list and placed there based on mistakes and misinformation. the consequences for wrongful exclusion can be devastating, people are stigma tiesed as terrorists and barred from commercial flight and detained and interrogated and subject to long-term investigation. these people may lose the ability to obtain employment that requires travel or because the government shares information about the individuals inclusion on the watch list with a prospective employer. there have been numerous government audits that suggest that watch list entries have a high error rate like the inspector general reports. most recent 2014 report suggests there's still concerns regarding the processes and procedures. the report found redundant and inefficient processes that clog the system and says that the fbi averages 44 business days to add suspected terror suspects referred by other agencies but it takes twice as long, 78 days

on the average to remove cleared suspects, former suspected, director comey, i think that we have to carefully balance that with our civil rights and liberties under the law. what specific steps is the fbi doing to ensure that innocent americans are not incorrectly placed on the no fly list and what reforms are being made to ensure those are erroneous replaced are quickly removed? >> first of all, i agree with you u. the premise it's important to protect and protect our liberties. i know we have an extensive process that we go through before someone can get on the list to make sure we've got it right and as you said, i'm aware there is a process to remove someone. if there's a mistake or the matter has been closed, i don't know enough to respond to your concern about the time lag or what improvements are needed. >> could you respond to us in

writing? >> sure. >> well, let me then ask about hate crime tracking. after the 9/11 attacks, hate crime and violence committed against individuals in the hindu and arab communities have been increased and violent anti-sooek attacks including the one in wisconsin that took the lives of parishioners. in march of 2013 there were congress members that sent a letter to the fbi and attorney general holder to reinclude the religious groups and hate crime tracking. for instance, tracking them as seikh rather than an all encompassing category. we welcomed the fbi announcement

that it will expand the hate crime incident report used by law enforcement to include crimes motivated by motives of other religious groups. could you please provide us with an update on the status of the revisions to the hate crime tracking program and when you expect the updates to be completed? >> i'll have to give you the plarz in writing, i'm aware of the issue and know that we have made progress in updating and include the categories you talked about. most importantly, to train our state and local counterparts about this because they are the ones that supply the data to us about what the categories mean and why they matter. there's been a tremendous amount of training but i'll have to follow-up to give you the particulars on it. >> okay, we would look forward to having that in writing because we understand that the decision has been made but has not yet been implemented. then could i ask good this task

force on domestic terrorism? attorney general eric holder announced he would revive it to stop violent attacks within the united states motivate the by a variety of causes like racial prejudice. i understand the fbi doj and u.s. attorney generals office will make up the task force domestic violence terrorism, executive committee. can you detail how the task force will expand on the fbi's efforts to detect and prevent hate based violence? >> i don't think it's going to affect me at all because this is something we've been doing all along and care an awful lot about. this is an effort that came from the u.s. attorney community and is a product of their desire to see coordination within their community and with nondoj enltties. now the fact is we do that already. they are just looking to be more involved or to improve it. but i asked my domestic terrorism guys the next morning when i heard about this and i

don't think it's going to change our life at all because we've been doing this and this is work we hear a lot about. >> could you respond to that in writing as well though? >> sure. >> thank you. i yield back. >> the time of the gentlewoman has expired and the chair recognizes the gentleman from idaho, mr. labrador for five minutes. >> i actually really enjoyed your presentation and why ayour answers, i like your forthrightness and enjoy listening to you. >> i'll have to get over this. >> you will eventually. >> you said you still have nine years to go. as deputy attorney general under the bush administration you refused to reauthorize the warrantless wiretapping program which i actually commend you. i think that was a courageous move on your part. you stated that you were asked to be part of something that is

fundamentally wrong. my question is, was it fundamentally wrong because it wasn't authorized by congress or was it fundamentally wrong because it was not constitutional? >> that situation involved programs and i'm still going to be careful about it because i don't know what part has been tee classified where i concluded there was not an adequate legal basis under the constitution or under a statute or some other legal basis for continuing it. >> so in that occasion, did you have a problem with the constitution -- even if it would have been authorized by congress, because i understand the bush administration later sought authority from congress. but because -- and i think mostly a part -- in part because of your statement, if it would have been authorized by congress, do you still think it would have been constitutional or was it just legal authority you were looking for? >> i'm searching back in my

memory now. it was -- i'm not sure i can remember well enough to answer because there were different angles and varieties to the issue. and my concern was there -- obviously i'm someone who devoted my life to the rule of law and there had to be an adequate legal basis for something either in the constitution or in a statute by congress. if congress had acted, and the congressional action had not been challenged on a constitutional basis or overturned that would have been an adequate footing. >> now severe abuses of this program have come to light, including nsa analysts listening to overseas calls of soldiers to their girlfriends and wives in the states. the solicitor general promised if any of the info was used in a court the defendant would be notified. but last year reuters report found doj officials are using nsa gathered intel jengs as

leads for criminal cases without informing the defendant of the origin of the case and misleading federal prosecutors about the origins. do you believe that such use of nsa intercepts are lawful? >> that's a complicated question and i'm trying to make sure i don't talk about anything classified in an open setting. for the fbi, the way we interact is entirely lawful and i also understand -- i don't know the history you're talking about well enough to comment but it is now the practice where someone is notified in the circumstances you talk about. >> the reports are that thern supposed to be notified and in some cases have not been notified. would you investigate any of these allegations if it's true that some of these people were not notified? >> i don't know if it would be fbi jurisdiction to investigate it.

it's probably the most i can say based on what i know from your question. >> okay, maybe we should have a conversation about this. this is an area of concern that some of us have about the nsa. there's been some abuses and obviously we are all concerned about fourth amendment protections and from your testimony sounds like you are as well. so hopefully we can work together on this. i have no more questions. i yield back the balance of my time. >> gentleman yields back. the chair recognizes mr. richmond for five minutes. >> let me say thank you for being here, i have the utmost confidence in my sect in new orleans and my new u.s. attorney. part of what you brought out in talking about public corruption and in your statement you talk about the people's confidence in the system more or less. something that erodes all of our

confidence in louisiana in the system is the fact that every couple of months we're getting someone released because of prosecutorial misconduct and because public confidence is so important, at what point does intentional acts much prosecutorial misconduct rise to the level of public corruption? >> i'm not sure i would call it public corruption but willful misconduct can be consider conduct. the label doesn't matter. it could be criminal conduct. >> is it something you would commit to looking into and i think it's very important for inner city communities to have that confidence to step up in terms of being witnesses to place their confidence in the system to know that the system

is on the up and up and every day we have something released because of intentional brady violation or something of that nature. i think it's something that i would like you all to look into. so i would hope that you're open to doing that. >> the other thing i would i inc., there was an article that talked about whether the fbi tracks criminal conduct by their informants. do you all do that? >> yes. >> do you have for lack of a better description, a range or not a tolerable amount, but do you tolerate certain acts as acceptable as long as it's leading to catch in a bigger fish? i'll let you know where i'm going with this. almost like fast and furious, my colleagues still bring up which i was concerned about also, but if you look at the drug trade

and inner city communities, even though a drug dealer becomes an informant and helps us lead to bigger fish, if he's still out on the street, he's still creating addicts and crack babies. my colleagues on the other side of the aisle don't take it that far. they stop at guns, i'm also worried about that in the drug trade. i think that i see it in my community and i just wanted to see if you all have approached it like that or have conversations about continuing to led informants rome the streets and do what they do. >> the way the world works is the best view of criminal activities is also going to come from a criminal and a lot of the people who are necessarily our informants have done bad things before they became informants, we studlied that carefully to determine who should be an informant and very worried about our informants committing criminal acts after us and

that's otherwise criminal activity. if an informant is going to be involved, there's a whole bunch of complicated layers to review to make sure we approve that or disapprove it. we don't want people working for the fbi committing crimes unless it's absolutely necessary and carefully monitored as part of trying to take down a bigger fish. >> i would hope you keep in mind that things i said earlier. the other part of my question about public corruption. when the investigation starts to effect political elections and i'll give you the example i race with attorney general, the d.c. mayoral race, where the allegation came out that the mayoral candidate was under investigation, which the attorney general defended and said it happened to be that time and came out. >> but then i point to the mayor who was indicted who federal agents gave money to years ago and we allowed him to stay in office and run for mayor and get elected and then indict him and

now it will cost the taxpayers a special election and who knows what he's done in the meantime. i'm worried about individual being able to play politics with it if we know someone is a bad actor, do we act on it immediately or if we're not going to affect elections, let's not affect elections. that's a big concern of mine. let me thank you for the job you do and your agents lie their lives on the liner day. i'm very concerned about our inner cities communities and the fact that every day we're dealing with weapons of mass destruction in terms of assault weapons and so forth. as we get the small drug dealers, let's get the big ones too. i yield back. >> the gentlemen recognizes mr.

