[House Hearing, 116 Congress]
[From the U.S. Government Publishing Office]







 
                   WHO IS STANDING UP FOR CONSUMERS?

                  A SEMI-ANNUAL REVIEW OF THE CONSUMER

                      FINANCIAL PROTECTION BUREAU

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

                                HEARING

                               BEFORE THE

                    COMMITTEE ON FINANCIAL SERVICES

                     U.S. HOUSE OF REPRESENTATIVES

                     ONE HUNDRED SIXTEENTH CONGRESS

                             FIRST SESSION

                               __________

                            OCTOBER 16, 2019

                               __________

       Printed for the use of the Committee on Financial Services

                           Serial No. 116-56
                           
                           
                           
                           
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]                           




                           
                         ______                      


             U.S. GOVERNMENT PUBLISHING OFFICE 
42-359PDF           WASHINGTON : 2020                           
                           
                           

                 HOUSE COMMITTEE ON FINANCIAL SERVICES

                 MAXINE WATERS, California, Chairwoman

CAROLYN B. MALONEY, New York         PATRICK McHENRY, North Carolina, 
NYDIA M. VELAZQUEZ, New York             Ranking Member
BRAD SHERMAN, California             ANN WAGNER, Missouri
GREGORY W. MEEKS, New York           PETER T. KING, New York
WM. LACY CLAY, Missouri              FRANK D. LUCAS, Oklahoma
DAVID SCOTT, Georgia                 BILL POSEY, Florida
AL GREEN, Texas                      BLAINE LUETKEMEYER, Missouri
EMANUEL CLEAVER, Missouri            BILL HUIZENGA, Michigan
ED PERLMUTTER, Colorado              STEVE STIVERS, Ohio
JIM A. HIMES, Connecticut            ANDY BARR, Kentucky
BILL FOSTER, Illinois                SCOTT TIPTON, Colorado
JOYCE BEATTY, Ohio                   ROGER WILLIAMS, Texas
DENNY HECK, Washington               FRENCH HILL, Arkansas
JUAN VARGAS, California              TOM EMMER, Minnesota
JOSH GOTTHEIMER, New Jersey          LEE M. ZELDIN, New York
VICENTE GONZALEZ, Texas              BARRY LOUDERMILK, Georgia
AL LAWSON, Florida                   ALEXANDER X. MOONEY, West Virginia
MICHAEL SAN NICOLAS, Guam            WARREN DAVIDSON, Ohio
RASHIDA TLAIB, Michigan              TED BUDD, North Carolina
KATIE PORTER, California             DAVID KUSTOFF, Tennessee
CINDY AXNE, Iowa                     TREY HOLLINGSWORTH, Indiana
SEAN CASTEN, Illinois                ANTHONY GONZALEZ, Ohio
AYANNA PRESSLEY, Massachusetts       JOHN ROSE, Tennessee
BEN McADAMS, Utah                    BRYAN STEIL, Wisconsin
ALEXANDRIA OCASIO-CORTEZ, New York   LANCE GOODEN, Texas
JENNIFER WEXTON, Virginia            DENVER RIGGLEMAN, Virginia
STEPHEN F. LYNCH, Massachusetts      WILLIAM TIMMONS, South Carolina
TULSI GABBARD, Hawaii
ALMA ADAMS, North Carolina
MADELEINE DEAN, Pennsylvania
JESUS ``CHUY'' GARCIA, Illinois
SYLVIA GARCIA, Texas
DEAN PHILLIPS, Minnesota

                   Charla Ouertatani, Staff Director
                   
                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on:
    October 16, 2019.............................................     1
Appendix:
    October 16, 2019.............................................    67

                               WITNESSES
                      Wednesday, October 16, 2019

Kraninger, Hon. Kathy, Director, Consumer Financial Protection 
  Bureau (CFPB)..................................................     5

                                APPENDIX

Prepared statements:
    Kraninger, Hon. Kathy........................................    68

              Additional Material Submitted for the Record

Clay, Hon. Wm. Lacy:
    Written statement of the Consumer Bankers Association........    83
Kraninger, Hon. Kathy
    Written responses to questions for the record from Chairwoman 
      Waters.....................................................    92
    Written responses to questions for the record from 
      Representative Budd........................................   129
    Written responses to questions for the record from 
      Representative Foster......................................   130
    Written responses to questions for the record from 
      Representative Anthony Gonzalez............................   132
    Written responses to questions for the record from 
      Representative Hollingsworth...............................   133
    Written responses to questions for the record from 
      Representative Posey.......................................   134
    Written responses to questions for the record from 
      Representative Steil.......................................   137
    Written responses to questions for the record from 
      Representative Timmons.....................................   138


                   WHO IS STANDING UP FOR CONSUMERS?

                  A SEMI-ANNUAL REVIEW OF THE CONSUMER

                      FINANCIAL PROTECTION BUREAU

                              ----------                              


                      Wednesday, October 16, 2019

             U.S. House of Representatives,
                   Committee on Financial Services,
                                                   Washington, D.C.
    The committee met, pursuant to notice, at 10:07 a.m., in 
room 2128, Rayburn House Office Building, Hon. Maxine Waters 
[chairwoman of the committee] presiding.
    Members present: Representatives Waters, Maloney, 
Velazquez, Sherman, Meeks, Clay, Scott, Green, Cleaver, 
Perlmutter, Foster, Beatty, Vargas, Gottheimer, Gonzalez of 
Texas, Tlaib, Porter, Axne, Casten, Pressley, McAdams, Wexton, 
Adams, Dean, Garcia of Illinois, Garcia of Texas; McHenry, 
Wagner, Lucas, Posey, Luetkemeyer, Huizenga, Stivers, Barr, 
Tipton, Williams, Hill, Emmer, Zeldin, Loudermilk, Davidson, 
Kustoff, Hollingsworth, Gonzalez of Ohio, Rose, Steil, Gooden, 
Riggleman, and Timmons.
    Chairwoman Waters. The Committee on Financial Services will 
come to order. Without objection, the Chair is authorized to 
declare a recess of the committee at any time.
    Today's hearing is entitled, ``Who is Standing Up for 
Consumers? A Semi-Annual Review of the Consumer Financial 
Protection Bureau.''
    I now recognize myself for 4 minutes to give an opening 
statement.
    Good morning, everyone. Today, we are here to receive the 
semi-annual report of the Consumer Financial Protection Bureau 
(CFPB), and to hear testimony from its Director, Kathy 
Kraninger.
    Director Kraninger, the record shows that you are 
undermining protections for consumers and letting bad actors 
off the hook. I am deeply concerned by your anti-consumer 
actions. You have helped payday lenders by moving to delay and 
weaken the Consumer Bureau's payday, small-dollar, and car 
title rule, which would have put a stop to abusive payday 
loans. You have helped predatory debt collectors by issuing a 
weak debt collection rule, giving a green light for debt 
collectors to intimidate consumers by sending unlimited emails 
and text messages and calling them 7 times a week, per debt, to 
collect debts. You have issued a proposal and final rule to 
weaken reporting requirements under the Home Mortgage 
Disclosure Act (HMDA), making it more difficult for communities 
across the country to detect predatory and discriminatory 
lending.
    You have forced the Consumer Bureau to abandon its 
longstanding defense of the constitutionality of the agency's 
structure. As the agency's lawyers conceded in a court filing, 
this change gives ammunition to bad actors that want to resist 
the agency's regulation and enforcement of consumer financial 
protection laws. Congress specifically designed the Consumer 
Bureau to be an independent agency, like other Federal 
financial regulators, and it is clear that you are working to 
undermine the agency's ability to serve as an independent 
watchdog for consumers. You have failed to ensure that 
financial institutions that are caught red-handed committing 
illegal acts are required to return funds to consumers who have 
been harmed by those acts.
    After three of the first five settlement agreements that 
you authorized as Director of the Consumer Bureau failed to 
provide any consumer restitution, I initiated a committee 
investigation to scrutinize your actions. One of the 
settlements that the committee examined was with a payday 
lender called Enova, which illegally took $2.6 million from 
consumers' bank accounts without their permission or knowledge.
    You authorized the Consumer Bureau to enter a settlement 
agreement that did not require Enova to return any of the money 
it took from its customers, not one dime. The committee's 
investigation has revealed that Eric Blankenstein, the Trump 
Administration political appointee most well-known for his 
history of writing racist blog posts, rejected the judgment of 
career enforcement attorneys and nonpartisan senior management 
officials who recommended requiring Enova to refund consumers 
as part of the settlement. Instead, Blankenstein overruled 
those recommendations, and as a result of his actions and your 
subsequent decision to authorize a settlement without redress, 
consumers who were cheated were left with nothing.
    It is unacceptable that Trump Administration political 
appointees are intervening to let predatory financial 
institutions off the hook and preventing consumers from getting 
their money back when it is wrongfully taken from them. Today, 
this committee continues its oversight of the Trump 
Administration's actions at the Consumer Bureau, and we will 
continue to stand up for consumers who deserve better from this 
agency.
    I now recognize the ranking member of the committee, the 
gentleman from North Carolina, Mr. McHenry, for 4 minutes for 
an opening statement.
    Mr. McHenry. Thank you, Madam Chairwoman, and I want to 
thank Director Kraninger for being here today. I want to begin 
by thanking you for defending consumers and working on behalf 
of consumers. I appreciate your commitment to process, to 
fairness, and to the rule of law, and I want to thank you for 
your recent letter to the Department of Justice and to the 
Speaker of the House about the for-cause removal provision that 
governs the Director position. We all have taken an oath to 
uphold the Constitution. This includes ensuring that the 
Bureau's organizational structure, which was created by the 
Democrats, is constitutional as well.
    As I said this past March, I sense a case of buyer's 
remorse by my friends on the other side of the aisle when it 
comes to the CFPB. Under former Director Cordray's regime, the 
limitless authority bestowed upon the CFPB Director was never 
an issue for my Democrat friends. However, now that Republicans 
are in charge of this Administration, and we have a newly 
appointed and confirmed Director, and that new Director is 
making necessary and appropriate changes to the way the Bureau 
functions, my colleagues on the other side of the aisle are 
quite unhappy with the product of their creation. Instead of 
upholding the Bureau as a wholly independent agency, free of 
political influence, the Democrats are passing bills to 
actually curtail your authorities, dictate the names of Bureau 
offices, and decree how employees should refer to the CFPB in 
public.
    You are criticized for helping consumers by delivering 
clear rules of the road to financial companies. You are 
reprimanded for modernizing the rules that haven't been touched 
in decades and do not account for technological innovations 
that have changed the way consumers and financial institutions 
interact.
    There is no doubt that the CFPB needs reform. Guardrails 
should be put in place, oversight and accountability must be 
more robust, and structural changes that put consumers above 
politics are needed.
    Before I yield back, I want to recognize the Bureau's 
efforts in enhanced financial innovation. However, how 
consumers interact with financial firms is changing rapidly. We 
cannot bury our heads in the ground and pretend that innovation 
isn't occurring. We can't stand in the way of innovation and 
try to kill it before it grows. We need to closely examine how 
financial technology can increase access to credit and put 
consumers on the path to financial independence while ensuring 
those consumers remain protected.
    Director Kraninger, I encourage you to continue with your 
plans and do what you need to do to ensure that the Bureau's 
goals are fully embraced and implemented by your examiners in 
the field. I hope my colleagues will bear in mind that you, 
like so many of us in the room today, are a public servant and 
are committed to consumer protections. And I hope my colleagues 
will treat you with the same type of fairness that they have 
sought for others who have been sitting in your same position.
    I look forward to your testimony, and Madam Chairwoman, 
before I yield back, as a point of personal privilege, I would 
like to recognize the newest member of our committee, Mr. 
William Timmons of South Carolina. We welcome you.
    Mr. Timmons has an extensive business background, and 
served in the South Carolina State Senate before getting 
elected to Congress last year. We welcome you to the committee, 
and look forward to a productive engagement as a legislator, 
and your leadership on important issues for South Carolinians.
    And with that, Madam Chairwoman, I yield back.
    Chairwoman Waters. Thank you very much, and welcome, Mr. 
Timmons.
    I now recognize the Chair of the Subcommittee on Consumer 
Protection and Financial Institutions, Mr. Meeks, for one 
minute.
    Mr. Meeks. Thank you, Chairwoman Waters, for calling this 
vital hearing. Unfortunately, I think this hearing is so 
important because the CFPB is failing to accomplish what it was 
created to do. It has forgotten that it is the Consumer 
Financial Protection Bureau and not the businesses' or anyone 
else's protection bureau. Instead of protecting desperate 
borrowers from ruinous payday loans, the CFPB is delaying 
crucial regulations. Rather than protecting consumers from 
overly aggressive debt collectors, the CFPB has proposed a rule 
that would harm everyday consumers. In lieu of ramping up in 
force against bad actors, the CFPB has drastically cut the 
number of actions taken and fines mandated.
    In contrast to the Federal Housing Finance Agency (FHFA), 
which is defending its constitutionality, Director Kraninger 
has forfeited on that matter. And when you look at the people 
who are there, I ask, who in the background is standing in the 
gap? Who has the experience? Who has protected consumers before 
and is working on this issue to do what the Consumer Financial 
Protection Bureau was created to do?
    I yield back.
    Chairwoman Waters. I now recognize the ranking member of 
the subcommittee, Mr. Luetkemeyer, for one minute.
    Mr. Luetkemeyer. Thank you, Madam Chairwoman, and Director 
Kraninger, we are happy to welcome you to our committee for the 
second time.
    The position of CFPB Director comes with unparalleled 
authority. As a single Director accountable to no one, the 
power the Director possesses is nearly limitless. In the 
previous Administration, Director Cordray completely ignored 
our system of checks and balances and used the power of the 
position to sidestep the Constitution. Instead of responsible 
regulation, he chose to regulate through enforcement of 
guidance, and to carry out politically-driven attacks.
    This Administration, which I have been pushing to stop this 
usurpation of congressional authority, has recently issued an 
Executive Order putting a stop to this practice across the 
entire Administration.
    Despite the actions of the previous Administration, 
Director Kraninger has made progress to increase the 
transparency and accountability of the CFPB. The Bureau is re-
examining previous rules that were not properly researched or 
administered, such as the small-dollar rule, and has issued new 
rules to protect consumers from harmful practices such as the 
debt collection rule. While CFPB has made progress under 
Director Kraninger, more can always be done. CFPB could also 
continue to progress to define what constitutes an abusive act 
or practice under Unfair or Deceptive Acts or Practices 
(UDAAP), and should continue its re-examination of the small-
dollar rule to address inconsistencies of the payments 
provision, just to name a few.
    Transparency and accountability are the guiding principles 
of American democracy and should extend to our regulatory 
regime.
    With that, I yield back.
    Chairwoman Waters. I now welcome to the committee our 
witness, the Honorable Kathy Kraninger, Director of the CFPB. 
Ms. Kraninger has testified before the committee previously, 
and I believe she needs no further introduction. Without 
objection, your written statement will be made a part of the 
record, and you will have 5 minutes to summarize your 
testimony. When you have one minute remaining, a yellow light 
will appear. At that time, I would ask you to wrap up your 
testimony so we can respectful of both the witness' and the 
committee members' time.
    You are now recognized for 5 minutes to present your oral 
testimony.

