    [House Hearing, 110 Congress]
    [From the U.S. Government Publishing Office]

                    H.R. 4332, THE FINANCIAL CONSUMER
                         HOTLINE ACT OF 2007: PROVIDING
                       CONSUMERS WITH EASY ACCESS TO THE
                         APPROPRIATE BANKING REGULATOR

    =======================================================================

                                    HEARING

                                   BEFORE THE

                     SUBCOMMITTEE ON FINANCIAL INSTITUTIONS

                              AND CONSUMER CREDIT

                                     OF THE

                        COMMITTEE ON FINANCIAL SERVICES

                         U.S. HOUSE OF REPRESENTATIVES

                           ONE HUNDRED TENTH CONGRESS

                                 FIRST SESSION

                                   __________

                               DECEMBER 12, 2007

                                   __________

           Printed for the use of the Committee on Financial Services

                               Serial No. 110-84

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                     HOUSE COMMITTEE ON FINANCIAL SERVICES

                     BARNEY FRANK, Massachusetts, Chairman

    PAUL E. KANJORSKI, Pennsylvania      SPENCER BACHUS, Alabama
    MAXINE WATERS, California            RICHARD H. BAKER, Louisiana
    CAROLYN B. MALONEY, New York         DEBORAH PRYCE, Ohio
    LUIS V. GUTIERREZ, Illinois          MICHAEL N. CASTLE, Delaware
    NYDIA M. VELAZQUEZ, New York         PETER T. KING, New York
    MELVIN L. WATT, North Carolina       EDWARD R. ROYCE, California
    GARY L. ACKERMAN, New York           FRANK D. LUCAS, Oklahoma
    JULIA CARSON, Indiana                RON PAUL, Texas
    BRAD SHERMAN, California             STEVEN C. LaTOURETTE, Ohio
    GREGORY W. MEEKS, New York           DONALD A. MANZULLO, Illinois
    DENNIS MOORE, Kansas                 WALTER B. JONES, Jr., North
    MICHAEL E. CAPUANO, Massachusetts        Carolina
    RUBEN HINOJOSA, Texas                JUDY BIGGERT, Illinois
    WM. LACY CLAY, Missouri              CHRISTOPHER SHAYS, Connecticut
    CAROLYN McCARTHY, New York           GARY G. MILLER, California
    JOE BACA, California                 SHELLEY MOORE CAPITO, West
    STEPHEN F. LYNCH, Massachusetts          Virginia
    BRAD MILLER, North Carolina          TOM FEENEY, Florida
    DAVID SCOTT, Georgia                 JEB HENSARLING, Texas
    AL GREEN, Texas                      SCOTT GARRETT, New Jersey
    EMANUEL CLEAVER, Missouri            GINNY BROWN-WAITE, Florida
    MELISSA L. BEAN, Illinois            J. GRESHAM BARRETT, South Carolina
    GWEN MOORE, Wisconsin,               JIM GERLACH, Pennsylvania
    LINCOLN DAVIS, Tennessee             STEVAN PEARCE, New Mexico
    ALBIO SIRES, New Jersey              RANDY NEUGEBAUER, Texas
    PAUL W. HODES, New Hampshire         TOM PRICE, Georgia
    KEITH ELLISON, Minnesota             GEOFF DAVIS, Kentucky
    RON KLEIN, Florida                   PATRICK T. McHENRY, North Carolina
    TIM MAHONEY, Florida                 JOHN CAMPBELL, California
    CHARLES A. WILSON, Ohio              ADAM PUTNAM, Florida
    ED PERLMUTTER, Colorado              MICHELE BACHMANN, Minnesota
    CHRISTOPHER S. MURPHY, Connecticut   PETER J. ROSKAM, Illinois
    JOE DONNELLY, Indiana                KENNY MARCHANT, Texas
    ROBERT WEXLER, Florida               THADDEUS G. McCOTTER, Michigan
    JIM MARSHALL, Georgia                KEVIN McCARTHY, California
    DAN BOREN, Oklahoma

            Jeanne M. Roslanowick, Staff Director and Chief Counsel
           Subcommittee on Financial Institutions and Consumer Credit

                    CAROLYN B. MALONEY, New York, Chairwoman

    MELVIN L. WATT, North Carolina       JUDY BIGGERT, Illinois
    GARY L. ACKERMAN, New York           TOM PRICE, Georgia
    BRAD SHERMAN, California             RICHARD H. BAKER, Louisiana
    LUIS V. GUTIERREZ, Illinois          DEBORAH PRYCE, Ohio
    DENNIS MOORE, Kansas                 MICHAEL N. CASTLE, Delaware
    4PAUL E. KANJORSKI, Pennsylvania     PETER T. KING, New York
    MAXINE WATERS, California            EDWARD R. ROYCE, California
    JULIA CARSON, Indiana                STEVEN C. LaTOURETTE, Ohio
    RUBEN HINOJOSA, Texas                WALTER B. JONES, Jr., North
    CAROLYN McCARTHY, New York               Carolina
    JOE BACA, California                 JUDY BIGGERT, Illinois
    AL GREEN, Texas                      SHELLEY MOORE CAPITO, West
    WM. LACY CLAY, Missouri                  Virginia
    BRAD MILLER, North Carolina          TOM FEENEY, Florida
    DAVID SCOTT, Georgia                 JEB HENSARLING, Texas
    EMANUEL CLEAVER, Missouri            SCOTT GARRETT, New Jersey
    MELISSA L. BEAN, Illinois            GINNY BROWN-WAITE, Florida
    LINCOLN DAVIS, Tennessee             J. GRESHAM BARRETT, South Carolina
    PAUL W. HODES, New Hampshire         JIM GERLACH, Pennsylvania
    KEITH ELLISON, Minnesota             STEVAN PEARCE, New Mexico
    RON KLEIN, Florida                   RANDY NEUGEBAUER, Texas
    TIM MAHONEY, Florida                 GEOFF DAVIS, Kentucky
    CHARLES A. WILSON, Ohio              PATRICK T. McHENRY, North Carolina
    ED PERLMUTTER, Colorado              JOHN CAMPBELL, California
                                         KEVIN McCARTHY, California

                                C O N T E N T S

                                  ----------
                                                                       Page
    Hearing held on:
        December 12, 2007............................................     1
    Appendix:
        December 12, 2007............................................    33

                                   WITNESSES
                          Wednesday, December 12, 2007

    Braunstein, Sandra F., Director, Consumer and Community Affairs,
      Board of Governors of the Federal Reserve System...............     6
    Kenney Jeannine, Senior Policy Analyst, Consumers Union..........    23
    McConnell, Cassandra, Director, Consumer and Community Affairs,
      Office of Thrift Supervision...................................     9
    Mierzwinski, Edmund, Consumer Program Director, U.S. Public
      Interest Research Group........................................    25
    Neiman, Richard H., Superintendent of Banks, New York State
      Banking Department, on behalf of the Conference of State Bank
      Supervisors and the New York State Banking Department..........    13
    Skiles, J. Leonard, Executive Director, National Credit Union
      Administration.................................................    11
    Thompson, Sandra L., Director, Division of Supervision and
      Consumer Protection, Federal Deposit Insurance Corporation.....     8
    Walsh, John G., Chief of Staff and Public Affairs, Office of the
      Comptroller of the Currency....................................     4

                                    APPENDIX

    Prepared statements:
        Braunstein, Sandra F.........................................    34
        Kenney Jeannine..............................................    42
        McConnell, Cassandra.........................................    53
        Mierzwinski, Edmund..........................................    61
        Neiman, Richard H............................................    69
        Skiles, J. Leonard...........................................    78
        Thompson, Sandra L...........................................    87
        Walsh, John G................................................   100

                     H.R. 4332, THE FINANCIAL CONSUMER
                         HOTLINE ACT OF 2007: PROVIDING
                       CONSUMERS WITH EASY ACCESS TO THE
                         APPROPRIATE BANKING REGULATOR

