comments at face value. mr. mulvaney: you said you -- mr. neugebauer asked you which states, you said all 37 that still allow payday lending, so i'll ask the question again and see if we get a clean answer. if your research as you prepared to produce these new rules on short-term lending, which states have you determined have failed to protect consumers? mr. cordray: maybe i wasn't clear in trying to respond to the question before, that's not how we approach the issue. it's not my job to control states or tell state officials what to do. it is my job -- it's not my job to control states or tell state officials what to do. it is my job -- mr. mulvaney: that's fair. mr. cordray: but it is my job to look at harm occurring in the mark place and look at ways to intervene to address certain predatory prackities of lenders. r. mulvaney: is it fair to

assume if you promulgate a rule that's more protective of down seemers than a state has made that you deem that state to not be adequately protecting consumers. mr. corcray: we won't seek to occupy by the field in that way. what we will do, if there is a federal intervention, and this is not determined, that will coexist with state regulation and authorities. mr. mulvaney: let's be clear and honest. you do intend to preempt state aw in certain areas. mr. cordray: i don't think we preempt state law. what will happen -- mr. mulvaney: in a letter of february 11, 2016, to my ffice.

i asked about this particular issue. you said among the bureau's goals is to ensure consumers are offered certain minimal protections no matter where they are located. state laws that afford greater protection would not be preempted by a bureau regulation on small dollar lending. the obvious implication to anyone who speaks the english language is states who offer less protection will be preempted. mr. cordray: what i would say, as is true in securities law and antitrust law, i worked with these laws as attorney general -- mr. mulvaney: the s.e.c. has a different oversight. you don't get appropriations from us, don't have the same level of oversight you are your own thing. you cannot compare yourself to the s.e.c. mr. cordray: i wasn't comparing -- mr. mulvaney: your home state acted in this area. last time they looked at short-term lending was 2009 they've done it over the course of the last 10 or 15 years. they have not provided a cooling off period between transactions. your proposed -- proposal will require 60 days. who knows better thousand protect consumers in the state of ohio, the people of ohio or the cfpb. mr. cordray: policymakers as i was for the state of ohio do

their best to protect the citizens of ohio. policymakers at the federal level who are given authority by congress as the cfpb has been given do their best to protect people nationwide. mr. mulvaney theck -- mr. mull vayneek north carolina -- mr. mulvaney: last time ohio kid this was in 2009. would you defend the ohio law or acquiesce to federal reemption? mr. cordray: i have been engaged in shombs preemption going back to 1993 and 1994. 've addressed them on both sides. nd so it would very much depend on what circumstances we ere talking about. r. mulvaney: this one.

ohio passes a law, says a two-day wait period. the cfpb pass as regulation with a 60 day. will you defend ohio law against federal regulation? mr. cordray: that's entirely hypothetical. mr. mulvaney: can you say the words the people of ohio know better how to protect consumers in ohio than the cfpb. mr. corcray: the people of ohio are also people of the united states. after the duel capacity. mr. mulvaney: do you believe that state snment do you believe that the people of ohio are better suited to protect consumers in are the cfpb? do you believe that statement to be true? mr. cordray: that's a very general statement and i don't know exactly what that means exactly. mr. mulvaney: fair enough. thank you. mr. hensarling: the time of the gentleman has expired. the chair recognizes the gentleman from california, mr. sherman. mr. sherman: i think the gentleman from south carolina is using -- misusing the word preempt. it means prevent the state law from being effective. to supplement means you have to bey the state law and you have to obey the federal law. mr. hensarling: will the gentleman yield -- if the chair will yield the additional time

i'll yield. mr. hensarling: the chair yields an additional 30 seconds. mr. mulvaney: my state has a law with two-day waiting period. they're proposing a 60-day waiting period. doesn't thus the federal regulation preempt state law. you would agree it would? mr. sherman: no. if the federal law requires me to wear a belt and the federal law requires me to wear suspenders, i will comply with both laws. f you take the position that

the state legislators are in best position to provide this, you should repeal dodd hch frank. when we passed the law establishing this cfpb, we decided that in addition to following state law, which might provide a two-day period, there could -- there will also be an additional federal law. now you can say that a state that decides to have no regulation in a financial area has made a conscious decision that that is the best policy for that state. but we passed a federal law to say that there will be standards. preempt is when you tell a company they don't have to comply with state law. supplement is when you say, you have to comply with the state law plus you must comply with the federal law. mr. cordray, thank you for all ou do. art of what you do is coming

here to congress so we can comment on what you do. nd perhaps help you do an even better job. mr. cordray: i think i just learned from you a little bit, o i appreciate that. mr. sherman: as to mr. stivers letter, there are some who say that that letter signed by many of us and i want to say i signed the letter and i'm a step ahead of you, i've read the letter. it does cite code section 1022-b-3 an quotes it accurately. and some have said, well, therefore it's in favor of exempting smaller institutions.

so toddlers wouldn't be wearing shirts at all. in fact what it calls for is look at each regulation, determine whether you can have a one size fits all regulation. buy hats in one size fits all or shirts need to be tailored to the right size. and the only ask in the letter is to be sure that your regulations don't have unintended consequences and that the specific focus is when you write a regulation and you would want a different regulation or different approach for smaller institutions that you have a portion of the regulation applicable to smaller institutions. mr. cordray: that's sound advice and something we'll continue to try to heed, yes. mr. sherman: and there may be individual circumstances we bring to your attention. mr. cordray: we'd be glad to take input. mr. sherman: you urged financial institutions to use text messages and thank you for saying you'll go to the f.c. dr. --

f.c.c. and smake sure they allow financial institutions to use text messages. if i get a message from think bank -- from my bank saying i'm about to overdraft, i'll pay my phone company a nickel to prevent that. i want to focus on these complicated regulations, particularly for smaller financial institutions. i want to commend you for having the whole harm -- the hold harmless period. and institutions would like to get more written guidance as to how to apply the regulars and what remediation steps they should take when remediation is necessary. we've talked about, the hold harmless period continuing and i think you should continue the hold harmless period at least until you can issue the interpretations necessary to provide written guidance. so -- mr. cordray: that may go on forever but we'll continue to be atent i to the industry and we've encouraged them to bring their prioritized -- mr. sherman: at least as long s it takes to answer the questions that emerged in the first four months. obviously new questions could

come up. finally the regulations require an inaccurate statement as to the cost of title insurance in states like california where there's a buyers policy and a owners policy and you get a discount on the owners policy when you get the lenders policy. there's a lenders policy and a buyers policy. mr. hensarling: i was reminded i gave you 30 seconds so you've got 14. go to town. mr. sherman: in any case, mr. cordray, you will be looking to make sure that the regulations deal with the situation where there's a stated price for the policy the buyer of the home is going to pay for but there's an automatic discount disclosed is the net price. mr. cordray: i know that's issue that's been under active consideration in the rule making process and i believe since. mr. hensarling: the time of the gentleman has expired. the chair recognizes the gentleman from georgia, mr. westmoreland. mr. westmoreland: mr. cordray, on data security, what system do you use to determine if somebody is fulfilling their commitment on data security. r. cordray: there's a number of procedures that have been

developed and actually really enhanced in the federal government other the last several years, you know the federal government has had some problems in this area and the private sector has had many problems in this area, it's something i think we're all very attentive to. nothing would -- r. westmoreland: what standard to you use if you're going to evaluate a company and fine them for -- mr. cordray: i thought you were talking about our own data security. we're using the standards that we understand to be common in the industry, we're using the standards of best practices at different institutions. mr. westmoreland: wo what

standard would that be? mr. cordray: we're taking guidance from the -- what we did, when we engage in enforcement matter, we open an nvestigation, took a look at their own security protocols whether they were being followed, by the way that's first thing, whatever security level or threshold they're talking about, one is whether it's there on paper but actually being followed. if it's not being followed you have a problem. that's one of the things. mr. westmoreland: but what standard to you use for the cfpb. so you don't have a standard now? mr. cordray: if you'd like my staff -- mr. westmoreland: i want to know what standard you're using. mr. cordray: i'm not an expert. mr. westmoreland: you stated that companies with significant amounts of personal information

