[House Hearing, 114 Congress]
[From the U.S. Government Publishing Office]


                        THE FDIC'S TARGETING OF
                       REFUND ANTICIPATION LOANS

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

                                HEARING

                               BEFORE THE

                       SUBCOMMITTEE ON OVERSIGHT
                           AND INVESTIGATIONS

                                 OF THE

                    COMMITTEE ON FINANCIAL SERVICES

                     U.S. HOUSE OF REPRESENTATIVES

                    ONE HUNDRED FOURTEENTH CONGRESS

                             SECOND SESSION

                               __________

                             MARCH 16, 2016

                               __________

       Printed for the use of the Committee on Financial Services

                           Serial No. 114-79
                           
                           
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                 HOUSE COMMITTEE ON FINANCIAL SERVICES

                    JEB HENSARLING, Texas, Chairman

PATRICK T. McHENRY, North Carolina,  MAXINE WATERS, California, Ranking 
    Vice Chairman                        Member
PETER T. KING, New York              CAROLYN B. MALONEY, New York
EDWARD R. ROYCE, California          NYDIA M. VELAZQUEZ, New York
FRANK D. LUCAS, Oklahoma             BRAD SHERMAN, California
SCOTT GARRETT, New Jersey            GREGORY W. MEEKS, New York
RANDY NEUGEBAUER, Texas              MICHAEL E. CAPUANO, Massachusetts
STEVAN PEARCE, New Mexico            RUBEN HINOJOSA, Texas
BILL POSEY, Florida                  WM. LACY CLAY, Missouri
MICHAEL G. FITZPATRICK,              STEPHEN F. LYNCH, Massachusetts
    Pennsylvania                     DAVID SCOTT, Georgia
LYNN A. WESTMORELAND, Georgia        AL GREEN, Texas
BLAINE LUETKEMEYER, Missouri         EMANUEL CLEAVER, Missouri
BILL HUIZENGA, Michigan              GWEN MOORE, Wisconsin
SEAN P. DUFFY, Wisconsin             KEITH ELLISON, Minnesota
ROBERT HURT, Virginia                ED PERLMUTTER, Colorado
STEVE STIVERS, Ohio                  JAMES A. HIMES, Connecticut
STEPHEN LEE FINCHER, Tennessee       JOHN C. CARNEY, Jr., Delaware
MARLIN A. STUTZMAN, Indiana          TERRI A. SEWELL, Alabama
MICK MULVANEY, South Carolina        BILL FOSTER, Illinois
RANDY HULTGREN, Illinois             DANIEL T. KILDEE, Michigan
DENNIS A. ROSS, Florida              PATRICK MURPHY, Florida
ROBERT PITTENGER, North Carolina     JOHN K. DELANEY, Maryland
ANN WAGNER, Missouri                 KYRSTEN SINEMA, Arizona
ANDY BARR, Kentucky                  JOYCE BEATTY, Ohio
KEITH J. ROTHFUS, Pennsylvania       DENNY HECK, Washington
LUKE MESSER, Indiana                 JUAN VARGAS, California
DAVID SCHWEIKERT, Arizona
FRANK GUINTA, New Hampshire
SCOTT TIPTON, Colorado
ROGER WILLIAMS, Texas
BRUCE POLIQUIN, Maine
MIA LOVE, Utah
FRENCH HILL, Arkansas
TOM EMMER, Minnesota

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

                   SEAN P. DUFFY, Wisconsin, Chairman

MICHAEL G. FITZPATRICK,              AL GREEN, Texas, Ranking Member
    Pennsylvania, Vice Chairman      MICHAEL E. CAPUANO, Massachusetts
PETER T. KING, New York              EMANUEL CLEAVER, Missouri
PATRICK T. McHENRY, North Carolina   KEITH ELLISON, Minnesota
ROBERT HURT, Virginia                JOHN K. DELANEY, Maryland
STEPHEN LEE FINCHER, Tennessee       JOYCE BEATTY, Ohio
MICK MULVANEY, South Carolina        DENNY HECK, Washington
RANDY HULTGREN, Illinois             KYRSTEN SINEMA, Arizona
ANN WAGNER, Missouri                 JUAN VARGAS, California
SCOTT TIPTON, Colorado
BRUCE POLIQUIN, Maine
FRENCH HILL, Arkansas
                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on:
    March 16, 2016...............................................     1
Appendix:
    March 16, 2016...............................................    29

                               WITNESSES
                       Wednesday, March 16, 2016

Gibson, Fred W., Jr., Acting Inspector General, Federal Deposit 
  Insurance Corporation..........................................     4

                                APPENDIX

Prepared statements:
    Beatty, Hon. Joyce...........................................    30
    Gibson, Fred W., Jr..........................................    31

              Additional Material Submitted for the Record

Green, Hon. Al:
    FDIC Office of Inspector General Audit Report dated June 
      2006, ``Challenges and FDIC Efforts Related to Predatory 
      Lending''..................................................    48
Waters, Hon. Maxine:
    Written statement of the National Consumer Law Center........    89

 
                        THE FDIC'S TARGETING OF
                       REFUND ANTICIPATION LOANS

                              ----------                              


                       Wednesday, March 16, 2016

             U.S. House of Representatives,
                          Subcommittee on Oversight
                                and Investigations,
                           Committee on Financial Services,
                                                   Washington, D.C.
    The subcommittee met, pursuant to notice, at 2:03 p.m., in 
room 2128, Rayburn House Office Building, Hon. Sean P. Duffy 
[chairman of the subcommittee] presiding.
    Members present: Representatives Duffy, Hultgren, Tipton, 
Poliquin, Hill; Green, Cleaver, Ellison, and Sinema.
    Chairman Duffy. The Subcommittee on Oversight and 
Investigations will come to order. Today's hearing is entitled, 
``The FDIC's Targeting of Refund Anticipation Loans.''
    Without objection, the Chair is authorized to declare a 
recess of the subcommittee at any time.
    Also, without objection, members of the full Financial 
Services Committee who are not members of the subcommittee may 
participate in today's hearing for the purposes of making an 
opening statement and questioning our witness.
    The Chair now recognizes himself for 5 minutes for an 
opening statement.
    A year ago this month, the Oversight and Investigations 
Subcommittee heard testimony from the Chairman of the Federal 
Deposit Insurance Corporation on its role in Operation Choke 
Point, which was a law enforcement initiative launched by the 
Department of Justice to choke off legal businesses from the 
financial system in an effort, they say, to combat consumer 
fraud.
    Although the FDIC has repeatedly denied that it was 
involved in the DOJ-named Operation Choke Point, it is clear 
from the investigative work of this committee and other 
committees that the FDIC cooperated closely with the DOJ in 
identifying so-called high-risk merchants and severing their 
ties with the financial system through its supervisory 
authority.
    Payday lenders, gun dealers, and other perfectly legal 
industries were targeted by the FDIC based on the Corporation's 
own decision about which industries were favorable and which 
industries were unfavorable.
    Regrettably, we are here today to learn about a separate 
but no less egregious effort by the FDIC to target refund 
anticipation loans (RALs) which, simply put, are loans based on 
anticipated Federal tax refunds.
    A recent Inspector General report of inquiry into the 
FDIC's supervisory approach to refund anticipation loans 
reveals a troubling pattern by the FDIC officials of targeting 
legitimate and legal activities through abusive and unfair 
regulatory practices.
    The I.G. uncovered this targeting when performing its audit 
on the FDIC's involvement in the Operation Choke Point 
initiative, which was released in September of 2015. Though 
only an executive summary of this extensive 180-page report of 
inquiry is being made public, I am concerned because the full 
report details actions of several FDIC employees who were also 
involved in the Operation Choke Point initiative.
    According to the Inspector General, the FDIC ``set in 
motion a series of interrelated events affecting three 
institutions that involved aggressive and unprecedented efforts 
to use the FDIC's supervisory and enforcement powers, 
circumvention of certain controls surrounding the exercise of 
enforcement power, damage to the morale of certain field 
examination staff, and high cost to the three impacted 
institutions.''
    In an effort to cause the three banks it supervised to exit 
the RAL business, the FDIC's Washington office also used 
``strong moral suasion'' in late 2009 and early 2010.
    The FDIC also used its powers to inappropriately reject 
underwriting plans and pressure field staff to assign lower 
ratings in safety and soundness examinations for at least two 
of the institutions, and used unprecedented examination 
resources to conduct an intrusive horizontal review when one 
bank continued offering RALs.
    The Inspector General's report also found that the FDIC's 
legal division believed that to proceed with such enforcement 
remedies against the banks represented high litigation risk, 
but the agency proceeded anyway. All three banks ultimately, 
and no surprise, exited the RAL business by April of 2012.
    After FDIC Chair Sheila Bair asked management to look into 
a complaint made by one of these targeted institutions, FDIC 
management did not accurately and fully describe the abusive 
behavior to Chairman Bair. This kind of behavior cannot and 
will not be tolerated by Congress and the American people who 
expect much more from their government and their government 
bureaucrats.
    I am concerned that the FDIC has repeatedly demonstrated a 
disregard for the rule of law, for the limitations of its 
power, and for the financial institutions that it is supposed 
to serve. The work of this subcommittee is an important way to 
hold the Corporation accountable and to expose its behavior to 
ensure that it is kept in check.
    That concludes my remarks. I will now recognize the ranking 
member of the subcommittee, the gentleman from Texas, Mr. 
Green, for 5 minutes.
    Mr. Green. Thank you, Mr. Chairman.
    And I thank the witness for appearing today.
    I would like to note from the outset that this was not an 
Operation Choke Point activity. My belief is that the witness 
will validate this contention. While there were things that, in 
the opinion of the I.G., merited his attention, this was not a 
Choke Point activity. This is something that occurred 5 years 
ago. It has been resolved and disciplinary action has been 
taken.
    I do think that there is some currency, some merit, some 
value, if you will, in examining this question of safety and 
soundness. And I say this because this is one of the reasons 
why the FDIC was engaged in the process.
    We have loans that are anticipation loans, loans that are 
predicated upon a person receiving a certain amount of tax 
relief in terms of a refund. And unfortunately, for many of 
these persons, most of whom are low-income, earned-income-tax-
credit folks--I will explain that at a later time if I need 
to--most of these loans did not materialize as expected.
    Perhaps ``most'' is too strong, ``a good many.'' How many 
is a good many? Too many did not materialize as expected, so 
the anticipated return was sometimes less than what was 
expected, which means then that the bank has an obligation that 
may or may not be fulfilled.
    An interesting thing about the loans has to do with how 
they were generated. This is not a circumstance where a person 
comes into the bank and talks to a loan officer in the bank to 
acquire a loan. These loans were generated away from the bank 
in the office of some third person, some third party, and they 
were generated by persons who were tax preparers, for the most 
part.
    These persons, in a de facto sense, became the loan 
officer, the loan originator, the underwriter. I am not sure it 
is a good practice for banks to have this kind of circumstance 
exist, but for our purposes today we won't go too deeply into 
it. It did exist.
    And under these circumstances, information was acquired, 
but that information didn't always prove to be true and there 
were occasions when the loans were not honored in the sense 
that they weren't repaid.
    So there are some safety and soundness questions here. 
Should banks be allowed to allow others--``others'' meaning 
persons outside of the bank--to underwrite loans that they 
anticipate will be covered by a tax refund when we know that 
not all tax refunds as they are anticipated are fulfilled?
    For example, you are scheduled to get a tax refund of X 
number of dollars but you have child support you haven't paid. 
You have other obligations that can encroach upon that refund. 
So you don't get the refund of X number of dollars. You get X 
minus some number of dollars.
    And as a result we have a bank now that has a client who is 
required to pay this money, but it was assumed from the outset 
that the money would be immediately available, almost 
guaranteed by way of the earned income tax credit refund that a 
certain person might get.
    So my point is this. I think that there is much to be said 
about the I.G's report, but there is a lot to be said also 
about the kind of business that was being regulated and whether 
the safety and soundness of the banks were in question as a 
result of the types of businesses with which these banks were 
associating themselves.
    With that, Mr. Chairman, I will yield back the 2 seconds 
that I have.
    Chairman Duffy. The gentleman yields back his 2 seconds.
    I now want to welcome our witness, Fred Gibson. Mr. Gibson 
is the FDIC's Acting Inspector General. Welcome. In his role, 
he is responsible for all facets of the Office of Inspector 
General's mission, which broadly is to prevent and detect 
waste, fraud, and abuse affecting the programs and operations 
of the FDIC, and to keep the Chairman of the FDIC and the 
Congress fully informed.
    We thank him for his work and for being with us here today. 
He will be recognized for 5 minutes to give an oral 
presentation of his testimony. And without objection, his 
written statement will be made a part of the record.
    Once the witness has finished presenting his testimony, 
each member of the subcommittee will have 5 minutes within 
which to ask questions of our witness.
    Mr. Gibson, on your table, and you are well aware of this, 
you have three lights: the green means go; the yellow means you 
have a minute left; and the red means your time is up. We will 
try to remain true to the lights and the time, but I have a 
limited panel here today so we might show some generosity with 
the gavel.
    The microphone is sensitive. Please make sure you are 
speaking directly into it. And so with that, Mr. Gibson, you 
are recognized for 5 minutes to give a presentation of your 
statement.

