i want to say to the ranking member. i would like to work with them in finding -- like major earthquake research or have the agency shift money within its budget from lesser priority objectives to this. this is a -- this is an important issue. i agree with you on how important this is. >> right. i appreciate that. i had spoken to former chairman young on the way out. he was going join me. maybe we can work out something together. thank you. >> i would like to recognize for another five minutes of questioning. mr. huffman of california. >> thank you, mr. chairman. i wanted to be at the hearing because i represent earthquake country, tsunami country. i think it's an important subject with some helpful testimony. i want to thank the witnesses for their contributions. mr. chairman, i also wanted to be here to thank you. as a new member of congress, thing is the first hearing i've

attended of any subcommittee in the natural resources committee that wasn't a loaded partisan title full of loaded partisan content with a loaded partisan agenda. this is an important subject. we can all be interested and gauged and might get something done together that can help the country. we need more hearings like this. and as much as anything, i wanted to be here to express that and thank you for it. with that, i'll yield the balance of my time to ranking member holt. >> i thank representative huffman. let me make two general comments. first, following on the line of our ranking member's comments. the mentality here in washington is a very pessimistic mentality, and mr. defazio points up one aspect that have. here in the richest country in the world, by far, undenially, doesn't act as if we have a

future. what invests, one builds infrastructure, one sponsors research. when we believe we have a future. instead we talk about cut, cut, cut here. it is a fundamental problem. the chairman says let's look for some money. i'll show him plenty of money. we've got it. we could invest in education. we could invest in research, we could invest in infrastructure and we should because we have a future, i believe. the other general comment i wanted to make has to do with the field of geology and earthquakes. for generations, humans believed that we experienced the happenings on earth, and probably the most development of recent years is the understanding that humans have the ability to actually change the earth.

to poison entire oceans, to change the very climate of our globe, and, in fact, to induce earthquakes. most of us would have thought that the energy involved in investing water into the ground is minuscule compared to the energy released in a earthquake that couldn't possibly happen but it does. doctor, am i right. have there been significant earthquakes tied to human activity such as waste water injecti injection? >> yes, absolutely. it's been known for decades that deep ingest of waste water and other fluids can induce earthquakes. there are many examples of the phenomena. in the 1970 the usgs conducted an experiment in colorado and found that dearthquakes could b turned on and turned off by injecting or not injecting water. >> what are the problems with collecting injection data.

what data do we need, for example, the drilling companies aren't reporting? >> the recordkeeping for injection wells, i'm speaking of the class two well for the oil and gas industry. the recordkeeping is minimal. it requires the operator to collect records, report the total volume injected in a monthly average pressure. monthly average volume. report it at the end of the year with a grace period. i mentioned forensics. >> it was just average. general data. it's not specifics about what is injected and when. >> it's not specific enough to when asked to tie an earthquake or series of earthquakes. >> and safe water drinking act that is the only regulation that requires reporting. >> it's the basis of safe water

drinking act. and most the epa delegated to the states and the states may or may not add additional requirements. >> we probably need more federal requirements about specific data? >> in order to make a progress on the research and the hazard assessment of the phenomena, either the federal government or the states need to consider that a priority to collect more precise data an the injection activities and make them available in more timely manner. >> i think the chairman observes my time is up. >> as we stated earlier, the full committee chairman is here. representative casings of washington. we'll hear his statement and

conclude it representative hastings. >> thank you, mr. chairman. thank you for holding this hearing. i apologize for coming in here at the last minute. that happens from time to time with our schedules. mr. lee, i have not a statement but a question, and hopefully question get it, you know, be helpful. as you know, the landslide in the state of washington -- i think all of america is, you know, listened to the news every day about what is a circumstances of that. would there be a time in the future we'll be able to exam the circumstances around the slide. right now the focus should be on the rescue efforts and the cleanup. you are well aware of that. my question is this. where can people look to find more information about the slide hazard. is that something you can be

working on? >> so, yes, the usgs has a landslide hazard program. we both operate. we have for the public a website which identifies landslide-prone areas of the country. and presents information on research and to how the public should deal with questions of landslides. the u.s. -- the responsibility for the land use decisions resides with the state, county, and local decision makers. and our job is to provide the scientific information that supports smart decisions about land use planning. we also map out the locations of landslides, and that includes the landslide that occurred last

week. >> i appreciate that. i know, there's going to be more awareness on that. i've had my colleagues in my district, number one, ask. the underlying question is, boy, that's a pretty massive landslide and what -- people are going to be interested in that. that's simply my question is to see if there is something that you guys can do to help facilitate that in the future. i see if that's the case, i think it's a positive development. i just wanted to ask the question, you know, to get it out there. >> would the chairman yield for a second? >> i would be happy to it. >> i wonder if doctor would have any comment. i know, in my state, we have taken the data and taken it a step further and mapped exactly where we see risk and hazard.

i wonder if washington state has done that. >> yeah. i know, a little bit about that. with the seismic network we notice a landslide within an hour and looking at the seismic signal to look at the krin kr nolgs. the department of natural resources they have maps of landslides. that are on the scene managing with the emergency management. they come out with a lot of people and -- and talking about what they can do to help understand the situation as well. right now there's a pretty coordinated effort going on to understand the landslide. try to figure out how it happened and the history of how it get to this point. >> i'm wondering about predicting or risk zones. i think part of what -- >> yeah. it is a state responsibility. and i couldn't tell you exactly what maps they will have and what they mean. >> if i may, i would be happy to

offer briefing specifically on that for you and your staff. what is done both within the u.s. agree logical survey federally and in the state. i think that would be helpful. obviously the tragedy like this is going raise the awareness to the extent you have been involved in that. that would be very helpful for public to understand better as best they can. thank you, mr. chairman. i yield back. >> i want to thank the member of the committee for their thoughtful questions. i want to thank each and every one of our four witnesses for the enlightning testimony. members of the committee may have additional questions for the record. i would ask you respond to those in writing. and if there is no further business, without objection, the committee is adjourned. on the next washington journal

we'll discuss the situation in iraq and some of the policy options available to the u.s. american enterprise institute michael rubin joins us for that conversation. natalie talking about her group's effort in addressing student loan debt as well as the recent action taken by congress and the white house. then space news staff writer talks about legislation in the house and senate that would fund science research and spacex mirror ration. we'll take your calls and look for your comments on facebook and twitter. beginning live at 7:00 a.m. eastern on c-span. >> one of the things people don't always recognize is during the war of 1812, of it from 1812 until after 1814, early 1815. it was really about the america reestablishing its independence

against the british. this was sort of our second american revolution. this flag is the object for which francis scott key pen the words which became our national anthem. >> the image in 1995 that the flag was made to look whole and restored. this was a whole bottom section that was reconstructed. the flag was moved into the new space. there was a decision by the cure raters not to do it again. what we wanted was that the flag becomes a metaphor for the country. it's tattered and torn and survives. the message is the survival of the country and the flag. we're not trying to make it look pretty. we're trying to make it look like it endured the history and can celebrate its history. >> this year marks the 200 anniversary of the british naval

bombardment. learn more about the flag francis scott key wrote about. sunday night at 10:00. richard corp. cordray he testified on the agency semi annual report before the senate banking, housing, and urban affair committee. this runs just under 90 minute. welcome back to the committee. today we county our regular at the cfpb. in three years, since the cfpb opened its doors, it has had a

notable impact in nearly every aspect of the consumer's experience with the financial system from student loans and credit cards mortgages and financial education debt collection, prepaid cards and credit reports. the bureau has conducted extensive outreach to both industry and consumers and has proven i.t. to be -- and many cases over industries that previously had no supervisor. importantly, the cfpb has proven itself up to the task congress set up for it which is to protect consumers. to date the world has obtained nearly $900 billion in refunds and filled over 375,000 consumer complaints. then the crisis we saw

underwriting to services had serious problems. federal money many of the cfpb's significant actions relate to mortgage lending. for example, the bureau recently finalized the mortgage disclosure rules to improve closings and provide key terms and costs to consumers and understandable qualms. while the consumer experiences the mortgage table is an important aspect of mortgage lending, the ability of consumers to access credible mortgage credit is critical. the rules to strengthen america's standards including the qm and servicing roles 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 strong mortgage standards, it is also important to ensure that others can continue to lend in all communities. since director cordray testified last november, the finalized the rule -- nonbank student loan servicers who service over 49 million. for the first time they'll have supervision. i'm encouraged by this a, 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 that they plan to take to address the growing problem. according to federal preserve data released last friday, consumer credit growth jumped to the fastest pace in three years with credit card debt rising at the pace unseen since 2001. this serves as a reminder that mechani memories of the last crisis made. we need an intelligent cfpb that guards against abusive practices and ensures that consumers are able to make responsible financial decisions while having access to affordable credit.

