[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]




 
                           CFPB BUDGET REVIEW

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

                                HEARING

                               BEFORE THE

                       SUBCOMMITTEE ON OVERSIGHT
                           AND INVESTIGATIONS

                                 OF THE

                    COMMITTEE ON FINANCIAL SERVICES

                     U.S. HOUSE OF REPRESENTATIVES

                    ONE HUNDRED THIRTEENTH CONGRESS

                             FIRST SESSION

                               __________

                             JUNE 18, 2013

                               __________

       Printed for the use of the Committee on Financial Services

                           Serial No. 113-33


                  U.S. GOVERNMENT PRINTING OFFICE
81-768                    WASHINGTON : 2014
-----------------------------------------------------------------------
For sale by the Superintendent of Documents, U.S. Government Printing Office, 
http://bookstore.gpo.gov. For more information, contact the GPO Customer Contact Center, U.S. Government Printing Office. Phone 202ï¿½09512ï¿½091800, or 866ï¿½09512ï¿½091800 (toll-free). E-mail, [email protected].  



                 HOUSE COMMITTEE ON FINANCIAL SERVICES

                    JEB HENSARLING, Texas, Chairman

GARY G. MILLER, California, Vice     MAXINE WATERS, California, Ranking 
    Chairman                             Member
SPENCER BACHUS, Alabama, Chairman    CAROLYN B. MALONEY, New York
    Emeritus                         NYDIA M. VELAZQUEZ, New York
PETER T. KING, New York              MELVIN L. WATT, North Carolina
EDWARD R. ROYCE, California          BRAD SHERMAN, California
FRANK D. LUCAS, Oklahoma             GREGORY W. MEEKS, New York
SHELLEY MOORE CAPITO, West Virginia  MICHAEL E. CAPUANO, Massachusetts
SCOTT GARRETT, New Jersey            RUBEN HINOJOSA, Texas
RANDY NEUGEBAUER, Texas              WM. LACY CLAY, Missouri
PATRICK T. McHENRY, North Carolina   CAROLYN McCARTHY, New York
JOHN CAMPBELL, California            STEPHEN F. LYNCH, Massachusetts
MICHELE BACHMANN, Minnesota          DAVID SCOTT, Georgia
KEVIN McCARTHY, California           AL GREEN, Texas
STEVAN PEARCE, New Mexico            EMANUEL CLEAVER, Missouri
BILL POSEY, Florida                  GWEN MOORE, Wisconsin
MICHAEL G. FITZPATRICK,              KEITH ELLISON, Minnesota
    Pennsylvania                     ED PERLMUTTER, Colorado
LYNN A. WESTMORELAND, Georgia        JAMES A. HIMES, Connecticut
BLAINE LUETKEMEYER, Missouri         GARY C. PETERS, Michigan
BILL HUIZENGA, Michigan              JOHN C. CARNEY, Jr., Delaware
SEAN P. DUFFY, Wisconsin             TERRI A. SEWELL, Alabama
ROBERT HURT, Virginia                BILL FOSTER, Illinois
MICHAEL G. GRIMM, New York           DANIEL T. KILDEE, Michigan
STEVE STIVERS, Ohio                  PATRICK MURPHY, Florida
STEPHEN LEE FINCHER, Tennessee       JOHN K. DELANEY, Maryland
MARLIN A. STUTZMAN, Indiana          KYRSTEN SINEMA, Arizona
MICK MULVANEY, South Carolina        JOYCE BEATTY, Ohio
RANDY HULTGREN, Illinois             DENNY HECK, Washington
DENNIS A. ROSS, Florida
ROBERT PITTENGER, North Carolina
ANN WAGNER, Missouri
ANDY BARR, Kentucky
TOM COTTON, Arkansas
KEITH J. ROTHFUS, Pennsylvania

                     Shannon McGahn, Staff Director
                    James H. Clinger, Chief Counsel
              Subcommittee on Oversight and Investigations

              PATRICK T. McHENRY, North Carolina, Chairman

MICHAEL G. FITZPATRICK,              AL GREEN, Texas, Ranking Member
    Pennsylvania, Vice Chairman      EMANUEL CLEAVER, Missouri
PETER T. KING, New York              KEITH ELLISON, Minnesota
MICHELE BACHMANN, Minnesota          ED PERLMUTTER, Colorado
SEAN P. DUFFY, Wisconsin             CAROLYN B. MALONEY, New York
MICHAEL G. GRIMM, New York           JOHN K. DELANEY, Maryland
STEPHEN LEE FINCHER, Tennessee       KYRSTEN SINEMA, Arizona
RANDY HULTGREN, Illinois             JOYCE BEATTY, Ohio
DENNIS A. ROSS, Florida              DENNY HECK, Washington
ANN WAGNER, Missouri
ANDY BARR, Kentucky


                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on:
    June 18, 2013................................................     1
Appendix:
    June 18, 2013................................................    41

                               WITNESSES
                         Tuesday, June 18, 2013

Agostini, Stephen, Chief Financial Officer, Consumer Financial 
  Protection Bureau (CFPB).......................................     5

                                APPENDIX

Prepared statements:
    Agostini, Stephen............................................    42

              Additional Material Submitted for the Record

Waters, Hon. Maxine:
    Letter to Chairman Jeb Hensarling, dated April 23, 2013......    47


                           CFPB BUDGET REVIEW

                              ----------                              


                         Tuesday, June 18, 2013

             U.S. House of Representatives,
                          Subcommittee on Oversight
                                and Investigations,
                           Committee on Financial Services,
                                                   Washington, D.C.
    The subcommittee met, pursuant to notice, at 2:05 p.m., in 
room 2128, Rayburn House Office Building, Hon. Patrick T. 
McHenry [chairman of the subcommittee] presiding.
    Members present: Representatives McHenry, Fitzpatrick, 
Duffy, Fincher, Hultgren, Wagner, Barr, Rothfus; Green, 
Cleaver, Ellison, Maloney, Sinema, Beatty, and Heck.
    Ex officio present: Representatives Hensarling and Waters.
    Also present: Representative Garrett.
    Chairman McHenry. The Subcommittee on Oversight and 
Investigations will come to order. Without objection, members 
of the full Financial Services Committee who are not members of 
the Oversight Subcommittee may sit on the dais and participate 
in today's hearing.
    And without objection, the Chair is authorized to declare a 
recess of the subcommittee at any time.
    Our hearing today is a CFPB budget review. And I yield 
myself 5 minutes for an opening statement.
    Almost 3 years ago, under the enactment of the Dodd-Frank 
Act, the Consumer Financial Protection Bureau (CFPB) was 
created. Its stated purpose is to regulate and supervise the 
offering and provision of consumer financial products or 
services under the Federal consumer financial laws.
    However, prior to its inception, when it was still but an 
idea of one Harvard academic, the proposed Bureau was already 
compared to an existing agency known as the Consumer Product 
Safety Commission, or the CPSC. As the original architect of 
the Bureau, Elizabeth Warren, stated, ``Just as the Consumer 
Product Safety Commission protects buyers of goods and supports 
a competitive market, we need the same for consumers of 
financial products, a new regulatory regime, and even a new 
regulatory body to protect consumers who use credit cards, home 
mortgages, car loans, and a host of other products.''
    However, the vision proposed was for an agency very 
different than the CPSC. While the CPSC has three 
Commissioners, the Bureau has a single-Director structure. And 
while the CPSC is subject to the congressional appropriations 
process and the OMB budget process, which our witness today is 
very familiar with, the Bureau is not.
    In the end, this single Director can disregard advice and 
manage as he or she wishes. He has or she has little 
accountability to the Administration and even less to Congress. 
His or her budget is secure. As a result, it should come as no 
surprise that the Bureau has operated with less transparency 
and less concern for fiscal discipline than is appropriate for 
a steward of taxpayer funds.
    The Bureau need not listen to basic advice from the Office 
of Management and Budget. For example, on May 31st of this 
year, the OMB issued a controller alert related to conference 
spending by agencies over which the OMB has jurisdiction. Given 
the waste and abuse at GSA and IRS conferences, this was the 
least we could hope for. However, based on Dodd-Frank, the 
Bureau can simply ignore this controller alert.
    As a result of this lack of accountability, certain 
expenditures have been called into question, such as the $55 
million that has been set aside for renovating the CFPB 
headquarters building just steps from the White House. 
Incidentally that number, $55 million, is more than the entire 
annual construction and acquisition budget for GSA for the 
totality of Federal buildings.
    The Bureau has also refused to participate in the Office of 
Personnel Management's Employee Viewpoint Survey. Despite its 
auditor's specific recommendations that the Bureau join the OPM 
survey in which 98 percent of Executive Branch agencies 
participate, the Bureau has instead decided to do its own. By 
taking this action, the Bureau avoided being ranked alongside 
the other 98 percent of Federal agencies that do participate.
    Nevertheless, the Bureau's in-house employee survey 
revealed significant concerns regarding the management of the 
Bureau's staff. The survey provided that only 35.6 percent of 
employees agree that the Bureau takes steps to deal with a poor 
performer who cannot or will not improve. So, only one-third of 
the staff of the Bureau believe that the Bureau's staff is 
providing real employee accountability. That is a major 
concern.
    Furthermore, the Bureau claims that it invests in world 
class training for its employees. However, its own survey says 
only 38.8 percent of employees agree that the training they 
received was sufficient. That sounds like anything but world 
class.
    Last week, a news story reported that the Bureau is losing 
senior staff faster than it can replace them. The report goes 
on to say the Bureau imposed management techniques which put an 
emphasis on ensuring all employees were considered equal 
stakeholders. A former Bureau official expressed concern that, 
``While it is good policy to get some people with no exposure, 
you don't want them to drive policy decisions because they 
don't understand the risk or cost involved.'' So thus, those 
with little training and experience are seated alongside those 
with greater training and experience and are considered equals.
    These weaknesses may reflect broader management problems. 
Last week, the CFPB employees voted to join the National 
Treasury Employees Union, the same union that is noted for 
representing the IRS employees as well.
    When considering all this, coupled with the total lack of 
accountability to the American people, I am deeply concerned 
that the CFPB presents a substantial risk to the taxpayers. And 
as the Chief Financial Officer of the CFPB, I welcome our 
witness today and look forward to his testimony.
    Now, I will yield to the ranking member of the full 
Financial Services Committee, Ms. Waters, for 3 minutes.
    Ms. Waters. Thank you very much, Mr. McHenry and Mr. Green, 
for this hearing.
    I must first begin by expressing my ongoing concern with 
the Majority's refusal to allow Director Cordray to appear 
before the Financial Services Committee. No court has addressed 
the legitimacy of President Obama's appointment of Richard 
Cordray. And the mere notion that some legal scholars dispute 
the legitimacy of Director Cordray's appointment does not make 
it legally invalid.
    Contrary to what some of my colleagues view as a lack of 
accountability and oversight, the CFPB has been transparent and 
forthcoming about their budget and operations. CFPB officials 
have testified before Congress at 36 hearings. Director Cordray 
himself has testified before Congress 13 times. The CFPB's 
operations and budgets are subject to independent private 
audits. The Government Accountability Office is also required 
to audit the CFPB. The Comptroller General is required to 
annually audit the financial transactions at the CFPB. And the 
agency is also held accountable by the Inspector General of the 
Federal Reserve Board.
    Current law requires the Director of the CFPB to appear 
before Congress to testify biannually on the CFPB's budget and 
rulemaking. And although Director Cordray is not statutorily 
required to present testimony at today's hearing, he testified 
on the CFPB's budget in this subcommittee last February. 
Whether or not Republican Members support the mission of the 
CFPB, the decisions to bar Director Cordray from testifying and 
deny his confirmation in the Senate are the very actions that 
impede congressional oversight of the Bureau and create 
regulatory uncertainty for consumers and the industry.
    I conveyed many of these concerns in a letter I sent to 
Chairman Hensarling on April 23rd requesting that he reconsider 
his position and schedule a hearing to allow Director Cordray 
to deliver the CFPB's semiannual testimony to the committee as 
required by statute. I ask unanimous consent that this letter 
be entered into the record of today's subcommittee hearing.
    Chairman McHenry. Without objection, it is so ordered.
    Ms. Waters. In the aftermath of this crisis, we worked to 
pass the Wall Street Reform Act, and now we are conducting 
robust oversight of the agency's task to implement that law. I 
would like to commend Director Cordray and his colleagues at 
the CFPB, in particular for their transparency and willingness 
to be forthcoming with the Congress about how they are 
fulfilling their responsibility to implement the Act. The CFPB 
has accomplished a great deal under extraordinary scrutiny and 
the Bureau will continue to have my support for as long as it 
continues to fulfill its statutory obligations to American 
consumers.
    I yield back the balance of my time.
    Chairman McHenry. The ranking member of the subcommittee, 
Mr. Green, is recognized for 3 minutes.
    Mr. Green. Thank you, Mr. Chairman. I thank the witness for 
appearing as well. It is regrettable that Mr. Cordray is not 
with us today.
    When it comes to the CFPB there are, generally speaking, 
two competing schools of thought. Should the CFPB be an 
independent agency that is independent of politics and 
accountable or should it be dependent upon politics and 
accountable? Should it be independent similar to the FHFA and 
the OCC with an executive officer and no board or should it be 
dependent on politics, similar to the NLRB, which has a board 
and cannot function efficaciously because of appointment 
politics? Should it be independent similar to the FED, the OCC, 
the FDIC, and the NCUA? They are funded, but they are funded 
without congressional approval? Or should it be dependent upon 
politics, similar to the SEC and the CFTC, which are funded 
through Congress and consistently contend that they are being 
underfunded?
    I think that consumers merit and deserve an independent 
agency, a watchdog if you will, that is independent of politics 
to the extent that we can have it such. The CFPB should be and 
is accountable. It is accountable, and this is why the Director 
can be removed for cause, this is why the CFPB has to consult 
with other Federal regulatory agencies during rulemaking, this 
is why it must do a cost-benefit analysis, why testimony before 
Congress twice a year is required, and thus far we have had 36 
appearances. This is why the rules are subject to judicial 
review. This is why it has to reassess its existing rules every 
5 years. This is why it can have its rules vetoed by other 
Federal regulators. This is why the rules are subject to 
external review by the SBA and the OMB. This is why it can be 
audited by the GAO, the IG, as well as an independent audit 
mandated by Congress.
    Consumers deserve an independent and accountable consumer 
protection bureau. This is what we have now. The challenge is, 
will we keep it this way?
    I yield back the balance of my time.
    Chairman McHenry. The ranking member yields back, and we 
will now recognize our witness. Mr. Stephen Agostini has been 
the Chief Financial Officer of the Consumer Financial 
Protection Bureau since 2011. Previously, Mr. Agostini served 
as the Chief Financial Officer of the U.S. Office of Personnel 
Management, a role he started in September of 2010. He also 
served as the Budget Director for the City of Philadelphia for 
2\1/2\ years, and prior to that as Chief Financial Officer for 
the Economics and Statistics Administration at the Commerce 
Department.
    Mr. Agostini, thanks so much for being here today. We will 
recognize you for the purposes of summarizing your written 
statement. We have a lighting system that I am sure you are 
well aware of, and we will give you 5 minutes to summarize. You 
are now recognized for 5 minutes.