  STATEMENT OF FRED W. GIBSON, JR., ACTING INSPECTOR GENERAL, 
             FEDERAL DEPOSIT INSURANCE CORPORATION

    Mr. Gibson. Chairman Duffy, Ranking Member Green, and 
members of the subcommittee, thank you for the invitation to 
speak with the Oversight and Investigations Subcommittee today 
regarding our report on the FDIC's supervisory treatment of 
refund anticipation loans or RALs.
    Our work on RALs is an outgrowth of work we performed in 
response to an October 2014 request from 35 Members of the 
Congress concerning the FDIC's participation in the Department 
of Justice's Operation Choke Point.
    During early stages of Operation Choke Point the Department 
of Justice attached a list of businesses, referred to as a 
high-risk list, to subpoena seeking information from a variety 
of organizations, including some financial institutions. The 
high-risk list, derived from an FDIC publication, was at the 
heart of the concern surrounding Operation Choke Point and was 
the starting point for our review.
    In our audit, we assessed the FDIC's supervisory approach 
to financial institutions that conducted business with 
merchants on the high-risk list. We concluded that the FDIC's 
supervisory approach was within the broad authorities that it 
is granted under the FDI Act.
    However, the manner in which the FDIC carried out its 
supervisory approach was not consistent, not always consistent 
with the FDIC's written policy and guidance. Payday lending in 
particular fell into this category.
    We also concluded that the FDIC's participation, direct 
participation in Operation Choke Point was limited to a few 
communications from FDIC staff to DOJ employees at the time the 
DOJ's initiative was implemented.
    During the course of that audit, we began to learn of the 
FDIC's supervisory approach to institutions offering RALs. 
Broadly speaking, refund anticipation loans are products 
offered to individuals through tax preparers that enable 
individuals filing returns to obtain a portion of their refund 
immediately.
    RALs can be legally offered in most locations. Because they 
are short-term, high-rate loans, the FDIC considered them to 
have similarities to payday loans. RALs were not on the high-
risk list and were not associated with DOJ's Operation Choke 
Point.
    However, we noted that the FDIC's approach to institutions 
offering this product appeared to be similar to those prompting 
the original congressional request regarding Operation Choke 
Point. As a result, we decided to perform additional work 
regarding RALs which led to the report that we are discussing 
today.
    This report contains information relating to open banks, 
supervisory matters, and information that is protected under 
the Privacy Act, which under the law cannot be publicly 
disclosed at this time. I have provided as my written statement 
the executive summary of the report accompanied by the 
executive summary of the FDIC's response in a separate letter 
from the Board of the FDIC.
    I respectfully request that that written statement be 
included in the record. Thank you, Mr. Chairman, for indicating 
you would do so.
    In summary, our review of the FDIC's supervisory approach 
to RALs strongly reinforced the concerns raised in our 
September 2015 audit. While the number of institutions offering 
RALs was limited, RALs were a nationwide product and the FDIC's 
supervisory approach affected both the product and all of the 
FDIC-regulated institutions offering it.
    With this report, we concluded that the FDIC's decision-
making process and supervisory expectations need to be more 
transparent. We found that the goal to eliminate RALs as a 
product line and the FDIC's approach in reaching that goal was 
not in keeping with that transparency.
    Taking our two reports together we believe: that the FDIC 
needs to examine how the actions described in the report 
unfolded as they did; that they should establish more 
meaningful controls over the exercise of certain supervisory 
tools; and lastly that the FDIC should create meaningful appeal 
and oversight mechanisms with remedies for institutions should 
they be subject to abusive treatment.
    The FDIC should also consider how its culture played into 
the events which our report details. On March 11th, I received 
a memo signed by each of the Directors committing to review and 
consider the key issues raised in our report and to provide a 
status update on their efforts by June 30th.
    Thank you for the opportunity to present our work. I am 
happy to answer your questions.
    [The prepared statement of Mr. Gibson can be found on page 
31 of the appendix.]
    Chairman Duffy. Thank you, Mr. Gibson.
    I now recognize myself for 5 minutes for questions. I just 
want to be clear. In regard to the refund anticipation loans 
and the three institutions that were subject to pressure by the 
FDIC, were those institutions facing safety and soundness 
issues based on their participation in refund anticipation 
loans? Was it a safety and soundness issue for those banks?
    Mr. Gibson. The FDIC would argue that there were safety and 
soundness issues associated with refund anticipation loans, so 
from that perspective, I think the answer is yes.
    Chairman Duffy. And what was their argument?
    Mr. Gibson. I'm sorry?
    Chairman Duffy. What was their argument?
    Mr. Gibson. The argument shifted over the course of time 
depending upon the time that we are talking about. There were 
questions that the--
    Chairman Duffy. Questions that either it was a work-in-
progress, an argument-in-progress, depending on--
    Mr. Gibson. I think it was. The argument shifted from 
various issues surrounding safety and soundness of the product, 
the manner in which the product was underwritten. The last 
issue that was raised, for example, was the loss of something 
called the debt indicator, an IRS tool that would enable 
institutions to have certain information about the borrowers.
    Chairman Duffy. Were they finding a high default rate with 
these loans?
    Mr. Gibson. No.
    Chairman Duffy. So to the banks' safety and soundness, do 
they see a real threat to the safety of the bank?
    Mr. Gibson. I think there is an argument to be made that 
numbers don't lie. The fact is is that the institutions never 
experienced a loss rate on these loans that exceeded 2 percent. 
In fact, in most years the loss rate on the loan was at the 
loans was significantly less than that. And that is true. We 
looked from 2007 forward to 2011, and during that period the 
loss rates were all less than 2 percent.
    Chairman Duffy. So the FDIC might try to make the argument 
of safety and soundness, but the facts showed something quite 
different. Is that fair to say?
    Mr. Gibson. The performance of the loans would suggest that 
there wasn't that much risk.
    Chairman Duffy. And you didn't see deceitful behavior, 
fraudulent behavior from these banks with the clients that they 
served or customers that they served at a high rate did you?
    Mr. Gibson. We didn't go and really examine the individual 
programs of the banks to make a call on something like that. 
But in the course of our work, we didn't become familiar with 
any such problem, no.
    Chairman Duffy. Did the FDIC make that argument to you that 
there is fraud and deceit being used by the financial 
institutions with their customers?
    Mr. Gibson. They never argued that there was fraud or 
deceit being used, to my knowledge.
    Chairman Duffy. One of my concerns is you have a product 
that doesn't affect the safety and soundness of the bank 
arguably, and it appears that the customers who are using the 
products know what they are getting and understand the terms of 
what they are getting.
    And here we have the FDIC stepping in using their judgment 
for the free will of the American people, which gives a lot of 
us concern, not just in this program but also with Operation 
Choke Point.
    The Congress uses its moral judgment as Representatives of 
the people. We didn't give that authority to the FDIC.
    In your report, Anthony Lowe, the Regional Director of the 
FDIC Chicago office, and Mark Pearce, the Director of Consumer 
Protection, were mentioned, I think in our search, 300 times in 
a 180-page report. Obviously if you reviewed, and you did, the 
Choke Point reports by Congress, and you were involved in that 
as well, these are two common names that came up in Choke Point 
as well.
    Can you describe Mr. Lowe's and Mr. Pearce's roles in the 
refund anticipation loan investigation that you did?
    Mr. Gibson. I am reluctant to discuss too many details for 
privacy concerns, but let me think about what I can say. Mr. 
Lowe is the Regional Director of the FDIC in the Chicago 
region. All three of the institutions offering refund 
anticipation loans were in the Chicago region and accordingly 
were supervised by an examination staff that Mr. Lowe 
supervises. Mr. Lowe directs that examination staff and is 
responsible for it.
    Mr. Pearce was the head of the Division of Consumer 
Protection at the time of these events, and as such was 
responsible for oversight of the consumer protection side, the 
compliance side, as it were, of the examination function.
    Both played roles in the course of this: Mr. Lowe from the 
standpoint of the implementation of directions that were 
received from headquarters in Washington; and Mr. Pearce at a 
higher level with respect to the policy of the FDIC concerning 
refund anticipation loans, as well as its implementation.
    Chairman Duffy. I am almost done here, but in the refund 
anticipation loans we saw with Mr. Lowe's and Mr. Pearce's 
involvement with the prior investigations with Choke Point, we 
had a chance to review the e-mail correspondence when they were 
targeting short-term lenders. Have these two been reprimanded? 
Do they still work for the FDIC? Have they been fired? What do 
you know about their employment status?
