responsible, balanced perspective on the problems we're facing. and frankly, whether we hire someone or not, and again, this particular situation that you raise is news to me, we're getting input on broad basis from people who have a lot of different perspectives, some of whom dislike the banks, some of whom love the banks. and we want to get all that perspective and filter that in as we figure out how to proceed on some of these hard. >> you made in your opening comment that everybody needs even hand oversight. and i think if you're true to your words there, i think mr. eeks would have a difficulty trying to gain employment with your agency. >> again, i think the premise of the question is mistaken. >> another question for you. with regards to basically you've got rule-making authority as well as authority. do you do any cost analysis on the rules you propose? >> we make strenuous efforts as

our statute tells us to assess the benefits, costs, and impacts of each and every rule that we would consider adopting, yes. >> is that information public? is that something we get our hands on -- >> it is part of every rule-making, and it is typically published as part of the rule-making. i think there is nothing hidden about it, and i think courts will review carefully when they look at finished product by us. it's something that not only do we have every reason to do and do carefully, but also it makes common sense. >> this is a -- this is -- for instance, the rule of thumb, or maybe get your thoughts on it. when you propose a rule and get a cost benefit analysis showing it's going to cost ten times more than the benefit it's going to return, that something that alarms you? is that something that you believe probably is not worthwhile pursuing? >> that would be of concern to me, and it should be, yes. >> okay.

give me just a quick overview here. i noticed also in your statement that you said you've been hearing from thousands of americans about what works and what does not work. what is working and what is not working from the things you've heard from them? >> thing is a lot of americans who still feel that they have trouble making their voices heard when they're on the other side of the table in some of these transaction, or if the transaction doesn't work out and they're now dealing with a mortgage servicer, a debt collector, someone down the road. again, i'm sure it's not anything different from what you hear every day from your constituents who sometimes are at their wit's end and coping with situations where they just would like to know that somebody is standing on their side and helping them. i know you do that. we try to do that as well, and we're happy to work together with you. >> appreciate your testimony. >> thank you. the committee will stand in recess. we have two votes. we'll get back as quickly as we can. thank you for your patience.

>> in the interest of everybody who is here, we're going to go ahead and start, if that's okay. mr. green for five minutes. >> thank you, madam chair. and again, mr. director, thank you for being here. i'd like to visit with you quickly on several issues. i'd like to start, if we may,

with the small banks and credit unions. as i've indicated, i've been meeting with them, and they have expressed some concerns. and i would like to give you an opportunity to share with some of the outreach efforts that you have in place to allay some of their concerns. >> so, thank you, congressman. it is something that have i indicated as a point of emphasis for the bureau, and this goes back to my personal background. i served as i mentioned before as the elected state treasurer in ohio and also as attorney general. as state treasurer, i worked a great deal with smaller banks in the state because we had a small business lending program that we made available to them, and a number of them participated in it. and out of that work we created a community bankers council that advised me about all aspects of the work we were doing at the treasury, and really improved

our work. when i became attorney general, i continued that and had a bankers advisory council on the kind of financial issues that we touched on in the attorney general's office. so i said i'm going to do the same as director of this bureau. we're going to have both the community banks advisory council and a credit union advisory council. we just met earlier this week to work out how we're going to select members for that and frequency of meetings and the like. they're going to have very direct input to me. the other thing is that, excuse me, we are required by the law in a number of our rule makings to special panels that give small providers and small banks the opportunity to give us very direct input about rule proposals and how that would affect their operations and whether there should be adjustments made and the like. that is something we're going to

consider with each of our proposals. we have issued one final rule thus far on remit tense transfers, the international transfers of money that many people engage in. and we have issued a supplemental proposal to consider whether there should be a threshold of institutions that don't do these transactions as a regular matter who should arguably be exempt or on a relaxed footing with some of the requirements. >> now with reference to our service members, i see that you have the office of service member affairs. i'm eager to hear what you have to say about this. i'm amazed at how important this has become to our country. the veterans as well as those on active duty. so could you share a few thoughts, and then i'll have one more question for you. >> sure. it is, as you say, you're exactly right. it is of increasing importance to our country because we have a whole new crop of veterans who

are or will be returning from active duty, many of whom were activated from national guard status and making sure that they are protected both during their active duty, which they have very special provisions in the law for them, and after they come back, that they -- a lot of emphasis right now on hiring veterans and making job opportunities available. but similarly, we want to protect them because many of them have benefits coming under the gi bill. and whenever you have money coming, there are people who have different ideas for you, and many of them are not in your own self-interest. so look, i've been very impressed both as a colleague of mine and since becoming director as i work with holly petraeus. she has been a strong voice for our military. she spends a lot of time going across the country, visiting military bases and bringing back

