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







 
                       THE SEMI	ANNUAL REPORT OF

 
                         THE CONSUMER FINANCIAL

 
                           PROTECTION BUREAU

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

                                HEARING

                               BEFORE THE

                    COMMITTEE ON FINANCIAL SERVICES

                     U.S. HOUSE OF REPRESENTATIVES

                    ONE HUNDRED THIRTEENTH CONGRESS

                             SECOND SESSION

                               __________

                             JUNE 18, 2014

                               __________

       Printed for the use of the Committee on Financial Services

                           Serial No. 113-84
                           
                           
                           
                           
                           
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]     





                           
                           
                           
                             U.S. GOVERNMENT PRINTING OFFICE
     91-148 PDF                     WASHINGTON : 2015
 _____________________________________________________________________________                           
     For sale by the Superintendent of Documents, U.S. Government Printing Office
   Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; 
         DC area (202) 512-1800 Fax: (202) 512-2104 Mail: Stop IDCC, 
                          Washington, DC 20402-0001                      
                           
                           
                           
                           
                           

                 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. VELAAZQUEZ, New York
PETER T. KING, New York              BRAD SHERMAN, California
EDWARD R. ROYCE, California          GREGORY W. MEEKS, New York
FRANK D. LUCAS, Oklahoma             MICHAEL E. CAPUANO, Massachusetts
SHELLEY MOORE CAPITO, West Virginia  RUBEEN HINOJOSA, Texas
SCOTT GARRETT, New Jersey            WM. LACY CLAY, Missouri
RANDY NEUGEBAUER, Texas              CAROLYN McCARTHY, New York
PATRICK T. McHENRY, North Carolina   STEPHEN F. LYNCH, Massachusetts
JOHN CAMPBELL, California            DAVID SCOTT, Georgia
MICHELE BACHMANN, Minnesota          AL GREEN, Texas
KEVIN McCARTHY, California           EMANUEL CLEAVER, Missouri
STEVAN PEARCE, New Mexico            GWEN MOORE, Wisconsin
BILL POSEY, Florida                  KEITH ELLISON, Minnesota
MICHAEL G. FITZPATRICK,              ED PERLMUTTER, Colorado
    Pennsylvania                     JAMES A. HIMES, Connecticut
LYNN A. WESTMORELAND, Georgia        GARY C. PETERS, Michigan
BLAINE LUETKEMEYER, Missouri         JOHN C. CARNEY, Jr., Delaware
BILL HUIZENGA, Michigan              TERRI A. SEWELL, Alabama
SEAN P. DUFFY, Wisconsin             BILL FOSTER, Illinois
ROBERT HURT, Virginia                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              STEVEN HORSFORD, Nevada
ROBERT PITTENGER, North Carolina
ANN WAGNER, Missouri
ANDY BARR, Kentucky
TOM COTTON, Arkansas
KEITH J. ROTHFUS, Pennsylvania
LUKE MESSER, Indiana

                     Shannon McGahn, Staff Director
                    James H. Clinger, Chief Counsel
                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on:
    June 18, 2014................................................     1
Appendix:
    June 18, 2014................................................    67

                               WITNESSES
                        Wednesday, June 18, 2014

Cordray, Hon. Richard, Director, Consumer Financial Protection 
  Bureau (CFPB)..................................................     8

                                APPENDIX

Prepared statements:
    Cordray, Hon. Richard........................................    68

              Additional Material Submitted for the Record

Green, Hon. Al:
    ``CFPB By The Numbers,'' dated May 13, 2014..................    70
Cordray, Hon. Richard:
    Written responses to questions for the record submitted by 
      Chairman Hensarling........................................    73
    Written responses to questions for the record submitted by 
      Representatives Bachus, Barr, Royce, and Pittenger.........    91

 
                       THE SEMI-ANNUAL REPORT OF


 
                         THE CONSUMER FINANCIAL


 
                           PROTECTION BUREAU

                              ----------                              


                        Wednesday, June 18, 2014

             U.S. House of Representatives,
                   Committee on Financial Services,
                                                   Washington, D.C.
    The committee met, pursuant to notice, at 10:08 a.m., in 
room 2128, Rayburn House Office Building, Hon. Jeb Hensarling 
[chairman of the committee] presiding.
    Members present: Representatives Hensarling, Bachus, Royce, 
Capito, Garrett, Neugebauer, McHenry, Campbell, Bachmann, 
Pearce, Posey, Fitzpatrick, Luetkemeyer, Huizenga, Duffy, Hurt, 
Stivers, Fincher, Hultgren, Ross, Pittenger, Barr, Cotton, 
Rothfus, Messer; Waters, Maloney, Velazquez, Sherman, Meeks, 
Capuano, Clay, McCarthy of New York, Lynch, Scott, Green, 
Cleaver, Ellison, Himes, Peters, Carney, Foster, Kildee, 
Murphy, Sinema, and Heck.
    Chairman Hensarling. The committee will come to order.
    Without objection, the Chair is authorized to declare a 
recess of the committee at any time.
    The Chair now yields himself 6\1/2\ minutes for an opening 
statement.
    This morning, we welcome back Director Cordray to deliver 
testimony on the fifth semi-annual report of the Consumer 
Financial Protection Bureau (CFPB).
    Protecting consumers within interstate commerce is a 
vitally important mission of the Federal Government, and, 
properly designed, the CFPB is capable of great good on behalf 
of consumers.
    It is also capable of great harm. In just 3 years, the CFPB 
has grown into an unaccountable Federal leviathan of nearly 
1,400 employees with an over half-a-billion-dollar budget and 
the unrestrained power to dictate which Americans can receive 
credit and which Americans cannot. Knowledgeable Americans are 
rightfully alarmed as the threat and the harm begins to mount.
    Since Director Cordray last appeared before our committee 
in January, we have learned much. First, we have learned that 
in the first quarter of this year, we actually had negative 
economic growth of 1 percent. And when you speak to practically 
any small-business person in our country, any community banker, 
they will tell you that the sheer weight, volume, and 
complexity of the regulatory red-tape burden is one of the 
primary reasons that they cannot expand and hire more people.
    We hear, for example, from Barry in Chicago. He says he 
owns a small insurance company, but, ``I spend most of my days 
on the CFPB Web site reading through all the regulations and 
trying to implement them into our system. My loan officers 
can't believe all the new complicated forms, and our borrowers 
are all confused. The CFPB is adding such cost to the business 
that only Wells Fargo, Chase, and Bank of America will be left 
for consumers to obtain loans.''
    Regrettably, this is not a unique piece of correspondence. 
It is one way that the CFPB is regrettably harming consumers 
and helping keep people underemployed and unemployed.
    We have also learned since Director Cordray's last 
appearance that the CFPB is incurring even more cost on its 
building renovation. What was then going to cost an estimated 
$145 million is now costing at least $184 million, according to 
information provided by the Bureau itself. That is $30 million 
more than the building is even worth--a building, we must 
remember, that the CFPB does not even own. This is what 
happens, I believe, when an agency is essentially unaccountable 
to the people.
    Even more troubling, we have learned since Director Cordray 
was last before the committee that the joint database project 
of the CFPB and the FHFA will undeniably collect personally 
identifiable information on millions of Americans in the 
National Mortgage Database. I am not speaking merely of names, 
addresses, and phone numbers, though the database will 
certainly include those, but, shockingly, also people's Social 
Security numbers, their race, their religion, personal 
financial information, and even the GPS coordinates to their 
homes. If this is not considered personally identifiable 
information by the CFPB, then I don't know what is.
    A breach of this database could cause untold harm to 
consumers by the very agency that purports to protect them. 
Without a doubt, this National Mortgage Database is an 
unwarranted and shocking intrusion into the privacy of American 
citizens. It is a database I would fully expect to see in 
either Russia or China, but I am appalled to see it in the 
United States of America. And I predict, as more Americans 
become aware of this, they, too, will be appalled and will 
demand accountability from this Administration.
    Next, we clearly have the most appalling development that 
has occurred since Director Cordray's last appearance here: 
independently corroborated reports of widespread discrimination 
and abuse of employees at the CFPB--not merely virtual 
discrimination, not merely theoretical discrimination or 
statistical discrimination, but appalling acts of actual 
discrimination.
    Since these allegations first came to light, this committee 
has served as a virtual trauma unit for employees who have come 
forward to report discrimination, retaliation, and other 
apparent violations of law at the CFPB.
    And although our committee has publicly invited aggrieved 
employees from every other Federal agency within our 
jurisdiction to come forward if they have experienced 
discrimination or retaliation, the only ones who have come 
forward so far all work or have worked for the CFPB.
    Most wish to remain anonymous because they fear 
retaliation, but, as you prepare to give your testimony, 
Director Cordray, I have no doubt that you are aware we will 
publicly hear from other whistleblowers this afternoon, 
including one Mr. Kevin Williams, whose testimony has already 
been delivered to the committee. He will testify later this 
afternoon about the CFPB, ``The frequency and duration of these 
occurrences,'' in speaking of discrimination, ``created a 
hostile work environment for all Blacks at the Bureau, whether 
they were unwitting manipulated Black managers or mistreated 
hardworking black employees. It is just that we, the latter, 
suffered the objectively adverse consequences.''
    Again, this whistleblower testimony is not unique.
    I have no doubt that all agree, including the Director, 
that invidious discrimination and retaliation are not only 
illegal; they are also morally repugnant. And until I heard it 
with my own ears, I never would have believed that a Federal 
office in the 21st Century would commonly be referred to as 
``the plantation.''
    I, for one, am uninterested in hearing how the system is to 
blame, Director Cordray. I am uninterested in hearing about 
plans to conduct listening sessions and hire consultants when 
the real problem is the people you have hired to help run this 
Bureau.
    These disturbing developments once again demonstrate, I 
believe conclusively, why there must be substantial structural 
reform at the CFPB. Consumers deserve accountability not only 
from Wall Street, but they deserve it from Washington, too. 
Yet, by design, the CFPB remains arguably the least accountable 
Washington bureaucracy in the history of America, and it shows. 
This must change.
    The Chair now recognizes the ranking member for 5 minutes 
for an opening statement.
    Ms. Waters. Thank you, Mr. Chairman.
    And welcome back, Director Cordray.
    Today, we once again gather to review the Consumer 
Financial Protection Bureau's semi-annual report.
    Mr. Director, since you were here last January, Republicans 
have been hard at work drafting and passing burdensome 
legislation that would gut your agency and its ability to stand 
up for our Nation's consumers. In the past 6 months, 
Republicans have advanced a number of these harmful measures 
through this committee and this House that would undermine the 
CFPB's ability to protect consumers from deceptive marketing, 
unlawful debt collection, lending discrimination, illegal fees, 
and other prohibited activity.
    I am disappointed that a package to destabilize CFPB's 
leadership and its autonomy and tie its funding to the whims of 
the congressional appropriations process made its way through 
the House of Representatives. If enacted into law, we will be 
one step closer to the Republicans' goal of ending the CFPB's 
ability to protect all consumers, including students, seniors, 
families, and servicemembers.
    Just last week, this committee considered and passed a 
collection of measures designed to bog the CFPB down with 
additional paperwork, increasing its bureaucratic 
responsibilities, and eliminating important tools at their 
disposal.
    It saddens me that my colleagues on the other side of the 
aisle have aligned themselves with Wall Street predatory 
lenders and other bad actors in our financial system at the 
expense of protecting customers and consumers. I know in my 
district, the Bureau has been helpful with all manner of 
constituent requests, and I am confident that the constituents 
we all serve benefit from the Bureau's expertise despite 
opponents' unwillingness to embrace its mission.
    Nonetheless, Director Cordray, we welcome you on this, the 
CFPB's 50th appearance before Congress since its inception in 
2011. That is nearly 1 appearance before Congress every 3 
weeks.
    Director Cordray, I would like to thank you for making 
yourself and other senior CFPB officials available to come 
before this body and discuss the important issue of diversity 
and discrimination. While I remain disappointed that my 
colleagues on the other side of the aisle have not granted us 
the opportunity to speak with you on this issue sooner, I hope 
to hear more from you today about your progress in addressing 
these issues.
    Mr. Director, this is the 5th time you have released a 
semi-annual report, as called for by law, and each time your 
agency has shown remarkable progress in your investigations and 
advocacy for American consumers. This most recent report shows 
a continuation of your unprecedented record of success 
protecting consumers and servicemembers.
    To date, the Bureau's enforcement actions have refunded 
$3.8 billion directly to 12.6 million consumers. And the 
American public's trust in the CFPB to fight for them has only 
increased, as the Bureau has received more than 354,000 
consumer complaints, resolved tens of thousands of individual 
problems, and provides answers to more than 1,000 frequently 
asked questions posed through its online portal known as, ``Ask 
CFPB.''
    The semi-annual report also indicates the Bureau has 
continued its unprecedented success in enforcement actions 
against a wide range of institutions for unscrupulous actions. 
In the past year, the CFPB was a party to 31 enforcement 
actions for violations of law, including mortgage servicing, 
kickback schemes, fair lending, unfair billing practices 
tactics, and deceptive marketing.
    The CFPB has issued a number of important regulations that 
protect consumers from predatory financial practices while 
having significant success on behalf of our Nation's active 
duty military. In fact, CFPB's actions and collaboration has 
led to over $100 million in refunds to our servicemembers.
    So I welcome you, Director Cordray. I commend you for 
CFPB's impressive track record in these very few short years.
    And I would like to insert into the record the information 
that was alluded to by the chairman on mortgage data 
collection. It seems that the National Mortgage Database was 
launched by Mr. DeMarco, and that the mortgage data collection 
repository is included in the chairman's PATH Act bill. There 
is only one sentence devoted to protecting personally 
identifiable information in that Act, so I thought the chairman 
should be reminded of that.
    And I yield back the balance of my time.
    Chairman Hensarling. The gentlelady yields back.
    The Chair now recognizes the gentlelady from West Virginia, 
Mrs. Capito, the chairwoman of our Financial Institutions and 
Consumer Credit Subcommittee, for 2\1/2\ minutes.
    Mrs. Capito. Thank you, Mr. Chairman.
    And I would like to thank Director Cordray for joining us 
this morning.
    In May of this year, the CFPB released their semi-annual 
report documenting the Bureau's activities from October of last 
year through March of this year. I am pleased that Mr. Cordray 
is able to join us this morning and talk about that report.
    I do have some questions about the management of the Bureau 
and the effect its rules are having on access to credit for 
consumers. Earlier this spring, we learned that there were some 
serious discrimination issues within the Bureau. During an 
Oversight and Investigations Subcommittee hearing in April, a 
Bureau employee courageously testified about her experiences 
with discrimination at the Bureau and provided detailed 
accounts of discrimination and inappropriate conduct by 
managers at the Bureau. Every Member in the hearing was rather 
surprised as the witness shared her experience and those of the 
other Bureau employees.
    I know that Director Cordray has pledged to set the record 
straight and has promised to make systemic changes, so thank 
you for that. However, changing the system is not enough. We 
need to have some accountability. Failing to do so is a 
disservice to all Bureau employees.
    I am also interested, as you well know, in the Bureau's 
efforts to monitor the impact of the mortgage rules that went 
into place in January of this year and the effect they are 
having on the national mortgage market.
    We have heard repeated concerns from community bankers 
about their ability to navigate the complexities of the rule. 
In some cases, these institutions have decided that, rather 
than attempting to quantify the litigation risks and compliance 
costs associated with these rules, the institutions are simply 
exiting the mortgage business.
    These rules have been on the books for 6 months, and we 
need to have an honest assessment of their impact on consumers 
and the availability of credit. Consumers are not better off if 
they are no longer able to work with their local bank or credit 
union to access that mortgage.
    It is our job, as members of this committee, to hold the 
CFPB accountable. The agency is charged with protecting 
consumers; however, it is incumbent upon us as policymakers to 
ensure that these consumers are not being harmed in any way by 
limiting access to credit as a result of the Bureau's rules. We 
must also ensure that those who choose to pursue the calling of 
public service are in an environment that is free of 
discrimination.
    I would like to again thank Director Cordray for appearing. 
I yield back my time, and I thank the chairman for holding this 
important hearing.
    Chairman Hensarling. The Chair now recognizes the gentleman 
from Connecticut, Mr. Himes, for 2 minutes.
    Mr. Himes. Thank you, Mr. Chairman.
    And, Mr. Director, thank you for being with us today. I am 
glad to see you. I am glad that the Consumer Financial 
Protection Bureau, despite the challenges it has had as it gets 
started, is here and protecting American consumers.
    You have been subjected to years, now, of complaints from 
the Republican Majority around governance, around your 
structure, around accountability. I will swallow hard and 
accept that they are making an argument in good faith as they 
raise the standard of antidiscrimination because they are 
right. Unfortunately, the information that came out of CFPB is 
discouraging and concerning. And I trust that you will do 
everything you can to make that right.
    I don't want it lost, though, as these criticisms are 
leveled at you, what it is that you really do. This is not 
about Wall Street, this is not about derivatives, this is not 
about insurance companies. This is about check cashers, pawn 
shops, and shadowy lending operations that cluster around our 
military bases. This is about products that are designed to 
strip senior citizens of the equity that they have in their 
homes. It happens. It happens big-time.
    Is there a need for you to be here? Since you got started, 
there have been 354,000 complaints to the CFPB about these 
products, which in some cases are predatory. And you have 
returned, as the ranking member said, almost $4 billion to 
12\1/2\ million American consumers.
    That is what this is about. It is not Wall Street. It is 
about protecting individual Americans and returning ill-gotten 
gains to them. I don't understand why there is this consistent 
drumbeat of attack on the CFPB when that is your mission, 
however challenging it may have been to get started.
    So, Director, I will trust that on these issues of 
discrimination, you will be quick and firm in dealing with 
them. I will trust that you will continue to treat the small 
and community banks that are so important in our districts 
carefully, but I would urge you to continue to do the good work 
that you have been doing.
    I yield back the balance of my time.
    Chairman Hensarling. The Chair now recognizes the gentleman 
from Wisconsin, the vice chairman of our Financial Institutions 
and Consumer Credit Subcommittee, Mr. Duffy, for 1 minute.
    Mr. Duffy. Thank you, Mr. Chairman.
    Without reservation, this committee and Members of Congress 
have continually expressed their concern to the CFPB about its 
data collection efforts. And, continually, Mr. Director, you 
have come to this committee and verbally and to our written 
questions have told us that is not what you are doing, you are 
not collecting personally identifiable information.
    Well, now we have found out that through your efforts with 
the FHFA, you are collecting names, addresses, phone numbers, 
race, ethnicity, religion, education, wealth, assets. You are 
collecting it all. My concern is about the truthfulness and 
veracity of the Bureau and your testimony before this 
committee. What you have told us, we now find out, isn't true.
    The NSA came to us and told us they were collecting our 
phone records because they want to protect us from terrorists. 
You collect everything else under the sun. And my question to 
you is: For what purpose? Who are you protecting us from?
    I would say, Mr. Chairman, that we need protection for the 
consumers from the CFPB and their data collection.
    I yield back.
    Chairman Hensarling. The Chair now recognizes the gentleman 
from Texas, Mr. Green, the ranking member of our Oversight and 
Investigations Subcommittee, for a minute and a half.
    Mr. Green. Thank you, Mr. Chairman.
    Mr. Chairman, I associate myself with the comments of the 
ranking member and would remind persons that this is but a 
continuation of the opposition to the CFPB, and, more 
appropriately, I think it is important to say the ``Consumer 
Financial Protection Bureau.'' Because, as has been stated by 
my colleague, Mr. Himes, this is an agency dedicated--
dedicated--to protecting consumers.
    And the great work that has been done at the Consumer 
Financial Protection Bureau has been done not because of but in 
spite of opposition. In spite of a refusal to allow the 
Director to testify, the Bureau has succeeded. In spite of a 
refusal to confirm the Director initially, the Bureau has 
succeeded. In spite of attempts to subject the CFPB to the 
appropriations process, it still succeeds. In spite of an 
attempt to create a commission so as to weaken the strength of 
the entity, it still succeeds.
    The Consumer Financial Protection Bureau has done an 
outstanding job, as evidenced by a document that I would like 
to submit, entitled, ``CFPB--which will be the Consumer 
Financial Protection Bureau--By The Numbers.'' We will find 
that these numbers are overwhelmingly positive as they relate 
to the Consumer Financial Protection Bureau.
    And I would like, Mr. Chairman, at this time to ask that 
this be submitted for the record.
    Chairman Hensarling. Without objection, it is so ordered.
    Mr. Green. Thank you.
    I would close with this, Mr. Chairman. The Consumer 
Financial Protection Bureau is here. If we did not have it, we 
would be trying to create it.
    And I am grateful that you are here to testify about the 
good things that the Consumer Financial Protection Bureau has 
done.
    Chairman Hensarling. The time of the gentleman has expired.
    The Chair now recognizes the gentleman from Georgia, Mr. 
Scott, for 1/1/2/ minutes.
    Mr. Scott. Thank you very much, Mr. Chairman.
    Director Cordray, again, welcome to the committee. And I 
want to start off by commending you and the CFPB for your 
outstanding work, particularly in two areas.
    I think your most demanding area has been in the debt 
collection area, if I am not mistaken. We have a very, very 
serious growing crisis--which I hope we will be able to get 
into as we get to our questions to find out more about what the 
CFPB is doing--and that is student loans. In in my State of 
Georgia, according to the Atlanta Business Chronicle, our 
students there--the student loan amount for over 1.2 million 
students is nearly $40 billion--$39 billion, to be exact.
    The President, last week, issued a plan to address that. I 
would like to know what you think about that plan. I think it 
would be very interesting for the committee to know, and for 
the Nation to know, is this enough, do we need to do more, and 
if so, what that might be.
    The other area is with our veterans. It is a pathetic 
shame, the way our veterans are being treated. And, certainly, 
the work that you are doing in there, we certainly want to hear 
about that.
    Thank you, Mr. Chairman.
    Chairman Hensarling. The time of the gentleman has expired.
    Again, today we welcome back to the committee Director 
Richard Cordray of the Consumer Financial Protection Bureau. I 
believe, since he has appeared here before, he needs no further 
introduction.
    Without objection, the Director's written statement will be 
made a part of the record.
    Director Cordray, you are now recognized for a summary of 
your testimony. Thank you.