and it's crucial that companies put systems in place to protect this information. i'm assuming you think it's just as critical for the cfpb to protect this information that in your statement you said consumers entrust with companies but the cfpb has a lot of information that the consumer wouldn't normally give to a credit agency, is that true? mr. cordray: i do think it's fair to hold us accountable for the security of data that we have but number two the data that we have typically is anonmiesed and it is de-identified and cannot identify you or me so it is less risky than the kind of tai ta you're talking about private companies having which tells all about you and all about me and it's very clear who is being identified there. that's much more risky and if they get my credit card information or yours we can be defrauded. mr. westmoreland: so in private

companies you think the information is much more risky han yours? mr. cordray: it's much more personally identifiable, they're using to it to market to you. mr. westmoreland: who tested your data security system? what company tested it mr. cordray: the folks in the federal government who deal with this across all agencies set standards and have now enhanced the standards and improved the standards we're all seeking to meet and i think we're all trying to keep up with the best practices. mr. westmoreland: but who tested your security of your data? mr. cordray: again, our i.t. group could come and give your office a briefing if you want to know the details. mr. westmoreland: i just want to know who ted it you mentioned the information that's available to other people and that you don't have that information. i want to give you -- mr. cordray: i said we have a different kind of information. we don't have information that's identified by you or by me it's anonmiesed. mr. westmoreland: i know you have the information, name, akess, zip code, date of birth,

race, ethnicity, gender, language, religion, social security, education, military, employment records, financial account nurbles, financial events in the last few years, life events in the last few years, mortgage information, current balance, current monthly payment, delinquency grid, monthly payment, refinanced amount, bankruptcy information, credit card account numbers, credit amounts, loan balances, past due amounts, minimum payment requirements, high balance amounts, chargeoff amounts, second mortgage, household composition, single male, single female, presence of children by various cat goirs, number of wage earners in household, household income, property attributes, number of bedrooms, barls, square footage, lot size, year built, age of structure, units in the

structure, most recently assessed value, longitude, latitude, census block, date purchased, origination date, acquisition. do you think this -- mr. cordray: i'm not sure what data you're talking about. mr. westmoreland: this data is given to you and is supposedly in your records from the national mortgage -- mr. cordray: what are you talking about here? mr. westmoreland: data in your system. i think we need to know how it has been protected. mr. hensarling: the time of the gentleman has expired. mr. cordray: i'd be glad to have my office talk to you. mr. hensarling: the chair advises that votes are expected at 1:00 or 1:30. i expect to clear the member in the queue. we'll adjourn once votes are roughly five minutes out, we will not ask our witness to come back but will adjourn at that time. i recognize the gentleman from illinois. >> as you know, the committee

has at length raised concerns with guidance bureau issued in 2013 which it dubiously claimed is simple interpretation of its authority under ecola, despite language to exclude automeative lending. mr. hultgren: we have taken issue with the questionable methodology. this is a major concern for automobile dealers in my district and across illinois. you've now relied on disparate impact theory of discrimination under ecola and at least three separate enforcement actions against businesses that underwrite auto loans. i expect what you're doing is extending the supreme court's holding in the inclusive communities case but that case dealt with the fair housing act, not ecola and that decision rersed primarily on the unique congressional history of f.h.a., a history that's plainly inapplicable to ecola. i wonder if you could spell out in detail the basis on which they're pursuing actions. mr. cordray: i believe there was hope among industries that isparate industries would be disapproved by the supreme

court and by the way i understand interesting news we have a new supreme court ominee this morning and that was a challenge that was raised in the inclusive communities case you referenced and in fact the supreme court resoundingly upheld -- mr. hultgren: that's an f.h.a. case. this is an ecola case. it's very different. very specific requirements we've got there. laid out housing, fair housing. i think you're extrapolating

something we can't find -- mr. cordray: they have been applied hand in blove for decades and they work together. mr. hultgren: the sense you have is you're pulling this out of nothing because there's an agenda. mr. cordray: again, we wouldn't be -- mr. hultgren: i want to ask you specifically about some concerns, privacy concerns, my colleague from georgia, mr. west moreland raised some issues of the amount of data that you already have specific data on individuals and all of us have concerns, federal government, i think, showing incredible weakness of being able to protect privacy of our citizens, i hear it all the time from them. the recently finalized rule is especially concerning to me because it looks like it's not enough. all the information that mr. west moreland had listed off, item after item after item and now it looks like cfpb is looking for more private information that i question if it's safe.

section 924 of the dodd-frank act required the bureau to develop regulations that modify or require modification of itemized information for the purpose of protecting the privacy interests of the mortgage application for mortgage orders that is or will be available to the public, end quote. in a footnote to the final humda rule in 2015, the bureau tates and i quote based on its analysis to date the bureau believes some of the proposed new data points may create privacy concerns sufficient to warrant some degree of modification include regular dax before public disclosure. however the pew row is only providing opportunity to comment on the balancing test for consumer privacy, not the actual data made public by ffiec. in 2005 speech, former federal reserve board senior advisor greg canner raised concerns about humda privacy risks noting, approximately 95% of loan records are unique, meaning loan amounts can be attributed to a single person. with a cross match to private lien transfer records one can identify the individuals in 95% of the cases, end quote. shond the pew row proceed with extreme caution before finalizing any policy that would direct ffiec to publish

further information even if steps are taken to anonmies it. mr. cordray: thank you for the question and as you pointed out we are approaching the issue, privacy issues, very sensitively and have engaged in a further notice and comment. mr. hultgren: i'm not pleased , my consumers are not pleased, banks are not pleased because they have seen breach after breach after breech by the

federal government. mr. west moreland asked who is the company looking at it, you said there isn't one. i've seen failures over and over again. my concern is getting more information, it's stated by people in the administration and saying that this does identify people that 95% chance as you're looking through this we know who it is, even if it's anonmiesed i don't think it's enough my citizens are concerned, now you're add manager requirements of get manager private information of my citizens, i think it's wrong. i think you ought to, all of us, ought to proceed with extreme caution. the least you could say is you will proceed with extreme caution. mr.sen hen sar ling: the chair recognizes the gentleman from colorado, mr. perlmutter for five minutes. mr. perlmutter: thank you, mr. chairman. mr. cordray thank you for being here. thanks for your service to the united states of america. thanks to the people that you lead in the agency and you know, as i've said to you many times, being a regulator, you're never anybody's best friend and that's not your job and that's not what you're supposed to be. but you're supposed to be looking autofor the best interests of the people within the jurisdiction of your agency and i thank you for doing that in so many different ways. you and i disagreed on auto lending issues and auto dealership issues from time to time. but in a civilized, i think, and respectful way. i was very disappointed to learn the other day about the

deposition taken of one of your staff, one of your lead staff, i don't think that was appropriate and i wanted to say that for the record. i mean, that kind of thing can happen in court if it needs to be. depositions under the eversight f a judge. k. that's how our system works. i would and i'm just saying this, take it or leave it as you choose, that i would hope that the agency keeps a dialogue open with the auto dealer industry in the hopes that there is some kind of common ground that can be reached without them continuing to pursue a legislative pproach but that there actually be some kind of something that is valuable for consumers, does our best to root out discrimination, respects due process.

good luck, i ask you to keep the line open. mr. cordray: and we had difficulty initially because we tried hard not to be reaching out to auto dealers to be respectful. we learned they were interested in talking to us an continue to be interested in talking to us on various issues and we therefore have been willing to respond to them in kind. mr. -- mr. perlmutter: thank you and i ask that you keep that line of communication open. and i want to thank you for all the other things that you've been working on, whether it's mortgages or credit cards or the like. we, the congress, in dodd-frank and i know many of my friends on the republican side they don't like a lot of the provisions in dodd-frank, ok, fine. but we had a lot of problems going into the 2008 collapse of the financial sector and a lot of it had to do with respect to consumer lending and consumer matters and that's obviously the mission of the agency, to deal with those kinds of things. o i didn't have anything specific i wanted to ask you.

