>> next, "newsmakers" with record -- richard cordray. then we will have a look at the supreme court activities. >> this week on "newsmakers," we are joined by richard cordray, director of the consumer financial protection bureau. two reporters to help with questions. we have a national business writer with the los angeles times. in two sentences, tell us what is the consumer financial protection bureau. >> all the ways in which you access credit for your personal

purposes, whether it is a mortgage or credit cards, your bank accounts or student lending, a whole variety of other products -- we are intended to stand on your side, protected against fraud, and make sure you are treated fairly in the marketplace. >> as you know, europe and then by president obama was very controversial. there will likely be some sort of legal action down the line regarding that. given that, i am wondering -- you have focused so far on a consumer education, complaints from improved disclosure. is that controversy and fought a legal action -- and threat of legal action brought you to not take on the big bank? >> it has not affected the work we're doing in any way except positive. it was overdue. we were not able to fulfill all of the authority that congress

had given us. since i was appointed, we launched our non-banks supervision program. we are at work with our bank supervision program. our teams going to financial institutions and they look at the intermission. they are entitled to have all the information to assess risk and compliance with the law to see how consumers are being treated. our approach to that is different from the historic banking-agency approach, looking at it from a standpoint of the institution. we look at the consumer's interests. we also have an active enforcement division that is looking carefully at many things. they have investigations ongoing. i am not prepared to talk about ongoing public activity. it becomes public record in the case. we have been engaging in our rule making process.

there are compulsory requirement for all institutions, banks and non-bank. we issued our first run rule on remittances and transfers among people who send money internationally. the mortgage market is a primary area in portland. we are only a few months old, especially in terms of our authority. it takes time to ripen. been on the investigation side, i know you cannot say anything -- >> on the investigation side, i know you cannot say anything. can you say whether it involves the big banks, as opposed to other banks in the industry? the large banks remain opposed to the state of existence. are you shy away from going after them in any way? >> we are not. i get different signals when i talk to ceos and compliance officers and top executives in

different profit plans at the larger banks. many of them recognize there seems to be -- there seems to be a clear recognition that something is needed. there needs to be a rebuilding of trust in the marketplace. we're dealing with all institutions top to bottom. we do have open matter is we're looking at involving larger banks, smaller banks, and non- banks. >> you'll have been looking at the books and records of some of the largest banks. what can you say about what you're finding that might be different from what other bank regulators are finding? have you started looking at non- banks? >> we have. we have examiners on the ground at banks and non-banks as we speak, even though our non-been program was hampered by not having a director until january.

therefore, a far away a little bit later. what is interesting about our role in examining and supervising these different financial institutions is two things. one, we can address those banks and non-banks. you markets where, before, only banks were catbird by the standards and examined to imply with those. non-banks were competing in the market and taking some market share and growing it. they did not have any oversight whatsoever. many of the bad practices originated and/or accelerated in that short. . you cannot have a market where you regulate part of it and leave it untouched. that does not work. i came to greece. one of the things i would say is, we're looking at institutions from the standpoint of what is the impact of comply with these laws on the institution itself, what kind of risk as a create -- that is the

banking agency costs wokas. that is what the law tells them to do. our focus is looking at the consumer. how did they will about marketing products? how does that affect individuals? are they being treated fairly and in accordance with the law? but may give you an example -- let me give you an example. with the contract with the vendor to offer a certain product and the like, i think there is a certain comfort level with that. if a contract to, they had legal remedies of the vendor made a mistake or treated people badly. they could seek redress. there was be less regulation bill -- there would be less reputation as a risk. >> of under deals with the consumer. consumer often does not know the difference. they are doing it on behalf of someone.

