public diplomacy is working with partners around the world to stand up counter messaging centers. we have put more pressure on their financial networks. , in the last couple of joined afghanistan has the coalition. there has been an intensification nationally and internationally. you will see that continue. this is a group that isn't the same as it was in august 2014. they do not move, operate, or communicate the same. they are having trouble obtaining and keeping foot soldiers. we are seeing that over and over in their increasing use of child soldiers and taking down defectors. >> you can see this online at c-span.org. we take your lead to the discussion at the heritage foundation on genocide by isis. the main speaker is the director

of the hudson institute center for religious freedom, nina shea. >> i want to welcome you to our monthly conservative women's lunch. very pleased and honored to have a distinguished speaker. especially so in this particular week. it has been very important in terms of the united states taking a strong moral stand against isis. on monday, the united states helped representatives unanimously passed a resolution condemning the campaign against christians and religious minorities in the middle east as humanity, war crimes, and genocide. it called on governments to do the same. john kerry recognized that isis is waging a genocide against , christians, and shiites in the areas under its control. this is only the second time in the united states' government

history they have condemned and ongoing genocide. there was some doubt that the united states would include christians. our colleagues have been writing about this for several months. today, we have a tireless warrior for this cause. she has been tireless in helping document the christian genocide, and has worked tirelessly to educate the public, media, lawmakers, and government leaders. of theea is the director center for religious freedom at the hudson institute. she has worked as an international human rights lawyer for more than 30 years. she works to advance individual religious freedom and human rights and foreign policy as it andronts islamic extremism nationalist and remnant communist regimes.

undertakes scholarships and advocacy in defense of those persecuted for religious beliefs and identities. and ask on democratic measures to end violence and oppression abroad. she has served seven terms on the u.s. commission on religious freedom. during the soviet era, her first client before the united nations bargraph. since then, she has been appointed as the u.s. delegate to the main human rights party democratican and administrations. she served as a member of the clinton administration's advisor . in 2005 she served as a member of the coalition to unesco. a role inayed grassroots for the international religious freedom acts and has

organized and led a coalition of churches and religious groups to and a religious war against non-muslims and dissident muslims in sudan. she organized and led a persecuted iraqi and egyptian christian minorities, which was relieved by a bipartisan congressional panel on may 7. in the summer of 2014 she met with pope francis to discuss the persecution of christians in the middle east. she worked across a broad range of persecuted religious minorities in the world. andhas also testified advises congress regularly on these issues. i would encourage everyone to check out the hudson institute's website to give you her many hermplishments and links to

writings. in a radio interview neither had yesterday she noted that this is an incredibly critical first step. it is just a step. as secretary kerry pointed out yesterday, the stakes in this campaign are utterly exit essential. pleaseand gentlemen, join me in welcoming a leader in the fight, nina shea, as she updates on isis' christian genocide and the policies ahead. [applause] thank you so much, bridget . i want to thank heritage and the policy institute for inviting me. when they did, we had no idea it week be such a momentus for this topic of christian genocide in the middle east. yesterday at 9:00 a.m. eastern,

secretary kerry took the podium and asserted "in my judgment word for isis, is responsible for genocide for groups under its control -- including yazidis, christians, and shia muslims. genocidal by self ideology, actions, in what it does."d that is the official u.s. designation. he goes on to give a talk about that. i encourage you to look it up. it is a genocide designation that is historic, surprising, important, and possibly of utmost significance. that is what i want to talk to you about. as bridget said, the second time in u.s. history with

the u.s. designated genocide while it was still going on. the other time was when secretary powell designated darfur as genocide. it has designation under the law as genocide and it is harmful acts committed with -- killings and harmful acts committed with the intent to destroy all or part of a group. a religious group, for example, national group, or ethnic group. ongoing means two important implications. it means that you do not want to wait until lambs are slaughtered like we saw with europe's jews under the nazi period. 2/3's of that population were

killed. we want to prevent it from getting to that number. we want to protect those victims think is aat we developing genocide. it also means that because it is ongoing the data is soft. it is not easy to run around in a war zone with conflicts raging , isis is still in iraq and syria at the crime scene. refugees huge flows of . it is hard to get testimony. we do know enough, we know too much. the knights of columbus this week, or last week, released websiteort on their and it has thousands of names of christians who have been killed, they, or tortured because

are christian. they believe it is only the tip of the iceberg. we are hearing new cases that are not in this report. i was talking to colonel backrick u.s. just gotten from iraq, touring the refugee camps. , and ita woman told him is not in this report, that she saw her husband crucified on the door of their home. edition for in theand reconciliation middle east. it supports refugees from iraq and jordan. it seems like every family that we are helping has a story. i'm thinking of georgina, a young gal that left her rock

when isis came in. she left in a car with her grandmother, parents, and three brothers and another car. arrived.r only she and her grandmother arrived in jordan. she doesn't know what happened to her family, no doubt they were murdered by isis. there are mass graves in sinjar area is. yazidis there were also three orthodox churches there. no one knows what happens to those congregations. there is speculation that some are in the graves. some were seen the intake to mosul, meaning they would be killed or enslaved for sexual abuse. there are mass graves in syria. these names are not in. i'm trying to emphasize that we only have the tip of the iceberg because it is an ongoing genocide. last summer we learned there was

a protestant pastor outside of aleppo that was crucified for .efusing to recant his faith so was his 12 euro son after his fingertips were cut off by isis, they were both crucified. we think of isis as showing up in august of 2014 or june of 2014 -- that summer. iraqstarted as al qaeda in in 2004. it morphed into something called the islamic state of iraq in 2006. all that daddy -- all tha baghdadi was put on the terrorist list in 2014. here is eight years between the d isis.f ic an

all this time, this group has torturing, and murdering, particularly targeting christians as a main civilian target. one of the biggest ways that they attacks christians is by taking hostages for ransom. this is a silent one by one genocide. thousands of christians have been taken for ransom. torturedhem have been and killed. the ships have been killed while trying to redeem priests here to priests have been killed while trying to redeem their congregation that has been taken hostage. winds have been killed as they bring ransom money for their husbands. hostages have been killed after the ransom has been paid.

on all thisn going time. one of my close friends from he has been featured in knights of columbus ads on television and was in town last ,eek, he was taken hostage tortured, beaten, shot in the teeth, nose,ke his this genocide designation by the

u.s. government was welcome, but a surprise. october, the united states state department has been giving indications that it is willing to designate the yazidis religion as a victims of genocide, but not the christians.

the yazidis have sever tremendously with thousands of women still enslaved. this continues throughout the fall, the reluctance and includegness to also the christian congressman jeff fortenberry from nebraska who introduced the resolution that tosed that bridget referred that unanimously passed. his district houses the largest population in the united states. he asked on february 20 eighth of secretary kerry if they would include christians in the genocide designation, which was mandated by congress to be made yesterday. on february 24 said to the congren "they are not killing them, but it is

removal." i can't think of a more cautious, neutral, and misleading term than "removal" in referring to the christians' experience with isis. one day before the deadline, the state department had a public announcement that if they would not make the deadline. it was pretty apparent they were resistant. was, they why explained that some point, is that isis did not have an intent to kill or destroy the christian community. respectedtually christians and jews as people of the book -- meaning people of the bible. this, is of course, the islamic tradition calling christians and

jews people of the book. isis does not follow islamic tradition. it is not want to coexist peacefully with christians or non-muslims. this is repeated in today's "new york times" about the genocide designation yesterday. how state department official said that christians had a different deal. the implication all along has been that of christians paid the islamic tax that isis was offering them the christians could have stayed and lived happily ever after in their homes. the christians refused and chose to leave. this is a phenomenal misconception. it is partly based on lack of knowledge. the state department did not

send fact-finding teams to the region to find out what was going on with the christians. owell did-- colin p when he sent troops to darfur. the knights of columbus went to the region to gather facts and a use the same questionnaire that the powell teams used. experts and christian cardinals to an expert for american progress on the left -- a whole array of christian leaders -- signed a letter asking secretary kerry couldmeeting so that they come in and briefed him about the situation on december 4. we never got an answer. one month before the deadline genocide designation, the