                                  ----------

                          Wednesday, December 12, 2007

                 U.S. House of Representatives,
                 Subcommittee on Financial Institutions
                                   and Consumer Credit,
                               Committee on Financial Services,
                                                       Washington, D.C.
        The subcommittee met, pursuant to notice, at 10:03 a.m., in
    room 2128, Rayburn House Office Building, Hon. Carolyn B.
    Maloney [chairwoman of the subcommittee] presiding.
        Members present: Representatives Maloney, Waters, McCarthy,
    Green, Hodes, Klein; Biggert and Royce.
        Chairwoman Maloney. This hearing of the Subcommittee of
    Financial Institutions and Consumer Credit will come to order.
    The hearing will focus on H.R. 4332, the Financial Consumer
    Hotline Act of 2007. The bill establishes a single toll free
    telephone number that consumers can call if they have a problem
    with their bank, and want to speak to the appropriate banking
    regulator.
        I would like to welcome all of the witnesses, and thank
    them for their time, their testimony, and for being here today.
        For our first panel, we will hear from representatives of:
    the Office of the Comptroller of the Currency; the Federal
    Deposit Insurance Corporation; the National Credit Union
    Administration; and the Office of Thrift Supervision. We will
    also hear from Superintendent Richard Neiman--a very special
    welcome to him from my home State of New York--who is here on
    behalf of the Conference of State Bank Supervisors.
        A second panel will include witnesses from consumer groups.
        This legislation builds on a suggestion that Comptroller
    Dugan put forward in a hearing before this committee back in
    June, to provide consumers one-stop service with their banking
    regulatory issues. Given that depository institutions in the
    United States can be regulated by any of five Federal
    regulators or a State regulator, consumers often don't know
    what entity to call if they have a problem.
        Apparently, customers often end up calling their attorney
    general, or the FDIC, even if that is not the right regulator,
    because their bank window or Web site states that the
    institution is FDIC-insured.
        We hope and expect this legislation will be cost-efficient
    as well as consumer-friendly. Right now, as our witnesses will
    explain, each of the agencies has a Web site, provides a phone
    number for consumers to call with questions, and has a staff to
    follow up on complaints or inquiries.
        The single hotline will help route calls to each agency
    more quickly, and encourage frustrated consumers to call and
    get answers to their questions. The establishment of a single,
    toll free number could also assist the banking regulators in
    compiling consumer complaints and inquiries, so that better
    information would be available about problems or issues that
    cut across institutions that the various agencies supervise.
        Congressional legislation and oversight would also be
    better informed by such centralized statistics. Also, the
    establishment of a single, toll free number could help raise
    the profile of banking regulators as consumer resources. This
    committee has called on the Federal bank regulators to provide
    more consumer assistance in a variety of contexts throughout
    this Congress, and this is a simple way to get this started.
        The legislation directs the Federal financial institutions'
    examination council to set up the hotline. The council is an
    existing interagency body established by statute to prescribe
    uniform principles and standards for financial institutions,
    and to otherwise coordinate regulatory activity among the
    Federal banking regulators.
        The Federal Reserve, FDIC, NCUA, OCC, and OTS are all
    members of the council. The legislation also directs the
    council to work with State banking regulators to integrate them
    into the hotline service. And Superintendent Neiman of the New
    York State Banking Department is here on behalf of New York and
    the Conference of State Bank Supervisors to address how that
    will be implemented.
        He has also come forward with a number of suggestions to
    improve the legislation, and I thank him for that. The Act also
    requires the council to report to Congress 6 months after
    enactment on the Agency's efforts to establish a public
    interagency Web site, likewise directing and referring consumer
    complaints and inquiries received on the Internet concerning
    any financial institution to the appropriate Federal or State
    financial institution regulatory service.
        I should note that not only the OCC, but the council as a
    whole has taken some steps in this direction on its own
    initiative, with an eye to both cutting costs and improving
    service to consumers.
        This past fall, the council formed a working group to study
    ways in which the separate consumer complaint handling systems
    of each regulator could be streamlined and leveraged to better
    and more efficiently serve customers. The council is
    considering hiring an independent consultant to evaluate the
    existing centers and make recommendations on how that might be
    consolidated.
        This legislation provides a statutory mandate that supports
    and guides these efforts in a framework for congressional
    oversight. It is an important step forward. It is simple to
    implement, but very necessary. I very much look forward to the
    testimony, and I recognize Mrs. Biggert, the ranking member,
    for 5 minutes.
        Mrs. Biggert. Thank you very much, Madam Chairwoman, and
    thank you for calling today's hearing. In these challenging
    times, it's important that consumers be able to quickly and
    easily get in touch with State and Federal banking regulators
    to provide comments or to make complaints about their financial
    institutions.
        I think, given the complexity of our banking system and the
    various regulators that work in this area, consumers may not
    know where to turn when they have a dispute with their
    institutions.
        The chairwoman has introduced legislation to create a
    single hotline to try to alleviate any consumer confusion. I
    think this idea is worthy of consideration, and I am interested
    to learn more about it today.
        It is my understanding that regulators already have an
    informal system in place to redirect misplaced consumer
    complaints, a system that they are constantly trying to
    improve. For example, when the OCC receives a complaint from a
    consumer about a thrift that should have been directed to the
    OTS, it is my understanding that these informal agreements
    exist to make every reasonable effort to redirect the complaint
    to the overseer of that thrift.
        I hope to hear more about this informal network, and how
    the regulators ensure that no consumer complaint falls through
    the cracks. Consumers should not be punished for misplaced
    complaints.
        I am also interested to hear what our witnesses think about
    such a hotline, and how that would work. It is--in my view, any
    hotline should be, number one, easy for consumers to register
    complaints or inquiries, and number two, simple for the
    regulators to obtain and evaluate the meaningful information
    provided.
        I look forward to the testimony today and to working with
    the chairwoman to ensure that consumer complaints are heard and
    that regulators are responsive. I yield back.
        Chairwoman Maloney. Thank you. I now recognize Congressman
    Green for 5 minutes, and welcome him up to the top panel, since
    not a lot of people are here. Thank you for being here.
        Mr. Green. Thank you, Madam Chairwoman, and I thank the
    ranking member, as well. And I would like to associate myself
    with the comments made by each of you.
        I would also like to thank the persons who are here to
    testify today. I have had an opportunity to meet several of
    you, and I am very much impressed with the outstanding list of
    witnesses that we have. I, too, am of the opinion that a
    hotline can be of great benefit to consumers, especially given
    the amount of concern that is currently in the marketplace with
    reference to banking, financial institutions, and some of the
    home mortgage concerns.
        I think that, while this may not address all of the
    consumer complaints and concerns, I think it is a good means by
    which we can have some semblance of one-stop shopping, such
    that persons will have a line that they can depend on to
    acquire some intelligence about concerns that they may raise.
        I think that one of the things that will make it
    efficacious is having access to the statistical information. I
    think that can drive a process, knowing that the information is
    available, and knowing that others will have an opportunity to
    evaluate the program itself.
        So, I am honored to associate myself with the comments of
    the chairwoman and the ranking member and I would endorse the
    chairwoman's proposal and would be honored to be a cosponsor of
    the legislation. I yield back the balance of my time.
        Chairwoman Maloney. Congressman Royce, for 3 minutes.
        Mr. Royce. Thank you, Madam Chairwoman. I would like to
    commend the chairwoman for holding this hearing.
        We are here today to discuss legislation which is going to
    establish a single telephone number that consumers with
    complaints or inquiries can call, anywhere around the country,
    and thereby locate the appropriate Federal or State regulator.
    I am sure that this is going to be a useful tool for consumers
    trying to file a complaint, or consumers who have an inquiry
    about something, and thus will be able to get in touch on the
    banking issue that they need to discuss.
        Now, I have coauthored the National Insurance Act with my
    colleague, Representative Melissa Bean, which would create an
    optional Federal charter for insurance. And some of those
    opposed to that legislation argue that, even if it creates
    greater market efficiencies, the creation of an OFC might cause
    confusion among insurance customers trying to determine the
    company's regulator.
        Well, in reviewing the Financial Consumer Hotline Act,
    which is going to be a Federal act, I believe this endeavor for
    the insurance sector would be beneficial, should a Federal
    regulator be created in the future. Any meritorious effort to
    increase consumer disclosure and shorten the distance between
    consumers and the appropriate regulator should be encouraged.
        So, I encourage the chairwoman, and I would like to thank
    the regulators here for their work on this issue, and I look
    forward to hearing about the progress made in the future. Thank
    you again, Madam Chairwoman, for the bill and for the hearing.
        Chairwoman Maloney. Thank you. And, without objection, all
    members' opening statements will be made a part of the record.
    I welcome all of the witnesses.
        First, we have Mr. John Walsh, Chief of Staff and Public
    Affairs, Office of the Comptroller of the Currency, and then we
    will go right down the line. Thank you. You are recognized for
    5 minutes. And thank you for coming forward with the idea in
    the first place.

    STATEMENT OF JOHN G. WALSH, CHIEF OF STAFF AND PUBLIC AFFAIRS,
               OFFICE OF THE COMPTROLLER OF THE CURRENCY

        Mr. Walsh. Subcommittee Chairwoman Maloney, Ranking Member
    Biggert, and members of the subcommittee, on behalf of
    Comptroller John Dugan and the Office of the Comptroller of the
    Currency, I thank you for this opportunity to discuss H.R.
    4332, which would direct the Federal banking agencies to
    establish a single toll free number to help consumers reach the
    right banking agency for assistance with a complaint or
    inquiry.
        Banks come in a variety of sizes, with both State and
    Federal charters, which offers choice and diversity to
    consumers. However, it can also present a complex maze for them
    to navigate when they have a problem and need help from their
    bank.
        When direct contact with the bank does not resolve an
    issue, figuring out where to turn next may be very challenging.
    The consumer with a complaint or inquiry must sort through
    dozens of phone numbers, Web sites, and addresses for the
    various State and Federal agencies. Few bank regulators are
    household names, and most are unfamiliar to consumers.
        The result is that consumers with a problem often reach the
    wrong regulator. Misdirected calls represent a significant
    portion of the 70,000 total cases opened by the OCC each year.
    This year, the OCC has received 11,000 referrals of misdirected
    complaints and inquiries from other Federal and State
    regulators, and has referred 10,000 misdirected complaints and
    inquiries to other regulators.
        This volume suggests that a large percentage of people who
    have questions or concerns about their financial service
    provider do not know where to turn for help. The OCC believes
    that this burden should not fall upon the consumer, and
    supports the goals of this legislation to develop simpler means
    for consumers to find their way to us, by phone or Internet,
    and for banking agencies to expedite the routing of misdirected
    consumer complaints.
        Development of a single toll free number, in coordination
    with the Federal financial institution's examination council
    would make it easier for consumers to register a complaint with
    the appropriate banking regulator. It would eliminate the
    burden of searching for the right agency, the frustration of
    being referred from one agency to another, and most delays that
    result from misdirected calls.
        A single toll free number would also help banking agencies
    compile and act on consumer complaints more efficiently.
    Eliminating the burden associated with rerouting misdirected
    calls would make existing agency complaint handling processes
    more efficient, and free up resources for use in responding to
    consumer concerns.
        A second objective of the bill on which Federal regulators
    would be required to report back to Congress in 6 months is
    establishment of a public interagency Web site for directing
    and referring Internet consumer complaints and inquiries, and a
    system to expedite the prompt, effective rerouting of any
    misdirected consumer complaint or inquiry documents.
        The OCC is currently working with other members of the
    FFIEC to study options in this area. This study will examine
    how we might leverage existing agency resources to simplify the
    process for identifying the appropriate regulator for
    consumers, and improve the complaint filing and resolution
    process.
        The council approved this study at its December 4th
    meeting, and we look forward to a report and recommendations by
    the end of 2008.
        The OCC itself has taken the initiative to reduce obstacles
    that consumers may face in registering complaints, and to
    improve the service they receive when they reach our customer
    assistance group, or CAG. The OCC has expanded the CAG's
    capabilities through a number of investments and upgrades in
    the last several years, most recently launching a new consumer
    Web site, HelpWithMyBank.gov.
        The OCC is developing a Web-based complaint referral system
    to reduce inefficiencies involved with forwarding documents
    associated with misdirected complaints. And the system will
    transmit complaint-related documents via the Web to authorized
    users, while ensuring information security and privacy.
        The OCC is also working with the Conference of State Bank
    Supervisors and with State regulators on a number of
    initiatives to expedite the referral of misdirected questions
    and complaints. In November 2006, the OCC and CSBS agreed on a
    model memorandum of understanding to improve referrals and
    information sharing regarding misdirected consumer complaints,
    and provide needed assurance of confidentiality for sharing
    that information. To date, 30 States and Puerto Rico have
    entered into agreements with the OCC.
        In conclusion, the OCC fully supports the goals of H.R.
    4332, creation of a single toll free number and call routing
    system, and a companion routing system for Internet-based
    inquiries and complaints. Improvements in these areas will
    promote timely assistance for consumers of bank services.
        I thank the subcommittee for the opportunity to testify and
    I appreciate Chairwoman Maloney's leadership in this important
    area.
        [The prepared statement of Mr. Walsh can be found on page
    100 of the appendix.]
        Chairwoman Maloney. Thank you very much for your testimony.
        I now recognize Sandra Braunstein, Director of Consumer and
    Community Affairs, Board of Governors of the Federal Reserve
    System. Thank you for joining us once again.