STATEMENT OF THE HONORABLE RICHARD CORDRAY, DIRECTOR, CONSUMER 
                  FINANCIAL PROTECTION BUREAU

    Mr. Cordray. Thank you, Mr. Chairman, Ranking Member 
Waters, and members of the committee. Thank you all for 
inviting me to testify today about the semi-annual report of 
the Consumer Financial Protection Bureau.
    As the ranking member mentioned, my testimony today marks 
the 50th time that a senior Bureau official, usually me, has 
testified before Congress. You would think I would have it down 
by now, but there are always challenges.
    The Consumer Financial Protection Bureau is the Nation's 
first Federal agency, as you know, with the sole focus of 
protecting consumers in the financial marketplace. Financial 
products like mortgages, credit cards, and student loans 
involve some of the most important financial transactions of 
people's lives. Since we opened our doors, we have been focused 
on making consumer financial markets work better for the 
American people, the honest businesses that serve them, and the 
economy as a whole.
    My testimony today focuses on the Bureau's fifth semi-
annual report to Congress, which describes our efforts to 
achieve its important mission. Through fair rules, consistent 
oversight, appropriate enforcement of the law, and broad-based 
consumer engagement, the Bureau is helping to restore American 
families' trust in consumer financial markets, to protect 
American consumers from improper conduct, and to ensure access 
to fair, competitive, and transparent markets.
    Through our enforcement actions to date, counting 
yesterday's enforcement action, we have aided in efforts to 
refund more than $4.3 billion to consumers who fell victim to 
various violations of consumer financial protection laws. In 
the fall of 2013, for the first time we took action, in 
conjunction with multiple State Attorneys General, 49 out of 
50, against an online--actually, that is a different matter--a 
dozen or so Attorneys General against an online loan servicer 
for illegally collecting money that consumers did not owe. We 
took action against a payday lender for overcharging 
servicemembers in violation of the Military Lending Act, and 
robo-signing court documents. We took action against an auto 
lender for discriminatory loan pricing. And we partnered with 
49 States in bringing an action against the Nation's largest 
nonbank mortgage loan servicer for misconduct at every stage in 
the mortgage servicing process. Yesterday, we announced a 
resolution with the Justice Department and 49 of 50 States 
against another large mortgage loan servicer that will put $500 
million in relief back to consumers across this country in all 
of your districts.
    In January, mortgage rules that the Bureau issued to 
implement provisions of the Dodd-Frank Act took effect, 
establishing new protections for homebuyers and homeowners, 
mentioned by a number of you in opening statements. During the 
reporting period, we also issued another major mortgage rule 
mandated by Congress: a final rule to consolidate and improve 
Federal mortgage disclosures under the Truth in Lending Act and 
the Real Estate Settlement Procedures Act, which we have 
called, ``Know Before You Owe.'' We also issued an Advance 
Notice of Proposed Rulemaking on debt collection, asking the 
public in-depth questions about a range of issues relating to 
the debt collection market, which is the Bureau's most frequent 
source of consumer complaints.
    To promote informed financial decision-making, we have 
continued providing consumers with online resources, including 
the AskCFPB section of our Web site, where we have the answers 
for more than 1,000 frequently asked questions.
    A premise at the heart of our mission is that consumers 
should be treated fairly in the financial marketplace and that 
they deserve a place that will facilitate the resolution of 
their complaints when that does not happen. As of June 1, 2014, 
the most up-to-date numbers are that we have now received 
nearly 375,000 consumer complaints on credit reporting, debt 
collection, money transfers, bank accounts and services, credit 
cards, mortgages, vehicle loans, payday loans, and student 
loans.
    The progress we have made has been possible thanks to the 
engagement of hundreds of thousands of Americans who have used 
our consumer education tools, submitted complaints, 
participated in rulemakings, and told us their stories through 
our Web site and at numerous public meetings from coast to 
coast. We have also benefited from an ongoing dialogue and 
constructive engagement with the institutions we supervise, as 
well as with community banks and credit unions, with whom we 
regularly meet.
    Our progress is also thanks to the extraordinary work of 
the Bureau's own employees--essential, dedicated public 
servants of the highest caliber who are committed to promoting 
a fair consumer financial marketplace. The Bureau's employees 
are our greatest asset.
    Their well-being is the reason I was personally troubled 
and take very seriously the concerns that you have raised about 
the Bureau's work environment. That is why we took broad and 
decisive action to remedy issues related to our performance 
rating system. After our analysis showed ratings disparities 
across a wide range of employee characteristics, we negotiated 
with our union to discard the system, announced that we would 
adjust past compensation, and agreed to a joint working group 
with our union to design a new system. By self-correcting and 
self-remediating disparities in our own performance ratings, we 
are holding ourselves to the same standard we expect from the 
industries we oversee.
    I have also elevated our Office of Minority and Women 
Inclusion (OMWI) to work directly out of my office and tasked 
its leader, Stuart Ishimaru, with conducting Bureau-wide 
listening sessions to hear directly from our employees about 
their experience with equality and fairness. We have also 
instituted further mandatory Equal Employment Opportunity (EEO) 
training for all managers. We will continue to work on creating 
an organization that consciously embraces diversity.
    Mr. Chairman, Ranking Member Waters, on all these issues, I 
appreciate your active oversight and I believe it improves our 
agency. I also want to be careful about protecting rights to 
privacy and due process of our employees, and so today I will 
try to respect their rights by avoiding any detailed discussion 
of pending personnel actions or individual EEO cases that are 
fundamentally private matters in this public hearing. We are 
glad to provide the committee with closed-door briefings as 
desired, and as we have done. We take all such allegations 
seriously and will continue to seek to resolve any of these 
issues through the appropriate channels.
    Every day, my colleagues at the Bureau do great work to 
accomplish the goals of renewing people's trust in the 
marketplace and ensuring that markets for consumer financial 
products and services are fair, transparent, and competitive. 
These goals not only protect consumers, they also support 
honest businesses that compete fairly, and they improve the 
stability of our economy as a whole.
    Thank you. I look forward to your questions.
    [The prepared statement of Director Cordray can be found on 
page 68 of the appendix.]
    Chairman Hensarling. Thank you, Director Cordray.
    The Chair now yields himself 5 minutes for questions.
    Mr. Director, it is no secret that you and I have had both 
public and private discussions about the accountability of your 
agency. I look again at the cost, the spiraling cost, of the 
office renovations. I look to the national debt clock to my 
left and my right. I think a lot about this issue, and I think 
a lot about how it impacts my children, particularly when I 
gaze upon them.
    So, the last time you were here, you stated that the cost 
of this building, I believe, was less than the figure I had, 
but now the most recent GSA cost is $139 million-and-change; a 
$22 million cost to temporarily sublease space from the GSA 
while the renovations take place; $13 million, other costs 
associated with the temporary 3-year occupancy of your 
temporary space at One Constitution Square--this is from your 
documents; $339,000 to move to the temporary space; $9,278,000 
to pay Skidmore, Owings & Merrill for the renovation.
    By my math, this now adds up to $184 million on a building 
that you do not own. Do you agree or disagree with the math?
    Mr. Cordray. A couple of things.
    First of all, the government does own that building. And if 
it is--
    Chairman Hensarling. I understand that. My time is limited, 
Director Cordray. If you don't believe the math, if you 
disagree, just please tell me that you disagree.
    Mr. Cordray. What I would simply say is that there are 
numbers about the cost of construction to renovate the 
building, which has been our previous focus. There are also 
attendant costs now that we will have to and have, in fact, 
moved out of the building so the construction can be speeded up 
and therefore more--
    Chairman Hensarling. I understand that, Director Cordray.
    Let me ask you about a couple of specific costs. Again, 
these come from public documents that have been filed. So, with 
taxpayer money--you do agree it is taxpayer money, do you not, 
that you are spending?
    Mr. Cordray. I would say that I have children, too, and I 
care about the debt, just as you do, for the same reasons.
    Chairman Hensarling. I just asked, do you agree it is 
taxpayer money, Mr. Director, that you are spending?
    Mr. Cordray. It is Federal--
    Chairman Hensarling. Okay.
    Mr. Cordray. --Government money. We come from the Federal 
Reserve, as you know.
    Chairman Hensarling. Okay. So it is difficult for you to 
say--
    Mr. Cordray. It is American money.
    Chairman Hensarling. --it is taxpayer money.
    Mr. Cordray. I don't know whether ``taxpayer'' is the right 
term or not, but it is the money of Americans.
    Chairman Hensarling. Oh, I assure you those who pay the 
taxes feel it is the right term.
    And so now, what I see--and I, admittedly, have not visited 
your building. I have visited some Federal buildings. But I 
don't know how many have ``a shady tree bosque, an elevated 
timber paved porch covered by dark-bronze-color trellis, an 
illuminated limestone seat wall, a raised water table flowing 
over a waterfall of naturally split granite, and a four-story 
interior glass staircase.''
    Now, the last time you were here, Mr. Director, you 
yourself had a lot of angst about this process, and you said, I 
believe--and I don't have your quote right in front of me--that 
you were not finishing out an opulent space. I don't know how 
many other Federal buildings have these features. Clearly, this 
is something which is within your power to say ``no'' to, to at 
least symbolically tell the American taxpayer you understand 
that it is their money.
    Mr. Cordray. I think every halfway-functioning shopping 
mall in America has the kind of features you describe. That is 
puffing by--
    Chairman Hensarling. It is their money, it is not--
    Mr. Cordray. --people trying to work through the permit 
process.
    Chairman Hensarling. --taxpayer money, Mr. Director, 
though. That is my point. I don't know, do other Federal 
buildings--I haven't seen a waterfall.
    Mr. Cordray. Come see the building. It is a dump. You want 
to come see it? Congressman McHenry has been there with his 
staff. I would invite--
    Chairman Hensarling. Well, apparently, it is--
    Mr. Cordray. --each of you and your staff to come.
    Chairman Hensarling. --not going to be a dump after you 
finish with your granite waterfalls--
    Mr. Cordray. Come see the building.
    Chairman Hensarling. --and your tree bosque. That is really 
the point, isn't it, Mr. Director?
    Let me move on, then, to a different point. I know you were 
aware, clearly aware, of the testimony that Angela Martin 
presented before this committee. One of the things she 
testified to as part of her testimony was that on the evening 
of August 7, 2013, you called her and told her to have her 
attorneys ``back down.''
    First question: Did you call her on the evening of August 
7, 2013?
    Mr. Cordray. I have had a number of conversations with Ms. 
Martin over the course of her time at the Bureau. We are 
friends and colleagues. I helped hire her. We have talked 
about, at times, her different situations, and I have always 
been one--
    Chairman Hensarling. Mr. Director, I will give you a chance 
to give some context, but can you first answer the question? 
You have certainly had an opportunity now to review the matter. 
Did you call her on the evening of August 7, 2013?
    Mr. Cordray. I have had a number of conversations with her. 
I don't dispute any particular conversations. My goal was to 
productively resolve her matter--
    Chairman Hensarling. So you don't dispute--
    Mr. Cordray. --and we have been doing so.
    Chairman Hensarling. --calling her on August 7, 2013?
    Mr. Cordray. I don't know offhand whether I did or not, but 
I certainly believe that I did if she says so.
    Chairman Hensarling. Do you agree or disagree that at that 
time, you told her to have her attorneys back down?
    Mr. Cordray. I simply wanted to have Ms. Martin reach a 
productive resolution of her complaint, which we did do so 
within a matter of a couple of weeks. That later was reopened. 
We have now resolved it again.
    I want her to have a good position at the Bureau where she 
can do good work for consumers. That is what she testified she 
wants. I was heartened to hear that. That is what I want, as 
well.
    Chairman Hensarling. She used the phrase ``back down,'' Mr. 
Director. Did you tell her to have her attorneys back down?
    Mr. Cordray. I don't recall the conversation. But I wanted 
her to have a productive resolution. I believe that is what she 
wanted, and I think it is what she has wanted. And I am glad to 
see that we are now achieving that. I think she will make a big 
difference for consumers.
    Chairman Hensarling. The time of the Chair has expired.
    The Chair now recognizes the ranking member for 5 minutes.
    Ms. Waters. Thank you very much, Mr. Chairman.
    Mr. Cordray, we asked the chairman and the Members on the 
opposite side of the aisle many times to allow you to come 
before this committee to discuss the allegations of 
discrimination, et cetera. They did not do that. They chose, 
rather, to go the subpoena process, to somehow try and emerge 
in this problem with the description or definition of people 
who really are going to fight for employees who are 
discriminated against, et cetera.
    We don't want to see this used as a political football. 
Take the rest of the time that I have and tell us how you have 
managed this problem.
    Mr. Cordray. This has been active oversight by this 
committee and the subcommittee. I always appreciate the 
oversight. Sometimes it can be painful to point out 
shortcomings of ours, and that has occurred here. It is also an 
opportunity for us to face those frankly and squarely and 
attempt to do better, and that is what we have done and are 
doing. This oversight has led us, in particular, to recognize 
that a performance management system that we put in place that 
was undoubtedly overly ambitious for an agency that was just 
starting up and was partially staffed, did not work well for us 
and did not work well for employees. I heard complaints about 
it all along on a variety of scales.
    We have determined that it categorized employees 
differently on a disparate-impact basis among different 
categories of employees. That was not appropriate, in my view. 
We have now discarded that system and are working with the 
union in negotiations. We will have a new system for the coming 
2 years, and we will work with the unions on a long-term 
solution to this.
    In addition, it felt to me that employees who were harmed 
by the previous system were entitled to be squared up for what 
should have been the treatment of them, and that resulted in 
remediation. Those were big steps to take. Other agencies have 
had similar issues and have resolved them similarly but often 
after long legal processes and drawn-out legal processes. We 
remediated this quickly because we thought it was the right 
thing to do and it was important for us to do that. Broader 
than that are issues of culture at the Bureau, and these are 
things that are very top-of-mind for me and personally engaged 
in going forward.
    Stuart Ishimaru, whom you know, former EEOC Commissioner, a 
very strong figure, is our head of the Office of Minority and 
Women Inclusion. He has been elevated to directly work with me 
on these issues, and he is engaged across the Bureau in 
understanding how people may be affected by culture, job 
opportunities, promotions, and the like. That is an ongoing 
investigation. We also are retaining a third-party consultant 
who will help us focus on these issues going forward.
    Frankly, as I look back, we were a start-up agency. We 
still are, in many respects. We were ambitious in what we were 
trying to accomplish. We tried to do too much and put a lot of 
pressure on our employees, and that created various issues and 
problems. I take responsibility for that. It is important for 
us to understand and fix those things going forward. I am 
dedicated to doing so. I know you will have me back repeatedly 
to ask about our progress, and I will be happy to provide 
updates on that progress. And I expect you will find that we 
will make significant progress. And that will be good for the 
Bureau and good for its employees, which is ultimately my goal. 
I want everybody at the Bureau to have a working environment in 
which they can do their best work on behalf of American 
consumers. In spite of all the obstacles, they have done 
extraordinary work in the first 3 years of the Bureau, and I am 
confident they will continue to do extraordinary work. The 
people I am proud of are the people who work every day at the 
Bureau and who work hard to stand up for American consumers. 
And it is a necessary role, and it is an important role. And I 
appreciated the chairman, in his opening, recognizing that 
consumer protection is very important for Americans, who, after 
all, are constituents in each of your districts and who need 
someone standing on their side to see that they are treated 
fairly in the financial marketplace. That is what we will 
continue to do. And the oversight of this committee, painful as 
it has been at times, has been very helpful to us and, I 
believe, will be a benefit to our employees.
    Ms. Waters. Thank you very much.
    And as I understand it, you have included the employees 
themselves in getting involved in helping to carry out the kind 
of rules and oversight within the agency. Would you tell us a 
little bit more about that?
    Mr. Cordray. Yes, very much so. And this may have been 
something we neglected, looking backwards.
    We did not have a union until last year. The union has 
actually forged a very productive working relationship with us. 
They were adamant that the performance management system needed 
a fundamental overhaul. I had come to agree with that, myself. 
That is where we arrived in the bargaining negotiations. And 
they have had a strong voice in resolving some issues that were 
causing pain to our employees, such as issues around office 
space, issues around travel, and other various complaints we 
have heard.
    I do want to stress, and I think it is important, our 
annual employee survey, which actually, contrary to some of 
this scrutiny, indicates a group of employees who have high 
morale, higher than the average government agency, and a strong 
dedication to the mission of the agency.
    The Bureau's employees are the ones who do the 
extraordinary work every day. I do a limited amount of work; I 
do as much as I can, but I am just one person. They do all this 
work--putting $4 billion back in the pockets of consumers, 
making sure that the mortgage market is safe but not overdone, 
and that access to credit is respected, as a number of you have 
indicated is important to you. That is the important work of 
the agency, and it is done not by me but by close to 1,400 
people of whom I am very proud.
    Ms. Waters. Thank you. I yield back.
    Chairman Hensarling. The Chair now recognizes the 
gentlelady from West Virginia, Mrs. Capito, the chairwoman of 
our Financial Institutions Subcommittee, for 5 minutes.
    Mrs. Capito. Thank you, Mr. Chairman.
    And thank you, Mr. Director.
    I would like to go to the issue of the collection of the 
data, the personally identifiable information (PII) data.
    In the Federal Register, on April 16th, I believe, of this 
year, it was noted that certain data was going to be collected 
in conjunction with the CFPB and the FHFA. And last week, we 
had a hearing where Congressman Westmoreland from Georgia read 
through the extensive list, and it was quite extensive.
    I would like to ask you about just a couple of those, 
although I am sure my colleagues will have other questions.
    First of all, religion is mentioned as one of the pieces of 
data that is going to be collected on individuals. What kind of 
relevance does that have to why we are collecting this data?
    Mr. Cordray. I would like to say two things. One is a 
general point, and one is specific to that point.
    The general point is: What people are reading from, and it 
has been somewhat misunderstood and misinterpreted, is a 
bureaucratic item known as a statement of records notice 
(SORN). It calls out what may or may not occur about 
collections of information and the effect on privacy, so it was 
overstated in terms of what the National Mortgage Database 
actually will be.
    I am going to assure you today and commit to you, as I did 
to the Senate Banking Committee last week, that we don't have 
any purpose in collecting religion. That will not be in the 
National Mortgage Database, I can assure you of that.
    Mrs. Capito. Okay. So that information will not be 
collected.
    Mr. Cordray. What is happening is--
    Mrs. Capito. Well, that is a ``yes'' or ``no'' right there.
    Mr. Cordray. It will not be in the National Mortgage 
Database.
    Mrs. Capito. So--
    Mr. Cordray. What we have to--let me try to explain this, 
because there is a gap there that I want to make sure you 
understand. In order to get information, we have to buy it from 
commercially available sources. Whatever we buy is an off-the-
shelf thing that has things in it. Then we work with the credit 
reporting agency, not employees of the Bureau or FHFA, to de-
identify that information and take out things like name, 
address, and Social Security number. Religion will be among the 
things taken out. None of our employees who work with the 
database will have any of that information available. We don't 
need it, and it would not be appropriate. And that is my 
commitment to you.
    Mrs. Capito. Okay. So that is kind of an in-between answer 
there.
    What about education and employment records? It says, 
``records.'' Does that mean hiring, firing, transcripts of 
educational achievement?
    Mr. Cordray. I don't believe any of that will be in the 
National Mortgage Database, but I would be happy to have staff 
get back to you on those specific points. Again, the 
information will be de-identified before it is poured into the 
National Mortgage Database, and our employees will only have 
access to the de-identified information.
    Mrs. Capito. Okay.
    Life events in the last few years and financial events in 
the last few years--how does that get collected if people don't 
self-identify what a life event would be? Is that--
    Mr. Cordray. Again, I don't believe that is necessarily--
    Mrs. Capito. --a thing you can purchase?
    Mr. Cordray. --any of that, anything about you or me 
personally is going to be part of this mortgage database. But I 
am happy to have staff follow up with you to give you very 
specific answers on--
    Mrs. Capito. Who makes the determination of what is de-
identified?
    Mr. Cordray. It is, frankly, a fairly standard thing that 
is done throughout the government. Particular identifiers that 
would tell us that it is my information or your information 
such as name, address, Social Security number, phone number, 
and bank account numbers are stripped off. That is typically 
what we do with all of our databases, because we are not 
interested in knowing what Representative Capito was doing for 
dinner last night or any of that spending information. Private 
companies care a lot about that, and that is what they home in 
on.
    We are interested in knowing, what is the pattern of how 
consumers are affected in the marketplace? And de-identified 
information is perfectly sufficient for those purposes. We 
don't need and we don't want more. The other stuff potentially 
gives us problems and doesn't advance our mission.
    Mrs. Capito. Okay.
    One last question: How many people would have access to 
this database within the CFPB and the FHFA? I would assume that 
numerous--
