process. now mr. cordray, we just met for the first time about 15 minutes ago. and although we don't know each other, those who i know from ohio say you enjoy a good professional reputation. they respect you. they respect your judgment and your fairness. so this is not personal. but in my humble opinion, i believe you sit before us as either an unconstitutional appointee, an unlawful appointee, in using the president's characterization, you suffer from a loss of credibility from the outset. so for as ever long as you may occupy this office you have been given an incredibly important charge to protect consumers. but you've also been granted unpress dent, unaccountable, unilateral powers to ban and irration consumer credit preside products and effectively control huge swaths of our economy. so, obviously, i look forward to

hearing your views. i yield back the balance of my time. >> thank you. >> thank you, mr. chairman. and i thank the ranking member as well. mr. director, i thank you for appearing today. and i am excited about some of the things that are happening, especially this service member's affairs program that you are working on. i think this is an initiative that all of us will be proud of, helping our service members, which is an opportunity for me to extend a word of gratitude to all of the members of the committee for helping with the homes for heroes initiative that we passed, the legislation. and my colleague, mr. hensarling yesterday gave an expression of appreciation, and i thank him for using a little bit of his time to give his expressions. i did not mention mr. grimm when i talked about this other initiative, the home for heroes. it's not something that you are associated with, but mr. grimm was the co-sponsor, and i want

to make sure i mention him. with reference to your appearance today you also have an office for older americans that i think is important. i understand that mr. skip humphries is the person who will lead this agency or office, and i am eager to hear more about this. i have some of the accomplishments. you've been there a short time but your list of accomplishments has become very impressive over a very short period of time. this test pilot program, know before you owe, i think that's something that the consumers with credit cards will be excited about. you've initiated an examination into the student loan debt. i think it's something that college kids especially are going to be excited about. you have an ask the cfpb q&a opportunity for members of the

public so that they can increase their financial literacy. you have initiated an overdraft exploration program and you're going to look at the harmful effects on consumers. you've created a first of its kind program, a database to -- for repeat offenders against milita military. and this is to combat the fraud that targets our veterans and their families. i think it's an important program as well. there are many others that you have initiated, and i'm looking forward to working with you. i do want to just call to your attention something i think is important to you. a lot of the small banks are still having a good deal of consternation, and i look forward to working with you so that we might do some things to allay their concerns. i'm confident there are ways by which we can make sure that they have a greater understanding of

what we're attempting to do with this agency. so i thank you for being here today. i am eager to hear more from you, and i yield back the balance of my time. >> mr. capato for two minutes. >> thank you, mr. chairman, and i want to welcome mr. cordray from a neighboring state of ohio to this morning's hearing, which is the first stat torly mandated hearing to discuss the cfpb and discuss the report. a little over a year ago, professor warren visited my office to update me on this progress of standing up the cfpb. she said at the time that the cfpb provided an opportunity to knock down the silos that existed between federal financial regulatory agencies and to provide clarity to consumers and constitutions and consumer supervision. unfortunately, from all of the interviews and testimony that we received, this is not -- this is

not what is occurring. and i fear that the cfpb has just created a new silo. although the prudential regulators transferred some personnel to the cfpb, some of these agencies have not eliminated fte positions, and they were not transferred. so rather than using this opportunity to ensure there's no duplication among the agencies, we have just added another bureaucracy to the equation. it is my hope that you and your team will be judicious in assessing the staffing needs going forward, and work with the prudential regulators to eliminate these divisions and positions. it does add an unnecessary and added burden, i think, to particularly the community banks as they are moving forward trying to unlock and create jobs and getlanding and small businesses going again. i do have questions like my colleague from texas on the nature of the appointment of mr. cordray as the director. i do believe it could lead to