if you have anything you'd like to talk about. mr. cordray: there was a point made earlier that i think is inaccurate and misguided that omehow our rules have pushed the mortgage marketplace into the g.s.e.'s. the reality is that the irresponsible lending that precipitated the crisis and blew up the mortgage market and blew up the economy pushed most lending now to g.s.e.'s and eliminated, destroyed the secondary financing market which has not yet recovered. all of that preceded any of our rules which didn't even take effect until fife years after that. so again, just to set the

record straight, there have been various statements today that i thought were not consistent with the facts. and i'll do my best to try to set the record straight where i can. mr. perlmutter: and actually the record is more stark than you've just stated, that in 2008, 2009, 2010, the only entities buying loans in the secondary market were fannie mae and freddie mac. there was no secondary market. ok. so everybody can, you know, go into their rhetoric and high per belee. mr. cordray: it blew up, destroyed itself. another comment i saw the other day was that the federal reserve kept interest rates too low leading into the housing crisis and as i looked back at it, the interest rates for between 4% and 5% during that period, i'm not sure how high people wanted them to be but the time ogen that is not accurate to the facts. mr. perlmutter: the last thing

i say and just to remind everybody, you an agency of the federal government. you have a lot of power. and however you exercise that power, we all expect you to do it judiciously. i think you've done that. but it's always something that has to be in the forefront of the minds of you and your members of your agency. mr. hensarling: the time of the gentleman has expired. the chair recognizes the gentleman from pennsylvania, mr. fitzpatrick, chairman of the terrorism finance task force. mr. fitzpatrick: i want to follow up on an issue raised by mr. perlmutter, indirect auto

lending. would you acknowledge that some borrowers, customers, in the indirect auto lending area, who have good credit have ended up paying highest interest rates as a result of the approach oaf the cfpb is that possible people with good credit who would have had a lower rate have seen an increase. mr. cordray: what i know our informations found is there were many people with good credit who belonged to different minority groups being charged were fair loans. charged were fair loans. charged were fair loans. charged were fair loans. charged were fair loans. charged were fair loans. charged were fair loans. charged were fair loans.

your bureau is limiting the ability of small community banks to serve their customers and they could be individuals small business owners. these are sometimes customers who would otherwise seek out nonbank alternatives. in regards to the overdraft fees, you're looking at a rule is being formulated now on this issue. is that correct? yes. >> when is that expected to be released? >> we have said that the rule, subject to considerable comment and a public notice process, ill be released this spring. so they wanted -- suggested i ask whether you have any

willingness to deidentify data something you were just talking about. and release it to the public. so that banks and financial institution ks interpret and draw their own conclusions. is that something you would be willing to do? >> what kind of data? or what purpose? >> i thought you were talking about small dollar loans. we're not releasing a proposal this spring. we issued a couple of different white papers on overdraft, if that's what you want me to address. >> yes. >> what i would like you to address is if you would be willing to release more information. are you ced a bill

familiar? >> not particular lifment >> it would require the bureau when you make a report or recommendation to issue a rule that you release the underlying data which many times snot released. so my first question the banks an form their own conclusions. >> let me speak -- because our orientation and our inclination is to release as much data publicly as we can. we want people to do their own analysis. that's why we have the public complaint data base. but some of the information we get is trade secret protected. so although one institution might want to know more about it another might feel grieved. >> if it doesn't fall within one of your exceptions are you willing to release all your

data? >> again -- >> so that the reports are transparent, banks and financial institutions and public can draw their own conclusion. rirt could contain confidential trade secret information. it may have been obtained, maybe we had to buy it from some provider in which there were conditions that we weren't able to negotiate away. it may be it was obtained through confidential information which would be compromised -- >> my time is expired. would you be willing to lay out can the exceptions to transparency on releasing the data that you were going to give us today? can you give us that nformation in writing? >> i think i laid out much. >> if there are others please provide it in writing. >> if you're interested, i would be happy to have your staff brief our staff. >> mr. elsen. >> director, your agency has

been under attack since its first day. i actually have something that i would like to post on the screen right now, if i can. powerful i want rests have proposeed the agencies every move. many call for the abolition of your agency and i have a slide up there right now on the screen is an ad run by a secret group called protect america's consumers. i have no idea whose running these ads. i have no idea who is paying or them. we have seen some addresses that lead us to conclude they might be powerful interests but haven't received a confirmation. i was angry at the deception in this ad and being quoted out of context by this front group that i made my own you tube video. -- not ll opponents

everyone is an opponent. in fact, i want to congratulate the people here the who are standing with you today. what you're doing is standing up for consumer justice. i think that's really excellent. so i don't know -- was i planning on running my thing? o this is my video setting the record straight that i have at all times supported you quite contrary to what the deceptive protect consumers ad implied. also you may have heard in a public speech that was given by our chairman yesterday on his vision financial markets. i would like to ask you some questions about some ideas that were raised. for example, do cfpb rules

require closing cost documents three days before they buy their house count as regulatory waterboarding of communities bankers? >> i wouldn't describe them that way. no. >> do you think that limiting forced arbitration consumer and financial contract is a monument to arrogance and the hubris of man? >> i understand us to be trying to implement authority and direction given us by congress. >> when we limit interest rates on small dollar loans to 36% for service members or act to prohibit lenders for charging african american rates is that creating an incomprehensible complexity of government control? >> i think congress legislated that to protect service members against being exploited while they're trying to protect and defend our country. >> a strange place to be against service members anyway.

when the cfpb requires lenders to tell buyers that the loans they're being offered are more expensive compared to other option in the market, is that an example of an unaccountable arrogant bureaucracy dragging us toward the failed economy of a european styled social democracy? you don't need to answer. >> but i will. i think we're just trying to put consumers in a position they can make choices they won't regret later. that empowers consumers and promotes personal liberty. >> it's fair to say that we don't all agree on this committee about the role of the cfpb but i will say this. $11 billion turned back into the economy in the hands of ordinary working people. pretty good. on the screen is a recent monthly report about consumer complaints made to your agency. many experts decried to the financialization of the economy. they note that overcharges hidden commissions arbitration

contracts and costs millions and wealth to ordinary americans. and yet one of the quotes in the chairman's public speech was quoting kanye west statement that the only true freedom is economic freedom. would you say that ensuring a fair financial marketplace actually furthers economic freedom for american people? do people have more wealth now than some of these costry schemes are stopped? what do you think? >> i think that enforcing the law fairly promotes economic freedom. it helps the free market work against the backdrop of law and order and law enforcement. and i think this has proven itself to be not only pro consumer protection but opportunity. that's certainly how i see things. >> being proconsumer is being pro business. if you are an honest business person trying to give a good product you're competing

against unscrupulous competitors and they can beat you out. and that hurts the marketplace. it doesn't help it. i yield back. >> the time of the gentleman has expired. the gentleman from florida mr. ross. >> you and i have discussed this before and i would like to bring it up again. i too was in the florida legislature. i too have experience with payday loans. we addressed that back in the early 2000s. we came out with a bill that i think has done a great deal of good to eliminate the predatory lending the bad actors and in fact make sure that the transaction has the duration between 7-31 days cannot be greater and process fee of $5. we've been able to in the state of florida, reduce the use of online loans which we don't want to see our consumers go to. that would eliminate any regulatory control. but we've been able to reduce

it by 82%. is florida the gold standard when it comes to state regulation of payday loans? >> i would not. >> why not? >> what i would say -- >> there isn't a better state. >> do you want me to answer? >> is there another state? >> there's been analysis done of the florida model and what it has shown these are still being made at above a 300% rate of interest. >> let me ask you this. again you're going to try to eliminate the demand -- supply thinking you're going to eliminate the demand. we have your monthly report on payday loans. my colleague just before me had it up there. since its inception i believe hat payday loans have had 1.5% have p been complaints. but ten times that have been credit reporting agencies, why

are we focusing on an industry that has a need in the market? >> when we look at these, people think they're complaining about debt collection. i'm saying the incidents is much higher than that for student loans or auto loans but that needs to be counted in as well. >> right at $8 million payday loans. >> let's also -- >> 117. >> how many proceed. 2/1000 of a percent. we have marriages everywhere if we had that. you're not using logic and reason. it's going to be a policy forth coming in spring.

