rules and it enhances and enforcement. i will make two quick comments, one about the details of the enforcement mechanisms and the other about the rulemaking investigative authority. the open enforcement mechanisms in the bill are excellent, however i agree completely with chairman leibowitz that the 120 days restrictions on the ftc is way too cumbersome. we it needs to be streamlined and made more efficient. secondly, and this i think is a very important one, in the bill, the ftc is given the authority to enforce federal consumer credit laws but not the regulations passed by the cfpa privacied fda regulations over time will become much more important then the consumer credit regulations. it is really critical that the ftc get the authority to enforce the regulations that are passed by the cfpa. there's also a consulting power

in there. a requirementok and that is correct, and i hope on an informal basis the agency takes account of the fact that the ftc, which enforces unfair and-- gains a particular type of experience in understanding that is vital, vital to setting those rules. secondly, the state ag's have authority but that mechanism for remedies needs to beç clarified because right now the section 1055 powers, it is unclear whether those are bootstrapped into the enforcement. finally, in its rulemaking authority the news cfpa desperatelyeeds detailed and express and clear invested tory powers. otherwise, the data that is brought to bear on what the rules are will be data held by the industry that the cfpa simply does not have access to so it is critical that the cfpa have the investigative powers of it they can get the rules right

the first time. i really appreciate the opportunity to be at this historic hearing in which the congress great luck in making this project work. >> thank you very much. ms. barkow. >> thank you mr. chairman, ranking member radanovich, thank you for inviting me to testify. i am honored to have the opportunity to discuss this piece of legislation. the linchpin of the financial protection agency act is of course the agency creates so whether this act will succeed or fail and its mission to protect consumers will depend entirely on whether the agency creates will succeed or fail. i analyzed the structure and powers of the proposed cfpa to determine if it is then defined inq the most effective way to achieve its stated statutory mission. i take the position on the merits of that mission or whether there is the need for a new agency to regulate this field. ratta my focus is on whether the cfpa has been designed as effectively as it can be. i would like to make six brief suggestions and observations

about the design of the cfpa. my first recommendation and the most important is to add a provision to this act that would limit the cfpa board to more more than three members of the same political party. unlike virtually all other legislation that governs multimember independent agencies including the ftc, the sec in consumer products they decommissioned the cfpa act as it is currently written does not require political balance. there is a wealth of empirical studies that are demonstrating that a group comprised solely of ideological like-minded people tends toward extreme decision-making and without a provision in the act requiring partisan balance the cfpa is likely to change positions from one extreme to another with each new presidential administration. this is unhealthy for the regulation of any market and certainly the consumer financial products market. political balance requirent can serve as a stabilizing force. and medish nabel asra crème mckinley to dissenting opinions

which is valuable for letting congress and the public at the agency goes in an extreme direction one way or another. >> cannot suggest amending the requirement as a have pa consult with banking agencies and any other relevant agencies before passing rules to make sure those rules will be consistent with the provincial market or systemic objectives of the agencies being consulted. because this consultation requirements suites broccoli covering every agency and related fields and anything of any importance to those agencies this process is likely to dramatically to lay the promulgation of cfpa rules. this is the kind of requirement that aids industry participants and tiny agency rules for years so unless congress is of the few the legal uncertainty is outweighed by the benefits of this provision i suggest making clear that consultation is at the discretion of the cfpa and not subject to judicial review. third, i advise modifying the statute of limitations provision to begin running from the time

the cfpa discovers a violation and not from the time of violation has occurred because violations by sophisticated interests are not discovered for years in many cases. this provision might hamper the cfpa in its enforcement efforts. fourth, i recommend including a limitation on the ability of cfpa board members to practice before the cfpa for a time after their service on the board has expired. this research will limit the affects caused by having the revolving door between agencies and the industries that they regulate. fifth i would like to highlight the protection act that i think will be critical to achieving the lawn enforcement objectives and that is section 1042 of the act which allows the state attorneys general to enforce provisions. state ag plausive demonstrated that they can be effective law enforcement partners and i think this is particularly true in the area of consumer protection were agency is a significant risk. i would like to alert the subcommittee is attention to the fact it is unclear from the fact

