[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]




 
         CONSUMER FINANCIAL PROTECTION EFFORTS: ANSWERS NEEDED

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

                                HEARING

                               before the

                         COMMITTEE ON OVERSIGHT
                         AND GOVERNMENT REFORM

                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED TWELFTH CONGRESS

                             FIRST SESSION

                               __________

                             JULY 14, 2011

                               __________

                           Serial No. 112-88

                               __________

Printed for the use of the Committee on Oversight and Government Reform


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              COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM

                 DARRELL E. ISSA, California, Chairman
DAN BURTON, Indiana                  ELIJAH E. CUMMINGS, Maryland, 
JOHN L. MICA, Florida                    Ranking Minority Member
TODD RUSSELL PLATTS, Pennsylvania    EDOLPHUS TOWNS, New York
MICHAEL R. TURNER, Ohio              CAROLYN B. MALONEY, New York
PATRICK T. McHENRY, North Carolina   ELEANOR HOLMES NORTON, District of 
JIM JORDAN, Ohio                         Columbia
JASON CHAFFETZ, Utah                 DENNIS J. KUCINICH, Ohio
CONNIE MACK, Florida                 JOHN F. TIERNEY, Massachusetts
TIM WALBERG, Michigan                WM. LACY CLAY, Missouri
JAMES LANKFORD, Oklahoma             STEPHEN F. LYNCH, Massachusetts
JUSTIN AMASH, Michigan               JIM COOPER, Tennessee
ANN MARIE BUERKLE, New York          GERALD E. CONNOLLY, Virginia
PAUL A. GOSAR, Arizona               MIKE QUIGLEY, Illinois
RAUL R. LABRADOR, Idaho              DANNY K. DAVIS, Illinois
PATRICK MEEHAN, Pennsylvania         BRUCE L. BRALEY, Iowa
SCOTT DesJARLAIS, Tennessee          PETER WELCH, Vermont
JOE WALSH, Illinois                  JOHN A. YARMUTH, Kentucky
TREY GOWDY, South Carolina           CHRISTOPHER S. MURPHY, Connecticut
DENNIS A. ROSS, Florida              JACKIE SPEIER, California
FRANK C. GUINTA, New Hampshire
BLAKE FARENTHOLD, Texas
MIKE KELLY, Pennsylvania

                   Lawrence J. Brady, Staff Director
                John D. Cuaderes, Deputy Staff Director
                     Robert Borden, General Counsel
                       Linda A. Good, Chief Clerk
                 David Rapallo, Minority Staff Director


                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on July 14, 2011....................................     1
Statement of:
    Warren, Elizabeth, Assistant to the President and Special 
      Advisor to the Secretary of the Treasury, Consumer 
      Financial Protection Bureau................................    36
Letters, statements, etc., submitted for the record by:
    Connolly, Hon. Gerald E., a Representative in Congress from 
      the State of Virginia, prepared statement of...............    88
    Cummings, Hon. Elijah E., a Representative in Congress from 
      the State of Maryland, prepared statement of...............     7
    Issa, Chairman Darrell E., a Representative in Congress from 
      the State of California:
    Followup questions and responses.............................   107
    Prepared statement of........................................     4
    Tierney, Hon. John F., a Representative in Congress from the 
      State of Massachusetts:
        Democratic staff report..................................    12
        Prepared statement of....................................    30
    Warren, Elizabeth, Assistant to the President and Special 
      Advisor to the Secretary of the Treasury, Consumer 
      Financial Protection Bureau, prepared statement of.........    38


         CONSUMER FINANCIAL PROTECTION EFFORTS: ANSWERS NEEDED

                              ----------                              


                        THURSDAY, JULY 14, 2011

                          House of Representatives,
              Committee on Oversight and Government Reform,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 9:30 a.m., in 
room 2154, Rayburn House Office Building, Hon. Darrell E. Issa 
(chairman of the committee) presiding.
    Present: Representatives Issa, Mica, Platts, McHenry, 
Jordan, Chaffetz, Mack, Walberg, Lankford, Amash, Buerkle, 
Gosar, Labrador, Meehan, DesJarlais, Walsh, Gowdy, Ross, 
Guinta, Farenthold, Kelly, Cummings, Towns, Maloney, Norton, 
Kucinich, Tierney, Clay, Lynch, Cooper, Connolly, Quigley, 
Davis, Braley, Welch, Yarmuth, Murphy, and Speier.
    Staff present: Thomas A. Alexander, senior counsel; Robert 
Borden, general counsel; Lawrence J. Brady, staff director; 
Katelyn E. Christ and Tegan Millspaw, research analysts; 
Benjamin Stroud Cole, policy advisor and investigative analyst; 
Drew Colliatie, staff assistant; John Cuaderes, deputy staff 
director; Gwen D'Luzansky, assistant clerk; Adam P. Fromm, 
director of Member services and committee operations; Linda 
Good, chief clerk; Ryan M. Hambleton, professional staff 
member; Frederick Hill, director of communications and senior 
policy advisor; Christopher Hixon, deputy chief counsel, 
oversight; Hudson T. Hollister and Christine Martin, counsels; 
Justin LoFranco, deputy director of digital strategy; Mark D. 
Marin, senior professional staff member; Laura L. Rush, deputy 
chief clerk; Rebecca Watkins, press secretary; Peter Warren, 
legislative policy director; Michael Whatley, professional 
staff member; Beverly Britton Fraser and Davida Walsh, minority 
counsels; Lisa Cody, minority investigator; Kevin Corbin, 
minority staff assistant; Ashley Etienne, minority director of 
communications; Jennifer Hoffman, minority press secretary; 
Carla Hultberg, minority chief clerk; Lucinda Lessley, minority 
policy director; Leah Perry, minority chief oversight counsel; 
Jason Powell, minority senior counsel; Dave Rapallo, minority 
staff director; Susanne Sachsman Grooms, minority chief 
counsel; and Mark Stephenson, minority senior policy advisor/
legislative director.
    Chairman Issa. Good morning. The hearing will come to 
order.
    We exist for two fundamental principles: First, Americans 
have a right to know that the money Washington takes from them 
is well-spent. And, second, Americans deserve an efficient, 
effective government that works for them.
    Our duty on the Oversight and Government Reform Committee 
is to protect these rights. Our solemn responsibility is to 
hold government accountable to taxpayers, because taxpayers 
have a right to know what they get from their government. We 
will work tirelessly in partnership with citizen watchdogs to 
deliver the facts to the American people and bring genuine 
reform to the Federal bureaucracy. This is our mission.
    Today's hearing is an important one because the Consumer 
Financial Protection Bureau is intended to bring protections to 
the American people in and around financial products. We are 
here not to micromanage every aspect of that. The Financial 
Services Committee has a responsibility to look at the details 
of that. What we are here to do is our oversight role as to 
government organization: whether or not this agency is properly 
designed and prepared; whether the funding stream is 
appropriate and verifiable; whether it will be transparent; 
whether or not, as it is being organized from a 2,000-page 
document, whether the guidance has been sufficiently clear; and 
whether or not the American people can feel comfortable that 
what was envisioned in Dodd-Frank is, in fact, what they want.
    We appreciate Professor Warren's willingness to clear her 
schedule, testifying for the second time before this committee, 
first time before the full committee. I know the American 
people want to know more about an agency that you have 
dedicated, in some ways your whole life, but certainly the last 
year to building up. The American people do not understand all 
the history that goes in to your preparation for this, and I 
believe today is an opportunity for us all to get a better 
understanding of that.
    Additionally, the definition of consumer financial products 
protection is one that people don't understand. Quite frankly, 
it may apply to payday loans, but that wasn't the basis for 
Dodd-Frank. Dodd-Frank was about making sure that we never 
again have a meltdown because certain types of credit 
instruments were unsafe, unsound, poorly documented, and 
ultimately worth less than they were intended to.
    But it is clear today that we will be dealing with an 
agency that will be far larger. The budget for next year is 
estimated to be larger than the two largest consumer protection 
agencies presently in existence combined. That is a lot of 
money.
    Additionally, the authority of this agency is extremely 
broad. Today, we also will ask some important questions that 
this committee has been dedicated to, along with the Financial 
Services Committee, for some time. The Federal Reserve is not 
transparent. The Federal Reserve does resist any kind of 
congressional oversight and considers it unreasonable 
interference.
    There have been limited--and I repeat, very limited 
ability--to get transparency in some cases related to the 
financial bailout from the Federal Reserve. It is likely that 
without the specific and documented ability to have guaranteed 
transparency and legitimate oversight, that this sub-agency, 
independent as it might be, but fully funded and accountable to 
the Federal Reserve, could well become an agency that, while 
well-intended, is not well-understood or transparent to 
Congress or to the American people.
    These concerns and others will be voiced here today. We are 
delighted to have a witness who, more than anyone, absolutely 
understands the intention of her agency. Often, you have used 
the term, ``cop on the beat.'' Oddly enough, we use it here, 
too. Today, we will ask the questions that will include: Does 
the cop on the beat have a district attorney overseeing the cop 
on the beat? Is there, in fact, a defense counsel available to 
check on the cop on the beat? Is there an independent judge of 
the cop on the beat? Is there, in fact, a court of appeals? 
And, by the way, if I am accused by the cop on the beat, can I 
get an attorney paid for by the State?
    These and other questions are important, because we are not 
talking, in the case of your oversight, about only large, 
international banks. We may be talking about a small 
organization formed for the purpose of one financial instrument 
potentially finding that product in disfavor with the large 
banks, who complain that that product is in some way deceptive. 
I have no problem with the idea that that will be looked in to 
by your entity. I do have a question about whether or not that 
small company will have their day in court and their ability 
not to be in financial ruin if, in order to save their company, 
they must disagree with your determination. That and many other 
issues we will be concerned with.
    Last, there is a concept of individual liberty. One of the 
concerns that the chair has and I believe many members of the 
committee have is, at what point do the American people have a 
right to say, ``I want to be informed, I want to be protected 
by being informed, but, quite frankly, I want something which 
you may not want me to have?'' In America, unless it is 
incredibly dangerous to others or may cause harm to society, 
generally we let people have what they want, even if we don't 
want them to have it. We could use many examples; I will simply 
quit with adult beverages.
    Under Dodd-Frank, the CFPB will have the power to regulate 
all consumer financial products and to prohibit the ones it 
deems unfair or abusive. Today, I hope we will be able to 
understand what, under Dodd-Frank, is the scope created by that 
language and others.
    I appreciate, again, your being here.
    And I yield to the ranking member for his opening 
statement.
    [The prepared statement of Chairman Darrell E. Issa 
follows:]

[GRAPHIC] [TIFF OMITTED] T1969.001

    Mr. Cummings. Thank you very much, Mr. Chairman.
    And thank you, Professor Warren, for being here today.
    And at today's hearing we have a fundamental difference of 
opinion about what we believe is important and who we are here 
to serve. The difference can be distilled into one simple 
question: Whose side are we on?
    On one hand, a homeowner who has been illegally evicted, 
foreclosed on, and charged inflated fees. They include 
thousands of U.S. military service members and their families 
who lost their homes, were charged millions of dollars 
illegally, and were subjected to other abuses in violation of 
Federal law.
    The chairman asked a question about someone having a day in 
court and facing financial ruin. They did not necessarily have 
their day in court, and they have faced financial ruin. Many of 
these service members are deployed overseas. Their credit has 
been impaired, and their security clearances have been 
suspended. While they are fighting to defend our Nation abroad, 
they are also fighting their banks back home.
    Professor Warren is on the side of these service members, 
these homeowners, and their families. Holly Petraeus, the wife 
of General David Petraeus, is now working at the Bureau as the 
head of the Office of Service Member Affairs to educate service 
members and banks about their legal rights and obligations. 
They have joined with our Nation's top uniformed lawyers, the 
Judge Advocate General, to protect service members from the 
predatory practices of these banks.
    I, too, am on the side of service members and other 
homeowners across the country who have been the victims of 
these illegal--and I emphasize, illegal--actions. In my 
opinion, none of our troops fighting overseas in Iraq or 
Afghanistan or anywhere else should also have to fight illegal 
actions by their banks back home just to keep a roof over the 
heads of their loved ones. And, by the way, a number of these 
illegal actions have already been admitted to by the banks.
    Over the past 6 months, I have urged this committee to 
conduct a thorough--thorough--bipartisan investigation of these 
systemic abuses. Initially, we had positive signs. On February 
11th, we formally adopted the committee's oversight plan, the 
blueprint for our committee's investigative priorities. As part 
of that plan, we voted unanimously to investigate, ``wrongful 
foreclosures and other abuses by mortgage servicing 
companies.'' We also held a bipartisan field hearing in 
Baltimore, where we heard heart-wrenching testimony from a 
disabled veteran who suffered abuses at the hands of a mortgage 
servicing company, including an illegal eviction.
    But since hearing that testimony, the committee has done 
nothing. I asked the chairman to join me in sending document 
requests to the top 10 mortgage servicers, but he declined. So 
I sent them myself. I asked the chairman to invite JPMorgan to 
testify about their illegal foreclosures against service 
members, but he declined. When some mortgage servicers refused 
to provide even a single responsive document, not a single 
syllable, I asked the chairman to issue subpoenas, but he 
declined.
    Instead of conducting a bipartisan investigation to help 
service members and other homeowners, this committee has now 
trained its eyes and sights on Professor Warren, who is trying 
to protect these very same families so that they may have, in 
his words, their day in court so that they might not face 
financial ruin.
    Ironically, it appears that the majority's single biggest 
criticism of Professor Warren is that she is somehow being too 
hard on these mortgage banks. Professor Warren has now been 
summoned to testify before the committee not once but twice, 
and the committee has demanded that she produce a massive range 
of documents, all while the mortgage banks are given a pass.
    So let me end with my original question: Whose side are we 
on? The side of service members risking their lives and their 
safety and their health, and the side of other homeowners and 
their families? Or on the side of the banks that are committing 
violations against these folks? And these are violations that 
they have admitted to.
    I hope we can come together and work with a common purpose 
to do what this committee has the opportunity to do best: to 
help millions of American families improve their lives by 
demanding accountability and compliance with the law.
    I have often said to my constituents, we have one life to 
live. This is no dress rehearsal. And guess what? This is that 
life. I do believe that Professor Warren is doing her very best 
to make sure that every American lives the very, very best life 
that they can.
    And, with that, Mr. Chairman, I yield back.
    [The prepared statement of Hon. Elijah E. Cummings 
follows:]

[GRAPHIC] [TIFF OMITTED] T1969.002

[GRAPHIC] [TIFF OMITTED] T1969.003

    Chairman Issa. The gentleman yields back.
    We now recognize the chairman of the Subcommittee on TARP, 
Financial Services and Bailouts of Public and Private Programs, 
Mr. McHenry, for his opening statement.
    And by previous agreement, any unused time you may yield on 
our side, and they will do the same.
    I recognize the gentleman.
    Mr. McHenry. Thank you, Mr. Chairman.
    As we sit here today, the economic health of the United 
States remains fragile. Unemployment numbers continue to be 
unacceptably high, while small businesses struggle to access 
credit and families struggle to simply pay their bills. With 
that in mind, this committee remains committed to examine the 
economic tradeoffs of current and proposed regulations and to 
define the limits of regulators in an effort to put this 
country back on the path to growth and prosperity.
    In the spirit of this process, the House Oversight 
Committee again welcomes Professor Warren, who has led the 
formation of the Consumer Financial Protection Bureau, set to 
launch on July 21st. Although the CFPB is not directly subject 
to congressional appropriations, I hope that our witness will 
be forthcoming to Congress and the American public about its 
processes, decisions, and budget today and for years to come.
    It is not a secret that the activity and formation of the 
CFPB has been controversial. Numerous questions regarding the 
scope of the CFPB's activity in the mortgage settlement case 
and the Bureau's regulatory limits remain unanswered. With the 
CFPB's inauguration next week, it is imperative that Professor 
Warren explain to this committee and to the American people the 
specifics regarding activities of the Consumer Protection 
Agency as of today and its broadly defined authority to 
regulate access to credit.
    We all agree that protections are needed. In fact, one of 
the CFPB's first initiatives is nearly identical to the 
Mortgage Disclosure Simplification Act that I introduced along 
with Democratic Congressman Green of Texas. It was a bipartisan 
piece of legislation. So that is a positive.
    With that said, the majority of rules and regulations 
coming from the CFPB will not be based on bipartisan ideas and 
will never require a vote. That is a concern. It will be 
conducted by a single regulator, single director, who will be 
given authority to author the terms for access to credit for 
the American consumers and small businesses. With meager 
oversight, they will be left outside the window of 
congressional appropriations.
    To make matters worse, Professor Warren has continued to 
evade questions about the types of financial products that the 
CFPB would ban or restrict. Businesses and investors are 
sitting on the sidelines due to regulatory and economic 
uncertainty. There are many questions left unanswered: What 
will the CFPB do? How will it proceed? And what are the costs 
incurred by the American consumers through these regulations? 
Because there will be costs. Professor Warren's evasive non-
answers only further contribute to this climate of tepid 
investment and slow job growth. I fear that actions by the CFPB 
that limit access to credit and increase its costs will only 
further damage a struggling economy.
    The only clear thing about the CFPB in its current form is 
that it will have extraordinary reach and control over 
individual consumer decisions, while having an unparalleled 
lack of oversight and accountability by the American people. As 
Professor Warren continues to work to stand up the CFPB by next 
week, it is the Oversight Committee's obligation to continue to 
ask the questions of the Bureau to be clear about its 
regulatory limits and proposals to restrict access to credit.
    I look forward to addressing these issues and many others 
today with Ms. Warren. And I thank Ms. Warren for returning and 
being here today and answering Members' questions.
    And, with that, Mr. Chairman, I would yield the balance of 
my time back to you.
    Chairman Issa. Thank you.
    And I won't use it for a further opening statement, but I 
would like to answer the ranking member's inquiry.
    As you know, we held a field hearing in Baltimore on the 
mortgage crisis. And I hope that hearings held here are not 
somehow weighted greater than those held in your own district 
with your mayor and your Governor there for the same fact-
finding. The time of the committee is limited. We are trying to 
do things which, in this case, Financial Services should be the 
lead. If they are not, we certainly want to make sure that we 
fill in any of the gap.
    Originally I said we were not going to let this go. We are 
not going to let this go. We are going to continue to look at 
those abuses, whether there is a government nexus or whether we 
believe this committee can make a difference. And I want to 
reiterate, nothing has changed from February until now. And I 
would hope the gentleman would realize that I am happy to 
continue working on specific opportunities.
    In the case of the mortgage industry, in your opening 
statement, you did say ``illegal,'' ``admitted,'' etc. If we 
already know something is illegal, if, in fact, it is already 
known and prosecution or corrections are being made, then it is 
appropriate for this committee to say, what more do we need to 
do? And if the answer is nothing more there compared to other 
areas where people are not admitting or not, in fact, known to 
have done wrong, we are going to choose to go to those who are 
still hiding behind a veil of ``We didn't do it. We are not 
wrong.'' And I would hope that both of us would always put our 
investigations first on those who are saying there is nothing 
wrong or on government agencies.
    And I, again, will join with the ranking member. At any 
time, if we see a wrong that is not being righted that we can 
help make right, I look forward to working with him.
    I would recognize Mr. Tierney for his opening statement.
    Mr. Tierney. Thank you, Mr. Chairman.
    Professor Warren, let me welcome you and thank you for your 
dedication to the interests of the American consumer. I think 
you are doing an excellent job on that.
    You know, the costs for lack of regulation certainly are 
pretty clear to all of us, and it culminated in the recession 
that we have been suffering through for some time. It is 
amazing that some people in both branches of this legislature 
seem to be flacking for Wall Street banks, attacking an entity 
that has been set up to be the champion of the American 
consumer and the taxpayer.
    Some seem bent on sabotaging Dodd-Frank's consumer taxpayer 
protections in order to cover for the Wall Street banks, who 
most of America believe wrecked our economy, got a taxpayer 
bailout, sometimes two, who built nothing of value for America 
except for financial products that ended up bilking the 
American public. And since then there has been too little 
legal, moral, or financial reckoning by these wrongdoers. And, 
frankly, the lack of accountability for this greed and misdeeds 
is stunning on that.
    So I want to add some comments and reiterate what the 
ranking member talked about, in terms of foreclosure abuses 
that hit service members particularly hard. And this is one 
thing that this committee can continue to do because it is an 
ongoing matter.
    As the ranking member of the National Security 
Subcommittee, I understand that readiness can certainly be 
affected by troops who struggle to deal with issues back home, 
whether that includes negative credit reports, security 
clearances that are suspended, and, worst of all, losing their 
homes due to the illegal actions by banks.
    Mr. Chairman, I would like to enter in to the record a 
report compiled by the Democratic staff entitled, ``Fighting on 
the Home Front: The Growing Problem of Illegal Foreclosures 
Against U.S. Servicemembers.''
    Chairman Issa. I look forward to it.
    Mr. Tierney. Thank you.
    [The information referred to follows:]

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    Mr. Tierney. The report describes in detail the systemic 
nature of these problems.
    Particularly troubling is that these abuses are already 
illegal. Congress enacted the Servicemembers Civil Relief Act 
to protect our men and women in uniform against foreclosures 
without court orders and against inflated fees.
    This report finds that when initial accounts of illegal 
foreclosures began surfacing, the banks downplayed these 
problems. But as thousands of affected service members were 
identified, it became clear the problems were more widespread. 
This year, three banks were forced to pay multimillion-dollar 
settlements related to these abuses. The largest was JPMorgan. 
At first, it announced it would pay $2 million, but it ended up 
paying $56 million to settle claims by Active Duty military 
personnel.
    Justice Department officials also condemned the actions of 
the Bank of America. This is what they said, ``The bank failed 
to protect and respect the rights of our service members, 
failed to comply with clearly mandated procedures, and 
foreclosed against homeowners who are valiantly serving our 
Nation.''
    I want to thank Professor Warren and Holly Petraeus, who 
have been working hard on this issue at the Bureau. Since these 
illegal actions are so much more widespread, Mr. Chairman, than 
originally thought, however, I believe a comprehensive 
investigation by this committee is urgently needed.
    And, with that, I yield to Mr. Quigley for the balance of 
my time.
    [The prepared statement of Hon. John F. Tierney follows:]