state department went to the knights of columbus, because they had been running television ads, and asked them to collect facts and present it to them in a report. which is what the report did. without waiting for the findings to come back to them, they visited, state department stateals, went visiting officials from iraq and told them genocide was out of the question. the state department did not have any interviews of christian leaders directly dealing with isis over the islamic tax issue. this is the pivotal issue over whether isis intended to destroy christians as it did yazidis to meet the definition of the genocide convention. i did interview the syrian hadolic priest who

dealings with isis, and he said that isis demanded that the adult christian men leave mosul and come to an auditorium to meet with them to learn the terms with which isis expected. the christian men decided that it was a trap. that they were being rounded up for slaughter. in the best scenario, if they they didilled, isis -- not trust isis to protect their women and girls. trustsprotects -- no one isis. not even the state department. they thought the christians should have taken the deal. the concerns of these christian a shortwere validated time later when a dozen christian women and girls were taken as slaves or they have not

been seen since. the church has not succeeded in ransoming them. 1000 yazidis women and girls have also been taken. that was about one month later. in october, isis released a slave price list giving out prices, sale prices, for the slaves. it is not only the amount of money designated and age, but christian and ethnic city. these were the slaves being sold. .- and ethnicity these were the slaves being sold. instead of learning about the situation, the state department it is stillke, in the new york times today, seemed to take isis propaganda at state value -- at face value.

ownstate department's propaganda on the issue of christian attacks and islamic for christians to peacefully coexist with isis is preposterous. we have all seen the beheading videos. isis does not want to coexist with christians. the state department's coordinator for counterterrorism , who worked for secretary kerry until a year ago, ambassador study and wrote a called it a publicity stunt, a ploy for further atrocities that serves two purposes. look morel-baghdadi khalifa like. and it allows them to either

forcibly convert christians or to keep the women around for rape or forcible marriage to their fighters, or to extract more money from the patriarchs who are in other cities with international financial networks. this genocide declaration yesterday is extremely important. it is important because of the moral power of it. crime of crimes, the most heinous of all human rights crimes. this is reflected in the fact tot it gives a moral boost the people that have been designated, christians, ethnic shia, and yazidis.

today, i received a video thank you the united states from the father and children in his camp. it was wonderful to see that. they are following very closely. forgotten.until now, here is their christian civilization that was 2000 years old wiped out by a force of hatred that hasn't been seen before. every trace of their civilization is being systematically destroyed by isis. these are churches and monasteries that have withstood of thears, the invasions romans, mongols, arabs, turks, and so forth. a cannot withstand this alone. this needs to be recognized. it can be of utmost significance, this designation,

if there's a policy roadmap adopted by the administration. it has to be put into place now here it not only is the situation dire on the ground in syria and iraq, but the government here is in transition , or will soon be in transition. we will lose one year between the lame-duck and the learning curve of the new administration. what can be done? what should be in the policy roadmap? there are judicial actions. secretary kerry alludes to that. he says he will start preserving and collecting evidence. that this is the business of the court. this is something that will be directed against those who aid or abet cyber recruiters, financers, arms suppliers,

artifact smugglers, all of these beomplices could someday caught and tried. there is also military action. secretary kerry alludes to that as well, and talks about how they have an eye to the protection of the minority communities that have been named the victims of genocide by liberating their occupied territory and freeing them of isis. nineveh none of the -- in iraq in particular. there are other actions that secretary kerry can take in his own portfolio in the state department. he should adopt these and put them into action. i will discuss them quickly,

because our time is short and i want to answer questions. here are five examples. first is refugee resettlement visas to the united states. christians from syria have been grossly underrepresented in the -- in thee numbers resettled. they constituted 10% of the war. there have been only 60 christians and one yazidis over five years of syrian conflict that have gotten pieces to resettle here. visas to resettle here. here there have been six christians and no yazidis this year. they have a published database databaselished that lists religion. we are bringing in 1000 refugees

from syria. six christians is one family and zero yazidis. in iraq, most of the christians and yazidis are displaced in a rocky kurdistan. all of those years push them north into the city of nineveh. remain ine christians iraq or nineveh during most of them are now in a rocky kurdistan with no resettlement rights. they are not refugees because they are within their own country, yet they cannot resettle in kurdistan. they do not have rights to drive a car, opened a bank account, start a business. there has to be some kind of plan for them, for many of them. many of them are too traumatized to go back to their home. that their land is

not liberated from isis, that is still a question, they will all have to be resettled in the west . there is nowhere in the region for them to go. the second thing would be land and property restitution. theirminorities lost homes, businesses, and farms. isis in many cases has passed them on to other people i selling them are giving them away. other people could have possession of them. the state department must press giveovernments involved to priority recognition to the the genocide victims. that is something that the press for them to do. another item would be a place at the -- alayset table.t the peace

there is no christian voice at those peace talks. they are not at the table. borders will be redrawn, constitutions drafted, and there is no voice or input. these minorities will be marginalized or shut out of whatever replaces the old syria. we have to speak up for them. humanitarian aid -- there is donor fatigue setting in, the minorities cannot go into you and camps because they are too dangerous for them. the persecution that has driven them out of their homes follows them into these camps. there is no christian in the camp and jordan run by the u.n.. these are mostly iraqi and andan christians in jordan the u.n. has large camps, probably the second largest city of jordan is probably a refugee camp and there is not a single christian there. it's very dangerous for them.

they are dependent on private aid and church eight and the u.s. government must ensure these genocide victims are not short changed. finally, reconstruction aid -- i say finally because that's my list of five but there are more things that can be done. if and when they do return to their homes after the defeat of isis, these genocide victims will need help reconstructing their homes and towns and churches. america's reconstruction aid to iraq after the military surge was largely diverted away from the christian areas by national and local government. the u.s. government must recognize the specific challenges facing these minorities and provide greater, more direct, more transparent and more oversight on their behalf. dashtary kerry said what wants to a race we must preserve

and i cannot be -- once to you race we must preserve and that cannot be a reality until we do this. in his announcement today, secretary kerry took the pains to point out that he is not a judge or a prosecutor or jury. a judicial and formal legal procedure will be needed. but he has taken a bold step and there are things he can do we're going to need all of your help to get it done. thank you. [applause] we have some time for questions. we have a couple of microphones in the room and i would ask if you raise your hand and wait for the microphone so that it and be captured on the recording. >> identify yourself and please give your affiliation as well. so -- we are ready for question. thank you.

>> i have more than one question. how do we get involved and why do you think it took so long for them to recognize christians over others? say it again question mark at it we get involved question mark >> how do you think we as students should get involved? it took so long to recognize the christians? yeah, students can do a lot. everybody can do a lot. we have the internet. we will be putting up petitions and doing conferences and campaigns and letter writing and contacting your congressman.

because this was so unexpected, we don't have a whole set of action points right now. when i say we, i mean a coalition of activists. i have worked all my life to achieve successes in this field and it has been done through working with teams of others, other coalitions. hudson.orgwebsite at under nina shea and i write for national review quite frequent late will often put in those pieces, links to more information, links to petitions that we need signatures for. until yesterday, we had a petition from the knights of columbus that got over 140,000 signatures including a lot of dignitaries. that was part of the pressure because all of this builds pressure.

there was the fortenberry amendment that passed unanimously monday and that built pressure. there was the press conference we had last week with the knights of columbus for its report and that old pressure. the european parliament in january past with strong socialist support, a resolution also calling for the designation on behalf of the european parliament for christians. and other minorities. all of that was building pressure and that's why there was this delay or the state department would have just declared a genocide back in october. that would have been the end of it. that would have been very hurtful for the other minorities. basically, by so -- by selecting

one, you are excluding the others by implication. why are they reluctant to do it? there are layers of reasons. reason the ostensible that they said it's because they -- they thinkisis isis respects christians as people. that's basically their stated reason. the second layer may be that -- they don't want to -- propaganda that this is a crusader war by sticking up for christmas -- christians. that was, interestingly enough, the finding of the holocaust museum regarding the nazi

holocaust, that the reason that president roosevelt did not concernut the jews for for american concern at the time was that he did not want to feed anti-semitic propaganda and that the united states was acting on behalf of only the jews and that was absolutely catastrophic as we saw. ships of refugees were turned away at that time. there is a lot of parallel. we are trying to head this off before everybody is killed, frankly. those are a couple of reasons. >> the question here? i agree that this definition of genocide adds a moral dimension to it.