    Mr. Cordray. It would be a limited number of people. My 
understanding is that the National Mortgage Database will not 
be used for enforcement or supervision purposes. It is a 
research tool.
    It is designed to close a gap that Chairman Bernanke 
described several times both publicly and to me, and Chair 
Yellen has reinforced. We didn't know enough about the mortgage 
market before the crisis. If we had, we might have headed off 
some aspects of the crisis.
    That blind spot was enormous--enormous cost to the American 
people. I know your constituents and my colleagues and friends 
and neighbors, people lost jobs, people lost homes. If we had 
known more about what was happening in the mortgage market, we 
might have headed that off.
    This information is very crucial for those purposes.
    Mrs. Capito. Okay.
    And finally, I am going to make a quick comment, because I 
just have 20 seconds left. I think that you can certainly 
appreciate the data security issues that we are--
    Mr. Cordray. I do.
    Mrs. Capito. --dealing with here, the most publicized one 
being the Target breach, but--
    Mr. Cordray. Yes.
    Mrs. Capito. --others, where millions and millions of 
records have been compromised. And that is something that I 
think--if you are going to cast a wide net, which you obviously 
are, to collect everything and then only take a few things, I 
still think it doesn't give us a measure of comfort, not just 
about the security issue but the usage of the information once 
we get it.
    But thank you.
    Mr. Cordray. I am happy to try to continue to work with 
you. I know you and some of your colleagues and those in the 
Senate are very concerned about this.
    GAO is looking at our data collection efforts. They will 
give us a thorough account of that, I am sure, and we are glad 
to learn from it. We don't want to have these problems either. 
It is not going to be helpful to my agency.
    Chairman Hensarling. The time of the gentlelady has 
expired.
    The Chair now recognizes the gentlelady from New York, Mrs. 
Maloney, the ranking member of our Capital Markets 
Subcommittee, for 5 minutes.
    Mrs. Maloney. Thank you very much, Mr. Chairman, and 
Ranking Member Waters.
    And welcome, Director Cordray. This is your fifth semi-
annual report to Congress. And I believe your agency has a 
remarkable success rate in helping consumers and veterans, our 
servicepeople, not only on large policy decisions but on 
individual problems, processing truly tens of thousands of 
consumer complaints. So I want to recognize that good work.
    And I want to focus on the work that you are doing now on 
prepaid cards. I read in the paper that you are conducting a 
review and will be issuing a report on prepaid cards. And I 
went to the Internet when you put up two suggested forms on how 
to disclose information. I am a big fan of number one. Model 
number one, I think, is far clearer.
    But I understand it was out for comment. Comment closed in 
April. Could you give us some feedback on what you learned from 
this field testing of better disclosure on prepaid cards so 
that consumers understand what they are buying and the services 
they are getting?
    Mr. Cordray. I feel like we got meaningful additional 
feedback just there. I will put you down as a fan of model 
number one. We will add that to our data.
    What we are doing there is, prepaid cards are a growing, 
fast-growing, explosively growing market for a lot of Americans 
and, particularly, a lot of low- and moderate-income Americans, 
who often will have benefits loaded by State and local 
governments and the Federal Government onto these cards. And 
then they can be used, if they are general-purpose reloadable 
cards, as a kind of a bank account for people who don't 
necessarily have access to the banking system.
    What people don't understand right now is those cards are 
not protected by any of the consumer financial protection laws 
currently. They are a new product. That is a hole in the 
fabric. We will be not just doing a report, but we are going to 
be putting out regulations that will provide new protections 
for those cards.
    One of the things we are trying to figure out, as you 
noted, is when you have a very small package of a prepaid 
card--like you see at CVS and places where you buy them off the 
rack--how do you package the kind of disclosures consumers 
need? It is a very tricky and difficult thing because there is 
limited real estate available for that. And the rest of the 
disclosures may be inside the packet, so you don't see them 
all.
    Mrs. Maloney. I understand that. It is not helpful to have 
the disclosure inside, the fees inside. I hope you are being--
will you address that in your rules and make--
    Mr. Cordray. We will be addressing it.
    Mrs. Maloney. --sure consumers can see that?
    Mr. Cordray. It is not as helpful, absolutely. And so that 
is why we are trying to create clear, straightforward, 
comparable apples-to-apples disclosure so that people can look 
at different prepaid cards and get a good sense of the fees, 
the key fees. And that is work we are doing right now.
    Mrs. Maloney. Another area is that two prepaid companies 
allow for overdraft. And I, for one, feel a prepaid card is 
money management for individuals. Let it be a prepaid card, not 
get into credit and credit cards. So I am a fan of not allowing 
overdrafts on prepaid cards.
    Can you comment on that? Are you doing a study on that in 
any way?
    Mr. Cordray. I will note your comments on that. That is one 
of the issues that has come up quite a bit with respect to this 
rule. We are working through that, and I expect we will have a 
rule toward the end of summer. And that will be out as a 
proposal for public comment. Lots of people will have a say on 
that. But that is certainly one of the main issues that is 
being considered on these cards.
    Mrs. Maloney. One of the areas that we worked together on 
was credit card reform. And this body passed a strong credit 
card reform act, which the Pew Foundation said saved consumers 
$10 billion a year, some economists said that it saved $20 
billion--they readdressed their numbers down to $16 billion a 
year; still, that is a lot of money--by ending deceptive 
practices.
    And my question is, in your review of credit cards, how is 
it working? Are you still getting credit card complaints? Or is 
this an area that is working well for consumers and for the 
overall economy?
    Mr. Cordray. We actually now, under the reform law, are 
required to report to Congress each year on the effects of the 
CARD Act and what is going on in the credit card market.
    I would definitely give a huge thumbs-up to the work this 
Congress did on the CARD Act. It has protected consumers, saved 
them money, and made things much more transparent so that they 
can see on the front end what they otherwise got stuck with on 
the back end.
    Many of the things that Congress sought to accomplish have, 
in fact, been accomplished--not always the case with 
legislation, but, in this case, it has been good. And you can 
see it in the satisfaction surveys J.D. Power does of 
consumers. The respect and trust in the credit card market has 
steadily grown since the CARD Act was passed, and I do think 
that is a significant reason why that has happened.
    Mrs. Maloney. Thank you very much.
    Chairman Hensarling. The Chair now recognizes the gentleman 
from Alabama, the chairman emeritus of the committee, Mr. 
Bachus, for 5 minutes.
    Mr. Bachus. Director Cordray, when you give us assurances 
that you are not going to use this information, like personally 
identifiable information, all we really have to go on is that 
in the Federal Register, your agency has asked permission to 
collect all this information. Isn't that true?
    Mr. Cordray. Again, in order to have the information--
unless we are going to go out and put a lot of burden on 
institutions by having them dig around and recreate new 
information--what we are essentially doing is we are buying 
off-the-shelf products, and then we are arranging to have a 
credit reporting agency de-identify that information before our 
employees can ever touch it, see it, and work with it. That is 
what is happening with the National Mortgage Database, and it 
is typically our process.
    Mr. Bachus. But what I am saying is, you are getting 
permission, you are asking for permission to collect all this 
information. I am not saying what you intend to do with it. You 
are collecting all this information.
    And the American people, and I think you will agree with 
me, are very concerned about their personally identifiable 
information.
    Mr. Cordray. And I am part of the American people. I am 
very concerned about it, too.
    Mr. Bachus. At what point will all this come out--you are 
saying their religious affiliation, their languages spoken. At 
what point will it come out? After it gets to the agency or 
before it is ever--
    Mr. Cordray. Before any of our employees have any 
opportunity to access or work with that database.
    Mr. Bachus. If it is going to be taken out, why not take it 
out and then send it to your agency? Let the people who have it 
take it out?
    Mr. Cordray. So--
    Mr. Bachus. Wouldn't that be--
    Mr. Cordray. --that is possible. We can potentially change 
some of this, but the way we set it up was a third party that 
deals with this kind of information all the time, a credit 
reporting agency, is the one taking it out.
    Mr. Bachus. I understand that. What I am saying is, you are 
saying, ``Give us this information, and we will take it out.'' 
Wouldn't it be a better approach to say, ``Take all that out, 
and then send it to us?''
    Mr. Cordray. Look, it is simply a matter of cost. By the 
time it comes to us, before our employees can ever work with it 
or see it, it will be de-identified. That is the crucial thing.
    Mr. Bachus. But the cost--
    Mr. Cordray. But I am happy to think further about the 
point you are raising.
    Mr. Bachus. But removing all that information you promise 
us that you don't want, you don't need, you are not going to 
share, why even receive that information?
    Mr. Cordray. It is simply a matter--
    Mr. Bachus. And I will say, if you ask permission, you may 
not take it out, but this regulation is going to be here until 
it is repealed. There may be another Director.
    And, also, what troubles me is that you have asked this 
permission. You said, where there is an indication of a 
violation or potential violation of law, whether civil, 
criminal or regulatory in nature and whether arising by general 
statute or particular program statute or by regulation, rule, 
or order issued pursuant thereto. That almost seems like any 
reason.
    The relevant records and the system of records may be 
referred as a routine use to the appropriate agency, whether 
Federal, State, local, tribal, foreign, or a financial 
regulatory organization, including FinCEN, and other law 
enforcement government entities, as determined by your agency 
and by FHFA to be appropriate.
    So you can share this information with any other government 
agency. And you may intend to scrub this information, but 
someone else, once it is received, may not.
    And you say only a few people will have the ability to go 
in and see that. If we are talking about scrubbing 227 million 
mortgages alone, not to speak of the credit transactions of 
credit cards, we are talking about thousands of people who will 
have to be doing that.
    Mr. Cordray. Again, that will be done before the 
information comes to our agency, so any potential sharing will 
be the de-identified information.
    Mr. Bachus. If it is done before you get it, why ask 
permission to receive it? Do you see my point?
    Mr. Cordray. I do. I think that is a fair point. And I 
would like to come back to you on that.
    Mr. Bachus. Sure.
    Mr. Cordray. And there may be some different ways we can 
capture that.
    Mr. Bachus. And let me say--I have 41 seconds.
    Mr. Cordray. GAO is also looking at this, and--
    Mr. Bachus. Sure. And I would like to pursue that with you.
    Mr. Cordray. Yes.
    Mr. Bachus. You know, participants in the auto financing 
industry, auto dealers, they keep asking for clarification on 
the use of disparate impact methodology being applied to 
vehicle finance. They still don't have that, do they? You are 
enforcing a rule and they really don't know what your 
methodology is.
    Mr. Cordray. There has actually been a lot of discussion 
with industry around this, and we have presented our 
methodology. There was a webinar with the Federal Reserve, 
where we and the Federal Reserve largely agreed on the 
methodology and presented to industry. We--
    Mr. Bachus. Would you share that with us?
    Mr. Cordray. I believe we have. I know--
    Mr. Bachus. Okay.
    Mr. Cordray. --the chairman has been very vigorous in 
oversight on this issue, and we have provided a lot of 
information.
    Mr. Bachus. If you can just share your information to 
clarify the use of that--
    Mr. Cordray. I can say one more thing today--
    Mr. Bachus. Sure.
    Mr. Cordray. --I know is of interest to both you and many 
others. We are working on a White Paper on the proxy 
methodology, in particular, that we expect to have out later 
this summer. We are continuing to try to respond on this issue 
to make sure people understand.
    Mr. Bachus. Thank you. And, finally--
    Mr. Cordray. The industry works on this all the time on 
their own.
    Mr. Bachus. Okay. Thank you--
    Mr. Cordray. They know this very well. They are trying to 
fend off private lawsuits.
    Mr. Bachus. And thank you for the billions of dollars' 
worth of refunds that you have gotten for the American people. 
I do appreciate that.
    Mr. Cordray. Thank you.
    Chairman Hensarling. The time of the gentleman has expired.
    The Chair now recognizes the gentlelady from New York, Ms. 
Velazquez, for 5 minutes.
    Ms. Velazquez. Thank you, Mr. Chairman.
    Mr. Cordray, thank you for your service, and welcome to the 
committee.
    Deceptive debt collection practices are becoming a major 
issue for consumers and servicemembers alike. Nearly one-third 
of consumer and 45 percent of servicemember complaints were 
associated with the debt collection industry.
    What is your agency doing to address this issue? And is 
there any outreach that you are doing today to inform consumers 
of their rights?
    Mr. Cordray. It is a great issue. It is an important issue. 
It is one on which we are actually receiving more consumer 
complaints than any other issue, interestingly. And we are 
trying to address it with all of our tools.
    So, just briefly, what we are doing: We have had a number 
of enforcement actions against debt collectors that we believe 
and found to have been violating the law. We have the ability 
to supervise and examine debt collectors now for the first time 
at the Federal level, and we are engaged in that process, which 
helps clean up a lot of violations and puts people on their 
toes.
    We have developed some consumer tools, such as sample 
letters that consumers can use if they believe they are being 
called and harassed at the workplace, which is not appropriate 
after the appropriate hours, other things, and exercise their 
rights.
    And, perhaps most important of all, we are embarked on a 
rulemaking process--we are in the early stages of it now--where 
we are going to be overhauling the rules that apply to the debt 
collection industry broadly, responding to a number of the 
types of concerns that you are raising. We also have heard from 
people all over the country, both consumer groups and industry, 
and also just regular folks that we talk to in our public 
hearings.
    Ms. Velazquez. Thank you. And the Dodd-Frank Act directed 
HUD to publish new information materials on the importance of 
presale home inspections. I understand that HUD is in the final 
stages of completing that process. With all the work CFPB has 
done to better inform consumers during the home-buying process, 
has there been any discussion about making similar home 
inspections literature available to new homebuyers?
    Mr. Cordray. First of all, I am pleased. HUD has been a 
great partner, and that is a great initiative that they are 
doing. I actually--I mentioned this before to this committee--
worked on that issue at the State level years ago when I was in 
the Ohio Legislature, and it is very important. We are working 
together with HUD on lots of outreach information to consumers. 
They have some great substance and tools, and we are developing 
some, I think, great substance and tools, in particular, I want 
to say, around housing counselors. We have worked together to 
get information out to the public that I think will be very 
helpful to people, particularly in saving homes and also 
thinking hard about how to go about buying new homes.
    So, it is a good partnership. I have enjoyed working with 
Secretary Donovan. I believe he is now potentially on his way 
over to OMB, and he will be a great partner there, and I am 
looking forward to the next HUD Secretary, whom I believe had a 
hearing yesterday, and we will work with him, as well.
    Ms. Velazquez. Thank you.
    Section 1071 of the Dodd-Frank Act requires banks and 
lenders to collect and report credit application data on small 
businesses as well as minority and women-owned businesses. Can 
you address recent criticism that collecting this information 
will be too onerous for banks and could lead to less small 
business credit?
    Mr. Cordray. Our strategy on this is twofold. First, we 
have a number of things Congress has required us to do, and one 
is to overhaul the Home Mortgage Disclosure Act (HMDA) database 
information. We have worked with the Federal Reserve. That will 
be moving over to us in the next several years, and we believe 
we may be able to build on that to then complete the 
requirements of Section 1071, the small business information, 
which will be potentially of great use to small businesses 
across the country. I also have been a little remiss. There is 
a new SBA Administrator in. I am looking forward to reaching 
out and working with her to see if we may be able to work 
together in scoping this out.
    But that is the sort of approach we are taking. I think it 
makes sense. And in the HMDA rules, we are looking for ways to 
streamline some of the data collection so it is easier for 
industry, and I think they are enthusiastic about what we are 
proposing in various respects, and we would like to be able to 
do the same here. We want to minimize burden if we can, but 
still accomplish the purposes of this statute.
    Ms. Velazquez. Do you have any sense as to when you expect 
to publish rules implementing this section?
    Mr. Cordray. The HMDA rules will need to come first. That 
is the sort of cart-and-horse order, I think, that works here, 
and then this will follow in turn.
    Ms. Velazquez. Thank you, Mr. Chairman.
    Chairman Hensarling. The gentlelady yields back.
    The Chair now recognizes the gentleman from New Jersey, Mr. 
Garrett, the chairman of our Capital Market Subcommittee.
    Mr. Garrett. Thank you, Mr. Chairman.
    And thank you, Director.
    The American public asks us in Congress, in Washington, to 
be prudent in our use of their tax dollars, and I believe all 
the banking regulators and other regulators in D.C. ask the 
institutions that they regulate to be prudent in their 
management of their operations as well. So let me just spend a 
minute or two on where the chairman initially began his 
questioning with regard to the less-than-prudent handling of 
your operations and the spending of money on your headquarters.
    Correct me if I am wrong, but I don't think I am on any of 
these numbers, the original estimate for the cost of the 
reconstruction of your building was $55 million, then it went 
up to $95 million. In May of this year, your legislative staff 
confirmed that the cost of demolition and reconstruction of 
your building would be $139 million. Your staff is correct on 
that, I assume, Director Cordray?
    Mr. Cordray. What you just described is a garble that we 
have seen repeated in many places, that this supposedly started 
off as a $55 million project and now has ballooned into 
something other. That is not correct, and I tried to correct 
the record in the Senate Banking Committee last week and I will 
do it again here.
    Mr. Garrett. What about--
    Mr. Cordray. That was never our estimate for the project. 
That was a placeholder budget number in the first year of what 
we were devoting toward the larger project.
    Mr. Garrett. What are the numbers right now, then? Your 
legislative staff gave us in May, the cost of demolition, the 
construction of the building, at $139 million. That is what 
they told us. Is that correct?
    Mr. Cordray. I believe that is correct.
    Mr. Garrett. Okay.
    Mr. Cordray. And an audit done of the building before the 
CFPB existed indicated that the work done on it at that point 
required $107 million worth of work, and there is actually more 
that has deteriorated since.
    Mr. Garrett. Right. So on top of the $139 million, you have 
the lease of the temporary space of $22 million; the top of 
that is a utilities and securities for $13 million, and the 
combined amount on the three task orders already is $9.2 
million; some other things for about $400,000. So you add it 
all up, and right now we are at $184 million, give or take. 
This is from your staff and from another place. That is a 
ballpark figure?
    Mr. Cordray. Again, that is including a lot of things that 
are not cost to construction. They are other things. The 
reason--
    Mr. Garrett. This is what it would cost to go from the dump 
that you are in to a building that you just told the Senate, 
even after we spend this money, in your own words, is still not 
optimal. Is that correct?
    Mr. Cordray. I would say it will be good, not optimal. That 
is correct, yes.
    Mr. Garrett. Right. Okay.
    In January, you told the chairman the number that you were 
looking at was around about $70 million at that point in time. 
That was your testimony here for the cost. Maybe you were just 
basing that off of the $55 million as the placeholder. Be that 
as it may, we are now at--
    Mr. Cordray. I don't recall that. I would be interested in 
seeing that excerpt.
    Mr. Garrett. Okay. Be that as it may, we are now at $184 
million. Depending on how you break down the cost of that on a 
square-footage cost, it is more than double of what any 
commercial luxury property in D.C. is. Do you think that is a 
prudential way of handling this matter?
    Mr. Cordray. But now you are into apples and oranges. That 
is not a square-footage cost. The construction is the square-
footage cost. You are including things--we moved out of the 
building in order to avoid additional costs that would have 
occurred if we had renovated in place. That was going to be 
more expensive. That was what was determined. So we are 
attempting to be prudent here even though--
    Mr. Garrett. This is a $153 million building. Even if you 
stave off $10 million or $20 million here for your relocation 
costs, you are basically taking a $153 million building and 
spending around $153 million to refurbish it and make it into a 
nothing more than optimal building.
    Mr. Cordray. You want me to describe the condition of the 
building? We would be glad to have you come in--
    Mr. Garrett. No, I--
    Mr. Cordray. If you can take an hour, we will have you come 
and take a tour. I would love to have you do that.
    Mr. Garrett. Yes. So do you think it was a bad decision by 
either you or your predecessors in 2011 that when they entered 
into a 20-year as-is contract on this building, knowing that 
this building is a dump, why would anybody from your agency 
enter into such a contract? And would any of the agencies that 
you have oversight of be chastised for entering into contracts 
like this?
    Mr. Cordray. The rent that we are paying takes account of 
the fact that we are responsible for the renovations. That is a 
somewhat unusual arrangement--usually the landlord would 
renovate, and the tenant would not--but our rent was calibrated 
off of that. So over the 30 years of the occupancy agreement, 
it comes out to be appropriate rent for essentially a class B 
building, which is about what we will manage to be. The other 
thing is it is a government-owned asset. We could just let it 
deteriorate into a white elephant kind of--
    Mr. Garrett. If you had this to do all over again, if you 
were just coming in, would you have done the exact same thing, 
rent a building like this and then spend $184 billion to redo 
it, or would you do something different?
    Mr. Cordray. I think I probably would. I think it is still 
the right answer. But, there are obviously challenges. And if I 
could describe--
    Mr. Garrett. Okay. Thank you.
    Mr. Cordray. Do you want me to describe the condition of 
the building?
    Mr. Garrett. No. My time is up. I think--
    Mr. Cordray. Feel free to come see it. We would like that.
    Mr. Garrett. Mr. Chairman, I think that is probably the 