      STATEMENT OF SANDRA F. BRAUNSTEIN, DIRECTOR OF CONSUMER AND
     COMMUNITY AFFAIRS, BOARD OF GOVERNORS OF THE FEDERAL RESERVE
                                 SYSTEM

        Ms. Braunstein. Thank you. Chairwoman Maloney, Ranking
    Member Biggert, and members of the subcommittee, thank you for
    the opportunity to discuss the recently introduced Financial
    Consumer Hotline Act of 2007.
        In addition to its responsibilities for rule writing and
    enforcing many Federal consumer financial protection laws, the
    Federal Reserve's Division of Consumer and Community Affairs
    administers a national consumer complaint and inquiry program.
        The proposed legislation would amend the FFIEC Act by
    requiring the Federal regulatory agencies to establish a single
    telephone number that consumers with complaints and inquiries
    concerning financial institutions or issues could call and be
    routed to the appropriate Federal supervisory agency or State
    bank supervisor for assistance.
        The Federal Reserve concurs with the intent of the proposed
    bill, and strongly supports the current efforts by the
    regulatory agencies to improve the consumer's experience with
    getting complaints involving banking services and transactions
    addressed promptly and accurately.
        However, given that the regulatory agencies are
    collaborating and cooperating on how to facilitate the consumer
    complaint handling and resolution process in ways that are
    consistent with the proposed bill, and the considerable
    progress being made already on both an interagency basis, as
    well as through our own efforts, legislation does not appear to
    be needed to ensure the continued momentum.
        Additionally, it is important that the agencies maintain
    flexibility so that they may benefit from recommendations that
    will result from the current agency initiatives and future
    technological advances.
        The regulatory agencies have been coordinating on consumer
    complaint processing since the 1970's. For example, the
    agencies have had procedures in place for decades to promptly
    refer misdirected consumer telephone calls and misdirected
    consumer complaints and inquiries to the appropriate Federal
    and State regulator.
        Recently, the agencies have started using new technology to
    speed up and improve the referral process, which has
    significantly reduced the paper flow between the regulatory
    agencies.
        Moreover, the agencies meet periodically to share complaint
    data, and to discuss emerging issues identified through the
    complaint process. To build upon the efforts of the agencies,
    in September, the FFIEC formed an interagency working group to
    identify ways to collectively improve the agencies' consumer
    complaint programs, and to make those programs even more
    consumer friendly.
        This group advanced several promising initiatives that will
    produce results similar to those envisioned by the proposed
    legislation. Additionally, it was recommended that a third
    party vendor be engaged to address the ideas for improvement,
    and to explore the feasibility of pursuing the initiatives
    related to leveraging the agencies' resources.
        Earlier this month, the FFIEC approved the working group's
    recommendations, and has begun the process of hiring a vendor.
    We believe the vendor's work will provide the agencies with the
    insight needed to develop a comprehensive strategy to further
    enhance the consumer complaint process.
        Consistent with the intent of the proposed legislation, and
    the Federal Reserve's longstanding commitment to consumer
    protection, we have recently announced enhancements to our own
    consumer complaint handling procedures.
        On November 19th, we launched Federal Reserve Consumer
    Help, a new centralized resource that consolidates and
    streamlines the Federal Reserve's consumer complaint and
    inquiry program. This resource includes a toll free number and
    centralized Web site for easy consumer access. Trained customer
    service professionals are available to answer questions and
    assist with a wide range of issues relating to financial
    products and services and consumer protection laws.
        Simply put, it serves as a one-stop complaint and inquiry
    site where consumers can go to get help from the Federal
    Reserve, or be directed to the appropriate regulator or agency.
        Consumers do not have to know which Federal bank regulator
    supervises the financial institution that they are concerned
    about in order to file a complaint or inquiry. Our customer
    service representatives query a national database in order to
    determine the appropriate regulator responsible for the
    institution in question. Misdirected telephone calls are
    transferred directly to the correct agency, and misdirected
    written or electronic correspondence is forwarded. And for
    agencies with the capability, these complaints and inquiries
    are passed on electronically.
        Through our work with the other agencies, and through our
    own program, the Federal Reserve remains strongly committed to
    ensuring that consumer issues and inquiries are handled
    promptly, courteously, and thoroughly, and that consumers have
    access to an effective and efficient means for resolving
    complaints.
        [The prepared statement of Ms. Braunstein can be found on
    page 34 of the appendix.]
        Chairwoman Maloney. Thank you.
        Next, Sandra L. Thompson, Director of the Division of
    Supervision and Consumer Protection of the Federal Deposit
    Insurance Corporation. Thank you for being here.

        STATEMENT OF SANDRA L. THOMPSON, DIRECTOR, DIVISION OF
    SUPERVISION AND CONSUMER PROTECTION, FEDERAL DEPOSIT INSURANCE
                              CORPORATION

        Ms. Thompson. Chairwoman Maloney, Ranking Member Biggert,
    and members of the subcommittee, I appreciate the opportunity
    to testify today on behalf of the FDIC.
        The FDIC recognizes the importance of providing consumers a
    convenient and timely way to get help with complaints and
    questions about a financial institution or other banking
    matters. From a supervisory perspective, consumer complaints
    and inquiries often provide our examiners insight into problems
    in an institution and developing industry issues.
        Currently, consumers can contact the FDIC through our Web
    site, as well as through our toll free phone number, 1-877-ASK-
    FDIC, which is answered by our call center staff. The call
    center has received over 133,000 calls this year.
        In addition to consumer issues and concerns, the call
    center staff handles questions about deposit insurance and bank
    resolutions. For example, last year's deposit insurance reform
    led to many inquiries about the increase in coverage for
    retirement accounts. And, when a bank fails, the FDIC provides
    institution-specific information for customers about the
    insured status of their deposits.
        When the call center receives a consumer complaint about an
    FDIC-supervised institution, or an inquiry that requires
    subject matter expertise, the caller is connected to the FDIC's
    consumer response center. As part of the investigation of
    complaints, response center staff informs consumers of their
    rights under Federal consumer protection laws, and they review
    the bank's actions to assess its compliance with the law.
        In order to help consumers determine where to send
    complaints, the FDIC Web site features a search tool called
    Bank Find. By entering the name of a bank, a consumer can
    immediately access information on the bank, including financial
    data, insured status, and its primary Federal regulator.
        The consumer can also link directly to the Web sites of the
    other bank regulatory agencies. The FDIC Web site also offers
    an online complaint form that consumers may use to file a
    complaint or inquiry.
        We are also working with our colleagues at the other
    Federal and State banking agencies to streamline the process
    for referring complaints between agencies. A little over half
    of the complaints and inquiries received by the FDIC this year
    related to institutions supervised by other Federal and State
    regulators, and we promptly and directly referred those
    consumers to the appropriate regulator.
        Last week, the agencies that are members of the FFIEC
    agreed to explore the feasibility and technical requirements of
    additional improvements to the interagency referral process. We
    want to ensure that future enhancements to the agencies'
    processes are both technically feasible and cost effective.
        The FDIC supports the intent of H.R. 4332, the Financial
    Consumer Hotline Act of 2007. The bill is consistent with the
    approaches that the Federal banking regulators have already
    committed to study through the FFIEC. Although conceptually
    simple, the creation of a single toll free number and Web site
    for interagency activities raises a number of issues and
    technical challenges. We must ensure that any improvements that
    the agencies undertake actually can achieve efficiencies that
    will benefit consumers.
        And because consumer correspondence, often by necessity,
    contains confidential, personally identifiable information,
    such as bank account numbers, Social Security numbers, and
    other financial data, it is imperative that any new information
    sharing system has sufficient controls to protect the
    consumer's privacy and confidentiality.
        Because our consumer contact system addresses several
    issues that are unique to the FDIC, we are recommending a
    clarification that the bill's requirement of a single toll free
    number and interagency Web site are intended to supplement,
    rather than replace, existing systems.
        Customers with questions about deposit insurance issues or
    issues regarding a failed bank should be able to continue to
    contact the FDIC for assistance directly, as they do now.
        In conclusion, the FDIC supports systems to ensure that
    consumers can get the answers they need on a convenient and
    timely basis. We look forward to working with the Congress and
    our fellow regulators to maintain and develop systems that
    achieve this goal.
        This concludes my testimony, and I would be happy to
    address any questions.
        [The prepared statement of Ms. Thompson can be found on
    page 87 of the appendix.]
        Chairwoman Maloney. Thank you. Thank you very much.
        Ms. Cassandra McConnell, Director, Consumer and Community
    Affairs, Office of Thrift Supervision.

       STATEMENT OF CASSANDRA McCONNELL, DIRECTOR, CONSUMER AND
            COMMUNITY AFFAIRS, OFFICE OF THRIFT SUPERVISION

        Ms. McConnell. Good morning Chairwoman Maloney, Ranking
    Member Biggert, and members of the subcommittee. Thank you for
    the opportunity to present the views of the OTS on Chairwoman
    Maloney's bill, ``The Financial Consumer Hotline Act,'' to
    establish a single toll free telephone number for consumers to
    call if they have a complaint or inquiry regarding a regulated
    institution.
        The consumer complaint process is an important link between
    the institution's regulator and its customers. It enables
    agencies to assist consumers in addressing problems at
    regulated institutions, and it helps agencies identify
    potential areas of risk at an institution for follow-up during
    an examination, as well as industry trends that warrant closer
    scrutiny.
        It also informs the agencies on areas where consumer
    education may be beneficial. A strong consumer complaint
    program is a valuable regulatory tool that strengthens the
    examination function.
        At the OTS, consumer complaints have revealed important
    information about weaknesses in internal controls, violation of
    Federal consumer protection laws, and potential unfair acts and
    practices.
        We share the concerns of the Chair, that consumers be able
    easily to identify the appropriate place to file a complaint or
    inquiry about a regulated institution. This not only helps the
    consumer, it helps us do our job more effectively.
        Establishing a single toll free consumer hotline is long
    overdue. We applaud the leadership of the Chair on this issue.
    The OTS is committed to fair access to financial services for
    all consumers, and fair treatment of customers at the
    institutions we regulate. OTS staff works directly with
    consumers to address their questions and inquiries, to
    investigate allegations and complaints, and to ensure that
    thrifts are in compliance with all applicable consumer
    protection laws and regulations.
        We use consumer complaint data to identify higher risk
    practices at institutions for follow-up by our examiners during
    regularly scheduled examinations. When warranted, we initiate
    specialized targeted investigation of particular institutions,
    based on information provided to the agency by consumers.
        All of this, of course, is predicated on the timely receipt
    of consumer complaints on the institutions we regulate. When
    this fails to occur, consumers become frustrated and may be
    harmed by the inability of a regulator to address their
    concerns.
        The FFIEC recently adopted a proposal to identify ways to
    improve the interagency consumer complaint process. This effort
    is aimed at simplifying the process for identifying appropriate
    regulators, creating easier complaint filing procedures, and
    improving the complaint filing procedure.
        It is intended to identify opportunities for enhancing the
    consumer experience, and leveraging the FFIEC agency resources
    to ensure that consumers reach the appropriate regulator.
        The OTS is working closely with the FFIEC to implement the
    initiatives set forth in the Financial Consumer Hotline Act, as
    well as additional items, to improve consumers' access and
    confidence in our financial system. The proposals outlined in
    the bill are among the highest priority for the FFIEC.
        Given the work currently being conducted by the FFIEC, our
    only concern is the extent that the legislation could be viewed
    as limiting our ability to craft consumer solutions that it
    does not currently address, or delaying development of an
    FFIEC-sponsored proposal because of uncertainties surrounding a
    final framework of the legislation.
        The Financial Consumer Hotline Act sets forth a number of
    sound consumer protection initiatives that should be
    incorporated in our banking system. These will improve the
    accessibility and confidence of consumers in our system, by
    providing a clear mechanism for filing consumer complaints.
        Given that the FFIEC is working hard to address these
    issues and other similar initiatives, we ask that you consider
    allowing the FFIEC to move forward on its work unfettered by
    legislative overlay. While we understand and appreciate your
    desire to address these issues expeditiously, we believe the
    FFIEC process will do that, while minimizing disruption to
    existing agency consumer protection programs.
        Thank you for your leadership on this issue, Madam
    Chairwoman, and for the time and effort of all the members of
    the subcommittee. I am happy to answer your questions.
        [The prepared statement of Ms. McConnell can be found on
    page 53 of the appendix.]
        Chairwoman Maloney. Thank you very much.
        Mr. Leonard Skiles, executive director, National Credit
    Union Administration. Thank you for being here.

