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Mick Mulvaney
  Consumer Financial Protection Bureau Report Part 2  CSPAN  April 12, 2018 4:28am-6:20am EDT

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>> that spring agenda will not include that. >> i implore you to make sure that our voices for everybody. >> now we declare a five minute recess. >> the fact that you had agencies so with that executive management leadership that we have to have you over to clinical agencies that handle and one handles the budget and finances of the federal government? the other protecting the financial transactions come
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on. you are a talented young man. but no matter. and to be disrespected and the fact that they do not have a person at the top but on top of that you are clearly out to destroy the cfpb and you make no bones about it. i don't like the cfpb. and in a six ad way some of us would like to get rid of it. that is what you said. and that is wrong but here's
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the point that you are the prime example of why when we passed on frank monk -- dodd frank with the cfpb we made it a commission for this very purpose that is the mission to dismantle and destroy i'm not jumping on you for what your boss wants you to do i'm just simply saying that and we have come to jesus moment. and why we do not need to have the management in the protection and for the
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american people changing every four years. and then changing administrations. and let me tell you we are representing democrats and republicans to go one county over from alabama. this is a concern of the american people that we have to deal with this. but the fact that in your report you mentioned nothing about your operation catalyst is catalyst group that you have to develop rules and regulations are very innovative and a new frontier
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to combine financial services with the rapidly changing technology. could you give us an update on the catalyst project? >> the reason i want you to do that my staff is working on legislation so we could bring harmonization but tell us what you are doing with the catalyst thematic. just because not in the annual report doesn't mean it's not a priority. in that catalyst not part of that requirement. that doesn't mean it isn't important to us. i am the cofounder of the block chain caucus here.
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we are trying to create a sandbox to allow these new industries to develop without that regulation but it is a priority. >> to put this legislation to meet with yours. >> we look at that as a potential. now the gentleman from illinois. >> director i'm grateful to see you thankful for your service we enjoy serving with you here we are grateful for the work you are doing it cfpb.
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i asked to be a ton of work i cannot imagine that we are grateful for your willingness. and then to hear from my constituents. and then to recognize the good work to bring accountability to the bureau that has been totally unaccountable. i agree with the principle to fight against discrimination and also the necessary and burdensome report also privacy issues. also with the effective date and i believe some like consumer friendly disclosures and those that preclude consumer friendly products. so as you mention three
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buckets so could you clarify what is happening? >> there is a pipeline at any particular time about 100 investigations and we maintain that which means roughly two on and to offer week average. >> can you pull the microphone a little closer? if it turns up wrongdoing rising to that level of enforcement action that moves into sue or settle to say you have misbehaved, we think we have gotcha and we need to file suit or you can settle like litigation. if we cannot resolve it there then it goes to litigation. but we just don't have anything to settle into the actual litigation.
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and with that litigation that we continue to pursue. >> and with that structural reforms at the bureau i agree to bring that under the appropriations process with that semiannual reporting many of which we advocated together we served together but there is one specific change after having spent if humans being on cfpb to oversee the agency and there was a bipartisan bill introduced the commission structure to market participants and then where that may get more technical mess partisan? the mega does.
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i was a cosponsor of the bill when i was here. >> so with those qualified mortgage rule and then the smoke is the special treatment to have a distinct regulatory advantage. so do you plan to let the patch expire? or how to make sure there is a smooth transition? you this is the same bucket i have mentioned as part of the look back we are currently reviewing and collecting data it is inappropriate for me to say where that will go but we are reviewing those issues at those merit. >> one person was the
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ombudsman in the hat of the office of student so in general is it important to be impartial and to commit to separate positions contributing to more and more balanced approach with student loans? the mecca do share some of those concerns in the last couple of change that house could improve on s125 it is for love provisions that there is to the president's desk. spend thank you very my time is expired.
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>> do you know how hungry director of omb so that will say as long as the president has me. so this is what i know about that role and then tuesday for six months and if the president is not formally nominated someone by that point then i have to leave. and then tuesday as such time is concerned what gets confirmed by the senate. so we tell folks how long it
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takes for the confirmation probably well into the fall or the end of this year. >> my guess is there won't to be a nominee by june. >> then i have to leave june 22. to make it there is no nominee made it and i must vacate the office june 22. >> because of the clarification i do believe that confucius said the person that chases to them gets me there. there's no way to have two masters and i believe that as
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well. i am a math -- methodist pastor in my real life in the catholic and methodist church those that can send them places but i would never ever become the head of the american atheist to because i don't like what they do or what they stand for. i just would not go. that is the end. it would be difficult to going to a place when i disagree with the premise of its
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existence so i try to understand the complexity you are a smart person i'm sure you've done that cerebral analysis of help me to understand and how you go someplace where you have a disdain for that existence you make that is fairly easy. i am a member of the executive branch of government i don't get to change the law. my job is to enforce the law and to run the bureau there is a statute that is what i cannot do and ims beam. >> with a conflict that you go to a place that you are completely alien to with no internal conflict to do that?
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>> i never thought about it but i guess i can make the argument a healthy skepticism makes me a better manager. >> we have to have a healthy skepticism about a lot and that helps humanity that to get up every day and go to a place that you wish to not exist seems to me to be some type of internal conflict that isn't easy to resolve. >> at the fairpoint. but to make this clear i really enjoy the job. the people there have been really good to work with of course there is the small minority that hate me tries to undermine the leadership at the best work i have seen comes out of the bureau.