holding. >> for making a successful directorship of the fbi, i recall when you were the dad, i was an assistant united states attorney and it was injure previous experience as a line assistant that made your tenure as dag so successful. widely regarded as a prosecutor's prosecutor and brought to bear your experience of how things work in the field to make the department of justice work better for the u.s. attorney's offices. and i think you'll do the same for the fbi. so. >> in your experience as an is astant and as u.s. attorney and deputy and from what you're hearing from your troops in the fbi, how important is

cooperation in a federal investigation of any variety? >> critical. it's the coin of the realm in the federal system. as you know from your own experience. >> how important do you think minimum mandatory sentences are in getting that cooperation from defendants? >> significant. been a useful tool in eliciting that information in my career. >> when a defendant is looking at the minimum mandatory of five years or 15 years or 30 years and that defendant's only opportunity to get out from under that minimum mandatory sentence is to provide substantial cooperation to the government, you think that's a inducing factor for that defendant to cooperate? >> yes, i do. i've seen it hundreds of times. >> so if assistant u.s. attorneys are deprifd of that tool in their tool box of

getting cooperation, do you think that will have an impact on federal law enforcement on your ability as a federal law enforcement officer to get your cases successfully completed? >> if they lose the tool, sure, yeah. >> >> again, talking about your tenure as a line assistant, i seem to recall that you were involved with project trigger lock enrichment, which was the going after convicted felons who are caught with a firearm or single piece of ammunition and using the federal firearms laws to take these criminals violent felons off the street in a whole sale figs. >> it was successful, right? >> we called it project exile but same concept, to sends a powerful message to criminals.

>> while you were deputy, you oversaw the implementation of project safe neighborhoods throughout the u.s. attorney community which was the same thing of going after violent felons and catching them with a firearm or single piece of ammunition to put them away for a minimal of five years, correct? >> we did that across the country. >> and is it your recollection that the decline in prime rates across the country were that program was implemented was -- that a climb was represented to the implementation of project safe neighborhoods? >> i always thought so. i always thought when you send a message to drug dealers and felons, as strong as we sent it changes behavior which sends crime down. >> also in your experience as an assistant and as a u.s. attorney and as the deputy and certainly in your role now, is it your

experience that federal prosecutors prosecute nonviolent drug offenders on a regular basis? >> not my experience. i don't know that i've ever in the offices i worked done that. >> if you were told that federal prisons more than 50% of the occupants of federal prisons are nonviolent drug offenders, would that surprise you? >> more than 50%? >> yeah. >> i don't know the stats but that would surprise me. >> that statistic has been alleged several times by members of this committee and i find it absolutely unbelievable, i don't think it's accurate because in my experience of being a u.s. attorney's office for ten years as an assistant, first assistant and united states attorney, out of the thousands of cases, i never recall us going after a nonviolent drug offender. >> sometimes we would to flip them into a gang, if i was working a gang case.

but yeah -- >> all right, thank you very much, mr. chairman, i yield back. >> chair recognizes the gentlewoman from texas for five minutes. >>. >> let me thank the chairman and ranking member as well for the yielding the time and to put on the record for my colleagues that we were in a homeland security markup and therefore i did not hear -- have the wisdom of the questions asked and maybe answered by my colleagues. i'm going to start out first to congratulate you on your service, we interacted with the fbi over the years and we know how important the responsibilities that you have are and how important it is to have an agency with such high esteem to reflect the diversity

of america. and you give me the outreach and the diversity numbers that you have with respect to women, african-american hispanics and asi asians. >> within our population? >> yes. >> sitting here i can't give you the exact figures but it's not good enough. and the representation is below that in the workforce for similar cohorts. but i can get you the numbers. >> would you get me the numbers. what effort -- what internal effort now is being suggested or implemented under your leadership to answer your own question that it is not good enough. >> first and foremost, the director, talking about it a lot. i sent a message to all 36,000 of my employees explaining why i care about diversity and why it matters. i believe it's a matter of effectiveness and doing the right thing. i sent them all that e-mail to try and drive my view into this great organization. and then on a more tactical level where the rubber hits the

road is in the recruitment efforts at colleges of different sorts and job fares of different sorts. it's a complicated answer but there's a lot going on. we have progress to make. >> i will work with you i'd like to get those numbers and i'd like to work with the fbi on outreach approach. the second point i want to make, you have -- let me thank you for the purpose of the sack. one of the most important aspect of the work is letting the local community know what they do. i encourage you to encourage your sacks when a member of congress calls to join them in a town hall meeting or university, which is a nonpartisan, let them realize that part of their work as a sack is to be engaged with the community. that's where they are. and it's very important. i hope that you will view that as an important role, not taking away from investigations but an important role. >> i agree very much with that. i speak to all of my sacs once a week. one of the things i've told them

repeatedly, you are my representative in each of your community, get out in and speak to people. the more you know the fbi, the more you like. we just have to get -- we got to get out there and talk to folks. >> i think you're very right. now i want to pose a question. i'm from texas. and we have been dealing with a case that seems to have gotten caught in quaug mir, alfred wright from jasper texas, the site of the james bar receipt killing, who's body was found 18 days after it was first reported in an location searched 17 days before by local law enforcement, honors graduate, and well liked and blofd from a family well respected in the area. i recognize this may be an ongoing investigation, but what i'm going to request is a general briefing on the general perimeters. here's what i'm hearing, mr. director, that this has gotten caught up in a scale of

injustice that is almost unbelievable. which includes local officials, people are suspicious and suspect of even federal law enforcement as to whether or not there is a too close and chummy a relationship. i do not make these allegations. make this in the form of an inquiry. it is alfred wright and i want a brief fg you have any assessment of it at this time. the other is the robby toller case, a young man shot on his own front lawn with his parents saying that this is his house and his car by a police officer in bell air, texas. unfortunately this officer under the state system was acquitted. we're asking for a reinvestigation which would include the fbi. i will pass on to you this letter and also going to ask unanimous consent to put the letter into the record that i have sent and also the letter again regarding mr.alfred

wright. >> without objection. >> what kind of work the fbi is doing on local police abuse cases and do you take those seriously? and secondarily, with respect to your priorities in investigation, i think mr. holder made one point, i want to make a another. in your investigation and drug cases, do you prioritize with cartels and major actors versus the local guy on the street with a crack possession situation that may wind up in the federal system but not going to harm anybody but himself. >> time of the gentlelady has expired. if you want to take those -- >> i thank the chairman for his courtesy. >> with respect to the drug cases you're exactly right. our focus is on the international groups or the gangs dominating a particular community. if we're working to the earlier question, if we're working at lower level offenders it's in order to make the bigger case

against the international group or street gang. with respect to the civil rights cases, it's a police brutality case, brees corruption cases are an important part of our civil rights investigative priority. we recently indicted a bunch of people in the sheriff's office in los angeles, it's work we do around the country and remains unfour natalie but necessary parlt part of what we do. >> thank you, dr. comey. >> the time is expired. >> i said the name incorrectly and i want to make sure that i put the gentlemen's name correctly in the record for this letter. i just ask the gentleman the cheeld. the gentleman's name would be robby tolan. >> without objection. >> name should be entered into the record. >> the chair recognizes himself for a period of five minutes.