STATEMENT OF THE HONORABLE KATHY KRANINGER, DIRECTOR, CONSUMER 
               FINANCIAL PROTECTION BUREAU (CFPB)

    Ms. Kraninger. Chairwoman Waters, Ranking Member McHenry, 
members of the committee, thank you for the opportunity to 
provide this update on the activities of the Bureau and its 
important work.
    Preventing harm to consumers is the CFPB's top priority. We 
prevent harm by educating consumers to protect themselves; we 
prevent harm by having clear rules of the road for regulated 
entities; we prevent harm by using supervision and enforcement 
to promote compliance with the law; and we prevent harm by 
supporting dynamic and competitive markets that provide for 
consumer choice.
    While prevention is not always possible, it is the right 
goal, saving consumers from financial headaches, setbacks, and 
devastation. The semi-annual report included with my written 
testimony provide a rundown of our activities for the first 
half of Fiscal Year 2019, and a preview of more recent 
initiatives, several of which I will highlight now.
    First, our efforts to provide clear rules of the road so 
that companies and consumers know what is lawful and what is 
not. Just last week, the Bureau finalized a rule that provides 
needed relief to smaller lenders from collecting and reporting 
data under the Home Mortgage Disclosure Act, or HMDA, and it 
also codifies a key provision of the Economic Growth, 
Regulatory Relief, and Consumer Protection Act.
    Additionally, last month the Bureau announced policies to 
facilitate innovation, reduce regulatory uncertainty, and 
enhance consumer choice. The Bureau also announced its first 
no-action letter under the new policy. It is designed to help 
keep funding streams open for our nation's housing counselors, 
who have assisted millions of Americans attain the dream of 
owning a home.
    Second, where we cannot prevent harm to consumers, we use 
our enforcement tool to hold bad actors accountable. Every case 
is managed by Bureau attorneys seeking justice in the public 
interest. In Fiscal Year 2019, we announced 22 public 
enforcement actions and settled 6 previously filed lawsuits, 
including, in a public fair lending enforcement action, the 
Bureau settled with one of the nation's largest HMDA reporters 
for violating HMDA and Regulation C.
    We took action against an individual who brokered contracts 
offering high-interest credit to veterans, and we took action 
against a student loan servicing company that engaged in unfair 
practices that violated the Consumer Financial Protection Act.
    Further, the Bureau's actions in Fiscal Year 2019 resulted 
in orders requiring a total of over $777 million in consumer 
relief and nearly $186 million in civil money penalties. I note 
these figures not as a measure of accomplishment but to 
underscore the fact that the Bureau continues to appropriately 
use its enforcement tool.
    Third, we continue to promote a culture of compliance 
through our supervisory tool and to empower consumers through 
education. Earlier this year, we launched an initiative, 
``Start Small, Save Up,'' to help prepare Americans to handle 
unexpected financial events. As part of this initiative, we 
released a new savings booklet to help individuals create a 
path to reach their savings goals, and we are looking at other 
innovative ways to move the needle on saving in America.
    For example, the Bureau partnered with H&R Block to study 
saving during tax refund time. The study showed that 
encouragement through a simple email or small incentive 
increased the consumer's likelihood of saving a portion of 
their tax refund. It also found that one in five consumers who 
took advantage of the specific savings feature continued to 
save 8 months later. We will continue to engage in research 
about what works to promote the habit of savings and overall 
financial well-being.
    Fourth, I have a few recent announcements to demonstrate 
that the Bureau is committed to using the tools Congress gave 
it as effectively and efficiently as possible. Just last week, 
the Bureau handled its two-millionth consumer complaint. To 
ensure that the Bureau's work continues to be informed by this 
input, I announced last month that we will continue the 
publication of the Consumer Complaint Database. In addition, we 
will be enhancing the database by providing new tools and 
graphics to analyze consumer submissions and putting that data 
into context.
    Also last week, I announced the establishment of a task 
force to examine the existing legal and regulatory framework. 
The task force will make recommendations for improving consumer 
financial laws and regulations, as well as enhancing consumer 
understanding of markets and products. We are currently 
accepting applications from individuals who are interested in 
serving on the task force, and we welcome recommendations from 
Members of Congress.
    Just yesterday, I am proud to note that a new private 
education loan ombudsman met an important congressional mandate 
given specifically to that position by issuing his first annual 
report, on time. The report covers 2 years and analyzes 
complaints submitted by consumers. The Bureau also sent a 
signed memorandum of understanding to the Department of 
Education, consistent with its statutory responsible to share 
consumer complaint information with the Department.
    Before I close, I would like to touch on one final issue, 
and that is the constitutionality of the Bureau's structure. As 
you are aware--Madam Chairwoman, I can finish. I know there 
will be questions about the constitutionality.
    Chairwoman Waters. No. I don't want you to get started on a 
new part of your--
    Ms. Kraninger. Understood.
    Chairwoman Waters. --report. Your time is up.
    [The prepared statement of Director Kraninger can be found 
on page 68 of the appendix.]
    Chairwoman Waters. I now recognize myself for 5 minutes for 
questions.
    When settling with a company found to have violated 
consumer protection law, the Consumer Bureau has typically 
required the company to compensate victimized consumers. 
Astonishingly, Director Kraninger, three of the first five 
settlement agreements that you authorized during your tenure as 
Director failed to provide any consumer restitution. Alarmed by 
this failure, this committee started an investigation and 
examined the three settlements in an effort to understand your 
rationale for denying consumers compensation in these cases.
    The committee recently released a Majority report detailing 
its findings. One of the settlements examined by the committee 
involved Enova, a payday lender whom the Bureau found illegally 
took $2.6 million from consumers' bank accounts without 
authorization. The settlement did not require Enova to return 
any of the money it illegally took from consumers. The 
committee's Majority staff report revealed that your political 
appointee overruled the recommendations of career enforcement 
attorneys and nonpartisan senior management officials to 
require Enova to provide consumer redress. The political 
appointee rejected not only the recommendation of career 
attorneys but also the opinion of the Consumer Bureau's legal 
division, that returning the money illegally debited was 
appropriate.
    Why did you not require them to--
    Ms. Kraninger. Madam Chairwoman, let me note that every 
case is fact- and circumstance-specific, and we have to apply 
the law to those facts and circumstances.
    Chairwoman Waters. No, no. Just tell me about Enova. They 
took the--well, let me ask you this, did they take the money 
from consumers' accounts without their knowledge? Did you find 
that was true?
    Ms. Kraninger. That is certainly the case that--
    Chairwoman Waters. Okay. That is true. Thank you. Having 
done that, and having done your investigatory work, et cetera, 
you got to the point of a settlement, is that right?
    Ms. Kraninger. Yes.
    Chairwoman Waters. But you denied the victims any 
compensation. Why?
    Ms. Kraninger. It is a negotiated settlement. It was the 
Bureau's estimation, my estimation, and the recommendation of 
the staff that we engage in this settlement discussion with 
Enova, and that that was going to bring--
    Chairwoman Waters. Okay. May I--
    Ms. Kraninger. --resolution--
    Chairwoman Waters. --interrupt for a moment and tell you 
that your career staff advised you that you should compensate 
the victims, and it was overruled by your political staff. Is 
that right? Is that true?
    Ms. Kraninger. No I do not--
    Chairwoman Waters. Did your career staff advise you--
    Ms. Kraninger. --remember it that way.
    Chairwoman Waters. Did your career staff advise you that 
they should be compensated?
    Ms. Kraninger. Every case is--
    Chairwoman Waters. No. Just in this case, did they advise 
you?
    Ms. Kraninger. I expect a robust--
    Chairwoman Waters. Did they advise you--
    Ms. Kraninger. --process--
    Chairwoman Waters. Ms. Kraninger--
    Ms. Kraninger. --that brings--
    Chairwoman Waters. Ms. Kraninger--
    Ms. Kraninger. --everyone's input in--
    Chairwoman Waters. --did your career staff advise you--
    Ms. Kraninger. --and it is ultimately my decision.
    Chairwoman Waters. --that these victims should be 
compensated? Did they advise you that these victims should be--
    Ms. Kraninger. Chairwoman--
    Chairwoman Waters. Yes. Did your career staff advise you 
that they should be compensated?
    Ms. Kraninger. The decision on the settlement was mine, and 
as we move forward--
    Chairwoman Waters. Okay. Let me--
    Ms. Kraninger. --we were looking for the best--
    Chairwoman Waters. --conclude that you refused--
    Ms. Kraninger. --outcome that we could get--
    Chairwoman Waters. --to answer the question, and you have 
decided just to answer it by saying that it was your decision, 
which means that you overruled your career staff and you took 
the advice of your political advisors. Is that right?
    Ms. Kraninger. I took into account the full advice of the 
deliberative process, as I have in every other case--
    Chairwoman Waters. As I understand it--
    Ms. Kraninger. --and as I look for--
    Chairwoman Waters. --Enova offered $1.6 million for the 
consumers. So they basically said, ``Yes, we did it. We were 
wrong. We should have compensated. But I guess we can offer 
them $1.6 million,'' and you said, ``No.'' Is that correct? Why 
did you say no?
    Ms. Kraninger. Chairwoman, again, there is a lot of back-
and-forth--
    Chairwoman Waters. No, no. I don't want to know about the 
back-and-forth. I just want to know, first of all, did Enova 
offer $1.6 million to the consumers? Is that correct?
    Ms. Kraninger. Chairwoman, it was a negotiated settlement--
    Chairwoman Waters. Did they offer $1.6 million to the 
consumers who had been harmed, and you turned it down? Just 
tell me, did they offer $1.6 million?
    Ms. Kraninger. Chairwoman, you are probably referring to 
documents that I don't have in front of me.
    Chairwoman Waters. Well, yes, you do. Listen, I beg to 
disagree with you, and don't try and come to this committee and 
not answer the questions, and filibuster, and pretend not to 
remember. This was a big case. They offered $1.6 million and 
you turned it down. You turned down the advice of your career 
employees. You took the advice of your political appointees, 
and you knew exactly what was going on. You were aware of the 
committee's interest in these matters. We requested information 
about these settlements in February.
    And so, I would like to just end my questions with a 
statement by saying, for whatever reasons you have made these 
kinds of decisions, they are not in the best interest of 
consumers, and I am very, very concerned about that.
    I now recognize the ranking member, the gentleman from 
North Carolina, Mr. McHenry.
    Mr. McHenry. Director Kraninger, at your agency, how many 
people are confirmed by the Senate? Under the Dodd-Frank Act, 
how many people at the Consumer Financial Protection Bureau are 
confirmed by the Senate?
    Ms. Kraninger. Just one.
    Mr. McHenry. Who?
    Ms. Kraninger. That would be me, sir, the Director.
    Mr. McHenry. Who makes the decisions for your Bureau on 
settlements?
    Ms. Kraninger. The Director does make that decision, 
ultimately.
    Mr. McHenry. The Director is the ultimate decision-maker?
    Ms. Kraninger. Yes.
    Mr. McHenry. Does your staff always agree with one another?
    Ms. Kraninger. Definitely not.
    Mr. McHenry. I think we all can agree that we have the same 
issue here on Capitol Hill, and if two or more are gathered on 
Capitol Hill, there will be a disagreement.
    I don't know your staff who were part of this decision-
making process, but are you accountable for the decision made 
for these settlements?
    Ms. Kraninger. Yes, Congressman.
    Mr. McHenry. Okay. Thank you.
    I am going to start by asking about the constitutionality 
question for your Bureau. I know this was the final phrase of 
your opening statement, but if you want to take a moment to 
answer this question, because many of us are interested in your 
view of the constitutionality of what we view as an 
unaccountable directorship at the CFPB.
    Ms. Kraninger. Thank you, Congressman. It is definitely a 
weighty decision. It was an important one that I was aware of 
from the time of my nomination. Every case that has been--many 
cases, I should say; every case would be an exaggeration--but 
in many cases that are brought by the Bureau, this claim is 
raised in response. The constitutional question has delayed 
many enforcement actions, it has delayed regulatory actions, 
and it has been something that I believe, fundamentally, the 
Supreme Court and Congress need to decide and settle, once and 
for all, so that the Bureau can move forward and actually 
engage in its mission proactively.
    And from that standpoint, I was looking at this question as 
well, to think about that. I took a very strong position that I 