what are the consequences if the government does not act upon the designation? >> that's a great question. it gets to the core of activism. democracy, and an election year, there will be response. that's the beauty of democracy and elections. there is political pressure from the grassroots and that's all of us. if we choose to use our rights in this democracy -- if there is a good idea our side, facts on the advantage of having the facts on her side and once you have that and they are government, then the not, individual actors, just some big iraq receipt but secretary kerry, president obama or ambassador samantha power who

wrote a book on genocide. she literally wrote the book on genocide and u.s. policy. they are not going to want to risk their reputations to go down in history saying that they did nothing. , a path that they are traveling down. once you call it genocide, there is no going back. then you say will why didn't you do it? all the mediaby coverage that emphasizes that there are no legal requirements. the reason the media says that is that's what some of the unidentified state department officials are saying that there is no legal requirement to take any action. there may not be legal requirements but there are certainly moral requirements. i am not advocating a military involvement or troops on the ground which some have been

whispering. the economist wrote about that a couple of weeks ago that while this would mean for troops on some analysts say. i am not advocating that at all. i think that would be counterproductive. i do see these other things we can do to rescue the minority by giving them refugee status or by making sure they have a place at the peace talks so that they can say what they will need to stay. what kind of laws they want. freedom of religion, equal rights -- secretary kerry, in his talk, references equal rights and they say they're going to advocate them. we've got to get more tactical now and say here is the example of where it's needed. maybe that's the religious identity line on the national identity card. you want to press the government to react. that is a tool for persecution, frankly.

in any part of the world. >> one of the most stunning parts of your remarks is how christian refugees have been accepted. even the body of syrian refugees that have been accepted, they are underrepresented. >> it's like 1%. >> to me, that's almost inexplicable in the sense that one of the barriers to accepting more has been the security question. you don't want to let in terrorist but here we have syrians who have been victimized terroristsm, by isis and yet our own government, in a sense, is victimizing them yet again. do you think this genocide

designation will somehow prod the bureaucracy to take action on this issue or is there a role for congress in rewriting some of the laws for refugees that could help some of these syrian and iraqi christians get out? yes, in fact there is legislation in the works now to designate a certain percentage of those refugees slots to the minorities that have been designated as genocide victims from syria. going to have to press them on everything because their approach now when i brought this to their attention last fall, the state department response has been, we've got to find out how many christians want to apply and how many are being turned away from applying or having a hard time applying.

i think that's the wrong approach. there are more than six christians who want to come to the united states. there is certainly more than 60 over the last five years. we should start with the premise that there are others who want to apply. we should go around the system we have in place. that theem here is u.s. refugee referral system is done through the u.n. from.n. takes its refugees their camps. as i said, the camps are too dangerous for these minorities because they are victims of genocide and they are targeted. it's too dangerous for them to go there. to u.n. has every incentive ship out the people it's working

and house in their camps so that's who gets referred. tot's who has been referred other western countries as well, not just us. it's a very pathetic situation. it needs to be, instead of , someiewing refugees stranger going over there and interviewing them about them having problems with the u.n. when they hold the key to their future, they will not want to go on record not knowing who is asking them this question, attacking the u.n. because that's the only route out for them. >> it seems the grassroots is all in place in the churches. every church and i remember of three of the moment, living in three different places, they all

have missions, they feed people in this country and they do this for that country and they do all these missions. i have not heard one of my churches mention anything about the genocide or trying to get a groundswell of support to help. how would they proceed? hearing from the christian churches? >> that's an excellent question. you hit your finger on one of the big problem's. the grassroots are not active as the should we because churches are not taking the lead in this to a large extent. some are. in my own church, i often don't hear about this either and we pray for victims of natural the ebolaand

disaster. it's never for this. i don't really understand it. one clue i got that was an a lot of theat church leaders or active have so many other issues on their plate that they cannot make this their priority. again, this shows exactly why the genocide designation is so critical. then it does elevate it to a higher plane, demanding attention and action. i hope you look at the knights of columbus report and go on my website and look at my own writings and follow it and then you will get ideas about how you can take it to your three churches. that would be great and everybody here has networks whether it's church networks or family networks or community networks.

you can do the same thing. it's just what we're talking about, a lecture on it petitions or letter writing or e-mail to your member of congress. we are going to make a push for and of these action points we have to do it fast because the transition in washington will distract everybody. we have a very little window here. what are the committees in the congress we should be following for these action points? which members of congress would take the lead? speaking to the state department yesterday after the speech. they were saying that we really do have to be concerned about appropriations. there is the funding to do some everythingff it not requires funding like getting christians at the peace table does not require or pressing but ,overnment for property titles

the iraqi government to respect property titles. that is not going to require funding but there will be some funding required for some of this. as that evolves, maybe in a year or a month from now, those committee members will be extremely important. even foreign affairs, the fortenberry bill that called it a genocide on monday which pushed it over the edge for the administration because it was totally bipartisan. 393 votes in favor and zero against. in an election year, that's pretty good. that was started in the foreign affairs committee which does not have a whole lot of leverage. congressman fortenberry is involved in the appropriations committee so they probably knew that. it's all interconnected. there are many avenues. >> any of the questions?

i just want to emphasize that we all have a role. we have a copy of her most recent national review piece outside that you all can take. would encourage you and especially young people who are here, to search online for the piste and posted to your facebook and this video will be posted on our website. i would encourage you to look back and share that link on your facebook so we can make an even and fordience aware those watching on c-span, i would encourage you to check out hudson page am a institute and check the daily signal. we've got a couple of videos interviewing the priests that nina mentioned. stay tuned, i'm sure we will hear more about it and nina will be alling this closely along with our holly here at heritage, james phillips.

we have a few thank you gifts for you which is our tradition. i will let lauren present first. >> thank you. >> thank you so much on behalf of of the clare booth lose policy institute. i would like to present you our mug with the phrase -- no good deed goes unpunished. [laughter] something you are familiar with. i would like to give you a copy of our annual 2016 great american conservative women calendar. anyone can have a copy. >> excellent. >> i would like to give you finally our tote bag. >> thank you so much. thank you all for coming. [applause] across the lobby, we can continue the conversation with nina so thank you for being here. >> that's wonderful. [captions copyright national cable satellite corp. 2016]

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event asn see this well as the announcement by secretary of state john kerry, the formal declaration of genocide by isis against religious minorities. find those events on our website www.c-span.org,. our live coverage continues today on the c-span networks. on c-span two, we are bringing you all day coverage of the discussion on the impact of

israel's influence on congress, media, academia and other major institutions. you can follow that on c-span two. book tv has 48 hours of nonfiction books and authors every weekend. there are some programs to watch fo he talks about how americans can build upon the digital economy by changing how they grow businesses to benefit employees and employers. p.m., law professor john yu. it examines the growth of the federal government during the obama administration and he is interviewed by the torilla deborah, former -- by toensing.

citizens united says since you have a right to free speech, during campaigns is what the framers wanted to protest, how can the government say but you can't spend money using your constitutional right? >> on sunday night at 8:00, former first lady laura bush chronicles the lives of afghan women since the u.s. invasion. she wrote the introduction to the book which was put out by the george w. bush institute. go to book tv.org for the complete schedule. tv onn american history c-span three saturday for live all day coverage of a lincoln symposium from the ford theater in washington, d.c. starting at 9:00 a.m. eastern, featured speakers include sidney blumenthal, the political life of abraham lincoln, author edna

major,edford, lewis p stacy pratt mcdermott , thomas l carson and terry all furred - alfored. the abraham lincoln symposium on american history tv on c-span three, live coverage saturday p.m..:00 a.m.-5:00 cordray who heads the consumer financial protection bureau repeatedly defended the agency's mission and action in oversight hearing before the house financial services committee this week. members criticized the agency for overstepping boundaries in overseeing areas like a day loans, mandatory arbitration clauses and dissemination in the auto market. congressman jeff canceling chairs the committee and the

ranking democrat is maxine waters of california. mr. hensarling: the committee will come to order. without objection, the chair is authorized to declare recess of the ea committee at any time. i now recognize myself for three minutes to give an opening statement. not that we need a reminder but if there's one thing the presidential campaigns have shown us, the american people are indeed angry and they have a right to be angry after seven years of obamanonics, they are still suffering through a failed economic recovery, the slowest and worst in our lifetime, this is indisputable. americans are even angrier at having their lives increasingly ruled by out of touch washington elites. every day they see their liberties slipping away as washington grows larger, more intrusive and more arrogant.