thank you for your testimony. news reports suggest that the fbi is in fact probing the scandal at the veterans affairs administration. can you confirm those reports? >> yes, our phoenix office has opened a criminal investigation. >> i would encourage you to probe that and i don't want to see happen is some type of fraud committed and these vet rarned died. i want to see them end up with pension and bonuses and be held accountable. in terms of benghazi and perpetrators, would you say that at this point finding the perpetrators and bringing them to justice is purely for law enforcement vice military at this point? >> as in any case, especially terrorism cases, all instruments of u.s. power are brought to bear. >> is it your understanding -- it is my understanding that the administration's position is that they do not have the legal authority to lethally engaged sharia or whoever committed those attacks.

is that your understanding? >> it's not something that i'm in a position to comment on just because it's not my remit but i don't want to talk about how i'm approaching that investigation because i don't want to give anything away to the bad guys. >> i understand, we run into a problem when they are making claims that they don't have the authority to respond. but what happened leading up to that was the president authorized force to overthrow gadhafi in libya. they said they had the authority to do that but somehow you would no have the authority to seek a reprisal attack against somebody that massacred four americans, including our ambassador. that may not be something you can comment on, it does not square with me. it seems the libya intervention is the weaker case, especially given the 2001 aumf. there were reports that the fbi noticed that we were starting to see islamic militants who are

u.s. citizens leaving minnesota to go wage jihad in syria. and then there was also the report a couple of weeks ago about a u.s. citizen suicide bomber from fort pierce who committed a suicide attack. you talked about the problems in syria, but if they are motivated to go over there and wage jihad. how would you character isz the threat of jihad, those type of people attacking americans here in the homeland? >> it's a significant concern of ours, which is why we try to identify and if people are going to go over to fight jihad with one of these al qaeda afill yalted groups, we want to lock them up before they go. once they go and get the worst kind of training and develop the worst kind of relationships, then they are a particularly different challenge because they are americans and they can flow back and do very bad things here. this syria problem is something

not just the fbi is focused on but all parts of the u.s. government are focused on this. >> what tools do you use if somebody has not committed an act of violence and they are radicalized, how would you look to stop them? financial transactions, material support statute? we want to get them before they strike. do we have -- >> all of the above. all of the above. typically we charge them with either attempting to provide material support to a designated terrorist organization or conspireing to provide material support. if we will use anything we can to stop these people from going over there and becoming further radicalized. >> my final question is there's an indictment and guilty plea of the conservative film maker who has written books and movie about president obama. it was for campaign finance he reimbursed money to donors,

$20,000 to a candidate who lost by 35 points. i think the conduct he committed it, i'm not suggesting that, but the decision to eventually charge him criminally, the fbi had put out a statement from one of the local offices in new york that they came across the i am propriety through a routine review of the fec reports. you know that if you just review an fec report, all you would see is the name and amount donation. there would be no indication that you would have reimbursed anybody. if it was just a routine review, it doesn't seem it would be sufficient to trigger that type of inquiry. can you explain how a routine review of an fec filing would have led to a reimbursement indictment? >> i guess i don't want to talk about the particular case but i could imagine a circumstance in which if you saw a bunch of checks to a candidate coming from a similar business or seem

connected to a particular person it may expose the straw donation scheme, but i don't know the case well enough and couldn't comment anyway. >> i think that's not been my experience. there have been families who donate and if that would be enough to trigger it, you would see more. you don't see this much cases being brought criminally and i know that's not your decision but i'd like to maybe explore that with you some more some other time in private. my time is expired and the chair now recognizes the gentlelady from washington for five minutes. >> thank you, mr. chair and thank you director for all of your time today and for your service. i as well as my colleagues have been deeply disturbed by the recent revelations of egregious misconduct at the va medical facilities and i know that the department of justice tib continues to consult with veteran affairs, office of the inspector general and their review, at this point they are looking at 69 va facilities.

i wanted to understand kind of what do you think you're going to look more broadly given that there are other facilities engaged beyond the phoenix issues and is there greater role you'll expect the fbi to play or other resources you think are important as we continue this investigation? >> thank you for the question. it's not something i can answer at this point and i don't think i would answer anyway about a criminal investigation. but we will follow it wherever the facts take us. the phoenix office is where we opened it. we're working with the va and we'll follow it wherever the facts take us. >> thank you, this is a very important issue. thank you for your work there. last month the white house release the findings of the working group review. one of the recommendations made by the report is that congress should amend the electronic communications privacy act to

ensure it is consistent with that provided to physical materials. it was written before e-mail and cloud computing have changed the way we live and work, and more productions for a letter in a filing cabinet than e-mail on a server. i'm pleased they have recognized that this law has been very outdated. and i wanted to ask whether you agree that we need to update ecpa in that policy? >> my sense is that the administration has communitied that as you said. we treat it -- there is an outdated distinction for e-mail over 180 days under the 1980 statute is treated ago something you can obtain without a search warrant. we don't treat it that way. we get a search warrant no matter how old it is. i've heard the concern which makes sense to me. >> i think it's very important we have a bill called the e-mail privacy act, hr 1852 and it would make meaningful updates to

the electronic communications privacy act to address this issue to acquire -- require law enforcement to obtain a warrant in order to gain access to the contents of e-mail and other evidence stored in the cloud. this has 216 co-sponsors. i also wanted to echo concerns raised by my colleagues about the bureau's work to deal with human trafficking. these are horrendous crimes in washington state, we've seen operations cross country through the innocence lost initiative, recovered juveniles and young adults being victimized through prostitution and that's commendable work. we haven't made inroads in how to make a debt in internet facilitated trafficking of children on bathe back page and oerds. human cost here are truly unspeakable and this activity is allowed to continue. are there tools that the fbi can use to combat online trafficking

of children and what are the challenges that you face in prosecuting these cases of trafficking? and what can we do to help that? >> a hunl part of what we do to protect and rescue kids is through investigations online. i have people all over the country doing that as we speak. one of our challenges is the increased use of encryption. that the government wants to be able to break encryption or find identities on the internet. no, it's not. with lawful authority and the involvement of a court, i need to be able to do that. but it's a technical challenge for us that is increasingly difficult. so that's something that we're working on. the back page issue is a challenging one because there are certain first amendment issues that may be implicated by the publications online.

but i don't want to say more about it at this point than that. >> thank you. thank you for your time. >> >> the gentlelady yields back. the chair recognizes himself for five minutes to ask questions. as my colleagues have indicated, we all appreciate you being here, mr. director, we have something in common. we both are graduates of the college of william and mary, you graduated in '82 and i graduated in '75. ifgs thinking perhaps at the end of the hearing we could get a quick shot and send it to our alma mater and say what they do with it. probably not much. >> wonder who these old guys are. >> we used to be -- when i was there we were the indians. >> me too. >> then the tribe and now i think the griffins. >> i think we're the tribe but the mascot is the grifens. >> a myth logical figure that's half eagle and half lion. >> so i'm told. >> in any event, that's beside the point, we welcome you here.

i first of all would like to just bring up again, i probably my colleagues have -- i have two hearings going on at the same time, i've been going back and forth. relative to the china hacking and charges recently and military hackers particularly that were indicted for computer hacking and economic espionage and other offenses aimed at solar products industries, for example, and particularly it's my understanding that alcoa and u.s. steel and westinghouse and allegheny technologies and others were targeted by the military hackers and i happen to be the foreign afirs committee and just in china about a month ago. and in light of these attacks and persistence of the threat of cyber espionage, if you could relate what the fbi is doing about that.