agreed with the Department of Justice in the response to Seila 
Law's petition to the Supreme Court for cert, and I look 
forward to the Supreme Court's response as to whether they will 
take this important case up to settle it.
    Mr. McHenry. Okay. Thank you, and thank you for holding 
your position as being not just under the rule of law but under 
the Constitution of the United States, and those constraints.
    Let's move on to the London Inter-bank Offered Rate (LIBOR) 
and FinTech for a moment, because there is significant 
movement--as you know, the phaseout of LIBOR as a bank 
reference rate in 2021, and the underlying reference rate, has 
about $200 trillion in financial transactions worldwide. This 
transaction is going to be particularly difficult for legacy 
consumer contracts, and there is a transition from LIBOR to 
SOFR (the Secured Overnight Financing Rate).
    What steps is the Bureau taking to ensure that consumers 
are not adversely impacted by this transition?
    Ms. Kraninger. Thank you for this question, too. It is an 
important one. We have had an interagency public-private 
partnership ongoing to talk about this transition. The Bureau, 
specifically, has been engaged in that and has a key role in 
education of the public. We also have a handbook on what are 
generally affected here with the adjustable rate mortgages, 
which is a big part of the market that relies on LIBOR. That 
handbook has been updated by the Bureau and will be issued 
soon.
    We also have some information that we are giving out to the 
public to start making them aware of this transition, but 
obviously a big partnership with industry and with other public 
sector entities.
    Mr. McHenry. Thank you. Thanks for the update on that.
    I also want to talk about FinTech, as I mentioned. You are 
finalizing what is called sort of a sandbox policy, which is 
another way of saying testing, right, testing new ways to meet 
societal goals and regulatory flexibility to ensure that we are 
meeting those societal goals under law?
    So, I want to ask, along those lines, for the sandbox 
approach, what safeguards has the Bureau put in place to ensure 
that consumers are not harmed while also granting regulatory 
flexibility?
    Ms. Kraninger. The applicants under our innovation policy 
need to come forward, articulating the risks to consumers that 
they see as well as the benefits to consumers of the products 
that they are proposing under the sandbox, for example, and 
that is the heart of the decision that will be made, that will 
be a back-and-forth conversation with the entity, and to 
understand the product better, and to understand where there 
are questions about regulatory requirements coming into play. 
But certainly, the benefits to consumers are what the Bureau is 
going to be weighing in that process.
    Mr. McHenry. Thank you, and thank you for taking this 
approach, and building on the former Director's initiative of 
innovation being a part of the Bureau's actions and activities.
    With that, Madam Chairwoman, I yield back.
    Chairwoman Waters. Thank you. The gentlewoman from New 
York, Mrs. Maloney, who is also the Chair of our Subcommittee 
on Investor Protection, Entrepreneurship, and Capital Markets, 
is recognized for 5 minutes.
    Mrs. Maloney. Director Kraninger, the last time you were 
here we talked about abusive overdraft fees, and you said you 
would consider putting it on the agenda for comment. And I know 
that in May you did put a request for comment out on the 
overdraft fees, although you were requesting comments on ways 
to make it less burdensome for banks, which was not what I had 
in mind.
    But I want to revisit this, because I feel very strongly 
about it. In fact, I have legislation before the committee on 
this. And I want to start with some very basic practices that I 
feel are deceptive, unfair, and abusive.
    Let me ask you, do you think it is right for banks to 
reorder, without their customers' knowledge, their transactions 
so that the largest transaction is processed first, for the 
sole purpose of maximizing the number of overdraft fees that 
the bank can charge the customer? Do you think that practice is 
fair? Yes or no?
    Ms. Kraninger. Absolutely not.
    Mrs. Maloney. Oh, okay. Well, I don't think it is fair 
either. You are the nation's top consumer financial regulator, 
so what are you planning to do about it?
    Ms. Kraninger. Congresswoman, I would like to take just a 
second to talk about that overdraft request for information 
because it is around our requirement under the Regulatory 
Flexibility Act to assess that rule. It is an opportunity to 
look at any comments that come in about the overdraft rule and 
to assess those. So that is what we intend to do, consistent 
with the conversation that you and I had.
    Mrs. Maloney. I would like to get a personal commitment 
from you that you will consider rules cracking down on abusive, 
unfair, and deceptive practices in overdraft. Many times, the 
customer knows nothing about it, and they are slammed with it, 
caught in a never-ending cycle of debt. Will you make that 
commitment?
    Ms. Kraninger. I certainly pledge to you that we will look 
at all of our tools, whether it is education or enforcement, in 
the case of unfair, deceptive, and abusive practices. Those are 
on the table.
    Mrs. Maloney. Okay. Thank you.
    Director, in September 2019, you indicated in a filing with 
the Supreme Court that you now agreed with the position of the 
Trump Administration that the Consumer Bureau's independent 
structure, which limits the President's authority to remove a 
Director solely for cause, was unconstitutional. Yet just a 
month before, the CFPB, consistent with its longstanding 
position, filed a brief in another case, arguing that the 
Bureau's structure was constitutional. And the Bureau's General 
Counsel assigned both filings, the one stating that the Bureau 
was constitutional and then the later filing asserting the 
exact opposition.
    My question to you is, did you direct the General Counsel 
or other CFPB career attorneys to change positions they 
previously argued to various courts regarding whether or not 
the structure of the Bureau is constitutional?
    Ms. Kraninger. Yes, I did direct the change, as we looked 
carefully at the cert petition to the Supreme Court in Seila 
Law, and discussed the issue with the Department of Justice, 
and certainly had an internal discussion about it. I took the 
position that the Director's removal provision in the Dodd-
Frank Act was something that needed review by the Supreme Court 
to settle this question, and that, in my view, it was 
unconstitutional.
    Mrs. Maloney. Well, I just find this very troubling. 
Congress deliberately created the CFPB as an independent 
regulator, and for you to second-guess Congress' judgment on 
the constitutionality of the CFPB and to argue against the 
CFPB's structure in court is disrespectful to Congress. So, I 
hope that you will reconsider.
    I would like to revisit some of the comments from the 
chairwoman, and I want to echo Chairwoman Waters and emphasize 
that if the Consumer Bureau can't get relief for consumers who 
have been harmed--and you admit they have been harmed--then 
what are you doing? If you are not following direction from 
your staff to help consumers who are harmed, then you are 
absolutely worthless.
    I yield back.
    Chairwoman Waters. The gentlewoman from Missouri, Mrs. 
Wagner, is recognized for 5 minutes.
    Mrs. Wagner. Thank you, Madam Chairwoman. Director 
Kraninger, thank you for your testimony and your leadership. 
You are standing up for consumers at the CFPB, and under your 
leadership the CFPB is making great strides to increase 
transparency and accountability, enforce the rule of law, and 
end regulation by arbitrary enforcement. For far too long, the 
CFPB had lacked any meaningful oversight or accountability that 
other Federal financial agencies have, and my colleagues and I 
are encouraged by your efforts to question the 
constitutionality of your position, and the structure of the 
CFPB, in a recent letter to the Justice Department. And I would 
like to ask that that be entered into the record.
    Chairwoman Waters. Without objection, it is so ordered.
    Mrs. Wagner. Director Kraninger, the Bureau is run by a 
single Director who cannot be removed at will by the President. 
How does this structure benefit American consumers in 
Missouri's Second Congressional District?
    Ms. Kraninger. Congresswoman, I appreciate where you are 
coming from on this question, and I took the position, 
certainly, that the Supreme Court needs to review this, and 
that, in my view, it is unconstitutional in terms of the 
removal provision, specifically, and the remedy was laid out in 
the Justice Department's filing.
    But I will say the rest I will certainly leave as a 
question for the Supreme Court and Congress to consider, in 
terms of what the structure is that would be most appropriate. 
And I recognize it is a controversy that needs to be discussed, 
and there are two sides to this position.
    Mrs. Wagner. In your opinion, how can CFPB better protect 
consumers? Is more regulation the answer?
    Ms. Kraninger. It is really the most effective use of all 
of our tools, and I take your point. I do believe that we 
really need to look closely at our regulatory actions to ensure 
that the benefits do outweigh the costs, because the costs are 
not just costs imposed on regulated entities. Those costs do 
actually make their way to consumers, both in access to credit 
as well as the cost of the credit that they are seeking. And so 
that is something that we absolutely have to take into account 
in our actions, and, no, costs without benefit do not help 
consumers.
    Mrs. Wagner. Cost-benefit analyses are a good thing for the 
CFPB and for other regulatory agencies to undertake, correct?
    Ms. Kraninger. Absolutely.
    Mrs. Wagner. They protect the consumer.
    How do transparency and accountability at the Bureau 
benefit consumers, as well as businesses?
    Ms. Kraninger. I fundamentally believe that the government 
owes the people a clear articulation of what the rules are. The 
debate and discussion needs to be out in the open, frankly, 
about what different positions are, and it is something that I 
have taken to heart. I have tried to make sure that we are 
engaged in that very robust discussion and transparency, 
including in issuing requests for information, having our 
symposia series, where we are bringing in experts to debate 
things and webcasting that, and issuing advance notices of 
proposed rulemaking, again, to continue to have a dialogue 
ongoing as the Bureau shapes its proposals before issuing 
regulations.
    Mrs. Wagner. And I commend you for those very public and 
transparent actions that you are taking. The steps under your 
tenure to greatly improve transparency and accountability are 
absolutely commendable. What else can be done within the 
Bureau's existing authorities? Is congressional action needed 
to strengthen that transparency?
    Ms. Kraninger. With respect to congressional action and 
transparency, certainly if I find any particular matters, I 
will ask. I do believe, in terms of protecting consumers, there 
is one request that I have sought from Congress, and that is 
specific authority to be able to supervise for Military Lending 
Act compliance. But beyond that, that is the only legislative 
ask at this time.
    Mrs. Wagner. Is congressional action necessary to ensure 
that CFPB is accountable? What is the CFPB doing, in absence of 
action, to ensure it remains accountable for its actions?
    Ms. Kraninger. Congresswoman, we are continuing to carry 
out, to the best of our ability, the mission that we have been 
given by Congress. I have nearly 1,500 employees who carry that 
work out every day, and I am very proud to represent them.
    Mrs. Wagner. You believe in the Constitution and in 
following it?
    Ms. Kraninger. Absolutely.
    Mrs. Wagner. My time has expired. I yield back.
    Chairwoman Waters. Thank you. The gentlewoman from New 
York, Ms. Velazquez, is recognized for 5 minutes.
    Ms. Velazquez. Thank you, Madam Chairwoman. Director 
Kraninger, as you know, I have had several concerns about the 
changes the CFPB is making to the Home Mortgage Disclosure Act. 
In May, Chair Waters and I sent you a letter, signed by 62 of 
the Members, expressing those concerns, including your decision 
to retire the HMDA Explorer Tool, which allowed users to design 
their own queries and tables, and to download raw mortgage 
data.
    In your response, you said that in order to prepare for the 
retirement of the old site, the Bureau conducted a number of 
interviews with community groups and HMDA stakeholders last 
summer, to develop a new set of requirements based on the needs 
of data users.
    Can you please tell me specifically which groups and HMDA 
stakeholders did you meet with, and which ones have endorsed 
your approach?
    Ms. Kraninger. Congresswoman, we can certainly get back to 
you with a list of individuals that we asked last summer about 
the change. I can tell you, I took seriously the letter that 
you sent, I asked the staff whether we had that robust 
engagement, and we are looking very carefully at this.
    Ms. Velazquez. Did you ask the staff if you had that robust 
engagement? What was their answer?
    Ms. Kraninger. They said, yes.
    Ms. Velazquez. Oh, yes?
    Ms. Kraninger. They did believe that they had that robust 
engagement.
    Ms. Velazquez. Then can you explain why the leading HMDA 
advocate in the country, the National Community Reinvestment 
Coalition (NCRC), slammed your approach? Did your staff meet 
with them, the leading organization nationwide?
    Ms. Kraninger. Congresswoman, I do believe that NCRC was 
part of that discussion. I have met with them several times 
since, and I can promise you that this is something that we are 
going to continue to look at so that we make sure that the 
tool, going forward, is providing the users of the data set the 