    STATEMENT OF STEPHEN AGOSTINI, CHIEF FINANCIAL OFFICER, 
          CONSUMER FINANCIAL PROTECTION BUREAU (CFPB)

    Mr. Agostini. Thank you, Chairman McHenry, Ranking Member 
Waters, Ranking Member Green, and distinguished members of the 
subcommittee for the opportunity to participate in today's 
oversight hearing about the Consumer Financial Protection 
Bureau's budget and workforce. The Bureau welcomes rigorous 
congressional oversight, and we appreciate the opportunity to 
testify before Congress for a 36th time today. My name is 
Stephen Agostini and I am the Chief Financial Officer of the 
Bureau.
    The Consumer Bureau was created by the Dodd-Frank Act in 
the wake of the worst financial crisis since the Great 
Depression. We are the Nation's first Federal agency whose sole 
focus is protecting consumers in the financial marketplace. In 
the Dodd-Frank Act, Congress followed the long-established 
precedent in providing the Bureau with funding outside of the 
congressional appropriations process. This ensures full 
independence as the Bureau carries out its statutory 
responsibilities to supervise and regulate providers of 
consumer financial products and services.
    Congress has consistently provided for independent funding 
for bank supervisors to allow for long-term planning, the 
execution of complex initiatives, and to guarantee that banks 
are examined regularly and thoroughly for compliance with the 
law. The Bureau's Fiscal Year 2013 budget totals $541 million, 
which supports ongoing operations and new investments in human 
capital, technology, and facilities, as well as consumer 
research and financial education activities. The Fiscal Year 
2013 budget also includes a one-time expense to renovate our 
headquarters in Washington, D.C.
    The Fiscal Year 2014 estimate of $497 million reflects 
continued growth in staff and new investments in technology, 
data, and equipment. While our budget is small relative to 
other banking agencies, we are committed to using our resources 
wisely and carefully. We rely on performance information to 
help inform our decisions and we will continue to do so as we 
grow. The budget provides additional resources for all of our 
programs over the next 2 fiscal years.
    The Division of Supervision, Enforcement, and Fair Lending 
will see the largest increase over the next 2 years to support 
additional staff and systems development. We will also be 
investing in those offices that work directly with consumers, 
such as our Office of Consumer Response, and our offices 
dedicated to servicemembers, students, and older Americans.
    The Bureau employs talented professionals from diverse 
backgrounds. They have ensured that the Bureau consistently 
meets its deadlines, puts in place strong rules of the road to 
fix the broken mortgage market, obtains millions of dollars in 
restitution for consumers, and handles tens of thousands of 
consumer complaints. The Bureau currently has approximately 
1,200 employees. We continue to retain, as well as hire, 
accomplished staff as we build the Bureau.
    So far in Fiscal Year 2013, the Bureau has hired over 300 
new employees. We will continue to staff up in order to carry 
out our mission to make consumer financial markets work for 
American consumers, honest businesses, and the economy as a 
whole.
    In order to ensure the Bureau's programs and strategies are 
effective, the Bureau is subject to periodic reviews of its 
performance, including studies and audits by the U.S. 
Government Accountability Office and the Office of Inspector 
General of the Board of Governors of the Federal Reserve 
System, and the Consumer Financial Protection Bureau. 
Additionally, as required by Congress, the Bureau orders an 
annual independent audit of our budget and operations. The 
independent audits of Fiscal Years 2012 and 2011 are available 
on our Web site.
    The Bureau is committed to public transparency in its 
contract procurements and spending. We post contract 
opportunities publicly on FedBizOpps.gov and contract award 
data is reported to usaspending.gov. Our budget Web page 
includes additional detail about our budget, including annual 
budget justification and budget in brief documents and annual 
financial reports. And we publish quarterly budget update 
documents on our Web site as well.
    We are committed to delivering tangible value to American 
consumers. Budget numbers are important, but so are results. 
With that in mind, I would like to share some additional 
numbers: $425 million represents the amount of money being 
refunded as a result of CFPB enforcement actions to consumers 
who are subjected to deceptive practices; 6 million represents 
the number of consumers receiving funds because of 2012 CFPB 
enforcement actions; more than 130,000 represents the number of 
complaints CFPB has handled from consumers in every State 
around the country since the CFPB formally opened its doors in 
July 2011; and 31,000 represents the number of military and 
veteran consumers the Bureau's Office of Servicemember Affairs 
communicated with in 2012 through 82 outreach events.
    Chairman McHenry, Ranking Member Waters, Ranking Member 
Green, and members of the subcommittee, thank you again for the 
opportunity to testify before you today at this important 
oversight hearing on the Bureau's budget and workforce. I will 
be happy to answer your questions.
    [The prepared statement of Mr. Agostini can be found on 
page 42 of the appendix.]
    Chairman McHenry. Thank you for your statement, and thank 
you for testifying today.
    I will now recognize myself for 5 minutes for questions.
    Mr. Agostini, as I referenced, you were previously at the 
Office of Personnel Management as the Chief Financial Officer, 
correct?
    Mr. Agostini. Mr. Chairman, that is correct.
    Chairman McHenry. Okay. And at OPM, did the Office of 
Management and Budget have authority with regard to the budget 
process at OPM?
    Mr. Agostini. Yes, they did.
    Chairman McHenry. Okay. And so, you engaged with OMB 
through that process?
    Mr. Agostini. Yes, I did as the CFO at OPM.
    Chairman McHenry. Does OMB have a similar function with the 
CFPB?
    Mr. Agostini. Mr. Chairman, as the Act has--
    Chairman McHenry. So that would be a no, is that correct?
    Mr. Agostini. Mr. Chairman, as the Act has laid out, OMB 
does not have the same review.
    Chairman McHenry. Okay. So other Executive Branch agencies 
have a check and a balance with the OMB process, such as the 
Securities and Exchange Commission does.
    Section 1017 of Dodd-Frank specifically exempts the CFPB, 
as you were referencing, ``any obligation on the part of the 
Director to consult with or obtain the consent or approval of 
the Director of the Office of Management and Budget with 
respect to any report, plan, forecast, or other information 
referred to in paragraph A,'' which is the additional 
reference, ``or any jurisdiction or oversight over the affairs 
or operations of the Bureau.'' Is that correct? That was the 
point you were referencing?
    Mr. Agostini. Mr. Chairman, that is correct.
    Chairman McHenry. Okay. So you are exempt from the 
Executive Branch budget process?
    Mr. Agostini. Mr. Chairman, as the Act states, we do not 
fall under the purview. We do submit, have submitted our budget 
as part of the Executive Branch budget in the past.
    Chairman McHenry. So, yes, and it is submitted, but you 
draw down your funds from the Federal Reserve, correct?
    Mr. Agostini. That is correct, Mr. Chairman.
    Chairman McHenry. Okay. And with the Federal Reserve is 
there a process by which they say yes or no to how you draw 
down those funds?
    Mr. Agostini. Mr. Chairman, as you may know, the Act also 
specifies how we are to receive funding and--
    Chairman McHenry. Which is just a cap of how much from the 
Federal Reserve.
    Mr. Agostini. It sets out a process, Mr. Chairman, for the 
funding of the Bureau. It gives us a cap, and that cap we are 
estimating for the current fiscal year to be somewhere in the 
neighborhood of $600 million.
    Chairman McHenry. Okay, $600 million. Now, with the 
congressional appropriations process, a lot of other agencies 
go through that process. Right? While I find it well and good 
that the CFPB has willingly submitted themselves or accepted 
our invitation to come before this committee for the purposes 
of congressional oversight, you are exempt under this Act from 
coming to this body for funding, correct?
    Mr. Agostini. Mr. Chairman, I think that the Act, while 
exempting us from that, does have us come before a number of 
oversight entities, as well as Congress, on at least three 
occasion: two as part of our semiannual reporting requirement; 
and one as a report to the Appropriations Committee as well.
    Chairman McHenry. So, a report to the Appropriations 
Committee and they accept the report. And if they don't like 
it, if they demand changes, what can they do? Can they 
legislatively withhold funds or give additional funds, too? I 
guess they could give additional funds, too, but with a $600 
million cap, that seems like a pretty large way to run in order 
to submit yourself to the congressional appropriations 
processes just sort of willingly.
    Obviously, you have an Inspector General who has some 
oversight of your agency. Your Inspector General, who would 
that be?
    Mr. Agostini. Our Inspector General is shared with the 
Federal Reserve Board.
    Chairman McHenry. Okay. Who oversees the fullness of the 
Federal Reserve Board, correct?
    Mr. Agostini. That is correct.
    Chairman McHenry. Okay. And so in this whole process what 
it seems like to me, and what becomes very clear with how your 
agency has been spending money, as we will get to with other 
questions here today, is that you, while having a reputational 
risk for free spending, you don't have an actual risk of losing 
appropriations or having to submit yourself to the 
congressional appropriations process.
    That is of deep concern and it will come to bear in this 
hearing, I believe, that it has led to mismanagement and 
overspending by your agency and not appropriate checks and 
balances to which other agencies have to submit themselves.
    With that, we will now recognize Mr. Cleaver for 5 minutes 
for the purpose of questioning the witness.
    Mr. Cleaver. Thank you, Mr. Agostini, for being here. I 
apologize for being late. I was over in the section of our 
Federal Government that needs to be closed, the Senate. I am 
very much interested, however, in finding out the regulators 
who are subject to our appropriations process.
    Mr. Agostini. Congressman, I am not necessarily an expert 
on other regulatory agencies, but there are agencies that 
receive, like the FDIC, like the OCC, funding from specific 
dedicated sources that are not appropriations. So there are 
instances, as is the case with our Bureau, where 
nonappropriated sources are made available for the operations 
of that particular entity over the span of a year.
    Mr. Cleaver. The reason I raise the question is that there 
have been some suggestions that we subject your Bureau to the 
appropriations process. And so I am curious about regulators 
who are subject to this process, and I can probably get that 
answer after the hearing today. I am not sure that we can find 
any regulators who are doing that, including the FDIC, the 
Federal Reserve, or the OCC. Maybe there are some regulators 
hidden out there somewhere that should be subjected to this 
budget process. But if you can't, you don't know of any, and I 
am--
    Mr. Agostini. Most of our sister agencies, Congressman, are 
indeed outside of the appropriations agency process. The most 
significant, I would suggest is the Federal Reserve, since the 
Federal Reserve is the benchmark stipulated in the Act by which 
we do much of what we do in terms of organization, in terms of 
salary, in terms of funding. And to your point, they are 
clearly not in that appropriations process.
    Mr. Cleaver. The big concern, and legitimately, is dealing 
with our deficit and our spending. I have not heard anybody 
express disinterest in trying to get spending under control or 
that they are not interested in trying to deal with the 
deficit. But considering budget constraints, if you had to make 
a choice--you probably don't want to answer this question--on 
what budget items you would choose to reduce, what do you think 
we could make it without in the next fiscal year?
    Mr. Agostini. Congressman, we are still a growing agency, 
we are still building up our capacity to deliver the mission 
that Congress gave to us with respect to American consumers, as 
well as with our regulatory responsibilities. It is the case 
that we are very careful stewards of our funding and make sure 
that we are using those funds in a manner that is appropriate 
to accomplishing that mission.
    If there was a desire to either reduce or in some other 
fashion constrain further our funding, it would require us to 
make some decisions about what we would and would not do moving 
forward. I don't have the ability to tell you exactly here 
today what those things would be, but we would have to go back 
and look at that carefully.
    Mr. Cleaver. But the Bureau is struggling right now looking 
at what it could reduce? You are examining the agency in terms 
of your budget right now, is that accurate?
    Mr. Agostini. Congressman, we are always looking at the 
budget. I am always involved in a review of how we spend our 
funds. I do that on a monthly and quarterly basis in order to 
ensure that we are effective stewards of the funds and that 
they are used in a manner that is appropriate with our mission. 
We are still building the agency; we are not in a process 
engaged in reducing the budget at the moment. We are still 
trying to staff up and build the infrastructure necessary to 
deliver our mission.
    Mr. Cleaver. My concern is that your responsibilities could 
be hurt without fulfilling them if you ended up not having the 
budget to carry out what were you commissioned to do.
    Thank you.
    Chairman McHenry. The gentleman's time has expired.
    We will now recognize the vice chairman of the 
subcommittee, Mr. Fitzpatrick, for 5 minutes.
    Mr. Fitzpatrick. I thank the chairman for the hearing.
    And thank you, Mr. Agostini, for your testimony here today.
    Sir, last year I joined with Mr. Neugebauer and Mr. 
Renacci, who at the time were both members of this committee, 
in writing a few letters to Mr. Cordray seeking additional 
details about the CFPB budget. And, unfortunately, while we did 
receive a pretty cordial reply, what we didn't receive were the 
details that I believe that the taxpayers deserve, especially 
when an agency is given a very unique ability to spend the 
public's money without congressional approval and without 
congressional authorization. And this is even more 
disappointing given that the CFPB is an independent agency and 
therefore you can release this budget information to Congress 