i applaud the cfpb's work so far and look forward to your testimony. with that, i turn to ranking memb member. >> thank you, mr. chairman. we welcome back director cordray to discuss the most recent semi annual report. in recent months, the cfpb laid out a broad and ambition rule making agenda that will affect many consumer football products and services. as the cfb proceeds with rules targeting small dollar credit, overdraft protection, auto financing, mortgage services and settlement and arbitration, it must fully understand how these rules will effect the cost and availability of credit for consumers. the cfpb must commit to take a balanced approach and performing a thorough qualityive and quantityive cost benefit able

sis of each rule. i'm concerned that many recent proposals and actions will continue to push main stream financial products into unregulated areas. diminish consumer choice, and make certain products unaffordable. those outcomes could come at the great cost to the consumer and should be prevented. as the director is aware, another initiative that is concern the 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 personal information it collects. unfortunately, my calls for transparency have been met with ramped up efforts bit bureau. this april, i learned that the federal housing finance agency and cfpb will expand the jointly national run data base to include religion, social security number, major life events, and link to other lines of consumer credit together on

potentially hundred 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. adding concern is the admission by fhfa concern for data base that information would be easy to reverse engineer. more over, the fhfa and cfpb indicated that borrowers don't have the opportunity or right to opt-out of the data base. finally, the recent report about employment discrimination are deeply troubling. two cfpb commissioned external reports and testimony from a whistle blower highlight the failure of the employment -- 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 a month for them to act upon the independent reports and what additional steps they are taking to increase transparency and accountability. thank you, mr. chairman. >> thank you, senator. are there any other members who would like to give brief opening statements? senator menendez. >> yeah. >> thank you, mr. chairman. and 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 jersey begans trying to get ahead. i feel they fall further behind. a new class of college grads

preparing to enter the work force. the question is what dos 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, in my state of new jersey, illustrates how challenging the issues can sometimes be. in 2004, christopher was a student at rutgers when he suffered a severe traumatic brain injury. it left him in a vegetative state for two years before he tragically passed away. during the time of hardship his parents were shocked to learn that the 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 danger recent loans in the event of a borrow's death or disability, others do not clearly communicate to cosigners what their obligations will be. leaving families like

christopher's they that are on the hook of the full cost of the loan. we need to take a look how we approach the student loan process. new graduates will be starting their career. before they collect their first paycheck. they will be burdened by massive student loan debt. like christopher, something happens to them the burden, in many cases, will fall to family members. many of whom are already struggling to make ends meet. according to the federal reserve bank of new york the 25-year-old student debt continued rise last year and the total outstanding balance exceeds $1.1 trillion. it's nearly $30,000 for an average student loan borrower in new jersey. the burden for families are real and the need for consumer protection, i believe, is critical. that's why today i'm introducing christopher's law. a simple and common sense bill that will require student loan providers to clearly communicate to borrowers and cosigners what

the obligation will be in the instance of death or disability. by increasing transparent si the bill can save families like christopher's years of potential hard hardship down the road. i plan to address two other related issues. first in the christopher celebratio instance his parents were hit with a large tax bill on what is deemed under the law to be income. the bill i'll be introducing will end the practice. second, if something unfortunate happens to the cosigner of the student loan death, disability, or bankruptcy. some have gone into default despite never missing a paumt. i look forward to discuss the issue with you today and look forward to being able to make a change so that death and

disability isn't a continuing challenge to families. thank you, mr. chairman. >> anybody else? >> mr. chairman? >> senator. >> thank you, i will not be able to stay until the time i would be able to ask questions. i'm concerned about a process that is underway by which the cfpb is collecting a vast amount of information about credit card usage. about individual usage of credit cards. i have a series of questions i will submit them for the record and look forward to an opportunity to have a follow yum discussion. thank you, mr. chairman. thank you, mr. cordray. >> i will be less than 30 second. i wanted to echo the words of senator menendez. i'm a cosponsor of his legislation. i was in a call the other day speaking with the sister of andrew who was a law student in western ohio who was killed right before he graduated from law school. his sister oliva spoke of some

of the same kind of behavior they experienced from their service is similar to what senator menendez talked about. i'm hopeful, director cordray, you can help us address the issues. >> anybodies else? >> i would like to remind my colleagues that the record will be open for the next seven days and added materials. mr. richard cordray is a director of the consumer financial protection bureau. direct eer cordray. you may begin your testimony. >> thank you for inviting me to testify today about the latest semiannual report of the protection bureau. the bureau, as you know, is the nation's first federal agency with the sole focus of producting 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're treated fairly. those consumers are your constituents. since we opened our doors, we've be been focussed on making financial markets work better for the american people, the honest businesses that serve them in the economy as a whole. my testimony today focuses in the bureau's fifth semiannual report to congress and the president which describes the bureau's efforts to achieve the vital mission. through fair rules, consistent oversight, appropriate enforcement of the law and broad bassed consume -- consumer financial markets, protect american consumers from improper conduct and 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 million directly to consumers who fell victim to various violations of

laws. we have also fined wrong doers more than $141 million all of which has gone to the civil penalty fund and used to compensate the victims. and to the extent kpeb sating consumers is not practical to support the education and financial literacy programs and benefit the public. in the fall of 2013, for the first time, we took action in con junk with multiple state attorney general again an online loan service for illegally collecting money that consumers did not owe. we took action against a payday lender for overcharging. we took action again an auto lender. and partnered with 49 states to bring action against the largest nonbank mortgage loan service for misconduct at every stage of the process. they super i are work contributed it a recent enforcement action resulting in

a a refund to 1.9 million consumers for illegal practices read related to credit card add on products. great new development among many of the financial institutions have resulted in more than $70 million to being remediated to the consumers. in january, as the chairman noted, mortgage rules that the bureau issued to implement provisions the dodd-frank act took effect establishing new protections for home buyers and owners. we issued another major rule mandated bit dodd-frank act. a final rule to consolidate and improve. we also issued an advanced notice for proposed rule making on debt collection asking the public in-depth questions about a rake of issues which is the

bureau's most frequent source of consumer complicates. to promote informed financial decision making we continued providing consumer with online resources including the ask cfpb section of our website i encourage you to use where we have answers for over 1,000 frequently asked questions. a premise at the heart of our mission is the consumer should be treated fairly in the financial market place and deserve a place that will facilitate the resolution of the complaint when it does not happen. to this end, the bureau has strengthened the office of consumer responsible as of june 1st, twourtd, we have received nearly. 5,000 consumer complaints on credit reporting, debt collection, money transfers, bank account 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 thousand of americans who have used our consumer education tools, submitted complaints, participated in rule making,

actually that should be millions. and told us the stories through the witness and numerous meetings from coast to coast. we have benefitted from ongoing dialogue and constructive engagement with the institutions we supervisor. as well as with community banks and credit unions with whom we regularly meet. our progress is also thanks to the ek the record their work of the employees. dedicated public servants of the highest caliber. in the years to come we look forward to fulfilling congress's vision. thank you for the opportunity to appear before you today. i appreciate the benefit of your active interest and oversight. i look forward to listening closely and responding to your questions today.