sunday is spring. so i anticipate there will be a report come this spring. can you give ause trailer on it? tell us how we're going to eliminate the regulatory environment so you have a company out there known as self-help credit union that is assisting you because they want to take over this market. >> i have no idea what you're talking about. some suggestion that they're trying to take over this market is -- >> are you familiar with the center for responsible lending? >> yes. >> and they've had some impact in trying to allow their opinion or influence in promulgating the rule. >> many have had impact. >> are you familiar with their subsidiary? self-4e7 credit union? >> what i'm not understanding -- >> you know -- vever heard? yes or no? >> yes. do you know they're a subsidiary of the center for responsible lending? >> i'm not familiar of the

corporate relationship. >> have you had any discussions any e-mails any communications with self-help credit union? >> i have discussions with many stakeholders. we have a pay day lending -- >> self-help credit union. any scuckses with them whatsoever? yes or no? >> what i don't understand this claim that somehow -- >> it's not a claim. it's a question. do you have any communications -- you can't say that you have. would it surprise you that you have? >> i'm sorry. >> what's the question? >> communications with self-help. >> what's the question? >> have you had any communications with them in any way shape or form? >> i don't know whether i have or haven't. what you're talking about exactly. >> ok. well, you don't know whether you've had communications with them. >> look, i'm sure i have. probably everybody who has had an interest going back five years now. >> in 18 seconds or less, a little anticipation in the rule

you're going to prom gate this spring with regard to short-term loans. >> nothing should be taken to the bank. but i think you can take a lot out of our white paper we provided which is that we are going to seek to eliminate and limit predatory practices by lenders that embroil many consumers in a debt trap with consistent and prolonged rollover -- >> the time of the gentleman has expired. the gentleman from north arolina. >> director you have touted the transparency of your agency. is that correct? > yes. let's be respectful. in that light you've also admitted that you and 12 of your directors have used

private e-mails for official business. is that not correct? >> i think that's been a very limited -- >> have you used them or not? >> very limited practice. >> you have used them. how does the american public ve any confidence in the records, the information that's capture recorded if you're using private email? do you approve of what secretary clinton did? >> i'm not familiar with that situation. >> you're not? >> very i want resting. >> i haven't been part of that. >> do you believe that the public gets a proper accountability when you're using your private empmails? do you feel they're getting the information they deserve to have? >> i know that there are policies that we have in place to make sure that government work is being captured in data bases. >> will you turn over to the committee all these private

e-mails? >> i don't know what you're talking about. i would be glad to have our staff work with your staff. >> we would like to have a full understanding of what has been conveyed over private e-mails regarding official business. >> well, i would be glad to follow up with you. >> thank you, sir. we will. regarding your structure in the cfpb, you are the single director. do you believe that it would be more prudent and acceptable to have perhaps a five-member bipartisan commission? >> i've seen different approaches to different organizations. and state government is -- >> wisdom from colleagues? do you think if you can gain wisdom from individuals who would join with you on such a -- >> i do every day. i have a leadership group at the bureau and every organization -- >> let's talk about your time in the general assembly in ohio. you said you served on the general assembly. and as such i'm sure you served on committee.

correct? do you feel like the public would be best served if that committee chair just issued his decision without the full support of those who are on the committee and aware of all those issues? he didn't act alone. did he, sir? >> some did and some didn't. well he had accountability. >> i had a charns to sponsor and introduce a bill. >> but you're accountable to nobody. are you? >> i'm accountable in the same way you are. i'm accountable to the public for the substantive actions i take. >> you don't act in full transparency. you don't have a board. you can't be fired without some egregious abuse. >> my role in the federal government is a role that was established by kgs the conditions were set. >> i think that's our point. i think we would like to hear your wisdom and what you believe would be the best

accountability for the american people. do you think it would be in the best interests of the american people that we have a five-commission bipartisan board? >> so one of the things i think that when i come here and testify in front of you, you can call me to account. there is nobody i can blame it n. >> these are difficult hours for you because you have to be accountable. >> i enjoy coming before the committee. when i was a single official in charge of the highway attorneys -- ohio treasury's office i've always been accountable to the public to serve them well. i appreciate the oversight of this body that i come here not only when i'm required but other times when i'm invited and i have never ducked or dodged and always been willing to stay as long as you want me to. >> you're responsive when we contact you and write you and ask for information that's been delay after delay in getting

information from you? on so many occasions. >> i've always answered your letters. if the response is not sufficient we're happy to follow up. we continue to do that. we will continue to do that. if there's anything that you think we haven't followed up -- >> your own man, own agency. essentially $600 million a year or more caurntable basically to nobody. you have no board accountable to. >> congress sets the terms 679 >> i just made the -- >> the time of the gentleman has expired. the chair recognizes the gentlelady from missouri. >> wow. never ducked or dodged? you answer all letters? let's have a conversation. our committee sent you a subpoena back in december asking for documents regarding a variety of issues. discrimination, retaliation, auto lending and others. despite you saying you are

committed to transparency and compliance, always answer our etters, never duck or dodge. you all have failed. failed once again to respond adequately to this subpoena. additionally, the committee sept this letter. right here i have a copy of i will submit not the good of the order on how all of your complying with the subpoena regarding the such terms that you all are using. will you commit to providing information and complying to the request of this subpoena rom your office? if so when. >> about how we have not complied. to scly. e failed

>> of course we've responded. we've produced another 20,000 pages of documents. >> not in any way shape or form. will you submit will you absolutely right now commit to complying with our committee if so when? >> we have been working to comply. >> working to comply is what we call ducking and dodging. last year i asked a question about who gave the authorization to renovate the leased headquarters of your agency. and i haven't forgotten the response you gave to me. which was and i quote and why does it matter to you? well, director, it still matters to me because that is government expenditure of $215 million of taxpayer money. last year you said that treasury made the decision.

however, the committee sent a letter to treasure tri asking about it and they said that you all -- you, the cfpb, made the decision. clearly both of you can't be right. you've had a year since that last time i've asked to look into this and so who authorized the renovation, sir? >> so first of all, this has been misstated and garbled. i never said that why would you look into an expenditure of funds. you're entitled and i appreciate that oversight. >> you said why does it matter to you? it matters to the taxpayers. >> but the it. >> the people i represent. >> the it was not expenditure. the it was who signed off >> who authorized it. who? because i have more questions. who authorized it? >> as i said to you, i later reaffirmed that decision. and i continue to stand behind that decision. in terms --

>> reclaiming my time. you're clearly not answering the question again. as you know elizabeth warren was working as a special adviser and responsible for setting up the bureau. she also published a blog post announcing that headquarters would be located at 1700 g street. was it elizabeth warren who ordered the renovation? >> i don't know. it seems like that's what you're trying to get me to say. >> i want the truth, sir. who ordered a $250 million expenditure of renovations using the taxpayer money? >> it's not $215 million. that's never been true. it's not accurate. we've corrected the record on that numerous times. second, i have reaffirmed that decision. i take responsibility for it. you're saying you gave the authorization. >> i was not in the position. >> reclaiming my time. >> reclaiming my time. it is my time. it is really unbelievable that you don't know who authorized it. >> look. >> reclaiming my time.

especially since you don't even own it. you know the buildinging has been assessed at $150 million. how else do you spend your money? last month representative bar questioned chair yellen on whether they approved the budget and whether the fed is even able to veto specific funding requests. the answer is no. so i'm not finished. so how exactly does this work? you simply send the federal reserve an invoice and as long as it doesn't hit the caps that were set by dodd-frank then it's approved automatically? how does this happen? >> we're simply careying out the law that congress enacted. you and your colleagues in the congress or those who preceded you enacted that law. we're car yig it out. >> the time of the gentlelady has expired. members are advised there are votes on the floor 10 minutes left in the first vote. we anticipate clearing one more question.

the gentleman from kentucky is recognized. >> thank you. i will just follow up from my colleague on that question regarding the source of the funding. in your semi-annual report, you say that the director of the cfpb requests transfers from the federal reserve system in amounts that he has determined are reasonably necessary to carry out the bureau's mission. what was the transfer requested in fy 2015? >> i would have to look at my -- >> what do you anticipate it being? published budget for 2016 is for $606 million. >> does the fed approve that udget?

does the fed approve the budget? >> i assume if we were seeking to obtain more than our cap, that that would not -- >> but otherwise the fed doesn't approve the budget. let me ask it this way. >> that's correct. has the fed or does the fed ever review the bureau's transfer requests? >> i believe they do. we send transfer requests and they fulfill them. >> it's as simple as that. so to your knowledge the fed has never asked any questions about that transfer. >> i don't deal with the details of the back and forth with the fed. >> but to your knowledge they've never asked any questions about that transfer request. >> i wouldn't know what to say to that. >> let me ask the question this way. has the fed to your knowledge ever denied a particular transfer request? >> all of our requests have been within the bounds of the law. >> and the fed has never vetoed a particular allocation of or a

particular expenditure made by -- >> the system established by congress and we're care yig it out. >> so the fed is not involved in any way in the complementation of the bureau's budget. that's the point. and to that point, that's our concern, frankly, because the fact that the bureau has been able to move forward with a $ 15 million luxury renovation to its head quarters spent $60 million on management consulting services and pays the average employee more than members of congress, would support the conclusion that the fed is merely a rubber stamp to your expenditures. we would hope that since you're not accountable to the congress, not subject to the congressional appropriations process, as you point out by statutory design and the dodd-frank law, a fundamental law, in my judgment, that we would hope that you would be at least accountable to the source of your funding. >> sir, i think several things you described are inaccurate. >> let's switch gears and talk

about the arbitration rule making that study that we asked about in that letter. your response to our letter did not answer our questions about the deficiencies and the data. did the study in any way confirm that arbitration can be faster than a class action lawsuit? sometimes a lawsuit can go faster. >> is there any data that arbitration can be lets expensive? >> depending on the matter. some cases would be less, some would be more. >> so there is data to support that. is there any data that can be more effective to resolve disputes? >> i don't know what a more effective way -- >> the point is that you have said that you have a duty to enforce the law, the dodd-frank law not the 1928 law. enact bid statute. here's what the law says.