     STATEMENT OF J. LEONARD SKILES, EXECUTIVE DIRECTOR, NATIONAL
                      CREDIT UNION ADMINISTRATION

        Mr. Skiles. Thank you Chairwoman Maloney, Ranking Member
    Biggert, and members of the subcommittee. I appreciate this
    opportunity to testify on behalf of the National Credit Union
    Administration regarding the proposal to improve the process by
    which consumers have their problems addressed and resolved.
        NCUA commends you for identifying this important consumer
    issue, and for formulating a well thought-out and sensible
    legislative approach. This proposal is consistent with NCUA's
    longstanding position that every effort should be taken to
    safeguard consumers.
        We particularly note your interest in eliminating confusion
    about which regulators should be responding to the consumer. I
    think it is safe to say that we in Washington are somewhat
    familiar with the alphabet soup of Federal regulatory bodies,
    but it is unfair to expect average Americans to know which
    government agency can best help them. Frankly, they just want
    the problem fixed. And this proposal would improve the process
    to do just that.
        As you are aware, credit unions differ from other financial
    institutions in several respects. These differences are
    important, and are relevant to how complaints are addressed.
        First, they are not-for-profit financial cooperatives owned
    by their members. That member ownership carries with it certain
    rights, including the right of a member to be informed about
    decisions made by their credit union.
        Second, Congress has recognized the unique structure of
    Federal credit unions, and mandated, by statute, that each have
    a supervisory committee. This committee, comprised of three to
    five credit union members, is responsible for independent
    oversight of the board of directors, and to advocate the best
    interest of the members.
        In practice, members, because of their relationship with
    their credit unions and NCUA, have viewed the supervisory
    committee as a first responder for credit union members who
    seek redress. When a complaint is received, we encourage direct
    contact with a credit union. We believe this is consistent with
    the cooperative structure of credit unions.
        At the initial stage of the complaint process, we contact
    the supervisory committee, and direct a thorough review of the
    complaint. While that review normally resolves the issue in a
    timely manner, in case the member is not satisfied with the
    outcome, or the supervisory committee's explanation suggests
    noncompliance with laws or regulations, NCUA has the authority
    to intervene. Importantly, at all stages, NCUA is actively
    engaged and oversees the process, to ensure that the member's
    rights are protected.
        I should also mention that NCUA has taken steps to ensure
    consumers know who to contact if they do have an inquiry or
    complaint. This information is available on loan denial forms,
    posters, statements, and a centralized 800 number posted
    prominently on the NCUA Web site, through which a consumer can
    register complaints or make inquiries. This line averages about
    120 calls per month, and is a focal point of the consumer
    contact with the agency.
        In short, NCUA encourages and facilitates consumer contact,
    has a structure in place to investigate complaints and provide
    answers, and, through our experience in regulating and
    supervising credit unions, we have a high degree of confidence
    that the system is working to the benefit of the credit union
    member.
        Turning to the proposed legislation, NCUA supports this
    initiative. Given the multitude of regulators, the distinction
    between Federal and State regulatory responsibility, and the
    increasing complexity of financial institution ownership
    structures, it provides another avenue for consumers to better
    understand the efficacy and procedures in place to protect
    their interests.
        Since a centralized call routing system would be a widely
    advertised process, it could, however, have an unintended
    result for credit union members. It is our experience that
    credit union members do not appear to be confronted with at
    least some of this government labyrinth. The name ``credit
    union'' provides a strong initial indicator of where a consumer
    should direct a contact, and NCUA believes it is important to
    preserve this distinction.
        So, while NCUA would be pleased to participate in any new
    consumer complaint structure, we want to emphasize the
    importance of a separate ability to assist consumers who are
    members of credit unions. The established NCUA method of
    dealing with consumer input, where the decentralized national
    system of regional offices can respond quickly, combined with
    the statutorily mandated supervisory committee structure
    overseen by NCUA, is a process that we believe Congress should
    want to preserve.
        The member-centric focus by credit unions is an element
    that NCUA not only recognizes, but attempts to foster. A credit
    union is expected to treat its members in a fair, beneficial,
    and, above all, legal manner. When that does not occur, NCUA
    proactively and aggressively polices the process, and makes
    certain that the members' rights are protected.
        It is our view that the current system for credit unions is
    working. We believe it can continue to work in the proposed
    consumer complaint structure. And NCUA looks forward to
    opportunities to collaborate with Congress and the FFIEC, as we
    take steps to assist consumers.
        Congress has recognized a need for improvement, and NCUA
    wants to be a part of the solution of ensuring that consumers
    do not, as earlier stated, fall through the cracks. Thank you
    very much.
        [The prepared statement of Mr. Skiles can be found on page
    78 of the appendix.]
        Chairwoman Maloney. Thank you. Thank you very much.
        I would like to give a very special welcome to the
    superintendent of banks from New York, Superintendent Neiman.
    He is here today testifying on behalf of the Conference of
    State Bank Supervisors, not just New York, but the whole
    conference of all State banks in our country. I thank you, and
    I welcome your testimony.

     STATEMENT OF RICHARD H. NEIMAN, SUPERINTENDENT OF BANKS, NEW
     YORK STATE BANKING DEPARTMENT, ON BEHALF OF THE CONFERENCE OF
         STATE BANK SUPERVISORS AND THE NEW YORK STATE BANKING
                               DEPARTMENT