as it is written whether this cfpa will be subject to presidential directives and oversight including review by the office of information and regulatory affairs. there is language in the act that suggest this is actually going to be an executive agency and will be subject to this kind of oversight. congress minton for this cfpa to be part of the oversight process but if not the act would need to be rewritten to make clear the cfpa is an independent agency for purposes of a review. i take no position on whether not the agency should be subject to this review but because it is a fundamental question i know for you it is currently unclear in the legislation. thank you for allowing me to testify and share my thoughts on this proposed legislation and i would be happy to lead to questions. >> thank you for this opportunity to speak with you today. i am very glad to hear that this is a fur step and hopefully which will be long process

because as many have expressed here today there's certainly some concerns about this issue and we hope that they are will continue to be somewhat of a cautious approach as we go forward. on the american family-- has been around for 100 years and we represent the around 30% of all consumer credit in the u.s.. with members in the market, credit card, auto and personal installment loans. first and foremost, we support strong financial consumer protection regulations. just because we have concerns going forward about the current agency does not mean that the industry and the association is not committed to strum consumer protection regulation. we believe in the consistent enforcement of existing consumer protection laws by government regulators would have greatly

lessened the harmful impact the current crisis has the consumers answered lee on our economy. many members are regulated primarily at the state level in subject to a patchwork of requirements. we firmly believe the consumer protections should be uniform in every state. therefore we support strong national consumer protection standards that allow members to meet their consumer protection obligation in an efficient and cost-effective manner. in addition, strong national consumer protection standards will provide a benefit to consumers only to the extent that they are consistent with sound potential regulation. consumer protections that threaten the safety and soundness of financial service providers offers no-- i don't. we believe consumersko will be better served by a regulatory structure of four potential and

consumer protection regulations are housed within a single regulator. congress tried to separate these two intertwining functions with the gse's. when it became apparent that the situation was unavoidable congress brought the two regulatory functions that under a single regulator and for good reason. we urge congress to support a regulatory structure that does not separate safety and soundness from consumer protection. the authority proposed in the new agency is breathtaking in both its scope and its effect. it would cover many entities and persons who have little or no involvement in the activities leading to the current economic crisis. without any demonstrated need, many unsuspecting persons will be swept into a web of scrutiny and reporting requirements that yield little in the way the consumer protection.

but much in the way of increased cost for consumers. attorneys, accountants, consumer reporting agencies, auto dealers, title cos among others will find themselves subject to review with no evidence that they behaved unfairly. financial service providers will find increasingly difficult to plan for risk as virtually any practice or product other than prescribed standard, a plain vanilla products could be labeled as the unfair or abusive. innovation will be discouraged. given the vast scope of the proposed agency's authority, its funding needs are also staggering. the proposal seems to fund the cfpa by assessing fees on persons and entities it regulates, including many that would not expect to be covered currently. there is no doubt that any

assessment of financial service products will be passed on eventually to consumers. that direct, the unavoidable result will be an increase in the cost and availability of credit. most afsa members are regulated by the ftc which has a proven record of enhancing consumer protection. it has addressed the economic crisis into ways. furs by using the enforcement authority to pursue bad actors in the financial-services industry and second, by setting federal policy for guidance and public comment. numerous examples are listed in our written testimony biting conclusion afsa believes the ftc has done an excellent job in enforcing consumer protection laws and is best suited to continue that world going forward. weep aleve the administrations coal can be achieved with the justice to the current regulatory structure and the result would be more efficient,

less costly and certainly more effective. to that end we have two specific suggestions. one, make current and future consumer-protection rules apply to all financial services providers. congress can insure that all federal consumer protection laws and regulations apply with equal force to all providers of financial services with respect to similar cases of products and services. these laws should include strong national standards that pre-empts state laws and permit all americans to enjoy a consistent level of services and access with respect to financial products and services. we have heard again and again today, as you have in 50 different states that can exceed or meet or exceed the current laws, that this is not the occasion. we are just going to wind up with 51 as he stated