visibility they need.
    Ms. Velazquez. My question is, which of the groups that you 
met with endorsed your approach?
    Ms. Kraninger. Congresswoman, there were a number of 
conversations with them. They understood--I guess one thing I 
haven't said yet is--
    Ms. Velazquez. But do you understand what I am trying to 
say to you?
    Ms. Kraninger. I do.
    Ms. Velazquez. The national leading advocate group, the 
coalition, slammed your approach.
    Ms. Kraninger. And I can tell you that the information 
technology tool itself is not supportable, and that is part of 
this problem. But we absolutely are committed to providing the 
right tool going forward, and have engaged them in the 
conversations around what capabilities they would like to see, 
and we will continue to do so.
    Ms. Velazquez. But you adopted the change. You just got rid 
of this tool that is so important to determine whether or not 
there is discrimination in lending. You are denying access to 
raw data for researchers, for university researchers who have 
done extremely great research in demonstrating whether or not 
discrimination in lending still exists.
    Ms. Kraninger. I can tell you, Congresswoman, that the tool 
that we have been talking about is just the IT mechanism to get 
to the old HMDA data. The new data is all available and, 
frankly, in larger data sets--
    Ms. Velazquez. Your raw data is available?
    Ms. Kraninger. --than they were before. Absolutely, yes.
    Ms. Velazquez. So anyone can download the raw data?
    Ms. Kraninger. Yes. That remains absolutely the case.
    Ms. Velazquez. That is not--
    Ms. Kraninger. The discussion seems to be around a couple 
of different analytic tools, slices that some of the advocates 
were using that they would like to see continued, and that is 
something that we are talking to them about. But I promise you, 
the data is available, frankly, in a broader and more usable 
format than it ever was before. The so-called LARs data, the 
loan-level data, is now available in standard format, whereas 
entities used to have to go to every single financial 
institution individually and get that data in slightly 
different formats. So there are constant improvements in this 
area, and I am committed to continuing them.
    Ms. Velazquez. How do you reconcile the fact that the 
national leading group, HMDA group, is opposed to the changes 
that you made?
    Ms. Kraninger. I think we are working to continue to 
understand what their concerns are, but I can tell you again 
that the Explorer Tool is still available, and the data that 
they have available to them is more extensive than ever before.
    Ms. Velazquez. But can you answer this question: S. 2155, 
did it require you to make changes?
    Ms. Kraninger. Yes, it did.
    Ms. Velazquez. To the HMDA Explorer Tool?
    Ms. Kraninger. No, it did not.
    Ms. Velazquez. I yield back.
    Mrs. Wagner. Madam Chairwoman, I have a point of order.
    Chairwoman Waters. The gentlelady is recognized.
    Mrs. Wagner. Madam Chairwoman, I hope that you will remind 
my colleagues that we should observe the decorum rules outlined 
in House Rule 17. And just to be clear, Director Kraninger, as 
sadly stated by one of my previous colleagues on the other side 
of the aisle, we do not believe that you are--
    Chairwoman Waters. Excuse me.
    Mrs. Wagner. --absolutely worthless.
    Chairwoman Waters. The gentlelady from Missouri must direct 
her questions and comments to the Chair.
    Mrs. Wagner. Madam Chairwoman--
    Chairwoman Waters. You are not--
    Mrs. Wagner. --I have directed it to you.
    Chairwoman Waters. --authorized to direct a question to the 
witness.
    Mrs. Wagner. I am directing it to you, Madam Chairwoman. I 
hope that you will remind our colleagues that we should observe 
the decorum rules outlined in House Rule 17.
    Chairwoman Waters. The Chair--
    Mrs. Wagner. Director Kraninger should not be referred to 
as ``absolutely worthless.'' I would ask you to please remind 
our colleagues.
    Chairwoman Waters. The Chair has recognized the gentlelady. 
The Chair is in charge, and the Chair will decide exactly how 
this committee will be run. Thank you for your comments. We 
shall move on.
    The gentleman from Oklahoma, Mr. Lucas, is recognized--
    Mrs. Wagner. Rule 17.
    Chairwoman Waters. --for 5 minutes. Mr. Lucas is recognized 
for 5 minutes.
    Mr. Lucas. Thank you, Madam Chairwoman, and, Director, I 
have a couple of questions. But before I launch into those, 
would you like to finish your opening statement?
    Ms. Kraninger. Oh, thank you, sir. I think we did with 
Congressman McHenry, but I am happy to do that if you have 
given me the moment to do so.
    As you are aware, I joined the government's recent brief 
urging the Supreme Court to hear the case, CFPB v. Seila Law. 
This matter is in litigation, so I am not going to discuss it 
at length, but I do want to highlight some key points.
    From the Bureau's earliest days, the constitutionality of 
the Director's removal provision has been raised, to challenge 
legal actions taken by the Bureau in pursuit of our mission. 
Litigation over this question continues to cause significant 
delays to some of our enforcement and regulatory actions. I 
believe this dynamic will not change until the constitutional 
question is resolved, either by Congress or by the Supreme 
Court.
    My position on this question will not stop the Bureau from 
fulfilling our statutory responsibilities. We will continue to 
defend the actions the Bureau takes now and has taken in the 
past.
    Thank you, sir.
    Mr. Lucas. Now, Director, many members of this committee 
have concerns about the small-dollar rule, and during your last 
visit before this committee we discussed the payments provision 
of the small-dollar rule. I would like to continue that 
dialogue by asking you if there are currently any plans to 
modify this section of the small-dollar rule?
    Ms. Kraninger. Congressman, I remember the conversation, 
and I know that there have been questions raised. There was a 
petition, in fact, for us to reconsider it, and that is a 
petition that is still standing.
    In the meantime, though, the payments provisions, as you 
know, are stayed due to litigation over the rule in its 
totality. I can say that the payments provision and the 
underwriting requirements do have a separate legal and factual 
basis in the 2017 rule, and the reconsideration rule that the 
Bureau issued last spring was directed specifically at the 
factual and legal underpinnings of the underwriting provision.
    Mr. Lucas. Coming at a slightly different question, next, I 
would like to ask about the Bureau's Tribal consultation 
process. This policy provides general guidance on how CFPB 
should consult with Tribal governments during the rulemaking 
process, and I note for the record that I represent all or part 
of 16 different Tribes, so I am very sensitive about how all 
Federal agencies interact with the Tribes.
    Could you elaborate on how the Bureau is working to adhere 
to, and improve, the Tribal consultation process?
    Ms. Kraninger. Absolutely, and I appreciate that 
opportunity. I have had the opportunity to meet with Tribal 
leaders in this position, and I shared with them that I have a 
history in many of my other positions in government of working 
with Tribal entities to understand the unique issues that they 
are facing, and to have that dialogue with them as required 
through the regulatory process.
    We do have a Tribal official designated. We do have regular 
interactions with the Tribes, and make sure that, again, they 
have the opportunity to raise the concerns or questions or 
issues that they are seeing in the marketplace that affect 
them. And we very much appreciate that engagement and take that 
into account, both in the formal process as well as informally 
seeking their views.
    Mr. Lucas. It is not only in Oklahoma but across the 
country, that they are a progressive, very focused economic 
force in developing communities, for the benefit of everyone.
    With that, thank you, Director, and I yield back the 
balance of my time, Madam Chairwoman.
    Chairwoman Waters. Thank you very much. The gentleman from 
New York, Mr. Meeks, who is also the Chair of our Subcommittee 
on Consumer Protection and Financial Institutions, is 
recognized for 5 minutes.
    Mr. Meeks. Thank you, Madam Chairwoman. Madam Director, I 
have 5 minutes, and I am going to ask you, first, a couple of 
questions that require simply a yes-or-no answer. That is all 
it is. Simple questions.
    One, are you aware of the fact that the Consumer Bureau's 
legal division concluded that the law supported the Consumer 
Bureau's ability to seek remediation from Enova? Yes or no?
    Ms. Kraninger. I'm sorry, that we sought mediation with 
Enova? Is that the premise of your question?
    Mr. Meeks. Yes, that the Consumer Bureau's legal division 
concluded that the law supported the Consumer Bureau's ability 
to seek remediation from Enova, yes or no?
    Ms. Kraninger. I don't know that I am aware of that, 
Congressman, but I guess we might need--
    Mr. Meeks. So the answer is no?
    Ms. Kraninger. --to get to the next question and we can 
talk more fully about it.
    Mr. Meeks. Okay. The next question is, did you go against 
your own legal division to deny consumers relief in the Enova 
case, yes or no?
    Ms. Kraninger. It was part of the process--
    Mr. Meeks. Yes or no?
    Ms. Kraninger. Congressman--
    Mr. Meeks. I only have 5 minutes.
    Ms. Kraninger. --I know you are seeking--
    Mr. Meeks. I don't have time. I have other questions. Yes 
or no?
    Ms. Kraninger. I can tell you that the full panoply of--
    Mr. Meeks. I just need a yes or a no.
    Ms. Kraninger. --was under consideration in each case.
    Mr. Meeks. You know, we are talking about decorum here and 
all of that. Decorum would say that the witness would answer 
the question, and the question is simple: Did you go against 
your own legal division to deny consumers relief in the case of 
Enova? Yes or no?
    Ms. Kraninger. Congressman, as we already discussed, the 
decision is mine.
    Mr. Meeks. You are not--
    Ms. Kraninger. I absolutely think--
    Mr. Meeks. So the answer is yes?
    Ms. Kraninger. --and recommendations of all of the staff--
    Mr. Meeks. So then, would the answer be yes?
    Ms. Kraninger. --it is a deliberative process--
    Mr. Meeks. It is your decision.
    Ms. Kraninger. --and it comes to me for a decision.
    Mr. Meeks. No one is denying the fact that it is your 
decision. My question is simple. You made the decision.
    Ms. Kraninger. Given that it is my decision--
    Mr. Meeks. The question is just--
    Ms. Kraninger. --I am not overruling anything.
    Mr. Meeks. --did you make--
    Ms. Kraninger. It is my decision.
    Mr. Meeks. Your decision. So, you overruled--
    Ms. Kraninger. There is no overruling when it is my 
decision, sir.
    Mr. Meeks. Well, you get recommendations. At times, my 
staff make certain suggestions to me, and if I overrule them, I 
will stand up and say I overrule them. So the question to you 
is simple. You had the authority. Nobody is questioning whether 
or not you had the authority. The question is, did you?
    Ms. Kraninger. The decision is mine to make, based on, of 
course--
    Mr. Meeks. I am not questioning that. The question is--
    Ms. Kraninger. I guess I would question the use of the word 
``overrule,'' then, Congressman.
    Mr. Meeks. The question is--
    Ms. Kraninger. Because that implies that there is an action 
that is taken--
    Mr. Meeks. --did you go against--
    Ms. Kraninger. --that is being reversed.
    Mr. Meeks. --what the legal division recommended?
    Ms. Kraninger. There was a robust discussion that many 
staff provided info on.
    Mr. Meeks. Let me try it one more time, because this is a 
yes-or-no answer. The legal division came up with an opinion, 
right, that they presented to you. Doing their job, they 
presented you with their opinion, right? That is their job.
    Ms. Kraninger. I wouldn't say--again, as a factual matter, 
the enforcement attorneys bring these recommendations forward--
    Mr. Meeks. Did they present you their opinion after they 
did their work? Yes or no?
    Ms. Kraninger. The enforcement attorneys do present the 
case--
    Mr. Meeks. So, it is a yes. What is so difficult about--
    Ms. Kraninger. --and it is my decision.
    Mr. Meeks. Is it difficult to say yes? So, they did.
    Ms. Kraninger. The question about the legal division is the 
part that is confusing, sir.
    Mr. Meeks. You looked at it and you decided that you didn't 
want to do it because you had the authority to, and others that 
you listened to, you had the authority and you said, well, I am 
not going to do that. I am going to do it a different way. You 
are the boss. You are the Director. You are there. That is what 
you did. So just say yes, because that is what you did. Because 
then the next question would be, when you do that, okay, what--
now this is not a yes-or-no question, it gives you a chance. I 
am trying to be fair here, but you won't answer yes or no.
    So what factors do you consider when deciding consumers 
deserve compensation, when the Consumer Bureau concludes that 
they have been cheated? What factors do you consider?
    Ms. Kraninger. Absolutely. There are a variety--
    Mr. Meeks. I have wasted all this time to get--
    Ms. Kraninger. Thank you, Congressman. A variety of factors 
are weighed when we are seeking justice and resolution in every 
particular case, including, certainly, the consumer harm that 
has been done, our ability to quantify that, and our ability to 
identify the consumers who have been harmed.
    The concept of disgorgement also comes into play. When you 
take the case of Enova, as has been discussed here, the funds 
that were taken in an unauthorized manner were actually funds 
that were owed by the consumers, and that is something that the 