as thomas jefferson said once, government agencies are sending people to harass our people and eat out their substance. today the poster child of jefferson's lament is the cfpb. its director, our witness, is neither elected by or accountable to the american people yet he's vested with the awesome power of the entire united states congress. this is amazing, this is frightening and this is tragic. soon mr. cordray will decide for all americans whether he'll allow them to take out small dollar loans to keep their utilities from being cut off or to keep their car on the road. soon he will decide whether he will permit whether he will permit americans to decide contract disputes from arbitration or hand over the keys to the cfpb's luxury office building to the wealthy, powerful, trial lawyers lobby.

already mr. cordray has decided who in america will be able to receive a mortgage under his qualified mortgage rule which when fully implemented will disqualify almost one fourth of all americans who qualify for a home mortgage just a few years ago. already mr. cordray has decided that countless americans should pay more for auto loans based upon junk science and a dubious legal theory of statistical unintentional discrimination, all the while his agent sir reels from countless accusations of actual discrimination. now apologists for the bureau along with mr. cordray cite the tens of millions of dollars of fines they have imposed as proof that they are indeed protecting consumers. but the bureau operates as legislature, cop on the beat, prosecutor, judge and jury all rolled into one. fines imposed in such an abusive structure tell us nothing about justice, tell us nothing about consumer welfare, nothing.

in short, congress has made mr. cordray a dictator. when it comes to the well being and liberty of american consumers, he is not a particularly benevolent one. congress must address this critical problem because congress helped create the problem. it is -- it has outsourced much of its legislative authority to the executive branch in general and cfpb in particular. in doing so, it's compromised our foundational principles of co-equal branches of government, checks and balances, due process and justice for all. congress must reclaim its article 1 authority and reclaim it now. there's no better place to start than the cfpb, an agency that's abused its power that it never should have had in the first place. it is time to uphold our oath to the constitution, it is time to strip the cfpb of its rule making authority and return it to the elected representatives of we the people. i now recognize the ranking member for five minutes. ms. waters: thank you, mr. chairman, and thank you mr. cordray for joining us to discuss the cfpb's semiannual report to congress.

the bureau has helped more americans participate in a financial system that's fair and strong. the work you do is so important because it means that consumers can access the financial products and services they need to live prosperous lives without the risk of deceptive or abusive practices. it also means that consumers can have recourse when they have been wronged and recoup any finances they may have lost. those accomplishments are reflected in the $11.2 billion you have returned to 25.5 million americans. they are reflected in the 830,000 consumer complaints you have handled on issues from debt collection to credit reporting. they're reflected in the increased share of mortgages

made to minority borrowers in recent years, and the expansion of access to credit cards, despite republican claims to the contrary. director cordray, you are helping consumers succeed to the benefit of the entire financial system. i'd like to highlight a few of these particularly important efforts. i'm encouraged by the bureau's work so far on payday lend, -- lending including soliciting input from small businesses on the forthcoming regulations. we need rules that will protect low income and minority communities from unreasonable loan terms and unaffordable rates. despite modest efforts by some states to curb predatory practices, most payday loans are simply used to help pay off another payday loan. we must stop this debt trap and we must fight any efforts to weaken rollbacks or stop -- to weaken, rollback, or stop the cfpb's upcoming rules.

the bureau has led the charge against the discrimination that still exists in the auto lending industry. we should be doing all we can to prevent minority borrowers from being charged higher interest rates and from overpaying on their auto loans. unfortunately, too many members of congress have been misled by republican arguments against the data and methodology used by the cfpb in this important work. while republicans are attempting to protect lenders, the bureau has fined banks and captive lenders such as toyota, honda, and fifth third bank for discriminatory practices. additionally in the months since its last report, the bureau has successfully won a case against an unscrupulous college that deceived students into taking out expensive private loans and engaging in illegal debt collection practices.

as you know, i've worked on this issue my entire career. just recently, the department of education announced a proposal to ban mandatory arbitration in student lending. i hope the bureau will follow in their footsteps by offering this protection not only to students but also to americans that have found these unfair clauses in their credit cards, prepaid cards, bank accounts, and mobile phone contracts. despite a successful track record of helping consumers whether looking to buy a car, own a home or attend college, republicans have turned the cfpb into a political punching bag, attempting to undermine its work at every turn. this tactic is at odds with the public's support for the cfpb and the bureau's efforts to remain accountable and transparent.

i'd like to remind my colleagues that the cfpb has now testified 59 times before congress since it was created. issued more than 40 reports on its activities in the last year alone, and provided tens of thousands of documents in response to a never ending list of republican fishing expeditions. director cordray, i'm thankful for the work you're doing. i look forward to hearing your testimony on how the bureau continues to help consumers and improve our economy. thank you so much and i yield back the balance of my time. mr. hensarling: the gentlelady yields back. the chair recognizes the gentleman from texas, mr. neugebauer, for two minutes. mr. neugebauer: thank you, mr. chairman. i want to use this opening statement to address an issue that director cordray raised himself in speaking before the consumer bankers association conference a couple of weeks ago. in speaking before the group of bankers he, highlighted the virtues of bringing market

changing enforcement actions instead of going through a transparent and formalized rule making process. some call this practice regulation by enforcement. further he critiqued his critics saying their concerns were misguided. after hearing -- after hearing these comments i feel it necessary to respond. businesses of all sizes deserve certainty. from the largest financial institution to the three-office title lender, regulatory risk drives up cost and stunts economic growth. federal agencies that are authorized to even force federal law take appropriate action when they hold unlawful actors accountable. however when they routinely bring enforcement actions instead of bringing rule making with the sole purpose of changing market behavior it begins to look like a deliberate evasion of public notice and comment. public notice and comment is a crucial check on the abuse of regulatory power. not only does it allow the public to provide unique insight into the marketplace but

balances the decision making. at the cfpb, this point is all the more important given the agency's current structure, a single individual who can unilaterally authorize action. this celebrated bureau practice is most obvious and concerning in the indirect auto industry market. in the midst of pushback, the bureau's -- on the bureau's policy position, he chose to strong arm lenders to change certain practices. it chose to do this instead of allowing a transparent and pro-- transparent process driven by public comment. some say purposefully evaded the public dialogue. unfortunately this example highlights the very problem with regulation by enforcement. it allows regulators to insert regulatory authority outside of transparent structure process. it provides an opportunity for regulatory overreach and abuse. further it inserts significant regulatory risk into the business of our main street job

creators. in closing, the director told the consumer bankers' association when you push back, we welcome your input. director should expect continued and aggressive pushback to continue his regulation by enforcement. mr. hensarling: we welcome the testimony of director cordray, he's testified before the committee and i believe needs no further introduction. without objection, your written statement will be made part of the record and you are now recognized to give an oral presentation of your testimony, thank you. mr. cordray: thank you, mr. chairman, ranking member waters -- members of the committee, thank you for the opportunity to testify about the semiannual report to congress. i appreciate your continued dialogue as we work together to strengthen our financial system and ensure that it serves consumers, responsible businesses and the long-term foundations of the american economy. as we continue to build this new agency, we made considerable

progress on our core responsibilities to exert supervisor oversight over the nation's largest banks and nonbank financial companies and to enforce the consumer financial laws enacted by the congress. our analytical approach to risk-based supervision is leading to more systematic changes at these institutions and we're making progress on leveling the playing field for all participants. it resulted in institutions providing more than $95 million in relief to over 177,000 consumers. our enforcement actions have based on careful and thorough investigations and most have identified deceptive practices by the parties involved. during this reporting period, the orders entered in our enforcement actions led to approximately $5.8 billion in total relief for consumers victimized by violations of the law. these consumers are located in every one of your districts nationwide. we're also working to provide