it says that the rule must be in the public i want rest for the protection of consumers and consistent with the study. my point is that your study shows that arbitration can sometimes and in many cases be in the best interest of the consumer in terms of faster resolution, a better result for the consumer. and so i would encourage that the bureau to not move forward with a rule that is inconsistent with the benefits of arbitration. in preparing the study did the bureau coordinate with the american association for justice? i don't know who that is. >> that's the trade association for class action lawyers. the reason i ask is because the bureau cites a study by professor soburn whether their financial agreements contain an arbitration clause. do you know how his study was funded? because it was funded by the

american association for justice. that's a conflict of interest that you have -- you're using data from a study that's funded by the class action plaintiff's bar. >> we took input from all stakeholders. there were also studies that were fund bid industry. i don't hear you complaining toobt conflict of i want rest there. >> the time of the gentleman has expired. i recognize the ranking member. >> submit for the record a study from the center for responsible lending report. >> without objection, it is so ordered. all members will have five days to submit additional question force the chair which we forward for his response. i ask you to respond promptly and accurately as you are able. without objection all members will have five legislative days within which to submit extraneous materials to the

chair. this hearing stands adjourned.

[captioning performed by national captioning institute] [captions copyright national able satellite corp. 2016]

>> in his congressional testimony tuesday if head of the secret service talked about ow his sage protects candidates. his remarks were at a house appropriations subcommittee hearing looking into the secret service's budget. congressman john carter chairs this hearing.

mr. carter: good morning everybody. let me start off by saying hello, i am cursed by allergy attacks right now. that may sound like i am either dying or escaped from a tuberculosis isolation, but i am not contagious. i am just congested. please forgive me for that. when i get allergies, they settle in my bronchial tubes. anyway, if you live as long as i have come a something stay with you for a while. mr. carter: i want to call this to order and thank all of you for being here.

today we welcome joe clancy, the director of the united states secret service. the second appearance before the subcommittee. mr. clancy, thank you. we appreciate for your service. we appreciate you. before i begin, i want to take a moment to remember former congressman martin who passed away at his home in the state of minnesota. he served 28 years in congress, two years as the ranking member of the subcommittee. please remember his friends and family in your plans. i commend you and the secret service for successfully, and most important, safely, completing multiple national security details last september. especially since it overlapped hen the pope visited ashington. at the same time, the united nations hosted when i just 52

heads of state in new york. it was truly a whole government response. thank you to everyone, very well done. i know you took responsibility ery seriously, and we are very proud of you. that is why we always like to have the secret service. this is the year 2017 budget, $1.9 billion. a decrease, largely due to the close of 2016 presidential campaign. am pleased to see continued nvestment in communications, including a long needed reinvestment in radios and tech systems, chemical, biological detection systems, upgrades to the white house protective structure. you have tackled many

challenges over the last year, i remain concerned about the rate of hiring. and associated attrition. it is forcing unsustainable over time. on this know, a few weeks ago, you and i discussed a new agent career path we instituted last summer, to improve morale. however, your budget undercuts the program, 130%. i look forward to hearing from you, what you're doing to address these continuing challenges. before i turn you over to make your opening statement, i would like to recognize some remarks. md. roybal-allard: i too would

like to take a moment to make my condolences to martin sable's family. he was a tireless advocate for minnesota and the people of our country. we have lost a truly remarkable person and i am saddened by his passing. i hope his family and the people of minnesota will find comfort in the legacy built and in the foundation he built for members of the subcommittee and for his state. director clancy, welcome to this morning's hearing. i know the past few years have been challenging for the secret service. but i'm very hopefully you have now turned a corner. i am putting the agency back on the right track. the incidents that have brought negative attention to the agency, the secret service faces significant operational challenges last september. when it provided protection to both businesses and the united nations general assembly while also preparing for the

beginning of the presidential nomination and transition process. by all accounts, the secret service performed admirably, and i congratulate you, your staff, and all the men and women of the secret service on a job well done. i understand a number of tsa and ice personnel pitched in, so this is truly a dhs unity initiative. other tests will be the nuclear summit coming up at the end of march, the ongoing presidential nomination contest, and the presidential transition next january. earlier this year, you began providing protection for three presidential candidates, in addition to protection already provided to hillary clinton as a former first lady. by the summer, you will be protecting the nominated candidates and shortly after that, setting up president

obama's post-presidency protective detail. since the protective mission panel issued its report, the secret service has made a number of projected changes, including improvements to the hiring process to both officers and agents. as we discussed, officer attrition continues to be a real problem. thank you for joining us this morning, i look forward to hearing from you about the progress you see at the agency. areas you hope to address during the last year of the ministration, and how the fy 17 budget request can continue moving in the right direction. mr. carter: mrs. chairman, before i turned for director, i would like to talk about my colleague martin sable. i remember him very fondly as a wonderful man, wonderful colleague. mr. price: a devoted member of this institution. he first entered public life at the ripe age of 22 i believe, when he was elected to the

minnesota house. he later served as the speaker of minnesota house and succeeded donald fraser in the u.s. house of representatives. martin was a well established accomplish member by the time i ot here in the 1980's. he served as chairman of the house budget committee, and then was the inaugural ranking member of this subcommittee, he had offered leadership on appropriations and a number of areas, most notably, transportation. when this subcommittee was first formed, martin took on the leading democratic role on the subcommittee, and that is where i served most closely with him. i learned a great deal from

them, as we figured out what the homeland security subcommittee was all about and what this new department was all about. as the undertook that post-9/11 reorganization here in the house. it is with real sadness and great fond memories that we received news of martin's death. since this is the first subcommittee since that has occurred, i think it is appropriate that all of us pause to remember him and his service to our country. thank you mr. chairman. >> anyone else want to comment? mr. carter: director clancy, we have your written submission. we are ready to hear from you. we give the floor to you. mr. clancy: thank you mr. chairman. good morning chairman carter, thank you members, and distinguished members of the committee. i am honored to join you to

discuss the president's fiscal year 2017 budget request for the secret service. this budget build on the investments made over the past two years. it moves our agency forward, and strengthens our capabilities to carry out riority missions of protecting the president in the white house. he fiscal year 2017 budget will continue to advance initiatives centered on increased staffing and training, as well as enhancements to technology and infrastructure that directly support our frontline personnel.