    [GRAPHIC] [TIFF OMITTED] T1969.021
    
    [GRAPHIC] [TIFF OMITTED] T1969.022
    
    Mr. Quigley. Thank you.
    Thank you, Mr. Chairman and Professor Warren.
    With due respect, I fear that this hearing is focused on 
issues which distract from the obvious task at hand: helping 
Professor Warren and others in our attempts to avoid another 
economic catastrophe caused in large part by unregulated greed.
    On one hand, we are trying to balance things here, or 
balance a known entity, the greatest economic downturn since 
the Depression caused by this lack of regulation; versus the 
concerns about what an agency is going to do, whose full effect 
doesn't go in to place until later this month.
    So if we balance this, I think the American public 
recognizes the real concern out there is what we have gone 
through, what we are still experiencing because of those 
problems, and how to face them, rather than some extraordinary 
concerns about an agency which really hasn't done anything yet 
to challenge those concerns that we have faced so far.
    And, like any agency, the CFPB needs vigilant oversight 
from Congress, but we should not obstruct the agency from 
carrying out the intent of Dodd-Frank. As I said, millions of 
Americans are still suffering the consequences of the housing 
and financial crisis, which was caused by weak or nonexistent 
regulation.
    We all here have the beauty of hindsight about what took 
place, but let's remember what Professor Elizabeth Warren said 
in 2007: ``Nearly every product sold in America has passed 
basic safety regulations well in advance of reaching store 
shelves. But credit products, by comparison, are regulated by a 
tattered patchwork of State and Federal laws that have failed 
to adapt to changing markets.''
    The CFPB was explicitly designed to address these 
regulatory shortcomings. Just like the Consumer Product Safety 
Commission protects consumers against exploding toasters, this 
agency will protect consumers against faulty mortgages.
    One key strength of the CFPB is to focus on the shadow 
financial services sector, and that should be a focus today 
instead of concerns about what we might do. These unregulated 
lenders will, for the first time, be held to the same standards 
as banks and credit unions. This should be our number-one 
priority. And I thank Ms. Warren for her efforts so far and in 
the future.
    Chairman Issa. I thank the gentleman.
    Mr. Cummings. Mr. Chairman.
    Chairman Issa. Just a moment.
    Members will have 7 days to submit opening statements and 
extraneous material for the record.
    For what purpose does the ranking member----
    Mr. Cummings. Mr. Chairman, I have a motion.
    Chairman Issa. The gentleman will state his motion.
    Mr. Cummings. Mr. Chairman, since listening to your 
statement a few moment ago, and since a key focus of today's 
hearing is the abuses by mortgage servicers, I move, pursuant 
to House Rule XI, clause 2(k)(6), that the committee authorize 
subpoenas for documents from the five mortgage servicing 
companies that have not been responsive.
    By the way, Mr. Chairman, you said that there were some--
you were right--that there are some that have admitted 
wrongdoing. The five that we are talking about have not 
admitted wrongdoing. And I think that it would be appropriate, 
based upon what we have done in other cases--just like you 
said, we want to make certain things are priority those things 
that we need to continue to look in to. I think this is an 
appropriate situation for us to look in to.
    Chairman Issa. I thank the gentleman.
    At a hearing, only motions for subpoenas related to that 
hearing can be considered in order for witnesses. However, we 
will take the motion and work with the ranking member on a 
business meeting where it could be in order.
    Mr. Cummings. Well, we have consulted carefully with the 
House Parliamentarian, and they tell us that, under Rule XI, 
clause 2(k)(6), this motion is in order and must be recognized.
    Chairman Issa. Under committee and House rules, we notice 
business of the committee differently than hearings. Today we 
have not noticed any business of the committee. So, although 
Members would be advised that if a witness had not shown up a 
subpoena could be in order to compel that witness, no other 
business would be appropriate.
    I will work with the ranking member to notice a business 
meeting so that it would be. At the next business meeting, 
including the markup of a post office, it would be ordinarily 
in order for that.
    Mr. Cummings. Very well.
    Chairman Issa. I thank the gentleman.
    Mr. Tierney. Mr. Chairman.
    Chairman Issa. Yes?
    Mr. Tierney. I would like to appeal the ruling of the 
chair.
    Chairman Issa. If the gentleman insists on his motion, we 
will take a 5-minute recess.
    Mr. Cummings. I insist.
    Chairman Issa. We stand in recess.
    [Recess.]
    Chairman Issa. The hearing will come back to order.
    Mr. Tierney, I have consulted with the House 
Parliamentarian. And he informs me that, under ``Hearing 
Procedures,'' which is throughout the ``800'' pages, at page 
802 and beyond, of the House Rule XI, which you have 
referenced, if you will look at ``Hearing Procedures,'' what it 
says is--it goes through paragraph five of what is in order, 
which is not included in what you have asked. And then 
paragraph six says, ``Except as provided in paragraph 5, the 
chair shall receive and the committee shall dispose of request 
to subpoena additional witnesses.''
    Do you have an additional witness?
    Mr. Tierney. Yes, sir. If you look at the subpoenas, we are 
moving the subpoena to custodians of the record for the five 
banks to produce the list of documents.
    Chairman Issa. And what would that have to do with today's 
hearing? It is additional witnesses for the hearing that has 
been noticed.
    Mr. Tierney. Right. So the ranking member's motion here is 
relevant and germane in the following way. The title of today's 
hearing----
    Chairman Issa. But no, no. Just before you----
    Mr. Tierney. I will answer your question.
    Chairman Issa. But let's get to the first question. It says 
``witnesses.''
    Mr. Tierney. Yes.
    Chairman Issa. Your subpoena is for documents.
    Mr. Tierney. Is for the custodian of the records to bring 
the documents.
    Chairman Issa. It is for documents.
    Mr. Tierney. It is for the custodian of the records to 
bring them in.
    Chairman Issa. It is for documents, not witnesses.
    Mr. Cummings. If the chairman would yield?
    Mr. Tierney. I have been through this a few thousand times 
in my life, all right? And I don't know about you. But the 
subpoena is to the custodian of the records for the documents. 
But the custodian is the one we are subpoenaing in here to 
produce the documents.
    Chairman Issa. So I want to understand your subpoena. So 
what you want is for 10 bank executives to be here with 
documents?
    Mr. Tierney. I don't know if they are executives or not. I 
want the custodian of the records.
    Chairman Issa. So you don't want documents. You just want 
the custodian.
    Mr. Tierney. What part of the English language, sir, don't 
you understand? We want the custodian of the records to bring 
the documents here. That person will be the custodian of those 
records and is the appropriate person to produce them as a 
witness under oath in front of this committee. That is what the 
subpoenas are for.
    Chairman Issa. I appreciate that.
    I have been additionally----
    Mr. Cummings. Mr. Chairman.
    Chairman Issa. Yeah, go ahead.
    Mr. Cummings. Thank you very much, Mr. Chairman.
    Mr. Chairman, since there is some question as to what our 
motion is all about, Mr. Tierney is absolutely correct, we are 
talking about the custodian of the records. And we are not 
talking about 10 or 12 banks. We are talking about five banks. 
And we are talking about the five banks where the minority 
requested information and these banks did not provide us, Mr. 
Chairman, with one syllable of information.
    And the relevance is, Mr. Chairman, we have before us 
Professor Elizabeth Warren. And her bureau, the bureau that she 
is putting together and is working so hard on, part of their 
task is to look at mortgage issues. And you said a little bit 
earlier that, with regard to Financial Services, they are doing 
the same thing. They have basically been tasked with looking at 
things prospectively, Mr. Chairman. We are looking at them from 
a historical standpoint.
    And so, that is what it is all about.
    Chairman Issa. And I appreciate the gentleman's comments.
    Additionally, the Parliamentarian informed me that an 
appeal of the ruling of the chair, although in order, is not 
immediately votable under the rules. So we will continue this 
hearing, and it is my intention before the end of the hearing 
to hold a vote on your appeal of the ruling of the chair.
    And, with that----
    Mr. Cummings. Parliamentary inquiry? Parliamentary inquiry, 
Mr. Chair.
    Chairman Issa. I recognize the ranking member for----
    Mr. Cummings. Thank you very much.
    Just one quick question: At what time--based upon your 
understanding of the parliamentary rules, is that where we have 
an opportunity to debate our motion? Do you follow me? In order 
words, you are talking about----
    Chairman Issa. An appeal is not debatable.
    Mr. Cummings. Okay. And so, basically, we will not have an 
opportunity--it is my understanding----
    Mr. Tierney. Point of order, Mr. Chairman.
    That certainly is debatable. An appeal of the ruling of the 
chair is debatable. And we get to discuss the germaneness of 
that motion that was made by the ranking member. And I am happy 
to do it now, if you like, or if you want to set it aside for 
later, we could do it later. But it is debatable.
    Chairman Issa. I have set it aside for later. The 
parliamentary office of the House is available to all Members. 
We will have plenty of time----
    Mr. Tierney. We consulted them fully.
    Chairman Issa. We will have plenty of time for you to check 
on what they just told me.
    And, with that----
    Mr. Cummings. Mr. Chairman, just one quick question.
    Chairman Issa. Yes, sir.
    Mr. Cummings. Mr. Chairman, Rule V requires that if a vote 
is postponed, as you are doing, you shall take reasonable steps 
to notify Members as to when that vote will be held. Pursuant 
to this rule, I ask that you provide all Members with at least 
half-an-hour notice before holding a vote on the pending 
motion.
    Chairman Issa. It will not happen before 10:40.
    Mr. Cummings. Very well.
    Chairman Issa. At this point, Professor Warren, I 
appreciate your being here.
    Pursuant to committee rules, all witnesses will be sworn 
before testifying. Please rise and raise your right hands.
    Thank you.
    [Witnesses sworn.]
    Mr. Cummngs. Please have the record reflect that the 
witness answered in the affirmative.
    Professor Warren, we have a number of items which are 
obviously pending. I want to and will allow you to go through 
your full opening statement before we deal with this that is 
unrelated to today.
    So, the ordinary rule of the committee is 5 minutes. Your 
opening statement is in the record in its totality. And what we 
will do is not look at the clock very carefully. Obviously, if 
you are summarizing or have additional items, we want to hear 
them. Today is about hearing what you have to say, your vision 
for this bureau.
    And, with that, the gentlelady is recognized.

 STATEMENT OF ELIZABETH WARREN, ASSISTANT TO THE PRESIDENT AND 
  SPECIAL ADVISOR TO THE SECRETARY OF THE TREASURY, CONSUMER 
                  FINANCIAL PROTECTION BUREAU

    Ms. Warren. Thank you, Chairman Issa, Ranking Member 
Cummings, and members of the committee, for inviting me to 
testify about the work of the Consumer Financial Protection 
Bureau. We appreciate the committee's important oversight role 
and welcome the opportunity to respond to your interest in how 
the Bureau is being organized and operating.
    Let me begin by assuring the committee that at the CFPB we 
are working nonstop to build an effective organization, with 
the goal of making consumer financial markets work better for 
consumers and work better for financial services providers. We 
want to make prices clear, and we want to make risks clear. And 
we want consumers to be able to compare two or three credit 
cards or two or three mortgages head-to-head.
    We are opposed to complicated forms and fine print. We 
believe they do not help consumers, and they do not work for 
responsible lenders, who are happy to have their products 
compared head-to-head in a competitive market.
    Attend of the day, we think every consumer should have the 
basic information they need to answer two basic questions: Can 
I afford this? And is this the best deal I can get? That is how 
markets are supposed to work, and that is where this new agency 
is headed.
    We have all seen the consequences of a regulatory system in 
which no single regulator has the authority and the 
comprehensive tools necessary to ensure that consumer financial 
markets work for American families. For years, we have seen the 
growth of fine print that hides important and complex terms, 
fine print that makes it almost impossible for consumers to 
know what they are really getting into before they sign on the 
dotted line.
    We have also witnessed an explosion of high-risk credit 
consumer lending among largely unregulated companies, such as 
payday and car title lenders. And we have seen the economy 
driven to the brink of collapse by sub-prime lenders peddling 
high-risk mortgages to people who couldn't possibly repay them. 
As a country, we are all paying a high price for a broken 
consumer credit system.
    The CFPB will increase accountability in government. Under 
the old system, seven different Federal agencies had bits and 
pieces of consumer financial protection, but no one had the 
authority and the comprehensive tools necessary to monitor 
whether prices and risks were clear and to ensure that consumer 
financial markets work for American families.
    In the wake of the worst financial disaster since the Great 
Depression, the Dodd-Frank Act reformed this flawed regulatory 
structure by placing consumer financial protection 
responsibility squarely on the CFPB so it can be directly 
accountable, both to Congress and to the American people, for 
getting the job done.
    In my written testimony, I describe in detail our 
achievements to date in standing up the new Consumer Financial 
Bureau. We have made significant progress in our efforts to 
combine two complicated mortgage disclosure documents into a 
single short form. We are laying the groundwork to supervise 
nonbank lenders, which will give better protection for all 
families and help level the playing field between banks and 
other kinds of lenders.
    We are setting up of our Office of Servicemember Affairs, 
under the very strong leadership of Holly Petraeus. We have put 
the basic building blocks in place for a functioning agency, 
hiring approximately 400 employees from diverse backgrounds. We 
have people who are coming to us from financial services, 
consumer advocacy, community banking, government service, 
private legal practice, and regulatory compliance.
    And we have kept stakeholders informed every step along the 
way. I have talked directly with community bankers in all 50 
States. I have spoken with literally dozens and dozens of 
credit unions and credit union officials. I have also spoken 
with big bank executives, with trade associations, with 
government watchdog groups, and with consumer advocates across 
the country.
    I am pleased to report that our various initiatives on 
improving mortgage forms, supervising nonbank credit 
businesses, and setting up a strong military service office 
have received widespread support from both individuals and 
groups across this country.
    In my written testimony, I also describe in detail the 
steps Congress has taken to provide meaningful oversight over 
the CFPB and to make sure that it remains accountable both to 
Congress and to the American people. I appreciate the 
opportunity to discuss that oversight today.
    So, with that, Chairman Issa, Ranking Member Cummings, 
members of the committee, thank you again for inviting me to 
testify about the Consumer Financial Protection Bureau. As we 
prepare this agency to begin its various responsibilities, we 
appreciate the important oversight role of the committee, and 
we thank you for your interest.
    [The prepared statement of Ms. Warren follows:]