secondly, we'll introduce the legislation in the very new future, which does a number of things which are unrelated to the fbi. one thing which is related to the fbi would call for the federal bureau of investigation and the department of homeland security to expand and the warnings that they are now giving to american companies on how they are susceptible to cyber attacks and other types of attacks and usb drives and travel gifts and promises of employment, social media and the rest. and we would look forward to working with you and your people, any modifications or anything that you think could be helpful. things we should add or leave out. we welcome your cooperation in that effort. if you have any comments on that. >> i look forward to working with you on that. as i try d to explain to folks, only two kinds of big companies in the united states, those hacked by chinese and those who

don't know they've been hack d by the chinese. it is an enormous problem. they are trying to steal everything that's not nailed down and maybe things that are nailed down. we're devoting great resources to it through our national cyber investigative task force to try to track ininclusions and respond quickly but therein lies the challenge. we have to get better with sharing information at machine speed because these bad guys are moving at the speed of light and we have to get better sharing information with us because they'll see things before we see them. that back and forth is a huge part of the answer to this threat. it is an enormous feature of the cyber work the fbi does. >> i appreciate your response. >> we know china is probably the worst actor. there are a handful of others? >> oh, sure, the internet is a very dangerous neighborhood.

criminal groups, terrorist groups, because it's where our lives are, that's where bad people come. it's a very complex challenge. there are other actors that are significant players in this. i'm not sure in an open hearing i want to point that out but you can guess. in the 48 seconds i have left, i know this has already been brought up but relative to the irs targeting certain groups for their political leanings, cincinnati which i happen to represent the first district of ohio, that was the location of the irs facility that was perhaps most directly involved and some initial talk about whether that's the people out in cincinnati, we don't know what's going on. i know -- correct me if i'm

wrong, i understand this is still information by the fbi and we expect the fbi to give this full consideration and that we get to the bottom of what happened here and prevent this from happening again. >> my time is expired. the gentleman from new york, mr. jeffries is recognized for five minutes. >> thank you for your testimony here today and the tremendous service you employprovided to t american people. we have a gun violence problem that should shook the con shens of every single american. we have 5% of the population and 50% of the world's guns. it's estimated in america there are more than 275 million guns in circulation. some of which are in the hands

of either criminals or the mentally ill. we also know that since the tragedy in newtown, connecticut, 14,000 additional americans, some of which live in the district i represent, have been killed as a result of gun violence since the tragedy in newtown, connecticut. and that there have been more than 70 school shootings since december of 2012. given the gun violence problem that we confront in america, is it fair to say that we need to do everything possible to thwart this growing issue? >> as you know, i've devoted nearly my entire justice department career to dealing with efforts to try to reduce gun related violence. i think it's an incredibly important topic.

and so i agree, whatever we can do to keep guns out of the hands of criminals or mentally defective is worth doing. >> i respect the opinion that you don't feel it's appropriate in your capacity to comment on legislative measures that this congress can undertake to address what i think we all acknowledge is a significant threat to this country and to our health and well being. but what can you provide to this committee in terms of recommendations as it relates to what congress can do to help the fbi programmatically deal with the issue of gun violence in a more robust fashion? >> i'll have to reflect on that with respect to the fbi, you're right, it's not a policy questions and legislative questions are not for the fbi director to opine on. one thing i can think of, we as a country have to get better at getting records into our

background check that would allow gun dealers to prohibit sales to people have mental health issues, which is a challenge across the country. >> is it fair to say that currently we're not doing everything possible in this country to prevent those 275 million guns to find themselves in the hands of individuals who would commit acts of violence or in the hands of mentally ill individuals who might do our children or the people of america harm? >> i think that's fair. you're familiar, i assume with the economic he is pea onnage act and it's my understanding it provides a criminal cost of action for knowing trade secrets for the economic benefit someone other than the owner by a foreign entity, is that right? >> that's my understanding.

>> the economic espionage act was the vehicle used to recently charge agents of the chinese government, is that right? >> yes. actually in a bit of dunch context but in the particular case i'm talking about the cyber case, that was part of it. >> okay. now the fbi counterintelligence division is the entity that's got jurisdiction to prosecute trade secret theft cases, is that right? >> we -- i think we do trade secret work both in the counterintelligence division and in our criminal division. >> it's my understanding that number has increased since 2009 and 2013. i commend the fbi in terms of the increased activity but there was also a recent report of the office of national counterintelligence executive that estimated that annual losses to the u.s. economy from trade secret theft approximate either tens or hundreds of

billions per year, is that a statistic you're familiar with? >> i don't know the number but that number is a huge number is appropriate. >> now, given the massive nature of the economic security problem posed by trade secret theft, obviously it's important for us to make sure that your agency has all of the resources necessary to combat this issue, but it is also my understanding that there is no companion civil statute that provides u.s. companies with the opportunity on a civil track to deal with trade secret theft. do you think it would be considerable in congress to consider as an additional weapon in the tool box to combat trade secret theft, empowering united states companies to have a civil cause of action to help police this issue? >> the gentleman's time is expired, but you can respond.

>> i don't know enough to respond to the particular. but the fuller the tool box with a threat of that size, the better. >> the gentleman from rhode island, mr. cicilline is recognized for five minutes and this will be the final question this morning. >> thank you, mr. chairman and dr. comey, i want to build on my friend from new york's question about gun violence, regrettably we seem to be working in a congress that is committed to doing nothing about it. despite the efforts of a lot of us to enact sensible gun safety legislation. one of the things you deal a lot with is the success of programs, that really became a national model of investing in these efforts to reduce gun violence. and that of course developed project safe neighborhoods established under the bush administration, really to build upon your work and has been really proven to be very effective program, unfortunately we didn't provide funding for it

in the bill we just passed. i offered an amendment to restore level funding of $8.5 million which just barely failed. but i would like your thoughts on whether or not our budget should include investments for programs like safe neighborhoods. do you see that as an effective tool in reducing gun vi sflens. >> i'm not in a position to comment on a budget matter but in general it's hugely important. i find in my experience that criminals can change behavior with respect to guns and the problem we encountered in richmond, the criminal gave no more thought to the gun than what pants or shoes he was going to wear that evening. our goal was to make that an object of focus and stretch the length between a criminal and gun. most homicides are happenstance homicides, it's a disrespect or disagreement becomes a shooter because the gun is in the waistband, it's very important to send those messages to change

behavior. >> director, you have a responsibility as the director of the fbi, and jurisdiction over a wide range of efforts to combat gun violence. in particular, the fbi oversees the national background check system. while you have said you don't think it's appropriate to opine about policy, of course you have a responsibility to enact policy or support policy which enhances public safety in the national security of the united states. i assume you would agree that a background system for every purchase of a firearm that capture or prevented criminals from buying guns would enhance safety. >> from my whole life experience, any time you can keep a gun out of the hands of a criminal, you've done a good thing. >> it would make sense, if, in fact, we required background checks for every purchase of a firearm to achieve that objective? >> what i love about my job is i'm not a policymaker.

i don't want to express -- >> i'm asking you as a chief law enforcement official. that would enhance public safety to ensure criminals don't have the ability to buy guns. simply would concede that preventing those who are seriously mentally ill, such that having a firearm who would pose a danger to themselves and others ought to be prevented from buying a gun. >> that would be a good thing. >> the way -- >> recognizing the vast majority of people who suffer from mental illness are not violent, what is the fbi doing in conjunction with state efforts to ensure that states are sharing that information, that it's accurately put into the national database and we're preventing

people from serious mental illness from purchasing firearms. >> communicating constantly, talking constantly to state partners to tell them what records we can accept, what form they should be in what is useful to us. the job really lies with the states in getting their acts together to figure out what records they can supply and then supplying them. but i knows there a vibrant dialogue between my folks at cges and the states to facilitate the flow of records. >> i look forward to continuing to work with you on this issue. i think this is a critical issue for our country when you see some of the most recent examples of terrible gun violence that has been caused by someone with very serious mental illness who should not have access to a firearm and we have to work together in a bipartisan way to make sure that doesn't happen. i thank you for your testimony. i yield back. >> the gentleman yields back. we have no more questions. that concludes today's hearing.