some legal challenges of the cfpb actions and create some more ambiguity. so i hope that this becomes more clarified. but i would like to thank you for appearing before the committee, and i look forward to your testimony. >> ranking member waters recognized for a minute and a half. two minutes. a minute and a half. >> thank you. mr. chairman, i thank you for holding this hearing this morning. and director cordray. i'm pleased that you have another opportunity to testify before our committee. in fact, we've been seeing a lot of you. as i understand it, you've been before the congress five times since you were appointed cfpb director back in january. that's once every few weeks and that's not to mention all of the times other employees of cfpb that have come up to congress to testify since the bureau opened its doors. your agency has been before congress 16 times over the short

course of its life. it's clear that this agency is setting the gold standard in terms of transparency and accountability. the cfpb has gone out of its way to send us public and industry feedback on mortgage disclosure forms as well as the student loan disclosure sheet. moreover, the cfpb is governed by budget caps, veto by the financial stability oversight council and an annual gao audit to name just a few provisions through which your role is uniquely subject to. i'm pleased to hear from you what's included in your semiannual report to congress and your plans for what you will undertake in the coming months. thank you, and i yield the balance of my time to the gentleman from chicago to add to his minute and a half, hopefully two minutes. >> you will reserve ten seconds.

mr. roy? >> thank you, mr. chairman. we have expressed our concern from time to time about this arrangement, but this legislation that set up the cfpb is going to add to the regulatory costs that are growing at a rapid clip. it has few checks and balances but broad, largely undefined authority. and here's the main point. it separates safety and soundness regulation from consumer protection regulation. prior to her departure, sheila bair had this to say about this problem. she said banking agencies assessments of risks to consumers are closely linked with and informed by a broader understanding of other risks in financial institutions. placing consume procedure techs policies setting activities in a separate organization apart from existing expertise and examination infrastructure could ultimately result in less effective protections for the

consumer. so if we're not able to mandate coordination between the cfpb and prudential regulators through changes in law, my hope is that this semiannual hearing before congress can at least serve for a platform for a discussion of the key concern that so many prudential regulators have on this issue and which we by past experience have learned the hard way is a big problem with bifurcated regulation. i yield back, mr. chairman. >> thank you. mr. bacca recommended for 1 minute and 15 seconds. >> thank you very much, mr. chairman and ranking member. i also want to thank mr. cordray for being here today. one of the biggest accomplishments contained in the dodd/frank act was the creation of consumer financial protection bureau. finally -- i say finally we have a cop on the beat with sole purposes to ensure the american consumers are getting a fair shake in the marketplace. in the past four years has been

dominated by efforts to clean up the mess created by the previous structure which left enforcement and regulation based solely on financial industries' bottom line. if we tor accept the notion that financial sector was created and exists and depend on the activity of the americans and consumer, well, then i think it's imperative that we do all we can to protect the well-being of the american consumer. and just a few short months, since mr. cordray took his post, the cfpb has taken a number of issues, including know before you own, which is great. it's a program and ensuring consumers know what they are getting into with mortgages, student loans or credit cards. i hope that this good work will continue. and i hope that we can discuss the next steps that we can do to work with cfbc to assure accountability and transparency. but at the same time as ed royce indicated, we need mandates. but remember that we need

mandates with funding to as well. you can't just have a mandate without giving you the additional fundings to make sure that we have the accountability and the transparency. that has to come hand in hand together. and i look forward to your testimony. thank you very much. >> thank you. >> thank you, mr. chairman. welcome, director cordray. i would like to echo a number of concerns expressed by my colleagues on this side of the aisle. i'm particularly concerned about reports that the cfpb is engaging in regulatory activity that could jeopardize the safety and soundness of financial institutions. i'm also concerned about attempts to regulate forced place insurance and finally i'm told that the simplified respite mortgage disclosures that the cfpb is developing may in fact, be more complicated than previous disclosures. i welcome your comments on these matters and thank you very much