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    Chairman Issa. I thank the gentlelady.
    With that, I will recognize myself for 5 minutes for a 
first round of questioning.
    As you know, I am not on Financial Services and never have 
been, so I am going to try and just do some business of the 
committee that I am particularly interested in.
    Although both you and I use the term, you know, ``cop on 
the beat,'' I received from Kim Wallace in your Legislative 
Affairs Department, I received a rather interesting response to 
our document request, which you had--or, actually, 1 second--
okay. And we are going to leave you with a copy of it. We are a 
little--I think he works sort of for you through Treasury.
    Ms. Warren. No, sir. I am sorry. He doesn't work for me.
    Chairman Issa. Okay.
    Ms. Warren. He works for the Secretary of the Treasury----
    Chairman Issa. Okay, then----
    Ms. Warren [continuing]. And is part of the Treasury. We 
have a----
    Chairman Issa. Okay. Well, the documents, though, that we 
requested we requested from you.
    And what we will do is we will give you a copy of this to 
take back, because what--we don't mind that we need to work 
through document requests. We have gotten about 300 pages from 
what we asked for. The gentleman said that it was voluminous, 
but we actually only received about 300 pages, most of it 
public. But Justice said that some of the document we 
requested--Department of Justice has concerns about responsive 
records that may implicate the Department's equities. The 
Department has advised us that disclosing some of these records 
would adversely impact ongoing law enforcement efforts.
    Now, just for you, Professor Warren, you are not in law 
enforcement, you are not involved--you wouldn't be involved in 
things which are criminal investigations at this time by your 
agency, would you?
    Ms. Warren. No, Congressman, Mr. Chairman, I am sorry, but 
I am afraid that there may just be a little bit of confusion 
here, and I want to make sure we don't get down the wrong path 
here.
    I believe there are requests for the Department of 
Treasury. It is not to us----
    Chairman Issa. Okay. Well, the problem is, you are not 
stood up yet, so we put to it the agency that is custodian of 
your records.
    Let me go through a couple more. And, again, we are going 
to have you take these with you, because, come July, the 21st--
--
    Ms. Warren. It is a week from today?
    Chairman Issa. A week from today, you are going to inherit 
these things. During this intervening period, FOIA requests 
have come in from Thomson West and from Judicial Watch. And 
they have been, apparently, pretty inadequate, so inadequate 
that Judicial Watch is appealing the CFPB's search for 
production of records, stating that it was an abuse of 
disclosure.
    The problem is, they received, Professor, they received 
these documents--actually, that is not--yeah, that is their 
letter. And, Professor Warren, they received documents that 
looked like this. And when you take over and have a FOIA 
department, I guess, under your control, what I would like to 
let you know is that, when someone redacts something so that 
you don't know what was redacted, you don't even know what page 
it is from, from what request, that is considered excess under 
FOIA.
    You have to find a way to make sure that, when you deliver 
a paper with nothing on it, that you are able to tell those who 
asked what that is responsive to. And, literally, in the case 
of Judicial Watch, what they received were countless--they 
received not as many pages as they should have, but they 
received countless pages like this.
    In the case of Judicial Watch, the State AGs have given 
them the information that Justice, on your behalf, wouldn't 
give them. So they have two pieces of paper. They have the one 
that is responsive and they can see why they have a right to 
it, and they have a black page.
    So, a week from today, you are going to inherit an agency 
where you are going to have a claim by a number of, you know, 
transparency groups who are saying, ``Hey, we have the document 
unredacted. You redacted it over at Treasury, so much so that 
you violated the law.'' That is going to be one of the first 
things on your table. And, like I say, I am going to give them 
to you today.
    My question to you is, will you please address them 
immediately and report back to us on how you have resolved the 
inconsistencies between what State AGs under their FOIA laws 
thought they had to give and what Justice on your behalf didn't 
give?
    Ms. Warren. I----
    Chairman Issa. Please.
    Ms. Warren. Yes, Mr. Chairman, I have never seen this. But 
I do want to say, Mr. Chairman, we will do our best here, but I 
am not sure I can explain or would be in a position to speak 
for the Justice Department.
    Chairman Issa. Actually, what I am asking you to do is, you 
are going to inherit those requests and those appeals.
    Ms. Warren. Yes, sir.
    Chairman Issa. You can resolve those appeals by having your 
own FOIA people go back through the document request and fully 
comply, or you will inherit the appeal. I am sure Justice is 
not going to continue defending on your behalf their bad 
decisions.
    So what I would like to know is, will you look at them 
immediately? Because these FOIA requests, I think, are going to 
speak pretty loudly to whether or not the transparency that you 
speak of, that we speak of, is actually occurring. And 
sometimes the best example of transparency is, do you give all 
you can give when FOIA requests come in asking for it, or do 
you hide behind every possible redaction?
    And FOIA officials have a considerable amount between what 
the law absolutely requires they put out--which, in this case, 
Judicial Watch, having unredacted forms, is saying Treasury 
violated the law--and what is full and complete and transparent 
and you could give out by saying, ``We are going to give all we 
can.'' Your agency, not being a law enforcement agency, not 
dealing with current criminal activities as a general rule, 
hopefully will be able to give more, not less.
    Please.
    Ms. Warren. My only--I am afraid I am just a little lost in 
the conversation because I am not sure what the FOIA request 
was for and I had not seen----
    Chairman Issa. For documents related to your activities 
during the lead-up to the formation.
    Ms. Warren. But I am not sure which documents you would be 
talking about or what the subject matter is or whether it is 
subject matter in which the Justice Department has indicated it 
has some interest.
    We have many activities, and I will say, sir, we have had a 
lot of FOIA requests, and I believe we have answered FOIA 
requests. We have had a--we have hired people who understand 
FOIA. And it is my understanding we have been putting out a lot 
of documents on FOIA, most of which the Justice Department has 
no interest in one way or another because they do not involve 
an ongoing law enforcement matter. And so----
    Chairman Issa. Well, thank you. My----
    Ms. Warren. I am sorry.
    Chairman Issa. Please.
    Ms. Warren. No, no. I am sorry.
    Chairman Issa. I just want to be respectful of the time.
    The ranking member is----
    Mr. Cummings. Your name is not Geithner, is it?
    Ms. Warren. No, sir.
    Mr. Cummings. Well, the request that he is talking about, 
the chairman is talking about, it is dated June 20, 2011, and 
it is addressed to Timothy Geithner.
    And I don't want the press to get confused and to get the--
there is an implication that you were trying to hold back 
documents. You didn't try to hold back anything from this 
committee, did you?
    Ms. Warren. No, sir.
    Mr. Cummings. Very well.
    Professor Warren, you recently came to Baltimore for a town 
hall meeting, where many of my constituents were able to learn 
about the Bureau and share with you their issues. And we heard 
from a veteran who was illegally foreclosed on and a retired 
steelworker who was tricked by a phony debt-consolidation 
company. These are real people who work hard, play by the 
rules, and expect others to do the same. And, by the way, they 
are the constituents of Chairman Issa and every single member 
of this committee. They are the same kind of people that I 
guess you have seen all over the country.
    What struck me most about the town hall meeting, however, 
was the overwhelming excitement. And I don't know if you know 
it, but they literally had to turn people away. One local--
several of our local papers said that you were treated like a 
rock star. I don't know about that, but they said it.
    How often do you see our constituents, and how have you 
been moving around to gather information? Can you tell us about 
that very briefly? Because I have a number of questions I want 
to ask you.
    Ms. Warren. I can, Congressman Cummings. And I appreciate 
just even the brief opportunity to do this.
    One of the most exciting parts about setting up the new 
Consumer Financial Bureau has been to be able to spend time 
talking to Americans around the country. And these are 
Americans of all political persuasions, Americans of all ages, 
Americans of all races, who say, ``This is a real chance to see 
government work for me. This is chance to have somebody on my 
side. This is a chance to have a voice in a world in which it 
is all run by big companies who want to drown me in fine print 
and tricks and traps and surprises that always keep me down.''
    I think we have a real chance with this agency, and it is a 
chance not only to help markets work better but a chance really 
to restore hope for many Americans who are starting over.
    Mr. Cummings. Well, what I heard from folks is that they 
said basically what you just said, they are just glad that they 
have somebody looking out for them. They said, the banks are 
doing okay; they are making record profits. But they want to do 
okay. And, sadly, so many of them are drowning.
    Now, let me ask you about the mortgage abuse issue. On 
April 13, 2011, the Office of the Comptroller of the Currency, 
the Federal Reserve, the Office of Thrift Supervision, and the 
Federal Deposit Insurance Corporation issued a report finding 
widespread problems at 14 mortgage servicing companies.
    Let me read the major finding, ``The weaknesses at each 
servicer, individually or collectively, resulted in unsafe and 
unsound practices and violations and violations of Federal and 
State law and requirements. The results elevated the agencies' 
concern that widespread risk may be presented to consumers, 
communities, various market participants, and the overall 
mortgage market. The servicers included in this review 
represent more than two-thirds of the servicing market. Thus, 
the agencies consider problems cited within this report to have 
widespread consequences for the national housing market and 
borrowers.''
    Professor Warren, these are massive and systemic 
weaknesses. When the Bureau is up and running, what role will 
it play in addressing them?
    Ms. Warren. Well, I think the best way to understand it is 
that we will be on the front line. And the question is, what 
kind of mortgages get fed in to the system on the very front 
end? Is it possible to use mortgages to surprise people, to 
trick people, to drown them in terms that no one understands so 
that consumers are neither able to ask the question, ``Can I 
afford this, and is this the best deal I can get?''
    Our job is to be there on the front end, and we are taking 
enormous strides in that direction right now to make sure that, 
in the first instance, mortgages are clear, people can tell 
what they can afford, they can shop in a competitive 
marketplace.
    It is also our job to be there throughout the process, 
including at the end, in mortgage servicing, if there are 
problems, all the way through default and potentially 
foreclosure, to make sure that the large financial institutions 
that handle these transactions are complying with the law. That 
will be our job, sir.
    Mr. Cummings. Now, with respect to service members, the 
report found cases in which foreclosures should not have been 
proceeded, including against borrowers who were covered by the 
Servicemembers Civil Relief Act. However, this review was based 
on only a sampling of a relatively small number of files. To 
address these widespread abuses, the agency has initiated 
enforcement action against all 14 banks. They directed a 
comprehensive review of all files of affected owners to 
identify borrowers that have been financially harmed and 
provide remediation.
    Professor Warren, when will we know the full extent of this 
problem, this year or next year? Do you know?
    Ms. Warren. Congressman, I do not. I rely on Sheila Bair 
and her most recent testimony, who pointed out, even with this, 
we really do not yet know the full extent of the problem.
    Mr. Cummings. And it is pretty bad, huh?
    Ms. Warren. Yes, sir.
    Mr. Cummings. Thank you very much.
    Mr. McHenry [presiding]. The gentleman's time has expired.
    I now recognize myself for 5 minutes.
    Investor's Business Daily reported on July 8th that the 
Justice Department has an investigation ongoing about biased 
banks, about lending in minority communities. And I was 
wondering, you know, you have been an advisor to Justice 
before, under your testimony, regarding the mortgage issue, the 
mortgage servicer issue. So I wanted to know if you are serving 
as an advisor for this investigation.
    Ms. Warren. The Secretary of the Treasury asked us to get 
involved in the mortgage servicing issue----
    Mr. McHenry. I am asking--you have already testified about 
that. But I was wondering about this biased bank investigation 
that has been reported in the New York Times and Investor's 
Business Daily.
    Ms. Warren. He has not asked us to be involved in that, I 
don't believe.
    Mr. McHenry. Okay. Thank you.
    Now, in terms of--in my opinion, financial terms need to be 
accurately and correctly disclosed to individuals, and 
individuals can make their decisions based on whether or not 
they would like to purchase the product. For instance, the one-
page mortgage disclosure issue you mentioned in your testimony 
that you have mentioned before, that I mentioned in my opening 
statement, I think that is positive.
    Ms. Warren. Good.
    Mr. McHenry. I think it gives individuals the terms that 
they need. And it is very similar to legislation that I put 
forward a couple years ago.
    So, disclosure, I think, is an important piece in all of 
this.
    Ms. Warren. Uh-huh.
    Mr. McHenry. Do you agree?
    Ms. Warren. Yes, sir, I do.
    Mr. McHenry. Okay. Now, in terms of what you see for the 
CFPB, do you think your actions mainly pertain to enhancing 
disclosures? Do you think that is going to be the core work of 
the CFPB?
    Ms. Warren. Well, I think the best way to understand it is 
that there are multiple tools available in order to try to 
promote a functioning market. And there is no doubt that no 
market functions if people don't have meaningful and adequate 
disclosure. But I never want to back away from the part that a 
significant part of what we will do will be supervision and 
enforcement. More than half of our resources will go to 
supervision and enforcement over financial institutions to make 
sure that there is a cop on the beat making sure everyone is 
following the rules. And that includes both banks and nonbanks.
    And if you will forgive me, I would also add to that, just 
because I think of this in terms of the central areas where we 
work, we also will have a significant responsibility on 
consumer financial education. We are required by Dodd-Frank to 
do that, and so, sir, will be doing that, as well.
    Mr. McHenry. Okay. Now, do you think--in terms of financial 
products now, do you see a financial product that is so complex 
that disclosure wouldn't be a remedy?
    Ms. Warren. It is a good and interesting question, 
Congressman McHenry. I recall sitting in the House Financial 
Services during long testimony and the question came up about 
banning products. And I remember that Ed Yingling, the then-
president of the American Bankers Association, said, ``Yes, 
there are certain products that should be banned.''
    I am less certain if that is true. I am a big believer in 
disclosure, meaningful disclosure. And I would at least like to 
start with the concept of, let's get out there and try some 
real disclosure, put some real power in to the hands of 
consumers, and see if we can't get these markets working. I 
believe in markets.
    Mr. McHenry. Do you see a financial product out there today 
that needs to be eliminated?
    Ms. Warren. I don't know of one, sir.
    Mr. McHenry. Okay.
    Ms. Warren. But if you had a particular suggestion you 
would like me to take a look at or others to take a look at----
    Mr. McHenry. Well, I don't----
    Ms. Warren. And there may be others.
    Mr. McHenry [continuing]. I don't have a half-billion-
dollar budget, so I would leave it to you and the 400 people 
working for you.
    Ms. Warren. Oh, we----
    Mr. McHenry. That is why I thought you would have some 
ideas on this.
    Now, in terms of enforcement mechanisms with the CFPB, 
beyond disclosure, do you think those enforcement mechanisms 
would prescribe terms going forward--meaning, setting interest 
rates and fee structures?
    Ms. Warren. Sir, I think what enforcement mechanisms are 
about are making sure that the laws are properly enforced. And 
it is done, as I understand it, both through supervision and 
through direct enforcement--that is, if it can't be worked out 
otherwise, suing banks if they don't follow the law or suing 
nonbank institutions if they don't follow the law.
    Mr. McHenry. But wouldn't part of the remedy be that they 
change their practices going forward in a way that you 
described? For instance, in the mortgage disclosure issue that 
we are talking about, the mortgage settlement issue, that is a 
significant piece of this, prescribing terms going forward?
    Ms. Warren. Yes, sir. That would be new regulations that 
would replace the older, complicated, more complex regulations 
that required higher regulatory costs for the financial 
institutions and probably produced a whole lot less value for 
consumers.
    And what we are going to do now and I think what we have is 
something that is both cheaper for mortgage originators, for 
banks, particularly for community banks and credit unions, to 
issue and produces more value for consumers. And it is a form, 
and they will be required to follow the form, just like under 
current law, only it would be an easier and, we think, more 
effective form.
    Mr. McHenry. Ms. Maloney is recognized for 5 minutes.
    The minority presented the list, and I am reading the list. 
If the gentlelady wants to----
    Mr. Towns. Thank you for considering me, but I think it is 
based on arrival.
    Mrs. Maloney. Thank you very much.
    And welcome, Professor Warren.
    Ms. Warren. Thank you.
    Mrs. Maloney. I would like to ask you that, after we went 
through the great recession and almost had the great 
depression, in which $18 trillion in personal wealth in this 
country was lost, would you say there was an overwhelming 
consensus that reforms were needed to prevent another crisis 
and that the CFPB and, I would say, the credit card bill of 
rights, which I authored, were and are important protections 
for consumers?
    Ms. Warren. Yes, ma'am, I would.
    Mrs. Maloney. And do you think that the CFPB, as already 
carefully constructed, urgently needed, and should be free to 
protect consumers as intended and go into effect on July 21st?
    Ms. Warren. Yes, ma'am, I do.
    Mrs. Maloney. Well, what has concerned me deeply, not only 
in this committee but in the Financial Services Committee on 
which I serve, is the number of questions against you, because 
people have asked you for advice. Now, I thought freedom of 
speech was in our Constitution and a fundamental right of our 
country.
    You have been described as a leading consumer specialist, 
advisor. Is it unusual for--well, you are an advisor to the 
President now, and to Secretary Geithner. But is it unusual for 
other members of government, Congress Members, AGs, States, 
city council members, other professors, other leaders and 
captains of industry or managers in industry, is it unusual for 
them to call you and ask you for advice?
    Ms. Warren. Congresswoman, I have been giving advice for a 
very long time. I hope it has been valuable, but I have always 
been willing to answer the phone and always been willing to 
talk to people.
    Mrs. Maloney. And you don't have a vote on anything right 
now. You are just basically putting in place an agency that the 
President has asked you to put this agency in place. So you 
basically don't have any power to force anyone to do anything.
    Ms. Warren. Yes, ma'am, that is right.
    Mrs. Maloney. But you can answer the phone, and you can 
give advice. Well, I would say that is a basic American 
fundamental principle and one that should be protected for 
every person, and especially professors and academics that are 
leading specialists in areas.
    If you talk about oversight, if you talk about 
transparency, the last thing we want to do is say people can't 
give advice. Would you say that is a fair statement?
    Ms. Warren. Well, I like to think that it is good to get 
advice. I should state, Congresswoman, I believe in advice, and 
I believe in it in both directions. We have been the 
beneficiaries at the Consumer Financial Protection Bureau of a 
great deal of advice from many, many people outside government 
and many people inside government. And I am glad we have been 
able to do that.
    Mrs. Maloney. Okay. I would like unanimous consent to place 
in the record an article that was in the American Banker, 
entitled, ``A Leaderless CFPB Is Not a Blessing for America's 
Bankers.''
    Mr. McHenry. Without objection.
    Mrs. Maloney. And it talks about, banks will likely pay a 
price for a leaderless CFPB. And it talks about what the CFPB 
on July--what they can do on July 21st, but what they can't do 
if they don't have a confirmed leader.
    Now, what they can do is write and enforce the rules that 
are already in place from the FTC and HUD and other banking 
agencies. But what is interesting to me is what they cannot do, 
which I believe would be very beneficial to placing American 
banking on a level playing field. And they cannot define which 
nonbanks should be supervised by the agency. They cannot 
examine or enforce laws against the nonbanks. And we know it 
was the unregulated nonbank activities, with the sub-prime 
mortgages and with the credit default swaps, of higher 
leveraged derivatives, that led us to this crisis.
    So not allowing the leader to come in and do this, 
according to the American Banker, would be harmful to the 
financial institutions of our country, particularly the 
regulated banks.
    Could you elaborate on that, Professor Warren?
    Ms. Warren. Well, Congresswoman, I will just say that I 
think when the consumer agency has its director and has its 
powers ready to go, fully operational, will be a very good day.
    Mrs. Maloney. I would like to also comment on the ranking 
member's first statement. I have 3 seconds to go. I have----
    Mr. McHenry. The gentlelady's time has expired.
    Mrs. Maloney [continuing]. Four seconds. Oh, my time has 
expired? Oh, my goodness.
    Mr. McHenry. All right. Thank you.
    Mrs. Maloney. I just want to say, 160 service members were 
foreclosed on unfairly, according to the Department of Justice. 
And I feel that his subpoena is rightly in order and should--on 
the merits, we should look at this information on the abuse to 
the American military service men and -women.
    Mr. McHenry. The gentlelady's time has expired.
    Mr. Chaffetz is recognized for 5 minutes.
    Mr. Chaffetz. Thank you, Mr. Chairman.
    The House Appropriations Committee was quoted in their 
report as saying, ``disappointed that an agency dedicated to 
transparency and accountability was not more forthcoming about 
how it plans to spend the taxpayer money.'' It also went on in 
there to say, ``In the absence of this fine print, the 
committee cannot discern what the Consumer Financial Protection 
Board plans to do, how it will do it, or how much it will 
cost.''
    Given that your agency is about to open up here in about a 
week, how do the taxpayers, how do we see what you are going to 
do and how you are going to do it?
    Ms. Warren. Well, Congressman, we started 5 months before 
the date that we are supposed to go live building a Web site, 
trying to put as much information out there as possible----
    Mr. Chaffetz. Okay. Now, on the Web site----
    Ms. Warren [continuing]. About our operations----
    Mr. Chaffetz. My time is so limited. My apologies. What I 
want to get is very specific about the budget that you put 
forward.
    In this document, which is just seven pages, it has just 10 
line items. The two biggest line items are full-time permanent 
positions, followed by personnel benefits. That accounts for 
about $225 million in expenses. The third item is contractual 
services, which has a very specific number of $48,907,000.
    Where is the detail about what you are going to do and how 
you are going to do it? So how do we find the breakdown of that 
number and how you are going to organize this agency? Because 
you have obviously gotten some specificity in the numbers. We 
are looking for the documents, the transparency in how you are 
actually going to do that.
    Ms. Warren. Congressman, let me try this at two levels, and 
you tell me if this is helpful. And if it is not, I will try--
--
    Mr. Chaffetz. Please.
    Ms. Warren [continuing]. A different way.
    The first level is to describe in a big sense where we will 
be spending money in the Consumer Financial Protection Bureau. 
And if you just think of it like a pie, half----
    Mr. Chaffetz. No, I am worried about the fine print, the 
details. The Appropriations Committee, this Oversight 
Committee, we don't have the details of how you are actually 
going to organize and put this forward.
    Let me read, for instance--go ahead. Go ahead.
    Ms. Warren. Also, Congressman, the--and I am afraid I am 
blocking on the name, but every contract issued by the Consumer 
Financial Protection Bureau is done, as you would know, through 
the ordinary competitive process, when appropriate through 
procurement, but is posted----
    Mr. Chaffetz. But in advance of those contracts. For 
instance, this is directly from the House Appropriations 
Committee: ``Unlike other agencies, the Consumer Financial 
Protection Board does not describe or explain the relationship 
between its policy objectives and the budgetary resources, 
performance measures or goals, significant proposals that 
affect obligations in the 5- to 10-year period, and their 
relationship to the current year and budget year, or the 
budgetary effect of workload, strategic planning, capital 
planning, or investment in information technology.''
    How do we get the details of all of this information? You 
obviously have a top-line number and that was based on 
something. But you seem to be hiding the details of how you 
came up with those numbers.
    Ms. Warren. Congressman, no one is hiding anything. We 
publish all contracts in--it is not called a Federal Register. 
There is a special place these are published. But I just want 
to say----
    Mr. Chaffetz. I am not talking about the contract. You have 
only--on your Web site, for a consumer--I am worried about the 
person who is out, you know, in Albuquerque or in Provo, Utah. 
How do they find out the makeup of all these numbers and the 
details? As the Appropriations Committee suggested they can't 
see that information, I doubt the public can see it either.
    Ms. Warren. Then they may want to go to 
www.usaspending.gov. It will list the type of contract, the 
awardee, and the amount of the contract. They may also want 
to----
    Mr. Chaffetz. What about all these other items? For 
instance--not just the contracts--performance measures and 
goals, budgetary resources, what are these people going to be--
where do we find all that information? Because it is not on the 
Web site, compared to other agencies.
    Ms. Warren. Congressman, we are in the process, for 
example, of developing our performance metrics. And we are not 