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i actually enjoy doing i just do it different than predecessor. >> my time is up. that is a great theological argument in the time has expired now the gentleman from colorado. >> thank you director for taking time to be here to follow-up on the question regarding the regulation bill it indicated you would like to point to some legislation we passed out of the house how we might be able to improve that to make sure we are getting the ball regulation in place would you like to address that? the mecca big fan of the way it is supposed to work or at least when i was a kid the senate would pass version the house where they work out the differences for compromise i think that is the best formula for arriving at the best results. i happen to like just about everything in the senate bill by recognize it doesn't
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contain it isn't more bills that have passed out of this chamber on the bipartisan basis that makes me wonder why can't we add that to the senate bill? there are some good things that when you work together to try to improve dodd frank and it makes complete to continue the debate about bipartisan support can translate on the other side of the hill. i have with the senate has done it isn't easy to pass anywhere let alone the senate and they have done excellent job i don't think that necessarily needs to be the end of the analysis to the extent you have done really good work to find ways on a bipartisan basis to improve dodd frank what see if we can add that to the senate bill if not it is a great fall back but if it could get better wide would we accept that as a good income?
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>> i appreciate that it came out a with unanimous support on the house floor mecca know how hard it is to get unanimous support on this floor and in the chambers of the bill may have a chance to pass in the senate. i welcome any efforts to reform as much of dodd frank as you possibly can. >> talking about dodd frank one thing we have heard from our small community bankers and credit unions is one-size-fits-all approach and with that ability to tailor those to meet the size of the institution. >> i spoke to a group of community bankers this week and except for the discussion the bureau was created to prevent the next financial
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crisis whether or not it is the proper ball but let's assume that i don't think anybody's chamber would suggest community banks or credit unions would cause the financial crisis to be treated the same which in many circumstances is what we do with dodd franken the bureau and am trying really hard to fix that to taylor regulation over those various entities that we see because that makes sense. >> so to be a little more detai detail. >> to be that analysis the
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only one by the way it was a lot of factors that went into it what i have bought that if i was a director at the time? that is the only one i said no to and we dismissed it. to say if i was the director would this have satisfied me sufficient? to make final determination. >> to the universal dutch university merely researcher to say aimed at abuses against
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the borrowers that actually triggered a substantial redistribution of credit on the middle-class households to wealthy households. section ten to two of dodd frank with respect to the cfpb prescribing the rule they shall consider the benefits and cost to consumers and covered person including the reduction of access by consumers to consumer financial products or services resulting from such rule we are well over time but perhaps one of the other individuals on our side could let you address that issue. the chair recognizes the gentleman from minnesota. >> welcome to the committee mr. mulvaney. >> it is good to be back stomach you know the doctrine of uncertainty of statutory
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construction? >> it's been a long time mac we started out by saying under the law you could just come here and here. >> that is one interpretation. >> with that which i know that you know that was the to the absurd results then you don't apply it that way so you sitting there playing candy crush or twiddling your thumbs so anyway. let me start off with that. >> let me ask you a question when you came to the cfpb wasn't clear? >> is a frosted now? >> it is. >> so when somebody walks by your office they are obscured from seeing what you are doing? >> yes they are.
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you magan the champion of transparency and you said we will send more time on accountability and transparency. and even today you talked about transparency but you have physically with yourself it just occurs to me that as we talk about transparency in how we have to be more accountable yet you are scaring yourself you also have your own vpn? >> i don't think so?
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we will see i guess the reporter will look into it. mac we have the same e-mail system mac we have the same e-mail system that as you describe how everyone else needs to be transparent you are literally making it more difficult mac i think it is legitimate. >> and to make yourself a champion of transparency i think it is ironic how much did that cost. >> 13 offices were frosted at the cost of $3000. this was the original plan
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under mr. cordray. >> but yet you did that make he had been there quite a while mac i am not a witness today you are. i have been to your office i cannot see into it. >> i am retaining my time. you are the one who is offering yourself as a champion of transparency this is your reason that the office you should not even hold right now. and the public can't see even your staff cannot who knows what you are doing in there? how many days a week or you there? >> generally i try to shoot tuesdays and thursdays and saturdays but i am there almost every day for the time not as nearly cut and dry as i hoped. >> do you have meetings in your particular office?
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>> i do also in the conference room which is not frosted cement given the nature of the changes that you made you are not applying the same rules to yourself to the agency that you hope to represent. that is too bad. i yield back to the gentleman yields now the chair lady from utah and i thank you so much it's great to see you director and i appreciate your candid questions and answers i really appreciate it is refreshing to be quite frank as you know on this committee we get a lot of information at least one week in advance if somebody is coming in and when we do these hearing.
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and we get a book that talks about what is happening in your report. i put the book aside and went to my district and spoke to some of the small bank in my district i had a roundtable because i knew i would have this meeting with you instead of asking the questions that were in here i literally gave them the ability to ask these questions one of the issues they wanted to talk about is the fact they are interested in making small dollar loan they want to know what your initiatives are with respect to small dollar loan and payday lending and what is the end results you are hoping to achieve? >> i have to give you more detail across the board the first we are revisiting the payday rule but i have to get more specific for
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across-the-board because that is more than just payday. >> right they are making sure they have the ability. >> i think more options the better. >> when i was on the small business committee as chair and ranking member of one of the subcommittees and we did a field hearing on micro- lending to small businesses we know it's important with bipartisan support to the extent we can help you we look forward to doing that. >> great to make the other question is how powerful are you? you make to powerful. >> to powerful? >> is a small bank or of euro was going after foreign issue, who today go to?