for being here and yield back. >> mr. gutierrez, 2 minutes and 15 seconds. >> thank you, chairman. appreciate that. first of all, welcome. and secondly, i would love to see how we went from seven pages to three pages and made it more complicated. because that's what we've done in terms of disclosure of transactions in key terms and something easier to understand. i agree. i know you're currently testing the document, and i congratulate you. i think that's what we should be doing. but maybe, never know, democrats -- oh, i'm sorry. you're just appointed by a democratic president. maybe we did find a way to take seven pages and reduce it to three and make it more complicated. but i want to tell you that credit card companies, you have to stay on top of them. they are getting trickier and trickier every day in terms of trying to figure out how it is that they hoodwink the american

public. and student debt, i think, should be a nonpartisan issue. $1 trillion more than all the credit card debt in america and all -- that's the -- those are the ones -- we have to figure out a way to make sure as they engage in student debt that they're not getting ripped off also and that the terms and the agreements are such that are going to let the next generation of great america, our children, to be able. so i'm happy you're looking into that. and you've done so many things, and i'd like to say that you've been, i think, it's been five times you had the job a short time. and five times. we see that would be like 16 times since last year. it looks like we're going to get -- you know the best thing about you is that people just want to see you on capitol hill. and i got to tell you, every time one of those bankers come knock on my door, i said we're going to talk about this. i think next year at halloween they're going to have like the

cordray costume for all the bankers and all their things. you are just a scary man when it comes to them. but i don't think that's so bad. i think that they need to have a little bit of fear of the lord in them as they move forward. and lastly, we've got to stay on top of them because last week i opened up my account and i said -- i keep $250 there because that's their minimum for the savings account. they raised it to $500 and charged me 4 bucks because i was under to continue to keep my money. they continue to do these tricky things to put their hands in the consumer's pocket. keep up the good work. thank you. >> we'll get a copyright on a richard cordray halloween outfit and -- mr. miller for one minute. >> thank you. mr. cordray, mortgage origination is a critical function of our housing finance system reform directed by dodd/frank must be implemented

with considerable care and caution. cfpb has been active in this area working on the ability to repay regulations, working on integrating mortgage disclosure requirements under respa and truthful lending act. while not well crafted these rules will not help consumers by drying up liquidity in the mortgage market, driving up cost and limiting access to mortgage credit. we've seen the rule implemented in the name of consumer protection that had the impact of limiting the impact to lower cost loans. some prevented borrowers from closing because legitimate discrepancy in the closing table. rules that are implemented in the consume procedure techs in the force of mortgage originators to offer loans where consumers pay more for their closing costs. we must protect the consumer and we must seek cost -- make sure that costs to increase in the name of consumer protections are not implemented. we must not restrict liquidity or consume procedure techs in the name of consumer protection. we must -- i hope you'll address the ways you make sure the

access to credit and preserve consumer closing costs will not formulate these rules and they are done appropriately. >> mr. carney for one minute. >> thank you, mr. chairman. thank you for having this hearing and thank director cordray for coming in. it's good to see you. my colleagues on the other side of the aisle are concerned how you were appointed. i am just happy you were appointed that we have a good man directing this agency doing a difficult job at a very challenging and important time. i look forward to following up on the conversations that we've had that we started in my office when you were the enforcement director, i thinkaed the time, about nonbank payday loan, making short-term lending and, in particular, practices on the online lending environment. appreciate the fact that you've had -- held hearings on this issue in alabama and looking forward to continuing our conversation on that.

thanks again for the great work that you're doing. look forward to our conversation today. >> mr. doe. >> thank you, mr. chairman and i am -- >> for one minute. i'm sorry. >> thank you, mr. chairman. and i am one of those on the other side that are concerned about how the appointment was made. and i think that's just -- goes down to the basic structure of the law. we know there's an ongoing discussion about the cfpb's organizational structure. it's also a big concern that i have. should the cfpb destructure be the same structure at the house under democrat control passed in the 111th congress which is also the structure that we've been advocating in this committee during this congress. or should the structure remain as it is today with few checks and balances,ible, for the american public. now while the structure discussion continues, i think that we all should be able to agree on some fundamental principles. first, strong consumer protection is important. necessary and good for consumers

