[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]
H.R. 4332, THE FINANCIAL CONSUMER
HOTLINE ACT OF 2007: PROVIDING
CONSUMERS WITH EASY ACCESS TO THE
APPROPRIATE BANKING REGULATOR
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON FINANCIAL INSTITUTIONS
AND CONSUMER CREDIT
OF THE
COMMITTEE ON FINANCIAL SERVICES
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED TENTH CONGRESS
FIRST SESSION
__________
DECEMBER 12, 2007
__________
Printed for the use of the Committee on Financial Services
Serial No. 110-84
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HOUSE COMMITTEE ON FINANCIAL SERVICES
BARNEY FRANK, Massachusetts, Chairman
PAUL E. KANJORSKI, Pennsylvania SPENCER BACHUS, Alabama
MAXINE WATERS, California RICHARD H. BAKER, Louisiana
CAROLYN B. MALONEY, New York DEBORAH PRYCE, Ohio
LUIS V. GUTIERREZ, Illinois MICHAEL N. CASTLE, Delaware
NYDIA M. VELAZQUEZ, New York PETER T. KING, New York
MELVIN L. WATT, North Carolina EDWARD R. ROYCE, California
GARY L. ACKERMAN, New York FRANK D. LUCAS, Oklahoma
JULIA CARSON, Indiana RON PAUL, Texas
BRAD SHERMAN, California STEVEN C. LaTOURETTE, Ohio
GREGORY W. MEEKS, New York DONALD A. MANZULLO, Illinois
DENNIS MOORE, Kansas WALTER B. JONES, Jr., North
MICHAEL E. CAPUANO, Massachusetts Carolina
RUBEN HINOJOSA, Texas JUDY BIGGERT, Illinois
WM. LACY CLAY, Missouri CHRISTOPHER SHAYS, Connecticut
CAROLYN McCARTHY, New York GARY G. MILLER, California
JOE BACA, California SHELLEY MOORE CAPITO, West
STEPHEN F. LYNCH, Massachusetts Virginia
BRAD MILLER, North Carolina TOM FEENEY, Florida
DAVID SCOTT, Georgia JEB HENSARLING, Texas
AL GREEN, Texas SCOTT GARRETT, New Jersey
EMANUEL CLEAVER, Missouri GINNY BROWN-WAITE, Florida
MELISSA L. BEAN, Illinois J. GRESHAM BARRETT, South Carolina
GWEN MOORE, Wisconsin, JIM GERLACH, Pennsylvania
LINCOLN DAVIS, Tennessee STEVAN PEARCE, New Mexico
ALBIO SIRES, New Jersey RANDY NEUGEBAUER, Texas
PAUL W. HODES, New Hampshire TOM PRICE, Georgia
KEITH ELLISON, Minnesota GEOFF DAVIS, Kentucky
RON KLEIN, Florida PATRICK T. McHENRY, North Carolina
TIM MAHONEY, Florida JOHN CAMPBELL, California
CHARLES A. WILSON, Ohio ADAM PUTNAM, Florida
ED PERLMUTTER, Colorado MICHELE BACHMANN, Minnesota
CHRISTOPHER S. MURPHY, Connecticut PETER J. ROSKAM, Illinois
JOE DONNELLY, Indiana KENNY MARCHANT, Texas
ROBERT WEXLER, Florida THADDEUS G. McCOTTER, Michigan
JIM MARSHALL, Georgia KEVIN McCARTHY, California
DAN BOREN, Oklahoma
Jeanne M. Roslanowick, Staff Director and Chief Counsel
Subcommittee on Financial Institutions and Consumer Credit
CAROLYN B. MALONEY, New York, Chairwoman
MELVIN L. WATT, North Carolina JUDY BIGGERT, Illinois
GARY L. ACKERMAN, New York TOM PRICE, Georgia
BRAD SHERMAN, California RICHARD H. BAKER, Louisiana
LUIS V. GUTIERREZ, Illinois DEBORAH PRYCE, Ohio
DENNIS MOORE, Kansas MICHAEL N. CASTLE, Delaware
4PAUL E. KANJORSKI, Pennsylvania PETER T. KING, New York
MAXINE WATERS, California EDWARD R. ROYCE, California
JULIA CARSON, Indiana STEVEN C. LaTOURETTE, Ohio
RUBEN HINOJOSA, Texas WALTER B. JONES, Jr., North
CAROLYN McCARTHY, New York Carolina
JOE BACA, California JUDY BIGGERT, Illinois
AL GREEN, Texas SHELLEY MOORE CAPITO, West
WM. LACY CLAY, Missouri Virginia
BRAD MILLER, North Carolina TOM FEENEY, Florida
DAVID SCOTT, Georgia JEB HENSARLING, Texas
EMANUEL CLEAVER, Missouri SCOTT GARRETT, New Jersey
MELISSA L. BEAN, Illinois GINNY BROWN-WAITE, Florida
LINCOLN DAVIS, Tennessee J. GRESHAM BARRETT, South Carolina
PAUL W. HODES, New Hampshire JIM GERLACH, Pennsylvania
KEITH ELLISON, Minnesota STEVAN PEARCE, New Mexico
RON KLEIN, Florida RANDY NEUGEBAUER, Texas
TIM MAHONEY, Florida GEOFF DAVIS, Kentucky
CHARLES A. WILSON, Ohio PATRICK T. McHENRY, North Carolina
ED PERLMUTTER, Colorado JOHN CAMPBELL, California
KEVIN McCARTHY, California
C O N T E N T S
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Page
Hearing held on:
December 12, 2007............................................ 1
Appendix:
December 12, 2007............................................ 33
WITNESSES
Wednesday, December 12, 2007
Braunstein, Sandra F., Director, Consumer and Community Affairs,
Board of Governors of the Federal Reserve System............... 6
Kenney Jeannine, Senior Policy Analyst, Consumers Union.......... 23
McConnell, Cassandra, Director, Consumer and Community Affairs,
Office of Thrift Supervision................................... 9
Mierzwinski, Edmund, Consumer Program Director, U.S. Public
Interest Research Group........................................ 25
Neiman, Richard H., Superintendent of Banks, New York State
Banking Department, on behalf of the Conference of State Bank
Supervisors and the New York State Banking Department.......... 13
Skiles, J. Leonard, Executive Director, National Credit Union
Administration................................................. 11
Thompson, Sandra L., Director, Division of Supervision and
Consumer Protection, Federal Deposit Insurance Corporation..... 8
Walsh, John G., Chief of Staff and Public Affairs, Office of the
Comptroller of the Currency.................................... 4
APPENDIX
Prepared statements:
Braunstein, Sandra F......................................... 34
Kenney Jeannine.............................................. 42
McConnell, Cassandra......................................... 53
Mierzwinski, Edmund.......................................... 61
Neiman, Richard H............................................ 69
Skiles, J. Leonard........................................... 78
Thompson, Sandra L........................................... 87
Walsh, John G................................................ 100
H.R. 4332, THE FINANCIAL CONSUMER
HOTLINE ACT OF 2007: PROVIDING
CONSUMERS WITH EASY ACCESS TO THE
APPROPRIATE BANKING REGULATOR
----------
Wednesday, December 12, 2007
U.S. House of Representatives,
Subcommittee on Financial Institutions
and Consumer Credit,
Committee on Financial Services,
Washington, D.C.
The subcommittee met, pursuant to notice, at 10:03 a.m., in
room 2128, Rayburn House Office Building, Hon. Carolyn B.
Maloney [chairwoman of the subcommittee] presiding.
Members present: Representatives Maloney, Waters, McCarthy,
Green, Hodes, Klein; Biggert and Royce.
Chairwoman Maloney. This hearing of the Subcommittee of
Financial Institutions and Consumer Credit will come to order.
The hearing will focus on H.R. 4332, the Financial Consumer
Hotline Act of 2007. The bill establishes a single toll free
telephone number that consumers can call if they have a problem
with their bank, and want to speak to the appropriate banking
regulator.
I would like to welcome all of the witnesses, and thank
them for their time, their testimony, and for being here today.
For our first panel, we will hear from representatives of:
the Office of the Comptroller of the Currency; the Federal
Deposit Insurance Corporation; the National Credit Union
Administration; and the Office of Thrift Supervision. We will
also hear from Superintendent Richard Neiman--a very special
welcome to him from my home State of New York--who is here on
behalf of the Conference of State Bank Supervisors.
A second panel will include witnesses from consumer groups.
This legislation builds on a suggestion that Comptroller
Dugan put forward in a hearing before this committee back in
June, to provide consumers one-stop service with their banking
regulatory issues. Given that depository institutions in the
United States can be regulated by any of five Federal
regulators or a State regulator, consumers often don't know
what entity to call if they have a problem.
Apparently, customers often end up calling their attorney
general, or the FDIC, even if that is not the right regulator,
because their bank window or Web site states that the
institution is FDIC-insured.
We hope and expect this legislation will be cost-efficient
as well as consumer-friendly. Right now, as our witnesses will
explain, each of the agencies has a Web site, provides a phone
number for consumers to call with questions, and has a staff to
follow up on complaints or inquiries.
The single hotline will help route calls to each agency
more quickly, and encourage frustrated consumers to call and
get answers to their questions. The establishment of a single,
toll free number could also assist the banking regulators in
compiling consumer complaints and inquiries, so that better
information would be available about problems or issues that
cut across institutions that the various agencies supervise.
Congressional legislation and oversight would also be
better informed by such centralized statistics. Also, the
establishment of a single, toll free number could help raise
the profile of banking regulators as consumer resources. This
committee has called on the Federal bank regulators to provide
more consumer assistance in a variety of contexts throughout
this Congress, and this is a simple way to get this started.
The legislation directs the Federal financial institutions'
examination council to set up the hotline. The council is an
existing interagency body established by statute to prescribe
uniform principles and standards for financial institutions,
and to otherwise coordinate regulatory activity among the
Federal banking regulators.
The Federal Reserve, FDIC, NCUA, OCC, and OTS are all
members of the council. The legislation also directs the
council to work with State banking regulators to integrate them
into the hotline service. And Superintendent Neiman of the New
York State Banking Department is here on behalf of New York and
the Conference of State Bank Supervisors to address how that
will be implemented.
He has also come forward with a number of suggestions to
improve the legislation, and I thank him for that. The Act also
requires the council to report to Congress 6 months after
enactment on the Agency's efforts to establish a public
interagency Web site, likewise directing and referring consumer
complaints and inquiries received on the Internet concerning
any financial institution to the appropriate Federal or State
financial institution regulatory service.