without prior or previous approval from the Office of 
Management and Budget. So I am going to make sure that we get 
copies of those letters to you, sir, and I would ask that you 
just take a look at them, get them to the appropriate people 
within your agency, and perhaps provide some additional 
information. Would you be willing to do that?
    Mr. Agostini. I will, Congressman.
    Mr. Fitzpatrick. Thank you.
    Now, Mr. Agostini, I am also interested in learning more 
about a substantial amount of money that the CFPB has spent on 
employee travel, which will amount to nearly $12 million by the 
end of this fiscal year. This is the kind of expense that 
requires strong procedures and controls in order to prevent 
waste and abuse, the kind of waste that we have seen in other 
agencies across the Federal Government.
    I am currently working on legislation that will require our 
Federal agencies to consider alternatives to expensive travel, 
such as video conferencing, as a way to reduce spending and 
increase efficiency and productivity among the workforce. Do 
you see any reason why the CFPB would not be able to 
significantly reduce what you have in the line item right now 
as employee travel and convert to video conferencing? It is 
cleaner, greener, it is more efficient, it is safer, it is 
better for the taxpayers.
    Mr. Agostini. Congressman, we do take advantage of video 
conferencing when possible. It is a technology that we think 
has substantial promise, and allows us to do some things we 
aren't able to do.
    I would point out that we, unlike many of the other 
regulators, are not resident, do not have offices in cities 
across the country. There was a conscious decision when the 
Bureau was stood up that we would not have bricks and mortar, 
if you will, in cities across the country, much like either the 
FDIC or the Federal Reserve does. And because of that we have a 
distributed workforce and our ability do the work requires to 
us to do a lot of traveling because of that distributed 
workforce. That would be the explanation for the travel and the 
level of travel.
    Mr. Fitzpatrick. But you are willing to take a look at it?
    Mr. Agostini. Absolutely, sir.
    Mr. Fitzpatrick. Okay. Are you aware of an audit done of 
the CFPB by ASR Analytics?
    Mr. Agostini. Congressman, yes, they actually completed two 
audits of the Bureau.
    Mr. Fitzpatrick. ASR Analytics found that travel requests 
within the CFPB are approved by a supervisor without any 
knowledge of the estimated dollar amount to be expended on the 
trip. And in addition, travel vouchers are not routed for 
approval by the traveler's supervisor. Have you resolved this 
control failure yet?
    Mr. Agostini. Congressman, we go through a rigorous process 
of reviewing both the authorization for travel, as well as the 
voucher expenditure. My office has a very significant role in 
that. I have actually spent time doing that myself. We are 
always looking for improvements to that. We think that there 
are improvements we can make moving forward. But we do subject 
all of those travel, both vouchers and authorizations, and that 
requires us most times to be talking directly with supervisors 
so that they can assure us that travel was relevant and 
purposeful.
    Mr. Fitzpatrick. Does CFPB's staff continue to arrange for 
trips without a supervisor's knowledge as to the cost of the 
trip, which is an issue that was raised in the audit?
    Mr. Agostini. Congressman, currently supervisors do sign 
off on the trip itself, but we are about to make some 
modifications where they will look at the budget for those 
trips as well.
    Mr. Fitzpatrick. As the CFO, do you consider the failure to 
demand supervisors actually have knowledge of the travel costs 
to be a significant failure in the financial controls of the 
organization?
    Mr. Agostini. Congressman, because of the manner in which 
my office does the reviews and interacts with both regional 
directors and supervisors, I believe that we have had a control 
in place to prevent abuse. But there are improvements we can 
make. And I think the one that you are suggesting about 
supervisors reviewing is one that we are about to implement. So 
I think it would be an improvement.
    Mr. Fitzpatrick. I just want to say that I appreciate your 
concern as well, your willingness to look at converting to 
things like video conferencing in order to reduce travel 
expenses. And we will get those letters over to you and look 
forward to a reply. Thank you, sir.
    I yield back.
    Chairman McHenry. The ranking member of the full Financial 
Services Committee, Ms. Waters, is recognized for 5 minutes.
    Ms. Waters. Thank you very much, Mr. Chairman.
    I would like to basically ask you if you are aware that 
Director Cordray continues to testify in the Senate and stands 
ready to testify before Congress at any time? On April 30, 
2013, the Director wrote to Chairman Hensarling, and he said, 
``I personally stand ready to testify before Congress at any 
time and have done so already on 13 occasions, including 6 
times before House committees and subcommittees, including the 
House Financial Services Committee.'' Are you aware of this?
    Mr. Agostini. Yes, Congresswoman, we are aware of that.
    Ms. Waters. And are you aware that he is prohibited from 
testifying before this committee because the chairman of the 
committee, Mr. Hensarling, believes that his appointment is 
unconstitutional?
    Mr. Agostini. I understand that he is not invited to 
testify, Congresswoman.
    Ms. Waters. Thank you very much. I just wanted to clarify 
that and again put that in the record because I have been asked 
by some of the staff and colleagues today whether or not he had 
been invited here, and I thought I would just clarify that.
    Having said that, I would like to ask you a few questions 
about the budget. As I understand it, you have the smallest 
budget of all of the banking agencies of the Federal 
Government. Is that correct?
    Mr. Agostini. Congresswoman, we do have one of the 
smallest. I would need to do a little more research, but I do 
believe among the large regulatory agencies, we do have one of 
the smallest budgets.
    Ms. Waters. I also understand that your budget is capped at 
$598 million. Is that right?
    Mr. Agostini. Congresswoman, we do have a transfer cap. 
That transfer cap for Fiscal Year 2013 is $598 million and our 
estimate for the subsequent fiscal year is $608 million.
    Ms. Waters. And when I compare that with the other 
agencies--for example, the 2009 budgets of the OCC, the FDIC, 
and the Federal Reserve budgets were $775 million, $2.56 
billion, and $4.98 billion, respectively, for those agencies. 
Are you aware of that?
    Mr. Agostini. Yes, I am.
    Ms. Waters. I am also made aware that you have not utilized 
your full budgetary authority. Is that correct?
    Mr. Agostini. Congresswoman, that is correct.
    Ms. Waters. Let me just ask, why has the CFPB not utilized 
its full budgetary authority, and do you anticipate that the 
Bureau will continue to operate on a budget somewhat less than 
your allowable transfer cap in future years?
    Mr. Agostini. Congresswoman, over the last 2 years, now 3 
years, we have been building the agency, and as you will see, 
we have gone from approximately $123 million in spending in 
2011 to $300 million in 2012, and we anticipate it will be 
something larger than that in the year coming.
    While we did have the ability to transfer, request larger 
transfer fund amounts from the Federal Reserve, we did not 
think it was necessary, nor appropriate since there was no need 
for us to spend those funds in either of those fiscal years. So 
we refrained from asking for those funds.
    Ms. Waters. I don't want to ask you to repeat too much, but 
I was taken by some numbers that you gave in your testimony 
earlier. Would you just repeat what you told this committee 
about $25 million, 6 million, 130,000, I believe it was, and 
31,000? What were you referring to in those numbers.
    Mr. Agostini. Congresswoman, I would be happy to do that: 
$425 million is the amount of money being refunded as a result 
of CFPB enforcement actions.
    Ms. Waters. I'm sorry, refunded?
    Mr. Agostini. Refunded as a result of our enforcement 
actions.
    Ms. Waters. Okay.
    Mr. Agostini. 6 million represents the number of consumers 
receiving refunds because of enforcement actions as well.
    Ms. Waters. All right.
    Mr. Agostini. 130,000 represents the number of complaints 
we have handled from consumers in every State around the 
country since July of 2011.
    Ms. Waters. Okay.
    Mr. Agostini. And 31,000 is the number of military and 
veteran consumers the Bureau's Office of Servicemember Affairs 
communicated with in 2012.
    Ms. Waters. Thank you very much.
    Let me just say as I wrap up that I am very proud of the 
work that the CFPB has been able to accomplish in a relatively 
short period of time. I think that those numbers reflect how 
effective you have been. I am very proud of the way that you 
have managed your budget, and I hope that you continue in the 
fashion that you have. And please communicate to Director 
Cordray that he does have supporters over here.
    Thank you very much.
    Chairman McHenry. The gentlelady's time has expired.
    The gentleman from Wisconsin, Mr. Duffy, is recognized for 
5 minutes.
    Mr. Duffy. Thank you, Mr. Chairman.
    Was that 400-and-some-million dollars returned to Treasury, 
is that what you said?
    Mr. Agostini. Congressman, it is $425 million that was 
refunded as a result of CFPB enforcement actions.
    Mr. Duffy. Refunded to Treasury?
    Mr. Agostini. These are refunds, Congressman, by private 
entities to consumers.
    Mr. Duffy. Okay, I just want to make sure you are not 
sending that money back to the Treasury. That is going to 
consumers. I just want to be clear on that.
    In regard to your salaries at the CFPB, they are actually 
set by the Director. Is that correct?
    Mr. Agostini. That is correct, sir.
    Mr. Duffy. And is it fair to say the top salary at the CFPB 
is $259,000?
    Mr. Agostini. Congressman, I believe that the top salary is 
closer to $251,000, and that is as a result of the Director 
setting the salaries as required in Dodd-Frank, that they are 
comparable to the Federal Reserve.
    Mr. Duffy. That is wonderful because I looked at the 
Federal Reserve pay scale and the top of the Federal Reserve 
pay scale is $205,000 and the top of your pay scale is 
$259,000, $54,000 more than the Federal Reserve. How do you 
account for a $54,000 difference if you are trying to make them 
comparable?
    Mr. Agostini. Congressman, I am not familiar directly with 
the Federal Reserve.
    Mr. Duffy. You just told me that you were trying to set up 
a pay scale that was similar to the Federal Reserve; you just 
used them as your example. So I assume that you are aware of 
what their pay scale is and that yours is $54,000 more than the 
Fed.
    Mr. Agostini. I would like to go back and check that, sir, 
I am not aware of that here. So I don't feel I can answer that.
    Mr. Duffy. If you want, we can use Treasury, because 
Treasury has the same pay scale as Congress and they top out at 
$155,000, basically $100,000 less than the CFPB.
    Do you have a budget for your interns, do you pay your 
interns at the CFPB?
    Mr. Agostini. For the period of time that they are actually 
interning with us, yes.
    Mr. Duffy. What is that budget?
    Mr. Agostini. It depends on each of the--
    Mr. Duffy. Not what you pay each of them, what is the 
budget you have for your interns?
    Mr. Agostini. I would have to get back to you. I know that 
we have a number of about 65 or 70 interns who will spend the 
summer with us.
    Mr. Duffy. How many?
    Mr. Agostini. 65 or 70.
    Mr. Duffy. I think you have eight people here with you 
today. Does one of them know what the budget is for the 
interns?
    Mr. Agostini. I would be happy to bring that number back to 
you, Congressman.
    Mr. Duffy. Wonderful. You have bonuses at the CFPB of 
$750,000. How are those distributed? How do you decide how they 
are distributed?
    Mr. Agostini. The Bureau gave bonuses as part of its 
performance plan that was implemented in 2013 to actually 
recognize work that was done in Fiscal Year 2012.
    Mr. Duffy. So what is the largest bonus that is given at 
the CFPB, how much money?
    Mr. Agostini. I believe that the largest bonus was $11,000 
or $12,000.
    Mr. Duffy. To whom was that given?
    Mr. Agostini. I don't know. I could get back to you with 
that information.
    Mr. Duffy. That would be wonderful.
    I want to take a look, if I heard you correctly--well, 
let's go back. How many people work at the CFPB now?
    Mr. Agostini. Just over 1,200, Congressman.
    Mr. Duffy. Just over 1,200. And if I am not mistaken, I 
believe that you at the CFPB spent $55 million on a renovation 
for your new office space. Is that correct?
    Mr. Agostini. Congressman, no, that is not correct. We have 
not spent $55 million. We are still in the planning stages for 
the headquarters renovation.
    Mr. Duffy. How much have you budgeted for the renovation?
    Mr. Agostini. For Fiscal Year 2013, we budgeted 
approximately $95 million for that renovation.
    Mr. Duffy. And how much total has been budgeted for the 
renovation?
    Mr. Agostini. I believe that $95 million has been budgeted 
for Fiscal Year 2013, in addition to about $15 million in, I 
think, Fiscal Year 2012. But again, it is budgeted; we have not 
spent anything near that.
    Mr. Duffy. As you deal with a lot of numbers, more than I 
do, 1,200 people and $95 million for renovation. Now, this 
isn't new construction. Do you know how much that is per 
person?
    Mr. Agostini. I could calculate it. I don't have it off the 
top of my head.
    Mr. Duffy. $75,000 per person, something like that?
    Mr. Agostini. Again, I haven't calculated it, sir.
    Mr. Duffy. Not new construction, but renovation.
    Quickly, the CFPB is storing a lot of America's financial 
data; there is a data grab going on at the CFPB. How much money 
is budgeted to store the data that is being collected at the 
CFPB?
    Mr. Agostini. Congressman, that depends. We have storage 
that we do as part of our natural activity, it is part of the 
infrastructure for our Technology and Innovation section. And 
then, there is storage that we purchase from private providers 
as well.
    Mr. Duffy. So in regard to the data that you take from 
Americans on their financial records, how much do you spend, 
whether it is internally or externally, on the storage of that 
data?
    Mr. Agostini. I think, Congressman, if you are referring to 
purchases of data that we have done recently, I believe we have 
3 contracts that total approximately $10 million for those 
contracts.
    Chairman McHenry. The gentleman's time has expired.
    Mr. Duffy. I yield back.
    Chairman McHenry. Mr. Ellison from Minnesota is recognized 
for 5 minutes.
    Mr. Ellison. Thank you, Mr. Chairman.