        Mr. Neiman. Thank you, Madam Chairwoman, Ranking Member
    Biggert, and distinguished members of the subcommittee. On
    behalf of the Conference of State Bank Supervisors, and the New
    York Banking Department, I really appreciate this opportunity
    to speak with you today. I personally also want to commend
    Chairwoman Maloney for her efforts on this very important
    issue.
        I am pleased to share our perspective on the proposal to
    establish a national call number and centralized intake for
    consumer inquiries directed to Federal regulators. States are
    on the front lines, and have provided many innovations with
    respect to handling of consumer complaints, including Web-based
    and consumer satisfaction surveys.
        We believe that the creation of a national system, one that
    also routes calls to the respective State agencies, when
    appropriate, is much needed.
        For those of you who are familiar with New York City's
    general hotline information line, I envision this functioning
    as a national 311 for financial complaints. This issue has been
    on the Department's agenda for some time. My predecessor, Diana
    Taylor, as superintendent of banks, also promoted this 311
    concept before I joined the Department. And I concur that the
    time is right to put the idea into practice.
        Ideally, over time, if successful, this could be expanded
    to include a wider range of financial services beyond just
    those regulated by Federal bank regulators and State
    regulators, with the possible inclusion of the FTC.
        Consumers with a variety of concerns, whether related to
    credit cards, payment billing, or funds availability would
    benefit from an enhanced interagency information sharing. And
    in the context of the present turmoil in the mortgage market, a
    streamlined approach for handling consumer inquiries would be
    especially useful in outreach to borrowers facing a mortgage
    hardship.
        The goal is to connect with these homeowners early in the
    delinquency process, before their credit history is damaged, or
    they lose their homes to foreclosure. With our complex,
    financial services system, however, consumers who want to be
    proactive may be confused, and understandably so, when trying
    to identify the correct government agency to contact.
        A consumer should not need to know whether their financial
    institution is a thrift, a savings bank, or a commercial bank,
    or a State-chartered institution or a national-chartered
    institution, or a sub of a bank or a sub of a holding company
    in order to receive assistance.
        And with many citizens unaware of the chartering authority
    for their financial institutions, State agencies regularly
    receive local inquiries related to institutions that are
    federally supervised.
        Troubled consumers tend to look locally first, when seeking
    help, and the statistics bear this out. In 2006, the New York
    Banking Department referred more than 1,300 complaints to the
    Federal regulators, well over half of the volume of the
    approximately 2,200 complaints we received. The figures for the
    year-to-date are virtually the same.
        It is critical, however, that any national hotline linking
    the Federal regulatory agencies include the capability to refer
    consumer inquiries back to the States. Resolution of the
    underlying issues that prompted the complaint often requires
    assistance at the local level. This is especially true in the
    case of mortgage lending, which, due to the nature of the
    collateral, is unavoidably local.
        Therefore, I am pleased that the current proposal provides
    for this referral to the States. In reviewing the draft of The
    Financial Consumer Hotline Act of 2007, we are encouraged that
    it represents a positive development toward the type of
    integrated system that is needed.
        In my remaining time, I would like to offer a few
    suggestions to further enhance the current proposal. First,
    while the Federal-to-State referral mechanism is addressed in
    the proposed legislation, the reverse ability, to refer State
    to Federal, is not directly addressed in the current draft. We
    would suggest making this a two-way process more explicit, as
    there could be significant flow of referrals in this direction.
        Troubled consumers tend to look locally first when seeking
    help. And with many citizens unaware of the chartering
    authority for their financial institution, State agencies
    regularly receive local inquiries related to institutions that
    are federally supervised.
        Second, the database connected to a centralized intake
    system would be a source of vital statistics about trends and
    consumer complaints. This information could also be used to
    identify institutions generating a high volume of complaints
    that may warrant a target exam, or other form of enhanced
    supervision, or to identify the need for regulatory or
    legislative changes.
        The same system could also be used to track case resolution
    status and response times. We recommend expanding the proposed
    legislation to mandate the FFIEC to produce such monitoring
    reports to maximize the value of the system.
        And, third, consideration should be given to the
    development of model forms and intake processes, to ensure that
    all participating agencies collect consistent and sufficient
    information. CSBS has developed a model form and is preparing
    best practices for agencies in the operation of their call
    centers. A copy of the form and a list of the standards that
    CSBS is developing for its members is included in my written
    submission for your reference.
        The States welcome the opportunity to share our perspective
    on the approaches to complaint case management that we have
    tried, and have found to be effective. The New York State
    Banking Department was the first State regulator to enter into
    a complaint sharing agreement with the OCC, and we offer our
    positive experience with this partnership in support of the
    concept of a nationwide hotline.
        I thank you for your time this morning, and for inclusion
    of the States' perspective. I would be glad to address any
    questions.
        [The prepared statement of Mr. Neiman can be found on page
    69 of the appendix.]
        Chairwoman Maloney. Thank you very much. I would like to
    ask Mr. Walsh, the statistics on consumers who call the wrong
    number are certainly impressive, the numbers that you gave. And
    the FDIC alone, it seems that about a third to half of all the
    people who call a Federal bank regulator call the wrong one.
        I would say that it seems logical that if each agency
    spends a third of its time sending calls to the other agencies,
    that a great deal of consumer frustration and needless cost and
    time to the agency occurs. Would you say that these statistics
    are strong support for this bill?
        Mr. Walsh. Madam Chairwoman, certainly the numbers are
    support for the contention that a lot of calls wind up in the
    wrong places. Of course, it's worth bearing in mind that
    receiving a call that needs to be redirected does not take the
    time of handling a case, or sorting through a complex issue.
        So, it--the numbers are too large to be acceptable, but
    they wouldn't represent a third of the time that our consumer
    assistance people spend.
        Chairwoman Maloney. You also mentioned the need for a
    public relations campaign to raise consumer awareness of the
    hotline. What sort of campaign do you envision, and do you
    believe that it is required to be part of this bill?
        Mr. Walsh. Well, the notion there was that if there--if
    FFIEC, for example, decides to create some of these centralized
    functions, that the natural part of including that process
    would be to publicize the creation of a single number, or a
    single Web site, whatever it might be, and that process of
    making consumers aware of a single Web site would, of course,
    increase awareness, generally, of the service that is
    available.
        So, we would expect that to be part of any plan to roll out
    any new system that would be agreed to.
        Chairwoman Maloney. Thank you. Superintendent Neiman, I
    liked your idea to add a mandate to collect data on consumer
    calls to the centralized hotline. What should such a mandate
    include?
        And I liked, also, your idea of a centralized form, to have
    uniformity in the system. But what would you see in this
    mandate, and what are the key measures that should be part of
    it, for us as regulators, to monitor?
        Mr. Neiman. Certainly trends in the nature of the
    complaints. Are they folks in a particular area? Within credit
    cards? And even within credit cards, is there a particular
    segment of complaints around a particular issue?
        As some of the other regulators mentioned, that type of
    information is extremely helpful in preparing for examinations,
    as well as follow-up supervisory reviews at those institutions.
        I think it also is important to identify those institutions
    that do have a higher rate of complaints in comparison to their
    peers. So I think it is extremely useful information for
    individual regulators taken separately, but also taken as a
    group, to identify trends and areas requiring further review,
    further supervision, or possibly areas that require regulatory
    change, if these areas of concern are expansive.
        Chairwoman Maloney. It would also be very helpful for
    congressional oversight.
        You mentioned in your testimony that sharing information
    with the OCC was pioneered by New York State. Are other States
    following your lead? Do the other States have these types of
    programs?
        Mr. Neiman. There are certainly a number of States. I think
    the specific number now--I bet John has it--is 30. Thirty
    States have now signed on to that memo of understanding
    confidentiality agreement.
        Chairwoman Maloney. Okay, and how could the establishment
    of a single toll free number help raise the profile of banking
    regulators as a consumer resource for registering complaints
    and inquiries.
        Mr. Neiman. Well, I agree that a consistent marketing
    approach would be an important element of identifying for
    consumers a single national hotline to call for financial
    complaints.
        Chairwoman Maloney. And I would like to ask--some of the
    panelists raised concerns that this legislation may interfere
    with initiatives that they already have in place. That was
    certainly not the intent. It was more of referring to the
    appropriate place, saving consumers time, helping monitor
    trends, and so forth.
        Are there any specific examples in the legislation where
    it, in any way, interferes with what is happening in your own
    agency's regulation and oversight? Anyone?
        Ms. Braunstein. Well, I think our concerns are that
    mandating certain kinds of practices, like the 1-800 number and
    other things in the legislation, could end up conflicting with
    whatever we learn from the third-party vendor that we hire.
        We all have--we recognize the intentions of the
    legislation, and I think we are all on the same page, that we
    need to do whatever we can to improve the complaint process for
    consumers. But we, the agencies, just decided to hire a third-
    party vendor to get some professional advice about what would
    improve things for consumers.
        And suppose the recommendations that come out of that study
    somehow conflict with what is in the legislation, but we're
    locked in by the legislation? I think that is one of our
    concerns.
        We also have concerns, in terms of legislation locking us
    in in the future, in terms of being able to take advantage of
    technological advances in the future. Who knows, 10 years from
    now, what kinds of operations people will use to file
    complaints?
        And so, we want to be able to remain--we just want to be
    able to have some flexibility, in terms of the changes and the
    enhancements that we do make to the systems.
        Chairwoman Maloney. Well, just to be clear, the legislation
    does not relieve any agency of the responsibility to respond to
    consumer complaints, it only takes away the significant burden
    of helping consumers find the right agency. And I would say
    that is a valuable resource. And, obviously, legislation is
    always updated to respond to new technology.
        I now call upon my good friend and colleague, the ranking
    member on this committee, Congresswoman Biggert, for 5 minutes.
        Mrs. Biggert. Thank you, Madam Chairwoman. My line of
    questioning is somewhat similar.
        But I think that we, a couple of years ago, passed
    legislation that was to deal with financial literacy in
    education, and asked the various agencies to work together so
    that there wasn't duplication, and so that the agencies would
    know what the others were doing.
        But my goal was always to do no harm. And I think when we
    look at legislation like this, it still is to do no harm. And
    when I hear the word ``mandate,'' I get a little concerned. But
    maybe you can relieve me of that concern.
        For example, do you see any other unintended consequences
    arising from the proposed legislation?
        And another question I have is, how is this paid for? Ms.
    Braunstein, you talked about the Federal Reserve having a
    hotline now, and directing it to other agencies, and the FDIC,
    too. Of course, I would assume that is something that comes out
    of your pocket. But with this bill, I don't know where that
    comes from. Would all the agencies have to get together? Would
    this just be something else that comes out of the Federal
    Government?
        Ms. Braunstein. I would think we would all have to chip in
    to enact whatever is done in the legislation.
        But the current system, as you said, comes out of our
    budget. Our system, as do the other agency systems come out of
    their budgets.
        Also, I do want to clarify something that Congresswoman
    Maloney raised, and also you just raised, is that, frankly, the
    consumers now don't have to know which agency to go to, because
    we have established some pretty robust systems among us to get
    them to the right place.
        So, I know if they call us, and it's a misdirected call, we
    get them to the right place very quickly. I am not sure that's
    any different than if they call a 1-800 number and they still
    will have to be transferred to the right place.
        Mrs. Biggert. How do they get--
        Ms. Braunstein. I believe that is going to get very--
        Mrs. Biggert. How do they get to you, though, right now,
    with the hotline? How do they know to call you?
        Ms. Braunstein. Well, we have advertised the hotline. I
    would assume there is information in some of their financial
    institutions. And some of the consumers we find just--they kind
    of take a shot in the dark. And they know--the Federal Reserve
    is known, so we get a call. Or the FDIC is known, so people
    pick up the phone and call them.
        And, like I say, if they did call the wrong place, or they
    wrote to the wrong place, we get it to the right place very
    quickly.
        Mrs. Biggert. Ms. Thompson, would you like to comment on
    that?
        Ms. Thompson. Yes. Certainly, the FDIC supports the intent
    of the legislation, and we would just like to make a
    recommendation that there is a clarification in the bill that a
    single toll free number is intended to supplement, and not
    replace, existing processes.
        The FDIC logo is prominently displayed on all insured
    depository institutions, and we do get lots of calls. Apart
    from consumer complaints and inquiries, we get lots of calls
