go about proposing rules they have a lot of insight and input into those rules command i think that that has improved enormously. not to saynot to say that i do not still here isolated instances now and then where it feels to me the coordination could be better but certainly the leadership at those agencies, the federal reserve have been committed to collaborating an understanding that we have distinct but related rules that need to be integrated so that institutions do notto not have to face what i regard as an unfair situation. then they wouldthen they were not no how to proceed. i do not think we're hearing that. i tell institutions all the time, let us no about your complaints that we can fix

them. they're has been tremendous progress. >> thank you, mr. chairman. as you know, recently we have been debating the question of whether the nsa should be allowed to access telephone records of americans. i have been concerned about asset data collection. last congress i asked that the cfp be the collection program be reviewed by the government accountability office. that report established that the cfp be has an ongoing collection of the $600 million credit card being evaluated. 29 million mortgages andfive and a half million student loans. is that in the ballpark?

>> i would certainly agree with the figure set forth. they did a careful evaluation of us. >> as you no in several places they prohibit the cfp be. the cfp the claims it is not doing so because it is not collecting certain things like the name,name social security number and address. could you tell me what data points are not being collected? >> you mentioned the fact that we have developed a credit card database is july consumer credit panel and all of those areas this information's is significant

as you noted the personally identifiable information account number is not included in any of that material. it is actually pretty uninteresting data. instead it gives us a sense a pattern of consumer protection consumer abuse, consumer service in the industry which is what we're looking for. it is not about what you want i do. >> and you and i have had this conversation before. before. one of the concerns i have is that it is easy to say the data has been doing and not wise for ananonymized. it is also relatively easy did the anonymizing. we found that just the dates and locations for purchases

are enough to identify about 90 percent of the people in a credit card data set. the information cannot be be anonymized? >> it is not easy to do and would take time and effort. i do not see that it would be worthwhile. i have no interest. personally identifiable information is only a problem to us doing our work it creates issues that we try to avoid as much as possible so to avoid making extra work. >> just to get clear my understanding is you are collecting data on about 80 or 90 percent of all credit cards that. >> in all other areas we do sampling. and that we will we do not.

this is consistent with other agency treatment. >> because of time i we will move on. >> okay. >> okay. >> i do believe the protection is not adequate. >> happy to speak to you personally. >> the last question, the paperwork reduction act was designed to ensure the greatest possible public benefit and maximize the utility of information collected, maintained, used, shared, and disseminated and shared command disseminated and to improve the quality and user information decision-making. it is my understanding each of the 1022 orders issued to date the orders to collect this data has been sense to fewer than nine companies to avoid the review of the request by the office of management and budget. can you tell me how many times the cfp be has

utilized the exception for reviewing data request by sending requests to fewer than ten companies? >> we have utilized this several times and gone to the full process. that process. that is one way of characterizing. another is as we're seeking data if we can limit the number of institutions that we do not have to burden other institutions i assume that is what you would like us to do. rather than seeking data from hundreds of institutions if we can get a representative sample that is easier for us and for institutions. >> clarified, and maybe you can do it in aa written response. i would like to no the exact data. half of all of the data requests how many have with the omb review? >> we will get you to that. >> fair enough. >> thank you very much mr. chairman. military consumer protection day. fittingly you should be here

i will speak personally. one of the proper achievements of the affairs in your organization. thank you for all you are doing. the basic legal protection for these young americans because back to the civil war. enforcement is scattered about. the department of justice has several authority and action, banking regulators condoning collect. the enforcement is blacks and you pointed out last week when you get a report which indicated servicemembers continue to report difficulty obtaining there servicemembers civil relief act. going back a long time ago. prior existing debt and they are not getting. i have put legislation in as

background. if congress were to enact this legislation how would they be equipped? >> i think it stands to reason that there are more cops on the beach to protect our troops in terms of potential abuses are problems and financial products and services which for them are a distraction from there ability to focus on there job which is defending and protecting all of us which would be a helpful thing.a helpful thing. i no that the congress a couple of years ago did provide enforcement authority to the consumer bureau. i thoughti thought that was a positive step forward. we work with partners. particularly the department of justice but they only

have so many resources. if thereresources. if there is ever an area we should be training in focusing resources it is making sure servicemembers are treated appropriately and fairly in the financial marketplace so that they do not have to worry about problems. >> thank you. you made reference the military lending act passed for the fiscal year 2,007 national defense act. it gives you a authority but puts the burden on the department of defense to create the framework, the rules and regulations. they are trying to do that again. thereagain. they're were a series of regulations that were well-intentioned but did not really fully address some of the problems. can you briefly explain how these members remain vulnerable today in anticipation of rules that we will be forthcoming? >> i particularly appreciate that you have at a constant

and sharp focus on these issues and have seen tonight the progress moves along. their close to having a knew set of military lending act rules and i commend the department of defense for the speed with which they have recognized the importance of working on this problem. the difficulty is that the military lending act passed in2,007 was originally a set of rules meant to implement but there were too narrow and easily circumvented, very much the problem pointed out earlier of people being able to swim around some of the otherwise well-intentioned rules and you still can see website after website of online lenders offering loans to servicemembers's and triple digit percentages and some of them 400, 500 600 percent dolling lay