I should note that not only the OCC, but the council as a
whole has taken some steps in this direction on its own
initiative, with an eye to both cutting costs and improving
service to consumers.
This past fall, the council formed a working group to study
ways in which the separate consumer complaint handling systems
of each regulator could be streamlined and leveraged to better
and more efficiently serve customers. The council is
considering hiring an independent consultant to evaluate the
existing centers and make recommendations on how that might be
consolidated.
This legislation provides a statutory mandate that supports
and guides these efforts in a framework for congressional
oversight. It is an important step forward. It is simple to
implement, but very necessary. I very much look forward to the
testimony, and I recognize Mrs. Biggert, the ranking member,
for 5 minutes.
Mrs. Biggert. Thank you very much, Madam Chairwoman, and
thank you for calling today's hearing. In these challenging
times, it's important that consumers be able to quickly and
easily get in touch with State and Federal banking regulators
to provide comments or to make complaints about their financial
institutions.
I think, given the complexity of our banking system and the
various regulators that work in this area, consumers may not
know where to turn when they have a dispute with their
institutions.
The chairwoman has introduced legislation to create a
single hotline to try to alleviate any consumer confusion. I
think this idea is worthy of consideration, and I am interested
to learn more about it today.
It is my understanding that regulators already have an
informal system in place to redirect misplaced consumer
complaints, a system that they are constantly trying to
improve. For example, when the OCC receives a complaint from a
consumer about a thrift that should have been directed to the
OTS, it is my understanding that these informal agreements
exist to make every reasonable effort to redirect the complaint
to the overseer of that thrift.
I hope to hear more about this informal network, and how
the regulators ensure that no consumer complaint falls through
the cracks. Consumers should not be punished for misplaced
complaints.
I am also interested to hear what our witnesses think about
such a hotline, and how that would work. It is--in my view, any
hotline should be, number one, easy for consumers to register
complaints or inquiries, and number two, simple for the
regulators to obtain and evaluate the meaningful information
provided.
I look forward to the testimony today and to working with
the chairwoman to ensure that consumer complaints are heard and
that regulators are responsive. I yield back.
Chairwoman Maloney. Thank you. I now recognize Congressman
Green for 5 minutes, and welcome him up to the top panel, since
not a lot of people are here. Thank you for being here.
Mr. Green. Thank you, Madam Chairwoman, and I thank the
ranking member, as well. And I would like to associate myself
with the comments made by each of you.
I would also like to thank the persons who are here to
testify today. I have had an opportunity to meet several of
you, and I am very much impressed with the outstanding list of
witnesses that we have. I, too, am of the opinion that a
hotline can be of great benefit to consumers, especially given
the amount of concern that is currently in the marketplace with
reference to banking, financial institutions, and some of the
home mortgage concerns.
I think that, while this may not address all of the
consumer complaints and concerns, I think it is a good means by
which we can have some semblance of one-stop shopping, such
that persons will have a line that they can depend on to
acquire some intelligence about concerns that they may raise.
I think that one of the things that will make it
efficacious is having access to the statistical information. I
think that can drive a process, knowing that the information is
available, and knowing that others will have an opportunity to
evaluate the program itself.
So, I am honored to associate myself with the comments of
the chairwoman and the ranking member and I would endorse the
chairwoman's proposal and would be honored to be a cosponsor of
the legislation. I yield back the balance of my time.
Chairwoman Maloney. Congressman Royce, for 3 minutes.
Mr. Royce. Thank you, Madam Chairwoman. I would like to
commend the chairwoman for holding this hearing.
We are here today to discuss legislation which is going to
establish a single telephone number that consumers with
complaints or inquiries can call, anywhere around the country,
and thereby locate the appropriate Federal or State regulator.
I am sure that this is going to be a useful tool for consumers
trying to file a complaint, or consumers who have an inquiry
about something, and thus will be able to get in touch on the
banking issue that they need to discuss.
Now, I have coauthored the National Insurance Act with my
colleague, Representative Melissa Bean, which would create an
optional Federal charter for insurance. And some of those
opposed to that legislation argue that, even if it creates
greater market efficiencies, the creation of an OFC might cause
confusion among insurance customers trying to determine the
company's regulator.
Well, in reviewing the Financial Consumer Hotline Act,
which is going to be a Federal act, I believe this endeavor for
the insurance sector would be beneficial, should a Federal
regulator be created in the future. Any meritorious effort to
increase consumer disclosure and shorten the distance between
consumers and the appropriate regulator should be encouraged.
So, I encourage the chairwoman, and I would like to thank
the regulators here for their work on this issue, and I look
forward to hearing about the progress made in the future. Thank
you again, Madam Chairwoman, for the bill and for the hearing.
Chairwoman Maloney. Thank you. And, without objection, all
members' opening statements will be made a part of the record.
I welcome all of the witnesses.
First, we have Mr. John Walsh, Chief of Staff and Public
Affairs, Office of the Comptroller of the Currency, and then we
will go right down the line. Thank you. You are recognized for
5 minutes. And thank you for coming forward with the idea in
the first place.
STATEMENT OF JOHN G. WALSH, CHIEF OF STAFF AND PUBLIC AFFAIRS,
OFFICE OF THE COMPTROLLER OF THE CURRENCY
Mr. Walsh. Subcommittee Chairwoman Maloney, Ranking Member
Biggert, and members of the subcommittee, on behalf of
Comptroller John Dugan and the Office of the Comptroller of the
Currency, I thank you for this opportunity to discuss H.R.
4332, which would direct the Federal banking agencies to
establish a single toll free number to help consumers reach the
right banking agency for assistance with a complaint or
inquiry.
Banks come in a variety of sizes, with both State and
Federal charters, which offers choice and diversity to
consumers. However, it can also present a complex maze for them
to navigate when they have a problem and need help from their
bank.
When direct contact with the bank does not resolve an
issue, figuring out where to turn next may be very challenging.
The consumer with a complaint or inquiry must sort through
dozens of phone numbers, Web sites, and addresses for the
various State and Federal agencies. Few bank regulators are
household names, and most are unfamiliar to consumers.
The result is that consumers with a problem often reach the
wrong regulator. Misdirected calls represent a significant
portion of the 70,000 total cases opened by the OCC each year.
This year, the OCC has received 11,000 referrals of misdirected
complaints and inquiries from other Federal and State
regulators, and has referred 10,000 misdirected complaints and
inquiries to other regulators.
This volume suggests that a large percentage of people who
have questions or concerns about their financial service
provider do not know where to turn for help. The OCC believes
that this burden should not fall upon the consumer, and
supports the goals of this legislation to develop simpler means
for consumers to find their way to us, by phone or Internet,
and for banking agencies to expedite the routing of misdirected
consumer complaints.
Development of a single toll free number, in coordination
with the Federal financial institution's examination council
would make it easier for consumers to register a complaint with
the appropriate banking regulator. It would eliminate the
burden of searching for the right agency, the frustration of
being referred from one agency to another, and most delays that
result from misdirected calls.
A single toll free number would also help banking agencies
compile and act on consumer complaints more efficiently.
Eliminating the burden associated with rerouting misdirected
calls would make existing agency complaint handling processes
more efficient, and free up resources for use in responding to
consumer concerns.
A second objective of the bill on which Federal regulators
would be required to report back to Congress in 6 months is
establishment of a public interagency Web site for directing
and referring Internet consumer complaints and inquiries, and a
system to expedite the prompt, effective rerouting of any
misdirected consumer complaint or inquiry documents.
The OCC is currently working with other members of the
FFIEC to study options in this area. This study will examine
how we might leverage existing agency resources to simplify the
process for identifying the appropriate regulator for
consumers, and improve the complaint filing and resolution
process.
The council approved this study at its December 4th
meeting, and we look forward to a report and recommendations by
the end of 2008.
The OCC itself has taken the initiative to reduce obstacles
that consumers may face in registering complaints, and to
improve the service they receive when they reach our customer
assistance group, or CAG. The OCC has expanded the CAG's
capabilities through a number of investments and upgrades in
the last several years, most recently launching a new consumer
Web site, HelpWithMyBank.gov.
The OCC is developing a Web-based complaint referral system
to reduce inefficiencies involved with forwarding documents
associated with misdirected complaints. And the system will
transmit complaint-related documents via the Web to authorized
users, while ensuring information security and privacy.
The OCC is also working with the Conference of State Bank
Supervisors and with State regulators on a number of
initiatives to expedite the referral of misdirected questions
and complaints. In November 2006, the OCC and CSBS agreed on a
model memorandum of understanding to improve referrals and
information sharing regarding misdirected consumer complaints,
and provide needed assurance of confidentiality for sharing
that information. To date, 30 States and Puerto Rico have
entered into agreements with the OCC.
In conclusion, the OCC fully supports the goals of H.R.
4332, creation of a single toll free number and call routing
system, and a companion routing system for Internet-based
inquiries and complaints. Improvements in these areas will
promote timely assistance for consumers of bank services.
I thank the subcommittee for the opportunity to testify and
I appreciate Chairwoman Maloney's leadership in this important
area.
[The prepared statement of Mr. Walsh can be found on page
100 of the appendix.]
Chairwoman Maloney. Thank you very much for your testimony.
I now recognize Sandra Braunstein, Director of Consumer and
Community Affairs, Board of Governors of the Federal Reserve
System. Thank you for joining us once again.
STATEMENT OF SANDRA F. BRAUNSTEIN, DIRECTOR OF CONSUMER AND
COMMUNITY AFFAIRS, BOARD OF GOVERNORS OF THE FEDERAL RESERVE
SYSTEM
Ms. Braunstein. Thank you. Chairwoman Maloney, Ranking
Member Biggert, and members of the subcommittee, thank you for
the opportunity to discuss the recently introduced Financial
Consumer Hotline Act of 2007.
In addition to its responsibilities for rule writing and
enforcing many Federal consumer financial protection laws, the
Federal Reserve's Division of Consumer and Community Affairs
administers a national consumer complaint and inquiry program.
The proposed legislation would amend the FFIEC Act by
requiring the Federal regulatory agencies to establish a single
telephone number that consumers with complaints and inquiries
concerning financial institutions or issues could call and be
routed to the appropriate Federal supervisory agency or State
bank supervisor for assistance.