>> i ask them to put five minutes on the clock for each has been. the cfpb has been up and running for almost three years. what do you consider to be the most significant accomplishment the bureau since 2011 and looking forward, what actions can we expect either the bureau or the next three month? thank you, mr. chairman. ill say a number of things. the challenge of building a federal agency from scratch has been significant. we've been working through the growing pains. we have gone from 0 employees to 1400. they are dedicated to it. the mortgage rules we put in

place that congress set a high priority on and mandating we do so on a tight deadline have been significant. that's a single biggest consumer financial market. the enforcement activity we've had to ensure that institutions understand that we need to be treated fairly and money will go back to people's pockets when treated unfairly have been important. and we can supervisor and oversee and entire markets and even playing field have been very significant. reveals the pattern of complains but our effort to provide public was in that you can see and share and call attention to various practices. some of which were described in legislative proposals noted here

today. i think effectively work in meaningful ways. the rule has been in effect since january. would you discuss the rule's impact and the mortgage market and home buyers. the qualified mortgage rule or ability to pay rule has been one of the -- and it's important provision to recognize the need to prevent similar financial crises from growing out the mortgage market in the future. and i think it's been widely acknowledged it will help to do so. the effort to put the qrm rule in a level with the qm rule acknowledges the fact. i think it's a balanced rule making but something we're attentive to and closely monitoring. if we see unexpected consequences for the mortgage market we want to be ready to act. we've been close to the national association of realtors,

mortgage bankers who are bringing regular data to let us see how it might be effecting the market. in the rural area, it's an area we try 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 the act. we back the proposal off for two years while we reconsider it further. we're taking lot of input on it. i think we'll have a proposal more satisfy to people within the two-year time frame. the point and fees limit to cur a loan that exceeded the level. can you describe why the changes

were necessary or whether you think additional changes to the fees limit -- be needed? >> the points and fee provision extends from their action. we have heard from a number of lenders about it including the concern stated. mortgage bankers in particular but a number of -- there's a points and fee cap under the rule and people should be able to go right up to the edge of the cap and making mortgages and the market. we like and expect them to do so. there was some concern that if they got close to the cap, they would have to stay away and create a gray area. and right to cure at least on a certain limited basis would be a way to ease that concern. we took that input to heart and we have proposed a provision to take account of that that we have now had comment on.

overwhelmingly supported by lenders. there's difference of opinion and what time frame to cover in the like. i think it's a reflection of our willingness to listen to lenders about what is happening in the market. how we can ease access to credit without lessening consumer protections. i think there may be a number of places where we have opportunities to do that. senator. thank you, mr. chairman. i want to start out with regard to the big data collection issue. there are so many questions to ask on that. i'm going to get into it briefly. but i want to remind you we need to get further answers from the agency with regard to literally the scope of and the content of

the big data project underway. i want to clarify one fact in these questions. that is 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. i wouldn't put quite that way. we're trying to collect information that would give us the pattern of credit card activity in the marketplace to protect consumers against the abuses that lead to the card act and have been reigned in considerably under the card act. we're trying to collect information so we can accomplish our task that the congress set for us of reporting to you every year on the effect of the card act. how it's effecting the marketplace, do you want to consider legislation to go further or reconsider what was done. we can't do it if we don't have information. >> i understand that.

if my math is correct in understanding is correct. we're talking about 9 -- approximately 900 million accounts, and you're collecting data on that 9 had 00 million accounts. as i understand the purpose, you stated the purpose for the collection draft draata. i have probably concerns about the misuse of the data and the privacy that comes with. the cfpb is joining with the fhfa with regard to the national mortgage data base. what we learned then, last april, is that the two agencies, the fhfa and the cfpb are going to jointly work to expand the national data base and the information that came out in the

federal register forward to this proposed expansion is extremely alarming. i'm reading from the federal register right now. the record is in the new expanded system may include without limitation borrower name, zim zip code. social security number, military status and records. financial information, account information, including life events of the last few years and the list goes on and on and on. the question i have does it mean the assurances so you 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 as agency's intent changing. >> no, it is not. i believe without -- i believe what you're reading from is a

particular statement that is done for bureaucratic,s under the law as to what could conceivably be the case. the national mortgage data base, as conceived, will not conclude personal identifiable information such as name, address, social security number. i want to make a point to assure you and your colleagues because the question was raised there are no plans and we will not be including the religion in the national mortgage data base. so what i want to say is the need for the information is acute. governor bernanke, when he testified here and when we spoke personally said that one of the problems before the financial crisis was they didn't know enough about the mortgage market. they didn't see coming whaptd in the mortgage market. and it has been reintegrated. we have know more about the mortgage market to prevent the economy from cratering again in the same grounds it did before. >> i understand.

this is a similar rational to your explanation. >> it is. >> your need for credit card transactions. i understand. i have the concern that the government collecting this phenomenal data could be used in an invasive way. my time is running out. 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 it operates in five minute segs. we're happy, as i said before, to have our staff continue. i know, we are to brief your staff and talk back and forth about your concern about this. i share those concerns. the gaos conducting the study you asked for. it will get into the concern. we've had back and forth with them to comfortable length. they're conducting it responsible but comprehensive

inquiry. it's so critical that the bureau and the agencies have information to be able to oversee the markets and make sure that things are not happening that we don't comprehend. at the same time, recognize the issues of security and privacy you're raising. i want to be sensitive to those and recognize it as foundational for the agency as well. happy to spend as much time as you like. personally myself or our staff on these issues. >> thank you. senator menendez. >> in your mid year update on student loan complaints you high lie a particularly egregious practice where lenders put a loan into default if the loan's cosigner dies or declares bankruptcy even if the borrower never missed a payment. so -- i'm in the midst of

drafting legislation to fix the problem. what are some steps that can be taken under existing law to protect students from the practice? students who might otherwise be able to qualify for the existing loan either on their own or a new cosigner. does the bureau have the authority to remedy the practice to rule making or do you need additional legislative authority? >> thank you for raising the issue, senator. it was shocking to me. i want to describe the practice so people understand it and tremendous work don by the student loan in the cfpb who has been an outstanding advocate on behalf of the young people who bear student loan debt burdens across this country in significant measure. the practice was that nowadays many, many the vast majority, i think 90% plus of student loans that people take out have a cosigner on them. often a parent maybe a grand

grandparent. they may have a spotless payment history. suddenly something happens to the cosigner, a this point, the parent or gragrandparent is age. at the time when the person is affected by the death of parent or grandparent. we saw student loan servicers calling in the count because the cosigner is no longer available. instead of considering the situation, working with the borrower or recognizing they made a spot leless payment. it was not right. ic the issue of the report itself sent people scuttling. we heard from one of the major servicers the other day.

>> i don't mean to interrupt you. my time is limited. short of the report and public shame is there any regulatory ability to do anything about this? do you need additional authority? >> i would like that have our folks talk more with your staff. >> they would do that. >> i think the shaming sheer a great example. it's -- >> i would like to have a guarantee. many borrowers are having difficulty releasing cosigners even though it was an option. what is the feasibility of requiring an automatic cosigner release situation where the lender's conditions are met? >> i think it may be possible. i'm not clear in my mind as i sit here now whether we need legislation on that or not. obviously when things are written in legislation, they're more lasting and more secure. but we would be happy to work with you on that. >> would you make that part of the agenda we're going follow up on. >> sure.

>> okay. as you said, we're at 90%. we used to have 67 percent of private students loan were cosigned in 2008. by 2011, that number jumped to 90%. the whole issue of cosigners. the whole issue of a young person passing away or having a disability and having their parents now facing this debt, the whole issue of even if there is forgiveness at the end of the day getting a big tax liability. is this issues that, you know, we would like to work with you on. i have seergs concerious concer >> i strongly agree with the concerns you raised and the concern you're sharing about them. at the minimum, even if something gets worked out after four, five, or six years of hassle and frustration. it's not a good situation for people. >> no. you would think the death would have some -- >> you would think.