perfectly legal under the current set of rules which is why congress as i understand it has directed at this. done. the department of defense has taken that seriously and again acted with great speed in addressing it and i believe that very shortly by use of rules and they're we will be knew important protections. >> thank you very much. we all rightfully are appreciative of the service and we say that repeatedly. if there rights cannot be adequately protected the rhetoric is nice, but it is better to have access to rules and protections. >> preparing for testimony. they can speak to this personally. >> thank you very much. >> thank youyou, mr. chairman. like a lot of members and citizens i am concerned about the last amounts of data that cfp be collects on

all citizens related to financial transactions. i have a proposal to allow any citizen to see what personally identifiable information that cfp be has collected at least once a year. would you support that? wwor

we do not have been a name. we do not have an address. we do not have an account number. we are interested in what goes on in the market. >> do you collect it before you scrub it? >> we asked for the data to be scrubbed. therefore it comes to us. >> who gets it into scrubs it?

>> it depends on which database we are talking about. i would be happy to have a full briefing for you on this. so somebody involved in the process has that? >> typically it's scrubbed before comes to the agency so private companies have all this data. they care very much what you and i do in our personal transactions and they are always marketing to us on that. that is where the focus should be. we don't have that data. we are trying to monitor markets as a whole and there's a big difference and is often misunderstood and misstated by people. so that's what i would say to that. >> so what about these databases and the collection a one-time collection of 100,000 to 500,000 deposited accounts that contain a deposit account data? did you while never collect that? >> you up had particular

collections from industry in order to work on particular reports. again we are typically not interested in transaction level data. >> what i just referenced included transaction level data. >> again a number of different collections over different times. if you would like people to come to your office and speak specifically about anything you want to know more about happy to do it. i don't think you'll find it problematic that i want you to be able to work it through. if you do see something problematic i want to know about it as if it's a problem in your mind therapy problems in my mind. >> there are big robins in my mind and i have seen transaction related data that have been collected. >> you have c? how have c? how have you c? >> i have read about three specific databases that you have all collected.

>> bears all sorts of data you collect that involve that information at least before it gets to you. so in any case however large or small than your opinion this universe is, would you support citizens being able to see what data is being collected by or because of regulations of cfpb? >> this sounds abstract but typically the data we are collecting we wouldn't even be able to tell you which citizen is what because you and i don't want us to know that and we do not know it. >> it would only apply to what i'm describing. would you support citizens having access to that to understand what is being collected? >> again i would be glad to talk to you further about that. if this consumer response information they gave us the data so we can work the problem.

if it's an enforcement or supervise reaction to get relief to people we need to know who should get the relief and work with institutions to accomplish that. in terms of general data-gathering i don't care and i don't want to know what individualism we typically do not know it and there or we couldn't tell an individual anything about their data as we don't even know who's data it is. that is the way you should want wanted and that's the way i wanted. >> thank you mr. chairman. >> senator menendez. >> yankee mr. chairman. with the fifth anniversary of the wall street reform act there has been a lot of discussion about what the law did well where there might be room for improvement and what challenges still remain on the financial landscape. as we look back i think it is without question establishing the consumer financial reduction bureau had been one of the cornerstone achievements of the law. families now have an independent cop on the beat on their side to

identify and stop territory and deceptive practices and the cfpb provides both consumers and policymakers with better information and research about financial products risks and trends and markets. i thought hard for the cfpb's creation as well as many the protections is charged with enforcing such a strong mortgage servicing rules to stop her closure pieces and protections to end abusive and deceptive credit card practices. i also thought hard for many the wall street reports financial stability corporate governance and while the law is not perfect some important challenges remain the last five years of shown overall there's a lot we got right. and director cordray cfpb has been at the forefront of many of these games which is a testament to the work that you senator warren in the cfpb staff have put into standards agency from scratch and continue so i want to commend you for being a force

for good. there are two areas i would like to get in my questions. one is about mortgage servicers invasion of the dual-track provisions and some of the credit card reforms that i fought for in the 2009 credit c.a.r.d. act in what i want to talk to you about those. i am pleased that the bureau has made the set priorities while our economy and housing market continued to become -- there are still many parts of the country struggling with mortgage debt and foreclosure including my home state of new jersey which has the highest rate in the country of homes currently in foreclosure. now despite the cfpb's new rules many homeowners behind in their market continued to face obstacles to obtain modifications that can help. for example until mortgage servicers mark applications as complete homeowners are not avail -- eligible for dual

tracking services which birth prohibits a foreclosure while the homeowners pursuing loss mitigation. while homeowners scramble to pull together document after document they accumulate additional fees and burdens that make them even more likely to default. some servicers request documents on a piecemeal basis and repeatedly request the same documents. making prompt and effective loss mitigation a pipe dream for distressed homeowners. do you have concerns that services are intentionally obstructing the loss mitigation process to favor foreclosure and if so what more can be done to correct protection service? >> we do and i do have concerns about that in from even go back to when i was a state and county treasury at the local level in ohio and solve the difficulties mortgage servicing problems were creating for individual homeowners who really didn't deserve to have that heaped on top of financial distress.