    Mr. Gibson. Both are still employed by the FDIC. And I 
cannot speak to any personnel action that may have been taken. 
I wouldn't know about that.
    Chairman Duffy. And we are not surprised by that. My time 
has expired.
    The Chair now recognizes the gentleman from Missouri, Mr. 
Cleaver, for 5 minutes.
    Mr. Cleaver. Thank you, Mr. Chairman.
    Mr. Gibson, thank you for being here. These RALs are 
products that have been around now for a while, and my first 
question is, do you see anything inherently evil with RALs, 
particularly those which are issued from reputable companies?
    Mr. Gibson. I don't really know that I have a position on 
RALs, per se. They seem to me to be a loan product that is 
being offered to people and that is really what they boil down 
to.
    Mr. Cleaver. I am thinking about that, yes, that there are 
some benefits. One, of course, is that the recipient of the 
loan which is based on anticipated refunds is able to get that 
refund not only more quickly, but it would allow them to speed 
up some delayed attention towards financial challenges. And so, 
I guess I don't see them as being evil.
    And my other concern and that made more impact, the FDIC, 
than you as the Inspector General, but that every entity 
providing RALs is not designed to rip them off. And so I think 
we may be doing a disservice if we have a conversation that 
would suggest that everybody who is doing it is a rip-off 
agent.
    Now, at the same time, I do agree with your recommendations 
that you made, that the I.G. made. I think those are right on 
target. And I don't think a reputable entity would back away 
from that. I would think that all of the reputable institutions 
doing RALs would probably jump right on it and say that they 
can do this: better communications internally and externally; 
improved guidance to supervised institutions; and an enhanced 
appeals process, which is what you have recommended.
    If that is cleaned up, and I don't know if this ends up in 
your purview, if those recommendations are taken do you see 
that as the most significant step that could be taken in terms 
of allowing this to be something that we live with? I don't 
particularly like high interest rates, even though it is a high 
interest rate for a short period of time. The truth of the 
matter is some people do in fact need that.
    Mr. Gibson. Sir, I think with respect to the 
recommendations that we made, the FDIC's Board indicated that 
they would provide us with a status update by June 30th. They 
indicated they would take the key issues under consideration 
and advise us about exactly what they were going to do in 
response to that.
    At that point in time, we will take a look at them. And I 
hope that they will be responsive to the issues that we have 
raised and we can address it at that point in time.
    Mr. Cleaver. Do you have any idea about--my concern is 
``Uncle Willie's tax preparation company.'' Uncle Willie is an 
automobile body shop owner when he is not in tax season and he 
is a good human being, but I am just wondering how many of 
those kinds of things were involved in offering the RALs on 
behalf of, let us say, small banks, community banks?
    Mr. Gibson. The three banks that offered the RALs had 
different programs under which they would take a look at the 
folks who were offering these things. And one of the risks 
associated with offering these sorts of products is the risk 
that the person offering the product to the public isn't going 
to follow the law.
    The banks all had mitigation programs. One bank had a 
fairly extensive audit program that went out and looked at a 
very large number of the people who were offering these in 
order to assure that they were complying with the law.
    They made suggestions directly to the board of directors of 
that institution. And the board of directors, as I understand 
it, took action in order to remediate any of the issues that 
came up. So there was attention that was being paid by 
certainly that institution, to what was going on with the 
individual RAL offerors, the people who were offering the 
loans.
    Mr. Cleaver. Yes, but there are some of the lenders who are 
also banks themselves, who have a subsidiary that are actually 
banks, but I think those are all at another level.
    I am sorry I have run over, Mr. Chairman.
    Chairman Duffy. The gentleman yields back.
    The Chair now recognizes the gentleman from Arkansas, Mr. 
Hill, for 5 minutes.
    Mr. Hill. Thanks, Mr. Chairman. I thank you and the ranking 
member for this interesting hearing.
    Mr. Gibson, thank you for being with us today. Do you know 
off the top of your head when reputation risk was added into 
the CAMELS rating process? My guess is sometime around the mid-
2000s or so, but I just--if you might know?
    Mr. Gibson. Sir, I do not know. I don't know that CAMELS 
particular, that reputation risk is necessarily--it is not an 
individual component of CAMELS. I am not too sure if that--
    Mr. Hill. No, but it was added in the exam manual sometime 
in 2000 that everything had reputation risk, and that boards 
needed to review that, particularly in new product development 
areas. But you agree that banks are responsible for their own 
product development consistent with the laws and regulations?
    Mr. Gibson. Yes, sir, I do.
    Mr. Hill. And I think banks are supposed to offer products 
based on consumer needs, which we see in CRA. You get extra 
credit in community reinvestment exams if you show survey 
results of your consumer base, your neighborhoods. And so from 
surveys or word of mouth that banks get credit for doing 
product innovation and trying to meet consumer needs, you have 
seen that, I'm sure, in your work?
    Mr. Gibson. Yes, we have.
    Mr. Hill. And banks have obligations for consumer 
compliance and for fair dealing under a number of statutes. So 
it always concerns me when I hear these stories of a regional 
office or a particular examiner kind of going rogue on taking 
the place of the microprudential manager of the bank about what 
he or she should not do in the product development arena.
    And that was kind of the whole point that we were 
frustrated about with Operation Choke Point, because I had a 
lot of customers who had legitimate reasons for refund 
anticipation loans, such as paying off a credit card after 
Christmas, car downpayments, home improvement, or tuition 
payments for a semester.
    And so when we had these sorts of activities by our 
regulators we are actually contradicting. We are hypocritical. 
We are saying that consumers want these products like overdraft 
protection or prepaid cards or refund anticipation loans and 
then we don't facilitate banks offering them.
    In fact, we, through moral suasion and other ways, defeat 
that causing these consumers who want the product to migrate 
out to the unbanked, unregulated or under-regulated segments. 
So again, that is one of my biggest frustrations in this 
process.
    Do you think it is fair to say that if banks do product 
innovation, and their board of directors reviews that product, 
and that they offer it and they accept the reputational risk 
and the financial risk with it, that generally a bank should be 
able to innovate, based on your work at the FDIC?
    Mr. Gibson. Sir, I think as a general proposition that it 
is up to the bank to mitigate the risks that are associated 
with the product that it offers.
    As you pointed out, we create laws that establish 
requirements that banks are obligated to follow. And we 
supervise for the purpose of ensuring that they are doing so in 
a safe and sound manner, but ultimately, risk is the bank's 
job.
    Mr. Hill. Right. So from your review of Mr. Lowe's work, is 
it fair to say that the Chicago regional office was off the 
reservation on pursuing this compared to the national policy 
directives from Washington?
    Mr. Gibson. Sir, I think with respect to the RALs, what our 
work shows is that the national policy informed what Mr. Lowe 
did. I think that the national policy directed how the RALs 
should be supervised. The banks offering RALs should be 
supervised ultimately.
    Mr. Hill. But what is setting that apart from any other 
consumer loan product? I don't understand. If it is that we 
have measured loss ratio, if we are in compliance with all the 
lending consumer disclosure laws, and we are operating in a 
fair dealing manner, why is this loan or why is this product 
being separated out from any other consumer credit decision to 
finance a car or finance a new air conditioning system for a 
home?
    Why is this being singled out? It is because of somebody's 
idea that it is bad. Isn't that right? Instead of a financial--
    Mr. Gibson. I really can't answer the question. And I am 
sorry to say that I can't because I can't point to something 
specific that says, this is why we are doing this with respect 
to RALs. The FDIC chose not to issue any guidance or policies 
with respect to that particular product.
    Now, there is general guidance associated with kind of the 
type of lending here and third-party risk concerns, but there 
is no specific guidance on this particular product which we can 
turn to that answers that question.
    Mr. Hill. Thank you.
    Thank you, Mr. Chairman.
    Chairman Duffy. The gentleman yields back.
    The Chair now recognizes the ranking member, Mr. Green, for 
5 minutes.
    Mr. Green. Thank you, Mr. Chairman. Thank you, thank you.
    Sir, I believe you will agree that the FDIC has a mandate 
when it comes to safety and soundness. Is this correct?
    Mr. Gibson. Absolutely.
    Mr. Green. And I believe that their opinion is of great 
value when it comes to safety and soundness?
    Mr. Gibson. As do I.
    Mr. Green. And you would probably also concur and agree 
that while you can give opinions about the process, the 
ultimate judge of safety and soundness is the FDIC.