consumers did not--
    Mr. Meeks. Let me just conclude with this.
    Ms. Kraninger. There are a number of factors that are 
weighed in the process.
    Mr. Meeks. I have 8 seconds. Let me just conclude with 
this. Enova offered $1.6 million to consumers and you did not 
accept it, so that seems clear. And the fact that going into 
this transparency and accountability--I am out of time. I yield 
back.
    Chairwoman Waters. The gentleman from Florida, Mr. Posey, 
is recognized for 5 minutes.
    Mr. Posey. Director Kraninger, I regret this committee 
began with a lot of partisan sniping directed at you by the 
Majority here, and I regret even more the denigration of you 
personally by members of this committee. I think if I ever 
called a witness before this committee ``totally worthless,'' I 
would probably be asked to step aside from this committee. I 
think that is a new level of low behavior in this committee, 
and I regret that the Chair does not enforce the rule of 
decorum in any way whatsoever.
    Your predecessor, of whom they seem to be speaking so 
gleefully about today, appeared before this committee several 
times. You should know the words ``yes'' or ``no'' were not in 
his vocabulary, and I think he set a new level of bureaucratic 
petulance, arrogance, and defiance. I asked him one question, 
and he didn't have the answer at hand with him, so he said he 
would get back with me. Over 190 days later, I still did not 
have it. If he ever found anyone under the jurisdiction of your 
agency that tardy, they would be automatically assumed to be 
terribly in default, in any number of ways, and I can't imagine 
the penalties that there would be.
    But there really does seem to be a double standard here, 
and because the Chair cut you off in your opening statement, 
and a number of members have asked you questions and not given 
you a chance to answer them, I would like to yield such time to 
you, as you might like to respond to some of the things. Please 
don't ask them, the men, if they still beat their wives. That 
is the kind of questions they have been asking you, and it 
really shouldn't be asked in this committee. But anything else 
you would like to say, I would be happy to yield you the time.
    Ms. Kraninger. Thank you, Congressman. I agree with you 
that there are not very many yes-or-no questions asked in a 
forum such as this that actually have a yes-or-no answer. So 
the opportunity to elaborate a little bit, to provide the 
context that gives a better answer, a more fulsome answer, a 
transparent answer, to explain what are complex decisions, I 
truly appreciate.
    And I do think, again, the very nature of the decision in 
some of these cases, reasonable people can disagree. Reasonable 
people at the agency disagree. Ultimately, it is my decision, 
sitting in this seat, as I have a case presented to me, what 
the facts and circumstances are. And many of you have 
participated in negotiated settlements or lawsuits and 
litigation. We have to think about the resources that are going 
to be applied if we can't reach a negotiated settlement, and 
end up going to court. Those are attorneys who are now spending 
their time trying to resolve that particular case, carry that 
forward for years, potentially. And in the meantime, we also 
have to think about what we can do to just move through that 
expeditiously to get justice, because that is what we are 
looking at in each case. So, thinking about the mix of 
restitution, of penalty.
    I know the committee is focused on two particular cases in 
the report that they issued, that I haven't had the chance to 
review yet, and I look forward to seeing what their conclusions 
are. But we have actually settled 19 cases in the last fiscal 
year, many of which did, in fact, include restitution for 
consumers, and some of which did not. And, in fact, as we 
judged that the entity had no ability to pay, a civil penalty 
of $1 was levied so that we could--we used the civil money 
penalty fund that Congress provided to us to provide 
restitution to consumers. For example, in the Corbett case, the 
case that I mentioned in my opening statement, we did, in 
January, levy a civil penalty of $1 on Mr. Corbett, and since 
that time we have given $9 million in redress to veterans who 
were harmed by his actions.
    And so, that is the opportunity that I get to highlight 
here with the time you have given me here, sir, so thank you.
    Mrs. Wagner. Will the gentleman yield?
    Mr. Posey. For 20 seconds.
    Mrs. Wagner. I just want to reiterate, following up on your 
point, Mr. Posey, that Clause 1(b) of Rule 17, House Rules, 
requires that Members confine their remarks to the matter under 
debate, avoiding personality. Impugning a Member's motives or 
implying a lack of intelligence, calling someone ``absolutely 
worthless'' is not consistent with the principles of decorum, 
and I hope that the Chair will ensure the debate is consistent 
with the standards and history of this committee.
    I thank the gentleman for yielding.
    Mr. Posey. I thank you for yielding back.
    Director, are your stipulated settlements a matter of 
public record, unlike the Obama Administration's Justice 
Department?
    Ms. Kraninger. Yes. Our settlements are public.
    Mr. Posey. Thank you.
    Chairwoman Waters. I recognize myself for a point of 
personal privilege, to respond to Mr. Posey's comment about my 
actions as Chair. First of all, I do not believe there was a 
breach of order and decorum, and the Director is not a 
protected class. And I believe that the remarks were directed 
to the Bureau.
    Mr. Huizenga. Yes, we agree that the CFPB is one of those.
    Chairwoman Waters. The gentleman from Missouri, Mr. Clay, 
who is also the Chair of our Subcommittee on Housing, Community 
Development, and Insurance, is recognized for 5 minutes.
    Mr. Clay. Thank you, Madam Chairwoman, and welcome back, 
Director Kraninger. Recent data released by the Federal Reserve 
Bank of New York revealed the racial disparities in student 
loan debt. Based on data from the country's 10 most segregated 
metropolitan areas, majority-minority neighborhoods had 
significantly higher student loan default rates. For example, 
in Milwaukee, the default rate in majority-minority 
neighborhoods is 4 times greater than the rate in majority 
white neighborhoods.
    The Consumer Bureau's 2017 Fair Lending Report indicated 
that the Bureau prioritized student loan servicing, but its 
most recent Fair Lending Report for 2018, issued under your 
leadership, indicated that the Consumer Bureau did not identify 
student loan servicing as a priority.
    Director Kraninger, given the significant racial 
disparities in student loan and overall student loan debt, why 
is student loan servicing no longer a fair lending priority?
    Ms. Kraninger. Congressman, thank you for bringing this 
study to my attention. It is not something I have seen, and I 
would certainly be interested in going back to look at it.
    I'm also interested in understanding if they have found any 
corollaries to that racial disparity, whether it was also based 
on income or graduation rates, because we know the default 
rates are very much tied, certainly, to graduation rates and 
other factors. And so, if there is new information from that 
study, I look forward to looking at it.
    With respect to all of the different markets where fair 
lending laws apply, they continue to be areas where we are 
engaged in examination and enforcement actions.
    Mr. Clay. Will the Bureau address the racial disparities in 
student loans?
    Ms. Kraninger. Certainly, compliance with the law in 
general is something we absolutely are enforcing, and looking 
at this study and other areas where we can learn from that. I 
look forward to that.
    Mr. Clay. The Bureau's spring 2019 report to Congress 
stated that the Bureau wants to ensure that the data collection 
and reporting requirements established in the 2015 HMDA rule, 
``appropriately balanced the benefits and burdens associated 
with data collection and reporting.''
    I would like a simple answer, yes or no, do you agree that 
robust HMDA data is essential to the Consumer Bureau's 
enforcement of fair lending laws?
    Ms. Kraninger. Congressman, I guess I want to make sure I 
understand how you are using the word ``robust.'' But if it is 
in a typical statistical mode of how robust data is used, then 
yes, it is a disclosure law.
    Congress required that HMDA data be made available and 
transparent, and that is something that we are committed to 
continuing to do and have done.
    Mr. Clay. And as you know, the data reveals patterns in 
lending practices. You know that, right? And so when you look 
at these disparities, do you have a plan on how to respond to 
it?
    Ms. Kraninger. The data, sir, I would say is in and of 
itself certainly useful in that conversation and we do 
analytics on the data. It is not dispositive. There is a lot of 
back and forth that happens with entities, even in examining 
for compliance with HMDA to understand what the data actually 
tells us. But it is certainly useful.
    Mr. Clay. Okay. But then, that will take us to the next 
logical question, how can you protect consumers from 
discriminatory lending practices if you reduce transparency and 
the amount of information mortgage lenders have to disclose? 
How is this proposed rollback a balanced approach?
    Ms. Kraninger. There is a balancing test even in the 
original 2015 rulemaking and, as you know, both by 
congressional action and the Bureau's action this is something 
that is an ongoing review and an ongoing rulemaking around how 
we balance that burden, particularly on smaller entities, and 
how we ensure that there is transparency around the mortgage 
data that is provided.
    That is something that we are looking at very carefully. 
But it is not the only activity that we are engaged in to 
promote fair lending and address discrimination in the 
marketplace.
    I certainly am using both our education tool and our 
enforcement tool, looking at that data carefully, and working 
with industry, many of whom want to also address these issues.
    Mr. Clay. Thank you.
    Chairwoman Waters. The gentleman from Missouri, Mr. 
Luetkemeyer, is recognized for 5 minutes.
    Mr. Luetkemeyer. Thank you, Madam Chairwoman.
    Welcome, Director Kraninger, and, obviously, my first 
question is going to be about Current Expected Credit Losses 
(CECL). This subject is extremely concerning to me and has my 
full attention, and I have discussed this with you before.
    To me, I think it is vitally important that CFPB be engaged 
in this as well because I think if this rule is implemented to 
the full effect that it could be, it would have a dramatic 
effect, I think, on the availability of affordable home loans 
for low- and moderate-income individuals, which I think should 
be of grave concern to you.
    So my question to you is, we discussed this before from the 
standpoint, I believe, of there needs to be a study done. I 
think the Office of Financial Research is ready to do this 
study.
    If the Financial Stability Oversight Council (FSOC) would 
request such a study, hopefully it would happen. You sit on 
FSOC. Would you be willing to make such a request of the FSOC 
committee?
    Ms. Kraninger. Congressman, as you noted, we have talked 
about it. I appreciate where you are coming from on it. There 
do seem to be a lot of different opinions on this.
    But I can promise you I have talked to my colleagues about 
it and will continue to, and I have not had the chance yet to 
bring it up to the head of the Office of Financial Research. 
But I have talked to others in terms of the study that you are 
seeking.
    Mr. Luetkemeyer. In earlier testimony, you made a comment 
that it was important to study information to make effective 
rules, and so this, to me, just makes sense. And I would 
appreciate your continued support of that.
    A number of comments have been made this morning about the 
constitutionality of the CFPB and arguments about fixing it, 
how you fix it, whatever you do.
    It is really kind of interesting to me that my good friend, 
Mr. Scott, and I have a bill that we have asked the Chair to 
bring to the Floor which would actually address one of the 
issues that we brought up this morning.
    Yet, we have yet to have that hearing, and I would 
respectfully request such a hearing of the chairwoman because I 
think to not do that would be hypocritical, to not have a 
hearing from the standpoint that everybody in a bipartisan 
fashion believes this is an issue that needs to be brought 
forward, and to have a hearing on.
    Yet, here we are, 9 months into this Administration, and 
this committee has yet to have this hearing.
    With that, I know one of the other comments--I think it was 
Mr. Lucas who mentioned minutes ago that with regards to the 
payday rule, I think the National Automated Clearing House 
Association (NACHA) has had some rule changes that they put in 
place, and I think you made the comment a minute ago with 
regards to sort of letting everything sit on hold, to see how 
it all works out.
    I would hope that you are taking those rule changes into 
consideration as you work through this process.
    Ms. Kraninger. Yes, Congressman, we are looking at new 
information. We obviously got a lot of comments back in 
response to the proposed reconsideration rule, as well as 
things that are changing in the market in general and 
activities the States are taking in this space. So, all of that 
information is useful.
    Mr. Luetkemeyer. In the fall of 2018 Unified Regulatory 
Agenda, the Bureau announced it was considering whether 
rulemaking or other activities may be helpful to further 
clarify the meaning of ``abusive acts or practices'' in the 
Dodd-Frank Act.
    In addition, in June of this year the CFPB held a symposium 
on the definition of ``abusive acts or practices.'' What was 
your takeaway from the symposium and what was the response from 
the stakeholders?
