[Senate Hearing 115-305]
[From the U.S. Government Publishing Office]
S. Hrg. 115-305
THE CONSUMER FINANCIAL PROTECTION BUREAU'S SEMI-ANNUAL REPORT TO
CONGRESS
=======================================================================
HEARING
BEFORE THE
COMMITTEE ON
BANKING,HOUSING,AND URBAN AFFAIRS
UNITED STATES SENATE
ONE HUNDRED FIFTEENTH CONGRESS
SECOND SESSION
ON
RECEIVING AND DISCUSSING THE CONSUMER FINANCIAL PROTECTION BUREAU'S
SEMI-ANNUAL REPORT TO THE COMMITTEE ON RECENT ACTIVITIES, RULEMAKINGS,
SUPERVISORY ACTIONS, AS WELL AS FUTURE PLANS FOR ACTION
__________
APRIL 12, 2018
__________
Printed for the use of the Committee on Banking, Housing, and Urban
Affairs
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Available at: http: //www.govinfo.gov /
___________
U.S. GOVERNMENT PUBLISHING OFFICE
31-195 PDF WASHINGTON : 2019
COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS
MIKE CRAPO, Idaho, Chairman
RICHARD C. SHELBY, Alabama SHERROD BROWN, Ohio
BOB CORKER, Tennessee JACK REED, Rhode Island
PATRICK J. TOOMEY, Pennsylvania ROBERT MENENDEZ, New Jersey
DEAN HELLER, Nevada JON TESTER, Montana
TIM SCOTT, South Carolina MARK R. WARNER, Virginia
BEN SASSE, Nebraska ELIZABETH WARREN, Massachusetts
TOM COTTON, Arkansas HEIDI HEITKAMP, North Dakota
MIKE ROUNDS, South Dakota JOE DONNELLY, Indiana
DAVID PERDUE, Georgia BRIAN SCHATZ, Hawaii
THOM TILLIS, North Carolina CHRIS VAN HOLLEN, Maryland
JOHN KENNEDY, Louisiana CATHERINE CORTEZ MASTO, Nevada
JERRY MORAN, Kansas DOUG JONES, Alabama
Gregg Richard, Staff Director
Mark Powden, Democratic Staff Director
Elad Roisman, Chief Counsel
Joe Carapiet, Senior Counsel
Travis Hill, Senior Counsel
Elisha Tuku, Democratic Chief Counsel
Laura Swanson, Democratic Deputy Staff Director
Corey Frayer, Democratic Professional Staff Member
Dawn Ratliff, Chief Clerk
Cameron Ricker, Deputy Clerk
James Guiliano, Hearing Clerk
Shelvin Simmons, IT Director
Jim Crowell, Editor
(ii)
C O N T E N T S
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THURSDAY, APRIL 12, 2018
Page
Opening statement of Chairman Crapo.............................. 1
Prepared statement........................................... 40
Opening statements, comments, or prepared statements of:
Senator Brown................................................ 2
Prepared statement....................................... 40
WITNESS
Mick Mulvaney, Acting Director, Consumer Financial Protection
Bureau......................................................... 4
Prepared statement........................................... 41
Responses to written questions of:
Senators Brown, Warner, Van Hollen, Cortez Masto, and
Jones.................................................. 47
Senator Reed............................................. 62
Senator Scott............................................ 63
Senator Sasse............................................ 65
Senator Warren........................................... 72
Senator Cotton........................................... 184
Senator Schatz........................................... 184
Senator Cortez Masto..................................... 188
Additional Material Supplied for the Record
The April 2018 Semi-Annual Report of the Bureau of Consumer
Financial Protection........................................... 205
List of bills cosponsored by Mick Mulvaney submitted by Senator
Warren......................................................... 261
Letter submitted by the National Association of Federally-Insured
Credit Unions.................................................. 264
Letter submitted by the Consumer Bankers Association............. 269
Letter submitted by the Carolinas Credit Union League............ 279
Letter submitted the American Council of Life Insurers, American
Insurance Association, American Land Title Association, and
other U.S. Trade associations.................................. 280
Letter submitted by the National Association of Insurance
Commissioners and the Center for Insurance Policy and Research. 281
Letter submitted by the Credit Union National Association........ 283
(iii)
THE CONSUMER FINANCIAL PROTECTION
BUREAU'S SEMI-ANNUAL REPORT TO CONGRESS
----------
THURSDAY, APRIL 12, 2018
U.S. Senate,
Committee on Banking, Housing, and Urban Affairs,
Washington, DC.
The Committee met at 10:16 a.m. in room SD-538, Dirksen
Senate Office Building, Hon. Mike Crapo, Chairman of the
Committee, presiding.
OPENING STATEMENT OF CHAIRMAN MIKE CRAPO
Chairman Crapo. By a slim majority vote, the hearing comes
to order.
[Laughter.]
Chairman Crapo. Today we will hear from CFPB Acting
Director Mick Mulvaney on the most recent Semi-Annual Report of
the Consumer Financial Protection Bureau and the Bureau's
activities since his appointment in November 2017.
On April 2nd, the CFPB released its fall 2017 Semi-Annual
Report, which provides insights on the issues consumers face
and primarily focuses on the CFPB's significant work between
April and September 2017, including rulemakings, supervisory
actions, and enforcement actions.
The CFPB recently announced a series of requests for
information on various functions, including its rulemaking,
supervision, guidance, and enforcement processes.
Consumer protection is vital for a properly functioning
financial marketplace and is best determined by a robust,
quantitative analysis.
I look forward to learning what feedback the CFPB has
received from stakeholders with respect to its requests and how
consumers and the marketplace stand to benefit from changes
being considered.
I have long been concerned about the ever increasing
amounts of ``big data'' collected by companies and the
Government.
In 2014, the Government Accountability Office issued a
report in which it highlighted shortcomings in the CFPB's data
collection process and privacy controls and recommended a
number of improvements.
The CFPB's data collection is especially concerning in
light of a number of high-profile cyber attacks, such as last
year's Equifax data breach and recent news about how outside
groups have collected private information from Facebook users.
I commend Acting Director Mulvaney for treating these
concerns seriously by freezing the agency's collection of
personal information while the agency reviews the ways it can
improve its data security program.
Today we should discuss how the CFPB's data collection
process can be narrowed and enhanced to better protect
consumers' personal information.
While I am encouraged by today's testimony, the fundamental
structure of the CFPB needs to be reconsidered to make it more
transparent and more accountable.
I continue to support a bipartisan commission instead of a
single Director, a congressional funding mechanism, and a
safety and soundness check.
Given the changes taking place at the agency, now is an
appropriate time to consider the future of the CFPB.
Senator Brown.
STATEMENT OF SENATOR SHERROD BROWN
Senator Brown. Thank you, Mr. Chairman. Welcome, Director.
Good to have you.
The reason we are here today is that there was a financial
crisis a decade ago caused by predatory lenders. That crisis
cost millions of Americans their jobs, their homes, their
savings.
The St. Louis Fed looked at the subprime mortgages made
from 2000 to 2007. It found that 70 percent--7-0--of those
loans were refinances. That is important. It means that most
subprime loans were not going to people who were ``buying too
much house.'' These loans were going to people that had already
paid off some of their debt and built some equity.
Subprime refinance loans allowed shady lenders to steal the
equity from homeowners with false promises of lower monthly
rates under confusing payment plans. These loans, designed to
steal wealth from hardworking families, overwhelmed the banking
system and crashed the whole economy.
There was no Consumer Financial Protection Bureau while
this was happening in those years, from 2000 to 2007. There was
no dedicated cop on the beat to be tough on predatory mortgage
lenders or to warn consumers about these loans.
The result was the biggest financial crisis and recession
since the Great Depression. The lesson from 2008 is simple: If
we do not protect hardworking Americans from powerful Wall
Street banks and financial scammers, it can bring down our
entire economy.
That is why we created the CFPB. Its job is clear: to fight
for hardworking families against unfair, abusive, and deceptive
practices, the tricks and traps that some financial
institutions design in order to line their pockets.
It is a consumer-first agency. Before Mr. Mulvaney's
arrival, the CFPB got $12 billion--$12 billion, $1,200
million--in relief for 29 million Americans that had been
harmed by shady practices.
Before Mr. Mulvaney arrived, the CFPB was doing its job. It
initiated a handful of enforcement actions every month on
behalf of the consumers it was created to serve. It is a
consumer-first agency.
But now Mr. Mulvaney is trying to convince us that
protecting families and prosecuting shady lenders is ``pushing
the envelope.'' That is simply a lie. Protecting consumers is
not ``pushing the envelope.'' That is the agency's mission. It
is a consumer-first agency. Look at the title: Consumer
Financial Protection Bureau.
It is a mission that Mr. Mulvaney is completely failing at.
The number of enforcement actions under his watch? Zero. Well,
actually, that is not correct. The number of enforcement
actions under his watch is negative four. Not only has the CFPB
not initiated a single enforcement action, it has withdrawn
lawsuits against four payday lenders that charge consumers
triple-digit interest rates.
It is Mr. Mulvaney who is pushing the envelope. His
appointment at the CFPB was only made possible by ignoring the
law that created the CFPB, which says that the Deputy Director
should be in charge of the agency.
Yesterday marked the 50th anniversary of the Fair Housing
Act. Mr. Mulvaney observed this year's anniversary by moving to
weaken the office of Fair Lending--the office that focuses on
discriminatory lending.
While he claims the agency is under a hiring freeze, he has
actually created new positions at the Bureau. He has installed
his own political appointees. That may seem unsurprising given
the behavior of this Administration, but it has no precedent in
the short life of the CFPB.
Not only did Mr. Mulvaney replace nonpartisan career staff
with his political allies, he gave them enormous salaries.
In his role at the CFPB, Mr. Mulvaney is continuing the war
on working families he started at OMB. As Budget Director, he
worked to slash benefits for Americans making $30,000 to
$40,000 a year and enact tax cuts that benefit the wealthiest
Americans while adding trillions of dollars to our national
debt.
At the CFPB, he is handing out favors to Wall Street and
shady lenders. He is lining the pockets of his top four
political appointees with over $1 million in salaries. Remember
I said there are eight political appointees, never been done in
this agency. Four of those appointees together make over $1
million in salary. They are not economists. They are not doing
the work of bringing actions against people who cheat
consumers. They are political appointees. He has not taken on a
single enforcement action that would continue the CFPB's good
work of putting money back in the pockets of consumers harmed
by financial scammers, harmed by shady lenders.
Shel Silverstein, with whom we are all familiar, once said,
``If you have to dry the dishes, and you drop one on the floor,
maybe they will not let you dry the dishes anymore.'' Mr.
Mulvaney seems to be following that advice. He is hoping that
if he does a bad enough job running the CFPB, Congress will
take away the CFPB's ability to protect consumers.
Congress should not fall for it. We have seen that the CFPB
can be a real, positive voice and force for American consumers.
We know the real problem is not the CFPB.
Thank you.
Chairman Crapo. Thank you, Senator Brown.
Director Mulvaney, thank you for being with us today. We
appreciate your attendance here and look forward to our
discussions with you. You may proceed with your testimony, and
as usual, we ask you to try to conclude it within 5 minutes.
And anything you do not get said of your statement will be put
in the record. The time is yours.
STATEMENT OF MICK MULVANEY, ACTING DIRECTOR, CONSUMER FINANCIAL
PROTECTION BUREAU
Mr. Mulvaney. Thank you, Senator. Mr. Chairman, thank you,
Ranking Member Brown. I will not take the whole 5 minutes. I
think I have submitted a written statement for the record, and
I think you also have the written copy of the Semi-Annual
Report, which is the reason for the hearing today.
Let me just say this: I am happy to be here, happy to
answer your questions, happy to talk a little bit about the
operations of the Bureau of Consumer Financial Protection, and
I hope that amongst other things today we can use this time to
try and draw attention to ways that the Bureau can be improved,
especially in terms of accountability and transparency.
I evidently made a little bit of news yesterday when I
reminded everybody, or at least pointed out the fact that while
I have to be here by statute, I do not think I have to answer
your questions. If you take a look at the actual statute that
requires me to be here, it says that I ``shall appear before
the Committee on Banking, Housing, and Urban Affairs of the
Senate,'' and I am here and I am happy to do it.
I want to make it clear that I am going to answer every
question that I can today. I am not using this as an excuse not
to answer your questions. But the statute says I have to
appear. Elsewhere in the same statute, it says that the head of
FSOC ``shall appear, discuss, and answer questions,'' and it
says that the Office of Financial Research, the Director
``shall appear and testify.'' Either that is a mistake and it
needs to be fixed, or it was done on purpose and it needs to be
fixed. It is just one example of many of ways that I think we
can improve the Bureau of Consumer Financial Protection because
I think we all maybe could admit that it was not perfect the
first time. As someone said yesterday, actually, it was a
Democratic Member yesterday who said the statute was not handed
down from on high.
So I look forward to talking about my management of the
Bureau, about the statute, and about ways that we can make this
Bureau more accountable to you and more accountable to the
American people. I know it was set up to be independent, and
that is fine; it was set up supposedly to be free of
micromanagement, and I agree with that. I do not think that
equates to being free of oversight, free of accountability, and
free of transparency. So I hope that if we can accomplish
anything together today, we can maybe draw some attention to
ways that this particular part of Government can be improved.
Senator Brown. [Presiding.] Senator Shelby can go first, if
you would like.
Senator Shelby. Thank you.
Director Mulvaney, we appreciate you. We know your
background as a Member of the House, and I believe you knew a
lot about the House Financial Services Committee. We call it
the ``Banking Committee.'' You served there, so you bring some
experience to this job, not just to OMB but to this job itself.
Actually, I personally believe you will bring a ray of
sunshine to a black hole of bureaucracy, and it is just a good
start. I like what you are trying to do. I have always been
concerned about the structure of this. I fought it. I agree
with Chairman Crapo. We tried to make a commission here, not
one person, not like a czar or a dictator or whatever with no
accountability. And I think you are on the right track.
I do believe that as we have a discussion here, a
conversation this morning, some of us would be interested in
some of your thoughts on how we can restructure this or what
direction should we go. We all have some ideas, because I think
it is important. And you seized on a couple of things a minute
ago, and I think they are very important to any agency, and
especially this agency--that is, accountability and
transparency. And if we can work on that together, we will do
something for the American people, because I do not think you
can get around that.
So what are your thoughts as far as structure? I think we
might have to do some legislative changes here.
Mr. Mulvaney. We do. I have got one suggestion. In fact,
the Semi-Annual Report makes four, but the one at the top of
the list is the one I will talk about. Please put the Bureau on
appropriations. Seriously. I mean, why you all wanted to give
up the appropriation power that Congress has over this agency I
do not understand.
Senator Shelby. Excuse me. Now, a lot of us did not. Just
appropriators did.
[Laughter.]
Mr. Mulvaney. I can walk down to the Federal Reserve on
October 1st, of this year or next year, Senator, and they will
give me $700 million if I ask for it. And I do not have to tell
you what I am going to do with it. The Ranking Member made
comments about salaries; I welcome a discussion of the salaries
at the Bureau. There are 370 folks who work there who make more
than you do. And that may be fine, but my guess is you probably
did not know that because we do not go through the
appropriations process.
The inquiry, the sunshine that is attached to the
appropriations process does not apply here. So there is a lot
of stuff that goes on that you all will never know about unless
you know to ask or I choose to tell you.
Senator Shelby. Mr. Director, excuse me. Basically it is
just we have had no oversight of this agency, have we?
Mr. Mulvaney. I have to come here twice a year, and that is
about it.
Senator Shelby. Go ahead.
Mr. Mulvaney. So there are other things you can do. We have
asked for you all to take a look at our major regulations. I
have asked separately for an independent Inspector General.
There are a bunch of things we can do, Senator, to make this
better without undermining the mission. I am not seeking to
undermine the mission of the Bureau. I have every interest in
enforcing the law. I am required by law to protect consumers
and educate consumers, and I intend to do both of those things.
But there is no reason for this Bureau to be a black hole, as
you put it, Senator, in order to conduct that mission. And I
very much hope that both the House and the Senate choose in the
near future to sort of take back some of their oversight
ability over this Bureau.
Senator Shelby. Thank you.
Thank you, Mr. Chairman.
Senator Brown. Thank you, Senator Shelby.
Thank you, Director. I would add that I would just point
out that there have been some 60 appearances in front of the
two committees, either Director Cordray or one of his top
assistants, and thousands of pages coming from the Consumer
Bureau in response to questions, many of them from Members of
this Committee and the House. So to say there is no oversight
is, I think, a bit of a reach, but that is all right.
I want to talk about payday lending. Pew has said that Ohio
has the biggest payday lending problem in the country. Ohioans
pay the highest rates for payday loans in the country. The Ohio
Speaker of the House just resigned, a Republican Speaker,
perhaps due in part to some exotic trips he went on with payday
lobbyists.
Since you started at the CFPB, have you rubbed elbows with
payday CEOs or their lobbyists and lawyers in exotic locations?
Mr. Mulvaney. No, sir. The only contact that I have had
that I know of with anybody associated with the industry was as
part of our community groups that we have. We have advisory
boards, we have groups from industry, we have consumer
advocates. And I have met with those groups in the ordinary
course of business, but that is the only contact I am aware of.
Senator Brown. That is the only time, OK. Thank you for
that.
You talk about the power of the CFPB. Before your
appointment, the CFPB used that power, in a good way mostly, to
get $12 billion in relief for 29 million Americans. You have
heard those numbers. You have not disputed those numbers. Five
months, you, on the other hand, have not initiated a single
enforcement action to put money back in the pockets of
servicemembers or veterans or seniors or students. You have
said publicly that it is naive to think financial institutions
are not out there breaking the law. So what gives there? Why
don't you use the power to do--why are you using your power to
do favors for shady lenders and Wall Street banks rather than
taking action, decisive action, against these bad actors that
you claim are out there?
Mr. Mulvaney. I will disagree with that characterization,
but I will answer your question, which is that we have over 100
investigations ongoing right now. We have 25 lawsuits,
including 10 against short-term, small-dollar payday lenders,
as you describe them. We have, I think, another dozen that are
in what we call the ``sue or settle part'' of the process where
we decide to either settle with them or move to a lawsuit. I
will point out that my predecessor in his first 6 months never
filed a lawsuit, so it is not at all unusual.
We continue to enforce the law, Senator. It is a true fact
that we have not filed a new lawsuit in the last 5 months, but
I would disagree with the characterization that means that we
are not enforcing the law.
Senator Brown. Why, against the advice of nonpartisan CFPB
staff, did you drop a lawsuit against those four payday
lenders? What was that about?
Mr. Mulvaney. I will challenge the characterization of the
advice I get from staff. That being said, I will not comment on
the advice that I get from my staff, especially my legal staff,
and I will point out to you that the dismissal is one of 25
that I could have done. I chose to only dismiss one. The
dismissal was without prejudice to bring the action again, and
there is a current ongoing investigation against the same
entity. So with that, I will not comment any further because we
do not comment, as Mr. Cordray did not either, on ongoing
investigations. But I can assure you that the characterization
just made is not accurate.
Senator Brown. Is the CFPB still subject to a hiring
freeze?
Mr. Mulvaney. Yes, sir.
Senator Brown. So during that hiring freeze, you hired
eight political appointees, more distinct from the nonpartisan
professional career staff. There used to be none of those at
the CFPB. Why does CFPB require more political staff in the
aggregate than worked at the Federal Reserve, the FDIC, and the
OCC combined in 2016?
Mr. Mulvaney. Actually, I do not think that last statement
is accurate. I was just talking--I cannot remember which one of
the other regulators that I share, and I think it may have been
the FTC, another independent regulator, and they have more
political appointees than we do. There was nobody there, there
were no political appointees other than me on the day that I
showed up.
Senator Brown. That is the point.
Mr. Mulvaney. I will point out, which was unusual, that I
think I have netted three additional positions, so you talk
about the eight, but many of them have replaced other positions
that already existed. They were career, not political. But
there have only been three new positions created in my time.
Senator Brown. But eight political appointees.
Mr. Mulvaney. I think that is right, yes, sir.
Senator Brown. And you do not question the characterization
of those, the four of those, their pay exceeds $1 million in
the aggregate?
Mr. Mulvaney. Because the pay that they are receiving is
under the exact same pay system that my predecessor set out.
Senator Brown. But for career people as opposed to
political people.
Mr. Mulvaney. Yes, but they are on the same level. I would
also point out that I have complete statutory authority to do
so.
Senator Brown. But with less necessity because they are not
doing the kind of work that their predecessors were doing.
Mr. Mulvaney. No, no. In fact, nothing could be further
from the truth. What I have done is set up a--if you are
familiar with OMB, and I think that you are, we have a PADs and
DADs system where we marry a political appointee to a career
staffer, and they work together as a team. And that is simply
the same model that I have used at the Bureau.
I will also point out that I have complete authority under
the statute to do exactly what I have done. The statute
actually contemplates hiring the SES people under Schedule C
that I have, and we have received approval from the Office of
Personnel Management to hire the folks. We have done it 100
percent legally and 100 percent by the book.
Senator Brown. Of course you have received approval, but
you have received the approval of this Administration, so no
surprise there.
One other question in my last few seconds. You claim to
want CFPB to be data-driven. You have told staff, ``There is a
lot more math in our future.''
Mr. Mulvaney. Yes, sir.
Senator Brown. But at OMB you reportedly quashed the
Department of Labor's analysis that showed employers would
pocket hundreds of millions of dollars in tips meant for
employees. Is rejecting data that does not help your agenda the
kind of quantitative analysis we can expect?
Mr. Mulvaney. Again, I appreciate the question. I disagree
with the characterization. I did not quash anything at OIRA.
Senator Brown. So who did that?
Mr. Mulvaney. I would suggest to you that nobody quashed
anything. But, again, we do not comment on the OIRA process.
That is part of the delivery process of the executive branch.
We do not comment on that. But I can assure you that we did not
do what you said we did.
Senator Brown. So you are claiming there was no attempt by
your agency or any other agency to wipe that information away
in that process?
Mr. Mulvaney. The rule to which you are referring is a
Department of Labor regulation, and I would encourage you to
raise that issue with the Secretary of Labor the next time you
get the opportunity.
Senator Brown. So you are not saying the Secretary--you are
saying you did not do it. You are not saying the Secretary of
Labor did not do it.
Mr. Mulvaney. I am saying I do not comment on how OIRA
functions.
Senator Brown. So can we be confident that you will not
engage in that kind of behavior in this job?
Mr. Mulvaney. I am not in the business of quashing
information. I want as much information as I can get. In fact,
one of the things I have done since I have been there is ask
for a lot more information from a lot more sources.
Senator Brown. All right. Thank you.
Chairman Crapo. [Presiding.] Thank you. Thank you very
much. Mr. Director, I apologize. I had to step out for a vote
in the Judiciary Committee.
Mr. Mulvaney. I completely understand. Of all the folks who
appear before you, I probably appreciate that more than
anybody.
Chairman Crapo. Well, thank you.
In your Semi-Annual Report's introduction letter, you
recommend four changes to the Dodd-Frank Act. The first one is
to fund the Bureau through congressional appropriations. The
second one is to require legislative approval of major rules.
The third recommendation is to ensure that the Director answers
to the President in the exercise of executive authority. And
the fourth is to create an independent Inspector General for
the Bureau.
Could you take a minute or two and explain how important
that fourth recommendation is about the Inspector General?
Mr. Mulvaney. Sure, and I want to make one thing perfectly
clear. This is not to denigrate the work that the Inspector
General has done. I share an Inspector General right now with
the Federal Reserve Board, and I have absolutely no complaints
about the service that I have received from them, so this is
not a personal attack on the IG. I will tell you that I think
in the long run it serves this agency, this Bureau, better to
have our own IG who is dedicated to what we do, who is familiar
and focused with what we do exclusively. And I would also point
out to you, Senator, that it is a cost-reducing move for us to
have our own IG. I think we save about $2 million a year in our
analysis.
I honestly do not know what the objection is as to why you
would not give us our own Inspector General. It makes me wonder
why we could not get our own Inspector General. I do not know
how often executive agencies come to you and say, ``Please,
please, give me more IG oversight. Give me my own.'' But for
some reason, that appears to be controversial to some folks,
and I do not understand why.
Chairman Crapo. Well, thank you. I do not sometimes
understand the disagreements we have up here either, but I do
agree with your recommendation here, and I point out this would
be an independent Inspector General that you are requesting.
Mr. Mulvaney. Yes, sir.
Chairman Crapo. We will see if we can find a way, a pathway
on that.
In my opening remarks, I talked about data collection. I
have long been concerned about the ever increasing amounts of
big data collected by both private sector companies and by the
Government. The CFPB's data collection has been especially
concerning to me because of how broad it was and concerns that
I held about the fact that it was not appropriately being
managed. And, in fact, some of our evaluation has proven that
to be the case.
In light of the high-profile cyber attacks that we have
seen recently, like the Equifax breach, the OPM data breach,
and recent news about Facebook--and the list continues to
grow--I would like to ask you to tell me: How can the CFPB's
data collection process be narrowed and enhanced to better
protect consumers' personal information?
Mr. Mulvaney. We are in the process right now, Mr.
Chairman, of asking those exact same questions for the reasons
that you raised. When I got there, the two priorities that the
previous IG reports had sort of brought to light within the
Bureau were the travel card--there are some potential
difficulties there--and our data security. And for that reason,
I immediately instituted a data collection freeze until I could
get my arms around what the scope of the difficulty was.
I met with the IG. We can talk privately about what the IG
told me because I do not want to talk about it publicly. But
after the meeting with the IG, what we decided to do is that we
will go ahead and continue some data collection as it is
necessary to our enforcement, and we have taken some steps to
work with our sister agencies, for example, the Department of
Justice, and then we have also changed some of our practices in
terms of looking at data but not collecting it. I heard a great
expression yesterday: ``You do not have to protect what you do
not have.'' So there is stuff we have to see, but it is not
stuff we have to keep.
We have also hired an outside party, I believe it is with
the Defense Department, to see if they can test the integrity
of our system, sort of a white-hat hacker type of situation, as
we try and get a better handle on what we can do. Until I nail
it down and until I know that we are holding ourselves to at
least as high a standard as we intend to hold the people we
oversee, we are trying to be extraordinarily judicious in the
amount of data that we take, the scope of the data that we take
in, and how we keep that data. We will continue to keep
Congress up to speed. I think we have commissioned a report on
data sources and uses that we will make available to you and to
the public once it is completed.
Chairman Crapo. Well, I appreciate that, and I will just
indicate to you I have been focused on this with regard to the
CFPB for some time. My understanding is that it was the
objective and perhaps an achieve objective for the CFPB
collecting data on somewhere in the neighborhood of about 900
million credit card accounts. And I do not think most people in
America realize that there is an extremely high likelihood that
every time they swipe their credit card, the CFPB collects
their data. That single fact alone to me is alarming. And so I
would like to see your evaluation of exactly what is being
collected, whether there is a justification for collecting it,
and whether there are adequate safeguards in place.
Mr. Mulvaney. We actually share your concern, and I hope
that we will have bipartisan support if we have suggestions on
how to fix our systems.
Chairman Crapo. Thank you very much.
Mr. Mulvaney. Thank you.
Chairman Crapo. Senator Tester.
Senator Tester. Thank you, Mr. Chairman and Ranking Member
Brown. I want to thank you for being here today, Director
Mulvaney. I appreciate you appearing in front of the Banking
Committee.
You had previously referenced that you have the authority
to ask the Fed for some dollars, which you do.
Mr. Mulvaney. Yes.
Senator Tester. How much do you intend on asking the Fed
when it comes up in October?
Mr. Mulvaney. We have not done that analysis, Senator. I
will tell you, because we just got into a new quarter, I asked
for $98.5 million at the end of March, and that will be
sufficient to run the Bureau for the next fiscal quarter.
Senator Tester. OK. How does that compare with the previous
Director?
Mr. Mulvaney. That is the same amount he asked for in 2015.
It is less than he asked for the last couple of years. We have
some cost savings related to the hiring freeze. But we are also
spending down what started off as a $170 million reserve fund
that I did not think we needed.
Senator Tester. OK. Thank you.
Mr. Mulvaney, you come to this position with a record of
being a deficit hawk, and I think that is true.
Mr. Mulvaney. I try.
Senator Tester. Yes. But I will tell you that it is
somewhat troubling that--and this goes on with the Ranking
Member's questions that your chief of staff is getting paid
$47,000 more per year, more than Members of Congress, most
Federal judges, the Vice President, and Cabinet Secretaries,
more than you. You have got political designees that are making
right at or right next to $240,000. That does not jibe with
being a fiscal conservative. Can you explain to me why you had
to pay these salaries to get the political appointees?
Mr. Mulvaney. Sure. That is the system that you all set up
in the statute.
Senator Tester. I know, but you have the flexibility to pay
whatever you want.
Mr. Mulvaney. My average compensation is $195,000.
Senator Tester. I know, but your political appointees are
making a lot more than that.
Mr. Mulvaney. Yes, and, again, I do have the authority
statutorily to bring in political appointees. Most of the folks
that you referenced are the senior team that the practice of
the previous administrator or Director was to pay those folks
as much as he possibly could, and he did. I did not want to set
up a situation, Senator, where----
Senator Tester. So what you are saying is you are given
more flexibility for your chief of staff to pay him nearly
$260,000 when Cordray's chief received $212,234?
Mr. Mulvaney. But the folks who are actually working with
their senior partners are making the exact same thing that they
are, so my political folks----
Senator Tester. I am not talking about them. I am talking
about your political appointees, because it looks like
favoritism.
Mr. Mulvaney. I am saying my political appointees I
mentioned--I do not know if you are aware or not. The system at
OMB marries a political person with a career person. And at the
CFPB, I thought it was important that those folks make exactly
the same, and they do. That is how we arrived at those numbers.
Senator Tester. Well, it is--I will just tell you, from my
perspective--and I think that the debt is important to
address--I think it smacks of impropriety.
Mr. Mulvaney. Senator, I would welcome bipartisan review of
our compensation structure over at the Bureau. I cannot tell
you the number of folks who I know on the Hill, the number of
folks who I know in the White House who are begging for jobs at
the Bureau because of how much money we pay. I do not think it
is necessary to pay that. We pay it because that is what the
statute says.
Senator Tester. Well, all I know is when I look at the
numbers--and you can talk about how you are paying and how you
are not. But when Cordray was in there, he paid his chief of
staff 212,000 bucks. You stepped in, being a fiscal
conservative, budget hawk and you are paying him $260,000.
Mr. Mulvaney. And my overall budget will still be $16
million less than previous years.
Senator Tester. I know your overall budget will be that,
but the truth is that I think it is good to be conservative.
But you need to be consistent. You cannot be conservative when
convenient. That is all.
I want to talk about the budget process. We had Secretary
Perdue in front of the Appropriations Committee yesterday, and
I talked to Secretary Perdue about cutting crop insurance
subsidies significantly--I think by almost half, by the way--
which is going to price a bunch of folks out of the business in
the crop insurance thing. I think Perdue gets it. I think the
problem may be at OMB. And I am going to tell you, as a farmer,
you reduce those safety net programs and food security becomes
a problem because farmers will not buy that insurance. They
will go broke. And I guarantee you unequivocally if we are
dependent on multinational corporations to feed this country,
we have got a national security issue.
Can you tell me the thought process that went into reducing
crop insurance subsidies?
Mr. Mulvaney. Senator, I am having to take off my Bureau
hat now and put my OMB hat on. To be perfectly candid with you,
I am not as well prepared on that as I was when I met before
you on the Budget Committee, but I seem to recall we had this
similar conversation.
Senator Tester. No, I am not on the Budget Committee.
Mr. Mulvaney. Oh, you are not? OK. I got asked the
question, and the point of the matter was that we tried to
tailor our benefits to farms that had below quarter of a
million dollars of adjusted gross income to speak to the exact
group that you have just talked about, to encourage family
farming, but small farming.
Senator Tester. That is not what the President's budget
proposal does, and I am going to tell you----
Mr. Mulvaney. With respect, I think it----
Senator Tester.----Perdue understands agriculture. I hope
you have people in your agency that understand family farm
agriculture. Otherwise, I am telling you we will see a mass
exodus off the land. It will hurt our security in this country.
It is critically important.
The last thing, and then I will give up the mic. When I go
around and talk to folks in Montana--agriculture is the number
one industry--they say one thing to me, the first thing out of
their mouth, when we talk about reauthorizing the farm program,
``Do not screw up crop insurance. It is our safety net. It will
put us out of business.'' And I am talking about the little
guys that are telling me that. OK? Thank you.
Mr. Mulvaney. Thank you, sir.
Chairman Crapo. Senator Perdue.
Senator Perdue. Director, thank you for being here today.
You get double duty, as we have talked about before. I want to
focus on a couple of things.
First, you know, the characterization of the creation of
the CFPB is just astounding to me because people talk about it
since 2008 forward, the cause and the need for it. It actually
started in 1998 when that Administration decided that
homeownership should go up from the low 60s to the mid-70s, and
it did over a few years. The problem with that, to do that they
created things like no-income-verification loans, low-income-
verification loans, and the documentation went down and people
took advantage of that. So it is a much more complicated issue.
My concern today is that it is the only regulatory body I
can find that has no oversight by the U.S. Congress.
Let me ask you a question directly. Are there any
responsibilities the Consumer Financial Protection Bureau has
today that were not already under the purview of the OCC, FDIC,
Federal Reserve, and the FTC?
Mr. Mulvaney. I think there are two. I think we alone have
some additional scope under the UDAAP statutes that nobody else
has, and I think we are the only ones who are explicitly
charged with promulgating rules and regulations on fair debt
collection practices. But other than that, the answer to your
question is no.
Senator Perdue. In your opinion, do those two needs, those
two charges, do they justify being outside the purview and the
oversight of the United States Congress?
Mr. Mulvaney. No. You could protect consumers without me
being here.
Senator Perdue. We already have at least four Federal
agencies who are charged with consumer financial protection. Is
that correct?
Mr. Mulvaney. I think it is at least four, yes, sir.
Senator Perdue. Now, the next thing is--there are at least
four. These are the four major ones. The next question I have--
and I get questions about this all the time. When I tell people
what is being collected, they are really apoplectic. I just got
back from China and talked to two of the largest market cap
companies in the world, Tencent and Alibaba, and over there
they are collecting data, and the customers just assume that
the Federal Government has access to their data. American
citizens do not have that assumption. We had Equifax in here a
few months ago and grilling their CEO over the exposure, and
rightfully so, of Social Security numbers. But your agency
today, prior to your taking this responsibility, collects--has
the right to collect every credit card transaction, every debit
card transaction, every car loan application, and every home
loan application package. Is that generally correct?
Mr. Mulvaney. My understanding is that, yes, we do have the
right to collect that data.
Senator Perdue. So the question then is: How is that
stored? Where is it stored? Are there third parties? Have you
been hacked? Can you provide a report to this Committee with
regard to that data? Have there been any breaches to your
knowledge before you got there and since you have been
Director?
Mr. Mulvaney. We have been able to, to your point,
Senator--and I want to be careful about what I say, and I would
be happy to talk about this more in private. But we have been
able to document about 200-odd--I think 240--lapses in our data
security.
Senator Perdue. Lapses? Is that a breach?
Mr. Mulvaney. I think data got out that should not have
gotten out.
Senator Perdue. So they call that ``exfiltration,'' right?
That is when data gets exfiltrated out of your control, and we
do not know who--do we know who----
Mr. Mulvaney. I think in that circumstance we put up stuff
that we should not have put up.
Senator Perdue. OK.
Mr. Mulvaney. There are another 800 lapses that we suspect
but have not been able to confirm.
Senator Perdue. So 800 potential exfiltrations so far, and
this could be not just Social Security numbers. This could be
my personal bank account. Is that correct?
Mr. Mulvaney. It could be a lot of different things, yes,
sir, including those.
Senator Perdue. But every single factor that I have as an
individual in the United States, every single financial factor
can be reviewed and can be collected and can be exposed by the
CFPB. Is that correct?
Mr. Mulvaney. Everything that we keep is subject to being
lost, yes, sir.
Senator Perdue. Thank you. Has any of that information been
lost?
Mr. Mulvaney. I do not want to say anything in public. I
would be more than happy to talk to all of you about what I
have talked with the IG about, and I think it actually does
more harm than good to mention it in a public setting.
Senator Perdue. Agreed. Mr. Chairman, I would propose that
we have a follow-up meeting. You are not obligated to do that,
I understand, under this----
Mr. Mulvaney. I am happy to do it.
Senator Perdue. But I would love to request a classified
conversation about this, because I am absolutely deathly
concerned about the exposure of our data in this rogue agency
that has no responsibility to this Congress about the security
of financial information that nobody in my State really
understands that they are collecting. I am very concerned about
that, and I have seen the other side just recently in China
where, if we decide to go in that direction, we have got the
rogue agency here that will absolutely do that. So I am very
concerned about the data collection.
Tell me about the third-party people who are storing this
data today.
Mr. Mulvaney. Senator, I would have to get back to you.
Senator Perdue. Would you, please?
Mr. Mulvaney. I was under the impression we kept most of
our own, but I have just been told some of our data is kept by
third parties.