    And also my thanks to the ranking member and to you, Mr. 
Agostini.
    So how much money was refunded to the American taxpayers 
because of the CFPB?
    Mr. Agostini. $425 million, Congressman.
    Mr. Ellison. And that was distributed among, did you say, 
130,000 families?
    Mr. Agostini. No, those are slightly different, sir. The 
130,000 represents complaints from--
    Mr. Ellison. Okay.
    Mr. Agostini. --consumers to the CFPB.
    Mr. Ellison. But how many people got that $425,000 million?
    Mr. Agostini. I don't have that number in front of me. That 
number represents what entities, private entities who have gone 
through enforcement actions with CFPB are in the process or 
have begun paying back to consumers who have been harmed.
    Mr. Ellison. But what I want to know is, and I think you 
shared this, how many individuals or families are going to 
benefit from the enforcement action?
    Mr. Agostini. I believe it is 6 million.
    Mr. Ellison. 6 million people?
    Mr. Agostini. That is correct, sir.
    Mr. Ellison. That is pretty good. I want to commend you all 
for that. If the CFPB was not out there, if we didn't have any, 
I just wonder what would happen, particularly in this 
environment of high unemployment, rising tuition, and 
fluctuating gas prices. That money, that $425 million, comes in 
handy for those people, wouldn't you agree?
    Mr. Agostini. Yes, sir, I would agree.
    Mr. Ellison. Who were some of the market players, the firms 
that you had to address to make sure the money was refunded?
    Mr. Agostini. I will give you a brief list, sir: Capital 
One Bank; Discover; and American Express represent three of the 
largest entities. Payday Loan Debt Solution, United Guaranty, 
Genworth, and Mortgage Guaranty are some of the others.
    Mr. Ellison. Now, Mr. Agostini, let me ask you this. Let's 
just say you are not one of those firms but you are a firm that 
deals with commercial lending. Do you think a firm that is not 
in that company of the ones you named can now feel that they 
can offer an honest product at a fair price and not have to 
worry that other people are sort of cutting corners to make a 
profit?
    Mr. Agostini. Congressman, I believe that is the intent of 
our enforcement actions and our approach in delivering the 
mission to ensure consumers are protected and get sort of a 
fair shake, if you will, from the market.
    Mr. Ellison. But consumers are getting a fair shake in that 
and you have the numbers to prove it, but I am talking about 
other firms. Say I am an honest firm trying to loan money at a 
fair rate at good, fair terms, but I have competitors who are 
doing deceptive things. I will compete with those deceptive 
actors or I am going to have to start doing what they do. Do 
you think the work you are doing actually benefits the market? 
I am talking about the financial firms, not the consumers. Do 
you understand my point?
    Mr. Agostini. Yes, Congressman. I believe, and we at the 
Bureau believe, that our actions are ensuring that the 
marketplace is level and fair, level for consumers, level for 
businesses that are attempting to provide products in a manner 
that is forthright and honest and plays by the rules.
    Mr. Ellison. Yes. Now, there were some questions raised 
about things like pay. Do you have any idea about how much the 
executives at some of those firms that you took enforcement 
action against are paid?
    Mr. Agostini. No, Congressman, I don't.
    Mr. Ellison. Is it fair to say that it is more than 
$250,000?
    Mr. Agostini. If newspaper accounts are to be believed, I 
would say yes.
    Mr. Ellison. Yes. Maybe put a couple of zeros behind that 
$250,000.
    Do you have to try to attract the best talent you can in 
order to be able to go toe to toe with some of these market 
players?
    Mr. Agostini. Absolutely, Congressman. I think that has 
been a hallmark of the agency, that we have attempted to bring 
on the best people possible in order to provide us with the 
capacity to do our work and do it very well. And I think it is 
instructive that in many instances we are competing with some 
of these other regulatory agencies which have some of the same 
tools, but in many instances other tools that we don't have in 
order to bring that talent on board.
    Mr. Ellison. I just want to wrap up, because I see my 
yellow light is on, but I just want to ask you, these fines 
that you have had to levy against some of these big firms which 
have engaged in some poor practices, put it like that, do you 
think that they have a shot at reforming themselves given that 
they cannot operate with impunity anymore?
    Chairman McHenry. The gentleman's time has expired. The 
witness can answer.
    Mr. Ellison. Thank you, Mr. Chairman.
    Mr. Agostini. Congressman, I am not sure about the 
motivations of those entities. I would offer that I expect they 
are watching what we are doing and watching what the other 
entities are engaging us with and hopefully paying attention to 
that.
    Mr. Ellison. Thank you, Mr. Chairman.
    Chairman McHenry. The gentlemen's time has expired.
    And the committee will stand in recess due to House Floor 
votes. We certainly expect that the witness will still be here 
when we return, as congressional votes do occasionally 
interrupt committee hearings. And so with that, we stand in 
recess.
    [recess]
    Chairman McHenry. The hearing will come to order. We will 
continue with the line of questioning, and we will now 
recognize Ms. Wagner from Missouri for 5 minutes.
    Mrs. Wagner. Thank you very much, Mr. Chairman.
    Mr. Agostini, the mean per capita income in the United 
States of America is around $43,000. What percentage of CFPB 
employees would you estimate make more than that amount?
    Mr. Agostini. Congresswoman, I don't have that number off 
the top of my head. I am happy to bring that back to you.
    Mrs. Wagner. You don't have that number? I can tell you 
that 98 percent of the CFPB employees make more than that 
amount, according to FedScope data. You are not aware of that?
    Mr. Agostini. Congresswoman, again, I don't have that 
number off the top of my head.
    Mrs. Wagner. Let me ask, you are the CFO, is that correct, 
Mr. Agostini, of the CFPB?
    Mr. Agostini. Yes, I am, Congresswoman.
    Mrs. Wagner. And this was a hearing on the budget.
    Chairman McHenry. If the witness will turn the microphone 
on and pull it closer.
    Mr. Agostini. My apologies.
    Chairman McHenry. Thank you.
    Mrs. Wagner. And this is a hearing on budgetary matters, 
correct?
    Mr. Agostini. Yes, Congresswoman.
    Mrs. Wagner. And can any of the eight employees that you 
brought with you discuss any of these budgetary matters at all, 
sir?
    Mr. Agostini. Congresswoman, again, I don't have that 
number off the top of my head. I would be remiss if I gave you 
an incorrect number--
    Mrs. Wagner. An approximation perhaps, Mr. Agostini? Are 
you aware how many CFPB employees make more than $100,000 per 
year?
    Mr. Agostini. Congresswoman, yes, I am.
    Mrs. Wagner. And what would that be, sir?
    Mr. Agostini. That is 700.
    Mrs. Wagner. 700 employees, around 61 percent or more, make 
more than $100,000 per year. Are you aware of how many CFPB 
employees make more than a Cabinet Secretary, who makes 
$199,700 per year?
    Mr. Agostini. Congresswoman, I believe that number is about 
58.
    Mrs. Wagner. That would be an accurate number. So the CFPB, 
which by my count is a controversial agency with, in my 
estimation, a Director who has been unconstitutionally 
appointed, is paying its employees more than almost every other 
Federal agency. Why should Congress allow the CFPB to keep 
paying its employees these very high salaries, especially when 
millions of Americans are out of work and we are at nearly $17 
trillion in debt?
    Mr. Agostini. Congresswoman, we are paying people as was 
anticipated in the Dodd-Frank Act. We are maintaining 
comparability with the Federal Reserve, as was designated in 
the Act. Actually, the Federal Reserve's top salary, I believe, 
is $260,000 for its--
    Mrs. Wagner. At the discretion of whom? Who has the 
discretionary authority to set such high, high salaries when, 
again, the annual mean per capita income in the United States 
of America is $43,000? Whose discretion?
    Mr. Agostini. Congresswoman, I think the Act speaks 
specifically to comparability with the Federal Reserve.
    Mrs. Wagner. Is it the Director?
    Mr. Agostini. Congresswoman, the Director has set salaries, 
again, comparable to the Federal Reserve and--
    Mrs. Wagner. The Director has set salaries. Mr. Agostini, 
according to FedScope data collected by the Office of Personnel 
Management, the CFPB employs, as I understand it, two 
psychologists who both make a six-figure salary. The CFPB Web 
site offers a possible explanation for employing these 
psychologists. And let me just state the Web site, ``We are 
also developing and testing new financial education strategies 
to build on insights from the field of behavioral psychology. 
We are working on an initiative to help consumers overcome 
common financial challenges they face on a regular basis. For 
example, people who start a new job may feel overwhelmed and 
fail to sign up for their employer-sponsored retirement 
account. Behavioral psychology research has shown that if new 
employees are automatically signed up but have the option to 
opt out at any time, enrollment rates are much higher, and 
those employees who are automatically signed up are pleased 
about their participation. We will take a close look at what 
other problems like these exist, what behavioral issues might 
be swaying the decision and prototype solutions based on well-
researched hypotheses. We will then evaluate the effectiveness 
of these solutions. As with other projects, we will share our 
research with financial educators, policymakers, and the 
public.'' This is all from the CFPB Web site.
    Mr. Agostini, why does the CFPB need psychologists and what 
exactly do they do?
    Mr. Agostini. Congresswoman, I believe that at least one of 
the psychologists works in our human capital area. One of the 
items that I believe they are working on is the employee 
survey, but I am happy to bring back the actual descriptions 
and work of those individuals for you to review.
    Mrs. Wagner. Please do. I have one more question.
    Chairman McHenry. The gentlelady's time has expired.
    Mrs. Wagner. Thank you.
    Chairman McHenry. And so, the employee survey that would 
have otherwise been done for free if you just had complied with 
the OPM survey, just to note for the record.
    We now recognize Ms. Maloney from New York for 5 minutes.
    Mrs. Maloney. Thank you. Thank you so much, Chairman 
McHenry. I thank you and Ranking Member Green for calling this 
hearing.
    And welcome to you, Mr. Agostini.
    The creation of the CFPB, the Consumer Financial Protection 
Bureau, was a major victory for consumers. We saw during the 
financial crisis that often the concerns of the consumers were 
not considered. The agencies had other primary goals, and 
consumers were either a secondary thought, a third thought, a 
fourth thought, or not thought about at all. So the creation of 
an agency that focused on consumers and protecting them with an 
independent source of funding and an independent bureau was a 
priority of many Democrats, including myself, and many of us 
believed that if we had had an agency focusing on protecting 
consumers, then possibly we could have presented the subprime 
crisis, as the abuses would have been pointed out and hopefully 
stopped.
    One of the first actions of the CFPB was to come out with a 
simplified mortgage statement that consumers could understand, 
that they could compare between financial institutions. And I 
think that is an important step forward. Also, the help for our 
men and women in the military, help for young people with their 
credit. They have had a number of initiatives.
    But one of the goals that I read about, Mr. Agostini, is 
that you want to be very much a goal-driven agency and that you 
want to use data-driven analysis of consumer finance markets 
and consumer behavior to inform policymakers and the CFPB in 
their own oversight and their own actions that they take.
    Just last week, your agency came out with an overdraft fees 
report which found that some financial institutions, not all, 
but some financial institutions were not following best 
practices and were following abusive overdraft practices to 
maximize their overall fees, at the pain of consumers to the 
point, I believe, of $30 billion, if I remember correctly. And 
you used data-driven analysis to inform yourselves on that. I 
would like you to comment about some of the items that you 
learned in this report. It came out, I believe, on Monday. And 
do you believe that the CFPB has the authority to address these 
practices, to correct them on its own through rulemaking?
    Mr. Agostini. Congresswoman, thank you for the question. I 
believe there are others in the Bureau much more adept and 
expert in answering questions like that on specific 
programmatic aspects, and I would be happy to take your 
question back and have them put together a response for you.
    Mrs. Maloney. I would also say that the fact that you are 
here today shows that you are accountable to Congress. Some of 
my colleagues say the CFPB is not accountable to Congress, but 
I would say your testimony and your presence here today shows 
that you are responding and are accountable to Congress.
    They also say that this is unusual, to have a financial 
agency that is so independent, but as I understand it, all of 
the agencies that deal with finance are independent. Is that 
not correct, with independent funding sources, often fees?
    Mr. Agostini. Congresswoman, many of the agencies that you 
are referencing, like the Federal Reserve, like the FDIC, have 
independent sources of funding and are not subject to the 
appropriations process.
    And with respect to accountability, I would say that we 
have a great deal of accountability, ranging from reports of a 
congressional arm, GAO, on our finances, independent audits 
that are mandated by the Act, along with the reviews and work 
of the IG, coupled with reports that are established on a 
frequency to Congress for our semiannual reporting, as well as 
for our annual report to the Appropriations Committee.
    Mrs. Maloney. And there is a debate sometimes about what 
the structure of it should be, but I believe you are the only 
agency where the FSOC can overrule your actions, which is an 
unprecedented power for the FSOC. Is that correct?
    Mr. Agostini. It is the case that the FSOC can overrule. I 
don't know, I don't believe that there are others that fall 
under that review. Again, I would be happy to have others bring 
that back to you.
    Mrs. Maloney. Could you give us some of the accomplishments 
of the CFPB?
    Mr. Agostini. Congresswoman, I will speak from the sort of 
