are writing the recess appointment power out of the constitution. that is antithetical to the liberty enhancing issues of the separation of powers. thank you. >> the case is submitted. >> c-span, we bury you in the room. -- we put you in the romm. om. all as a public service of private industry. created by the cable industry 30 years ago. follows in hd and us on twitter. >> this week on "newsmakers," richard cordray, welcome back. we appreciate your time. we have jim puzzanghena who is with the "los angeles times" and

alan zibel with "the wall street journal." alan has the first question. >> you are the first regulator to really have a broad look at how consumers are being treated across the entire financial system. what is the area you have looked at that you are most concerned about? >> we are worried. most have been worried about the mortgage market. the mortgage market is clearly the reason the economy blew up in 2008. consumers were massively harmed. it was the single biggest financial market that has been troubled in many respects than the lending side in the service eye. -- and the servicing side. >> you had just come out with some new mortgage rules.

the housing market is finally starting to recover from the crash. why do you think these rules will help the market as opposed to hurt it? >> the rules are not really much more than a back to basics approach to mortgage lending and mortgage services. the same things are thanks have been doing for a long time, making sure that before they lend money the person borrowing the money will be able to repay it so they are not being set up to fail. they are being set up to succeed. that is basic banking 101. it was not the norm in the mortgage market in the last decade. putting that back into place, some of this cleaned up after the crisis because the markets crashed. if the market recovers and comes back and says that is happening, we want to make sure the framework does not allow us to get the same kind of problem again. >> there is concerns in the industry in some areas that the rules will constrict credit and

will have a spill over effect of people being able to get mortgages. how did you try to structure the rules so that that did not happen? >> the biggest thing that has constricted access to credit in the last decade and in our lifetimes was the financial crash of 2008. long before our rules came along, they took effect this month, credit became very tight because of the crash. we did draw our rule so as provide a modest safeguards for mortgages that are the vast majority of the mortgage is being offered in the marketplace today. we included special exemptions for community banks and credit unions to continue the lending we think is the very responsible and has performed well. >> one of the big issues when the rope was being developed was whether lenders would lend

outside the box, the definition you true. since then, some of the biggest lenders in the country, wells fargo, jpmorgan, bank of america, have said they are willing to do that. you heard from smaller lenders saying they are going to be a lot more cautious. they are worried about going over the boundary. how do you think that is going to play out? >> i have a lot of confidence about this. i think many of the banks and other mortgage lenders have to simply get used to the new rules and live with them. if you are a smaller lender, the way we drew these, almost every loan you ever make is protected under these rules. either you are making a loan and selling it in the secondary market or you are not selling it

and keeping it in your portfolio, which for smaller lenders is all covered under a rule as well. there are a few loans that were not fall under the rule. many of them have talked to us about the fact that if you are doing responsible lending, you should just keep doing the same kind of responsible lending you have been doing. you know they have performed well. all you do is have to document the consumer's ability to repay. many lenders have been doing that. >> there has been criticism on the other side from some consumer advocates who think they do not go far enough. you decided to not have a minimum down payment or credit score. why did you go in that direction? not locking into minimum levels like cheap bad loans from being -- keep bad loans from made? >> there's always something to be said for rules that are being criticized by both sides of the spectrum.

we did not think the criteria we put in place for documenting the ability to repay in the loans, many of them can be remembered were no doc loans. nobody verified anything. this stops that. in terms of whether we needed to have further requirements like a down payment or a loan-to-value ratio, we do not think we needed to do that here there can be a lot more flexibility. the protections we have in place will solve the problems that have led to the crisis. we don't need to go further and micromanage the way these are being made. >> are you confident we won't have a time in the future where

we have those types of loans? >> as of this month that is no longer permitted. there was a study done by as i last saw. assessed the loans that were made. they determine the loans and 50% had been made under our rules. that would have changed the landscape in terms of whether we have a financial crisis and how severe it would have been. >> what do you think will happen with the minimum down payment? naturally goes's up?