we're likely to look at vendors a little differently from the way the banking agencies do. they involve more direct risk to consumers. we will be aggressive about going on-site and looking at vendors. i think it will be a change for some of these institutions. they will need to adjust their compliance regimes accordingly. but what can you give us an example for those outside of washington. vendors and non-banks. the mortgage servicing is one example. -- >> mortgage servicing is one example. what happen in this marketplace, which has gotten a lot more complicated, is that the person -- the firm that is dealing with my mortgage on an ongoing basis, taking the payments and making sure they are applied correctly, dealing with situations that might come up if i fall behind, working

with me to make sure i am making payments, that is a whole industry to itself out. mortgage service. those rights are often bought and sold in the secondary market. i may get a loan from you. by the time i have a problem compared it may be someone different. those can be bought and sold without my approval. many of them more contract with their parties to deal with some aspects of this. some of the bitter really lousy job. it is documented now. banking agencies, the gao -- everybody who has looked at this has shown this. the way in which some of the vendors really performed poorly matters a lot to consumers. it also matters to the institutions. many of them are flimsy capitalized. this looks good on paper, but it does not always work in

practice. >> which non-banks are looking at? where are your examiners? >> their are two ways we set our priorities -- >> there are two ways we set our priorities. congress's priorities are important for us. they specify the mortgage market, which includes mortgage origination -- the actual making of alone -- and mortgage servicing, which is dealing with the performance of a loan and the progress of it overturned. depending was an area they specified as a high-priority. and private student spending. those are the priority areas that congress specified. there are other areas. congress agreed to supervise those areas and enforce the law regardless. when we supervise, we need to designate who are the larger

participants and focus on them. as you know, we have proposed to send out of reach over debt collection and credit reporting -- to extend our reach over debt collection and credit reporting. you do not necessarily deal with your debt collector. the rights can be bought and sold. credit reporting has a tremendous impact on people's lives. they did not understand it. it is kind of shied away. -- shadowy. it could be checked by a potential employer. you might be rejected on that basis without realizing it. these areas exert a lot of influence over people's lives. prioritizing with the knees ranges depends on consumer impact -- within these ranges depends on consumer impact. larger institutions are more of our party because they deal with

a broader range of consumers -- is more of our priority because they deal with a broader range of consumers. we are undertaking a number of pay lenders, where we are on the ground at any given moment. some places were getting ready to go and were working with them. >> how would consumers benefit from the different way you are examiners -- your examiners are looking at vendors compared to the way banking regulatory agencies have looked at them and the past. can you bring it down to the consumer level? ms certainly. if an institution contracts with the vendor to sell you a product, a vendor may be -- this is a general in -- generalization. they may be inclined to be more aggressive.

and maybe one of many product lines at a larger bank. there also might be fewer controls their -- theire. people do not always comply with a lot. there can be a difference between the scripts that are used, which they are supposed to use, and when you call things might have gone differently. people competitively try to sell a product. we will look very carefully at all aspects of this and not be content with the notion there is a vendor contract and that provides protection for the institution. from the consumer side, it does not really matter. whoever is dealing with them is the person creating harm to them. that is our focus. >> you look to see those vendors

are being overly aggressive or misleading things the banking agencies might not have delved into because -- from a safety issue standpoint, they were content with the setup. >> i've been the banking industry needs to deal with that to some degree. the reserve level of the installation for the institution. they have a contractual relationship. they could seek indemnification. the bottom line is, for the direct contact with the consumer. thence our focus. we will be quite aggressive -- that is our focus. we will be quite aggressive about that. >> have you seen any evidence yet of customers' changing it is 11 on the ground? -- any evidence yet of customers changing anything on

the ground? >> if you could signal more clearly to the market the direction you are going, there is a certain amount of interest among some of the good businesses in trying to get out ahead and understand what is expected. i think the mere fact that people understand we're out there, looking at whether consumers are being treated fairly, they have to think more about compliance and about whether they are treating consumers fairly. we have seen examples where companies were bringing to us a couple different settings -- one is the simplicity, clarity, and understanding of a brienz -- an understanding of agreements reached. we have institutions that have signed up to work with us on simplifying their agreements. others who are bringing things to us on their own that