    Mr. Gibson. I'm sorry, sir; I am having difficulty hearing 
you.
    Mr. Green. Okay. While you may give an opinion about a 
process, the ultimate judge of safety and soundness is the 
FDIC.
    Mr. Gibson. Oh, absolutely. Yes, sir.
    Mr. Green. So any opinion that you give today, and you are 
a wonderful person. I love you. I know your mother does. But my 
mother loves me, but that is just your opinion. You don't have 
the mandate that the FDIC has. And by the way, you have not 
gone so far as to say that there was not a safety and soundness 
issue. That is a fair statement, isn't it?
    Mr. Gibson. Sir, I didn't say that there wasn't a safety 
and soundness issue, but what I would point out--
    Mr. Green. Let me just do this. I will let somebody--my 
time is limited and perhaps someone else--
    Mr. Gibson. That is fine.
    Mr. Green. --will work with you. Let us talk about the 
quality of these loans. You did not give an opinion about the 
quality of the loans. I think you sort of indicated that you 
had no position on the quality, the quality in terms of whether 
or not these are good products or bad products in the main?
    Mr. Gibson. That is correct.
    Mr. Green. So with the banks having the duty to effectively 
manage safety and soundness, they have to determine something 
with reference to quality because the banks also have one other 
mandate.
    I think you will agree that the banks have a duty to also 
have a consumer protection component. Let me strike that and 
make it that the FDIC has this duty. The FDIC has a certain 
consumer protection component associated with it. Is this true?
    Mr. Gibson. That is true.
    Mr. Green. Okay. So you have the FDIC with a consumer 
protection component. They have the safety and soundness 
component. They have a real concern, especially given how 
certain underwriting standards in 2008 created a crisis that 
had a domino impact across the globe.
    Now, this is not of that magnitude, obviously, but they 
still have that safety and soundness concern, and they still 
have to deal with consumer protection issues, which is why we 
have to now examine the product itself because the FDIC has to 
give some value judgment about these products.
    And clearly, some of these RALs had annual percentage rates 
of as much as 500 percent, some, not all, just some. Look, I 
agree that if you need money you have to be able to go in and 
get it if you need it. But I also think that we have to have 
some protections for consumers, especially low-income people. 
It is a balancing test that we have to engage in.
    So with the 500 percent, with the underwriting being 
performed off campus away from the bank, and you couple that 
with the opportunity for fraud, you indicated there were some 
systems in place, but you did not go out and evaluate each 
individual underwriter, did you?
    Mr. Gibson. Of course not.
    Mr. Green. Okay. So you really don't know. You really don't 
know what those individual underwriters were doing, do you? You 
don't know. Come on--
    Mr. Gibson. Do I personally know? No, of course not.
    Mr. Green. Of course you don't. You are the I.G., and you 
didn't go out and examine them, so you don't know. I think that 
is a fair statement, isn't it?
    Mr. Gibson. It is a statement.
    Mr. Green. Okay. Well, it is a fair statement. You weren't 
there. You don't know. You didn't examine them. If you want to 
find a clever way to say I know, tell me what that clever way 
is?
    Mr. Gibson. I wouldn't say that it is a clever way, but 
what I would point out is this. One of the institutions was to 
receive, based on the examination of the bank, an overall 
rating of two. That is a pretty good CAMELS rating, 
particularly if I--
    Mr. Green. Can you do this a little bit faster because I 
have another question for you?
    Mr. Gibson. That is fine. I will be as quick as I can.
    Mr. Green. Okay.
    Mr. Gibson. The point I would make is that the DCP 
examiners, the consumer protection examiners of the FDIC 
reviewed that rating for that institution that was offering 
RALs, and they concurred in it.
    Mr. Green. Okay. Let us do this.
    Mr. Gibson. They didn't have a problem with giving that 
rating.
    Mr. Green. I appreciate your commentary. Let us do this. Do 
you agree that there was not a culture at the FDIC with 
reference to this type of product--there was not a culture at 
the FDIC? There was not a culture as it relates to what they 
were doing in auditing these products? There was not a culture 
there? Do you agree with that?
    Mr. Gibson. I am not sure what you mean, sir. I'm sorry.
    Mr. Green. Do you agree that this was not widespread, that 
all of the employees were involved in some sort of conspiracy 
to go out and put an end to these products? Do you agree with 
that?
    Mr. Gibson. Sir, I think that this involved a decision that 
was made at a headquarters level and was passed down to the 
field to execute. And I don't think anybody else was involved 
in it.
    Mr. Green. So there is not a culture at the FDIC. And do 
you also agree that you have been working with the FDIC and 
they are going to give you some indications as to the 
corrective actions that have been taken?
    Mr. Gibson. Yes, they will.
    Mr. Green. Okay.
    Mr. Gibson. I believe they will.
    Mr. Green. And finally, and I thank you for allowing me to 
go over, Mr. Chairman, do you also agree that this was not, 
``N-O-T'', not a part of Operation Choke Point?
    Mr. Gibson. Sir, Operation Choke Point was a DOJ program.
    Mr. Green. I am going to--
    Mr. Gibson. And this wasn't part of a DOJ program, correct.
    Mr. Green. Okay. All right. So then that is another way of 
saying it was N-O-T a part of Operation Choke Point, right?
    Mr. Gibson. Yes.
    Mr. Green. Okay. Thank you.
    Chairman Duffy. The gentleman yields back the time he 
doesn't have.
    Mr. Green. It is done.
    Chairman Duffy. The Chair now recognizes Mr. Poliquin, from 
Maine, for 5 minutes.
    Mr. Poliquin. Thank you, Mr. Chairman. I appreciate it very 
much.
    Mr. Gibson, thank you very much for being here. I 
appreciate it. I am a business owner, and before I became State 
Treasurer of Maine a few years ago, and before serving in 
Congress, I was in the private sector my entire life.
    And do you know one of the things that absolutely gives me 
fits is that this big, strong arm of the Federal Government, 
and I could extend that and say State and local government 
also, that continues to put pressure on our employers.
    One of the things that we parents all want are better 
opportunities for our kids. More jobs, we want to make sure 
they are healthy and safe and they get a good education.
    The Competitive Enterprise Institute computes that a couple 
of years ago, and presumably in 2015 also, the total cost to 
our employers in this country for Federal regulations only, Mr. 
Gibson, not State, just Federal regulations is $1.9 trillion--
$1.9 trillion on our businesses in this country.
    Now our businesses, of course, pass along these costs to 
the folks who buy their products or their services. So we end 
up paying for all this overregulation.
    Now, overregulation is bad enough, and I bet I spend 25 
percent of my time, Mr. Chairman, 25 percent of my time here in 
Congress, being here for a year, listening to business owners 
or folks who represent business owners with one simple request: 
``Get the government off my back. I know how to make money. I 
am an entrepreneur. I know how to take risk, invest my own 
savings, grow the economy. In doing that, I will hire more 
people and I will pay you more.'' That is what we want.
    So now comes this Operation Choke Point or something 
similar to it. This is alarming. And Mr. Gibson, I am guessing 
as an I.G. you are also alarmed or you wouldn't be here. Now, 
we are in a free enterprise economy where if you have a legal 
business, you should be able to conduct that operation, that 
business legally and lawfully in this country.
    But all of a sudden we see, Mr. Chairman, a few months ago 
we had a hearing on this that--there is a list of companies 
that the Justice Department didn't like, when you sell firearms 
legally or fireworks legally or tobacco legally or alcohol 
legally.
    Let us go put pressure on the FDIC. Let us put pressure on 
the regulators to stop these businesses by choking off their 
credit. And now, we have a situation that I think is very 
concerning. It takes it to another level.
    Unless I am mistaken, Mr. Gibson, and maybe you can shed 
light on this, and I quote from the Deputy Director of Policy 
at the FDIC, ``Marty Gruenberg who runs the FDIC thought it was 
a strong document,'' referring to a document that was written a 
few years before, which is a guideline in dealing with these 
issues, ``I thought it was a strong document.''
    But he stated that, ``his instinct was to wait to issue a 
document like this until after we--i.e., the FDIC--had taken 
strong specific action with one or more of our RAL lenders.'' 
He said he believes these lenders are recalcitrant and would 
ignore the directive.
    So in other words, these are the cops showing up at your 
door, arresting you, and then after they do that saying now we 
will issue a guideline on what the heck the law is. Am I 
getting this wrong? What am I missing here?
    Can you imagine the behavior of the Federal Government that 
is supposed to help our citizens in this country, help our 
businesses, help our families live better lives with more 
opportunity and more freedom? And now these regulators are 
saying we don't like your business, or worse, we will put 
pressure on you now and we will write the regulation after. 
What am I missing here, Mr. Gibson?
    Mr. Gibson. Sir, I believe that one of the issues that is 
raised by the facts that are contained in this report does 
relate to the transparency of the decisions that are being made 
by the government. I believe that the government should be able 