>> let me ask you one other quick question. on prepaid cards the last time you were here in november, we discussed the upcoming rule making on prepart cards. it's something i followed for some time. you can have products largely remain unregulated. consumer can fall victims to all type of hidden or abusive fees being charged for customer service or just to check your balance or sometimes if you want to cancel the card because of fees are too high. you get charged more fees to close the account. we have legislation dealing with that. can you provide an update on the status of the bureau's work on prepaid cards and what is your expected time line for a proposed rule? >> i can. and you and i have discussed this a fair amount. this is a market where people don't realize it but they're subject i know consumer protections currently. there are billions and billions of dollars loaded on to the card. it's a growing market. we anticipated we would have a

rule making proposal in june. it's taking us a built longer. it will be into the summer before it can happen. it's very high priority for us right now. it doesn't indicate any particular problems about the rule making. just that it's hard to work through some of the issues. we're getting there and we'll have something fairly soon. >> i'll look forward to it. thank you, mr. chairman. >> thank you, mr. chairman. mr. director, as you know, i'm one of the senators who has taken the position and argued for some time that there should be greater oversight over your budget process. in fact, there is much limitation under the law. you can request up to 12% of the federal reserve operating budget and the expenses must be >> and i think that's pre

problematic. i want to focus on just a small piece of architects from the building. here are some of the things you are spending money on. at the -- and i'm quoting from the document. at the western terminous of the skin fountain, a water table spills over and down into a

sunken garden below. the water cascade creates an atmosphere of white noise as visitors peer over the glatt railings into t into the sunken pools and sinkings below. at the west side of the plaza is a calmer, informal seating area under shady trees. under the trees the soft contrast of the stone dust floor further implies a base of rest and contemplation. additional seating is provided along the winder building edge at a lightly elevator tim per paved porch covered by dark bronze color trellis with a light bronze color adorned with vines. the southern side of the raised water table over a water wall of naturally split granite.

at this southern edge, a new water source creates a cascade of water that flows down the wall into the sunken garden. terminating in a ray pool. more slabs of granite rest in the bottom of the pool. then it talks about a four-story interior glass staircase in all glass and stainless stair places in the vertical light wells, connects levels 2 through 6 to allow increase circulations while allowing daylight into the interior. it is nearly embarrassing as i read through this stuff, and that is about the oversight we have with you, is to just raise these issues. do you think that kind of spending is really reasonably necessary to carry out your

functions on a building that is a leased building? would you make the case to us today that that is reasonably necessary? >> so if i may, several things in your discussion i would like to address. first of all, this has been out there and taken as gospel in the public record for some time. it is a fiction of the washington examiners that this project started out at $55 million and has ballooned to higher proportions. there was never any expectation this project could be completed for $55 million. that is just faults. >> how much did it cost? >> in the first budget where we put anything in as a partial payment on the ultimate project, $55 million was listed in that year's budget. that was never considered to be the notion that -- this is tripled in cost is a fiction gi the washington examiner, that is all it is. in fact, there was a review done of this building prior to the

cfpb being created when it was the octs building, when they anticipated even at that point in time the base library needs of the building, such as the hvac and electrical and other problems will require triple figures worth of construction work and that didn't include a lot of the contingencies that go along with a project like this. as to the description you described. i find is embarrassing. it is flowers statements someone will make when they are trolling for a bid trying to get the business and trying to make it sound as wonderful as they can. much of the flowery words there do not reflect any particular cost. i would say that you could say the same thing about many of the staircases and outer areas around the capitol here. there is nothing special about this one with respect to other government buildings and 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 penny on that. and we don't own the building. and so the notion we trying to create a palace we don't own makes any sense to me. >> we are out of time and don't want to impose upon the chairman's patience here. would you be willing to give us a thorough accounting of what has been spent and on what on this building? >> absolutely. >> thank you, mr. chairman. >> senator brown. >> thank you, mr. chairman. and welcome back. i'm always -- amused is not the right word, but when i hear a nug of colleagues especially in the house question the accountability of this -- of your work and this bureau and i know that you've appeared in front of the house and senate close to 50 times now and thanks for being as accountable as you have been. the semiannual report states that the cfpb will soon take

steps toward providing protection for the consumers in the small dollar credit markets. i appreciate the bureau's continued interest in providing oversight to this high cost market but i'm concerned that tailing regulations of traditional pay day loan market may still leave consumers vulnerable to harm product as we saw with ohio's experience attempting in the legislator to prohibit high cost, small dollar loans, targeting only traditional pay day loans allows lenders to move into other traps of death. and now they have moved into auto title lending as you know. as the bureau considers new over sight for the high cost loan market, how do youen sure that new rules will protect consumers through the whole range of products, including traditional pay day loans but one-line pay

day loans and auto title loans and installment loans. >> so the issue you raise is of extreme importance to the bureau in addressing this market. because, as you say, i've seen the experience in ohio where rules that were monday to address concerns about debt traps and pay day lending were circumvented through mike races in the market. and it is happen ago cross the country in a -- happening across the country in a number of states right now. and we have seen it, frankly, senate, because the military lending act gave rise to similar problems. the first set of rules that was adopted into the military lending act about 7 or 8 years ago was not -- was narrow and allowed the rules to be circumvented by how cost lenders who continued to operate outside of military bases online with patriotic flags and pedaling

products to our service members. we've been working to revise those rules. congress reopened that and it is exactly the same type of problem we're dealing with in the small dollar lending market. it is taking us longer as a result to address this but i think it is well worth additional time in order to make sure that we we do won't be made a mockory of by people circumventing it through transforming their product slightly. >> thank you. i want to follow up on -- expand on senator mendendez's question about student loan servicing. i chaired a sub-committee hearing a week or so about this a week ago. i'm concerned about the problems we saw in mortgage services are being repeated in student loan servicing, including flawed incentives, confusing loan transfers, and nondisclosure of those violation measures of the service members and modification

and refinancing. we agreed we need consist ant standards for private student loans and will you move along with the servicer standards and how can we align that as you move forward on this? >> i would agree we see a lot of same problems that -- just absolutely be-devilled student loan marketing. there are different markets and characteristics of the product. but poor customer service, problems with transfers, lack of information, harm to consumers, there is an eerie consistency there. what we have done in the past period, wee finally -- we finalized the rule for us to begin to supervising student loan servicers on the spot and go in and see what they are doing to comply with the law.

and that insight is leading us to things like recognizing the auto default problem which was not well-known before we called attention to it. whether that will lead to specific standards and we do a lot of work with the department of education on these issues, i don't know yet, but we now have the ability to go in and actually correct problems on the spot, which we did not have before -- before. and it will make a significant difference in this market, i believe. and where it will all lead is hard to stay at this point. be happy to keep you posted as we go. >> thank you. >> senator coburn. >> thank you. welcome. i've been watching on television. i wanted to follow up a little bit with the line of questioning that senator johanns had. and when you were here last i asked you about this building and i believe the quote was the

estimated cost to renovate was $95 million at that time. that is your testimony back then. and now theest plated total cost -- the estimated total cost for the renovation is $185 million. so the first thing is how many square feet? >> i can't give you what the scare footage is. but what i know is that the building is problematic. we're having to move out of it so it can we renovated. >> i understand that. you don't know the square feet u. don't know if $185 million is good for the taxpayers or not based on renovation costs. >> i know we've been through these numbers and it is -- i i believe it is an -- i believe it is an appropriate value and taken accounted into when we took part in the lease with the occ and so our payment leases were less, to show that we, not the landlord, would make improvements on building.

it is a building that would be a white elephant if this work is not done and it is a government asset owned by the treasury and the occ. and when we finish with it, it will be populated more densely than it has been before. >> that is a great sale job, administrator. but the point is, we're 17 trillion in debt and regardless of what the senate read to you. this will be opulent. >> it will not be opulent. >> if you have any water falls, that is the kind of stuff we can't afford right now in country. because we are running a $600 billion dollars a year deficit and what you are trying to help people with in terms of fairness and the consumer being treated fairly we will be taken back from them because we don't run things on a tight ship. so my point is the structural

renovations, $139 million, the temporary lease is $22 million. the security and utilities and expense at the three years for $13.6 million. the cost of architect you'll engineering design was $9.2 million. that does not include the i.t. and shuttle service to run back and forth. so there is a lot of cost with this. i'm not saying what you did was wrong, but i'm saying we're buying top dollar design and construction at a time that we don't have the money to pay for it. now you have an unlimited budget, and as senator jo hans made the point. we don't get any chance to oversight. we don't get it. and the fact is who, with you, has the experience outside of washington of doing a rehab on a building? what works for you that actually has private world experience in rehabbing buildings? >> so first i would like to invite you and your staff to come take a tour of that

building that we're now going to be out of. >> i'm not saying it is not -- >> it is a dump and it is not opulent and it won't be opulent when it is done either. >> i'm not saying that. one of my statements was it probably does need to be done. but the question is can it be done for less and under the realization that this country is in trouble financially and could we spend less money. that is my only question. >> that is fair enough. and i'm responsible to you on that and this is meaningful over sight you have with me. we are briefing the appropriate sub committee on these issues in the house and senate and that is something i agreed to as i was confirmed by the senate. and i take this seriously. and we don't have an unlimited budge. we have no capital budget. so every dollar we spend on something like this is take ago way from work we are doing -- take ago way from what we are doing and i'm feeling that and want to spend as little as possible on this. i will be happy to continue to

keep you and your staff closely apprised. >> 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 a construction projict -- project like this and what is their experience outside of doing it for the government? >> so we have people in the agency that are working on this that are in charge of facilities and we also have brought gsa in because they are the expert in the federal government on all of these types of projects and that is why we brought them in. so i could feel comfortable. >> but you don't have on staff that has outside knowledge or experience to run an $80 million construction project. >> don't know any would agree with that. but that is part of the reason i brought ags in. >> can you tell us who on your staff can determine any predictions about this project. >> would love for to you meet with our facility group and others and the folks from gsa working on this.