The Federal Reserve concurs with the intent of the proposed
bill, and strongly supports the current efforts by the
regulatory agencies to improve the consumer's experience with
getting complaints involving banking services and transactions
addressed promptly and accurately.
However, given that the regulatory agencies are
collaborating and cooperating on how to facilitate the consumer
complaint handling and resolution process in ways that are
consistent with the proposed bill, and the considerable
progress being made already on both an interagency basis, as
well as through our own efforts, legislation does not appear to
be needed to ensure the continued momentum.
Additionally, it is important that the agencies maintain
flexibility so that they may benefit from recommendations that
will result from the current agency initiatives and future
technological advances.
The regulatory agencies have been coordinating on consumer
complaint processing since the 1970's. For example, the
agencies have had procedures in place for decades to promptly
refer misdirected consumer telephone calls and misdirected
consumer complaints and inquiries to the appropriate Federal
and State regulator.
Recently, the agencies have started using new technology to
speed up and improve the referral process, which has
significantly reduced the paper flow between the regulatory
agencies.
Moreover, the agencies meet periodically to share complaint
data, and to discuss emerging issues identified through the
complaint process. To build upon the efforts of the agencies,
in September, the FFIEC formed an interagency working group to
identify ways to collectively improve the agencies' consumer
complaint programs, and to make those programs even more
consumer friendly.
This group advanced several promising initiatives that will
produce results similar to those envisioned by the proposed
legislation. Additionally, it was recommended that a third
party vendor be engaged to address the ideas for improvement,
and to explore the feasibility of pursuing the initiatives
related to leveraging the agencies' resources.
Earlier this month, the FFIEC approved the working group's
recommendations, and has begun the process of hiring a vendor.
We believe the vendor's work will provide the agencies with the
insight needed to develop a comprehensive strategy to further
enhance the consumer complaint process.
Consistent with the intent of the proposed legislation, and
the Federal Reserve's longstanding commitment to consumer
protection, we have recently announced enhancements to our own
consumer complaint handling procedures.
On November 19th, we launched Federal Reserve Consumer
Help, a new centralized resource that consolidates and
streamlines the Federal Reserve's consumer complaint and
inquiry program. This resource includes a toll free number and
centralized Web site for easy consumer access. Trained customer
service professionals are available to answer questions and
assist with a wide range of issues relating to financial
products and services and consumer protection laws.
Simply put, it serves as a one-stop complaint and inquiry
site where consumers can go to get help from the Federal
Reserve, or be directed to the appropriate regulator or agency.
Consumers do not have to know which Federal bank regulator
supervises the financial institution that they are concerned
about in order to file a complaint or inquiry. Our customer
service representatives query a national database in order to
determine the appropriate regulator responsible for the
institution in question. Misdirected telephone calls are
transferred directly to the correct agency, and misdirected
written or electronic correspondence is forwarded. And for
agencies with the capability, these complaints and inquiries
are passed on electronically.
Through our work with the other agencies, and through our
own program, the Federal Reserve remains strongly committed to
ensuring that consumer issues and inquiries are handled
promptly, courteously, and thoroughly, and that consumers have
access to an effective and efficient means for resolving
complaints.
[The prepared statement of Ms. Braunstein can be found on
page 34 of the appendix.]
Chairwoman Maloney. Thank you.
Next, Sandra L. Thompson, Director of the Division of
Supervision and Consumer Protection of the Federal Deposit
Insurance Corporation. Thank you for being here.
STATEMENT OF SANDRA L. THOMPSON, DIRECTOR, DIVISION OF
SUPERVISION AND CONSUMER PROTECTION, FEDERAL DEPOSIT INSURANCE
CORPORATION
Ms. Thompson. Chairwoman Maloney, Ranking Member Biggert,
and members of the subcommittee, I appreciate the opportunity
to testify today on behalf of the FDIC.
The FDIC recognizes the importance of providing consumers a
convenient and timely way to get help with complaints and
questions about a financial institution or other banking
matters. From a supervisory perspective, consumer complaints
and inquiries often provide our examiners insight into problems
in an institution and developing industry issues.
Currently, consumers can contact the FDIC through our Web
site, as well as through our toll free phone number, 1-877-ASK-
FDIC, which is answered by our call center staff. The call
center has received over 133,000 calls this year.
In addition to consumer issues and concerns, the call
center staff handles questions about deposit insurance and bank
resolutions. For example, last year's deposit insurance reform
led to many inquiries about the increase in coverage for
retirement accounts. And, when a bank fails, the FDIC provides
institution-specific information for customers about the
insured status of their deposits.
When the call center receives a consumer complaint about an
FDIC-supervised institution, or an inquiry that requires
subject matter expertise, the caller is connected to the FDIC's
consumer response center. As part of the investigation of
complaints, response center staff informs consumers of their
rights under Federal consumer protection laws, and they review
the bank's actions to assess its compliance with the law.
In order to help consumers determine where to send
complaints, the FDIC Web site features a search tool called
Bank Find. By entering the name of a bank, a consumer can
immediately access information on the bank, including financial
data, insured status, and its primary Federal regulator.
The consumer can also link directly to the Web sites of the
other bank regulatory agencies. The FDIC Web site also offers
an online complaint form that consumers may use to file a
complaint or inquiry.
We are also working with our colleagues at the other
Federal and State banking agencies to streamline the process
for referring complaints between agencies. A little over half
of the complaints and inquiries received by the FDIC this year
related to institutions supervised by other Federal and State
regulators, and we promptly and directly referred those
consumers to the appropriate regulator.
Last week, the agencies that are members of the FFIEC
agreed to explore the feasibility and technical requirements of
additional improvements to the interagency referral process. We
want to ensure that future enhancements to the agencies'
processes are both technically feasible and cost effective.
The FDIC supports the intent of H.R. 4332, the Financial
Consumer Hotline Act of 2007. The bill is consistent with the
approaches that the Federal banking regulators have already
committed to study through the FFIEC. Although conceptually
simple, the creation of a single toll free number and Web site
for interagency activities raises a number of issues and
technical challenges. We must ensure that any improvements that
the agencies undertake actually can achieve efficiencies that
will benefit consumers.
And because consumer correspondence, often by necessity,
contains confidential, personally identifiable information,
such as bank account numbers, Social Security numbers, and
other financial data, it is imperative that any new information
sharing system has sufficient controls to protect the
consumer's privacy and confidentiality.
Because our consumer contact system addresses several
issues that are unique to the FDIC, we are recommending a
clarification that the bill's requirement of a single toll free
number and interagency Web site are intended to supplement,
rather than replace, existing systems.
Customers with questions about deposit insurance issues or
issues regarding a failed bank should be able to continue to
contact the FDIC for assistance directly, as they do now.
In conclusion, the FDIC supports systems to ensure that
consumers can get the answers they need on a convenient and
timely basis. We look forward to working with the Congress and
our fellow regulators to maintain and develop systems that
achieve this goal.
This concludes my testimony, and I would be happy to
address any questions.
[The prepared statement of Ms. Thompson can be found on
page 87 of the appendix.]
Chairwoman Maloney. Thank you. Thank you very much.
Ms. Cassandra McConnell, Director, Consumer and Community
Affairs, Office of Thrift Supervision.
STATEMENT OF CASSANDRA McCONNELL, DIRECTOR, CONSUMER AND
COMMUNITY AFFAIRS, OFFICE OF THRIFT SUPERVISION
Ms. McConnell. Good morning Chairwoman Maloney, Ranking
Member Biggert, and members of the subcommittee. Thank you for
the opportunity to present the views of the OTS on Chairwoman
Maloney's bill, ``The Financial Consumer Hotline Act,'' to
establish a single toll free telephone number for consumers to
call if they have a complaint or inquiry regarding a regulated
institution.
The consumer complaint process is an important link between
the institution's regulator and its customers. It enables
agencies to assist consumers in addressing problems at
regulated institutions, and it helps agencies identify
potential areas of risk at an institution for follow-up during
an examination, as well as industry trends that warrant closer
scrutiny.
It also informs the agencies on areas where consumer
education may be beneficial. A strong consumer complaint
program is a valuable regulatory tool that strengthens the
examination function.
At the OTS, consumer complaints have revealed important
information about weaknesses in internal controls, violation of
Federal consumer protection laws, and potential unfair acts and
practices.
We share the concerns of the Chair, that consumers be able
easily to identify the appropriate place to file a complaint or
inquiry about a regulated institution. This not only helps the
consumer, it helps us do our job more effectively.
Establishing a single toll free consumer hotline is long
overdue. We applaud the leadership of the Chair on this issue.
The OTS is committed to fair access to financial services for
all consumers, and fair treatment of customers at the
institutions we regulate. OTS staff works directly with
consumers to address their questions and inquiries, to
investigate allegations and complaints, and to ensure that
thrifts are in compliance with all applicable consumer
protection laws and regulations.
We use consumer complaint data to identify higher risk
practices at institutions for follow-up by our examiners during
regularly scheduled examinations. When warranted, we initiate
specialized targeted investigation of particular institutions,
based on information provided to the agency by consumers.
All of this, of course, is predicated on the timely receipt
of consumer complaints on the institutions we regulate. When
this fails to occur, consumers become frustrated and may be
harmed by the inability of a regulator to address their
concerns.
The FFIEC recently adopted a proposal to identify ways to
improve the interagency consumer complaint process. This effort
is aimed at simplifying the process for identifying appropriate
regulators, creating easier complaint filing procedures, and
improving the complaint filing procedure.
It is intended to identify opportunities for enhancing the
consumer experience, and leveraging the FFIEC agency resources
to ensure that consumers reach the appropriate regulator.
The OTS is working closely with the FFIEC to implement the
initiatives set forth in the Financial Consumer Hotline Act, as
well as additional items, to improve consumers' access and
confidence in our financial system. The proposals outlined in
the bill are among the highest priority for the FFIEC.
Given the work currently being conducted by the FFIEC, our
only concern is the extent that the legislation could be viewed
as limiting our ability to craft consumer solutions that it
does not currently address, or delaying development of an
FFIEC-sponsored proposal because of uncertainties surrounding a
final framework of the legislation.
The Financial Consumer Hotline Act sets forth a number of
sound consumer protection initiatives that should be
incorporated in our banking system. These will improve the
accessibility and confidence of consumers in our system, by
providing a clear mechanism for filing consumer complaints.