    Ms. Kraninger. It was a very robust discussion, as you can 
imagine. Hours of back and forth and conversation about whether 
the statute stands on its own and whether there is a need for 
further either guidance or rulemaking or other action to 
further clarify the language in the statute.
    That is something that I am taking a look at now and the 
staff is taking a look at now to take some follow-up action out 
of that symposium. So, nothing at this particular moment to 
relay, but it is an active issue that we are looking at.
    Mr. Luetkemeyer. Thank you. With regards to the debt 
collection rule, how will consumers who are affected by the 
collections industry benefit from the changes in the proposed 
debt collection rule?
    Ms. Kraninger. I'm sorry. How are collectors--
    Mr. Luetkemeyer. How will consumers--
    Ms. Kraninger. Oh, consumers.
    Mr. Luetkemeyer. --who are affected by the collections 
industry benefit from the changes in the proposed debt 
collection rule?
    Ms. Kraninger. Thank you for the question, Congressman.
    The clarity that the rule provides is what we are really 
proposing, and there were 162 questions that we asked for 
comment on. It is an incredibly challenging area, actually, to 
provide a bright line rule test on.
    I know we will be talking, I am sure, about the frequency 
of contact and the mode of contact. Those were things that we 
thought we could actually provide some clarity on. But that is 
not the only thing that characterizes harassment under the 
FDCPA.
    And so, the ability to set a bright line rule, perhaps, for 
what words are in the communication that is, again, something 
that we thought was beyond our ability to put clarity into 
place.
    But the goal of the rule overall and the rulemaking effort 
and the assessment we are making of all of the comments is 
really around providing clarity so both consumers and 
collectors understand what the rules are.
    Mr. Luetkemeyer. Thank you. I yield back.
    Chairwoman Waters. Thank you.
    The gentleman from Georgia, Mr. Scott, is recognized for 5 
minutes.
    Mr. Scott. Thank you, Madam Chairwoman.
    Director Kraninger, we have a national crisis, and it seems 
to me that your agency is the centerpiece, should be the 
centerpiece, for our nation to really put forward meaningful 
action to solve, and that national crisis is this: financial 
education of the American people.
    Did you know, Director, that only 17 of the 50 States' 
school systems require a course for their students in financial 
education, personal finance, just the simple things?
    Is it any wonder that right now, we have 58 million 
unbanked and underbanked folks? We have our young people 
without the knowledge of how to navigate our financial system, 
and as a result of that, predators are out there just waiting 
to pounce.
    And so, I want to start by letting you know that you cannot 
have consumer financial protection without consumer financial 
education. The predators are out there.
    That is why we have these problems. It is a tragedy that 
only 17 out of 50 States require the kids to have a course in 
financial education out of 50.
    And so, you being the Director of this agency should be at 
the forefront, and I want to start off by asking you, can you 
describe any financial protection, financial education programs 
that you are currently working with?
    Ms. Kraninger. Absolutely, Congressman, and I share your 
passion on this topic. It is an important one. We have 
tremendous capabilities inside the Bureau, and education is a 
key facet of the tools that Congress gave us. It is a pillar of 
my tenure and will continue to be.
    One of our premier programs is actually called, ``Your 
Money, Your Goals,'' and it is something that we are continuing 
to build upon, working with financial educators across the 
country, putting it in library systems, getting that out. So, 
that is a key program for us.
    Mr. Scott. Okay. I only have 2 minutes, and the chairwoman 
brings that hammer right down.
    I am working on a piece of legislation, Director, that 
would give the CFPB grant-making authority. We don't put 
resources for this to reach out, to work with these school 
systems.
    We should mandate for all 50 States' school systems to 
teach our young people how to handle their money, how to make 
it in what is the world's financial system, or we won't have 
the best financial system if we don't bring our younger 
generations along.
    So, it would give you the grant-making authority to provide 
funding for a flexible education program. The CFPB would be 
able to work with schools, with library systems, and with 
nonprofits to provide targeted education instruction on a range 
of critical topics that provides the most value for consumers.
    And I want to ask you, would you partner with us in this? 
We are bringing forth this powerful piece of legislation. This 
is the richest country in the world.
    What better place to put grant power and grant authority? 
You have the money and if you need more for this worthy cause, 
to educate the American people, to keep our people out of the 
grip of these predatory lenders--they are going after our young 
people. They are going after them because they know technology 
in our financial system is moving so fast.
    So, would you partner with us? Thank you, Madam Chairwoman. 
I yield back. You have the floor, Director. I am looking to you 
as a partner. Thank you.
    Chairwoman Waters. The gentleman yields back his time.
    Mr. Scott. Yes, ma'am.
    Chairwoman Waters. The gentleman from Michigan, Mr. 
Huizenga, is recognized for 5 minutes.
    Mr. Huizenga. Director Kraninger, I am going to rewind the 
tape here a little bit. I know that alienates a number of the 
younger staff. Tape is what we used to record things on and it 
is time to do a little rewind.
    Please do not take the comments of one of my colleagues as 
the belief of this committee. That comment, by the way, was 
directed at you personally, not at the Bureau writ large, as 
the Chair laughingly tried to characterize it.
    And I can tell you that having sat in this chair and in 
this committee with, back then, Director Warren as she was 
creating this entity, and then with Director Cordray, if those 
comments were ever directed at them personally like that, there 
would be rioting out in those halls right now, and that is 
just--you, frankly, deserve an apology, and I hope my colleague 
from New York does do that and does the right thing.
    I also want to rewind a little tape. I am pretty sure that 
Director Cordray's middle name was ``Stonewall.'' It was 
probably one of the least transparent hearings that we would 
ever have when he would come in, and it lends itself to a 
number of the other concerns that many of us had with the 
actions of the CFPB.
    There are two things. There is the structural question--how 
it is constituted and put together--and then also, what were 
its actions?
    I had direct involvement with one of those when the CFPB, 
without announcement, went after a small land title company in 
my district called Lighthouse Title. And I won't impugn him and 
risk his career on the other side of the aisle by naming him, 
but one of my colleagues on the other side, after a month of 
not even getting a return phone call from the staff at the CFPB 
about our concerns, offered to intervene, put me on the speaker 
phone while he made the call to the CFPB to try to help resolve 
this because Lighthouse was going to be put out of business by 
the CFPB, not because they violated a rule, not because they 
violated the law, but because the CFPB decided to put a letter 
out that they didn't like the actions, even though it was 
legal, they just decided that no longer should this company act 
in this way and they wanted to set a precedent for everybody 
else.
    That gets to the very heart of the issue that we have with 
what is the constitutional structure of this organization? Is 
congressional action necessary to ensure CFPB accountability? 
Because right now, there is none.
    Many of us believe that it was an out-of-control and 
unaccountable organization when it was first created, and I 
believe that you had to come in and do some serious repair of 
relationships between both the regulators and the regulated 
with consumers and their interaction with those that you 
regulate.
    So, I want to give you an opportunity to maybe lay out what 
you think are those congressional steps that could be put in 
place to hold the CFPB properly accountable.
    I will, by the way, point out that many of us on this side 
of the aisle pointed out to our colleagues on the other side of 
ther aisle that at some point, that worm was going to turn.
    When you had an unaccountable organization with a Director 
that not even the President could remove, that was going to be 
problematic, and that is exactly what it turned out to be.
    And I appreciate your efforts in trying to put this back in 
a reasonable box. But the time is yours.
    Ms. Kraninger. Thank you, Congressman.
    I will note that it is, certainly, the purview of Congress 
and now with a cert petition before the Supreme Court for the 
court to look carefully at the removal clause associated with 
the Director, and that is where I have made my view very clear 
that I do believe that that provision is unconstitutional and 
needs review and needs to be addressed and settled.
    So I am hoping that takes place fairly quickly. The 
important work of protecting consumers, the important work laid 
out in the statute that gave the Bureau its mission, our 
efforts to educate consumers, to create regulations that are 
clear rules of the road for the regulated entities, to engage 
in the supervisory conduct that allows for compliance by 
entities that are seeking to, again, provide responsible 
products and services to consumers, that is important, and our 
enforcement actions. And we will continue to do those.
    Mr. Huizenga. All right. And in my last second, I believe 
that fiscal oversight needs to be returned to Congress with 
this organization as well.
    With that, I yield back.
    Chairwoman Waters. Thank you.
    I recognize myself to respond to the gentleman's criticism 
of the gentlewoman from New York.
    The gentlewoman's remark was directed, in my view, to the 
CFPB, not to the witness.
    The gentleman from Texas, Mr. Green, who is also the Chair 
of our Subcommittee on Oversight and Investigations, is 
recognized for 5 minutes.
    Mr. Green. Thank you, Madam Chairwoman.
    Madam Director, should the CFPB place more emphasis on 
protecting financial institutions than protecting consumers?
    Ms. Kraninger. Congressman, our mission is protecting 
consumers.
    Mr. Green. Should it place more emphasis on consumers?
    Ms. Kraninger. Our mission is to protect consumers.
    Mr. Green. May I take that as a yes?
    Ms. Kraninger. Yes, sir.
    Mr. Green. Thank you. If that is the case, let us look at 
the curious circumstance of Capital One.
    In 2012, Capital One added payment protection to the 
accounts of their consumers without consent. Sterling Jewelers, 
in 2019, did a similar thing.
    When the CFPB engaged in taking corrective action, Capital 
One paid $140 million in restitution. Sterling, on the other 
hand, paid zero in restitution.
    Both engaged in similar activities. One paid a very, very 
substantial amount to consumers by virtue of the Bureau's 
actions, and in the Sterling case, the Bureau did not ascertain 
the number of consumers who were harmed, the amount of 
restitution that should be paid, and, in fact, made a zero 
amount of restitution applicable.
    It just seems to me that if this is the case, you are 
putting the financial institution before the consumer. How do 
you rationalize going from $140 million as restitution to zero 
in restitution?
    Ms. Kraninger. Congressman, I am presuming that the 
comparison that you are making is laid out in the report that 
the committee issued as we were just starting the hearing.
    I haven't had the chance to look at it. I very much look 
forward to looking at it and seeing what conclusions that you--
    Mr. Green. Well, in that case, let me continue. Let me 
continue if you haven't reviewed it.
    One would assume that as the head of the CFPB, the person 
who makes these decisions--you indicated earlier that these are 
your calls--I have to assume that this zero amount of 
restitution was your call.
    The $140 million occurred before you arrived. So if you 
recommended zero restitution, I find that quite egregious, to 
be quite candid with you. A zero amount of restitution when you 
have consumers who have been harmed and, clearly, they are owed 
restitution.
    Without their consent, they had this payment protection 
added to their accounts. This is unacceptable.
    But let us just look at why it is unacceptable. It is 
unacceptable because these large institutions will simply build 
in the cost of doing business these penalties, and if they have 
zero, then they really have a bonanza, because these large 
institutions are paying billions in fines.
    Over the last 10 years, I show where one lending 
institution paid $76.1 billion in fines.
    So what you are doing is giving them a license to continue 
without penalties. At least if they had to make the 
restitution, that would be something to deter them.
    But under your watch, no restitution. I find that 
unacceptable.
    Ms. Kraninger. If I could, Congressman, there was, in fact, 
a penalty in the Sterling case.
    Mr. Green. Not just yet, please. I have 39 seconds and I 
gave you the opportunity to explain.
    Let me ask you one other question. Do you believe in the 
concept of testing? Do you think that that works in acquiring 
empirical evidence?
    Ms. Kraninger. Congressman, I believe you are referring to 
matched-pair testing?
    Mr. Green. Yes, ma'am.
    Ms. Kraninger. Okay. It is something that the Bureau does 
utilize.
    Mr. Green. Do you believe that is effective?