mr. chairman, 51 different rules that these people will have to follow and number two pursue a regulatory structure that does not separate the viability of the companies that offer them. all provincial agency should work together to coordinate consumer protection regulation for financial products and services with the gold that regulations be preemptive, consistent and uniform. if we don't have that we are not going to make headway. thank you for your time. >> the chair thanks the witnesses and the chair now recognizes himself for five minutes for questioning. according to the administration's proposals, proposal weather, the state will and forced the statutes and rules being transferred to the new agency right away. in contrast, the sepses-- ftc will be required to provide in

this efta with notice of proposed action and this has been stated earlier with 120 days for this defeat-- to determine if they will take a case before they take any action. this applies to the very rules and laws currently in force by the ftc. mr. calkins, in your testimony, he suggested this would prevent the ftc from ever investigating or taking action in these areas. can you explain and expound upon that please? >> when i read the bill, i said then tried to think about what life would be like under the new legislation and the 120 day rule. wet with the ftc to?

and, as i thought about it i read the bill. i read where the bill says, quote,@@@@@@@@@ @ @ @ @ @ @ @ @ 's is. >> and i don't think that because the whole point of the bill as it appears is to transfer a large part of what the ftc does to this agency. let's talk about the 120-day rule. the ftc in the department of justice, with the ftc can ask

the justice department to bring a civil penalty action, 45 days then. the reality is that the ftc, although i am not sure they would admit it, goes out of its way to avoid using that authority. it is a lot more effective and efficient for the commission to go directly to court, bring an action, take action against the wrong door, stop a fraud, stuff the harming get really, so they use the authority they can use by themselves in time and again they don't go to the department of justice. i think that 120 day authority will be very rarely used in the new world. it is really were in case we have a new agency that is so opposed to enforcing these rules that in ftc might come along and try to develop some sort of alternative world as a backstop but i think that the world that

i see would have the ftc using this authority very, very rarely and they just do not think that is the vision contemplated by the bill as written. >> does any other witness want to chime in here? is their shared skepticism on the part of the other witnesses? ms. barkow,. >> it does seem like 120 days would be the equivalent of a lifetime in this kind of industry, what you are talking about. >> if it was 60 days, would that make a real difference? >> that i would leave to the ftc to decide that the fact that they are worried about the 120 days speaks volumes. >> anyone else want to chime in here on this? >> cfe likud some of the discussion that occurred earlier when they are talking about the

number of days but perhaps more importantly look at the actual structure. if they have taken so many of the personnel, the team has been taken from the ftc and is now part of the new agency and yet they are supposed to maintain the backstop or the back up in these areas, but the team is gone. as mr. caulkins suggested, all they can do is go out and rehired new experts that your suppose to be the backup. it does not sound like a very good system to me. >> ms. hillebrand. >> thank you mr. chairman. under the one rove riding and forsen modeled we wanted to be as easy as possible to bring the cases to enforce the cfp rules. the commission recommends a short time we would want to look at that very seriously. we think a waiver process could help there. the commission in the cfpa could agree that this kind of case, we don't need to know in advance of these other cases when a shorter

period. >> filcher's time is up in the chair recognizes the ranking member, mr. radanovich. >> mr. calkins, the proposed legislation provides a coverage entity to include those who provide tax planning, financial and other related advisory services or provide educational courses and instructional materials to consumers. pbs often runs such a programming on tv for their audiences as to financial cable stations and radio stations. with these entities be covered persons under the proposed legislation in your opinion? >> certainly there is a risk that they would be covered persons. certainly the commission would have to think about whether it is required to transfer responsibility for all of those and very important, even if they are not covered entities today, the new agency has authority to define for itself additional

activities that it would have jurisdiction over. and so, even if the ftc didn't have to transfer authority today, they might have to transfer authority a year from now for the definitions of gotten change. >> thank you mr. calkins. i want you to comment on a prior statement about the ftc's bipartisanship in the way conducts its activities. can you elaborate on that and how the lack of bipartisanship might hinder the cfpa ability to carry out what is now the ftc's mission? >> well, the ftc i thinkb[j)s credibility with congress, with theuñ states, with the it operates in a bipartisan way. the commissionersçófáiyñ try toy consensus. they tried to take the actions that make thet somebody wants to go out on a limb in the wild and crazy to the left of the right.