Senator Perdue. I know that for a fact.
Mr. Mulvaney. OK.
Senator Perdue. I just do not know who.
Mr. Mulvaney. I would be happy to find out and let you
know.
Senator Perdue. To me, I am very concerned about that. We
went through laborious questioning of one company, an
individual corporation, about the collection of Social Security
numbers. And yet I am talking about an agency here that has
every single financial fact about every single United States
citizen, potentially, and we have no control over that.
Mr. Mulvaney. We have what is called ``loan level data,''
which is fairly detailed.
Senator Perdue. It is very detailed.
Mr. Mulvaney. Yes.
Senator Perdue. And by loan level, you mean it goes all the
way to the second decimal place. Is that correct?
Mr. Mulvaney. Loan level, but, yes, so when you put it on a
loan application, we know about it.
Senator Perdue. Now, what is included--I am sorry. I am out
of time. But what is included in a home mortgage application is
pretty much every financial fact about an individual. Is that
correct?
Mr. Mulvaney. We like to collect a lot of information about
you from institutions when you take a loan.
Senator Perdue. So how does that information help the
agency protect me from, what do we call it, predatory lenders?
Mr. Mulvaney. We share your concerns, which is one of the
reasons we have already changed our data collection and are
continuing to work on trying to----
Senator Perdue. Would you provide us an update on that?
Mr. Mulvaney. I would be more than happy to. In fact, I
think I mentioned we have already commissioned a report, which
we will be sharing with you.
Senator Perdue. Thank you, sir.
Thank you, Mr. Chairman.
Chairman Crapo. Senator Warner.
Senator Warner. Thank you, Mr. Chairman.
I respectfully have to disagree with my colleague from
Georgia. Having lived through the crisis, having been here and
seen the meltdown, I think it was absolutely appropriate to
create this agency. I recall that there were proposals made to
make this a more traditional agency, and, frankly, the majority
at that point did not want to do it that way, so it was put
within the structure that was created, really in many ways
based upon the majority's wishes. And candidly, Mr. Mulvaney, I
think--I do not know if you do not know the facts or you are
not understanding fully data security, but the information that
the CFPB collects is information on a macro level but does not
have personalized individual indicators. It is anonymous. But
to be able to show patterns of behavior is part of the goal to
see if there are inappropriate practices. Where there is
individual data collected on an individual basis--and there
does not seem to be the same kind of concern--is on a bank
examination, an OCC, a Fed, an FDIC, where you actually go in
and look at the individual person's account by name. The
information that the CFPB collects is on a macro basis to see
trends so that we can identify--and I am very anxious to have
this in a full-scale hearing, Mr. Chairman, to get into data
security issues, because I think what happened with Equifax is
a complete reason why we need a CFPB, a company that was so
sloppy with personalized information, 147 million Americans'
data exposed. The company was so sloppy it was unwilling to
even put in place a known patch that the software vendor had
put out in place, and then in their aftereffects, put out a
website that was full of additional flaws. So if there was ever
a case for a need of a CFPB, it is Equifax, and, candidly, I
have been disappointed that your agency has not taken more
aggressive steps to make sure that the Equifax disaster does
not happen again.
But I have got a specific separate question. I want to talk
to you about the payday lending rule. Now, I think the payday
lending rule's purpose is pretty simple, and I think actually
most Americans, regardless of side, would agree on this, that
lenders should figure out up front whether a borrower is able
to pay back a loan and to make sure that consumers do not get
caught up in this revolving cycle of debt by folks that do not
have the same kind of regulatory oversight that our traditional
lending institutions do.
Now, you have been in this job a few months, acting in this
job. Did you order the Bureau to engage in a rulemaking process
to reconsider the rule on the payday lending?
Mr. Mulvaney. Yes, sir.
Senator Warner. And how would revoking the rule or changing
it help consumers, particularly consumers who are living
paycheck to paycheck?
Mr. Mulvaney. Senator, I do not automatically conclude that
making an indication to revisit the rule assumes that we will
be revoking the rule or even changing the rule. I have the
right under the statute to revisit the rules, which I am doing,
but we have not arrived at any preconceived notions of
outcomes. That would violate the Administrative Procedure Act,
which we have not done.
Senator Warner. But, sir, my understanding is this
rulemaking took a number of years. It was a subject of a great
deal of scrutiny. I believe there was industry input as well as
consumer input. And I guess I really wonder why in your first
few months of coming into this acting role that this would rise
to the top of a priority that would say we need to relook at
the practices of payday lenders, which I think most folks would
agree is a last result--last resort financial tool and one that
was absolutely appropriate for this Bureau to take on.
Mr. Mulvaney. Again, I think it was appropriate for it to
take on, although I think you could make the argument that the
statute simply says you have to supervise this industry, which
may not include regulating. Different story for another day
perhaps. But why was it at the top of the list? Because it was
the last thing the previous Director did on his way out the
door. There was a bunch of public criticism or questions as to
whether or not it had been rushed. So for a variety of reasons,
I thought it was entirely appropriate in my role as Acting
Director to do that the very first thing. In fact, I think I
did it the first or second day I was there.
Senator Warner. Well, Mr. Mulvaney, I think there was a
great deal of work that went into it, and I think the previous
Director took those actions because of an ongoing need, a need
that people on both sides of the aisle had discussed for a long
time. I was disappointed you took that as your first action,
and I would look forward--my time is up, but I think it is very
important, Mr. Chairman, on these questions of data security,
on these questions of how and which institutions collect data
and whether that data is actually individualized or anonymous,
that we get the facts out and we tell folks the truth about the
process that it has engaged.
Thank you.
Chairman Crapo. Thank you.
Senator Heller.
Senator Heller. Mr. Chairman, thank you. And to the
Director, thank you very much for taking the time to be here
today. I know you wear a couple of different hats. In your
particular position, I appreciate all your hard work and
efforts.
As you know, Director, there are things you and I agree on,
a lot of things that you and I agree on. There are some things
that we do disagree on, and I would probably like to touch on
both of those, if you do not mind.
Mr. Mulvaney. You are not going to talk about Yucca, are
you?
Senator Heller. You read my mind. You read my mind. But I
do want to begin by applauding your efforts to cut the waste
out of CFPB and your efforts in that behalf. For a State like
Nevada that has grown as quickly as it has, and the financial
institutions that are now finally starting to expand after new
banking rules, this accountability and transparency of the CFPB
is, I believe, long term going to have a very positive effect
on my State. So that is where we agree.
Let us talk for a minute, put your other hat on as the
Budget Director, and talk a little bit about the issue that you
brought up. Let me ask you this: Do you believe that Yucca
Mountain is an unsafe, ill-conceived proposal?
Mr. Mulvaney. My immediate reaction to that is no. The more
educated answer is probably to say all I asked for in the
budget was a continuation of the certification process so that
we could answer that question as best as we can.
Senator Heller. Do you know how long this certification
process has been going on?
Mr. Mulvaney. All I know is that--and, again, I am almost
taking off my OMB hat and putting on my old U.S. House of
Representatives hat the folks in my State have been paying for
it for about 40 years.
Senator Heller. Yes, at least 30 or 40 years. You know, in
2017, as the Budget Director, you put in the application
process money--I cannot remember, $120, $130 million.
Mr. Mulvaney. That sounds about right, yes, sir.
Senator Heller. And I took it out.
Mr. Mulvaney. Yes, you did.
Senator Heller. Then you put it in in 2018.
Mr. Mulvaney. Yes, I did.
Senator Heller. And I took it out.
Mr. Mulvaney. Yes, sir.
Senator Heller. Are you going to put it back in in 2019?
Mr. Mulvaney. Obviously, we have not started the 2019
budget, Senator. I look forward to working with you on it. I do
not know if I have had my mind changed about it yet, but I know
that you have not changed yours either.
Senator Heller. If you do, I will take it out. All right? I
will give you a heads-up.
Mr. Mulvaney. And that is how it works.
Senator Heller. All right. You have said yourself that the
reason that the proposal is in there to restart the licensing
activity is yours and your decision alone. I think you have
been quoted as saying that. Is that accurate?
Mr. Mulvaney. My decision alone? No. I remember meeting
with Secretary Perry on this a couple different times, so I do
not know if that is an accurate representation.
Senator Heller. OK. Over the past 30 years, the Federal
Government has wasted billions of dollars on this proposal.
According to the official DOE cost estimates, in 2008 close to
$15 billion has already been spent on the project before it was
suspended. Another $82 billion would be needed to license,
construct, operate the repository through closure, for a total
cost of approximately $97 billion. Now, that was in 2008
dollars. I would guess that, if recalculated, those amounts
would be probably 15 to 20 percent higher. Would you disagree
with that?
Mr. Mulvaney. It would certainly be higher. I do not know
if I could do the net present value or time value of money
analysis right now. But, yes, they are going to be higher.
Senator Heller. Knowing that Yucca has not and will not
ever see the light of day, do you think it is fiscally
responsible to continue to seek hundreds of millions of dollars
for this unsafe and ill-conceived proposal?
Mr. Mulvaney. Senator, let me see if we can agree on
something, which is you know what is driving it, which is that
we have nuclear power plants all over the country, including in
my home State, that are filled to the brim with the waste, and
we promised those folks that if they paid a tax over the course
of the last several decades, we would put it someplace. So
maybe we could work together. If Yucca is not the answer, let
us work together on finding an answer, because the temporary
fix we have now is fraught with risk.
Senator Heller. Are you familiar with a proposal in Texas
for a repository for this purpose?
Mr. Mulvaney. Yes, the West Texas something. I remember a
little bit about that from when I was in the House.
Senator Heller. Senator Cornyn has spoken of this, and I
would urge that you have a conversation with him and the desire
of Texas to actually take this waste.
Are you also familiar with a proposal in New Mexico to do
the same thing?
Mr. Mulvaney. Again, generally, yes, sir.
Senator Heller. OK.
Mr. Mulvaney. And I am open-minded to other resolutions. I
am not trying to beat up on Nevada.
Senator Heller. I know.
Mr. Mulvaney. I am trying to figure out a way to put this
stuff someplace safe.
Senator Heller. Well, we feel like we are being beat up on.
Mr. Mulvaney. Fair enough.
Senator Heller. Just so that you know. And you talk about
your constituents, those who have paid utility bills and have
actually had to fund this for three or four decades. You know
that the amount of money that is in that account right now
would not cover even in current dollars the $97 billion it
would take to open this thing up to fruition?
Mr. Mulvaney. I think that is accurate, yes, sir.
Senator Heller. OK. Mr. Chairman, I have run out of time,
but I do want to thank again the Director of taking time for
being here, listening to my questions and concerns, and let me
just reiterate, if that proposal is back in there in 2019, I am
going to do everything I can to reverse those funds and get
them back out.
Mr. Mulvaney. I hear you, Senator. Thank you very much.
Senator Heller. Thank you.
Chairman Crapo. Senator Warren.
Senator Warren. Thank you, Mr. Chairman.
So before the 2008 crash, mortgage lenders ripped off
families, and regulators did almost nothing to stop it. The
result was a disaster: 4 million people were forced out of
their homes, more than 8 million people lost their jobs, and
2.5 million businesses were shut down.
So in 2010, Congress established the CFPB to make sure that
that kind of crisis did not happen again, and a lot of people
supported it: 60 Senators, 237 Representatives, Democrats and
Republicans, voted for it.
But you never supported the consumer watchdog, Mr.
Mulvaney. You got to Congress after the CFPB was created. But
in 2012, you voted in favor of a Republican budget that called
for eliminating the agency entirely. Is that right?
Mr. Mulvaney. I do not have a specific recollection, but
that sounds familiar to me, yes, ma'am.
Senator Warren. Sounds familiar, OK. But that was only the
beginning. You also voted for Republican budgets that
eliminated the CFPB in 2013, 2014, and 2015. Does that sound
right?
Mr. Mulvaney. Again, yes, ma'am. There were occasional
Republican budgets I did not vote for. I do not know what was
in them. But, generally speaking, I see your point, yes, ma'am.
Senator Warren. All right. And in 2015, you also supported
a stand-alone bill that would have killed off the CFPB. Is that
right?
Mr. Mulvaney. I think that is correct. I think I was a
cosponsor of that bill.
Senator Warren. OK. So I want to take a look at what would
have happened if you had gotten your wish and the CFPB had been
abolished as early as 2012. So in 2015, the CFPB went after
Citigroup for cheating its credit card customers. CFPB forced
Citigroup to return $700 million to people that it cheated.
Now, if you had gotten your way and the CFPB had been
abolished in 2012, that $700 million would be in Citigroup's
bank account right now instead of in the pockets of thousands
of Americans. Right?
Mr. Mulvaney. Not necessarily. The Office of the
Comptroller of the Currency also has jurisdiction over those
actions and could have brought the same actions.
Senator Warren. Oh, I see. They could have brought the same
action. That is the same agency that did not bring those
actions before the crash of 2008 and that did not bring this
particular case. But, you know, let us not kid ourselves. Let
us not pretend like you hope that some other agency would do
that work, Mr. Mulvaney. I have a list of 11 bills that you
supported during your time in Congress that would have made it
harder for States and other Federal agencies to protect
consumers and to hold cheaters accountable. I would like to
submit it for the record.
Chairman Crapo. Without objection.
Senator Warren. Thank you.
Senator Warren. So let us look at another example. In 2016,
the CFPB went after a for-profit college chain called
``Bridgepoint'' that scammed students with deceptive loans. The
CFPB returned nearly $25 million to those students. If the CFPB
had not existed, that $25 million would still be sitting at
Bridgepoint instead of with working families.
Let me do one more. In 2017, the CFPB shut down a company
called ``Top Notch Funding,'' which was scamming 9/11 first
responders out of the taxpayer money they got to treat medical
problems developed after 9/11.
Mr. Mulvaney, if the CFPB had been abolished like you
wanted, Top Notch Funding might still be out there stealing
from 9/11 first responders, right?
Mr. Mulvaney. They might be, or the FTC might have enforced
the law.
Senator Warren. Or some other agency might magically have
intervened, when they did not.
Mr. Mulvaney. Why would it be more magic to have the FTC do
it than the Bureau?
Senator Warren. They have a history of not doing this.
You know, let us do one more example. In 2013, CFPB went
after DFS and US Bank and recovered $6.5 million for 50,000
active-duty members of the military who were targeted for scam
car loans. Those 50,000 active-duty military would have been
out of luck if the CFPB had been abolished in 2012, just like
you wanted. Right, Mr. Mulvaney?
Mr. Mulvaney. Again, the OCC has concurrent jurisdiction
over this issue.
Senator Warren. Yes, they have concurrent jurisdiction,
which they did not use.
So I just want to point out one of those 50,000 active-duty
military members is Ari Cabot-Booras from Hull, Massachusetts.
His father, Harry, is in the audience today, right back over
there. When Ari was a 20-year-old soldier, he had good credit,
but he was pushed into a car loan that was a scam. When he
deployed to Iraq, his Dad discovered that the loan and the fees
were taking up more than 60 percent of Ari's military paycheck
every month. Mr. Booras alerted the CFPB. The agency stopped
the scam, and Ari got some money back.
You know, in Congress, you repeatedly tried to kill the
consumer agency. Since you got to the agency, you have
announced that you will not use the exact enforcement tool that
CFPB used to stop every single scam that I have mentioned
today. You have taken
obvious joy in talking about how the agency will help banks a
lot more than it will help consumers and how upset this must
make me.
But here is what you do not get, Mr. Mulvaney. This is not
about me. This is about active-duty military. It is about first
responders and students and seniors and families and Ari and
his Dad and millions of other people who need someone on their
side when consumers get cheated. You are hurting real people to
score cheap political points.
Thank you, Mr. Chairman.
Chairman Crapo. Senator Cotton.
Senator Cotton. Director Mulvaney, welcome to the
Committee. How does it feel to lead an unconstitutional agency?
Mr. Mulvaney. Senator, I have given that one a lot of
thought. I am not sure that I have the discretion to consider
this agency to be unconstitutional. I work there. I have been
appointed by the President to be the Acting Director, and I
think the system starts to break down if people who work at
places make their own conclusions about constitutionality. If
the President tells me it is unconstitutional, I will pay
attention. I am assuming it is constitutional every single day
when I go in. But I see your point and it is well taken.
Senator Cotton. That is a reasonable response. As you know,
a three-judge panel of the DC Circuit had held it to be
unconstitutional for a variety of reasons.
Mr. Mulvaney. Yes, sir.
Senator Cotton. Combining the single Director structure as
opposed to a five-member commission, its independence from the
congressional appropriations process, and its independence from
the President's Executive authority. That court, the whole
court, just reversed that decision en banc after it was packed
when Senator Reid broke the rules of the Senate in 2013 to fill
the DC Circuit. Of those two opinions, which one do you find
more persuasive--the DC Circuit panel or the DC Circuit en banc
opinion?
Mr. Mulvaney. Having worked there, having seen the
authority and the discretion that is given to the sole
Director, I think that the circuit decision was well reasoned.
Senator Cotton. Let us turn then to your report. You
mentioned a few changes, two of which are funding the Bureau
through congressional appropriations.
Mr. Mulvaney. Yes, sir.
Senator Cotton. We have addressed one of those issues.
Another one is ensuring that the Director will answer to the
President in the exercise of his Executive authority. But it
does not mention, as far as I can tell, the single Director
structure as opposed to having a five-member commission. Could
you give me your opinion on that question?
Mr. Mulvaney. Thank you for that, yes, sir, and we
absolutely support that. The four that we put in the report
this year, we tried to have a constant theme, and the constant
theme was accountability and transparency. And while we think
that a five-person commission could help smooth out some of the
variations from one Director to another, Mr. Cordray and I are
very different people, and we plan to run the agency very
differently. And a five-person commission might sort of bring
some stability. We tried to focus these four specifics on your
oversight and on the accountability that we have.
Senator Cotton. But from your experiences, you believe that
the Bureau would operate in a more effective manner for
taxpayers and consumers alike if it had a five-member
commission leading it as opposed to a sole Director?
Mr. Mulvaney. I do not know if any Director of any
bureaucracy has ever come to you and said, ``Please take my
power away,'' but that is what I am doing. And to the extent
you can do that, I think we will all be well served by it.
Senator Cotton. So let me ask you now to draw on your
experience as the Director of the Office of Management and
Budget, which oversees the entire Federal Government. There are
many examples of five-member commissions, to include in the
financial services world the SEC, or in your world, in consumer
protection, like the FTC. From what you have seen and the way
those agencies operate, is there any reason to believe that
five-member structure that they have is not suitable for the
Consumer Financial Protection Bureau?
Mr. Mulvaney. None whatsoever.
Senator Cotton. Thank you. Let us turn to the conversation
we had earlier about your compensation for your employees. I
believe you said that your payroll will be $16 million less
than your predecessor's?
Mr. Mulvaney. Yes, sir.
Senator Cotton. So $16 million less. Do you know what the
average compensation numbers are compared to your predecessor?
Mr. Mulvaney. Total compensation average, $195,000 a year.
We have 1,627 employees.
Senator Cotton. How does that compare to Director Cordray's
average compensation?
Mr. Mulvaney. It is the same. He is the one who set most of
this up. I have three departments where the average
compensation is about $250,000. I have a dozen employees that
are above $230,000. And I have another dozen after that that
are above what you all earn.
Senator Cotton. So the CFPB has had pretty high employee
salaries going back to its very beginning?
Mr. Mulvaney. Oh, yes. I think it was set up that way.
Senator Cotton. Indeed, it was set up in that fashion. I
have to say I do not remember any Democratic Member of this
Committee ever asking Director Cordray about the salaries that
he paid his employees.
Chairman Crapo, you have been around for a long time. Do
you remember questions like that?
Chairman Crapo. I do not recall one.
Senator Cotton. What about Senator Shelby?
Chairman Crapo. He is engaged in a conversation.
Senator Cotton. He was the Chairman. I do not think I
remember any questions from them either.
Let me ask you a question about one specific employee:
Leandra English. What is she up to today?
Mr. Mulvaney. I honestly do not know.
Senator Cotton. She purports to be the Acting Director,
correct?
Mr. Mulvaney. There is a lawsuit that she is maintaining
that asserts that, yes, sir.
Senator Cotton. And I think that actually is in court
today. How much does she earn?
Mr. Mulvaney. I honestly do not know; $212,000 is her base
compensation.
Senator Cotton. And you do not know what she does?
Mr. Mulvaney. I am trying to be careful here, Senator,
because she is suing me. But I have never met her.
Senator Cotton. So she is earning $212,000, claiming to be
the Director, running around, and we have no idea what she does
all day long.
Mr. Mulvaney. You said it better than I probably could.
Senator Cotton. If this Bureau was accountable to the
President and had five members and had congressional oversight
of its appropriations, do you think maybe we would avoid a
situation like this?
Mr. Mulvaney. Well, I certainly think someone would have
been able to ask the question.
Senator Cotton. I have to say I am somewhat amused by the
tone of this morning's hearing. Again, the roles seem to be
reversed from what they were for the first several years of
this Bureau. The Democrats seem to have been hoisted on their
own petard the way this Bureau was structured in the Dodd-Frank
bill. I think, therefore, we should all take a lesson from what
we have done here and just adopt some of these prudent
amendments to its structure. If it was more like the SEC or the
CFTC or the FTC or the FCC----
Mr. Mulvaney. All of which are appropriated.
Senator Cotton. All of which are appropriated and have
five-member structures and have some greater degree of
accountability, we would not see this wild swing in the opinion
that Congress had toward the Bureau and what consumers and
businesses and other people can expect from the Bureau.
Thank you, Mr. Director. My time has expired.
Mr. Mulvaney. Thank you, Senator.
Chairman Crapo. Senator Jones.
Senator Jones. Thank you, Mr. Chairman. And thank you,
Director Mulvaney, for being here today.
I would like to revisit just a moment the questions from
Senator Brown and Senator Warner regarding payday lending
because that is such an important issue in my State. There was
a reason why President Obama in 2015 came to Alabama. Senator
Brown's State may be the worst, but we are right up there. In
fact, President Obama mentioned in his speech that there were
four times as many payday lenders in Alabama as there are
McDonald's hamburgers. That is unconscionable. For every one
person that takes out a payday loan, they end up taking an
average of eight. About a quarter of a million people,
Alabamans, in 1 year took out those loans, and they ended up
being over 2 million loans made that same year.
I am struck--this is an important issue for State
lawmakers, for civic leaders. It to me seems bipartisan. It is
personal. As I watch the members of my community, it is very
important to the faith community in Alabama. In fact, my home
church, Canterbury Methodist, took the lead in some--you know,
kind of lobbying for some changes.
My concern about the removal of the rule--I do not disagree
with you that you have the right to take another look, to redo
the rule, and I initially took you at your word that you had no
preconceived notions about where that ended up. And then you
made a comment that you are not sure that supervising means
regulating, and that troubled me a lot, because I can watch my
children and supervise them at a playground, but unless I can
regulate them and they have no consequences for bad behavior, I
do not know what the difference is.
So I would like to ask you just your basic philosophy about
the payday lending industry and whether or not your
organization will, in fact, commit to some pretty strong
Federal rules to make sure that they are not completely ripping
off customers in creating this spiral of debt.
Mr. Mulvaney. And I think you have actually hit the nail on
the head there, Senator, which is that I think we might both
agree that the best way to address this would be through
legislation, which was what my State did when I lived there. I
imagine your State either has done or certainly has the ability
to do it.
Senator Jones. They have the ability. I am not sure they
have the political will. I think that is the problem when you
have got payday lenders who are spending tens and tens of
thousands of dollars, and the consumers who are taking out
these loans are taking out loans because they cannot make ends
meet. It is not emergencies. They cannot match the dollar-for-
dollar payday lenders that are giving to the legislatures
around the country.
Mr. Mulvaney. I guess it comes down to who do you trust
more, your hometown legislature or the U.S. Congress.
Personally, I have a great deal of faith in my State
legislature.
Senator Jones. Does that mean that your notion is that you
are likely to have a payday lending rule in favor of letting
legislatures----
Mr. Mulvaney. We are going to follow the act. We are not
going at this with any preconceived notions. We have already
made a request for notice and comment. We are going to go
through that process. We are going to go by the book. It may be
possible, it may be that I look at the exact same type of data
that Mr. Cordray looked at and draw a different conclusion.
Senator Jones. I agree with that.
Mr. Mulvaney. That is the discretion that was given in the
Dodd-Frank Wall Street Reform and Consumer Protection Act, to
the Director's position, and I encourage you to consider
whether or not you want to change that. But keep in mind, we do
not have the ability to make law. That is not what we are
supposed to do in the executive branch. We are supposed to
enforce the laws that you pass. And I would encourage you that
the best way to address the problem that you perceive is to
pass legislation and not rely on me to do it for you.
Senator Jones. All right. So thank you very much for that.
I would like to also get back--and I apologize for doing
this because I am going to ask you to kind of put both your
hats on again as well.
Mr. Mulvaney. Yes, sir.
Senator Jones. I know that is maybe a little bit
uncomfortable. It is a little bit bizarre to me that you have
done that.
Mr. Mulvaney. I get used to it.
Senator Jones. But I would like to ask you about the equal
pay. Earlier on, as OMB Director, you unilaterally withdrew
things and rules considering equal pay and collection of data.
This is an important issue for folks in Alabama. The Lilly
Ledbetter Fair Pay Act was named after an Alabama native. You
were asked about this in the House yesterday, why you halted a
rule that would have required large employers to collect and
report aggregate pay data that was designed to help detect
trends in unequal pay. Your answers, with all due respect, were
a little bit flip to me that you just did not give it much
thought, and I can tell you, Mr. Director, that there are
millions of women, there are millions of African Americans that
think about this issue every day. So I basically have two
questions for you, one as OMB Director and the other as
Director of the CFPB.
Number one is: Are you going to revisit the rule concerning
equal pay and the collection of data concerning equal pay.
And the second is: I tend to see that attitude about the
noncollection of that data involving major corporations of over
100 people in the workplace in the same way as I see, as
Senator Brown said, about putting consumers first. In other
words, if you are not wanting to collect data about
discrimination in the workplace, how can we be assured that you
are going to in your role put consumers first in your role as
Director of CFPB?
Mr. Mulvaney. Thank you for that, Senator, and I apologize
if my answer came across as flip. What I remember saying
yesterday was I am simply not familiar with it because I had
not been asked about it in a while. I think this is an action
that took place last September, and I have been in front of
several congressional hearings and had press conferences, and
nobody asked me. So I simply was not as familiar with it. Since
yesterday, I have not had a chance to go back and get a little
bit more up to speed on it.
Senator Jones. Fair enough.
Mr. Mulvaney. And keep in mind the reason it comes to OIRA,
which is part of OMB, is because of the Paperwork Reduction
Act, and one of the things we noticed when it went through the
process on paperwork reduction is that we were increasing the
data fields from 180 to 3,660, which is a dramatic increase.
We also found when we drilled down into it, Senator, that
the data was unlikely to yield information that was useful. I
will give you the classic example. Under health care we were
treating the accountants and the janitors and the doctors as
the same. If you were an accountant making X in a hospital and
you were a doctor making Y in a hospital, you would be lumped
together, and I am not sure how usable that data would actually
be as to whether or not there was equal pay for equal work. So
there were a lot of difficulties with it, which is why we did
what we did.
So, again, it is not that it is not important to us. It is
just we are following the law, and the Paperwork Reduction Act
tells us to do that, and I think we did it in an acceptable and
defensible fashion.
Senator Jones. All right. I think I am out of time, Mr.
Chairman. Thank you.
Chairman Crapo. Senator Kennedy.
Senator Kennedy. Thank you, Mr. Chairman. Mr. Director, how
are you, sir?
Mr. Mulvaney. Senator, I am hanging in there. I hope you
are.
Senator Kennedy. I am. I know you are familiar with the way
our credit reporting agencies work. They collect information,
financial information on all of us and give us a score, and
then they sell that score and the report to folks who are
considering loaning us money.
Senator Schatz and I have a bill. It is a pretty simple
bill, really, but I think it will be good for the American
people. Sometimes the reporting agencies get that information
wrong, but since we are the product, not the customer, they
have no real obligation to listen to us when you call them up
and say, ``Hey, you got my information wrong, man, and I cannot
get my loan.''
So Senator Schatz and I have a bill that is going to ask
our reporting agencies to set up a portal so consumers can go
in there and say, ``Hey, you got my information wrong. Let me
explain to you why.''
I am not asking you to commit to supporting that bill, but
we would like to be able to talk with folks in your office to
make sure that we get the regulatory part right. Would you be
willing to----
Mr. Mulvaney. I am a little bit familiar with it. We do
look forward to working with you on it. I think there are some
good ideas there.
Senator Kennedy. Thank you for that.
I want to take you back a few years. It is true, is it not,
that in 2008 and 2009, the American taxpayer--I am talking
about the people who get up every day and go to work and obey
the law and pay their taxes and try to do the right thing by
their kids. The American taxpayer had to give one of our large
banks, Citigroup, $476.2 billion in loans and guarantees under
the TARP program. Do you remember that?
Mr. Mulvaney. I am not familiar with the exact number, but
I am familiar with the bailouts, yes, sir.
Senator Kennedy. OK. It is also true, is it not, that the
American taxpayer had to bail out Bank of America to the tune
of $120 billion taxpayer dollars. Does that sound about right?
Mr. Mulvaney. It would not surprise me.
Senator Kennedy. Well, our friends at Citigroup and Bank of
America apparently are not busy enough with their banking
business. They have decided that they are going to set policy
for the Second Amendment, and Citigroup has announced that it
will no longer do business with any customer who sells lawful
weapons to someone under the age of 21. Citigroup has announced
that it will not sell banking services to anybody who sells
bump stocks or large-capacity magazines. And I understand that
Bank of America is about to do the same thing.
So it looks like we are headed toward red banks and blue
banks. Do you think that is appropriate?
Mr. Mulvaney. I think it is troubling, Senator. I do not
know if there is a role for the Bureau in addressing it. I do
not bank with either of those institutions, and I think as long
as I have got the ability to make that decision, then it is up
to consumers to adequately defend themselves. I think when you
start to run into the area of possible Government oversight is
when that choice is not a real choice, and you run afoul of the
antitrust laws and so forth. But I would be personally slow to
want to get my Bureau involved in telling companies what they
must provide when it comes to matters like that.
Senator Kennedy. Well, let us suppose tomorrow that
Citigroup decided that it would no longer provide banking
services to abortion providers. Do you think that would be
appropriate?
Mr. Mulvaney. I think that is completely within their
discretion.
Senator Kennedy. Do you think it is appropriate?
Mr. Mulvaney. Personally? I mean, to take my bureaucrat hat
off, it would not bother me at all. In fact, I might be more
likely to bank at an institution that did not contribute to
that.
Senator Kennedy. OK. Suppose that Citigroup decided it was
going to no longer offer banking services to people who support
the pro-life position?
Mr. Mulvaney. Again, as long as I know about that and have
the ability to make real decisions, I do not see a role for
Government intervention in the marketplace.
Senator Kennedy. Has anybody filed a complaint about
Citigroup's thoughts and actions with respect to the Second
Amendment?
Mr. Mulvaney. That is a great question, and I do not think
we have searched our consumer complaint database recently for
that. But I would be happy to take a look and see if a
complaint has been submitted.
Senator Kennedy. Well, I am going to file a complaint.
Mr. Mulvaney. OK.
Senator Kennedy. OK? Against Citigroup and Bank of America.
Mr. Mulvaney. We would be happy to work with you on that,
on searching our database, because it is publicly available
data.
Senator Kennedy. I am going to file a complaint because
they are hurting my people for exercising their constitutional
rights, and I hope you will--I do not want any special
treatment, but I would like my complaint considered.
Mr. Mulvaney. Absolutely.
Senator Kennedy. Because I find their conduct offensive.
Mr. Mulvaney. Thank you, Senator.
Senator Kennedy. Thank you, Mr. Director. Thanks for your
good work. I think you are doing a great job. I do not care
what Senator Warren says.
Chairman Crapo. Senator Menendez.
Senator Menendez. Mr. Mulvaney, in December the Bureau
announced that it was eliminating penalties to lenders for
errors in mortgage reporting and that it plans to reconsider
its Home Mortgage Disclosure Act rule, which could mean
allowing lenders to omit information critical to understanding
lending patterns and policing discriminatory practices. And in
January you reorganized the Office of Fair Lending and Equal
Opportunity, and you stripped the office of its enforcement
powers. This is the office that
Congress--Congress--remember that? I think you started in the
other House, didn't you?
Mr. Mulvaney. I am familiar with it, yes, sir. I have heard
of it.
Senator Menendez. Yes, OK. So Congress charged in the law
with combating predatory lending practices, the very practices
that contributed to the destruction of nearly half of African
American and Latino household wealth during the crisis and
Great Recession. Don't these actions send a clear message to
lenders that the Bureau is pumping the brakes on vigorous
oversight and enforcement of the Federal fair lending laws?
Mr. Mulvaney. Not at all, and I can deal with HMDA
separately, but let me deal with the Office of Fair Lending,
which has several things that it is supposed to do. It does
enforcement and supervision, and it also does education in one
area.
Within the Bureau, the system that I inherited from the
previous Director, actually supervision and enforcement is in
one place, and education is in another. And all I have done is
to move those things into the appropriate category.
Senator Menendez. But it was Congress that said that this
department should do enforcement, not your judgment.
Mr. Mulvaney. Actually, I think you gave me a great deal of
discretion over what they do and what they enforce.
Senator Menendez. Let me tell you what the message has been
that has been received by lenders. In a February memo to its
clients, who include Bank of America and Deutsche Bank, on law
firm said, and I quote:
On January 31st, we witnessed a major concrete change with the
announcement of the Office of Fair Lending and Equal
Opportunity would be
removed from the CFPB's Supervision, Enforcement, and Fair
Lending
Division. The removal of a supervision and enforcement team
focused exclusively on fair lending issues will significantly
reduce the CFPB's enforcement.
So let us be clear. We are not going to stand by while you
thwart the statute and subvert congressional intent, nor will
we be silent while you give winks and nods to lenders that they
will no longer be subject to vigorous review of their
activities under the fair lending laws. We are not going to do
that. And I do not know how you think you can usurp
congressional intent, but it is not going to go unchallenged.
In a January op-ed published in the Wall Street Journal,
you said that the Bureau would no longer be ``pushing the
envelope'' when it comes to enforcement. In the 137 days since
you took over the Bureau, you have not initiated a single new
enforcement action. The scandals and breaches of consumer trust
at Wells Fargo and Equifax demonstrate that consumers need the
CFPB now more than ever. Equifax's egregious failures
compromised the personal information of an astounding 145.5
million consumers. Consumers are understandably concerned about
identity theft and fraud. They are concerned that they will not
be able to get a fair rate the next time they go get a mortgage
or a car loan because Equifax failed them.
In 2017 consumers submitted more complaints to the Bureau
about consumer reporting agencies than any other product or
service, something you said should help guide the Bureau's
actions. But yet yesterday, in testimony before the House, you
reiterated your commitment to scaling back the Bureau's
activities, saying, ``Regulation by enforcement is done. We are
not doing it anymore.''
So, Mr. Mulvaney, does that include eliminating enforcement
actions under the Bureau's authority to prevent unfair,
deceptive, abusive acts and practices?
Mr. Mulvaney. No, sir. Do you know what regulation by
enforcement is?
Senator Menendez. Can you answer my question? I am not here
to answer yours.
Mr. Mulvaney. Regulation by enforcement is where people
find out that you accuse them of breaking the law after you
file a lawsuit against them. That is what I stopped. I believe
you have the right to know what the law is before I sue you for
breaking it. Under previous leadership, Mr. Cordray believed it
was actually OK to change years and years of practice. In fact,
there is a major lawsuit, I think, that is being considered
right now over this exact issue, where there was an entity--I
think it may be from your State, as a matter of fact. In fact,
it is a resident in your State that was acting under the
assumption that HUD guidance that had been in force for decades
was still good law----
Senator Menendez. Well, obviously, rulemaking needs--always
has notification and a process before it----
Mr. Mulvaney. No, it----
Senator Menendez.----goes into effect, but in addition to
enforcement activity, the CFPB has rulemaking authority to
prevent unfair, deceptive, or abusive acts and practices. That
is the primary way that the Bureau can prevent consumer abuses
by consumer reporting agencies like Equifax. And your most
recent regulatory agenda including--you know, does the Bureau's
most recent regulatory agenda include a rulemaking to protect
consumers from failures and abuses by consumer reporting
agencies?
Mr. Mulvaney. I am sorry. Is there a question?
Senator Menendez. Does your agency's most recent regulatory
agenda include a rulemaking to protect consumers from failures
and abuses by consumer reporting agencies?
Mr. Mulvaney. It does. That is in the statute, and I think
my predecessor was there for 5 years and did not do it either.
Senator Menendez. Well, my understanding is that it is not.
So if the Bureau does not intend to use its enforcement or
rulemaking authority to prevent unfair, deceptive, and abusive
practices by companies like Equifax, I do not know how you
intend to hold Equifax accountable and protect consumers from
future catastrophes.
Thank you, Mr. Chairman.