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>> nobody. >> who are you accountable to? nobody i make the decision to bring a lawsuit or not to. >> if you send a handwritten note to the federal reserve but they required to give that to you? >> connect that statute doesn't say that they can't. >> and if you are to spend that 700 million? >> here's the problem that we have. i think the american people and members of congress have false choices that depending who was on the seat one side or the other is frustrated so the american public is frustrated which tells me there is a problem with how this was set u up. can you imagine if we actually had a bureau that worked well
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for people? >> we don't get a sense of frustration about the sec or the f soc maybe some complaints but doesn't rise to that same level as this. we are not the same as the other regulators we need to have a more down the middle approach to be taken approach. that we do not have the same credibility as the other regulators do. and to implement the law and those that have lost their ability to get the resources that they need because i was the mayor of one of those
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small cities that the banks are in and that there that committee. and to make that more political or policy oriented. these statutes are policies doing the same but with a spear out on appropriations and i yield back the magnet time has expired me now recognize the gentleman from the investigation subcommittee directing the ranking member and to be quite candid, i do have some degree of
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appreciation so if he can do with each other i have seen the world from the bottom up know what discrimination is like and to go to backdoors. so i'm very much interested with the illumination there and as a result that you are aware of the testing process the means by which to
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african-american or to anglos and see if they are treated similarly you're saying that is called testing. bank in the main do not favor testing as fact it is to accomplish testing it is the means by which we have that empirical evidence that discrimination exists so my question is do you support testing and banks to determine whether or not there is discrimination? >> thank you for bringing that to my attention we have asked and we continue to do that i
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have no reason to think we would change that. >> you support changing mom -- testing? just to go on record you will support testing. >> i don't want to cut you off and to specifically mention the role in the semiannual report that we just sent to you somebody asked me if it was in there that we do take it seriously enough to put in the semiannual report. >> many times i have to resort to the. >> didn't i just equivocate? >> mi your testimony is that you will continue to test banks to determine whether or
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not the nation exist? i'm telling you yes the neck i appreciate your answer of yes. that means something to me. i appreciate your being candid make is an effective tool? >> absolutely it is used in housing, the most efficacious methodology available to us. there is nothing that i know of that is better and i would challenge anyone to engage in a college with me mom -- colin quigley -- colloquy with me to engage in testing yes it is very effective. by the way notwithstanding the effectiveness, this committee has fought allowing it to continue and expand into certain areas. the committee has. we don't disrespect anybody on the committee but that is the
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case because i remember trying to get legislation through that included testing and there were all kinds of contingency how it would not work and why. i'm bringing it to your attention because i appreciate you referring to person mr. carson unfortunately would not but the testing is something that makes a difference for people who have been denied access to capital and it is access to capital that makes the difference in the lives of people. believe it or not discrimination exists in mac i do to make your time is expired.
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>> thank you mr. chairman and welcome back director. i have long been interested in understanding the decision-making process the bureau's headquarter renovation under your predecessor i didn't get meaningful answers to simple questions and unfortunately the committee is still in the process of investigating the oversight on this topic was obstructed my understanding is the bureau calculation it will spend $242.8 million renovating the building to make luxury office space with a building that it doesn't even home and it rents. >> correct mac understand some improvement may have been needed but can you explain
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briefly? why was necessary to spend a quarter of a billion dollars on luxury offices for the cfpb? >> short answer is i don't know. >> it is stunning. >> i will unpack this acting director members of the committee have long thought to understand who made the initial decision to renovate the headquarters building the committee repeatedly requested and i did also records relating to this issue but then director cordray indicated he did not know the identity of the individual who made the initial renovation decision is that correct? >> i'm sorry could you repeat the question? >> we have known for some time to understand who made the initial decision to renovate and then director cordray
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repeatedly said he did not know the identity is that right? >> i was in this committee i asked him that question and got similar answers. >> now it is my understanding we do know from the inspector general the decision was made in 2011 it was publicly announced february 18, 2011. it stands to reason initial decision was made during that 28 day timeframe? >> that is the assumption yes ma'am. >> in response to a recent letter about the building you undertook supplemental records sure want us search and sent production under a detailed cover letter to be placed in the record with redaction.
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>> this contains records that i am shocked were not previously produced a generate h decision of memorandum and information memorandum that was placed in elizabeth warren briefing book at a staffing meeting reminder she termed as assistant to the president and advisor to the secretary of treasury on the bureau at the time. to recommend she approve entering into contract or design work to prepare for renovations to the headquarters building but also contains staff communication and calendar circumstantial he indicated that ms. moran approved this recommendation do i have that right? i certainly that is the conclusion, yes ma'am. >> was this in a hard to search location? >> it was not.
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>> was it ever circulated within the bureau? >> i don't know we found them and we thought they were responsive to the previous request so we disclose them. >> where were they? >> in the directors file office of the director's file. >> so this committee that would be the first place i will look for stuff to make this committee asked repeatedly with oversight investigation responsibilities, $242million a quarter of a billion dollars spent on luxury renovation on a building we don't even own. the bureau rents and we have asked repeatedly for six solid years and we find out it was in the directors office file? mr. chairman i have further questions about the records not previously produced a
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reference in the issue revealed by these records i trust the bureau will cooperate with any future committee oversight? >> absolutely my time is expired and i yield back to make the chair recognizes the gentleman from maryland. >> it is nice to see you back. probably have a lot of questions what is going on with the cfpb and want to talk about what you think about it we are confronted with false choices in congress as you know ed you have to completely repealed on frank in every aspect or defend every single word the same with consumer financial protection bureau repealed or eliminated of you have advocated for in the past so have you thought about approaching this in a way where you actually come out strongly supporting consumer
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financial protection bureau that you believe in its mission and you hope it endures long-term? but however to overcompensate for those comments in the past that make people suspicious about your intentions with the agency but at the same time you have put forward a list of constructive improvement have you thought about approaching it that way? i have heard you come out strongly in support of the importance of the institution for the long-term or doing anything to undermine its existence or the ability to function short-term and long-term that you do. >> i hope that is what you take away from the recommendation not that we repealed dodd frank that is your prerogative. you're a bureaucrat i'm a member of the executive branch the bureau shall exist.