we brought them in specifically because i share your concerns about this and every dollar spent on this is a dollar way from other work -- >> i will tell you i'm not satisfied with the work gsa is on this. we are getting rild to build a 190 square foot veteran building in muscogee and gsa has negotiated a lease and $8 million design and construction budget for a facility that will be three times the size it was now and we have a 5% increase in veterans expected over the next 10 years in tulsa. so the point is, gsa isn't great at this either. >> i don't really know about that. >> but you are relying on expert -- >> i'll tell you, if you have other suggestions i'm all ears. >> it is a little late now. the deal is done, isn't it? >> well if you have further suggestions -- >> yeah, i will give you this

suggestion. go to the outside of washington, go into the middle of the country, and find people like manhattan construction that knows how to do this for a whole lot less money. they can design and build it adequate and built well and do it in a way that says, we don't have fln extra penny -- an extra penny to spend and how can we get what we need for the least amount of money. and that doesn't happen at the gsa and that doesn't happen in most government agencies. and you ought to set the example given the position that you are in. >> uh-huh. okay. happy to talk with you further about that and i know it is a concern for you. we've talked about it before. >> senator. >> thank you very much, mr. chair and thank you, director for your testimony. i wanted to start and ask you to say a little bit about the resolution of the kessel and cook place issue. i believe this is where steering payments occurred to employees

who were steering customers into higher interest loans and then getting bonuses for it. these steering payments being banned on dodd frank and now under your supervision. you've taken action against their appearance. can you summarize where this action ended up? >> sure. and frankly it is exactly as you just described it. you have had steering going on that we believed was in a violation of the law. we were actually surprised that the company didn't recognize what it was doing was in violation of the law because we thought there are many areas where you could say it is debatable but we thought this was clear-cut. it took a while for that to sink in. the the matter was resolved with significant payment and also penalty. and it is indicative of the need to oversee the actual enforcement of rules and laws

and not just to assume that once they are on the books, everybody understands them and abides by them. particularly if there may be financial incentives not to do so. so it is a great example of why you need an agency to actually bulldog laws and rules and make sure they are actually occurring in the market place as they should. >> i believe about $9 million was returned to approximately 9,000 individual mortgage holders. did the mortgage holders also get a -- if you will -- a permanent discount on their interest rates since they were steered into higher interest loans? i donent -- >> i don't recall offhand. i know there was concern that what we saw happening would not happen again. and i think this signals the market as a public enforcem action does that if other people are engaging in this and thinking it is appropriate and people won't pay attention, that

we will. and i think it is quite important as a matter of principle. >> and you anticipated my next question. the deterrence effect, because this type of steering in which a mortgage originating steers people into high interest lobes when they -- loans when they qualify for low interest loans, i'm happy you are trying to stop that predatory access and there is an effect to what you have done. >> what is surprising is that there was so much visibility on this issue and marked on and specifically dealt with by congress and us in the wake of the mortgage market meltdown, i was surprised to see a company engaging in these practices and upon engaging with them did not seem to be aware that these practices were illegal. eventually that got through. >> well millions of american

homeowners -- mortgage holders will benefit from the action, so thank you. i want to turn to the issue of medical death and thank you for this report you put out. data point medical data and credit scores. this is something i've been very concerned about. because essentially when you get a bill on health care activity, you normally get papers saying this is not a bill and then you get something from the laboratory and the x-ray technician and your insurance says something and says these what we think we will pay and you are not sure and it is a whole, confusing matrix that often takes quite a while to sort out whether appropriate payments have been made by the insurance company. in that process of that, that is put on your credit and making a scar on your credit. and this type of debt takes a while to figure out when i felt when the medical debts are paid

off they should be cleared from the credit record because of the logic behind the fact that they probably bear little resemblance to the roll of other debts in anticipating whether or not you will make payments and your report indicates about a 20 point margin, and it is the first solid evidence i've seen this is in fact a miscalculation of the ability to pay. and do you want to comment on this at all? >> i do. i would like to reinforce what you said. medical debt is something i think we all can understand and appreciate. we've all been to the doctor's office and either not been billed or later we are billed and not sure whether the insurance company is paying for it or whether we are supposed to double pay the bill. it is confusing and often small amounts but it gets reported on people's credit reports and it effects their credit and it may keep them from getting a mortgage or a car loan, something significant when it

was $50 and they thought it was paid for by the insurance company. it is the first time we had enough data and information to dig into this and point out to the credit reporting companies that they are not scoring medical debt and they are not scoring appropriately compared to other debt. if we did not have that data and information we could not do that analysis and show that and we are already seeing the credit companies are recognizing this and up their game and think differently about medical debt from the rest of debt for all of the reasons i think you laid out so well. >> my time is running out so i will close by saying i appreciate the letter i received from the cfpv in regard to pay day loan access and if they are engaged in illegal practices, the bureau will hold them accountable no matter how their products are structured. this is a big concern to states like oregon that have tried to

comprehensively protect against predatory, triple digit interest and they are using online practices and remotely generated checks that are violating the law. and in a straightforward away and they can get it away with it because they can pull money out of checking accounts. and thank you to taking a look at this and i'll continue to look at this with you on it. >> senator heitkamp. >> we share common experience and that is running our own local consumer protection when we were both attorney's general. when i look at this, i look at the broad scope of possibility of protection for our consumers not just laying at your shoulders. so one of the concerns i have is the need to do coordination with

what is happening on a state level, understand what is happening on a state level, under what is happening on a local level and then broadly understanding what is happening with all of your sister or brother agencies that also have overlapping jurisdiction. and one of the frustrations i hear is here it comes again. another agency to talk to without any coordination. so i would just ask that as you look at each one of these issues, that you look at coordinate fating with the state -- coordinating with the state and better understand what state agencies are doing. a good example was today with prepaid cards. you said there is no regulation. there is in the state of north dakota. i made sure there was regulation of these cards in the state of north dakota. so you can't say with center there is none when i know that there is a number of activities going on in states. and it is important for us to understand those. with that said, i would also say

that we have referred north dakota residents to your consumer complaint website and have gotten really very favorable reviews back. and so it is yet another avenue for people to raise concerns. and with that, i will say one of the issues that i worked on when i was attorney general was the issue of bank privacy. and i share senator crap yo's concern about the amount of data being collected and i understand having enough to do the analysis, but we need to be very, very mindful of the sensitivities of consumers today about their information. and i think there is a growing insecurity. and if they look at the federal government, we haven't exactly given them reason to believe we'll be confidential with it or that we'll be straightforward. and so, i look forward to the g.a.o. report, and i look

forward to other enhanced discussions. i want to mention something on pay day lending. i was probably one of the first foolish people to weigh in that area back in the day. and i'll tell you a quick little story. the pay day lending going on was just as egregious as it is today. it has just taken different forms. but how -- why i was unsucce unsuccessful in getting appropriate regulation is 900 consumers signed a petition telling me to mind my own business. and so we need to be aware that in that lane, there is a desperate need that is not being fulfilled for short-term credit that -- whether it is to buy cars or diapers or whatever it is. and so we need to be mindful that as we look at this, that we don't close off the avenue for that kind of credit. i listened to those 900 consumers and where i think that was done incorrectly, and i have

a lot of concern about what is happening with pay day lending until we have a country that has maybe more economic justice, we're going to need to give people access to that kind of credit. i want to just talk a little bit about student loans and ask you your opinion. the administration i think recently said that they are going to cap repayment at 10%. all of that will do for a lot of the consumers in my state, a lot of student borrowers in my state, is extend the time that they are going to have. so they are never going to be out of consumer debt. senator warren and i have a bill along with a number of us to restructure consumers debt. how do you see the restructuring of consumer debt benefiting long-term the credit worthiness of americans who currently have that level of debt? >> it is obviously a complicated subject and it depends on the individual circumstances, the individual borrowing.