Mr. Mulvaney. We have----
Chairman Crapo. Senator Rounds.
Mr. Mulvaney. Yes, thank you.
Senator Rounds. Thank you, Mr. Chairman.
I want to followup just a little bit on what Senator
Menendez has suggested, but I perhaps would go at it in a
little bit different way, Director. If a United States Senator
or, for that matter, a Member of Congress had a problem with
the way that you were doing your job, under the current
guidelines and layout of the CFPB, what are their options?
Mr. Mulvaney. Very little. In fact, it goes beyond that. If
you have a constituent back home who does not know or does not
like what I have done, there is nothing you can do to help
them.
Senator Rounds. I think that is really the concern that a
lot of us have had, that I think there are some times in
which--as a matter of fact, I think there are a lot of times in
which a Member of Congress should have a way to get a message
across to an agency of the Federal Government. Do you know of
any other Federal agencies that have the autonomy that the CFPB
does to simply do--and in this particular case, I understand
that Senator Menendez is disappointed in the way that he
believes that you should be working on your job. I think a lot
of us on the other side had real frustrations with the way the
previous Director had been doing his job.
Isn't there something within this process that is
absolutely broken when Members of the elected body here and, in
fact, the President of the United States, do not have the
ability to influence the way that this agency is going about
doing or not doing the job that they were supposed to be doing
in the first place?
Mr. Mulvaney. I think it is a dangerous precedent. There is
no question. You asked a question as to whether or not anybody
else has the type of discretion and authority that the Director
of the Bureau of Consumer Financial Protection has, and the
answer is no.
Senator Rounds. I think there might be some opportunities
here for some bipartisan discussions about taking some of that
authority back.
Mr. Mulvaney. Again, I do not know why you do not want to
appropriate my Bureau.
Senator Rounds. Thank you. Let me work in just a little bit
different direction for just a minute. You had mentioned
earlier, Director, and had expressed a concern that while there
are some perhaps classified discussions that should occur with
regard to data breaches, loan level data. There might have been
a misunderstanding as to how much data was included in loan
level data. Could you share with us how much information the
agency, the organization, actually collects?
Mr. Mulvaney. A couple different things, and I can get you
more details on exactly what we do and do not collect. The
ordinary practice is to take things like balances, average
balances, balances at the beginning of the month, balances at
the end of the month, but we know of no limitation on what we
can get. None.
Senator Rounds. So would you be receiving data from a bank
that would include a Social Security number?
Mr. Mulvaney. We could.
Senator Rounds. Would it have loan numbers?
Mr. Mulvaney. In a bank exam context, yes, absolutely, we
get the loan numbers.
Senator Rounds. Would it have account numbers at a bank?
Mr. Mulvaney. The same, yes, sir.
Senator Rounds. Would it have tracking numbers from----
Mr. Mulvaney. That is a good--and, again, I can get you all
the detail on what we actually do collect. I am not familiar
with what we actually go in and take out of every particular
file.
Senator Rounds. Would it be fair to say that in your
discussions with your staff as you come into this agency to try
to gear up, did you ask questions about how much information
and did you have any concern about the amount of data that this
agency was collecting?
Mr. Mulvaney. Again, yesterday I thought it was a
Democratic colleague of mine who said that you do not have to
worry about what you do not keep. So one of the questions is:
Do we actually need the stuff we are asking for? And if we do
not, then why are we asking for it?
Senator Rounds. Do you actually keep it, or do you--and I
understand that there are different ways in which you can
securely obtain, maintain data over a long period of time. Are
there third-party entities that are retaining this on a
contractual basis for the agency?
Mr. Mulvaney. I just asked that question of my staff in
response to an earlier question. I understand that we do farm
some of our data out to third parties.
Senator Rounds. But would it be fair to say that it is
similar to a cloud establishment, basically where there is an
intent to utilize independent third parties that have as their
area of expertise the ability to maintain that data for you?
Mr. Mulvaney. I do not know if it is a cloud-type
structure, but, yes, it would be somebody other than us.
Senator Rounds. Did the----
Mr. Mulvaney. And if they get hacked, then that information
is at risk.
Senator Rounds. You have had a lot of discussion back and
forth today with a lot of folks on either side of the aisle.
Have you had any questions that you looked at so far into this
process and said, ``I needed to clarify something a little bit
more than what I have done so far''? Are there any questions
that have been asked so far that you would like an opportunity
to clarify or correct in terms of material that we have
received so far today?
Mr. Mulvaney. Oh, there is probably a bunch of stuff that I
will find after the hearing. I did want to point out to Mr.
Menendez that I think he tried to make the insinuation that we
were not enforcing the UDAAP statute. That is not true. We are
actually litigating lawsuits right now. There has been a lot of
attention to the fact I have not filed any brand-new lawsuits.
We are litigating 24 or 25 lawsuits right now. We are doing 100
investigations right now. There are a dozen investigations that
have gone into that ``sue or settle'' component that I am
talking about. We are enforcing the law. I want to be perfectly
clear. Do I have criticisms of this Bureau? I absolutely do.
But I am trying to be a good bureaucrat. I never thought I
would say that, but that is my job. And I am trying to enforce
the law vigorously where necessary, and I think we are doing a
good job of it. So I think some of the characterizations that
we do not care about protecting consumers, it is unfortunate
and not accurate.
Senator Rounds. Thank you, Director Mulvaney.
Mr. Mulvaney. Thank you for the opportunity.
Senator Rounds. Thank you, Mr. Chairman.
Chairman Crapo. Thank you.
Senator Van Hollen.
Senator Van Hollen. Thank you, Mr. Chairman. Welcome, Mr.
Director.
Mr. Mulvaney. Mr. Van Hollen, sir.
Senator Van Hollen. I think some of our colleagues may be
surprised to learn that we actually worked together in the
House on some deficit reduction efforts with respect to the
budget.
Mr. Mulvaney. Clearly, you and I were the only ones worried
about it.
Senator Van Hollen. Which is why I wanted to raise a
question with your other hat on. Just yesterday in the Budget
Committee, we had Dr. Hall, the head of CBO, the nonpartisan
Congressional Budget Office, who issued their report finding
that the tax bill that was passed out of this Congress and
signed by the President is going to add $2 trillion, very close
to $2 trillion to the national debt over the next 10 years. Did
you see that report?
Mr. Mulvaney. I know of the report. I have not had a chance
to read it.
Senator Van Hollen. I really urge you to take a look at
their analysis because it directly contradicts the fanciful
theories we heard floating around that somehow the tax cut was
going to pay for itself.
The other thing that we have found, since the beginning of
the year corporations that have gotten these windfall tax
breaks have used $235 billion of that money for stock buybacks.
Are you aware of that phenomenon?
Mr. Mulvaney. I am not familiar with the exact number, but
I am familiar with the reporting generally, yes, sir.
Senator Van Hollen. All right. And stock buybacks are
simply a way of increasing the value of stocks held by CEOs and
executives and stockholders. And during the whole debate, one
of the things we tried to point out was that 35 percent of the
stock owned is actually owned by foreign stockholders, money
being borrowed by the U.S. Government and in the form of stock
buybacks going directly into the pockets of foreigners.
One of the things I found stunning, actually--maybe not
totally surprising, but still the magnitude of it was
stunning--was the CBO report found that when the tax plan has
fully kicked in at the end of the 10-year period, 80 percent of
the income generated from new economic activity is going to go
into the pockets of foreigners, not American workers.
I want you to take a look at that because it certainly does
not sound like putting Americans first to me, and it was a
stunning finding. And I just want to be clear what he said. He
said, yes, the tax bill will generate some new economic
activity, but 10 years from now, 80 percent of the income
generated from that new economic activity into the pockets of
foreigners. Very disturbing finding.
Mr. Mulvaney. Did he explain how that was going to happen?
Senator Van Hollen. I would be happy to go into great
detail. Part of it is the fact that foreigners own a large
share of our stock, but there were other components.
Mr. Mulvaney. I was going to say because 35 percent and 80
percent are different.
Senator Van Hollen. That is true. But that is the
conclusion they reached at the end of the 10-year period, which
I found stunning, and I hope our colleagues will take a look at
it.
Let me ask you a question on payday lending because I want
to pick up on what Senator Jones asked.
Mr. Mulvaney. Sure.
Senator Van Hollen. Because you made this reference during
your response to a question about supervisory versus
regulatory, and then you told Members here that you are going
to look at the same facts and you may reach the same conclusion
with respect to regulation.
Mr. Mulvaney. Or may not.
Senator Van Hollen. But it is a threshold question, right,
is it not, as to whether or not you have the regulatory
authority? So have you concluded--would you agree that you have
the regulatory authority, regardless of what the details of the
regulation may be, you have the regulatory authority with
respect----
Mr. Mulvaney. There have not been any conclusions. I raised
the point to make this point, Senator, which is it would be a
lot clearer if you all would legislate and I would enforce.
Senator Van Hollen. Look, but this is a threshold question.
You must have reached a decision----
Mr. Mulvaney. No, sir.
Senator Van Hollen.----on this threshold question. You are
telling me you have not reached a threshold question about
whether you can do any payday lending regulation?
Mr. Mulvaney. I am looking you in the face. I do not think
I am under oath, but I am looking you in the face under oath
and saying, no, I have not made any predetermination about that
issue.
Senator Van Hollen. So apart from the details of what any
regulation might entail, you say you might not do one, period,
because of the possibility that you claim you do not have the
authority.
Mr. Mulvaney. Senator, I can honestly tell you, I have no
idea what we are going to do in payday.
Senator Van Hollen. Let me just--in terms of protecting
information, Equifax has come up here, and I think we are all
very concerned about confidential data. I do think it is
important to point out that Federal agencies are bound by what
is called the Federal Information Security Act, FISMA. Are you
familiar with that?
Mr. Mulvaney. Yes, sir.
Senator Van Hollen. Right, and under FISMA, if there is any
agency that has compromised or lost the data of more than
100,000 people, they have to report to OMB, do they not?
Mr. Mulvaney. I believe that is correct, yes.
Senator Van Hollen. Within 7 days. And they have to report
to Congress within 7 days?
Mr. Mulvaney. I think that is right as well.
Senator Van Hollen. Do you think that companies like
Equifax should have some kind of standard that applies to when
they have to inform the public about data breaches?
Mr. Mulvaney. Isn't that addressed in Mr. Crapo's bill? I
thought that it was raised.
Senator Van Hollen. I am just asking----
Mr. Mulvaney. I think it is good practice, yes, sir.
Senator Van Hollen. OK, because I think we want to take a
look at nailing that down.
Chairman Crapo. Equifax is addressed about this issue.
Senator Van Hollen. No, the----
Mr. Mulvaney. I am sorry.
Senator Van Hollen. The issue of generally having the
responsibility to inform the public within a certain period of
time is something that applies to the Federal Government, but
it does not apply today in the private sector.
Mr. Mulvaney. As a member of the public, I would like to
know if my stuff gets hacked.
Senator Van Hollen. I appreciate it. Thank you.
Chairman Crapo. Senator Tillis.
Senator Tillis. Welcome, Director Mulvaney. You have spent
some time in North Carolina and South Carolina, and all
Carolinians are proud and I am proud of you being in a job and
head of a department or an agency that I personally wish did
not exist.
Mr. Mulvaney. I need you to talk to my son. He got into UVA
and UNC, and he is making the wrong decision.
Senator Tillis. We know what the wrong decision is.
Mr. Mulvaney. That is exactly right.
Senator Tillis. Look, first off, as you go through the
process on the payday issue, you said something earlier as a
former speaker of a State legislature, I hope you will
recognize that the States are well within their authority to
deal with this issue. And I do not necessarily think that the
Federal Government needs to weigh into it. States can decide
what is appropriate and then protect the consumers along the
way.
I feel like since the CFPB was created, it kind of reminds
me of the final stages of a Monopoly game where the players are
the FTC, the Fed, the FDIC, the OCC. But all of a sudden, the
CFPB is just buying up all the properties or they are putting
their hotels and houses on the other places on the Monopoly
board. It is absurd. I mean, I think in response to one of the
things that Senator Warren said, that but for the CFPB, this
person would have been harmed, you responded very quickly that
the FTC, if they were doing their job, they would have probably
protected that consumer.
So outside of UDAAP and fair debt collection, what on Earth
are you guys doing that should not be something that we
should--incidentally to the agencies that we have control over,
that we actually have some responsibility from, should be doing
their jobs, why on Earth should you be doing it? And isn't
there a risk that because of that lack of clarity in terms of
regulatory jurisdiction that some legitimate opportunities to
enforce regulations could fall through the cracks?
Mr. Mulvaney. Absolutely, and I think I said earlier in
response to a question, I think there is an appropriate Federal
role in
protecting consumers. That does not mean that you have to do it
through the Bureau of Consumer Financial Protection.
Senator Tillis. Is there a way for you to really just take
the position to redefine the scope of the regulatory purview of
the CFPB and say we do not do this because the FTC should, we
do not do this because the Fed should, we do not do this
because the FDIC should, we do not do this because the OCC
should? You know, actually as a result of the reg reform bill
that I supported and is now lying in the House, we have got
four and maybe five de novo banks that are talking about moving
forward with charters in North Carolina. That is because they
recognize that maybe they can make a business model work if
they have a little bit more regulatory certainty and
regulations that are tailored to the size of their
institutions.
One of the real victims that we do not talk about with all
this regulatory overreach are the people who are not getting
loans, who are not getting capital. I heard someone speak on
the floor about how our bill was going to kill the opportunity
for that mobile homeowner to get a mobile home loan. I have had
one, and I also lived in that trailer park with a father that
was doing construction work that we were living on 90-day
notes. And I know damn well right now those 90-day notes that
my father was getting back in the 1970s and 1980s he could not
get today because you simply cannot underwrite them.
So when we have this discussion about the victims that are
being saved only because of the CFPB, let us talk about the
untold victims that because of the regulatory overreach are not
getting loans, are not getting mobile home mortgages, are not
able to pay their bills. Do you agree with that?
Mr. Mulvaney. You and I may be the only people in this room
who have ever lived in a mobile home, but you are absolutely
right. There is a consequence to all of this overregulation,
which is that people do not have access to credit. They do not
have access to capital.
Senator Tillis. Yes, so it makes me wonder whether or not
some people are just laying the predicate to nationalize our
financial--our banking institution here, and they are willing
to have some of these victims just lie along the path to their
end goal.
Mr. Mulvaney. There is a Senator who is no longer present
who has written a very vigorous defense of why the Postal
Service should be in the banking business.
Senator Tillis. Yes, so if you want to come here and you
want to talk about all the victims that have been saved by the
CFPB, you better damn sure be willing to list out all the other
people who are suffering as a result of the regulatory
overreach. Do you agree with that?
Mr. Mulvaney. Yes, sir.
Senator Tillis. Now, the other thing that I find
remarkable--I mean, I would expect that you came into this
hearing with a heart rate of about two, because you know damn
well there is not a single thing that any one of us can do and
hold you account for. Do you agree with that?
Mr. Mulvaney. You can make me look bad, and that is about
it. You cannot touch me statutorily.
Senator Tillis. If I could come out with this enormous,
this horrible story about how you have destroyed a business or
somebody else's personal life back in my State, you would just
tell me to pound sand if that is something you wanted to do,
right?
Mr. Mulvaney. I am unelected, and nobody can do anything
about it.
Senator Tillis. So thank you for being in charge of an
agency in the administrative branch and try to tell us to make
you more accountable. I appreciate your service.
Mr. Mulvaney. If I may, thank you for that. I appreciate
that. Do not rely on me, because I am not always going to be
here. At some point there is going to be somebody that these
folks do not like; at another point it will be somebody you
folks do not like. Do not rely on the person. Fix the structure
so that we avoid the potential abuses that exist today. Thank
you for that, Senator.
Senator Tillis. Thank you.
Chairman Crapo. Senator Cortez Masto.
Senator Cortez Masto. Director Mulvaney, thank you for
appearing today, and I appreciate your comments as I was
sitting and listening.
I would like to jump back to enforcement actions, and you
started out by talking about that you are engaging in
enforcement actions. And I believe you talked about undergoing
right now 100 investigations. Is that correct?
Mr. Mulvaney. Yes, ma'am.
Senator Cortez Masto. Were those investigations started
under your watch or prior to you coming into the----
Mr. Mulvaney. Some of them. The ordinary course of business
is that we sort of add some on a regular basis. They drop off.
There are 100 ongoing at any one particular time.
Senator Cortez Masto. And under your watch, of those 100,
some you started?
Mr. Mulvaney. You would actually be surprised to know I am
actually not involved in the decisionmaking to start or stop an
investigation.
Senator Cortez Masto. But they were either started under--
some of them were started under your watch?
Mr. Mulvaney. I would imagine, yes, ma'am.
Senator Cortez Masto. You would imagine but you do not know
for sure?
Mr. Mulvaney. Again, I know it sounds strange. I am not
involved in the process. That is a decision made by career
employees as to who they investigate.
Senator Cortez Masto. And the 25 litigation efforts you
talked about that are ongoing, do you know if any of those were
started while you were--while you are under the----
Mr. Mulvaney. I know the answer to that question. We have
not started any new lawsuits since I have been here.
Senator Cortez Masto. So there has been no enforcement
action say, for instance, under your watch?
Mr. Mulvaney. No new ones.
Senator Cortez Masto. No new enforcement----
Mr. Mulvaney. We are actively litigating 24 or----
Senator Cortez Masto. OK. That is helpful. Does that have
anything to do with the fact that I heard your comment earlier,
you were talking about that the CFPB engages in regulation by
enforcement, and so you have stopped enforcement because you
have concerns about that?
Mr. Mulvaney. No. Again, regulation by enforcement is
different than enforcement. Regulation by enforcement is
essentially, look, we do not have a rule, we do not have a reg,
we are not going to tell you what the rules are, but we are
going to sue you and then tell you after that what you did that
we thought was against the rules.
Senator Cortez Masto. Right. For that reason you have not
started any enforcement actions.
Mr. Mulvaney. No, ma'am. There are a lot of contributing
factors as to why we have not filed any lawsuits. That might be
one of them.
Senator Cortez Masto. So can I ask, has the Consumer Bureau
taken any public enforcement action related to the Equifax
breach?
Mr. Mulvaney. The policy of the Bureau is not to comment on
the existence or nonexistence of any ongoing investigations. As
to Equifax, I would point out to you that they disclosed
publicly in their last 10-Q that they were under investigation
by the Bureau of Consumer Financial Protection.
Senator Cortez Masto. Has the Bureau taken any public
action related to allegations that Clayton Homes practiced
racial discrimination in lending to manufactured home buyers?
Mr. Mulvaney. I do not want to comment on the existence or
nonexistence. I would be happy to get back to you as to whether
or not--well, as to--I am not familiar with Clayton Homes as to
the matters you have just raised.
Senator Cortez Masto. OK. So let me jump back to another
issue that has come to my attention. In February the Consumer
Bureau put out a Request for Information asking for comments
from interested parties on the usefulness of the Bureau's
consumer complaint data reporting and analysis.
Mr. Mulvaney. Yes, ma'am.
Senator Cortez Masto. Are you using this RFI to either
dampen the effectiveness of the database or completely remove
it from public view?
Mr. Mulvaney. Well, the collection of data is mandated
statutorily, so we will continue to do that.
Senator Cortez Masto. Let us talk about this, because we
are not just saying general data. These are consumer
complaints.
Mr. Mulvaney. Yes, ma'am.
Senator Cortez Masto. That is what I am talking about.
Mr. Mulvaney. Yes.
Senator Cortez Masto. So you did an RFI.
Mr. Mulvaney. Right.
Senator Cortez Masto. And what is the intent of the RFI? Is
it your intent to take the consumer database offline, out of
public view?
Mr. Mulvaney. It is not the intent. It is one option
available to me.
Senator Cortez Masto. Why are you even looking at that?
Mr. Mulvaney. Because it is not statutorily mandated.
Senator Cortez Masto. What is not statutorily mandated?
Mr. Mulvaney. The public-facing portion of the consumer
database, the complaint database.
Senator Cortez Masto. So let me ask you this then: How are
we to gather information and see patterns or practices? And how
are you going to continue to work with other law enforcement
agencies like the attorney generals across the States when you
are looking at consumer protection?
Mr. Mulvaney. Closing off the public-facing portion of the
consumer complaint database would not impact the collection of
that data in any way.
Senator Cortez Masto. So you have not made a determination
as you sit here right now whether you are going to take it off
public view?
Mr. Mulvaney. No, ma'am.
Senator Cortez Masto. OK. Let me jump----
Mr. Mulvaney. But, again, if I were to make that decision,
that is completely within my discretion under the statute.
Senator Cortez Masto. So the Bureau has a legal charge to
protect people from unfair, deceptive, and abusive practices.
We have talked about that.
Mr. Mulvaney. Yes, ma'am.
Senator Cortez Masto. And you have the responsibility to
make sure financial firms treat similar customers the same. The
way that you enforce that is by looking at the data, and we
have talked about that. However, it is my understanding that
you have stopped banks from sharing information with examiners.
Is that true?
Mr. Mulvaney. No, ma'am. I think you may be referring to
the data freeze that we made. We have changed some of the
methods by which we collect data for the reasons I mentioned
before regarding our security. Again, if anyone wants to stick
around, it would take 2 minutes to talk privately afterwards as
to why we have done that.
Senator Cortez Masto. So as we sit here today, what you are
telling me is that you have not stopped banks from sharing
information with the examiners?
Mr. Mulvaney. That is correct.
Senator Cortez Masto. OK.
Mr. Mulvaney. What we have tried to do is limit the amount
of data that we actually take possession of. I will give you an
example. Instead of having them send it to us electronically,
we are going to look at it.
Senator Cortez Masto. OK. I notice my time is up. Thank you
very much.
Mr. Mulvaney. Thank you.
Senator Cortez Masto. And I will submit the rest of my
questions for the record.
Thank you.
Mr. Mulvaney. Yes, ma'am.
Chairman Crapo. Thank you very much. And Senator Brown
has----
Senator Brown. Only one statement. Thank you, Director, for
being here. I know in response to one of my first questions you
made the comparison to the first 6 months of Director Cordray,
and you, of course----
Mr. Mulvaney. Yes, sir.
Senator Brown.----know that was as he was setting the
agency up. So I hope that you will move aggressively----
Mr. Mulvaney. Actually, the agency was set up by other
folks----
Senator Brown. But it was not--but it was still getting up
and running. It was not--there was not the actions in the
pipeline that there have been when you took over, so I hope you
will be a little more aggressive. I will just leave it at that.
Mr. Mulvaney. Fair enough. Thank you, sir.
Chairman Crapo. All right. Thank you. I want to thank you,
Director Mulvaney, for being here with us today and for being
firm and forthright in your answers and helping work with us. I
appreciated a lot of your insights and a lot of your
suggestions. I do think you should expect that the Committee
will follow up with you in some kind of form.
Mr. Mulvaney. I would expect nothing less. I used to be on
one of these committees.
Chairman Crapo. I am referring specifically to this data
collection issue. I think we may need to get together further.
I have to be somewhere in about 2 minutes, and so it will not
be the 2 minutes after this hearing. But for Senators who wish
to submit questions for the record, those questions are due on
Thursday, April 19th, and I encourage you, Acting Director
Mulvaney, if you received questions, to please respond
promptly.
With that, this hearing is adjourned.
Mr. Mulvaney. Thank you, sir.
[Whereupon, at 11:58 a.m., the hearing was adjourned.]
[Prepared statements, responses to written questions, and
additional material supplied for the record follow:]
PREPARED STATEMENT OF CHAIRMAN MIKE CRAPO
Today, we will hear from CFPB Acting Director Mick Mulvaney on the
most recent Semi-Annual Report of the Consumer Financial Protection
Bureau, and the Bureau's activities since his appointment in November
2017.
On April 2nd, the CFPB released its Fall 2017 Semi-Annual Report,
which provides insights on the issues consumers face, and primarily
focuses on the CFPB's significant work between April and September
2017, including rulemakings, supervisory actions and enforcement
actions.
The CFPB recently announced a series of requests for information on
various functions, including its rulemaking, supervision, guidance and
enforcement processes.
Consumer protection is vital for a properly functioning financial
market place and is best determined by a robust, quantitative analysis.
I look forward to learning what feedback the CFPB has received from
stakeholders with respect to its requests for information, and how
consumers and the marketplace stand to benefit from changes being
considered.
I have long been concerned about the ever increasing amounts of
``big data'' collected by companies and the Government.
In 2014, the Government Accountability Office issued a report in
which it highlighted shortcomings in the CFPB's data collection process
and privacy controls, and recommended a number of improvements.
The CFPB's data collection is especially concerning in light of a
number of high-profile cyberattacks, such as last year's Equifax data
breach, and recent news about how outside groups have collected private
information from Facebook users.
I commend Acting Director Mulvaney for treating these concerns
seriously by freezing the agency's collection of personal information
while the agency reviews ways it can improve its data-security program.
Today, we should discuss how the CFPB's data collection process can
be narrowed and enhanced to better protect consumers' personal
information.
While I am encouraged by today's testimony, the fundamental
structure of the CFPB needs to be reconsidered to make it more
transparent and accountable.
I continue to support a bipartisan commission instead of a single
director, a Congressional funding mechanism, and a safety and soundness
check.
Given the changes taking place at the agency, now is an appropriate
time to consider the future of the CFPB.
______
PREPARED STATEMENT OF SENATOR SHERROD BROWN
The reason we are here today is that there was a financial crisis
10 years ago caused by predatory lenders, and that crisis cost millions
of Americans their jobs and their homes.
The St. Louis Fed looked at the subprime mortgages made from 2000
to 2007, and it found that 70 percent of those loans were refinances.
That's important--it means that most subprime loans weren't going to
people who were ``buying too much house,'' these loans were going to
people that had already paid off some of their debt and built some
equity.
Subprime refinance loans allowed shady lenders to steal that equity
from homeowners with false promises of lower monthly rates under
confusing payment plans. These loans, designed to steal wealth from
hardworking families, overwhelmed the banking system and crashed the
whole economy.
There was no Consumer Financial Protection Bureau while this was
happening from 2000 to 2007. There was no dedicated cop on the beat to
be tough on predatory mortgage lenders or to warn consumers about these
loans.
The result was the biggest financial crisis and recession since the
Great Depression. The lesson from 2008 is simple--if we don't protect
hardworking Americans from powerful Wall Street banks and financial
scammers, it can bring down our entire economy.
That's why we created the Consumer Financial Protection Bureau. Its
job is clear--to fight for hardworking families against unfair,
abusive, and deceptive practices, the tricks and traps that some
financial institutions design in order to line their pockets.
It's a consumer first agency. Before Mr. Mulvaney's arrival, the
CFPB got 12 billion dollars in relief for 29 million Americans that had
been harmed by shady practices.
Before Mr. Mulvaney arrived, the CFPB was doing its job, initiating
a handful of enforcement actions every month on behalf of the consumers
it was created to serve.
But now Mr. Mulvaney is trying to convince us that protecting
families and prosecuting shady lenders is, ``pushing the envelope.''
That's a lie. Protecting consumers is not ``pushing the envelope,''
that's the agency's mission.
It's a mission that Mr. Mulvaney is completely failing at. The
number of enforcement actions under his watch? Negative four. Not only
has the CFPB not initiated a single enforcement action, but it has
withdrawn lawsuits against four payday lenders that charge consumers
triple digit interest rates.
It is Mr. Mulvaney who is pushing the envelope. His appointment at
the CFPB was only made possible by ignoring the law that created the
CFPB, which says that the Deputy Director should be in charge of the
agency.
Yesterday marked the 50th anniversary of the Fair Housing Act. Mr.
Mulvaney observed this year's anniversary by moving to weaken the
office of Fair Lending--the office that focuses on discriminatory
lending.
While he claims the agency is under a hiring freeze, he has
actually created new positions at the Bureau and installed his own
political appointees. That may seem unsurprising given the change in
the Administration, but it has no precedent in the short life of the
CFPB.
Not only did he replace nonpartisan career staff with his political
allies, he gave them enormous salaries. In his role at the CFPB, Mr.
Mulvaney is continuing the war on working families he started at OMB.
As budget director he worked to slash benefits for Americans making
$30,000-$40,000 a year, and enact tax cuts that benefit the wealthiest
Americans while adding trillions of dollars to the debt.
At the CFPB, he's handing out favors to Wall Street and shady
lenders. He's lining the pockets of his top four political appointees
with over $1 million in salaries, but hasn't taken on a single
enforcement action that would continue the CFPB's good work of putting
money back in the pockets of consumers harmed by shady lenders and
financial scammers.
Shel Silverstein once said ``if you have to dry the dishes, and you
drop one on the floor, maybe they won't let you dry the dishes
anymore.'' Mr. Mulvaney seems to be following that advice. He's hoping
that if he does a bad enough job running the CFPB, Congress will take
away the CFPB's ability to protect consumers.
I hope Congress doesn't fall for it. We have seen that the CFPB can
be a real, positive force for consumers. We all know that the real
problem is not the CFPB.
______
PREPARED STATEMENT OF MICK MULVANEY
Mick Mulvaney, Acting Director, Bureau of Consumer Financial Protection
April 12, 2018
Chairman Crapo, Ranking Member Brown, and Members of the Committee,
I am pleased to present the Bureau of Consumer Financial Protection
(Bureau) Semi-Annual Report to Congress for the period beginning April
1, 2017 to September 30, 2017, as well as to provide you an update on
the activities of the Bureau during my tenure.
Shortly after President Trump appointed me as Acting Director of
the Bureau, I announced that the Bureau would continue to execute the
law but would no longer go beyond its statutory mandate. In enacting
section 1016(c) of the Dodd-Frank Wall Street Reform and Consumer
Protection Act (Dodd-Frank Act), Congress enumerated nine elements for
inclusion in the Bureau's Semi-Annual Reports to Congress:
1. A discussion of the significant problems faced by consumers in
shopping for or obtaining consumer financial products or
services;
2. A justification of the budget request of the previous year;
3. A list of the significant rules and orders adopted by the Bureau,
as well as other significant initiatives conducted by the
Bureau, during the preceding year and the plan of the Bureau
for rules, orders, or other initiatives to be undertaken during
the upcoming period;
4. An analysis of complaints about consumer financial products or
services that the Bureau has received and collected in its
central database on complaints during the preceding year;
5. A list, with a brief statement of the issues, of the public
supervisory and enforcement actions to which the Bureau was a
party during the preceding year;
6. The actions taken regarding rules, orders, and supervisory
actions with respect to covered persons which are not credit
unions or depository institutions;
7. An assessment of significant actions by State attorneys general
or State regulators relating to Federal consumer financial law;
8. An analysis of the efforts of the Bureau to fulfill the fair
lending mission of the Bureau; and
9. An analysis of the efforts of the Bureau to increase workforce
and contracting diversity consistent with the procedures
established by the Office of Minority and Women Inclusion.
This Semi-Annual Report meets this mandate.
Moreover, section 1012(c)(4) of the Dodd-Frank Act contemplates
that the Director will submit independent legislative recommendations
to Congress. It is appropriate to include legislative recommendations
in this Semi-Annual Report, because doing so will afford Members of
Congress a timely opportunity to discuss my recommendations in the
hearing.
Undoubtedly, many Members of Congress disagree with my actions as
the Acting Director of the Bureau, just as many Members disagreed with
the actions of my predecessor. Such continued frustration with the
Bureau's lack of accountability to any representative branch of
Government should be a warning sign that a lapse in democratic
structure and republican principles has occurred. This cycle will
repeat ad infinitum unless Congress acts to make the Bureau accountable
to the American people.
Accordingly, I request that Congress make four legislative changes
to the law in order to establish meaningful accountability for the
Bureau:\1\
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\1\ Other than the Bureau's Acting Director, no other officer or
agency of the United States approved these legislative recommendations
prior to submission to Congress. The views contained herein are those
of the Acting Director and do not necessarily reflect the views of the
Board of Governors of the Federal Reserve System or the President of
the United States.
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1. Fund the Bureau through Congressional appropriations;
2. Require affirmative legislative approval of major Bureau rules;
3. Ensure that the Director answers to the President in the exercise
of executive authority; and
4. Create an independent Inspector General for the Bureau.
You also requested that I discuss the activities of the Bureau during
my tenure, and I am prepared to explain the Bureau's new strategic
priorities and new approach.
Semi-Annual Report requirements
The first section of the Bureau's Semi-Annual Report to Congress is
a discussion of the significant problems faced by consumers in shopping
for or obtaining consumer financial products or services. In this
section of the report, the Bureau discusses ``credit invisibles,''
consumers who lack a credit record at one of the nationwide credit
reporting companies. In June 2017, the Bureau released the Data Point:
Becoming Credit Invisible,\2\ which explores the means by which
consumers transitioned out of credit invisibility. The Semi-Annual
Report also discusses the Bureau's mandate to provide consumers with
financial education and the Bureau's 2017 financial literacy annual
report.\3\
---------------------------------------------------------------------------
\2\ https://www.consumerfinance.gov/documents/4822/
BecomingCreditVisible_Data_Point
_Final.pdf.
\3\ https://www.consumerfinance.gov/documents/5810/cfpb_financial-
literacy-annual-report-2017.pdf.
---------------------------------------------------------------------------
The second section of the Semi-Annual Report is a justification of
the Bureau's budget request of the previous year. The Bureau's FY 2017
Strategic Plan, Budget, and Performance Plan and Report includes
estimates of the resources needed for the Bureau to carry out its
mission. The justification of the FY 2017 budget request is on the
Bureau's website at https://www.consumerfinance.gov/about-us/budget-
strategy/budget-and-performance/.
The third section of the Semi-Annual Report lists the significant
rules and orders adopted by the Bureau, as well as other significant
initiatives conducted by the Bureau, during the preceding year and the
plan of the Bureau for rules, orders, or other initiatives to be
undertaken during the upcoming period. The Bureau's significant final
rules during the term of this report are the final rule on arbitration
agreements (which will not go into effect because Congress adopted a
joint resolution of disapproval, which the President signed pursuant to
the Congressional Review Act) and the final rule on Payday, Vehicle
Title, and Certain High-Cost Installment Loans. The Bureau's
significant initiatives include requests for information on assessments
of significant rules under section 1022(d) of the Dodd-Frank Act, which
include 2013 Real Estate Settlement Procedures Act Servicing Rule
Assessment; Remittance Rule Assessment; and Ability-to-Repay/Qualified
Mortgage Rule Assessment. On September 14, 2017, Bureau staff also
issued its first no-action letter to Upstart Network. Additionally, the
Bureau's plan for upcoming initiatives lays out a series of Calls for
Evidence about various aspects of the Bureau's work. This section of
the Semi-Annual Report also lists out the Bureau's plans for upcoming
proposed rules: Payday, Vehicle Title, and Certain High-Cost
Installment Loans rule; the Expedited Funds Availability Act rule; the
Debt Collection rule; and Home Mortgage Disclosure Act rule, as well as
upcoming final rules: Gramm-Leach-Bliley Act Privacy Notice rule;
Amendments Relating to Disclosure of Records and Information rule; and
the Amendment to the Federal Mortgage Disclosure Requirements under the
Truth in Lending Act rule. The Semi-Annual Report contains additional
details on these and other Bureau initiatives.
The fourth section of the Semi-Annual Report provides an analysis
of complaints about consumer financial products or services that the
Bureau has received and collected in its central database on complaints
during the preceding year. During the period October 1, 2016 through
September 30, 2017, the Bureau handled approximately 317,200 consumer
complaints. Most of those complaints were submitted through the
Bureau's website. The Bureau does not verify all the facts alleged in
complaints, but it takes steps to confirm a commercial relationship
between the consumer and the company. Approximately 235,400 (or 74
percent) of all complaints handled were sent by the Bureau to companies
for review and response. Companies have responded to approximately 93
percent of complaints sent to them for response during the period.
Consumers did not receive a timely response from the company in only 3
percent of complaints. The top four complaints by the product category
designated by the consumer when submitting the complaint are debt
collection (27 percent), credit or consumer reporting (27 percent),
mortgages (13 percent), and credit cards (9 percent).
As required by the Dodd-Frank Act, the fifth section of the Semi-
Annual Report discusses the public supervisory and enforcement actions
to which the Bureau was a party during the preceding year. The Bureau's
supervisory activities with respect to individual institutions are
nonpublic. The Bureau has, however, issued numerous supervisory
guidance documents and bulletins during the preceding year. These
documents are listed under section 3.3 of this report as ``issued
guidance documents undertaken within the preceding year.'' With regard
to enforcement actions, the Bureau was a party in 53 public enforcement
actions from October 1, 2016 through September 30, 2017. The detailed
list of those actions, with a brief statement of the issues, is set out
in section 5.2 of the Semi-Annual Report. Section 5.2 also identifies
those actions involving Office of Administrative Adjudication Orders
with respect to covered persons that are not credit unions or
depository institutions.
The sixth section of the Semi-Annual Report addresses actions taken
regarding rules, orders, and supervisory actions with respect to
covered persons that are not credit unions or depository institutions.