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i cannot change that so this is what could be done to improve that. as well as sending a larger message how i feel about it especially when we do for a living or what i used to do look what that what they do more than what they say. i haven't blown it up. >> sometimes what you say matters the tone at the top is important. >> i absolutely agree and in your prior life that is one thing but now you are in a position at the white house with an expanded portfolio so for example do you support the consumer financial protection bureau you like to see and do her and exist long-term. >> i will tell you what i have told the people who work there you can try your conclusions i said look this is a brand-new
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agency right now it is associated with one person and you cannot be taken seriously as a regulator if you are the brainchild of one person on one side of the aisle if you want to be taken seriously as a regulator you have to be able to be more than that. this is the first transition the bureau has ever gone through from one party to another and i have to learn how to do that if they will take -- be taken seriously. >> rather than supporting cfpb generally do support the existence of the consumer financial protection bureau as an enduring part of our government looking out for the best interest of consumers with reforms to make it more accountable or transparent? the mcnair are better ways. i recognize the fact there can
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be a role for the federal government protecting consumers it would seem to fall to the federal government to oversee them. >> i am interpreting your answer respectfully to say you can say you would best support the existence you support that concept? >> and think that's what i said. >> so the torsion of a nonprofit bank to serve distressed communities banks are not allowed to be nonprofit right now if they could raise philanthropic caught dollars that could be a positive force in some of these communities although not specifically under your purview do you support that concept? >> not-for-profit? what you do with your money is your business. >> you would support those changes. >> i would look at it that you
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make this is an enterprise that could be the thing that we need to help consumers in the market to have a double bottom line cement that is your inaccurate time has expired. >> thank you chairman we appreciate the hearing it's great to have the director before us today and we appreciate his public service.
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that was a goal o the goal of ty at the time. it was a merger in the truth in lending statement and settlement statement we are going to make it one form. consumers will be benefited by the work costs that will be easier to and i would argue eight years later that is not the case and it's been made worse by the rulemaking's by your bureau. i still have complaints about
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extending mortgage closing and one thing i've heard time and time again with candid conversations about this, why can't the agency issue legally binding guidance to the mortgage originators so they can be saved ansafeand helped save from prosn or action of the bureaus and investigation. a lawyer can write an essay if we do this about a closing day of legal certainty do you support the concept of no action letters as guidance?
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>> we believe that is in the authority to do exactly that. towards the end we've made a request for information to try to get the type of input that you have just suggested because i do believe that it's within our authority and it can bring clarity to the wall and regulation in a way to the financial service providers. we want to lower the cost and less costly. with ththe bureau has some all e years is offer webinars that are confusing, hard to find and not helpful to the market participants. i hope you will consider this as an official comment. good luck with that if you can find it on the website. let me change subjects to the data breaches. i noted some of the material in the hearing of the bureau has 233 confirmed breaches of identifiable information within
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the bureau and i into consumer response system come 840 suspected preachers in the financial institutions using your portal that you've investigated do you support the data security breach notification if the bill were made law do you support a notification standard? what have you done to protect the consumers information? >> a little bit of attention i think a lot of it was inaccura inaccurate. we immediately stopped the collection once i took over once i was assigned to the office for the purpose of analyzing the data security. we made certain accommodations within the enforcement areas to allow the data collection to continue. for example we used other agencies and systems in supportt and we wilof the people collecte but not off.
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i'm not satisfied with the data security right now in the bureau. >> i want to be on the record supporting your ideas putting it on the appropriation and also on behalf of the people that you oversee to have an ombudsman that someone you regulate can have someone to call besides your office and have guidance on whether they've done right or wrong. >> at the time is expired for what purpose does the ranking member seek recognition plaques plaques >> pursuant to the calls i request the gentle lady from ohio be recognized to question the witness for an additional five minutes upon the conclusion of the time allotted under the five-minute rule's. >> the gentle lady from ohio for
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a total of ten minutes. >> thank you mr. chairman and ranking member and mr. mulvaney thank you for being here today. it is a meeting heavy on my heart. it should be an exciting time as we separate the 50th anniversary of this jobs act website then martin luther king and people embraced it and president johnson signed it because of the practices and consumers being mistreated, so i echo the comments of my colleagues before me. but you are here so i'm going to ask a question that's been established that you have two full-time jobs. in my world to have two full-time jobs one that you found was a joke and the other you wished it didn't exist and
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to get paid for doing a full-time job it is impossible to do full-time jobs in the world that we live in and for the type of work that is expected not only by the consumers of your colleagues on both sides. that's the reason we cannot work two full-time jobs being paid and their salaries. that said, already is part of your top staff teams. that is a problem, and that is a problem for me. do you know what section 342 is of the dodd frank act? you're going to sit here and tell me you came before the committee an and sat before the committee and you know for the six years i've been here the question that i asked of every single person coming here i've
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asked about the section 342. you were the only one to say you have no knowledge of what it is and you were a former member of congress. i find that appalling and unacceptable. tell me what you're going to do about if not understanding -- >> i didn't recognize it as section 342. >> explained to me, you just told us you have 300, or your staff informed yo you said you wanted to bring to our attention that there were 370 high paid people, how many women are in those positions, how many african-americans and hispanics are in those high paid positions? >> i have this breakdown if you want to give me the chance to give it to you. i have it by raising gender and who makes bloo wakes blood at ty
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through. to the opening point, you know i only get paid one paycheck. i only get paid my salary, i don't get paid an additional salary. >> and i understand that. i guess the question is i don't know how you get paid for a full-time job when you have two full-time jobs. i find it hard to believe that for the two types of jobs you have that you would be able to do due diligence in time on either one of them. producing 50% if that on each of the jobs. consumers would love to have a job where they could only work half time and be paid full-time. >> i work more than 100% of the time, but that's fine. >> in theory --
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>> earlier as my colleagues wanted, we get to this comparison and come here whether it is a former or spending time it presidential, and my colleagues open in their opening remarks started talking about the former director from my hometown i think it's good to run the clock out when you have substantive things to say in facts and answers. when you don't run it out it's because you don't have a lot to say what you don't have enough knowledge to say about it. what is the number one thing you are going to do to change to help consumers? we know what we have heard in the past, being able to put billions of dollars in returning to some 12 million consumers. what is it very quickly that you are going to be able to do that
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i can go back home and say to my constituents who are confronted with the loans of payday lenders i can go back and say to my minority communities somebody is fighting for you. how do i tell them that and you don't have people that look like me in high position. you do not readily know what those numbers are for women in general and women of color in our white male counterparts. you know that we have a ranking member that has worked tirelessly in her entire career fighting for the underdog and the consumers and you come here absent of that in the absence of having answers? >> i think i tried to answer every one of your questions and you've raised a couple different things. the senior career staff doesn't include african-americans and
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women. we will continue to do with the bureau has done the past which is to enforce the 18 consumer financial protection acts charged by the statute it is not changing the fact that we might not try to push the envelope the same as the previous administration. >> i'm only asking what you do. >> i sat here all day and said i'm going to enforce the law and follow the statute. i'm not going to shorten the obligations. i'm going to be a bureaucrat and encourage folks to do the same thing as. for that reason, we still have 100 investigations of the eight team goals ongoing. we have a dozen or so that might get settled into 25 that are being litigated but still ongoing at the bureau. when i'm going to do is enforce the law because that is what i get paid to do.