the insights that she gleans from those trips about the needs and struggles not only of service members, but their families and making sure that we give voice to those concerns, whether they're within the narrow jurisdiction of the bureau or whether it means working with the department of defense or department of education or others, there is much that she is getting done. and we want to protect service members every way we can because it feels like the appropriate way to repay our debt to people who have risked so much, sacrificed so much for the liberties of the rest of us. >> thank you. and finally, my district is quite diverse. we have the ballot in my district printed in four languages -- english, spanish, vietnamese and chinese. so i would like to know what you're doing in terms of language translation to make sure that we are communicating with all persons in the country lawfully here, i might add. >> first of all, that's

fascinating. second of all, at the bureau, maybe the most direct way we hear from people is on our consumer complaint line. and we are able, and this is very important to us, we created this capacity, we're able to field inquiries from people in 187 languages, which is, you know, pretty much covers the waterfront in this country as best we can tell. and we don't want anybody to be blocked from being treated fairly as a consumer by the fact there is some sort of language barrier that they can't make their voice heard. we also know that many communities where there is a language barrier, they can be the targets of predatory schemes and plans because there is an assumption often sadly correct that they will not pursue law enforcement remedies or complain to the government. they'll just take their lumps. we don't want that to be the case. we want those communities to be just as protected as the

majority community. and if that means breaking down language barriers to do it, that's something that feels like it's appropriate for us. >> thank you, madam chair. i owe you a minute and 15 seconds. >> thank you. mr. renacci for five minutes. >> thank you, madam chairman. i want to welcome a fellow buckeye. no matter what we agree or disgrow, i'm sure saturday night we'll be agreeing on which teams should be winning. >> we certainly will. >> i've heard concerns about the examination policy under which one or more enforcement attorneys accompany cfpb exams. pointing out none of the federal banks agencies have ever done this, and having enforcement attorneys participate in exam has a chilling effect on examination process. i'm afraid that the cfpb practice is intimidating and does not foster the openness that should characterize a relationship between the cfpb and the institutions it examines.

indeed this feeds the institutional fear that the cfpb's main purpose or object during an examine is to obtain documents that can be later used to launch an examination. are you concerned about this perception of the cfbp? >> it's something i've had discussions with a number of bank ceos about. i make it a point. i am frequently calling through the list of different institutions we're working with to make sure they know there is an open line of communication with me. some have raised the issue. and i've taken pains to explain that we are trying to integrate our supervision and enforcement teams. we want the supervision to understand where enforcement works and why and how. and we want the enforcement team to understand how supervision examinations work and how. that often may be a preferable way to address and resolve problems, which is a new thing for a lot of enforcement attorneys who come from contexts

like it was new to me coming from an attorney general's office where we didn't have any kind of an examination capacity. so i have indicated it's not an attempt to create some sort of macho message that we're sending. we don't have regional councils. and so this is one way to ensure that our examination teams have proper support. people shouldn't read any message to that, and none is intended. >> okay. on enforcement also, according to some reports, you may be able to confirm this, the cfpb enforcement staff now has over 100 attorneys, which is more than twice as many as currently employed by the occ. this disparity is striking since unlike the occ, the cfpb has no 150-year track record of supervision and regulation on which to judge its reasonably anticipated enforcement needs. will enforcement be a principle focus of these examinations? >> first of all, i think that that's -- that number is out

front of where we are at the bureau. i don't think it's accurate that we have 100 enforcement attorneys. at the moment. but what i would say is what people need to keep in mind is that we are supposed to enforce the law not only against the banks, the large organizations like the occ does, but the densely populated nonbank realm as well. and we're going to need attorneys to force in that area. we're talking debt collection. we're talking about mortgage issues, both servicer and brokers. a lot of areas that people have a lot of dissatisfaction with, and that we need to make sure that the laws are being respected, that they're being followed, that they're being enforced. so i do think that our emphasis is that enforcement is one of a number of tools, all of which are essential to doing our job well. and i think particularly given the fact that we're dealing with

both banks and nonbanks and no federal oversight of nonbanks has previously existed, this is appropriate. but we will continue to calibrate that as we go. we're learning as we go every month, as you can imagine. >> based on the consumer testimony, the cfpb's overdraft protection and payday advance, it's apparent there exists in the marketplace a growing need for short-term needs. i think it's critical we identify and address the small number of lenders who operate illegally whether they're ensured depositories or nonbanks. my concern is overregulation by the cfpb of the vast majority of regulated banks and nonbank lenders will limit innovative products and access consumers need to legitimate short-term credit. can you provide some assurances that that will not be the case? >> so that's a great question. it's an issue that we're thinking a lot about at the bureau. we had our first field hearing

on the issue of short-term low-dollar loans. we recognized that that is an area where consumers have a real demand. they need that product. but we're concerned the products in that area need to be products that help consumers rather than harm them. there are some banks that are now coming into that atmosphere and competing. we'd like to see there be robust competition with good products and good customer service for consumers who have short-term needs, and many do, no question about it. not everybody has a rich family member who is always there to provide $500, $700 when they need it. so we want to foster competition in that area, but it's something we're thinking carefully about because there are some predatory products as well, and we want to encourage the good products and we want to discourage the bad products, frankly. >> thank you, mr. cordray. i yield back. >> thank you. mr. sherman for five minutes.