but it is certainly the case that what upsets someone's credit most of all is ending up in default. and if the payment levels are unrealistic, particularly a lot of young people coming out of school today are not finding the jobs that they hoped to find. it is particularly in the wake of this financial crisis. and so the income-based repayment as i understand it was an attempt to maintain some sort of balance there, whether it is the exact right balance, exactly what it should be is hard to say and i'm not an expert on it. >> if we did an analysis of student debt and we said restructuring it the way we've set up the ability to restructure it -- >> uh-huh. >> -- could we be at the 10% and shorten the time period of repayment? >> maybe. it depends on the level of rates and i know that is one of the things your legislation would try to address. if you compared a mortgage and

the comparison isn't exact but there are a lot of parallels. it has been loan restructuring and sensible loan restructuring, not any old loan restructuring, because sometimes you can have loan modifications and can end up with higher payments which is not a formula success has been the winning and the most optimal way of addressing some of the mortgage problems that people are still digging out from and it could be that student loans is the same type of approach. it could be beneficial to people. >> just one quick comment. we have a state-owned bank in north dakota. we are proud of the bank in north dakota. >> you are the only one. >> yeah. and we have recently announced a program at the bank for restructuring student debts and in a month there has been over a thousand applications. so it tells you the absolute essential need for assisting people in restructuring this debt. thank you. >> senator ward. >> thank you mr. chairman and thank yu director cordray for being with us wednesday again.

when i taught contract law, i would cover arbitration clauses near the end of the term. and students usually came in thinking arbitration sounded so friendly and so inexpensive. but after studying the law, they discovered that arbitration stacks the deck against customers in favor of large corporations. arbitrators often have a financial interest in remaining in the good graces of the corporation that places a lot of business with them. corporations usually hold all of the key evidence in the dispute but are under no obligation to turn it over and an arbitrator's ruling cannot be overturned even if it contains clear legal mistakes or factual errors. so the bottom line is that when a customer thinks he's been cheating or that a bill is wrong, and arbitration clauses in his contact makes it nearly impossible for him to get any real help. so it is no surprise that many

big banks and other big corporations force customers to agree to arbitration clauses to get credit cards or open checking accounts, knowing that this means that the customer will have no real remedy if things go wrong. so director cordray, as you know, dodd frank requires the bureau to conduct a study on the forced arbitration clauses and authorizes the bureau to prohibit and limit the use of such clauses based on that study. the bureau released the preliminary reports last december and they were damning. forced arbitration clauses are everywhere, particularly in contract with the largest banks and they dramatically restrict the legal options available to consumers. i know there are additional issues that the bureau wants to examine in the final study. when do you think the bureau will have that study? >> so i would say a number of

things. this is an interesting area where if you look at what industry says and then you look at what consumer groups say, sometimes there is some relation between the two. here there seems to be almost none. and so as i understand it, congress waded into this area in dodd frank in a way that is more interventionist than congress has been on arbitration in other areas, particularly in business situations where the federal arbitration act has been viewed by the courts of having a policy in favor of arbitration. here under dodd frank, arbitration clauses have been barred from mortgage contracts, flat out by the congress. in terms of the other consumer finance contracts as you noted, what the congress has said very specifically and carefully to us, as the bureau, there seems to be very different views of this. we are going to direct you, not suggest, but mandate that you

perform a appropriate study, comprehensive study and make your best judgments about the pros and cons of arbitration clauses and based on the results of that study consider what oprie. interventions may be the bureau has been trying to carefully adhere to that and frankly, if anything, we've errored on the side of process but we think that is the right thing to do here. as you noted, we put out an interim progress report where we covered certain subjects. we have more to come. i believe we have indicated that the further work on that -- it is ongoing and very active and i believe it will be completed this year. and then we'll be in a position to make policy judgments based on that. and i understand that some people think we should take forever on this and other people think we should have finished it yesterday. i have my own views, but we're

pushing along and trying to do the work as congress set it out in that framework, the two-steps just as they said. >> but you anticipate it will be this year. >> i do anticipate this year. >> good. i'm very glad to hear that. i have a second question. i'm sure you would tell me you will need to see the final study before deciding whether to issue rules restricting or prohibiting forced arbitration clauses. so let me ask the question this way: what kind of evidence will lead you to believe that bureau should issue rules on forced arbitration? >> this is -- it feels very much to me sort of like a case that is under advisement in court. i should not judge it before we finish the study. we are well along but not yet complete. certainly in the end it is going to depend in part on things like how does arbitration work, does

it provide a meaningful avenue for resolution for consumers. does it not? why does it and why doesn't it? does it matter how an arbitration proceeding is procedurally set up. there is variety of things we are considering. other is how does it compare to alternatives in it court. i think we could all look at it and come to about the same conclusions about what kind of evidence we think matters. but i would really like to today, here if i can, stay away from prejudging that. >> but i want to be clear, if the evidence supports it, the bureau is willing to issue rules. >> congress said look at this very carefully, study it and tell us your results and based on those results you have an obligation in policy making that

appropriately reflects the conclusion you reach. >> i want to say, i realize that arbitration can take an important role in our legal system as long as the parties choose arbitration freely after the dispute has arisen. but forcing customers into a arbitration that banks control is another way to tilt the playing field against consumers. the cfpv can level the playing field and i look forward to seeing the report. thank you very much. >> senator crapo. >> thank you. before i go back to data, operation choke point, news release tells us that the department of justice and several regulating bankers are pressuring to end regularationships with gun stores or retailers. and this is known as operation

choke point. are you familiar with it? >> i have certainly read numerous press accounts of it and tl therefore i would say -- and therefore i would say i'm aware of it. >> is the cfpv doing anything about it. >> i think it should be police of legal lending, whether online or in person. and much of what we are talking about here is online. the further issue that has been raised is what about illegal lending that operates by piggy backing on the existing payment system. that is not something the banks like, not a risk they want to be exposed to. some of this gets into areas of credential regulation, safety and soundness and risk and operational risk, legal risk and things i am not an expert on -- >> does this mean you are

participating with operation choke point. >> i'm not sure what you mean by participating. i think the knowing approach to know your customer and that is more of a regulator term but our concern at the consumer bureau is we are to be policing nonbank lenders and the banks and the nonbank lenders that are riding along the payment system and if they are acting illegally and this is one of the enforcement distractions i explained in my opening remarks that feed to be address addressed. but it is about whether the activity is legal or illegal. it is not about whether it is disfavored or favored. >> from what i understand -- and again we just get this in the news reports, but i understand there is a conscious effort to force legally operating pay day lenders and gun store retailers to stop their business. >> i don't know if -- that is in the reports and i don't know if

that is accurate or not. i don't know if that is what anybody intends or if it is happening. the bureau is focusing on ferreting out illegal activity and that is hard to do. >> and i understand that. and what advice have you gix to the department of justice on this. >> i have not given advice to the department of justice. >> and to switch back to the data issues and mr. chairman, i have a lot of questions on this and others that i'm going to have to just submit for the record, i would hope that we can do that. i just want to talk quickly back again about this new project on the national mortgage data base that you are engaged with, with the fha. when i saw that the federal records are going to be collected, you indicated that was just a list that was -- i don't know what you call a sorn list. >> it is a term of out that is

the kind of thing only bureaucrats can understand. is a sorn. sorn. and i don't know what the acronym is, it is a statement of operational risk notice or something like that. >> it is accepted but it is also a statement in the federal record -- the forward register that says this data will be collected. >> but here is the difference. i believe that in order to access data we have to secure it from somewhere, prodcure it, bu it or whatever. and it comes out in whatever format it comes out. and it is being sold out there in the industry in that format. for us to create the kind of data base i've pledged to you will identify the personal identifying information if it comes to someone in a different form, then it needs to be deidentified before it can become part of the data base.