and private sector businesses. second, the cfpb's rule making and other processes should be constructive and transparent while thoroughly and objectively considering all viewpoints from interested parties. third, regulations that stifle legitimate product availability, innovation, competition and growth would be inefficient and uneffective. as we move forward, i hope the cfpb and congress will use common ground as a basis for analyzing existing and future proposals. mr. cordray, i appreciate your time and being here today. >> thank you, mr. frank for two minutes. >> thank you, mr. chairman. mr. cordray, welcome to one of the longest running hearings in washington. the hearings on oversight over your agency in which my colleagues complain there is no oversight. i look ford the ward to the rer. one reason they complain about there not being oversight is that they have nothing firm to

complain about. the agency has been in existence now for a considerable period of time and there are no problems. none of the horrors and abuses we threatened were going to happen, happened. now let me talk about an important issue which was our addition of the word abusive to the practices you were to protect people against. on fair and deceptive. people said what do you mean by abusive? we defined it in the statute to say it is abusive if materially supervise with the ability of a consumer to understand a term or condition or takes unreasonable advantage of understanding the risk, cost or conditions, the inability of the consumer to protect the interest. it may depend on the consumer. and if people think that's some far-fetched notion, remember that one of the problems with the subprime loans, they were -- when you go to an 80-year-old and urge her to refinance when she's nearly paid off her mortgage, now refinancing for some people might be a good idea.

when it's sold to an 80-year-old it's probably not such a good idea. this allows you to deal with ignorance. and people said, why your getting said why are you getting involved in ignorance? and i misplaced the book, of a very distinguished economist who said of course there needs to be a capacity in the government to protect people not just against deception and not just against unfairness, but against people who would take advantage of their ignorance. that's what abuse does. and we in acting in that and giving you the authority to protect people against abuse, we are following the instruction of that particular economist whose name is freed rick highiak and i urge my friends to look at efforts to exploit individuals. thank you, mr. chairman. >> thank you. we have one and possibly two votes on the house floor. so members may want to do that. we'll come back and hear your

testimony. ms. canseco for one minute, mr. garrett for one minute. that will wrap-up our side. so ms. canseco. >> thank you, mr. chairman. this week, across the street from the capitol, we've been reminded of the constitutional limits as the president's health care law appears to be in serious jeopardy. unfortunately, i believe it won't be very long before matters involving the cfpb and end up in the very same place. we must be ever so mindful today that president obama gave a recess appointment to mr. cord e.r.a., despite the fact the senate was in session at the time. a black and white matter, despite the administration's spin there is some gray there. this political maneuver by the president has set up a constitutional crisis at a time of already heightened, uncertainty in our economy.

in other words, at a time when we can least afford it. with that, mr. chairman, i yield back. >> thank you. mr. garrett will close out the opening statements and we'll go vote, come back as soon as we can. so i would encourage members to make your way to the floor. >> mr. chairman, with your indull engines, he have another committee i have to testify at so i won't be back right away. it's not a sign of my lack of interest in the oversight of this agency. >> thank you. mr. garrett, one minute. >> thank you. mr. cordray, the fact you are here today is quite troubling. ask yet another display this administration's arrogance and flagrant disregard of the constitution. the only check in dodd/frank is the position of the director requires senate confirmation and this president ignored it. the only way this president gets around the confirmation process is to rely on the constitutional power to fill up vacancies that may arise during recess. but the problem is, this constitutional authority depends on the senate being in recess. you know, i suppose this