Given that the FFIEC is working hard to address these
issues and other similar initiatives, we ask that you consider
allowing the FFIEC to move forward on its work unfettered by
legislative overlay. While we understand and appreciate your
desire to address these issues expeditiously, we believe the
FFIEC process will do that, while minimizing disruption to
existing agency consumer protection programs.
Thank you for your leadership on this issue, Madam
Chairwoman, and for the time and effort of all the members of
the subcommittee. I am happy to answer your questions.
[The prepared statement of Ms. McConnell can be found on
page 53 of the appendix.]
Chairwoman Maloney. Thank you very much.
Mr. Leonard Skiles, executive director, National Credit
Union Administration. Thank you for being here.
STATEMENT OF J. LEONARD SKILES, EXECUTIVE DIRECTOR, NATIONAL
CREDIT UNION ADMINISTRATION
Mr. Skiles. Thank you Chairwoman Maloney, Ranking Member
Biggert, and members of the subcommittee. I appreciate this
opportunity to testify on behalf of the National Credit Union
Administration regarding the proposal to improve the process by
which consumers have their problems addressed and resolved.
NCUA commends you for identifying this important consumer
issue, and for formulating a well thought-out and sensible
legislative approach. This proposal is consistent with NCUA's
longstanding position that every effort should be taken to
safeguard consumers.
We particularly note your interest in eliminating confusion
about which regulators should be responding to the consumer. I
think it is safe to say that we in Washington are somewhat
familiar with the alphabet soup of Federal regulatory bodies,
but it is unfair to expect average Americans to know which
government agency can best help them. Frankly, they just want
the problem fixed. And this proposal would improve the process
to do just that.
As you are aware, credit unions differ from other financial
institutions in several respects. These differences are
important, and are relevant to how complaints are addressed.
First, they are not-for-profit financial cooperatives owned
by their members. That member ownership carries with it certain
rights, including the right of a member to be informed about
decisions made by their credit union.
Second, Congress has recognized the unique structure of
Federal credit unions, and mandated, by statute, that each have
a supervisory committee. This committee, comprised of three to
five credit union members, is responsible for independent
oversight of the board of directors, and to advocate the best
interest of the members.
In practice, members, because of their relationship with
their credit unions and NCUA, have viewed the supervisory
committee as a first responder for credit union members who
seek redress. When a complaint is received, we encourage direct
contact with a credit union. We believe this is consistent with
the cooperative structure of credit unions.
At the initial stage of the complaint process, we contact
the supervisory committee, and direct a thorough review of the
complaint. While that review normally resolves the issue in a
timely manner, in case the member is not satisfied with the
outcome, or the supervisory committee's explanation suggests
noncompliance with laws or regulations, NCUA has the authority
to intervene. Importantly, at all stages, NCUA is actively
engaged and oversees the process, to ensure that the member's
rights are protected.
I should also mention that NCUA has taken steps to ensure
consumers know who to contact if they do have an inquiry or
complaint. This information is available on loan denial forms,
posters, statements, and a centralized 800 number posted
prominently on the NCUA Web site, through which a consumer can
register complaints or make inquiries. This line averages about
120 calls per month, and is a focal point of the consumer
contact with the agency.
In short, NCUA encourages and facilitates consumer contact,
has a structure in place to investigate complaints and provide
answers, and, through our experience in regulating and
supervising credit unions, we have a high degree of confidence
that the system is working to the benefit of the credit union
member.
Turning to the proposed legislation, NCUA supports this
initiative. Given the multitude of regulators, the distinction
between Federal and State regulatory responsibility, and the
increasing complexity of financial institution ownership
structures, it provides another avenue for consumers to better
understand the efficacy and procedures in place to protect
their interests.
Since a centralized call routing system would be a widely
advertised process, it could, however, have an unintended
result for credit union members. It is our experience that
credit union members do not appear to be confronted with at
least some of this government labyrinth. The name ``credit
union'' provides a strong initial indicator of where a consumer
should direct a contact, and NCUA believes it is important to
preserve this distinction.
So, while NCUA would be pleased to participate in any new
consumer complaint structure, we want to emphasize the
importance of a separate ability to assist consumers who are
members of credit unions. The established NCUA method of
dealing with consumer input, where the decentralized national
system of regional offices can respond quickly, combined with
the statutorily mandated supervisory committee structure
overseen by NCUA, is a process that we believe Congress should
want to preserve.
The member-centric focus by credit unions is an element
that NCUA not only recognizes, but attempts to foster. A credit
union is expected to treat its members in a fair, beneficial,
and, above all, legal manner. When that does not occur, NCUA
proactively and aggressively polices the process, and makes
certain that the members' rights are protected.
It is our view that the current system for credit unions is
working. We believe it can continue to work in the proposed
consumer complaint structure. And NCUA looks forward to
opportunities to collaborate with Congress and the FFIEC, as we
take steps to assist consumers.
Congress has recognized a need for improvement, and NCUA
wants to be a part of the solution of ensuring that consumers
do not, as earlier stated, fall through the cracks. Thank you
very much.
[The prepared statement of Mr. Skiles can be found on page
78 of the appendix.]
Chairwoman Maloney. Thank you. Thank you very much.
I would like to give a very special welcome to the
superintendent of banks from New York, Superintendent Neiman.
He is here today testifying on behalf of the Conference of
State Bank Supervisors, not just New York, but the whole
conference of all State banks in our country. I thank you, and
I welcome your testimony.
STATEMENT OF RICHARD H. NEIMAN, SUPERINTENDENT OF BANKS, NEW
YORK STATE BANKING DEPARTMENT, ON BEHALF OF THE CONFERENCE OF
STATE BANK SUPERVISORS AND THE NEW YORK STATE BANKING
DEPARTMENT
Mr. Neiman. Thank you, Madam Chairwoman, Ranking Member
Biggert, and distinguished members of the subcommittee. On
behalf of the Conference of State Bank Supervisors, and the New
York Banking Department, I really appreciate this opportunity
to speak with you today. I personally also want to commend
Chairwoman Maloney for her efforts on this very important
issue.
I am pleased to share our perspective on the proposal to
establish a national call number and centralized intake for
consumer inquiries directed to Federal regulators. States are
on the front lines, and have provided many innovations with
respect to handling of consumer complaints, including Web-based
and consumer satisfaction surveys.
We believe that the creation of a national system, one that
also routes calls to the respective State agencies, when
appropriate, is much needed.
For those of you who are familiar with New York City's
general hotline information line, I envision this functioning
as a national 311 for financial complaints. This issue has been
on the Department's agenda for some time. My predecessor, Diana
Taylor, as superintendent of banks, also promoted this 311
concept before I joined the Department. And I concur that the
time is right to put the idea into practice.
Ideally, over time, if successful, this could be expanded
to include a wider range of financial services beyond just
those regulated by Federal bank regulators and State
regulators, with the possible inclusion of the FTC.
Consumers with a variety of concerns, whether related to
credit cards, payment billing, or funds availability would
benefit from an enhanced interagency information sharing. And
in the context of the present turmoil in the mortgage market, a
streamlined approach for handling consumer inquiries would be
especially useful in outreach to borrowers facing a mortgage
hardship.
The goal is to connect with these homeowners early in the
delinquency process, before their credit history is damaged, or
they lose their homes to foreclosure. With our complex,
financial services system, however, consumers who want to be
proactive may be confused, and understandably so, when trying
to identify the correct government agency to contact.
A consumer should not need to know whether their financial
institution is a thrift, a savings bank, or a commercial bank,
or a State-chartered institution or a national-chartered
institution, or a sub of a bank or a sub of a holding company
in order to receive assistance.
And with many citizens unaware of the chartering authority
for their financial institutions, State agencies regularly
receive local inquiries related to institutions that are
federally supervised.
Troubled consumers tend to look locally first, when seeking
help, and the statistics bear this out. In 2006, the New York
Banking Department referred more than 1,300 complaints to the
Federal regulators, well over half of the volume of the
approximately 2,200 complaints we received. The figures for the
year-to-date are virtually the same.
It is critical, however, that any national hotline linking
the Federal regulatory agencies include the capability to refer
consumer inquiries back to the States. Resolution of the
underlying issues that prompted the complaint often requires
assistance at the local level. This is especially true in the
case of mortgage lending, which, due to the nature of the
collateral, is unavoidably local.
Therefore, I am pleased that the current proposal provides
for this referral to the States. In reviewing the draft of The
Financial Consumer Hotline Act of 2007, we are encouraged that
it represents a positive development toward the type of
integrated system that is needed.
In my remaining time, I would like to offer a few
suggestions to further enhance the current proposal. First,
while the Federal-to-State referral mechanism is addressed in
the proposed legislation, the reverse ability, to refer State
to Federal, is not directly addressed in the current draft. We
would suggest making this a two-way process more explicit, as
there could be significant flow of referrals in this direction.
Troubled consumers tend to look locally first when seeking
help. And with many citizens unaware of the chartering
authority for their financial institution, State agencies
regularly receive local inquiries related to institutions that
are federally supervised.
Second, the database connected to a centralized intake
system would be a source of vital statistics about trends and
consumer complaints. This information could also be used to
identify institutions generating a high volume of complaints
that may warrant a target exam, or other form of enhanced
supervision, or to identify the need for regulatory or
legislative changes.
The same system could also be used to track case resolution
status and response times. We recommend expanding the proposed
legislation to mandate the FFIEC to produce such monitoring
reports to maximize the value of the system.
And, third, consideration should be given to the
development of model forms and intake processes, to ensure that
all participating agencies collect consistent and sufficient
information. CSBS has developed a model form and is preparing
best practices for agencies in the operation of their call
centers. A copy of the form and a list of the standards that
CSBS is developing for its members is included in my written
submission for your reference.
The States welcome the opportunity to share our perspective
on the approaches to complaint case management that we have
tried, and have found to be effective. The New York State
Banking Department was the first State regulator to enter into
a complaint sharing agreement with the OCC, and we offer our
positive experience with this partnership in support of the
concept of a nationwide hotline.
I thank you for your time this morning, and for inclusion
of the States' perspective. I would be glad to address any
questions.
[The prepared statement of Mr. Neiman can be found on page
69 of the appendix.]
Chairwoman Maloney. Thank you very much. I would like to
ask Mr. Walsh, the statistics on consumers who call the wrong
number are certainly impressive, the numbers that you gave. And
the FDIC alone, it seems that about a third to half of all the
people who call a Federal bank regulator call the wrong one.