these investments are important contributors to our operational uccess during ultimately, is the dedication and professionalism of our people that ensures our success as an gency. i am how to them and what we are complicated together every day. the fiscal year 2017 for the secret service totals $1.9 billion. this is roughly 42 million below the active level. due to the drawdown of the presidential campaign operations. program increases proposed in the budget will allow us to omplete the two year effort to

upgrade the radios and associated infrastructure at the white house context. other enhancements include ongoing work to replace aging officer booths and security state. classified protective countermeasures that include known and emerging threats. in addition to these increases, he budget provides funding for the final months of the presidential campaign activities, and will sustain the cost associated with the establishment of the former presidential protective division for president obama, o ensure a smooth transition on january 20, 2017. the secret service is focused on our human capital needs across the organization. obtaining appropriate staffing levels will use over time demand on individual employees and further increase training opportunities. in fiscal year 2015, the agency hired 500 new employees. in fiscal year 2016, we are building on this momentum as we work to meet our goal of hiring

over 860 employees. in fiscal year 2017, we will continue to maximize our hiring efforts as a work to keep pace with our five-year, human capital plan. and to fill recommendations made. as we work to meet our hiring goals, it is critical we recruit the highest quality candidates. in 2015, more than 2100 recruits representing 96 organizations attended the federal law enforcement training center. only eight received the prestigious honor of graduate award. i am proud to say, four of these recipients were secret service recruits. as impressive as this achievement is, i am especially proud that one of our special agent trainees on the title of honor graduate of the year. i congratulate these ndividuals for their achievements, and could not be more optimistic about our future, when i see the people of this caliber joining our ranks. while the secret service has made significant progress in meeting our hiring goals, we have yet to see the desired impact on our overall staffing levels, due to increased attrition. in order to maximize our hiring, we have to turn considerable attention to the retention of our existing workforce. we have begun retention

initiatives available to us within our existing authority. we are pursuing several options for more comprehensive retention initiatives. every presidential campaign increases the tempo of the secret service. this year, a number of national ranks, and overseas protector travel have increased the tempo even further. this increased operational tempo highlights important points. number one, the success of these events is dependent on more than just those agents and officers assigned permanent details. the majority of the staffing and advanced planning required to fulfill the mission is a result of special agents and support staff working in field offices around the world. number two, hiring and retention initiatives are especially critical this year, so our employees across agency can begin to see the benefits of increased staffing

levels. with respect to the president campaign, candidate protection details are currently in place for secretary clinton, donald trump, and senator bernie sanders. work is already underway for months to establish the security plan for the nominating conventions which will take place later this summer. in fiscal year 2017, the budget provides $72 million for presidential campaign at these. this includes protection costs to the nominees and their families, through the general lection. too close, i would like to take a moment to extend our condolences to the reagan family on the passing of former first lady, nancy reagan. protecting the president and first family is an honor unique to the secret service.

over the course of 35 years, many fine people served president and mrs. reagan with honor and distinction. i salute them all, past and present. nd i think the reagan family for this privilege. jeffrey carter, ranking members, thank you once again for the opportunity to beer to represent the men and women of the secret service. i will be happy to answer any questions you and the members of the committee may have. mr. carter: thank you, irector. we will try to stick to five minutes, but we will have some flexibility. right to something you entioned in the conversation we started. iven the amount of overtime on

the present detail on campaigns within the uniformed division, nd additional agents and officers. our own human capital plan are unique. they say you will need 7600 people by 2019, and increased over your current 6287. owever, your budget only request 6072 positions. is that number obtainable in light of the fact that they need more agents and they have brought on board? in the last 40 months you have lost 19 positions. can you truly bring on 427 people by the innocent cover? how are they ensuring the quality of the officers required? lastly, is it truly the equirement of the secret

service? if so, your future budget continues to build on this number. is that correct? i know that fy-17's number only increases by 58. but in fy-16 none of those were special agents, but supports that. could you going to detail on that? mr. clancy: yes, thank you mr. chairman. when i came in over a year ago, i have three priorities. staffing, training, and morale. the number one priority here is taffing. we had retooled the way we go about hiring people. we condense the time without lowering the quality of

candidates that we get, to bring in more people, new employees. we had retooled the way we do business at human resources. in fiscal year 15, we hired a proximally 200 agents, and approximately 140 professional taff people. in our first year, we have done significant hiring. we will continue to build on hat momentum during we are confident in the fiscal year 16, we will reach our goals of hiring three to 12 agents, three to 12 officers, and over 260 professional staff. the big issue for us, is retention. we are losing a lot of folks. our attrition rates for uniform

division is 8%. for our agent population, 7%. and for our professional staff, 8%. we are losing good people. when you think of the time we spend training these people and the time given for the experience they need, we need to find ways to keep them. we have one retention initiative, which we felt was within our authority working with homeland security, to provide a bonus for uniformed officers. it is a two year plan, hopefully in places that they will stay when we have this campaign going on. over 1000 of our uniformed division officers assigned up for that. but we have more initiatives on the table that we are looking at within our authority. as an example, we are hoping to push out this month tuition-reimbursement initiatives. also, tuition assistance initiative. that is within our authority, things we can do to entice our people to stay with us, rather than move on to other agencies or opportunities. there may be other initiatives

we may look at further. mr. carter: is your chief financial officer looking at the costs of those things? we have great ideas, i can understand that. but we can't have any shortfalls. we have shortfalls to deal with right now. mr. clancy: i have the chief financial officer with me today. she was newly appointed to this position, within the last year. in the past, and i may get into this later, in the past we have had agents in a lot of these positions, and they will be moving more into running this agency as a business. we have brought in the chief financial officer, that is her expertise. mr. carter: that is a good idea. we are joined by the chairman

of the whole committee. and an opening statement. >> thank you mr. chairman, i apologize for being late. but i have three simultaneous hearings that i have to be at. mr. rogers: i want to echo the sentiments exercised by the chairman, ranking member and others, regarding our former colleague and committee member, artin sable. e devoted 47 years of his life to public service, 28 of which were in this house, including two years as the first ranking member of this subcommittee.

when we started this subcommittee for homeland security in 2003, martin was ranking member and i was the chairman. we worked together beautifully, and i think, effectively, for those years. he was a true patriot, a great legislator, former speaker of his own state house, and many ther things. my condolences go out to his family. to his wife and loved ones, let them know he will be sorely missed here in his nation's capital. mr. director, thank you for being here. i want to share my gratitude for the men and women that your agency who serves our great country. many of them put their lives on the line on a daily basis, put their families in harms way.

the fiscal 2017 request includes $1.89 billion, that is a $42 million decrease from current levels. largely due to the winding down of the presidential campaign. the request includes $108 billion to increase security at the white house, $27 billion for upgrades, $72 million for continuing security work presidential candidates threat the inauguration. i'm disappointed, to see that it does not include funding for the national center for missing and exploited children, which is a bipartisan priority for years. the secret service fulfilled a very critical mission of course, of protection and investigation. your agency is charged with protecting the commander-in-chief, the vice president, the presidential candidates, former heads state, among many others. this past year, you were tasked

with protecting the public on the visit throughout the u.s., as well as 160 visiting heads of state and their spouses for the un's general assembly in new york. these were no small task. i want to commend you and all the men and women at your agency for the tremendous job they did. the world was watching, and the secret service did an exemplary job. there is much to praise your agency about, but there have also been some major missteps in recent years. there seems to be an overarching theme within the secret service, since well before your tenure as director began a short time ago during the number of high profile incidents in the recent past have called many to question the integrity and culture and effectiveness of the agency.

rom a series of unacceptable misconduct by some of your agents, to major security lapses, changes need to be made in order for the secret service to regain the trust of the american people. while i have to commend you and your agency for being relatively scandal-free since the last time you came before this subcommittee, the bar needs to be set much higher. leadership starts at the top, and i trust that you are leveraging your careers work and experience to write the ship at the secret service. i look forward to hearing from you today on what measures you have put in place over the last year to address these problems at your agency. one particular thing comes to mind. was recently in south america. in peru. i think it is that counterfeiting capital of the world, is that correct? >> there is a significant amount of counterfeit coming

ut of peru, yes. mr. rogers: you can get a harvard diploma or a $1000 bill, whatever you want. it seems out will. mr. clancy: we have an agent there assigned to our peru office. we have gotten positive feedback from the ambassador there. there are over $10 million fees last year alone. there been several offshore assets close down. they have had a significant effect in peru, getting great support from the ambassadors office at the embassy. mr. rogers: well, that is not quite the report i got. i talked to the ambassador and the head of the agency. they are working hard, i give them that. but the problem is so broad.