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bureau up to $1.15 million verdict illegal practices for other remedial actions the bureau found that crucial information they needed to receive. i have constituents who were harmed by the failure to protect against for closure that they were entitled to by law. can you give an update on the status of how they've received remedial compensation to address this wrongdoing and provide copies of both the compliance. >> i can't provide all the
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information as i sit here i will say that as is a matter i concd before >> i am concerned about payday lenders that they have no influence over you as you are well aware. a former chief executive and one of your contributors, one of the biggest payday lenders under the director committed bureau started an investigation into the acceptance corp.. after you showed up at the consumer bureau, the investigation was dropped just five days after the investigation is dropped and two days before she stepped off the ceo of the payday lending company she reached out to you about her interest in becoming the head of the consumer financial protection bureau.
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so, what is oldest? >> i don't think that it's entirely accurate. the part about the investigation. >> didn't have anything to do with the investigation? did you weigh in on it or know about its? >> no ma'am. it without you knowing anything about it, are you sure you want to answer it that way?
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>> [inaudible] seen it on my time. it does raise a lot of questions because of the fact that you stated. you claim you have no knowledge of this enables find out more. >> the time is expired. i will get right to it since you've been here a long time already. congress enacted the home mortgage disclosure act. this exposed and help eliminate the lending practices particularly against minorities. in short.
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the cfp be demanded from the lenders were than double the amount of data originally required. this change to the regulation was supported, was supposed to take effect last january but you provided relief for the institutions trying to comply with the change is essentially delaying the compliance until 2019. could you agree that this actually helps the smaller lenders in the marketplace?
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you announced you were going to reopen the process? >> you mentioned the fact that previous director had almost double or more than doubled the data set beyond what was required by the statute. >> do you believe the focus of the disclosures in the regulation on hubby's focus on the original intent of the law to expose and help eliminate the discriminatory lending practices? do you agree also that it's important for consumers but smaller local community banks and lenders and credit unions that they are important to ensure consumers have full and fair access to the mortgages and other overblown and are you aware other small thing is in my state of minnesota and other smaller lenders were
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reconsidering their ability to actually even offer the home mortgages and covered ones because of the additional compliance costs created by the rule? >> i don't think we get enough consideration to what the intended or unintended consequences are which is that people are not going to have access to the credit and capital that they need which is extraordinarily important to folks thafolks that are on the d of the spectrum because it is the way you gebelieved it up onc spectrum. several examples of that especially when it comes to this. >> of ththe model proposed by yr predecessor would cost an additional 326 million of compliance cost. do you know if your predecessor received any qualitative or quantitative cost-benefit analysis on the topic? >> i have no idea how sufficient it was. >> this additional cost again i asked you for your if the relief thaof reliefthat you provided tp
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the smaller lenders but because the additional cost larger lenders can absorb these additional. i suspect all across the country that they get hit hardest with these additional costs and just rephrasing it so that i understand that my simple minnesota away, you can protect the consumer bu but what you are protecting them from if they don't have any option to get a loan for a new house or car. shouldn't that be part of the concern? it is hardwired into the statute. >> without the divdavida issuese out and you testified to the senate are back in january of the confirme confirmed reaches e 840 suspected breaches of the
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portal. going to your testimony today, you are not comfortable with the data security agency. with the scope of the role and cybersecurity. with the additional cost of the potential loss in the marketplace with an opportunity for consumers, the problems why not just get rid of the rule, why open the process? of >> i need to go back home to folks and encourage them to participate. we will do it the right way. and i need to hear from those folks all across the spectrum from consumer advocates and consumers themselves, financial institutions they need to participate because it is the way the system is supposed to work. >> but is expired.
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as someone as bright an as with your work ethic i have to say for $250 million i'm not all that impressed with your office. i forgot i had five different releases. the office currently owns my building. just put a plug in for the great lakes restoration initiative the great lakes are important to the midwest and have over 20% of the freshwater supplies and funding
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is critical. you've been beat up a little bit today by the ranking member and mr. sherman and mr. ellison for your comment where you suggested that it just requires that you appear and not testify. i think your subtlety has been lost. in asking for a gold star for being willing to testify. you are here saying that you want to be accountable and you want to be on the appropriations and you don't believe the statute in the way that it's written to date aches a lot of sense in terms of a member of congress is that a fair sense of your position? >> let's say the next director comes in and takes the position. so many folks talked about how
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the agency has been. in fact its very founding was supposed to be independent and explicitly removed from oversight by congress and were supposed to be micromanaged by congress. congress. congress. it is a love of language out of there by people that go exactly to that point. if you take that and combine that with the actual language of the statute you could make the case i don't have to answer your questions and neither does the person. >> should the president be able to fire you without cause? i enjoyed your january 23 article in the journal and i underline the three sections one usage of the previouyou said ths government for most of the list to push the envelope aggressively under the assumption we've are the good guys and financial industries where the bad guys and i couldn't have said it better myself. in the prior year, director cordray and his attitude was dismissed is bad if you are in the business and profitable, then you must be taking advantage of consumers.