The Bureau's Supervisory Highlights publications provide general
information about the Bureau's supervisory activities at banks and
nonbanks without identifying specific companies. The Bureau published
four issues of Supervisory Highlights between October 1, 2016 and
September 30, 2017. As noted in the previous paragraph, all public
enforcement actions are list in section 5.2 of the Semi-Annual Report.
The brief statement of issues identifies those actions taken with
respect to covered persons that are not credit unions or deposit
institutions.
The seventh section of the Semi-Annual Report requires an
assessment of significant actions by State attorneys general or State
regulators relating to Federal consumer financial law. For purposes of
the section 1016(c)(7) reporting requirement, the Bureau determines
that any actions asserting claims pursuant to section 1042 of the Dodd-
Frank Act are ``significant.'' The Bureau is aware of two State
Attorney General actions that were initiated during the reporting
period and that asserted Dodd-Frank Act claims. The actions are listed
in the Semi-Annual Report.
The eighth section of the Semi-Annual Report provides an analysis
of the efforts of the Bureau to fulfill the fair lending mission of the
Bureau. This update is focused on highlights from the Bureau's fair
lending enforcement \4\ and rulemaking \5\ activities from October 1,
2016 through September 30, 2017, and continued efforts to fulfill the
fair lending mission of the Bureau, through supervision, interagency
coordination, and outreach from April 1, 2017 through September 30,
2017.\6\ The Bureau's Fair Lending Supervision program assesses
compliance with Federal fair lending consumer financial laws and
regulations at banks and nonbanks over which the Bureau has supervisory
authority. As a result of the Bureau's efforts to fulfill its fair
lending mission in this reporting period, the Bureau's Fair Lending
Supervision program initiated 11 supervisory events at financial
services institutions under the Bureau's jurisdiction to determine
compliance with Federal laws intended to ensure the fair, equitable,
and nondiscriminatory access to credit for both individuals and
communities, including the Equal Credit Opportunity Act (ECOA) and the
Home Mortgage Disclosure Act (HMDA). Over the past year, the Bureau
announced two fair lending public enforcement actions involving HMDA
reporting and credit cards. First, as described in section 5 of this
report, on March 15, 2017, the Bureau resolved an enforcement action
against a national mortgage originator for violating HMDA by
consistently failing to report accurate data about mortgage
transactions for 2012 through 2014. Second, as described in section 5
of this report, on August 23, 2017, the Bureau took action against a
credit card company, for violating ECOA by discriminating against
consumers in Puerto Rico, the U.S. Virgin Islands, and other U.S.
territories by providing them with credit and charge card terms that
were inferior to those available in the 50 United States.
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\4\ Dodd-Frank Act section 1016(c)(5).
\5\ Dodd-Frank Act section 1016(c)(3).
\6\ Dodd-Frank Act section 1016(c)(8).
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The ninth, and final, section of the Semi-Annual Report provides an
analysis of the efforts of the Bureau to increase workforce and
contracting diversity consistent with the procedures established by the
Office of Minority and Women Inclusion (OMWI). The Bureau has developed
an agency-wide strategic plan--Diversity Strategic Plan--to guide the
Bureau in its efforts to manage its diversity and inclusion goals and
objectives.\7\ The Bureau also publishes an Annual OMWI report in the
spring of each year. The 2017 OMWI Annual report was published on March
29, 2018.\8\ Additionally, during FY 2017,\9\ the Bureau awarded 30
percent of contract dollars to small businesses enterprises (SBEs),
some of which are also minority-owned or woman-owned businesses
(MWOBs). The Bureau's contracting rate to small businesses exceeds the
Small Business Administration's recommended goal for each Federal
agency of 23 percent. Of the 30 percent of SBE contracts awarded at the
Bureau in FY 2017, 10 percent went to small disadvantaged businesses
(minority-owned). The total contract dollars awarded to woman-owned
small businesses
during this period was 11.9 percent. In accordance with the mandates in
section 342(c)(2) of the Dodd-Frank Act, goal six of the Bureau's
Diversity and Inclusion Strategic Plan describes the efforts the Bureau
takes to determine that a contractor will ensure, to the maximum extent
possible, the fair inclusion of women and minorities in the contractor
workforce, and, as applicable, subcontractors workforce. This concludes
the overview of the Bureau's Fall 2017 Semi-Annual Report to Congress.
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\7\ https://s3.amazonaws.com/files.consumerfinance.gov/f/documents/
201611_cfpb_diversity-and-inclusion-strategic-plan-2016-2020.pdf.
\8\ https://s3.amazonaws.com/files.consumerfinance.gov/f/documents/
201703_cfpb_OMWI-2017-annual-report.pdf.
\9\ Data source is from the Federal Procurement Data System (FPDS)
for FY 2017 from October 1, 2016 through September 30, 2017. The data
are current as of October 4, 2017. FPDS data is subject to an OMB
annual validation each January for the previous fiscal year.
---------------------------------------------------------------------------
New strategic priorities
As noted above, you have also requested that I discuss the
activities of the Bureau during my tenure. I will begin by outlining
the Bureau's new strategic priorities, and then I will provide an
overview of the new approach I have taken in leading the Bureau.
The Bureau's new strategic priorities are to recognize free markets
and consumer choice and to take a prudent, consistent, and humble
approach to enforcing the law. This reflects my understanding that
consumers and creditors alike gain from mutual exchange, provided that
promises are kept, terms are clearly disclosed, and property rights are
protected.
As an officer in the executive branch, I am sworn to execute the
law, and that is what I am doing. That is all I should be doing. My job
is to make sure the Bureau is acting consistently with our statutory
responsibilities, to improve our daily operations and our interactions
with consumers and industry, and to ensure we are accountable to the
American people.
Our recently published Strategic Plan outlines how I intend to
fulfill the Bureau's statutory duties. Specifically, the Bureau's
mission statement is ``to regulate the offering and provision of
consumer financial products or services under the Federal consumer
financial laws and to educate and empower consumers to make better
informed financial decisions.'' That is what Congress created us to do.
And that is what we will do. We will adhere to the Bureau's
statutory responsibilities. Our job is to enforce Federal consumer
financial laws, and our focus will be on carrying out only those
activities Congress explicitly wrote into law.
New approach
The Bureau is going about its work in several new ways. First, to
execute the new mission, the Bureau will continue to seek the counsel
of others and make decisions only after weighing relevant available
evidence and a full range of perspectives. Second, the Bureau will
protect the legal rights of all, equally. And third, we will do what is
right with confidence, acting with humility and moderation.
That is why we launched the Call for Evidence--an initiative aimed
at gathering public feedback on the wide range of work done by this
agency. It is important to learn more about what is working and what
needs to improve in the work done by the Bureau. An agency that is
confident in its mission should care about getting it right. An agency
should welcome constructive feedback and then learn from it.
We are actively seeking this feedback. To date, the Bureau had
issued 11 requests for information--RFIs. We are seeking public comment
on the Bureau's Civil Investigative Demands, administrative
adjudications, enforcement processes, supervision processes, complaint
reporting, external engagement strategies, our rulemaking process,
rules issued by the Bureau, and rules the Bureau inherited. Most
recently, we issued RFIs on guidance and implementation support and
consumer education. Later this week, we will issue an RFI on consumer
complaints and inquiries. We have extended all of the comment periods
to 90 days to give everyone more time to provide us with feedback. I
encourage any interested parties to submit comments. Your comments will
help the Bureau evaluate what we do and how we do it and determine
whether changes are warranted.
Another area where we are doing things differently is executing the
Bureau's regulatory agenda. First, regulatory agencies like the Bureau
are not legislatures. The Bureau has very broad rulemaking authority to
regulate consumer financial products and services. We must be very
judicious in the use of this power.
Second, we are committed to making sure the Bureau's regulations
work not only for those who use consumer financial products and
services but also for those who provide them. This means clear rules
that, where appropriate, can be tailored to the business models of the
companies subject to these rules. For instance, the Bureau is here to
help protect people who use credit, but we're also here to establish
clear guidelines for those who provide that credit because it is an
important service for consumers and central to our capitalist system.
Additionally, under my leadership the Bureau will implement a more
robust quantitative analysis of potential costs and benefits to
consumers and those we regulate.
We are also opening up the rulemaking process to reconsider
elements that may create unnecessary burden or restrict consumer
choice. Specifically, the Bureau recently issued statements about
revisiting the regulation issued under the Home Mortgage Disclosure Act
and the ``Payday, Vehicle Title, and Certain High-Cost Installment
Loans'' rule.
Regarding HMDA, the Bureau intends to open a rulemaking to
reconsider various aspects of the 2015 HMDA rule, such as reporting
thresholds and transactional
coverage and reconsider data points not mandated by the Dodd-Frank Act.
Furthermore, we have announced, with our partners at the Office of
Comptroller of the Currency, the Board of Governors of the Federal
Reserve System, and the Federal Deposit Insurance Corporation, that our
supervisory examinations of 2018 HMDA data will be diagnostic. Our goal
is to help companies identify any weaknesses, and we will credit good-
faith efforts to comply. Financial institutions that submit HMDA data
are doing so through the Bureau's new online platform, which allows an
institution to upload loan application registers, review edits, certify
data, and submit data for the filing year without the manual processes
required previously. Over 5,800 institutions have submitted their 2017
data using the new platform.
We are not pre-judging the outcome of any rulemaking; instead, I
share our recent efforts with you to demonstrate that under new
leadership the Bureau is willing to revisit existing rules to find ways
to ease undue burdens and protect consumer choice. This we will do
efficiently, effectively, and transparently. We will structure
ourselves and conduct Bureau operations in a way that reduces
redundancy and makes the best use of resources.
Above all, the Bureau must be efficient. That means I will organize
the agency and conduct its operations in ways that reduce redundancy
and make the most of our resources. For example, the Office of Fair
Lending and Equal Opportunity is being moved to the Director's Office,
to become part of the Office of Equal Opportunity and Fairness. The
Office of Fair Lending will continue to focus on advocacy,
coordination, and education.
The Bureau will continue to enforce fair lending laws. The current
fair lending supervision and enforcement functions will remain in the
soon-to-be-renamed
Division of Supervision, Enforcement, and Fair Lending. Accordingly,
the Bureau will have one office, not two, that handles enforcement
matters. It will have one office, not two, that handle supervision
policy, and one office, not two, that handle supervision examinations.
This will make enforcement and supervision more efficient, effective,
and accountable.
In another change, the Bureau practice of ``regulation by
enforcement'' has ceased. The Bureau will continue to enforce the law.
That is our job, and we take it seriously. However, people will know
what the rules are before the Bureau accuses them of breaking those
rules.
Through the changes I have discussed and others, I am making sure
the Bureau is operating within its statutory mandate, is accountable
for its actions, and is doing the American people's business in ways
that are efficient and effective.
The best that any Bureau Director can do on his own is to fulfill
his responsibilities with humility and prudence and to temper his
decisions with the knowledge that the power he wields could all too
easily be used to harm consumers, destroy businesses, or arbitrarily
remake American financial markets. But all human beings are imperfect,
and history shows that the temptation of power is strong. Our laws
should be written to restrain that human weakness, not empower it.
Thank you again for the opportunity to present the Bureau of
Consumer Financial Protection's Semi-Annual Report to Congress for the
period beginning April 1, 2017 to September 30, 2017, as well as to
provide you an update on the activities of the Bureau during my tenure.
I would be happy to answer any of your questions about the Bureau's
work.
RESPONSES TO WRITTEN QUESTIONS OF SENATORS BROWN, WARNER, VAN
HOLLEN, CORTEZ MASTO, AND JONES FROM MICK MULVANEY
Q.1. We would like clarity on the CFPB's enforcement trends
since you assumed leadership:
Q.1.a. How many CFPB investigations were ongoing as of November
24, 2017?
Q.1.b. How many CFPB investigations were ongoing as of April
19, 2018?
Q.1.c. How many new CFPB investigations were initiated from
November 25, 2017 to April 19, 2018?
A.1.a.-c. As I noted at the hearing, the Bureau of Consumer
Financial Protection (Bureau) had roughly 100 ongoing
investigations as of April 19, 2018. The Bureau does not
generally comment publicly on confidential enforcement
investigations.
Q.2. In January, you announced that the CFPB would reconsider
its 2017 payday loan rule and delay the compliance date for the
rule's main requirements. You have claimed that you plan to
undertake a great deal more cost-benefit analysis at the CFPB.
Did you undertake any cost-benefit analysis in connection
with the decision to revisit the payday loan rule and delay the
compliance date for the rule's main requirements? If so, please
provide a copy of that analysis to the Committee.
A.2. I note that this question is similar to a question I
received from Ranking Member Maxine Waters (CA) following my
testimony before the House Committee on Financial Services,
regarding the Bureau's Semi-Annual Report. For that reason, I
am providing you the same response I provided the Ranking
Member.
If I decide that the Bureau should propose revisions to the
rule, the Bureau will follow the procedures set forth in the
Administrative Procedure Act and the Dodd-Frank Wall Street
Reform and Consumer Protection Act (Dodd-Frank Act), including
analyzing the costs and benefits of the proposal to consumers
and to covered institutions. It would have been premature to
conduct such an analysis before decisions are made as to what
changes, if any, to propose to the rule. The January 16, 2018,
statement did not delay the compliance date by which lenders
would have to begin complying with most provisions of the rule.
Q.3. In a speech to State attorneys general in February, you
implied that the CFPB would step back if State authorities
``don't think it's against the law'' or ``don't think it's your
State's best interest.'' This was in the context of a case
against four payday lenders accused of charging triple-digit
interest rates in violation of State and Federal law. You noted
that some State attorneys general opposed the case. But what
you didn't mention was the fact that this case charged the
lenders with making illegal loans in 15 different States, with
varying policies on payday lending.
Did the State attorneys general of any States other than
New Mexico and Oklahoma express an opinion on the case? If so,
please provide copies of any written correspondence.
A.3. The Oklahoma Attorney General and the New Mexico Attorney
General filed amicus briefs on the question of whether State
and Tribes are considered ``persons'' against whom the Bureau
may bring civil actions under 12 U.S.C. 5564(a). The briefs
did not comment on payday lending, interest rates, or where the
loans in question were made. Though it must be noted that New
Mexico filed an amicus brief in support of defendants even
though it was a ``subject State'' whose laws might have deemed
void ab initio the loans at issue in that litigation. No other
State attorney general filed an amicus brief in this case.
Q.4. According to the CFPB's complaint, Connecticut and New
York State authorities sent cease-and-desist letters to some of
the lenders telling them the loans were illegal.
Q.4.a. Did you reach out to those States to solicit their
opinion? If so, why does it seem that you take the advice of
the States you agree with and dismiss the advice of those you
disagree with?
A.4.a. No.
Q.4.b. What is the statutory authority for making the opinions
of some State authorities determinative in CFPB's decision to
pursue an enforcement action to protect consumers in other
States?
A.4.b. It is incorrect to assert that the opinions of some
State attorneys general are ``determinative'' of decisions made
by the Bureau. Rather, as I have explained in my public
remarks, the Bureau will weigh those opinions in making many
decisions, including whether to pursue any given enforcement
action.
Q.4.c. If you choose not to bring an enforcement action because
certain State authorities recommend against it, how is that
consistent with CFPB's role as a Federal regulatory agency to
enforce Federal law?
A.4.c. The Bureau independently enforces Federal consumer
financial law as defined in the Dodd-Frank Act. That fact does
not mean that the Bureau cannot consider the perspectives of
State attorneys general when making decisions about whether and
how to enforce Federal consumer financial law.
Q.4.d. Did you undertake any cost-benefit analysis in
connection with the decision to drop this case? If so, please
provide a copy of that analysis to the Committee.
A.4.d. The Bureau considers a number of factors when deciding
whether to bring or continue with an enforcement action.
Although the Dodd-Frank Act generally requires the Bureau to
consider benefits and costs to consumers and providers of
consumer financial products or services when promulgating a
rule, it does not require the Bureau to conduct such an
analysis before exercising its enforcement discretion.
Q.5. In 2011, the CFPB entered an agreement with State
attorneys general to support each other in enforcing consumer
protection laws, including through ``joint or coordinated
investigations of wrongdoing and coordinated enforcement
actions.'' State attorneys general from coast to coast have
said they've appreciated the CFPB's partnership in the past.
However, Virginia Attorney General Mark Herring recently said
that you're now dropping cases that were previously approved.
In light of these comments, we are concerned that you have
abandoned the CFPB's previous agreement to support State
efforts to protect consumers.
Q.5.a. How many CFPB investigations or lawsuits in which the
CFPB worked with State authorities were ongoing as of November
24, 2017?
Q.5.b. How many CFPB investigations or lawsuits in which the
CFPB worked with State authorities were ongoing as of April 19,
2018?
A.5.a.-b. Four publicly filed lawsuits in partnership with
State authorities were ongoing as of November 24, 2017. The
number and type of nonpublic enforcement investigations are
confidential to protect the integrity of the investigation. The
Bureau continues to value its partnerships with State
regulators and attorneys general. As I stated to a group of
attorneys general at the National Association of Attorneys
General Winter Meeting, under my leadership they can expect to
see even more collaboration from the Bureau. The Bureau will
also be making a greater effort to seek input from State
regulators and the attorneys general before the Bureau
exercises its enforcement authority.
Q.5.c. How many new CFPB investigations or lawsuits in which
the CFPB worked with State authorities were initiated from
November 25, 2017 to April 19, 2018?
A.5.c. No new lawsuits in partnership with State authorities
were initiated from November 25, 2017 to April 19, 2018. The
Bureau does not generally comment publicly on confidential
enforcement investigations.
Q.5.d. Since November 25, 2017, have you or CFPB staff denied
any requests by State authorities for the CFPB to join or
support an investigation or lawsuit?
A.5.d. As a matter of policy, the Bureau does not comment on
nonpublic enforcement matters. As noted in my previous
response, under my leadership State law enforcement partners
can expect to see even more collaboration from the Bureau. The
Bureau will also be making a greater effort to seek input from
State regulators and attorneys general before exercising its
enforcement authority.
Q.5.e. Is the Virginia Attorney General correct, and if so,
which cases or investigations have been dropped? If so, did you
undertake a cost-benefit analysis before coming to a decision
to drop those cases? Please provide a copy of an analysis to
the Committee.
A.5.e. No public enforcement matters were brought in
conjunction with a State regulator. The Bureau does not
generally comment publicly on confidential enforcement
investigations.
Q.5.f. Do you continue to adhere to the CFPB's 2011 agreement
with State attorneys general? If there have been any changes to
the CFPB's approach to working with State authorities, did you
personally approve these changes?
A.5.f. In 2011, the Bureau and the National Association of
Attorneys General Presidential Initiative Working Group adopted
a joint statement of principles to, where appropriate and to
the greatest possible extent:
LDevelop joint training programs and share
information about developments in Federal consumer
financial law and State consumer protection laws that
apply to consumer financial products or services;
LShare information, data, and analysis about conduct
and practices in the markets for consumer financial
products or services to inform enforcement policies and
priorities;
LEngage in regular consultation to identify mutual
enforcement priorities that will ensure effective and
consistent enforcement of the laws that protect
consumers of financial products or services;
LSupport each other, to the fullest extent permitted
by law as warranted by the circumstances, in the
enforcement of the laws that protect consumers of
financial products or services, including by joint or
coordinated investigations of wrongdoing and
coordinated enforcement actions;
LPursue legal remedies to foster transparency,
competition, and fairness in the markets for consumer
financial products or services across State lines and
without regard to corporate forms or charter choice for
those providers who compete directly with one another
in the same markets;
LDevelop a consistent and enduring framework to
share investigatory information and to coordinate
enforcement activities to the extent practicable and
consistent with governing law;
LShare, refer, and route complaints and consumer
complaint information between the Consumer Bureau and
the State attorneys general;
LAnalyze and leverage the input they receive from
consumers and the public in order to advance their
mutual goal of protecting consumers of financial
products or services; and
LCreate and support technologies to enable data
sharing and procedures that will support complaint
cooperation.
The Bureau continues to be guided by these principles in its
work with State attorneys general.
Q.5.g. If there have been any changes to the CFPB's approach to
working with State authorities, did you undertake a cost-
benefit analysis in connection with those changes? If so,
please provide a copy of that analysis to the Committee.
A.5.g. See above.
Q.6.a. We have a number of questions related to the
reorganization of the Office of Fair Lending and Equal
Opportunity (OFLEO):
Did the CFPB perform a legal analysis to determine whether
stripping the OFLEO of its enforcement authority would hinder
the CFPB's ability to carry out its statutory mandate to
provide oversight and enforcement of Federal fair lending laws?
A.6.a. I note that this question is identical to a question I
received from Ranking Member Maxine Waters (CA) following my
testimony before the House Committee on Financial Services,
regarding the Bureau's Semi-Annual Report. For that reason, I
am providing you the same response I provided the Ranking
Member. Additionally, this question is identical to a question
I received from Senator Elizabeth Warren (MA) following my
testimony before the Senate Committee on Banking, Housing, and
Urban Affairs (BHUA), regarding the Bureau's semiannual report.
For that reason, I am providing you the same response I will
provide to the Senator.
Under the Dodd-Frank Act, the Office of Fair Lending and
Equal Opportunity (OFLEO) ``shall have such powers and duties
as the Director may delegate to the Office.''
I have been working to ensure that the Bureau's operations
are conducted in a way that best enables the Bureau to fulfill
all of the Bureau's statutory requirements while reducing
redundancy and maximizing efficiency. Changes to the structure
and operations of OFLEO are being implemented in furtherance of
these priorities. The existing OFLEO performs different
functions, including oversight and enforcement of fair lending
laws on one hand, and promotion of fair lending compliance and
education on the other.
The reorganization will separate the supervision and
enforcement functions previously performed by OFLEO from its
promotion and education functions. The supervision and
enforcement functions will remain in the division that is
responsible for supervision and enforcement generally. OFLEO's
remaining functions will be elevated to the Director's Office
to become part of an Office of Equal Opportunity and Fairness
with a focus on advocacy and education, coordination, and
reporting.
The changes are designed to create efficiency and
consistency in the Bureau's supervision and enforcement
functions, and allow OFLEO to focus on promoting advocacy and
education, coordination, and reporting. These changes should
improve the Bureau's operations and our interactions with
consumers and industry, in fulfillment of our mission, and in
full compliance with the Bureau's statutory mandate.
Q.6.b. How will bringing the OFLEO under the control of the
Office of the Director modify the Bureau's decisionmaking
process with regard to enforcement and other actions to protect
consumers from unfair discrimination?
Q.6.c. What, if any, continuing role will the OFLEO play in
supporting the Bureau's enforcement of fair lending laws?
A.6.b.-c. I note that these questions are identical to
questions I received from Ranking Member Maxine Waters (CA)
following my testimony before the House Committee on Financial
Services, regarding the Bureau's Semi-Annual Report. For that
reason, I am providing you the same response I provided the
Ranking Member. Additionally, these questions are identical to
questions I received from Senator Elizabeth Warren (MA)
following my testimony before the Senate Committee on Banking,
Housing, and Urban Affairs, regarding the Bureau's Semi-Annual
Report. For that reason, I am providing you the same response I
will provide to the Senator.
The reorganization will not hamper the Bureau's fair
lending enforcement and supervisory activity; indeed, the
reorganization should help the Bureau operate more efficiently
and effectively. In consultation with Bureau stakeholders and
the National Treasury Employees Union (NTEU) and in accordance
with the Bureau's collective bargaining agreement, the Bureau
and NTEU have signed a memorandum of understanding (MOU) on the
implementation plan for the reorganization. Full implementation
of the reorganization is expected to take a few more months to
complete. While the Bureau works through the processes required
to fully implement such a change, OFLEO will continue to
operate as it has previously.
The reorganization of OFLEO will elevate OFLEO to the
Director's Office to become part of the Office of Equal
Opportunity and Fairness. OFLEO will continue to support the
enforcement of fair lending laws through the use of advocacy
and education, coordination, and reporting.
Q.6.d. How will the reorganization affect the reporting duties
for OFLEO employees, including the OFLEO Assistant Director?
A.6.d. I note that this question is identical to a question I
received from Ranking Member Maxine Waters (CA) following my
testimony before the House Committee on Financial Services,
regarding the Bureau's Semi-Annual Report. For that reason, I
am providing you the same response I provided the Ranking
Member. Additionally, this question is identical to a question
I received from Senator Elizabeth Warren (MA) following my
testimony before the Senate Committee on Banking, Housing, and
Urban Affairs, regarding the Bureau's Semi-Annual Report. For
that reason, I am providing you the same response I will
provide to the Senator.
In consultation with Bureau stakeholders and the NTEU, and
in accordance with the Bureau's collective bargaining
agreement, the Bureau and NTEU have signed a MOU on the
implementation plan for the reorganization. While staff will
not experience changes in employment status, employees may
experience changes in jobs and duties. Some OFLEO employees
will remain in the OFLEO while others will take positions
throughout the Supervision and Enforcement Division. The OFLEO
Assistant Director's duties will change insofar as the role
will focus on advocacy and education, coordination, and
reporting. We are working diligently to effect these changes
while minimizing disruption to operations and employees.
Q.6.e. After the reorganization, which officials in the Office
of the Director will be consulted about OFLEO activities?
Q.6.f. Which of these officials have been hired, politically
appointed, or detailed to the CFPB since November 24, 2017?
Q.6.g. After the reorganization, which political appointees and
temporarily detailed employees will be granted veto power over
OFLEO activities and decisions?
Q.6.h. What criteria will political appointees and temporarily
detailed employees in the Office of the Director use to
determine whether the Bureau will follow the recommendations of
career policy experts in the OFLEO?
Q.6.i. What actions will the Bureau take to ensure that OFLEO
decisions continue to be based on the best advice of
independent, expert, career policy staff?
A.6.e.-i. I note that these questions are identical or
substantially similar to questions I received from Ranking
Member Maxine Waters (CA) following my testimony before the
House Committee on Financial Services, regarding the Bureau's
Semi-Annual Report. For that reason, I am providing you the
same response I provided the Ranking Member. Additionally,
these questions are identical or substantially similar to
questions I received from Senator Elizabeth Warren (MA)
following my testimony before the Senate Committee on Banking,
Housing, and Urban Affairs, regarding the Bureau's Semi-Annual
Report. For that reason, I am providing you the same response I
will provide to the Senator.
In consultation with Bureau stakeholders and the NTEU and
in accordance with the Bureau's collective bargaining
agreement, the Bureau and NTEU have signed a MOU on the
implementation plan for the reorganization. Full implementation
of the reorganization is expected to take a few more months to
complete. While the Bureau works through the processes required
to fully implement such a change, OFLEO will continue to
operate as it has previously.
Q.6.j. How will new requirements that the OFLEO report to the
Office of the Director enhance the CFPB's ability to protect
consumers from unfair discrimination?
A.6.j. I note that this question is identical to a question I
received from Ranking Member Maxine Waters (CA) following my
testimony before the House Committee on Financial Services,
regarding the Bureau's Semi-Annual Report. For that reason, I
am providing you the same response I provided the Ranking
Member. Additionally, this question is identical to a question
I received from Senator Elizabeth Warren (MA) following my
testimony before the Senate Committee on Banking, Housing, and
Urban Affairs, regarding the Bureau's Semi-Annual Report. For
that reason, I am providing you the same response I will
provide to the Senator.
The Bureau intends to continue fulfilling its statutory
obligation to enforce Federal consumer financial laws, which
include the Equal Credit Opportunity Act (ECOA) and the Home
Mortgage Disclosure Act (HMDA). The reorganization should
improve the
Bureau's operations and our interactions with consumers and
industry, in fulfillment of our mission, and in full compliance
with the Bureau's statutory mandate. The Bureau's supervision
and enforcement of fair lending laws will continue
uninterrupted in the
existing supervision and enforcement divisions. This will allow
remaining OFLEO personnel to focus on education, outreach, and
compliance efforts. OFLEO's previous organizational structure
placed primary emphasis on ``back-end'' supervision and
enforcement of fair lending laws, resulting in a focus on
corrective measures, rather than ``front-end'' promotion of
education, and coordination of, fair lending efforts.
Q.6.k. Please describe any independent analyses, such as third-
party studies, that informed the decision to bring the OFLEO
under the Office of the Director and strip OFLEO of its
enforcement and supervisory authority.
A.6.k. I note that this question is identical to a question I
received from Ranking Member Maxine Waters (CA) following my
testimony before the House Committee on Financial Services,
regarding the Bureau's Semi-Annual Report. For that reason, I
am providing you the same response I provided the Ranking
Member. Additionally, this question is identical to a question
I received from Senator Elizabeth Warren (MA) following my
testimony before the Senate Committee on Banking, Housing, and
Urban Affairs, regarding the Bureau's Semi-Annual Report. For
that reason, I am providing you the same response I will
provide to the Senator.
Under the Dodd-Frank Act, the OFLEO ``shall have such
powers and duties as the Director may delegate to the Office.''
I have been working to ensure that the Bureau's operations are
conducted in a way that best enables the Bureau to fulfill all
of the Bureau's statutory requirements while reducing
redundancy and maximizing efficiency. Changes to the structure
and operations of OFLEO are being implemented in furtherance of
these priorities.
Q.6.l. Did you or any other CFPB employee consult with or
discuss this reorganization with any outside entities--
including lobbyists or representatives of the banking or
financial services industry--prior to announcing the
reorganization?
A.6.l. I note that this question is identical or substantially
similar to a question I received from Ranking Member Maxine
Waters (CA) following my testimony before the House Committee
on Financial Services, regarding the Bureau's Semi-Annual
Report. For that reason, I am providing you the same response I
provided the Ranking Member. Additionally, this question is
identical or substantially similar to a question I received
from Senator Elizabeth Warren (MA) following my testimony
before the Senate Committee on Banking, Housing, and Urban
Affairs, regarding the Bureau's Semi-Annual Report. For that
reason, I am providing you the same response I will provide to
the Senator.
No, I did not consult, nor am I aware of any Bureau
employee discussing, the reorganization outside of the Bureau.
Q.6.m. Did you consult with other officials, employees, or
political appointees at OMB or the White House about the OFLEO
reorganization prior to its announcement?
A.6.m. I note that this question is identical to a question I
received from Ranking Member Maxine Waters (CA) following my
testimony before the House Committee on Financial Services,
regarding the Bureau's Semi-Annual Report. For that reason, I
am providing you the same response I provided the Ranking
Member. Additionally, this question is identical to a question
I received from Senator Elizabeth Warren (MA) following my
testimony before the Senate Committee on Banking, Housing, and
Urban Affairs, regarding the Bureau's Semi-Annual Report. For
that reason, I am providing you the same response I will
provide to the Senator.
Office of Management and Budget (OMB) detailees to the
Bureau were, as a matter of course, part of the discussion, but
no other employees at OMB or the White House were consulted.
Q.6.n. Is the CFPB considering any substantive changes to its
approach to the enforcement of fair lending laws, including
changes to the CFPB's interpretation of these laws?
A.6.n. I note that this question is identical or substantially
similar to a question I received from Ranking Member Maxine
Waters (CA) following my testimony before the House Committee
on Financial Services, regarding the Bureau's Semi-Annual
Report. For that reason, I am providing you the same response I
provided the Ranking Member. Additionally, this question is
identical or substantially similar to a question I received
from Senator Elizabeth Warren (MA) following my testimony
before the Senate Committee on Banking, Housing, and Urban
Affairs, regarding the Bureau's Semi-Annual Report. For that
reason, I am providing you the same response I will provide to
the Senator.
The Bureau intends to continue fulfilling its statutory
obligation to enforce Federal consumer financial laws, which
include the Equal Credit Opportunity Act (ECOA) and the Home
Mortgage Disclosure Act (HMDA). As you may be aware, the Bureau
issued a statement on the passage of the Congressional Review
Act resolution disapproving a bulletin titled ``Indirect Auto
Lending and Compliance with the Equal Credit Opportunity Act,''
which had provided guidance about the ECOA and its implementing
regulation, Regulation B. Consistent with the joint resolution,
the guidance has no force or effect. The ECOA and Regulation B
are unchanged and remain in force and effect. As I noted in
that statement, I want to make it abundantly clear that the
Bureau will continue to fight unlawful discrimination at every
turn. We will vigorously enforce fair lending laws in our
jurisdiction, and will stand on guard against unlawful
discrimination in credit. However, given this recent
Congressional action, the Bureau will be reexamining the
requirements of ECOA in light of relevant Supreme Court
precedents.
In addition, on August 31, 2018, the Bureau issued an
interpretive and procedural rule \1\ to implement and clarify
the requirements of section 104(a) of the Economic Growth,
Regulatory Relief, and Consumer Protection Act (the Act), which
amended the HMDA. The Bureau also released updates to the
Filing Instructions Guide (FIG) for HMDA data collected in 2018
to incorporate the Act as implemented and clarified by the rule
issued that day.
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\1\ https://files.consumerfinance.gov/f/documents/
bcfp_hmda_interpretive-procedural-rule_2018-08.pdf.
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The Act contains provisions that are intended to decrease
the burden smaller depository institutions face in complying
with HMDA and its implementing regulation, Regulation C. Some
such institutions have raised questions about the application
of the Act, and the rule issued in August seeks to provide
clarification. At a later date, the Bureau anticipates that it
will initiate a notice-and-comment rulemaking to incorporate
these interpretations and procedures into Regulation C and
further implement the Act.
Q.6.o. Please provide a copy of all documents and
communications relating to the decision to bring the OFLEO
under the control of the Office of the Director, and strip
OFLEO of its enforcement and oversight responsibilities.
A.6.o. The requested documents would contain confidential
Bureau information. It would not be appropriate to submit them
into the public record. I urge you to work with the Committee
Chairman when submitting requests for confidential Bureau
information.
Q.7. At the hearing, you said you had received approval to hire
several political appointees to the CFPB. Please provide copies
of that approval to the Committee.
A.7. The Bureau received official approval from the Office of
Personnel Management (OPM) for the Schedule C political
appointees via the OPM Form 1019 forms attached. [Attachment
follows response to Senator Warren--A.47.e.].
Q.7.a. Additionally, did you perform any cost-benefit analysis
in connection with the decision to hire these employees or set
their salaries? If so, please provide copies of that analysis
to the Committee.
A.7.a. The decision to place a position in the Schedule C
category is made by the Director of OPM at the request of an
agency head. The Bureau followed the process established by OPM
and provided all of the information that OPM required. OPM does
not require a cost-benefit analysis.
Q.8. At the hearing, you said you ``did not quash anything at
OIRA,'' and that in fact ``no one'' had quashed anything.
However, Bloomberg Law previously reported that ``Labor
Department leadership convinced OMB Director Mick Mulvaney to
overrule the White House regulatory affairs chief and release a
controversial tip-sharing rule without data showing it could
allow businesses to skim $640 million in gratuities.'' We have
several follow-up questions:
Q.8.a. Were you aware of any dispute between OIRA Administrator
Rao and the Department of Labor about whether the Department
should include certain quantitative analysis in materials
accompanying the tip-sharing regulation?
Q.8.b. Were you aware of any initial opposition by
Administrator Rao to publishing the regulation without certain
quantitative analysis?
Q.8.c. Have you, as OMB Director, ever intervened in disputes
between the OIRA Administrator and the head or staff of a
Federal agency (such as the Department of Labor)?
Q.8.d. Did you play any role, direct or indirect, either
yourself or through your agents or political appointees, in
resolving any dispute related to the tip-sharing rule between
the OIRA Administrator and the Secretary of Labor or the staff
of the Department of Labor? If so, please describe that role.
Did the Secretary of Labor or the staff of the Department of
Labor request your intervention related to the tip-sharing
rule?
A.8.a.-d. We do not comment on the deliberative interagency
review process for particular rules, but OMB Circular A-4
continues to require that agencies quantify costs, benefits,
and transfers to the extent feasible when preparing regulatory
analysis for economically significant rules.
No quantitative analysis was prepared by the Obama
administration when the rule was originally promulgated. As the
Department of Labor was preparing its analysis for this rule,
it had no prior analysis to rely on. The Secretary of Labor has
publicly stated that critical assumptions were required to
provide quantitative analysis that could lead to almost any
number. As a result, the Department of Labor determined they
lacked sufficient data to provide a meaningful quantitative
analysis.
As you know, Congress recently acted on the
Administration's recommendation to legislatively resolve the
issue of whether employers may retain the tips of tipped
employees. The amendments to the Fair Labor Standards Act
(FLSA) that were included in the Consolidated Appropriations
Act of 2018 now prohibit employers from keeping tips received
by their employees, regardless of whether an employer takes a
tip credit under the FLSA. The Department of Labor has
announced that they expect to proceed with rulemaking in the
near future to fully address the impact of the 2018 amendments
to the FLSA, and OMB looks forward to working with DOL to
ensure that any such rulemaking in this area contains an
appropriately thorough and transparent regulatory impact
analysis.
Q.9. At the hearing, you expressed concern about the handling
of personal data by third parties with which the CFPB has
contracted. Senator Perdue asked you if, ``every single factor
that I have as an individual in the United States, every single
financial factor can be reviewed, and can be collected, and can
be exposed by the CFPB, is that correct?'' In creating the
CFPB, Congress required the Bureau to monitor consumer
financial products and services, including developments in
those markets. It also limited the Bureau's market monitoring
authority to prevent the Bureau from obtaining information for
the purpose of gathering or analyzing the personally
identifiable information of consumers.