represents shorter, clearer, simpler, appropriate grade reading level agreements that are much more understandable and accessible for consumers. we clearly are stimulating the market on that. there are some areas where, as a haven't practices -- and i do not want to get into details. we have had institutions come to us and talk about how the air changing their practices. and i think that would not have occurred if we were not interested in those practices. we're getting people's attention. there is a lot of ways in a somewhat cooperative way to make other improvements. >> we have about 10 minutes left. give us an example of something that is coming down the road that consumers out there are going to say, oh, good, i am glad that agency is here and doing its work. >> that -- i think there is a

number of them. we have recently finalized remittance transfer. there are many people who send money abroad for a variety of reasons, maybe somebody is traveling or going to school overseas. there had never been any around those transactions, which is kind of offensive when you think about it. most of us, as i said when testifying from the senate banking committee, everybody in that room -- when they use a credit card or they write a check or get a mortgage, they expect and receive significant protection about what can or cannot be done in that transaction. for people who very often are at the core and the spectrum, many arrivals who are trying both take care of their needs here with their families, and send money back to others. there were no protections. they often did not know when

money how much would be received on the other end. there was no ability to correct errors and there was not any responsibility to do that. these are things that had changed by us finalizing a rulemaking that now provides protections for people. >> that is a small part of our population. can you tell me something that is the -- >> in the mortgage area, anybody who has bought the house knows that, when they come to the application process, the closing, there are massive amounts of paperwork, much of it duplicative and confusing. in part because it is rich language. different agencies have now qualified and been integrated within our agency. we have been directed to simplify and clarify and boil it down so that people know what was as they are making and the

key terms are more salient. product that we have had under way for more than a year already. by january, we will have in place a new regime on that. people will see that as they go to buy and sell houses. credit-card agreements, the card congress with significant projections. we now oversee making sure that those protections are being delivered by institutions. we are working to simplify agreements there. there has been a lot of movement in dan -- in that market toward similar agreements. people will shop for credit cards 3 in. intend to shop, they are shocked for credit cards. you get them in the mail. i am sure you do as well. some of that will be boiled down and made simpler so that you can understand what is it going to be, what are the terms, what are the payment terms and the late fees associated, and

you can make comparisons. it will also help if people have trouble making comparisons. a lot of consumers do. a lot of complicated things in the financial space. it will help third parties to better compare products and set out for people, kind of like consumer reports thus in the automotive realm, here are the relative american the merits of these projects. we might be able to advise you, given your situation, you're spending, your income, what might be preferable for you. >> you have a lot of oversight over the financial industry. i want to ask about the agency. a number of republicans in congress would like to change the oversight. u.s. the single director have lot of authority, soul of 40 bang in a lot of ways. if you were not the director --

you as the single director have a lot of authority, in a lot of ways sole authority. >> we have different commissions and boards that are organized differently. some have one head. most cabinet agencies have a single head. some of the independent agencies have a board of three, five, or seven. some have a single director. nobody seems to actively try to change. in each organization, i think it is common that there is some group that is group leadership. i am the bureau director, but we have an executive committee of very talented people, some from public-sector, some from

private. we run the place together. when you have a board the mother typically is a chair or acting director who asked to run the agency -- when you have a board, there typically is a chair or acting director who i has to run the agency. congress has been very interested in us. some people are friendly, some are more resistant. they have called us to testify. they want oversight over us. i think that is a good thing. i welcome every opportunity i have to testify. i will be going up for my fourth time in three months next week. to me, that is a good thing. they are entitled to look closely at us and trust they of the opportunity to explain what they're doing. the more overset there is, the harder it is to make the case that we are somehow insulated

from oversight. it just is not true. >> what do you plan to tell congress when you are there next week? the cfpb is kind of president obama's maybe. he pushed for it along with elizabeth warren. how do you push for an independent agency along with all the policy? >> the path is pretty clearly marked. yeah the federal trade commission, securities and exchange commission, the banking agencies, the cftc, a number of them. the fact of the matter is the weirdest thing from the administration. they may be interested in a lot of things we're doing and supportive of a lot of things, but we're happy to work with anybody and everybody, whether their elected officials or appointed officials -- whether they are elected officials or