>> i do not know that it does. it is one way to control a loan. we are not trying to micromanage how a lender makes those judgments. they have to decide. if they have to document the ability to repay, it is a major change. if they were not doing this, that is part of what caused the problem. as for some of the other things, some of these things like advertising loans for certain classes of people, they might work ok for others. they are rates were you're trying to bridge and the entire life will be done at the teaser rates. i got a lot of people into trouble. a lot of things are in the fine print better not to be different one year or two years later. consumers should have known better. consumers should always know better. it causes them to make some pretty bad decisions. >> you now have to underwrite

the loan of the actual costs of the life of the loan. he can no longer pretend that what happens for the first six months is the life of the loan. it is misleading and is now banned. >> i want to talk about auto lending. your agency has been concerned about allegations of discrimination against minorities. last month you reached a net worth of nearly $100 million with allied financial. how widespread is this problem? what will it take to resolve it? >> there is a problem. it is fairly widespread. i am a consumer. i walk in to try to get a loan to buy a car. with car prices as they are, many people have to borrow now to buy cars and trucks. i walk in and i am offered a rate and i assume that is the off the shelf rate. there is a certain pattern that if you are a different race or ethnicity or gender you may get

a different rate as part of a pattern than someone else. that is not fair or right. that is what we're trying to root out. in terms of how we're doing that, we are working with the lenders. we just announced together the largest single resolution of an auto finance discrimination master in u.s. history. that will send a message to the market that this is a serious problem. we are working toward a solution that could encompass the market so that this is not happening to consumers. we are taking a lot of input on that. that is our concern. >> is that solution going to come with more solutions? are there private discussions? >> we will see. >> your agency has had a lot of settlements, particularly in charges.

i think the total is 750 million or more. does that amount of money, did that surprise you? what percentage of overcharges do you think that represents? how much are they being overcharged? >> it is the me initially. we have pointed out a deceptive marketing practice that was written in the agency. there was pressure for people delivering this over the phone to people. they are selling you other projects. it happens in a lot of industries. you think that i would want

that. it will cost you $10 a month. what they do not tell you is that you really needed to take another step or two before you got the project. you're paying $10 a month. down the road you say i want to invoke the project and get the benefit of it. if it is an employment protection, you find you do not have the product in the first place. it was not explained. you paid for air. we were able to get full restitution for consumers. in great britain they had similar problems, similar credit card add-on problems. there have been similarly large resolutions there. it is not unique to the united states.

>> when it comes to settlements, the sec has started tough cases, forcing companies to admit guilt. is the consumer bureau considering doing that in some cases as opposed to the typical settlement were the company neither admit nor deny skilled and just pays the money? >> we have done that. some situations it makes more sense. the other tools is that we have penalty authority. it is always about if there is a problem that hurt consumers, getting consumers money back. we have to think about how we deter the behavior. we can deter that by potentially going after individuals who made very bad decisions. we can try to recover money for them. getting the right provisions in place so it is clear what they have to do now which is different than what they had to do. in any situation where we do that, if they violate that, that will come with harsh penalties.

they know better. >> have you referred any cases? >> i am not aware there have been criminal charges. >> you would not know. these are handed by the u.s. attorney's office. we do not keep a record of that. >> it would come out at some point if somebody is charged connected to one of these. >> they may or it may not. sometimes it comes out publicly because there is some sort of plea agreement. that is part of the tools.

there is a certain amount of consumer abuse out there that crosses the line to being criminal that is significant fraud. there's no question that the people perpetrating it do better. we have had matters like that. >> we have about 10 minutes more. >> you have been looking at student lending and for-profit colleges. what concerns you the most about how students are being treated in terms of taking out loans? >> there's a lot of concern. you have been keeping track of what we do. we are worried about the overall student lending problem. it has a domino effect on the

economy. the federal reserve is talking about treasuries. you have a generation of young people who make their way through higher education. they come outside of the loan can be in excess of $100,000. they're less able to buy a home or thinking about starting a family or small business. it is stunting our economy. it is important for us to recognize how major a problem this is in terms of this country and future leadership. we expect to be the real leaders. on for-profit colleges in particular, there is a fair amount of student aid and other things that are being utilized there. our concern is are people being

properly describe to people, what they're getting into? is it being properly describe what they are buying with that money? what the graduation rates are. if you've are not in the position to know a lot of this. for then to end up spending their years in their hope and a chance for the future and something that will not be an out for them, it is a concern for us. >> i know you have uniform disclosure. can you do something like this on student loans? there's more of a heightened efforts to make clear. >> we have been working towards this. the shopping sheet has now been adopted by over 2000 colleges and universities. it is to help get us to a place. we have a paying for college tool available on our website to

walk the average person who's 18, 17 through the choices they have to make in understanding what the costs will be on the back end. what the monthly payment would be at this university compared to another. that else he will make a better decision. we do not want to find it out later. they are writing to us with complaints of how they are being treated. they now regret the decision they made because they do not know enough at the time. i urge people to go to our website, look up our paying for college tool, and to learn from that. it is meant to be neutral the device. no one has a self-interest in what you make. >> are consumers being treated

better in the financial marketplace? >> one of the things we have done that i am excited about is we have set up a consumer complaint function at the bureau where they can come here and filing a complaint in less than half an hour online. if you're not online savvy, you can call 855-411-cfpb. people are standing by in multiple languages. you file a complaint because you think something is not right. we are now getting significant numbers of complaints. the first month we got about 600 complaints only on credit cards. we expanded it. we now have more than 15,000 complaints.