all members will have five additional days to submit questions for the record. if there's no further business to come before the committee, we're adjourned. thank you. join us later today when hillary clinton recounts her tenure as secretary of state from her eventually published memoir, "hard choices." mrs. clinton will talk with a form speech writer for miss

clinton. the program is held at george washington university in washington, d.c., we'll have it live at 6:00 p.m. eastern on book tv on c-span2. watch the state of wifi access in schools and libraries. tom wheeler recently addressed the issue speaking to the institute of museum and library services, along with former chair reed hunt. that's tonight at 8:00 p.m. eastern on c-span2. this saturday we'll have live coverage of the iowa state republican party convention in des moines. speakers include louisiana governor bobby jindal, kentucky senator, rand paul, and 2012 presidential candidate rick santorum. that starts at 11:00 a.m. eastern saturday on our companion network, c-span. when i started covering

congress you had people like senator russell long, wilbur mills, danny rostankowski, howard baker, people who were giants in their own way. a couple of those guys got themselves in trouble, but overall they were all intelligent. they knew how to craft legislation, they knew how to do a deal, they all worked with whoever the president was, whether it was their party or the other party. yes, there was politics. at the end of the day they usually found a way to come together and make decisions for the good of the country. today you just don't see that anymore. first of all, the quality of members of congress with the house and senate in terms of their intelligence, their work ethic, it has diminished.

i think increasingly people are driven by the politics and by their own self-survival. you know, i think the hardest work they do is raising money. it's not learning the issues. it's not crafting deals. it's making speeches and, you know, positions themselves to get re-elected. >> emmy award winning journalist, lisa myers is leaving washington, d.c. behind. find out why sunday night at 8:00 on c-span's q & a. next, consumer financial protection bureau director, richard cordray outlines his agency's agenda and accomplishment to date. cordray testified on the agency's semiannual report before the senate banking, housing and urban affairs committee. senator timothy johnson chairs the committee. senator mike crapo serves as the ranking member. this runs just under 90 minutes.

i call this hearing to order. director cordray, welcome back to the committee. today we continue our regular oversight of the cfpb, and three years since the cfpb opened its doors, it has had a noticeable impact in nearly every aspect of the consumer's experience with the financial system from student loans to credit cards, mortgages, education, debt collection, credit records.

the bureau has conducted extensive outreach to both industry and consumers and has proven itself to be a careful regulator in many cases over industries that previously had no federal supervision. importantly, the cfpb has also proven itself up to the task congress set out for it which is to protect consumers. to date, the bureau has obtained nearly $900 million of refunds and fielded over 375,000 consumer complaints. during the crisis we saw mortgage lending from underwriting to servicing had serious problems. many of the cfpb's actions relate to mortgage lending.

for example, the bureau recently finalized its mortgage disclosure rules to improve closings and provide key loan terms and costs to consumers in clear, understandable forms. while the consumer experience at the mortgage table is an important aspect of mortgage lending, the ability of consumers to access affordable mortgage credit in the first place is critical. the cfpb's rules to strengthen mortgage standards including the qm and servicing rules went into effect this past january. director cordray, i look forward to hearing how these rules impact mortgage lending, particularly by small lenders or lenders in rural areas, such as south dakota. while i support mortgage

standards, it is also important to ensure that lenders can continue to lend in all communities. since director cordray testified last november, the bureau finalized its rule to supervise nonbanks student loan services who service over 49 million borrower accounts. for the first time, the nation's second largest consumer debt market will have federal supervision. i'm encouraged by this action, but remain concerned about the high level of student debt, which stands at $1.2 trillion. this issue is particularly important to me as south dakota has the highest proportion in the country of students with student loan debt. i'm interested to hear from director cordray about actions

the bureau plans to take to address this growing problem. according to federal reserve data released last friday, consumer credit growth jumped to its fastest pace in 30 years, with credit card debt rising at a pace unseen since 2001. this serves as a reminder that as members of the last crisis fade, we need a diligent cfpb that guards against abusive practices and ensures consumers are able to make responsible financial decisions, while having fair access to affordable credit. i applaud the cfpb's work so far, and look forward to your testimony. with that, i turn to ranking member crapo. >> thank you. today we welcome back mr.

cordray to discuss the most recent report of the consumer protection bureau. in recent months the cfpb laid out a broad and ambitious rule making agenda. as the cfpb proceeds with rules targeting short-term and small dollar credit, overdraft protection, auto financing, mortgage servicing, settlement and arbitration, it must fully understand how these rules will affect the cost and availability of credit for consumers. the cfpb must commit to take a balanced approach and to performing a thorough, qualitative and quantitative cost benefit analysis of each rule. i'm concerned that many of the cfpb's recent proposals and actions will continue to push mainstream financial products into unregulated areas. diminish consumer choice and make certain products unaffordable. those outcomes could come at a great cost to the consumer and

should be prevented. as the director is aware, another initiative that is of great concern to me is cfpb's big data collection. in the past i've asked simple questions regarding cfpb's data collection, such as how many consumer accounts the cfpb is monitoring and how it intends to use the information it collects. unfortunately my calls for transparent i will have been met with ramped up efforts by the bureau. this april i learned that the federal housing finance agency and cfpb will expand the jointly run national mortgage database to include social security number, life events and other credit together on hundreds of millions of loans. this information is undoubtedly intrusive, unnecessary and contrary to the cfpb's public statements of not collecting and using personally identifiable

information. add together concern is the project manager for the database that the information on it would be easy to reverse engineer. moreover the fhfa and cfpb indicated that borrowers don't have the opportunity or right to opt out of the database. finally the recent reports about employment discrimination at the cfpb are deeply troubling. two external reports and testimony from a whistle-blower highlight the cfpb's failure of the employment rating and compensation system and unacceptable conduct of certain bureau managers. today we will need to discuss how this occurred, why it took months for cfpb to acknowledge and act upon these independent reports and what additional steps the cfpb is taking to increase transparency and

accountability. thank you, mr. chairman. >> thank you, senator crapo. any other members who would like to give brief opening statements? senator menendez? >> emergency alert. >> yeah. >> senator menendez. >> thank you, mr. chairman. welcome director cordray. the cfpb earlier this year released a report on consumer protection issues involving student loans and as i look at hard working middle class new jerseyans trying to get ahead, i feel that they fall further behind. a new class of college graduates preparing to enter the work force, but the question is at what cost to them and their families? at what cost if something should happen to them before the loan is paid off? the experience of the family of christopher briskie in my state of new jersey illustrates how

challenging the issues with stateme these can be. during this time of hardship, christopher's parents were shocked to learn that his student loan debt continued, that not the injury nor christopher's death was enough to stop the debt from growing. while some private lenders made clear they will discharge recent loans in the event of a borrower's death or disability, others do not clearly indicate to cosigners what obligations will be, leaving to families like christopher's to find out they're on the hook for the full cost of the loan. we need to step back and think about how we look at the process in cases like christopher's. this month new graduates will be starting their careers, before they collect their first paycheck they will be burdened

by massive student loan debt. like christopher, if something happens to them the burden in many cases will fall to family members, many of whom are struggling to make ends meet. according to federal reserve bank of new york, the share of 25-year-olds with student debt continued to rise last year ant total outstanding balance now exceeds $1.1 trillion. that's nearly 30,000 for an average student loan borrower in new jersey. the burden for families is real and need for consume procedure tech shun is critical. that's why today, mr. chairman, i'm introducing christopher's law a simple and commonsense bill that will require student loan providers to clearly communicate to borrowers and cosigners what their obligations will be in the instance of death or disability. by increasing transparency in this simple and small way the bill can save families like christopher's years of potential hardship down the road. i plan to introduce separate legislation to introduce two

other issues. in the briskie situation, when the lender forgive finally the loan debt after six years, his parents were hit with a large tax bill on what is deemed under the law to be income. the bill i'm introducing will end that practice. second, if something unfortunate happens to the cosigner of the student loan, death, disability or bankruptcy, some borrower's have gone into default despite never missingunacceptable. i look forward to discussing this issue with you later today, mr. cordray, and make a change so death and disability is not a continuing challenge to families. >> anybody else? >> mr. chairman. >> senator toomey? >> i wanted to say briefly i would not be able to stay until the time i ask questions, i'm concerned about a process underway by which the cfpb is

collecting a vast amount of information about credit card usage. you know, on the order of -- well, it's a staggering amount of data about individual usage of credit cards. i have a series of questions. i will submit them for the record and look forward to have a follow up discussion. thank you, mr. chairman and mr. cordray. >> senator brown? >> i will be less than 30 seconds. i wanted to echo the words of senator menendez. i'm a co-sponsor of his legislation. i was on a call the other day speaking with the sister of andrew catby, a law student in western ohio who was killed right before he graduated from law school. his sister spoke of similar kinds of behavior they experienced from their servicer similar to what senator menendez talked about. i'm hopeful, director cordray, you can help us address those issues. thanks.