>> so i understand you are collecting all of this information. >> i don't know that for sure. >> that you are not identifying it. >> they are collecting identification and what is out there in the market place and freely passed around and for our purposes if it contains that kind of information, then that would be de-identified before it come news our data base and could not be used by any of my employs. >> and what the fhfa notice said it will include that information and then in this notice also say that they are going to de-identify it for some purposes. so the question then comes back to, is there an unnecessary invasion of the privacy of citizens. when you look at the identifying information that was contained, it is scary. >> it could be. >> but here is the question. at a 2013 urban conference, prior to the issue of this in

the federal register. the fhfa own project manager for the data base said the information in it would be, quote, easy to reverse, engineer. end quote. and i've been told that by many experts we've talked to. is that not correct? >> i would like to address that. my understanding is that quote that is being quoted is a truncated quote. it is a cut off quote. there is more to the quote. and the individual went on to say that is the risk and it is important that we handle this properly and deidentify information and et cetera, et cetera. that was part of a longer passage and the full passage needs to be quoted to put in context. taken out of context it sounds worse than it sounds. >> i think folks can watch that quote on you tube if they want to. >> they can. >> but the core question here is, isn't it possible to reverse engineer -- every expert i talked to about this issue as we started looking into it, has

said, yes, you can reverse engineer and obtain the de-identified data. are you telling me this is not possible? >> this is a fair question. and particularly in the real estate market with data on the books for decades, there is a lot of information available in the real estate market and the mortgage market. i recall when i taught at law school back in the 1990s, my students coming to me and saying here is the kind of information out there. i was kind of poo pooing this at time and they said here is the information out there on you. they had your mortgage, my purchase price and things about me. that is out there. that has nothing to do with whether the cfpb exists or doesn't exist. and it is a robust market. >> my time is almost up, and i understand that. it is quite concerning that this information is broadly available in the public or in the private sector as well. >> yes. >> and i do have great concerns about that. but the concern i'm expressing

today is the term that the government is collecting it. i think that is a different thing. and i think the rational for the government to collect this information does not necessarily justify the level of potential invasion of privacy that is involved here. and this is a much longer discussion. thank you for letting me go a few minutes. >> and let me state my attitude toward this and it is important and i know you know it but i'll say it again. this is a classic area where congressional over sight is extremely important. you are concerned about this, the public should be concerned about this. we are concerned about it. your work is making us be on our toes to make sure we are doing things as right as we can. the gaoin query has been ---in query has been significant and exhaustive and will result in a report and we're working with them and whatever findings they have or raise we will take to heart. i'm happy to have our staff spend as much time with you and your staff as you like on this because it is not just something

you are interested in and i'm trying to fepd you o-- fend you i'm interested in it too. but we also have to have information in order to do our work, other than just throwing darts against a wall, which you or anybody else would like. and information about medical debt or mortgage market or credit card market is credible for you and us to engage in good policy making and knowing whether we are getting it good or bad. you can't criticize us well unless you have information whether it is good or bad. >> we'll have i'm sure more discussions about this. we both look forward to the gao report and we'll continue to engage on this until we get it right. >> okay. good. thank you. >> director cordray, i thank you for your testimony today and your leadership of this important agency. this hearing is adjourned.

this saturday c-span's road to the white coverage will take you live to des moines for the iowa state republican party convention. jindal, rand paul and candidate rick santorum are scheduled to speak. that is live starting at 11:00 a.m. eastern on c-span. and you can comment on the event as it happens on our facebook page and on twitter, using the #c-span chat. c-span's new book on sundays at eight including senior military correspondent david wood. >> there is something that drives them to this thought of

service -- and it is like so many people i know who served in war. that the intensity of the experience, the intensity of the relationships they have with their combat buddies are so strong and so pure and true that they look back on those times with mourning. and so i would always ask them, do you wish this had never happened, and they're like, i would do it again in a heartbeat. i think there is something else that goes on there too and it is that going through a near-death experience somehow seems to give them so much strength and courage and optimism that i think that that is one reason they would do it again.

>> read more on our conversation with david wood from our book notes and programs on c-span sunday at 8:00 on public affairs books. not available at your favorite book seller. this week the house veterans affairs committee held a hearing on care being provided to veterans and the manipulation at some facilities. the hearing occurred the same day that an internal audit revealed 36,000 veterans have waited over a tree-month -- three-mon three-months for treatment. this is just over 2 1/2 hours.

>> we had set aside time for a business meeting tonight to talk about a subpoena that we thought we were going to need to issue. we asked for some information from the department almost a year and a half ago. miraculously, it appeared today. so that negates the need for us to move forward with a subpoena on that particular issue so we will not be having the business meeting that we had originally noticed and talked to everybody here on the committee and appreciate it. good evening, i want to welcome you again to tonight's hearing entitled over sight hearing on data manipulation and access to v.a. health care.y testimony from gao, the ig and

from v.a. toni and tonight we are going to address ongoing issues of on tha systematic wait times, erans manipulation occurring throughout the veterans health administration and negatively impacks the veterans that we serve and the health care they should be provided.me a v.a. weight times and -- wait s times and scheduling have been subject of investigations by the committee for many years. we have many outstanding requests for information and hae have held hearings to address t the problems within v.a. that has led to veterans waiting so long for v.a. care. the inspector general has also repeatedly warned the v.a. abou the sub-standard scheduling practices, from as early as 2005, in numerous reports, they have noted that medical cility facilities did not have

effective electronic waiting pe procedures anddu the outscheduln patientwi procedures needed e improvement worldwide and the u data improvement was not appropriate and there were larg wait times. ti they found these reported wait times were still unreliable. the v.a. policy continued to be implemented inconsistently across the v.a.d schedules lacked proper trainind and the appointment scheduling system was outdated and e c insufficient. despitome repeated warnings fro congress, from the gao and even from the v.a. own investigate t. ive property remain the same.sea last year it was suggested thatt a separate investigation be

undergone regarding on going patient wait times and consult delays. g.a.o. will testify as to the or findings here tonight. phoen there were whistleblowers complaints regarding the phoenio v.a. health care system on how n the consumer was keeping numerous wait w lists to give t idea wait times were less than they were. lists one of the secret wait lists at the facilities, sources found, y that as many as 40 patients may have died while they were awaiting care.after th after the committee was able too confirm these allegations, we made the issue public during ou9 april 9th, 2014 hearing.at tha at thatt hearing, i asked that the v.a., oig, look into those allegations which prompted the investigation. the interimig results of that investigation were released on may 28th of 2014. in that report the oig substantiated a number of x

problems at the phoenix v.a. and noted how it has opened or planned to open investigations into 42 different v.a. medical facilities. the oig found that at phoenix, at least 1700 patients who were waiting for a primary care me appointment were not on the electronic wait list, meaning these veterans may never receive such an appointment.x additionally oig found that the phoenix leadership underestimated new patient wait times which it noted as the metric used to consider bonuses and salary increases for v.a. d employees. v.a. oig said inappropriate scheduling practices like thosea in phoenix are systemic across the veterans health administration. finally we were notified earlier last week that the v.a. would provide the findings of the internal audit of appointment

weight -- wait times by early last friday.tonigh they were provided this afternoon. tonight i look forward toar hearing what the v.a. has to saw about the audit, how it plans ts repair the damage it has caused by tampering with veterans' access to care and with that, ii now yield to the ranking member, mr. mesho, for any opening statement he may have. >> thank you very much, mr. chairman for having this hearing this evening. there is nothing more important than the welfare of the men and women who have served this country with honor and distinction. than i'm pleased our committee is continuing to move quickly and . in a bipartisan manner to investigate the many serious short comings within the v.a. especially those regarding access to health care.to now is the time for us to identify the problem so we can move forward and implement ges. changes. that means working together on over sight and legislative solution and it also means having very frank conversation withence veterans about their

personal experiences. so we know what -- what -- how we can improve the system.ov over the years, this committee s has identified and helped fix hn many of the proshs within the v.a. -- problems within the vic v.a., but the v.a. is clearly facing a crisis.being a crisis now being addressed byw the media and increased over met sight, efforts.especi in this environmenalt it is especially important that we are fairrs in our over sight and measured in our responses, but above all we must never fall hat short of doing what we need to ensure that veterans have accese to the health care system that d they'v e earned and deserve.impn it is important for us to work o together to achieve the v.a. weh envisioned. we must work togethe arcr acrose aisle and across the branches of government to fix these problem and ensure the v.a. is caring for oure veterans. when we work together, this bes committee workst. best. we now -- we know the work we