tools and information to develop practical skills and help people understand the choices they'll be making to manage the ways and means of their lives. our ask cfpb resource provides guidance to inquiries across the entire spectrum of consumer finance. our major moment in time decisional tools include paying for college, owning a home and planning for retirement. we developed the new partnership with the financial services round table to work together on financial education in the schools, in the work plates and on behalf of older american which is proving to be productive. listening and responding to consumers is central to our mission. we continue to refine the capabilities of our office of consumer response to receive, process and respond to consumer complaints, including those referred to us by your offices. we also continue to expand our consumer complaint database ask which is now populated about over half a million complains -- complaints. we marked a milestone for consumer empowerment when we

began to publish consumer complaint narratives which allow people to share in their own words their experiences in the consumer financial marketplace. reasonable regulations are essential to protect consumers from harmful practices and ensure that consumer financial markets operate in a fair, transparent, competitive manner. we focus on markets like the mortgage market where consumer can shop effectively for financial products and services and are not subject to unfair, deceptive or abusive acts or practices. during this reporting period, we issued several proposed rules, final rules, o requests for information. to support industry compliance with our rules, we published plain language compliance guides and other resources to aid in their implementation. we're also seeking to streamline, modernize and harmonize regulations we've inherited from other agencies. over this reporting period, the bureau continued to expand its efforts to support and protect consumers in the financial marketplace. recent data end dates that sound

consumer protections in our major markets are strengthening them for consumers and providers alike. the mortgage market has been expanding briskly for two years now, since our major rules took effect. the credit card market is greatly um improved with stronger consumer protections and increasing consumer satisfaction. the auto lending market is supporting record sales of cars and trucks to meet consumer demand. the growing sense of consumers that these markets can actually work for them without fear of tricks and traps and other predatory conduct is stoking their confidence and restoring their trust. these developments reflect well on the work being done by the consumer bureau and taken as a whole, they're making substantial contributions to the continued gradual recovery in the american economy. mr. chairman, ranking member waters an members of the committee, thank you again for the opportunity to testify today and to discuss all the work we're doing on behalf of consumers. we will continue to listen closely to all of our stake holders, and we will attend

carefully to your oversight in order to ensure that all americans can be assured fair treatment in the consumer financial marketplace. i look forward to your questions. mr. hensarling: the chairman recognizes himself for five minutes for questions. as you are well aware, in late 2013, the buy row entered a suit -- the bureau entered into a consent order with allied financial based upon a legal theory of disparate impact. at the time, ally had an important yet unrelated pending approval. the c.e.o. of ally said the charges were, quote, trumped up that your bureau brought against ally. the went on to say that ally had been strong armed by the cfpb and the cfpb, quote, absolutely knew they had leverage over us. isn't it true that you and

senior staff in the office of fair lending knew ally was seeking to achieve financial holding company status prior to the settlement? mr. cordray: i read the interview -- with mr. carpenter -- mr. hensarling: just a simple yes or no. were you aware or not aware of the pending application prior to the consumers. mr. cordray: we pursued this for well over a year before ally themselves -- mr. hensarling: were you aware or were now not aware. a simple yes or no question. mr. cordray: we pursued this for more than a year before they brought it to our attention. mr. hensarling: so you were aware. that's the answer to the question. isn't it true they were in discussions with both the federal reserve and the fdic on how to -- thousand the -- on how the see of p -- cfpb determination of an ecoa violation could adversely impact

their application, is that true? mr. cordray: we had no decision making authority over those matters. we were attempting to conclude our investigation. mr. hensarling: but were they in discussion? was senior staff with the fair lending of the cfb in discussion with the federal reserve and the fdic regarding this application? mr. cordray: i believe there were consultations about them. mr. hensarling: you say consultation, we say discussion. pull up slide number six, please. i believe on october 7, 2013, a decision memorandum was prepared for you, i'm not sure you saw this but it has the operative phrase, staff is in a dialogue with both the federal reserve board and fdic. it begs the question, what does this have to do with a potential violation of eoca? now i'm also led to believe -- did you receive this memo?

do you know? mr. cordray: i do not know. mr. hensarling: go to the next slide, please. what is also interesting is that the last sentence of the previous slide was deleted. instead we have somebody with the initials of p.a.f., perhaps patrice fickland, saying let's refrain from this discussion and instead, quote from the securities filing which seems to me that either senior staff attempted to cover up the discussions or they tried to withhold this information from you. did senior staff try to withhold this information from you prior to the determination? mr. cordray: i don't believe so. i think you've got the entire matter exactly backwards, mr. chairman. mr. hensarling: regardless of whether you saw this october 7 memorandum you certainly saw the one on october 17. i believe these are your initials, decision memorandum

for the director, and in it it says, this could have a material adverse effect on ally's business, result of operation in financial position, and seemingly you initialed this. are you at least familiar with this report? mr. cordray: i think you've got this matter exactly backwards. mr. hensarling: the question is did you initial this memorandum? and if so, it would seem to indicate that you knew ahead of time that you had advantage over ally and you used it. mr. cordray: again, i think you have this backwards i would be glad to explain. mr. hensarling: you will have ample opportunity within this hearing but i wanted to know. if you saw this memo. so i have another question. in employing your -- in determining the racial characteristics of borrowers in auto lending contexts, you don't actually have the racial characteristics that you know for a fact.

instead, the bureau uses surname geocoding? mr. cordray: we use the same that's used in discrimination cases. mr. hensarling: we have the names and salaries of the bureau's employees in our possession. and our committee has used a public search tool to match home addresses and match names using your own surname geocoding, what we have discovered is that you pay black employees almost $16,000 less than their white counterparts. which would suggest that either, one, you are presiding over a racist organization, and if you are not, mr. cordray, should not the same disparty impact analysis you apply to others be applied to you and if you don't believe our analysis, i would assume you actually know the racial characteristics of your employees, i invite you to do

your own analysis, but should disparate impact analysis be applied to the cfpb? mr. cordray: i have no idea what analysis you're referring to. disparate analysis was upheld by the u.s. supreme court last june in an important decision. and if you're going to do that analysis you need to correct for pay bands and different jobs, i have no idea whether you did that or not so i would not -- mr. hensarling: i would invite you to do your own analysis. i'm not sure there's any justice taking place here. the evidence is fairly overwhelming. i fear we are seeing shake couns for headlines. our shakedowns for headlines and this has to stop. the chair is way beyond his time and now recognize the ranking member. ms. waters: thank you very much, mr. chairman. mr. cordray, i do not want you to be intimidated or to be made to feel bad by these accusations that are being made by the chairman.

i would like to think that the chairman and the opposite side of the aisle are truly interested in discrimination. there's nothing in their work or their history that shows they are. and so you continue to do your work and make sure that the work that you do on disparate impact analysis is work that will benefit all of the people who are being harmed by it. and so let's get on with the real issues. let's talk about payday lending. despite the fact there is substantial support for payday operations on the opposite side of the aisle, we know that these operations have targeted minority communities and poor communities and people are getting hooked on these payday loans and i want to talk about for a minute what is happening here in florida.