hey have an absolute factory for fake dollars. and everything else. i don't think we are putting enough effort in there to stop. this is an assault on the american dollar. you have a lot of critically important missions that safeguard the country's financial infrastructure. you play a vital role in protecting the economy from cybercrime and counterfeiting. in fiscal year 2015, you made over 800 arrests and seized almost $60 million in currency before it headed into circulation. you also trained 24 members of the peruvian counterfeiting force, to help them combat this problem. but i really think we are not doing nearly enough, and i

sometimes wonder, whether peruvians are not too unhappy. there is a lot of money being circulated in their country before it has caught on to be counterfeiting elsewhere. could you give us a report in the due course of time here on how we can beef up our efforts there? r. clancy: yes sir, we can certainly give you a more detailed briefing. those peruvian recruits did come up to our training facility here in washington, and we address their command structure as well. we will take a good look at that and our staff will give you a better briefing. mr. rogers: i am not interested in everything, i am interested in action. mr. clancy: yes, sir. mr. rogers: i know what is going on, i just got back. they are all hard-working, and

innocent, and trying their best, but it is not enough. mr. clancy: thank you, mr. director. ms. roybal-allard: director clancy, you talked about some of your efforts with regards to firing and retention. but in this 2014 report, regarding the hiring process, can you elaborate on the status of the filling the other recommendations of the protective missions panel, and f the budget request sufficient to allow you to make progress on those recommendations? r. clancy: yes, thank you. there were 19 recommendations through the panel. we took them all very

seriously, and we are making a lot of progress. we are proud to say we have made a lot of progress in addressing these recommendations. recently, a month or so ago, i brought back members of the panel to show them we are taking serious their report. a very well written report. t started with the structure. they talk about an outside erspective with a secret service, a culture, starving for leadership and management. in the past, we have had a director and deputy director. now, we're looking at running this more like a business, as i said earlier. with our chief operating officer we brought in from the outside from the department of

defense, this gentleman here with me today. that chief operating officer is now overseeing the business aspect of the secret service. we have elevated the chief financial officer. in the past, our finances were overseen by an agent. we brought in the subject matter experts to oversee our finances area we created a new director of the office of strategy and planning to look at our 90 day plan and five-year plan. we have elevated the subject matter expert, we wanted to get that outside perspective again. we recently hired a chief information officer, a 34 year marine corps brigadier general. he was a cio and the marine corps.

we were thrilled to get this gentleman and a short matter of a few months. he made great strides in assessing where we are very and we have strengthened that cio position so we can do a much better job at our i.t. functions. and we have done other things, structurally. based again on the blue-ribbon panel and their recommendations. training was not where it should be. we have applied more focused to our training. we previously had one directory. we split that so they can both get the training they need. and that is increased 43%. leading up to this campaign we made a commitment to ensure that our details that are protecting these candidates that are out there are well trained. we trained over 940 agents prior to this campaign to ensure that they're set. so the blue ribbon panel, structurally, we made significant changes. much different from a management standpoint than it was years ago. thanks to funding you provided to radios and infrastructure there is going to be improved. some of the facilities, our training facility will be improved.

so we are moving forward with the blue ribbon panel recommendations and i think making a lot of progress. ms. roybal-allard: the secret service has had a difficult couple of years with several incidents of misconduct. my personnel suggest strongly hat the culture within the agency had drifted and needed to be changed. the issue has not only been about misconduct but also whether personnel feel confident in coming forward when they become aware of misconduct. for example, do they know how to register their concerns of misconduct? and do they feel confident that their careers will not suffer as a result of speaking out? can you please elaborate on how in your opening, how things are improving and what the signs of progress are that you can point to and areas where you think more progress needs to be made in this particular area? mr. clancy: primarily through communication, initially. telling our workforce, we can't fix what we don't know. you have to come forward and tell us what issues are out there.

we've given them several avenues to do this, whether through ombudsman, through the office of professional responsibility or go to the office of inspector general. any of those avenues, or come to me directly. i have an open door policy. come to me directly and we will look into the misconduct that may or may not be out there and we'll act upon it. but we've also gone out to field offices and we've addressed them. i've addressed them personally. i've gotten every protective detail we have, and addressed them and reiterated the fact that if there's issues out there we need to know about them so we can fix them. and i think we're making progress. we've heard several responses from our work force where we have taken initiative and gone out to field offices to investigate what they've reported. ms. roybal-allard: just very quickly, in that same area, one of the recommendations was to implement a disciplinary system in a manner that demonstrates zero tolerance for stands incompatible with the zero failure mission. is that being worked on? mr. clancy: yes, the office of professional responsibility, we

elevated our integrity officer to an sds position to highlight the importance of integrity within our agency. we've also, through the table penalties, strengthened some of these penalties so that if you're a supervisor and don't report things up, you're subject to discipline, more severe discipline. we've gone back and looked at that. the whole entire table of penalties is under review now to see if we are where we should be with the discipline process. we're benchmarking against other federal agencies. mr. carter: thank you, mr. chairman, welcome, director clancy. i recently co-founded a bipartisan caucus, a congressional task force to combat identity theft and fraud.

mr. young: you know the importance of all this, it can happen on the individual scale, a larger scale, affecting corporations, businesses, individuals, public sector, it's something we need to take quite seriously, i know you know that how will the proposed budget assist the secret service? i look particularly at your testimony here about the electronic crimes special agent program and how will the budget assist the secret service to help prevent and investigate cybercrimes and data breaches? and is the need primarily staff or is it new technologies, that kind of thing that you need? mr. clancy: thank you, congressman. it starts with staffing. our field offices are down considerably at this point because we have had to move a number of our field office agents to a protected mission.

what we do have in the field is 37 electronic crimes task forces throughout our country and two overseas in london and in rome. so we take this very seriously, obviously, the cyber crimes that are out there and the identity theft that's out there, but we're also partnering with our local and state law enforcement officials to the point where we also have a national computer forensics institute down in alabama that we train a lot of these law nforcement officials and judges, as well. so they can go back into their communities and use this expertise they've learned and take the equipment we provide for them to work these types of ases in their communities. mr. young: in your testimony ou state the secret service is

working with state and local partners on this. can you elaborate on this? and how does the secret service work with other agencies to protect private citizens? and do you review and follow-up investigations to find out shortcomings, successes and needs with real analytics from there? and from there, how can we help you in terms of maybe even authorizing legislation, although we are the appropriations committee? mr. clancy: right now, through the electronic crimes task force that's where we partner with our community, state and local authorities. during this, for example, during this campaign year a lot of folks think our investigations may get pushed to the wayside but the beauty of these electronic crime task forces, where we have a lot working with us, if our agents get pulled out the door, those cases continue on. they're not dormant, in the being put aside. we continue to work those. we do look at the metrics. our staff can get with yours and give you a better idea of what those metrics are in terms of the number of cases closed in your community, for example, an the amount of arrests made in your community. >> with the new technologies and new scams and hucksters out there, trying to steal identities and commit these frauds, you're seeing this growing? and what are your roots into his community?

mr. clancy: you are exactly right. these cyber criminals today run like a business. they don't take the spoils from their crime and spend it, they reinvest it in their criminal enterprise. we have to evolve and improve our techniques as well. that's where this continuing education for our investigators and the work with the private sector and try to keep up with the new technology, we have a representative out at carnegie mellon to study the newest technology out there. we're out at tulsa university studying wireless mobile new technology that's out there we're trying to continue to educate our folks too as we move forward. mr. young: thank you for coming here today, i'm sure our bipartisan task force will take take you up on your offer of briefing and working together. thank you, mr. chairman. mr. carter: mr. price. mr. price: thank you, mr. chairman. welcome, director, we're happy to have you before the

subcommittee. i know off lot on your plate this year with the election warming up and the election proving to be very contentious. and that defines what i want to ask you to address today that contentiousness. we had a regrettable example in my congressional district last week, fayetteville, north carolina. a recent incident at a donald trump rally. in this instance, it was reported that without any physical provocation, a trump supporter allegedly sucker punched, as they say, a man named raquin jones and later

said, the next time we see him we might have to kill him. in referencing mr. jones. now there's a lot of inflammatory rhetoric being used on the campaign trail. i would imagine that's making your job and that of your agents more difficult, at a minimum and perhaps more dangerous. so that's what i want to ask you to help us understand here today. to the extent you can in an unclassified setting, can you speak to these challenges faced by your agents and as more and more violent and provocative rhetoric is being used out on the campaign trail, are you seeing an increased number of incidents that you of course need to protect against but also need to investigate? compared to the 2012 election cycle or any modern election cycle, for that matter. and then this vitriol on the ampaign trail, has that led to

an increased number of threats against the president or first family question again, to the extent you can comment in this setting. mr. clancy: thank you for the question. in general, i will say that every day is a challenge for us. we talk about this within the ranks, every minute of every day is a challenge for us, whether any of our protectees is at a large rally where there's a lot of passion and intensity, or whether a protectee is going into a coffee shop. every minute of every day, we have to be on our game. and to the question that came arlier, even off duty as well. that's something we're stressing too. in regards the campaign, it all starts with the events. ne of things we talk about events is we are there to protect our protectee. if there are protesters, if there are people that are disrupting the event, that is not our primary responsibility. if it's an an nfse, we're more involved, but for typical campaign events, we sit down with the host committee and event organizer and say, if there is someone you feel is disrupting the event or protesting, it is incumbent on you to make that decision and work with your private security you may have or your university security or the local law