when we created our new mortgage servicing rules which went into effect in january of 2014 we looked closely at those issues which we know were paying points for consumers and we hear about it on a consumer complaint line frequently and work to address them. we have had further work in enforcement actions. we have had several enforcement actions against workers services where this has been part of the problem and part of the orders that we had to impose and also in supervisory work we are doing with institutions that we highlighted in our supervisory highlights last edition so all the industry could know this is a focus for us. it's a problem that has been persisting for years and it's one that they need to clean up. it is a complex problem and as you noted different states have different situations that they are in with underwater homeowners and foreclosure processes that differ dramatically from judicial and nonjudicial or closure states

that this has been a constant. >> i would like to follow up with you on many cases and finally with the 2009 credit c.a.r.d. act we are pleased to see an independent valuation four years later show there were forms are saving american consumers almost $21 billion per year. in 2013 the bureau released its own report on the card at the found similar successes but also identified barca practices that are concerned for consumers. can you give us an update in that regard? >> i will tell you and michael back to the state level where we saw all kinds of complaints before making about credit cards in 2005 and 2006 before the c.a.r.d. act in the financial crisis. that market is considerably better today than it was 10 years ago and i would say there are three reasons for that and i want to get credit where it's due. the c.a.r.d. act in the federal c.a.r.d. act and the federal reserve rules that made enormous difference in correcting problems and late fees.

universal default another issue some of the real problems have been cleaned up. second credit card companies themselves have done a better job on customer service. you can see it in the j.d. power surveys. the score index which they have used in handling credit card calls from customers has been an enormous shift putting financial incentives behind the way people handle those calls so that they are more consistent with what the customers looking for rather than just trying to get them off the phone. i want to give the company's credit for that. i would ask them to think about using net promotion score index principles across customer service on all of their financial products. that would be a good thing. if they know how to do it they should do it. a third thing is consumers themselves. coming out of the financial crisis consumers have been more responsible about thinking about how to approach their credit card debt whether to maintain long-term record -- credit card debt and what the interest rates are. people up in paying down debt and i think the newer consumer

do is have a better experience in managing your debt you will have a better experience with the marketplace. that to me has been one of the success stories. there are issues we are concerned about. deferred interest is an issue of some concern for us. how the programs are advertised. we want to be careful about that in the credit card as a been a focus through enforcement actions and much of that has been cleaned up. i would say the credit card industry is a hopeful sign for me that the financial institutions when they come under pressure from congress and others and also when they understand the importance doing it themselves have the ability to clean up their act and i would urge them to consider what they have done and how they could do it elsewhere. >> thank you mr. chairman. >> thank you mr. chairman. good morning. as i'm sure you are probably aware the south go one that has been the automotive giant in the

sector of transportation. i'm proud of my states state's progress whether bmw mercedes continental tires bridgestone continental we certainly have seen a lot of jobs created by these manufacturers that depend on dealers around the country being able to sell cars. that is why i'm particularly concerned at the print cfpb's bulletin on indirect auto lending which imposes a one-size-fits-all cookie-cutter regulation on lenders and dealers as senator shelby has stated. cfpb has no jurisdiction over auto dealers but it seems your euro is regulating the relationship between lenders and dealers. my concern however i'm not as concerned about the dealers or the lenders. i'm concerned about the consumers ends south carolina whether it's greenville or charleston who will now have to pay a higher price for their vehicles because of the governments involvement in trying to make things better.

director cordray eliminating the ability for lenders and directors to compete for a customer's business will mean the customer the customer ultimately pays a higher interest rate. how do we explain that back at home cfpb's involvement forcing south carolinians to shop for vehicles paying higher interest on their cars and how does that provide greater consumer protection? >> a couple of things. thank you for that question. first of all understand my back round is i come from a strong automotive state. talk to senator portman and senator brown. gm, ford chrysler honda have and significant presence in the state. when i was the highway attorney general we had to deal with the issues first at chrysler and then general motors bankruptcies which were tremendously written some for everyone involved but ultimately came to a good result result. the resulting we understand the

importance of employment in that area. pensions and health care for people who work in that field and its importance to our economy. i'm the director of the consumer financial protection bureau. the last thing i want is to do things that hamstring import markets like auto lending mortgage lending and the like and if i do that it would need to the detriment of my agency and the american public. so i'm very concerned about this. we have had the hottest auto market in the last several years than we have ever had before i believe in the history of this country and that's at the same time the consumer bureau was gathering its wings and coming into existence. i'm pleased about that because i think consumers benefit when they have access to automotive transportation. probably in your area as an mind if you don't have the ability to get around your car or truck you are really in a lot of trouble in your life. so that's important and having said that we also believe strongly there should not --