    about deposit insurance, such as, ``Am I covered if a bank
    fails, or is having problem?'' People want to know what their
    deposit insurance status is. So we just want to make sure that
    this supplements, and does not replace.
        Mrs. Biggert. Are you concerned about the possibility that
    the legislation could slow down the projects that you are
    currently working on to improve customer service?
        Ms. Thompson. Well, we are going to move forward with the
    FFIEC program, and we are supportive of anything that makes a
    process easier for consumers to understand. But we would like
    to work out the details.
        Mrs. Biggert. What would be the--I do not know if there
    would be liability, but say somebody does call the hotline, and
    is misdirected to the wrong place, and the consumer never does
    kind of find the right place to--for their complaint, or--and
    then they are not helped.
        Is there any issue on that, or any issue of privacy?
        Ms. Thompson. There are issues regarding privacy, and also
    information security. When people call, they usually call with
    a specific question about their specific bank account, so they
    have to provide identifying information.
        So, we would be very concerned that any system--whether it
    was through the Web or through a telephone--made sure that a
    customer's private information was secure, and that the
    information was safe.
        Mrs. Biggert. Anybody--Mr. Walsh?
        Mr. Walsh. Yes, if I could. I think, in this case, since
    the legislation--since the idea here is focused on a facing-
    the-world new piece of technology, if you will, or a new place
    that people can go to that is unified in nature, and its basic
    purpose is to route calls to the right end point, it has not
    been--I think it was agreed by the council when they met that,
    as Ms. Thompson has mentioned, the idea in the project that we
    are looking at is to add something to the process that would
    handle this routing issue, not to change or interfere with
    other processes.
        The project itself is funded through a cooperation within
    the council, and any eventual 1-800 number, whatever else,
    would similarly be shared cost among the agencies, and that is
    quite routine within the activities of the council.
        So--and as to questions of privacy or protection of the
    information of the consumer, that problem, that issue, exists
    no matter how that intake occurs. So, I think as long as we're
    talking here about simpler and more assured routing, I don't
    see that any substantial problems arise.
        Mrs. Biggert. Thank you. My time is expired. I yield back.
        Chairwoman Maloney. I would like to just add that in the
    Act establishing the council, as Mr. Walsh says, everyone would
    chip in, unless they agree otherwise, so as to maintain maximum
    flexibility.
        And certainly, the intent is not in any way to supplant the
    wonderful activities that many of you are doing already in your
    agencies; it is just to provide a more simplified routing
    system to save consumers time and help them receive the
    information that they need to have more quickly.
        I now recognize Mr. Green for 5 minutes.
        Mr. Green. Thank you, Madam Chairwoman. And, again, I thank
    you for this most valuable piece of legislation.
        Let us start with identifying a term. There is a French
    term, ``voir dire.'' Lawyers are familiar with it. Some of you
    may not be familiar with the term. It is a term that means,
    ``to speak the truth,'' and we use this in trials, so as to
    examine large numbers of persons en masse when we are asking
    our questions. So, I am going to ask questions of you en masse,
    and hopefully I will get through this a little bit faster.
        If you agree that we need one number so that all consumers
    can call one number and be properly routed to the correct
    agency, if you agree that one number is needed that will not
    preempt other numbers, would you kindly raise your hand?
        [Show of hands]
        Mr. Green. Thank you. Let the record reflect that everyone
    agrees that one number that does not preempt other numbers is
    needed.
        If you support this bill, as currently drafted, would you
    kindly raise your hand?
        [Show of hands]
        Mr. Green. Okay. All right. Now, if you did not raise your
    hand then, would you raise your hand now?
        [Show of hands]
        Mr. Green. All right. So, let the record reflect that all
    but one of the witnesses seems to support the bill as currently
    drafted.
        If the bill can be tweaked such that you can find a means
    by which it is acceptable and supported--this would apply to
    Ms. Braunstein--would you conclude that it can be tweaked, such
    that you can support it?
        Ms. Braunstein. Yes. And I do want to say we support the
    intent of the bill, absolutely, 100 percent. We just are not
    sure that it is necessary to sustain momentum, and that we are
    already moving in the direction--
        Mr. Green. Well, now--
        Ms. Braunstein. --that the bill is--
        Mr. Green. Let me just ask you this, Ms. Braunstein. My
    initial question was, do you think we need one number? And your
    response to the initial question was ``yes.''
        Ms. Braunstein. Well, we--that is why we hired a
    consultant, was to move in that direction.
        Mr. Green. Okay. Now, in Texas--
        Ms. Braunstein. I support that we are--
        Mr. Green. So you are getting ready now to do something,
    you are starting to do something. In Texas, we call that,
    ``fixing to do.'' And I appreciate what you are fixing to do,
    but I don't see how that would preclude us from doing what we
    are fixing to do.
        Why would what you want to do preempt in some way what we
    are trying to do? Or should it preempt what we are trying to
    do? Why should it?
        Ms. Braunstein. I guess I do not want to presuppose what
    the conclusions of our consultant will be.
        Mr. Green. Let us assume--
        Ms. Braunstein. And so I cannot predict--
        Mr. Green. Let us assume that your consultant tells you to
    do whatever you can imagine. Would your consultant say to you
    that we don't need that single number, do you think?
        Ms. Braunstein. I don't know that. I would think not, that
    it would not be a problem, which is why I raised my hand about
    the 800 number. But I don't know what the consultant will or
    will not say. I don't think we can predict that.
        Chairwoman Maloney. Will the gentleman--
        Ms. Braunstein. But we are hiring somebody.
        Chairwoman Maloney. Will the gentleman yield for a second?
        Mr. Green. Always to the Chair, absolutely.
        Chairwoman Maloney. The planned study apparently will not
    yield a report until the end of 2008. And don't you think that
    consumers should get the benefits of one-stop shopping and
    information sooner than that? The chairwoman yields back.
        Mr. Green. I would gladly want to hear the lady's response
    to the question.
        Ms. Braunstein. Well, yes. I agree with anything that will
    improve the process for consumers.
        Mr. Green. How is it, Ms. Braunstein, that you would
    conclude that we need the number, but we really do not need the
    number if the number impacts my operation. Let me retract that.
        The number has no impact on what you are doing. You
    continue to do what you are doing. You continue to publish your
    number. You continue to be effective in doing what you are
    doing. Now, why would this number become a problem?
        Ms. Braunstein. It is not.
        Mr. Green. Okay. One more thing. On the question of
    privacy--and, Mr. Walsh, you addressed this, but I just want to
    go back to it--did you not say, sir, that the same question
    exists, regardless of what number we have? Is this correct?
        Mr. Walsh. Well, we would be--we are concerned, we do deal
    very carefully with protection of privacy of any case that is
    brought to us by whatever means, and that would be true whether
    it came through a referral through an 800 number or--
        Mr. Green. So this doesn't present some peculiar set of
    circumstances that we don't already have to cope with?
        Mr. Walsh. I don't believe so.
        Mr. Green. Okay. My final question is this: Do you each now
    have a number for consumers to call? If you do, raise your
    hand.
        [Show of hands]
        Mr. Green. All right. You all have a number. So now, can
    you agree that if you all have a number, if one number can get
    the consumer to each of your numbers, can you agree that would
    be beneficial? If so, would you raise your hand?
        [Show of hands]
        Mr. Green. Okay. Let the record reflect that all persons
    agreed.
        Thank you, Madam Chairwoman. I yield back.
        Chairwoman Maloney. Thank you for your questioning. I now
    recognize Mr. Hodes for 5 minutes.
        Mr. Hodes. Thank you, Madam Chairwoman, and thank you for
    offering this legislation.
        I noted in the testimony of the OCC that there are 70,000
    total cases opened each year. Of those, what is the current
    inventory in active cases? How quickly are your cases turning
    over?
        Mr. Walsh. Within that number, there are about 40,000 that
    are, in fact, inquiries. They are the kind of questions that
    can be answered relatively expeditiously.
        And about 28,000, in the most recent year, became what we
    call actual complaints that were opened, that then have to be
    processed. And the goal, with those complaints, is to complete
    them within 60 days. We have--I am not sure at this moment of
    the backlog. There is always a kind of a time trail behind
    that.
        Our staff has actually been doing Saturday work to work at
    that backlog, because the numbers have been up a bit, although
    not as much as one might expect, given some of the problems
    taking place out in the credit markets.
        Mr. Hodes. Thank you. I appreciate the importance that the
    regulators who are testifying here today place on handling
    consumer complaints, and the efforts that you are making, sort
    of interagency, to work together towards the goal of efficient
    handling and directing of the kinds of complaints we are
    dealing with.
        Are there any statistics that tell us how many total
    consumer complaints, among all the groups of regulators that
    are here today, that we are seeing on an annual basis now? Do
    we know what that number is?
        Mr. Walsh. We certainly know individually. I have not
    consulted with the others to add them together, but we can
    certainly provide that number.
        Mr. Hodes. So, for instance, that piece of information is
    not something that, so far, regulators have gotten together to
    talk about yet. Is that correct?
        Ms. Thompson. We do get together periodically. In fact, we
    get together quite often.
        A couple of years ago, the FDIC sponsored a conference
    where we talked about these issues. This year it was at the
    OCC. Next time it is at the Federal Reserve. We do speak
    frequently.
        But, to your point, there is no mechanism. We would all
    have to get together and bring our numbers. There is no central
    repository of information for that data.
        Mr. Hodes. So, would you agree that it is possible that
    this legislation, and the creation of this number, would
    facilitate that kind of data sharing?
        Ms. Thompson. Yes.
        Mr. Hodes. Ms. Braunstein, you said an interesting thing
    during your oral testimony. In answer to a question about what
    was available to consumers, you said that you assume there is
    some information in their financial institution telling
    consumers who to reach and how to reach them.
        The use of the word ``assumed'' to me was interesting,
    because I am trying to think back--I go into my bank quite
    frequently--about what is displayed, and how I know about where
    to go if I have a complaint. And I am not the most observant
    person in the world, but I cannot think of any prominent
    display in my financial institutions, the ones I use regularly,
    that say, ``If you have a problem, here is where to go.''
        And so, what strikes me in listening to the testimony, and
    reading the testimony that all of you have presented, is that
    the good news is that, in some way, each of the folks here have
    good access for consumers' complaints. Everybody has an 800 or
    an 888 number, and everybody is trying to do something. That is
    the good news.
        The bad news is that everybody has a different 800 number,
    or 888 number, and everybody is trying to do something. And it
    strikes me that, both in terms of data and the ability to
    facilitate sharing, as well as being able to provide one-stop
    shopping for consumers, the number is a good idea.
        I confess I have not read the legislation in detail, so I
    don't know whether this is in there. Would you find that a
    requirement that there be a prominent display in the covered
    financial institutions of the 800 number--assuming that the
    legislation goes through and there is an 800 number--that there
    be a prominent display in each financial institution that says,
    ``Here is your 800 number. If you have a problem, here is where
    to call,'' would be a good idea? I will take it from any one of
    you.
        Ms. Braunstein. I think that is an excellent idea.
        Mr. Hodes. Anybody have a problem with it? Anybody--
        Mr. Neiman. I don't have a problem. I think it is very
    important. And, in fact, even more important with respect to
    operating subsidiaries of institutions.
        So, if you have a mortgage subsidiary that is a mortgage
    subsidiary of a Federal bank, those States would not have any
    jurisdiction, and that complaint should be directed to a
    banking regulator.
        If it is a subsidiary of a holding company, and the
    mortgage subsidiary is regulated by the State, it should be
    directed to the State supervisors.
        So, a mandated number, a national number, whether it be
    prominent in a statement or a brochure or a Web site of that
    service provider, would be extremely helpful.
        Mr. Hodes. Okay. I am actually thinking about some kind of
    poster that is right there, where people are dealing with it,
    where they cannot miss it. That kind of thing, that can direct
    to State or Federal, or whoever it ought to go to, but the
    consumer now knows there is one place to call if you have a
    problem.
        Ms. Braunstein. A poster in the lobby is an excellent idea,
    but a lot of people don't go into their banks anymore, so you
    might also think of other means--
        Mr. Hodes. Sure. Understood. Great. Thank you. I have no
    further questions at this time. Thank you very much.
        Chairwoman Maloney. I thank my colleagues for their
    questions, and I would like to note that all of the witnesses'
    testimony, their written testimony, will be made a part of the
    hearing record.
        And I would like to note that members who may not have been
    able to be here--it is a busy week--will have an additional
    opportunity to ask questions of this panel. They may submit
    them in writing and without objection, the hearing record will
    remain open for 30 days for members to submit written questions
    to these witnesses and to place their responses in the record.
        I thank you very much for your time and for your excellent
    testimony today. Thank you for being here, and we will go to
    the next panel.
        I now recognize and welcome Jeannine Kenney, the senior
    policy analyst of the Consumers Union, and Edmund Mierzwinski,
    the consumer program director of U.S. Public Interest Research
    Group. Thank you both for being here.
        First, Ms. Kenney, the senior policy analyst of Consumers
    Union.