financial controls and financial review aspect. We are very 
proud of our ability to stand up an agency rather quickly, one 
that has a very important mission with respect to consumers. We 
are very proud of our internal controls review and the checks 
and balances that we have set internally in order to be sure 
that we are spending funds in an expeditious and appropriate 
manner for our mission. I believe that the policies and 
procedures that we have set in place, that even GAO has noted, 
as well as the independent auditor has noted, speak to those 
controls and the effectiveness and success we have had with--
    Chairman McHenry. And the gentlelady's time has well 
expired.
    We will now go to Mr. Barr of Kentucky.
    Mr. Barr. Thank you, Mr. Chairman.
    As you know, Mr. Agostini, ASR Analytics, in its 
independent performance audit results reported on November 12th 
of last year, recommended that the CFPB should participate in 
an OPM-led annual Employee Viewpoint Survey to provide a 
mechanism for anonymous employee feedback. Despite this very 
specific recommendation, and despite the fact that I am told 
that 98 percent of all Executive Branch agencies participate in 
these OPM annual Employee Viewpoint Surveys, the CFPB instead 
decided to pick and choose 44 questions out of the 84 questions 
required by this OPM Employee Viewpoint Survey.
    So my first question is, why did your agency design its own 
survey, selectively identify questions it chose to ask, instead 
of participating in the OPM survey in which 98 percent of all 
other Executive Branch agencies participate?
    Mr. Agostini. Congressman, I believe that the reason we did 
not participate in the FedView Survey is that as a brand-new 
agency with an infrastructure that we were putting in place, we 
had a sense that the OPM product, which I am familiar with, 
having been at OPM, was not necessarily appropriate for us. You 
referenced the 98 percent--
    Mr. Barr. I am sorry to interrupt, but do other Executive 
Branch agencies that are subject to more direct congressional 
oversight, subject to the appropriations process, do they get 
to tailor their own self-evaluations the way that the CFPB did?
    Mr. Agostini. I believe, Congressman, if they decide to 
participate with the OPM program, that they use that particular 
survey instrument, but there are--I think you referenced that 
98 percent--there are, I believe, a couple of agencies that 
don't participate in the Fed Viewpoint Survey.
    Mr. Barr. By designing your own survey, isn't it true the 
CFPB was able to avoid being ranked alongside all of the other 
agencies that are subject to this more standardized, uniform 
OPM product, survey product that now makes us as congressional 
oversight investigators have a more difficult time comparing 
your performance to other Executive Branch agencies?
    Mr. Agostini. Congressman, because we do not participate, 
we are not ranked with other agencies.
    Mr. Barr. Okay. In avoiding participation in the OPM 
survey, the CFPB avoided asking at least 40 questions of their 
staff that OPM asks of 98 percent of Federal agencies. Are you 
aware why your agency sought to avoid those specific 40 
questions required of virtually all other Federal agencies?
    Mr. Agostini. Congressman, I think at the time when we were 
doing our survey, we had done a number of surveys internally 
already. We arguably had done a sizeable set of surveys in 
advance. And our view was that putting the workforce through 
another fairly sizeable survey that soon after some of the 
internal surveys we had done was going to be burdensome and--
    Mr. Barr. You say it is burdensome. You just testified that 
your agency is, in fact, accountable. And one of the arguments 
that you just made about why you are accountable to Congress is 
that you subject yourselves to a variety of independent audits. 
There was an independent audit. It was the ASR Analytics. And 
that independent audit said that you all should submit to the 
OPM survey. You didn't do that. So why on earth would we 
believe you that you are accountable when you don't even follow 
the recommendations of the independent auditor which you say 
holds you accountable?
    Mr. Agostini. Congressman, I believe the ASR audit came out 
in November of 2012. I believe that we had done our AES survey 
prior to that. We still have a survey which needs to be done 
for this year. And as with all of the recommendations from 
auditors, we will take those recommendations seriously to heart 
and proceed with that information.
    Mr. Barr. I would encourage you--obviously, you can tell my 
position on this--to follow the recommendations of independent 
auditors that you say are critical to holding you accountable.
    Now, one final question. My time is expiring. I want to 
know, of the 1,200 employees of your agency, what percentage, 
approximately, of those employees have any experience in the 
private sector working for either a bank or a credit union or a 
financial institution which is subject to your regulatory 
oversight? And I am not talking about attorneys or former 
prosecutors; I am talking about bankers or credit union 
employees.
    Mr. Agostini. Congressman, I am happy to get back to you 
and find out where, what the backgrounds are for those 
individuals.
    Mr. Barr. Would you say that less than 50 percent have 
private sector backgrounds?
    Mr. Agostini. Congressman, I don't know the answer to that 
question.
    Mr. Barr. Okay.
    Chairman McHenry. The gentleman's time has expired. We will 
now go to--
    Mr. Barr. Thank you.
    Chairman McHenry. --the ranking member of the subcommittee, 
Mr. Green.
    Mr. Green. Thank you, Mr. Chairman.
    I didn't come prepared to deal with a course in comparative 
salary analysis, however, I would like to make a few points. 
Let us consider that the highest paid hedge fund manager in the 
year 2007 made $3 billion. It would take a minimum wage worker 
at that time 198,000 years to make $3 billion. This hedge fund 
manager was making what a minimum wage worker makes in about 37 
or 38 seconds.
    Similar circumstance in 2009, a hedge fund manager made $4 
billion. That is an amount which would require 265,252 years 
for a minimum wage worker. It took the hedge fund manager about 
28 seconds to make what a minimum wage worker makes in a year.
    Numbers can be fascinating and they can be intriguing, but 
they can also point out some things that are important. The 
cost of the financial crisis is said to be $12.8 trillion. The 
Consumer Financial Protection Bureau costs each taxpayer about 
$2 per year. That is less than 17 cents per day week and about 
a half a penny a day.
    Moving on to your costs compared to the other agencies, my 
research shows that the top salary at the OCC is about $260,000 
and the top salary at the Fed is about $260,000 as well. So you 
are within the range of these other agencies, and you are 
mandated to have salaries that are comparable to these 
agencies, is my understanding. As it relates to the salaries 
with reference to the OCC and the Fed, does that help refresh 
your memory to any extent, sir?
    Mr. Agostini. Congressman, yes. I believe that the top 
salaries at the Federal Reserve are up to $260,000 for their 
executive individuals. So, yes, that does.
    Mr. Green. Now, let's talk about interns. Just for 
edification purposes, I don't believe any of the persons behind 
you are interns, are they?
    Mr. Agostini. That is correct, sir, they are not.
    Mr. Green. Okay. If they are, while they are quite 
youthful, they would be a little bit out of the range that I 
have for most of the interns with whom I work.
    But my information from our staff, which is quite good, 
indicates that you have about 64 paid interns, that the range 
of pay is from $14.72 to $20.22 per hour, and the average 
salary is about $18.45 per hour. If they worked full-time for 
10 weeks, we would be paying the interns about $5,800 to $8,100 
each, an average of about $7,380. Now, if this is incorrect, I 
am sure somebody will correct the record, but that is what our 
research indicates on the question of interns.
    Do you have persons who came over to your office from some 
other Federal agency?
    Mr. Agostini. Approximately 80 percent of our employees, 
Congressman, are transferees from other agencies.
    Mr. Green. And do they come with skills that they have 
acquired as a result of working in these other agencies?
    Mr. Agostini. Yes, sir.
    Mr. Green. Okay. And quickly, tell me about your attrition 
rates compared to other Federal agencies, if you can.
    Mr. Agostini. Congressman, I believe our attrition rate is 
almost exactly the same as the attrition rate that you would 
see in other Federal agencies, roughly about 9 percent.
    Mr. Green. And what about independent funding? How 
important is it for you to have independent funding?
    Mr. Agostini. Having the independent funding, Congressman, 
allows us to focus in on what we are doing. It also creates a 
situation where we are similar to many of the agencies that we 
work with shoulder to shoulder.
    Mr. Green. Thank you. I will leave with this. I don't 
especially enjoy getting into salaries, because there are a 
good many people who think that Congresspersons are slightly 
overpaid. I yield back the balance of my time.
    Chairman McHenry. We will now recognize Mr. Garrett for 5 
minutes.
    Mr. Garrett. And I think the chairman for holding this very 
important hearing.
    So I sat through for the last couple of hours that we have 
been here on this and listened to your answers. And the 
takeaway I have gotten so far is that we have an agency which 
lacks oversight and lacks accountability. And from your 
answers, I have yet to be able to pinpoint exactly who the 
public can go to if they are looking for accountability.
    We have discussed the issue of appropriations. And as far 
as I understand it, there is no accountability to the Senate 
Appropriations Committee, because it is not appropriated 
through them. There is no accountability on your budget to 
House appropriators, because this does not go through House 
appropriations. Your funding comes to it through the Federal 
Reserve. And by your testimony today, as I understand it, the 
Federal Reserve is not subject to review as far as the funds 
coming to it there as well.
    And in addition, there is something called the Consumer 
Financial Civil Penalty Fund, which the CFPB may use, in my 
understanding, to selectively compensate victims in cases 
brought not only by this Federal agency, but other Federal 
agencies, State agencies, and State attorneys general or even 
private plaintiffs, so there is no oversight outside of this 
entity as well.
    Are any of those facts incorrect which I stated with regard 
to the funding?
    Mr. Agostini. Congressman, the Act itself anticipated and 
set forth--
    Mr. Garrett. I understand, but are any of those facts 
incorrect as far as oversight of your spending and your 
appropriations?
    Mr. Agostini. Congressman, we are proceeding as the Act has 
established we should.
    Mr. Garrett. So once again, just a simple yes or no, are 
any of my facts incorrect?
    Mr. Agostini. With respect to the funding and the transfer, 
they represent the facts as was dictated in Dodd-Frank.
    Mr. Garrett. Right. And I understand that is not your doing 
as far as creation of the law, you are just implementing what 
Congress in its wisdom or lack thereof did, but it seems ironic 
in this day and age when we are trying to rein in runaway 
spending that we would create an agency which would basically 
have no constraints on it by any elected body whatsoever or by 
the Federal Reserve, which is not an elected body, and then to 
try, as the other side has done, to say, can't we equate this 
to other independent agencies? We realize as well this agency 
is unique in the fact that it does not have a commission, like 
the SEC does, which has their funding coming from a different 
stream as what have you.
    So this is a unique agency unlike any other in the Federal 
Reserve that is able to spend upwards of half a billion dollars 
without any public accountability whatsoever. Now, this may be 
arguably good if they were doing an extremely high amount of 
benefit to the public, but the number that you gave us as far 
as civil penalties that you have recovered was 400 and--
    Mr. Agostini. 25 million, Congressman.
    Mr. Garrett. $425 million. Now, how does that compare to 
what the track record was when we had the FDIC, the FRB, the 
OCC, and the OTS doing it prior to you? Do you know the answer 
to that?
    Mr. Agostini. No, Congressman, I don't.
    Mr. Garrett. No. Wouldn't that be one thing you would want 
to take a look at just to see how you compared to other 
entities prior to your existence to see whether you are doing 
it in a cost-efficient manner?
    Mr. Agostini. We have not done that, to my knowledge.
    Mr. Garrett. Let me give you the answers. It was on an 
upward spiral or trajectory prior to this creation of this 
entity. It went from 157, to 170, 170, 220, 318, and that was 2 
years ago. So the $420 million that you are doing is basically 
on the same trajectory of all the other agencies were doing 
beforehand, and those agencies were doing it without the costs 
that we are doing it right now of over $500 million coming 
through the Federal Reserve, which basically means coming from 
the taxpayers of this country, because if the money didn't go 
there, it would come back to the general fund.
    So I am not sure that we are getting anything, any 
additional benefit from the CFPB, but it is coming out of the 
cost of lack of accountability and also, as I say, cost of lack 
of efficiency at the same time. Can you disagree with that 
point?
    Mr. Agostini. Congressman, we do have the accountability 
that was established in Dodd-Frank.
    Mr. Garrett. Okay. Let me understand that, then. Who is it 
that you are actually accountable to directly?
    Mr. Agostini. Congressman, in the Act, we have a unique 
situation where the U.S. Government Accountability Office, an 
arm of Congress, reviews our financial statements. We also have 
a unique situation with an independent audit that is mandated 
in the Act to go over our budget and other items that are 
deemed--
    Mr. Garrett. And if they find something wrong, they could 
direct you to change the way you operate?
    Mr. Agostini. Congressman, we take all of our audit 
findings very seriously.
    Mr. Garrett. Yes or no. Can they direct you to change your 
operation if they find something wrong in your operation?
    Mr. Agostini. If they were to find, Congressman, a finding 
that would represent significance, we would indeed--
    Mr. Garrett. Okay. The question is--if the chairman will 
allow it--can they direct you to take action, or is it just you 
decide whether you want to follow that direction or not?
    Mr. Agostini. Congressman, when auditors find areas of--
    Mr. Garrett. Just a yes or no, can they direct you to take 