people should not be subject to higher prices or owners terms based on their ethnic racial or gender background of the justice department feels strongly about that as well. the bulletin that you described was actually a bolotin that was a pretty straightforward restatement of the law. several years ago simply stated if your lender and you have an automotive lending program you are subject to the equal credit opportunity act that is an undeniable proposition any need to think carefully about what your program is. >> i hate to interrupt you but i need to go to another question. i will say there is legislation working its way through the house with a number a large number of cbc members on this specific topic so i would suggest perhaps members of cbc are concerned to the indirect

lending market is inconsistent with the outcome but i think you sincerely desire to achieve it. my other question in the time i have remaining is on our conversation before we started the panel as it relates to tila and senator donnelly and myself both submitted a letter back in may asking for a grace period or sometimes so those good actors in the mortgage business who are trying to transition to new forms would have more time in october to have less liability exposure as it moves into the new forms. >> thank you for that. we have heard a tremendous amount for members of congress on both sides of cap where he'll about the tila of respa what we call our know before you go mortgage rule which is something congress required us to do just as a reminder, it's in the law.

it's a good day. it takes the regime that has grown up a starkly that did make a lot of sense for the consumer had to get two different forms at the application stage from two different government agencies how did the federal reserve into in two different forms at the closing stage. very confusing to consumers. how do they differ in what am i supposed to take from that is him penetrable. we were supposed to reduce that to one form in each state which we have done in this world and everybody recognizes that's a good thing. there is still pain in any kind of transition so that requirement was in the law five years ago when it was passed. we worked on this very carefully over time and did consumer testing. we finalize the rule in november of 2013. we gave a 21 month implementation in response to what we heard from industry. nonetheless as you get toward the end of that some people are ready. we heard from you and others

back in the spring and it's an example of the oversight mr. chairman you talked about. when we get congressional oversight or take it seriously. i don't regard myself as being able to blow off concerns that people are racing to me. so we did in the end and it was due to an error on our part in part but we did backup implementation date out of the summer sale season which was important the number of people. it's now under consideration to put that in october. a lot of people don't like it data of january because only did our first round of mortgage rules and we were under timeframes from congress there were some any system changes or system freezes they did at the end of the year that that was convenient for people.

we went and worked with the other agencies to get an agreement which we have that the early examination of this will be diagnostic and corrective. we don't think people are out there trying to exploit consumers on something like this. they will just be trying to get it right so for the first period which may last many months of the other agencies as we look at this if we see errors we will point out what they are and how they should be corrected. we will not be looking to be punitive. i will say it on the record here today to you that is how it will be. what we said about the mortgage rules two years ago and no one has said otherwise a complain and we have taken that to heart as well. happy to talk further about it that we have given a fair amount of leeway while the same time moving forward with an important change for consumers that will help them understand this

transaction better. >> thank you. >> senator tester. >> thank you senator and ranking member brown for having this hearing and thank you for being here today richard. i appreciate what you are doing and i want to say a senator scott did we appreciate the extension you gave it to you a respa. he did respond to a letter that i am planning on this committee have signed with senator donnelly. i want to talk about a little different ballgame because of the issues of sovereignty. and the issues of consultation. you know well because we have talked about it before. i have some tribes that are unhappy with the consultation process. to be fair i have heard from an oklahoma bank that thought they were you were doing good things. the question comes up is the consultation process is there a policy on what you do and how

you do it that applies to every tribe across the country and if that's true can you give me an idea what it is? >> yes. we in fact in responders to bachan or that you and i have on the subject and others from that area of the country in particular but in other parts of the country may have at tribe or two as well we did it together a policy on consultation and we formalize that in shared it and got input on it from the leading tribal council. we have since then been requested could be put together an mou that would be more specific about some of the aspects of how this works and we worked at this and to develop a draft that we have now shot actively tribes as a whole. i don't want to get into having individual consultations with individual tribes because my

understanding there are more than 500 across the country but we are trying to deal with them as a group. they are concerned about small dollar lending potential regulations there. we have had two distinct consultations with them on that subject at their request at this point and had a considerable amount of input from them and of course we are open i want to emphasize this, we tried to be as an agencies accessible to people at all times to tell us what they are concerned about. i feel that improves her work and it doesn't help me not to know it so i would say that too. i think we have been trying to be very fulsome in our approach to this. i know you have emphasize that to me again and again and i'm happy to hear further from you. >> we will try to help where we can help. appreciate that. earlier this year debris or proposed changes to rudmack lending and american allies

think there are a few things we can keep working on i certainly perceive with the bureau did. one of which was expanding the definition a burr states and now under those changes almost the entire state of oklahoma is considered rural which is correct. are you still hearing from folks who think they are in rural areas and the cfpb has not defined very well? >> by the way i recall a meeting we had in your office in which he pressed upon me i said i thought i understand something about rural from parts of ohio and he said i don't think you really know what rural means in aunt anna and you gave me a little schooling on that and that led imports were thinking on how to extend this definition. if you go back the federal reserve proposed the definition of rural and their definition would cover 2.2% of the mac and population which was plausible