wrong answer to hear that a bad decision that was made back in 
2011 or 2010 would be replicated today.
    Chairman Hensarling. The time of the gentleman has expired.
    The Chair now recognizes the gentleman from Massachusetts, 
Mr. Capuano--no, apparently the Chair now recognizes the 
gentleman from New York, Mr. Meeks, for 5 minutes.
    Mr. Meeks. Thank you, Mr. Chairman.
    And I want to first thank you, Director Cordray, for the 
great work that you are doing at the CFPB on behalf of, of 
course, everybody in the Fifth Congressional District, but also 
I think for working Americans, our veterans, our college 
students, the elderly, women and minorities, and the list can 
continue.
    I was just informed that, for example, in just 2 years, 
your enforcement actions have resulted in almost $4 billion 
directly refunded to more than 12.6 million consumers and 
servicemembers. That, to me, is really remarkable, and we want 
to thank you for that kind of work, as well as your balanced 
approach that you have taken in various rules that the Bureau 
has established.
    You have, I believe, listened very carefully and addressed 
many legitimate concerns that were brought to your attention, 
and I just want to encourage you to continue in that spirit 
with the goal of achieving greater small business and nonbank 
lenders' participation in advisory councils and greater 
transparency in how these councils work and dissipate 
information.
    And I also just want to make sure that I mention that I 
welcome your continued resolve and commitment to get to the 
bottom of the internal management issues that had surfaced 
recently, and I trust that you are going to do that.
    My first question is this: I always had some concerns about 
the effect of the QM rules, especially as they deal with 
minority borrowers and the ability to borrow, et cetera. I 
would just like to get, 6 months now, 6 months after the rule 
had become effective, could you give me your thoughts on the 
effects of the QM rule particularly for--
    Mr. Cordray. Sure. We are a few months in now, and we are 
starting to get some data. We are working very closely with 
groups like the National Association of REALTORS which have 
been eager to provide data and let us see exactly what is 
happening in the marketplace, mortgage bankers.
    There was a great article in the American Banker yesterday 
that I thought encapsulated it well, and what it indicated was 
that the QM rule was having a negligible effect on access to 
credit. More than 95 percent of the mortgages being offered 
are, in fact, QM. And, in fact, they said 6 months later, has 
this really made a negative difference? They couldn't tell. 
There were a lot of people quoted around the country, including 
some who said they make hundreds or thousands of mortgages, and 
maybe only a few dozen have been affected. So, look, we tried 
hard to strike the balance in a way that was not going to 
undermine the mortgage market. I think we have done so.
    I think people across the spectrum and industry have 
recognized that we have done so, particularly the patch for 
Fannie Mae and Freddie Mac in conservatorship has made an 
enormous difference. But we are eager to hear more, and if 
there are unintended consequences or unexpected results, we 
want to know about them and see what we can do to address them.
    Mr. Meeks. On that line in dealing with the American 
Banker, I think that they made in their assessment that it was 
largely due to FHA and GSEs that can still largely, they said, 
I think, operate under approved exemptions.
    Mr. Cordray. It can.
    Mr. Meeks. I was wondering, how do we prepare for when the 
FHA and GSEs begin to retract in the market participation?
    Mr. Cordray. That is a really great question. One of the 
things we had to do when we wrote the mortgage rules was we 
didn't know exactly what Congress was going to do about the 
GSEs or about the FHA program, and so we tried to create some 
latitude. Congress eventually will settle those issues, not us, 
and we had to write a rule that could be flexible to take 
account of whatever Congress would do. That is ultimately up to 
you all, but I think our rules have allowed Congress to have 
the latitude to act, while continuing to operate. And I think 
people have recognized that was a very important step we took, 
and it has really helped those rules be much more successful 
than they might have been otherwise.
    Mr. Meeks. Let me go on to another question in the little 
time I have left, because your job is really tough, and I know 
it is not always easy to get it right. On the one hand, we know 
that close to 70 million Americans are underbanked and don't 
have access to the traditional banking system and therefore 
sometimes rely on less-regulated entities for financial 
services; and on the other hand, they are also more vulnerable 
and are more easily taken advantage of by these less-regulated 
entities.
    So how do we balance access to credit, which for many 
equals access to opportunities, versus protecting Americans 
from predatory financial products and services?
    Mr. Cordray. That is a central core issue for the Bureau 
now. Our Office of Financial Empowerment is very focused on 
that issue. We are working with the FDIC, who has had a lot of 
focus on the unbanked and underbanked issues. The prepaid card 
rule that we are developing will be very important in that 
respect. And I think some of the other work I see going on 
around the country--the New York attorney general yesterday 
announced an initiative with Capital One with respect to people 
being barred from the checking account system. These are things 
that are important for us all to work on together and make sure 
that more Americans can have access to the banking system, 
which is a great way to protect them, or if they don't have 
access to the banking system, for whatever reason, including 
that they just don't want to be in a bank, they have tools and 
opportunities available to them that can work for them.
    We had a field hearing in New Orleans last week on mobile 
payments. That is a potential promising technology as well, and 
we want it to be a pro-consumer technology.
    Mr. Meeks. Thank you.
    Chairman Hensarling. The time of the gentleman has expired.
    The Chair now recognizes the gentleman from Texas, Mr. 
Neugebauer, the chairman of our Housing and Insurance 
Subcommittee.
    Mr. Neugebauer. Thank you, Mr. Chairman.
    Director Cordray, I think we have been talking about this 
data collection, and so, I guess, one of the questions is, 
where are you getting this data from?
    Mr. Cordray. We buy it from the same commercial sources 
that everybody else buys it from.
    Mr. Neugebauer. What are the names of those vendors?
    Mr. Cordray. I don't recall offhand, but I would be happy 
to get those to you and to your staff.
    If you are talking about different types of information, 
there are times when we go directly to institutions and make 
efforts to do voluntary collections from them, and work with 
them to try to make sure those are not unduly burdensome. There 
are also times where we collect information through the 
supervisory process. So, there are lots of places where we can 
get information, and we try to be careful about handling it 
carefully.
    Mr. Neugebauer. When you testified before, one of the 
things I pointed out is that I am not sure who is going to win 
the race on who is collecting the most data, NSA or your 
agency. Now that we have restricted the amount of data, NSA, I 
think, is going to win that contest.
    I think the question that comes to my mind is, you are 
tracking millions of mortgages, 990 million credit card 
accounts, and the question begs: Why are you collecting this 
much data when, if you say it is just for research purposes, 
most researchers take samplings, and it looks like to me it 
would make it more cost-effective to take a sampling of data 
that you are going to have to redact.
    But when you talk about the number of records that you are 
talking about collecting, and redacting those kind of records, 
and making sure that the personal identifiers are not there, it 
appears to me there is going to be a huge cost for something. 
And so the research answer doesn't really seem to resonate 
here, or you wouldn't be collecting that amount of data.
    Mr. Cordray. Yes, and you raised this point with me in a 
private conversation we had some months ago, and it was a good 
point. We went back and thought further about it, and I think 
we made more progress on it. The National Mortgage Database 
that we are talking about, we are only going to collect data on 
5 percent of mortgages. We are going to do a sampling, just as 
you said, for the reasons you said, and we can collect a 
limited amount of information for that purpose.
    On credit cards, there are times where when we go to 
institutions, and they tell us, look, it would just be easier 
for you to tell us to give it all to you rather than making us 
bear the cost of making some sort of slice of it, and it may or 
may not be objectively, statistically unbiased, et cetera. 
Sometimes they tell us it is easier for them just to give us 
what we are asking for rather than do a lot of work to sort 
through it. On the National Mortgage Database, we are just 
doing a sampling, and limiting ourselves to 5 percent. If it is 
a reasonable sample, that will do the job, just as you had 
indicated to me when we had this discussion. We will continue 
to try to do that where that is sufficient.
    Mr. Neugebauer. The other issue which continues to be, I 
think, of great concern in some of this collecting of huge 
amounts of data is the security of that data. And at a 
presentation, I think on June 11, 2003, Bob Avery, the FHA's 
Project Director for the National Mortgage Database stated the 
following: ``We believe that we created a public data set, as 
wide a set of users as possible, so that there are major 
challenges in keeping this data secure. He says that it is easy 
to reverse-engineer and identify the people in their database.
    And I know you keep hanging your hat on, hey, we are 
redacting the personal identifiers, but here is the guy who is 
overseeing the project, and he says it is very easy to reverse-
engineer, so that doesn't give me a lot of confidence.
    Mr. Cordray. But that is a quote. There is a longer passage 
there in which he says it could be easy, but there are things 
we are doing to be more productive. They had the same quote 
over in the Senate and made the same point. If you read the 
whole passage, you will see we are all aware of the problem, we 
are concerned about the problem, we recognize the risk it could 
pose to our agencies if we mess that up, and we are working 
hard to avoid those results. So, it is a challenge. I don't 
want to in any way minimize that. It is a challenge that I am 
as concerned about as you are, because the reputation of our 
agency is on the line, and we are working hard to try to 
address it. And I believe if you look at Mr. Avery's full 
statement, that is his outlook as well.
    Mr. Neugebauer. A lot of the financial institutions that 
you regulate have to issue privacy statements to people to let 
them know that, hey, we have a lot of personal data on you. Are 
you giving the American people a privacy statement about all of 
the data that you are holding on them?
    Mr. Cordray. Actually what we are trying to do is minimize 
the burden on industry of those annual privacy notices, and 
some of your colleagues have been pursuing legislation on this. 
We have proposed a regulation to accomplish the same purpose, 
and I think it will actually be beneficial.
    In terms of what we are doing, again, this is de-identified 
information. What industry does is something different. They 
are interested in, Representative Neugebauer, what are your 
spending habits? What do you do? They want to know all about 
you. The Bureau doesn't care to know about you or me; we want 
to know about how the general pattern of consumers is affected. 
De-identified information is a very different issue than the 
privacy issues of individual information that is personal to 
me.
    Chairman Hensarling. The time of the gentleman has expired.
    The Chair recognizes the gentleman from Massachusetts, Mr. 
Capuano, the ranking member of our Housing and Insurance 
Subcommittee.
    Mr. Capuano. Thank you, Mr. Chairman.
    And thank you, Mr. Cordray.
    Mr. Cordray, I want to follow up a little bit on 
Representative Neugebauer's questions on data. Do you keep this 
data for long periods of time?
    Mr. Cordray. I believe we will keep it for long periods of 
time, yes.
    Mr. Capuano. Do you share it with any other agency?
    Mr. Cordray. We use this data for our own research 
purposes, both on the credit card market and the mortgage 
market, and, frankly, it is critical data. If we don't have 
it--
    Mr. Capuano. I understand. I am not against the concept.
    Mr. Cordray. Yes.
    Mr. Capuano. I want to know if you are sharing it with 
anyone else.
    Mr. Cordray. It depends. The National Mortgage Database is 
a joint project of the CFPB and the Federal Housing Finance 
Administration, so that is a joint project by definition, so we 
are sharing information.
    On our Consumer Credit Panel and credit card database, that 
is something we use. I don't honestly know if we are sharing it 
with anyone, but I think we are--
    Mr. Capuano. Is the information being shared with the IRS?
    Mr. Cordray. Not that I am aware of.
    Mr. Capuano. Is it being shared with the NSA?
    Mr. Cordray. I don't know. I am quite sure it is not.
    Mr. Capuano. All right. Because I don't mind you collecting 
the data to some extent for the purposes as you describe them. 
I do prefer sampling. I think that is the better way to go, and 
you have said you are heading that way.
    Mr. Cordray. Yes.
    Mr. Capuano. But I would object incredibly strongly to 
having that information shared beyond those parameters. And 
honestly, why are you keeping any of the data? Once you do your 
research, why keep it?
    Mr. Cordray. Because it is ongoing work that we are having 
to do. We need to see what is happening in the mortgage market 
over time. It isn't just--
    Mr. Capuano. I understand where you would keep the results, 
the conglomeration of the data. So you collect 1 year, you can 
conglomerate it, see how many mortgages, how many people are 
there. I get that. Keep that. Why keep the individual data?
    Mr. Cordray. Again, it is the pattern of data that we are 
keeping and the pattern of how markets are affected--
    Mr. Capuano. Are you keeping my individual mortgage data--
    Mr. Cordray. No. --
    Mr. Capuano. --for 20 years?
    Mr. Cordray. De-identified, so nobody would have any idea 
that it is you or me--
    Mr. Capuano. Yes, I have heard that before.
    Mr. Cordray. Right.
    Mr. Capuano. I love you, and you know I support the agency, 
but I don't trust that answer from a governmental agency.
    Mr. Cordray. Okay. I'll tell you what, we would be happy to 
have our staff brief your staff.
    Mr. Capuano. I would very much like that. I am very 
supportive of what you do. I am supportive of you doing 
research. I am not supportive of anyone gathering additional 
data that is unnecessary or kept for inappropriate time 
periods.
    Mr. Cordray. Fair enough. Okay.
    Mr. Capuano. Mr. Cordray, the last time--actually you 
weren't here because at that time you weren't allowed to come 
to the committee, but there were others from your agency. The 
last fight I had, had to do with QM, because I asked a very 
simple question. At the time people were saying, oh, my God, 
QM, it is going to disqualify 40 percent of the people who are 
currently eligible for mortgages from ever getting a mortgage. 
Has that happened?
    Mr. Cordray. There were people who said that it would 
double the cost of a mortgage--
    Mr. Capuano. Yes.
    Mr. Cordray. --and cut the market in half. That was 
absolutely wrong, and the American Banker article just 
yesterday, interestingly, verified that the market is about the 
same as it was before QM, but with more protections in place, 
and it has had negligible costs.
    Mr. Capuano. So QM did not kill the situation, it actually 
helped consumers. Do you think that is a fair assumption, a 
fair conclusion?
    Mr. Cordray. The housing market is challenged right now, 
and it has to do with things like the interest rate popped up 
last summer and the winter, and other things that people have 
pointed to. But the QM has not killed the mortgage market. I 
think it strengthens the mortgage market over time by giving 
people more confidence.
    Mr. Capuano. QM has done exactly what it was intended to do 
without having a negative impact on the market?
    Mr. Cordray. I believe so. And if there are unintended 
consequences revealed to us, we are in close contact with 
people like the mortgage bankers, retailers, et cetera, and we 
will take account of those issues.
    Mr. Capuano. I ask you that because I have not had a single 
complaint about the impact of QM on individual borrowers or on 
the housing market itself. And I am just curious. You are 
collecting all this data. You would know more than me, so I 
wanted to ask.
    Mr. Cordray. Yes. I am glad to hear it, and it is 
consistent with what we--
    Mr. Capuano. Actually I don't hear it, which is good. I 
only hear bad things. I don't hear good things.
    Mr. Cordray. That is kind of us, too.
    Mr. Capuano. Last question, when did you get appointed 
again? Tell me the year.
    Mr. Cordray. Beg your pardon?
    Mr. Capuano. What year were you appointed the first time?
    Mr. Cordray. That's a complicated question. I was recess-
appointed in January of 2012.
    Mr. Capuano. 2012.
    Mr. Cordray. I had been blocked in the Senate. I was 
blocked again in the--
    Mr. Capuano. I know that.
    Mr. Cordray. I was finally confirmed in July of 2013.
    Mr. Capuano. I am just wondering if, when you were 
appointed, were you in this hearing room before it was redone?
    Mr. Cordray. That guy's picture wasn't on the wall then. He 
was sitting--
    Mr. Capuano. Because we had a major remodel of this hearing 
room just a few years ago, and actually one prior to that a few 
years before, because when I was first on the committee, I was 
down in that seat, and it was a folding table, as was the other 
side.
    Mr. Cordray. I notice a lot of work being done in the 
Cannon Building.
    Mr. Capuano. Do you think that we should have done this 
room over, or do you think we should have left it in the way 
that it was?
    Mr. Cordray. Up to you all. It is a nice room.
    Mr. Capuano. It is kind of a nice room. It is--actually the 
colors are very pretty. I guess what I am saying and trying to 
make the point is working in a decent work environment isn't 
such a bad thing for anybody to get their job done. Keep doing 
it.
    Chairman Hensarling. The time of the gentleman has expired.
    The Chair now recognizes the gentleman from California, Mr. 
Campbell, the chairman of our Monetary Policy Subcommittee.
    Mr. Campbell. Thank you, Mr. Chairman.
    Continuing on that theme, Director Cordray, and not to beat 
it to death, but, again, to read that this new building of 
yours will have a raised water table flowing over a water wall 
of naturally split granite--at the southern edge, a new water 
source creates a cascade of water that flows down the water 
wall into the sunken garden, terminating in a raised splash 
pool. More slabs of granite rest in the bottom of this pool.
    I thought this room was fine before. I don't see any 
waterfalls here. But the question I have is, how does that 
serve your mission of consumer protection?
    Mr. Cordray. Look, that has been quoted back to me. I feel 
like if you found some of my old poetry I wrote when I was a 
kid, it would be embarrassing to have that read in a public 
hearing. This was the kind of puffery that was working through 
government permitting processes in trying to get business from 
the Bureau. The reality is you can describe probably any two-
bit fountain on any corner square of any part of the country in 
the same glowing terms if you wished to do so. The building is 
a dump. I invite you to send your staff to take a look at it 
and--
    Mr. Campbell. Okay. Director Cordray, this is outside.
    Mr. Cordray. Yes.
    Mr. Campbell. Nobody works outside. Did you--
    Mr. Cordray. It sounds wonderful, but there is not going to 
be a lot of cost expended on that, I can tell you that.
    Mr. Campbell. The point of all this--because I could read 
more of this, and it goes on--There is a removed space of rest 
and contemplation. I thought this was a workplace. But who 
approved--we have established that there is at least $185 
million being spent on this. Who approved this?
    Mr. Cordray. Again, we are mixing apples and oranges in 
those numbers.
    Mr. Campbell. No. No.
    Mr. Cordray. That is being spent on renovating the 
building.
    Mr. Campbell. I understand that includes moving away, your 
rent for wherever while it is being redone, and then moving 
back.
    Mr. Cordray. Yes.
    Mr. Campbell. It includes all those expenses. So, say it is 
$139 million, whatever the number is, who approved that?
    Mr. Cordray. Whoever was the leadership of the Bureau at 
different times approved that, including most recently, myself.
    Mr. Campbell. And who outside of the Bureau would have had 
to review or approve that?
    Mr. Cordray. There have been various permitting processes 
we have to work through. We are now working with--
    Mr. Campbell. To spend the money.
    Mr. Cordray. --GSA, frankly, in part to give me comfort 
around that this is being handled professionally and 
appropriately. GSA is now involved in the renovation, and they 
are the experts in the Federal Government work, as I understand 
it.
    Mr. Campbell. But to spend $185 million of taxpayer money, 
who outside of this Bureau had to approve that? Not the 
permits.
    Mr. Cordray. I approve it, and Congress oversees me 
vigorously.
    Mr. Campbell. Oh, really?
    Mr. Cordray. Yes. Like you are doing right now.
    Mr. Campbell. Oh, really? And what should we do about your 
budgets? Suppose we don't think you should spend this $185 
million. What can we do about it?
    Mr. Cordray. I suppose you could change the law.
    Mr. Campbell. Ah. I guess we could, but no one approves 
your--the point here is that in this Bureau, you could spend 
$200 million of taxpayer money without anybody outside the 
Bureau having the ability to change it, approve it, review it, 
or say no.
    Mr. Cordray. No.
    Mr. Campbell. Director Cordray, it is my time. It is my 
time.
    Mr. Cordray. That is not accurate. Not accurate.
    Mr. Campbell. That is unaccountability, and that is the 
problem with this Bureau. They can't do that in the Pentagon.
    Mr. Cordray. If I could correct the record, we have a GAO 
audit every year. They have to review what we do, and they can 
call us out for misspending. The Inspector General does regular 
reviews of us and has reviewed our budget process. We also have 
an independent audit that Congress laid on us.
    Mr. Campbell. And they are not cutting or approving this 
before you do it, are they?
    Mr. Cordray. They are looking at our budgeting process and 
our spending process, so, yes, this is part of what we are 
doing.
    Mr. Campbell. Director Cordray, the point I am making here 
is regardless of the mission of this thing and the noble 
mission for which it was created, the problem with this agency 
is your unaccountability to anybody outside of the agency. And 
that wouldn't matter if that is in government or in a private 
industry or anywhere else; that is a structural problem that 
you can't have exist.
    And when I look at your agency now, one of the things you 
are supposed to do is stop discrimination, yet you are 
discriminating within the agency. And then you are collecting 
data that enables discrimination out in the world where it 
doesn't currently exist.
    You were established because of overspending on housing, 
yet in my view, and the view of others up here, you are 
overspending on your own housing.
    And then on top of that, one of the things that consumers 
are most concerned about, as Mr. Capuano indicated, is 
invasions of their privacy by banks, by whomever, taking that 
information and abusing it. But now it appears that you are 
collecting more of that information, and the public has more to 
fear from you than they do from the bank, because at least you 
can sue the bank.
    It seems like the moral of this agency is do what I say, 
not what I do, and that is not a good way to run a railroad.
    I yield back.
    Chairman Hensarling. Regrettably, the time of the gentleman 
has expired.
    Mr. Cordray. Mr. Chairman, no opportunity to respond to 
that?
    Chairman Hensarling. It is the gentleman's time. He did not 
ask a question. I am sure that someone on this side of the 
aisle, Director Cordray, will give you additional time.
    The Chair now recognizes the gentleman from Missouri, Mr. 
Clay, the ranking member of our Monetary Policy Subcommittee.
