bodies and independent agencies that are structured in different ways. some have a board, some have a board and a director, some have a director. examples of each and they all can work well. i do think that in our situation, the law that we are carrying out provides for a single director. that means there's one person, in this case myself, who sits here. and is responsible to you to answer your questions. and if i can't give you a satisfactory answer, i'm responsible to go back and get that answer and bring it back to you. there's no passing the buck. i'd like to say this, but others might say something else and diffuse responsibility. so there is something to be said for that. the accountability i said before lies from our into row to congress. you pass the laws that give us the only authority we have to do anything. we are responsible to you. for how we carry out those laws. you can bring us here to testify any time.

you can have us come to meetings and brief your staff, as many of you have done, and we'll listen closely to you and try to make sure you know exactly what you need to know about the work we're doing and have input into that work. >> director caudry, government of the federal financial literacy efforts received significant attention last year. however contrary to media's inaccurate reporting, they did not find evidence of overlapping duplication among the 56 programs and did not identify cost savings that would result from consolidating financial literacy programs. according to the gao, this issue was examined by the previous administration which found that each program was targeted to a specific audience such as students or veterans and carried

out by an agency with expertise for a given topic. makes coordination essential. coordinate closely with treasury to clearly define financial literacy roles and activities to make the best use of resources. >> is that a question question, critically important there be coordination. the law has provided there is the financial literacy council called fleck and set up director of consumer bureau to be the vice chair of it, working with other agencies. it goes beyond other agencies. there are a lot of nonprofits, a lot of private sector backs and

others who offer financial literacy efforts. there's no need for us to reinvent the wheel. when i was a state treasurer in ohio and we worked for financial education in our schools and we eventually got a law passed that changed it so every high school student in ohio now has to have personal finance education before they can graduate, i think that's a good model for the nation. but there's lots of curriculum, lots of material out there, a lot is very good material. if we coordinate with one another, we can safe resources and be effective and ee fishgt. that's what i think the financial literacy council is intending to do and that will be my approach as vice chair. >> thank you. thank you very much.

>> not necessarily to stir that up, because i think there's going to be litigation that will make that happen. but in my mind, you being here today races fundamental questions about the constitution, about the inner relationship of the president with congress and ultimately at the end of the day, the extend of your power in this position. now, my views on this are not isolated views. let me, if i might, kind of set the stage here with some references to some people who have served as united states senators. some who i have great respect for. then senator barack obama, when

a recess appointment came out of the bush administration, referred to recess appointments as the wrong thing to do. he referred to a recess appointee, not necessarily that specific appointee, but a recess appointee as damaged goods. that's his words. they described it as an end run. called it an abuse of power. senator john kerry, again a gentleman i've worked with, referred to recess appointments as an abuse of the power of the

presidency. sometimes in this business there's a certain amount of political push and shove that goes on, obviously. i don't think that's what they were talking about here. i think they were talking about genuine issues of constitutional power. now, in your case, if we accept the premise of your validity in this position, then we accept the premise that our ability to offer advice and consent basically disappears. because president can determine when we're in recess and when we're not in recess and just appoint however. then we don't have a constitutional provision for advice and consent of the senate. i have a tremendous amount of respect for that process.

i think i benefitted greatly and i hope the country benefitted greatly from me going through that process and seeking a vote of the senate. i had no idea when i started whether i would win or lose. now, there's even a greater challenge here. we took the opportunity to do some research. there's not a lot of cases out there, as you might expect on the issue of what impact does this have on your power. but back in 1989 when congress created the office of thrift supervision, there was a challenge to the director. i want to read something to you, judge lamberth for u.s. district court for the district of columbia, found the company that was raising the challenge, i'm quoting here, was subject top regulation only by individuals.

with legal authority to act. then goes on to say, because the director was not properly appointed, he has no power -- he has no power or right to exercise the director's appointment powers than this court does. and then says olympic has the ability to seek an injunction to restrain to stop the director. so not only do we have this constitutional issue, which i think is fundamental to our power of advice and consent under the constitution, but if you are successfully challenged, would you agree with me your actions are invalid during the time are you in this position?