but somewhat narrow. we looked at it and we decided that it was too narrow. i looked at maps of ohio at the time. we came out with a different definition that was more like 9.9% of the population so quintuple that and even after that people showed me maps of ohio county-by-county and senator brown and i can do this in our sleep. there were whole bunch of counties that were clearly rural in my mind but were not covered under definition so we felt the need to go back in and do it again. one of the things about the euros that i appreciate this we want to get right and if we didn't get it right we are not going 2% like we did and say we can't change it. we are going to try to fix fix it. we now have a definition that is much broader and includes the entire state. it includes 22% of the entire population. we have had disagreements within the agency over it that we are

working to finalize rules on that which is what you should do by the end of the summer and i think for the most part they have been fairly well received although once we hear from people as they see how they work we will talk our body. >> one last point. i was very concerned for this hearing about the information you've collected them because of the data breach at opm the concern made be this database would be reachable to match it i was encouraged by the fact that you are not collecting social security numbers and names and account numbers. you would have to go back and put names and addresses and social security to the data which would take a ton of time and would make me very concerned about what's going on. thank you very much richard and mr. chairman. >> director i want to raise the

issue on a bipartisan level of the cost of your building. what i understand from your inspector general the total cost of this building which used to be used by the office of supervision as they $260 million $260 million. this is a leased facility which you have got it and you are putting it in a two-story waterfall. if you look at the number of employees in europe euro is 1459. that would lead to a per employee cost of head quartering them in washington d.c. of $148,046. i would say since this building was okay with the thrift -- office of thrift supervision and why would you need the $2 million? >> several things.

>> let me just follow-up. how does a two-story waterfall help you do your job? >> on that one in particular would say i don't have to see how it helps us do our job and probably we won't end up with a waterfall. i think that's been overstated by people. in any event the office of through supervision which had this building before it went defunct in the dodd-frank act had already recognized and done an audit and recognize the building was in deep need of fundamental repairs. we are talking about -- the. >> let me just interrupt and follow the line of senator tester by saying as an ohio attorney general you certainly would be old pickup the issue. the bulk collection you are doing as a reservist in the intelligence committee for 20 years have you taken specific action and i would ask again at

the taken specific action to take members of congress out of your data collection and members of the supreme court out of your data collection? do you see the separation of powers? >> you have piled to questions on and i haven't had a chance to answer. i would like to go back to the building of first if i may. systems were reaching the end of their useful life. >> a secondary question, have you made sure that you have not collected the credit card data of supreme court justices? >> we have not collected credit card data on any member of congress or any supreme court justice. they would be no purpose for me to do so but i don't consider that issue as being more important than the privacy of individual companies. >> have you not collected supreme court justice

information? >> why on earth would i do that? why would i be collecting supreme court justice data? >> i would assume this scandal is a bit like nsa scandal. they give shoe to much power. >> i can't really even follow the question here. >> any first year law student would pick up on this -- to give shoe ability to abuse of power and intimidate the court. >> intimidate the court. i don't really follow that at all. we are not doing anything like that nor would i want to do that or would it make sense for me. >> i think senator tester brought up the issue. if you are collecting all the stated the only purpose of collecting data is to be able to access it. >> not so. the private sector the purpose of collecting access for us is to monitor markets.

>> now that we have seen on the order of 200 million people compromised by opm the problem is we don't even trust you to keep us secure. >> i can see that you don't trust me. i think you are setting up a set of hypotheticals that have nothing to do with what we are doing. maybe i could have staff refused to give you more comfort on that score. >> do you want to go back of the building's? >> i would ask why is $148,000 per employee absolutely necessary to your position? >> those numbers are off. >> they are the members of your inspector general. >> they are talking about things like other rounds and other services. the construction costs have remained fairly consistently constant. we have those contracts that are coming in under budget and

fairly consistent with what the ots opined was necessary six or seven years ago but for the cfpb existed. i think this is vastly overdone. i would be happy to talk to you further about it and. >> i would suggest you are not collecting intel on members of the supreme court of the congress. >> i will be glad to take a look at that. i can imagine we are doing that in that we were doing that -- >> that would reassure us all to make sure that the chinese don't have it before you do. >> we will look to give you reassurance on that point very at. >> thank you mr. chairman.

i believe that's simply a function of there are still a lot of lack of visibility and people don't know what the cfpb is and will no more overtime and i hope you will see where providing value to them.

that is what we aim to do. i think we had something like 700 some credit card complaints in our first month and we are now up to 25000 complaints per month across the financial services. what happens then is weak if the consumer a chance to tell us whether they were satisfied with the resolution or if not what they continued to be concerned about and then prioritize investigation enforcement action or supervisory activity and institutions know that they i think that pushes them to be more thoughtful about how they'd try to resolve these complaints in the first instance. i don't know the exact numbers but it maybe 20% of consumers continue to feel they have a dispute once we have worked through our process and that we have further steps we can take great in terms of how much resolution for consumers it's been many millions of dollars. it's hard to know exactly for sure.