Q.9.a. Can you clarify that the Bureau does not collect data
for the purposes of monitoring any individual?
A.9.a. Correct, the Bureau does not collect data using its
market monitoring authority in order to monitor individual
consumers. Rather, the Bureau collects data to track the
behavior of the markets. To do this, the Bureau does collect
certain account-level data; however these data are de-
identified so that any particular individual is not directly
identified. In September, the Bureau released a report \2\ on
the Bureau's data governance program, what data the Bureau
collects, where the data come from, how data are used, and how
data are reused within the Bureau.
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\2\ https://www.consumerfinance.gov/data-research/research-reports/
sources-and-uses-data-bureau-consumer-financial-protection/.
Q.9.b. Does the data that the Bureau collects for market
monitoring purposes differ from the data it reviews under its
---------------------------------------------------------------------------
examination and supervisory authority?
A.9.b. Yes. The composition of a data collection differs
depending on the purpose of the collection. The data collected
for market monitoring is de-identified information so that it
does not contain any consumer's name, address, account number,
or Social Security number. The Bureau's Enforcement and
Supervision staff often review individualized transactional
data as part of their work.
Q.9.c. Is data gathered for market monitoring purposes stripped
of personally identifiable information before it is studied by
the Bureau?
A.9.c. The Bureau ensures that the data it uses for market
monitoring purposes is first stripped of ``personally
identifiable financial information,'' i.e., direct personal
identifiers such as names, account numbers, or Social Security
numbers. The Dodd-Frank Act places restrictions on the Bureau's
collection and use of personally identifiable financial
information in its market monitoring work.
To be clear, ``personally identifiable information'' (PII)
is a technical term that has been defined by the Office of
Management and Budget (OMB) very broadly to include any
information that can be used to distinguish or trace an
individual's identity, either alone or when combined with other
information that is linked or linkable to a specific
individual. See OMB Circular A-130, Appendix II-1. Thus, any
data that presents re-identification risk, however remote, is
technically considered PII, even if it has been stripped of
direct personal identifiers.
Q.9.d. Is it true that the private entities from whom the
Bureau collects anonymized data have access to millions of
Americans' personally identifiable information, and that those
entities offer that information for sale to other private
businesses?
A.9.d. Yes, the Bureau purchases publicly available data from
entities with access to PII. The Bureau also has collected de-
identified data from financial institutions via financial firms
that, due to the nature of their business, have access to PII
on their customers.
Q.9.e. Does the data that the Bureau reviews in supervision and
examination differ from the data that the prudential banking
regulators review during their supervision and examinations?
A.9.e. The Bureau and prudential regulators review the same
kinds of data during their respective compliance examinations.
Prudential regulators review additional data for purposes of
their safety and soundness examinations, which the Bureau does
not conduct.
Q.9.f. What evidence exists that shows that third parties have
mishandled such personal data? Please provide copies of any
analysis that shows that these third parties have mishandled
any personal data.
A.9.f. We are not aware of any data breach in connection with
Bureau data possessed or handled by a third-party vendor under
contract with the Bureau to assist with the Bureau's market
monitoring, supervision, and examination work.
The Bureau also has a relationship with the Conference of
State Bank Supervisors (CSBS). CSBS created the Nationwide
Multistate Licensing System and Registry, which is the system
of record for nondepository, financial services licensing or
registration in participating State agencies under the Bureau's
Regulation G. In May 2015, CSBS notified the Bureau of a
potential incident involving Nationwide Multistate Licensing
System data where files from one financial institution were
shared with another financial institution in error. The
misrouted data was quickly identified and destroyed.
Q.10.a. In early December 2017, the CFPB withdrew its request
to OMB to conduct an online survey of 8,000 individuals related
to debt collection disclosures. This survey would have provided
important data about debt collection disclosures to assist the
CFPB's obligations to root out unfair, deceptive, and abusive
acts and practices related to debt collection.
Why did the CFPB withdraw this survey?
A.10.a. I note that this question is substantially similar to a
question I received from Ranking Member Maxine Waters (CA)
following my testimony before the House Committee on Financial
Services, regarding the Bureau's Semi-Annual Report. For that
reason, I am providing you the same response I provided the
Ranking Member. Additionally, this question is substantially
similar to a question I received from Senator Catherine Cortez
Masto (NV) following my testimony before the Senate Committee
on Banking, Housing, and Urban Affairs, regarding the Bureau's
Semi-Annual Report. For that reason, I am providing you the
same response I will provide to the Senator.
The survey for which the Bureau sought Office of Management
and Budget (OMB) approval under the Paperwork Reduction Act was
tied to testing particular disclosures that were under
consideration as part of a potential rulemaking with respect to
debt collection. The request for comment on the Bureau's
request appeared in the Federal Register on November 14, 2017,
less than 2 weeks before I became the Acting Director. I
decided that before proceeding with the survey I first wanted
to review the proposals that were under consideration for the
rulemaking so that any data collection would be tailored to
what I determined to be the appropriate scope for the
rulemaking rather than driven by decisions that may have been
made by my predecessor. Prior to my tenure as Acting Director,
the Bureau did conduct a survey of consumers about their
experiences with debt collection.
Q.10.b. Did you personally approve this decision?
A.10.b. Yes.
Q.10.c. How do you reconcile this decision to deprive the CFPB
of important data with your previous statements about your
intention to engage in more cost-benefit analysis based on
quantitative data?
A.10.c. Withdrawing the request to OMB did not deprive the
Bureau of any data, but rather deferred a decision on what data
would be relevant to collect until such time as I had the
opportunity to review the scope of the underlying rulemaking.
Q.10.d. Did you undertake any cost-benefit analysis in
connection with this decision? If so, please provide a copy of
that analysis to the Committee.
A.10.d. As noted in a previous response, I decided that before
proceeding with the survey I first wanted to review the
proposals that were under consideration for the rulemaking so
that any data collection would be tailored to what I determined
to be the appropriate scope for the rulemaking.
Q.11.a. At the hearing, you said that you immediately issued a
data collection freeze with certain accommodations made for
enforcement data and that you are now looking at some data
offsite instead of storing it onsite.
Did the Bureau perform a cost-benefit analysis prior to a
decision to halt collection of certain data and instead view it
offsite? If so, please provide that analysis.
A.11.a. When I joined the Bureau, I announced a 30-day data
freeze on the collection of new sensitive data for the Bureau
in order to assess the Bureau's data security program. While we
instituted the freeze, I ensured that we could continue our
enforcement and supervisory activities. To ensure strong data
security in the meanwhile, we stored data at the same
commercial vendor as the Department of Justice. Bureau staff
budgeted for an increase of $1,055,830 in FY18, and anticipates
that this funding will get us through the end of the 2018
calendar year.
Q.11.b. What, if any, information did the Bureau previously
collect that it does not collect now?
Q.11.c. What, if any, information did the Bureau previously
collect that it does not collect or view offsite now?
A.11.b.-c. After December 4, 2017, the Division of Supervision,
Enforcement, and Fair Lending (SEFL) suspended intaking certain
sensitive information, such as data with direct personal
identifiers. Enforcement attorneys were conducting review of
most investigative materials by storing those materials on a
system used by the U.S. Department of Justice (DOJ).
Supervision did not take data with direct personal identifiers
onto the Bureau's systems, instead reviewing it onsite.
On May 31, 2018, after an exhaustive review by outside
experts, including a comprehensive ``white-hat hacking''
effort, I lifted that hold. The independent review concluded
that ``externally facing Bureau systems appear to be well-
secured.'' The assessors identified no ``Critical'' findings
and made only three technical recommendations, all of which the
Bureau has completed remediating.
Q.12. At the hearing, you said that you have been able to
document 240 lapses in data security and that you suspect but
have not been able to confirm 800 others. Are the 240 lapses in
data security that you described 240 separate pieces of
information or 240 instances in which multiple data lapses
occurred? Please describe the nature of these lapses and how
many of these lapses contained personally identifiable
information (PII).
A.12. You may not be aware that prior to my appointment as
Acting Director, there were 233 confirmed breaches of consumer
PII within the Bureau's Consumer Response system. These
confirmed breaches generally occurred in one of three ways: (1)
the Bureau failed to follow internal processes and provided an
update to a consumer about his or her complaint prior to
receiving three pieces of information that would validate the
consumer's identity; (2) the Bureau attached an incorrect
document to a consumer's complaint; or (3) the Bureau sent an
unencrypted email to the wrong consumer. Almost all breaches
(approximately 90 percent) involved one or more of the
following data elements: first name, last name, email address,
phone number, or account number. For almost all of these
breaches, the number of individuals potentially impacted by
each breach was most likely one. This means that those breaches
each involved separate pieces of information and no multiple
data lapses occurred for any breach.
In addition, prior to my appointment there were at least
another 840 suspected PII breaches committed by financial
institutions that the Bureau had not investigated to determine
whether a breach occurred. Earlier this year, I instructed the
staff to develop a proposal for responding to them.
By July 1st, staff had implemented enhancements to the
Bureau's processes for handling suspected PII breaches by
financial institutions to determine whether a breach occurred,
identify what steps the financial institution took to provide
redress, and determine whether suspending, restricting, or
otherwise modifying a financial institution's access to the
secure Company Portal is warranted. These process enhancements
reflect improved coordination between the Office of Consumer
Response and the Chief Privacy Officer's staff.
Q.12.a. Does the Bureau monitor the accounts of particular
consumers or track the financial habits or activities of any
individual consumer? If so, in what cases?
A.12.a. To my knowledge the Bureau does not collect data for
the purpose of monitoring an individual. The Bureau collects
individual-level data to understand how consumer markets
perform and proactively monitor consumer financial markets.
However, data collected for the Bureau's monitoring function is
generally de-identified so that any particular individual is
not directly identified. In September, the Bureau released a
report \3\ on the Bureau's data governance program, what data
the Bureau collects, where the data come from, how data are
used, and how data are reused within the Bureau.
---------------------------------------------------------------------------
\3\ https://www.consumerfinance.gov/data-research/research-reports/
sources-and-uses-data-bureau-consumer-financial-protection/.
Q.13.a. In response to questions about data security at the
Bureau, you said, ``the rule is this, I'm not going to hold
somebody to a higher standard than we're willing to hold
ourselves.''
Will you assure us that the Bureau also will hold any
company that holds consumers' data to the same standard that
you hold the Bureau?
A.13.a. The Bureau will exercise the authority granted to it.
Q.13.b. How has the data collection freeze affected the CFPB's
supervisory and examination efforts? Please provide statistics
on the following:
LThe mean and median time to complete an
examination over (i) the 6 months before you
implemented the data freeze and (ii) the period
beginning when you implemented the data freeze and
ending April 19, 2018.
LThe mean and median cost per examination over
(i) the 6 months before you implemented the data freeze
and (ii) the period beginning when you implemented the
data freeze and ending April 19, 2018.
A.13.b. I am not aware of any evidence suggesting that the
temporary data security measures affected supervisory and exam
efforts in a quantifiable way. To address the specific metrics
identified, the mean number of days it took to issue an exam
report or supervisory letter after first going onsite was 212
days for exams taking place between June 4, 2017 and December
4, 2017. The median for that same period was 170 days. For the
period between December 5, 2017 and April 19, 2018, the mean
was 210 days and the median was 182 days.
I am not aware of any evidence suggesting that the
temporary data security measures have affected supervisory and
exam efforts in a quantifiable way. Further, there is not
sufficient data to estimate what the cost difference would be,
and/or whether there is a cost difference.
------
RESPONSES TO WRITTEN QUESTIONS OF SENATOR REED FROM MICK
MULVANEY
Q.1. Does the President stand by the Bipartisan Budget
Agreement he signed into law in February, including the top
line numbers for defense and nondefense spending?
A.1. The President supported the agreement that he signed into
law in February, as it allowed for critical investments to be
made in support of our National Security. The President
recognizes that the agreement set funding caps for both defense
and nondefense. However, the caps--by definition--are ceilings
on spending and not floors. The President believes it is his
responsibility to spend only what is necessary under the caps.
Given the current fiscal situation, and the Administration's
views on the proper role and scope of the Federal Government,
the President's Budget does not propose spending at the
nondefense levels for FY 2019 included in the recent budget
agreement. Furthermore, as the President carries out his duties
to execute enacted appropriations, he also believes it is his
responsibility to propose reductions in places where he
believes the spending will be wasteful or unnecessary.
Q.2.a. One of the early decisions under your tenure was to
reverse the CFPB's previous practice of consolidating the
required reporting on campus credit cards with a broader
analysis of campus-based financial products. Institutions of
higher education have considerable influence on their students'
financial choices, from
student loans to credit cards to bank accounts and other
financial products. CFPB, in fulfilling its broader mandate to
protect consumers in the financial products marketplace,
previously has played an important role in disclosing
information on these financial products to students.
What actions are you taking to protect and inform student
consumers?
A.2.a. The Bureau of Consumer Financial Protection (Bureau)
helps young adult consumers navigate the consumer finance
market and manage their money by developing tools and resources
with a focus on student debt and paying for college.\1\ The
Bureau also provides student loan borrowers with commonly asked
questions and answers on financial topics from bank accounts to
credit cards through our online question and answer tool.
---------------------------------------------------------------------------
\1\ See https://www.consumerfinance.gov/consumer-tools/student-
loans/.
Q.2.b. Please describe how the CFPB is currently collaborating
---------------------------------------------------------------------------
with the U.S. Department of Education on the following:
Q.2.b.i. Student loan servicing complaints;
A.2.b.i. The Bureau's collaboration with the Department of
Education on student loan servicing complaints was governed by
an October 19, 2011, Memorandum of Understanding (MOU) that
allowed the Bureau to refer servicing complaints to the
Department of Education through a secure web portal. The
Department of Education terminated that MOU effective October
1, 2017. In the absence of an MOU, the Department of Education
continues to have access to the Bureau's public complaint
database.
Q.2.b.ii. Student loan servicing standards; and
A.2.b.ii. The Bureau's Office of Supervision and the Department
of Education's Office of Federal Student Aid (FSA) have held
interagency consultations to discuss student loan servicing and
the standards adhered to by servicers.
Q.2.b.iii. Protecting student loan borrowers from debt relief
scams.
A.2.b.iii. Since the termination of the supervisory MOU, the
Bureau continues to pursue options that would allow for the
Bureau to share Confidential Supervisory Information with the
Department of Education for permissible purposes under 12 CFR
1070.43. These efforts include providing relevant supervisory
information where the Department of Education has active
confidentiality assurances and negotiating with the Department
of Education for the Bureau to obtain information from student
loan servicers necessary for supervisory examinations. The
Department of Education continues to have access to the
Bureau's public complaint database. Bureau staff also continues
to analyze complaint data and provide that analysis as
technical assistance when requested by the Department of
Education.
Q.2.c. Has the Federal Student Aid Administration at the U.S.
Department of Education consulted with the CFPB on the proposal
to create a pilot student aid payment card program? If so, what
guidance has the CFPB offered?
A.2.c. The Bureau and the FSA have participated in a series of
staff-level discussions related to FSA's proposed pilot student
aid payment card program, during which Bureau staff offered
general subject-matter expertise about the prepaid card market.
In addition, the Bureau provided FSA with an analysis, at its
request, of publicly available data on fees assessed by
companies that currently provide college-sponsored debit and
prepaid products to students.
------
RESPONSES TO WRITTEN QUESTIONS OF SENATOR SCOTT FROM MICK
MULVANEY
Q.1. Thank you Director Mulvaney for joining the Committee.
It's always a pleasure to have a South Carolinian in the mix. I
have to confess: I'm a bit confused by the outrage from my
friends across the aisle over the CFPB's lack of
accountability. Weren't they the ones that designed the Bureau
and voted for its creation? Did they not realize there would be
another election? Did they not think there was a chance their
party wouldn't be in power? Now that the shoe's on the other
foot, it's not so fun. That's why both sides of this debate
should meet in the middle. A CFPB that swings wildly in the
political winds is bad for consumers and terrible for the
economy. Mick, I agree with your commonsense recommendations.
It's time for a bipartisan commission at the Bureau. And it's
time to place the Bureau under Congressional appropriations.
Doing so will create a more trustworthy CFPB better able to
protect consumers. With that, I do have some questions.
I was glad to see your report's first section was titled
``credit invisibles.'' The Bureau found that over 26 million
Americans are ``credit invisible,'' meaning they have no
recorded credit history. That includes 23 percent of South
Carolinian adults. A disproportionate amount of these folks are
African American or Hispanic. We're trying to tackle this
problem through the Credit Score Competition Act, legislation
that will allow for the use of newer credit scoring models by
Fannie and Freddie. Modern credit scoring models use data like
rent payments, utility payments, and cell phone bill payments,
all of which benefits the ``credit invisible.'' Plus, a free
market guy like yourself would agree that the Government
shouldn't be picking winners and losers. Unfortunately, the
CFPB's safe harbor for its QM rule applies to loans using the
same old credit score mandated by the GSEs. Please answer the
following with specificity:
Wouldn't encouraging the use of newer credit scoring models
better align with the Bureau's dual mandate to provide market
access to all consumers and ensure competitive markets?
A.1. As you note, the Bureau of Consumer Financial Protection's
(Bureau's) research shows that 26 million consumers are
``credit invisible'' and do not have credit files at all in our
national credit reporting system. Another 19 million adult
consumers have credit files that are ``stale'' or ``thin,''
i.e., the file information is insufficient to generate a credit
score. The Bureau has taken a number of steps to explore the
use of alternative data and modeling techniques as a potential
way to increase access to credit for these consumers, while
being mindful of the risks that these innovations can pose to
consumers. For example, last year, the Bureau published a
Request for Information (RFI) Regarding Use of Alternative Data
and Modeling Techniques in the Credit Process, and received
approximately 100 comments in response. Comments received in
response to this RFI have been made public and may help
industry develop best practices for using alternative data and
modeling techniques. Also, the Bureau held a day-long
symposium, Building a Bridge to Credit Visibility on September
17, 2018. This event explored challenges many consumers face in
accessing credit. Sessions also highlighted strategies and
innovations to overcome barriers and expand consumer credit
access.
In addition, the Bureau issued a No-Action Letter to a
company that uses alternative data in making credit and pricing
decisions. That company evaluates consumer loan applications
using traditional factors such as credit score and income, as
well as incorporating nontraditional sources of information
such as education and employment history, and will be required
to regularly report lending and compliance information to the
Bureau to mitigate risk to consumers and aid the Bureau's
understanding of the real-world impact of alternative data on
lending decisionmaking. The Bureau may explore similar steps in
the future.
Q.2. I want to move on to the topic of insurance, a product I
sold for over 20 years. Please answer the following with
specificity:
Q.2.a. Is the CFPB an insurance regulator?
A.2.a. No.
Q.2.b. Did Congress intend for the CFPB to regulate insurance?
A.2.b. No, I do not believe so.
Q.2.c. Would you support legislation to make it clear that
Congress intended to exempt insurance from the Bureau's
authority when it passed the Dodd-Frank Act?
A.2.c. I believe that in Section 1027(t) of Dodd-Frank Wall
Street Reform and Consumer Protection Act (Dodd-Frank Act)
Congress made clear its intention not to provide the Bureau
jurisdiction over State-regulated insurance companies except to
the extent they offer a consumer financial product or service.
The Bureau should not regulate insurance.
------
RESPONSES TO WRITTEN QUESTIONS OF SENATOR SASSE FROM MICK
MULVANEY
Q.1.a. I appreciate your concern about the CFPB's large-scale
collection of consumer data. In November 2015, I wrote then-
CFPB Director Cordray on this topic. Director Cordray responded
on April 6, 2017. Please answer the following questions, all of
which are substantially similar to those that Director Cordray
answered on April 6, 2016.
Former Director Cordray testified at a hearing with the
Senate Banking Committee on July 15, 2015, regarding reverse
engineering of information in the CFPB's database collections,
that ``it is not easy to do that. It would take a lot of time
and effort to do that. I don't see that it would be worth
anybody's while to try to do that.''\1\
---------------------------------------------------------------------------
\1\ See The Consumer Financial Protection Bureau's Semi-Annual
Report to Congress: Hearing Before the Senate Banking Committee on
Banking, Housing, and Urban Affairs, 114th Cong. (2015) http://
www.banking.senate.gov/public/index.cfm?FuseAction=Hearings.Hearing&
Hearing_ID=7cac453a-bd43-4f4c-b071-9aba43c80946.
---------------------------------------------------------------------------
Do you agree?
A.1.a. When originally asked this question, it pertained to the
credit card data the Bureau of Consumer Financial Protection
(Bureau) receives. These data are difficult to reidentify. Even
so, since then, the Bureau has changed key aspects of the data
collection that further decrease any privacy risks.
Q.1.b. Why or why not?
A.1.b. The credit card data that the Bureau receives does not
contain direct personal identifiers or account numbers and does
not contain information about transactions such as purchases.
Rather, it is de-identified account level data. In addition, at
the urging of multiple Members of Congress, the Bureau has
reduced the data it retains to a 40 percent sample, making it
increasingly harder to re-identify data housed at the Bureau.
Identifying an individual from a de-identified dataset
(``reverse engineering'') generally involves combining that
data with additional data that is not de-identified. Reverse
engineering the Bureau's data likely would involve acquiring
multiple similar data sources that are not publicly available,
a task that would be time consuming, difficult, and expensive.
Q.1.c. Has the CFPB conducted a study looking at the national
security, privacy, and economic risk that could come from a
data breach, including the possibility that information
contained in the databases could be reverse engineered? If so,
please provide us with a copy of this report. If not, please
provide an explanation for why the CFPB has not yet conducted
this study.
A.1.c. I share your concern about the risk of a breach of
Bureau data, and the consequences therefrom. Soon after I
arrived, I commissioned a white hat hackers exercise to test
the security of the Bureau's systems. The independent review
concluded that ``externally facing Bureau systems appear to be
well-secured.'' The assessors identified no ``Critical''
findings and made only three technical recommendations, all of
which the Bureau has completed remediating. This is, however,
no guarantee of security, and the Bureau must remain vigilant
in its efforts and response to emergency threats.
Q.1.d. Who is the highest-ranking person in charge of
cybersecurity at CFPB?
A.1.d. Jerry Horton, Chief Information Officer (CIO).
Q.1.e. Is this person solely and directly responsible for
cybersecurity or are there others as well?
A.1.e. The CIO has designated a Chief Information Security
Officer (CISO) to carry out those responsibilities. The CISO
manages a cyber-security team.
Q.1.f. Is anyone at the CFPB in charge of assessing the
strategic security risks the various databases could pose? If
so, who?
A.1.f. The Bureau's Chief Information Officer is the senior
Bureau official in charge of assessing risk associated with
data maintained by the Bureau. The CIO is supported by numerous
staff in making these risk assessments, including a Chief
Information Security Officer, a Chief Data Officer, a Chief
Privacy Officer, and staff in their respective offices.
Q.1.g. Does the CFPB and the OCC hold information on
transaction level data, such as on individual purchases, in the
CFPB's credit-related databases? If so, what type of
information is held?
Does this include data on the date, location, and price of
each transaction?
A.1.g. No. The Bureau's credit card database does not contain
transaction-level information, such as individual purchases.
Q.1.h. Can you state with certainty that a data breach at the
CFPB could not result in the reverse engineering of information
in the CFPB's various credit databases to identify personal
information from individual consumers?
A.1.h. No. It is not possible to state categorically that any
system is incapable of being breached or that any protections
can ensure with certainty that information cannot be reverse
engineered.
Q.1.i. Can you state with certainty that a data breach at the
CFPB could not result in the reverse engineering of information
in the CFPB's National Mortgage Database to identify personal
information from individual consumers?
A.1.i. No. As noted in the previous response, it is not
possible to state categorically that any system is incapable of
being breached or that any protections can ensure with
certainty that information cannot be reverse engineered.
Q.1.j. Can you state with certainty that a data breach at the
CFPB could not result in the reverse engineering of information
in any of the CFPB's other databases to identify personal
information from individual consumers?
A.1.j. No. As noted in the previous response, it is not
possible to state categorically that any system is incapable of
being breached or that any protections can ensure with
certainty that information cannot be reverse engineered.
Q.1.k. Is the CFPB in full compliance with all Federal
cybersecurity laws and guidance?
A.1.k. The Bureau complies with requirements provided in FISMA,
applicable Office of Management and Budget (OMB) Memoranda,
U.S. Department of Homeland Security (DHS) Binding Operational
Directives, and other applicable guidance.
Q.1.l. If any of the CFPB's large-scale databases were ever
breached, how many Americans would have their information
exposed?
A.1.l. As noted in a previous response, much of the data held
by the Bureau (including collections previously examined by the
Government Accountability Office) consist of de-identified
information that do not contain any consumer's name, address,
account number, or Social Security number. Therefore,
information that could be exposed by a breach of the large-
scale databases (such as those identified in the GAO report
\2\) would not be attributable to a specific American. If an
individual were to attempt to re-identify a record from the
Bureau's datasets, he or she would generally find only basic
non-identifiable data that would not be very useful in any
attempted combination with other available information.
---------------------------------------------------------------------------
\2\ Consumer Financial Protection Bureau: Some Privacy and Security
Procedures for Data Collections Should Continue Being Enhanced, GAO-14-
758, September 22, 2014.
Q.1.m. What if information about the identity of individual
---------------------------------------------------------------------------
consumers in your databases could be reverse engineered?
A.1.m. As noted in a previous response, it is not possible to
state categorically that any protections can ensure with
certainty that information cannot be reverse engineered. For
the de-identified
information contained in the Bureau's databases (including
collections examined by GAO) much of the data are at the
account rather than transaction level.
Q.1.n. Does the CFPB's databases ever contain personal
information that will be depersonalized at any point? If so,
when does the CFPB store such information, and for how long is
such information stored on the CFPB's servers?
A.1.n. Data from the consumer complaint database are de-
identified and made available to the public and internally.\3\
---------------------------------------------------------------------------
\3\ In November 2017, the Bureau identified that its redaction
program inadvertently had not redacted proper nouns that arose in
certain circumstances in published complaint narratives, impacting 101
complaints. The Bureau determined that the privacy risk associated with
the disclosure was minimal with respect to most of the complaints. It
identified two individuals who could be subject to risk of harm by the
disclosure and notified them of the breach. The Bureau also fixed the
error that led to the missed redactions.
---------------------------------------------------------------------------
Occasionally, enforcement or supervisory data are de-
identified and used for market monitoring or research that may
inform rulemaking or assessments. These data are de-identified
before they are used for these purposes. The retention of these
data is based on records retention schedule for the data.
Q.1.o. Can you provide a comprehensive list of the sources from
which the CFPB purchases and receives data?
A.1.o. In September, the Bureau released a report \4\ on the
Bureau's data governance program as well as what data the
Bureau collects, where the data come from, how data are used,
and how data are reused within the Bureau.
---------------------------------------------------------------------------
\4\ https://www.consumerfinance.gov/data-research/research-reports/
sources-and-uses-data-bureau-consumer-financial-protection/.
Q.2. A June 10, 2015, letter from Senators Scott and Crapo,
---------------------------------------------------------------------------
along with 21 other Senators, noted the following:
At [a 2013 House Financial Services Subcommittee hearing,
Acting Deputy Director Stephen Antonakes] said that CFPB was
``in the process of developing . . . our data destruction
schedules,'' and confirmed that until such destruction protocol
was in place, that CFPB would be holding all the data it has
ever collected.'' Director Cordray's July 14, 2015 response to
this letter explained that the CFPB has received approval from
the National Archivist on some of the CFPB's retention
schedules but not others. However, this letter did not clarify
if the CFPB has started to delete any of its data.
Q.2.a. Please provide us with a list of what--if any--data the
CFPB has already started to delete, what specific data the CFPB
plans to delete, and an expected timeline for when the CFPB
will fully implement its data destruction schedules.
A.2.a. The destruction of data depends on variables, including
how the data was acquired and the type of data. For example,
commercially purchased data has vendor license agreement
restrictions. Ultimately, the destruction of records is
controlled by the record retention schedules for each division
within the Bureau. A list of the approved records management
schedules for the Bureau can be found at: https://
www.archives.gov/recordsmgmt/rcs/schedules/index.html?dir=/
independent-agencies/rg-0587.
Q.2.b. How does CFPB control access to its various databases
that contain consumer information?
Q.2.b.i. Please provide a comprehensive list of what types of
people the CFPB provides, and plans to provide, access to the
database. For example, are outside researchers able to access
these databases?
A.2.b.i. As outlined in the Bureau's report on the Sources and
Uses of Data at the Bureau, the Bureau's Policy on Information
Governance establishes guidelines regarding access to
information by CFPB employees and contractors. This policy sets
forth the principles governing who may be granted access to
what data, based on the sensitivity level of the data and the
user's assigned duties. The Bureau manages access to data at
the level of each individual data asset for all network users,
including contractors. In addition, all users are subject to
the same training requirements and background checks. The
Bureau grants access to information consistent with the
information's sensitivity level (as outlined in the Bureau's
Information Sensitivity Leveling Standard), the authority under
which the Bureau collected the information, the Bureau's
information sharing standards, cybersecurity policies and
procedures, and applicable law or contractual obligations.
The Bureau has a limited number of researchers who are
subject to Intergovernmental Personnel Agreements and
therefore, subject to all Bureau policies, standards and
related data access restrictions. The Bureau does not currently
have an outside researchers program.
Q.2.c. Does the CFPB conduct background checks on any
individuals who are provided access to their consumer
databases?
A.2.c. All Federal employees and contractors go through
background checks. The Bureau also has established access
control policies.
Q.3. On January 9, 2017, I wrote to the Trump administration,
with Senator Mike Lee, calling for President Trump to fire
then-CFPB Director Richard Cordray. As we said at the time:
[R]emoving Director Cordray would be consistent with President
Trump's oath to `preserve, protect, and defend the Constitution
of the United States' and his duty to serve as an independent
guardian of the U.S. Constitution. Removing Director Cordray
would also uphold the American idea of limited government,
because Director Cordray has vigorously supported the
unconstitutional independence of the CFPB and pursued a
regulatory agenda that is harmful to the American people.
Please answer the following questions relating to this letter
on unconstitutional independence of the CFPB. Our letter argued
the following:
Over the past 80 years, however, the Federal Government has
blurred the lines between the executive branch and Congress by
delegating lawmaking authority to agencies, including to a
``headless fourth branch'' of independent agencies
unaccountable to the public or the president. The CFPB is the
single-most egregious example of this practice.
Q.3.a. Do you agree?
A.3.a. I expressed my views regarding the structure of the
Bureau in the preface to the semi-annual Report of the Bureau
of Consumer Financial Protection issued in April 2018.\5\ As I
stated there, the structure and powers of the Bureau are not
something the Founders and Framers would recognize.
---------------------------------------------------------------------------
\5\ https://www.consumerfinance.gov/data-research/research-reports/
semi-annual-report-fall-2017/.
---------------------------------------------------------------------------
Q.3.b. Why or why not?
A.3.b. As I explained in the semi-annual Report issued in April
2018, the Bureau is far too powerful, and with precious little
oversight of its activities. Per the statute, in the normal
course the Bureau's Director simultaneously serves in three
roles: as a one-man legislature empowered to write rules to
bind parties in new ways; as an executive officer subject to
limited control by the President; and as an appellate judge
presiding over the Bureau's in-house court-like adjudications.
By structuring the Bureau the way it has, Congress established
an agency primed to ignore due process and abandon the rule of
law in favor bureaucratic fiat and administrative absolutism.
Q.3.c. Our letter cited the CFPB's ``ill-defined authority to
prohibit `abusive acts or practices,' '' as an example of the
agency's ``vague and sweeping authority to regulate large
swaths of the economy . . . ''
Do you agree?
A.3.c. During my testimony before the House Committee on
Financial Services, I expressed my view that the term
``abusive,'' while defined by the Dodd-Frank Wall Street Reform
and Consumer Protection Act (Dodd-Frank Act), provides the
agency with a great deal of discretion because the terms of the
definition are inherently subjective. I suggested that this
would be a place for Congress to provide additional guidance.
Q.3.d. If so, what do you intend to do to reign in this
authority?
A.3.d. The Bureau has and will continue to closely review any
exercise of the Bureau's authority to enforce the Dodd-Frank
Act's prohibition on abusive acts and practices. In addition,
on January 16, 2018, the Bureau publicly announced its
intention to engage in a rulemaking process so that the Bureau
may reconsider its rule entitled ``Payday, Vehicle Title, and
Certain High-Cost Installment Loans'' (Payday Rule). The Payday
Rule is the only rule issued by the Bureau to date that relies
on the Bureau's authority to identify abusive acts or practices
and imposes requirements intended to prevent abusive practices.
The Bureau is also considering how rulemaking may be helpful to
further clarify the meaning of ``abusiveness'' under the
section 1031 of the Dodd-Frank Act.
Q.4. Judge Kavanaugh's dissent for the DC Circuit's en bane
decision in PHH Corp. v. CFPB argued that the CFPB's structure
``represents a gross departure from settled historical
practice'' because ``[n]ever before has an independent agency
exercising substantial executive authority been headed by just
one person.'' As a result of the broad authority delegated to
the CFPB and its novel
structure, aside from the president, the CFPB Director is quite
possibly the ``single most powerful official in the entire U.S.
Government.''
Q.4.a. Do you agree?
A.4.a. As noted in a previous response, I expressed my views
regarding the structure of the Bureau in the preface to the
semi-annual Report of the Bureau of Consumer Financial
Protection issued in April 2018. As I stated there, the
structure and powers of the Bureau are not something the
Founders and Framers would recognize. I also sought four
legislative changes to the Bureau to improve accountability:
fund the Bureau through Congressional appropriations, require
legislative approval of major Bureau rules, ensure that the
Director answers to the President in the exercise of executive
authority, and create an independent Inspector General for the
Bureau.
Q.4.b. Why or why not?
A.4.b. As I explained in the semi-annual Report issued in April
2018, the Bureau is far too powerful, and with precious little
oversight of its activities. Per the statute, in the normal
course the Bureau's Director simultaneously serves in three
roles: as a one-man legislature empowered to write rules to
bind parties in new ways; as an executive officer subject to
limited control by the President; and as an appellate judge
presiding over the Bureau's in-house court-like adjudications.
By structuring the Bureau the way it has, Congress established
an agency primed to ignore due process and abandon the rule of
law in favor bureaucratic fiat and administrative absolutism.
Q.5. Judge Kavanaugh's PHH dissent argued that Dodd-Frank's
restriction on the president's power to remove the CFPB's
Director violated Article II of the constitution and that the
president has the constitutional authority to remove the
director at will. Do you agree?
A.5. I have sought legislation that would ensure that the
Bureau's Director serves at the pleasure of the President.
Q.6. In 2012, the CFPB set up ``Project Catalyst,'' an
initiative that was meant to ``support the creation and growth
of innovative consumer financial products and services.'' Some
have argued that Project Catalyst has been so muddled as to be
unhelpful for companies.
Q.6.a. Do you agree?
A.6.a. Yes.
Q.6.b. Why or why not? If you agree, how is the CFPB addressing
this problem?
A.6.b. I have created the Bureau's Office of Innovation, which
is working to revise Bureau policies where appropriate and
coordinate with State, Federal, and international agencies to
promote innovation for the benefit of consumers.
Q.7. As an example of how the CFPB could improve Project
Catalyst, in your recent hearing in front of the House
Financial Services Committee, you said that the CFPB
``continue[s] to look at [no action letters] as a potential
tool.''
Q.7.a. Can you elaborate? As you know the CFPB's first no
action letter was not issued until September 14, 2017. Is the
CFPB considering issuing more no action letters? Would issuing
more no action letters require easing the regulatory standards
for a no action letter, or adjusting the legal import of such
letters?
A.7.a. Yes, the Bureau would like to issue more no action
letters, and is considering what adjustments should be made to
the Bureau's current policy to achieve such result and what
other types of relief beyond traditional no-action letter
programs might be provided.
Q.7.b. How could the increased use of no action letters
encourage innovation?
A.7.b. By providing increased assurance to market participants
that the Bureau will work collaboratively with them to bring
products to market for the benefit of consumers.
Q.8. As you know, Arizona recently launched a State-level
FinTech sandbox. As a part of revamping Project Catalyst, would
the CFPB considering exempting State-level sandboxes from
Federal regulations using its section 1022 exemption authority?
A.8. This is an interesting idea and the Office of Innovation
will explore it. The Bureau's ability to effectively coordinate
with State partners in this area will be an important factor in
assessing the success of the Office of Innovation.
------
RESPONSES TO WRITTEN QUESTIONS OF SENATOR WARREN FROM MICK
MULVANEY
Q.1. Last week, you testified that ``regulation by enforcement
is done, we're not doing it anymore.'' What does that mean?
A.1. That means that I have departed from the practice of my
predecessor, which was to use consent orders to signal market
participants new Bureau of Consumer Financial Protection
(Bureau) expectations and requirements, rather than first
issuing example guidance or engaging in Administrative
Procedures Act compliant rulemakings. This practice not only
deprived regulated entities of the advance opportunity to
conform their behavior to the requirements of the law, it
starved Bureau enforcement resources.