and should be willing to explain to people why it is it is 
doing what it is doing. And that in this particular case, the 
FDIC didn't achieve that end.
    Mr. Poliquin. Let us drill down there a minute, Mr. Gibson, 
if you don't mind, in my remaining time. We both agree, and by 
the way I salute you for your work, keep digging. Absolutely 
keep digging. And you operate independently within FDIC and I 
know you have that authority and that power.
    Do you think, and I think you just said you didn't, that 
they have not explained why they conducted themselves the way 
they did? Is that what I am hearing?
    Mr. Gibson. Sir, I think at the time there was no 
transparency really associated with the FDIC's reasons for 
taking the actions that it took.
    Mr. Poliquin. And why do you think today--
    Mr. Gibson. That is what I am saying.
    Mr. Poliquin. --they have taken those actions, sir?
    Mr. Gibson. Pardon me?
    Mr. Poliquin. And why do you think today, they took those 
actions when they did? Do you have an opinion now?
    Mr. Gibson. The FDIC says that they believe that these 
products represented safety and soundness issues and consumer 
protection issues--
    Mr. Poliquin. But does that just--
    Mr. Gibson. --and were not appropriate for that.
    Mr. Poliquin. But does that justify putting pressure by 
regulators on a bank to shut this down and then afterwards 
issuing guidelines?
    Mr. Gibson. In my view, they should have explained why it 
was they felt that way.
    Mr. Poliquin. What is next? Do you see anything coming down 
the road? What is next? Buying a new pair of tennis shoes even 
if you don't like the color? What is next?
    Thank you, Mr. Chairman. I yield back my time.
    Chairman Duffy. The gentleman's time has expired. We are 
now going to go into a second round so that the gentleman from 
Maine will have another chance to continue his questioning or 
comments. And with that, the Chair recognizes himself for 5 
minutes.
    I want to follow up, Mr. Gibson, on the points that were 
just made by Mr. Poliquin. This is stunning to me, the fact 
that this individual by the name of Marty Gruenberg, in essence 
in an e-mail, was saying that, let us go through enforcement 
first and we will talk about guidance in our financial 
institution letter later. This individual, Marty Gruenberg, is 
he a low-level individual at the FDIC?
    Mr. Gibson. No, sir.
    Chairman Duffy. Who is he?
    Mr. Gibson. Mr. Gruenberg currently is the Chairman of the 
FDIC.
    Chairman Duffy. The Chairman of the FDIC, a-ha. The 
Chairman is the one who is saying let us go through an 
enforcement measure and let us look at guidance at a later 
date. Did the guidance in the form of a financial institution 
letter, a field letter, ever come from the FDIC?
    Mr. Gibson. Specifically with respect to this product, no, 
sir.
    Chairman Duffy. And so, it is no wonder that the 
individuals involved in this report, Anthony Lowe and Mark 
Pearce, are still working for the FDIC.
    Frankly, they are following the directive of the Chairman 
of the FDIC. Their boss is in up to his armpits in the report 
that you provided to this committee. Yes? Is Mr. Gruenberg part 
of this? Did Mr. Gruenberg know what was going on?
    Mr. Gibson. Sir, that e-mail wasn't written by Mr. 
Gruenberg. It represents what someone believe that he said.
    Chairman Duffy. Right, but it represented a comment that 
Mr. Gruenberg made--
    Mr. Gibson. Yes.
    Chairman Duffy. --about holding off. And Mr. Gruenberg, as 
the Chair, said, let us enforce first, in essence, and we will 
give guidance later, right?
    Mr. Gibson. Sir, that is what he reportedly said.
    Chairman Duffy. And did they do enforcement first?
    Mr. Gibson. Yes.
    Chairman Duffy. Yes, and frankly the guidance never came, 
correct, because everybody got out of the business?
    Mr. Gibson. That is correct.
    Chairman Duffy. No wonder changes haven't been made at the 
FDIC and Mr. Gruenberg was a part of Operation Choke Point. And 
as Mr. Poliquin indicates, we are in a situation where we have 
a nanny state. Mother government will tell us what products are 
good and bad for us.
    I think, as Mr. Cleaver indicated, we have people who find 
themselves in hard times, who might need to get a little money 
early from their tax return. They might have to get a short-
term loan because their car broke down. Or the family pet got 
hit by a car and has to go to the vet, and they need to get 
short-term money.
    And we are turning everyone away from an opportunity to 
access cash in the short term because we think we know best or 
they think they know best in Washington.
    And if you can't turn to a bank or a short-term lender, 
where do you turn? You are going to turn to Uncle Vinny, not 
uncle, Mr. Vinny down the street. And he is not too kind when 
you don't repay. And this is concerning stuff.
    Let me ask you this. In regard to the banks that were 
involved in your investigation, was any pressure put on the 
banks with any downgrade of their CAMELS rating that you found?
    Mr. Gibson. Yes, sir, there was.
    Chairman Duffy. Could you explain that?
    Mr. Gibson. A downgrade of the CAMELS rating results in 
increased assessments. It can result in limitations on the 
bank's ability to engage in certain activities. In this case, 
the downgrade of an institution from a two to a three basically 
reinforced a prohibition on that institution participating in 
the purchase of assets of failed institutions, which was part 
of their business strategy.
    So, changes in CAMELS ratings cause significant effects on 
financial institutions.
    Chairman Duffy. I think I read somewhere in your report 
that the FDIC was concerned there might be a high litigation 
cost to going after these three banks that are referenced in 
the report. Is that correct?
    Mr. Gibson. They did.
    Chairman Duffy. And it is fair to say that when your CAMELS 
rating is reduced, due pressure is applied, and people get out 
of the business instead of litigating it? Is that fair to say?
    Mr. Gibson. Sir, I don't know what the reasons were that 
people got out of the business. We didn't speak with them. But 
it is possible.
    Chairman Duffy. It is possible. I would just note that you 
look at what is taking place and the fact that last year alone 
80,000 pages of new rules and regulations have come from the 
Federal Government.
    It is hard enough to comply with the rules that are put out 
that people can try to read and try to comply with, but it is 
even harder when you have a regulatory body of our financial 
industry that tries to enforce first and give guidance later.
    We should know what the rules are. The rules of the game 
should be clear. We should all be able to understand them and 
we should all be able to follow them. This is frightening that 
we have another Act by the FDIC that goes through enforcement 
first and guidance, if we are lucky, second.
    I want to thank you again, Mr. Gibson, you and your team 
for the hard work they have put into this investigation, and I 
appreciate your willingness to testify before this committee.
    Mr. Gibson. Thank you, sir.
    Chairman Duffy. My time has expired.
    And I now yield to the gentleman from Missouri, Mr. 
Cleaver, for 5 minutes.
    Mr. Cleaver. Thank you, Mr. Chairman.
    I think I sufficiently raised the issues that I needed to 
raise. I would like to yield the balance of my time to the 
ranking member.
    Mr. Green. Thank you, Mr. Cleaver. I greatly appreciate 
your sharing your time with me.
    Sir, with reference to the chairperson of the FDIC, is it 
true that the statements that were called to your attention, 
and we want to make sure that this is clear on the record, were 
statements that we would probably call hearsay in some 
circumstances? Is that a fair statement?
    Mr. Gibson. Sir, that is fair.
    Mr. Green. I'm sorry. Say that again?
    Mr. Gibson. That is fair.
    Mr. Green. Yes, hearsay. Somebody heard it or they say that 
they heard it and they then repeat it. That is not the most 
reliable evidence. In fact, it would take some sort of 
exception to the hearsay rule for it to be admitted in court. 
Of course, we bend the rules around here, so that just about 
anything that we want to say gets heard.
    But I want to kind of defend his reputation because I 
believe him to be an honorable man. And I don't think that he 
had a circumstance wherein he had an outcome that he desired 
and hence any means necessary to get to the outcome was the 
methodology employed. I just don't see the evidence of that as 
it relates to him.
    Now, let us go to what I have here as intelligence. I have 
here an indication that in 2006, there was a report by the 
FDIC's Office of Inspector General. Are you associated with 
that office, sir?
    Mr. Gibson. Yes, I was.
    Mr. Green. You were? All right. And how long were you 
there?
    Mr. Gibson. I have been there for a long time. I have been 
with the FDIC Office of Inspector General since the sunset of 
the RTC, which was 1995 or--
    Mr. Green. So it is fair to say that you would be familiar 
with this report?
    Mr. Gibson. I don't know if I would be familiar with a 
report from--
    Mr. Green. Okay. The style of the report is, ``The 
Challenges and FDIC Efforts Related to Predatory Lending.''
    Mr. Gibson. I am sorry, sir. I am not specifically familiar 
with the report at this time.
    Mr. Green. Not specific. I don't want you to have read it 
in its entirety, but have you heard of such a report existing?
    Mr. Gibson. It doesn't surprise me that we did one at all.
    Mr. Green. Okay. And would it surprise you to know that the 
report indicates that borrowers lose more than $25 billion 
annually due to predatory mortgages, payday loans, lending 
abuses involving overdraft loans, excessive credit card debt, 
and tax fund loans. Would it surprise you to know that is in 
the report?