they don't always tell us how the matter was resolved although many come back to tell their story line and tell us often with real gratitude that they did get a resolution and they couldn't get a resolution for months and months but after speaking to us they got one promptly. that process when we hear that. the other thing is there is a lot of modern -- nonmonetary relief people get from most complaints. getting something fixed on their credit report. >> may be taking get a mortgage. may be worth thousands of dollars. debt collection issues are a constant source of irritation for consumers. the wrong death or they are not the right person and they can't get people to stop calling their home. they are getting 12 calls a day or calls of the work ways that's not the right person and being able to stop that looms large

for people. a point you have made to me is the sometimes it's always easier to quantify the amount of relief we give back to people that angst that happened to them before today and we can't usually quantified the benefit to them of things that will not happen to them tomorrow because of changes made today he does go on in the future and accumulate extensively over time. we don't have a way of putting a price tag on that but i've got to think it's significant. >> you have created this web site and we are getting 25,000 people on the web site and rising and get some rep -- who resolution. it looks like 80% get some kind of resolution here. the agency also just recently went live with this consumer complaint database and here you have a collection of tauzin's of narratives from real consumers about alms they are having with financial products or with companies.

it's all sortable now on line so it's possible to go on line and see it by product, by date and where the consumer lives. for example this morning onto the database and look for all the complaints from massachusetts about mortgages so it's a powerful way to see what kinds of issues are cropping up in the communities that all of us represent. i know it is only been on line for just a few weeks but i wondered if you could describe how you think this will help improve the market for financial products. >> the database has been on line longer although was broken into generic categories which i think were less insightful for people than hearing in the consumer's own words what the problem was as they sought it. i think that's incredibly important. we have described the narrative as the heart and soul of the complaint said for me to make a complaint and have it be categorized as somehow debt collection wrong amount is not

nearly as insightful as to be able to hear exactly what happened to me the calls i got it home the effect on my life. it's just tangible. it's real. it's the difference between statistics and stories and to me that's very significant. the database i think is causing institutions to have to compete on customer service which is a good thing and take good ones are competing very well on customer service and others are having to improve. that's it a pressure that is a positive treasure. i'll also mention there are many members of this committee who are preferring complaints to us when they come to our office and we encourage you to do that. we are happy with to work those complaints and you can see and keep track of how they go. we want every american has a problem to come to us and see if we can get a result page. >> i really appreciate that and i see this as a time example of

how government can take small steps that will have a very positive impact on the market. there's a bit more accountability for companies that just plain cheat their customers and on the other hand there is public knowledge meant for the companies who treat their customers well and resolve the complaints quickly. if i can i would like to lip in one follow-up to the point that senator brown made earlier and that's about forced arbitration clauses. as senator brown highlighted there a port the cfpb recently released contains damning findings about how forced arbitration clauses fundamentally tilt the process against consumers and keep them from effectively fighting back even when they have been cheated eerie at it's clear the biggest banks and some other republican republican friends in the house of representatives see the writing on the wall and that is the rule is coming so they are pushing legislation that would force the cfpb to redo the

report before you issue any new rules. i think this is a stall tactic plain and simple. the report took three years and 720 pages to complete. it carefully documents a wide range of albums. i want to ask you very briefly because the chairman is indulging in i'm over time but can we get on the record the steps the agency took to ensure that the study was complete and accurate including soliciting and concerning comments from the financial services industry lacks. >> first of all we did a request for information at the outset to ask people how we should go but doing the studies so we heard a lot from industry and different kinds of markets and also from consumer groups and others. we aired toward the side of being comprehensive about what they told us we should do and trying to do as much as we possibly could.

they founded many areas this was breaking ground. there wasn't necessarily data easily accumulated on that. we did go to the american arbitration association. we were able to get significant data about the arbitration process which really shed light on that the people i've not had before. we looked at a number different ways of trying to get judicial resolutions of similar matters. we were helped in part because there were class actions involving certain institutions who have one point has stopped doing arbitration agreements. you could see what the before-and-after was and did it save consumers money to have this enforced arbitration process and we were able to about that and discern that. we looked at enforcement actions as another means of enforcing -- . it was a very comprehensive report. i don't think we could think of a single thing we could that we

didn't do. we are always happy to hear more and we have had tremendous input and we have given roundtables to digest the report talk to us about it and that's an ongoing process. as we embark on a row making process there will be review panels. and there will be noticed that comment process. everybody will have their say. we will i just is as best we can and do what we are supposed to do after the public interest consistent with the results of that report to determine what to do about this. >> thank you and thank you mr. chairman. it's an important issue. >> senator rounds. >> erector cordray earlier several members of the panel requested information concerning the collection of data and probably the reason why it's an item of berlin just is because of opm and the loss of the data

there. a lot of our employees have become concerned about the loss of their personal data so when we talk about the collection process that you use and utilized to collect the data you want to do market mouses with the question comes in to really are the organizations required to submit data to you are they submitting from them there perhaps a third party that scrubs it or are they providing data that is scrubs by the organization itself? are you aware of how that works in terms of how you scrub the data or how it gets scrubbed to begin with? >> i'm generally aware of it and we have people who are carefully focused on that. depends on the data collection. some of it is negotiating with industry. they have all this data. they know everything you are doing. they know everything i'm doing. they use it to market to us.