Q.2. Will CFPB open new investigations under its Unfair,
Deceptive, Abusive Acts and Practices enforcement authority? If
so, what criteria will CFPB use to determine whether to open
these investigations?
A.2. Yes, where appropriate. The Bureau is tasked with
enforcing Federal consumer financial law, which includes the
prohibition on covered persons engaging in unfair, deceptive,
or abusive acts or practices. The Bureau will look to the
language of the Consumer Financial Protection Act (CFPA) and
existing case law, including the unfairness and deceptive cases
brought by the Federal Trade Commission (FTC) under the Federal
Trade Commission Act, when evaluating whether a given practice
is unfair or deceptive.
Q.3. Will CFPB continue to negotiate settlements or file
lawsuits under its Unfair, Deceptive, Abusive Acts and
Practices
enforcement authority? If so, what criteria will CFPB use to
determine whether to negotiate settlements or file lawsuits?
A.3. Yes, where appropriate, as noted in the previous response.
Q.4. Will CFPB continue to prosecute lawsuits already brought
under its Unfair, Deceptive, Abusive Acts and Practices
enforcement authority? If so, what criteria will CFPB use to
determine whether to prosecute lawsuits?
A.4. Yes, where appropriate, as noted in previous response.
Q.5. In either the supervisory or enforcement contexts, will
CFPB take action against regulated entities whose neutral
policies have a disparate impact on a certain protected classes
of consumers?
A.5. Whether or not the Bureau will take any action against a
regulated entity depends upon the facts and circumstances
specific to that case.
Q.6. Is your review of enforcement cases still ongoing? When is
it projected to end?
A.6. The Bureau's review is ongoing.
Q.7. Please provide a list enforcement cases currently active
in Federal Court, including the court, the docket number, and
the judge.
A.7. See attached.
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Q.8. How many enforcement actions were filed from November 25,
2016-November 24, 2017?
A.8. Forty-three public enforcement actions, including consent
orders and lawsuits, were filed between November 25, 2016 and
November 24, 2017.
Q.9. How many of those were fair lending cases brought with the
Justice Department in in the same period?
A.9. Zero.
Q.10. On average, how much does CFPB spend on enforcement
investigations where it does not subsequently file a lawsuit?
A.10. The Bureau does not maintain this type of information.
Q.11. On average, how much does CFPB spend on those enforcement
cases that are settled?
A.11. The Bureau does not maintain this type of information.
Q.12. On average, how much does CFPB spend on enforcement cases
that are filed in Federal court or on the administrative
docket?
A.12. The Bureau does not maintain this type of information.
Q.13. How much in relief did consumers obtain from CFPB
enforcement actions last year?
A.13. In calendar year 2017, $335 million in consumer relief
was ordered in Bureau enforcement actions. The corresponding
number for FY 2017 is $354 million.
Q.14. How many exams did CFPB do from November 25, 2016-
November 24, 2017?
A.14. The Bureau does not generally publicly disclose this kind
of confidential supervisory information beyond that disclosed
in its annual performance plan and report.
Q.15. How many of those were fair lending examinations?
A.15. The Bureau does not generally publicly disclose this kind
of confidential supervisory information beyond that disclosed
in its annual performance plan and report.
Q.16. How much, on average, did examinations cost from November
25, 2016-November 24, 2017?
A.16. The Bureau does not maintain this type of information.
Q.17. How long, on average did these examinations take from
November 25, 2016-November 24, 2017?
A.17. For exams with onsite start dates from November 25, 2016
to November 24, 2017 that were completed at the time of this
response, exams took, on average, 174 days from onsite start
until exam report was mailed.
Q.18. How much in relief did consumers get from violations
discovered during exams from November 25, 2016-November 24,
2017?
A.18. In Issue #15 of Supervisory Highlights,\1\ the Bureau
reported that institutions provided $6,694,289 of consumer
redress in response to supervisory activity. The Bureau
reported $14,006,695 of consumer redress in Issue #16.\2\
---------------------------------------------------------------------------
\1\ https://www.consumerfinance.gov/documents/4608/
201704_cfpb_Supervisory-Highlights_Issue-15.pdf.
\2\ https://www.consumerfinance.gov/documents/5386/
201709_cfpb_Supervisory-Highlights_Issue-16.pdf.
Q.19. How many new enforcement investigations have been
---------------------------------------------------------------------------
initiated during your time at the CFPB?
A.19. The Bureau does not generally comment publicly on
confidential enforcement investigations.
Q.20. How many open cases have been dropped?
A.20. The Bureau does not generally comment publicly on
confidential enforcement investigations.
Q.21. In how many cases has CFPB asked for a continuance?
Please provide a list of all such cases, the continuance asked
for by CFPB, and the current status.
A.21. We interpret continuances to mean tolling agreements
during our investigations. The Bureau does not generally
comment publicly on confidential enforcement investigations.
Q.22. How many examinations have been completed since you took
over?
A.22. The Bureau does not publicly disclose this kind of
confidential supervisory information beyond that disclosed in
its annual performance plan and report.
Q.23. How many of those were fair lending examinations?
A.23. The Bureau does not publicly disclose this kind of
confidential supervisory information beyond that disclosed in
its annual performance plan and report.
Q.24. How much on average did those examinations cost?
A.24. The Bureau does not maintain this type of information.
Q.25. How long on average did they take?
A.25. On average, examinations that were completed between
November 27, 2017 and April 30, 2018 took 204 days to complete.
Q.26. How much in relief has been given to consumers from
violations discovered in examinations?
A.26. As of September 24, 2018, entities have reported to the
Bureau that $540,195,754 in restitution was made to 4,100,745
consumers. This amount does not include amounts obtained via
enforcement action, and includes self-reported restitutions.
Q.27. How many exams are currently in progress?
A.27. The Bureau does not publicly disclose this kind of
confidential supervisory information beyond that disclosed in
its annual performance plan and report.
Q.28. How many of those are fair lending examinations?
A.28. The Bureau does not publicly disclose this kind of
confidential supervisory information beyond that disclosed in
its annual performance plan and report.
Q.29. How many exams are planned for the rest of 2018?
A.29. The Bureau does not publicly disclose this kind of
confidential supervisory information beyond that disclosed in
its annual performance plan and report.
Q.30. How many of those are fair lending examinations?
A.30. The Bureau does not publicly disclose this kind of
confidential supervisory information beyond that disclosed in
its annual performance plan and report.
Q.31. You previously committed to this Committee that you
intended to preserve the practice of delegating decisions on
the opening of new investigations to career Enforcement staff
at CFPB.
Q.31.a. Can you confirm that CFPB's current process is free
from interference by your new political appointees, including
any decisionmaking about whether illegal practices identified
via Supervision should result in the opening of a new
Enforcement matter?
A.31.a. Bureau policy delegates the decisions of whether to
open an investigation to the Enforcement Director, a career
official. 12 C.F.R. 1080.4 (``The Assistant Director of the
Office of Enforcement and the Deputy Assistant Directors of the
Office of Enforcement have the nondelegable authority to
initiate investigations.''). Decisions by career staff to open
an investigation are reviewed by the Policy Associate Director
of the Division of Supervision, Enforcement, and Fair Lending.
Q.31.b. Specifically, have there been cases where career
Enforcement staff have recommended opening a new enforcement
matter, but have been prevented from doing so by you, your
immediate staff, or other political appointees at CFPB?
Q.31.c. If so, how many times has this occurred since November
25, 2017?
Q.31.d. Why were career Enforcement staff not allowed to
proceed with their recommendation in these cases?
A.31.b.-d. The Bureau does not generally comment publicly on
confidential enforcement investigations.
Q.32. Did the CFPB perform a legal or other analysis to
determine whether stripping the OFLEO of its enforcement
authority would hinder the CFPB's ability to carry out its
statutory mandate to provide oversight and enforcement of
Federal fair lending laws? If so, please provide the analysis.
A.32. I note that this question is identical to a question I
received from Ranking Member Maxine Waters (CA) following my
testimony before the House Committee on Financial Services,
regarding the Bureau's Semi-Annual Report. For that reason, I
am providing you the same response I provided the Ranking
Member. Additionally, this question is identical to a question
I received from Ranking Member Sherrod Brown (OH) following my
testimony before the Senate Committee on Banking, Housing, and
Urban Affairs, regarding the Bureau's Semi-Annual Report. For
that reason, I am providing you the same response I will
provide to the Ranking Member.
Under the Dodd-Frank Act, the Office of Fair Lending and
Equal Opportunity (OFLEO) ``shall have such powers and duties
as the Director may delegate to the Office.'' I have been
working to ensure that the Bureau's operations are conducted in
a way that best enables the Bureau to fulfill all of the
Bureau's statutory requirements while reducing redundancy and
maximizing efficiency. Changes to the structure and operations
of OFLEO are being implemented in furtherance of these
priorities. The existing OFLEO performs different functions,
including oversight and enforcement of fair lending laws on one
hand, and promotion of fair lending compliance and education on
the other.
The reorganization will separate the supervision and
enforcement functions previously performed by OFLEO from its
promotion and education functions. The supervision and
enforcement functions will remain in the division that is
responsible for supervision and enforcement generally. OFLEO's
remaining functions will be elevated to the Director's Office
to become part of an Office of Equal Opportunity and Fairness
with a focus on advocacy and education, coordination, and
reporting.
The changes are designed to create efficiency and
consistency in the Bureau's supervision and enforcement
functions, and allow OFLEO to focus on promoting advocacy and
education, coordination, and reporting. These changes should
improve the Bureau's operations and our interactions with
consumers and industry, in fulfillment of our mission, and in
full compliance with the Bureau's statutory mandate.
Q.32.a. How will bringing the OFLEO under the control of the
Office of the Director modify the Bureau's decisionmaking
process with regard to enforcement and other actions to protect
consumers from unfair discrimination?
Q.32.b. What, if any, continuing role will the OFLEO play in
supporting the Bureau's enforcement of fair lending laws?
A.32.a.-b. I note that these questions are identical to
questions I received from Ranking Member Maxine Waters (CA)
following my testimony before the House Committee on Financial
Services, regarding the Bureau's Semi-Annual Report. For that
reason, I am providing you the same response I provided the
Ranking Member. Additionally, these questions are identical
questions I received from Ranking Member Sherrod Brown (OH)
following my testimony before the Senate Committee on Banking,
Housing, and Urban Affairs, regarding the Bureau's Semi-Annual
Report. For that reason, I am providing you the same response I
will provide to the Ranking Member.
The reorganization will not hamper the Bureau's fair
lending
enforcement and supervisory activity; indeed, the
reorganization should help the Bureau operate more efficiently
and effectively. In consultation with Bureau stakeholders and
the National Treasury Employees Union (NTEU) and in accordance
with the Bureau's
collective bargaining agreement, the Bureau and NTEU have
signed a memorandum of understanding (MOU) on the
implementation plan for the reorganization. Full implementation
of the
reorganization is expected to take a few more months to
complete. While the Bureau works through the processes required
to fully implement such a change, OFLEO will continue to
operate as it has previously. The reorganization of OFLEO will
elevate OFLEO to the Director's Office to become part of the
Office of Equal Opportunity and Fairness. OFLEO will continue
to support the enforcement of fair lending laws through the use
of advocacy and education, coordination, and reporting.
Q.32.c. How will the reorganization affect the reporting duties
for OFLEO employees, including the OFLEO Assistant Director?
A.32.c. I note that this question is identical to a question I
received from Ranking Member Maxine Waters (CA) following my
testimony before the House Committee on Financial Services,
regarding the Bureau's Semi-Annual Report. For that reason, I
am providing you the same response I provided the Ranking
Member. Additionally, this question is identical to a question
I received from Ranking Member Sherrod Brown (OH) following my
testimony before the Senate Committee on Banking, Housing, and
Urban Affairs, regarding the Bureau's Semi-Annual Report. For
that reason, I am providing you the same response I will
provide to the Ranking Member.
In consultation with Bureau stakeholders and the NTEU, and
in accordance with the Bureau's collective bargaining
agreement, the Bureau and NTEU have signed a MOU on the
implementation plan for the reorganization. While staff will
not experience changes in employment status, employees may
experience changes in jobs and duties. Some OFLEO employees
will remain in the OFLEO while others will take positions
throughout the Supervision and Enforcement Division. The OFLEO
Assistant Director's duties will change insofar as the role
will focus on advocacy and education, coordination, and
reporting. We are working diligently to effect these changes
while minimizing disruption to operations and employees.
Q.32.d. After the reorganization, which officials in the Office
of the Director will be consulted about OFLEO activities?
Q.32.e. Which of these officials have been hired, politically
appointed, or detailed to the CFPB since November 24, 2017?
Q.32.f. After the reorganization, which political appointees
and temporarily detailed employees will be granted veto power
over OFLEO activities and decisions?
Q.32.g. What criteria will political appointees and temporarily
detailed employees in the Office of the Director use to
determine whether the Bureau will follow the recommendations of
career policy experts in the OFLEO?
Q.32.h. What actions will the Bureau take to ensure that OFLEO
decisions continue to be based on the best advice of
independent, expert, career policy staff?
A.32.d.-h. I note that these questions are identical or
substantially similar to questions I received from Ranking
Member Maxine Waters (CA) following my testimony before the
House Committee on Financial Services, regarding the Bureau's
Semi-Annual Report. For that reason, I am providing you the
same response I provided the Ranking Member. Additionally,
these questions are identical or substantially similar to
questions I received from Ranking Member Sherrod Brown (OH)
following my testimony before the Senate Committee on Banking,
Housing, and Urban Affairs, regarding the Bureau's Semi-Annual
Report. For that reason, I am providing you the same response I
will provide to the Ranking Member.
In consultation with Bureau stakeholders and the NTEU and
in accordance with the Bureau's collective bargaining
agreement, the Bureau and NTEU have signed a MOU on the
implementation plan for the reorganization. Full implementation
of the reorganization is expected to take a few more months to
complete. While the Bureau works through the processes required
to fully implement such a change, OFLEO will continue to
operate as it has previously.
Q.32.i. How will the new requirements that the OFLEO report to
the Office of the Director enhance the CFPB's ability to
protect consumers from unfair discrimination?
A.32.i. I note that this question is identical to a question I
received from Ranking Member Maxine Waters (CA) following my
testimony before the House Committee on Financial Services,
regarding the Bureau's Semi-Annual Report. For that reason, I
am providing you the same response I provided the Ranking
Member. Additionally, this question is identical to a question
I received from Ranking Member Sherrod Brown (OH) following my
testimony before the Senate Committee on Banking, Housing, and
Urban Affairs, regarding the Bureau's Semi-Annual Report. For
that reason, I am providing you the same response I will
provide to the Ranking Member.
The Bureau intends to continue fulfilling its statutory
obligation to enforce Federal consumer financial laws, which
include the Equal Credit Opportunity Act (ECOA) and the Home
Mortgage Disclosure Act (HMDA). The reorganization should
improve the
Bureau's operations and our interactions with consumers and
industry, in fulfillment of our mission, and in full compliance
with
the Bureau's statutory mandate. The Bureau's supervision and
enforcement of fair lending laws will continue uninterrupted in
the
existing supervision and enforcement divisions. This will allow
remaining OFLEO personnel to focus on education, outreach, and
compliance efforts. OFLEO's previous organizational structure
placed primary emphasis on ``back-end'' supervision and
enforcement of fair lending laws, resulting in a focus on
corrective measures, rather than ``front-end'' promotion of
education, and coordination of, fair lending efforts.
Q.32.j. Please describe any independent analyses, such as
third-party studies, that informed the decision to bring OFLEO
under the Office of the Director and strip OFLEO of its
enforcement and supervisory authority.
A.32.j. I note that this question is identical to a question I
received from Ranking Member Maxine Waters (CA) following my
testimony before the House Committee on Financial Services,
regarding the Bureau's Semi-Annual Report. For that reason, I
am providing you the same response I provided the Ranking
Member. Additionally, this question is identical to a question
I received from Senator Ranking Member Sherrod Brown (OH)
following my testimony
before the Senate Committee on Banking, Housing, and Urban
Affairs, regarding the Bureau's semiannual report. For that
reason, I am providing you the same response I will provide to
the Ranking Member.
Under the Dodd-Frank Act, the OFLEO ``shall have such
powers and duties as the Director may delegate to the Office.''
I have been working to ensure that the Bureau's operations are
conducted in a way that best enables the Bureau to fulfill all
of the Bureau's statutory requirements while reducing
redundancy and maximizing efficiency. Changes to the structure
and operations of OFLEO are being implemented in furtherance of
these priorities.
Q.32.k. Did you or any other CFPB employee consult with or
discuss this reorganization with any outside entities--
including lobbyists or representatives of the banking or
financial services industry--prior to announcing the
reorganization?
A.32.k. I note that this question is identical or substantially
similar to a question I received from Ranking Member Maxine
Waters (CA) following my testimony before the House Committee
on Financial Services, regarding the Bureau's Semi-Annual
Report. For that reason, I am providing you the same response I
provided the Ranking Member. Additionally, this question is
identical to a question I received from Ranking Member Sherrod
Brown (OH) following my testimony before the Senate Committee
on Banking, Housing, and Urban Affairs, regarding the Bureau's
semiannual report. For that reason, I am providing you the same
response I will provide to the Ranking Member.
No, I did not consult, nor am I aware of any Bureau
employee discussing, the reorganization outside of the Bureau.
Q.32.l. Did you consult with other officials, employees, or
political appointees at OMB or the White House about the OFLEO
reorganization prior to its announcement?
A.32.l. I note that this question is identical to a question I
received from Ranking Member Maxine Waters (CA) following my
testimony before the House Committee on Financial Services,
regarding the Bureau's Semi-Annual Report. For that reason, I
am providing you the same response I provided the Ranking
Member. Additionally, this question is identical to a question
I received from Ranking Member Sherrod Brown (OH) following my
testimony before the Senate Committee on Banking, Housing, and
Urban Affairs, regarding the Bureau's Semi-Annual Report. For
that reason, I am providing you the same response I will
provide to the Ranking Member.
Office of Management and Budget (OMB) detailees to the
Bureau were, as a matter of course, part of the discussion, but
no other employees at OMB or the White House were consulted.
Q.32.m. Is the CFPB considering any substantive changes to its
approach to the enforcement of fair lending laws, including
changes to the CFPB's interpretation of these laws?
A.32.m. I note that this question is identical or substantially
similar to a question I received from Ranking Member Maxine
Waters (CA) following my testimony before the House Committee
on Financial Services, regarding the Bureau's Semi-Annual
Report. For that reason, I am providing you the same response I
provided the Ranking Member. Additionally, this question is
identical substantially similar to a question I received from
Ranking Member Sherrod Brown (OH) following my testimony before
the Senate Committee on Banking, Housing, and Urban Affairs,
For that reason, I am providing you the same response I will
provide to the Ranking Member. The Bureau intends to continue
fulfilling its statutory obligation to enforce Federal consumer
financial laws, which include the Equal Credit Opportunity Act
(ECOA) and the Home Mortgage Disclosure Act (HMDA). As you may
be aware, the Bureau issued a statement on the passage of the
Congressional Review Act resolution disapproving a bulletin
titled ``Indirect Auto Lending and Compliance with the Equal
Credit Opportunity Act,'' which had provided guidance about the
ECOA and its implementing regulation, Regulation B. Consistent
with the joint resolution, the guidance has no force or effect.
The ECOA and Regulation B are unchanged and remain in force and
effect. As I noted in that statement, I want to make it
abundantly clear that the Bureau will continue to fight
unlawful discrimination at every turn. We will vigorously
enforce fair lending laws in our jurisdiction, and will stand
on guard against unlawful discrimination in credit. However,
given this recent Congressional action, the Bureau will be
reexamining the requirements of ECOA in light of relevant
Supreme Court precedents.
In addition, on August 31, 2018, the Bureau issued an
interpretive and procedural rule \3\ to implement and clarify
the requirements of section 104(a) of the Economic Growth,
Regulatory Relief, and Consumer Protection Act (the Act), which
amended the HMDA. The Bureau also released updates to the
Filing Instructions Guide (FIG) for HMDA data collected in 2018
to incorporate the Act as implemented and clarified by the rule
issued that day.
---------------------------------------------------------------------------
\3\ https://files.consumerfinance.gov/f/documents/
bcfp_hmda_interpretive-procedural-rule_
2018-08.pdf.
---------------------------------------------------------------------------
The Act contains provisions that are intended to decrease
the burden smaller depository institutions face in complying
with HMDA and its implementing regulation, Regulation C. Some
such institutions have raised questions about the application
of the Act, and the rule issued in August seeks to provide
clarification. At a later date, the Bureau anticipates that it
will initiate a notice-and-comment rulemaking to incorporate
these interpretations and procedures into Regulation C and
further implement the Act.
Q.33. Title X of the Dodd-Frank Wall Street Reform and Consumer
Protection Act establishes the CFPB to administer and interpret
Dodd-Frank's prohibition on unfair, deceptive and abusive acts
or practices. The Act instructs the Bureau to supervise
nonbanks that are large participants of a market for consumer
financial products or services, which includes Federal student
loan servicers and debt collectors.\4\
---------------------------------------------------------------------------
\4\ 12 U.S.C. 5481(5),(15); 12 U.S.C. 5514(a)(1)(B); 12 C.F.R.
1090.106; 12 C.F.R. 1090.105.
---------------------------------------------------------------------------
Will the CFPB continue to supervise Federal student loan
servicers and debt collectors?
A.33. To the extent that a Federal student loan servicer or
debt collector meets the criteria contained in the Bureau's
larger participant rules, the entity should be included in the
Bureau's supervision prioritization process. Whether any given
entity is subject to a supervision event in any given time
period is based on a number of factors, including the potential
for consumer harm related to a particular market, the size of
the product market, the supervised entity's market share, and
the risks inherent to the supervised entity's operations and
offering of financial consumer products within that market.
Q.34. The U.S. Department of Education does not have the
statutory authority to enforce the Dodd-Frank Act's prohibition
on
unfair, deceptive and abusive acts or practices. Do you believe
CFPB has the statutory authority to enforce the Dodd-Frank
Act's prohibition on unfair, deceptive and abusive acts or
practices if the violations are committed by Federal student
loan servicers, debt
collectors, or other Department of Education contractors?
A.34. The Bureau has taken the position that Federal student
loan servicers and debt collectors meet the definition of
covered person under the CFPA. Whether other Department of
Education contractors also meet the definition will depend on
the activity in which each contractor engages.
Q.35. Earlier this year, you informed the National Association
of Attorneys General that you will be relying on the State law
enforcement community to perform much of the routine
investigation and oversight over participants in the markets
you regulate. Specifically, you said, ``We're going to be
looking to the State regulators and the States' attorneys
general for a lot more leadership when it comes to
enforcement.''\5\
---------------------------------------------------------------------------
\5\ https://www.americanbanker.com/news/ags-not-cfpb-should-take-
greater-role-on-enforcement-mulvaney.
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Does this principle extend to State-level oversight of
student loan companies, including student loan servicers?
A.35. My remarks were an expression of my eagerness to
coordinate the Bureau's efforts with the State attorneys
general. One
example of this coordination is the joint town hall I held on
June 8, 2019, with Kansas Attorney General Derek Schmidt on
fighting elder financial exploitation. The Bureau held a second
town hall on October 18, 2018, with Louisiana Attorney General
Jeff Landry. I am also eager to coordinate the Bureau's efforts
with Federal departments and agencies, including the Department
of Education.
Q.36. CFPB's proposed Student Loan Market Monitoring
initiative, published in the Federal Register on September 8,
2017 (F.R. 2017-18776) pursuant to the Bureau's authority under
Section 1022(c)(4) of the Dodd-Frank Wall Street Reform and
Consumer Protection Act, proposes ``quarterly data collection
on aggregated student loan servicing metrics and borrower
outcomes from student loan servicers.''
Please provide an update on the status of this initiative.
A.36. In accordance with the Paperwork Reduction Act of 1995
(PRA), the Bureau published two notices in the Federal Register
soliciting comment on a new proposed information collection--
the ``Student Loan Servicing Market Monitoring'' project. The
collection was submitted to the Office of Management and Budget
(OMB) and the second notice was published in the Federal
Register on September 6, 2017. The comment period for this
notice closed on October 6, 2017.
As of October 6, 2017, OMB had received six comments. As of
October 19, 2018, the information and collection request is
still pending at OMB.
Q.37.a. CFPB's proposed Student Loan Market Monitoring
initiative requires approval from the Office of Management and
Budget in order to precede.
Given your role as the head OMB, please provide a detailed
explanation as to why this data collection has yet to be
implemented.
A.37.a. The Bureau of Consumer Financial Protection submitted
an information collection request to OMB on ``Student Loan
Servicing Market Monitoring'' under the Paperwork Reduction Act
on September 6, 2017. The request is still under review by
OIRA.
Q.37.b. Please provide any memoranda, reports, analysis, or
correspondence prepared by any of the following parties related
to proposed Student Loan Market Monitoring following the
closing of the public comment period on October 8, 2017:
LThe Office of Management and Budget,
LThe U.S. Department of Education, and
LThe Consumer Financial Protection Bureau.
A.37.b. The requested documents, if any exist, would include
the confidential information of the Bureau or other Federal
agencies, and therefore would not be appropriate to submit into
the public record. I urge you to work with the Committee
Chairman when submitting requests for confidential Bureau
information.
Q.38. Earlier this year, you provided CFPB staff with a
memorandum indicating that you intend to use data, including
data on consumer complaints, to inform Bureau priorities,
including rulemaking, supervision, and enforcement.\6\ The
Bureau has received more than 60,000 student loan complaints
since 2012 and student loan companies are routinely among the
most complained about financial services companies you
regulate. Navient was also the subject of more CFPB complaints
than any other company in the country during the first quarter
of 2017, including Wells Fargo, Equifax, and other national
banks and credit unions.
---------------------------------------------------------------------------
\6\ https://www.consumerfinancemonitor.com/wp-content/uploads/
sites/14/2018/01/Mulvaney-memo.pdf.
Q.38.a. As student loan defaults continue to set new records
each year, what steps is CFPB taking to address unfair,
deceptive, or abusive acts or practices in Federal and private
---------------------------------------------------------------------------
student lending that exacerbate the default crisis?
A.38.a. The Bureau continues to assess compliance with Federal
consumer financial law with respect to student loan servicers,
including the prohibition against unfair, deceptive, and
abusive acts or practices, and can bring enforcement actions
where appropriate.
Q.38.b. How will complaints from borrowers inform this work?
A.38.b. The Bureau uses complaints from borrowers to, among
other things, prioritize exam work, scope exams, and to
determine whether to open investigations.
Q.39. As Director of OMB, you're responsible for overseeing and
managing the costs associated with the U.S. Department of
Education's student loan servicing and collections contracts,
while the Bureau is simultaneously responsible for
independently policing the companies contracted to perform
these servicing and collections functions when they violate
Federal consumer protection law. These separate
responsibilities are in conflict.
Q.39.a. What steps have you taken to insulate the Bureau's
oversight of student loan companies from the Administration's
political or policy direction on the administration of the
Education Department's contracts?
A.39.a. There is no conflict in my responsibilities. The Bureau
coordinated with the Education Department in the prior
Administration and we will continue to collaborate going
forward. The Bureau will act consistently with its obligation
to enforce the law.
Q.39.b. How do you plan to ensure that your duty as OMB
Director to protect taxpayers' investment in Federal loan
servicing contractors does not compromise your obligation at
CFPB to fairly and independently administer Federal consumer
protection laws with respect to these companies?
A.39.b. As I noted above, there is no conflict in my
responsibilities.
Q.40. Dodd-Frank Act Section 1035(c) establishes the functions
of the student loan ombudsman and states that the ombudsman
shall resolve complaints ``in collaboration with the Department
of Education and with institutions of higher education,
lenders, guaranty agencies, loan servicers, and other
participants in private education loan programs.'' Dodd-Frank
Act Section 1035(c) also requires the ombudsman to establish a
memorandum of understanding with the Department of Education's
student loan ombudsman ``to ensure coordination in providing
assistance to and serving borrowers seeking to resolve
complaints related to their private education or Federal
student loans.''\7\
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\7\ 12 U.S.C. 5535.
Q.40.a. Given the U.S. Department of Education's August 2017
decision to terminate existing memoranda of understanding
between the CFPB and the Education Department, how does the
CFPB plan to collaborate with the Education Department to
---------------------------------------------------------------------------
resolve student complaints related to Federal student loans?
A.40.a. The Department of Education continues to have access to
the Bureau's public complaint database. Bureau staff also
continues to analyze complaint data and provide that analysis
as technical assistance when requested by the Department of
Education.
Q.40.b. Will CFPB comply with Dodd-Frank Act Section 1035(c)
and establish a new memorandum of understanding with the
Education Department?
A.40.b. The Bureau continues to pursue options for entering
into a new MOU with the Department of Education. The statutory
function you described formally rests with the Private
Education Loan Ombudsman.
Q.40.c. In accordance with Dodd-Frank Act Section 1035(c)
requirement to ``ensure coordination'' with the Department of
Education ``in providing assistance to and serving borrowers
seeking to resolve complaints related to their private
education or Federal student loans,'' how will the CFPB work
with the Department of Education to resolve complaints related
to borrowers' Federal student loans?
A.40.c. As noted in a previous response, the Bureau continues
to pursue options for entering into a new MOU with the
Department of Education. In the absence of an MOU, the
Department of Education continues to have access to the
Bureau's public complaint database. Bureau staff also continues
to analyze complaint data and provide that analysis as
technical assistance when requested by the Department of
Education.
Q.40.d. If CFPB plans to refer complaints to the Education
Department, how will CFPB ensure that such complaints are fully
resolved after referral?
A.40.d. Bureau staff directs consumers with student loan
origination complaints to contact the Department of Education
and relies on the Department of Education to appropriately
resolve the complaint. The Department of Education also has
access to the Bureau's public complaint database. If the
Bureau's Private Education Loan Ombudsman is able to enter into
a new MOU with the Department of Education permitting complaint
referral, the Bureau will rely on the Department of Education
to appropriately resolve any referred complaints.
Q.40.e. If CFPB plans to refer complaints to the Education
Department, how will complaint substance and volume inform the
Bureau's student loan enforcement and supervision as it relates
to Federal student loan contractors?
A.40.e. The Bureau's Office of Consumer Response (Consumer
Response) analyzes consumer complaints, company responses, and
consumer feedback to accomplish two primary goals. First, these
analyses enable Consumer Response to assess the accuracy,
completeness, and timeliness of company responses. Second,
these analyses ensure that the Bureau, other regulators,
consumers, and the marketplace have reliable and useful
information about consumer financial products and services.
Consumer Response uses a variety of approaches to analyze
consumer complaints, including cohort and text analytics, to
identify trends and possible consumer harm. The Bureau also
shares consumer complaint information with prudential
regulators, the Federal Trade Commission, other Federal
agencies, and State agencies.\8\
---------------------------------------------------------------------------
\8\ Id. 5493 (b)(3)(D).
Q.40.f. Will CFPB continue to produce its monthly complaint
snapshot highlighting consumer complaints about student loans,
---------------------------------------------------------------------------
including Federal student loans?
A.40.f. One of the primary functions of the Bureau is
collecting, investigating, and responding to consumer
complaints. Consumer Response hears directly from consumers
about the challenges they face in the marketplace, brings their
concerns to the attention of companies, and assists in
addressing their complaints. On May 31, 2018, the Bureau
published a Complaint Snapshot that provides a high-level
overview of trends in consumer complaints and supplements the
Consumer Response Annual Report with more recent
information about monthly changes in complaint volume and a
spotlight on debt collection. On October 23, 2018, the Bureau
published a complaint snapshot that provides a high-level
overview of trends in consumer complaints and supplements the
Consumer Response Annual Report with more recent information on
complaints about consumer financial products and services by
State.\9\
---------------------------------------------------------------------------
\9\ https://www.consumerfinance.gov/documents/6568/bcfp_complaint-
snapshot_debt-collection_052018.pdf.
Q.40.g. Will CFPB continue to include Federal student loan
---------------------------------------------------------------------------
complaints in its consumer complaint database?
A.40.g. The Bureau published a Request for Information (RFI) in
March 2018 seeking comments and information from interested
parties to assist the Bureau in assessing potential changes
that can be implemented to the Bureau's public reporting
practices of consumer complaint information.\10\ The comment
period closed June 4, 2018. The Bureau is evaluating comments
received before determining whether any changes to the
reporting or publication practices would be appropriate.
---------------------------------------------------------------------------
\10\ https://www.consumerfinance.gov/policy-compliance/notice-
opportunities-comment/open-notices/request-information-regarding-
bureau-public-reporting-practices-consumer-complaint-information/.
Q.41.a. How much does the CFPB intend to request in transfers
from the Federal Reserve for the remaining two quarters of the
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fiscal year?
A.41.a. The Bureau requested $98.5 million for the third
quarter, and $65.7 million for the fourth quarter of fiscal
year (FY) 2018.
Q.41.b. How much of the reserve remains?
A.41.b. The Bureau ended Fiscal Year (FY) 2018 with $56 million
in unobligated balances in the Bureau Fund.
Q.41.c. The Office of Management and Budget's FY 2019 budget
request asks for $545 million for the CFPB. Does CFPB intend to
request transfers from the Fed consistent with the budget
request in the coming fiscal year?
A.41.c. The transfer cap for FY 2019 is $678.9 million.
However, the Bureau plans to request no more than $533 million
in FY 2019 to support the FY 2019 budget that I approved. A
summary of the Bureau's FY 2019 budget was included with the
transfer request letter sent to the Federal Reserve Board for
funding for the first quarter of 2019, which is available on
the Bureau's website at https://www.consumerfinance.gov/about-
us/budget-strategy/funds-transfer-requests/.
Q.41.d. Please list any multi-year contracts or projects that
were started prior to FY 2018 for which payment will be due in
subsequent fiscal years and the amount and timing of those
payments.
A.41.d. As defined by the Federal Acquisition Regulation (FAR
17.103), the Bureau has not awarded any multi-year contracts.
The FAR's definition of a multi-year contract is `` . . . a
contract for the purchase of supplies or services for more than
1, but not more than 5, program years.''
Q.41.e. How much does CFPB pay annually in rent for its
headquarters and for each regional office?
A.41.e. The FY 2018 rental payments for the Bureau's space are
in the below table. Several spaces were terminated in FY 2018
as a result of the completion of the renovations to the
Bureau's headquarters.
Location Annual Rent
$ amount
1275 Ist Street NE, Washington, DC $822,412
(rent terminated)
1990 K Street NW, Washington, DC $2,156,284
1801 F Street NW, Washington, DC $358,959
(Temporary space for child care;
rent terminated in FY 2018)
230 S. Dearborn St., Chicago, IL
$492,598
140 East 45th St., New York, NY $1,190,940
30 I Howard St., San Francisco, CA
$1,376,681
1700 G Street NW, Washington, DC $13,094,110
Total Fiscal Year 2018 Rent Payments $19,491,984
Q.42.a. You have said repeatedly that you intend to cut CFPB's
budget by 30 percent.
Please describe the process the Bureau intends to use to
develop it budget and make spending decisions for the next
year,
A.42.a. In May 2018, the Bureau began the process of revising
its budget estimates for FY 2019 and developing estimates for
FY 2020. Each Division had an opportunity to request and
justify funds to help the Bureau meet its priorities.
Q.42.b. Who will make the final decisions?
A.42.b. The Bureau's Director approves the Bureau's budget.
Q.42.c. What role will political appointees at the agency play
in the budget process, particularly the so-called ``PADs,'' the
Chief of Staff, and Senior Adviser Brian Johnson?
A.42.c. Through the budget process, the Policy Associate
Directors and Associate Directors identified amounts necessary
to carry out the Bureau authorities and to meet the Bureau's
priorities for FY 2019-2020.
Q.42.d. What role will CFO Eli Reilly and the rest of the
career staff in her office play in the budget process?
A.42.d. The budget process is led by the Office of the Chief
Financial Officer (OCFO).
Q.42.e. What role will CSO Dave Uejio and the rest of the
career staff in his office play in the budget process?
A.42.e. The budget reflects the Bureau's priorities, as
identified in the Bureau's Strategic Plan, which is developed
under the guidance of the Office of Strategy.
Q.42.f. What role will the career Associate Directors play in
making budget recommendations for their divisions?
A.42.f. Through the budget process, the Policy Associate
Directors and Associate Directors identified amounts necessary
to carry out the Bureau authorities and to meet the Bureau's
priorities for FY 2019-2020.
Q.43.a. Employee compensation and benefits are CFPB's biggest
budget line item.
Will CFPB initiate a reduction in force under its
collective bargaining agreement and lay off employees to meet
its aggressive budget targets?
A.43.a. If the Bureau were to initiate a reduction in force, it
would do so consistent with applicable law, regulation, and the
Collective Bargaining Agreement (CBA).
Q.43.b. Will CFPB seek to renegotiate the compensation and
benefits chapters of its collective bargaining agreement?
A.43.b. If the Bureau were to seek to renegotiate these
chapters, it would do so consistent with the CBA. The current
Compensation article of the CBA with the National Treasury
Employees Union (NTEU) does not expire until December 31, 2019.