    Mr. Gibson. No.
    Mr. Green. And if this is the case, we would then focus on 
the refund loans and someone would conclude that predatory 
lending, not being a good thing, that we ought to regulate 
these tax refund loans. I am not saying eliminate, but I am 
saying that the FDIC ought to regulate them to the extent that 
they don't create a part of this $25 billion in predatory 
mortgages and other loans as well. But that shouldn't be a part 
of that. Don't you agree?
    Mr. Gibson. Sir, I don't know if I can comment on that.
    Mr. Green. All right, I will accept that. Sir, I think that 
was a fair comment. I will accept that you won't comment on 
that. I will give my editorial, my commentary, and I think that 
we clearly expect the FDIC to deal with predatory lending. And 
we ought to make sure that we deal with these refund loans.
    Let me give you a case in point, what we will call a case 
in point. A person goes in to the tax preparer. The tax 
preparer says, okay, I can get you this refund and I will 
charge you a certain amount of money because I am going to help 
you get a refund. The tax preparer makes a mistake or two, not 
intentionally, and the person does not get the amount of loan 
refund, well, doesn't get the amount of refund that the loan is 
for.
    And as a result, these persons who make these loans, they 
sign agreements. And when they sign these agreements, there is 
language contained therein requiring them to have to pay for 
the amount that the loan was for even if the refund is a lot 
less. You agree with this, don't you?
    Mr. Gibson. I think so.
    Mr. Green. Okay. I think you are thinking right. And so 
given that they have to pay for that loan, and given that you 
have a person who is getting this loan with an earned income 
tax credit, needed the money right away, now we have a person 
who doesn't have the loan. He spent that money already. And 
then, they have this obligation that was not expected.
    That happened in these circumstances such that poor people, 
people who needed the money found themselves having to repay 
loans that they didn't expect to have to pay because of 
mistakes that were made in tax preparation.
    I yield back.
    Chairman Duffy. The gentleman yields back.
    The Chair recognizes the gentleman from Arkansas, Mr. Hill, 
for 5 minutes.
    Mr. Hill. Thank you, Mr. Chairman. Again just, I think, to 
the ranking member, the FDIC exam manuals and exam process 
cover all consumer lending. All consumer loans have to be in 
compliance with the statutes and regulations. There is just 
nothing per se that distinguished these loans from another kind 
of consumer loan in the exam process.
    So that is why I have been searching for the point of why 
they have been singled out and why this kind of a project or 
the Choke Point project is so off the norm from the FDIC or the 
DOJ's process.
    With that, Mr. Chairman, I yield the balance of my time to 
you, sir.
    Chairman Duffy. Thank you, Mr. Hill.
    I just want to be clear that, again, Mr. Gibson, the 
allegation wasn't being made on predatory lending, was it, in 
regard to your investigation?
    Mr. Gibson. Not that I am aware of.
    Chairman Duffy. And to Mr. Green's point, this was not 
about the FDIC regulating these loans. They were there to 
eliminate these loans. Is that what you found?
    Mr. Gibson. Sir, what our report found was that there was a 
decision that was reached that FDIC's supervised institutions 
should not be offering refund anticipation loans. So the goal 
was to get them out of refund anticipation loans. So that is 
the goal.
    Chairman Duffy. So you would agree that is not regulating, 
that is eliminating, correct?
    Mr. Gibson. It is not regulating.
    Chairman Duffy. Did you have a chance to talk to Chairman 
Gruenberg about this?
    Mr. Gibson. Sir, we have talked about it, yes.
    Chairman Duffy. Did he know that this elimination was 
taking place in regard to--
    Mr. Gibson. Sir, I did not speak with him personally or 
directly about that. I really don't know.
    Chairman Duffy. Did someone on your team? Did someone on 
your team speak with Mr. Gruenberg?
    Mr. Gibson. Mr. Gruenberg really had little recollection of 
these events, sir.
    Chairman Duffy. And it is my understanding that the quote 
that was given by the Deputy Director of Policy from the FDIC, 
which stated that Mr. Gruenberg thought it was a strong 
document, meaning to fill, but stated that his instinct was to 
``wait to issue a document like this until we had a strong, 
specific action with one or more of our RAL lenders,'' meaning 
he wanted to go through enforcement before regulation.
    Did you ask Mr. Gruenberg or did your team ask Mr. 
Gruenberg about that e-mail?
    Mr. Gibson. Yes, sir, and he didn't recall it.
    Chairman Duffy. So he didn't deny it, per your 
recollection?
    Mr. Gibson. He didn't recall.
    Chairman Duffy. So he didn't deny it?
    Mr. Gibson. Not that I know of.
    Chairman Duffy. Okay. And it is also fair to say that Mr. 
Pearce in an e-mail said, ``I want to see if we can achieve a 
resolution with Bank A,'' that was redacted, ``in the next 
month or two then follow up with something like this in the May 
timeframe before institutions get going on next year's 
product.'' Then you are following up with a fill. Is that 
correct? That is the--
    Mr. Gibson. Sir, if it is quoted and I don't remember the 
specific language of the e-mail, but if it is in our report 
then that is exactly what the e-mail said.
    Chairman Duffy. And how many people did you interview in 
regard to your investigation?
    Mr. Gibson. We interviewed 25 or 26 people with respect to 
this and well over 100 in connection with the original audit we 
did in the Choke Point era.
    Chairman Duffy. So how high does this go? Who is making the 
decisions? Mr. Hill is a former banker who is obviously 
outraged by the actions of the FDIC.
    Who is in control of the FDIC? Does it go to the top or is 
there someone below Mr. Gruenberg who is making these 
decisions, whether it is in regard to Choke Point or it is in 
regard to the current topic refund anticipation loans?
    Mr. Gibson. I think with respect to refund anticipation 
loans, the only answer that I can give you is that the decision 
was made by no one, but it was made by everyone. I can't point 
to a specific decision-maker because I can't find anything that 
identifies somebody.
    The origin of the discussion in recent times, in 2008, was 
an e-mail from Chairman Bair or a question that Chairman Bair 
asked about why FDIC banks should be offering these products. 
It seems to have just moved forward from there.
    Chairman Duffy. But it is obvious that Mr. Gruenberg knew 
about the program, at least by way of some of the e-mails that 
you discovered. So my question is, is Mr. Gruenberg a negligent 
leader at the FDIC or is he complicit in all the bad behavior 
at the FDIC?
    Because it has to be one or the other. Either he is 
involved and complicit or he doesn't know what is going on, and 
someone else is running the FDIC and he has checked out.
    Mr. Gibson. Sir, I believe that Mr. Gruenberg was generally 
at least aware of what was going on with respect to RALs. What 
I can tell you is that members of the board did most of these 
briefings and received information from management and in a 
variety of different ways each of the inside members of the 
board was engaged in these activities.
    Chairman Duffy. My time from Mr. Hill has expired.
    The Chair now recognizes the gentleman from Minnesota, Mr. 
Ellison, for 5 minutes.
    Mr. Ellison. Right next door to you.
    Chairman Duffy. I know. You are my neighbor.
    Mr. Ellison. That is right. Well, anyway, thank you Mr. 
Chairman, and Mr. Ranking Member. I have long been critical of 
refund anticipation loans, RAL loans. These short-term high-
cost bank loans secured by the taxpayers' expected tax refund 
are often predatory and expensive. I would say always, but 
there might be some that aren't and I just don't know about 
them. But all the ones I have ever seen have been bad.
    I believe in many cases they violate the Equal Credit 
Opportunity Act (ECOA). A RAL preparer will typically charge 
tax preparation fees, loan administration fees, and bank fees 
in addition to other fees that a borrower can avoid by filing 
directly with the IRS. And I know your report starts in 2003 
when refund anticipation loans or RALs were turning into a huge 
wealth-stripping problem.
    Professional tax preparers, as well as thousands of small 
independent preparers, were brokering these deals on behalf of 
insured financial institutions. These 7- to 14-day loans were 
paid by the actual IRS refund. The RAL preparers were often 
able to offer these loans because they partnered with banks.
    Numerous consumer groups decried this practice and urged 
regulators to stop the practice. And according to your report, 
most large banks stopped being involved with RALs. JPMorgan 
Chase, HSBC, and Santa Barbara Bank and Trust all stopped 
financing RALs.
    So I guess my question is, is that right? The most well-
known RAL preparers, H&R Block and Jackson-Hewitt, stopped 
offering RALs? Would you agree?
    Mr. Gibson. Sir, I don't really know. I am not here to talk 
about whether RALs are good or bad products, frankly. It is the 
FDIC's supervisory approach to those three institutions--
    Mr. Ellison. Okay. So did the IRS make an effort to stop 
RALs too by not allowing tax preparers to use its so-called 
debt indicator?
    Mr. Gibson. Yes. I believe they did.
    Mr. Ellison. Okay. And is it possible that the FDIC could 
have had a legitimate supervisory concern for the safety and 
soundness of institutions engaged in RALs?
    Mr. Gibson. The FDIC did have supervisory concerns with 
respect to the institutions offering RALs. In fact, the debt 
indicator or the loss of the debt indicator is something that 