     STATEMENT OF JEANNINE KENNEY SENIOR POLICY ANALYST, CONSUMERS
                                 UNION

        Ms. Kenney. Thank you, Madam Chairwoman, and members of the
    subcommittee. On behalf of Consumers Union and the Consumer
    Federation of America, we appreciate this opportunity to talk
    about the significant barriers that consumers face when they
    simply want to complain about their bank.
        Assuming consumers even know they have the right to
    complain in the first place, it is understandable that they
    have such difficulty in knowing where and how to complain.
        Consider what consumers must understand to know where to
    complain. They must know that there is a difference between a
    national bank and a State chartered bank, and that there is an
    OCC, and that it regulates national banks. They must know that
    the national bank operating subsidiaries--which may not call
    themselves banks--are regulated by the OCC, as well. They must
    know that the Fed supervises State-chartered banks that are
    members of the Reserve system, but that the FDIC supervises
    State-chartered banks that are not members of the Federal
    Reserve system.
        They must know that there is a difference between a bank
    and a savings and loan, that a savings bank is a thrift, and
    that the OTS regulates them. And they must know that credit
    unions can be State- or federally-chartered, and that there is
    an NCUA.
        This sounds ridiculous, and it is. To most consumers, a
    bank is a bank is a bank. Regardless of how and by whom it is
    regulated, they need to know how to complain. And when they
    have a problem, it should be easy for them to do so. Right now,
    it is difficult for all but the most persistent consumer to
    determine where, how, and to whom they should complain. And
    faced with a dizzying array of options, consumers may simply
    give up.
        A single consumer toll free complaint hotline provided for
    in your legislation, Madam Chairwoman, The Financial Consumer
    Hotline Act, is an excellent first step in rectifying the
    inherent difficulties created by what is a fragmented and
    Byzantine regulatory system, and we are pleased to offer our
    support for it.
        We also applaud the legislation's directive that the
    agencies report back to Congress on their efforts to establish
    a single interagency Web site for the routing of complaints,
    and are pleased that the agencies are working together to look
    for improvements.
        But to be truly effective, a complaint system must do the
    following: It must be easy for consumers to access and use; it
    must be effective for the individual consumer; and it must
    provide transparent and meaningful results to the Congress, to
    the public, and to the regulators.
        To that end, we would argue that the agencies should
    establish a seamless, integrated complaint system on the front-
    end--not just a referral site or a toll-free number--with a
    consistent complaint procedure, a single, easy-to-understand
    complaint form, a single snail-mail and e-mail address, and a
    single fax number.
        So long as the agencies maintain their own stovepipe Web
    pages, the confusion will simply not end. The agencies should
    work out the difficulties and complexities on the back-end, and
    those complexities should remain hidden to consumers.
        In addition, both formal and informal complaints should be
    accepted by phone and via secure online connection. The current
    requirement by most agencies that consumers mail their formal
    complaints erects just one more barrier to the process. And any
    single Web site and hotline should be widely promoted, as the
    prior panel suggested.
        But perhaps most importantly, an effective complaint system
    should not discourage consumers from complaining, but encourage
    consumer input, commentary, and complaints. We believe that the
    current system is structured not just so that the process
    itself discourages complaints, but so that the substance of the
    Web sites and the brochures that the agencies provide subtly
    discourage consumers from complaining.
        Consumers are told to contact their bank first, before
    complaining. Someone upset by the conduct of their bank is
    understandably discouraged by this advice, and it probably
    means that some violations of law will go undetected by the
    regulator.
        Consumers are also told that their complaint will be routed
    to the bank for a response, a process unlikely to be
    encouraging to a consumer who has been down that road, only to
    hit a dead end.
        They are told that when it comes down to believing what the
    bank said and the consumer said--that is, when there is a
    question of fact--the consumer is on her own, and advised to
    consult legal counsel, an option ludicrous on its face for all
    but the most significant financial injuries.
        OCC's HelpWithMyBank Web site advises consumers to contact
    the complaint line if they cannot find their answer online.
    Unfortunately, when they look for the answer online, they are
    more frequently than not told that what the bank is doing that
    is so bothering them is perfectly legal. The content on the Web
    site provides, more often than not, what the bank's rights are,
    not what the consumer's rights are. Also, as we point out in
    our written testimony, in some cases, the information is flat
    out wrong.
        On an issue I know you have been very concerned about,
    Madam Chairwoman, overdraft loan fees, on HelpWithMyBank,
    consumers are told that there are no limits on the size of fees
    that banks must charge, that banks are not required to process
    checks so as to avoid overdraft fees, that banks get to choose
    whether to reject the check or charge the overdraft fee, that
    the law does not require deposits be processed before debits,
    and so on.
        Nowhere, by the way, are consumers told that they could
    opt-out of this service and pursue other, less costly,
    overdraft protection services.
        Would any rational consumer bother to tell the regulator
    that they don't like what the banks are doing on overdraft loan
    fees in the face of this information? Of course not. And that
    means the regulators are missing out on critical consumer
    input. The reality is that consumers will not waste their time
    when the consistent message from the regulators is, ``We cannot
    or we will not help you.''
        And although most complaint centers describe themselves as
    neutral arbiters, consumers can be forgiven for thinking the
    deck is stacked against them. When they bother to file a formal
    complaint, they are going to, more often than not, receive a
    ``tough-luck'' letter. Consumers deserve a regulator that
    serves as their advocate, not their adversary.
        Finally, we would urge a single technical platform for the
    agencies with a uniform complaint coding system, so that we can
    facilitate information sharing of trends regarding the types of
    complaints. And the coding system should be granular, so we
    know exactly what consumers are complaining about, not just the
    broad categories that we hear about in the OCC Ombudsman
    Report.
        Finally, the complaint system must be more transparent to
    policymakers and the public. Right now, it is not. We receive
    general information. We don't even know, unless we do the math
    ourselves, how many complaints the agencies are receiving.
        So, with that, Madam Chairwoman, thank you very much.
        [The prepared statement of Ms. Kenney can be found on page
    42 of the appendix.]
        Chairwoman Maloney. Thank you very much for your testimony.
        Mr. Edmund Mierzwinski.