yet standing up as an agency, but as soon as we are stood up, 
we are putting as much of this as possible----
    Mr. Chaffetz. So are you saying by next week----
    Ms. Warren [continuing]. On the Web site.
    Mr. Chaffetz [continuing]. You are going to have this?
    Ms. Warren. Let me say it this way, Congressman.
    Mr. Chaffetz. You just said you would have it when you 
stand up, and that is next week. So are you telling me that 
this will be available next week?
    Ms. Warren. Congressman, I don't want to overpromise, 
because I am not sure how many things you have read. I am not 
familiar with the document you are reading from.
    Mr. Chaffetz. You are not familiar with the Appropriations 
report?
    Ms. Warren. Of course I try to stay up with the 
Appropriations work. I am just trying--I am not sure what 
particular paragraphs and lines----
    Mr. Chaffetz. He is going to hand that to you right here. 
It is the budget justification, which is dramatically different 
than any other agency moving forward.
    Ms. Warren. I am sorry, Congressman, is this----
    Mr. Chaffetz. Your document.
    Ms. Warren. This is our document?
    Mr. Chaffetz. Yes.
    Ms. Warren. I think you were reading from something else.
    Mr. Chaffetz. Based on your giving that document to the 
Appropriations Committee, the Appropriations Committee said, 
``Unlike other agencies''--and it listed out all the other 
things that they normally see, that we normally see as members 
of the Oversight Committee. And all of that is absent.
    Ms. Warren. Congressman, we----
    Mrs. Maloney. Point of information? Mr. Chairman, could we 
get a copy of this document to also look at it so we could 
understand the questioning?
    Mr. McHenry. Sure, sure.
    Mrs. Maloney. Yeah.
    Mr. McHenry. We will do that.
    Ms. Warren. And could I also ask, is there a request 
outstanding from the Appropriations Committee----
    Mr. Chaffetz. That is my understanding, yes.
    Ms. Warren [continuing]. For more information?
    Mr. Chaffetz. Yes. And I think this committee is also 
asking for that same sort of transparency.
    Ms. Warren. Congressman, if that is the case, we would be 
glad to come back, we would be glad to brief you, we would be 
glad to work with you in order to find something that is 
adequately transparent, both to Congress and to the American 
people.
    Mr. Chaffetz. I have to yield back.
    Mr. McHenry. The gentleman's time----
    Mr. Chaffetz. My time has expired. But I would hope that 
that information would be on Web site for the public, as well.
    Thank you.
    Ms. Warren. Thank you, Congressman.
    Mr. McHenry. Ms. Norton for 5 minutes.
    Mr. Tierney for 5 minutes.
    Mr. Tierney. Thanks, Mr. Chairman.
    Mr. Chairman, this is stunning, I really have to say, this 
whole display of being concerned about a consumer group that 
somebody might actually be standing up to protect the consumer 
and the taxpayer here, as opposed to flacking for the banks. 
This is a not-too-transparent attempt here to sabotage the----
    Mr. Chaffetz. Will the gentleman yield? Will the gentleman 
yield for 15 seconds?
    Mr. Tierney. No, I won't, sir. I won't. I only have 5 
minutes, all right? And I probably won't get to go over, as you 
did.
    But the fact of the matter is, this is absolutely 
incredible. We have no concern here about responding to 
subpoenas to the banks asking them to show us documents related 
to their foreclosing on service men and women acting in 
Afghanistan or Iraq on behalf of the American people. But we 
are----
    Mr. Chaffetz. Will the gentleman yield?
    Mr. Tierney [continuing]. Going around and around and 
around here about----
    Mr. Chaffetz. With the gentleman yield?
    Mr. Tierney [continuing]. An agency that is in the process 
of standing up.
    Professor Warren, you know, I think the abysmal record of 
these mortgage servicers is pretty well-chronicled. I have over 
100 cases at any given time in my office alone. You know, they 
lose documents, they are unresponsive, they give conflicting 
guidance, they refuse to process payments, they have false 
negative credit reporting. All of that is going on. And it is 
terrible for the people generally, but it is even more terrible 
when they do it with respect to our service members who are 
deployed overseas.
    And so I want to ask you about a particular case, the case 
of Captain Kenneth Gonzales in the U.S. Army.
    Would you put that up, please?
    I think you may be familiar with this case, and I want to 
ask you about it.
    He was deployed to Iraq as a lieutenant from December 2009 
to December 2010. His bank, Chase, told Captain Gonzales' wife 
to submit their mortgage payments by using money orders, so she 
did it. But Chase then failed to process the payments. Then 
they submitted inaccurate and negative reports to the credit 
bureaus, which then affected and badly impacted Captain 
Gonzales' security clearance while he was still deployed.
    The military JAG officer tried to help him, but she 
described the uphill battle that she had when she wrote an 
email to the American Bar Association. I would like to quote a 
few. She said, ``To be honest, I have not been able to do 
anything for this client. I am just talking to clerks at the 
customer service section who refuse to talk to me without a 
letter of authorization, which I have sent in four separate 
times to four separate fax numbers. I am given a different one 
every time and told processing takes 48 to 72 hours. I have 
left voice messages with two supervisors, and no one calls me 
back. Basically, I just need to talk with a human being that 
will listen to the facts of this case and who will understand 
the need to make it right.''
    Professor Warren, if this JAG officer can't get any 
reaction, you know, from a mortgage servicer, how do we expect 
that our members in the service who are overseas in Iraq and 
Afghanistan are going to get some response?
    Ms. Warren. I think you have put your finger on the 
problem, Congressman. These systems are not designed to be 
responsive.
    Mr. Tierney. Well, you know, Chase had clear errors and 
clear abusive practices. They then tried to charge Captain 
Gonzales fees--fees--when they finally admitted they were wrong 
on the whole process and tried to help him unwind all the 
damage that had been done to him.
    So how often are mortgage servicers initiating these types 
of unlawful foreclosures and fee collections or whatever and 
then charging them more fees at the back end, how often does 
that go on?
    Ms. Warren. Congressman, we do not know. There have not 
been full investigations of this, and there is no public 
information on this.
    Mr. Tierney. Well, as I said at the outset, you know, this 
is far from unique, the situation. I think everybody on both 
sides of this dais have had these kinds of complaints coming in 
from their constituents; some, no doubt, from people that are 
in the service. And that is why it is critical that we get the 
documents the ranking member has subpoenaed and asked this 
committee to subpoena and that we go through and we thoroughly 
investigate all these illegalities and these abuses.
    No service member--no service member--should spend his or 
her personal time while they are in Iraq or Afghanistan trying 
to unwind customer service mistakes from a bank that just isn't 
doing the job they should do, nor should their family be 
evicted from their home being foreclosed upon.
    Thank you. I yield back. Or I will yield to Ms. Maloney, if 
she likes.
    Mrs. Maloney. There have been a number of settlements--I 
want to applaud the gentleman's work on this, but there were a 
number of settlements with Countrywide, particularly with 
service members, where they were fined, I believe, well over 
$20 million for foreclosing and throwing the service members' 
families out on the street while they were serving in Iraq.
    I have read those documents, and I ask permission to put 
them in the record to support the fine work of Mr. Tierney and 
also to say that we can talk about substance, process, 
appropriations, but we are the investigative committee. And I 
believe that we should follow, with a subpoena or with 
voluntary actions, the leadership the ranking member has put 
forward to look at the bottom of this.
    Recently, Holly Petraeus, who is heading up a very special 
division for the military, testified in the Senate and also--on 
the very extreme problems.
    I yield back. Thank you.
    Mr. McHenry. Ms. Buerkle is recognized for 5 minutes.
    Ms. Buerkle. Thank you, Mr. Chair.
    And thank you, Ms. Warren, being here today.
    We had the opportunity to question you in a subcommittee 
hearing, where we called attention to the salaries of many that 
will be working in your new department, and the concern that 
those salaries were anywhere from 10 to 40 percent higher than 
Federal salaries, and that the salaries you set for your 
employees are not subject to and not consistent with the 
Federal salaries and that you have the autonomy to set your own 
salaries, and the concern that, in this economy, that may be a 
little more liberty than we would like with the American 
taxpayers' dollars.
    But I just want to talk about a couple of issues here. 
First of all, we heard about the service men and women and the 
particular issue with Chase Bank. That issue was already 
declared illegal.
    So I am trying to understand--we all agree in this body--
and this is a bipartisan issue--that our men and women should 
be protected and no home should be foreclosed on when they are 
overseas serving this Nation. But this action by Chase was 
already deemed illegal. We heard that Countrywide has already 
had a settlement.
    How do we justify this $500 million department if that is 
the gist of what we are taking about here?
    Ms. Warren. Well, Congresswoman, I would put it this way: 
We know about specific abuses that have come to light. They 
were brought to light by the press, not by government 
investigation. And we know of three specific mortgage servicers 
who have publicly admitted to wrongdoing and engaged in a 
voluntary settlement----
    Ms. Buerkle. Excuse me. And, again, we have such a short 
period of time.
    Ms. Warren. I am sorry.
    Ms. Buerkle. But, again, that wasn't your department--you 
are not up and running yet----
    Ms. Warren. No, ma'am.
    Ms. Buerkle [continuing]. That shed light on those abuses 
to the military.
    Ms. Warren. That is right.
    Ms. Buerkle. Okay.
    Ms. Warren. But the question I thought you asked is how the 
consumer agency may be helpful. We are there to be an ongoing 
monitor. We have only talked with three mortgage servicers here 
so far.
    Let me put it this way: We set up our Office of 
Servicemember Affairs back in January. It was one of the first 
groups we organized. Shortly after that, press reports came out 
about illegal foreclosures against service members. Just to 
give you an idea of what we do, Holly Petraeus wrote a letter 
immediately to 25 servicers asking them to review their 
practices. And we have heard back from about half of those 
servicers and engaged in some discussion----
    Ms. Buerkle. Thank you. I don't wish to cut you off, but I 
know in Veterans' Affairs we have handled this issue up front, 
close, and so----
    Ms. Warren. Yes, ma'am.
    Ms. Buerkle. I do want to talk to you about a couple of 
issues. Number one, this past week, the jobs numbers came out, 
and they were horrific. As you know, only 18,000 jobs were 
added in June.
    My concern is what you are going to do will continue to 
hurt job growth in this country. So I would like to know from 
you specifically, do you intend to raise compliance costs or 
raise the cost of credit for consumers?
    Ms. Warren. Congresswoman, I should say we are trying to 
make prices clear, risks clear, and we are trying to make it 
easy for families to compare products. I don't think that that 
is going to cost people jobs. I think it likely makes them a 
little more secure.
    In the case specifically of compliance costs, our first 
initiative is the one that Congressman McHenry also talked 
about. Congress and the regulatory agencies have been working 
for 15 years to try----
    Ms. Buerkle. Well, excuse me. Again, our time--I watch my 
time clicking away.
    Do you intend to raise compliance costs on companies, which 
will further add to the unemployment and the difficulties that 
our companies and small-businesses owners are facing in this 
economy?
    Ms. Warren. Congresswoman, I am sorry. I was----
    Ms. Buerkle. That is a ``yes'' or a ``no.''
    Ms. Warren. It is a ``no.'' We already have our first 
example of what we are doing lowers compliance costs. That is 
why it has been embraced by the American Bankers Association, 
by the Independent Community Bankers Association, by the 
Consumer Bankers Association, by the credit unions. It has been 
embraced by bankers and mortgage originators across the country 
because it will reduce their----
    Ms. Buerkle. So that is a ``no.'' You don't intend to raise 
compliance costs for companies----
    Ms. Warren. No, ma'am. We are trying to lower costs for 
them.
    Ms. Buerkle. Never, ever?
    Ms. Warren. Well, right now what we are trying to do--we 
have lined up what we are trying to do, and we hope it is the 
prototype for all of our work. We are working closely with 
community banks; we are working closely with credit unions----
    Ms. Buerkle. Thank you.
    One last question. You talked in your testimony about--and 
it concerns me--that you have this conception that the mortgage 
and the credit consumer world is fraught with tricks and 
traps--I think that was your word.
    If that is the case and you are sitting here saying that 
this world is fraught with all of these issues--and this goes 
back to the chairman's question--what is it that you intend to 
ban? What is it that you intend to change? If you are saying 
this world is filled with tricks and traps, what is it that you 
intend to change and to----
    Ms. Warren. Congresswoman, I don't think banning is the 
right way. This is what we were talking about. It is make the 
prices clear, make the risks clear, mow down the fine print so 
it is possible for consumers to compare one product to two or 
three others.
    Ms. Buerkle. But then why do you need the power and a $500 
million budget? That is my concern.
    Mr. McHenry. The gentlelady's time has expired.
    Ms. Buerkle. That is my concern.
    I yield back. Thank you, Mr. Chairman.
    Mr. McHenry. The witness may answer.
    Ms. Warren. I am sorry?
    Mr. McHenry. The witness may answer the question.
    Ms. Warren. Oh, I just didn't hear you. Thank you.
    Congresswoman, we need a budget because these are very 
large and powerful financial institutions who hire armies of 
lawyers to design financial products that can't be read by 
ordinary American families. We need some pushback. We are the 
voice on behalf of the customer, the American family.
    Mr. McHenry. Ms. Norton is recognized for 5 minutes.
    Ms. Norton. Thank you, Mr. Chairman.
    I do want to welcome Professor Warren, and to indicate that 
I have asked staff to look, and they informed me that the 
salaries are in line with all banking regulatory agencies.
    I want to go back to this report and to the bicameral forum 
and to some of what was said at that forum, because this 
committee should be trying to find out whether what we found 
from law enforcement amounts to a systematic problem that needs 
further investigation.
    Holly Petraeus, the head of the Office of Servicemember 
Affairs, appeared at this bicameral forum. And she was asked 
whether the cases of the kind she had heard were isolated or 
more typical, and let me read you what she said. She recalled a 
National Guard wife saying to me that every time her husband 
was activated--and he had been activated three times--she had 
to go through an extended fight with her bank to get the 
interest rate reduction. And it was the same sort of thing: 
send the paperwork; oh, we don't have the record on that; send 
it again; send it again; send it again.
    Have you heard similar accounts?
    Ms. Warren. Yes, ma'am, I have.
    Ms. Norton. I want to ask you about what you think the CFPB 
could do, because we know it is not charged with enforcing the 
service act. So I think it is fair to ask, what would be the 
role of the CFPB in uncovering and doing something about these 
kinds of abuses and ensuring that what our service members are 
encountering does not happen again and again with bank after 
bank?
    Ms. Warren. Thank you. If I can, I will give a two-part 
answer.
    The first part is that, last week, the Consumer Financial 
Protection Bureau, led by Holly Petraeus, signed an 
understanding with the Judge Advocates General of all of the 
services, and it was for how we can cooperate and, between the 
two of us, use our resources more effectively to protect 
service members. We had already been well into the process of 
working with the Department of Defense, and this was just a 
more formal acknowledgment of that process and, I think, 
building a strong relationship going forward.
    But I also want to say a second thing about it within the 
consumer agency, and that is what it means to have a strong 
leader like Holly Petraeus, what it means to make an Office of 
Servicemember Affairs front and central in this organization. 
And that is, we have started reaching out. Holly Petraeus and I 
went together to a joint base in San Antonio. We have been to 
other places; she has been on her own. She has opened up a Web 
site. We have hired more people----
    Ms. Norton. Well, Professor Warren, this is just the kind 
of thing we had hoped you would be doing.
    I would like to ask you, though, about the kinds of 
complaints that you expect to receive first when you come on 
line on July 21st. Have you anticipated what kind of complaints 
are likely to come to the forefront? Do you expect these 
servicemember complaints to be among them?
    Ms. Warren. We have reason to believe, because we have 
already been reaching out to service members and service-member 
families and, actually, are already in active communication 
with many families and with many of those who serve service-
member families--we anticipate that this will be a significant 
part, over time, of our workload at the Consumer Financial 
Protection Bureau.
    Ms. Norton. Thank you, Mr. Chairman.
    Ms. Warren. Yes, ma'am.
    Mr. Tierney. Mr. Chairman, a point of order? Is there any 
recent update on the disposition of the subpoena motion that 
was going to be addressed at 10:40?
    Mr. McHenry. Well, the chair announced that it would not 
happen before 10:40. There is no update.
    The gentleman----
    Mr. Tierney. So midnight might be a good time, is that the 
idea? Or could we have a little closer approximation? Some 
Members have other business to attend to, as well. And in 
fairness to the Members on both sides, it would be nice to have 
some idea of roughly when you think that might occur.
    Mr. McHenry. The chair will give a 30-minute notice, which 
was the ranking member's request. And the chair has--will now 
announce that you will have a 30-minute heads-up before the 
vote happens.
    With that, Dr. DesJarlais is recognized for 5 minutes.
    Mr. DesJarlais. Thank you, Mr. Chairman.
    And, Professor Warren, thank you for being here today.
    I have a pretty simple question. I represent Tennessee and 
also sit on the Agriculture Committee. And I was just curious 
to know your take on an issue central to ensuring credit for 
Tennesseeans and farmers in general.
    Title X in the Dodd-Frank Act, of the act which creates 
your agency, the CFPB, states that the Farm Credit 
Administration will retain all of its enforcement authorities 
over persons regulated by the Farm Credit Administration and 
that the CFPB will have no authority to exercise any 
enforcement powers under the Dodd-Frank Act with respect to 
persons regulated by the FCA.
    So is it your interpretation that the CFPB has any 
enforcement authority over institutions regulated by the FCA?
    Ms. Warren. Dr. DesJarlais, this is evidently a question 
that is what lawyers are all about. The language you have read, 
as I have been briefed on this, I think you used the word 
``persons,'' and then there is a question about whether that 
covers institutions, covered entities, which are different from 
persons in this. And so, as I understand it, the lawyers are 
out just trying to work this through to make sure there aren't 
any gaps and there aren't any overlaps. That is my 
understanding at this point, sir.
    Mr. DesJarlais. Okay. I am not sure that I fully understood 
your answer. So is it your interpretation that the CFPB has any 
enforcement authority over institutions regulated by the FCA?
    Ms. Warren. So, Congressman, I am just going to have to 
back up. The statutory language you used referred to persons, 
and your question referred to institutions. And what the 
lawyers are trying to figure out, from multiple authorities 
here, how is it that we get appropriate coverage, which is what 
we all want, and to carry out Congress' will.
    So all I am saying, sir, is I think there is a little bit 
of a statutory interpretation question, and we are just trying 
to work through it in a reasonable way. We just want to make 
sure we carry out the intent of Congress.
    Mr. DesJarlais. Okay. So what do I tell my farmers?
    Ms. Warren. Well, you tell your farmers that, because of 
the language in this particular part of the statute, the 
lawyers are working on it right now.
    Mr. DesJarlais. Well, I don't know if that would be very 
comforting to them.
    Ms. Warren. I certainly understand that, sir.
    Mr. DesJarlais. I do have a second question.
    Ms. Warren. Sure.
    Mr. DesJarlais. As you know, nearly half of small 
businesses use personal credit cards when they are first 
founded. Can you commit that none of CFPB's regulations will 
remove financing possibilities for these businesses?
    Ms. Warren. Oh, Congressman, you hit on a very important 
question. As you rightly know, it is consumer credit that we do 
at the Consumer Financial Protection Bureau. And, as you also 
know because I have said it probably every chance I get, that 
we are about trying to make prices clear and risks clear and 
trying to mow down fine print so people can make real 
comparisons.
    I have actually had small-business groups reach out to me, 
and small-business individuals, who would like to know that 
they are going to have coverage and that they will have the 
same kind of protection about clarity in pricing and clarity in 
risks and not face fine print if they are using a credit card 
to try to start a small business. And I think this is going to 
be a real challenge, because we have a constrained authority at 
the Consumer Financial Protection Bureau, sir.
    Mr. DesJarlais. Okay. So it is going to be a struggle, you 
are saying, to determine whether credit is being used for 
personal use or business use?
    Ms. Warren. Well, what I am saying is, the way Dodd-Frank 
was established, it is clear that we can help beat down the 
fine print in the case of consumer credit cards, but in the 
case of business credit cards, our authority is limited.
    Mr. DesJarlais. Okay. Would there be a situation where 
there is a credit card that has a 20 percent interest rate and 
you step in and say, ``No, you can't have that?''
    Ms. Warren. No. Congressman, the statute is quite clear 
that we are not in the business of establishing usury laws. 
Congress spoke unambiguously. I know there are some parts of 
the statute that ambiguous, but I think that part is pretty 
unambiguous, sir, pretty clear.
    Mr. DesJarlais. Okay. So small businesses can breathe 
comfortably that they are going to have access to credit?
    Ms. Warren. I want to say it this way: Small businesses are 
struggling, I understand that. And access to credit is about a 
whole lot of issues. But in terms of what we are doing here at 
the Consumer Financial Protection Bureau, we are hoping we are 
going to make things a little better for all those good people 
out there who are trying to start businesses and that it will 
be good for them if they know prices, if they know risk, if 
there is not so much fine print in their contracts.
    Mr. DesJarlais. Thank you, Professor Warren.
    My time has expired. I yield back.
    Ms. Warren. Thank you, sir.
    Chairman Issa [presiding]. I thank the gentleman.
    We now recognize the gentleman from Missouri, Mr. Clay, for 
5 minutes.
    Mr. Clay. Thank you, Mr. Chairman.
    And thank you, Professor Warren, for being here.
    And before I go into the questions, let me state that this 
is one of the most incredible committee hearings that I have 
ever attended in this committee, because the two sides are so 
far apart.
    I just can't help but give you two examples of abuses that 
cry for an agency like this bureau. One is the area that I 
represent in north St. Louis County, where homeowners, middle-
class, African-American homeowners, were steered into high-
cost, predatory loans. And if you look at a map of the 
foreclosures in my community, it is evident that they were 
steered and that these predators took advantage of them.
    In the second example--and let me say, you know, to my 
colleague, patriotism also means standing up for the men and 
women who wear our uniform, who bravely--who bravely defend 
this country. And if you don't think this is an abuse, then I 
have a bridge to sell you.
    You know, illegal foreclosures against U.S. service members 
is a growing problem. Multiple mortgage servicing companies 
have conceded that they violated the Servicemembers Civil 
Relief Act. They illegally foreclosed on service members and 
charged fees in excess of the maximum amounts allowed under the 
law.
    And we have only begun to understand the scope of these 
problems. In April, four Federal agencies that regulate 
mortgage servicers issued a report finding critical weaknesses. 
They initiated enforcement actions against 14 banks, and they 
directed a comprehensive review to identify borrowers who have 
been financially harmed and to provide remediation.
    And it is good that these agencies are on the job, but this 
highlights just one of the many reasons why we need the 
Consumer Financial Protection Bureau: to protect consumers from 
unfair, deceptive, and abusive financial practices. And if 
people here don't understand that, then I don't know what we 
can do about that.
    But it is good that the agencies work to enforce the law 
after the fact. But consumers, and especially Active Duty 
service members, shouldn't have to go through an illegal 
foreclosure in the first place. Think about it: A service 
member stationed overseas, fighting for their country, risking 
their life, while back here their family is losing their home--
illegally. That is devastating, and no one should have to 
endure that.
    Professor Warren, I understand that you organized an Office 
of Servicemember Affairs with CFPB. Can you please explain the 
role of the CFPB in protecting the rights of service members 
and their families?
    Ms. Warren. Yes, sir.
    When we set up the Consumer Financial Protection Bureau, 
one of the first pieces that we tried to put in place and make 
active was the Office of Servicemember Affairs. I first met 
with Holly Petraeus--I believe it was October, although my 
calendar is public, so it would be possible to find that. And 
she had come to see me about what she thought were terrible 
abuses that were going on with military families. And she said 
to me, ``You now have this new consumer agency, and you can do 
something about this.''
    I must say, for a small woman, she is very forceful. And I 
listened to her and took lots of notes. And she had lots of 
very specific instances of what she was concerned about and 
very specific recommendations for what we could do.
    So about a week went by, and I invited her to come back. 
And we talked a second time, and she had even more ideas. And 
that is when I realized we had found our leader for the Office 
of Servicemember Affairs. And I made her an offer, and she came 
to work for us.
    And that is really how I want to describe this. This office 
started with someone who fully, on-the-ground understands what 
is happening to military families. She, herself, comes from a 