president is an impatient man. but instead of waiting for a constitutionally significant recess of at least three days, this president declared the senate in recess and this was a unilateral infringement on the constitutional powers of this congress to determine for himself when it's in recess. the recess appointment clause was adopted to ensure an unfettered continuation of government. it's not here to provide an escape hatch for this president when he wants to avoid the senate confirmation process. history tells us this. the founding father said so. nothing more than a supplement for the purpose of establishing an auxiliary method of reappointment, they said, in case in which the general method was inadequate. this position was illegitimately occupied and has not only been granted broad and definable powers, it also has been insulated from the congressional appropriation process and oversight. i say all that, mr. cordray, with nothing ill against you personally. but as a member of this congress, who has sworn an oath to support and defend the constitution, i find the method in which you were appointed ex

tle tleemly offensive and a violation of the highest law of this land, the constitution of the united states. with that, i yield back. >> thank you. at this time we'll stand in a brief recess.

>> mr. cordray, the committee will come to order. are we ready to proceed? you're recognized for a five-minute opening statement. and if you wish to go over, that won't be a problem. we won't be interrupting you. >> okay. thank you, mr. chairman, ranking member frank, members of the committee. i want to thank you for this opportunity to testify on the first semi annual report of the consumer financial protection bureau, detailing the bureau's accomplishments in its first six months. in january, i presented this information to your colleagues in the senate, and i look forward to presenting it to you today. before i became director, i promised members of congress in both chambers, and on both sides of the aisle that i would be accountable to you for how the consumer bureau carries out the

laws you enact. i said i would always welcome your thoughts about our work, and i stand by that commitment. i'm pleased to be here today to tell you about our work and to answer your questions. the people who work at the consumer bureau are always happy to discuss our work with the congress. this is 15th time, maybe the 16th time i learned this morning, we have testified before either the house or the senate. and my colleagues and i look forward to working closely with you, with the businesses who serve their customers and the consumer finance markets and with the millions of american consumers themselves. i'm honored to serve as the first director of this new consumer bureau. i'm energized and inspired by the many talented people who work at the cfpb, and i'm driven by the challenges and responsibilities of our mission to protect american consumers. our mission has a critical importance positive making life better for americans. consumer finance is a big part of all of our lives.

mortgages allow people to buy a home and spread the payments over many years. student loans give young people with talent and ambition access to an education. credit cards give us immediate and convenient access to money when we need it. these products enable people to achieve their dreams. but as we've all seen in recent years, they can also create dangers and pitfalls if they're misused or not properly understood. during my years in state and local government, i became deeply engaged in consumer finance issues. i saw good people struggling with debt they could not afford. sometimes those people had made bad decisions they came to regret. sometimes an unexpected event like a loved one getting sick or a family member losing a job overwhelmed even their most careful planning. still other times, i saw unscrupulous businesses who obscured the terms of loans or engaged in outright fraud, causing substantial harm to

unsuspecting consumers and even ruining their lives and devastating their communities. i'm certain that each one of you hears every day from your friends, your neighbors, constituents in your district who have these kinds of stories to tell. these people do not want or expect any special favors. they just ask for a fair shake and a chance to get back on track toward the american dream. one of our primary objectives at the consumer bureau is to make sure the costs and risks of these financial products are made clear. people can make their own decisions, and nobody can or should try to do that for them. but it is the american way for responsible businesses to be be straight forward and upfront with their customers, giving them all the information they need to make informed decisions. that is good for honest businesses, and it's good for the overall economy. another key objective is making sure that both banks and their nonbank competitors receive the

even-handed oversight necessary to promote a fair and open marketplace. our supervisors are going on site to examine their books, ask tough questions, and fix the problems we uncover. under the laws enacted by you, the congress, and with the director now in place, we had the ability to make sure this is true across all financial products and services. the consumer bureau will also make clear that violating the law has consequences. there are field examiners, our direct contact with consumers and businesses and our highly skilled researchers, we have multiple channels to know the facts about what is happening in the marketplace. we plan to use all of the tools available to us to ensure everyone respects and follows the rules of the road. where we can cooperate with financial institutions to do that, we will. when necessary, however, we will not hesitate to use enforcement actions to right a wrong. as we move forward with our work, we need to hear directly from the