    Mr. Clay. Thank you so much, Mr. Chairman, and welcome 
back, Mr. Cordray.
    And I don't know, I am one who feels as though the public 
does need someone watching out for their best interests, and I 
will let you take a little bit of my time and respond to my 
statement that the public does need an umpire or a referee, 
since not too many of us in this body want to be that umpire or 
referee. Can you respond to that, Mr. Cordray?
    Mr. Cordray. Yes. And I appreciate that, Congressman.
    When the Congress set about to pass the financial reform 
law, it recognized that everybody suffered in this country 
greatly through the financial crisis, and people lost jobs, 
millions of people. Millions of people lost homes. People lost 
trillions of dollars in household wealth, and in many 
communities it has been difficult to recover that wealth.
    The point of that reform was to do a lot of things, and one 
of them was to make consumer protection in the financial 
marketplace more front and center and to give someone the 
responsibility. I, and the Bureau, have this responsibility to 
see that people are treated fairly, and to stand on their side 
when they are not, and that is something that we take very 
seriously. As I said in my opening statement, I am very proud 
of the nearly 1,400 people who work at the Bureau every day to 
accomplish some of the things that you have described today.
    I think the work we do is essential. I think it doesn't 
take any of us very far to go in order to see that. This is a 
sophisticated body. All of you work on financial services 
matters, and you are experts in it, but you don't have to think 
very far to parents, or grandparents, or cousins, or friends, 
or sons and daughters to recognize for a lot of people this is 
intimidating stuff, and it is difficult. And they may or may 
not know how to get it right, and they may need some 
protections in the marketplace. I think that we are trying to 
do that in a balanced and reasonable way. I think it has mostly 
been recognized even by industry that that is how we have been 
proceeding. And it is really important because otherwise people 
end up making a lot of bad decisions--
    Mr. Clay. Not to cut you off, but I certainly appreciate 
the role you play in protecting consumers.
    I am not going to throw you all softball questions. So let 
us talk about the $10 billion ceiling for direct examination by 
the CFPB.
    Your IG report which came out last March found that 59 
percent of draft examination reports submitted by regional 
examination teams during the scope of the IG's evaluation did 
not meet the CFPB's timeliness requirement for submission. 
Within 30 days of field work completion, 90 percent of the 
drafts that received headquarters approval as of July 31, 2013, 
had not been approved by headquarters within the 30-day 
requirement.
    One reasonable take-away from that is that your examination 
team is stretched too thin. And at a hearing last year, one of 
the witnesses recommended that the CFPB's $10 billion threshold 
for direct examination of financial institutions be raised to a 
higher level. With the current $10 billion threshold, you have 
authority over about 80 percent of our bank assets; if it was a 
$25 billion threshold, you would have authority over 75 percent 
of all bank assets; and if it was $50 billion, you would have 
direct examination authority over 70 percent of our bank 
assets.
    Let me ask you this: Would you be willing to work with me 
and other members of this committee to identify a higher direct 
examination threshold than the current $10 billion?
    Mr. Cordray. I honestly, until you raised it just now, had 
not given that any thought because our job is basically to 
enforce the law as is. And I know that when the Dodd-Frank bill 
went through Congress, there was a lot of debate back and forth 
over different thresholds, and there are certain thresholds set 
for some of the financial derivative types of things, and 
resolution plans and other things are set at a higher level. I 
guess $10 billion was the compromise Congress reached on this, 
and it feels like it is a workable level.
    The issue you raised about the timeliness of that 
particular exam was something we struggled with early on as we 
were staffing up. We have gotten a lot better on it. We went 
out and sought input and got input from the U.S. Chamber of 
Commerce on how to approach this. We went to the clearinghouse 
of banks to get their input, as well. Our Inspector General has 
done a careful scrub of this process and recommended many 
changes and improvements. And we have done our own work on 
this, and I think that has improved enormously.
    So I think we are getting more efficient. I think we can 
handle the workload. If Congress wants to think about that, we 
would be happy to provide technical assistance, but I don't 
have a strong position one way or the other on that.
    Mr. Clay. Thank you for your response.
    Chairman Hensarling. The time of the gentleman has expired.
    The Chair now recognizes the gentleman from California, Mr. 
Royce, the chairman of the House Foreign Affairs Committee, for 
5 minutes.
    Mr. Royce. Director Cordray, how are you?
    I have heard criticism that the CFPB is conducting 
regulation of financial products and services through 
enforcement actions and through guidance bulletins rather than 
through notice-and-comment rulemakings, which, of course, would 
include input from the public and input from Congress. Since 
this door has been opened, I think the CFPB has finalized 54 
rules, 18 of which were part of congressionally-mandated 
regulation, and at the same time issued 34 bulletins and 23 
enforcement actions.
    So if you take out the congressionally-mandated rules, that 
means the CFPB issued about the same number of rules as it did 
bulletins: 36 rules; 34 bulletins. The 23 enforcement actions 
often include specific business reforms. The CFPB promotes the 
bulletins as statements of law and policy, and the enforcements 
actions as deterrence, yet in both cases the agency appears to 
be making policy without obtaining public input, if you follow 
my logic on that. So if the CFPB intends to impose specific new 
requirements, wouldn't it be better for the agency to use the 
rulemaking process, which has the benefit here of notice-and-
comment periods, rather than enforcement actions and bulletins?
    Mr. Cordray. We can do that and, of course, are required by 
law to do that in appropriate instances, particularly where we 
are making substantive changes in the law pursuant to 
congressional delegation.
    On enforcement actions, in particular, I don't think there 
is a law enforcement agency in America that requires a notice-
and-comment process before engaging in enforcement action, 
because you are, by definition, responding to potential 
violations of the law, and having that drag along while you are 
allowing lawbreakers to operate is not appropriate.
    I think the issue that you raise is around some of our 
guidance and bulletins and whether those should be done with 
notice and comments. Typically, that is not required. But there 
have been lots of instances where we have put things out for 
notice and comment anyway. We have done a lot of requests for 
information to get a lot of input from people, and we are very 
accessible. We have so far tried to hew very closely to what we 
understand the law to be in this area, which is notice and 
comment for substantive administrative rules and not for 
guidances where we are simply clarifying and laying out the 
laws. It is already, we believe, understood.
    I believe the U.S. Supreme Court has just granted a case 
around interpretive rules where they are going to, and 
sometimes this is a difficult line to draw, try to clarify that 
next term.
    Mr. Royce. But let me just walk you through sort of an 
example here, because regulation conducted through enforcement 
often results in confusion. So I will give you an example, and 
I think confusion can be harmful to consumers.
    By way of example, the CFPB has issued four enforcement 
orders against banks in connection with the marketing of debt-
protection products. Each of the enforcement actions imposed 
different, quite different, remedial measures.
    So banks, of course, under this circumstance, are not 
certain of what is required of them to safely sell these 
products. Many have stopped offering the products to consumers. 
And then a subsequent bulletin related to add-on products did 
not resolve this uncertainty. So hence the thought here.
    If you could clarify the agency's position on debt-
protection products so that the financial services industry 
could understand what is expected in connection with these 
products, and does the CFPB have concerns about debt-protection 
products themselves or just how these products are marketed, 
but the fact that every case is handled differently with 
different remedial measures leaves that big question mark.
    Mr. Cordray. It is a fair concern. The remedial measures 
depend critically on the facts and circumstances of that 
matter. If the institution was marketing these things telling 
people that they were signed up when they weren't, that is 
going to get a certain response. If they are telling them that 
the product did this, and it didn't--
    Mr. Royce. I hear you. The four examples. But I have been 
told that other Federal agencies often enlist the use of 
advisory opinions to help businesses seeking clarification on 
specific practices. Would the CFPB consider issuing similar 
advisory opinions, because then you might have them know on the 
front end exactly what was expected, and what wasn't, and you 
wouldn't have, arguably, four different results.
    Mr. Cordray. That is something we are working to do in 
appropriate cases. The SEC has done some things, and we have 
looked at other agencies, and I do think we can probably do 
more in this area, yes.
    Mr. Royce. Yes, I think that would move you more towards 
the input from the public, and input from Congress, and input 
especially with respect to those who are going to be impacted, 
understanding exactly where you are going with your rulemaking. 
Thank you.
    Chairman Hensarling. The time of the gentleman has expired.
    The Chair now recognizes the gentlelady from New York, Mrs. 
McCarthy, for 5 minutes.
    Mrs. McCarthy of New York. Thank you, Mr. Chairman. I 
appreciate that.
    Welcome, Mr. Cordray.
    You know, it is funny. When I first got here, a lot of 
people said I had too much common sense, and that doesn't fit 
into Congress. And while we were talking about the renovation 
of your building, I was thinking about the Cannon Building, 
which is--actually all of our buildings are old. They have 
already moved out the support staff down in the basements over 
to another building that they had to renovate so that even 
Members will be going over there in this new Congress that will 
be coming up.
    I live in an older home that belonged to my parents, and 2 
years ago I had to do some renovations, and of course every 
time you do a renovation, something else pops up. So it ended 
up costing at least 15 percent more than I had budgeted for.
    But I also want to thank you for the work. And I think it 
is important that we get back to where and why we wanted to 
have oversight to protect our constituents.
    I am sure here Members, many a time, would get calls from 
constituents to be able to straighten out something that either 
happened with their financial institution or a credit card, 
and, of course, we would try to solve that, but now we actually 
have an area where even the Members of Congress can go with the 
problems that our constituents are coming to.
    But to get back down to what you have been doing, in your 
testimony you mentioned that the CFPB has been able to refund 
consumers, which is taxpayers' money, who are victims of 
violations of consumer financial protection laws by over $3.8 
billion. That is a lot of money to come back to the consumer 
into their pockets.
    You mentioned that the CFPB took action against the payday 
lender for overcharging servicemembers. That is extremely 
important because our servicemembers have been taken advantage 
of, especially those who are overseas. Can you go into further 
detail of how the CFPB took action in that case?
    And I just want to say thank you for trying to educate our 
constituents on financial literacy. I have been working on this 
for years, not only on this committee, but on the Education 
Committee, because that, to me, is the most important thing 
that we can do for our consumers so they don't get into debt or 
get taken advantage of.
    So with that, I would like to hear your response.
    Mr. Cordray. Sure. In terms of servicemembers, we have been 
blessed, because we have a tremendous head of our Office of 
Servicemember Affairs, Ms. Holly Petraeus. She and her team 
have done great work across the country bringing back 
information and stories and problems that active duty 
servicemembers and their families and veterans and their 
families have brought to our attention. Some stories are the 
general consumer problems, and some of them are made 
particularly pointed by being an active duty servicemember. And 
we have been working with the Department of Defense on new 
rules under the Military Lending Act that I think will really 
strengthen what has been done there, and that is great work, 
and it is important work, and we are glad to be doing it.
    On the financial literacy front, we are working with 
servicemembers in particular on an initiative, a financial 
fitness coaching program for them. And we are doing a lot of 
things with the Pentagon and the Veterans Administration. I 
just signed something the other day where Assistant Director 
Petraeus and her team are going to be working with the 
Department of Education, the Department of Defense, and the 
Department of Veterans Affairs around the principles of 
excellence for making sure that GI bill money is being used 
effectively so the servicemembers really get the benefit they 
are promised of a meaningful education that will advance them 
in life rather than having it squandered on things that don't 
provide value. And so that is important.
    In general, financial literacy is something we don't do 
enough of in this country, and I know that is a bipartisan 
issue among members of this committee and Members of the 
Congress, but it is something at the State and local level 
people have to recognize they need to do more. You can't send 
our 18-, 19-year-olds out into the world with no basis to go on 
and no understanding of the kind of big decisions they are 
going to be expected to make and think that is somehow going to 
succeed. It doesn't succeed. It didn't in the run-up to the 
financial crisis, and it won't now, and it is something that 
has to change.
    Mrs. McCarthy of New York. We have found in our communities 
on Long Island that those, especially first-time homebuyers, if 
they go through some of the nonprofits--and actually it is not 
just a mortgage. It is the insurance, it is utilities, it is 
everything that goes with it. Many of us feel that a lot of 
people who got mortgages should have never gotten them. Never 
gotten them. And I blame all the bankers because they didn't 
look closely enough. And unfortunately, that is what caused so 
much pain in this country and continues to cause pain. The 
problem has not been solved yet. We are getting there, but it 
is still something. Thank you for your service.
    Chairman Hensarling. The time of the gentlelady has 
expired.
    The Chair now recognizes the gentleman from New Mexico, Mr. 
Pearce, for 5 minutes.
    Mr. Pearce. Thank you, Mr. Chairman.
    And thank you, Mr. Cordray, for being here.
    Mr. Cordray, following up on the questions from the 
gentlelady from West Virginia, you had mentioned that there are 
items that you de-identify. Are you going to put that into the 
Federal Register? Are you going to say publicly that you are 
going to buy the data, but then you are going the de-identify 
it?
    Mr. Cordray. We are going to continue to work with the 
FHFA. Both of us have been listening carefully not only to 
hearings like this and testimonies, but also questions for the 
record and inquiries from this committee, and we will be very 
responsive to that.
    Mr. Pearce. Okay. Because what I am reading in this is that 
it says right now that the records in the system may include 
without limitation, and so if you do not identify those 
limitations, then later people can come back and say, hey, we 
told you we are going to collect this stuff, and we are going 
to use it how we want to. And so unless you correct the 
record--and by the way, taking exception to something you had 
said earlier, you said it is going to be a very small, select 
group who has access to it. One page over, it says a whole list 
of people have access, but in one spot it says the contractor, 
personnel, grantees, the volunteers, interns, and others 
performing work on the contract, so it doesn't--and it 
identifies the project of the FHFA. So it doesn't sound like it 
is such a limited group who will be able to look at it.
    So I am reading in your book here that you are protecting 
consumers from unfair, deceptive, abusive practices, and some 
of the unfairness has come because of the Federal Reserve 
driving the interest rate to zero. We had kind of a round of 
questions with a previous witness, and he simply said, well, 
there is collateral damage.
    And I think that this idea that seniors who have saved--and 
they generally use very unsophisticated products, and so 
usually it is a savings account, and when they get zero, now 
they tell me at the town halls they saved enough for 
retirement. So have you visited with the Federal Reserve about 
this abusive, unfair practice of driving the interest rate to 
zero where the seniors get nothing? Have you visited with the 
Federal Reserve?
    Mr. Cordray. On your previous point, if I am hearing you, I 
am understanding you want us to come back to you and keep you 
posted as the National Mortgage Database moves forward. It will 
be a much more limited group of people who have access to that, 
and we will keep you posted on the issues you raise. If you 
were reading--
    Mr. Pearce. I don't see how that addresses the question I 
am asking.
    Mr. Cordray. No, I know. And then the current question, if 
you want me to respond to it, there is no question that low 
interest rates hurt savers who are trying to live off the money 
they have saved, and this is part of the residue of the 
financial crisis. If we hadn't had the financial crisis, 
interest rates wouldn't have had to plunge and--
    Mr. Pearce. Okay. Believe me, I really do think somebody 
should be talking to the Federal Reserve because they are 
printing money and driving interest rates down, which hurts the 
poor, and it hurts the seniors.
    Under your watch, the agency has decreased the number of 
seller financing from 3 to 1. Now, in my district, about half 
of the houses are trailer houses. And what happens is people 
during their lifetime, they accumulate these mobile homes. 
Banks generally won't loan money on them. A lot of times, they 
are pretty old. People would move into them. So it is that 
whole idea that we would have access--one of your other deals--
to credit.
    Why are you taking such a limiting stance on seller 
financing, because that is the way that many trailer houses are 
sold? I don't think any banks are ever going to come from New 
York or Massachusetts or anywhere and come out to New Mexico 
and lend money on these 30- and 40-year-old trailer houses. But 
some of the low-end consumers, people who are really struggling 
to get by in my district, which has per capita income of about 
$30,000, so you can guess that there are a lot of people living 
on $15,000 or $20,000.
    So why did you do that? Why are you making it so difficult 
for people to sell these houses, number one, and get their 
money out of them?
    Mr. Cordray. I am honestly not sure what to say to you on 
that issue. I am making a star on that, that we need to come 
back to you.
    Mr. Pearce. Okay.
    Mr. Cordray. If seller financing in particular is a 
problem, then I would like to understand how our rules will be 
affecting--
    Mr. Pearce. Yes. Because what happens, basically, is people 
then have to sell them when they get older to a group, and they 
get stripped of their asset value.
    Mr. Cordray. Yes.
    Mr. Pearce. Now, my last thing here is I am holding up a 
summons--I think you have used the words ``intimidating 
stuff,'' not with respect to summonses. But included in the 
second page is the sentence and all the things they are 
supposed to provide, but then you are not required to produce 
any records in response to the summons. Isn't that deceptive?
    This is coming from our IRS. And so, again, in protecting 
consumers, protecting people, these are pretty abusive 
practices. They deal with the financial world because of that. 
Do you ever visit the IRS on stuff like this?
    Mr. Cordray. I don't have jurisdiction over the other 
government agencies, so, no, I don't. I would be happy to see 
and read what you are--
    Mr. Pearce. Mr. Chairman, thank you, but it looks like we 
are going to protect consumers from everybody but the 
government.
    Chairman Hensarling. The time of the gentleman has expired.
    The Chair recognizes the gentleman from California, Mr. 
Sherman, for 5 minutes.
    Mr. Sherman. Okay. One comment in support of the Fed. 
People say, oh, we should have higher interest rates so I can 
live on my savings, but when we had 6 percent interest rates, 
we had 6 percent inflation. So they were really invading their 
principal in that the value of their principal was declining by 
6 percent each year. Today, we have real interest rates of 2 
percent, and it is a real interest rate.
    So perhaps if we had financial literacy, people would 
understand that if you are getting a 5 percent or 6 percent 
nominal return at a time of 5 or 6 percent inflation, you are 
really earning nothing. You are invading your principal by 
seeing it decline in its purchasing power.
    Speaking of financial literacy, I am all for it, Mr. 
Cordray, but I hope that you would write rules and industry 
would engage in practices that were fair enough and transparent 
enough so even people who had not yet benefited from your 
financial literacy would not be taken advantage of. I don't 
want to see this financial literacy mantra be a replacement for 
fair disclosure and honest practices.
    As to your building, if you can make it cheaper, if you can 
make a change, you will make us happy. You will never have a 
structure that will allow you to compete with the private law 
firms and their beautiful offices, but you will be able to 
recruit from those law firms or get good people because you are 
doing the Lord's work, not because you have a heavenly 
building.
    Mr. Cordray. You are right that the advantage for us in 
recruiting is our mission. People want to come to work to 
protect consumers, and we are going to have a decent building.
    Mr. Sherman. I understand. I want to quickly go on to a 
question here.
    There has been significant dissatisfaction here in this 
room with the guidance that you provided about indirect auto 
leasing, particular concern about how you are basing this 
guidance on methodology that at least our chairman says he 
can't get explained, and sends letter after letter to you, 
Freedom of Information Act requests. Would you consider another 
study that would be based on methodology so convincing that you 
would be willing to share the methodology and the data with 
Congress?
    Mr. Cordray. Again, it has been a source of, I think, some 
frustration to the committee, and to me, and to the Bureau, 
that we have been back and forth on different kinds of 
information about this. We think we are providing a lot of 
information, but people identify other information that they 
want. Partly as a result of that, we are going to put out a 
White Paper on the proxy methodology to try to address that 
very directly later this summer. We will continue to try to be 
responsive on this. The reality is the auto industry and the 
auto lenders, they know all about this because they are 
constantly having to monitor themselves the--
    Mr. Sherman. If they know all about it, why don't you 
answer the chairman's question so he can know all about it?
    Mr. Cordray. I think that we are on the same page. They 
have to fend off private lawsuits whether the CFPB ever existed 
or not. And they have had private lawsuits, and they have had 
to pay out and make changes, and they do the same analysis that 
we do, I believe. We have had lots of discussions with them. We 
will be glad to have more. It is an ongoing dialogue, and--
    Mr. Sherman. I would hope that you would--it is my 
understanding that the Bureau is threatening enforcement 
actions for failure to comply with its interpretation of the 
law as set forth in an informal guidance, and I would hope that 
you replace that guidance with a real regulation that goes 