>> anybody else? >> the record will be open for the next seven days for additional statements and other materials. mr. richard cordray is the director of the consumer financial protection bureau, director cordray, you may begin your testimony. >> thank you, chairman johnson, ranking member crapo, and members of the committee, thank you for inviting me to testify today about the semi-annual report of the consumer financial protection bureau. the bureau, as you know, is the nation's first federal agency with the sole focus of protecting consumers in the financial marketplace. financial products like mortgages, credit cards, and student loans involve some of the most important financial transactions in people's lives. in the dodd-frank act, congress created the bureau to stand on the side of consumers and ensure they are treated fairly in the consumer financial marketplace. those consumers are your constituents. since we opened our doors, we have been focused on making consumer financial markets work

better for the american people, the honest businesses that serve them, and the economy as a whole. my testimony today focuses on the bureau's fifth semi-annual report to congress and the president, which describes the bureau's efforts to achieve this vital mission. through fair rules, consistent oversight, appropriate enforcement of the law, and broad-based consumer engagement, the bureau is helping to restore american families' trust in consumer financial markets, to protect american consumers from improper conduct, and to ensure access to fair, competitive, and transparent markets. through our enforcement actions to date, we have aided in efforts to refund more than $3.8 billion to consumers who fell victim to various violations of consumer financial protection laws. we have also fined wrongdoers more than $141 million, all of which has gone into our civil penalty fund and can be used to compensate wronged consumers and victims, and to the extent compensating consumers is not practicable, to pay for consumer education and

financial literacy programs that will educate the public. in the fall of 2013, for the first time, we took action, in conjunction with multiple state attorneys general, against an online loan servicer for illegally collecting money that consumers did not owe. we took action against a payday lender for overcharging service members in violation of the military lending act, and robo-signing court documents. we took action against an auto lender for discriminatory loan pricing. and we partnered with 49 states in bringing an action against the nation's largest nonbank mortgage loan servicer for misconduct at every stage of the mortgage servicing process. cfpb supervisory work contributed to a recent enforcement action resulting in a refund of approximately $727 million to 1.9 million consumers for illegal practices related to credit card add-on products. in addition to this public enforcement action, recent nonpublic supervisory actions and self-reported violations which is a great new development among many of these financial

institutions, has resulted in more than $70 million in remediation for over 775,000 consumers. in january, as the chairman noted, mortgage rules that the bureau issued to implement provisions of the dodd-frank act took effect, establishing new protections for homebuyers and homeowners. during the reporting period, we also issued another major mortgage rule mandated by the dodd-frank act, a final rule to consolidate and improve federal mortgage disclosures under the truth in lending act and the real estate settlement procedures act to simplify this process for individuals alike which we have called "know before you owe." we also issued an advance notice of proposed rulemaking on debt collection, asking the public in-depth questions about a range of issues relating to the debt collection market, which is the bureau's most frequent source of consumer complaints. to promote informed financial decisionmaking, we have continued providing consumers with online resources, including the askcfpb section of our website, which i encourage you to use on behalf of your constituents, where we have

answers for over 1,000 frequently-asked questions. a premise at the heart of our mission is that consumers should be treated fairly in the financial marketplace, and that they deserve a place that will facilitate the resolution of their complaints when that does not happen. to this end, the bureau has strengthened its office of consumer response. as of june 1, 2014, we have received nearly 375,000 consumer complaints on credit reporting, debt collection, money transfers, bank accounts and services, credit cards, mortgages, vehicle loans, payday loans, and student loans. the progress we have made has been possible thanks to the engagement of hundreds of thousands of americans who have used our consumer education tools, submitted complaints, participated in rulemakings, and actually that should be millions, and told us their stories through our website and at numerous public meetings from coast to coast. we have also benefited from an ongoing dialogue and constructive engagement with the institutions we supervise, as well as with community banks and credit unions, with whom we regularly meet. our progress is also thanks to the extraordinary work of the bureau's employees - dedicated

public servants of the highest caliber who are committed to promoting a healthy and fair consumer financial marketplace. each day, we work to accomplish the goals of renewing people's trust in the marketplace and ensuring that markets for consumer financial products and services are fair, transparent, and competitive. in the years to come, we look forward to continuing to fulfill congress's vision of an agency dedicated to cultivating a consumer financial marketplace based on transparency, responsible practices, sound innovation, and excellent customer service. thank you for the opportunity to appear before you. i appreciate the benefit of your active interest and oversight. and i look forward to your questions today. >> thank you for your testimony. as we begin questions, i will ask the clerk to put five minutes on the clock for each member. director cordray, the cfpb has now been up and running for almost three years. what do you consider to be the most significant accomplishment

of the bureau since 2011 and looking forward what actions can we expect either the bureau over the next few months. >> thank you, mr. chairman. it's a broad question. i would say a number of things. the challenge of building a federal agency from scratch has been significant. we've had some growing pains. we've been working through those. but at the same time we've gone from zero employees to now close to 1400 employees. people who are very dedicated, as i said in my opening statement, to protecting consumers, seeing they're treated fairly and doing marvelous work to accomplish that. the mortgage rules that we put in place that congress set such a high priority on, both mandating that we do so and putting it on a tight deadline have been significant. that's the single biggest consumer financial market. the enforcement we had tone sure institutions and people need to be treated fairly and money will

go back to peoples pockets when they're treated unfairly have been important. our attempts to supervise and put in place now a significant supervision program for nonbanks to put them on a level with the banks and allow that we can supervise and oversee entire markets with an even hand and an even playing field have been significant. i think increasingly not only consumer response, which addresses individual complaints, but also reveals the pattern of complaints, but also our efforts to provide public information that all of you can see and share and that call attention to various practices, some of which were described in legislative proposals noted here today and otherwise i think do affect the market in meaningful ways. >> the rule has been in effect since january. would you discuss the rules impact in the mortgage market and home buyers? >> the qualified rule or ability

to pay rule alternative names has been one of the most significant protections for the mortgage market to date. it's an important provision to recognize the need to prevent similar financial crisis from growing out of the mortgage market in the future. i think it's been widely acknowledged that it will help to do so. to put the qrm rule in effect, it's been a balanced rulemaking but something we're attentive to and closely monitoring. if we see unexpected consequences for the mortgage market, we are quick to act. re in the rural areas, that's an area where we tried to be sensitive. we had an original proposal that was -- i now believe not calibrated properly in terms of

gauging what is rural for purposes of this act. we backed that proposal off for two years. we're taking a lot of input on it. receiving a lot of comment. we will have a proposal more satisfactory to people within that two-year time frame. >> director cordray, the bureau recently proposed changes to the qm rule including a change to the points and fees limit to allow lenders an opportunity to cure a lone that inadvertently exceeded the limit. can you describe why the changes were necessary and whether you think an y additional changes to the points and fees limb will be needed?y additional changes to the points and fees limb will be needed? the points and fees limit stems from dodd-franks act in congress. we have heard from a number of lenders about it, including the

concern that was stated. i think it was mortgage bankers in particular, but a number of people brought it to us, that though there's a points and fees cap under the rule and people should be able to go right up to the edge of that cap in making mortgages in the market, we like and expect them to do so, that there was some concern that if they got

further answers from the agency with regard to the scope of and content of the data project underway to collect credit card information. i want to clarify one act in these questions. that is that it's my understanding that the agency's goal is to collect the credit card transaction information on 90% of the credit card accounts in the united states. is that correct?