      STATEMENT OF EDMUND MIERZWINSKI, CONSUMER PROGRAM DIRECTOR,
                  U.S. PUBLIC INTEREST RESEARCH GROUP

        Mr. Mierzwinski. Thank you, Chairwoman Maloney, and members
    of the committee. I am pleased to testify in support of your
    legislation to establish a joint hotline among the several
    Federal bank regulators, and also the requirement that there be
    a study done of a joint Web site for the regulators, as well.
        We support, in addition, a number of other suggestions and
    changes to improve the legislation, and some other changes that
    may go beyond the intent or the scope of the legislation, but
    that we think would be important for the subcommittee to
    consider in future legislation.
        The great science fiction writer and futurist, Arthur C.
    Clarke, once said that any sufficiently advanced technology is
    indistinguishable from magic.
        Unfortunately, there is nothing magical about dealing with
    a Federal bank regulator. Consumers who complain to us are very
    frustrated with their interactions with the banks. We believe,
    however, that your legislation will go a long way toward
    creating a seamless interaction.
        The first recommendation we would have--and we concur with
    Consumers Union and the CFA on this, of course--is to establish
    one-stop consumer complaint shopping, no matter what the point
    of entry is, whether it is phone, Web, e-mail, fax, snail mail,
    or perhaps even a walk in.
        Consumers should have one Web form, one complaint form, and
    they shouldn't have to deal with figuring out anything. The Web
    site or the bank telephone numbers should figure out, ``Okay,
    here is a complaint. We have taken it in, we will figure out
    who to send it to, we are not going to ask the consumer to
    decide is it a national bank or is it a State bank, is it a
    national bank or is it an operating subsidiary.''
        The OCC's Web site currently requires this sort of forensic
    examination by a consumer through a set of drill-down menus.
    The consumer should not have to deal with anything like that.
        We believe that this intake system, this centralized
    source, should also be in both English and Spanish, to start,
    and perhaps in other languages in the future.
        Also, and I believe some of the bank regulators even may
    have supported this concept, which surprised me--is that we
    believe there should be advertising at point-of-sale in the
    banks.
        We suggest something like a complaint busters logo, modeled
    after the Ghost Busters, ``Who are you going to call,'' or Mr.
    Yuck at the Poison Control Center, something easy to remember,
    something easy to identify, something that consumers will see
    and say, ``Look, if I have a problem with my bank, I see the
    poster on the wall, or I see the link on the Web site, and I
    will contact this number.'' Something like that would greatly
    aid in pushing this out into the public's eye.
        And even if we can't get legislation enacted that requires
    it to be posted in every bank, it should certainly be promoted
    by the regulators in some way.
        Much of the problem that consumers face is that the problem
    isn't finding a bank regulator, it is getting a bank regulator
    to do something about their problem. The most recent studies of
    the GAO on the bank complaint handling process at the
    regulators suggest that the number one recommendation of the
    regulators is, ``Sorry, we cannot help you, it is a contractual
    matter.'' ``Go to court,'' or something like that, but ``Sorry,
    we cannot help you, go away.'' And the least common response of
    the bank regulators to a complaint is that, ``The bank made an
    error.''
        In our view, the bank regulators aren't even balanced in
    the middle. They are, essentially, on the side of the banks. So
    we would suggest that you take some of the money that the
    regulators receive in the form of fees--and they mostly are
    outside the Federal budget process, they mostly get their money
    from fees from regulated institutions--and put that money into
    the centralized source, and make the centralized source into an
    advocate for consumers.
        We already have a model in about 40 States that have a
    national association of State utility consumer advocates. They
    take a portion of utility fees, and they create a regulator who
    simply acts on behalf of consumers.
        To go even further, you could establish something that
    consumer groups have been supporting for years, and then-
    Congressman Schumer supported 20 years ago, which was the
    establishment of a financial consumers association that is
    chartered by the government, but run by consumers and paid for
    by dues, that has an opportunity to raise money by putting
    inserts in bank account statements.
        Again, I think Mr. Neiman strongly supported a lot of
    this--we need to require accountability of complaint systems.
    We need to have data more easily available to you, the
    policymakers, to me, to the public, to academics, and to
    others. What if the top 10 banks were ranked on the basis of
    their per capita level of complaints? What if the 10 worst
    banks appeared on a Web site? This would be very interesting,
    to have the regulators posting this kind of information, which
    would help the market work.
        But, at a minimum, we really need to look at getting more
    information about these complaints out there without having to
    file FOIAs and receive data full of redactions months or years
    later, which is the current situation of dealing with the bank
    regulators.
        We need to address the toxic regulatory culture. As I
    indicated, the regulators just aren't on the side of consumers.
    I do not have time to go into this today, but in our joint
    testimony, of all the consumer groups presented by Travis
    Plunkett of the CFA at your hearing this summer, we presented a
    number of the issues, a number of the problems.
        For example, the Federal Reserve, the only agency not to
    fully support your legislation today, has tremendous legal
    authority today to ban some of the most unfair bank practices,
    which it simply chooses not to use.
        Next, we really believe you need to reinstate State
    attorney general enforcement authority over Federal banks and
    other Federal institutions. Again, it is a long-standing
    concern of the consumer groups that the OCC's preemption
    determinations, as upheld by the courts, are unfair. We need
    more consumer cops on the beat. We need the competition between
    State and Federal regulators to come up with the best public
    policies.
        And, finally, as I indicated earlier, the major response
    that the bank regulators make to consumers, according to GAO
    reports to the Congress is, ``Go away, your complaint is
    contractual.'' Well, the consumer can't take that complaint to
    court, because mandatory arbitration provisions in their bank
    contracts prevent them from going to court.
        So, we support Representative Hank Johnson's legislation,
    The Arbitration Fairness Act, that would eliminate binding
    mandatory arbitration as a requirement in all consumer
    contracts. Thank you very much.
        [The prepared statement of Mr. Mierzwinski can be found on
    page 61 of the appendix.]
        Chairwoman Maloney. Well, I would like to thank both of you
    for your testimony.
        But as you heard from the first panel, the Federal Reserve
    says that this legislation is not necessary to encourage the
    banking agencies to develop a consumer response program such as
    hotlines.
        What is your view of this? Is the Fed doing enough on its
    own, or do we need this legislation?
        Ms. Kenney. Well, I imagine that Ed and I are not in
    disagreement on this.
        Certainly, we are pleased that the interagency working
    group is moving forward on this. But, frankly, it is long
    overdue. And there is nothing duplicative about legislation
    that holds the regulators' feet to the fire, and ensures that
    they do what they should have done a very long time ago.
        Mr. Mierzwinski. We would agree. I was pleased, when I
    looked on the Fed's Web site, when I was preparing my
    testimony. They now have consumers on the homepage, and that is
    good. But they need to do more. They need to support this
    legislation.
        And, even if they don't, go forward without them.
        Chairwoman Maloney. I would like you to comment on the
    suggestions by Superintendent Neiman for additions to the bill.
        Do you agree that adding a requirement for tracking trends
    and case numbers could help with congressional oversight, and
    provide a factual basis for seeing if legislation on a
    particular issue is needed, for example?
        I would also like to respond to your testimony that we need
    to track whether or not consumers are satisfied with the
    answers. It is one thing to be able to lodge a complaint, but
    have they gotten an answer that allows them to correct the
    situation, or improve the situation?
        Ms. Kenney. We would certainly agree, and I think indicate
    in our written testimony, that a really fundamental function of
    a complaint system is tracking consumer attitudes, not just
    formal violations of law. And that is an opportunity that the
    current system, because it is stovepiped, and because it
    discourages those types of comments, really misses out on.
        So, absolutely. I mean, it is a little bit shocking if
    tracking is not happening now, I think. And, certainly, all of
    these agencies need to do a better job in tracking consumer
    satisfaction with the resolution. We hear from consumers who
    are not just frustrated because they can't figure out where to
    complain, but who are really unhappy with the outcome that
    simply says this outrageous practice was disclosed in a
    contract you saw 4 years ago, and so, take it up with your bank
    or go talk to a lawyer.
        Mr. Mierzwinski. We agree.
        Chairwoman Maloney. Okay. And finally, to what extent are
    statistics currently available to you, as advocates for bank
    customers?
        You mentioned the overdraft challenge. Is there a way that
    you can track how many consumers are disturbed about this
    practice? To what extent are statistics there for you to track
    trends that are extremely burdensome to consumers?
        Ms. Kenney. Well, Madam Chairwoman, we do have the data
    that is sort of reported in bulk by the agencies, which the OCC
    now reports in the Ombudsman Report, which gives you very broad
    categories of complaints by product, and then within each
    individual product.
        But frankly, it is very difficult for us to know without--
    as Ed mentioned, you know--doing a FOIA request, how many
    people, for example, are complaining about overdrafts. And,
    even within the overdraft category, what specifically they are
    annoyed about. The size of the fees? The number of fees? The
    order of processing? Check hold times? And so forth.
        Mr. Mierzwinski. Yes. We would certainly agree that it is
    very difficult to obtain information, other than the summary
    data that they provide, unless you file a very specific FOIA
    request.
        I would also take this opportunity to say that the other
    place that the consumer groups find inadequate data
    availability is in the call reports. When we want to compare
    different banks, and figure out how much money they are making
    on all their new fees, the call reports are extremely
    inadequate.
        I know there are some government GAO studies of call
    reports going on now, but it would greatly aid us if we could
    get all of this information without having to file FOIAs,
    without having to jump through hoops.
        Chairwoman Maloney. Well, my time has expired. I now
    recognize Congressman Green for 5 minutes. Thank you.
        Mr. Green. Thank you, Madam Chairwoman. Madam Chairwoman,
    if I had any doubt prior to hearing these two witnesses, it has
    been completely eliminated. I again commend you for the
    simplicity of the idea that will deal with what appears to be a
    very complex set of circumstances.
        As indicated, the system appears to be Byzantine. In a
    polyglot society, that makes for an unusual set of
    circumstances.
        So, Ms. Kenney, let me ask you the question, given that we
    are a polyglot society, should we have multiple languages
    available to persons who call in?
        Ms. Kenney. Absolutely. And certainly starting with the
    most frequently spoken non-English languages on the Web site,
    as well as on the hotline. I know that does create some
    resource issues, but we certainly need to be responsive to all
    types of consumers who are aggrieved by their bank, and
    particularly those who have fewer resources available to them.
        Mr. Green. Thank you. And because I have really enjoyed
    hearing your testimony, not because you have a melodious
    voice--although you do sound good--but because of the substance
    that you presented. It was overwhelming, to a certain extent.
        So, permit me to ask this, so as to enhance your level of
    acceptance among a diverse group of folk who will have to pass
    judgement on what we are doing. How are you funded? Let us
    start with Ms. Kenney. How is your organization funded?
        What I am trying to get to is this: Do you have an axe to
    grind? Is there some reason for you to come to Congress and
    present the kind of testimony that you presented? And I think
    you spoke well. Is there some reason that you would have to do
    this, other than that you want to see the right thing done?
        So, tell us, how are you funded, if you do not mind?
        Ms. Kenney. Thank you, Congressman Green, for your kind
    words. Consumers Union is a nonprofit organization fully funded
    by consumer subscriptions to our print magazine, to our online
    Web site, as well as to some of our other print products, such
    as our health and financial newsletters. And we receive some
    charitable contributions from foundations. But we receive no
    corporate support, and accept no advertising, whatsoever.
        Our goal is to protect consumers and to inform them.
        Mr. Green. And when you arrive at the positions that you
    espouse, do you--how do you synthesize these positions? You do
    not just wake up one morning and say, ``You know what? I think
    this is a good idea.'' Is there some process that you go
    through to arrive at the position that you have arrived at?
        Ms. Kenney. Yes. Certainly one of the advantages that we
    have is we work across a wide range of substantive areas, and
    we can see difficulties facing consumers across those areas in
    some of the same categories.
        And, certainly, the banking agencies are not alone in the
    difficulties of the complaint procedures and the unsatisfactory
    results that they yield. So, certainly, we look at a wide range
    of issues and analyze them. We have been looking at the banking
    complaint procedure for some time now, and we will be writing
    about it in an upcoming issue of our magazine, Consumer
    Reports, as well.
        Mr. Green. All right. Let me pass to--and sir, I will not
    embarrass myself by--
        Mr. Mierzwinski. That is okay. It is ``Mierzwinski.''
    Simple.
        Mr. Green. Thank you.
        Mr. Mierzwinski. Congressman Green, we are an independent,
    nonprofit organization. We serve as the federation of State
    public interest research groups, and we are funded solely by
    individual donations. About half of the State PIRGs have
    college chapters, and all of the State PIRGs have individual
    citizen members.
        We knocked on doors--over four million, five million
    doors--this summer, asking people to join our organizations.
    And we also accept some charitable contributions from
    independent foundations. We accept no corporate money,
    whatsoever, and we accept no government grants, either.
        We come upon our positions based on taking a hard look at
    what is the right public policy solution to a problem. We
    conduct our own research, we do our own surveys. We have done a
    number of studies, for example, of bank fees called The Big
    Banks Big Fees studies, and we have done this in a number of
    other areas that we participate in, as well as banking.
        Mr. Green. Thank you. I yield back the balance of my time.
        Chairwoman Maloney. Thank you so much. Congressman Hodes,
    for 5 minutes.
        Mr. Hodes. Thank you, Madam Chairwoman. Thank you both for
    your testimony. I am struck, as a new Member of Congress, now
    having been here a year, by the complexity of the regulatory
    schemes facing consumers, and the clear testimony that comes
    across that the regulators are not attuned to protecting
    consumers, that the culture that we are faced with is one that
    has, in fact, set up barriers to consumers, and in which
    consumers are given short shrift.
        According to Mr. Mierzwinski, what you saw on the Web site
    with the Federal Reserve was, for the first time, you said you
    saw the word ``consumer'' on there. But it does not sound like
    it is very prominently displayed.
        Now, some of your suggestions, Mr. Mierzwinski, for
    amendments or additions or considerations in the bill, sound
    like you are advocating that there be a consumer ombudsman
    office associated with this 800 number. Am I getting that
    right?
        Mr. Mierzwinski. I think that is absolutely the case. And
    the situation we have today is that the bank regulators have a
    dual responsibility. They supervise the banks and they also
    promote the banks. They are required to do a job that makes
    them too cozy with the banks.
        Consumers do not have an ombudsman. I realize there is an
    ombudsman at the OCC, but the legal responsibility of that
    ombudsman is not to protect consumers. There are 40 State
    officials known as utility councils, or people's council, who
    bring cases on behalf of consumers in the State utility arenas.
        There could be a model like that here. Why don't we make
    the centralized source, the centralized complaint handling
    system, an advocate for consumers, rather than simply a
    pipeline to the existing agencies, which, again, in our view,
    have a culture that is pro-bank, not even unbiased, but
    literally pro-bank.
        Mr. Hodes. And whether or not this legislation is the right
    vehicle for that idea, and whether or not--it certainly sounds
    like it is important for this committee to address the kind of
    cultural disconnect that you have raised in your testimony
    between the regulators' obligation to their institutions and
    the need for help for consumers. So I appreciate your thinking
    on that.
        I also take it that it sounds like you share my thought
    about the prominence with which the 800 number and
    communication about it needs to happen in today's talk show/
    deficit disorder culture, in order to reach consumers in as
    clear and simple a way as we would like it to happen with this
    800 number.
        Mr. Mierzwinski. I think, without a doubt, if you don't do
    that, then the system will fail. And I would strongly recommend
    you don't call it the FFIEC hotline, for example.
        Mr. Hodes. All right. All right. Follow the KISS principle?
        Mr. Mierzwinski. Right, exactly.
        Mr. Hodes. Do you also think that Congress needs to go so
    far as--let us assume that we have this legislation about the
    800 number--requiring the regulatory agencies to display
    information about it on their Web sites and in their
    information in a particular way, with particular prominence, in
    a particular style, or is that something that we simply leave
    up to them?
        Mr. Mierzwinski. Well, that is exactly my view, is it
    should be something like ``Ghost Busters'' or ``Mr. Yuck.'' It
    should be something that they all have that is the same, so
    that people know that, hey, it is easier to go here. And that,
    ideally, would go into a bank.
        So, if I walk into a national bank, I see Mr. Yuck or Ghost
    Busters. If I walk into a State bank or an operating
    subsidiary, no matter where I go, I see the same logo. Right
    now, the only logo that goes across all the depository
    institutions is the FDIC logo, because they insure them all,
    except for the credit unions, which are insured by the credit
    union share fund.
        So, that is the only non-confusing logo that is out there.
    And we need something like that, so people understand that when
    they really want help with their bank, there is a one-stop
    shopping central source, complaint-busters site.
        Mr. Hodes. Thank you very much. I appreciate it. I yield
    back with great appreciation, Madam Chairwoman.
        Chairwoman Maloney. Thank you. And thank you for your
    attendance and questions. I would like to note that without
    objection, your written testimony, in its entirety, will be
    made a part of the record, and that the record will remain open
    for 30 days, so that members will have an opportunity to submit
    written questions to you, and to place your responses in the
    record. I thank you very much for your time and your testimony
    today, and for all of your hard work. Thank you.
        The hearing is now adjourned.
        [Whereupon, at 11:43 a.m., the hearing was adjourned.]

                                A P P E N D I X

                               December 12, 2007

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