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my concern is there's numerous articles over a year and a half ago in the atlantic magazine about the culture of the cfp be into this mindset. you said great things about the mindset of how dedicated they are and i appreciate the comments. this mantra of the business is bad and is not the prevailing thought of the bureaucrats. >> i think that we would agree on probably more than he recognizes which i do agree that the personality of an organization often takes on the personality of a man and woman in charge. and to the extent that mr. cordray had that attitude of business at the bureau, i think that predated the operation of the bureau. i have an entirely different attitude towards which financial services are and what they can do to help people. so we are going to look at this
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with a healthy balance of the folks who make loans and take loans and do our best to protect consumers without removing the choices from consumers. >> you also talk about the process and you say where do the people go to get the time, money and good games back of the company closes its door was about the workers that are laid out as a result ended my prayer life i can tell you i knew of a thousand people there's not many good things that happened for good actors and my question is have you changed the process or looked at it as such a burst of findings the company shouldn't be put out of business. >> i can change the way the place is run while i'm there.
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that means changing the statute. >> i appreciate your comments and i also thought giving guidance is important because as it existed in the prior administration, it acted more like the mafia than the protection agency. by time is expired and i recognize the gentleman from georgia. >> thank you to the director for being here today. listening earlier when you were talking about the statute and how the interpretation i think you are exactly right. it doesn't compel you to answer any questions that you are answering the questions and that is the testimony to you wanting to do good governance and the testimony that you want to upgrade the organizatio organize way that it should be operated in protecting consumers and that is what we are here to get at is flow of information and i apologize if some have turned this into just being a gotcha moment.
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the more we take and the more we have to lose which goes back to something when i worked in the military 20 years in the it industry you don't have to protect what you don't have. in other words if you don't need the data, don't collect data. you mentioned earlier that you stopped the collection of consumer information as you came in. again, data collecting that you don't have to have, you don't necessarily need to have becomes a brisk to be compromised in the future. and can you elaborate a little bit more on the items that you are looking into because that is a big concern today we treated the data in the enforcement area
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one way because they have to have it in order to enforce the law you have to have some information. so we tried to make accommodations and worked with some of the sister agencies whose systems are more robust. we limited some of the stuff that we take in where we look at the data that we don't collect it to your point. we may need it but we don't need to keep it so they try to make accommodations there. it's not been as quick with thee supervision area which is different. it's been a little slower with a one-year party we hire folks to see if they could hack into the
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system. we have done that which you would have done under the circumstances to make sure that the systems are protecting the data. >> i highly commend you because of all of the agencies that we've dealt with. for the first one that laid out a plan that actually hits on what we should be doing. looking at the costs and benefits for consumers in the room. >> as the statute says to do. >> thank you. while we are talking about the statute, i've looked at the statute and i don't see the cfp anywhere. what is the name of the organization and why do we call it that? >> it is not the name of the organization. it is the bureau of consumer
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financial projections, the statute title x that is the subheading under the bureau for the financial protection bureau does not exist. >> i assume there's any legal filings that is all under the name of the statute and not the cfp. >> the stuff we send over is not in the name of the financial protection. the lawsuits are actually brought in the name of the consumer financial protection bureau which surprised me it is a practice we are going to change but it technically does not exist. if of transparency from the organization in the previous leadership of the organization their birthday lack of transparency when it came to this asking of information that we needed and i hope that would
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be different under georgia directorship. two jobs very well. i appreciate you taking on the extra task and your family for supporting you in doing that. i think it is fair to say in this point of time it is
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probably perceived as being closely aligned with senator elizabeth warren. >> isn't acting in a way that is different than an executive branch agency? >> things have changed. i run the place differently if that answers your question. >> the culture is important and frankly the executive branch and as you've highlighted as a job is to execute the law as the director wishes to. in a sense of touch harder as you've highlighted the authority is massive so you can really
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flesh out what is at the heart of the ideology of the person reading the organization, and so to highlight back, do you feel in a nonpartisan agency why would they need to spend money on a per? >> if you are speaking of the contract. >> that would be in the contract that yes they chose their switches and just a pr firm they are a particulatheir particulare firm people were getting a good value for the $43 million budget was spending a
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>> i don't think the statutory mission was being served. i'm not sure why they do not advertise that it exists. it doesn't advertise that it exists. i guess you could make the argument in the very early days when you were going from nothing to something maybe you could make the argument of a that you should let people know that you. but that's for the declining expenditure on advertising over the course of time, not increasing line item on advertising. so like i said, we have the contract, and it was the right decision. >> thank you for your stewardship on that. as an agent even in the size of the budget, thank you for bringing that in as well.
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they have had 3%, the highest of any in this decade in spending, not just the agencies spent that way out of bounds in the hyper partisan affiliated pr firm that they spent millions of dollars as a presidential candidate. the money i spend on the spent e building i could take that and hire the drudge report to do marketing that i like for the bureau but it's not going to do that because it is the wrong thing to do, but i have that kind of flexibility. i could hire a ei t aei to do te type of thing.
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in the statute is really does more to highlight the ideology of the person making decisions in this case there was a very different value system than the one that you have and i thank you for your stewardship and a couple of other questions. in the real consumer protection that means we are turning the power of the bureau of.
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increasing the transparency i don't think there's any doubt by having an increased economic freedom part of this was discussed in the plan as one of your primary objective is to close identify and address outdated unnecessary and unduly burdensome regulation. can you elaborate on some of the changes that you have imposed to ensure all have access to markets for financial products and services? >> reason we are doing that is the specific mandate of the statute. i don't think that it appeared in the strategic plans in the past even though it is in the
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statute. you've heard me mention several times today the stuff that's been in the books for five years we will go back and see if it is working with the way we thought it would to have unintended consequences, good consequences, does it need to be revisited and those kind of thing is to be revisiting certain rules. i want to see the information myself and go through the procedures act.