appointed officials. members of the congress and the senate, we want them to have the opportunity to understand and appreciate what we're doing. we will work with members from both parties and across the country. they respond to the same constituents we hear from with the very same kind of problems, losing their houses, drowning in credit-card debt, dealing with student loans. as we make progress on the issues, i think that is helpful in terms of building support. we also work with fiscal at the state level, the local level, including cities for financial empowerment and efforts under way there. we're getting out across the country quite a bit since i -- buquite a bit. we have our folks go across the country all the time. one service member visits military bases across the

country and brings back a wealth of information and insight. we have our older americans. the director is canvassing the country to understand special problems with that population. and looking after elderly parents. i just think, as we work, we have a mission set by congress. not, we want support and our partnership with all elected officials and agencies -- >> we have time for one more question. do you want to take it? >> just to get back to the oversight question alone but, and the question of possible legal action, is that in keeping the agency, the thought that the first aggressive action they take, rulemaking or enforcement aggressive, is likely to end up in court and be challenged?

are you preparing for that contingency? is that holding you back for impeding anything you are doing? >> i do not see how it legitimately could affect our decision making. now that i am appointed as the director, people might have their own questions or perspectives about that. now that i am the director, this bureau is under obligation, by law, to do certain things. the things that not only we are required to do, but they are really important and the matter to the lives of consumers -- peanut the mortgage market, a leveling the playing field between banks and non-banks -- cleaning out the mortgage market, leveling the playing field between banks and non- banks. as we protect consumers, they will see the benefits of this

agency and it will justify the work we're doing. >> what is the hearing next week? will you be saying? i have testified on the same report in front of the senate banking committee. this might not break a whole new ground, but it is a new set of people inquiring. will find that very stimulating. >> thank you for being our "newsmakers." we're back with our reporters. let me ask about this agency. as for the oversight and where they get their money. >> the agency was set up somewhat unusually. they did not give money directly from congress. they get it from the federal reserve -- they do not get money from congress. it creates questions among some

in congress about how much oversight they have. for example, when he goes to the hearing this week, they cannot say, if you do not do what we want, we are going to cut off your funding. we will not give you the funding that you need. there is a lot of concern, particularly amongst republicans, that the agency is really on its own and can do what it wants. as you heard, he is trying to stick to what the law has put forward, but that is an ongoing question. that is where this legal challenge of the recent appointment is going to come in. that's another area where congress was not able to have a say on his appointment. >> who is pushing the legal and challenges? >> some republicans in congress. some people in that industry. if his appointment is not valid, there are a lot of authorities

that the agency had that they got only when there was a full- time director appointed. you could make the argument that any rule making more enforcement action that the agency undertakes under his supervision would be invalid. that is the expectation. somebody, at some public, is going to file a legal challenge along those lines. >> what did he tell us this agency is doing that could be controversial? >> he made it clear that they are moving ahead, regardless. one thing they are moving on that is new is this this passing examiners -- this dispatching four of the examiners to non-banks. they will look at firms that provide loans to consumers, but not necessarily banks. they give more information about -- we are looking to pay lenders, some of the biggest in the country, just like we're

looking at the banks. i know that is of the bankers have been wanting to see to try to level the playing field. look at all the financial products, whether from a bank or a non-banks, student loans, credit cards, mortgages to he is sending examiners to some of these non-banks. that is pretty interesting. >> there is a movement out there, occupy wall street. people want to see some action against big banks. what do you say on that? but he made it clear that he will not shy away. he did not tell us what he is doing more looking at, but he told us he would not shy away. they have a charge to look at all kinds of financial firms, and that is what they are doing. >> how will consumers benefit from this agency? >> the overriding idea is to take these consumer protection responsibilities s