[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

                     U.S. GOVERNMENT PRINTING OFFICE

40-436 PDF                 WASHINGTON DC:  200?
---------------------------------------------------------------------
For sale by the Superintendent of Documents, U.S. Government Printing
Office  Internet: bookstore.gpo.gov Phone: toll free (866)512-1800
DC area (202)512-1800  Fax: (202) 512-2250 Mail Stop SSOP, 
Washington, DC 20402-0001

























                 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

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