>> senator, i don't know that i believe that's clear-cut one way or another. it's also not clear-cut, by any means, this is not a valid appointment. i believe it is. i've read the justice department's opinion, which i thought was persuasive. in any event, do i take your point and your concern. i know you went through a confirmation process to become a cabinet officer. undoubtedly you appointed numerous people when you were governor who went through confirmation processes. you're very familiar with the process. as you know, i was in this process, was nominated in july. came up, had a hearing here, met with many of you, was -- appreciated the opportunity to meet with you. and ultimately went to a vote. so, i benefitted by months of that experience and understanding over the course of it, the value of hearing from and having input from the senators who took the time to spend time with me and give me

their views about my appropriate role. i have been appointed as director. there may be issues about that, i understand people have different points of view about that. but i now have legal obligations. i'm supposed to carry out for this bureau. i am going to do that. we're going to continue to walk straight ahead one step at a time, trying to fulfill our legal responsibilities, and that seems to me the best i can do at this point. >> i've run out of time, but i'll wrap up with this. i can't imagine how anybody could maintain under the circumstances that your appointment and your service is valid. and i can't imagine, then, based upon the precedent i see how the actions you're taking will be upheld. and i i think that's a very, very serious consequence for our nation. thank you, mr. chairman. >> senator brown. >> thank you. i just simply can't believe we're still having this debate. the job of richard -- richard

co cordray's job is so important. the american financial service, trade group for consumer lenders says we need to learn, they want to get it right. american bankers association said the agency approach to bank oversight was pretty good news. the independent community bankers called the process for refining model mortgage reforms refreshing. it was clear more to the point a substantial improvement. the cfpb had banks audited which found financial statements are fairly presented in all material respects, strong, effective internal control over financial reporting, acting controller of the currency not exactly known for his hostility to banks, has said last week some attempts to regulate the opec over the counter derivatives market might be an overreaction. all of these speak to the focus of this agency and the effect of this agency and that we're still having this debate, and let's

lay out some facts before people continue here to play this inside baseball game that the country simply doesn't care about, that president obama has overstepped his overreach. first of all, president bush made 171 recess appointments. president clinton made 139 recess appointments, eight years, i understand. president obama has made only 32 recess appointments. his recess appointments, in large part, are because one political party, the other political party, has blocked time after time after time, even bringing these to a vote. we weren't saying to my colleagues on the other side of the aisle, vote for rich cordray. we were just saying, give him a vote. this is the first time i've said in this committee, and on the floors a number of times, first time in american history, according to the senate historian, where a political party has blocked a nominee simply because they don't like the agency. so, if their precedence -- if the other side would get their

way on this, and that precedent would stand, next time a commissioner is appointed for the fda are we going to say, we're not going to aimprove him until we weaken food safety laws, as senator jack reed has said? is that the way we're going to operate this place? we can't operate this government when one party says we're not going to confirm somebody because we don't like the agency over which he will -- which he will administer or regulate. in the end, we know that the other side was simply doing the bidding of wall street. that's what they've always done. that's what they're doing today. that's what they'll continue to do. but this agency has important work to do. you can see already the effectiveness when people whom you wouldn't -- from whom you wouldn't expect compliments are saying those positive things. let's put that aside and talk about what rich cordray, what the consumer bureau can do as in my subcommittee when skip humphrey testified about what they're doing with senators to protect seniors and what holly

petraeus has testified about how we protect veterans. that's why these agencies are here. not to score political points but to protect them against the kind of -- the kind of financial service abuses too many veterans and seniors have been subjected to. i would like to ask mr. cordray a question. every year i invite college presidents from around ohio, 50 or 60 of them to come to washington where we spend a day, day and a half. whether graduates finding jobs, student loans, affordability, whether it's training, scientists, all the things that our college universities do so well. one of the issues that we address most recently is rising co cost. that's why i proposed ombudsman office included in the cfpb.