through the real process with a methodology that is open, that 
you are proud of.
    And I would point out that as things exist now, your 
guidance may not only guide you, but it may also guide the 
courts. So something you put out that you say, well, this is 
just a press release, okay, a long press release, it may not 
guide us, somebody is using it in court, and millions of 
dollars are changing hands, and companies are changing their 
practices. This is an important area. Let us go back and do the 
full work.
    Mr. Cordray. If people want to bring us thoughts about a 
rule, including people from the industry, we will certainly 
welcome any input and give it some careful consideration.
    Mr. Sherman. And be willing to go through the 
administrative procedure process to draft a regulation?
    Mr. Cordray. We are going to work through what the issues 
are and what can be done, but we are happy to hear from people, 
and we welcome that.
    Mr. Sherman. And then finally, I want to say that we 
recently passed legislation that I cosponsored out of the Small 
Business Advisory Board. I look forward to that actually being 
done, whether the Senate passes the legislation or not, and I 
hope that you will include somebody from the title industry, as 
that plays such an important role in the real estate 
transactions--
    Mr. Cordray. If there is anybody from the title industry 
you think hasn't been able to access us and meet with us and 
talk to us, I would be glad to hear about it. I think we are 
trying to be very accessible.
    Mr. Sherman. Thank you.
    Mr. McHenry [presiding]. The gentleman's time has expired.
    We will now go to the vice chairman of our Oversight 
Subcommittee, Mr. Fitzpatrick of Pennsylvania.
    Mr. Fitzpatrick. I thank the chairman, and I thank you, Mr. 
Cordray, for your time today.
    I wanted to follow up on some of these questions having to 
do with the rulemaking of CFPB, and the White Papers that are 
issued, and ultimately the underlying methodologies that Mr. 
Sherman was talking about, but also the data.
    Last week, Mr. Cordray, this committee passed out to the 
House Floor a bill that I sponsored called the Bureau Research 
Transparency Act. And we feel the bill is necessary because the 
CFPB portrays itself as being a ``data-driven agency.'' 
However, over the past 2 years it has become clear that when 
the CFPB wishes to engage in a rulemaking in a particular area, 
it first releases a purportedly objective White Paper on the 
issue. Invariably, research papers conclude that regulations 
are necessary, press releases are issued, then the media is 
driven by the press release and then used to come back to try 
to create some momentum for the proposed rulemaking.
    Many have picked up on this pattern at the CFPB. And it is 
difficult to prove that the CFPB's research is faulty because 
the Bureau often refuses to subject its work to peer review or 
to release its methodology or the underlying data.
    By requiring the CFPB to release its work publicly, the 
bill that I have sponsored will allow interested parties the 
opportunity to review the Bureau's work, and ensure that its 
findings are supported by the data itself. So the bill, in my 
view, improves the rulemaking process by ensuring that its 
policy prescriptions are supported by objective and unbiased 
research.
    I am not going to ask you to comment on a specific piece of 
legislation, but I would ask you just a couple of general 
questions. The first is, does anything prevent the CFPB from 
obtaining the data that you feel you need separately through 
the OMB approval and public comment requirements of the 
Paperwork Reduction Act?
    Mr. Cordray. We have been complying with the Paperwork 
Reduction Act; that is part of the constraints upon our agency. 
And we have worked with OMB for some collections, and then 
there are certain ones that are exempt from the Act, limited 
ones.
    We also have the supervisory authority, which is a method 
of gathering information related to supervision of particular 
institutions. There is a variety of different sources there. 
And we have done voluntary collections from industry, where 
they, in many cases, have been responsive to us.
    Mr. Fitzpatrick. So the bill, Mr. Cordray, simply says that 
the data must be available to the public. Your agency will have 
some discretion on how to implement the law, even by 
rulemaking; is that not correct?
    Mr. Cordray. We will have some discretion, yes.
    Mr. Fitzpatrick. I want to use the couple of minutes I have 
left to get into a separate issue. The O&I Subcommittee, we 
will be meeting later this afternoon. Pursuant to subpoena, a 
couple of the employees of the Bureau will be testifying.
    Mr. Cordray. Yep.
    Mr. Fitzpatrick. And, in your opening statements, I 
appreciate your concern about the process, about the 
allegations of discrimination within the agency.
    So there are some who are coming forward today. There are 
others, employees of the Bureau, who are much more reluctant. 
They are concerned, I guess, about their futures within the 
Bureau. They have given some statements to the committee. And 
even though they are either unable or not willing or afraid to 
come forward, I do want to make sure that they have--all those 
employees do have a voice on this committee.
    Mr. Cordray. I do, too. Yes.
    Mr. Fitzpatrick. And I just want to read the statement of 
one of the employees who wanted to share her story:
    ``I am an employee at the Consumer Financial Protection 
Bureau, and I write to share my experience at the CFPB with 
you. I wish to remain anonymous due to fear of retaliation from 
the CFPB management.
    ``I am a minority employee on term status, and I joined the 
Bureau in the Office of Consumer Response. Sadly, though, since 
my appointment I have experienced discrimination by the Bureau 
at the hands of the very same managers who were the subject of 
the first hearing where Angela Martin testified. Unfortunately, 
my story is not unique, and I am one of many minority employees 
who have suffered discrimination at the CFPB.
    ``Like many of my colleagues, I believed that the CFPB was 
a meritocracy and that I could excel and obtain permanent 
status if I consistently did good work and improved process and 
procedures at the Bureau. However, I quickly learned that I was 
wrong. I suffered retaliation and discrimination by the CFPB 
managers whenever I questioned the status quo or when I 
suggested improvements in the way the Bureau handles consumer 
complaints.''
    So I would just ask, Mr. Director, as you go forward to 
improve the process and protect the employees, consider that 
there are many employees who, for a variety of reasons, have 
been unwilling or incapable of coming forward, and I ask that 
you consider them, as well.
    Mr. Cordray. I will. We are working to resolve individual 
grievances through the appropriate process. And for those who 
wish to remain anonymous, if there are ways for us to try to 
address the general problems that they are describing, we are 
interested in doing so.
    Mr. Fitzpatrick. Thank you, sir.
    Mr. McHenry. The gentleman's time has expired.
    Mr. Scott of Georgia is now recognized for 5 minutes.
    Mr. Scott. Thank you very much, Mr. Chairman.
    Mr. Cordray, I think that you have been made aware of the 
committee, how interested we are in working with you in 
resolving the auto dealers issue. It has gone on way too long. 
The auto industry is in limbo, the dealers are. So we encourage 
you to resolve this issue.
    I had spoken to you about that before and it is good to see 
that you are at least working through it. Sit down with them. 
Let's work this thing out, get it off the table, so they can go 
about their business and not be threatened with indirect 
lending.
    Mr. Cordray. I do welcome the opportunity to spend time on 
this--
    Mr. Scott. Sure.
    Now, I want to ask your help on something else, because we 
are doing things out here, particularly for mortgages and 
helping people. Are you familiar with what we call the Hardest 
Hit Program?
    Mr. Cordray. I am, yes.
    Mr. Scott. Okay. Now, I want to ask you to help us in 
Georgia, because I have sort of taken the leadership in that. 
In August, we are putting together an event in which we will 
have an emphasis on that. And I would appreciate very much if 
you would make a call to Georgia's Department of Community 
Affairs--if you would do that and offer your assistance.
    The issue is this: When we got this program, we got it for 
about $6 billion for the hardest-hit 17 or 19 States in the 
Nation. Georgia's share of that was $339 million. Here is the 
kicker: If we don't use that money within the next 29 months, 
it comes back to the Treasury.
    We need your encouragement. This is money that is there. We 
got this because a number of us on this committee held up the 
Dodd-Frank bill because we said we can't just throw money up at 
Wall Street and think that is going to handle it without 
helping the struggling homeowners. And so, we got this money. 
And Georgia has spent maybe $139 million of it, so we have $200 
million left down there. And if we don't get that out in the 
next 28 months, it comes back to the Treasury.
    So in August, we are putting together an event. The 
Department of Community Affairs is the group that is handling 
it.
    Now, you must understand this point, that my State sat on 
that money for a year and did nothing until we lit a fire under 
them. I am saying to you, spring into action with us. It is not 
going to hurt you to make a call down there. You are there to 
protect the consumers and to help them. Here these folks can 
get up to 24 months of loan forgiveness, of free home mortgage 
help.
    Nowhere is that needed more than for our veterans. We have 
a defense policy now which is lessening our military impact in 
Iraq and Afghanistan. Our soldiers are coming home, and they 
are the fastest-growing group of homeless people. This money 
can help them.
    So in August, we are putting this event together, where we 
hope to get thousands of people, so that we can get this money 
out in the system in Georgia. A call from you, as the chief 
enforcer of consumer protection and help, to help let's get 
that money there. Would you do that for me?
    Mr. Cordray. We--
    Mr. Scott. Her name is Commissioner Gretchen.
    Mr. Cordray. Yes.
    Mr. Scott. They are working now, thanks to lighting the 
fire. The issue is, we only have 28 months to get $200 million 
out to help struggling homeowners. And we are putting this 
event together.
    Now, I have 50 seconds, so much. But will you do that? Can 
I get you to do that?
    Mr. Cordray. We will be glad to work with you and your 
staff to see how--
    Mr. Scott. No, no.
    Mr. Cordray. --we can support that effort.
    Mr. Scott. Can I get you--
    Mr. Cordray. Yes.
    Mr. Scott. --to make a call down there?
    Mr. Cordray. Yes.
    Mr. Scott. And, see, that is a part of the problem. I don't 
need you to work with me. I need you to make a call down there 
to Georgia and offer help for this event for Congressman Scott 
in Georgia to get this free mortgage assistance to struggling 
homeowners and especially our veterans.
    The other point I wanted to ask is about my earlier comment 
about the student loans. As I said, in the Atlanta Business 
Chronicle, $39 million, 1.2 million.
    Mr. Cordray. Yes.
    Mr. Scott. The President put forward a program last week to 
cap monthly payments. What say you about that? Are you familiar 
with it? Is it enough?
    Quickly. I have 4 seconds left.
    Mr. Cordray. Student loans are an enormous problem. We 
happen to have some great people at the Bureau working on them. 
We have been pushing for more refinancing options, and we are 
also pushing on the student loan servicers to do a better job, 
much better job, of actually servicing these loans and 
minimizing the pain.
    Mr. Scott. Is what the President is putting forward--
    Mr. McHenry. The gentleman's time has expired.
    Mr. Scott. --sufficient?
    Mr. McHenry. We will now go to the next--
    Mr. Cordray. I don't know for sure, one way or the other. 
But it is the kind of thing that will create more activity in 
the area, which is needed.
    Mr. Scott. Thank you, Mr. Chairman.
    Mr. McHenry. The gentleman's time has expired.
    We will now go to the vice chairman of our Housing and 
Insurance Subcommittee, Mr. Luetkemeyer of Missouri.
    Mr. Luetkemeyer. Thank you, Mr. Chairman.
    Mr. Cordray, the last time you were here we discussed the 
situation with nondeposit lenders and Operation Choke Point. 
And at that time, I asked you for a letter indicating your 
support for individuals and businesses that were doing business 
in a legal fashion with a legal entity to not be impacted, and 
you would support them. I talked to you the other day. And you 
are working on a letter still, I take it, is that correct?
    Mr. Cordray. I testified last week in front of the Senate 
Banking Committee on this issue and indicated that, as we view 
it, people who are operating legally should be fine, people who 
are operating illegally--
    Mr. Luetkemeyer. Right.
    Mr. Cordray. --should not be fine.
    Mr. Luetkemeyer. Right.
    Mr. Cordray. And that is the right divide here.
    Mr. Luetkemeyer. Right. We would just like a letter stating 
that policy. Is there a problem with that?
    Mr. Cordray. Why don't you write to me, and then I will 
write back to you.
    Mr. Luetkemeyer. Okay. We can do that. We thank you.
    Along those lines, we find that the FDIC and DOJ are 
working together in this Operation Choke Point and have taken a 
scorched-earth policy to trying to ferret out the bad actors. 
And while I do not support the bad actors, I fully support 
their efforts to find the bad actors in whatever entity, 
whatever industry there is, to do this in a way that harms the 
entire industry, in my judgment, is wrong.
    And so my question to you then is, are you working with 
either one of these agencies, the FDIC or the DOJ? Are any of 
your people working with them with regards to Operation Choke 
Point or those activities surrounding that operation?
    Mr. Cordray. I don't really know what the ambit of 
Operation Choke Point is. That is a Justice Department term. I 
believe that we work regularly with the other agencies on 
issues around ``know your customer,'' which is a standard 
approach to bank supervision, where if someone is facilitating 
illegal conduct, they can be culpable, and they need to be very 
careful about that. The line I would draw is the same one you 
and I just discussed, which is, are you operating legally or 
are you operating illegally?
    Mr. Luetkemeyer. I would hope that you are working with 
them if somebody is operating illegally. But if they are 
operating legally, are you still in the loop here, are you 
still working with them to try and do the scorched-earth theory 
of getting at every single individual in an industry and 
choking their financial services off?
    Mr. Cordray. I don't believe in a scorched-earth approach. 
Again--
    Mr. Luetkemeyer. Okay.
    Mr. Cordray. --we need access to credit, and people who are 
operating legally should be operating legally. People who are 
operating illegally should be either operating legally, 
changing their ways, or going out of business. That is the 
right divide.
    Mr. Luetkemeyer. One of the things that I discussed with 
DOJ as well as the FDIC is that we need a safe harbor in place 
for the banks to be able to continue to do business with 
entities that are legal entities and doing it in a legal way. 
And they refuse to do that, and, at some point, we are going to 
have to probably do some legislation.
    Would you support legislation to provide a safe harbor for 
the banking industry to be able to continue to do business with 
legal entities doing business in a legal way?
    Mr. Cordray. I am not quite sure what to make of that, 
because the problem is it is a factual matter, whether somebody 
is operating legally or illegally. I think the law already says 
that if you are operating legally, you have a safe harbor; if 
you are operating illegally, you have no safe harbor. The law 
is the law.
    Mr. Luetkemeyer. The problem, Mr. Director, is that, as you 
well know, there is intimidation going on here, there is 
bullying going on here by the FDIC, in particular, and by DOJ. 
They will go in and, by inference, say, ``Hey, you shouldn't be 
doing business with these particular people,'' but refuse to 
put it in writing. So, therefore, by refusing to put it in 
writing, they are bullying the bankers into no longer being 
able to provide financial services to an entire industry of 
people.
    That is going on with not just nondeposit lenders, but they 
are also doing it with gun manufacturers, ammunition 
manufacturers, and people who sell guns and ammunition. It is 
documented. Even the papers have this information out now. But 
we see it--
    Mr. Cordray. I don't know if that is so at the FDIC. I 
really don't know if that is so.
    Mr. Luetkemeyer. I have talked with--
    Mr. Cordray. I have read press accounts about Operation 
Choke Point and I am not clear on what the ambit of that is.
    Mr. Luetkemeyer. It has gone beyond just nondeposit 
lenders. And the FDIC admits that they are doing this. So we 
have documented evidence by some of the stories related in the 
press, if the press is doing their business at all, that would 
be the case.
    So my concern is, are you willing to help us provide a safe 
harbor for those banks and stop this intimidation, this 
bullying, that is going on with the FDIC and DOJ by putting in 
place a safe harbor? Would you support something like that?
    Mr. Cordray. If people are operating legally, they have a 
safe harbor by law. If they are operating illegally, they are 
not. The difficulty often is knowing which they are doing, and 
you have to dig in and really understand the facts and 
circumstances to know that. But, I don't think you and I are 
far off from each other.
    Mr. Luetkemeyer. I don't think we are, but I would like for 
you to say ``yes.'' I think you agree that a safe harbor is 
necessary, but you won't do it, Director.
    Mr. Cordray. I am not sure what to make of that. Honestly, 
I am not. Sorry. I just--
    Mr. Luetkemeyer. Okay. I appreciate your comments this 
morning. And I am running out of time, so I will stop right 
there.
    Thank you, Mr. Chairman.
    Mr. McHenry. All right. I thank the gentleman for yielding 
back.
    We will now go to the ranking member of our Oversight 
Subcommittee, Mr. Green of Texas.
    Mr. Green. Thank you, Mr. Chairman.
    Mr. Chairman, we have reached a point in time where we have 
to take the axe of truth and slam it into the tree of 
circumstance and let the chips fall where they may.
    And the truth is, Mr. Cordray, that if you eliminated the 
work on the building, the renovation process today, it would 
not end the argument, the opposition to the CFPB, the Consumer 
Financial Protection Bureau. It wouldn't end it, because the 
building project is not an end. It is a means to an end. And 
the end that persons are seeking, not all but some, is to place 
the CFPB under the appropriations process.
    Then you would find yourself in the same position as the 
SEC: budget cut, underfunded, understaffed, overburdened, still 
got 300 million people to protect but you are under the process 
that allows Congress to cut your budget, manipulate your 
budget, to the extent that you won't be efficacious.
    The truth is we spent $621 million on a visitors center, a 
congressional visitors center. It cost $621 million.
    Mr. Cordray. Wow.
    Mr. Green. That is a lot of money for visitors.
    Mr. Cordray. Yes.
    Mr. Green. I welcome visitors to the Capitol. I think the 
argument can be made that you don't need a $621-million 
visitors center. But that is just an argument.
    The truth is, if you become a part of the appropriations 
process, you will not be able to do many of these things that I 
have evidence of your being able to do. You won't be able to 
supervise bank and nonbank mortgage companies. You won't be 
able to produce new protections against irresponsible mortgage 
lending. You won't be able to produce new protections for 
homeowners facing foreclosure. You won't be able to produce a 
``Know Before You Owe'' mortgage disclosure program. You won't 
be able to stop mortgage servicing misconduct. You won't be 
able to take action against real estate kickbacks. And, in my 
State, you just took action against a builder, who had to 
surrender more than $100,000 received in a real estate kickback 
scam.
    You will become ineffective if the CFPB is placed under the 
appropriations process. This is why the design of the CFPB is 
such that you are under another funding source, so that you can 
have some independence, so that you can take some actions that 
many in this country who are big and powerful would find 
unacceptable.
    This is about helping people who were scammed with loans 
that were a part of the 2008 crisis--the 327s, the 228s, the 
negative amortization, the no-doc loans. All of these things 
could have been dealt with had we a Consumer Financial 
Protection Bureau.
    The truth is, it took 66 years to get rid of Glass-
Steagall--66 years--but they did it. They emasculated Glass-
Steagall. This is why we have a Volcker Rule today, because 
Glass-Steagall was emasculated. It took 66 years, but I say to 
you, Mr. Cordray, on my watch, I am going to do all that I can 
to protect the Consumer Financial Protection Bureau.
    I don't like the allegations of invidious discrimination, 
and I think they have to be dealt with. And I plan to work with 
the chairman of the Oversight and Investigations Subcommittee 
to make sure we deal with these allegations, not only at the 
CFPB but also at the banks. Many of these banks have similar 
circumstances that are not being aired. And I think we have to 
go straight to the heart of the matter and deal with it across 
the length and breadth of all of the agencies that come under 
our purview.
    So I am concerned about this, but I am not going to limit 
my concern to the CFPB to the extent that it appears that this 
agency is ineffective and ought to be eliminated or 
emasculated. Not on my watch.
    I yield back the balance of my time.
    Mr. McHenry. I appreciate that. I thank the gentleman for 
his promptness.
    I will now recognize myself for 5 minutes.
    Yesterday, in Politico and the Washington Examiner, it was 
noted that Ms. Angela Martin, who testified before my 
subcommittee in April, a CFPB whistleblower--are you familiar 
with Ms. Martin, Mr. Cordray?
    Mr. Cordray. Yes.
    Mr. McHenry. Okay.
    And, as I remember, back in April you issued a new equal 
employment opportunity policy saying that you had zero 
tolerance for workplace discrimination and retaliation.
    It was noted in that article that Angela Martin received a 
financial settlement, that her claim has been settled.
    My question to you, sir, is: The person who was--have you 
actually taken any disciplinary action against Scott Pluta for 
retaliating against Ms. Angela Martin?
    Mr. Cordray. We have now resolved claims involving Ms. 
Martin on two separate occasions. The first time was in August 
of 2013. There were some difficulties, as I understand it, in 
implementing--
    Mr. McHenry. I am not asking about the claims. I am asking 
whether or not someone who continues to be in your employ, Mr. 
Scott Pluta, whom the allegations were levied against, if he 
has been held accountable for his actions.
    Mr. Cordray. I do not have a basis for disciplining Mr. 
Pluta.
    Mr. McHenry. So you have not fired somebody who has been 
proven to be--based off the financial terms of the settlement, 
it is clear to me that there was truth in this, if you are 
going to make such a financial settlement with an employee.
    And, likewise, if you are going to issue taxpayer funds to 
someone to settle a discrimination and retaliation claim, yet 
on the other side of the ledger not hold someone accountable, 
it seems irresponsible to me. How would you see it differently?
    Mr. Cordray. You said things have been proven. They have 
not been proven. And--
    Mr. McHenry. So you gave her--
    Mr. Cordray. --the investigation is ongoing.
    Mr. McHenry. --Federal money, you gave her taxpayer money, 
on a frivolous claim?
    Mr. Cordray. No, it was not--I don't know that it was a 
frivolous claim. It hasn't been proven, okay?
    Mr. McHenry. It has not been proven. Have you done an 
investigation about whether or not it has been proven?
    Mr. Cordray. As you know, we began doing an investigation. 
That--
    Mr. McHenry. When?
    Mr. Cordray. --investigation proved to be defective, which 
was done by the investigator you heard from in front of your 
subcommittee.
    Mr. McHenry. Yes.
    Mr. Cordray. We are now reopening that investigation and 
working through it. But I don't want to--
    Mr. McHenry. You are reopening it?
    Mr. Cordray. --get into the details of--
    Mr. McHenry. I'm sorry. You are reopening that 