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to try to bring some common sense back and how it interacts with both consumers and providers of capital. >> by doing that, does that adequately strike a balance between the industry concerns and needs? >> i've met with as many groups as i have industry groups. it's about balance and listening to all the sides of the equation before making a determination not to go into an analysis and just checking the box. that is in the right way to do what we do and it isn't going to happen in the future.
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>> you have encountered this, how would you characterize the told? they want to be good bureaucrats and they want to be good governance workers and they are working just as hard to undermine the direction and that's been a pleasant surprise to the quality of the work and the legal work it is as good as i see from any place in my adult career.
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it was overreached by the cfpb. do you feel like there is the concern people would have in terms of overreach by the cfpb? >> if it is in the statute we are going to do it and we will be reserved in the execution of the authority. >> i will yield back the balance of my time. >> the actions under the director it's been taken since november 212173 days before he resigned. except for those strategically announced yesterday there is
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nothing coming out. reports indicated you scaled back. we didn't enforce them yesterd yesterday. they need to be scaled back and while its findings note the investigations of this is reported from both resources that they did not order against a koufax or sought this one testimony. in any investigation as you know it seems like you've been into test plans more than a hundred 43 million people were affected by this sophisticated than sign up for by providing services and address their failures. in the clear jurisdiction why has the subject of so many americans?
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>> most of what you just said is wrong. it's not your fault because it's reported. and the end of the last filing they were being investigated by the bureau of the consumer financial protection and they wrote a story that said we've done what you just described. i am not in a position to correct that or to comment. folks knew that it was ongoing because they chose to disclose it. i was not in the position to clarify anything and the folks that leaked the inaccurate information new that's all i said as i encourage folks to look at the filing that will come at the end of the first quarter. sure enough, when they filed,
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they once again disclosed the fact that they were being investigated by the bureau of consumer financial protection. most of what you said is wrong. it's not your fault because it is the media. but you are disturbed like the rest of us about what has been found and the millions that were affected. >> i was one of those folks but i do not comment on the ongoing investigations. >> if we could switch gears quickly to the agency was proactively protecting first responders and the directors tim was making sure they have payments from the fund but were not being scammed and these are the places that were spotted after the terrorist attacks and that were being scammed and other people were moving in helping those injured in helping the country recover after a terrorist attack that another is at least one company among others trying to take advantage of these scam or payments. one company misled police officers, firefighters and others about the terms of advanced payments and in some
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cases they were the equivalent to more than 250%. 250%. companies convoluted contracts confused consumers and charged high interest rates for advances and wrote about one officer that was disabled by illness after responding t to ground zero ande received $350,000 in advances as he waited for the settlement with a mere 19% interest for the company that charge roughly 860 in total repayments. do you think if the bureau is still going after companies like this and do you think the bureau is appropriate to go after companies like this? >> i am not sure if the facts and circumstances related to the lawsuit but i know is public so i'm going to assume it is. similar enough. it's publicly disclosed. that is an ongoing piece of litigation. we did not dismiss that we are pursuing the cost of action against them.
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>> and are you picking i. know you can't comment on specifics but in general, the companies that are taking action against victims of first responders and who are victims of companies like these, what is your opinion on this? >> they will be pursued by the bureau. >> thank you for your time. >> the chair recognizes the gentleman from new jersey. >> thank you chair man and director thank you for your presence here today, and your candid answers. i wasn't here when it was passed or wednesday fpb was started. maybe i don't feel any need to defend or attack this institution. i just want to see the agency do its best for consumers. i know there are bad actors out there. i spent time in business and
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encountered some of them. i'm a strong advocate for consumer protection and i am concerned about second order of facts of some things i have seen and i am concerned that it might hurt the very consumers that it's purportedly trying to protect. enforcement penalties have an affect on companies that in my view should be commensurate with what they've done. if they've done some egregious act, then the penalty should be commensurate with that act. the reality though is for public companies their value is a multiple of their earnings into million-dollar reduction of earnings could be a 15 million-dollar effect. the mere suggestion that the company has acted badly can destroy its reputation in the public market and can't drive it into a tailspin and that worries
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me because these companies are owned by main street investors, pension funds. are you familiar with the case of? >> yes sir. >> i spent a good deal of my time a year or two years ago questioning your assets are about this case. they are domicile in my district and employ 3500 people. in my district, tell me if i m.m getting any of these facts wrong, they were tried in spite of dusty -- cfpb. the result was a judgment which ignored the statute of limitations that aside, that was the judgment. your predecessor then unilaterally increased about $109 million, and the company subsequently lost over a billi billion, over a billion dollars in market valuation.