it can be positive and it can be negative but there are repositories of data that are much more troublesome than anything we have traded where we can get the daytona sampling basis and ask for certain yields it comes to us and now form, the credit card database i believe is that it through experience which is a credit, one of the leading credit reporting companies that scrubs the data and remove certain fields. we are trying to make sure our employees do not have access to personal identifying information. the opm breaches they affect my employees as well as your employees and we are sensitive to that and something we are dealing with to make sure our employees know what their rights are and what is available to them. >> what it did was rocked to like the fact that one may collect data we have an additional obligation to protect

that data. what i was curious about was whether you receive the data and scrubbed it or if it was delivered by a third hardy who would have that responsibility? it sounds like what you have indicated in the case of some of the larger bowl bid amounts at scrub via third-party before it gets to you. >> the credit reporting agency that has access to this data typically but i would be happy to have our folks -- i want you to know that we are being careful about it. i am an american citizen i have the same concerns that i think you do about that but i think that's distinct from what we are talking about here. i'm happy to have her folks spend the time and if you remain concerned. >> that's a good way to leave it and we will work west that creates. >> let me just move on.

we have had challenges and i'm not sure how deep into this you have gotten but rural appraisals have been tough to get. i'm not sure how they are not urban areas but south dakota trying to get an appraisal is difficult. i know you tried to set it up so we could identify rural locations and i'm asking is there another way in which we can get a third or fourth because we have communities in south dakota that are clearly rural in nature but they are not identified that way. is there a process in place where we can get the challenge set up to get them placed in the appropriate category? >> when we opened our doors we have a number of mortgage rules that we were required to do by law. i have always been somewhat concerned as to whether we got that right and one of the big issues as you are describing is in rural areas are fewer

comparables. appraisers might have to come from a greater distance so they are not as accessible so just very used to being able to make rural transactions. we have been working at trying to alleviate that but i would encourage you to continue to press on that. we will talk to the federal reserve and if there is more relief we can give him that because of the peculiar circumstance and we want people to get mortgages and the denser areas. >> number one it's the appraisals themselves and comps which in many cases don't exist and along with it you are saying legislation that would create the ability for some of the banks who are literally holding those mortgages because they can't qualify in the secondary market. we want to make sure that those are considered an appropriate asset for those banks.

if i could mr. chairman i have one more question. i know when you work through the qualified or consolidated statements and the goal was to perhaps simplify some of it last year as i was moving around south dakota one of my bankers, just got a copy of the most recent release or the qualifications statement. he said the new disclosure statement as proposed was 164 pages. that was the pdf. the only reason i bring this up is that is the case and he is accurate in his definition and his estimation look we have to have disclosures of people who actually read. >> that is not correct. what he is talking about is the regulation and the rule that implemented these forms is

lengthy. the actual forms themselves are not 164 pages. that would be ridiculous. they are shorter than they were before. they are not as short as my friend senator warner wanted it to be one page at the application stage in one page at the closing stage. >> we might find something that we agree on. >> if congress legislates congress legislates but we are at 5 in three pages. it's the key information. its executive summary of the whole transaction and we are with you at electronic closings which they want to go anyway so a lot of the paper gets taken taken off and he can focus on the key form here. we have tested those forms with consumers than they have found them to be much easier and more excess one of standing. whether it's two pages were three pages might matter in some sense an abstract that these are not lengthy forms.

they're meant to be key summarized forms and that is what we are doing. on the rural i would be glad to hear more from you. i heard a lot from senator johnson about south dakota and senator tester and others about western states where the population is more spread out. we have in working to get more latitude to credit unions to portfolio mortgages and their own portfolio and given all the protections of the rule. i think we are getting too good place but we will hear more from them as we go. >> my time is up. >> community banks are increasing their market share in the mortgage market which i'm glad up and it's a good thing. >> thank you mr. chairman. drucker cordray it's great to see you again. i have two or three areas i want to touch on and i will try to be

brief. one is when we started to see the hacking obviously concerns about opm as well and i'm hopeful that the conversations will move aggressively but one of the areas we started seeing this on the private sector side early on in terms of the card and debit card hacking was an area that i was not that familiar with the big difference for consumer protections between credit cards and debit cards. >> and i think particularly about the young people using debit cards rather than credit cards. i know they have different business models but how do we lean in to make sure consumers senator kirk and i have legislation that harmonize -- but would you speak to that or a moment how we better inform that

particular is the parent of daughters who use credit cards all the time how we equalize these? >> some of the regulation grows through historical circumstances that don't necessarily make logical sense so credit card or texans were developed at a different time and for different purposes than debit card productions. prepaid cards currently have no consumer protection. that is why we are working to get those finalized so we cover that gap. credit cards and debit cards started out as very distinct. credit cards were about credit and a way to get away from store cards and credit generally but debit cards were seen as having to do with atms and other things. i think people often may pull out one card of the other not

think that carefully about them although some people are quite careful. i believe the fraud section on that credit card is $50 limit of exposure and debit cards i believe our $500. it may have made more since when debit cards were about the atm and you are taking out a fair amount of cash. it's something i would invite congress to think about and you may have guidance for us on that. whether we can fix fix it or we would have to have a statutory fix i'm not clear on that. >> this is an area where i found an industry there are some interest in harmonization and folks ought to know there are different protections. let me move to another subject. one of the areas i spent some time on his looking at this dramatic growth in the gig economy or the on-demand economy particularly amongst millennials.