I would say that it seems logical that if each agency
spends a third of its time sending calls to the other agencies,
that a great deal of consumer frustration and needless cost and
time to the agency occurs. Would you say that these statistics
are strong support for this bill?
Mr. Walsh. Madam Chairwoman, certainly the numbers are
support for the contention that a lot of calls wind up in the
wrong places. Of course, it's worth bearing in mind that
receiving a call that needs to be redirected does not take the
time of handling a case, or sorting through a complex issue.
So, it--the numbers are too large to be acceptable, but
they wouldn't represent a third of the time that our consumer
assistance people spend.
Chairwoman Maloney. You also mentioned the need for a
public relations campaign to raise consumer awareness of the
hotline. What sort of campaign do you envision, and do you
believe that it is required to be part of this bill?
Mr. Walsh. Well, the notion there was that if there--if
FFIEC, for example, decides to create some of these centralized
functions, that the natural part of including that process
would be to publicize the creation of a single number, or a
single Web site, whatever it might be, and that process of
making consumers aware of a single Web site would, of course,
increase awareness, generally, of the service that is
available.
So, we would expect that to be part of any plan to roll out
any new system that would be agreed to.
Chairwoman Maloney. Thank you. Superintendent Neiman, I
liked your idea to add a mandate to collect data on consumer
calls to the centralized hotline. What should such a mandate
include?
And I liked, also, your idea of a centralized form, to have
uniformity in the system. But what would you see in this
mandate, and what are the key measures that should be part of
it, for us as regulators, to monitor?
Mr. Neiman. Certainly trends in the nature of the
complaints. Are they folks in a particular area? Within credit
cards? And even within credit cards, is there a particular
segment of complaints around a particular issue?
As some of the other regulators mentioned, that type of
information is extremely helpful in preparing for examinations,
as well as follow-up supervisory reviews at those institutions.
I think it also is important to identify those institutions
that do have a higher rate of complaints in comparison to their
peers. So I think it is extremely useful information for
individual regulators taken separately, but also taken as a
group, to identify trends and areas requiring further review,
further supervision, or possibly areas that require regulatory
change, if these areas of concern are expansive.
Chairwoman Maloney. It would also be very helpful for
congressional oversight.
You mentioned in your testimony that sharing information
with the OCC was pioneered by New York State. Are other States
following your lead? Do the other States have these types of
programs?
Mr. Neiman. There are certainly a number of States. I think
the specific number now--I bet John has it--is 30. Thirty
States have now signed on to that memo of understanding
confidentiality agreement.
Chairwoman Maloney. Okay, and how could the establishment
of a single toll free number help raise the profile of banking
regulators as a consumer resource for registering complaints
and inquiries.
Mr. Neiman. Well, I agree that a consistent marketing
approach would be an important element of identifying for
consumers a single national hotline to call for financial
complaints.
Chairwoman Maloney. And I would like to ask--some of the
panelists raised concerns that this legislation may interfere
with initiatives that they already have in place. That was
certainly not the intent. It was more of referring to the
appropriate place, saving consumers time, helping monitor
trends, and so forth.
Are there any specific examples in the legislation where
it, in any way, interferes with what is happening in your own
agency's regulation and oversight? Anyone?
Ms. Braunstein. Well, I think our concerns are that
mandating certain kinds of practices, like the 1-800 number and
other things in the legislation, could end up conflicting with
whatever we learn from the third-party vendor that we hire.
We all have--we recognize the intentions of the
legislation, and I think we are all on the same page, that we
need to do whatever we can to improve the complaint process for
consumers. But we, the agencies, just decided to hire a third-
party vendor to get some professional advice about what would
improve things for consumers.
And suppose the recommendations that come out of that study
somehow conflict with what is in the legislation, but we're
locked in by the legislation? I think that is one of our
concerns.
We also have concerns, in terms of legislation locking us
in in the future, in terms of being able to take advantage of
technological advances in the future. Who knows, 10 years from
now, what kinds of operations people will use to file
complaints?
And so, we want to be able to remain--we just want to be
able to have some flexibility, in terms of the changes and the
enhancements that we do make to the systems.
Chairwoman Maloney. Well, just to be clear, the legislation
does not relieve any agency of the responsibility to respond to
consumer complaints, it only takes away the significant burden
of helping consumers find the right agency. And I would say
that is a valuable resource. And, obviously, legislation is
always updated to respond to new technology.
I now call upon my good friend and colleague, the ranking
member on this committee, Congresswoman Biggert, for 5 minutes.
Mrs. Biggert. Thank you, Madam Chairwoman. My line of
questioning is somewhat similar.
But I think that we, a couple of years ago, passed
legislation that was to deal with financial literacy in
education, and asked the various agencies to work together so
that there wasn't duplication, and so that the agencies would
know what the others were doing.
But my goal was always to do no harm. And I think when we
look at legislation like this, it still is to do no harm. And
when I hear the word ``mandate,'' I get a little concerned. But
maybe you can relieve me of that concern.
For example, do you see any other unintended consequences
arising from the proposed legislation?
And another question I have is, how is this paid for? Ms.
Braunstein, you talked about the Federal Reserve having a
hotline now, and directing it to other agencies, and the FDIC,
too. Of course, I would assume that is something that comes out
of your pocket. But with this bill, I don't know where that
comes from. Would all the agencies have to get together? Would
this just be something else that comes out of the Federal
Government?
Ms. Braunstein. I would think we would all have to chip in
to enact whatever is done in the legislation.
But the current system, as you said, comes out of our
budget. Our system, as do the other agency systems come out of
their budgets.
Also, I do want to clarify something that Congresswoman
Maloney raised, and also you just raised, is that, frankly, the
consumers now don't have to know which agency to go to, because
we have established some pretty robust systems among us to get
them to the right place.
So, I know if they call us, and it's a misdirected call, we
get them to the right place very quickly. I am not sure that's
any different than if they call a 1-800 number and they still
will have to be transferred to the right place.
Mrs. Biggert. How do they get--
Ms. Braunstein. I believe that is going to get very--
Mrs. Biggert. How do they get to you, though, right now,
with the hotline? How do they know to call you?
Ms. Braunstein. Well, we have advertised the hotline. I
would assume there is information in some of their financial
institutions. And some of the consumers we find just--they kind
of take a shot in the dark. And they know--the Federal Reserve
is known, so we get a call. Or the FDIC is known, so people
pick up the phone and call them.
And, like I say, if they did call the wrong place, or they
wrote to the wrong place, we get it to the right place very
quickly.
Mrs. Biggert. Ms. Thompson, would you like to comment on
that?
Ms. Thompson. Yes. Certainly, the FDIC supports the intent
of the legislation, and we would just like to make a
recommendation that there is a clarification in the bill that a
single toll free number is intended to supplement, and not
replace, existing processes.
The FDIC logo is prominently displayed on all insured
depository institutions, and we do get lots of calls. Apart
from consumer complaints and inquiries, we get lots of calls
about deposit insurance, such as, ``Am I covered if a bank
fails, or is having problem?'' People want to know what their
deposit insurance status is. So we just want to make sure that
this supplements, and does not replace.
Mrs. Biggert. Are you concerned about the possibility that
the legislation could slow down the projects that you are
currently working on to improve customer service?
Ms. Thompson. Well, we are going to move forward with the
FFIEC program, and we are supportive of anything that makes a
process easier for consumers to understand. But we would like
to work out the details.
Mrs. Biggert. What would be the--I do not know if there
would be liability, but say somebody does call the hotline, and
is misdirected to the wrong place, and the consumer never does
kind of find the right place to--for their complaint, or--and
then they are not helped.
Is there any issue on that, or any issue of privacy?
Ms. Thompson. There are issues regarding privacy, and also
information security. When people call, they usually call with
a specific question about their specific bank account, so they
have to provide identifying information.
So, we would be very concerned that any system--whether it
was through the Web or through a telephone--made sure that a
customer's private information was secure, and that the
information was safe.
Mrs. Biggert. Anybody--Mr. Walsh?
Mr. Walsh. Yes, if I could. I think, in this case, since
the legislation--since the idea here is focused on a facing-
the-world new piece of technology, if you will, or a new place
that people can go to that is unified in nature, and its basic
purpose is to route calls to the right end point, it has not
been--I think it was agreed by the council when they met that,
as Ms. Thompson has mentioned, the idea in the project that we
are looking at is to add something to the process that would
handle this routing issue, not to change or interfere with
other processes.
The project itself is funded through a cooperation within
the council, and any eventual 1-800 number, whatever else,
would similarly be shared cost among the agencies, and that is
quite routine within the activities of the council.
So--and as to questions of privacy or protection of the
information of the consumer, that problem, that issue, exists
no matter how that intake occurs. So, I think as long as we're
talking here about simpler and more assured routing, I don't
see that any substantial problems arise.
Mrs. Biggert. Thank you. My time is expired. I yield back.
Chairwoman Maloney. I would like to just add that in the
Act establishing the council, as Mr. Walsh says, everyone would
chip in, unless they agree otherwise, so as to maintain maximum
flexibility.
And certainly, the intent is not in any way to supplant the
wonderful activities that many of you are doing already in your
agencies; it is just to provide a more simplified routing
system to save consumers time and help them receive the
information that they need to have more quickly.
I now recognize Mr. Green for 5 minutes.
Mr. Green. Thank you, Madam Chairwoman. And, again, I thank
you for this most valuable piece of legislation.
Let us start with identifying a term. There is a French
term, ``voir dire.'' Lawyers are familiar with it. Some of you
may not be familiar with the term. It is a term that means,
``to speak the truth,'' and we use this in trials, so as to
examine large numbers of persons en masse when we are asking
our questions. So, I am going to ask questions of you en masse,
and hopefully I will get through this a little bit faster.
If you agree that we need one number so that all consumers
can call one number and be properly routed to the correct
agency, if you agree that one number is needed that will not
preempt other numbers, would you kindly raise your hand?
[Show of hands]
Mr. Green. Thank you. Let the record reflect that everyone
agrees that one number that does not preempt other numbers is
needed.
If you support this bill, as currently drafted, would you
kindly raise your hand?
[Show of hands]
Mr. Green. Okay. All right. Now, if you did not raise your
hand then, would you raise your hand now?
[Show of hands]
Mr. Green. All right. So, let the record reflect that all
but one of the witnesses seems to support the bill as currently
drafted.