>> i believe that's correct, though i wouldn't put it quite that way. we're not trying to collect information on individual credit card accounts, we're trying to collect information that would give us the pattern of credit card activity in the marketplace so that we can protect consumers against the kind of abuses that led to the card act and have been reined in considerably under the card act. we're trying to accomplish our task that the congress set for us of reporting every year on the effects of the card act, how it's affecting the marketplace, do you want to consider further legislation, go further, reconsider what was done. we can't do that if we don't have information. >> i understand that. if my math is correct and understanding is correct, we're talking about 900 million accounts. and you're collecting data on that 900 million accounts.

i understand the purpose of your collection of this data, i have significant concerns about the potential abuse and misuse of that data and the loss of privacy that comes from it. i want to move to the more recent development which we learned about in april which is that the cfpb is joining with the fhfa with regard to the national mortgage database. what we learned then, just last april, is that the two agencies, the fhfa and the cfpb are going to jointly work to expand the national mortgage database. the information that came out in the federal register with regard to this propose the expansion is extremely alarming. i'm reading from the federal register. the records in the new expanded system may include without limitation borrower, co-borrower information, name, address, zip code, telephone numbers, date of birth, race, ethnicity, gender,

religion, social security number, education records, military status, and records, financial information, account information, including life events. and the list goes on and on. the question i have is does this mean the assurances you have given us recently and as we've discussed the big data projects, that you will not collect personal identifiable information on americans is being changed? is the agency's intent changing in terms of its data collection? >> no, it's not. i believe without being certain, i believe what you're reading from is a sorn, a particular statement done for bureaucratic reasons under the law as to what could conceivably be the case. the national mortgage database will not include personally identifiable information such as name, address, social security

number. i also want to make a point to assure you and your colleagues, because the question was raised, there are no plans -- we will not be including religion in the national mortgage database. so, what i do want to say is the need for this information is acute. governor bernanke -- chairman bernanke when he testified here and we spoke personally, he said one of the problems before the financial crisis is that they didn't know enough about the mortgage market. they didn't see coming what happened in the mortgage market. we have to know more about the mortgage market to prevent this economy from cratering again. >> i understand. this is a similar rationale to your explanation of the need for information about credit card transactions. i understand the rationale, again, i have the concern that the government collecting this phenomenal amount of data about private citizens could be used in an invasive way.

frankly, my time is running out, but i hope we'll have another opportunity for additional rounds, mr. chairman. i want to get into the questions about whether we can reverse engineer this information and whether abuses of the information could occur. >> i recognize that this operates in five-minute segments. that is quite short. we're quite happy to have our staff continue -- i know we are -- to brief your staff and talk back and forth about your concerns about this. i their shows concerns. the gao is conducting the study and report that you asked for. it's extensive. it will get into all these concerns. we went back and forth with them at considerable length. they are conducting a responsible and comprehensive inquiry. any way we can be helpful to -- it's critical that things are not happening that we don't comprehend. at the same time recognize the issues of security and privacy that you're raising. i want to be sensitive to those

and recognize that as foundational for this agency. happy to spend as much time as you like, personally myself or our staff on these issues. >> thank you. >> senator menendez? >> thank you, mr. chairman. director in your mid year update on student loan complaints you highlight an egregious practice where lenders automatically put a loan into default if a co-signer dies, becomes disabled or declares bankruptcy even if the borrower has never missed a payment. that practice to me is extremely unfair to borrowers who have been making their payments on time and whose loans are current and in good standing. i'm in the midst of drafting legislation to fix that problem what are some steps that can be taken under existing law to protect students from this practice, students who may otherwise to be able to qualify for their existing loan on their own or with a new cosigner?

does the bureau have the authority to fix this through rulemaking or do you need additional authority? >> thank you, senator. it was shocking to me -- i want to describe the practice so people understand it. tremendous work done by the student loan ombudsman in the cfpb who has been an outstanding advocate for young people who bear student loan debt burdens across this country. the practice was that nowadays many, many -- the vast majority, 90% plus of student loans that people take out have a co-signer on them. often a parent, maybe a grandparent what will happen is the student attends school maybe for multiple years, ultimately graduates and begins to repay student loans. they may well have a spotless payment history. yet suddenly something happens to the co-signer, at this point the parent or grandparent is aging, eventually some of them

pass away. at a time when that young person is now affected by the death of their parent or grandparent, we saw student loan servicers calling in the account because the co-signer is no longer available on t rather than considering the situation, working with the borrower, working out a payment plan or recognizing that they made a spotless payment on time, that was the way they heaped trouble on these poor affected people. it was not right. i think the issuance of the report itself has sent people scuddaling throughout the industry to avoid a repeat of this. we heard from one of the major servicers -- >> short of the report, public shame, is there any regulatory ability do anything about this or do you need additional authority? >>

there's nothing special about this in respect to other government buildings and is it is not a special government building. it is a building that needs a great deal of work. i wish it didn't. i would rather not spend a single penny on that. we do not own the building, so the notion that we are trying to create a palace that we don't own -- >> we are out of time. i don't want to impose upon the chairman's patience here's. >> mm-hmm. >> would you be willing to give us a thorough accounting of what

is being spent and on what in this building? >> absolutely. >> thank you. >> senator brown. >> welcome back, director. i am always -- amused is not the right word, when i hear a number of colleagues, especially in the house question the accountability of this -- of your work and this bureau and i know that you have appeared in front of the house and senate close to 50 times now, thanks for being as accountable as you have been. the semiannual report state that's cfpb will soon take steps toward providing new protections for consumers in the small dollar credit markets. i appreciate the bureau's continued interest in providing oversight to the high cost market. but i'm concerned that tailoring regulations tot 1200the quote w

the estimated cost to renovate was 95 million at that time. that's your testimony back then. now, the estimated total cost for the cfpb headquarters renovation is 185 million. first thing is how many square feet?

>> i can't give you exactly what the square footage is. i know the building is problematic. we're having move out of it. >> i understand that. you don't know how many square feet? you don't know whether 185 million is a good value for the american taxpayers or not based on a per square foot calculation of renovation costs? >> i know we've been through these numbers and it is a -- i believe it is an appropriate value. it is something that was taken in account of in the lease that we negotiated with the occ so that our lease payments were less over the 30 years to take into account that we and not the landlord would be making the improvements on the building. it is a government asset owned by the treasury and occ. it is a building when finished with it will be a building more densely populated than before. >> that's a great sale job,

administrator. but the point is we're $17 trillion in debt. when you hear -- regardless of the flowery nature of what the senator read to you, the fact is this will be opulent. >> it will not be opulent. >> if you have any of those waterfalls, any of that stuff, that's the kind of stuff we can't afford right now in this country. we're running a $600 billion a year deficit. the very thing you're trying to help people with in terms of fairness and consumer being treated fairly, we'll take back from them in terms of excess costs because we don't run things on a tight ship. so my point -- my point being to you is, you know, the structural renovations, 139 million. the temporary release is 22 million. the securities, utilities, other expenses for three years is 13.6 million. the cost of architectural engineering design contract was 9.2 million. that does not include the i.t., shuttle service that will run

back and forth. so there's a lot of costs in this. i'm not saying what you did was wrong. i'm just saying we're buying top dollar design and construction at a time that we don't have the money to pay for it. you have an unlimited budget. as senator johanns made the point, we don't get a chance to oversight. the fact is who with you has the experience outside of washington of doing a rehab on a building? who works for you that actually has private world experience in rehabbing buildings? >> i would invite you and your staff to tour the building -- >> i'm not saying it's not adequate. >> it's not opulent. >> i'm not saying it doesn't need to be done. one of my statements is that it may need to be done. the question is can it be done

for less? are we spending money we have to spend or could we spend less money? that's my only question. >> that's fair enough. i'm responsible to you on that. this is meaningful oversight you have with me. we are also now briefing the appropriations subcommittee on these issues in the house and senate. that's something i agreed to as i was confirmed by the senate. i take this seriously. we also do not have an unlimited budget. we have to capitol budget. so, every dollar that we spend on something like this is a dollar taken away from other work we're doing. i'm feeling that, wanting to spend as little as possible on this. so i will be happy to continue to keep you and your staff closely apprised. i know you care about these issues. >> i just have a few seconds left who is the expert on your side, on your staff, that has the knowledge to make the decisions about construction project like this?