the institutions know. we have made it plain that a growing amount of data is in that base. we are going to prioritize these issues. this is back to the basics. they paid a lot of attention to what they are talking about. if you are a good business, retaining a customer is a lot easier than going out and taking on new customers. some of these institutions are large. we now create a new pressure. we have taken the complaints and we have put those into a public database. anybody out there can look and see. how is this bank or that thing doing? how do they treat people in credit cards? maybe i can go elsewhere if i do

not like what i see. do they have a lot of complaints? it is increasingly a better measure. it is changing behavior. >> will be bureau start making announcements about the scoring that you are doing or that certain companies are not doing

well? it is one thing for the public to go and get that information. if it was released by your agency, that might help people be aware. >> let me be clear. we are taking that data and making it public. it is released by our agency. for someone to assemble it, and a lot of people are doing it. this is exactly the same thing they have been doing for years with cars and trucks. they release data on safety and the results of their studies and their work. that has been rated by consumer

reports. the same thing now can be done. it is like a television screen. it is a fuzzy picture. they are going to scorecard it. the research group has done some of this. by making this public, we use it in our work. it is very valuable to us. we think consumers can benefit. >> what a couple minutes left. this seems like a good time to say how are you funded? who works for you, given that you are a relatively new agency? >> congress specified how we are funded. they deemed that we'll be part

of the federal reserve board of governors. we are an independent agency. by law we get a specific portion of the budget. that is how we are funded. >> who works for you? what kind of people do the job? >> one is action commitment to proving things. it has guided a lot of people to be hired by us. we still have tremendous support. we have bank examiners and other examiners. people with knowledge, we have economists. of all the support staff that you have. we have a whole technology group that i think has been fantastic. at this point, one of the big jobs we have had is creating an agency from nothing. we hit the starting line with the zero.

the last three years we are up to 1400 people. we will probably hit our next to the state. we have enough people now that we are really doing our work across all of these different issues. there have been a lot of problems that have not been addressed. >> you mentioned payday loans

when you talk about the complaints. three banks have announced that they are exiting the market for a similar product. this is responding to pressure. broadly, what is the space for this kind of product to exist? what kind of needs it does this project meet? >> you mentioned work done by our colleagues. we need to be on the same page. the industry deserves to have is on the same page. it is not just payday lending. it is also certain kind of installment loans. there has always been a clear demand for some small dollar short-term project. people have emergency needs. there are situations where the cash flow is uneven. many resolve the matter is by maybe have an uncle or brother or cousin they can go to and ask

for a loan. they managed to resolve things that way. many people are not in that situation. they go out and seek loans. as long as we moved away from the agrarian economy, we recognize that. at the same time, we want the products to be fair to consumers and not to be causing them to fail. when you have a project that is not set them up to fail, this is a troublesome market. we have it in our agenda to make rules. this is something we will get to in the future.

>> we will have to leave it there. thank you very much. >> my pleasure. >> we are back with our reporters. the first question for the new director of this new agency was the work they have done when it comes to mortgage lending. what did you fear from him? >> i think he is trying to be careful in how they put these rules together. they doubt back some of the things like a minimum down payment or credit score. that is why they're getting a little pushback from consumer groups. they try to thread the needle with rules that would prevent a

repeat of the subprime crisis without trying too much to restrict credit. it is not as much as the original proposals. not as much as what people were calling for four or five years ago. >> what does it mean for a consumer? >> i think most will not see anything different. they could be some changes for people on the margin. people go in and try to get a mortgage with a pretty high level of debt. interest only will be harder to get. there are legitimate concerns about whether it will restrict credit. over the next year there will be a lot of pressure from congress on that issue. community banks. credit lenders. they are raising all kinds of issues. the cfpb is going to look at the

data. >> he knows of the consumer is better off after the creation of his agency. are consumers saying that? are they feeling the consumer protection bureau? do they know it exists? >> i do not think there is as much knowledge about the bureau as they would like. it's certainly recovered a lot of money. those people have seen refunds. it is still not in the public consciousness, the idea that this bureau fully, it is going to take time. you can see that in the complaints.