If the bill can be tweaked such that you can find a means
by which it is acceptable and supported--this would apply to
Ms. Braunstein--would you conclude that it can be tweaked, such
that you can support it?
Ms. Braunstein. Yes. And I do want to say we support the
intent of the bill, absolutely, 100 percent. We just are not
sure that it is necessary to sustain momentum, and that we are
already moving in the direction--
Mr. Green. Well, now--
Ms. Braunstein. --that the bill is--
Mr. Green. Let me just ask you this, Ms. Braunstein. My
initial question was, do you think we need one number? And your
response to the initial question was ``yes.''
Ms. Braunstein. Well, we--that is why we hired a
consultant, was to move in that direction.
Mr. Green. Okay. Now, in Texas--
Ms. Braunstein. I support that we are--
Mr. Green. So you are getting ready now to do something,
you are starting to do something. In Texas, we call that,
``fixing to do.'' And I appreciate what you are fixing to do,
but I don't see how that would preclude us from doing what we
are fixing to do.
Why would what you want to do preempt in some way what we
are trying to do? Or should it preempt what we are trying to
do? Why should it?
Ms. Braunstein. I guess I do not want to presuppose what
the conclusions of our consultant will be.
Mr. Green. Let us assume--
Ms. Braunstein. And so I cannot predict--
Mr. Green. Let us assume that your consultant tells you to
do whatever you can imagine. Would your consultant say to you
that we don't need that single number, do you think?
Ms. Braunstein. I don't know that. I would think not, that
it would not be a problem, which is why I raised my hand about
the 800 number. But I don't know what the consultant will or
will not say. I don't think we can predict that.
Chairwoman Maloney. Will the gentleman--
Ms. Braunstein. But we are hiring somebody.
Chairwoman Maloney. Will the gentleman yield for a second?
Mr. Green. Always to the Chair, absolutely.
Chairwoman Maloney. The planned study apparently will not
yield a report until the end of 2008. And don't you think that
consumers should get the benefits of one-stop shopping and
information sooner than that? The chairwoman yields back.
Mr. Green. I would gladly want to hear the lady's response
to the question.
Ms. Braunstein. Well, yes. I agree with anything that will
improve the process for consumers.
Mr. Green. How is it, Ms. Braunstein, that you would
conclude that we need the number, but we really do not need the
number if the number impacts my operation. Let me retract that.
The number has no impact on what you are doing. You
continue to do what you are doing. You continue to publish your
number. You continue to be effective in doing what you are
doing. Now, why would this number become a problem?
Ms. Braunstein. It is not.
Mr. Green. Okay. One more thing. On the question of
privacy--and, Mr. Walsh, you addressed this, but I just want to
go back to it--did you not say, sir, that the same question
exists, regardless of what number we have? Is this correct?
Mr. Walsh. Well, we would be--we are concerned, we do deal
very carefully with protection of privacy of any case that is
brought to us by whatever means, and that would be true whether
it came through a referral through an 800 number or--
Mr. Green. So this doesn't present some peculiar set of
circumstances that we don't already have to cope with?
Mr. Walsh. I don't believe so.
Mr. Green. Okay. My final question is this: Do you each now
have a number for consumers to call? If you do, raise your
hand.
[Show of hands]
Mr. Green. All right. You all have a number. So now, can
you agree that if you all have a number, if one number can get
the consumer to each of your numbers, can you agree that would
be beneficial? If so, would you raise your hand?
[Show of hands]
Mr. Green. Okay. Let the record reflect that all persons
agreed.
Thank you, Madam Chairwoman. I yield back.
Chairwoman Maloney. Thank you for your questioning. I now
recognize Mr. Hodes for 5 minutes.
Mr. Hodes. Thank you, Madam Chairwoman, and thank you for
offering this legislation.
I noted in the testimony of the OCC that there are 70,000
total cases opened each year. Of those, what is the current
inventory in active cases? How quickly are your cases turning
over?
Mr. Walsh. Within that number, there are about 40,000 that
are, in fact, inquiries. They are the kind of questions that
can be answered relatively expeditiously.
And about 28,000, in the most recent year, became what we
call actual complaints that were opened, that then have to be
processed. And the goal, with those complaints, is to complete
them within 60 days. We have--I am not sure at this moment of
the backlog. There is always a kind of a time trail behind
that.
Our staff has actually been doing Saturday work to work at
that backlog, because the numbers have been up a bit, although
not as much as one might expect, given some of the problems
taking place out in the credit markets.
Mr. Hodes. Thank you. I appreciate the importance that the
regulators who are testifying here today place on handling
consumer complaints, and the efforts that you are making, sort
of interagency, to work together towards the goal of efficient
handling and directing of the kinds of complaints we are
dealing with.
Are there any statistics that tell us how many total
consumer complaints, among all the groups of regulators that
are here today, that we are seeing on an annual basis now? Do
we know what that number is?
Mr. Walsh. We certainly know individually. I have not
consulted with the others to add them together, but we can
certainly provide that number.
Mr. Hodes. So, for instance, that piece of information is
not something that, so far, regulators have gotten together to
talk about yet. Is that correct?
Ms. Thompson. We do get together periodically. In fact, we
get together quite often.
A couple of years ago, the FDIC sponsored a conference
where we talked about these issues. This year it was at the
OCC. Next time it is at the Federal Reserve. We do speak
frequently.
But, to your point, there is no mechanism. We would all
have to get together and bring our numbers. There is no central
repository of information for that data.
Mr. Hodes. So, would you agree that it is possible that
this legislation, and the creation of this number, would
facilitate that kind of data sharing?
Ms. Thompson. Yes.
Mr. Hodes. Ms. Braunstein, you said an interesting thing
during your oral testimony. In answer to a question about what
was available to consumers, you said that you assume there is
some information in their financial institution telling
consumers who to reach and how to reach them.
The use of the word ``assumed'' to me was interesting,
because I am trying to think back--I go into my bank quite
frequently--about what is displayed, and how I know about where
to go if I have a complaint. And I am not the most observant
person in the world, but I cannot think of any prominent
display in my financial institutions, the ones I use regularly,
that say, ``If you have a problem, here is where to go.''
And so, what strikes me in listening to the testimony, and
reading the testimony that all of you have presented, is that
the good news is that, in some way, each of the folks here have
good access for consumers' complaints. Everybody has an 800 or
an 888 number, and everybody is trying to do something. That is
the good news.
The bad news is that everybody has a different 800 number,
or 888 number, and everybody is trying to do something. And it
strikes me that, both in terms of data and the ability to
facilitate sharing, as well as being able to provide one-stop
shopping for consumers, the number is a good idea.
I confess I have not read the legislation in detail, so I
don't know whether this is in there. Would you find that a
requirement that there be a prominent display in the covered
financial institutions of the 800 number--assuming that the
legislation goes through and there is an 800 number--that there
be a prominent display in each financial institution that says,
``Here is your 800 number. If you have a problem, here is where
to call,'' would be a good idea? I will take it from any one of
you.
Ms. Braunstein. I think that is an excellent idea.
Mr. Hodes. Anybody have a problem with it? Anybody--
Mr. Neiman. I don't have a problem. I think it is very
important. And, in fact, even more important with respect to
operating subsidiaries of institutions.
So, if you have a mortgage subsidiary that is a mortgage
subsidiary of a Federal bank, those States would not have any
jurisdiction, and that complaint should be directed to a
banking regulator.
If it is a subsidiary of a holding company, and the
mortgage subsidiary is regulated by the State, it should be
directed to the State supervisors.
So, a mandated number, a national number, whether it be
prominent in a statement or a brochure or a Web site of that
service provider, would be extremely helpful.
Mr. Hodes. Okay. I am actually thinking about some kind of
poster that is right there, where people are dealing with it,
where they cannot miss it. That kind of thing, that can direct
to State or Federal, or whoever it ought to go to, but the
consumer now knows there is one place to call if you have a
problem.
Ms. Braunstein. A poster in the lobby is an excellent idea,
but a lot of people don't go into their banks anymore, so you
might also think of other means--
Mr. Hodes. Sure. Understood. Great. Thank you. I have no
further questions at this time. Thank you very much.
Chairwoman Maloney. I thank my colleagues for their
questions, and I would like to note that all of the witnesses'
testimony, their written testimony, will be made a part of the
hearing record.
And I would like to note that members who may not have been
able to be here--it is a busy week--will have an additional
opportunity to ask questions of this panel. They may submit
them in writing and without objection, the hearing record will
remain open for 30 days for members to submit written questions
to these witnesses and to place their responses in the record.
I thank you very much for your time and for your excellent
testimony today. Thank you for being here, and we will go to
the next panel.
I now recognize and welcome Jeannine Kenney, the senior
policy analyst of the Consumers Union, and Edmund Mierzwinski,
the consumer program director of U.S. Public Interest Research
Group. Thank you both for being here.
First, Ms. Kenney, the senior policy analyst of Consumers
Union.
STATEMENT OF JEANNINE KENNEY SENIOR POLICY ANALYST, CONSUMERS
UNION
Ms. Kenney. Thank you, Madam Chairwoman, and members of the
subcommittee. On behalf of Consumers Union and the Consumer
Federation of America, we appreciate this opportunity to talk
about the significant barriers that consumers face when they
simply want to complain about their bank.
Assuming consumers even know they have the right to
complain in the first place, it is understandable that they
have such difficulty in knowing where and how to complain.
Consider what consumers must understand to know where to
complain. They must know that there is a difference between a
national bank and a State chartered bank, and that there is an
OCC, and that it regulates national banks. They must know that
the national bank operating subsidiaries--which may not call
themselves banks--are regulated by the OCC, as well. They must
know that the Fed supervises State-chartered banks that are
members of the Reserve system, but that the FDIC supervises
State-chartered banks that are not members of the Federal
Reserve system.
They must know that there is a difference between a bank
and a savings and loan, that a savings bank is a thrift, and
that the OTS regulates them. And they must know that credit
unions can be State- or federally-chartered, and that there is
an NCUA.
This sounds ridiculous, and it is. To most consumers, a
bank is a bank is a bank. Regardless of how and by whom it is
regulated, they need to know how to complain. And when they
have a problem, it should be easy for them to do so. Right now,
it is difficult for all but the most persistent consumer to
determine where, how, and to whom they should complain. And
faced with a dizzying array of options, consumers may simply
give up.