This agreement generally covers employee salaries and benefits.
The Bureau and NTEU will begin negotiating any changes to the
Compensation article in June 2019.
Q.44. In early December, you announced a freeze in CFPB's
collection of personally identifiable information (PII). Is
that freeze still ongoing?
A.44. On May 31, 2018, after an exhaustive review by outside
experts, including a comprehensive ``white-hat hacking''
effort, I lifted that hold. The independent review concluded
that ``externally facing Bureau systems appear to be well-
secured.'' The assessors identified no ``Critical'' findings
and made only three technical recommendations, all of which the
Bureau has completed remediating.
Q.45. Prior to November 24, what were CFPB's plans to address
the recommendations provided by its Inspector General in its
FISMA report?
A.45. The Bureau's original plans to address the
recommendations made in the 2017 Office of the Inspector
General's Federal Information Security Modernization Act Audit
report are described in that final report under ``Appendix B:
Management's Response'' dated October 27, 2017. These actions
include defining organizational risk tolerance levels,
enhancements to multifactor authentication, validation of
contractors' background checks, conducting periodic phishing
exercises, continued log collection for new systems,
development of additional incident containment strategies, and
integrating contingency plan tests with those of incident
response and continuity of operations. Since the report, the
Bureau has closed the recommendations related to validation of
contractors' background checks, development of additional
incident
containment strategies, and integrating contingency plan tests
with those of incident response and continuity of operations.
Q.45.a. Why did you make additional changes to these plans?
A.45.a. These plans were not changed, they are still active
efforts that the Bureau is undertaking. I bolstered the
Bureau's cybersecurity efforts with additional protective
measures appropriate to the sensitivity of data with which the
Bureau works.
Q.45.b. Why did you believe these measures were insufficient?
A.45.b. The Bureau works with consumer and financial data that
deserve our best efforts to protect and use in a manner
consistent with applicable laws, regulations, and Federal
security guidelines. This additional effort is intended to
protect these resources by effectively managing risk and
operational capability.
Q.45.c. What steps did you take to evaluate additional options?
A.45.c. On my first day at the Bureau, I met with the Chief
Information Officer (CIO) and Chief Information Security
Officer (CISO) to discuss the topic of cybersecurity. That
initial discussion and follow-on planning identified an
opportunity to leverage an independent party to assess the
Bureau's cybersecurity posture. Since that time, the Bureau has
entered into an Inter-Agency Agreement with the Department of
Defense to leverage ``Risk and Vulnerability Assessment (RVA)''
services as a mechanism to identify potential gaps in
cybersecurity controls. This Assessment has completed and the
Bureau has remediated all recommendations identified in the
final report.
Q.45.d. What specific changes in examination or enforcement
procedures related to cybersecurity were implemented in the
Division of Supervision, Enforcement, and Fair Lending program
in the aftermath of the December 4th announcement, and what
were the impacts of these changes?
A.45.d. After December 4, 2017, the Division of Supervision,
Enforcement, and Fair Lending (SEFL) ceased intaking certain
sensitive information, such as data with direct personal
identifiers. Enforcement attorneys were conducting review of
most investigative materials by storing those materials on a
system used by the U.S. Department of Justice (DOJ).
Supervision did not take data with direct personal identifiers
onto the Bureau's systems, and instead reviewed it onsite.
Q.45.e. Please provide copies of any guidance given to
supervision or enforcement staff about changes in examination
procedures.
A.45.e. The attached guidelines on collections of information
through supervision available to examiners was used during the
data hold. This guidance has since been rescinded.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Q.45.f. Please describe any changes to procedures for obtaining
and reviewing records in discovery precipitated by your
December 4th announcement.
A.45.f. No procedures have been formally amended. Where
possible, information subject to the data security policy was
hosted on a system used by the DOJ.
Q.45.g. Please provide copies of any communications with
regulated entities related to providing personally identifiable
information to bank examiners and enforcement lawyers.
A.45.g. Communications between supervised entities and
examination staff are generally considered confidential
supervisory information, and communications between entities
and enforcement staff in connection with an investigation are
generally considered confidential investigative information.
The Bureau typically does not make public this type of
confidential information. For our guidance to examiners,
including on communicating with entities, see response to
subpart (E) above.
Q.45.h. Please provide copies of all emails sent or received by
you, Brian Johnson, Eric Blankenstein, Christopher D'Angelo,
Patrice Ficklin, Paul Sanford, Peggy Twohig, Kristen Donoghue,
Sartaj Alag, or Jerry Horton about policies related to the
acquisition of personally identifiable information from
November 24 to present.
A.45.h. The requested documents would include documents that
contain confidential Bureau information and it would not be
appropriate to submit into the public record. I urge you to
work with the Committee Chairman when submitting requests for
confidential Bureau information.
Q.45.i. Did you evaluate the impact of the new procedures on
CFPB supervision and enforcement activities prior to ordering
and implementing them? If so, what did this evaluation show?
A.45.i. I determined that the benefits of protecting consumers'
privacy outweighed the cost of potentially slowing enforcement
and supervisory activities.
Q.45.j. Were any Bureau functions outside the Division of
Supervision, Enforcement and Fair Lending impacted?
A.45.j. Yes.
Q.45.k. Are there any plans to alter the consumer complaint
process?
A.45.k. In April, the Bureau issued a Request for Information
(RFI) on its handling of consumer complaints and inquiries.\11\
We sought comments and information from interested parties to
assist the Bureau in assessing its handling of consumer
complaints and consumer inquiries and, consistent with law,
considering whether changes to its processes would be
appropriate. The opportunity to submit comments on this RFI
closed on July 16, 2018. Bureau staff is in the process of
reviewing the more than 1,000 comments received.
---------------------------------------------------------------------------
\11\ https://www.federalregister.gov/documents/2018/04/17/2018-
07943/request-for-information-regarding-the-bureaus-consumer-complaint-
and-consumer-inquiry-handling.
Q.45.l. Are there any plans to alter how the Research, Markets,
---------------------------------------------------------------------------
and Regulation division obtains or uses consumer data?
A.45.l. The Bureau is reviewing how all divisions obtain and
use data. In September, the Bureau released a report on the
Bureau's data governance program, what data the Bureau
collects, where the data come from, how data are used, and how
data are reused within the Bureau.
Q.45.m. Are there any plans to alter internal operations in the
CFPB with respect to how the agency uses or deploys employees'
personally identifiable information?
A.45.m. There are no plans to alter internal BCFP operations
regarding how the agency uses or deploys employees' personally
identifiable information.
Q.45.n. Did you consult with the CFPB Inspector General before
instituting your PII freeze?
A.45.n. No.
Q.45.o. Did CFPB consult any other agency before instituting
the PII freeze?
A.45.o. No.
Q.45.p. Did you consult any other cyber security expert before
instituting the PII freeze?
A.45.p. No.
Q.45.q. Did CFPB consult with any lobbyist or other individual
representing any financial services firm or other regulated
entity before instituting the PII freeze?
A.45.q. No.
Q.46.a. You testified that the CFPB is in the process of
completing an analysis of the agency's cybersecurity
vulnerabilities.
Please describe the scope of the review and how it is being
conducted.
A.46.a. In January of 2018, the Bureau signed an Inter-Agency
Agreement with the U.S. Department of Defense to leverage
``Risk and Vulnerability Assessment (RVA)'' services as a
mechanism to identify potential gaps in cybersecurity controls.
This service is the same service the U.S. Department of
Homeland Security (DHS) provides to other Federal agencies to
assess vulnerabilities beyond those identified in their Cyber
Hygiene program (in which the Bureau also participates).
Q.46.b. What is the specific goal of the review?
A.46.b. This technical assessment had two primary dimensions,
to determine the susceptibility of the Bureau's systems from an
external threat and also an assessment of vulnerability within
the Bureau's network. Four specific scenarios were tested:
LExternal testing of Cloud Service providers and
publicly accessible servers;
LUser susceptibility to phishing attacks from
external sources;
LTesting of security controls applied to a mobile
device (laptops, mobile devices, and standard-issue
encrypted USB storage devices); and
LDetermining the potential impact of an attacker
with access to the internal network, to include Wi-Fi
testing.
Q.46.c. Which CFPB personnel are involved?
A.46.c. The Office of Technology and Innovation, headed by the
Chief Information Officer (CIO), coordinated execution of the
testing. The Acting Chief Information Security Officer
performed the role of Technical Point of Contact for the
testing team.
Q.46.d. Which other agencies are involved?
A.46.d. This service is provided under an interagency agreement
(IAA) with the U.S. Department of Defense under a contract
administered by the Air Force with the Software Engineering
Institute at Carnegie Mellon University, which is a federally
Funded Research and Development Center (FFRDC).
Q.46.e. Which private companies or individuals representing
private companies are involved?
A.46.e. This service is performed by personnel from the
Software Engineering Institute at Carnegie Mellon University.
Q.46.f. How much is the review expected to cost?
A.46.f. The cost to execute the interagency agreement was
$448,580.
Q.46.g. How long is it projected to last?
A.46.g. The independent review has concluded.
Q.46.h. How much has CFPB spent each year on cybersecurity
measures in each of the last 5 years?
A.46.h.
LFY 2014: $4,158,893
LFY 2015: $6,240,950
LFY 2016: $7,303,500
LFY 2017: $8,521,892
LFY 2018: $7,778,994
Q.47.a. Shortly after arriving at the CFPB, you announced that
you intended to hire political appointees ``now,'' because
career staff that were hired before your arrival were
``political anyway.''
How did you know the political affiliations of CFPB career
staff?
A.47.a. I do not know the party affiliations of individual
employees.
Q.47.b. Did you ask CFPB staff for their political affiliation?
A.47.b. No.
Q.47.c. In hiring civil servants and making decisions about
individuals' responsibilities, do you or your designees employ
a political or ideological litmus test?
A.47.c. No.
Q.47.d. Before bringing political appointees to the CFPB, did
anybody at the agency analyze whether any other independent
agency have a similar structure where a political appointee
oversees each division?
A.47.d. The Bureau hired individuals under Schedule C of the
excepted service, which is authorized by governmentwide Office
of Personnel Management (OPM) regulations, including
independent regulatory agencies.
Q.47.e. Please provide the justifications sent to OPM in
support of each request CFPB made for authority to hire
political staff.
A.47.e. The Bureau followed the Schedule C appointment approval
process established by the Office of Personnel Management,
which requires agencies to submit a completed 1019 Form. The
Bureau's 1019 Forms are attached.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Q.47.f. In a recent letter, the CFPB told me that the agency
currently employs eight political appointees, excluding you and
several political detailees from other agencies.
A.47.f. As of October 23, 2018, the Bureau employs or has
employed 12 Schedule C political appointees and 7 detailees on
political appointments from other agencies (including the
Acting Director). Three of the 12 Schedule C political
appointees held a detail position at the Bureau prior to their
Schedule C appointment (noted in the table below).
Table A below provides the names, types of appointment, and
position titles for each appointee.
Table A--List of Bureau Schedule C Political Appointees and Detailees
as of October 23, 2018
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Q.47.g. Are there plans to hire more political appointees?
A.47.g. Yes.
Q.47.h. Please provide the position descriptions and salary
bands for the all political appointees and most senior career
staffer they supervise, where applicable, including for
political positions that have not yet been filled.
A.47.h. Table B--Political appointees as of October 23, 2018:
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Table C--Career staff supervised by political appointees as
of October 23, 2018: Career
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
The remaining Schedule C Political appointees do not have
supervisory responsibilities.
Attached are the following position descriptions:
1. Principal Policy Director
2. Chief of Staff
3. Policy Associate Director (Supervision, Enforcement, and
Fair Lending)
4. Policy Associate Director (Consumer Education and
Engagement)
5. Policy Associate Director (Research, Markets, and
Regulations)
6. Policy Associate Director (External Affairs)
7. Chief Communications Officer
8. Attorney-Advisor
9. Executive Assistant
10. Executive Assistant
11. Associate Director, Supervision, Enforcement and Fair
Lending
12. Associate Director, Consumer Education and Engagement
13. Associate Director, Research, Markets, and Regulations
14. Associate Director, External Affairs
15. Associate Director, Legal Division (General Counsel)
16. Associate Director, Office of Equal Opportunity and
Fairness
17. Assistant Director, Office of Innovation
18. Ombudsman
19. Assistant Director, Office of Civil Rights
20. Disability Compliance Program Manager
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Q.47.i. Please indicate who was performing the duties included
in their position description before political appointee was
hired.
A.47.i. The table below shows the Schedule C political
positions that were previously performed by career employees.
The remaining Schedule C political appointees are on newly
created position descriptions.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Q.47.j. In a recent letter, the CFPB told me that the agency
has employed five political appointees from other agencies as
reimbursable detailees.
A.47.j. There are currently four active political appointees
from the Office of Management and Budget, on reimbursable
details, including the Acting Director (see Table A above). The
terms and conditions of the details for James Galkowski, Mark
Paoletta, and Michael Williams, are covered by Memoranda of
Understanding (MOU) entered into by the participating agencies.
Q.47.k. Please provide position descriptions for each of these
detailees.
A.47.k. The attached MOUs are for James Galkowski, Mark
Paoletta, and Michael Williams. The MOUs include a brief
description of the type of work for each detailee at the
Bureau.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Q.47.l. Please indicate who was performing the duties included
in their position description before the detailee was hired at
the bureau.
A.47.l. Detailees are not placed on position descriptions. The
duties being performed by the detailees are described in the
applicable MOU.
Q.47.m. Please list how much CFPB is paying to each of these
detailees' salary.
A.47.m. The Bureau has agreed to reimburse each political
appointee detailee's home agency for a proportional share of
their salary according to each detailee's expected schedule of
work at the Bureau. The specific amounts reimbursed to each
agency for the expected duration of the detail are as follows:
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Q.47.n. What is your salary?
A.47.n. My salary is $199,700.
Q.47.o. How much is paid by the CFPB?
A.47.o. The Bureau reimburses the Office of Budget and
Management for a proportional share of my salary and benefits.
The specific amount to be reimbursed based on my expected
schedule of work through September 30, 2018, is $102,869.
Q.48.a. Other than the CFPB, there are four other Federal
banking regulatory agencies: the OCC, the Federal Reserve, the
FDIC, and the NCUA.
Are any of these other banking regulatory agencies funded
through the congressional appropriations process?
A.48.a. No, these agencies are prudential regulators. As you
know, the Bureau is not a prudential regulator. Congress
specifically conceived of the Bureau as a product regulator,
like the Consumer Product Safety Commission (CPSC). Product
regulators, like the CPSC, FTC, SEC, and CFTC are all
appropriated.
Q.48.b. Are ``major'' rules issued by any of these other
banking regulatory agencies subject to congressional approval
before they take effect?
A.48.b. No. The Bureau is uniquely unaccountable by design, and
therefore requires additional statutory mechanisms to ensure
the responsible exercise of its considerable power. I am
puzzled by Members of Congress who have no apparent interest in
overseeing the exercise of their delegated legislative
authority.
Q.49. Since the CFPB was created by Congress, how many reports
relating to the CFPB has the Federal Reserve's Inspector
General issued?
A.49. As of November 13, 2018, the Office of the Inspector
General has issued 66 reports on the Bureau containing 246
recommendations. I believe the Bureau would be well served by
an independent inspector general, specifically focused on the
Bureau's operations.
Q.50. The CFPB Director must testify before Congress four times
a year. Are the heads of the OCC, FDIC, and NUCA subject to a
similar requirement?
A.50. In point of fact, the Dodd-Frank Act requires the Bureau
Director to appear before Congress, but not specifically to
testify. I made this observation when I voluntarily testified.
Perhaps we can agree that this is one provision of Title X of
the Dodd-Frank Act in need of amendment.
Q.51. The CFPB's rules may be vetoed by the Financial Stability
Oversight Council (FSOC). Are rules issued by any of the other
banking regulators subject to an FSOC veto?
A.51. No, however, the threshold for a set-aside of a Bureau
rule under Section 1023 is so high that it provides no
meaningful restriction on the Bureau's rulemaking discretion.
Q.52. What caused you to reverse your prior position that only
Congress has the ability to delay or reverse the CFPB Payday
Rule?
A.52. I did not reverse my position. Congress may disapprove a
Bureau rule under the Congressional Review Act, as it did with
the Bureau's arbitration rule. I support Congressional
oversight of the exercise of its delegated legislative
authority. The Bureau may also amend or repeal its rules,
consistent with applicable law.
Q.52.a. Please provide a list of CFPB personnel and OMB
personnel who provided legal advice with respect to the Payday
Rule prior to December 4, 2017, and a summary of the advice
they provided.
A.52.a. In light of the contemplated rulemaking, it would not
be appropriate to disclose legal advice received related to the
Payday Rule. The requested information would include
confidential Bureau information that would not be appropriate
to submit into the public record. I urge you to work with the
Committee Chairman when submitting requests for confidential
Bureau information.
Q.52.b. Please provide a list of all the meetings where you,
Kirsten Mork, Emma Doyle, Eric Blankenstein or Brian Johnson
were present and the Payday Rule was discussed, including the
date, time, and other attendees at the meeting, and a summary
of the content of those meetings.
A.52.b. The requested information would include confidential
Bureau information that would not be appropriate to submit into
the public record. I urge you to work with the Committee
Chairman when submitting requests for confidential Bureau
information. My calendar is available for review on the
Bureau's website.
Q.52.c. What analysis did the CFPB undertake before deciding to
halt the Payday Rule on January 16?
Q.52.d. What did these analyses conclude about the impact of
the decision on lenders and borrowers?
A.52.c.-d. The Bureau did not ``halt'' the Payday Rule. As
noted in a previous response, the Bureau announced its
intention to engage in a rulemaking process so that the Bureau
may reconsider, as appropriate, its final rule. Any final rule
the Bureau adopts will describe the basis and purpose of any
changes to the rule.
Q.52.e. Did you or other officials meet with or communicate
with representatives of the payday loan industry prior to the
January 18 decision to dismiss the case against Golden Valley
Lending, Inc., Silver Cloud Financial, Inc., Mountain Summit
Financial, Inc., and Majestic Lake Financial? If so, please
provide a list of all such meetings, and a brief discussion of
their content.
A.52.e. Neither I nor any other Bureau official consulted with
any groups or individuals outside of the Bureau, including any
representatives of the payday loan industry, in connection with
my decision to dismiss the case against those lenders without
prejudice.
Q.52.f. Did you or other officials meet with or communicate
with representatives of World Acceptance Corporation or the
installment loan industry prior to the January 22 decision to
drop the investigation into the case? If so, please provide a
list of all such meetings, and a brief discussion of their
content.
A.52.f. As a general policy, the Bureau does not confirm the
existence of an investigation or its disposition, but is aware
of the public statement made by World Acceptance Corporation.
Q.52.g. Please provide all communications related to the
discussion of the Payday rule, the dismissal of the Kansas
case, and the halting of the investigation into World
Acceptance Corporation, including email on personal or official
accounts from custodians Mulvaney, Mork, Doyle, Blankenstein or
Johnson that contain the words ``payday,'' ``Small dollar,''
``installment,'' ``auto,'' ``vehicle,'' ``Golden Valley,''
``Silver Cloud,'' ``Mountain Summit,'' ``Majestic Lake,'' or
``World Acceptance.''
A.52.g. The requested documents would include documents that
contain confidential Bureau information and it would not be
appropriate to submit into the public record. I urge you to
work with the Committee Chairman when submitting requests for
confidential Bureau information.
Q.53. You claim you were lawfully appointed by President Donald
Trump to be Acting Director of the CFPB pursuant to the Vacancy
Reform Act. Will you comply with the time limitations of 5
U.S.C. 3346?
Q.53.a. How do you interpret the word ``days'' in this statute?
Calendar days? Business days?
Q.53.b. Days that you actually work at the CFPB?
A.53.a.-b. Yes, I will comply with the Federal Vacancies Reform
Act's (FVRA) time limits. I interpret the word ``days'' to
refer to calendar days.
Q.53.c. What is your legal basis for this interpretation?
Please cite any relevant legal precedent.
A.53.c. This interpretation has been the consistent
interpretation that executive agencies and the Comptroller
General have applied. For example, under the FVRA, the
Comptroller General must notify certain congressional
committees and others if he determines that an officer is
serving longer than the permitted 210-day period. The
Comptroller General's reports about such violations of the
FVRA's time limits count calendar days when determining the end
of the 210-day period.\12\
---------------------------------------------------------------------------
\12\ These violation letters are available at https://www.gao.gov/
legal/federal-vacancies-act/violation_letters.
Q.53.d. As of April 20, 2018, how many ``days'' have you served
in your role at the CFPB? Please provide the exact number of
---------------------------------------------------------------------------
days in response to this question.
A.53.d. 147 days.
Q.54.a. On April 9, 2018, the Community Financial Services
Association of America (CFSA) and the Consumer Service Alliance
of Texas today filed a Federal lawsuit against CFPB.
Have you or any member of your staffs at either the OMB or
CFPB met with CFSA?
A.54.a. Yes.
Q.54.b. If so, please provide the date(s), attendees of the
meeting(s), and topics or agenda, including whether litigation
against the Bureau or its small dollar lending rule discussed.
A.54.b. On February 15, 2017, Community Financial Services
Association of America (CFSA) attended a roundtable meeting of
nonbank trade associations. Dennis Shaul, Chief Executive
Officer, represented CFSA. Topics included: the rulemaking
process; regulatory guidance; supervision and enforcement; and
the consumer complaint database. I participated in the meeting.
Other Bureau participants included: Brian Johnson, Acting
Deputy Director; Kirsten Sutton, Chief of Staff; Emma Doyle,
Detailee; Anthony Welcher, Policy Associate Director; Zixta
Martinez, Associate Director; Dan Smith, Assistant Director;
Eric Blankenstein, Policy Associate Director; Chris D'Angelo,
Associate Director; Sheila Greenwood, Policy Associate
Director; Gail Hillebrand, Associate Director; David Silberman,
Associate Director; and Mary McLeod, General Counsel.
On April 5, 2018, CFSA met with Brian Johnson, Dan Smith,
and Emma Doyle. CFSA requested the meeting to discuss the
status of the reconsideration of the rule. Dennis Shaul, Chief
Executive Officer; Robert Batson, General Counsel; and Chris
Vergonis represented CFSA at the meeting.
Since the lawsuit was initiated, attorneys of the Bureau
have had communications with counsel for CFSA in the ordinary
course of representing the Bureau in the lawsuit.
Q.55. Earlier this month, CFPB appealed a judge's decision that
ordered CashCall, a payday loan company, to pay a $10.3 million
fine--a fine well below the $287 million sought by CFPB.
Q.55.a. Were you or your immediate staff involved in the
decision to appeal this ruling?
Q.55.b. If so, please describe your involvement.
A.55.a.-b. Yes, I approved the decision to appeal.
Q.55.c. Prior to the April decision to appeal, did you have any
contact with Paul Reddam, CEO of CashCall, or any other
individual representing or affiliated with CashCall? If so,
where and when did this contact occur, and what was the nature
of any discussions you had with Mr. Reddam or any other
individual representing or affiliated with CashCall?
A.55.c. Response No, to the best of my knowledge, I did not
have any contact with any individual representing CashCall
prior to the decision to appeal.
------
RESPONSE TO WRITTEN QUESTION OF SENATOR COTTON FROM MICK
MULVANEY
Q.1. Manufactured housing is an important and affordable
homeownership option in Arkansas. However, several years ago,
the CFPB implemented new rules on HOEPA rules and thresholds
that have made it harder for lenders to originate lower dollar
amount manufactured home loans--the category of homes that are
the most affordable. This development is not just backed up by
anecdotal evidence. HMDA data shows that in the 2 years after
2014 as the new HOEPA rules were put into place, that while the
overall number of manufactured home loans increased, the number
of loans below $75,000 fell. The CFPB has indicated it is
undergoing a thorough review of CFPB rules and policies.
Moreover, the CFPB has the statutory authority to fix the
problems with the HOEPA thresholds.
Will you commit to reviewing this data, exploring its
relationship to the HOEPA thresholds, and adjusting the
thresholds to the appropriate levels as appropriate?
A.1. The Bureau of Consumer Financial Protection (BCFP)
understands that caps on points and fees under the Home
Ownership and Equity Protection Act (HOEPA) or the Ability to
Repay and Qualified Mortgage Act (ATR/QM) can
disproportionately affect low dollar mortgage loans, including
manufactured home loans. Yes, the Bureau will commit to
studying market developments in this area, and will then decide
whether to adjust the thresholds and by how much, as
appropriate and authorized by law. Bureau staff have met with
members of the manufactured home industry to better understand
their perspective on how the Bureau's rules may be impacting
consumer lending in this space.
------
RESPONSES TO WRITTEN QUESTIONS OF SENATOR SCHATZ FROM MICK
MULVANEY
Q.1.a. I understand you cannot discuss an ongoing investigation
or the supervision of a specific institution.
But can you describe generally how the CFPB is approaching
the supervision of the big credit bureaus going forward?
A.1.a. The Bureau of Consumer Financial Protection (Bureau)
supervises nonbanks for the purpose of ``(A) [a]ssessing
compliance with the requirements of Federal consumer financial
law; (B) obtaining information about the activities and
compliance systems or procedures of such persons; and (C)
detecting and assessing risks to consumers and to markets for
consumer financial products and services.''\1\ The Bureau has
authority to supervise larger participants of the consumer
reporting market, pursuant to 12 U.S.C. 5514(a)(l)(B) and 12
CFR 1090.104. As you know, on July 12, 2018, Ms. Peggy L.
Twohig, Assistant Director, Supervision Policy, Division of
Supervision, Enforcement and Fair Lending, Bureau of Consumer
Financial Protection testified before the Senate Banking,
Housing, and Urban Affairs Committee during the hearing
entitled ``An Overview of the Credit Bureaus and the Fair
Credit,'' where she discussed the Bureau's approach to
supervision of the credit bureaus.
---------------------------------------------------------------------------
\1\ 12 U.S.C. 5514(b)(l)(A)-(C).
Q.1.b. What should the credit bureaus be doing to protect the
---------------------------------------------------------------------------
data they collect on consumers?
A.1.b. The Dodd-Frank Wall Street Reform and Consumer
Protection Act (Dodd-Frank Act) tasked the Bureau with
enforcing Federal consumer financial laws. To the extent those
laws impose duties on credit reporting agencies related to
protection of consumer data, those institutions should ensure
that they are fully complying with the law.
Q.1.c. How can they make it easy for consumers to protect their
own data and guard against identity theft?
A.1.c. The Bureau believes that it is critical that consumers
have the tools they need to protect their data and protect
themselves against identity theft. The Fair Credit Reporting
Act (FCRA) requires certain consumer reporting companies--
including the nationwide credit reporting companies--to make a
number of tools available to help consumers protect the
information in their consumer reporting files.
The nationwide credit reporting companies must comply with
a new Federal security freeze law. In May 2018, Congress passed
the Economic Growth, Regulatory Relief, and Consumer Protection
Act (the Act),\2\ which requires nationwide consumer reporting
agencies to provide ``national security freezes'' free of
charge to consumers. The ``national security freeze'' restricts
prospective lenders from obtaining access to a consumer's
credit report, which makes it harder for identity thieves to
open accounts in the consumer's name.
---------------------------------------------------------------------------
\2\ P.L. 115-174.
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The nationwide credit reporting companies can also assist
consumers by facilitating consumers' access and review of their
own credit file information. Consumers have the right to obtain
at least one free report from each of the nationwide credit
reporting companies every 12 months. Consumers who regularly
review their own credit files have the opportunity to identify
unauthorized credit accounts opened in their name and can take
corrective action, for example, by notifying the issuer of the
fraudulent account and by disputing this information with
credit reporting companies.
Additionally, the FCRA provides a number of other tools
that these companies must deploy to help consumers protect
their credit file information. For example, the FCRA requires
nationwide credit reporting companies to put fraud alerts and
active duty alerts on consumers' credit files at the request of
eligible consumers. The Act also extends from 90 days to 1 year
the minimum time that nationwide consumer reporting agencies
must include an initial fraud alert in a consumer's file. A
fraud alert informs a prospective lender that a consumer may
have been a victim of identity theft and requires that the
lender take steps to verify the identity of anyone seeking
credit in the consumer's name.
Q.2. Consumer complaints to the CFPB about credit reports are
consistently high. They are among the top three products and
services that consumers complain about. Three-quarters of those
complaints appear to be about inaccurate credit reports and
errors that credit bureaus do not fix.
Q.2.a. Do you think credit bureaus are doing enough to ensure
the maximum possible accuracy of credit reports?
Q.2.b. Are they engaging in a meaningful reinvestigation when
consumers find problems with their credit report?
A.2.a.-b. Federal law provides a framework to ensure the
players in the consumer reporting system receive the benefits
of our risk-based credit economy. The FCRA sets forth a dispute
and investigation framework, as you note, to ensure errors are
corrected promptly, as well as requirements around accuracy and
maintaining reasonable policies and procedures.
The Bureau's oversight has focused on helping to ensure the
consumer reporting system is one where furnishers provide
accurate information and consumer reporting companies comply
with the FCRA by maintaining and distributing data that are
accurate, and having an effective and efficient dispute
management and resolution process for consumers.
The Bureau published a special edition of Supervisory
Highlights in March 2017.\3\ The Bureau explained in that
publication that, in the preceding 2 years, the Bureau
identified failings in compliance management systems and
violations of law both at consumer reporting companies and at
furnishers.
---------------------------------------------------------------------------
\3\ https://www.consumerfinance.gov/documents/2774/
201703_cfpb_Supervisory-Highlights-Consumer-Reporting-Special-
Edition.pdf.
---------------------------------------------------------------------------
The law requires both bank and nonbank furnishers to
establish and implement reasonable written policies and
procedures regarding accuracy of the information they furnish,
and to take corrective action when they determine they have
furnished inaccurate information. In addition, the Bureau took
steps to ensure furnishers' dispute handling processes comply
with the law in response to failures either to conduct
investigations or to send results of dispute investigations to
consumers.
Q.3. In December, you announced that CFPB would reexamine
requirements to provide mortgage transaction data such as
pricing and underwriting. Lenders already have that data and
most, if not all, have systems in place to report it. This data
gives us insight into the market, to identify risks, enforce
fair lending laws, and better understand the market. You are
about to enforce one of the largest penalties against a
financial institution for persistent predatory practices in
mortgage lending, and at the same time you are saying the
Government should have less visibility into mortgage lending
practices.
Q.3.a. Why is CFPB rejecting data that is available and ready
to be reported?
Q.3.b. Why would CFPB want to create an information blind spot
in mortgage lending when there are still so many abuses?
A.3.a.-b. The Bureau is not rejecting any data that is
available and ready to report. Rather, the Bureau has announced
that it will reconsider the decisions made by my predecessor in
implementing the Dodd-Frank Act's amendments to the Home
Mortgage Disclosure Act (HMDA), including decisions that were
made to require lenders to report at least 14 new data points
that the Dodd-Frank Act did not specify must be reported. I
have not predetermined whether changes should be made in the
data that is collected and, if so, what changes should be made.
Any such decision will be made through the notice-and-comment
rulemaking process provided for in the Administrative Procedure
Act. Also note that the Economic Growth, Regulatory Relief, and
Consumer Protection Act amended HMDA to exempt certain smaller-
volume institutions from their obligations to collect and
report for certain transactions many of the data points the
Bureau implemented under the Dodd-Frank Act. The Bureau issued
a rule on August 31, 2018, to implement and clarify the partial
exemptions provided by the Act.
Q.4. Student loan debt is growing faster than all other
categories of consumer debt, even credit cards. It is the
highest category of consumer debt behind mortgages. According
to the Federal Reserve Board of New York, the student loan debt
is highly delinquent. At least 11 percent is seriously
delinquent, and the true number is likely twice that high. In
contrast, mortgage delinquency peaked at 5 percent during the
recession.
Are you concerned about the levels of student loan debt?
A.4. Yes. As a father of three college-age children, I am
concerned about the level of debt some students choose to take
on, and whether they receive education worthy of their
investment.
Q.5. Federal Reserve Chair Jerome Powell recently testified
that he didn't understand why student loan debt is not
dischargeable in bankruptcy. Do you think student loan debt
should be dischargeable?
A.5. That would be a decision for Congress to make.
Q.6. In your role as Director of the Office of Management and
Budget, have you requested that the Department of Housing and
Urban Development make recommendations on recessions to
specific accounts, projects, or functions funded in the
Consolidated Appropriations Act of 2018 (P.L. 115-141)? If so,
please provide the specific directions OMB gave to agencies for
identifying these rescissions.
A.6. The Office of Management and Budget did not provide
specific directions to agencies for identifying rescissions to
specific
accounts, projects, or functions funded in the Consolidated
Appropriations Act of 2018, but did more generally inform
agencies that OMB would review any rescission proposals that
agencies would like OMB to consider. OMB worked with the
Department of Housing and Urban Development to identify viable
candidates from among these proposals. In addition, OMB has
asked Federal agencies to provide information concerning the
obligational availability of funds appropriated to specific
accounts, projects, or functions.
Q.7. In your role as Director of the Office of Management and
Budget, have you requested that the Department of
Transportation make recommendations on recessions to specific
accounts, projects, or functions funded in the Consolidated
Appropriations Act of 2018 (P.L. 115-141)? If so, please
provide the specific directions OMB gave to agencies for
identifying these rescissions.
A.7. The Office of Management and Budget did not provide
specific directions to agencies for identifying rescissions to
specific accounts, projects, or functions funded in the
Consolidated Appropriations Act of 2018, but did more generally
inform agencies that OMB would review any rescission proposals
that agencies would like OMB to consider. OMB worked with the
Department of Transportation to identify viable candidates from
among these proposals. In addition, OMB has asked Federal
agencies to provide information concerning the obligational
availability of funds appropriated to specific accounts,
projects, or functions.
Q.8. In your role as Director of the Office of Management and
Budget, have you requested any other Federal agency make
recommendations on recessions to specific accounts, projects,
or functions funded in the Consolidated Appropriations Act of
2018 (P.L. 115-141)? If so, please provide the specific
directions OMB gave to agencies for identifying these
rescissions.
A.8. The Office of Management and Budget did not provide
specific directions to agencies for identifying rescissions to
specific accounts, projects, or functions funded in the
Consolidated Appropriations Act of 2018, but did inform
agencies that OMB would review any rescission proposals that
agencies would like OMB to consider. In addition, OMB has asked
Federal agencies to provide information concerning the
obligational availability of funds appropriated to specific
accounts, projects, or functions.
------
RESPONSES TO WRITTEN QUESTIONS OF SENATOR CORTEZ MASTO FROM
MICK MULVANEY
Q.1. The Congressional Budget Office said that the tax bill
that gave massive tax cuts to multinational corporations and
the wealthiest families. All while raising taxes on 92 million
middleclass families--leading to a Federal budget deficit of
$804 billion this year. The tax scam bill will lead to a
deficit 43 percent higher than it had projected last summer,
and exceed $1 trillion a year starting in 2020. Last year,
without the tax giveaway bill, the deficit was $665 billion,
next year, it will be $804 billion. Debt held by the public
will hit $28.7 trillion at the end of fiscal year 2028, or 96.2
percent of gross domestic product, up from 78 percent of GDP in
2018. Those estimates assume current law will remain in effect,
meaning Congress would allow some tax cuts to expire and
spending caps to take effect again in the coming years. If
Congress extends the tax cuts, as many Republicans want to do,
the CBO predicted higher deficits and publicly held debt
totaling 105 percent of GDP by the end of 2028--a level
exceeded only once in U.S. history, in the immediate aftermath
of World War II.
LIf you decide to reverse course and use this time
of strong economic growth to reduce the deficit, who
will bear the cost of deficit reduction? What
investments do you plan to reduce or eliminate and
which region, population, or industry will bear these
costs?
LWill you seek to cut Social Security, Medicare, and
Medicaid to offset the debt increase from the tax bill?
LWill you seek to reduce resources that help poor
families afford safe homes and nutritious food? Or will
you urge higher taxes on the powerful corporations and
the 1 percent of families?
A.1. The CBO baseline confirms that deficits and debt will rise
to alarming levels unless we take strong action to grow the
economy and reduce spending, as proposed in the 2019
President's Budget. The Administration's ambitious deregulatory
efforts, combined with tax reform and our pro-growth budget
policies, are key components of returning to sustained economic
growth. In addition, the Administration is committed to
bringing Federal spending under control by eliminating wasteful
spending and making Government programs more efficient, as
detailed in the most recent Budget.
The Administration is committed to bringing Federal
spending under control, while preserving economic and social
programs for the most vulnerable by making them more efficient
and sustainable. The 2019 President's Budget is consistent with
the President's commitment to protect Social Security and
Medicare, while also taking steps to extend the solvency of
Medicare by reducing wasteful spending. The 2019 Budget also
contains Medicaid reforms which will allow States to design
State-based solutions that put the program on a sustainable
fiscal path while ensuring Medicaid is preserved for the most
vulnerable.
We plan to continue to protect these vital programs and to
strive to make the programs more cost-effective and efficient.