mr. cordray, tell me what the bureau has done to address the rising level of educational debt in the country, what are your future plans as you begin to run this agency and figure out how to protect students and these kinds of situations? >> sure. first of all, we've hired a terrific individual to serve as that private student lending ombudsman in the agency. we also have made student loans one of the focuses of our know before you owe project. we reached out to the department of education, trying to work in partnership with those who are relevant in this space and we developed a student aid shopping sheet, which is now being promoted around the country to simplify and clarify for young people and their families, who very often it's the first time they've undertaken an obligation of this size and magnitude, and it's going to be critical to the future of that child, and their opportunities, exactly what they're getting into, exactly

what the terms of their loans would be, the repayment terms, the costs, the interest rate, and the like. and we are also working to further promote clarity around the repayment terms of student loans. we have a calculator tool on our website that people can use, young people who often don't appreciate the difference between federal student loans and private student loans, to understand the difference in terms, don't understand the types of repayment. we're going to look for more opportunities to try to positively affect this marketplace. it's too important for young people. you and i both know many, many young people who could not get a college education or any higher education, community college, vocational training f they didn't have help and loans. they can't get it from their family. they need to understand the choices they're making so that they can make good decisions about their future. and the bureau stands ready to atsdz and help this marketplace

and be clear and transparent for them. >> senator moran. >> thank you very much. i had no decision to go down your confirmation process. whether or not he was con fired had no effect on the kosz 6 dodd franc to wall street. and to suggest that at least i am -- had refused to confirm mr. cordray because of my protection of wall street, i find unfounded. and i can't imagine there's not a institutional issue about what article 2, seconds 2, of the united states constitution means when it says the president can make appointments when the senate is in recess. so that issue is certainly prejts itself -- i don't think it presents itself today. it will present itself in court. i didn't intend to use this

hearing as an opportunity to rehash this issue, but i do want to respond to the gentleman from ohio to indicate that i simply disagree with his premise that those of us who found fault, not with mr. cordray, but with the confirmation or the lack of confirmation in the president's appointment. mr. cordray, i did not hear but understand you responded to chairman johnson about community banking. i appreciate hearing that. i would indicate to you that in my short period of time as united states senator, trying to get a regulatory environment in which community banks can lend money to credit-worthy borrowers has been a cause of mine. it seems to me that the regulatory environment in which they operate is oppressive and uncertain. so, your suggestion about appointmenting an advisory group of community bankers of lenders to advise you, i certainly don't disagree. would suggest that's valuable.

i would only point out that at every opportunity in which i've had to question witnesses from the otc, the treasury department, the fdic, they've all done the same thing. they have those advisory committees, and yet the growth and regulations continue and the sense by community bankers that they're not understood still prevails. so, don't want to discourage you from doing that, but please at least from my perspective understand that that's probably not sufficient. it will depend upon your attitude and approach. and then in that regard, before you respond, our small lenders, community banks, credit unions, they need clarity. not only for their own sake but in my view, the ability to grow the economy. i do think there is a lot of lee luck tans on the part of many small businessmen and women to make diss because they don't

know what is next coming from washington, d.c. in regard to the rules. the phrases around are understood, unfair, deceptive. the legislation that created your position has to bankers to us a new word called abusive. and my request of you is that before you find something to be an abusive action by any financial institution, that you take the full steps of defining what the word abusive means beyond whatever, in my view, minor definitions -- lack of substantive definition there is to that word in the dodd/frank legislation and would ask that you a-v an opportunity for public comment. i've seen examples in just recent days in which financial regulators have determined a practice that until that point was never considered to be

inappropriate. and then go ahead and criticize a financial institution for that conduct. yes, so my question is due process, fairness requires, define what abusive means before you find some practice to be abuse si. they've found me to be a pragmatic and listening person who was cared about and mindful of their business model and how we could preserve it. the thing that hurt the community banks as much as anything was not so much -- too much regulation of them as a complete lack of regulation of many of their competitors in the mortgage market who didn't adhere to the same standards.

sometimes people would come in asking them for a loan that they knew was irresponsible. they would say no and go down the street and get a loan from someone that wasn't licensed or wasn't regulated and could sell it to someone else. they would be right about the loan but it didn't matter. they lost market share to those people. our leveling the playing field between the banks and nonbanks and mortgage market in particular is very important to protect the community banks and credit unions. beyond that, we will be, as i have said, we will be mindful of burdens we're imposing on them. we will listen closely to what they tell us about the effects on their operations and we will do our best to take account of that. but the other thing that hurt the community banks and credit yuns was the financial meltdown, the credit crunch that toppled a bunch of community banks, caused many loans to default because of the deep recession we suffered. if we could have headed that off by a more sensible approach to these financial markets ten years ago, community banks and

credit unions could have thrived. their model to me is the winning model. a customer service model. a community-oriented model. one we want to preserve and enkoe encoura encourage. that's my personal background on it. >> mr. cordray, thank you. it is -- what you point out is accurate and it is the community bankers who believe that they in most instance had nothing to do to cause the problem but are still in the bull's eye for additional regulation. my time has expired. i am the ranking republican on the appropriations subcommittee for financial services where we have responsibility for determining at least initially the appropriation for the s.e.c., the cftc, treasury department, while you're not subject to our subcommittee's jurisdiction, i can't speak for mr. durbin, i would indicate to you a desire, a willingness to have conversations with you about the appropriations process through the federal reserve and your funding, if you're willing to visit with me.