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is this case resolved was finally adjudicated or is that still pending? >> i'm going to be careful here. there was a decision handed down by the appellate court. i do not believe the time for filing appeals have run yet, so it's technically still ongoing either side can appeal, but the decision handed down by the court of appeals. >> but it is fair to say, and i'm not trying to litigate that here. it's complicated, and i think my own view is that cf pb overreached and hammered a company that was relying on guidance from two different agencies, but that aside, the point i'm trying to make is a billion dollars of value was wiped out and that affected main street investors, pension fund holders, four o. one k., and players of the company, and it
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has been bouncing around the courts now because there was overreached an into the directos unilateral judgment of $109 million was challenged, and the challenge has been sustained. >> going back to the chariots opening comments about what the director can and cannot do, and i hope that the ranking member will pay attention to this because what you described as an actual factual representation of what happened. i am the court of appeals for the administrative law judge. >> my question to you the director, is do you look -- does any part of cfpb look at the the affected companies valuations on the second order effect from the penalties that you impose is there that kind of an analysis to see whether the effect is commensurate with the offense of? >> i don't know because i have not been called upon to do that. but the point you are making pitches should we consider what's going to have them come
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absolutely. >> in my remaining time i just want to thank you for doing two jobs. there's been much made today by the fact that you are filling the role temporarily until june 22, there is not a company in the world when they lose a senior executive, which happened when richard cordray stepped down to run for governor but is his prerogative, but he created the vacancy and it takes time to fill vacancies and the president asked you to do this temporarily. it is a lot of work and i appreciate your efforts. thank you and i will yield back. >> unanimous consent to enter into the record communication one from the consumers union in support of the consumers financial protection bureau and also in support of speed to >> the gentleman from north carolina. >> thank you mr. chairman and mr. mulvaney as well appreciate all you do for service i service
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nation and your vision is one that i support transparency and objectivity so thank you and thanks also for doing two jobs for the price of one. last year "the wall street journal" investigation found a large number of public comments the first of the two federal agencies including the fcc and the agency that you have those are actually fraudulent submissions? stolen identities of real people to mimic actual grassroots support. all this according to "the wall street journal." does dusty fpb -- cfp subject oe comments and other computer-generated ideas and if not, why? >> i'm going to get back to you with more details. we have systems in place that would filter out what are obviously informed as and if
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they are the same, we know about that. i don't know what you need to do ticketo get to the more sophistd stuff that i do know we have some protections in place so that if someone wrote in their own answer was sending a response to somebody else. >> i just want to switch over to the data security to discuss efforts you've taken to improve the data security program. can you tell me how many breaches of the identifiable information has occurred within the bureau consumer response system and in the company's portal? >> it is north of 200. we think there's another 800 we suspect might have been lost but we haven't been able to nail that down. >> how many complained narratives have been published in the portal with unredacted consumer third-party names?
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>> a couple hundred. >> your point is we are supposed to be packed with information and those that fall through the cracks and they end up on the publicly available portal which is wrong. >> what specifically has the bureau done under your leadership to improve them and i think it was one of your goals when you stepped up to the role. we are taking a long look at it doing budgeting of things including asking our sister agency to manage the data while we fix our systems and the primary thing we are doing is actually working with the department of defense to test our own vulnerabilities. >> shifting gears a little bit, and this may have come out earlier in the hearing, but you discussed previously the number of well-paid economists support their and it's hard to do a reduction of course in the way
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that it's constructed, the way the statutes are for your agency. is there a way to take the well-paid key employees and perhaps do an interagency loan of these employees tax >> it's called detailing and we've reached out to some folks to see if they are interested in doing that and if there's folks we have that could be getting a better return on investment and another agency we are exploring the possibility. >> thank you for your time and i will yield back. >> the gentleman yields back into the chair man recognizes the gentle lady from new york. >> thank you mr. chairman and mr. mulvaney for your service and before withstanding all of this exciting testimony to the one we have another -- >> i don't remember the room being this cold. is it colder in here than it is up there? >> it is cold. i enjoyed reading some of your preparatory materials including madison and the federalist papers. when i think about who is in
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charge i always think about madison's federalist ten which enlightened statesmen will not always be at the helm and i think we are prepared for that and that is one of the reasons i wanted to ask. going back to the importance of transparency and accountability in this body if you could say one more time, and i know that you've had this and i apologize if you've set it in another way, how can we make cfpb more accountable? i know we are doing that under your leadership, but to understand if we are going to have the own enlightened statesmen at the helm again how do we prevent that from happening using the checks and balances in the constitutional system? and i know that he looted to the process bringing us back to the congress for that. can you highlight a couple of things you would do as chair man to make sure that in the event that you are not the chair man and we have someone that is not as enlightened as you are how we
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protect people? >> weevils get over the appropriations because we talked about that and if there's one thing you can do to raise accountability and transparency it would be bad, but beyond that i need a couple suggestions i will talk about. i would love to have an independent team. i have tremendous service from the inspector general and i don't mean to denigrate their work is always worked extraordinarily well but they do share with the federal reserve board the cost savings. i'm going to go down the list a little bit and i think you all voted on just about all of these and i think most of them have passed in a bipartisan basis. i would love to see this position answered and removable at will as opposed to just for cost. i think that makes it a lot more accountable. i think what we call applying their brains act to the rules would help bring consistency across the various agencies. keep in mind one of the things
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that is important is to make sure when we put out a rule we are not doing the exact opposite of what one of the other regulators is doing. we don't say that you have to do a and then the fdic says you have to do the exact opposite of a. if we were brought under four coordinating across the agencies, that would be helpful. there's a lot of things we can do to talk about the commission to smooth things out so you don't get these wild swings between whoever comes next. so there's a bunch of things you can do and have already done. i encourage you to continue to push those reforms as you look at your version of the bill because i think now is the time to do it. if you don't get it now if could be a long time and i didn't get the chance to say this earlier, i don't think we are in a rush. we don't have to have a bill by the end of this week from the
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senate. we need to go ahead and do it right or you don't get the chance to do it again for a long time. >> i appreciate the testimony and i think down the road we have to do it right this time. we have an opportunity of crisafulli to get the senate to act on many of the bill .-full-stop we have that you have cited and make sure these things go through but we are on the right road. i appreciate the leadership and your willingness to come here and be honest and frank with our committee today. it was a pleasure to listen to you and it's unusual to see someone in the government that is so honest and transparent and we appreciate it. thank you for your service and i yield back. >> the chair wishes to inform all members of the booths are currently taking place on the floor and being no other members in the queue, i would like to think the witness for his testimony today objection all members will have five legislative days with which to set the additional ten questions for ... to the chair which will
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be forwarded for his response and i would as they've asked thr to please respond as promptly as he is able. the hearing stand adjourned. >> [inaudible conversations]
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[inaudible conversations] [inaudible conversations]
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