what is their experience on doing it outside the government. >> we have people outside the agency working on this and we brought gsa in. >> you don't have anybody on staff that has outside knowledge and outside experience to run $180 million construction project. >> i don't know that i would agree with that. at the same time that's part of why we brought gsa in. >> would you answer for the record who on your staff and what their experience is in terms of making decisions for this project? >> i would be happy to have you or your staff meet with our facilities groups and others, also metet with the folks from gsa. i share your concerns on this. every dollar spent on this is a dollar away from other work. >> i'm not real satisfied with the work gsa does on this. we're getting ready to build a 190,000 square foot va facility in muskogee that ultimately we

could own for a third of the cost that we will pay through rents,s throu s througplus we h on the lease andñki $8 million design and construction budget for a facility that now is going to be the three times the size it was now and we have añi 5% increasen veterans expected over the next áp so the point is, gsa isn't really great at this >a$ther. >> i don'tñiñrñ$áqp&ly know abo that. >> but you're relying on ìáhp &hc% suggestions for us i'm all ñiñrears.ñr i don't want to spend more money than we need to either. the deal is done,ñyru isn't it? if you have furtherñi suggestions -- >> yeah. i'll give you the suggests4jy s )= toñiñrñiñr the outside of. go into the middle of the country.ñfg cf1 o construction that knows how toñ do this for a whole lot less money, that can designñi and bud t and built well, and do it in a way that

says we don'tñr have an extra penny to çóñiñrspend. how can we do -- how can we get what we need for the least amount of money? and that doesn't happen at the [pos achl and thatçó doesn't ha in most governmentñi agencies. you ought to set theñiñiñr exam given the position you're in. >> okay. happy to talk with you further about that. i know it's a concern. we've talked aboutçóñiçó it bef. >> thank you very much, mr. chair and, director,ñr for your testimob çó resolution of the kes l and cook place ñr issue. i believe this is where steerinr i believe this is where steerinr payments occurred to employeesñ loans andñi thençó getting bonu these steering payments being banned under dodd/frank and now under yourñiñi supervision you' taken action against their appearance. can you just maybe summarize

where this action ends up?ñi >> sure. andñi frankly it's exactly a is you just described it. you have had steering goingçó o that we believedñr was in violation ofçó the law. we were actually surprised that the company didn't recognizeñi that what it was doing was in violation of the law because we thought it was, you know, there this we thought was absolutely clear cut. it took a while for thatxdñrñi k in. ultimately, the matter was 3p"esolvedçó with significantñi [pgversee theñi excellent enforcement of rules and laws and not justçóñi shume that onc they're on the books everybody understands themçó andñrçóñi abi them.ñi particularly if there may be financial incentives not to do sék so, you know, añi gquq examplef why you need an agency to actually bulldog laws and rules and make sure thatñr tze['reñrñ actually occur+a'gxdñr in the marketplace as they should.

>>ñr i believe about $9 million was returned to approximately 9,000 individual mortgage holders also get a, if you will, a permanent  as they'veñi been steered into higher interest loans? $zmeáu$er on that.ll you in i know there was injunctive relief going forward to make sure that what weñi sawçó happe was not going to i do think also this will -- this signals the market as açó public ñiñiçóenforcement action that if other people continue to be engaging in this and somehow thinking it's appropriate or people won't pay attention that we will. as a matter of principle. >> youñi anticipatedñr myñrñi n question was really the deterrence effect because this type of steering in which añi mortgage originator poses as a financial counselor and steers people into highñr interest loa isñiñi añi huge, predatory prac.

i'm delighted you're patrolling against that predatoryñi practi. i hope and anticipate that there is a substantial deterrent effect from what you've done. >> again, what was surprising to me here was there has been so much visibility on this issue, and iwmñrñi soñrñi remarked up congress and by us in the wake of the mortgage market ñimeltdo thai was just veryñi surprised see a company engaged in these with them did notñi seem to be aware that these practices were illegal. eventually, that got through. >> millions of american home owners, mortgage holders, will thank you. medical debt. thank you for this reportñi xmue all put oótz data point medica debt and credit scores. concerned about because essentially when youñrçó get a

on health care activity you normally get theseñr papers tha say, this is not a bill,çó and then you get something from the laboratory and you get somethinr frs theçóçó xeriy technician=%k meanwhile, your insurance sends you something and says this is what we think we're going to pay but you're not sure and it's this whole,ñrñi confusingçó mat that often takes a while to sort out whether appropriate paymenti have been made by the insgro!e r medical debt is reported to a credit agency putting a permanent scar on yourñiçó credñ record. it really has nothing to do with your -- just the fact that this type of debt takes a while to ñiñr they should be cleared -- becauqq behindxd the factñi tha they probably bear a little resemblance toñr the other payments and you reported a case

first solid evidenceñi i've see miscalculation of the ability to pay and doçó you want to commen on this at ñiñzll?ñiñrçóñr i'd like to reinforce what you said. medical debt is somethingñi we n we've been to the doctor's office andñi it's not billed or later we are billed and we're not sure wlt insurance company is paying it or whether we're supposed to double pay that bill. it is very confusing for people. it is oftençóñi small ñiamountsi itñuuj reports andxd affects their credits and they honestly thought it was paid by the insurance company. this is a greatçwi exampleñi of you say the first time we've been actually able to have enough data andñzinformation to really dig into this and point out to the credit reporting companies thatçóñr they're not scoring medical debt in the credit scoring companies appropriately compared to other debt. you know, if we didn't have that

data or information we could not do that analysis and we could not show that. i think we're already beginning to see the credit sco"ing companies are responding to this more -- think differently about medical debt from the rest of debt for all theñi ze"sons i thk youñi laid outbuz çóñiwell. >> my time is running out. i'll just close by saying i appreciate the letter iñi receio yesterday in reaidñr to a payçóy loan practices and the statement in that letter that ifñi they'r engaged in ñiunfairñrñi practic institutions will be held accountable no matter how the products are structured. thisñi certainlyçóçó s a big c to states like oregon that have ut(u against predatory, triple digit, 500% ñrçóinterest, paydayçóñi çd then lenders using online practices andçó remotely generad checks are basically pullingñr

violating the law in a straight forward way but able to getñr ay with it because they are at añr distance and can pull money out of checking accounts. a lot has to be done on this. thank you for taking a look and i'll continuo to work with you >> senator? >> thank you, mr. chairman. youxdçóñr and i share administr common experience and that isçó protection bureau when we were both attorneys general. look at the broad scope of y%=9 ofçó ñiñi consumers, not just laying at your shoulders. and so one of theñiñi concerns i haveñi is the need to do coordination with what's happening onñrñi mrçóñrñr state state level, understand what's happening on a locp level,çóçó what's happening with allçó of your sister or brother agencies that alsoñi have overlappingçó i jurisdiction. ez the frus

talking to without any coordination. so i wouldñiñr justúy-ñr that look at eachñi one of these isss u"u$ the state and understandini better what state agenciesñi ar doing. a good example was already today with prepaid cards. $zmeáq is in the state of north dakota. i made sure there was regulation north dakota. so you can't say with certainty )h)jj @r(t&háhp &hc% sjtóur+ities going on in states. it's important for us toçó understand those. alr that we have referred north dakotans to yourñiçóñiñr consum complaint website and have gotten really very favorable >r reviews back andñrñi so it is y another avenue for people to raise ñrconcerns. with that said, i would also say, one of the issues that i worked on when i wasñi attorney

privacy.çó i shareñi the concerns about th and i understano the need toñi have enough to do theñrñi analy. but weñi needñtv be very, very>o mindful of the sensitivities of consumers today aboutñr their information. and i thinkñr there is a growin insecurity. if they look at the federal government, we haven't exactly that we're going to be confidential with it or we're so i lookñi forward to the gao report. i look forward toçóçó enhancedñ% want to mention on payday lending i was probably one cññi the firstñrxd foolish peopleçóx weigh intoxd thatñr area back ii day. i'll tellñrñr awe quick little