investigation?
    Mr. Cordray. It is an ongoing investigation--
    Mr. McHenry. When did you reopen that investigation?
    Mr. Cordray. Recently--
    Mr. McHenry. Okay.
    Mr. Cordray. --when we--
    Mr. McHenry. Because the Defense Investigators Group gave 
you the report, I think 6 or 7 months ago, if my recollection 
is correct. Did you start your internal investigation on the 
investigation after that or just when we got the letter 
yesterday?
    Mr. Cordray. You know and you have the letter from me that 
states--
    Mr. McHenry. We got it last night, yes.
    Mr. Cordray. --that investigation was not according to the 
statement of work. It was deficient. The company has 
acknowledged it. We have to--
    Mr. McHenry. They have not acknowledged it.
    Mr. Cordray. --now redo it again.
    Mr. McHenry. That is not the testimony we heard, Mr. 
Cordray. In fact, the testimony we heard was that, for the 
reasons you outline in the letter, that she didn't have sworn 
testimony and signed transcripts, that was a decision that the 
Bureau gave her because they didn't want to pay for her travel 
to D.C. to get signatures. So your claims that it is deficient 
are very dubious at best.
    I want to go to--
    Mr. Cordray. I don't agree with--
    Mr. McHenry. --a separate report, because you can debate 
one investigative firm.
    Mr. Cordray. Yes.
    Mr. McHenry. Revered consulting firm Deloitte was hired by 
OMWI, the Office of Minority and Women Inclusion. The report is 
rather damning: six areas of enormous deficiency within the 
Bureau dealing with racial disparities, and disparities against 
women as well.
    Yet I read that you have promoted Stuart Ishimaru, who ran 
that office, after this report was received. It seems 
perplexing to me that the person who receives a damning grade 
from a revered consulting firm would receive a promotion.
    How does that work in your department? If you are taking 
these claims and if you are taking these reports of 
discrimination and retaliation seriously, how can I see that 
you are taking real action?
    Mr. Cordray. You are misstating the actual events. All 
right? That report was commissioned by Mr. Ishimaru as an 
attempt to get a baseline so that he could develop a strategic 
plan for the OMWI office. All right? That was the purpose of 
the report.
    Mr. McHenry. Right.
    Mr. Cordray. It was generated for that reason, and--
    Mr. McHenry. And it was delivered in September of last 
year.
    Mr. Cordray. End of September last year, that is correct.
    Mr. McHenry. And nothing further occurred until the March 
6th American Banker article--
    Mr. Cordray. No, that is not true.
    Mr. McHenry. --was published. Well, that is what--
    Mr. Cordray. That is not correct.
    Mr. McHenry. --the union testified to, that there was no--
    Mr. Cordray. No, not correct.
    Mr. McHenry. --action against--
    Mr. Cordray. The union is not necessarily privy to 
everything that is going on in the agency.
    Mr. McHenry. Who is not?
    Mr. Cordray. So let me--
    Mr. McHenry. Who is not? Who is not privy to--
    Mr. Cordray. The union members don't necessarily know 
everything--
    Mr. McHenry. That is the leaders.
    Mr. Cordray. --that I know as the Director.
    They were engaging in negotiations, which they have done. 
Those have been fruitful. They have dealt with the performance 
review system thoroughly. It has now been discarded. We have 
gone back and corrected the effects for employees.
    The report was received at the end of September. It was an 
internal OMWI report. It was then raised to the level of 
executive leadership in early November, so pretty short order. 
We immediately began looking at the issues around the 
performance review system because I was concerned about them. 
And that led to union negotiations of resolution in a matter of 
a few months. That is very fast.
    We didn't put this into a legal process and try to defend 
it and--
    Mr. McHenry. Okay.
    Mr. Cordray. --resist it for years.
    Mr. McHenry. My time has expired.
    Mr. Cordray. We resolved it. And--
    Mr. McHenry. My time has expired--
    Mr. Cordray. --that was appropriate.
    Mr. McHenry. --and other Members--
    Mr. Cordray. Okay.
    Mr. McHenry. We will now go to Mr. Carney of Delaware for 5 
minutes.
    Mr. Carney. Thank you very much, Mr. Chairman.
    And thank you, Director Cordray, for coming in again to 
answer questions before this committee. I appreciate what you 
are doing, and I appreciate your personal responsiveness to me 
and my office and staff when we have questions and concerns.
    And thank you for this summary of the activities that you 
have done over the last year. I would just like to highlight a 
few: you have ordered $3.8 billion to be returned back to the 
pockets of more than 12.6 million consumers; you have collected 
over $141 million in civil penalties from the companies that 
harm consumers; you have handled approximately 354,000 consumer 
complaints; you have issued new mortgage rules; you have 
launched new tools, such as Paying for College, Ask CFPB, and 
debt collection action letters that help consumers navigate 
critical financial decisions.
    You have done a lot on financial literacy. You have heard 
that is an issue that we all are concerned about, creating 
tools and providing resources to the people that you serve. You 
have created the ``Know Before You Owe,'' which I think is 
really important. This is hard stuff for people. It is hard 
stuff for those of our constituents who are highly educated, 
and it is even harder for people who aren't and don't have a 
lot of access to these resources.
    So thank you so much for what you and the agency are doing.
    I would be remiss if I didn't say that I am concerned, as 
well, about the complaints of racial discrimination. Very 
troubling. And I take you at your word that you will get to the 
bottom of this.
    Mr. Cordray. Yes.
    Mr. Carney. These things just can't happen. And I 
appreciate that.
    I am going to take you up on your offer for us to come over 
and visit. I am dying to see this fountain and the landscaping 
around which so much has been made.
    I would like to go back to--
    Mr. Cordray. Maybe we will run a shuttle bus for you and 
your colleagues.
    Mr. Carney. Thank you. Maybe I could do that, lead that 
effort.
    I would like to go back to something that Mr. Meeks said 
about the QM rule. And I did read the American Banker article. 
What I drew from the article was that it wasn't having an 
impact because of the exemptions given to Fannie and Freddie.
    And in your response to Mr. Meeks, you said that the rule 
has latitude and flexibility depending on what Congress might 
do.
    Mr. Cordray. Right.
    Mr. Carney. I am a cosponsor with Mr. Delaney and Mr. Himes 
of legislation that we plan to introduce that would replace 
Fannie Mae and Freddie Mac with the functions that would come 
under Ginnie Mae.
    Suppose that would happen; how would the regulations apply? 
And how is that latitude and flexibility, how do you see that 
happening?
    Mr. Cordray. I think at the time we passed the mortgage 
rules, one of the big difficulties--there were a number of 
difficulties--was uncertainty about GSE reform. If and when 
that issue is resolved by the Congress, I imagine anything that 
might be done would be staged in over a period of time, rather 
than some precipitous change.
    Mr. Carney. That is what our bill--
    Mr. Cordray. And it would be absolutely essential for us to 
then revisit our rules in light of that and probably work with 
the Congress to understand how all of this should dovetail 
going forward. And that is absolutely what would be needed at 
that time.
    Mr. Carney. So that is something that you will commit to 
doing--
    Mr. Cordray. Yes.
    Mr. Carney. --depending on what happens?
    Mr. Cordray. Absolutely.
    Mr. Carney. And we obviously don't know what is going to 
happen.
    Mr. Cordray. That is right.
    Mr. Carney. There is a different approach in the Senate. 
Actually, this committee has voted the PATH Act out, which 
would--
    Mr. Cordray. That is right.
    Mr. Carney. --completely eliminate any Federal guarantee 
there. We don't think that is the right way to go, and--
    Mr. Cordray. Yes.
    Mr. Carney. --we have an alternative to that.
    Mr. Cordray. We didn't know then. We don't know now. We 
tried to build in flexibility, and I think it reflects a 
sensible approach to those rules that we did that.
    Mr. Carney. You and I have talked about student loan debt 
before and all of that, and I have expressed my concerns to 
you. I have asked, kind of, for your advice as a professional, 
as a smart guy, not so much as the head of the CFPB.
    And you have been reluctant to share your own views on what 
we should do. Somebody asked you, a minute ago, about the 
legislation that passed in the Senate that would enable 
students to pay a percentage of their income, and you kind of 
deflected that.
    Do you have any thoughts, any further thoughts, based on 
your more recent experience with what you are seeing out there 
in the marketplace?
    I notice you say that the student debt can have a domino 
effect on the rest of the economy, and we have had some 
discussion about that.
    Mr. Cordray. Yes. So, look, in my capacity just as an 
informed public official, not on behalf of the Bureau--
    Mr. Carney. And a parent.
    Mr. Cordray. I am very concerned as a parent, yes, and as a 
citizen about the fact that tuition costs continue to spiral in 
ways that are unbelievably dramatic around the country. I saw 
figures recently that the cost of tuition at our higher 
institutions went up, it was--I don't have the exact numbers, 
but it was something like 580 percent over a period of time 
where inflation--
    Mr. Carney. 600 percent.
    Mr. Cordray. --and even things like housing costs and other 
things went up at a much lower pace.
    Mr. Carney. Twice healthcare costs.
    Mr. Cordray. And this is an example of something that goes 
well beyond the Consumer Bureau. We end up with the back end, 
holding the bag on this problem. People have all these costs. 
We got to it at the State and local level. And the institutions 
themselves have to think hard about the costs they are imposing 
on the American public, and they have to get to be more 
efficient.
    Mr. McHenry. The gentleman's time has expired.
    Mr. Carney. Thank you.
    Mr. McHenry. We will now go to Mr. Huizenga of Michigan for 
5 minutes.
    Mr. Huizenga. Thank you, Mr. Chairman.
    And, Director Cordray, I appreciate you being here.
    I know this is tough, coming up here. You feel badgered, 
feel beat up. I am going to try not to do that.
    Mr. Cordray. It is part of my job.
    Mr. Huizenga. I know it is part of your job, but I am going 
to try not to do that. I actually have some serious questions, 
though.
    On January 28th, we had a hearing where you testified and I 
had submitted a question with a series--four different points, 
subpoints, kind of, under it. We received the answers 
yesterday. That is 6 months, well, to be fair, 5\1/2\ months. 
Is that an acceptable timeframe to be getting back to an 
oversight committee like we are with some pretty basic 
questions?
    Mr. Cordray. It is not the timeframe I would like, but if I 
had a set of questions from you and I was responding to you, 
that would be one thing. We have had quite a few follow-ups and 
document requests and emails and other things from this 
committee, which is fine, that is the committee's job, but it 
has been a burdensome load for us. We are trying to get back as 
timely as possible. Some things we can get back more quickly, 
some things more slowly. I will say, it is always true that a 
committee hearing like this concentrates the mind and causes us 
to get some things done because we know that it is time--
    Mr. Huizenga. Okay.
    Mr. Cordray. --to do so. But--
    Mr. Huizenga. Well, I have a--
    Mr. Cordray. --we have been under tremendous strain to 
accomplish all of it.
    Mr. Huizenga. --couple of other questions regarding QM. One 
of them is a repeat of the question from January, and this was 
from our hearing with Meredith Fuchs on April 8th.
    Mr. Cordray. Yes.
    Mr. Huizenga. Any idea when those might be coming back?
    Mr. Cordray. Sorry, so what is the question?
    Mr. Huizenga. So I am just--a set of four simple questions.
    Mr. Cordray. Yes.
    Mr. Huizenga. Some of them are slightly modified from 
earlier answers, where basically--the answers you gave us from 
yesterday were, ``Well, we are monitoring the situation.'' So 
do I have to wait another 6 months to get the answers for this 
set, or, hopefully, will that be quicker?
    Mr. Cordray. I'm sorry. So you are putting out a set today, 
a new set? Or--
    Mr. Huizenga. No. This is from--these were submitted to you 
on April 8th.
    Mr. Cordray. Okay.
    Mr. Huizenga. So I am just--how about we work better than 
5\1/2\ months? Can we agree to that?
    Mr. Cordray. We will absolutely do our best.
    Mr. Huizenga. Okay.
    Mr. Cordray. Yes.
    Mr. Huizenga. Perfect.
    Openness and transparency. It seems to me that the goal--I 
wasn't here for the creation of Dodd-Frank. I am dealing with 
the echo effects of it. It seems to me that it was to ensure 
systems were more transparent and easier for consumers. Is that 
happening?
    Mr. Cordray. I think it is in some areas. We are working to 
make it happen in some areas. I actually do think that the 
tenor of the market has moved in some considerable way in that 
direction, with a lot more work yet to do.
    Mr. Huizenga. I would agree with that. There is the a-lot-
more-work part. The disclosures that I see now, when we all get 
our credit cards or our bank card statements, certainly are not 
easier. They are more confusing, I think, to the people in the 
general public. It is frustrating for those who are running the 
operations; it is frustrating for those of us receiving it. And 
I am afraid that is bleeding out into other areas, including 
our QM situation, which was some of my questioning from back in 
January and part of my question.
    So, I will give you a preview. Or, actually, this was from 
April 8th, so I will do a vocal follow-up here, I guess, on 
dealing with the QM rules.
    A recommendation had been to increase the threshold of 
``small loans'' from $100,000 to $200,000. The answer you gave 
to me from that question back in January was, ``Well, it could 
have been worse. It was $75,000. We increased it up to 
$100,000.''
    One, do you have the legal authority to increase the 
amount? And if so, why haven't you increased the threshold? 
That is one of the questions that I have.
    The other one--and I am very concerned about this--is that 
``QM'' is quickly become known as ``quitting mortgages.'' When 
you talk to small lenders especially, they are trying to enter 
into this and do the right thing. They are not the people who 
caused any of this housing bubble, for the most part. They are 
not the people who have these nameless, faceless relationships. 
These are the people who are meeting their customers day to 
day. I was a REALTOR for a number of years. I dealt with that.
    But how do we reconcile this one-size-fits-all approach 
taken by CFPB promulgating these QM rules and to promote 
consumer choice and facilitate access to that marketplace when 
it doesn't seem to be happening?
    Mr. Cordray. I actually agree with you on this about the 
smaller lenders. And we actually did not take a one-size-fits-
all approach. We had a special small-creditor provision for any 
institution with less than $2 billion in assets and makes 500 
or fewer mortgages a year. Everything they do, whether it is 
sold to Fannie or Freddie or it is kept in portfolio, is a QM 
with a safe harbor.
    And I have had--
    Mr. Huizenga. Two billion dollars is a pretty low 
threshold, though.
    Mr. Cordray. --conversations with dozens of smaller 
creditors who say this, ``Well, we are going to have to get out 
of the mortgage market,'' and when I talk it through with them, 
it is clear that they didn't understand that part of the rule, 
and we are trying to get the word out to them. I know the trade 
associations need to work harder at getting the word out to 
them.
    But it wasn't one-size-fits-all. There are special 
provisions for the small creditors. And we are happy to 
consider more.
    Mr. McHenry. The gentleman's time has expired.
    Mr. Huizenga. I appreciate it. Thank you.
    Mr. McHenry. We have an announcement of House Floor votes. 
I am respectful of your time. I am also respectful of heads of 
the CFPB, their packed schedules. And so, being aware of this--
    Mr. Cordray. I am available.
    Mr. McHenry. --if we could have Members' indulgence on 
time, we will now go to Mr. Ellison--I'm sorry, Mr. Heck of 
Washington, the other Washington.
    Mr. Heck. Thank you, Mr. Chairman.
    Director Cordray, thank you very much for being here. I 
never want to miss an opportunity to thank you for your public 
service and that of your agency and, in particular, that of the 
Office of Servicemember Affairs. As somebody who represents 
Joint Base Lewis-McChord, it is deeply appreciated.
    Mr. Cordray. Yes.
    Mr. Heck. Although I will add, in actually reading your 
report, I note that the office made 77 outreach visits in the 
6-month period ending March 31st and none of them were near the 
largest joint operating base in America.
    Mr. Cordray. She is in great demand. You put in a request, 
and we will see what we can do.
    Mr. Heck. I would like to follow up on something Mr. Royce 
asked you. And I was very pleased to hear you say that you were 
exploring ways in which the agency might be able to issue 
advisory opinions.
    I want to make sure that you know that, while that bill 
came out on a partisan, divided vote, there are lots of Members 
on this side of the aisle who think that is not just a good 
idea; they think it is a very good idea. And, as a matter of 
fact, I would suspect, as a former attorney general, that your 
agency probably issued something that in our State, we call 
attorney general's opinions--
    Mr. Cordray. Yes.
    Mr. Heck. --and even letters that--
    Mr. Cordray. About 100 a year. Yes.
    Mr. Heck. This is a good, smart business practice that is 
win-win.
    Our sensitivity to your concerns about how the bill, as 
worded now, might not work--
    Mr. Cordray. Yes.
    Mr. Heck. --is something we want to take into account. So I 
would like you to enumerate, what are the kinds of changes in 
that legislation that would enable you to implement it in a 
good fashion?
    And please hear me. We think the idea behind this bill is 
excellent.
    Mr. Cordray. I am not at all certain that legislation is 
needed in this area. I don't think anything prevents us from 
issuing responses. We do it all the time. In fact, people ask 
us questions about our mortgage rules, and we put out guidance 
and various things, both verbally and in writing. We do that 
all the time.
    But it is sort of a formal procedure for particular 
instances where people could have some assurance around what 
the answer is. Again, I think we can do that. I think we are 
doing that in various respects. I think we could do it in more 
respects.
    There are things in the legislation--I am not that familiar 
with the legislation--but mandatory timeframes and everything 
has to be answered. All of that could potentially really impede 
other work of the Bureau.
    I was attorney general in Ohio, as you say, and we did have 
a mechanism under State law for advisory opinions in 
appropriate circumstances from designated people who could ask 
us those questions, and at times, it was quite helpful.
    Mr. Heck. I heard you say you don't need legislation to do 
this. Are you hereby now publicly committing that you will 
pursue the development of an advisory opinion process at the 
agency?
    Mr. Cordray. Again, we are actually doing this all the time 
in a somewhat more informal way. People ask us all the time 
about clarifying--
    Mr. Heck. Would you commit to doing it in a more formal 
way?
    Mr. Cordray. I think you can expect to see more from us in 
this area, yes.
    Mr. Heck. So, someone asked, and I do not recall who, about 
the Military Lending Act. I want to remind you that when you 
were here in January, I asked you, given the tardiness of the 
Department of Defense's issuance of regulations, maybe it was 
time to actually place the responsibility for rulemaking with 
the agency that has the most expertise in this regard. Frankly, 
that is you.
    Here we are, 6 months later, no rule. And you demurred 
under very appropriate diplomatic terminology, but, Director 
Cordray, it is time. I realize getting it right should come 
before getting it done now, but is it not time for us to call 
for this responsibility to be placed with the agency that 
actually has the deepest expertise on how to go about this?
    Mr. Cordray. I think that is actually what Congress did in 
the Dodd-Frank Act. And then later, when they reopened the 
Military Lending Act at the end of 2012, they gave the 
authority to the Department of Defense, but they urged them to 
work with the other agencies and explicitly said that they 
should consult with the CFPB.
    We have worked with them. It has been a very fruitful 
partnership--
    Mr. Heck. It is not fruitful in the sense of having the 
regulations.
    Mr. Cordray. No, it actually is. There is pretty much a 
final version of a regulation, is my understanding. It has been 
working its way through the Department of Defense, and soon 
will be on its way to the Office of Management and Budget, 
which is a required step they have to take, and very shortly 
thereafter will be proposed publicly. And I think you will see 
it is going to be a good rule. And the Department of Defense 
has worked hard on this. They have many other things to do, I 
think we are well aware. I think people should continue to 
express interest in this, and that will be helpful. But I think 
things have moved along quite a bit, and I think we are on the 
verge of something going out--
    Mr. McHenry. The gentleman's time has expired.
    We will now go to the vice chairman of our Financial 
Institutions Subcommittee, Mr. Duffy of Wisconsin.
    Mr. Duffy. Thank you, Mr. Chairman.
    Mr. Cordray, the National Mortgage Database, invasive, but, 
per your testimony today, I think you are telling us it is a 
pretty good database that is going to help you with good 
information to make rules. Yes?
    Mr. Cordray. That is the intention. Yes.
    Mr. Duffy. Okay. And that database, per your testimony, is 
a database that samples information, 5 percent, per your 
testimony.
    Mr. Cordray. That is correct.
    Mr. Duffy. I would just like to bring up my point in our 
prior conversations, that I have asked you to actually sample 
data with regard to credit card information.
    Mr. Cordray. Yes.
    Mr. Duffy. You could get similar good data instead of 
taking nearly a billion credit cards and sampling--actually, 
collecting data off those credit cards. I think you have made 
the point with the National Mortgage Database, and you should 
then apply that to the credit cards. Fair point?
    Mr. Cordray. I understand that. And what I want you to know 
is we are listening, we are hearing, and where we can do 
sampling and that will be sufficient, that is fine. Where we 
ask about the data and they say it is just easier for us to 
send you all of it rather than us having to cut out a sample 
and it may not be--
    Mr. Duffy. Well, don't ask for it all. Just ask for 5 
percent. I am sure you--
    Mr. Cordray. Yes.
    Mr. Duffy. --could make the same argument, too, with the 
National Mortgage Database; it is just easier to give it all. 
Listen--
    Mr. Cordray. Yes. We will go back and continue to think 
further about that.
    Mr. Duffy. I would appreciate that.
    Now, I think your testimony was also--you indicated that 
you don't care about information personal to me. I think that 
was your quote. Is that correct?
    Mr. Cordray. I really don't care about your--
    Mr. Duffy. I am going to tell you something.
    Mr. Cordray. --particular spending habits and the like.
    Mr. Duffy. Why don't--
    Mr. Cordray. Although I understand you have a new arrival, 
so you probably have some--
    Mr. Duffy. I do.
    Mr. Cordray. --economic burdens.
    Mr. Duffy. That is what I was going to bring up. I do 
care--
    Mr. Cordray. Yes.
    Mr. Duffy. --that you know the number of children I have 
and the ages of my children. I care about that. That is 
personal to me.
    Mr. Cordray. I don't have that.
    Mr. Duffy. Also personal to me are my religion, my phone 
number, my race, and my education. My education records are 
personal to me.
    Mr. Cordray. Yes.
    Mr. Duffy. And here you have indicated to all of us that 
you are going to collect it.
    Now, I want to ask you about that collection, because on 
December 10, 2012, a SORN notice went out about this new 
mortgage database.
    Mr. Cordray. Yes.
    Mr. Duffy. And it was pretty straightforward, and it didn't 