there is someone from the other side to hold them back and as noted before, ms. barkow when you have people going to far, dissents can be filed, and did succeed in developing a shared understanding of the sensible way to proceed and then as presidents come and go, there exists some continuity and that continuity i think adds credibility to the agency's operations and really helped makew3çñió#okmk it into=zñ ae agency. >> thank you. ms. barkow would you care to respond to that? >> i agree completely and the whole idea of the regulatory agency which they think is part of the coal in this legislation is to have that kind of consensus generating form of norms that transcend any particular president shalev ministries and so you don't have instability that comes with every new administration and sweeping changes one way or the other.

you have the stablest agency that has membership from both parties. i think it is proven to be effective and it is hard to understand why do you would have a malton member agency here that does not have that mix of political views. why not just then have a single member? >> thank you very much. mr. stinebert, i want to ask you about the uncertainty in the financial markets in this massive shift from the response of the creation of consumer protection. your bird's-eye view on the industry, how would would react to something like this. and the level of uncertainty that it might bring into the markets where it uncertainty is, we are trying to do everything to avoid the uncertainty. would you comment on that please? >> some might argue this is the perfect time to do something like this and i think it is absolutely the worst time. we are from unleasing stability in the financial markets. we are starting to see some recovery. we are starting to see investors come back into the marketplace

which eventually investors have. and in europe and the u.s. we are starting to see it come back. this does introduce a whole level of uncertainty back into the whole of reno because people are now going to stand back and wait and see what goes on, whether there is additional liabilities or requirements and regulations on these entities, so yes i do agree that it is going to bring a new level of uncertainty to the marketplace that the worst possible time. >> can you describe a scenario where the duplicative regulatory authorities allowed by this act might actually prevent consumers from access to the valuable financial-services? this is the state preemption issue where you have 51 different-- >> right now it is set up been basically a floor or a standard that states will have to exceed.

some will make a judgment, whether what the state is trying to do is meeting or exceeding. i'm assuming this would be the new agency but of the determination is made by them that exceed did of course anything that they would do to exceed would be permitted, so i think you have seen it in many other instances. i will give you the most recent. the new safe act, the licensing for residential mortgage originators. you basically have up there in the implementation of that law 50 different standards that everyone is trying to meet and each of them, many of them exceeding the federal guidelines. so people regulated at the state level will have to register in multiple states as originators are going to have to follow many different laws. >> thank you very much. thank you mr. chairman. >> the chair now recognizes the gentleman from massachusetts,

mr. sarbanes. i am sorry. >> we are trying to get to massachusetts. thank you mr. chairman. i appreciate the hearing. mr. stinebert he said this is absolutely the wrong time. what would be a good time? >> well, i think when you go back and there is plenty of history to point fingers at what was the cause of the sub-prime mortgage crisis and currently economic crisis but i don't think he would get anybody that would predict that whatever is done here today, that you could control every bubble that is going to occur in the future. most economists would agree that yes this bubble is a housing bubble before it was a tech bubble and before that it was a savings and loan bubble. you cannot have government totally controlling financial

markets unless they can totally control potential bubbles unless you totally stymie innovation and all you have is a vanilla, plain vanilla standard product felled there. i don't think that is good for consumers that we are trying to protect here. >> i agree with that. i don't think you connect government totally controlling every single financial dimension in the market. i don't think you can do that. i don't think this tries to do that. i think what this tries to do is provide some oversight and direction and rules of the road so that people stop driving off the road. not only because in the view of alan greenspan that causes the drivers to crash and hurt themselves, but because they have run over hundreds of thousands of innocent bystanders in the process. ..