but before i do that, i have asked my staff to get me more information about where they are locating and how many are locating and what areas they're locating. we do know this. as it has been said by the federal reserve in st. louis, there are more payday loan operations than there are mcdonald's stores. so a number of states like florida and ohio have attempted to reform payday lend bug even after so-called reforms, -- lending but even after so-called reforms loopholes and other gaps remain, still leaving vulnerable borrowers susceptible to exorbitant interest rates and cycles of debt. for example, even after florida's reform, florida januarys still take out an -- floridians still take out average of about nine loans a year, according to the center for responsible lending with an annual interest rate of about 312%. according to one report an

investigation into florida auto lenders who expanded dramatically after florida's so-call red form, one florida consumer appeared to have renewed her loan 17 times in one and a half years. another woman borrowed $3,100 and made $2,600 in payments and after rolling her loan over seven time she is still owed $3,900. i can give more examples of this but what i'm giving examples of is how poor people get hooked on payday loans. the fact that these borrowers have to take out multiple loans shows that the loans are not affordable. they are trapped borrowers. into a cycle of debt. tell me why you are issuing guidance on payday loans? what have you discovered about them and how they work? mr. cordray: what we have discovered, and this is through careful and comprehensive

research into the payday lending industry is that the description you provided is substantially correct and accurate. about half of payday loans in the united states today are made to por row -- to borrowers trapped in a cycle of 10 or more loans. that's about half the loans being made nationwide. that's what we found in our research that looks into millions of such transactions. and it's difficult to see how that assists a consumer in improving their financial well being. now there are plenty of payday borrowers who get in and get out with one or two or three loans and that's perfectly great and we are not attempting to cut off any such lending. but it is the debt trap being stuck in the debt cycle, living your life off of those massive rates of interest and difficult collection practices and the like that we've seen that creates a tremendous amount of consumer harm. ms. waters: according to the work you have done, research you

have done, is this a profitable industry? are they making money? are they making large sums of money? what's keeping them going? mr. cordray: it's actually a difficult product economically. there's high costs involved in defaults, high costs involved in customer acquisition. so there are not super normal profits being made in that area. but what keeps them going, the business model for the average payday lender is rolling the customer into loan after loan after loan so that eventually you have recovered more in fees than they borrowed in the first place and your example was an apt one of someone who takes out a loan, pays back more in the end than they borrowed to begin with and still owes in the end more than they borrowed to begin with. that's a normal part of this business. ms. waters: this is why they're referred to as debt traps. people get trapped. they can't get out.

they keep rolling them over. is that what this is all about? mr. cordray: yes. industry objected to that notion but it's the best description i've seen of what happens in the marketplace. ms. waters: thank you, i yield back. mr. hensarling: the chair recognizes the gentleman from texas, chairman neugebauer for fife minutes. mr. neugebauer: this committee spent a considerable amount of time studying the short-term, small dollar marketplace. recently, your deputy director testified at my subcommittee on this issue. many of my colleagues did not walk away with much confidence in the direction you're headed with the rule making particularly on the issue of state and tribal sovereignty. at issue are roughly 38 states who allow these products to be offered in some form and the federal preemption that will occur if your rule goes forward as outlined by the bureau, i have a few questions. i'll use some slides during that questioning, i hope you will be brief and forthright in your answers.

slide number one, please. so after reviewing the current regulatory framework, does any state, did you find any state that does not have the authority to enact and regulate short-term small dollar loans? mr. cordray: states have authority in this area and the federal government has authority in this area as well. mr. neugebauer: you didn't find anybody who didn't have the authority? states have the authority to regulate? mr. cordray: as is true in many areas of law, states have authority and the federal government also has authority. mr. neugebauer: slide two, please. can you list the states that have laws in place that have contributed to the problem that you have identified? which states have failed to protect their citizens? mr. cordray: what i can say is, as you indicated, approximately 37 states or so that allow some form of payday lending with different degrees of regulation. and our study that analyzed millions of such transactions

nationwide showed that repeatedly in this business, across the country, many consumers fall into the debt trap, more than half of the loans are made to people -- with 10 or more loans in a row. mr. neugebauer: which states are allowing the debt trap? mr. cordray: all the areas, all the states that were examined in the study. mr. neugebauer: do you have a list of those states? mr. cordray: it would be all the areas where payday lending is authorized. mr. neugebauer: you looked at all the states? mr. cordray: we looked at millions of transactions nationwide in every state. mr. neugebauer: so you mentioned there's a floor, is anything below that void? mr. cordray: we don't have a rule, we have an initial framework and this kind of input is relevant to our process but as with our mortgage services rule which is are final, we did not preempt state law there.

we did provide a federal policy judgment about mortgage servicing practices and indicated in line with the statute that congress enacted that gives us authority in the area that our rules would be a floor for consume brother text not a ceiling. mr. neugebauer: you do not think you're preempting state law? mr. cordray: we are not preempting state law. typically the federal government when it's active in an area could seek to occupy the field that would be broad preemption, we're not doing that. they could also seek to preempt state law in specific respects, we're not doing that. whatever we do in this area will coexist with state law. there will continue to be state regulation of payday lend, there will now be federal regulation as well. that's true of many areas of law, telecommunications law, environmental law -- mr. neugebauer: but the attorney general disagrees with you. mr. soler disagrees with you.

mr. cordray: i know the indiana attorney general, we served together, we have both been interested and concerned about issues of federal preemption going back to our time in state government and for myself i spent 20 years in state government. so -- mr. neugebauer: if one state has a five-day cooling off period and the rule comes out that you require a 60 day, have you preempted the state that says five days is appropriate cooling off period and you say 60 is, isn't that preempting that state mr. cordray: a common aspect of federalism in our system is that there may be federal regulation and state regulation. mr. neugebauer: what is your definition of preemption then? mr. cordray: preemption is when the froth overrides state law -- when the federal government overrides state law and invalidates state law. mr. neugebauer: so my state has

a five-day cooling off period you say that 60 is the new norm, then haven't you preempted my state? mr. corcray: you could say the same about securities law, states have securities laws to protect people that are investing, the federal government have laws as well. they coexist. they don't necessarily jive in every particular. mr. neugebauer: so here's the question, these 37 states have gone out there, they've had hearings, they've had, you know, debates on the floor, they've passed laws, what do you know that they don't know? mr. cordray: you could say anything about any of these laws, the telecommunications act, states regulated that for years and the federal government had authority, congress gave authority and they acted -- mr. neugebauer: i'm sorry, mr. chairman. one last. if you brought those attorneys general of these states and the various groups of the state, if you brought them in to have a discussion about them? mr. cordray: i have talked to them all the time.

those are my former colleagues. mr. neugebauer: have they had an opportunity to comment? mr. cordray: i speak to them in meetings, i have spoken to them individually, i have spoken to attorney general zoeller. since he testified on your committee and we talk all the time. including enforcement actions against payday lending. mr. hensarling: the time of the gentleman has expired. the chair recognizes the gentlelady from new york, mrs. maloney. mrs. maloney: welcome, mr. cordray. my question concerns the credit card bill of rights the second bill president obama signed into law. and rahm emanuel, his former chief of staff told me that it's one of the most popular thing he is ever did because it touches so many consumers. in that card act we require you, the bureau, conduct a review every two years of whether the act was having the effects that we intended. so first of all, i want to know what is the response to the card act when you get complaints are you getting complaints about

credit cards to the extend you were before the card act went into effect? and what about the clear and transparent disclosures? has that worked? and no more hidden fees or unexpected interest rate hikes that are hidden? the bill wanted to crack down on unfair and abusive tactics by card companies on consumers. and your report found that the card act has dramatically improved the credit card market, making it fair, more transparent, and even as the cost and availability have improved. i for one think it's useful to have this type of regular review of a major bill and my question is, are there lessons that you've learned from your two card act report that was been useful to the bureau in writing other rules and have you used those lessons going forward? also, two celebrated reviews, one by the pew foundation, said

that the card act saved consumers $10 billion a year. the n.y.u. review with others said it was anywhere from $16 billion to $20 billion a year and have you conducted any reviews similar to what they have done to see whether it is as good a stimulus package as -- actually a stimulus package that president obama signed into law because it keeps the money in the consumers' hands, so your comments please on the card act and those various things. mr. cordray: we have had a chance to review the credit card market and do that on a biannual basis to report to congress. i would congratulate the congress, the congress did an excellent piece of work in passing the card act. and it has made an enormous difference for consumers. different assessment of amounts that consumers have been saved in terms of previously exploited -- exploitive fees rang from $16 billion to whatever.