A single consumer toll free complaint hotline provided for
in your legislation, Madam Chairwoman, The Financial Consumer
Hotline Act, is an excellent first step in rectifying the
inherent difficulties created by what is a fragmented and
Byzantine regulatory system, and we are pleased to offer our
support for it.
We also applaud the legislation's directive that the
agencies report back to Congress on their efforts to establish
a single interagency Web site for the routing of complaints,
and are pleased that the agencies are working together to look
for improvements.
But to be truly effective, a complaint system must do the
following: It must be easy for consumers to access and use; it
must be effective for the individual consumer; and it must
provide transparent and meaningful results to the Congress, to
the public, and to the regulators.
To that end, we would argue that the agencies should
establish a seamless, integrated complaint system on the front-
end--not just a referral site or a toll-free number--with a
consistent complaint procedure, a single, easy-to-understand
complaint form, a single snail-mail and e-mail address, and a
single fax number.
So long as the agencies maintain their own stovepipe Web
pages, the confusion will simply not end. The agencies should
work out the difficulties and complexities on the back-end, and
those complexities should remain hidden to consumers.
In addition, both formal and informal complaints should be
accepted by phone and via secure online connection. The current
requirement by most agencies that consumers mail their formal
complaints erects just one more barrier to the process. And any
single Web site and hotline should be widely promoted, as the
prior panel suggested.
But perhaps most importantly, an effective complaint system
should not discourage consumers from complaining, but encourage
consumer input, commentary, and complaints. We believe that the
current system is structured not just so that the process
itself discourages complaints, but so that the substance of the
Web sites and the brochures that the agencies provide subtly
discourage consumers from complaining.
Consumers are told to contact their bank first, before
complaining. Someone upset by the conduct of their bank is
understandably discouraged by this advice, and it probably
means that some violations of law will go undetected by the
regulator.
Consumers are also told that their complaint will be routed
to the bank for a response, a process unlikely to be
encouraging to a consumer who has been down that road, only to
hit a dead end.
They are told that when it comes down to believing what the
bank said and the consumer said--that is, when there is a
question of fact--the consumer is on her own, and advised to
consult legal counsel, an option ludicrous on its face for all
but the most significant financial injuries.
OCC's HelpWithMyBank Web site advises consumers to contact
the complaint line if they cannot find their answer online.
Unfortunately, when they look for the answer online, they are
more frequently than not told that what the bank is doing that
is so bothering them is perfectly legal. The content on the Web
site provides, more often than not, what the bank's rights are,
not what the consumer's rights are. Also, as we point out in
our written testimony, in some cases, the information is flat
out wrong.
On an issue I know you have been very concerned about,
Madam Chairwoman, overdraft loan fees, on HelpWithMyBank,
consumers are told that there are no limits on the size of fees
that banks must charge, that banks are not required to process
checks so as to avoid overdraft fees, that banks get to choose
whether to reject the check or charge the overdraft fee, that
the law does not require deposits be processed before debits,
and so on.
Nowhere, by the way, are consumers told that they could
opt-out of this service and pursue other, less costly,
overdraft protection services.
Would any rational consumer bother to tell the regulator
that they don't like what the banks are doing on overdraft loan
fees in the face of this information? Of course not. And that
means the regulators are missing out on critical consumer
input. The reality is that consumers will not waste their time
when the consistent message from the regulators is, ``We cannot
or we will not help you.''
And although most complaint centers describe themselves as
neutral arbiters, consumers can be forgiven for thinking the
deck is stacked against them. When they bother to file a formal
complaint, they are going to, more often than not, receive a
``tough-luck'' letter. Consumers deserve a regulator that
serves as their advocate, not their adversary.
Finally, we would urge a single technical platform for the
agencies with a uniform complaint coding system, so that we can
facilitate information sharing of trends regarding the types of
complaints. And the coding system should be granular, so we
know exactly what consumers are complaining about, not just the
broad categories that we hear about in the OCC Ombudsman
Report.
Finally, the complaint system must be more transparent to
policymakers and the public. Right now, it is not. We receive
general information. We don't even know, unless we do the math
ourselves, how many complaints the agencies are receiving.
So, with that, Madam Chairwoman, thank you very much.
[The prepared statement of Ms. Kenney can be found on page
42 of the appendix.]
Chairwoman Maloney. Thank you very much for your testimony.
Mr. Edmund Mierzwinski.
STATEMENT OF EDMUND MIERZWINSKI, CONSUMER PROGRAM DIRECTOR,
U.S. PUBLIC INTEREST RESEARCH GROUP
Mr. Mierzwinski. Thank you, Chairwoman Maloney, and members
of the committee. I am pleased to testify in support of your
legislation to establish a joint hotline among the several
Federal bank regulators, and also the requirement that there be
a study done of a joint Web site for the regulators, as well.
We support, in addition, a number of other suggestions and
changes to improve the legislation, and some other changes that
may go beyond the intent or the scope of the legislation, but
that we think would be important for the subcommittee to
consider in future legislation.
The great science fiction writer and futurist, Arthur C.
Clarke, once said that any sufficiently advanced technology is
indistinguishable from magic.
Unfortunately, there is nothing magical about dealing with
a Federal bank regulator. Consumers who complain to us are very
frustrated with their interactions with the banks. We believe,
however, that your legislation will go a long way toward
creating a seamless interaction.
The first recommendation we would have--and we concur with
Consumers Union and the CFA on this, of course--is to establish
one-stop consumer complaint shopping, no matter what the point
of entry is, whether it is phone, Web, e-mail, fax, snail mail,
or perhaps even a walk in.
Consumers should have one Web form, one complaint form, and
they shouldn't have to deal with figuring out anything. The Web
site or the bank telephone numbers should figure out, ``Okay,
here is a complaint. We have taken it in, we will figure out
who to send it to, we are not going to ask the consumer to
decide is it a national bank or is it a State bank, is it a
national bank or is it an operating subsidiary.''
The OCC's Web site currently requires this sort of forensic
examination by a consumer through a set of drill-down menus.
The consumer should not have to deal with anything like that.
We believe that this intake system, this centralized
source, should also be in both English and Spanish, to start,
and perhaps in other languages in the future.
Also, and I believe some of the bank regulators even may
have supported this concept, which surprised me--is that we
believe there should be advertising at point-of-sale in the
banks.
We suggest something like a complaint busters logo, modeled
after the Ghost Busters, ``Who are you going to call,'' or Mr.
Yuck at the Poison Control Center, something easy to remember,
something easy to identify, something that consumers will see
and say, ``Look, if I have a problem with my bank, I see the
poster on the wall, or I see the link on the Web site, and I
will contact this number.'' Something like that would greatly
aid in pushing this out into the public's eye.
And even if we can't get legislation enacted that requires
it to be posted in every bank, it should certainly be promoted
by the regulators in some way.
Much of the problem that consumers face is that the problem
isn't finding a bank regulator, it is getting a bank regulator
to do something about their problem. The most recent studies of
the GAO on the bank complaint handling process at the
regulators suggest that the number one recommendation of the
regulators is, ``Sorry, we cannot help you, it is a contractual
matter.'' ``Go to court,'' or something like that, but ``Sorry,
we cannot help you, go away.'' And the least common response of
the bank regulators to a complaint is that, ``The bank made an
error.''
In our view, the bank regulators aren't even balanced in
the middle. They are, essentially, on the side of the banks. So
we would suggest that you take some of the money that the
regulators receive in the form of fees--and they mostly are
outside the Federal budget process, they mostly get their money
from fees from regulated institutions--and put that money into
the centralized source, and make the centralized source into an
advocate for consumers.
We already have a model in about 40 States that have a
national association of State utility consumer advocates. They
take a portion of utility fees, and they create a regulator who
simply acts on behalf of consumers.
To go even further, you could establish something that
consumer groups have been supporting for years, and then-
Congressman Schumer supported 20 years ago, which was the
establishment of a financial consumers association that is
chartered by the government, but run by consumers and paid for
by dues, that has an opportunity to raise money by putting
inserts in bank account statements.
Again, I think Mr. Neiman strongly supported a lot of
this--we need to require accountability of complaint systems.
We need to have data more easily available to you, the
policymakers, to me, to the public, to academics, and to
others. What if the top 10 banks were ranked on the basis of
their per capita level of complaints? What if the 10 worst
banks appeared on a Web site? This would be very interesting,
to have the regulators posting this kind of information, which
would help the market work.
But, at a minimum, we really need to look at getting more
information about these complaints out there without having to
file FOIAs and receive data full of redactions months or years
later, which is the current situation of dealing with the bank
regulators.
We need to address the toxic regulatory culture. As I
indicated, the regulators just aren't on the side of consumers.
I do not have time to go into this today, but in our joint
testimony, of all the consumer groups presented by Travis
Plunkett of the CFA at your hearing this summer, we presented a
number of the issues, a number of the problems.
For example, the Federal Reserve, the only agency not to
fully support your legislation today, has tremendous legal
authority today to ban some of the most unfair bank practices,
which it simply chooses not to use.
Next, we really believe you need to reinstate State
attorney general enforcement authority over Federal banks and
other Federal institutions. Again, it is a long-standing
concern of the consumer groups that the OCC's preemption
determinations, as upheld by the courts, are unfair. We need
more consumer cops on the beat. We need the competition between
State and Federal regulators to come up with the best public
policies.
And, finally, as I indicated earlier, the major response
that the bank regulators make to consumers, according to GAO
reports to the Congress is, ``Go away, your complaint is
contractual.'' Well, the consumer can't take that complaint to
court, because mandatory arbitration provisions in their bank
contracts prevent them from going to court.
So, we support Representative Hank Johnson's legislation,
The Arbitration Fairness Act, that would eliminate binding
mandatory arbitration as a requirement in all consumer
contracts. Thank you very much.
[The prepared statement of Mr. Mierzwinski can be found on
page 61 of the appendix.]
Chairwoman Maloney. Well, I would like to thank both of you
for your testimony.
But as you heard from the first panel, the Federal Reserve
says that this legislation is not necessary to encourage the
banking agencies to develop a consumer response program such as
hotlines.
What is your view of this? Is the Fed doing enough on its
own, or do we need this legislation?
Ms. Kenney. Well, I imagine that Ed and I are not in
disagreement on this.
Certainly, we are pleased that the interagency working
group is moving forward on this. But, frankly, it is long
overdue. And there is nothing duplicative about legislation
that holds the regulators' feet to the fire, and ensures that
they do what they should have done a very long time ago.