military family, from generations of military service people, 
and she has seen it firsthand. She often describes that she has 
even lived parts of this.
    She was there from the beginning to build an Office of 
Servicemember Affairs that said, ``We at this agency will be 
responsible for identifying what is going wrong, for dealing 
with service members' families who get caught in traps, and for 
helping change, putting a cop on the beat, to make sure that 
these who are dealing with military service members are 
following the law.'' That is our job.
    Mr. Clay. Thank you so much.
    Chairman Issa. The chair now recognizes the gentleman from 
South Carolina, Mr. Gowdy, for 5 minutes.
    Mr. Gowdy. Thank you, Mr. Chairman.
    ``Free of legislative micromanaging, the Financial Product 
Safety Commission could develop nuanced regulatory responses. 
Some terms might banned altogether, while others might be 
permitted only with clearer disclosure.''
    So you don't support legislative micromanaging? What about 
legislative macromanaging?
    Ms. Warren. I am sorry, Congressman. I don't----
    Mr. Gowdy. It is a quote from an article you wrote, ``free 
of legislative micromanaging.'' So my question to you is, what 
is legislative micromanaging? Because, to me, it is a euphemism 
for ``oversight.''
    Ms. Warren. I am sorry, Congressman. I may have written it, 
but I am not sure what the context is. Was it an article?
    Mr. Gowdy. The context is it is in the Democracy Journal--
--
    Ms. Warren. All right.
    Mr. Gowdy [continuing]. And it is the first public notion 
that we have of an agency similar to the one that you are going 
to head in a week. And you wrote an article about----
    Ms. Warren. Yes?
    Mr. Gowdy. And you said, ``Free of legislative 
micromanaging, the Financial Product Safety Commission could 
develop nuanced regulatory responses. Some terms might be 
banned''--my question to you is, to some of us ``legislative 
micromanaging'' is a euphemism for ``oversight.''
    Ms. Warren. Actually, I think this goes to the point that 
Congressman McHenry raised. And that was the question, you may 
recall, we are trying to figure out how to combine the TILA and 
RESPA forms--complicated, hard to read, high regulatory 
compliance costs for the bank, or at least higher, very little 
value for the consumers. For more than 15 years, the various 
regulatory agencies have been negotiating to try to bring those 
together. And, as Congressman McHenry said, there have been 
multiple attempts from Congress trying to do it. The problem--
--
    Mr. Gowdy. Ms. Warren, my question is actually more general 
than that. My question is, what is the role for congressional 
oversight? You don't like legislative micromanaging; you wrote 
that.
    Ms. Warren. No.
    Mr. Gowdy. Some of us think that that is oversight. So do 
you concede that Congress has the authority and should have the 
authority to, for instance, hypothetically, set the budget for 
your agency? Is that legislative micromanaging, or is that 
oversight?
    Ms. Warren. Congressman, I was trying to respond to your 
question, and what I was trying to point out is that it was an 
example of how difficult it is for Congress to get an 
appropriate nuanced response to a specific problem. And, in 
this case, it was combining two forms.
    But what we have been able to do as a consumer agency, 
because agencies operate differently, is that we have had banks 
in, community banks, credit unions; we have been able to put 
out multiple iterations of the forms. We have been able to 
adjust, we have been able to consult with groups in ways that 
is not possible in the legislative process.
    Mr. Gowdy. Well----
    Chairman Issa. Would the gentleman yield for a moment?
    Mr. Gowdy. Yes.
    Chairman Issa. I think Mr. Gowdy is very happy, you doing 
what you are doing. I think what he is really asking is, does 
Congress have a right to look over your shoulder? And did that 
statement indicate that you think that Congress not--looking 
over your shoulder, second-guessing your funding or, in fact, 
your actions? That is, I think, the question, and I haven't 
heard an answer.
    Ms. Warren. I am sorry, Congressman. Let me give as 
straightforward an answer as I could.
    My direct testimony this morning is, of course we need to 
be responsible to the Congress. The Congress should look over 
our shoulder 24 hours a day, 7 days a week. And I was trying to 
explain, once I understood where the passage came from, I was 
just trying to explain what I thought that passage meant. But--
--
    Mr. Gowdy. Well, may the record reflect that your article 
did not go in to the detail that your answer this morning went 
in to on that nuanced point. And so I will ask a less nuanced 
question.
    Ms. Warren. Yes, sir?
    Mr. Gowdy. What about congressional involvement in your 
budget? Is that micromanaging, or is that oversight?
    Ms. Warren. Congressman, I think it is neither. I think 
that is a big policy and political decision. As you know, sir, 
not one banking regulator in the history of the United States 
has ever had its funding through the political process.
    Mr. Gowdy. So you agree that Congress should not be 
responsible for setting the budget for your agency?
    Ms. Warren. I believe that Congress should treat all of the 
banking regulators alike and not say that the one that tries to 
watch out for consumers is going to be put through the 
political process and subject to lobbying by trillion-dollar 
financial institutions.
    Mr. Gowdy. You did mention oversight in your opening 
statement. And the distinguished gentleman from Maryland, for 
whom I have great regard, used the term ``illegal'' seven 
times. It has been used an additional five times since Mr. 
Cummings used it.
    Criminal and civil engagement with companies is also 
another form of oversight. If these practices are illegal, then 
why isn't Eric Holder sitting here with you explaining what he 
has done? Why do we need your agency if they are already 
illegal?
    Ms. Warren. Well, Congressman, I think there is a real 
question about whether there has been adequate investigation in 
to what financial----
    Mr. Gowdy. What have you done with respect to Attorney 
General Holder and the 90-plus U.S. attorneys, most of whom 
have been appointed by this administration, what have you done 
to cajole them to do their jobs? Because I have heard the word 
``illegal,'' and that has a very specific meaning to me. If it 
is illegal, what have you done to cajole the prosecutors to do 
something about it?
    Ms. Warren. Congressman, that is what we did when we got 
involved in mortgage settlement and were so sharply criticized 
for having advised the Department of Justice and our sister 
agencies as they are trying to work through holding responsible 
the parties that violated the law.
    Mr. Gowdy. You were criticized for referring people for 
criminal prosecution?
    Ms. Warren. Congressman, we were criticized for trying to 
help----
    Mr. Gowdy. By whom?
    Ms. Warren. Congressman----
    Mr. Gowdy. Not me.
    Ms. Warren. Congressman McHenry, Congressman----
    Mr. Gowdy. Well, I am going to let Congressman McHenry 
speak for himself. But as a former prosecutor, when I hear the 
term ``illegal,'' which I have heard 12 times this morning, I 
want to know why there aren't criminal prosecutions, why we 
need an agency and the Department of Justice can't do it.
    Chairman Issa. The gentleman's time has expired.
    The gentleman from Tennessee, Mr. Cooper.
    Mr. Cooper. Thank you, Mr. Chairman.
    I don't have a question for the witness. I do have a 
comment, primarily aimed at the junior members of the committee 
on both sides of the aisle.
    I think all of us realize that this Congress is viewed as 
dysfunctional. And I would submit that this committee is also 
viewed as dysfunctional. And this alleged hearing is one of the 
reasons why. It too easily degenerates into a partisan food 
fight, and it doesn't have to be this way. In fact, just a few 
years ago in Congress, it was not this way.
    So I would urge the junior members of the committee to 
resist the partisan talking points that enable people on both 
sides of the aisle to walk in here, read a question, make a 
partisan hit, look like we are smart, and then leave. That is 
not good governance regardless of which party is in charge.
    I didn't vote for Dodd-Frank. It had many good features; it 
had some less good features. But I do not want to be part of a 
committee, at least at the subcommittee level, that treated Ms. 
Warren with more rudeness and disrespect than I have ever seen 
a committee witness treated. That is not the American way.
    Now, some of us come here and we get so used to the food 
fight that we want it to continue. And you will probably score 
brownie points if you make your partisan hit. You might even 
get on a better committee. Well, congratulations. You will not 
have solved a problem.
    I would suggest to the chairman and the ranking member that 
oftentimes a seminar format is much more instructive, is much 
more educational than the sort of partisan charade we seem to 
continue to engage in with hearings like this.
    I would urge Members to read Ms. Warren's--one of her 
books. I have only read the ``The Two-Income Trap.'' It is 
outstanding. Your constituents back home should read this book. 
Your bankers back home should read this book. Then there would 
be a lot less hatred and a lot less discord and a lot less 
anger. Because this lady is trying to do the right thing.
    And we all recognize that consumers oftentimes get the 
short end of the stick. I have tried to refinance my home 
mortgage several times to take advance of today's record-low 
interest rates, and the paperwork is a blizzard. I went to a 
very good law school, and it is almost impossible for lawyers 
to understand this stuff.
    Ms. Warren has pointed out that the existing regulatory 
agencies have taken over a decade to try to simplify a couple 
of the forms, and they have failed. What has this committee 
done to simply some of the forms? Nothing. So isn't it time for 
a new approach? Isn't it time for fresh thinking to give the 
consumers a break?
    And let us also acknowledge that Congress is sometimes 
captured by vested interests. Sometimes that happens. And we 
need to resist that.
    So I would urge the members of the committee, particularly 
the junior members who are not so entrenched in bad habits, to 
consider new and fresher approaches to solve some of these 
problems so that we can protect consumers and also give 
legitimate industries a fair shake, because all bankers aren't 
bad people.
    But I am afraid that we are falling into a rut here that is 
going to be the detriment not only of this committee and this 
Congress but of the Nation. It doesn't have to be this way. We 
can be civil to each other. We can be informed. We can resist 
the partisan talking points. But I am not seeing that sort of 
behavior, at least so far.
    So let's try to do better, and let's try to be civil to 
witnesses like Ms. Warren. Let's try to focus on the substance, 
because I have actually heard very little substance here today. 
And there are better ways to solve our problems, and I hope 
that this committee will be part of those.
    So I thank the chairman. I see that my time is about 
expired.
    Chairman Issa. Would the gentleman yield?
    Mr. Cooper. I would be delighted.
    Chairman Issa. We have worked together for a long time, and 
I join with you in wanting this hearing and any talking points 
in front of any Member, junior or senior, to be about our 
oversight.
    I do agree with you on the simplification. Patrick McHenry 
offered a bill like that a number of years ago and continues to 
support it.
    I hope that all of us understand that our jurisdiction here 
is limited. We are here to discuss whether Dodd-Frank got it 
right for the organization, whether Professor Warren is now 
finding things which are poorly defined within the statute that 
she is working and her 400 employees are working to try to 
resolve, whether some committee, probably Financial Services 
primarily, needs to revisit to give her guidelines, additional 
authority, and so on.
    If we do our job right--and the gentleman is absolutely 
right--we will, in fact, be talking about an organization that 
Professor Warren may head as the first head, she may not, but 
she is certainly the most knowledgeable witness. And I have 
said, this hearing will be about civil behavior for Professor 
Warren and about a dialog about the agency that she has put a 
year of her life in to standing up.
    So I join with the gentleman in full agreement.
    Mr. Cooper. Well, Mr. Chairman, a civil discussion would be 
a marked improvement over the subcommittee's behavior.
    You are right that the Financial Services Committee does 
have substantive jurisdiction, but here we have had two 
hearings with Ms. Warren before her agency is even stood up. A 
lot of people are rushing to conclusions here. And sometimes 
that is the only exercise they get.
    It is unfortunate that this----
    Chairman Issa. It is one of the things we really do well 
here, isn't it, is make conclusions?
    Mr. Cooper [continuing]. Nice lady has been treated as a 
partisan punching bag before she has even had a chance to 
really serve. So let's give all American citizens the benefit 
of the doubt.
    Thank you, Mr. Chairman.
    Chairman Issa. Thank you.
    We now go to the gentleman from Pennsylvania, Mr. Kelly, 
for 5 minutes.
    Mr. Kelly. Thank you, Mr. Chairman, and Ms. Warren, thanks 
for being here today.
    In my previous life, I was in the automobile business, and 
I know how critical it is----
    Ms. Warren. Sorry, sir?
    Mr. Kelly. I said, in my previous life, I was in the 
automobile business, and the availability of credit is so 
critical and I know that. And I have looked at your background. 
You really have an impressive background and you--by so many 
people and so many things.
    The availability of credit is one of those things, and I 
know that automobile loans come up quite often, and sometimes 
they are regarded as predatory lending. Tell me, how would your 
agency work toward that end, because we already are governed by 
the FTC. So is there going to be some overlap there, and how is 
that going to work, and how are we going to be able to sift 
through that?
    Ms. Warren. Just to make sure I am being responsive, and 
you help me if I am not in the right place.
    On automobile loans in particular, you do know that dealer-
initiated automobile loans, that automobile dealers are not 
within the jurisdiction of the consumer agency, that Congress 
made that distinction in Dodd-Frank. And so the place where we 
are focused--and I just want to be clear about this--it is 
really about saying, consumers just need to know--they need to 
know what the price is. They need to kind of know generally 
what the risk is, the difference between, say, a fixed rate 
mortgage and a variable rate mortgage. And they need there to 
be less fine print so they really have a shot at comparing 
straight-up three mortgages, three credit card agreements, 
three checking accounts. They can actually look at those.
    That is really the thrust of what we want to do. My own 
view of that is that that actually makes credit, if anything, 
more available to consumers. Consumers can trust that when they 
sign on the bottom line, I get it, I know what is happening 
here.
    Mr. Kelly. And that is true, and I think that oftentimes 
when we are dealing with retail customers, and they go to a 
lender, and we try to guide them through that process, and it 
can be very difficult, and I think there is lot of good advice, 
and over the years, you have given a lot of good advice to 
people. And one of the things we caution people about is, you 
know, the amount of money that you are borrowing, the length of 
time that you are going to have it, and the percentage that you 
are going to pay on it, and these are all critical aspects of 
it. I think we both agree on that.
    And so I guess what I am coming to you for, and I want to 
hear from you, because this is critical--this is critical. I am 
looking at, the American taxpayer is actually a cosigner to 
loans that are being asked for right now by a body that governs 
these folks, like to buy them, who governs them, borrows money 
on their behalf, and they actually sign up as the cosigner, the 
coborrower.
    And I guess I'm a little bit intrigued. The emphasis is on 
credit availability, how much money you can borrow, and 
rightfully so, the banks actually put a limit on what you can 
borrow, a ceiling as it were. And we're looking now at 
increasing the debt ceiling again, and I find that kind of 
amusing that we use the word ``ceiling'' because, in my world, 
a ceiling means that's something that's actually established 
and you can't go beyond. And all the lending institutions I've 
ever gone to, they put a ceiling on what you can borrow and 
what you can't go beyond.
    And so now we're involved in this measure, and we're going 
to tell these cosigners who are responsible for making all the 
payments on these loans, that don't worry about that ceiling, 
this doesn't really matter; we're going to continue the raise 
it because we've been so reckless and so irresponsible, and you 
know what, you put us here and you put us in the position to 
actually borrow money for you that you're cosigning us.
    So as your past history and the way you have advised 
people, and I know, right now, the consumers are the most 
important part of what we're talking about. We want to protect 
these people because I noticed in your testimony, you did say, 
an economy being driven to the brink of collapse, and we use 
terms about companies that are predatory companies and what 
we're doing to the economy.
    I think that maybe we should be expanding your role to 
taking a look at what this body is doing to not only the future 
of our children and grandchildren but also the present, and I 
would like to--you have a big experience in this--this amount 
of money that we pay is interest, that's kind of artificially 
low right now, if we think this debt limit now or this deficit 
is great now, wait until we get the real interest rates out 
there. Then people, instead of holding their heads, they're 
really going to be holding their stomachs because they will be 
sick. So I know you only have a couple of seconds left, but how 
would you advise these consumers on buying the product that 
they're being asked right now to buy into and cosign for?
    Ms. Warren. Well, Congressman, I think the one distinction 
I would make is I am very familiar with creditors putting 
limits on how much you can spend in the future. That's a--
that's a world I live in, but I do want to say people expect 
you to meet your obligations that you have already incurred and 
they expect you to meet those a 100 cents on the dollar.
    Mr. Kelly. That's why in the automobile industry, you 
actually have a beacon score that tracks your past history and 
watches actually what your revenues are. That's a big part of 
what you're allowed to borrow. So I think that's maybe part of 
the equation we're looking beyond. Thank you, though, for your 
time.
    Chairman Issa. Thank you. The gentleman's time has expired.
    The gentleman from Kentucky, Mr. Yarmuth.
    Mr. Yarmuth. Thank you, Mr. Chairman.
    Professor Warren, it's great to see you here again, and I 
had the opportunity during the subcommittee hearing some weeks 
ago to ask many of the questions I would ask. So I'm not going 
to repeat them.
    One of the things that I was curious about is in the 
Republican budget that passed the House, the so-called Ryan 
plan for Medicare was part of that, and under that plan, for 
those people under 55-years old, Medicare would no longer 
exist. Instead, citizens who then reached 65 would be given 
some kind of payment in some form to go out and shop for 
insurance in the private insurance market. Would you envision 
that that might be a role at some point for CFPB, that 
insurance contracts would be subjected to the same scrutiny in 
terms of clarity and transparency that other financial 
documents would be?
    Ms. Warren. Congressman, I would say I think there are some 
very real concerns about the difficulty that consumers have 
reading insurance contracts and that it raises some of the very 
same issues we'll be dealing with in the Consumer Financial 
Protection Bureau over other kinds of contracts that are 
unreadable.
    But right now, Congress has put a very clear curb in place. 
We have a lane we are supposed to swim in--I think I just 
explained that--about consumer credit, consumer credit 
products, the issuing of consumer credit, credit reporting, and 
we are not to stray into insurance. And we are not to stray 
into investment products, and right now, sir, that's exactly 
what we'll be doing.
    Mr. Yarmuth. Certainly I would think, though, that whatever 
progress you've made in making sure that financial documents 
were understandable and transparent might serve as a good model 
for other areas of the economy.
    Ms. Warren. I certainly hope that's the case, and I also 
want to say, it's a little piece of the consumer agency, since 
we're here doing oversight, and you give me a chance to talk 
about the agency and the things it's going to do.
    We have a research division in our agency. In fact, it's 
called research markets and rule writing. We've combined it all 
together, and we are building a robust research team; I mean, 
smart and very diversified in terms of approaches to how to 
think about research. And a significant part of what we will 
do, we will look at what it takes to take complicated ideas and 
get them into something that really works on the ground day in 
and day out for American families. That research will be 
available to everyone, and I hope it will be useful in places 
beyond its implications in consumer credit.
    Mr. Yarmuth. I'm sure it will be. In the remainder of my 
time, I had the privilege the other day of sitting in on a 
forum that Senator Rockefeller conducted with Holly Petraeus 
and a couple of the servicemen who had been subject to these 
incredibly unscrupulous practices.
    And one of them was Chief Warrant Officer Charles Pickett, 
and he was an Apache helicopter pilot serving in the Army 
National Guard, was flying missions in Operation Iraqi Freedom. 
And while he was on duty, Bank of America attempted to 
foreclose on his home, or actually, they ended up trying to 
foreclose four times. One of those times, his daughter came 
home from school and found the eviction notice, foreclosure 
notice, I'm sorry, posted on the door. And so he is here trying 
to--also, he was current on his mortgage, which was--I guess 
adds insult to injury, and here he is flying missions in Iraq, 
trying to spend his spare time on the phone with banks trying 
to clear this up, was unable to do so.
    Finally, he hired a lawyer who was familiar with the 
Servicemen's Civil Relief Act, and that lawyer took seven--I 
think seven different times trying to find somebody, four 
different people before he could finally stop this foreclosure 
procedure, which was totally unjustified.
    So in terms of what we had been discussing earlier and the 
incredibly good, positive effort that Holly Petraeus is making 
from the CFPB and trying to deal with this, I certainly think 
it would be appropriate if this committee would use its 
subpoena power and its oversight responsibilities to make sure 
that we have all the information possible to make sure that 
people like Chief Warrant Officer Pickett are not abused in 
this way in the future.
    Do you have any comment on that? I have 20 seconds left.
    Ms. Warren. I would just say in that very short period of 
time, you know, I think it's easy to put out of sight what the 
real implications are of these financial misdeeds on military 
readiness. The number one reason for losing a security 
clearance in the United States now is a problem over credit. 
Servicemembers who are deployed abroad have talked to us 
multiple times about what it means to try to fight a war on two 
fronts, one in a foreign location and one back at home, to take 
care of their families. This is wrong.
    Chairman Issa. I thank the gentleman.
    The gentleman from New Hampshire, Mr. Guinta.
    Mr. Guinta. Thank you, Mr. Chairman.
    Thank you very much, Professor Warren, for being here 
today.
    I was listening to the questions and the testimony, and 
part of the responsibility we have in this committee relative 
to this particular hearing is stated in the paperwork that we 
all received today, and I just want to read from the conclusion 
what it says so we're all clear about what we should be doing: 
During this hearing, the committee will examine what oversight 
mechanisms are in place to ensure that this new government 
bureaucracy properly carries out its mission to protect 
consumers. The committee will also examine the potential uses 
and consequences of the CFPB's powers.
    And in keeping with a responsible line of questioning, I 
think we all have an obligation to ensure that the country 
trusts what this new entity is going to do and that there's 
transparency with this new entity and this new agency, and that 
we are charged with that responsibility.
    In the last time we met back in March, I had wanted to talk 
to you a little bit about the--excuse me, on May 24--I wanted 
to you talk to you a little bit about the structure and what I 
think is somewhat unprecedented. You had stated that there's no 
banking regulator who is subject to the political process or to 
the appropriations. All banking regulators are funded 
independently, and indeed, all of the other banking regulators, 
not the consumer agency, but all of the other banking 
regulators are able to set their own funding levels.
    I don't disagree with your comment in regards to the Fed, 
the FDIC, the OCC, but I do think that there are distinctions 
and differences between those entities and this one. So could 
you clarify for me if you think that there's any difference in 
terms of oversight relative to the appropriations process?
    Ms. Warren. I'm sorry, Congressman, I just don't know what 
you're driving at. I don't mean to be unhelpful. I just don't 
know what you're driving at.
    Mr. Guinta. Okay. Well, let me read your comment again. On 
May 24th, in the hearing that we had, you had stated that there 
is no banking regulator who is subject to the political process 
or to appropriations. And I was making the point that there is 
a distinction between this agency and others relative to power 
and authority. Can you comment on that and whether you think 
you are treated as every other banking regulator or if there 
are differences between you and other agencies?
    Ms. Warren. Well, I hope this is responsive, but please if 
it's not, stop me. In terms of funding, yes, we are different. 
We have capped funding. Other banking regulators, for example, 
the OCC, determines funding levels and assesses financial 
institutions for them. The FDIC follows a similar structure. 
The Fed, of course, gets its money in yet a different way.
    So, as I said in my statement, there are--there are limits 
on our funding. If we want funding above the cap provided in 
the statute, we must come back to Congress and ask Congress for 
an additional appropriation. That's what's provided in Dodd-
Frank, and we would be permitted to do that, but it means we 
have to come back into the appropriations process, and as I 
understand it, the other bank regulators do not go into the 
appropriations process in order to get their funding.
    Mr. Guinta. Would it be fair to say that the CFPB is 
different in the sense that, with respect to the director 
position, it is subject to removal only for cause and is, 
therefore, exempted from Presidential control?
    Ms. Warren. I would have to go back and look at the statute 
again, Congressman.
    Mr. Guinta. My concern is this: It appears as though there 
is some unintended power or powers that are vested in this 
particular position, and that's what I would like to clarify, 
because the concern I would have, as an individual--I'm not 
talking about you personally--just the individual who would 
oversee this agency would appear to have greater powers and 
authority simply by the fact that it is treated differently 