but it's porn to recognize that this is going forward every year -- it's important to recognize that this is going forward every year and every year consumers are saving. the second piece is, this shows, and by the way my experience gos back to when i was in state government before the card act was pass and we would hear tremendous complaints and concerns about the credit card product at that time. and i'm now in the federal government, since the card act was passed and we are doing a regular review of this and watching the j.d. power consumer surveys which show increasing customer satisfaction in this marketplace, year in and year out. it's a tremendous success story. and it show what is can be done with serious, substantive, even-handed regulation, better performance by the industry, which there is, and i give them credit for that, especially on their customer service in the credit card industry, and better consumer performance. people are being more careful with cards coming "out of practice" of the financial crisis. so that's important. it shows that if we work together in a balanced and reasonable way we can improve those markets so consumers can

get more value from them and that's what we all should want. mrs. maloney: also in your report you highlighted the so-called deferred interest promotions and i quote, impose significant costs on many consumers, end quote. i think that's really important and my question is, what, if anything, should be done to address the risk the bureau has identified in deferred interest promotions? and also your comments on the overdraft, you know, we have also a bill that i offered on overdrafts, bills on the credit card bill of rights, your comments on where we stand on that rule making. mr. cordray: we did indicate we have significant concerns about deferred interest products. the reason is, the core principle of the card act was back end pricing which is never transparent to the consumer upfront by definition, and it's confusing and harmful to consumers because they think they're making a deal and having certain terms and it turns out it's going to be changed after

the fact in a way that was not disclosed to them. deferred interest operates much in that same fashion so that's something we spotlighted in our most recent report. it's an issue we're looking at carefully and we'll be taking actions as appropriate. i think that credit card issuers would be mind -- should be mindful of thinking about their deferred interest products and the harm that's hp happening to a number of consumers who end up with back end pricing that is very different from what was represented to them upfront. that's an ongoing concern. mr. hensarling: the time of the gentlelady has expired. the chair recognizes the gentleman from michigan. mr. huizenga: thank you, mr. chairman. i appreciate it. and director cordray, i have to tell you, i'm a little surprised, a little stunned. you just have laid out a case where you are intentionally trying to create conflict between state law and federal law. now, a number of my colleagues over on the other side have been working on a slightly different

issue that i'm sure you're familiar with. medical marijuana law. not lining up with federal law. and how that has affected banking. usually there's an understanding that we're going to try and solve that problem, not create the conflict. and i just couldn't let that pass as my colleague from texas was asking you about the lending -- mr. cordray: do you want me to respond to that? mr. huizenga: very briefly, sure. why would you want to create additional conflict? mr. cordray: i spent years in state government. in the state legislature, state attorney general, state treasurer. it was very common across many fields of law for us to be administering and enforcing state law in conjunction with common administration of federal law. it happens all the time. mr. huizenga: i did that as well. but you don't have, in what we typically have, for example in environmental law is you have preemptive state law that goes in.

first it has to clear that hurdle. i served in the state legislature as well. that's not the direction i want to continue to ask. i want to pursue a little bit about orb tration agreements and i know -- arbitration agreements and i know that was brought up earlier. in march of 2015, the bureau released a report on the use of arbitration agreements and disputes between consumers and financial product providers. however, the report was criticized by a number of academics and industry for completely ignoring major pieces of data. on june 17 of 2015, over 80 members of congress, including me, signed a letter asking that the bureau reopen the arbitration study citing issues with the megged odds on which the study was conducted, including the processes that developed the study that were not, quote, fair, transparent or comprehensive. i'd like to submit the letter for the record without without objection, mr. speaker. mr. hensarling: without objection. mr. huizenga: it also noted the precedent of dispute resolution which exists in streamlining the american judicial system.

one of the complaints i hear all the time is we're bogged down in court. arbitration was a tool introduced to streamline that. arbitration is a tool introduced to streamline, not to eliminate anybody's rights. not to eliminate a fair hearing. the purely to start to break the logjam. i'm very curious. do you think this report reflects accurately a consumers use these tools? >> our report has been widely recognized as the most conference of report on this issue ever done. new data from the american arbitration association and others. it is an outstanding report. we have tended closely to criticism of that report. it is an mostly incidental. we sat down with the authors of the one critical study. one of them agreed to sit down and talk it through, the other did not. >> i have got a question.

where did the study estimate the --nsaction costs associated >> what we look that was how the judicial process compared to the arbitration process in terms of outcomes and the like. as a matter of history, when you say somewhat correct. it is reasonable in that context. in more recent times it is been used to cut off access -- todoesn't compare consumers pursue a claim about a lawyer in federal court versus arbitration? >> is at a of the addresses many aspects of the judicial process of the arbitration process and compares the outcomes of the two. >> answered about those questions is no. >> my answer is to describe what our study is. is the most conference of study ever done. >> there is a noble of -- number

of people involved the believe there were major flaws in the data and how it was used. >> and we look at what they had to say it is not particularly credible. >> you would not have a problem requestr heating the that over 80 members of the house and senate have saying we would like to open this up and express some of our concerns in this? >> i will continue to enforce the law. congress has us doing a broad conference of study. we are now living with congress's direction to move ahead with our report. >> what i need to know is i you make a meaningful comparison between class action and arbitration in this report. many in the space do not see that. that ultimately is the concern i have. somebody receiving a check for $.25, that being part of a class action suit which often happens as these major class-action suits go on. the trial lawyers and the attorneys are all paid up.

it's not the consumers. it is streamlined. it sounds like to meet you are not -- >> it's a conference of study of this. virtually no relief to consumers in the arbitration process and billions of dollars a relief to consumers in the judicial process. as long as the attorneys are paid. >> the chair recognizes the generality from new york. >> thank you, mr. chairman. we have seen indication from the cfp be that the lines between what is consumer lending and what is concise -- marshall blending -- commercial lending are blurred. can you say how the distinction between commercial and consumer lending? how a loan to a small business can be a consumer loan?

can you elaborate on the nature of those circumstances? >> sure. the line areas where between commercial lending and consumer lending is blurry. a lot of startup out small businesses are being financed by individuals by putting debt on their credit cards. that is why the card act become so important. it protects not just individuals but many fledgling small businesses. it is also the case at home equity loans are often used to get capital to improve businesses or grow a business. if i had my way, i don't have my way, we would do what i did when i was an attorney general and protect individual consumers but also small businesses who often operate in a marketplace with no greater clout than an individual household does. if congress sees fit to give us the authority, we will aggressively pursue that. it would help small businesses across the country. as it is, your protections we

put in place for consumers often loaned of -- will end up helping small businesses that start out as small individuals in seek to grow. >> one area where i am concerned is regarding oine landing. -- lending. this is an increasingly popular choice for small businesses. yet the regulatory environment has yet to catch up. what role do you see the cfpb playing with the small business online lending marketplace. >> we are very interested in financial innovation. ech.;lled fint we do have jurisdiction over them. both aasury has convened set of actors and is working on a paper on this subject. it is something we are all interested in.

it is a new source of capital for small businesses but nice to be subject to certain oversight. and protections that is something we will continue to work on. i'm hearing a great deal of interest in this area. >> think he for answering my letter. -- thank you for answering my letter. today five attorney general's have issued consumer alerts about the advertising practices by solar companies. a handful of settlements reached in eurozone of last year alone. -- arizona last year alone. are you working with regulatory bodies, interviewing complaints and investigating the depth of the problem we're hearing about? i cannot speak to specific enforcement activity being engaged in by the bureau. across the country when the consumers complain about harm done to them.

those are things we prioritize for investigation and potential action. i think i can say that much. >> -- this committee against applicants participating in the section eight housing choice voucher homeownership program. can you explain this and how it will help increase access to >> under the equal credit opportunity act, it is illegal for lenders to discriminate against potential buyers based on the fact they are receiving assistance income. it is supposed be part of the occupation. we have had several actions were we found that lenders were not taking appropriate account of that kind of income and they have made corrective actions accordingly.

the equal credit opportunity act is what we administer. >> thank you. >> i went to pile up -- follow up on the issue of arbitration. passed apassed a law, bill and the president signed it which validated the use of arbitration. my understanding now is the study was done -- what lies that -- what law is that?