get much of a rise out of Congress. Basically, you were going 
to collect loan level information. But you have now reissued it 
and greatly expanded the information that is going to be 
collected. And that has been a topic of many people here today, 
and I think it has a lot of concern for not just Members of 
Congress but for America as a whole.
    Is it your testimony that you are only collecting religious 
affiliation or numbers of children and ages but then parsing it 
out and it doesn't go into the database? Is that your 
testimony?
    Mr. Cordray. We are not doing it. A credit reporting agency 
that actually handles that kind of information all the time is 
doing it so that my employees will only see de-identified 
information. That is the effort here. And the same is true of 
the FHFA.
    Mr. Duffy. So I want to--
    Mr. Cordray. We think it is responsible.
    Mr. Duffy. --talk about your notice, then.
    Mr. Cordray. Yes.
    Mr. Duffy. Because the notice says, ``The revised system of 
records notice is set out in its entirety and described in 
detail below. The revisions expand the category of records that 
will be collected, maintained, and stored in the system as well 
as make `minor' changes and clarifications.''
    So you don't tell us, I am going to just collect all these 
data points that concern us. You tell us here that you are 
going to collect it, maintain it, and store it.
    And, Mr. Cordray, you have been here 5 times. You are a 
smart man, very smart, and you have a lot of smart people who 
work for you. When you put these out, you know exactly what you 
are doing. And you didn't specify, we are going to collect all 
of this information that concerns us but we are only going to 
store a certain portion of that which was collected. You didn't 
specify it here. You are collecting, maintaining, and storing, 
per your notice.
    Mr. Cordray. So, again, the point of the SORNs, they are 
typically written very broadly--
    Mr. Duffy. That is not--I am not going to go into your--
    Mr. Cordray. --so that--
    Mr. Duffy. We are not going to talk about--
    Mr. Cordray. --they--
    Mr. Duffy. I just want an answer--
    Mr. Cordray. But I can tell you--
    Mr. Duffy. --why you wrote it that way.
    Mr. Cordray. --what we are doing about the database. I 
think it is in line with what--
    Mr. Duffy. I want to ask you one more question.
    Mr. Cordray. --you expect. And we are happy to keep you 
posted on it.
    Mr. Duffy. You are giving me the color of a song--
    Mr. Cordray. Okay.
    Mr. Duffy. --to quote--
    Mr. Cordray. I am trying to help you.
    Mr. Duffy. --your prior testimony.
    Mr. Cordray. Yes.
    Mr. Duffy. I introduced a bill that would require you to 
ask for permission from Americans before you collect their 
information. I imagine you don't support that bill.
    Mr. Cordray. It just wouldn't be workable.
    Mr. Duffy. Let me ask you a question. Would you support a 
bill that would say something like this: You can collect the 
consumer's personal information only with their consent and 
notify consumers regarding their collection and use of personal 
information, including purpose, method, and scope of use. Would 
you support that bill?
    Mr. Cordray. So, we are not going to use that personally--
    Mr. Duffy. Would you support a bill like that?
    Mr. Cordray. --identifiable information--
    Mr. Duffy. Would you support a bill like that?
    Mr. Cordray. It would render--
    Mr. Duffy. Would you--
    Mr. Cordray. It would render--
    Mr. Duffy. Come on, Mr. Cordray, just answer my question. 
Would you support a bill like that?
    Mr. Cordray. I don't typically take positions on 
legislation, but that would make it unworkable for us to have 
data. We would be blind to the mortgage market--
    Mr. Duffy. I am going to give you a little notice here.
    Mr. Cordray. --and the mortgage crisis and all that.
    Mr. Duffy. This law exists. It exists. Do you know where? 
Communist China.
    I yield back.
    Mr. McHenry. The gentleman's time has expired. Strong note.
    Mr. Ellison of Minnesota is now recognized for 5 minutes.
    Mr. Ellison. Let me thank the Chair and the ranking member.
    And Mr. Cordray, thanks for being here today.
    I just want to note for the record that the CFPB is 
investigating more than 354,000 consumer complaints. I have a 
picture up on the screen of the breakdown of the complaints 
that you get. You are getting complaints about payday loans, 
money transfers, student loans, consumer loans, and credit 
cards.
    Does the volume of complaints that you get assure you that, 
without regard to what anybody else might say, the American 
people feel that your agency is important and is there to help 
them?
    Mr. Cordray. And I actually think many more American people 
would want to bring complaints to us but don't yet know to do 
that. Yes, I do.
    Mr. Ellison. Yes.
    So, also, I am kind of concerned about the market for 
buyers of manufactured homes. I requested information from the 
Manufactured Housing Institute about their largest lenders and 
their loan data, and they recommended that I get the 
information on their industry from the CFPB.
    Now, what has been the CFPB's approach to assessing 
potential concerns about these borrowers' financing options?
    Mr. Cordray. Frankly, I would be happy to have you get it 
from them and then share it with us. We have been trying to get 
information, and we would like to have more. This is an issue 
that came up in this committee the last time I was here. There 
is a lot of interest in it. We have interest in it, as well. We 
are trying to understand that market.
    I will say--and Mr. Chairman and others may be interested; 
I know you will, too--we are working on a White Paper on 
manufactured housing that we want to put out hopefully toward 
the end of summer that will bring you up to date on what we 
know about it. And if there are issues or problems in this 
industry, we want to consider and potentially address them.
    I will say, some of the concerns that have been stated 
don't necessarily jibe with some of the data. We saw that the 
division of Berkshire Hathaway that focuses on manufactured 
homes, their profit was up 60 percent this first quarter over a 
year ago. It is not at all clear that manufactured housing is 
lagging in any particular way. But that is the kind of data we 
need to understand in order to assess whether there is a 
problem; if so, what the problem is; and what could or should 
be done about it.
    Mr. Ellison. There is a bill in front of the Congress now 
called the Preserving Access to Manufactured Housing Act. It is 
presented as a bill--it is H.R. 1779--that is designed to help 
occupants of manufactured housing, the idea being that people 
aren't lending to this market, and that if we allowed lenders 
to assess higher interest rates on these people, it would 
attract them to the market.
    Do you have any views on this particular piece of 
legislation you are in a position to share today?
    Mr. Cordray. This is the same as with all aspects of the 
mortgage market since the rules took effect. We are interested 
in people bringing us data.
    Mr. Ellison. Right.
    Mr. Cordray. If, in fact, they aren't lending, if that is 
true, we would like to know the facts on that. We want to also 
know why that is so and want to think about whether something 
could be done about it.
    We are interested in data here. We would like to have data. 
Industry has data, and if they would share it with us, that 
would help us all see the picture more clearly, and then we 
could talk and consider together. And we are very accessible to 
them, but we need data.
    This White Paper we are going to put out will help a little 
bit, I think, to clarify the situation. And maybe that will 
prompt people to think more specifically about other things 
they can bring us and show us.
    Mr. Ellison. Thank you, sir.
    My last question--and then I am going to yield back after 
you answer--is, what can you tell us about the CFPB and their 
activities to ensure auto buyers are not overcharged due to 
their ethnicity or protected factors like race?
    Mr. Cordray. So what I can say is we worked with the 
Justice Department and resolved a very significant auto-lending 
discrimination matter in December--$98 million, a significant 
remediation to consumers.
    We continue to work on the problem and try to understand 
it. And we are interested in working with industry so that they 
can understand how we might be able to approach this and 
resolve it on a broader basis. And there was suggestion earlier 
that people might be willing to come to us and talk to us about 
a rule. We are open-minded and welcome all discussions. And, 
although we have been very careful about not reaching out 
aggressively to dealers, because they are not within our 
jurisdiction and Congress specified that and we need to be 
respectful of that, as they have been wanting to come to talk 
to us, we have been trying to open the door to that and see how 
we can understand their concerns, as well, again, trying to 
respect very carefully our jurisdiction and not overstep our 
bounds.
    Mr. Ellison. I just want to say briefly, please rout out 
discrimination in your agency and any other agency. Rout it 
out, because it gives you the moral authority to protect these 
buyers, who are--
    Mr. Cordray. I hear you loud and clear on that, sir. Yes.
    Ms. Waters. Will the gentleman yield?
    Mr. Ellison. I will.
    Ms. Waters. Thank you for raising the question about 
manufactured housing. And I think that the information that was 
shared with us about what you are doing will help us to ask for 
them not to take up the bill until we get this information.
    Chairman Hensarling. The time of the gentleman has expired.
    We have three remaining Members. We have votes on the 
Floor. If the Members wish to voluntarily restrain themselves 
to 4 minutes, I think we could conclude and allow our witness 
to exit.
    The Chair now recognizes the gentleman from Tennessee, Mr. 
Fincher.
    Mr. Fincher. Thank you, Mr. Chairman.
    And, Mr. Cordray, thank you for coming today. Manufactured 
housing has turned out to be a big issue in this committee. The 
last time you were here, several of us talked to you about it. 
You and I have had a conference call about trying to fix this 
issue.
    Mr. Cordray. Yes.
    Mr. Fincher. Since the CFPB's new rules for HOEPA went into 
effect January 1st, manufactured-home lenders have stopped 
making loans that are less than $20,000. A $20,000 loan allows 
many families the opportunity to buy a starter home, build 
equity, and gain homeownership or sell a home and move to 
something better.
    You made a statement a few minutes ago to my colleague, Mr. 
Ellison, about profits being up. This has nothing to do with 
profits of manufactured-home businesses, sellers. This has to 
do with access to consumers being able to purchase a product. 
The CFPB's new rules have caused a reduction of credit to low- 
and moderate-income borrowers with low credit scores, 
particularly those in rural, distressed, and underserved areas.
    In conversations between the CFPB and my office, we have 
been told that the Bureau wants more data in this area. 
Voluntarily, at the request of the CFPB, leading manufactured-
home lenders have provided a significant amount of data--4,000 
pages, to be exact--in this regard on March 6th and March 24th 
of this year. It is my understanding that this data represents 
roughly one-third of the lending activity in the manufactured-
home market.
    In addition, data was given to the CFPB on the following 
dates during meetings between the industry and your staff: June 
18, 2012; August 7, 2012; December 17, 2012; May 17, 2013; and 
September 23, 2013.
    It is also my understanding that the CFPB has, on their own 
initiative, communicated with additional manufactured-home 
lenders.
    I am just going to kind of skip through some of this to 
hopefully leave time for my other colleagues.
    Mr. Cordray. Sure.
    Mr. Fincher. Number one, can you confirm that the CFPB has 
received data from the leading lenders in the manufactured-home 
market? Just ``yes'' or ``no.''
    Mr. Cordray. Yes.
    Mr. Fincher. Okay.
    Mr. Cordray. Not all that we want. And the March data will 
be most relevant. And, to be honest, in our efforts to protect 
against personally identifiable information, we have had to 
have some back-and-forth with the people who submitted that 
data to make sure it is being handled correctly. And I believe 
it will be helpful to us. Yes.
    Mr. Fincher. Okay.
    You have the ability to mitigate the impact of Dodd-Frank, 
HOEPA, and loan origination rules on manufactured-home owners 
and the industry that serves them, but you continue to delay 
after the industry thoroughly complied with your data request.
    My other question--and this has been, I guess, today, much 
more than about manufactured homes. The data that you are 
collecting, is it the practice of your agency to collect this 
data and do nothing with it?
    Mr. Cordray. That is not our practice.
    Mr. Fincher. Okay.
    Mr. Cordray. Look, I am not collecting data because I am 
collecting baseball cards or something. This is information 
necessary so that we can do things that all of you want: We can 
understand what is happening in the mortgage market, whether 
the rules are getting it right or getting it wrong; whether the 
Credit CARD Act is helping or hurting, and if not, whether 
Congress wants to reconsider some of it or whether we should 
reconsider. That is the kind of information we need.
    Mr. Fincher. We want to get this fixed. We have a bill with 
over 100 cosponsors. This is bipartisan. This is not rocket 
science, Director. We have been willing to negotiate and try to 
make this bill more--
    Mr. Cordray. There are a number of bills. Which one are you 
talking about?
    Mr. Fincher. We are working to make it where we can pass 
this through the House, get this problem fixed with the 
industry--and more than the industry. This is not about the 
industry.
    Mr. Cordray. What is ``this?'' Is it data collection, or is 
it manufactured housing, or--
    Mr. Fincher. Manufactured housing.
    Mr. Cordray. Okay. I see.
    Mr. Fincher. This is about the consumer having and being 
able to purchase a product. That is what this is about. This is 
not about business. This is about the consumer.
    So, we are going to keep working, and hopefully you will be 
given the data that you need.
    Mr. Cordray. Yes.
    Mr. Fincher. And, with that, Mr. Chairman, I yield back.
    Mr. Cordray. And--
    Chairman Hensarling. The gentleman yields back.
    The Chair now recognizes--
    Mr. Cordray. Could I--
    Chairman Hensarling. --the gentleman from Illinois, Mr.--
    Mr. Cordray. Mr. Chairman?
    Chairman Hensarling. --Hultgren, and informs remaining 
Members that there is about 8\1/2\ minutes left on the vote on 
the Floor.
    Mr. Cordray. All right.
    Mr. Hultgren. Thanks, Mr. Chairman.
    Director Cordray, I would like to focus on why the CFPB is 
spending money to renovate a building it doesn't own. We have 
not received a satisfactory answer yet on this question.
    Just last week, you testified before the Senate Banking 
Committee that the building renovation costs were ``taken 
account of in the lease that we negotiated with the OCC so that 
our lease payments were less over the 30 years to take account 
of the fact that we, not the landlord, would be making the 
improvements to the building.''
    This is not what the OCC tells us. In fact, they say, and I 
quote, ``The OCC contracted with an independent real estate 
appraiser to determine the fair market value of 1700 G Street 
and a fair market rental rate. The appraisal considered the 
current condition of the building. The fair market value of the 
building and the fair market rental rate were not based on any 
assumption that the building would be renovated or upgraded. 
Rather, the fair market value was based on the assumption that 
the building would be leased as is. The appraiser determined a 
fair market range for the rental rate. The agreement between 
the OCC and the CFPB provides for a triple net rate that 
reflects the midpoint range of the appraisal.''
    I have several questions on this. Director Cordray, how do 
you--
    Mr. Cordray. That is consistent with what I am saying.
    Mr Hultgren. Let me finish my questions.
    How do you reconcile the OCC statements with your own 
testimony, first of all? Will you provide the committee with 
documentation substantiating those claims?
    And if, as you previously testified, the Bureau knew that 
at least $100 million would be needed to renovate the building, 
yet this cost would not be taken into account in rent, as the 
OCC asserts, why would the Bureau volunteer to make these 
renovations rather than find a more suitable location? How does 
this make any fiscal sense? And do you not have an obligation 
to expend your agency's funds responsibly?
    Mr. Cordray. Let me try to lay this out. And I really want 
to get this across, because what you said is just consistent 
with what I have said.
    What the OCC did was they put together a lease and they set 
a rate based on the as-is condition of the building, which 
right now is classed, generously in my view, as a Class C 
building, barely subpar. So that is the rent that we are paying 
over the 30 years.
    After we do these renovations, we hope that the building 
will at least be a Class B building. I don't know if it will 
ever get to be a Class A building. That would be a higher rent.
    Having done the renovation ourselves, we will then have 
potentially a Class B building for the remainder of the 
occupancy agreement, which is a significant amount of time, 
paying Class C rent. That is the difference between the two, 
and it comes out exactly as I tried to lay it out.
    Mr. Hultgren. Yes, it seems like a conflict to me, and it 
seems like a misuse of taxpayer dollars, when certainly there 
could have been something available that would be much more 
appropriate.
    Let me move on to the QM rule. The CFPB has adopted 
policies that have increased legal uncertainty rather than 
alleviate that uncertainty, which has hurt the growth of the 
mortgage market.
    One example is the CFPB's decision not to preclude the use 
of oral evidence in cases brought by borrowers claiming that 
they did not have an ability to repay. In its QM rule, the CFPB 
states that the Bureau believes that courts would determine the 
weight to be given to such evidence on a case-by-case basis. In 
response to this decision, we have heard that banks and credit 
unions will need to videotape closings to have a record of 
everything a borrower says at the closing table.
    Have you heard about this problem? Is this an example of 
the CFPB's policies creating new compliance burdens and massive 
legal uncertainty for smaller lenders already struggling under 
the regulatory onslaught unleashed by the Dodd-Frank Act?
    And I wondered if you would be willing to reconsider this 
decision to provide more certainty to community financial 
institutions that are suffering under the weight of regulatory 
burden and uncertainty.
    Mr. Cordray. So, two things. The first is that we now have 
some months of data, and there has not been a huge spike in 
interest rates because of risk around potential litigation. We 
predicted that there would not be any significant spike. There 
has not been. And I think the market has pretty much--
    Mr. Hultgren. I think the biggest concern I have heard is 
compliance burdens. And that is a concern. The idea of having 
to videotape closings is ridiculous, and yet that is the 
concern.
    Mr. Cordray. If somebody wants to--
    Mr. Hultgren. My time has expired. I am going to yield back 
the balance of my time so Mr. Ross can finish up.
    Mr. Chairman, I yield back.
    Mr. Cordray. We are working to streamline the closing 
process, and that is an exciting initiative of the Bureau.
    Chairman Hensarling. The gentleman has yielded back.
    The Chair now recognizes the gentleman from Florida, Mr. 
Ross.
    Mr. Ross. Thank you, Mr. Chairman.
    Director Cordray, the semi-annual report states, ``The 
Bureau is in the process of considering what regulations to 
propose to address issues in the market for small-dollar credit 
that have been identified through the Bureau's research and 
public engagement.''
    And I have discussed this with you before with regard to 
payday lending and small-dollar credit. I come from Florida; we 
have a great law in that regard. I understand you have been 
working with Commissioner Breakspear at the Office of Financial 
Services.
    What is your timeline in issuing regulations in that 
particular industry for small-dollar credit?
    Mr. Cordray. We just published our unified agenda, which 
kind of lays out the immediate future in terms of potential 
rulemakings at the Bureau. That is something we did and we 
published on our Web site in response to an oversight question 
I got from Congressman McHenry a number of sessions ago. We 
indicated that on the payday lending, we will be writing rules. 
We expect those to potentially come out in a Small Business 
Regulatory Enforcement Fairness Act (SBREFA) process sometime 
later this fall, and that would be--
    Mr. Ross. Okay.
    Mr. Cordray. --our expectation.
    Mr. Ross. So within the next 6 months, easily?
    Mr. Cordray. I think that is fair, yes.
    Mr. Ross. Okay.
    You testified to Mr. Luetkemeyer that you are not actively 
participating in the Operation Choke Point, yet many of the 
businesses that are being affected by this come under your 
regulation. Do you feel that you are being usurped, your 
authority is being usurped by bank examiners or banking 
regulators that are engaged in the Operation Choke Point?
    Mr. Cordray. I don't think so. The reality is--and I found 
this when I came into the Bureau, and I was a little surprised 
because I just didn't know how these things worked at the 
Federal level--there are a number of Federal banking agencies 
with some real overlap among them. That is alleviated by us 
working together in a close and collaborative fashion--
    Mr. Ross. But do you--
    Mr. Cordray. --which we try to do.
    Mr. Ross. Are you working with them under that operation?
    Mr. Cordray. What we try do is pay attention to know-your-
customer issues, and--
    Mr. Ross. Now, there is a $17-billion business--
    Mr. Cordray. --that is important.
    Mr. Ross. --out there in consumer loans and small-dollar 
credit.
    Mr. Cordray. Yes.
    Mr. Ross. Operation Choke Point, if it were to eliminate, 
due to reputational risk, this particular supply, if you will, 
the demand will remain. What will happen to those consumers who 
need this particular market niche?
    Mr. Cordray. What we are working on right now is potential 
regulations that you and I just discussed for the industry.
    Mr. Ross. Right, but when you--
    Mr. Cordray. That is not consistent with wiping out the 
industry. It is regulations to make sure that the industry is 
working in a pro-consumer fashion. That is our intent.
    I have recognized and acknowledged the demand for small-
dollar credit. People--
    Mr. Ross. It will be there.
    Mr. Cordray. --have that demand.
    Mr. Ross. And if they don't have it in a regulated fashion, 
they are going to get it in a black-market fashion, and that is 
even more harmful to the consumer.
    Mr. Cordray. I agree with you on that.
    Mr. Ross. Finally, with regard to the rule of law, and, as 
a lawyer, you believe in due process and--
    Mr. Cordray. I do.
    Mr. Ross. --bulletins, the issuance of bulletins, they 
don't hold the force and effect of a regulation or statutory 
law. Yet, you continue to issue bulletins, which don't allow 
for public comment, in lieu of issuing even interim rules and 
regulations. Why is that? And what can be done soon to get that 
resolved?
    Mr. Cordray. So, again, my understanding of the 
Administrative Procedure Act, it goes back about 70 years now, 
is that there is a distinction between substantive rules that 
change the law, and notice and comment is required, and then 
guidance and other things that agencies use quite a bit, which 
is not really a change in the law, it is just a clarification 
or restatement of the law so that people can understand more 
clearly what--
    Mr. Ross. So your April 30th press release commending BMO 
Harris for adopting the pay scheme recommended by the CFPB is a 
guidance, it is not a substantive law?
    Mr. Cordray. That was just a statement to the media. That 
is all that was. Yes.
    Mr. Ross. Mr. Chairman--
    Mr. Cordray. But I meant what I said. But it was--
    Mr. Ross. --I yield back.
    Chairman Hensarling. The gentleman yields back.
    I want to thank Director Cordray 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.
    This hearing stands adjourned.
    [Whereupon, at 1:15 p.m., the hearing was adjourned.]
                            A P P E N D I X


 
                             June 18, 2014

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]