>> thank you, director cordray. in a world of the darkness of the filibuster, the recess offers one little glimmer of light. and if a series of pro forma sessions cute real sessions of the senate, then cartoons are real people. i welcome you to this committee. i've got one long question dealing with mortgage finance, and then a whole bunch of questions that are probably so numerous that for those you'll probably want to just respond for the record. the bureau is currently working on the ability to pay qualified mortgage regulation. this is going to shape the future of the mortgage market and people's ability to buy homes. congress created this ability to payroll to ensure fact that creditors were determining a consumer's ability to repay the loan before making the mortgage.

everybody agrees you make a mortgage to someone who can afford to repay it. however, we've heard from consumer groups, i've heard from industry, i've heard from others that the bureau's current thinking might give us a regulation that is so stringent that it could reduce access to mortgage credit in what is already a tight mortgage lending environment. so i'd like your comment on this qualified mortgage rule, specifically whether you intend it to be a broad measure based on ability to pay or a narrower measure that might deny credit worthy buyers access to credit. you've indicated a desire to finish the rule by the middle of this year. so when finalized, will it require lenders to determine that the borrower has a reasonable ability to pay.

under dodd-frank, the bill the lenders can satisfy this requirement by originating a qualifying mortgage which is a safer, more sustainable product. and how will that definition of qualifying mortgage relate to the rules that you're putting together on ability to pay? >> okay. >> i told you it was a long question. >> it was a long question, but have i long answers typically, so maybe they match up. as i said is earlier on the subject, i want to be a little careful because it is a pending rule-making. there was the proposed rule that the federal reserve put out, and it's now fallen to us to finalize that rule. we are consulting with other agencies, and we have received extensive input on the rule from consumer groups, from industry groups, and from people across the spectrum, all of whom are interested in the mortgage market, the real estate market, and all of whom, and we all feel the same way want to see it come

back to life and to vibrancy. it's going to be important to the economic recovery. so this is an important statute. we want to get the rule in the right place. we're trying to be careful as we think about it. and we're looking closely at the alternatives that the federal reserve board proposed. we're considering how best to give effect to the language of the statute. and as you indicated, congressional intent in this regard is a salient point to us, ensuring access to credit in the market broadly is important to us. and one of the difficulties here is it's not so easy to predict the path forward of the mortgage market. you know, we had a very overheated mortgage market leading up to the financial crisis. there were a lot of lenders that astonishingly were making loans without considering the ability the repay of the borrower, completely ignoring that.

they were able, surprisingly to sell the loans on the secondary market. >> i'm going have to interrupt you at this point. >> okay, sorry. >> i'll have a number of questions for the record. >> okay. >> but one of them will relate to atm disclosures, which as you know have to be a physical disclosure on the machine as well as a screen that pops up as you're operating the atm. what has come to my attention is there are people who will rip off the external physical disclosure, and then somebody will come sue for the fact that it's not on the machine. now that we have a more technological world in which every machine also has the screen warning, which is far more noticeable and far more important, one would hope that you would write regulations so you either didn't have to have the physical one, or that you had the physical one when you installed the machine, but you're not responsible for the fact that somebody comes by and

rips it off and then coincidentally, somebody comes by and sues you. that will be one of my questions for the record. others will relate whether to establish an office of regulatory monitoring, whether to have credit unions and community banks involved on your consumer advisory board. >> time. >> the fact that you've got a 400 page regulation on remit tenses. and we would hope for at least credit unions and other smaller financial institutions you would be able to put out something a little bit more streamlined. >> gentlemen, the time has expired. >> i'll ask you also when we expect the larger market participants rule to be finalized. >> okay. >> and we'll get all those submitted as questions for the record. and i thank you for your appearance. >> thank you. i'm trying to squeeze it in so we can get this before the next vote. mr. royce? >> i'm like director cordray to