but certainly in a transitional stage, predators have a lot of opportunities to make mischief, and i think the discussion about the 120 days kind of points to some of these things. but i would like anyone who would care to -- i would like to

hear you respond to the idea of some kind of a special initiative or task force where wishesness that during this transition we need to be paying attention to maybe it is a limited set of activities. lu-i say this because a lot of taxpayer money is flowing right now into the financial infrastructure of the country. many of the same players took advantage of people over the last few years are thinking creatively to come up with ways to take advantage of them again

to access some of the dollars. to speak to that issue of how we can not be caught napping during the transition, we can start with you. >> i believe you were asking the right question, there will be a danger per gooding the transition. there's a couple things and i don't have the whole answer. the work the ftc does right now up to the date of the transition will be important. it could be two years after enactment. if they are enacted to give the ftc will get a rule making improvements right away and can get some of these rules that have been back blocked because the limitations on its power moving and and to place that will help certainly to put those into place. we do need to be paying attention to the new problems developing. one that brings me in particular is a new form of zombie debt where no one's got the paperwork. someone just as a list saying

you owe this amount. that might come out of mortgage modifications are post mortgage dispositions. á@@@@@ @ iu2@ @ @ @ @ @ @ @ @ç cases, we can bring that in my state tomorrow. there's more need than the number of people in place to do the surface of the federal level. >> yes, sir. >> i think you need to break your question, this is a great question, to parts. one is more scam activities and i think this congress

effectively delegated the ftc charged to go after foreclosure rescue scams where a lot of mortgage brokers were moving and loan modifications games and that kind of thing. that kind of activity is clearly sufficient to regulate and the additional authority has recently given help. you break that from traditional and large-scale sale of products such as mortgages, etc., and i think in that area the credit markets are so beaten down that i think that this agency would be up and running effectively to get ahead of the new product. >> that's helpful. thank you very much. >> the chair will extend to the members additional time, for one additional question. the chair recognizes himself for one additional question. i want to get back to this area of concurrent enforcement.

are there any risks or downside to consumers or industry with this whole idea of, current enforcement between two agencies? can you predict or look into a crystal ball and tell us what you see in terms of downsize or harms to the industry or consumers regarding this whole area of concurring in force at? anybody want to jump -- mr. stinebert? >> i will give it a try to go first. one of the whole thing is i think the agency being proposed is supposed to do is have single source responsibility. and you take enforcement and break that among current enforcement agencies and then

you have a new agency that's supposed to share some type of tool enforcement. it doesn't sound practical to me. we think that enforcement should continue to stay with existing agencies. now, to your question, congressman, about the timing and you mentioned the speed limit and people watching, people going down the road. i think that -- i don't think anybody the regulations or the speed limits were in place, but up until several years ago that perhaps the regulations were in place but the enforcement and the oversight was not. but i think if you look today and all of these agencies, whether it be the ftc or the other agencies in washington, i think everybody has their radar guns out and are certainly looking issues as well as credit

and lending issues in general. i done think there's ever been a focus in this syria like there is today. and so, to that respect i think that going back to your question, mr. chair man, i think that it's very important. i think most important that there be continued responsibility between safety and soundness and viability of those companies and consumer protection. and i think it is on why is to separate the two entirely. i mean, we have gone through the good example with the gse of trying to do that and find out why that doesn't work and it would be very simple if that agency that is just concerned about consumer protection can make everything so safe that it's not really good for the companies offering those products or for the consumers themselves. there's always going to be risk

in this industry that defines what it is and i don't think you can eliminate that entirely. >> i think it's a really good question and i would say i don't think it is so much risk as long as the rules are clear so long as you have the one agency setting rules and what it is companies have to do. the fact that there would be multiple enforcers of the rules is less disconcerting because you have clear standards and everyone would know what they are and you essentially have this more cops on so that's when you could have states helping out, you would just be getting more manpower but the rules would be clear so the success would depend upon what kind of rules and up being produced from the process and i guess i would say that's why it works to have all the states can police medicaid fraud for example and it's not a risk because everybody really important for the agency that created to have

clear rules and if they see enforcement action that looks like it's not in the spirit of those rules the act as it's written if the state ag brings it the cf p.a. could intervene and they could step in to that action that's a bad interpretation or it is a bad enforcement action, so i think it is okay to have multiple law enforcers and probably necessary because there are not enough resources for all of the fraud that's out there. >> ms. gillibrand. >> i have to think about your question to remember there are six authorities, it's just thinking agencies haven't used that open public enforcement model to bring cases with the vigor and approach the ftc has used so we already do have concurrent enforcement and the downside has been that many of the agencies of the ftc that have enforcement authorities also have other obligations tied to the industry they regulate.