action?
    Mr. Agostini. If they find items of significant deficiency 
or material weakness, we would take action to resolve it.
    Mr. Garrett. Can they direct you to take action? It was a 
simple question. Can they direct you to take action?
    Mr. Agostini. They can recommend to us.
    Mr. Garrett. They cannot direct you to take action. So, 
there is no one who can direct you to take action when they 
find a failure by efficiency or otherwise in an audit or stream 
of funding?
    Mr. Agostini. Congressman, when the Government 
Accountability Office--
    Mr. Garrett. Yes or no, can anyone outside of your own 
agency direct you to take any action?
    Mr. Agostini. I believe that if the GAO were to come and 
make recommendations to us, we would make those--
    Mr. Garrett. Can the GAO direct you to take that action?
    Mr. Agostini. They can make recommendations to us.
    Mr. Garrett. Can they direct you to take that action?
    Mr. Agostini. I don't believe so.
    Mr. Garrett. So, is there anyone who can direct you to take 
action?
    Chairman McHenry. The gentleman's time has expired.
    Mr. Garrett. Thank you.
    Chairman McHenry. With that, we will now recognize Ms. 
Beatty for 5 minutes.
    Mrs. Beatty. Thank you, Mr. Chairman, and Mr. Ranking 
Member. And thank you to our witness today.
    Before I ask my questions, I would certainly be remiss, 
being from Ohio, if I did not welcome you, but join my 
colleagues in saying I am somewhat disappointed that Director 
Cordray could not be here. I had the opportunity to work with 
him as one of the State of Ohio's co-chairs on financial 
literacy. I do have a financial literacy question, but since we 
have been asking you so many questions about your budget and 
finance, I will come back to that.
    One of the things that I have been most impressed with is 
what you have been doing in the area of financial literacy and 
also some of your productive and successful things that you 
have listed. If we look at the total student loan debt, it has 
recently passed the $1 trillion mark. It is the second-largest 
type of consumer debt after home mortgages. Further, 11 percent 
of all student loans are seriously delinquent, compared to just 
6 percent if we go back to 2003. So saddled with immense 
student loan debt, young people are struggling to begin their 
professional lives. This in turn weighs on the economy as a 
whole.
    Can you explain how the CFPB has approached this critical 
issue and how tools like the Financial Aid Shopping Sheet can 
help young folks?
    Mr. Agostini. Congresswoman, I would refer that question to 
Rohit Chopra in our office, who handles much of our student 
loan initiatives. I would say it is one of the areas that we 
are very proud of in terms of the activities that we have 
proceeded with, but he is much more expert and much more adept 
at answering those questions. I would be happy to take that 
back to him.
    Mrs. Beatty. Thank you. So now, I will go back to the 
financial questions like some of my colleagues.
    Republicans in both the House and the Senate have argued 
that the CFPB should be subject to the appropriations process 
to ensure greater accountability for the agency. This is 
despite the fact that Congress has consistently provided for 
independent funding for other bank regulators.
    In your own personal view, can you tell me how likely you 
would explain why Congress gave all the bank regulators 
independent funding and to what extent is it important for a 
regulator with responsibility for examining large and complex 
financial institutions to have stable and consistent funding?
    Mr. Agostini. Congresswoman, I think your last point is the 
point, that having that stable funding allows us to focus on 
mission. It allows us to play an equally important role with 
those other entities that have other sources of funding, which 
allows us to be a significant actor in the markets and in the 
areas of consumer protection that we are tasked with doing by 
Congress.
    Mrs. Beatty. And lastly, let me ask you this: We have heard 
a lot of questions about the salaries, the size of the budget. 
I have also read that you have a smaller budget.
    Do you have any knowledge of people not being transparent 
with salaries or any misappropriations within your own? I am 
sure in an office this size, there are internal checkpoints on 
if you spent the money for what it was supposed to have been 
spent. I have not heard of any glaring things where you have 
been challenged or any internal problems financially. Can you 
talk, as an administrator, about how you feel about how you 
have been spending the dollars?
    Mr. Agostini. Congresswoman, yes. I would point to the 
GAO's most recent audit of our financials, where not only were 
we given a clean audit opinion by GAO, we also did not receive 
a management letter from GAO, which is typically provided to 
entities when there are matters for consideration that 
management should take up in the opinion and given the review 
of GAO. So not only did we get a clean audit opinion, but we 
didn't have a management letter, and I think that speaks 
volumes to our internal controls, our reviews of our finances, 
and the manner in which we are spending our funds.
    Mrs. Beatty. And lastly, has that been consistent over the 
past 3 years? I am just looking at something and reading from 
the GAO where it talks about 19 of 24 major agencies where we 
do have some of the accountabilities in those agencies that you 
don't have, and the GAO is saying that they could not render 
clean opinions on their statements.
    Mr. Agostini. Congresswoman, having a clean opinion is a 
very important thing to us. Having it 2 years in a row has been 
a testament to how we are operating.
    Mrs. Beatty. Thank you.
    Chairman McHenry. The gentlelady's time has expired.
    We will now recognize Mr. Hultgren of Illinois for 5 
minutes.
    Mr. Hultgren. Thank you, Mr. Chairman.
    Thank you, Mr. Agostini, for being here as well. I have a 
quick question, just before we get started. I know you are the 
only witness. I wonder, are there other employees from the CFPB 
who are here as well today? I wonder if they could just raise 
their hand if there are any other employees from CFPB. Okay. So 
just kind of that row there behind you.
    The question I would have is, I know there has been some 
reporting recently of loss of employees, especially high-level 
employees, management-level employees. That could be concerning 
for a lot of reasons, but I think it is important for us to 
discuss that for a couple of minutes. Literally, a dozen senior 
officials have left the agency, I know, including Chief of 
Staff Garry Reeder, COO Victor Prince, Raj Date, Bart Shapiro, 
Nicholas Rathod, Leslie Parrish, Len Kennedy, Benjamin Olson, 
and many others, I think, as well.
    In interviews with American Banker, I know several former 
CFPB officials offered different reasons for the flood of 
departures, but many cited cultural clashes between the new 
agency and the regulators where they used to work. They also 
pointed to aggressive recruiting in the private market of 
agency personnel, coupled with the expected turnover after an 
intense early few years.
    I wanted to talk about kind of the other side of this as 
well and something I am hearing that is concerning to me. I had 
a meeting with small and medium-sized banks from the Midwest 
area talking to them and some of their frustrations. The 
biggest frustration they have is uncertainty and really not 
knowing the regulations with which they are going to have to 
comply. One of the bankers there just had a line that really 
just struck me, and I think it ties into the fact or concern 
that we have with a loss of senior staff as well as people with 
institutional knowledge there as well. But this banker said: 
``I have been in banking for 30 years, I understand how to run 
a bank, my bank is small, has never been a threat to any 
financial viability of our Nation, but now I have regulators 
coming in and telling me how to run my bank.'' And he said, ``A 
lot of these regulators were playing hacky sack on the quad 2 
years ago, and now they are in my bank telling me how to run my 
bank. Something is wrong.'' And I think that has even increased 
when we see the huge turnover that has happened.
    So, just a question: Management clearly should accept some 
responsibility or accept at least a share of the blame for the 
recent large exodus of senior CFPB staff over the recent 
months. Wouldn't you agree, wouldn't there be some questioning 
there?
    Mr. Agostini. Congressman, I believe that many of those 
people have left for a variety of reasons, representing either 
new opportunities, or a desire to do something different. The 
first 2-plus years at the Bureau have been very intense periods 
of time in standing up a Federal agency, and I think for many 
folks it was time to do something different. I think that there 
is just a range of reasons why folks--
    Mr. Hultgren. No, I understand. I understand people make 
decisions, but there seems to be more than just random 
departures. There seems to be a pattern here that I think would 
be wise for you all to address.
    And then tied into that, when new employees in their own 
survey are saying they are not receiving proper training to do 
their job and yet our banks, my small and medium-sized banks 
especially, just west of Chicago, are dealing with the 
consequences of new people who are regulators who are saying 
themselves that they haven't received adequate training to be 
doing this and yet have significant authority. This is a 
problem, and I think we have to address it.
    Another problem that I think we have to address, and many 
others today have discussed it, is this place and other 
departments, so Congress and Washington really was set up by 
our Founders to have checks and balances. And I would say most 
places have those checks and balances. The one that doesn't 
have checks and balances right now is the CFPB. It seems 
completely unaccountable, and that is a very real concern I 
have. And even as I see small and medium-sized banks who feel 
like they have had adverse decisions or regulation or reports 
placed on them, there is no place for them to go to have a 
check on that--was this proper, did the person have the 
training to be able to make this decision, how can we go back 
and question that?
    I think we do have to clear this up. And it is a real 
problem, on top of the fact when people are saying themselves 
they don't have adequate training to be doing the job that they 
have been given to do, a lot of senior management has been 
leaving, and yet the consequences falling back on small and 
medium-sized banks are real. They are feeling it. They are 
being crushed by this.
    Just in the last couple of seconds I have, I know that we 
also have some real questions about the number of 
contributions. The CFPB is supposed to be an independent 
agency, and yet 95 percent of CFPB employees who contributed to 
the Presidential race in the last election cycle contributed to 
President Obama. Given the IRS scandal, such a politically 
imbalanced organization as the CFPB truly is at risk of acting 
with similar political biases as the IRS, potentially 
exercising its powerful regulatory authority to abuse.
    My time has expired, but I think these are important 
questions for us to ask with an independent agency that doesn't 
have anybody to keep it in check and balance. With that, I 
yield back.
    Chairman McHenry. Those are indeed important questions.
    We will now enter into a second round of questions. The 
Chair will now recognize Mr. Duffy for 5 minutes.
    Mr. Duffy. Thank you, Mr. Chairman.
    I want to move back to our salary conversation, not to beat 
a dead horse, but I believe the last salary update list we had 
from the CFPB was from late last summer. Would you provide the 
committee an updated salary breakdown from the CFPB?
    Mr. Agostini. Congressman, yes, we will do that.
    Mr. Duffy. Wonderful. We had a conversation earlier about 
comparing the CFPB pay scale to that of the Federal Reserve and 
also looking at the CFPB pay scale as it relates to the GS pay 
scale, and the GS pay scale is one that the DOD uses, the FBI 
uses, the Executive Branch uses. Would you have any objection 
to the CFPB moving to the GS scale that most other government 
entities are on?
    Mr. Agostini. Congressman, if Congress deems that they wish 
to change our salary scale so that the Act, which currently 
speaks to comparability with the Federal Reserve, is altered or 
modified in some fashion, we would of course follow the laws 
that are set for us.
    Mr. Duffy. Wonderful. I have dropped a bill to that effect, 
so maybe we will see how much support we get from the CFPB. I 
think it was yesterday we dropped it.
    I want to move to the issue of how much is spent on the 
renovation of the Office of Thrift Supervision building that 
you are in right now. I think you indicated it was $15 million 
in 2012, and $95 million in 2013, for a total of $110 million 
so far in dollars budgeted for the renovation of that building. 
Is that about correct?
    Mr. Agostini. Actually, Congressman, it is $95 million. We 
changed that number. Originally, it was $15 million and $40 
million, for a total of $55 million. That number has now been 
changed to $95 million.
    Mr. Duffy. And do you anticipate any more budgeting 
necessary in 2014 or is $95 million going to do the job?
    Mr. Agostini. Congressman, we are at the early stages of 
understanding what it would cost to renovate a building that is 
30 years old and needs major system improvements, elevators, 
HVAC. We are working with the General Services Administration 
to understand that.
    Mr. Duffy. Are you aware that we have $17 trillion in 
national debt?
    Mr. Agostini. Yes, Congressman, I am.
    Mr. Duffy. And the OTS building was built in the 1970s, 
right?
    Mr. Agostini. I believe that is correct, sir.
    Mr. Duffy. You may be surprised to learn that the Rayburn 
Building in which we sit today hasn't had a major renovation 
since it was built in 1965. On top of that, the building right 
across the street, the Longworth Building, was built in 1933 
and hasn't had a major renovation since 1933.
    But here for the CFPB, a building that is newer than the 
one we sit in today, deserves a $95 million renovation to the 
tune of $90,000 for every single employee at the CFPB? How do 
you justify that, when we owe $17 trillion in debt?
    Mr. Agostini. Congressman, we have floors at 1700 G Street 
where we cannot run telephone lines, run electrical lines, run 
computer lines, because when the building was built, it was not 
anticipated they would use those things. So we actually have 
parts of at least two floors that cannot be occupied in a sort 
of standard office configuration.
    Mr. Duffy. $90,000 per employee. $17 trillion in debt.
    I want to move to how much you are spending on the storage 