than other banking regulators or agencies.
    Ms. Warren. I see. I think I understand the question. Yes, 
there are differences. The consumer agency is the only agency 
that is subject to a veto by other agencies. There is no other 
agency subject to that kind of oversight. There's no other 
agency--banking agency, at least as far as I know agency 
anywhere, whose rules or regulations can be thrown out by a 
vote of other agencies. So, yes, there is a difference. The 
consumer agency operates under a unique constraint that is not 
there for others.
    Mr. Guinta. Okay. Thank you. I see my time has expired.
    Chairman Issa. I thank the gentleman.
    We now go to the gentleman from Illinois, Mr. Quigley.
    And Mr. Quigley, I apologize, I did not see you on the last 
round. So I'm taking you late.
    Mr. Quigley. No problem. Thank you, Mr. Chairman.
    Good morning, Ms. Warren.
    Ms. Warren. Good morning.
    Mr. Quigley. Mr. Chairman, as to Mr. Cooper's comments, I 
think it's appropriate occasionally to catch ourselves at these 
hearings and ask ourselves if we're maintaining the proper 
decorum and respect.
    I'm reminded as a veteran of about 200 criminal trials that 
cross-examination can be contentious, but there's a respect due 
to the court, as there is a respect due here and our witnesses. 
And now, it is incumbent upon our witnesses to answer questions 
succinctly and forthrightly, and when they're not doing that, 
it's fair for the member to push them along.
    I would respectfully suggest that both sides have on 
occasion pushed the envelope on that and appeared to be 
disrespectful to the process and to our witnesses. So I think 
Mr. Cooper's point is well taken and if we could all move in 
that direction, it would be a better body overall.
    Ms. Warren, salaries of your employees have been discussed, 
and I recognize they don't necessarily come straight from the 
taxpayers, but they're still important. The concern I have is 
really toward the other end, and that is, your ability to 
attract qualified employees because you are really looking for 
folks who have the same knowledge set of people you're 
regulating.
    I understand that in 2009, the average salary, even for the 
back office folks at hedge funds, is about $300,000. Just the 
sheer volume of workers on the banking side and the salaries, 
my concern isn't so much how much your folks are making; it's 
your ability to track qualified workers and keep them to get 
the experience they need to do the work you're supposed to do. 
Is this a challenge that you see as a real problem at this 
point?
    Ms. Warren. Yes, Congressman, it is a serious challenge.
    You know, I just want to be sure that we're clear on the 
record since this question came up earlier. We don't set our 
own salaries. They're set by Federal statute, and we have 
exactly the same salary base as the Fed, as the OCC, as the 
other banking regulators. We're just--we're in a system. That's 
what Dodd-Frank requires, and we're following the law in terms 
of the salaries we set.
    But there is a serious problem right now in the regulation 
of financial services, and that is--I want to put it this way: 
We have been genuinely blessed at the Consumer Financial 
Protection Bureau with people who have come to this agency who 
are incredibly smart and who have the opportunity to make lots 
more money somewhere else, but they truly hear the call of 
public service. They see an opportunity to make a real 
difference in a marketplace that they know, sometimes from 
firsthand experience, is badly broken.
    I worry how long we will be able to keep those people when 
the siren song of money from elsewhere continues to play. But 
it is where we are, and I say today, as much I worry about this 
as a long-term problem, I'm proud of every single person who 
has come to work for the Consumer Financial Protection Bureau.
    Mr. Quigley. How much of this is the institutional memory, 
given the complexities of the new world of finance and learning 
how systems operate? By the time people are experienced enough 
to really do this competitively, they're really worth a lot 
more because of their experience with you.
    Ms. Warren. That is a very fair point, Congressman. We're 
doing a lot of training. I want to put it this way, we invest 
in our people. We spend a lot of time with them on education in 
a formal sense. We spend a lot of time in education in an 
informal sense; that is working across groups, running lots and 
lots of--we call it lunch and learns--around different topics. 
We think that every time we make an employee of the Consumer 
Financial Protection Bureau smarter, it's good for the bureau 
and ultimately inures to the benefit of the American people. 
But I recognize, it also makes them a lot more attractive to 
people with more money.
    Mr. Quigley. Again, for the record, I have no problem with 
someone who's smart enough to go out in the financial world and 
make a good living, but given that this is a new, complex 
world, I'm concerned that there isn't a balance here of equal 
experience and knowledge and understanding so that the American 
public isn't cheated. But I appreciate what your workers do and 
what you do. Thank you.
    I yield back.
    Ms. Warren. Thank you, sir.
    Chairman Issa. We now recognize the gentleman from Florida, 
Mr. Ross, for 5 minutes.
    Mr. Ross. Thank you, Mr. Chairman.
    Let me preface my comments, Professor, on first of all 
acknowledging that in your position, where a lot of it is 
administrative, you also have the responsibility to testify 
before Congress, and I'm very grateful to you for doing this. I 
know that it is not always the most enjoyable part of your day, 
but I also understand that it's necessary, and I do realize 
that while we may not always be philosophically aligned, I'm 
grateful for your continued participation today.
    And to that end, I would like to ask you some questions, 
specifically with regard to what I think is one of the most 
important powers of the Dodd-Frank Act, and that's found in 
Section 1031, which gives the CFPB the authority to ban any 
product, any consumer financial product, service, or practice 
that it deems unfair, deceptive, or abusive. Would you agree?
    Ms. Warren. Yes, sir.
    Mr. Ross. And to that end, back in May, May 24th, when we 
had the hearing here, Mr. Gowdy asked you a question as to how 
you would distinguish between abusive practice and nonabusive 
practices of these financial institutions. And the reason for 
that, of course, is because now that it has been in effect for 
a year, we're looking to make sure that consumers as well as 
companies know what to look for when they're going to be deemed 
to either be an abusive or nonabusive product or service to the 
market.
    And now that we've had a year, I want to ask you again, 
because I believe your response in May was that we will go 
through the process of interpreting the language that Congress 
has given us. And I don't think that was quite where we want to 
be, what we need to know. So I want to ask you again 
specifically, can you name any product, service, or 
transaction, not already illegal, that is unfair, deceptive, or 
abusive within the meaning of the Dodd-Frank Act?
    Ms. Warren. Congressman, can I just start by saying we have 
not been in effect for a year?
    Mr. Ross. You've got 1 week to go.
    Ms. Warren. We've only been--we will be in effect next 
Thursday.
    Mr. Ross. Yes, ma'am, that's pretty darn close. I'll give 
you 51 weeks, you've been in effect.
    Ms. Warren. No, we have not been in effect.
    Mr. Ross. But you have had an opportunity for 51 weeks to 
interpret and understand the Dodd-Frank Act, and getting back 
to my question, please answer this: Do you know of any product 
that is not already illegal that is unfair, deceptive, or 
abusive within the meaning of the act?
    Ms. Warren. Congressman, I can recall no product----
    Mr. Ross. Have you had any discussion with your team as to 
any such products, or how you would go about identifying such 
products?
    Ms. Warren. I have not had a discussion with my team about 
a particular product, no, sir.
    Mr. Ross. Don't you think that's probably one of the most 
important things, though? I mean, that's the power to ban, to 
ban, to stop the marketing of a certain product. Don't you 
think, though, that that would be something that you and your 
team should be addressing as you go into your first year next 
year?
    Ms. Warren. Congressman, I appreciate the advice, but 
actually, no. I think that what we should be doing is 
concentrating on the places where we can best make changes in 
the marketplace, and that's, for example, in our TILA RESPA 
form.
    Mr. Ross. So would it be okay then if we just revoke the 
power?
    Ms. Warren. Congressman----
    Mr. Ross. Believe me, I'm being very respectful, ma'am. I'm 
from the South.
    Ms. Warren. Well, I think the point is that we are starting 
our work in the places that, for example, Congressman McHenry 
suggested was an important place to start, and that is where we 
can reduce----
    Mr. Ross. You have the power through the Dodd-Frank Act to 
ban any such products, and you're telling me now that you've 
not even given them any consideration. Would it be safe to say 
then that there are no such products that you are aware of that 
are either unfair, deceptive, or abusive within the meaning of 
the act?
    Ms. Warren. Congressman, what I'm trying to describe is 
that we have priorities, and our first priority in terms of 
rulemaking is around the TILA RESPA forms. We are trying to 
reduce regulatory burdens at the same time that we're trying to 
increase the understanding for consumers so they can make good 
product choices.
    Mr. Ross. Professor, with respect to my time and yours, I 
will yield the rest of my time to Mr. Gowdy so that you may 
adequately answer his questions.
    Ms. Warren. Thank you, sir.
    Mr. Gowdy. Payday lenders have a bad reputation for taking 
advantage of people. No one should expect to be treated well by 
them. Do you know who said that?
    Ms. Warren. Probably me.
    Mr. Gowdy. So that would be one group that should be 
banned?
    Ms. Warren. Congressman, there's a lot of space between 
banning a product and making a product clearer to consumers.
    Mr. Gowdy. But not including capping the interest rate; you 
don't have the power to do that.
    Ms. Warren. The statute is unambiguous.
    Mr. Gowdy. So you do not think payday lending should be 
banned?
    Ms. Warren. The statute is unambiguous that we have no 
authority to engage in usury caps.
    Mr. Gowdy. That wasn't my question. My question was, do you 
think payday lending should be banned?
    Ms. Warren. Congressman, payday lending is one of the areas 
that will be under our jurisdiction.
    Mr. Gowdy. Do you think it should be banned, Professor 
Warren? You just said no one should expect to be treated well 
by them. You also said, subprime lending, payday loans, and a 
host of predatory high-interest loan products that target 
minority neighborhoods should be called by their true names, 
legally sanctioned corporate plans to steal from minorities. 
That sounds like a wonderful thing to ban. Should they be 
banned?
    Ms. Warren. Or to make better. We have a whole agency, and 
we have a whole process to work on this. We have a lot of 
different tools available at the Consumer Financial Protection 
Bureau. One of the advantages we have is that it is possible to 
work on multiple fronts at once.
    Mr. Gowdy. So with respect to----
    Mr. Connolly. Mr. Chairman, I call for regular order.
    Chairman Issa. Excuse me, Mr. Gowdy, I apologize, but Mr. 
Ross' time has expired, which is why I was already gaveling.
    We now go to the gentlelady from California, Ms. Speier.
    Ms. Speier. Thank you, Mr. Chairman.
    And thank you, Professor Warren.
    I was at that hearing on May 24th and was shocked by the 
way you were treated. A number of us members wrote to the 
subcommittee chairman and asked him to apologize to you, and I 
was curious whether or not he has extended an apology to you.
    Ms. Warren. No, ma'am.
    Ms. Speier. Well, on behalf of the members that found that 
conduct absolutely beyond the pale in terms of professional 
conduct for Members of Congress, please accept my apology for 
that behavior.
    We have spent a great deal of time today on a number of 
issues that are probably premature because you are yet not 
operational, but this committee just recently had a hearing on 
the Department of Education's regulations that they are going 
to impose on for-profit schools, universities, and colleges 
that, you know, provide not only an education but also do have 
financing through the Federal Government, through Pell grants 
and the like.
    One of these for-profit colleges, Kaplan University's 
training manual entitled, ``military e-learning modules,'' 
tells recruiters how to utilize fear, uncertainty, and doubt in 
the sales process with regard to competitors' offerings and 
teaches them how to overcome objections that potential students 
may raise to signing an enrollment agreement. The document 
states this technique was originally created within the 
computer hardware industry and uses these emotions to attempt 
to influence perception or a belief. The technique is 
especially effective when prospects introduce the need to 
examine other online schools.
    Now, this is particularly targeted, again, at our military. 
That, coupled with the fact that not only are we talking about 
a few incidents of military members, typically abroad, who have 
been foreclosed on, we're talking about JPMorgan, who has 
foreclosed on 4,000 active duty members of the military, has 
made $2 million in refunds, and has paid a $56 million fine; 
Wells Fargo that has admitted to 55,000.
    Now, back in January, I joined--asked a number of 
colleagues to join in a letter to Mr. Bernanke and also to John 
Walsh, the Acting Comptroller of the Currency, asking them to 
audit these very banks. I have not yet heard from any of them, 
and yet, to my surprise and delight, you've already undertaken 
to do this within the Consumer Financial Protection Bureau.
    So my question to you is, will you also look at this issue 
as it relates to military servicemembers?
    Ms. Warren. Yes, ma'am, we will. Starting next week, on 
Thursday, July 21st, we will receive transferred authorities 
from the other agencies that have been responsible before for 
the consumer financial protection laws. It will come to the new 
consumer agency, and we will be in the largest financial 
institutions engaging in on-the-ground supervision of whether 
or not they are following the law as regards different consumer 
financial products.
    Remember, I want to be clear about our approach. We are not 
safety and soundness supervisors. We are there to examine 
consumer products and examine to see whether or not the 
financial institutions have put appropriate procedures in place 
to assure that they are following the law and that they are, in 
fact, carrying out those procedures and are in compliance with 
the law. That would be our job. We will be there. We will be 
cops on the beat to do that starting next week.
    Ms. Speier. Now, as I understand it, not only can these 
financial institutions not foreclose on military 
servicemembers, but they cannot charge more than a 6 percent 
interest rate. Will you be looking at that issue as well?
    Ms. Warren. Congresswoman, I should make a caveat here. It 
is the Department of Defense and not the Consumer Financial 
Protection Bureau that is specifically responsible for the 
enforcement of the Servicemembers Civil Relief Act, and so what 
we are--our statutory part will be around truth in lending and 
other parts of the statute for consumer financial protection, 
but we will be working closely over a long period of time with 
the Department of Defense to gather appropriate information 
through different channels and to be able to work with them in 
a way that makes us understand the problems better and makes 
sure there is more diverse enforcement of current laws.
    Ms. Speier. Thank you. My time has expired.
    Chairman Issa. I thank the gentlelady.
    We now recognize the gentleman from Oklahoma, Mr. Lankford, 
for 5 minutes.
    Mr. Lankford. Ms. Warren, honored for you to be able to be 
here. You are a fellow Oklahoman from the Fifth District of 
Oklahoma, and so let me say welcome to you for being here as 
well.
    Ms. Warren. Thank you.
    Mr. Lankford. Let me ask a couple of questions off of you 
on just some of the structure as it's coming up. You've 
mentioned several times that the authority is coming over July 
21st to the agency from the other agencies, Comptroller of the 
Currency, FDIC, wherever it may be, for some of these. Do you 
happen to know or have you heard if, as that authority is 
transferring over from that agency, that agency has been 
downsizing as you are ramping up? I know that's not your agency 
that you're dealing with, but have you heard that they're 
downsizing to accommodate for the transfer of authority?
    Ms. Warren. Yes, sir, we have. Indeed, there's been--if you 
will permit me, there's been a lot of trying to coordinate with 
these agencies. We've done some recruiting from these agencies. 
You know, there are some good on-the-ground people who 
currently work at the Fed.
    Mr. Lankford. There are some people that are--those 
agencies are downsizing as you are ramping up?
    Ms. Warren. Yes, sir.
    Mr. Lankford. Okay. Let me follow through on a couple of 
things. You had great emphasis on the unregulated businesses. 
Payday lenders you mentioned that a couple of times as well. Do 
you see a difference between engaging with a payday lender and 
a community bank, specifically? I know the big banks get tagged 
all the time on things. I'm just talking about community banks 
today when I'm talking about banking. Do you see a difference 
between payday lenders and community banks as far as regulating 
them?
    Ms. Warren. Yes, sir, I do.
    Mr. Lankford. Will there be a difference in the way the two 
are handled, in the way that your agency will interact with 
payday lenders or community banks?
    Ms. Warren. Yes, sir, there will be.
    Mr. Lankford. Dodd-Frank has about a hundred rules this 
year that will be added to community banks. Between now and 
December 31st, they have a hundred rules to be able to 
implement on that. Do you anticipate another series of rules on 
top of those coming down on community banks from the new 
Consumer Financial Protection Bureau?
    Ms. Warren. I just want to say, on the hundred, it's not a 
hundred for the consumer agency.
    Mr. Lankford. That's what I'm saying. They're already 
getting hundred from Dodd-Frank, not from you. That's what I'm 
trying to say. If they're getting a hundred already, they're 
coming down from Dodd-Frank. When y'all stand up, will there be 
more that will be coming through?
    Ms. Warren. The one that we have teed up right now is this 
TILA RESPA combination, trying to reduce the paperwork around 
mortgage origination, something--and I will say to you, sir, 
because I think it might be relevant. When we first started 
this process, the idea for us to put that first came from the 
community banks. And I asked them at many points along the 
line, I know there have been other changes--I know it costs 
every time forms are changed--is this something you want us to 
go forward with? And they have said yes.
    We also have as one of our very early rulemaking 
obligations will be around payday lenders, but of course, I 
should say, not payday lenders--other nonbank lenders, other 
than payday, because payday is automatically covered, the large 
participants, but of course, that's not going to affect the 
community banks other than how it affects their competitive 
environment.
    Mr. Lankford. The concern is, is that right now, they have 
a lot of rules that they're trying to put into place, and you 
know well community banking. That is not some large bank with a 
New York headquarters. This is 12 people in a small town in 
Oklahoma that they're trying to go implement a hundred rules 
and figure out how to do it, and it's very overwhelming.
    So while the rules come down and say that's not a big rule. 
It's not the size of each rule; it's the stack of all the rules 
that are coming down on them.
    What I'm asking of you is, in the days ahead, will you 
please make sure that's coordinated, that there's not just 
saying, oh, we just added 20 new rules to them, at the same 
time, OCC added 20 and FDIC added a hundred, and then suddenly, 
they're getting overwhelmed in a small community bank. If you'd 
make sure those things are coordinated, that would be very 
helpful to them to able to continue to have the free flow of 
credit going on.
    Let me ask you as well on the way you will interact with 
the banks also. You made a statement that one of my community 
bankers notified me on, in forms of business, that there may be 
an exam every 2 years on the banks from the--from your bureau. 
Do you anticipate also engaging as a bank examiner role, not 
for safety and soundness, but for consumer protection, there 
will also be an audit of each bank from your agency?
    Ms. Warren. I'm sorry, sir, that's for the 111 largest 
financial institutions, not for the community banks.
    Mr. Lankford. So community banks should not be concerned on 
that?
    Ms. Warren. We are not the supervisor for the community 
banks.
    Mr. Lankford. But as far as engaging and doing auditing and 
stepping in and being another person that's on the ground for 
them, will not be?
    Ms. Warren. As explained to me, they've run out of chairs 
for that kind of----
    Mr. Lankford. They actually have. They have just about 
every week they have another auditor that's sitting there, so 
they might as well leave an office set aside for the Federal 
Government because there's going to be somebody there the next 
time.
    Do you have a concern with the authority that's been given 
to the specific director to kind of determine products and 
services that are unfair, that the next director has that same 
authority to come undo what you do on that?
    Ms. Warren. I think you may overstate the power of the 
director. There's a whole process in place for this, that 
starts with research, that starts with community outreach, that 
goes into analysis of markets, that has cost and benefit. 
There's a big process in an agency before we get to a place 
where any rule, whatever it's on, can be issued.
    I started to say earlier, just to get an idea about how 
this agency functions, half of our entire budget and our FTE 
will be about supervision and enforcement, supervision of the 
largest financial institutions and supervision of the nonbank 
financial institutions, and straightforward enforcing the law. 
About a quarter will be around consumer education, which we 
haven't talked about much today, and consumer complaint.
    And the last quarter has to cover everything else. Writing 
rules is just one piece of how we can help make this market 
work better for American families. I've given you our first 
priority. That's where we intend to go, and we want to do that 
in conjunction with community banks all around the country.
    Mr. Lankford. Thank you.
    Chairman Issa. The gentleman's time has expired. Thank you.
    I want to announce that when we've completed with Professor 
Warren we'll take a recess of between 10 and 15 minutes. I 
estimate that that will occur within about 20 minutes based on 
the number of members here, and I don't think I can accurately 
give everyone a half an hour notice, but my intention is to, in 
fact, allow us to work through Professor Warren's completion, 
dismiss our witness, and we'll take a recess of not more than 
15 minutes and then reconvene for the vote related to the 
earlier motion.
    So I hope everyone's comfortable with that. If people feel 
they need a half hour notice, they have it, but depending upon 
people coming back, they may choose to then ask questions so 
they actually could make it longer, but I want to make sure 
that--you have been very kind with your time and answers; 
hopefully, we've been kind back--that we get through it and 
allow you to get on with your day and we'll get on with our 
procedures.
    So, with that, I recognize the gentleman from Virginia for 
5 minutes, Mr. Connolly.
    Mr. Connolly. Thank you, Mr. Chairman.
    And welcome, Professor Warren. It's good to see you again.
    And let me ask you a question. The agency you are 
representing here today, the Consumer Financial Protection 
Bureau, was created how?
    Ms. Warren. By Congress.
    Mr. Connolly. No, but I mean in a piece of legislation?
    Ms. Warren. Yes, the Dodd-Frank Act, sorry, sir.
    Mr. Connolly. And was that act passed with overwhelming 
bipartisan support?
    Ms. Warren. No, sir, it passed, and I believe there were--
there was some bipartisan support, but I don't think it was 
overwhelming.
    Mr. Connolly. How is--tell us about the governance of the 
Consumer Financial Protection Bureau.
    Ms. Warren. Well, it's set up to have oversight in terms of 
its money. Its budget is set up outside the political process, 
like other banking regulators, so that it receives a capped 
amount of money from the Fed.
    Mr. Connolly. But actually, I am asking more about the 
actual governance. For example, are you appointed by the 
President?
    Ms. Warren. Oh, I apologize. I currently am the Special 
Advisor to the Secretary of the Treasury for standing up the 
consumer agency. There will be a nominee from the President of 
the United States, and there will be advice and consent, 
presumably, from the Senate on that nominee.
    Mr. Connolly. Are there other members of the board who are 
also appointed and subject to confirmation?
    Ms. Warren. That's the only Senate confirmable or, I should 
say, Presidential appointment in the Consumer Financial 
Protection Bureau.
    Mr. Connolly. And on a bipartisan basis in the other body, 
has there been indication that they're willing and receptive to 
the idea of such an appointment and they're ready to act on it?
    Ms. Warren. I have seen a letter that says 44 Senators will 
block any nominee to head up the Consumer Financial Protection 
Bureau unless the bureau is substantially changed.
    Mr. Connolly. From the Dodd-Frank legislation?
    Ms. Warren. Yes, sir.
    Mr. Connolly. Which passed into law but not with much of a 
bipartisan vote, as you indicated?
    Ms. Warren. Yes, sir.
    Mr. Connolly. Mr. Chairman, I just want to say, I listened 
carefully with rapt attention to our colleague, my friend from 
Tennessee, admonishing this committee, especially the junior 
members of this committee, for lack of civility and for 
partisanship.
    With all respect, the tone of partisanship and civility is 
not set by the junior members of this committee; it's set by 
the senior members of this committee. They're the ones, at the 
end of the day, who make the rules, enforce the rules, and 
engage in certain practices or not.
    And frankly, while I also regret how you were treated 
before the subcommittee of this committee, Professor Warren, I 
think the issue of civility toward you begs the question 
because what we're really up against is a relentless attack on 
the creation of your bureau, of the legislation that created 
that bureau, even to the point of blocking any nominee.
    Every single Republican in the Senate signed that letter 
you referenced saying they will move to block any nominee of 
the President's; so if we can't win legislatively, we're going 
to use other mechanisms to make sure that your mandate is not 
enforced and that you can't really do your job.
    And so while I wish the problem were just one of civility, 
it goes far deeper than that. It is, in fact, a political 
attempt to prevent the protection of consumers the legislation 
foresaw and tried to create a framework for. I deeply regret 
that because I think you could provide enormous visionary 
leadership in protecting the consumers of America, and I deeply 
regret that one party decided to make that a partisan issue 
rather than try to come together and find a common ground.
    With that, I yield back.
    Mr. Cummings. Would the gentleman yield?
    Mr. Connolly. Yes, I will happily yield to the ranking 
member.
    [The prepared statement of Hon. Gerald E. Connolly 
follows:]