at least with concurrent enforcement with the cfpa and ftc. >> mr. chairman i think that concurrent enforcement authority could work, but i worry that there is too much attention to the ftc as an enforcer. i prepare for this over the weekend when the website was down so i was reduced to the documents i happened to already own. i owned a 2004 annual report. it happened to be in my files. i opened it up to consumer protection where the ftc is a good list of the range of activities in which the agency engages and that is part of what makes it a success. consumer protection policy. one, research and reports. number two, hearings and

workshops. three, advocacy. number four, amicus briefs. five, consumer and business education and outreach. the ftc is not just a cop on the beach. it is an agency that has economists that the does competition that does consumer protection and eustis a whole range of tools to develop expertise to identify problems and to craft solutions. and if a huge part of what the ftc does as a matter of subject matter is transfer eight out and if the new agency has the exclusive authority to give guidance in this way than we have lost a great deal of what the ftc does and i think the consumers would be the worse for it. >> chairman russia think the industry has to arguments about the concurrent authority and problems. the first since it is too much

enforcement but as ms. hillebrand said someone who spent years making prayer lists commodore list is longer than you will ever get, and the problem with this bubble was certainly wasn't bostick wasn't too much enforcement. the second problem which is much more subtle is inconsistency and enforcement policy and ms. barkow appropriately says if the rules are clear enough certainly we will solve the problem and i would further say the cfpa has given sufficient authority to make sure it is happening in a uniform way but there is a second response to the inconsistency which is like rulemakings where i agree you want a unified rule maker, when it comes to enforcement this is what regulatory competition actually works because you are competing to be a better enforcer as opposed to competing for a race to the bottom so the people with a charter review which was a serious problem in creating the situation. and when you compete to do

better you are aware if you don't do it and somebody else and forces your rule in a situation you might get embarrassed, madoff, sec, that when you have competitive you have a market that essentially forces public entities to be aware of that that actually works and when it comes to the authority i just want to say it's so important state attorneys general, and i'm putting myself on the bac because i was part of a group who did this we were the only ones out there screaming about and bringing these cases. the ftc was saying it's great because they were going after different actors but we did one taste where we got half a billion back with subprime mortgages household followed by another case where there were 300 mollyann and i felt that was too little and i left by then. this was a problem if you were on the ground you saw it. it was this girl. these people were out of control. the state agencies were able to enforce because they had a different enforcement agenda sitting at a different place,

regulatory competition works in terms of the open enforcement model. >> the chair now recognizes mr. radanovich. >> i appreciate everybody's testimony but mr. cox, what i thought i heard is that we need multiple agencies having to do the same job to make sure that the people are doing our job, and that, to become is a recipe for wasted spending. but i do want to ask a question about -- i believe it was ms. sutton here earlier talked about a situation where an 84-year-old woman who owned her place free and clear was duped into a 30 year mortgage. i would like to know whether there was family involved putting her up to that and that happened for reasons that wouldn't have anything to do with this current financial crisis. but it happened to represent california, the epicenter of

mortgages frequently the number one county in the nation where mortgage defaults and foreclosures have happened, so i have a great appreciation for what is happening and we had tells about one particular non-english speaking people that were talked into a home of the needed to do is come and sign the papers once they got there they were jammed with points and fees they knew absolutely nothing about and were put into an uncomfortable situation, signed the mortgage papers, later lost the house so i'm curious to know after we have spent in reaction to this financial crisis anywhere between 800 to $1.5 trillion to stimulate the economy we get a rise in the unemployment rate that we are supposed to drop with all that spending i'm a little leery of broad sweeping reactions to the problems we are in, so how does something like

this -- and i would offer that to you, mr. cox and mr. stinebert and anyone else that wants to respond, how would that help the person -- i'm not sure about the sutton case. i want to know if the family put that up, the poor and elderly person to the situation that my situation in modesto california within on english-speaking person was jammed into the loans and the shyster put points on there and they quickly sold the mortgage to somebody else and this guy was washing his hands and out of there. how this broad sweeping change your talking about prevent something like that from happening and at what cost? any more so than is currently on the books to prevent. >> thank you, ranking member radanovich. i will respond to that by also responding to mr. stinebert's, and we all agree the enforcement was a problem. we don't all agree on that and here is the problem had to parts if you want to break into its