    Ms. Kraninger. It is one capability of our--
    Mr. Green. Is it one capability that is effective? Can you 
say that it is effective in any way or do you believe--
    Ms. Kraninger. It is one that we use so--
    Mr. Green. Okay. So you believe that it is effective? Is 
that a yes?
    Ms. Kraninger. In certain circumstances, yes. In the right 
circumstances.
    Mr. Green. Okay. Thank you very much. I yield back.
    Chairwoman Waters. The gentleman from Kentucky, Mr. Barr, 
is recognized for 5 minutes.
    Mr. Barr. Thank you.
    Director Kraninger, I first want to address a comment made 
by my colleague from New York earlier in this hearing. When she 
said that she believed that you had disrespected Congress for 
having the audacity of taking the position that the Bureau's 
structure is unconstitutional, as if the Executive Branch has 
no independent responsibility to assess the constitutionality 
of its actions, let me just say on behalf of me and my 
colleagues, I want to thank you for respecting many of us, 
Members of Congress, who believe that the Bureau's structure is 
unconstitutional and apparently the en banc panel of the Fifth 
Circuit Court of Appeals agrees with you, Director Kraninger, 
and agrees with those of us in Congress who believe that it is 
unconstitutional, and disagree with the gentlelady from New 
York, as they have held that the structure of the FHFA is 
unconstitutional because it shares the same defects in its 
structure as the Bureau.
    I would also just make the editorial comment to my 
colleagues on the other side of the aisle, that to the extent 
that they are frustrated with or to the extent that they 
disagree with some of your decisions, or worse, to the extent 
that they refer to you as worthless, in violation of House 
Rules, I would invite them to end their stubborn opposition to 
my legislation that would bring the Bureau under the 
congressional appropriations process. That would actually bring 
much-needed accountability to the Bureau.
    Instead of blaming you, I would respectfully submit that 
they ought to blame themselves because they created an agency, 
they deliberately designed an agency to elude congressional 
oversight or accountability.
    My question, Director Kraninger, to you, though, is about 
UDAAP. As you know, Dodd-Frank gave the Bureau authority over 
so-called unfair, deceptive, and abusive acts and practices, 
and while the concept of ``unfair or deceptive'' has long 
histories and regulatory track records, the ``abusive'' element 
is causing some confusion and uncertainty.
    In short, the absence of due process about how lenders can 
comply with UDAAP will result in fewer choices for consumers, 
less competition, higher prices, and ultimately less access to 
credit for borrowers.
    Besides the June symposium, what progress have you made on 
clarifying the definition of ``abusive'' under UDAAP?
    Ms. Kraninger. I will say that the symposium was the 
starting point of that conversation, as you noted, Congressman, 
and we received statements from the experts on it.
    We benefited from their conversation and we are looking at 
that very carefully now to decide what the next steps are. I 
don't have anything to share with you today specifically on 
that.
    But the record is clear in terms of what that conversation 
was, and is something that I am weighing carefully.
    Mr. Barr. Director, I would encourage you to expedite that, 
because due process is counting on you.
    The small-dollar payment provision--when a lender places a 
loan in collections that can harm the borrower and limit 
opportunities for credit rehabilitation--are you concerned that 
lenders could react to the payments provisions of the rule by 
proceeding straight to collections following the second 
unsuccessful payment attempt?
    Ms. Kraninger. Actually, this is the first time I have 
heard that concern raised. I know there are other concerns that 
have been raised about the payments provision.
    It is currently stayed by the court, so is not in effect 
yet. We also have petitioned to look at it but, largely, again, 
are reconsiderations associated with the underwriting 
provision.
    Mr. Barr. I appreciate you considering that potential 
unintended consequence.
    With respect to debit cards in the payments provision, the 
provisions that I understand that would apply when a payment is 
made through a debit card, even though this method of payment 
results in no charge to a consumer when there is insufficient 
funds, would you consider revising the rule to exclude debit 
cards since there is no harm to consumers in the debit card 
context?
    Ms. Kraninger. We are certainly looking at the petition 
around the payments provisions but found that the underwriting 
provisions had a greater concern in terms of the legal basis 
and the factual basis for it. So, that is why that is the 
reconsideration part.
    Mr. Barr. Again, take a look at that, because I think there 
may be some well-intended drafting of this but some unintended 
consequences.
    Finally, disparate impact--as you know, this summer HUD 
published a proposal to revise its disparate impact rule under 
the Fair Housing Act. The HUD-proposed rule established a five-
part test to assess claims of disparate impact in compliance 
with the inclusive communities decision.
    In its fall 2018 rulemaking agenda, the Bureau stated it 
was considering future rulemaking on the application of 
disparate impact theory under the Equal Credit Opportunity Act.
    The spring 2019 rulemaking agenda did not mention this 
effort. Does the Bureau plan to examine how it evaluates 
disparate impact claims in order to harmonize the standards 
with those of HUD?
    Ms. Kraninger. I can tell you, Congressman, that we have 
disparate impact on the symposia agenda and we want to have 
that conversation.
    Mr. Barr. Harmonization with HUD would be helpful.
    Thank you. I yield back.
    Chairwoman Waters. The gentleman from Missouri, Mr. 
Cleaver, who is also the Chair of our Subcommittee on National 
Security, International Development and Monetary Policy, is 
recognized for 5 minutes.
    Mr. Cleaver. Thank you, Madam Chairwoman.
    I want to talk collections. ProPublica, in 2015, conducted 
an investigation into collection lawsuits, and it was very 
troublesome because one of the things they discovered was that 
debts in most African-American communities were, on average, 20 
to 25 percent smaller than the debts in predominantly non-
minority communities.
    And you had nothing to do with creating that, but I want to 
know if there is anything afoot in the CFPB to address that 
issue and reduce the pain it is causing.
    Ms. Kraninger. Congressman, you are raising an important 
issue. Your colleague mentioned the study around student loan 
default rates and a racial disparity issue there.
    This is certainly something that we need to understand and 
what, really, are the factors associated with that.
    For example, I haven't had the chance to look at either 
study, so now I have another one to look at, but with the 
understanding of what other factors were involved in that in 
terms of income or other things that were associated with those 
challenges.
    I would say on debt collection, I do believe clear rules 
for collectors are important, and that is why we are engaging 
in rulemaking and modernization of the Fair Debt Collection 
Practices Act (FDCPA).
    Mr. Cleaver. Yes, some of this is--I don't think people had 
a meeting and said, let us figure out a way to do minorities in 
on collection lawsuits. Nobody had that meeting. Some of this 
stuff is institutionalized and so we are not conscious of it.
    And so when you were saying that you want to look at some 
extenuating circumstances or some other things that may be at 
play, that is one of the things that I think ought to be 
involved in the way you look at that.
    But equally disturbing, at least to me, is that the highest 
rate of garnishments are among workers who earn between $25,000 
and $40,000, and here, again, you know that same report--this 
is the ProPublica report--is dealing with things that happen 
all the time, over and over and over and over again.
    I think a deep dive is needed into doing that, and so my 
question is, will you look at that but also look at the fact 
that it may take something else to fix it other than just 
saying, well, this happens on a cold day and people are nervous 
because it is cold, and so it slips in there. There are some 
other things at play.
    One of the other things is I am on the Congressional 
Modernization Committee, as is the newest member of this 
committee, Mr. Timmons, and one of the things we have agreed 
on--the Democrats and Republicans--is that we pay our staffs 
insufficiently, and one of the recommendations that I am 100 
percent behind is when we make our recommendations, we will be 
figuring out a way to pay the staff more money.
    Everybody agrees that we don't pay them sufficiently and it 
is difficult to keep good staff.
    Now, I want to talk about your staff and, I mean the 
political appointees. I know some of them and they are worth 
what they are making. I am not upset with what they are making. 
I wish we had the had capacity to pay our staffs that well.
    But I am wondering about the morale of people--you know, 
when you bring people in, give them a higher salary, and maybe 
even give them your ear a little more than you do the people 
who have been there since the beginning.
    Can't you understand or can't you see that that could have 
created a morale problem? I mean, just look at the people who 
resigned as a result of that.
    One of them, the Student Loan Ombudsman, resigned, the 
Assistant Director resigned.
    Ms. Kraninger. Thank you, Congressman, because I can tell 
you that the morale of the employees is important. It is 
important to the functioning of the agency so that we can carry 
out our mission.
    And so as a leader, that is something that is important to 
me. I have made it a huge priority, setting the right staffing 
levels. I challenged managers to articulate what their needs 
are and hiring people at the right levels and bringing them in 
to make them part of the process.
    So my engagement with the staff at all levels is critically 
important to me in my leadership.
    Chairwoman Waters. The gentleman's time has expired.
    Mr. Cleaver. I yield back.
    Chairwoman Waters. The gentleman from Colorado, Mr. Tipton, 
is recognized for 5 minutes.
    Mr. Tipton. Thank you, Madam Chairwoman.
    Director Kraninger, thank you for taking the time to be 
here.
    It's an interesting conversation today, and I think I would 
like to start with, should the CFPB stay within the constraints 
of the law?
    Ms. Kraninger. That sounds like a trick question. But yes, 
I think the answer is yes to that.
    Mr. Tipton. No trick to it. You know, I think that is 
something that is important. I think that there has been 
certainly a lot of concern, particularly from our side of the 
aisle, that the CFPB has overreached in so many instances, and 
to be able to have those confines under the direction of 
Congress, is something that is achievable.
    When we are talking about being able to identify consumers 
who have actually been hurt, I think we can all agree we would 
like to make sure that there is adequate restitution.
    But I would like to know if you have experienced instances 
in which you suspect maybe a company's behavior has harmed 
consumers, but being able to identify those specific consumers, 
the amount of time it may take--have you had those types of 
circumstances where it has been difficult?
    Ms. Kraninger. Absolutely. As we look at each case that 
comes forward and the facts at play and our ability to identify 
and quantify the harm, identify the consumers who have been 
harmed, that is part of every case.
    Sometimes, we are able to do it, and other times, we are 
not. But we are seeking the best outcome in the interest of 
justice, using all the tools that Congress gave us including 
civil penalties, injunctive relief, and restitution.
    Mr. Tipton. So given that sort of basis, how are you going 
to provide restitution when you can't identify who has been 
harmed specifically?
    Ms. Kraninger. That is truly a challenge, and one that we 
have had in some of the cases, frankly, that the committee is 
highlighting.
    But where we can, we are absolutely providing redress. I 
would also note, too, that the supervisory process supports 
this.
    There are a lot of companies that are coming forward self-
identifying issues, and providing redress to consumers. That is 
something that is not out as a public figure or amount of money 
but is hugely important to the functioning and proper 
functioning of the financial services processes.
    Mr. Tipton. Great. Thank you.
    In your time as Director over the Bureau you have talked at 
great length about the need to be able to use all of the tools 
at the Bureau's disposal to be able to protect consumers and 
regulate the financial institutions.
    Can you explain what you have done, maybe in a little more 
detail, to be able to equip your staff and examiners during the 
efficiency process and the exams?
    Ms. Kraninger. Yes, Congressman.
    This is important to me, as I came in as Director and 
looking at, really, a fundamental important tool of 
supervision, having the examiners with the right training and 
engagement with the entities.
    I have set the tone that that tool is really about setting 
that culture of compliance. We point out issues to companies, 
and those companies, unless we are talking about violations 
that require further action, are at liberty to decide what they 
want to do with the recommendations that we make and the 
observations that we share.
    And that is what you would expect responsible companies to 
do, is to consider that in their own business models and 
activities and engage with us.
    And so that is something that we are really looking at 