Mr. Mierzwinski. We would agree. I was pleased, when I
looked on the Fed's Web site, when I was preparing my
testimony. They now have consumers on the homepage, and that is
good. But they need to do more. They need to support this
legislation.
And, even if they don't, go forward without them.
Chairwoman Maloney. I would like you to comment on the
suggestions by Superintendent Neiman for additions to the bill.
Do you agree that adding a requirement for tracking trends
and case numbers could help with congressional oversight, and
provide a factual basis for seeing if legislation on a
particular issue is needed, for example?
I would also like to respond to your testimony that we need
to track whether or not consumers are satisfied with the
answers. It is one thing to be able to lodge a complaint, but
have they gotten an answer that allows them to correct the
situation, or improve the situation?
Ms. Kenney. We would certainly agree, and I think indicate
in our written testimony, that a really fundamental function of
a complaint system is tracking consumer attitudes, not just
formal violations of law. And that is an opportunity that the
current system, because it is stovepiped, and because it
discourages those types of comments, really misses out on.
So, absolutely. I mean, it is a little bit shocking if
tracking is not happening now, I think. And, certainly, all of
these agencies need to do a better job in tracking consumer
satisfaction with the resolution. We hear from consumers who
are not just frustrated because they can't figure out where to
complain, but who are really unhappy with the outcome that
simply says this outrageous practice was disclosed in a
contract you saw 4 years ago, and so, take it up with your bank
or go talk to a lawyer.
Mr. Mierzwinski. We agree.
Chairwoman Maloney. Okay. And finally, to what extent are
statistics currently available to you, as advocates for bank
customers?
You mentioned the overdraft challenge. Is there a way that
you can track how many consumers are disturbed about this
practice? To what extent are statistics there for you to track
trends that are extremely burdensome to consumers?
Ms. Kenney. Well, Madam Chairwoman, we do have the data
that is sort of reported in bulk by the agencies, which the OCC
now reports in the Ombudsman Report, which gives you very broad
categories of complaints by product, and then within each
individual product.
But frankly, it is very difficult for us to know without--
as Ed mentioned, you know--doing a FOIA request, how many
people, for example, are complaining about overdrafts. And,
even within the overdraft category, what specifically they are
annoyed about. The size of the fees? The number of fees? The
order of processing? Check hold times? And so forth.
Mr. Mierzwinski. Yes. We would certainly agree that it is
very difficult to obtain information, other than the summary
data that they provide, unless you file a very specific FOIA
request.
I would also take this opportunity to say that the other
place that the consumer groups find inadequate data
availability is in the call reports. When we want to compare
different banks, and figure out how much money they are making
on all their new fees, the call reports are extremely
inadequate.
I know there are some government GAO studies of call
reports going on now, but it would greatly aid us if we could
get all of this information without having to file FOIAs,
without having to jump through hoops.
Chairwoman Maloney. Well, my time has expired. I now
recognize Congressman Green for 5 minutes. Thank you.
Mr. Green. Thank you, Madam Chairwoman. Madam Chairwoman,
if I had any doubt prior to hearing these two witnesses, it has
been completely eliminated. I again commend you for the
simplicity of the idea that will deal with what appears to be a
very complex set of circumstances.
As indicated, the system appears to be Byzantine. In a
polyglot society, that makes for an unusual set of
circumstances.
So, Ms. Kenney, let me ask you the question, given that we
are a polyglot society, should we have multiple languages
available to persons who call in?
Ms. Kenney. Absolutely. And certainly starting with the
most frequently spoken non-English languages on the Web site,
as well as on the hotline. I know that does create some
resource issues, but we certainly need to be responsive to all
types of consumers who are aggrieved by their bank, and
particularly those who have fewer resources available to them.
Mr. Green. Thank you. And because I have really enjoyed
hearing your testimony, not because you have a melodious
voice--although you do sound good--but because of the substance
that you presented. It was overwhelming, to a certain extent.
So, permit me to ask this, so as to enhance your level of
acceptance among a diverse group of folk who will have to pass
judgement on what we are doing. How are you funded? Let us
start with Ms. Kenney. How is your organization funded?
What I am trying to get to is this: Do you have an axe to
grind? Is there some reason for you to come to Congress and
present the kind of testimony that you presented? And I think
you spoke well. Is there some reason that you would have to do
this, other than that you want to see the right thing done?
So, tell us, how are you funded, if you do not mind?
Ms. Kenney. Thank you, Congressman Green, for your kind
words. Consumers Union is a nonprofit organization fully funded
by consumer subscriptions to our print magazine, to our online
Web site, as well as to some of our other print products, such
as our health and financial newsletters. And we receive some
charitable contributions from foundations. But we receive no
corporate support, and accept no advertising, whatsoever.
Our goal is to protect consumers and to inform them.
Mr. Green. And when you arrive at the positions that you
espouse, do you--how do you synthesize these positions? You do
not just wake up one morning and say, ``You know what? I think
this is a good idea.'' Is there some process that you go
through to arrive at the position that you have arrived at?
Ms. Kenney. Yes. Certainly one of the advantages that we
have is we work across a wide range of substantive areas, and
we can see difficulties facing consumers across those areas in
some of the same categories.
And, certainly, the banking agencies are not alone in the
difficulties of the complaint procedures and the unsatisfactory
results that they yield. So, certainly, we look at a wide range
of issues and analyze them. We have been looking at the banking
complaint procedure for some time now, and we will be writing
about it in an upcoming issue of our magazine, Consumer
Reports, as well.
Mr. Green. All right. Let me pass to--and sir, I will not
embarrass myself by--
Mr. Mierzwinski. That is okay. It is ``Mierzwinski.''
Simple.
Mr. Green. Thank you.
Mr. Mierzwinski. Congressman Green, we are an independent,
nonprofit organization. We serve as the federation of State
public interest research groups, and we are funded solely by
individual donations. About half of the State PIRGs have
college chapters, and all of the State PIRGs have individual
citizen members.
We knocked on doors--over four million, five million
doors--this summer, asking people to join our organizations.
And we also accept some charitable contributions from
independent foundations. We accept no corporate money,
whatsoever, and we accept no government grants, either.
We come upon our positions based on taking a hard look at
what is the right public policy solution to a problem. We
conduct our own research, we do our own surveys. We have done a
number of studies, for example, of bank fees called The Big
Banks Big Fees studies, and we have done this in a number of
other areas that we participate in, as well as banking.
Mr. Green. Thank you. I yield back the balance of my time.
Chairwoman Maloney. Thank you so much. Congressman Hodes,
for 5 minutes.
Mr. Hodes. Thank you, Madam Chairwoman. Thank you both for
your testimony. I am struck, as a new Member of Congress, now
having been here a year, by the complexity of the regulatory
schemes facing consumers, and the clear testimony that comes
across that the regulators are not attuned to protecting
consumers, that the culture that we are faced with is one that
has, in fact, set up barriers to consumers, and in which
consumers are given short shrift.
According to Mr. Mierzwinski, what you saw on the Web site
with the Federal Reserve was, for the first time, you said you
saw the word ``consumer'' on there. But it does not sound like
it is very prominently displayed.
Now, some of your suggestions, Mr. Mierzwinski, for
amendments or additions or considerations in the bill, sound
like you are advocating that there be a consumer ombudsman
office associated with this 800 number. Am I getting that
right?
Mr. Mierzwinski. I think that is absolutely the case. And
the situation we have today is that the bank regulators have a
dual responsibility. They supervise the banks and they also
promote the banks. They are required to do a job that makes
them too cozy with the banks.
Consumers do not have an ombudsman. I realize there is an
ombudsman at the OCC, but the legal responsibility of that
ombudsman is not to protect consumers. There are 40 State
officials known as utility councils, or people's council, who
bring cases on behalf of consumers in the State utility arenas.
There could be a model like that here. Why don't we make
the centralized source, the centralized complaint handling
system, an advocate for consumers, rather than simply a
pipeline to the existing agencies, which, again, in our view,
have a culture that is pro-bank, not even unbiased, but
literally pro-bank.
Mr. Hodes. And whether or not this legislation is the right
vehicle for that idea, and whether or not--it certainly sounds
like it is important for this committee to address the kind of
cultural disconnect that you have raised in your testimony
between the regulators' obligation to their institutions and
the need for help for consumers. So I appreciate your thinking
on that.
I also take it that it sounds like you share my thought
about the prominence with which the 800 number and
communication about it needs to happen in today's talk show/
deficit disorder culture, in order to reach consumers in as
clear and simple a way as we would like it to happen with this
800 number.
Mr. Mierzwinski. I think, without a doubt, if you don't do
that, then the system will fail. And I would strongly recommend
you don't call it the FFIEC hotline, for example.
Mr. Hodes. All right. All right. Follow the KISS principle?
Mr. Mierzwinski. Right, exactly.
Mr. Hodes. Do you also think that Congress needs to go so
far as--let us assume that we have this legislation about the
800 number--requiring the regulatory agencies to display
information about it on their Web sites and in their
information in a particular way, with particular prominence, in
a particular style, or is that something that we simply leave
up to them?
Mr. Mierzwinski. Well, that is exactly my view, is it
should be something like ``Ghost Busters'' or ``Mr. Yuck.'' It
should be something that they all have that is the same, so
that people know that, hey, it is easier to go here. And that,
ideally, would go into a bank.
So, if I walk into a national bank, I see Mr. Yuck or Ghost
Busters. If I walk into a State bank or an operating
subsidiary, no matter where I go, I see the same logo. Right
now, the only logo that goes across all the depository
institutions is the FDIC logo, because they insure them all,
except for the credit unions, which are insured by the credit
union share fund.
So, that is the only non-confusing logo that is out there.
And we need something like that, so people understand that when
they really want help with their bank, there is a one-stop
shopping central source, complaint-busters site.
Mr. Hodes. Thank you very much. I appreciate it. I yield
back with great appreciation, Madam Chairwoman.
Chairwoman Maloney. Thank you. And thank you for your
attendance and questions. I would like to note that without
objection, your written testimony, in its entirety, will be
made a part of the record, and that the record will remain open
for 30 days, so that members will have an opportunity to submit
written questions to you, and to place your responses in the
record. I thank you very much for your time and your testimony
today, and for all of your hard work. Thank you.
The hearing is now adjourned.
[Whereupon, at 11:43 a.m., the hearing was adjourned.]
A P P E N D I X
December 12, 2007
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