grossest problem. the first was the type of product is being sold they were simply too high risk, too complex and way too aggressively sold for average consumers to work through all the problems and understand all the costs and consequences and context. for instance, the great held up at the time as the great financial innovation, the payment option arm was sold so aggressively on its benefits but its risks were not clear to the average consumer, you know, the kind of thing i could have sold her on if i was an evil person without informing her of the risk so there is a product regulation problem that existed here. the fed if you read the fed's papers during this time and put them next to the industry papers you could change the titles and couldn't tell the difference. there was one type of thinking that needs to change. the second problem was a fraud problem.

the fraud problem got so far out of control i've never seen anything like it. you know, if you%@@@@@@ @ @ @ @p earlier discussion whether we should have multiple regulators is a good thing. i asked you if you are a business and have multiple regulators, two and three regulators is competition regular entity and the costs that are involved so the ftc is

in your office one week and having your staff gather everything and the next week another regulator is there. i can see where there might be some contention where that is good but you won't have businesses that anyone that operates a business small profit or a large business which think multiple regulators and enforcers coming into your office this is necessarily a good thing because in all of those costs are eventually passed on to consumers. these do not happen in vacuums. yes there are predictions that need to be in place and you are absolutely right about that -- you can overdo a process. we want to have a process that protects consumers but is efficient for everyone involved. it's efficient for the safety and soundness and viability of the companies being regulated as well as good for the consumers

that are buying their products, and i think that that's an important thing. thank you, mr. chairman. >> the chair recognizes the chair emeritus, mr. dingell. >> i think you for your courtesy. this question to gail hillebrand and mr. cox, what authority will remain in the ftc to protect the consumers after the administration's plan has been adopted if it is adopted in its current form? >> thank you chairman emeritus. the ftc remains all of its authority to bring section 5 enforcement subject only to a staff level consultation discussion -- >> so it loses that authority? >> the ftc retains, i'm willing to give a list of things it

retains. it retains a section 5 authority, it retains the authority to bring cases under statutes and rules that the alphabet soup, the efta, so on. it retains -- those are big things it retains. it also retains its broad authority. there are financial services and then there are people who tell lies and say sign up with me and give me your social secure the number and checking account number and you will never see me again. those folks are not selling financial services, they retain authority and we have recommended it also be given the same kind of backstop authority that it now has currently and would have under the proposal for the existing consumer statutes with respect to enforcement of the cfpa rules that isn't yet in the proposal. >> what would it louis? what would ftc louis? what jurisdiction but it louis?

>> the ftc would lose jurisdiction that has been difficult to use, which important but difficult to use, which is its authority to develop unfair and deceptive practices rules in the financial-services area. i'm sure you're aware the last time it was used was in the practices will which came into effect in the mid 1980's. >> why should that be taken away from ftc? >> if we were looking at just the ftc there would be no reason to take it away but the problem would be -- >> there's no reason to take away? >> i'm not quite finished. >> let's just go a wee bit further, and explain to me why we should give it to some of those good hearted folks who've led the fight for the repeal of glass steagall, who left financial-services and left this

glorious mess we have in the form of probably the biggest depression this country has had since 1929, now why should we do that? >> authority to agency that can make one set of rules that applies to the bank provider and then on big provider. if the ftc -- >> i have no objection to taking care of the bank regulatory agencies. let them -- let them create them and let them do their thing. but why wouldn't we bought the honest men and women at the ftc looking over their shoulder and why wouldn't we want them looking over their shoulder of those good hearted banks and financial folks and nba up in new york that created this mess? now, help me, why wouldn't we want that? >> we definitely want oversight, somebody that can look over the -- >> the ftc keeping an eye on those people?