the FDIC mentions as a reason for that concern. What I would 
point out in that particular regard is that the debt indicator 
was one of 80 to 120 factors that were used by institutions in 
evaluating the loan that they were making.
    Mr. Ellison. Thank you. In looking at your report, is it 
true that the FDIC staff identified compliance deficiencies at 
the three small financial institutions that were offering RALs?
    Mr. Gibson. I'm sorry. Could you repeat that, sir?
    Mr. Ellison. So in looking at your report, is it true that 
FDIC staff identified compliance deficiencies at the three 
small financial institutions that were offering RALs?
    Mr. Gibson. I believe there were some compliance 
deficiencies that were identified, yes.
    Mr. Ellison. Okay. So I am looking at perhaps weak 
electronic return origination training, a lack of RAL program 
audit coverage, and even substantive violation of the ECOA? 
Does that ring a bell for you?
    Mr. Gibson. Sir, that could be. Yes.
    Mr. Ellison. Okay. So if the FDIC had already identified 
previous violations with these three institutions on notice 
that the agency was concerned about their performance in RALs?
    Mr. Gibson. Well, sir, all I can say on that regard, again, 
with respect to one institution, that institution received a 
CAMELS rating of two from the safety and soundness examiner 
during that same period of time.
    The compliance examiners reviewed that examination, weighed 
in on it, and they concurred in a rating of two for that 
institution. The conclusion I would draw from that is that they 
weren't overly concerned about the extent of those compliance 
violations.
    Mr. Ellison. Okay. Thank you, and that is all I have for 
you today.
    Chairman Duffy. The gentleman yields back.
    The Chair recognizes the gentleman from Illinois, Mr. 
Hultgren, for 5 minutes.
    Mr. Hultgren. Thank you, Mr. Chairman.
    Mr. Gibson, thank you so much for being here. I appreciate 
you being here to testify, and I also appreciate your office 
looking into what appears to look very similar to the abuse of 
power that was uncovered by the Operation Choke Point.
    I respect that the names of some of the affected 
institutions will and need to remain anonymous for the purposes 
of your report and for this investigation, but I also 
understand that they may have been in my district or at least 
in Illinois given the role of the FDIC's Chicago Regional 
Director.
    In late 2009, the FDIC contended that Bank A had expanded 
its RAL program while operating under a 2009 cease-and-desist 
order. This perceived expansion prompted M. Anthony Lowe, the 
FDIC Chicago Regional Director since 1985, to send a letter to 
the institution's board of directors dated September 30, 2009, 
expressing concern about the bank's RAL products and requesting 
a plan for discontinuing this type of lending.
    In separate letters, both dated February 3, 2010, Mr. Lowe 
notified the boards of the two remaining institutions that RALs 
were unacceptable for the banks and that plans should be 
developed for the expeditious exit of those lines of business.
    The FDIC OIG determined that the FDIC's letter to all three 
institutions were coordinated through the Washington office, 
including the then Division of Supervision and Consumer 
Protection and the legal division. And there was discussion of 
a global approach at the FDIC to deal with the RAL products as 
well.
    Notably the OIG found that, ``The verbiage included text 
from letters that had been sent to banks engaged in payday 
lending'' as covered in the OIG September 2015 audit on 
Operation Choke Point.
    The specific language is as follows, ``We find that RALs 
are costly and offer limited utility for consumers as compared 
to traditional loan products. They also carry a high degree of 
risk to an institution, including third-party reputational 
compliance and legal exposures. These risks may expose the bank 
to individual and class actions by borrowers and local 
regulatory authorities. Consequently, we find RALs unacceptable 
for the bank.''
    All three banks considered in this report of inquiry are 
located in the Chicago region. Is that correct?
    Mr. Gibson. They were located in the region--yes. They were 
located in the region, sir.
    Mr. Hultgren. And the Chicago Regional Director supervising 
these banks is Anthony Lowe. Is that correct?
    Mr. Gibson. Yes, sir, it is.
    Mr. Hultgren. This is the same Anthony Lowe who was 
mentioned in your September 2015 Operation Choke Point audit, 
is that right?
    Mr. Gibson. Yes, sir, it is.
    Mr. Hultgren. And Mr. Lowe was responsible for sending 
several letters to banks asking them to stop their payday 
lending businesses. Isn't that correct?
    Mr. Gibson. Mr. Lowe sent some letters, sir.
    Mr. Hultgren. Actually, in an informal interview with the 
committee staff on June 2, 2015, Mr. Lowe indicated that there 
may even be a letter template floating around the FDIC's 
Washington office for such letters. Would that surprise you?
    Mr. Gibson. Sir, I don't know whether there was or there 
wasn't. I don't remember seeing a template, per se.
    Mr. Hultgren. Okay. Let me move on. On December 17, 2014 
FDIC Chairman Martin Gruenberg requested that the FDIC OIG 
``conduct a fact-finding review of the actions of FDIC staff.'' 
That is ``in regards to the Operation Choke Point initiative.''
    His request was prompted by concerns raised by Congressman 
Luetkemeyer in a December 10, 2014, letter which asks that the 
role of the five FDIC officials and others as appropriate be 
examined.
    The FDIC OIG addressed the roles of the five individuals in 
its audit report Number AUID15-008, dated September 2015, 
entitled, and I quote--``The FDIC's Role in Operation Choke 
Point and Supervisory Approach to Institutions That Conducted 
Business With Merchants Associated With High Risk Activities.''
    In that audit, the FDIC OIG committed to conduct additional 
work on the role of the FDIC staff with respect to the agency's 
supervisory approach to financial institutions that offered 
RALs.
    The FDIC's OIG's more recent report of inquiry reveals that 
two of the five officials referenced by the Congressman--Mark 
Pearce, Director, Division of Depositor and Consumer 
Protection; and M. Anthony Lowe, Chicago Regional Director--as 
well as others at the agency played key roles in forcing banks 
to exit the RALs business.
    What was the impetus from the OIG's report of inquiry into 
refund anticipation loans?
    Mr. Gibson. Sir, as we were doing the work with respect to 
Operation Choke Point, we became aware of the FDIC's approach 
to refund anticipation loans. There were some similarities in 
that approach and it struck us that there were concerns that 
were similar to the concerns that were raised in the letter 
from 35 Members of Congress that triggered our original work.
    So we elected to continue to conduct work with respect to 
RALs even though they were a product that wasn't really 
directly involved in the DOJ's Operation Choke Point.
    Mr. Hultgren. Okay. Did the OIG determine any overlap in 
the FDIC officials involved in targeting refund anticipation 
loans and working with DOJ in carrying out Operation Choke 
Point?
    Mr. Gibson. No, sir. I don't believe so.
    Mr. Hultgren. Okay. I see my time has expired.
    I yield back the balance of my time. Thank you, Mr. 
Chairman.
    Chairman Duffy. The gentleman yields back.
    The Chair now recognizes the ranking member, Mr. Green, for 
5 minutes.
    Mr. Green. Thank you, Mr. Chairman. Let us talk some more 
about Mr. Gruenberg. These activities that occurred, did they 
occur prior to 2011?
    Mr. Gibson. Yes, some of them did.
    Mr. Green. Okay. And is it true that Mr. Gruenberg became 
Chair in 2011, if you know?
    Mr. Gibson. Yes, it is.
    Mr. Green. And as a result, it would be inappropriate and 
misleading to imply that Mr. Gruenberg was Chair when these 
activities took place?
    Mr. Gibson. Mr. Gruenberg was the Vice Chairman. That is 
correct.
    Mr. Green. He was not the Chair?
    Mr. Gibson. No, he was not.
    Mr. Green. He was not the Chair. He was there, but he was 
not the Chair?
    Mr. Gibson. No, he was not.
    Mr. Green. And it seems as though we were trying to imply 
that as Chairman, he had knowledge of these things. He was a 
Vice Chair. He was there, but he was not the Chair. As a matter 
of fact, there was another person who was Chair, who, of course 
is obviously no longer there, Ms. Bair. Is that a fair 
statement?
    Mr. Gibson. That is correct.
    Mr. Green. And is it also true that Mr. Gruenberg was the 
person who asked for the investigation?
    Mr. Gibson. Yes, sir, Mr. Gruenberg had asked us to conduct 
investigative work. That is true.
    Mr. Green. Yes.
    Mr. Gibson. Yes, sir.
    Mr. Green. Yes, it is true. It is true. It is okay to just 
say it is true because it is. He is the person who caused you 
to come over to perform the investigation because he requested 
it. True?
    Mr. Gibson. He requested the investigation.
    Mr. Green. So that is true? Do you have a problem saying it 
is true, sir?
    Mr. Gibson. I don't have a problem with saying--
    Mr. Green. Okay. Is it true that he is the person who asked 
for the investigation?
    Mr. Gibson. Sir, I don't know that I accept the premise of 
all of your questions.
    Mr. Green. Okay.
    Mr. Gibson. That is why--
    Mr. Green. Did he ask for an investigation--
    Mr. Gibson. --on that project.
    Mr. Green. Pardon me? Did he ask for an investigation?
    Mr. Gibson. He did.
    Mr. Green. And did he ask for the investigation as it 
related to Operation Choke Point?
    Mr. Gibson. He did.
    Mr. Green. And is it true that when you got there, you 
decided that you were going to expand the investigation into 
this other area, but he was the reason that you arrived because 
he asked for the investigation into Operation Choke Point?