[GRAPHIC] [TIFF OMITTED] T1969.035

    Mr. Cummings. Thank you very much. I just wanted to add on 
to what the gentleman just said, and I want to associate myself 
with his words.
    Ms. Warren, there's absolutely no doubt that you bring to 
this agency something that is so very, very important, and that 
is passion, and I say to my children, I say to them, if you can 
take what you believe to be your purpose in life and then match 
it up with a job, then you are truly blessed. And you bring 
that passion, competence, and integrity and we really do 
appreciate you. Just in case I don't have a chance to say that 
again on the record, I want to make that very, very clear.
    Mr. McHenry. Gentleman's time has expired.
    Dr. Gosar is recognized for 5 minutes.
    Mr. Gosar. Hi, Ms. Warren.
    I'm one of the junior members, too, and I'm from the 
private sector. I'm a dentist, so some of this makes a lot of 
sense to me, but I also come with a different set of eyesights, 
too. Is that when you're at the dance, it always takes two 
parties to dance, and that there's problems not just from the 
private sector in wrongdoing but also from government. And 
that's why I come with a different eyesight. I'm also from 
Arizona, so just to give you some perspective.
    So the way I look at things and the way I've seen things is 
that legislation, when it comes into new existence, isn't 
always perfect, and so what we're straining here with, and me 
as one of them, is was that legislation crafted right, did it 
have the proper checks and balances, and I think, I hope and I 
extend that's what the tenor is there is that question. And 
when you don't get an answer to a question, it just creates 
more questions. I hope you understand. Okay.
    So, with that being said, I heard you talk to Mr. Gowdy 
that no product should be banned, okay. I thought I heard that 
you didn't say any product should be banned.
    Ms. Warren. No, Congressman, I hope what I said is that 
I've been in hearings before. The President of the American 
Bankers Association has been asked, are there products that 
should be banned. He said, yes. I've said I think the way we 
should go is I think we should start with much clearer 
disclosure. I don't think it's appropriate to take any tool off 
the table. It depends on what happens.
    Mr. Gosar. I love where you're going with this.
    Ms. Warren. Good.
    Mr. Gosar. What I'd like to do is see us kind of work in, 
this is a new agency; it's got some breadth of powers. So, with 
that being said, I mean so would you endorse repealing the 
specific power of Dodd-Frank to that degree, that you could not 
ban any specific item.
    Ms. Warren. No, Congressman.
    Mr. Gosar. You wouldn't?
    Ms. Warren. No.
    Mr. Gosar. And you say that power, that law is perfect?
    Ms. Warren. Congressman, repeal the--giving the agency the 
powers that Dodd-Frank has given it, you know I think what we 
ought to do is we ought to get out there and get started on 
behalf of the American people.
    Mr. Gosar. But I'm a businessman, too, and the last job 
numbers I saw are just plummeting, and part of that is, is the 
uncertainty we're creating in here, and to have one individual 
truly heading an agency, dictating that there won't be a 
product, creates some uncertainty into the markets. So you can 
understand why me as a businessman don't like that, right?
    Ms. Warren. Actually, I do have a little problem with why 
you wouldn't like that because when we're starting and we've 
made clear our initial regulatory actions, with the help of the 
consumer--with the community banks is that we're actually going 
to change the law in a way that reduces the regulatory burden 
for these community banks and at the same time increases the 
ability of customers to read and understand a mortgage. You've 
seen that----
    Mr. Gosar. Well, I love where you're going here. I'm sorry, 
again, I'm going to interrupt. I'm not being rude, but I've got 
so little time here. Okay. I also told you I'm from Arizona, 
and Ms. Buerkle talked to you and you gave her some answers 
that you had a lot of outreach, a lot of support from a lot of 
different perspectives, big banks, community banks. Can you 
tell me specifically which banks those are, the community 
banks?
    Ms. Warren. Sure, Roger Beverage at the Oklahoma Bankers 
Association. I met with Roger and probably 25 bankers on the 
very first day I was in office. They were here visiting from 
Oklahoma.
    Mr. Gosar. You have letters of support from all of those?
    Ms. Warren. Well, Roger's their leader. I don't know how 
every single one of them feels.
    Mr. Gosar. Let me ask you a question. I know we talked 
about the housing market. Could you agree that Arizona is one 
of the epicenters for a problem with mortgages and home crisis, 
would you say?
    Ms. Warren. There's some terrible problems in mortgage 
foreclosures in Arizona.
    Mr. Gosar. Give me some examples of some groups that you've 
reached out into Arizona because it seems to me if we've got a 
problem of the magnitude like this, that you'd reach out and 
have some support in Arizona. Could you tell me specifically 
and throw a couple of community banks in if you could?
    Ms. Warren. Congressman, I've talked with community bankers 
in all 50 States, including community bankers in Arizona, but 
I'm afraid I'm not good enough to remember the names of 
everyone.
    Mr. Gosar. I'd love to know who they are, and why I ask is 
that we've had to have outreach--I'm from one of the poorest 
districts in the country. I have a lots of Native Americans, 
have a lot of veterans, have a lot of senior citizens, a lot of 
folks that--this agency is really easy in my district because 
there are no choices. You cannot refinance your house. Right 
now, most of the people are living not paying their mortgages, 
and the banks aren't even putting it on their list because they 
can't take it as another hit.
    And I'm not finding, from my standpoint in District One, 
any banks that have been contacted in my district from you, and 
I'd love to know who they are so that we would find out and get 
a list from you if we could. Thank you.
    Mr. McHenry [presiding]. The former chairman, Mr. Towns, is 
recognized for 5 minutes.
    Mr. Towns. Thank you very much.
    Let me begin by saying that I've heard some of my 
colleagues' concern about the salary of the workers. Let me say 
to you that I applaud you for really paying wages that you can 
keep people, to be able to do the kind of job that needs to be 
done.
    I think that if we look back and if we're honest that I 
think some of our problems have been is because we did not pay 
people that had oversight responsibility the way we should have 
paid them, and that led to some of the problems. I do believe 
that. I've not done any research on it, but I do think that 
that's an issue, but at least you have the insight and 
understanding to pay people so you will be able to hold on to 
them to be able to do the job that needs to be done to bring 
about the confidence that needs to happen in order for us to be 
able to move forward from this point on. So I want to go on 
record saying I salute you, you know, for doing that.
    And of course, I was in Afghanistan not too long ago, and I 
had an opportunity to talk to many of the soldiers and their 
real concern was about the fact that they were having 
difficulty maintaining their homes, and they gave me stories 
like, for instance, they were stationed in one place, 
transferred them out and then, of course, they had a house 
there, and now they're moving again, and what can we do? How 
could you be a helpful to us? So that was the outcry that was 
coming from many, many of the soldiers as we talked and walked 
in Afghanistan, and to me, I think that we have an obligation 
and responsibility to do something about it.
    What suggestions do you have?
    Ms. Warren. Well, Congressman, I will start by saying 
you're really showing how we are all paying a price for a 
broken consumer credit system, that letting things get as far 
out of control as they got in 2005, 2006, 2007, 2008, and now 
we pay. At a minimum, what we can work on at the Consumer 
Financial Protection Bureau is giving servicemembers and 
veterans a place to come, a place that we can at least get a 
better understanding of what's wrong, to work with the 
Department of Defense to make sure that the Servicemembers 
Relief Act is fully and fairly enforced, that other tools that 
are available to us, like truth in lending, are also fully and 
fairly enforced and to make this issue a national priority for 
America.
    You know, we've done a lot to heal other segments in the 
economy, but we have not focused on the impact on our 
servicemembers of a broken credit market, and we must do 
better.
    Mr. Towns. I really appreciate you focusing on it, and let 
me again thank you, of course, Professor Warren, and Mrs. 
Petraeus for your effort to bring accountability to the banks 
that unlawfully foreclosed on servicemembers, especially during 
the course of deployment. I want to do that.
    And on July 6, 2011, Mrs. Petraeus announced that the 
Consumer Financial Protection Bureau and the Judge Advocate 
General of the U.S. Army, Marine Corps, Navy, Air Force and 
Coast Guard agreed to a number of steps to provide stronger 
protections for servicemembers and their families; is that 
right?
    Ms. Warren. Yes, sir.
    Mr. Towns. One important aspect of this has to be 
education, but another aspect has to be enforcement. When Mrs. 
Petraeus appeared at the forum on Tuesday, she emphasized this. 
Here is what she said. Let me go repeat, ``You could have the 
laws in place, but if the people on the other end of the phone 
are not aware of them or are not applying them properly, then 
it is not going to work.'' What is your reaction?
    Ms. Warren. I think that is absolutely certain, 
Congressman. She speaks truth on this. You know, one of the 
things I want to say about the consumer bureau and I'll just 
say it again quickly, half of all of our money, our employees, 
eventually will be in supervision and enforcement, not in 
trying to change rules but in making sure that the law is 
enforced. A quarter of our people will be in financial 
education and consumer complaint, dealing right on the ground 
with families, and the remaining quarter will be about 
research, will be about rule writing, will be about the other 
things it takes to keep an agency functioning. We believe in 
enforcement at the consumer agency, yes, sir.
    Mr. Towns. Let me say this before I yield back, Mr. 
Chairman. You know, I'm excited about this agency, and of 
course, you are launching on my birthday.
    Ms. Warren. I'm delighted to hear that. Happy birthday, 
sir.
    Mr. McHenry. The subcommittee chair on government 
management, Mr. Platts, is recognized for 5 minutes.
    Mr. Platts. Thank you, Mr. Chairman, appreciate you and 
Chairman Issa holding this hearing.
    Ms. Warren, appreciate your being here and your patience as 
all of us have an opportunity to interact with you and your 
past and current service to our fellow citizens.
    I don't want to be repetitive, and so I'll try not to be, 
and I also plan to try to focus specifically in areas that deal 
with the subcommittee I chair, which is Government 
Organization, Efficiency, and Financial Management, and I 
chaired it 4 years past with Mr. Towns, who was ranking member, 
and I was chair. Then he was chair, and I was ranking member. 
And so I'm going to get into some structure of the bureau and 
in the area of financial management.
    In reading through your testimony, I know you're standing 
up a new bureau, a lot of hard decisions, and part of your 
testimony is the commitment to accountability and transparency 
and seeking comments and critiques, whether this falls under 
the area of comment or critique, it's meant to be helpful. And 
that is, in your testimony, you talk about how you're hiring. 
You talk about general counsel, information technology, 
procurement, human resources. An area that's not mentioned 
specifically, there is financial management and a chief 
financial officer, and I guess if you could give me an update, 
first. I know that you had a request for, you know, resumes in 
essence for a CFO. I think it closed maybe in late June. Where 
do we stand on getting a CFO in place, given how I see the 
importance of that position?
    Ms. Warren. Right. And I'm glad you asked about this 
because this is very important, and in the startup phase, we've 
also had to lean on Treasury to make sure that we were 
following every letter of the law and the spirit of the law and 
doing this appropriately. Would you permit me the tiniest 
little diversion? You stop me obviously at any second.
    I actually want to start with COO because in the way I 
understand this, this becomes even more important. What we did 
for the chief operating officer at the bureau, who is the 
person who is responsible for the----
    Mr. Platts. The director----
    Ms. Warren. We hired someone who has been the head of a 
very large financial institution. She has been responsible for 
a budget, has been the person who has had to sign off on a 
budget, and I may get my numbers wrong, I believe it's over a 
billion dollars. She has been responsible for the management of 
tens of thousands of people. We hired her. She had not had 
government experience. What she had had was private sector 
experience and private sector experience in keeping up with 
every nickel and making sure it was well spent.
    We have an acting chief financial officer who has really 
been terrific and who has worked, not only to make sure we have 
the appropriate internal procedures but with Treasury and their 
existing officers and I should say has worked with the 
Inspector General for Treasury and the Inspector General with 
the Fed so that we were getting external review of how we were 
setting our procedures up.
    Mr. Platts. Your mentioning COO was kind of in line with 
what I wanted to follow up in. Glad to hear the quality of the 
person in that position, and hopefully someone of equal caliber 
will be in the CFO permanent position. The one concern I guess 
is, one, on the alignment, emphasizing that direct access in a 
major corporation, any CFO has to be directly tied to the CEO, 
you know, to the director of the whole bureau. Is delineating 
within the organization, great you have a good COO, but 
structurally make it clear that that CFO is directly, you know, 
reporting, you know, to the director because of the importance 
of financial management. We're talking hundreds of millions of 
tax dollars or fees and dollars ultimately that your bureau is 
going to be handling.
    Ms. Warren. The organization chart, as it is set up right 
now, is that the CFO reports directly to the COO, who in turn 
reports directly to the director so----
    Mr. Platts. I would encourage and when we sit--it is 
because you are a new organization, when we set up the 
Department of Homeland Security Under Secretary of Management, 
we had a dual report where there was a CFO reporting there, we 
also had it set up going directly so that it sent a message to 
the whole agency that CFO has direct access to the director, 
you know, does go to the COO, but we want to make sure it's 
sending a message, and it does relate to the issue that I 
know--I don't want to be a part of the budget justification 
issues.
    Another way you send a priority is how much is being 
allocated to the CFO's operation and internal control, and here 
at the base level, you know, at the ground level, setting up 
really strong internal controls so that when you get into the 
audits by GAO, you know, your financial reports, you're not 
playing catch up because you didn't have good systems in place. 
I talk about internal controls over and over and over. So some 
suggestions in that area of financial management, I hope you'll 
take to heart as you move forward.
    Thank you, Mr. Chairman. I yield back.
    Ms. Warren. And I just want to--could I say, thank you very 
much, Congressman.
    Mr. Platts. Yep.
    Ms. Warren. Thank you.
    Mr. McHenry. Mr. Davis of Illinois for 5 minutes.
    Mr. Davis. Thank you very much, Mr. Chairman.
    And thank you, Professor Warren, for your service to the 
country, for your patience, and for being here with us this 
morning.
    When you appeared the last time--and let me just say that I 
believe that consumer protection, consumer education, is one of 
the most valuable functions that our government can perform for 
its citizenry. And when you appeared before us the last time, 
on May 24th, the title of hearing was, ``Who's Watching the 
Watchmen?'' But I think a better question is, who is watching 
the banks? We certainly aren't. I wonder if the committee as a 
whole is ever going to watch the entities that have admitted 
that they need watching.
    This committee has now summoned you twice to appear before 
us. We have sent a massive document request seeking all manner 
of emails, reports, and other items. At the same time, we have 
not brought the mortgage servicers in even one time to answer 
for their conduct. We have asked JPMorgan, that they be invited 
to testify, but the chairman did not agree to that request. Nor 
has the committee made a single document request to a mortgage 
servicer the entire year.
    I want to ask you to weigh in on this, but it seems pretty 
obvious that our priorities are somewhat backward.
    Here is what I will ask you about. On July the 11th, 
Newsweek published an article entitled, ``The Billion-Dollar 
Bank Heist.'' It notes that the same financial institutions are 
spending vast amounts of time and money to impede the Dodd-
Frank Act and the Consumer Bureau from becoming fully 
operational and effective.
    As a matter of fact, I will read from that article. It 
states that, ``JPMorgan Chase is on track to spend $7 million 
this year on lobbying. Wells Fargo, which spent $5 million last 
year, spent $1.9 million on lobbying in just the first quarter 
of this year. None of that includes the millions in campaign 
contributions the banks and trade associations have poured into 
the coffers of those Members of Congress who sit on the 
relevant committees responsible for financial reform, 
especially those willing to take on Dodd-Frank,'' end of the 
article.
    Professor Warren, these are the same two institutions that 
publicly admitted to wrongdoing in State and Federal mortgage 
servicer investigations, is that not correct?
    Ms. Warren. Yes, sir.
    Mr. Davis. As I understand it, JPMorgan admitted to 
overcharging thousands of Active Duty military personnel 
millions of dollars in fees and interest charges, in violation 
of the Servicemembers Civil Relief Act. Is that correct?
    Ms. Warren. Yes, sir.
    Mr. Davis. And Wells Fargo admitted to flaws in 55,000 
foreclosure proceedings.
    And I guess my question is, do you think this kind of 
action and activity has anything to do with what has been their 
opposition to your agency becoming fully operational and 
carrying out its duties and functions?
    Ms. Warren. Congressman, it was a hard fight to get this 
agency passed into law, but I thought, once it had passed and 
it had become the law, that this kind of fighting would be 
over, at least for a while, and we would have a chance to get 
on with protecting families. Obviously, I did not fully 
understand the politics of the situation.
    Mr. Davis. Well, let me just thank you again for your 
service, because I believe that this agency is designed to 
function in the public interest and that you have demonstrated 
throughout your career that you are a public-interest-oriented 
individual, and that is exactly what you will do. I thank you 
very much and appreciate your service.
    Thank you, Mr. Chairman. And I yield back the balance of my 
time.
    Ms. Warren. Thank you, sir.
    Chairman Issa [presiding]. I thank the gentleman.
    Professor, you have been very kind with your time. Would 
you like a short break before we do the last few or----
    Ms. Warren. If we have a few more to go, could I just be 
excused for about 3 minutes?
    Chairman Issa. Absolutely. We will take a 5-minute recess.
    Ms. Warren. Thank you.
    [Recess.]
    Chairman Issa. The hearing will come back to order.
    Professor Warren, we are down to just the last few. The 
ranking member and I have agreed that we will conclude by 
approximately 1 o'clock. You will be dismissed, and then we 
will talk about other matters. And I want to thank--that may be 
a very short, quick ``thank you, goodbye,'' so I want to thank 
you in advance for your participation.
    I have tried to let the clock run so that you get full 
answers. Hopefully I have never cut you off. This has been the 
kind of hearing, at least as to your participation, that we 
strive for, and we appreciate your being here.
    And, with that, we recognize the gentleman from Florida, 
Mr. Mack, for his round of questioning.
    Mr. Mack. Thank you, Mr. Chairman.
    And I also want to thank you for being here and, your 
testimony, not once, not twice, but a third time. And so I 
appreciate that very much.
    And I want to move in to another area a little bit, and 
maybe you can help me understand a few things. And just to be 
clear, I oppose the legislation. I don't support the 
legislation. If my comments appear to some to be political in 
nature, it is because I don't trust what it is that we are 
doing. So, just wanted to put that on the table at the outset.
    Let me ask you--start with this. Are you still actively 
campaigning for your preferred settlement?
    Ms. Warren. Congressman, you mean in the mortgage servicer, 
where the mortgage servicers----
    Mr. Mack. Yes.
    Ms. Warren. This is an effort that is led by the Department 
of Justice----
    Mr. Mack. No, but--all right. But are you still actively 
campaigning for your preferred settlement?
    Ms. Warren. Am I still--no, Congressman, but I am not--I 
just want to be careful about the premise here. I am not sure 
what kind of campaign I have ever had, but----
    Mr. Mack. Well, haven't you been--I mean, isn't there a 
preferred settlement option that you think is right, and 
haven't you been out kind of campaigning around the country for 
that?
    Ms. Warren. Around the country?
    Mr. Mack. Yeah, the country.
    Ms. Warren. On a settlement for mortgage servicers? No, 
sir, I don't think so.
    Mr. Mack. Okay, so you haven't been campaigning for a 
preferred settlement? Have you or haven't you?
    Ms. Warren. Congressman, I don't think I understand what 
you mean.
    Mr. Mack. Okay. Have you been engaged in trying to convince 
people that your point of view is right in a settlement?
    Ms. Warren. Congressman, I am always engaged in trying to 
persuade people that my point of view is right.
    Mr. Mack. Okay. But have you been doing that with attorney 
generals around the country or private industries, banks?
    Ms. Warren. I don't think I have had a conversation with 
anybody in private industry about mortgage settlement for 
months. And I----
    Mr. Mack. But you have stated that----
    Ms. Warren. I don't think.
    Mr. Mack [continuing]. These are in negotiations with the 
private parties, are entirely directed by the Department of 
Justice, by the States' attorney generals, and by other Federal 
agencies.
    Ms. Warren. Congressman, I think, if I am following the 
same thing you are reading, the negotiations over settling the 
wrongdoing----
    Mr. Mack. All right. Let me--wait, I am sorry, because my 
time is going to go by, and I want to get to some specific 
things.
    So you have been saying that you are only giving advice. 
Does that advice mean to seek out meetings with States, 
attorney generals in different States?
    Ms. Warren. If it is helpful, I have been glad to talk with 
attorneys general, sir.
    Mr. Mack. Does that mean you give advice to private parties 
to the settlement?
    Ms. Warren. To private parties?
    Mr. Mack. All right, maybe this will----
    Ms. Warren. No, sir.
    Mr. Mack [continuing]. Help you. I would like to put an 
email document up on the screen, if we could.
    Number one, please?
    This is a copy of an email from Iowa's assistant attorney 
general to someone with CFPB on February 24, 2011, where he 
states that, ``It is my understanding that you,'' Ms. Warren, 
``would like to make a loan mod presentation to the executive 
committee,'' which is referring to the National Association of 
Attorneys General. ``We would like to do this.''
    Did your presentation give advice on the mortgage 
settlement?
    Ms. Warren. Congressman, I think you might want to look at 
the email that preceded this. Because, as I recall, there is an 
email that precedes this that----
    Mr. Mack. Did you give advice on your preferred settlement?
    Ms. Warren. Congressman----
    Mr. Mack. All right.
    Ms. Warren [continuing]. I gave advice----
    Mr. Mack. Let's go to the----
    Chairman Issa. You know, I would ask unanimous consent that 
the gentleman have 2 more minutes. In return, please, Ms. 
Warren, go ahead and finish your answer. I want it to be the 
time necessary to get a full answer and the additional followup 
questions. Additional 2 minutes.
    Ms. Warren. I will try to be as right to the point.
    The first point is, I think this email says that I was 
trying--I was soliciting to make a loan presentation. And since 
you had started your question there, I simply wanted to say, I 
think if you look at the earlier emails, there may have been 
some misunderstanding. I was asked by the attorney general of 
Illinois, I think it was, to make this presentation. It was 
their idea.
    The second question about did I talk with the attorneys 
general and give them advice, yes, I certainly did. Yes, sir.
    Mr. Mack. That you gave advice on your preferred 
settlement?
    Ms. Warren. Sir, I said things I thought were right, yes.
    Mr. Mack. Okay. But haven't you been saying that you 
haven't been participating in these things? Hasn't your quote 
been that you have been giving advice to the Secretary of 
Treasury and other Federal agencies? But you have been avoiding 
answering this pretty simple question. I mean, the question we 
want to know is, are you out there trying to--part of the 
negotiations on this settlement?
    Ms. Warren. Congressman, on April 4th, I said, ``We have 
provided advice to Federal and State officials regarding a 
potential servicing settlement. In doing so, we have been an 
active participant in interagency discussions, sharing our 
analysis and recommendations in support of a resolution that 
would hold accountable any servicers who violated the law.''
    It also says in this letter, ``The consumer agency is not 
conducting settlement negotiations with mortgage servicers.''
    Mr. Mack. Okay. Have you talked to private--have you talked 
to any private servicers, private industry, about the 
settlement?
    Ms. Warren. We have not engaged in negotiations with any 
private--with any of those who are alleged to have violated the 
law.
    Mr. Mack. Okay. Let me ask you this.
    If we can put up Document 4?
    Here is an email from the chief executive officer at Wells 
Fargo to you on February 25, 2011, with the subject, 
``Mortgage.'' And he wrote to you, ``Would you be interested in 
discussing what the press is reporting on speculated terms and 