is that still the law of the land? congress passed the dodd frank act and made changes in terms of how arbitration began including outlining arbitration clauses. >> the federal arbitration act is still the law of the land. it has been modified in several respects. it is your agency's decision to offend that law through a comprehensive action? >> no. congress has intervened and militaryd and the lending act. question? a yes or no >> they barred arbitration causes. bannedodd frank they

contracts for the most part. we have eliminated arbitration. >> they gave us authority. congress >> congress specifically said and we carry out the will of congress. congress said we should issue a act in do a study and terms of addressing arbitration. >> when 80 members of congress write to you and ask for a specific question do you believe you should answer those questions, yes or no? >> i would pay close attention. it is my job to enforce the law that congress has enacted. >> to you believe you have the responsibility to respond and answer those questions question that>> i enforced the law

congress enacts. >> the answer is no. >> that is not correct. the answer is yes. >> we sent a letter and we were waiting for answers. the bureau ignored requests that -- to close the topics. topics? disclosed all -- wenot sure what responded to that letter. if you think that response was insufficient we would be happy to work with you further. materials were kept behind closed doors and the study included sections that were not included in their report that was provided to the public. was there a reason you decided certain information would be held confidential and not disclosed to the public? is this is have deemed -- thistial and made

would be the obstacles. there would not be any desire on my part. -- is it a broad swath of areas? >> it would be grateful to have my staff deal with this. we have responded to the letter and if that is deemed insufficient we would glad to work with you further to get you more information. ,> it goes that to your answer if you feel it is your responsibility to answer to 80 members of congress. when you are first -- came to this committee i asked you the seminal question if the house of representatives said you should not do something i you accountable to them and her response was no. if the senate said you should be doing something should you respond to them and respond and your answer was no. if the president asked -- ask if

you should be doing something, the answer was no. >> i do not remember it in that way. >> are you accountable to anyone and the answer to this letter in -- question was >> that is not a legitimate characterization. i responded to members, i have a to enforce laws enacted by congress. >> the law has been enacted by congress. the chair recognizes the gentleman from new york, mr. meeks. mr. makes: thank you. great to see you this morning. let me first join many of my colleagues and it should be on both sides because we should be thanking you for all the work you happen doing to help the

american consumer. the work you've been doing to help our veterans and students, to help our mortgagees and the work you do for low income and communities that are victimized. the work that you are doing to make sure there is a level playing field. i would think that given the scenario both sides of the aisle should be appreciative of the agency and the work it does. i see there's room that we can work collectively together. for example, what's important is that since the financial crises, a number of financial services have closed. there's been over 5,000 branches of closures of, especially, most of them in low-income and communities of color. leaving behind banking deserts

which are neighborhoods with no mainstream financial services. but the people in those neighborhoods cannot live without access to financial services. and therefore to meet those great needs, there are alternative products. such as short-term lenders, and hear my colleagues talking about that and prepaid call providers, etc. of which, you know, i just think about my parents, i was poor, lived in public housing, went to a bank at that time, some banks -- they were not bankable. but they needed to have options. so they used other options. back then, some of the options are dark. we don't want folks to go to the dark. it would seem to me, your agency is a god send to me, is not to wipe out all of those businesses, but to try to make sure that we have -- we regulate them. so that there is a good practice, so that people are not being ripped off. so that there is a strong and functioning alternative financial services, so they're not being denied access to

financial products also, as they would have. sometimes -- i know my dad needed an extra few dollars to make it to the next month, until the next paycheck came. we need that kind of service but we don't want it where people are caught in that forever. i think that would be good for both sides. nobody should want that. we don't want anybody taking advantage of it. so if we have an agency like yours that can put in some rules and regulations so we can make sure that the consumers are not getting ripped off, but also -- and i think that would be good for those who are providing good services, they would want that also. because we want to get rid of the bad folks. we don't want to get rid of everybody. we want to get rid of the bad folks. that would seem to me to be the goal. that is the right approach that we should take and i think that that's the approach that you're trying to take in this. not just eliminating an entire -- but eliminating the bad guys. and let's make sure that we uplift the good so poor folks and low-income areas would have some opportunities to continue to bank.

is that correct? mr. cordray: i found myself sitting here thinking that you're saying a lot of things that i try to say when i'm sitting here in this seat testifying and i think you may have just said it better. i would just agree with you. mr. meeks: let me just give in the little time i have left, what i was concerned i saw about the bureau's latest enforcement and findings, because i'm shocked here we are in 2016 and there's still red lining going on. and the red lining, especially in the mortgage lending, in the steering of consumers in high cost loans, it amazes me that we're still finding institutions thriving from this egregious practice. can you please discuss with us in the little time left what is going on in those cases and what the bureau has done to address it? mr. cordray: we've seen a lot of things over the past few years. 90% or more of our enforcement actions involve deceptive conduct by financial institutions. which is discouraging in some ways. we were somewhat surprised to see what we thought was very blatant red lining occurring.

this is the enforcement action that we and the justice department jointly took involving hudson city savings bank. and the patterns when they were mapped were very clear. and so it's a significant resolution and a shot across the bow to the entire marketplace. that this is not acceptable behavior, it is not acceptable approach and people need to review what they're doing and correct it if in fact they have gone down that road in any respect. mr. meeks: i only have seven seconds to i yield back. mr. hensarling: the gentleman yields back the balance of his time. the chair now recognizes the gentleman from missouri, mr. luetkemeyer, chairman of our housing and insurance subcommittee. mr. luetkemeyer: thank you, mr. chairman. mr. cordray, you and i have had a number of discussions in regards to trip. and certainly i appreciate your willingness to discuss it with us. as we've seen, you've delayed the implementation of the rule until october. and since then we've seen a lot of concern by the industry, they're struggling with this

rule. some of the software programs that they've utilized have not been as good in implementing this as they would have liked to have seen and they're still struggling. so my question is, what do you see from your position as an enforcer of this, as well as, you have had any enforcement actions taken against anyone at this point? mr. cordray: i think we see and hear much the same things that you're describing. i think the i.t. problems here have been much larger than maybe people would have expected. in particular because a mortgage lender can't control the i.t. systems of realtors or title agents or settlement agents and others. and they have to all work together. so i know there was a bill in congress proposing to have a hold harmless period through february 1 of this year. what i had said, and i've worked with the other regulators to jointly say was, we were going to be corrective in dying not tick, not punitive, as we saw

-- diagnostic, not punitive. made 3 -- midway through march and it remains open ended. we've taken no enforcement actions. i don't expect us to take enforcement actions unless somebody's blatantly failing to try to implement the new rule. and to the extent that they are making some mistakes, but trying to get it right, we're attempting to provide more clarification to them, which is something industry is asking us for and also recognizing nobody is really trying to exploit consumers here. this is just a matter of getting these forms right and getting them correct. by the way, the whole purpose behind this is something congress wanted and it's a positive purpose which is taking what used to be two bureaucratic forms at the application stage and streamlining them into one. and the same at the closing stage. that's what we have done here. mr. luetkemeyer: are you going to issue additional guidance on this? or you feel everybody's doing ok with what's going on? mr. cordray: we have been monitoring this very closely. the last thing i want is for any of our rules to cause a jam-up in the market beyond anything that anybody would intend. i think we're getting more

guidance inquiries every day. but the trade associations are working together to provide some joint questions that they think are most important. we will attempt to be responsive to that. and you feel free to keep after us to make sure we do that. mr. luetkemeyer: we will. trust me. also, along a different line, the federal trade commission act grants the federal trade -- the ftc and banking regulators with the power to pursue regulations. dodd-frank marked an unprecedented expansion of the authorities for the cfpb including for the first time the term abusive. expanded series of powers for c.p.b. has become a primary enforcement tool. i realize the last week you spoke to the consumer banker association, rejected the notion that you're regulating by enforcement. i beg to differ. when it comes to cfpbing the authority, you have issued little to no guidance, regarding any financial institution from any sort of predictability.

you use your authority on a case by case basement isn't that the -- basis. isn't that the definition of regulation by enforcement? mr. cordray: we're doing the very same thing that the federal trade commission does and that the state attorneys general do. it is difficult to know how to do more than case by case when you're talking with cases of fraud. or deceptive conduct. but we attempt to give guidance to the entire market by very specific orders that are issued in these cases, so that everyone knows that if they're doing this, they should stop. if that's called regulation by enforcement, i think it's a strong deterrence and it's important as a law and order mechanism for signaling to other actors. mr. luetkemeyer: the last time you were here, i asked the question, just before we got finished up, with regards to a debt collection company that you wound up settling a situation for $12 million based on a proposed rule. not a rule that's enforced. but a proposed rule. mr. cordray: what matter are we talking about? mr. luetkemeyer: encore. mr. cordray: ok. debt collection. mr. luetkemeyer: and this was based on not a rule that was enforced but it was a proposed