    Mr. Gibson. Yes.
    Mr. Green. Okay. And by the way, you did not do an audit. 
You did a review.
    Mr. Gibson. That is correct, sir.
    Mr. Green. Okay. Now, let us go to something else with 
reference to elimination versus regulation. The product still 
exists, doesn't it? RALs?
    Mr. Gibson. As far as I know, it does. Insofar as I know, 
it does. FDIC-supervised institutions don't offer it.
    Mr. Green. Yes. And they were in the business of protecting 
banks, but they don't have jurisdiction over many other 
institutions that have the opportunity to present this product 
to the public. Is that a fair statement? Other institutions do 
this now. There are other institutions that are doing it. Banks 
don't.
    Mr. Gibson. I assume that there are, yes, but--
    Mr. Green. Okay. The FDIC--
    Mr. Gibson. --I am not aware of the industry--
    Mr. Green. And well, you are not aware, but let us do it 
this way since I have to get this answer on the record for my 
own purposes. You agree that this product still exists but not 
with FDIC institutions, right?
    Mr. Gibson. I believe that is true. Yes.
    Mr. Green. Okay. So the FDIC, while it did, as my 
colleagues have indicated, deal with the product as it related 
to them, the FDIC could not eliminate this product so there are 
others that are doing it.
    It is just the FDIC, the entity in charge of safety and 
soundness, has a duty to protect consumers. This entity decided 
that it wasn't in the best interests of the banks to do this, 
and it moved to eliminate this as a product within these three 
institutions. Is that a fair statement?
    Mr. Gibson. Apparently so.
    Mr. Green. Okay. Now, final comment to you, sir, is this. 
Look, I appreciate your testimony here today. I really do. And 
after we finish, I am going to come down and shake your hand 
and offer you lunch. But I do want you to know that Mr. 
Gruenberg is not the source of this, and I don't want you to 
get caught up in some sort of implication that Mr. Gruenberg 
was the genesis of this and that this, all of this was 
emanating from him. He was a really bad manager, because that 
is just not the case.
    He did what he could when he found out about things, the 
Choke Point circumstance he called to your attention, and also 
he has taken a corrective action once you have called it to his 
attention. He is going to be reporting to you again in June.
    So I am just a person who wants to see people treated 
fairly, and I think Mr. Gruenberg has not been treated fairly 
today. And I am going to stand up for him.
    I yield back.
    Chairman Duffy. The gentleman yields back. Hopefully, he is 
paying for lunch when he offers that to you, Mr. Gibson.
    [laughter]
    Chairman Duffy. The Chair now recognizes the gentleman from 
Maine, Mr. Poliquin, for 5 minutes.
    Mr. Poliquin. Thank you, Mr. Chairman. And thank you, Mr. 
Gibson, for continuing to be here. I appreciate it very much.
    We all know in any organization that the bad behavior of 
that organization starts at the top if there is bad behavior. 
How long has Mr. Gruenberg been at the FDIC, sir?
    Mr. Gibson. Sir, he was appointed as Vice Chairman of the 
Board of Directors. I am not sure what year that was honestly. 
It was a number of years before he became the Chairman of the 
FDIC.
    Mr. Poliquin. And how do you become a chairman of a major 
regulator like this in Washington? How did he become the 
Chairman?
    Mr. Gibson. Sir, you are appointed by the President and--
    Mr. Poliquin. And how long is Mr. Gruenberg's term 
appointed by the President?
    Mr. Gibson. Pardon me?
    Mr. Poliquin. How long does Mr. Gruenberg's term last?
    Mr. Gibson. Sir, I may have to get back to you on that, but 
I believe it is 5 years. I could be wrong, but--
    Mr. Poliquin. Okay. And how long have you been the I.G. at 
the FDIC?
    Mr. Gibson. Sir, I have been the acting I.G. at the FDIC 
for almost 3 years now.
    Mr. Poliquin. Okay. So your time has overlapped with that 
of Mr. Gruenberg's. Is that correct?
    Mr. Gibson. Yes, it is.
    Mr. Poliquin. Okay, fine. If I am not mistaken, Mr. 
Gruenberg was in a position of extreme authority at the FDIC 
during Operation Choke Point, is that correct?
    Mr. Gibson. Sir, he was either the Vice Chairman or the 
Chairman, but I am not sure--
    Mr. Poliquin. Okay. How many Chairmen--
    Mr. Gibson. --what the timeframe of Operation--
    Mr. Poliquin. How many Chairmen do you have at the FDIC?
    Mr. Gibson. We have one.
    Mr. Poliquin. And how many Vice Chairmen do you have?
    Mr. Gibson. We have one.
    Mr. Poliquin. Okay. So he was either the top banana or the 
number two guy, right?
    Mr. Gibson. That is correct.
    Mr. Poliquin. Okay, fine. You must associate with Mr. 
Gruenberg professionally and maybe otherwise with other I.G.s 
in this town embedded in other major regulators like the FDIC. 
Do you know who your counterparts are?
    Mr. Gibson. I know who my counterparts are, yes, sir.
    Mr. Poliquin. Okay. Do you think that the behavior of 
Operation Choke Point where Mr. Gruenberg was there and was in 
a position of authority and did nothing to stop it when it was 
exposed in their coordinated work with Justice? Do you find 
this unusual for other government agencies here in Washington?
    Mr. Gibson. Sir, what I would point out is that our audit 
found that the FDIC had minimal direct involvement with 
Operation Choke Point. And in fact, the FDIC's communications 
with DOJ at the time Operation Choke Point initiated ceased 
because Chairman or Vice Chairman Gruenberg--I believe he may 
have been the Chairman at the time--basically indicated that 
the FDIC shouldn't participate in those.
    Now, I can't really speak to the rest of your question. I 
am not sure that I can associate that with the heads of other 
agencies.
    Mr. Poliquin. Do you recall the genesis of Operation Choke 
Point, Mr. Gibson?
    Mr. Gibson. Yes, sir. I think I do.
    Mr. Poliquin. Could you tell us a little bit about it?
    Mr. Gibson. Operation Choke Point was a program that was 
initiated by the Department of Justice.
    Mr. Poliquin. Who was the head banana at the Department of 
Justice at that time?
    Mr. Gibson. Sir, I believe Eric Holder was the Attorney 
General at the time.
    Mr. Poliquin. Mr. Holder was the Attorney General at the 
time? And how long was Mr. Holder's term?
    Mr. Gibson. Sir, I don't know that he had a term.
    Mr. Poliquin. Okay, but he was appointed by whom?
    Mr. Gibson. He was appointed by President Obama.
    Mr. Poliquin. Okay, so what you are telling me is in some 
shape or form it is the Administration that is responsible for 
appointing all of these regulators, either top people--
    Mr. Gibson. Yes, sir.
    Mr. Poliquin. --or those who eventually become the top 
people. This behavior with respect to Choke Point using Federal 
regulators to force banking regulators to choke off credit to 
legally operating businesses has been conducted recently over 
the last 7 years. Is that correct?
    Mr. Gibson. Sir, I believe Operation Choke Point was 
conducted during that timeframe.
    Mr. Poliquin. Okay, fine. And how long have you been in 
this town, Mr. Gibson?
    Mr. Gibson. Longer than I care to admit.
    [laughter]
    Mr. Poliquin. Okay. That is a fair statement. Do you find 
that this sort of behavior has happened throughout different 
parts of this Federal Government for the last 7 years? Is it 
unique to this period of time?
    Mr. Gibson. Sir, I am genuinely not sure how to answer that 
question. I don't know that I would accept the premise that 
things are necessarily different now than they were prior to 
that period of time.
    Mr. Poliquin. And do you find in the last 7 years, Mr. 
Gibson, that there has been an unusual amount of activity by 
the Federal Government to put burdensome regulations on legally 
run businesses--
    Mr. Gibson. Sir--
    Mr. Poliquin. --that we haven't seen in the past?
    Mr. Gibson. I honestly don't have an empirical basis on 
which I can make an assessment about that.
    Mr. Poliquin. How can we find out that information?
    Mr. Gibson. That is a good question.
    Mr. Poliquin. And to whom do we go?
    Mr. Gibson. Sir, I am sure there are studies that are done 
which address that.
    Mr. Poliquin. Another study. We don't--okay.
    Mr. Gibson. I--
    Mr. Poliquin. Can you cite any of those studies?
    Mr. Gibson. I'm sorry?
    Mr. Poliquin. Could you cite any of those studies for our 
committee now?
    Mr. Gibson. No, I am afraid I can't. I am only--
    Mr. Poliquin. And where we might go to find out--
    Mr. Gibson. In terms of burdensome regulation, none. I am 
not an expert on that subject.
    Mr. Poliquin. Where might we go to find out if such studies 
existed?
    Mr. Gibson. Sir, I think the Congressional Research Service 
would be a place to start.
    Mr. Poliquin. Okay. Thank you very much.
    Thank you, Mr. Chairman. I yield back my time.
    Chairman Duffy. The gentleman's time has expired.
    The Chair now recognizes the gentleman from Texas for 5 
seconds.
    Mr. Green. Thank you, Mr. Chairman.
    I referenced earlier an I.G. report, and at this time I 
would like to place that report in the record if there are no 
objections. It is styled, ``Challenges and FDIC Efforts Related 
to Predatory Lending.''
    Chairman Duffy. Without objection, it is so ordered, and 
your 5 seconds has expired as well.
    I want to thank Mr. Gibson, you and your team, for your 
work and your testimony today. We are grateful for that.
    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.
    And with that, I note without further objection, this 
hearing is adjourned.
    Mr. Gibson. Thank you, sir.
    Chairman Duffy. Thank you.
    [Whereupon, at 3:30 p.m., the hearing was adjourned.]

                            A P P E N D I X


                             March 16, 2016

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