one of the good sides and bad sides of that and there's a lot of freedom that comes with these new work environments for some folks is quite lucrative to cobble together these different revenue sources. there are whole host of russians that there is a lack of social safety net common areas not necessarily for your purview by something we will have to work during navy now with a top-down solution but public private opt in and opt out. we have been starting as, estimates as much of a third of the workforce falls somewhere in this contingent workers. as we think about qualifying for mortgages within qm we have concern or we have heard some concerns that this emerging new 1099 or contingent workforce to

traditional banking system doesn't record their income inappropriate way so they qualify for qm's. minder standing is appendix q is the section with mqm that includes guidance for verifying and documenting borrower income. is this an area that you taken a look at and if not i understand because there are not a lot of policy may curse but far away the fastest growing set or of our economy. >> anytime anyone asked a question that includes appendix q they are in the weeds. the point you raise is an interesting one and something i have become increasingly aware of and concerned about. there are different aspects i would say several aspects. we are moving to an economy in

which we have fewer full-time full salaried employees in the old model just as we have moved over time away from defined in the pit pension systems. this is happening. interestingly the health care law is pro-liberty as a piece of legislation the sense that doesn't cause people to be stuck in a job to get their health care. i would say several things. it does create more complications for people qualifying for a mortgage because it's harder to document their income. the income may be more fluctuating but you start adding up whose intermittent employees and who are temporary employees who are seasonal employees. it's a huge portion of the american population so we need to look at her mortgage rules in light of that. it's not an easy thing to figure out how to handle but it's something we need to think more about.

i would also say from the standpoint of wealth and retirement accumulation for americans this is an increasingly big problem because pension plans and are a 1k contributions tend to be limited even in companies that have multiple types of workforces to the full-time full salaried people. everybody doesn't have access to the ability to put away services for retirement. we have to think about hard about what we do a bout that raid is something we to think about because otherwise people are going to be possibly falling behind in income disparity but also falling behind in wealth and retirement disparity. >> thank you. >> thank you mr. chairman and mr. cordray thanks for being here. in our office we talk a little bit about qm and i know we were all working on this issue way

back when in the bad old days when so much was happening. we were often turned about a 5% growth share if you remember that is where everybody's focus was and trying to figure out a way to get that right. one of the things we looked at in legislation is dealing with qualified mortgages. there seems to be a focus to only deal with it at community banks and smaller institutions. i guess if you look at a qualified mortgage that is held on the portfolio that means the institution is keeping 100% of the risk and i guess i have wondered why we have tried to differentiate if you will between smaller institutions holding qualified mortgages but larger institutions being unable to do so. i know we have talked about it and i want a few might address

that and i have one other question. >> we don't have as much time to talk about today i'm happy to talk more about it with you. we are generally trying to find ways to continue to encourage community banks and credit unions to mortgage lending because if you look at the data going through the crisis they have lower defaults than anyone else. they are the most responsible lenders we have and the more lending they do in accordance with their traditional underwriting models better it is for consumers and the better it is for our economy. that is why we have focused our portfolio provisions to benefit them. i'm concerned about it at upper levels because the logic of it may or may not obtain larger levels but we had i'm aware of number of institutions that have a lot of portfolio lending that lou up and didn't get it right and washington mutual, countrywide ameriquest some of these companies that really

threaten the economy because they made such a mess of things. they were doing portfolio lending. it isn't always a cure-all although it feels to make community banks and community -- have been highly responsible. i am pleased to see that the community banks share her mortgage lending seems to be on the increase. that is good for america i think we have. >> it seems to me and i agree with much of what you just said but it seems to me on the portfolio lending component there is something different than just stopping at $2 billion or whatever and people just going holes log into it at certain levels. there are two be some -- there ought to be something that's different than that stark line and we ought to explore that together. i live in a state where we have a lot of people that have

difficulty affording housing. there are a lot of people that difficulty affording houses and i know senator cotton does, no offense but the fact is that for some of the lower income citizens that we represent manufactured housing is an outlet that i know senator brown and i sponsored legislation back in 2012 that actually was more expansive than what was in the shelby bill this time and yet we have these rules that are in place that really make it difficult. you and i talked about the fact that a smaller loan a 20,000-dollar loan a 30 or 40,000-dollar bond the costs associated with doing that up front and up lumping up against some of the regulations we have and i wondered if you might address that and at least address the fact that you understand that's a problem and