return to that quote that i mentioned earlier in this hearing. sheila bears' observation that banking agencies assessments of risks to consumers are closely linked and informed by a broader understanding of financial risks of other consumers, policy setting activities in a separate organization she said, apart from existing expertise and infrastructure could ultimately result in less effective protections for consumers. i just ask you if you agree in concept with her concern there. >> i hadn't heard that quote before, and i found it curious because the fdic in fact has reorganized their own staff to separate consumer protection staff from other staff so that they can make sure that they have a more direct focus on

these same issues. so they've kind of mirrored dodd-frank. >> but remember, the quote here is a separate organization. >> yes, sir. >> and that's your point. >> yes. i actually think that the two issues go hand in hand. i don't think that you can have a safe and sound financial institution that is not treating its customers in a sustainable basis for the long-term. if they're eating their customer base by exploiting them in the short-run, which is the kind of things that raise consumer protection concerns, they will not be a safe and sound institution in the long run. i think there is much more harmony between these concepts than people have recognized. i also think, though, and i would agree with you, that it behooves us to collaborate closely with our fellow regulators to make sure that we aren't inadvertently -- we certainly don't intend undermining anything about the safety and soundness of the financial system, which would also disserve consumers. >> but of course, but of course,

however, since we have lost the argument for inclusion in one organization, or in one entity for these functions so that as she pointed out, you could share that information and have that broader understanding of other risks and financial institutions in terms of your decision making, would you agree that the authors of this bill went to great lengths during deliberations to ensure that you were not required to consider safety and soundness? >> well, i'm not sure i would agree with that. under the new law, i sit as part of the financial stability oversight council, along with my fellow regulators. what is called the fsoc has the ability to override our rules if they threaten the safety and soundness of the system. i think that means we'll have to want to and should take that

into account as we write rules and also seek out and hear their perspective and have that inform us. again -- i'm sorry. >> with a super majority vote. i would point out that perhaps the reason i am focused on that issue of not considering safety and soundness is because i tried during the markups, during dodd-frank to have that included and failed in that endeavor. but let me go to another concern that i have here. and it has to do with the cfpb will now have the authority to rule whether a state law is inconsistent with federal consumer protection laws. and i was going to ask what standards will the cfpb use when exercising this authority, because if little is done in terms of keeping the states on

the same page, then we could end up with a patchwork of varying consumer protection laws, and would you agree that that would be bad for consumers and businesses? >> i think we've had a patchwork of consumer laws in this country for decades, and it's, you know, another term for it is federalism. >> maybe articles of confederation would actually be the term for it. there are exceptions like in the insurance industry where we do have 50 different regulator, 50 set of rules, 50 sets of separate markets and a consequence to loss for the consumers as a result and loss to businesses. but the real reason we gave up on the articles of confederation and tried to go to one national market was to avoid just such a comeuppance, because that is what was so costly prefederalist system. the idea under the federalist system was we were going to have

at least one national market. that's not where we ended up. that's where i hope rather than compound this problem, which i think dodd-frank will do, you might work in the other direction to create one national system. >> gentleman's time has expired. >> could i respond to the congressman? >> quickly. >> one of the things that we're supposed to do is ensure coordinated enforcement of the federal law here. dodd-frank was unusual in allowing states to enforce the federal law. we want to make sure that we aren't going in 50 different directions on federal law. as for state law, we're inclined to be respectful of the states as we have situations or they come to your attention and you want to bring them to our attention, we'll be very interested in hearing about concerns in that regard. >> thank you, director. >> mr. westmoreland, five minutes. >> thank you, madam chair. mr. cordray, what would be your personal run over here?

i know it's hard to get the direction from down there. what would be your personal definition of fair, f-a-i-r? >> congressman, i don't know that my personal definition is relevant here, because unfair is a defined term in the law, and my job as director of this bureau is to enforce the law that congress has enacted, and therefore we will apply the terms that congress specified as to what unfair means. but i do think it's likely that you and i and most people would have a fairly common sense, probably consensus view of what is fair and unfair. not to say we would agree in every circumstance. there is probably a specific number of circumstances that we would all agree that something is unfair. and then there are areas that are gray areas where we should as a bureau tread cautiously and be a little careful. you don't want to come down on

people when things are not clear. >> that's fine. what is the definition of fair that you're going by? >> it is the definition in the dodd-frank act, which itself builds on years of case law and interpretation. >> okay. >> by the federal trade commission. >> what is the definition that you go by that dodd-frank lays out? >> i don't have it in front of me, but it is a defined term. and the term is defined on the basis of decades of case law that are very -- have been very carefully worked out. and this is not an area of controversy i think for financial institutions under our purview. they understand that law. their concern to us that they expressed is we not go deviating from that in some unexpected direction, which we do not intend to do. >> do you have a definition of personal responsibility? >> that is not a defined term