>> we like the idea of an agency that can look at everybody and not just the nonbank providers and we think the best way to do that -- >> what about the banks that are going to be engaging in all kind of things? they are going to be engaging real-estate, they are going to be engaging in issuing the bonds securities, they are going to be engaged and all kinds of wonderful activities on derivatives which are gambling devices. so why shouldn't the ftc retain its continued -- its continuing and ancient jurisdiction over keeping honest man honest and mabey occasionally catching a rascal, why should we take that away from the ftc? >> mr. chairman emeritus i suggest it's because -- >> why shouldn't we just leave ftc as it is and let these other

folks go about their nefarious business under the kind of weak minded regulation that the treasury has traditionally given to these institutions? >> we are absolutely in favor of -- >> you're speaking here for the consumers. i'm trying to figure out do you really understand the consumer's needs or are you engaged in perhaps disregarding the consumers because these other folks have done a better job of telling what a wonderful job they are going to do after they have gone about not one but two depressions. >> i'm looking from the point of view of the ordinary person trying to get a mortgage and they want to know -- the consumer doesn't think it is prescott, field practices -- >> but it's just the wrong question, answer my question, please. >> the answer is we think -- >> why should we not -- why

should we not keep ftc in its traditional jurisdiction of protecting consumers? when i was a boy, roosevelt tried to give ftc jurisdiction over the stock market, and you can't imagine the outrage that this generated and new york because they were scared to death of the federal trade commission which is under jurisdiction. we keep modest. and we find as soon as the sec got away from this committee all of a sudden it became a wholly owned subsidiary of the securities industry and the banking industry. now why should we sanctified that by stripping the consumers of the one remaining protection which they have, the ftc in favor of getting it to eight dee dee to a congregation of folks known to be influenced by some of the worst scoundrels in our

society? >> are you ready for my answer? we believe we need to put it in one place so that the non-banks aren't sitting don't regulate us because the banks can still do that, the banks are saying don't regulate us because they can still do that. >> we don't mind having this agency that would be created by the administration's proposal to do that. what we want is to have the ftc so as to sort of watch over these people and let them know that there are honest men and women watching them so that rascals are diminished and consumers are protected. what's wrong with that? >> i think we have the same goal and a different perspective how to get their. >> so are you telling me that you like the idea of having the ftc continue its jurisdiction when all these other folks go about their nefarious business? >> we have endorsed full retention of ftc enforcement

authority that we think we have to have all the rules in one place. >> we've talked about what ftc is going to lose. and you're apparently advocating a losing it. i am not of a view that maybe we want ftc to lose the jurisdiction and maybe we want ftc to be around to sort of provide a minor dampening of the riss county that is one continue to occur in the industry. what is your objection to that? >> we believe it is unique to put the rules -- >> in your words what is -- speegap will making in one place so it is clear whose job it is and then you can hold them accountable. >> de a range that one-stop shopping when they moved this whole thing across the hall and since then the whole financial services industry, the united states has had to be bailed out to the amount of $700 billion.

which was confiscated by mr. paulson who came from the industry, and which has done nothing but enriched the same rascals the costed trouble and has not only enriched those rascals but has given something new to think about, and that is it has seen to it that they have had the funds to pay the same scoundrels that made the mess enormous bonus amounting to as much as $165,000,000.1 instance. obviously this is the product of one-stop shopping which i suspect you were telling me you support or maybe you want to tell me now you don't support. >> we are trying to and the ability to shop for a regulator by having one entity write the rules no matter what kind of charter and what kind of

provider. that is our position. >> well, i have to say i think somebody else wrote your statement, but i thank you for your presence and mr. chairman i think you for your courage and ability to bring this about. >> the chair thinks the chairman emeritus and thinks the witnesses. this is -- this hearing now stands adjourned. but before we adjourn i really want to let you know how grateful we are for you to extend your time with us and spend your time with us. by unanimous consent, i request members submit all questions to be sent to the witnesses for the record within seven calendar days and witnesses will respond promptly to the questions that are submitted. thank you very much, and safe travel.ç

>> up next live, your calls and comments on "washington journal." and newsmakers with representative burgess and ca cassidy. >> and tonight on q and a. >> what are you going to do with

the declared state? he said i don't know. you will have to see. he's ready to sign it. he is told that i am going to support this. >> ron and and allis rad osh. you can listen to this online and xm radio. ..