of data collection. How much do you budget for the storage of 
data collection?
    Mr. Agostini. Congressman, what we budget is embedded in 
what we purchase in service from Treasury currently for 
purposes of running our network infrastructure. I can ask that 
the number be broken out and given to you. I don't have that 
number in front of me currently.
    Mr. Duffy. So are you actually setting money aside to build 
your own storage network or are you using another agency's 
storage network? Because you are grabbing a lot of American 
financial data. Are you storing it internally, at another 
agency, or are you paying someone offsite to store the data?
    Mr. Agostini. Congressman, we are doing a couple of things. 
We are currently utilizing another Federal agency, Treasury, to 
provide us with network services. We are in the process of 
moving off of that network so that we can run our own network 
and not be dependent on another Federal agency. We are also 
purchasing services and information from private entities as 
well, and part of that is storage on our network--
    Mr. Duffy. So if you would do this for me, if you would 
break down, and I am going to be very clear, how much you are 
spending to store data, whether it is internally, at another 
agency, or offsite, give me that number, and also how much the 
Bureau is spending to secure that data.
    My time has expired. I yield back.
    Chairman McHenry. We will now recognize Ms. Beatty for 5 
minutes.
    Mrs. Beatty. Thank you, Mr. Chairman, and Mr. Ranking 
Member.
    And, again, to our witness, thank you. I have a great 
appreciation for your answers to some of these very technical 
questions, so I took the liberty of looking at the table of 
organization to see where you would fall within it. Probably 
another reason for the questions and answer would be a good 
reason to have our Director there, taking nothing away from 
you, I think you are doing a fine job, but it gives me pause 
when I hear people asking some of the questions that typically 
I think a Director should answer. So I want you to relax. You 
are doing a great job. You are not the Director. And he should 
be here.
    But with that, let me ask you this question. When I hear a 
lot of the questions that are talking about the funding and the 
finances and then I look at the outcomes of what you have done, 
the number of consumers who have been affected, the number of 
things that you have been doing with those dollars, so then my 
question comes back to you, if you are working with any of the 
other Federal regulators, like the Attorney General's Office or 
State regulators to avoid any duplication effort? So, that is 
the first part of the question.
    Mr. Agostini. Congresswoman, we are constantly working with 
all of the agencies that have a role to play. In some cases 
that may be Justice, in some cases that may be some of the 
other regulatory agencies. I believe there was a recent GAO 
review on duplication that we are looking at very carefully to 
be sure that we are not duplicating.
    But I think it is the case that we work closely, we try not 
to duplicate, and we do that in a range of areas, from 
purchasing services from other Federal agencies so as not to 
create a larger workforce than necessary, to working carefully 
on things like our civil monetary penalty fund with other 
agencies to be sure that we understand their comments and 
concerns.
    Mrs. Beatty. Let me go back to the question that I started 
with in the beginning, because unlike the FDIC or the Federal 
Reserve, and certainly we have heard this, your budget is 
statutorily capped and it is much smaller than the other 
budgets. But yet when we look at, I am going to call it cost 
savings or what you have done in 2012, I was very pleased when 
I was able to read, despite your limitations, smaller budget 
going into 2014 than 2013, that with those limitations, 
however, 6 million consumers are receiving refunds because of 
your 2012 enforcement actions, and that you have also handled 
more than 150,000 consumer complaints since you opened, all of 
which I think is in part why you are there, to be able to serve 
consumers.
    So how would one of your core missions be affected if your 
budget were to be severely capped, in light of maybe you did a 
little renovation so you could be able to use IT and be able to 
communicate and probably increase those 150,000 consumer 
complaints? How would this affect the consumers?
    Mr. Agostini. Congresswoman, I believe that changes in our 
funding that would lower our funding would have the effect that 
we would have to go back and rethink how we deliver the value 
that we feel we have been able to deliver to American 
consumers. I can't tell you what that would look like today, 
but we would have to go back and carefully look at that.
    Mrs. Beatty. You have also been hit very hard on people, 
whether they resigned or they left. Can you also, in my seconds 
left, tell me if you have hired people to fulfill the 
vacancies, who brought on maybe even experience that would help 
you in this field, or is it just that these people left and now 
we don't have anyone there?
    Mr. Agostini. Congresswoman, we have a very deep bench. We 
have a very strong set of skills throughout the agency. And I 
think it is the case that for all of those positions, as we 
recruit to replace them, there have been individuals who have 
been able to step in and act in capacities in such a seamless 
manner that we are still focused and can still deliver on our 
mission.
    Mrs. Beatty. Thank you.
    Chairman McHenry. The gentlelady's time has expired.
    I will now recognize myself for 5 minutes.
    According to the CFPB's annual employee survey, only 35.6 
percent of employees agree or strongly agree that the CFPB 
takes steps to deal with a poor performer who cannot or will 
not improve. So, therefore, 64.4 percent are not satisfied at 
the CFPB that managers will deal with a poor performer who 
cannot or will not improve. Is this of concern?
    Mr. Agostini. Mr. Chairman, we are still a new agency. We 
are still getting, if you will, our legs. There are areas where 
I think we can show some improvement. It is one of the reasons 
that we do the surveys. And that is an area that we will be 
working on and have started working on in terms of training for 
managers. We are about to engage in a mandatory training for 
all of our managers using the resources of both OPM and--
    Chairman McHenry. Okay. And that goes right into my next 
question. I understand the claim that the CFPB invests in world 
class training, but the survey also asked employees, how 
satisfied are you with the training you received for your 
present job? Only 38.8 percent of your employees agreed that 
the training they received was sufficient. A failure to train 
employees reflects poor management, does it not?
    Mr. Agostini. Mr. Chairman, again, I would say that at the 
time of the survey, we were--
    Chairman McHenry. When was the survey?
    Mr. Agostini. I believe it was, Mr. Chairman, in the spring 
or early summer of 2012.
    Chairman McHenry. Okay. So a year later you are telling me 
that you are just getting around to the idea of perhaps 
training some people, since 38.8 percent are satisfied with the 
training they received. Let me ask again: Does this reflect 
poor management?
    Mr. Agostini. Mr. Chairman, I don't think it reflects poor 
management. I think it reflects--
    Chairman McHenry. Does it reflect good management, then?
    Mr. Agostini. I think, Mr. Chairman, what it reflects is 
that we are learning how to be a Federal agency and learning 
how to do our job.
    Chairman McHenry. Okay. And how long has your agency 
existed?
    Mr. Agostini. I believe it is a little over 2\1/2\ years, 
Mr. Chairman.
    Chairman McHenry. Okay. And so, you asked this survey 
question about 20 months into your agency's creation, and a 
year later you are still talking about getting around to 
implementing some of the things you found in your own survey.
    Last month, the CFPB employees voted to join the National 
Treasury Employees Union. Any understanding that we could have 
from the Hill, does this show troubles within the agency, 
because of employee dissatisfaction with their training and the 
fact that managers won't deal with poor performers who cannot 
or will not improve?
    Mr. Agostini. Mr. Chairman, I believe that the vote to 
establish a union simply demonstrates that our employees have 
exercised their right to be represented.
    Chairman McHenry. Right. And why do people institute 
unions, because things are going great at their agency or 
because they have grave concerns that are not being addressed?
    Mr. Agostini. Mr. Chairman, I can't speak to the 
motivation.
    Chairman McHenry. Okay. Let me reference a Politico article 
from May 15th of this year regarding the National Treasury 
Employees Union, the CFPB employees agreeing to do this, it 
says, ``The push to organize was driven in large part by news 
that many employees in Washington would be forced to give up 
their private offices while the Bureau renovates its 
headquarters, according to several people familiar with the 
situation.'' Some staffers were ``absolutely livid'' about 
their current office space...with very, very thin walls.''
    Do you understand that to be the case?
    Mr. Agostini. Mr. Chairman, I have an office with very thin 
walls. There are only two private offices in my area that seats 
32 people. We get along well and do well.
    Chairman McHenry. I understand your personal office. And 
you have your full staff here or are these others?
    Mr. Agostini. No, Mr. Chairman.
    Chairman McHenry. Okay. It is not often we see folks come 
before the committee, outside of well-heeled CEOs, who have a 
panoply of individuals behind them while testifying, so that is 
why some Members have been interested about that.
    So the reason for unionizing is not, as you understand it, 
a beef with office space?
    Mr. Agostini. Mr. Chairman, I can't speak to the 
motivations of why folks voted for the union.
    Chairman McHenry. The point is a year after the survey was 
taken, you are still trying to perhaps get around to 
implementing some of the necessary reforms. What we have a 
challenge with is getting the transparency so we can hold you 
accountable, as we hold all the other regulatory agencies 
accountable, and as the Founding Fathers intended with checks 
and balances.
    With that, we will go to Mr. Cleaver for 5 minutes.
    Mr. Cleaver. Thank you. Mr. Chairman, thank you.
    Look, we have different opinions on the CFPB, and that is 
the way our system works. And I don't think our side has any 
kind of unique position on always being right, nor does the 
other side. This is a process that we go through, and I respect 
it, and I respect the people who have a different view.
    My wife is a psychologist, and I would be remiss if I did 
not follow up on the issue that was raised earlier about hiring 
psychologists to work with the Bureau in terms of trying to 
detect what people are interested in. We have 300 million 
Americans, and I am not sure that we have funded you enough 
money to do a lot of focus groups, travel around the country. 
You would get beat up if you had a big travel budget going 
around doing focus groups. Do you agree that you won't get 
praise for traveling around the country doing focus groups?
    Do you think, Mr. Agostini, that you would be praised for 
traveling around the country doing focus groups?
    Mr. Agostini. Congressman, I really don't know if that 
would be the case.
    Mr. Cleaver. Okay. You won't be. So, I will answer my own 
question. Okay. You won't be.
    So I guess I am trying to say that we try to figure out the 
best ways to help the citizens. Do you see your job as being 
important, that you are actually in the business of preventing 
businesses from engaging in fraudulent practices or unfair 
practices?
    In my real world, I am an ordained United Methodist 
minister, and so we consider it a ministry to try to help 
people and prevent people from being ripped off and hurt. So, 
do you see this as a mission?
    Mr. Agostini. Congressman, while we don't do focus groups, 
and hadn't anticipated that, at least now, we have had a number 
of listening sessions throughout the country, and in those 
listening sessions what we have learned is how we might do our 
jobs better, because of the range of people who come to those 
listening sessions to provide us with feedback, both from 
consumers to industry participants. So I think that our ability 
to do that, go out and do that traveling and touch folks and 
hear directly from them, is important for us as we deliver our 
mission.
    Mr. Cleaver. Is the existence of the CFPB linked to the 
idea that consumers have rights?
    Mr. Agostini. I believe so, Congressman.
    Mr. Cleaver. If that is the case, and I think it is the 
case, here we are over 200 years old as a Nation and we have 
never had an agency protecting the consumers in the financial 
service industry. And so I think it is kind of remarkable that 
we have done it. We are tardy. And it may not be perfect; I am 
not suggesting at all that what we have done was perfect.
    I supported it. I was on the committee, I supported it very 
strongly, and I still support it. But I am also respectful of 
people who don't think that it exists, but it is important for 
us to try to get as much evidence out as possible on how 
important it is and that it is not, I don't think, an 
ideological agency. I don't think that your agency is out 
promoting a political ideology.
    Mr. Agostini. No, sir, we are striving to fulfill the 
mission that Congress gave us in Dodd-Frank.
    Mr. Cleaver. Did you have a vote on Dodd-Frank?
    Mr. Agostini. Did I have a vote on Dodd-Frank?
    Mr. Cleaver. Yes, sir.
    Mr. Agostini. No, sir, I did not.
    Mr. Cleaver. Okay. So you had nothing to do with creating 
the agency as it is currently structured?
    Mr. Agostini. I joined the agency in November of 2011, 
Congressman.
    Mr. Cleaver. I was trying to find somebody to blame for 
creating the agency. So the ranking member is the nearest 
person to me, and I followed him in voting for it.
    Mr. Hultgren [presiding]. The gentleman's time has expired.
    The gentlemen from Kentucky, Mr. Barr, is recognized for 5 
minutes.
    Mr. Barr. Thank you. Mr. Agostini, I have a question about 
the funding sources for your agency. Section 1017(a) of the 
Dodd-Frank Act provides that the Director is authorized to 
request amounts that he determines to ``be reasonably necessary 
to carry out the authorities of the Bureau under the Federal 
consumer financial law.'' The Act further provides the Federal 
Reserve system shall--emphasis on shall--``transfer the amounts 
requested by the CFPB Director.''
    Are you aware of any other agency model in the entire 
administrative state and in the entire Federal Government that 
is structured in a manner in which the administrator or head of 