enforcement to remove the protester if you think that's warranted. our concern is overt acts or threats to our protectee. f someone come into the buffer zone, or secure zone, we're going to respond to that, as we saw in dayton, ohio, just this past weekend. we also had other rallies where people have crossed into our buffer zone over the bike rack. we will remove those individuals. we do not interfere with people's first amendment rights. people have the right to voice their opinions. it's for the host committee to decide whether or not it's

disruptive to that event. mr. price: surely the environment matters, though. and the cooperation with -- i understand you're saying cooperation with local law enforcement involves deferring to them, mainly, in handling protests and presumably counterprotests. the atmosphere surrounding this, though, surely has some influence on how you assess your mission and the kind of complications you might face in executing your mission is -- and what i'm really asking is not about, i gave you an illustrative instance but i'm asking you about the environment surrounding this ampaign and whether it has posed those kinds of challenges. and if so, what have you undertaken to deal with this? this is not politics as usual, at least in my experience. mr. clancy: each site, again, we are flexible with our security plan and look at all the factors of every event and we are flexible with our assets, we may bring in additional assets if we feel there's more intensity, for example, at a rally. we want to make sure -- we have certain requirements we want to make sure we have available to us.

i don't want to get into too much detail here but we want to make sure we have a good, clean route in, as well as a good, clean route out. if we don't feel we can have some of these basic requirements of a good security plan, we may require us to bring in more assets or have more discussions with the staff or local law enforcement but there's a lot of give and take with all these events and there's no question some of these events create even more challenges for us. but it is our job to be flexible and resilient and make sure we have a good security plan. mr. price: and your response could conceivably be to advise local law enforcement about precautions and safeguards they need to put in place and you might advise that a rally be canceled or postponed?

mr. clancy: we work closely with local law enforcement. one of the beauties of our field offices is we have great relations with the local police departments. for a lot of these rallies and events, our field offices are the ones doing initial advance work. those relationships have been formed and there's a lot of give and take from an intelligence standpoint from what assets are available, it truly is a unity of effort, a team effort. mr. price: thank you, mr. hairman. mr. carter: thank you, mr. chairman, mr. clancy, i want you to know that many of us support you and we understand that, just culturally as a military officer, i'm supportive of law enforcement. mr. stewart: i recognize you have a difficult job that many times you or your agents rather involved with law enforcement have to make split second decisions that they're going to be criticized after the event.

i think the great majority of americans will support you and others working with you, and want to support you. but that only works, i think, if we recognize that trust is based on behaviors and having eople earn that trust. that is a bit of a concern of mine which i would like to laborate on. going back to quote a government oversight and reform report from 2015, i'm quoting here, internal u.s.s. data shows morale is further harmed because many employees don't have confidence in agency leadership. they told the committee this is due to culture where leaders not held accountable. i know that was previous to your time or about the same time you came on and that's not a critique of your leadership, his quote i just gave.

but i'd like to give an example of accountability and ask you to respond, if you would. i'm not using this example because he's a friend of mine or a member of congress, this is jason chaffetz. i'm using it, i would feel the same way about any u.s. citizen. that was where there was a breach of some 60 of his personal data, 60 different items. including from "the washington post," some information that he might find embarrassing needs to get out is what the assistant director, edward lawry wrote to another director. and wanting to support you, but also recognizing that that trust and that accountability is so important, could you tell the committee what disciplinary actions have been involved with those who were responsible for leaking this data of a private citizen? especially in regards to director lawry? mr. clancy: there have been 42 secret service employees who were issued discipline with regard to that case you referred to here. many of those are in the appeal

process and coming to the end of that appeal process. i can't speak specifically about what, because of privacy issues what each individual received as a result of those actions but it is something the agency is embarrassed by and e've said that publicly and in terms of are we holding people accountable and are people willing to come forward? in the year i've been here, we are now showing the discipline across the board, supervisors s well as nonsupervisors, to be transparent to our agency, to show that what discipline, we're not naming people in this report but we put it up for everyone in our agency to see, the type of events, misconduct that occurs, and what type of discipline is put into effect as a result of that. mr. stewart: i guess this is just a contrast with what i experienced, using my military experience.

when we had a concern, whatever it might be, whether we crashed an airplane or some type of security breach we knew immediately what the outcome would be. and the discipline was public and took place in a matter of days, maybe weeks. here we are a long time later, and we don't know those who have been disciplined. we don't know the outcome of that discipline. they're on appeal. just watching this, i can understand why some members of the organization would look at this and say, we do have a hard time holding people accountable and the system protects them, it seems. and again, let's use director lowery as an example. i'd be curious to know what his position is. his is fairly egregious to me, him writing to another some information he might find embarrassing needs to get out. this is what he wrote about a public official. yet can you tell me any discipline that has been affected upon this individual or director?

mr. clancy: i cannot speak to that currently, until this appeal progress goes through. we are entitled to title five, and i understand the frustration. it takes a long time to go hrough the process, but that is where we are today. r. stewart: i appreciate that, i expected that would probably e your response. but again, director a long time has passed. if we're going to hold people accountable, it can't be

accountable five years down the road. in my opinion, it's got to be more immediate than that. but once again, we appreciate what you're doing. i think you're trying to do the right thing here under maybe confined, you know, restrictions that are imposed upon you. but my heavens, i can't imagine that these individuals would have this type of attitude, cavalier attitude, regarding their elected representatives and wouldn't be held accountable. mr. clancy: thank you. mr. stewart: do you want to respond? mr. clancy: no, sir. mr. stewart: mr. chairman, thank you, i yield back. mr. cuellar: thank you, mr. chairman. i also want to echo what chairman rogers said on the issue of peru. there is an issue, and even peruvians say that outside of washington where there is the biggest printing press in the whole world. why peru? we don't know. but i think the secret service is doing a great job, under the circumstances. i would echo chairman rogers that you ought to put more resources on that. even though i think you said that you got $10 million, that's probably just a drop in the bucket as to what they're doing. i would ask you to, following chairman rogers, ask you to follow up on that. second of all, director, what are y'all doing to combat

transnational organized crime that targets citizens and financial institutions in the .s.? i do have a press release which was in san antonio, i think in january, you did this san ntonio electronic crime task force and you brought people together and i want to thank you, this is very, very good. i would encourage you to set up something, talk to your folks, do something on the border also and i'd be happy to bring you down to laredo and work with your folks and i'd be happy to put folks from the border law enforcement, state, local folks, recommendations, whoever you might need from the private sector, to sit down so i would ask you to, you would do this on the border. everybody talks about the border, but when they do events, they usually do them 150 miles away. i do represent san antonio, i

love san antonio, but if we're going to talk about border, i would ask you to have your folks come down to the border. we will be happy to set that up for you. the other question i have. whatever happened to the -- we talked about this a lot. the white house, $15 million. how is that coming along? >> well, we are committed to this white house mockup or building defense. we are in the process of working out a master plan for our rtc, our rally training center in maryland and we have to submit this master plan to the natural capital planning commission to get approval for what we want to do. we are definitely committed to this mock white house. we had an initial design that came back to us. we're going back to reevaluate that design to see where we are with that. but we have full intention of

implementing that. >> whats -- i think last year we talked about a $15 if i'm going by memory. what is your -- i hope that hasn't gone up, because as chairman said we have to work with a tight budget. my experience dealing with the federal government is you start out with a number and then before you know it it explodes. has that gone up? and for what amount to what amount? >> i'm not prepared to say what the amount would be but i will say that i know the official design came back which was a little more elaborate than what we really had expected. and the cost was going to be higher. so we've gone back to the drawing board in that regard. >> will you keep chairman carter and the members of the committee, the ranking member also, myself, what the cost is? because we want to be supportive. but, again, my experience has been is you start off with an initial number.

and i assume the number they gave you went up and not down. so i would ask you to just keep us informed. because i originally thought the original amount was a lot. but again, i i am interested in you keeping the cost as close as possible to the amount. >> yes, congressman. >> and again, the culture issues that were brought up last time you were here -- i know there are still some incidents but i do have to say you're doing a good job and i appreciate your service. >> thank you. the whiteickly, on house mockup. we gave you a million dollars. i know you are doing forward -- going forward and doing studies. don't take us out on a