conditions to settle the mortgage servicing issues?''
    You replied later that day, ``I apologize for not getting 
back to you earlier,'' and then you gave him your cell phone 
number to call over the weekend.
    What did you and the CEO of Wells Fargo discuss about 
mortgage servicing issues?
    Ms. Warren. I started that conversation by saying that ``I 
am not able to negotiate or discuss the settlement negotiations 
with you in any way, shape, or form. I am sorry''----
    Mr. Mack. And was that the end of conversation?
    Ms. Warren. ``I am sorry, but I am not able to do that.''
    Mr. Mack. And that was the end of the conversation?
    Ms. Warren. Yes, sir, it was.
    Mr. Mack. And then the last document, if we can put up 
Document 5----
    Chairman Issa. If the gentleman would make this his last 
question.
    Mr. Mack. This is my last question.
    Document 5, in an email to--I believe it is Mr. Date, the 
associate director of CFPB, to the executive vice president of 
JPMorgan Chase on February 24, 2011, with the subject, ``Monday 
agenda.'' And he wrote, ``Given persistent rumors and 
headlines, I do not want this meeting to be construed as 
relating to any potential settlement discussions or regulatory 
enforcement actions. And I think that the meeting really has to 
be off the record.''
    Why was Mr. Date so worried about the meeting being 
construed as relating to any potential settlement?
    Ms. Warren. Well, he wanted to make clear, as we have with 
all of the mortgage servicers whom we have spoken with them, 
that we are not engaged in any kind of settlement negotiations.
    As Mr. Date explained in his testimony and I am glad to 
explain, we have been receiving information and requests from 
people throughout the industry. We are standing up an agency, 
and we are trying to understand how this industry works. But we 
have been completely unambiguous in telling participants, ``We 
are not part of the settlement negotiations.''
    Mr. Mack. So you still stand by the fact that you are not 
actively campaigning for your preferred settlement?
    Ms. Warren. Congressman----
    Mr. Mack. It is a ``yes'' or ``no.'' Yes, you are, or no, 
you are not.
    Ms. Warren. I just don't know what you mean by the word 
``campaigning.'' If it means I think my ideas are good and I 
would rather have people follow my----
    Mr. Mack. And are you actively campaigning with the 
participants?
    Ms. Warren. I am not--we are not talking to the 
participants about mortgage servicing.
    Mr. Mack. Is there a potential----
    Mr. Miller. Mr. Chairman, regular order.
    Mr. Mack. Is there a resolution----
    Chairman Issa. Wait. No. The gentleman, I apologize, but 
your time really has expired.
    Mr. Mack. Thank you.
    Chairman Issa. With that, we go to the gentleman from Ohio, 
Mr. Kucinich.
    Mr. Kucinich. Thank you for being here, and thank you for 
your service to the country.
    Ms. Warren. Thank you.
    Mr. Kucinich. I would like to go back to the way that you 
see your responsibilities. What do you believe is the major 
purpose of your job today in terms of protecting consumers?
    Ms. Warren. The purpose of the consumer protection agency, 
as I see it, is to give consumers a fighting chance in the 
credit marketplace, to get enough basic information that they 
can make their decisions about what products they want to use.
    Mr. Kucinich. And is it your belief that, prior to the 
creation of this agency, that consumers really didn't have a 
fighting chance?
    Ms. Warren. Congressman, I just think there is a lot of 
evidence that they have not had a fighting chance in the credit 
markets over the last decade and, in some cases, longer.
    Mr. Kucinich. Would the proliferation in the past of no-
document and low-document loans come within that observation?
    Ms. Warren. In my view, yes, sir.
    Mr. Kucinich. What is the area that you intend to focus on 
with respect to banking today? What are some of the most 
important consumer services you would like to perform, A? And 
B, what do you say to the public about, if they have a 
complaint, how do they get it to you?
    Ms. Warren. Yes, thank you, sir.
    The first one is really about enforcement of current laws. 
One part of the agency that I am enormously excited about is 
that we will have bank supervision officers who will be in the 
banks, the 111 largest financial institutions in the country, 
very big financial institutions, checking to see if they are 
complying with current laws.
    This isn't about expanding the law. This is about taking 
the 19 Federal statutes that are out there, that are 
currently--7 different agencies, bits and pieces scattered 
around--it is to bring it to one place. We will have people who 
will be in those banks, looking at their books, looking at 
their records, determining whether or not----
    Mr. Kucinich. So you are functioning both proactively by 
looking at the records but you are also functioning by 
reference, people referring complaints to you?
    Ms. Warren. Yes, sir.
    Mr. Kucinich. And when you are in the banks looking at 
their records, what are their statutory obligations with 
respect to their compliance with you? And are you finding any 
resistance?
    Ms. Warren. Congressman, we are not there yet. We will go 
for the first time--next Thursday is the first day that we will 
be statutorily authorized to show up at the banks. Now, I don't 
want to overpromise; we can't go to every bank on the first 
day. But we are putting in place our plan for how to get out 
there----
    Mr. Kucinich. So walk me through that. Do you knock on the 
door of the bank president? Do you call ahead of time? Do you 
send them a letter? What do you do?
    Ms. Warren. We send a letter. First, we have to do a lot of 
internal work, partly because we have to do a serious risk 
assessment.
    Mr. Kucinich. Right. How many letters do you think you will 
be sending out?
    Ms. Warren. At the beginning, I anticipate we will probably 
be sending--I am worried that Steve Antonakes, my head of bank 
supervision, may fuss at me when I get back, but I am 
anticipating it would be in the range of about 20 letters.
    Mr. Kucinich. And would they go to banks based on their 
annual revenue? Or how would you determine who you send it to?
    Ms. Warren. Bank supervision actually takes in to account a 
lot of factors about how much risk you think any individual 
bank poses and how to assess those risks. As you know, the 
risks could sometimes be that it affects a lot of people but 
only few dollars; it could be that it affects only a few people 
but really big dollars. Some banks have----
    Mr. Kucinich. When you start--that you sent out the 
letters, it is essentially a private process?
    Ms. Warren. Yes, sir.
    Mr. Kucinich. So that no one gets smeared because they get 
a letter, but they are warned that they are expected to 
cooperate.
    Ms. Warren. Yes, sir.
    Mr. Kucinich. So then, how many people arrive at a bank, 
let's say?
    Ms. Warren. Well, it depends. These are--as you know, we 
are dealing with the largest financial----
    Mr. Kucinich. Right.
    Ms. Warren [continuing]. Institutions. But a team could be 
anyplace from 4 or 5 people maybe up to 20, 30. It depends on 
the kind of product we are trying to supervise at any given 
moment.
    Mr. Kucinich. One last question.
    Ms. Warren. Yes, sir.
    Mr. Kucinich. As you get the agency up and running, is 
there a number or--and maybe you already said this--an address 
that people can communicate to, an email or a Web address they 
can contact to file a complaint?
    Ms. Warren. So let me say two things very quickly on that. 
We have a Web site that is up and running right now, 
www.consumerfinance.gov. Anyone----
    Mr. Kucinich. Www.consumerfinance.gov.
    Ms. Warren. Right. One word, consumerfinance.gov. Not very 
catchy, but--people can email us now.
    We will have a formal complaint process in place starting 
on July 21st starting with credit cards. We are going to do 
this by product. We are trying something very innovative here. 
We will roll out the first one on July 21st, and the others 
will follow, product by product.
    Mr. Kucinich. Thank you very much, Ms. Warren.
    Ms. Warren. Thank you.
    Mr. Kucinich. Thank you, Mr. Chairman.
    Chairman Issa. I thank the gentleman.
    The gentleman from Michigan, Mr. Walberg, is recognized for 
5 minutes. And you are estimated to be the last one.
    Mr. Walberg. Well, better last than not at all, right? 
Thank you, Mr. Chairman.
    And thank you for your endurance, Professor.
    In a press release, it has been noted that the CFPB has 
determined that it will consider supervising such things as 
debt collection, consumer reporting, consumer credit and 
related activities, money transmitting, check cashing and 
related services. Is this list now complete?
    Ms. Warren. So, Congressman, I appreciate your asking about 
this. As you recall, the way Dodd-Frank was set up is that in 
the nonbank financial institution space we will automatically 
be required to supervise three types of institutions, no matter 
their size: private student lending, payday lending, and 
mortgages.
    For the rest of consumer financial services that are not 
handled by banks, we are required as an agency to supervise the 
largest--I think it is called ``large''--the large 
institutions. We are required, again by Dodd-Frank, to set up a 
rule to determine what that is and what areas it goes in to.
    What we have started doing is--we are not in the formal 
rulemaking process yet. We are bringing in people----
    Mr. Walberg. When will that be?
    Ms. Warren. The formal rulemaking process?
    Mr. Walberg. Yes.
    Ms. Warren. I am sorry. First, we have to get better 
information before we are ready to do a formal rule. So we have 
started the process by bringing in industry participants, 
community banks, credit unions, large financial institutions, 
trade associations, consumer groups----
    Mr. Walberg. Any specific criteria that you use in 
determining these, other than largeness?
    Ms. Warren. Well, this is the interesting question, given 
the open texture of Dodd-Frank on this point. We have actually 
been talking with all of the stakeholders about what is the 
right approach here, and we have gotten some very creative 
ideas. We are trying to work with them, we are trying to work 
with industry to find the right way to do this out of the box.
    Mr. Walberg. Well, the statement of the openness of Dodd-
Frank doesn't give me a lot of comfort about the--not simply 
the consumer protection, but the protection of liberty----
    Ms. Warren. Fair enough, sir, but I----
    Mr. Walberg [continuing]. Choice, individual freedom, and 
self-determination as well. So I guess that is why I asked the 
criteria. But you indicated that it is fairly broad.
    Ms. Warren. I want to say that, as best I can, we have 
gotten enormous support from the industry, from consumer 
groups, from banking groups for the process we are using to try 
to embrace everyone's participation in this and to give them 
all an opportunity to help us hammer out a rule that works best 
for everyone. That is what we are working on right now, sir.
    Mr. Walberg. I appreciate that.
    Let me continue that. How will the Bureau undertake the 
analysis required under Dodd-Frank, such as the impact that a 
rule or regulation will have on consumers? And what legal 
protection may already be in place for consumers before the 
Bureau can promulgate a rule or regulation?
    Ms. Warren. Well, I think the best way to say this is we 
are building a strong research function. We have--it is our 
view that it is our responsibility to study and understand how 
markets are working, what consumers actually face, what 
community banks actually face in terms of their regulatory 
hurdles, how markets operate.
    We will be a data-driven agency. I think we proved that 
starting back in February, before we were even formally 
launched, when we started a process to do an analysis of the 
CARD Act that had passed Congress. And we brought in 
stakeholders from across the industry, we developed data, we 
asked for their data so that we could evaluate----
    Mr. Walberg. Let me ask just in the remaining 43 seconds I 
have, how much weight--on another area--how much weight will be 
given to the fact that many products and services that the 
Bureau could potentially regulate are already well-regulated by 
the States, bringing the States into the whole equation here?
    Ms. Warren. It is certainly a part of our consideration how 
much regulation already exists. And if there are no problems, 
then there are no----
    Mr. Walberg. How much weight does that play, though, in 
making that determination?
    Ms. Warren. Well, it is--big. I mean, it is important, it 
is heavy, it is very relevant, how much regulation, how 
effective the regulation is, how well-enforced the regulation 
is, how consistent the regulation is throughout the country. 
Those are enormously important to us as we go forward.
    And I should say, in our early meetings with the industry, 
with consumer groups, this is exactly an issue that has been 
raised. And there were some differences of opinion between, for 
example, the community banks and the non-regulated financial 
services industry about how much effective regulation was 
occurring at this point.
    Mr. Walberg. I appreciate that. I know my time has ended. I 
would just encourage you to put heavy weight on the States, 
being that the original intention was not for the Federal but 
for the States to have that type of control.
    Ms. Warren. I understand----
    Mr. Walberg. Thank you.
    Ms. Warren [continuing]. And I appreciate that.
    Chairman Issa. I thank the gentleman.
    Professor Warren, as I predicted, additional Members have 
returned from their other committee assignments. Could you be 
kind enough to give us up to another 15 minutes?
    Ms. Warren. Of course, Congressman. I have cleared my 
schedule, and I am here for as long as you need me.
    Chairman Issa. It has still been a long day for you.
    What I would like to dispense with during this intervening 
period is an announcement that the ranking member and chair 
have agreed to a series of joint letters related to, 
specifically--and this is germane to the area you will be 
involved in a week from now--related to the members of the 
military and some of the loan activities.
    We are going to inquire in different ways to all 10 
entities, financial entities, some of which are banks, some of 
whom have given responses, some of whom haven't. Additionally, 
we are going to make a request to the Veterans' Affairs 
Committee, who apparently has done a quite a bit of discovery, 
which is why we thought much of this was already done--bring 
that together, and then see where we go from there.
    I now recognize the gentleman from Maryland.
    Mr. Cummings. Mr. Chairman, I want to thank you for your 
cooperation. We are just merely trying to make sure we zero in 
on this problem. And I know you share my concerns and all of 
our concerns. And so I really appreciate this.
    And, with that, I will--I guess we are--I withdraw my 
motion.
    Chairman Issa. I thank the gentleman.
    And, Professor Warren, this is an area that the committee, 
although it doesn't have exclusive jurisdiction, does want to 
make sure that this historical event is never to be repeated 
when it comes to our military overseas.
    With that, I recognize Mr. Braley for his round of 
questioning.
    Mr. Braley. Professor Warren, I heard you calling my name 
when you raised concerns about financial products that cannot 
be read by average customers. And the reason I say that is 
because, on October 13th of last year, President Obama signed 
into law my Plain Writing Act that I fought 4 years to get 
through both the House and the Senate. And that means that on 
October 13th of this year, every Federal agency is going to be 
required to use plain language in covered documents, using 
writing practices that are clear, concise, well-organized, and 
written for the intended audience.
    And this is something that has broad, bipartisan support 
but is part of what is endemically wrong with the way we write 
regulations and the way that financial products are written. 
And I would give you strong incentive to take a look at plain 
language and plain writing standards as a way of looking at how 
consumers can be protected in a much more powerful way and hope 
that that is something that you would consider.
    Ms. Warren. Congressman, could I just add, I have already 
looked, and I am a huge advocate of the notion, not only that 
financial services companies ought to be required to write in 
plain language, but that the government itself should be, as 
well.
    And I want to say, it is an uphill battle. It is hard to 
push--even within our agency. We have well-intentioned folks, 
but we have all learned a different way of thinking about 
regulations, of reading regulations, of writing them.
    I have talked to community banks around the country who 
say, ``I want to comply with the law. I can't read it. And I 
can't afford to hire an army of lawyers to come in and read it 
for me and then tell me what I am supposed to do.''
    I can tell you, the direction we want to go is exactly 
where you are on this. I can also tell you, it is a battle to 
get there. It is hard. But it is something I am very committed 
to. I am committed to it on behalf of the American people, on 
behalf of community banks and credit unions and others who 
really suffer under the notion of, you are legally obligated to 
do something and you can't figure out what it is.
    Mr. Braley. As the ranking member of the Veterans' Affairs 
Economic Opportunity Subcommittee, I have participated in 
hearings dealing with this underlying problem of these loan 
complications to our service men and women, and I attended the 
forum that we have been talking about here today.
    But I have a concern, and my concern is, we hear a lot 
about ``too big to fail,'' but as it comes to providing some 
level of responsibility for these lenders, I fear we have 
gotten too big to punish. Because when you look at the 
magnitude of this problem and you look at the existing 
sanctions to punish it, it is obvious that it is not achieving 
its desired effect.
    And I want to give you an example. I went back to Dubuque, 
Iowa, about 2 months ago for a welcome-home ceremony for a 
young Marine who lost both of his legs above the knee. And 
thousands of people turned out that day to line the route from 
the airport in Dubuque to his home. And we passed by many 
community banks and credit unions that had signs out front 
welcoming him home.
    And this gets down to the problem of who holds the paper in 
our increasingly complex mortgage industry. Because I guarantee 
you, if one of those local banks that we passed had engaged in 
the types of practices we talk about at these hearings, they 
would have been run out of town by the people lining that 
parade route.
    And I am concerned because the American people are not as 
outraged about this practice as you and I are and members of 
this committee are. And it is an insult to the people who put 
their lives on the line every day that we allow this to 
continue while these institutions continue to profit.
    And I will yield back.
    Mr. McHenry [presiding]. Mr. Farenthold of Texas is 
recognized for 5 minutes.
    Mr. Farenthold. Thank you very much.
    I would like to yield my time back to you, Mr. McHenry.
    Mr. McHenry. Thank you. I thank my colleague for yielding.
    Ms. Warren, you have previously written, ``Big corporate 
interests, led by the consumer finance industry, are devouring 
families and spitting out the bones.''
    Ms. Warren. Yes, sir, I sure have.
    Mr. McHenry. Now, previously, this committee had a number 
of questions about whether or not you would ban products. Now, 
has your opinion changed in this time? Because it seems like 
what your rhetoric was previously was that there are products 
that should be banned.
    Ms. Warren. No, Congressman. Let me see if I can say this 
more clearly.
    There are a lot of tools available to make markets work 
better for American families. It does not require--banning is 
not the only tool. In fact, it is probably not nearly the most 
effective tool.
    I think the best place to start in changing a world in 
which big corporate interests chew up American families and 
spit out the bones is to make prices clear, to make risks 
clear, to mow down fine print so people can make head-to-head 
comparisons, looking at three or four credit cards, three or 
four mortgages.
    I believe in the power of individual Americans to be able 
to make good decisions, and I believe in the power of markets, 
but they don't work if people don't have good information.
    Mr. McHenry. Well, okay. And, actually, I think you sound 
very similar to what I have said in Financial Services over and 
over and over again. And so I like what you just said.
    Is it your intention that the CFPB would not ban products? 
Or can you say--can you make some statement about intention? 
Because we have a lot of folks in the consumer finance industry 
and those that are accessing those products that have that 
concern about your bureau. And so, if you can make some 
statement to that, I think that would be a positive in terms of 
certainty, that that is not an intention you have.
    Ms. Warren. We have made all of our priorities clear, and 
we have no present intention to ban a product. But we are still 
learning about what is out there. And the world keeps changing 
and new things keep developing out there. It is a tool in the 
toolbox, and that is where it should stay.
    Mr. McHenry. Okay. So you still think that the ability to 
ban a product should be--it should continue for the CFPB, that 
that rule should--that power should still reside with the CFPB?
    Ms. Warren. I think that Congress was smart when they put a 
lot of tools in the toolbox. And I think, with the help of 
industry, with the help of consumer groups, with the help of 
good research, we are using those tools--or we are prepared to 
use those tools in very effective ways.
    Mr. McHenry. So the shorter way to say that is, yes, that 
you think that that power should continue to reside----
    Ms. Warren. I am sorry, sir. Yes.
    Mr. McHenry. Okay. Thank you. Thank you for your testimony.
    With that, Mr. Farenthold, I would yield my time back to 
you. And I think Mr. Guinta has----
    Mr. Farenthold. I will yield the remainder of my time to 
Mr. Guinta.
    Mr. Guinta. Thank you very much.
    Thank you, Mr. Chairman.
    I want to follow up on two specific items, number one an 
item that Ms. Buerkle had been focusing on. I just want to make 
sure we were clear.
    She had talked about possible concerns about raising 
compliance costs. And I think you had said that your goal is it 
to reduce compliance costs. Can you just affirm that the stated 
goal and the expectation is it to reduce costs for credit to 
consumers?
    Ms. Warren. Our first item that we are working on out of 
the box is to reduce the costs for the credit issuers, yes, 
sir.
    Mr. Guinta. Okay. So if in the next year they come to 
Congress and say, ``Look, that hasn't happened, the cost is 
going up,'' you would like to hear from us.
    Ms. Warren. Congressman, I suspect we will hear from them 
even before you do.
    Mr. Guinta. And then, second, you talked about greater 
disclosure rather than--and this is an important point--greater 
disclosure rather than banning, I think you said earlier in 
your testimony today.
    Ms. Warren. Yes, sir.
    Mr. Guinta. You just said you believe in the power of 
markets, we need good information. I, too, share that belief 
with you and with the chair. But you also said banning should 
be a tool in the toolbox. Can you give me an idea of when you 
plan to take that tool out of the toolbox?
    Ms. Warren. Congressman, we don't have any present plans. I 
don't--I can't identify a specific product. But remember, this 
is an agency we are building over a very long arc. And it is an 
agency that is built in the aftermath of a consumer credit 
industry that went wild. We could sit here--they invented new 
products, new approaches, new ways to surprise people, to sell 
people products that the issuer knew was going to explode, and 
never make that clear to the customer.
    Whether or not there will be a day when a creditor will 
figure out, I can make a fast buck with something that is so 
lousy that the answer is it should actually be banned, that day 
could come.
    Mr. Guinta. Okay. I thank you.
    And I see the time has expired.
    Chairman Issa [presiding]. Professor Warren, we are going 
to wrap this up. And if it is okay, I would like the ranking 
member and I to have a few minutes with you afterwards.
    Additionally, I would ask at this time, would you be 
willing for those who kindly said they will submit their 
questions for the record, would you be kind enough to answer 
them for the record?
    Ms. Warren. Of course, Mr. Chairman. We would be delighted.
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    Chairman Issa. With that, I recognize the ranking member.
    Mr. Cummings. Thank you very much, Mr. Chairman. I will be 
very brief.
    Professor Warren, I want to simply thank you. My mother 
used to say, ``Thank you for all that you are, but also thank 
you for all that you are not.''
    When you were in Baltimore, you told a story about how you 
came up and that it wasn't easy and that you have never 
forgotten your own struggles. And, in part, you were very 
fortunate to get a good education and to end up at Harvard. And 
I just want to thank you for never forgetting what you have 
been through, so that you might use it as a passport to help 
other people.
    I have met a lot of people in my life with a lot of 
passion. One of them was the President of Colombia, South 
America, Uribe--so much passion. And your passion is just 
phenomenal.
    But I also thank you for doing something else; I thank you 
for synchronizing your conscience with your conduct. And so, I 
don't know, you know, what your future may bring, but if it 
were to end today, the fact is that you have already had a 
tremendous impact on families and generations yet unborn.
    And I just want you, when you walk out of here, to know 
that there are a whole lot of people who really, really 
appreciate you and what you stand for. And they are inspired by 
you. And that is why, you know, in Baltimore people were--
literally, we had to turn people away. Because they just wanted 
somebody--somebody--to stand up for them. That is all they 
wanted. And you have taken on that role. I know it has not 
always been easy. I know there have been some difficult 
moments, but we thank you.
    And I am so glad that we were able to have this hearing, 
because, like the chairman said, this is the kind of hearing 
that, you know, we should have, where you actually get a chance 
to answer the questions, to lay out your goals, where you are, 
what you are trying to do.
    But anyway, as I said before, we thank you.
    Chairman Issa. With that, the hearing stands adjourned.
    [Whereupon, at 1:16 p.m., the committee was adjourned.]

                                 
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