>> be glad to visit with you and have our staff come and speak to your staff and make sure you need to know everything about what we're doing. >> thank you. >> thank you. >>. >> the rule was completed in january but i just want to state my understanding is that when people seek to transfer money internationally, this rule says they need to be told up front how much money is going to actually arrive. in other words, no hidden fees. you see the full impact of the exchange rate that's being assigned to it. and in addition, if the money doesn't arrive, or if the money that arrives is different than what the person was told, there's a way to fix that. is that the essence of this rule? >> it is, senator. if i could say, when you or i,

and i venture to say every one of the people sitting in this room, when we write a check or make a bank transfer or use a credit card, we're entitled to basic consumer protections. we expect that. we rely on it. it's appropriate. in this market, though, for those who send money overseas, typically a loved ones, one of the most steadfast loyal actions, people take, giving half and sending some back to mothers and fathers left behind, they're entitled to consumer protections, too. that's what this rule embodies. >> i think this kind of rule is compatible with a competitive marketplace. if i'm seeking to send money overseas but i can't get a firm estimate of what the fees are going to be, i have no way to compare vendors. therefore, there's no rewards, predatory practices, but with this rule, it rewards the efficient provision of services to the economy. am i correct in that? it empowers the consumer to shop between vendors. >> that's how i see it.

that's how the bureau sees it. i believe that's how congress saw it, that's why it required us to adopt a rule of this sort. i think we'll see an initial evaluation of the implementation and if there's way to make the even forcement more cost effective, more efficient, certainly that will be appropriate. but i was given some numbers on a cost of a $200 transfer, estimates are that the costs currently range from 3% to 13%. that's a 10% spread. now, some of that may be a difference in destinations but some may be a difference in the imbedded exchange rates and practices of the vendors. within that 10% spread the quarter that you refer to, that is one-quarter of 1% on $100 transfer and it may be a lower amount on a larger transfer, since the spread over a larger sum, it seems like a small price to pay for creating a

competitive marketplace and any predator practice, and if someone lifts you off, you have redress. seems like you have a very small price to pay for a competitive marketplace that will have all kinds of efficiencies to offset that fee. >> that's the judgment i understand congress to have made. seems like a reasonable squment. our job is to carry out the law regardless, but i do think that's right. as i said, we are further proposing to see if there's an appropriate threshold we might set for community banks and credit unions that don't do these transactions in the normal course of business. they shouldn't necessarily be subject to the same burdens and we'll be considering that over the next several months. >> when you speak of the same burdens, are you speaking of kind of the enforcement strategies? are you speaking of providing pricing up front, fair pricing, so would that also disappear?

the protection for consumers, the argument is they should be the same. if there's very few transactions and other places consumers can go, and we've made it easier for them to shop, which is very important in this market, and as you say, it's not been a transparent market, not a market that's included shopping, then we may well be able to exempt some of the smallest institutions that don't need to do the same kind of compliance as larger institutions when they're doing very, very few transactions. >> well, i certainly applaud you for this rule, for fairness, for american consumers. and the fact that you are setting the rules of the road for an effective, competitive marketplace that is so important in our xaptist system. i do hope in the next six-month report we'll see an analysis as you work to continue to make it operate in the most effective manner.

i want to turn to page 28 where you mention you're exploring an issue between the difference between credit scores sold to consumers and those that are provided to lenders. this is a new issue to me. one i hadn't heard of. can you summer rise how this came to light and what you're exploring? is this appropriate under the law? why is there a ady tikz? >> in the law, which is the authority we have, there were two studies congress asked to us do by last summer. the first had to do with remittance transfers and to what extent that could be used to create credit scores for individual who might not otherwise have enough data to score them accurately. the other one was we were asked to issue a report on the sort of variations that people have seen but don't quite understand among different types of credit scores. for example, when you