The 2019 President's Budget demonstrated the
Administration's dedication to helping needy families through
smart reforms to affordable housing and food assistance
programs. For example, the Budget included reforms to the SNAP
program that are designed to ensure that participants who can
work are expected to do so, that benefits are reserved for the
neediest households, and that we reduce wasteful and improper
spending.
We plan to maintain our commitment to needy families, while
also striving to spend taxpayer dollars responsibly. It is
imperative that we keep the tax cuts in place and pursue other
policies to support economic growth and bring spending under
control to ensure greater security for America's fiscal future.
Q.2. As the former Attorney General (AG) of Nevada during the
financial crisis, my office oversaw foreclosure fraud,
insurance fraud, Medicare and Medicaid fraud and many consumer
protection issues. State attorneys general have a big job. When
it comes to deceptive practices of financial firms, the CFPB
has powers AGs do not have--like Civil Investigative Demands.
The CFPB can see problems nationwide--so they can see patterns
that State AGs cannot. In addition, some financial firms can
pre-empt State law so we could not stop them even if we wanted
to. Only the Bureau can do that.
Q.2.a. How have State AGs responded to your suggestion that
they pick up the slack from your lack of enforcement? Please
name any AGs you have had communications--conversations,
correspondence, etc.--and their comments and concerns about
leading without the CFPB's resources.
A.2.a. I do not believe that I have ever stated that State
attorneys general would need to ``pick up the slack from [the
Bureau's] lack of enforcement.'' The Bureau of Consumer
Financial Protection (Bureau) intends to enforce the law as
written. But, as with every law enforcement agency, the Bureau
has limited resources. To the extent an attorney general
believes that there is a relevant legal violation not being
addressed by the Bureau, that attorney general can bring suit
pursuant to authority granted him or her by the Dodd-Frank Wall
Street Reform and Consumer Protection Act (Dodd-Frank Act). No
State attorney general has commented to me on the Bureau's
level of enforcement activity.
Q.2.b. Why have there been no public enforcement actions
announced in the past 5 months since you were illegally
appointed to head the Bureau?
A.2.b. I reject your assertion that I was illegally appointed
to head the Bureau. The President validly exercised his
authority to designate me pursuant to the Federal Vacancies
Reform Act. Further, the only court to review the validity of
my appointment has agreed that the President acted within his
statutory authority. The legal challenge to my authority was
subsequently voluntarily dismissed by the plaintiff.
As for substance of your question, the Bureau has taken
several enforcement actions. The list of enforcement actions
taken has been updated as of November 1, 2018.
The Bureau entered into a consent order with Wells Fargo on
April 20, 2018.\1\
---------------------------------------------------------------------------
\1\ https://www.consumerfinance.gov/policy-compliance/enforcement/
actions/wells-fargo-bank-na-2018/.
---------------------------------------------------------------------------
The Bureau entered into a consent order with Security
Group, Inc., Security Finance Corporation of Spartanburg,
Professional Financial Service Corp., et al., on June 13,
2018.\2\
---------------------------------------------------------------------------
\2\ https://www.consumerfinance.gov/policy-compliance/enforcement/
actions/security-group-inc/.
---------------------------------------------------------------------------
The Bureau entered into a consent order with Citibank N.A.
on June 29, 2018.\3\
---------------------------------------------------------------------------
\3\ https://www.consumerfinance.gov/policy-compliance/enforcement/
actions/citibank-na-2018/
---------------------------------------------------------------------------
The Bureau entered into a consent order with National
Credit Adjusters, LLC and Bradley Hochstein on July 13,
2018.\4\
---------------------------------------------------------------------------
\4\ https://www.consumerfinance.gov/policy-compliance/enforcement/
actions/national-credit-adjusters-llc-and-bradley-hochstein/.
---------------------------------------------------------------------------
The Bureau entered into a consent order with Triton
Management Group, Inc. on July 19, 2018.\5\
---------------------------------------------------------------------------
\5\ https://www.consumerfinance.gov/policy-compliance/enforcement/
actions/triton-management-group-inc/.
---------------------------------------------------------------------------
The Bureau filed a lawsuit against Future Income Payments,
LLC, Scott Kohn, and related entities on September 13, 2018.\6\
---------------------------------------------------------------------------
\6\ https://www.consumerfinance.gov/policy-compliance/enforcement/
actions/future-income-payments-llc/.
---------------------------------------------------------------------------
The Bureau entered into a consent order with Bluestem
Brands on October 4, 2018.\7\
---------------------------------------------------------------------------
\7\ https://www.consumerfinance.gov/policy-compliance/enforcement/
actions/bluestem-brands-inc/.
---------------------------------------------------------------------------
The Bureau entered into a consent order with Cash Express
on October 24, 2018.\8\
---------------------------------------------------------------------------
\8\ https://www.consumerfinance.gov/policy-compliance/enforcement/
actions/cash-express-llc/.
Q.2.c. Why did you end the investigation into the marketing and
lending practices of World Acceptance Corporation, a South
Carolina lender? On what basis did you stop the investigation?
It has been reported that you have taken campaign contributions
from some of these lenders. Will you recuse yourself from
deciding on enforcement and litigation actions from firms in
---------------------------------------------------------------------------
which you received campaign contributions?
A.2.c. As a general policy, the Bureau of Consumer Financial
Protection (Bureau) does not confirm the existence of an
investigation or its disposition, but is aware of the public
statement made by World Acceptance Corporation.
Q.2.d. Has the CFPB taken any public action against recent
reports that African Americans are more likely to be denied a
mortgage even with an adequate down payment and prime credit?
A.2.d. Redlining and discrimination in mortgage underwriting
and pricing practices continue to be priority areas of focus in
the Bureau's fair lending supervisory and enforcement
activities.
Q.2.e. Has the CFPB taken any public action following an Urban
Institute report showing that single women pay more for a
mortgage than single men even though the women are actually
better credit risks?
A.2.e. The Bureau continues to review reports, studies,
consumer complaints, whistleblower tips, and other sources of
leads in deciding where to conduct fair lending supervisory and
enforcement activities. As part of its mortgage-related
supervisory and enforcement activity, the Bureau routinely
assesses data related to possible gender discrimination. The
Bureau has not taken any public enforcement actions involving
gender-based pricing in its history, even under the previous
Director.
Q.2.f. Was it your decision to drop the lawsuit against Golden
Valley Lending and three other payday lending companies which
used faux partnerships with Native American tribes to charge
excessive interest rates of up to 950 percent--a clear
violation of State interest rate caps?
A.2.f. The decision to dismiss the case without prejudice was
made by me. Dismissal of a case, which is one legal theory
based on one set of facts, does not mean that a decision has
been made on whether to pursue other legal theories based on
different facts.
Q.3.a. When you arrived at the Bureau, you froze the Civil
Penalty Fund. By freezing this fund, you prevented people from
getting compensation due them. These are people who have
already suffered. They paid late fees, missed paychecks, and
lost earnings because of these overcharges.
How many people are still waiting for compensation from
completed enforcement actions as of December 31, 2018?
A.3.a. I have not prevented people from getting compensation
due to them. As of November 9, 2018, funds from the Civil
Penalty Fund have been allocated to classes of consumers from
22 cases. Of those 22, funds have been distributed to consumers
in all but three cases. Preparations for the remaining three
distributions are continuing according to the Bureau's
established procedures. In my time as Acting Director, the
Bureau has released over $110 million to nearly 30,000 harmed
consumers from the Civil Penalty Fund.
Q.3.b. Why are you delaying people from getting compensation
due them?
A.3.b. The Bureau is maintaining operation of the Civil Penalty
Fund. We are not delaying payments from the Civil Penalty Fund.
Q.3.c. You testified before the House that since you arrived at
the Bureau $92 million has been returned to consumers. How does
$92 million compare with how much is owed?
A.3.c. As noted in a previous response, there are three cases
for which funds have been allocated but not yet distributed.
The allocations for those three cases total $72 million.
Q.4.a. The Consumer Bureau fined Wells Fargo for opening 1.5
million fake accounts causing consumers to incur more than $2
million in fees.
Has every Wells Fargo customer who had a fake account or
unauthorized credit card been compensated?
A.4.a. The Bureau entered a consent order with Wells Fargo on
September 8, 2016.\9\ The order provided for remediation, which
is ongoing.
---------------------------------------------------------------------------
\9\ https://www.consumerfinance.gov/policy-compliance/enforcement/
actions/wells-fargo-bank-2016/.
Q.4.b. What about those who were illegally charged auto
insurance or had unnecessary fees added to their mortgage? Will
the Bureau take action against Wells Fargo for other fraudulent
actions beyond the fake accounts and fake credit cards? If so,
---------------------------------------------------------------------------
when?
A.4.b. Since the hearing, the Bureau has taken action relating
to these matters in coordination with the Office of the
Comptroller of the Currency (OCC). On April 20, 2018, the
Bureau announced a public enforcement action against Wells
Fargo regarding its mortgage origination and auto-loan
servicing practices.\10\
---------------------------------------------------------------------------
\10\ https://www.consumerfinance.gov/policy-compliance/enforcement/
actions/wells-fargo-bank-na-2018/.
Q.4.c. Have all the people who paid Equifax, Transunion, and
Experian for credit scores that turned out to be useless--not
their real scores but an ``educational score''--received the
---------------------------------------------------------------------------
tens of millions promised to them?
A.4.c. The Bureau entered consent orders with Equifax \11\ and
Transunion \12\ on January 3, 2017, and with Experian \13\ on
March 23, 2017. Equifax has completed remediation to consumers.
Transunion's remediation is ongoing. Experian was not directed
to pay remediation.
---------------------------------------------------------------------------
\11\ https://www.consumerfinance.gov/policy-compliance/enforcement/
actions/equifax-inc-and-equifax-consumer-services-llc/.
\12\ https://www.consumerfinance.gov/policy-compliance/enforcement/
actions/transunion-interactive-inc-transunionllc-and-transunion/.
\13\ https://www.consumerfinance.gov/policy-compliance/enforcement/
actions/experian-holdings-inc-experian-information-solutions-inc-and-
consumerinfocom-inc-dba-experian-consumer-services/.
Q.4.d. Navy Federal Credit Union illegally threatened to tell
their customers--members of the military--that the Credit Union
would tell their chain of command about their debts. Have all
those customers received all of the $23 million promised to
---------------------------------------------------------------------------
them?
A.4.d. The Bureau entered a consent order with Navy Federal
Credit Union on October 11, 2016.\14\ The order provided for
remediation, which is complete.
---------------------------------------------------------------------------
\14\ https://www.consumerfinance.gov/policy-compliance/enforcement/
actions/navy-federal-credit-union/.
Q.4.e. Woodbridge Gold & Pawn deceived consumers about the
actual annual cost of its loans by as much as half. Has
Woodbridge provided the $56,000 in restitution to all of the
---------------------------------------------------------------------------
1,000 people who were overcharged?
A.4.e. The Bureau, jointly with the Virginia Attorney General's
office, filed an enforcement action against Woodbridge Gold &
Pawn on February 2, 2017.\15\ The district court entered the
parties consent order providing for remediation on February 7,
2017, and that remediation is complete.
---------------------------------------------------------------------------
\15\ https://www.consumerfinance.gov/policy-compliance/enforcement/
actions/woodbridge-coins-and-jewelry-exchange-inc-db-woodbridge-gold-
pawn/.
Q.4.f. When RushCard had a massive service breakdown, tens of
thousands of people could not get their paychecks or pay bills.
Have all the thousands of UniRush and Mastercard customers
---------------------------------------------------------------------------
received their share of the $10 million compensation owed them?
A.4.f. The Bureau entered a consent order with UniRush and
Mastercard on February 1, 2017.\16\ Under the order, payments
by check and account credits were issued to consumers in March
2018. Certain reporting and other obligations related to
remediation under the order remain outstanding.
---------------------------------------------------------------------------
\16\ https://www.consumerfinance.gov/policy-compliance/enforcement/
actions/unirush-llc-and-mastercard-international-incorporated/.
Q.4.g. Planet Home Lending took illegal kickbacks for mortgage
referrals. Have all people who were overcharged and cheated
---------------------------------------------------------------------------
received the $265,000 in redress?
A.4.g. The Bureau entered a consent order with Planet Home
Lending on January 31, 2017.\17\ The order provided for
remediation, which is complete.
---------------------------------------------------------------------------
\17\ https://www.consumerfinance.gov/policy-compliance/enforcement/
actions/planet-home-lending-llc/.
Q.4.h. Attorneys at the Williamson Law firm conspired to charge
illegal fees to people seeking help with debt relief. Has the
---------------------------------------------------------------------------
CFPB provided funds to all the people who were overcharged?
A.4.h. The Bureau filed a complaint against the Williamson Law
Firm and related parties on January 30, 2017.\18\ That case is
ongoing.
---------------------------------------------------------------------------
\18\ https://www.consumerfinance.gov/policy-compliance/enforcement/
actions/vincent-howard-lawrence-w-williamson-howard-law-pc-williamson-
law-firm-llc-and-williamson-howard-llp/.
Q.4.i. Have all the clients of Works & Lentz received
compensation to offset the harm they suffered when this medical
collection firm provided inaccurate credit information to the
---------------------------------------------------------------------------
credit bureaus?
A.4.i. The Bureau entered a consent order with Works and Lentz
on January 9, 2017.\19\ The order provided for remediation,
which is complete.
---------------------------------------------------------------------------
\19\ https://www.consumerfinance.gov/policy-compliance/enforcement/
actions/works-lentz-inc/.
Q.5. Congress has made inadequate investment in IT and cyber
security for Federal agencies. The leaders of SEC, HUD, and the
CFTC have all told us recently that they need to upgrade their
IT systems but Congress has not provided adequate resources.
How many open IT security specialist positions have you chosen
---------------------------------------------------------------------------
not to fill?
A.5. The Bureau has a Cyber Team comprised of 20 positions,
which includes IT Specialists, Information Security
Specialists, Supervisory IT Specialists, and Policy & Planning
Specialists. There are six current vacancies among the team and
the Bureau is finalizing hiring for the Chief Information
Security Officer (CISO) position. Once this position is
permanently filled, the Bureau will assess the remaining five
positions to determine the need to proceed with filling the
existing vacancies as is given there are current staff
performing this same work or whether additional skillsets are
needed within the team. As of November 13, 2018, the remaining
five positions are:
LCybersecurity Architecture & Engineering Team Lead
(CN-60)
LInformation System Security Manager (CN-52/53)
positions (x2 vacancies)
LCloud Security Engineer (CN 52/53) positions (x2
vacancies)
Q.6. In my State of Nevada, half of renters pay more than \1/3\
of their income for rent. Other States also have a rental
housing crisis with tens of millions of families whose low
wages leave them struggling to pay rent and other bills. Yet,
fewer than 6 million families receive Federal assistance with
their rent. As OMB Director, you develop President Trump's
budgets. The 2019 budget request proposes the most radical
retrenchment of Federal aid for such families since the U.S.
Housing Act was first enacted in 1937.
Q.6.a. Why did the Trump administration's budget ask Congress
to cancel housing choice vouchers for 200,000 low-income
families? What will happen to these people--low-income
families, seniors, people with disabilities, veterans--if you
strip away the housing benefits they are currently receiving?
A.6.a. The 2019 Budget requested $20.5 billion for the Housing
Choice Voucher program. This amount provides sufficient funding
to continue to support all households currently assisted by the
program, and enables housing authorities to reissue all
vouchers currently in use to new families upon turnover.
Q.6.b. About 2 million people live in public housing. It's a
critical and deeply underfunded source of housing. Why does the
Trump administration budget cut public housing funding by half?
Q.6.c. For people who are elderly, have a disability, or are
children, what is the public health impact of not repairing
broken elevators, replacing broken windows or removing lead-
based paint in their homes?
A.6.b.-c. The current approach to supporting the Public Housing
program is unsustainable and has resulted in units lost due to
poor physical conditions. To address this problem, the 2019
President's Budget provides resources to shift Public Housing
to the Section 8 funding platform (Housing Choice Vouchers,
Project Based Rental Assistance) where it can leverage private
financing to address capital repairs. The Budget also allows
Public Housing Authorities (PHAs) to retain full control of
properties while protecting residents from displacement, and
facilitate demolition of uninhabitable units. Further, the
Administration believes that State and local governments should
more fully share in the responsibility of providing affordable
housing.
The Budget continues to support the Department of Housing
and Urban Development's (HUD) mission to provide decent, safe,
and sanitary housing for assisted families, including
addressing the health and safety conditions of Public Housing
residents. The 2019 Budget requests $10 million to address
emergency capital needs in Public Housing, including safety and
security measures, and $145 million for the Lead Hazard
Reduction program. Further, HUD has published a competitive
notice to award $25 million that was provided in 2017 to abate
lead hazards in public housing.
Q.6.d. Local elected officials, housing developers, and others
rely on the HOME Investment Partnerships, Community Development
Block Grant (CDBG), and Choice Neighborhoods programs which
give flexible aid to low-income rural, suburban, and urban
communities.
Why does the Administration budget propose cutting more
than $4 billion a year to improve basic infrastructure like
water and sewer lines, provide life-enriching services to youth
and seniors, build and rehabilitate affordable housing for low-
income residents, and promote economic development?
A.6.d. The 2019 President's Budget recognizes a greater role
for State and local governments and the private sector to
provide funding for community and economic development needs.
The program objectives of HOME, CDBG, and Choice Neighborhoods
could be met by non-Federal dollars. Many factors contribute to
housing cost burden and the problem cannot be solved by the
Federal Government through HOME or the subsidization of housing
construction alone. For CDBG, it has been documented that the
allocation formula poorly targets funds to the areas of
greatest need, and many aspects of the program have become
outdated. And finally, early reports suggest that many of the
funds leveraged by Choice Neighborhood grantees were existing
commitments and appear as if they would have occurred in the
absence of a Choice grant.
Q.7. We desperately need more resources for affordable housing
for families whose wages are too low to pay the rent and other
expenses. The National Housing Trust Fund provided $219 million
last year nationwide. In Reno, we received a $1.8 million
investment that provided 20 homes to low-income families.
Q.7.a. Why did the Administration propose eliminating the
National Housing Trust Fund even though these funds are NOT
even taxpayer funds?
A.7.a. The Housing Trust Fund, managed by the Department of
Housing and Urban Development, is a fee-funded Federal program
that provides grants to States to increase and preserve the
supply of affordable housing primarily for extremely low-income
families. Housing for low-income families is also currently
funded by multiple funding sources, including Federal, State,
and local governments, as well as the private and nonprofit
sectors. The result is a fragmented system with varying rules
and regulations that create overlap and inefficiencies, as well
as challenges to measuring collective performance. The
Administration's proposal to eliminate the Housing Trust Fund,
in concert with other proposals in the 2019 President's Budget,
would devolve some affordable housing activities to State and
local governments who are better positioned to comprehensively
address the array of unique market challenges, local policies,
and impediments that lead to housing affordability problems.
Q.7.b. Can I get your commitment that the Trump administration
will not seek to rescind any of the 2018 HUD and USDA housing
funds? That every dollar Congress provided to help veterans,
people with disabilities, low-income seniors and families live
in safe and affordable housing will be available?
A.7.b. Given the long-term fiscal constraints facing our
Nation, the President is committed to using all available tools
to put our fiscal house back in order. This includes his
authority to propose rescissions under the Congressional Budget
and Impoundment Control Act of 1974. I appreciate you sharing
your views on these rescissions.
Q.7.c. Can I get your commitment to prioritize funding for
affordable housing in your 2020 budget submission if you are
still serving as Director of OMB?
A.7.c. The President's 2019 Budget delivers on key promises
made to the American people by focusing on four main
priorities: the safety and security of the American people,
continuing to build an even stronger and robust American
economy, an enhanced quality of life for hardworking Americans,
and a commitment to a better future. As we begin work on
President Trump's FY 2020 Budget, I appreciate you sharing your
views on Federal affordable housing programs.
Q.8. More than 91,000 Nevadans have submitted complaints to the
Consumer Complaint database. About \1/3\ of the complaints in
Nevada and nationwide are about debt collection. People said
debt collectors illegally harass them for debts that were not
theirs, try to collect the wrong amount or demand payment on
outdated debts while they hold people's credit reports hostage.
Was it your
decision to drop the lawsuit against Golden Valley Lending and
three other payday lending companies which used faux
partnerships with Native American tribes to charge excessive
interest rates of up to 950 percent--a clear violation of State
interest rate caps?
A.8. The decision to dismiss the case without prejudice was
made by me. Dismissal of a case, which is one legal theory
based on one set of facts, does not mean a decision has been
made on whether to pursue other legal theories based on
different facts.
Q.9. A Reuters' report stated that ``A CFPB investigation found
[National Credit Adjusters] wrongly collected roughly $50
million.'' National Credit Adjusters, a notoriously abusive
payday loan collector, announced that the Bureau investigations
have ended.
Q.9.a. Was it your decision to drop this investigation? Did
your senior staff participate in this decision? If so, who
advised you to drop the investigation into NCA?
Q.9.b. Do you dispute the claim that National Credit Adjusters
wrongfully collected millions of dollars from American
consumers?
Q.9.c. If no, how can these consumers be made whole?
Q.9.d. If yes, would you provide in writing, the evidence you
have for disputing this claim?
Q.9.e. Are you considering dropping cases against debt
collection firms Security Finance, Cash Express, and Triton
Management Group?
A.9.a.-e. As I mentioned in my response to Question 2, the
Bureau entered into a consent order with National Credit
Adjusters, LLC and Bradley Hochstein on July 13, 2018.\20\ The
Bureau also entered into a consent order with Security Group,
Inc., Security Finance Corporation of Spartanburg, and
Professional Services Corp. on June 13, 2018,\21\ a consent
order with Cash Express, LLC on October 24, 2018,\22\ and a
consent order with Triton Management Group, Inc. on July 19,
2018.\23\
---------------------------------------------------------------------------
\20\ https://www.consumerfinance.gov/policy-compliance/enforcement/
actions/national-credit-adjusters-llc-and-bradley-hochstein/.
\21\ https://www.consumerfinance.gov/policy-compliance/enforcement/
actions/security-group-inc.
\22\ https://www.consumerfinance.gov/policy-compliance/enforcement/
actions/cash-express-llc/.
\23\ https://www.consumerfinance.gov/policy-compliance/enforcement/
actions/triton-management-group-inc/.
Q.10. In your Wall Street Journal op-ed you said almost a third
of consumer complaints received by the Bureau are associated
with debt collection and said ``data like that should, and
---------------------------------------------------------------------------
will, guide our actions.''
Q.10.a. Why then did the Consumer Bureau, at your direction,
cancel a survey of consumers about their experiences with debt
collection?
A.10.a. I note that this question is identical to a question I
received from Ranking Member Maxine Waters (CA) following my
testimony before the House Committee on Financial Services,
regarding the Bureau's Semi-Annual Report. For that reason, I
am providing you the same response I provided the Ranking
Member. Additionally, this question is substantially similar to
a question I received from Ranking Member Brown following my
testimony before the Senate Committee on Banking, Housing, and
Urban Affairs, regarding the Bureau's Semi-Annual Report. For
that reason, I am providing you the same response I will
provide to the Ranking Member.
The survey for which the Bureau sought Office of Management
and Budget (OMB) approval under the Paperwork Reduction Act was
tied to testing particular disclosures that were under
consideration as part of a potential rulemaking with respect to
debt collection. The request for comment on the Bureau's
request appeared in the Federal Register on November 14, 2017,
less than 2 weeks before I became the Acting Director. I
decided that before proceeding with the survey I first wanted
to review the proposals that were under consideration for the
rulemaking so that any data collection would be tailored to
what I determined to be the appropriate scope for the
rulemaking rather than driven by decisions that may have been
made by my predecessor. Prior to my tenure as Acting Director,
the Bureau did conduct a survey of consumers about their
experiences with debt collection.
Q.10.b. The debt collection industry and consumer groups both
believe a rule is needed either to clarify which types of debt
collection practices are acceptable or to protect consumers
from abuse. Given this information, are you also in agreement
that the Bureau should issue a debt collection rule?
A.10.b. I note that this question is identical to a question I
received from Ranking Member Maxine Waters (CA) following my
testimony before the House Committee on Financial Services,
regarding the Bureau's Semi-Annual Report. For that reason, I
am providing you the same response I provided the Ranking
Member.
The Bureau has identified debt collection as part of its
plans for upcoming proposed rules in the Fall 2018 Unified
Agenda. Debt collection is one of the most complained-about
financial products, and industry and consumer groups have
encouraged the Bureau to engage in rulemaking regarding this
over 40-year-old statute. The Bureau has engaged in research
and pre-rulemaking activities regarding debt collection
practices, including issuing an Advance Notice of Proposed
Rulemaking in November 2013 and releasing an Outline of
Proposals Under Consideration in preparation for a Small
Business Regulatory Enforcement Fairness Act (SBREFA) panel in
July 2016. The Bureau expects to issue a Notice of Proposed
Rulemaking addressing such issues as communication practices
and consumer disclosures by spring 2019.
Q.11. The Pathways Program was designed to increase the number
of highly skilled, well-trained minorities working at the
Bureau.
Q.11.a. Why have you canceled hiring under the Pathways
Program? How many full-time Federal staff members in the
Pathways Program will not be eligible for a permanent position
at the Bureau?
A.11.a. On November 28, 2017, I instituted a 30-day hiring
freeze which was extended indefinitely on January 18, 2018. The
freeze is designed to give the Bureau's leadership time to
align the agency's budget, programs, and staffing plans with my
priorities and evolving mission needs. The freeze prohibits the
Bureau from hiring external candidates, posting and filling
certain vacancies that result in promotion, converting Pathways
appointments, or extending temporary or term appointments.
While the freeze prohibits converting Pathways program staff to
permanent positions, on November 13, 2018, I signed an
exception granting conversion to all remaining full-time
Pathways employees currently onboard. As of November 21, 2018,
I have granted exceptions to the freeze for 47 positions so far
in 2018. The chart below indicates the type and number of
exceptions made for each position.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Q.11.b. How many of the staff you hired are Latino? African
American? Women?
A.11.b. From November 27, 2017 through October 23, 2018, 4 of
the 25 externally hired staff identified in the personnel
system as Hispanic or African American/Black (these numbers do
not include interns). Eleven of the new external hires are
identified in the personnel system as female. Of the 12
Schedule C appointments, not included in the exceptions list
above, made between November 27, 2017 and October 23, 2018,
none of the appointees are identified in the personnel system
as Hispanic and one appointee is identified as African
American/Black. Five of the Schedule C appointees are
identified in the personnel system as female.
Q.11.c. Do you have any Latinos or African Americans in your
top policy positions at the Bureau? Please name them.
A.11.c. There are currently 63 executives at the Bureau (pay
bands 81, 82, or 90). This includes Schedule C appointees.
There are no Hispanic employees serving in Schedule C political
appointments at the executive pay band levels and one African
American/Black employee serving in a Schedule C appointment at
the executive pay band level. For the rest of the executive
corps, there are four career employees who are identified in
the personnel system as Hispanic and seven career employees are
identified in the personnel system as African American/Black.
Q.12. On December 21, 2017, the CFPB announced that it does not
intend to assess penalties for errors in Home Mortgage
Disclosure Act (HMDA) data collected in 2018, and that it plans
to reconsider various aspects of its 2015 HMDA rule.
How can you enforce the law against racial discrimination
without actual data about who gets what type of loan? Or
without penalties for discrimination?
A.12. The Bureau issued its statement in recognition of the
significant systems and operational challenges needed to adjust
to the revised Regulation C, for Home Mortgage Disclosure Act
(HMDA) data collected in 2018 and reported in 2019. The
statement does not modify financial institutions' obligation to
submit 2018 HMDA data. The statement regarding HMDA
resubmission and penalties applies only to HMDA data collected
in 2018 and submitted in 2019.
For data collected in 2018 and submitted in 2019, the new
HMDA Platform, which allows financial institutions to upload
HMDA files, perform validation on the data, review edits,
submit HMDA data, and complete the HMDA filing process, will
encourage and facilitate financial institutions' ability to
file accurate and complete HMDA data. Further, under Regulation
C (and effective for data submitted in 2019), an authorized
representative of the financial institution with knowledge of
the data submitted shall certify to the accuracy and
completeness of data submitted.
Q.13. This year is the 50-year anniversary of the Fair Housing
Act. Yet, we have the largest homeownership gap between whites
and blacks as in 1968.
Q.13.a. How does your decision to suspend penalties for HMDA
violations move us toward closing the racial homeownership and
wealth gap?
A.13.a. The Bureau understands that financial institutions have
devoted considerable resources to properly convert their
systems, policies, procedures, and training to conform to the
changes in Regulation C that took effect on January 1, 2018.
The Bureau's decision along with the decision of the prudential
regulators not to
require financial institutions to pay penalties with respect to
errors in data collected in 2018 and reported in 2019 will not
undo their work or the ongoing work of institutions to get HMDA
reporting right. Collection and submission of the 2018 HMDA
data will provide financial institutions an opportunity to
focus on identifying any gaps in their implementation of the
additional requirements in Regulation C and making improvements
in their HMDA compliance management systems for future years.
The Bureau plans to conduct HMDA exams on 2018 data with the
goal of helping financial institutions improve data quality
going forward, and required HMDA reporting in future years will
also provide an incentive for HMDA filers to address any
compliance gaps as soon as possible.
Q.13.b. Director Mulvaney, would you please explain why you
believed it was necessary to change the language of the
Bureau's mission statement that focused on protecting
consumers?
A.13.b. I note that this question is identical to a question I
received from Ranking Member Maxine Waters (CA) following my
testimony before the House Committee on Financial Services,
regarding the Bureau's Semi-Annual Report. For that reason, I
am providing you the same response I provided the Ranking
Member.
You may recall that the language is drawn from one of the
five statutory objectives of the Bureau, and is drawn directly
from Section 1021(b)(3) of the Dodd-Frank Act.
Q.14. Director Mulvaney, it appears that you have begun to
refer to the Consumer Financial Protection Bureau as the
``Bureau of Consumer Financial Protection'' and also changed
the seal of the agency.
Q.14.a. If you persist in this confounding change, what are you
doing to minimize confusion to consumers, the very people the
Bureau was created to protect?
A.14.a. We are using the name expressly assigned to us by
Congress in the Dodd-Frank Act. To the extent you believe the
correction is confounding, the decision to use an improper name
for the agency was made by prior leadership.
Q.14.b. The current name puts people--consumers--first. Why do
you seek to change the name to minimize the responsibility that
we need a banking system that serves people, not financial
firms?
A.14.b. I am not sure why Congress decided in the Dodd-Frank
Act to call our agency the Bureau of Consumer Financial
Protection. We are using the name given to us in the law. You
would have to ask the drafters for insight into the meaning
they intended to convey by choosing this name.
Q.15. When I talk with banking regulators, they tell me that
they support a robust Consumer Financial Protection Bureau that
can focus 100 percent on consumer protection from unfair,
deceptive, and abusive practices while bank examiners focus on
safety and soundness.
Q.15.a. Are the banking regulators--the Federal Reserve, the
OCC, NCUA, the FDIC--prepared to step up their consumer
protection efforts as you weaken yours? Please provide evidence
that the banking regulators are planning to increase their
oversight of consumer protection for their regulated banks.
A.15.a. We are not weakening efforts. I do not accept your
premise. Requests for evidence about the planned future
activities of other Federal agencies should be directed to
those agencies.
Q.15.b. What about State attorneys general? Do they think they
can manage to fill the consumer protection void you are
leaving? Please provide evidence that AGs are ready to expand
their consumer protection activities in the financial
marketplace.
A.15.b. We are not leaving a void. I do not accept your
premise. Requests for evidence about the planned future
activities of State attorneys general should be directed to
those offices.
Q.15.c. What entities will police payday lenders, the title
insurance firms, the credit reporting agencies, money remitters
if the Bureau limits its oversight? Please provide evidence
that other regulators like the IRS and the FTC are planning to
expand their oversight over firms the Bureau has chosen to
weaken regulatory oversight.
A.15.c. We are not limiting oversight. I do not accept your
premise. Requests for evidence about the planned future
activities of other Federal agencies should be directed to
those agencies. The Bureau will continue to enforce Federal
consumer financial law as defined in the Consumer Financial
Protection Act.
Q.15.d. Can you point to any other precedent in history where
the head of the Office of Management and Budget had a second
job?
A.15.d. I am not aware of any such precedent.
Q.15.e. Can you point to any other precedent in history where
the head of a White House office also simultaneously headed an
independent banking regulatory agency?
A.15.e. I am not aware of any such precedent.
Q.15.f. What policies and procedures are in place to ensure
that your responsibilities at the Office of Management and
Budget do not undermine the Bureau's independence?
A.15.f. Emails and records relating to the separate agencies
are created and preserved on the respective agency's systems
and in accordance with the agency's record schedules and
retention policies. Funds of the respective agencies are used
only to cover costs associated with the respective agency's
duties. Personnel not detailed to the Bureau are not involved
with specific party matters before the Bureau, except when
specifically authorized and required by their normal OMB
duties. OMB and Bureau ethics officials coordinate on the
application of the ethics rules to ensure that OMB personnel
detailed to the Bureau comply with the rules of both agencies.
Q.15.g. Has either the Consumer Bureau Board or the Office of
Management and Budget Inspector General reviewed these
potential conflicts and the appropriateness of holding two
conflicting part-time jobs instead of focusing full-time on the
position of which you were confirmed and sworn into? If so,
what did they say? Please provide any correspondence or notes.
A.15.g. I note that this question is identical to a question I
received from Ranking Member Maxine Waters following my
testimony before the House Committee on Financial Services. For
that reason, I am providing you the same response I will
provide to the Ranking Member. There is no conflict and I am
not aware of any such review by the Inspector General of the
Board of Governors of the Federal Reserve System and the Bureau
of Consumer Financial Protection. There is no Inspector General
for the Office of Management and Budget.
Q.15.h. Please detail every meeting you attended at a Trump-
branded property since the 2016 election. Please note any
expenses you incurred at these properties including any
lodging, meals or other expenses. If you attended such events,
please list any staff who assisted in your attendance at events
at Trump property. Please define the name of the staff member,
that person(s) position(s) and the amount of time that they
devoted to scheduling your attendance at events at a Trump-
owned property.
A.15.h. On December 5, 2016, President-elect Trump interviewed
me as a candidate for Office of Management and Budget Director
at Trump Tower in New York. No executive branch staff assisted
in my attendance at that interview, and I did not incur any
expenses there. On February 19, 2017, I attended a meeting at
Mar-a-Lago. I was accompanied by Russ Vought and Emma Doyle,
who were both Senior Advisors at the Office of Management and
Budget at the time. Ms. Doyle spent less than one half hour
scheduling my attendance at this meeting. Neither Mr. Vought,
Ms. Doyle, nor I incurred any expenses at Mar-a-Lago. Finally,
on August 15, 2017, I attended a meeting at Trump Tower in New
York. I was not accompanied by any staff, though Ms. Doyle, by
then my Chief of Staff, spent less than 15 minutes scheduling
my attendance at this meeting. I incurred no expenses at Trump
Tower.
Q.16. During the hearing, you agreed with comments that
manufactured home lending has fallen. However, the HMDA data
(see below) finds that in 2016, 118,637 manufactured home loans
were made. This is higher than any year since 2009 when 125,832
loans were made. This is consistent with Nevada data that finds
that manufactured homes fell to 1,460 in 2009 and has since
rebounded with 1,612 loans in 2016.
On what basis do you assert that loans to manufactured
homeowners has fallen? Please share any information on lending
for manufactured housing for both real property and chattel
loans from 2008 to 2017, or the most recent available data.
A.16. At the hearing Senator Thom Tillis observed that because
of regulatory overreach consumers are not getting the loans
they need, including the kinds of loans his family relied upon
to live in a mobile home back in the 1970s and 1980s. I
expressed my agreement with the concern about the impact of
overregulation on access to credit. I am particularly concerned
about the impact that the Bureau's rules have had on the
ability of consumers to obtain smaller mortgages. The Bureau is
committed to understanding this important segment of the
housing market, including loans for
relatively low dollar amounts. In 2014, the Bureau issued a
white paper entitled ``Manufactured-housing Consumer Finance in
the United States,''\24\ and in May, we released our report on
2017 Home Mortgage Disclosure Act (HMDA) data trends,\25\ which
includes a section on Home Ownership and Equity Protection Act
(HOEPA) loans with a particular focus on manufactured housing.
HMDA data indicates, for example, that the number of mortgages
under $50,000 made to purchase a manufactured home is below the
level of such loans in 2013.\26\ The Bureau is examining
certain trends in mortgages for manufactured homes in its 5-
year assessment of the ability-to-repay and qualified mortgage
rule.
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\24\ http://files.consumerfinance.gov/f/
201409_cfpb_report_manufactured-housing.pdf.
\25\ https://www.consumerfinance.gov/data-research/research-
reports/cfpb-data-point-mortgage-market-activity-and-trends/.
\26\ Table 9b of the Data Point, https://s3.amazonaws.com/
files.consumerfinance.gov/f/documents/bcfp_hmda_2017-mortgage-market-
activity-trends_report.pdf.
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