must put forward that we must s ensure that the v.a. is receiving the necessary assistance and resources they ha needve to do what they have to.s as i see it, there is critical h questions that should be asked by this committee, questions that get to the root causes of . the problems. questions related to the broad n strategic changes needed at v.a. changes in the leadership climate, encouragement with other agencies like d.o.d. and h.h.s., increased utilization of the private sector and long-term resource planning. we need to ask the hard he questions, what should the department look like in the thes future? these are not easy questions. nor do they have easy, simple answers. but today more than ever, we must ask these questions and up come up with these answers. i believe thoughtful, measured, sound policy is needed today more than ever.ed the answers need to be comp

comprehensive and when necessary, newanced. for example, when holding leaders accountable, we need to not only focus on executive lso members but also the doctors ann nursesur who occupy administrate or executive leadership positions. as i mentioned earlier, h.r. 433 -- 4399 closes a gap in the current package of legislation n being considered by thed hout d the senate -- the house and the senate. mr. chairman i've been proud ofs the bipartisan nature in which this committee has operated. my hope is that we'll continue that spirit working together to help identify the problems and g working towards a solution. no single individual has a monopoly on the answers. and no single individual or iona institution has alls of the the answers. the work ahead of us will be hard and it will require all of us to work together in that rega regard. the veteransrd servicee e

organization, the department, this committee, the senate, and, the white house, and mr. u chairman i want to thank you once again for your robust add volk as for our veterans and holing all of the hearings we'ro havingpe for the over sight ands is my hope that when the committee asks for information from the department of veterans affairs they provide that timely information in a timely manner e so we'll not have to issue subpoenas to get the information we need so we can do our oversight hearing.ex that is our responsibility and we expect the department to help us do our over sight hearing asn well. so with that, mr. karm, i yiel back to balance my time. f >> thank you very muchor for yos comments this evening. a i would ask that allll members would waive their openinguld inv statements. as customary in the committee, o would invite now the witnesses to come to the witness table. fa tonight we are going to hear from dr. debra draper. h director of health care for the government accountability officeea.countabi

mr. philip mcoskpi assistance deputy undersecretary for health for administrative operations g for the department of veterans affairs. richard griffin acting inspector general for the department of veteran as fares. he is accompanied by linda holiday, assistant inspector general for audits and evaluations for the department a of veterans affairs.ti if i would ask the witnesses, if ur you would, to please stand, raise your right hand. do you solemnly swear under penalty of perjury that the testimony you are about to hat provide is the truth, the whole truth, and nothing but the truth?yoprov whol >> i do. e >> thank you very much.ated. please be seated. all of your complete written statements will be entered into the hearing record. thank you for being here tonight.nt dr. draper, you're now r, recognized for five minutes. >> chairman miller, ranking member misho and members of the committee, i appreciate the com opportunity to be here today toe

discuss the ongoing difficulties that veterans are experiencing n in obtaining medical care.nd in 2000 and 2001, we reported problems with wait times with scheduling in va facilities.in in 2012, we again reported ab problems, including the inconsistent scheduling of the va tpolicy, which impacted the timely delivery of care.ing we are currently conducting work examining va's management of va consults. and have again identified again problems that may hinderha ay veterans timely access to care.o across our body of work on seve access to va health care, these several common themes have emerged.in these include weak and ambiguous policies and processes which result in significant variation confusion and increased risk oft

undesirable practices at the local level.d software systems that do not facilitate good processes and e unclear staffing need and eds allocation priorities and inadequate oversight which relies largely on facilities self certification without lf-ci independent verification and the use of unreliable data for monitoring.oday my comments today focus on nary preliminary observations from our ongoing work. we found most of the 150 consults we reviewed were not managed in accordance with va's timeliness guidelines. specifically found that one of e five requests were not triagedq within the seven-day guideline. 19% were completed within 90 days but the provider failed to properly close out the consult in the electronic system. and the 4remaining 43% were closed without the veterans

being seen. va medical center officials telr us increased demand for services, patient no shows and s canceled appointments are amonga factors that lead to delays and impact the ability to meet the completion guideline. during the court of our review, we also identified one consult in which the veteran experience delays and died prior to obtaining needed care. i want to walk through the time line of events for this particular case.casein septe in september of 2013 the veteran was diagnosed with two forrysms. the surgery was subsequently canceled due to staffing issues. in december, the medical center approved non-va care and erred referred the veteran to a locale hospital for surgery. in late december, it was discovered the non-va provider had lost the veteran's in

information, which the medical center resubmitted. in february of 2014 the veteran died.provid this particular case is insightful for a number of reasons.asons including while nonva care may expand capacity, there are also some potential pit falls. for example, nonva care needs prior approval which may delay care. more coordination is needed between the va medical center, the veterans, and the non-va ait provider, and wait times for non-va care are not tracked by va. their findings relative to our 0 ongoing work include variation in how medical centers have implemented new business rules for specialty consults which the limits the usefulness of the rig data for monitoring and overseeing consults system widev an overall lack of oversight of the process, including no independent verification of medical center's actions.ions. as the demand for va health care continues to escalate, it is imperative that va address the

access to care problems.200 since 2005 the number of patients has increased nearly n 20% and the number of annual f outpatient medical appointments has increased approximately 45%. in light of this, the failure to address its access to care problems, will considerably dy worsen and already untenable situation. mr. chairman this concludes my , opening remarks. con i am happy to answer any ing questions. answ >> thank you very much dr. quesi draper. you are now recognized for five minutes. i understand you don't have prepared comments but you are prepared to make some comments. >> that is correct. you ar >> you're recognized for five tm minutes . >> good evening, chairman miller, and members of the committee.enin no veteran should have to wait unreasonable time for their care.

we now know swn of health care facilities, there is lack of integrity. this is a breach of trust, it i irresponsible, it is unacceptable. i apologize to our veterans, their families, and their loved ones. members of congress, veteran rae servicerv organizations, employs and the american people. i'll be talking about the auditd tonight and answering detailed questions. this audit visited over 700 locations, involved over 400 of our national and field staff at the senior executive level, senior manager level and frankle line managementnt level.

we interviewed over 3700 front line staff members. we saw this as an opportunity to sweep away and establish a clea assessment of our actual performance, not our reported a performance, and establish a system wide understanding of the change we needed to realize in our agency.li we released our results this morning on all va medical centers, all cbocs, mid and t small cbocs and the results from the audit confirm the interim report, our may 3rd initial release, and frankly the gao ae study. i'm here to answer questions about this audit and other ed a concerns. the audit reveals a number of things.berff on number win, we have hardworkingt staff that work in a high stress, complicated environment

with quite frankly completely e outdated technology. to i have to admit that our unfortunately we have found tha our staff had received instructions to enter a date other than the date a veteran wanted to be seen. we know there's an integrity issue here, among some of our leaders. we can and will address this issue. i want to make a comment about reprisals xhens employees.ng see acting secretary gibson mentioned it is not tolerated ie our system. most importantly, at the point of care we need our staff.

we need them to tell us how to r improve our system, to be able c toar deliver care better for veterans, so they must feel safy to identify problems and feel empowered to find solutions.ibsa acting secretary gibson has annn announced immediate actions.ce we will expand and create new veteran satisfaction surveys for patient care.pati we will begin with veterans and their perspectives. holdi we are holding senior leaders accountable. seni all of our senior leaders in thv field over the next 30 days are expected to inspect their practices in their facilities and to be personally accountablu for the integrity of those practices. int we removed the 14 day scheduline goal from employee performance plans. we are increasing the transparency in the reporting of our data we will be releasing our data bimonthly from here on out. affecting secretary gibson

announced an independent audit.. we are deploying a team to to f phoenix fix all aspects, notix t just the scheduling and gement management practices we are formalizing a process for the high performing sites in both lr quality access and integrity. we have directed staff to ilitis phoenix to hire additional su staff, to bring in temporary din clinical staff, to bring in mobile medical units that are currently on the ground. to increase local contracts to include for primary care and we are removing leadership where w appropriate. we are going to -- we have suspended all s.e.s. performancs awards for vha for fy-14.ng we are focusing our hr hiringay efforts on bringing clinical engineering and administrative staff to the field.