the agency can unilaterally determine, effectively, the budget 
of that particular agency?
    Mr. Agostini. Congressman, I am not as knowledgeable about 
the funding for the Federal Reserve or the Office of the 
Comptroller of the Currency or the FDIC. I do know that they 
have sources and resources that are outside of the 
appropriation process, and so I would look there to try and 
answer your question of comparability.
    Mr. Barr. You testified earlier in response to a question 
about accountability that policy justification for receiving 
the agency's funding from the Federal Reserve System as opposed 
to congressional appropriations was that, ``It allows us to 
focus on what we are doing.'' I would submit that focus comes 
only when the agency is actually accountable to Congress for 
its appropriations.
    In reference to an American Banker article recently, and 
other articles in a variety of publications, there has been 
much attention given to the fact that the CFPB has been losing 
its senior staff and a variety of other employees since its 
inception. One recent article, and I am quoting here, reports 
that, ``In recent months more than a dozen senior officials 
have left the agency. In interviews with American Banker, 
several former CFPB officials offer differing reasons for the 
flood of departures, but many cited cultural clashes between 
their new agency and the regulators where they used to work.''
    Question: Can you just briefly offer an explanation for the 
rash of departures from your agency?
    Mr. Agostini. Congressman, I believe that those people have 
left for a variety of reasons.
    Mr. Barr. Okay. Let's take one particular case and maybe 
you can illuminate why this may be happening. The issue of Raj 
Date, the former number two of the agency, please explain 
whether the CFPB has confirmed the propriety of the consumer 
finance consulting work currently performed by Mr. Date so 
closely following his role as Deputy Director.
    Mr. Agostini. Congressman, I am not involved in the review 
that you are speaking of, but I would be happy to take that 
back to our Legal Division to provide you with an answer.
    Mr. Barr. With respect to Mr. Date and others who have left 
your agency, others with high-ranking positions within your 
agency, what policies are in place with regard to a cooling-off 
period or work-related restrictions for those senior staff? 
Here in Congress, former Members of Congress or staff here have 
a cooling-off period before they can engage in consulting or 
lobbying activities, as you presumably understand. It is a one-
year cooling-off period. Does your agency have in place a 
similar cooling-off period restriction?
    Mr. Agostini. Congressman, I believe that we follow the 
laws and rules with respect to ethics. But again, I would refer 
you to the Legal Division and have them provide you with an 
answer.
    Mr. Barr. I would ask that your Legal Division in fact 
follow up with the subcommittee on that question.
    And also, are you aware of what Mr. Date was making in 
terms of compensation at the agency? And then a second 
question, what is he making now as a consultant?
    Mr. Agostini. Congressman, I have no idea what Mr. Date is 
making now, and I believe his salary at the Bureau was a matter 
of record and I am happy to provide that to you.
    Mr. Barr. I would appreciate again if you would follow up 
with that with the subcommittee.
    Are you aware whether or not Mr. Date worked with the CFPB 
to ensure that his transition is in fact in compliance not only 
with CFPB rules but other Executive Branch ethics requirements, 
and could you comment on that?
    Mr. Agostini. Again, Congressman, I am not aware of the 
process by which he was off-boarded, if you will, and all of 
the ethics requirements associated with that. And again, I am 
happy to take that back to our Legal Division to provide you 
with an answer.
    Mr. Barr. Are you aware of any departing staff having 
inappropriately taken advantage of information gained within 
their employment at the CFPB?
    Mr. Agostini. Congressman, I am not aware of that.
    Mr. Barr. Thank you. I yield back.
    Mr. Hultgren. The gentleman's time has expired.
    The gentleman from Texas, the ranking member of the 
subcommittee, Mr. Green, is recognized for 5 minutes.
    Mr. Green. Thank you, Mr. Chairman.
    I think that you have had a full day, but we will just take 
one more round and cover a few more facts. It seems to me that 
there is some concern about the turnover rate, and I think it 
is a legitimate question. What is your turnover rate? What was 
it said to be by the way?
    Mr. Agostini. Congressman, the turnover rate for our agency 
is slightly above 9 percent, I believe it is 9.2 or 9.3 
percent. I believe that it is almost exactly the same as the 
Federal turnover rate for the preceding year. I think it is 
about roughly 9.3, 9.4 percent. So we appear to be experiencing 
attrition that is comparable to the rest of the Federal 
Government.
    Mr. Green. The Federal Government, is that the entirety of 
the Federal Government? Because I have a number that differs if 
we are talking about the U.S. House of Representatives.
    Mr. Agostini. Congressman, it would be the entire Federal 
Government.
    Mr. Green. All right. Because my information indicates that 
the House has a turnover rate of 26 percent. That would be 
slightly above the 9 percent that you have.
    There is some concern about whether people like you or not. 
I hate to get into congressional approval rates, especially 
since I, like the rest of my colleagues, want to continue to do 
what we do. But as I am looking at the number, it looks like it 
is around 10 percent, which is pretty good for us by the way, 
that is an improvement over what it was at one time, as I 
understand it. It may have been a little bit less.
    All of these things are great theater, but when you delve 
into the numbers you can find rationale for why things are as 
they are. The turnover rate in Congress has to do with the fact 
that young people are upwardly mobile and they want to do 
bigger and better things, and we hire some of the best and 
brightest people who want to move on to do other things and 
that is understandable. So I think that to be fair to you, we 
have to look a little bit deeper into what actually happens to 
cause your turnover rate to be what it is.
    Now, in closing, let's do this. We talked about 
accountability and it appears to me that you are exceedingly 
accountable. Your Director can be removed for cause, you have 
to consult with other regulators when making rules. Is this 
true?
    Mr. Agostini. That is true.
    Mr. Green. You have to do a cost-benefit analysis, true?
    Mr. Agostini. That is true.
    Mr. Green. You have to testify before Congress twice a 
year. Actually, the Director is supposed to do it. We have a 
little bit of politics here, but the Director is supposed to do 
it twice a year, true?
    Mr. Agostini. That is true.
    Mr. Green. I am showing that to date, someone from your 
agency has testified about 36 times before Congress. Is that a 
roundabout number, is that--
    Mr. Agostini. That is the number that we have to date, sir.
    Mr. Green. Thirty-six times. Your rules are subject to 
judicial review, meaning if some entity is accorded a certain 
ruling, it can be appealed, and it can be appealed through the 
Judiciary, or an independent third body. Is this true?
    Mr. Agostini. I believe that is correct, sir.
    Mr. Green. You have to reassess your rules periodically. Is 
this true?
    Mr. Agostini. That is correct, sir.
    Mr. Green. Every 5 years?
    Mr. Agostini. I do not know the frequency, but I believe 
that they have to be reviewed.
    Mr. Green. Can your regulations, your rules be vetoed by 
other regulators?
    Mr. Agostini. I believe that is correct. I believe the FSOC 
has that ability, sir.
    Mr. Green. Are you subject to external review by the SBA 
and OMB?
    Mr. Agostini. I am not certain about that, sir. I would 
like to get back to you. But I believe that may be true.
    Mr. Green. All right. And let's talk about your audits. GAO 
audit, correct.
    Mr. Agostini. That is correct.
    Mr. Green. The IG associated with the Fed can audit you as 
well?
    Mr. Agostini. That is correct.
    Mr. Green. And then Congress has mandated an independent 
audit. This is something that we require, an independent audit. 
That means that you are not audited by another Federal agency. 
You actually will bring in an agency or entity from outside the 
government. Is this a fair statement?
    Mr. Agostini. That is correct, sir.
    Mr. Green. Mandated by Congress.
    Mr. Agostini. Yes, sir.
    Mr. Green. Done on an annual basis.
    Mr. Agostini. Yes, sir.
    Mr. Green. So, you do have accountability. The question is 
whether you will be able to maintain it, and that is our job.
    Thank you. I yield back.
    Mr. Hultgren. The gentleman's time has expired.
    I yield myself 5 minutes.
    Do you believe your agency is more or less accountable to 
Congress than the IRS?
    Mr. Agostini. Mr. Chairman, I cannot speak to the IRS. I 
would echo many of the comments made by others with respect to 
the accountability, the reviews that we are subject to: the 
GAO; an independent audit; semiannual reporting back to 
Congress; and an annual report to the Appropriations Committee. 
So we do feel that we are accountable, and we welcome that 
accountability.
    Mr. Hultgren. I talked earlier about the amount of 
contributions. Of those who have made contributions, political 
contributions, 95 percent of them who made contributions in the 
Presidential election reported were given to President Obama. 
Given the IRS scandal that we just heard recently, and given 
the lopsided numbers, I wonder what safeguards does the CFPB 
have in place to ensure that there is no political bias in 
CFPB's decision-making.
    Mr. Agostini. Mr. Chairman, I would offer that the Legal 
Division would be better at comprehensively answering that.
    Mr. Hultgren. That would be great. If you can get us a 
response, then, of safeguards that are in place to make sure 
there is no political bias in the decision-making process, 
since there is a difference of opinion on the level of 
accountability. But I think there certainly are some questions 
there.
    On a different subject, you had mentioned earlier that the 
CFPB has not spent up to its statutory cap. Would you then 
support a reduction in the statutory cap for the CFPB or would 
you seek an increase or would you seek to keep it at the same 
level?
    Mr. Agostini. Mr. Chairman, if Congress decides that it 
wishes to change either our funding mechanism or the level of 
funding, we will of course abide by those changes. It is the 
case that for us to proceed with the mission Congress has 
currently given us with something significantly less than we 
have would require us to make some choices as to what aspects 
of that mission we could actually accomplish.
    Mr. Hultgren. I hope we have that discussion, because I 
think there are some real questions there, again, to make sure 
is the mission really being done, why are so many people 
leaving, especially people who have regulatory experience, who 
had come into the agency with regulatory experience now are 
leaving. I think there are some real questions, if that mission 
could be getting done.
    And the point I need to stress is that why this matters to 
me is because it matters to my small and medium-sized financial 
institutions who are afraid, they are absolutely afraid of what 
regulators are doing to them, and specifically the CFPB, and a 
question of is there going to be accountability there, how are 
we going to comply, are the people who are coming in and 
regulating us, do they have the experience or the training they 
need? And again, the concerns seem to be justified since your 
own staff are saying they don't have the training they need.
    Let me wrap up with this, I think this is something that 
you have dealt with more directly, so hopefully you can have 
some answers on this.
    The CFPB may use the Consumer Financial Civil Penalty Fund 
to selectively compensate victims in cases that are independent 
of the CFPB, such as by another Federal agency, State's 
Attorney General, or even a private plaintiff. In effect, the 
Chief Financial Officer, my understanding is yourself, can 
selectively determine whether to intervene in cases brought 
anywhere to compensate victims. The CFPB's Civil Penalty 
Governance Board and the Chief Financial Officer have 
discretion to intervene selectively in matters.
    The question I have, Mr. Agostini, is, as the CFO, please 
explain your role and responsibilities with regard to the 
Consumer Financial Civil Penalty Fund and explain exactly how 
that works and what safeguards, again, are there.
    Mr. Agostini. Mr. Chairman, the Civil Penalty Fund was 
established based on statutory direction in Dodd-Frank. We have 
implemented a Governance Board. I sit as an advisor to that 
Governance Board. There is also a Fund Administrator. That Fund 
Administrator reports to me and I have the ability to select 
and remove them.
    I would offer that we have a notice of rulemaking that is 
out currently. We are currently soliciting and have asked for 
comments. That period of comment is open until July 8th. It 
sets out rather precisely all of the expectations and rules for 
the Civil Penalty Fund in that--
    Mr. Hultgren. Let me wrap up with this. My time has almost 
expired. But given the breadth of potential cases in which the 
CFPB could intervene to compensate victims, such a tool could 
easily be abused for political or other purposes. Wouldn't you 
agree?
    Mr. Agostini. Mr. Chairman, with the rules that we have put 
in place and the rules that are reflected in the public notice 
of rulemaking, I believe that we have a very accountable and 
very structured manner in which to operate that fund.
    Mr. Hultgren. My time has expired and we have had a chance 
to get through all of the witnesses for a second round. I would 
like to thank our witness for his testimony today.
    The Chair notes that some Members may have additional 
questions for this witness, which they may wish to submit in 
writing. Without objection, the hearing record will remain open 
for 5 legislative days for Members to submit written questions 
to this witness and to place his responses in the record. Also, 
without objection, Members will have 5 legislative days to 
submit extraneous materials to the Chair for inclusion in the 
record.
    Mr. Hultgren. Without objection, this hearing is adjourned.
    [Whereupon, at 4:50 p.m., the hearing was adjourned.]


                            A P P E N D I X



                             June 18, 2013


[GRAPHIC] [TIFF OMITTED] T1768.001

[GRAPHIC] [TIFF OMITTED] T1768.002

[GRAPHIC] [TIFF OMITTED] T1768.003

[GRAPHIC] [TIFF OMITTED] T1768.004

[GRAPHIC] [TIFF OMITTED] T1768.005

[GRAPHIC] [TIFF OMITTED] T1768.006

[GRAPHIC] [TIFF OMITTED] T1768.007