closely, making sure that we are focused on the right actors, 
making sure that we are using data that we have in the process 
effectively to limit the on-site time that we have, which we 
know is a huge resource consideration for both the financial 
entities and ourselves, and to make sure that we are doing that 
the best way we can.
    Mr. Tipton. One thing I have always been interested in is 
being able to not have a one-size-fits-all. We have a very 
dynamic economy, with different business structures.
    Are you pursuing ways to be able to tailor rules, the 
examination process, to be able to meet different needs of 
different size businesses?
    Ms. Kraninger. Definitely, and it is a work in progress, I 
can tell you that, when it comes to the examination process.
    But it is something that we are really working our way 
through also so we can be more agile so that we can address 
risk that we see in the system and be responsive to it. That is 
important.
    Mr. Tipton. And maybe as a final follow-up here, one thing 
I think we always need to be doing is always examining the 
impacts after the fact.
    When we have had a rulemaking, do you have a process in 
place to be able to see if it is working? Is it achieving the 
goal? Is it too cumbersome? Not aggressive enough? Is that a 
policy that you are pursuing?
    Ms. Kraninger. Absolutely, and I can tell you that Congress 
gave us a key mandate in that area, and that is to assess our 
rulemakings 5 years after they become effective.
    We are really building that into the up-front process. As 
we are considering a proposed rule, what data do we need to 
asses that 5 years later? What is the baseline? Well, if you 
don't have a baseline you have nothing to compare it to after 
the fact.
    Mr. Tipton. Great. Thank you for being here.
    Chairwoman Waters. The gentleman from California, Mr. 
Vargas, is recognized for 5 minutes.
    Mr. Vargas. Thank you very much, Madam Chairwoman.
    And welcome, Director. It is good to see you again.
    I do remember that you are a Jesuit product, and as a 
former Jesuit, I am not going to say anything harsh at all to 
you. It would be breaking protocol. So, you can count on that.
    I do have a long history, though, here, and I do recall 
conversations from my friends on the other side with the 
previous Director when they were actually screaming at the top 
of their lungs and calling him names.
    If you go back and look at the record, it was there, too. I 
didn't think that that was appropriate so I am not in favor of 
any of that.
    I do want to ask you, though, some questions, and maybe 
some tough ones. The issue of Asset Recovery Associates, Inc., 
the company--you signed a consent order that only consumers who 
affirmatively complained about the company's misrepresentation 
were eligible for redress.
    This is after your Bureau found that Asset Recovery 
misrepresented itself to the consumers. So should the burden be 
placed on consumers to proactively complain when they are 
cheated by debt collectors, banks, or credit card companies, or 
other financial services in order to get relief?
    Do they have to do that? Isn't that what you guys do?
    Ms. Kraninger. Congressman, I will say this was a 
negotiated settlement. We do have to consider the resources 
that we need to apply to carry it forward and the successful 
potential outcome of litigation.
    In that particular case, we did not have any evidence that 
we could rely upon because some of these statements--I should 
say all of these statements--were verbal.
    And so the ability to, again, identify the consumers who 
were harmed and get them restitution, this was the 
recommendation that came forward as to how to do that in this 
case. Each case is going to be different.
    Mr. Vargas. Okay. Fair enough.
    Are you aware, though, of any other prior settlements that 
the Bureau entered into that required the consumers subjected 
to illegal debt collection practices to have previously 
complained to be eligible for relief?
    Ms. Kraninger. I am not aware of other cases that had that 
exact fact pattern. But I think we will be looking at each case 
based on its own facts and the merits of the case and the 
opportunities we have to seek justice in all the forms Congress 
gave us.
    Mr. Vargas. Okay. And I know you have a tough job. But I 
have to say that the Enova case does seem strange to me. I know 
that my friend on the other side said that, well, you can't 
identify consumers.
    It is kind of hard to make them whole if you don't know who 
they are. But in that case, you did know who they were. There 
were 6,829 of these consumers.
    So, there is not a million of them. I mean, they are an 
identifiable group. And yet, you decided not to give them any 
redress. Why is that?
    And I know that you jumped around one way or another. But I 
have to say that one does seem a little bit disturbing.
    Ms. Kraninger. I understand, Congressman, where you are 
coming from on that one. But I would say what weighed the 
decision in that case was that the consumers did, in fact, owe 
the debt.
    That was not something that was in question. And so the 
opportunity to make sure that we got injunctive relief against 
that entity as well as disgorgement to discourage them from 
doing that again and taking the profits that they made from 
that was the approach that was taken in that case.
    Mr. Vargas. Okay. And just, lastly, I would say this: I 
hope that you are a little more aggressive when it comes to 
discrimination.
    Discrimination does exist, and I did notice that under your 
leadership, you haven't gone after those cases as aggressively 
as prior Directors have.
    So, I hope you do take a look at that. I mean that 
honestly. I think that there is a lot of discrimination that is 
not addressed and I think you are in the perfect position to do 
it, and I hope you think about that.
    Ms. Kraninger. Absolutely, and thank you for raising it, 
Congressman. Discrimination is abhorrent in every case where we 
find it and it certainly is a responsibility I take seriously.
    Mr. Vargas. Okay. If you weren't a Jesuit product, I would 
be much more aggressive. But I can't. It would mean breaking 
all sorts of protocols.
    But, again, I appreciate your work, and I wish you the 
best. Thank you.
    Chairwoman Waters. Thank you.
    The gentleman from Texas, Mr. Williams, is recognized for 5 
minutes.
    Mr. Williams. Thank you, Madam Chairwoman.
    And, Director, thank you for being here. Back in March, you 
told this committee that you were a capitalist, and before I 
start my questions I want to make sure that that is still the 
case and you haven't been tainted by all the conversations 
about socialism.
    Ms. Kraninger. Yes, Congressman, I am still a capitalist.
    Mr. Williams. Well, thank you for that. And also, we have 
had the word, ``worthless'' thrown around. I want to 
substitute, ``priceless'' for it.
    And also, I appreciate your being a capitalist, because I, 
too, am a devout capitalist and I think that competition is the 
best consumer protection.
    I want to read a quote from your Deputy Director, Brian 
Johnson, who said market activity is a product of competition. 
Firms competing over consumer dollars must offer products that 
offer a better value, better quality, or both. The consumer 
decides.
    And consumers can drive information about the product so 
through these processes, especially as it relates to quality, 
and Adam Smith the invisible hand of the market is itself a 
form of consumer protection.
    So, Director, do you share this same belief that the Bureau 
should be encouraging greater competition in a healthy 
marketplace to protect consumers who do need protection?
    Ms. Kraninger. I do agree, and Congress gave us that task 
specifically in the statutory language.
    Mr. Williams. Thank you.
    As you know, the final prepaid rule went into effect on 
April 1st, and I have been hearing there is some consumer 
confusion around mandated online disclosures.
    Are you aware of this issue, and are you willing to 
continue working through this unintended consequence that has 
come up since the implementation of this rule?
    Ms. Kraninger. I am embarrassed to say I am not aware of 
what you are referencing, but I will certainly look at that and 
the effective functioning of the prepaid rule.
    Mr. Williams. We will get with you, okay?
    Ms. Kraninger. Please do.
    Mr. Williams. Section 1071 of Dodd-Frank contains a mandate 
that CFPB conduct rulemaking on small business data collection.
    Now, while I understand the intent of this section, I am 
concerned, as some are, about the effects this could have on 
small business lenders and the cost of credit.
    So how do you plan on mitigating these potential pitfalls 
of Section 1071?
    Ms. Kraninger. Congressman, it is a mandatory rulemaking in 
the law and from that standpoint we are going to proceed with 
it.
    The first step under my leadership is actually hosting a 
symposium. It is going to take place in a couple of weeks here 
on November 6th, where we are going to have a conversation 
around the approaches that we could take to it.
    It is very clear from the statutory language that it is 
aligned with and borrowed some of the concepts from HMDA. So it 
is a data collection.
    I think that is something that we need to look at in terms 
of, this is not an area where there is a standardized data 
collection that happens, as you well know, in small business 
lending.
    So looking at that carefully is going to be important. The 
next step of the process then is the Small Business Regulatory 
Enforcement Fairness Act (SBREFA) process, so looking at small 
business impacts as we try to shape a proposal, moving forward, 
to carry out Congress' direction on this.
    But it is something we are going to move forward with but 
we are going to move forward in a very transparent and 
deliberative conversation.
    Mr. Williams. Great.
    Early this month, the President signed two Executive Orders 
that will limit the ability of agencies to circumvent Congress 
and public scrutiny when they are developing burdensome 
regulations.
    A 2018 report by the House Oversight Committee found that 
of the 13,000 guidance documents issued by Federal agencies 
since 2008, only 138 had been formally submitted to Congress 
and the U.S. Government Accountability Office (GAO).
    So, Director, how do you plan on continuing to make your 
agency transparent as you go through various rulemakings?
    Ms. Kraninger. I can tell you, sir, that when it comes to 
rulemaking and guidance, this is a conversation. I know of 
Congress' interest.
    I have looked at the law and looked at the Executive Orders 
that have come out on this, and we are committed to being 
transparent, issuing advance notices of proposed rulemaking, 
requests for information, inviting the public to comment and 
engage with us as we are looking to produce rulemakings that 
affect the marketplace so substantially. That is important.
    When it comes to guidance, you have made it very clear in 
the guidance on guidance, which is an interesting term to have 
to use. But that is merely an interpretation.
    It is not a requirement of law, and so we will continue to 
make those things clear as we provide answers to industry 
appropriately that they are asking questions about how to make 
sure they are in compliance with rulemakings and the law.
    Mr. Williams. Just quickly, you talked about your 
symposium. What is the biggest takeaway you think the general 
public can take away from that? I heard it was a success.
    Ms. Kraninger. Thank you. We have had two so far and it 
really is a commitment to transparency and a commitment to 
productive dialogue. Reasonable people can disagree. We can 
come at the facts from different vantage points.
    But agreeing to the facts is also something that I am 
hoping we can take away from this process, and it has been very 
helpful.
    Mr. Williams. Thank you.
    Main Street America appreciates you. Thank you.
    Chairwoman Waters. I now recognize Mrs. Maloney for a point 
of personal privilege.
    Mrs. Maloney. Thank you, Madam Chairwoman, for recognizing 
me for this point of personal privilege.
    I just wanted to clarify a comment I made at the end of my 
questions. I did not intend to say that Director Kraninger was 
worthless. I don't believe that is the case.
    I only intended to echo the chairwoman's point about the 
Bureau making consumers whole. I didn't intend to disrespect 
the Director personally, and I am sorry for the confusion that 
my statement caused.
    And I yield back.
    Chairwoman Waters. Thank you.
    The gentlewoman from Michigan, Ms. Tlaib, is recognized for 
5 minutes.
    Ms. Tlaib. Thank you so much, Madam Chairwoman. And 
Director Kraninger, thank you so much for being here again.
    Racial bias in mortgage lending is pretty well-documented. 
According to the Center for Investigative Reporting's Reveal 
Project, which examined about 31 million Home Mortgage 
Disclosure Act records, modern-day redlining persists in about 
61 metro areas, including the City of Detroit, which is in my 
district. It is over 80 percent African American, even though 
white borrowers got almost the same number of mortgages as 
Black borrowers in my City, again, despite that they are a 
smaller percentage.
    So the Home Mortgage Disclosure Act, as you know, Director, 
requires the collection reporting disclosure of information 
about mortgage lending that can be used to detect potential 
discrimination, which is really important to the people I 
represent at home.
    So to you, as Director, how important is the Home Mortgage 
Disclosure Act's role in assessing race as a factor in the 
mortgage market?
    Ms. Kraninger. It is, certainly, one of the capabilities 
that we have available to us and we use it extensively.
    In terms of the information that is provided, it provides a 
first stop as we are looking to conduct examinations, which we 
do a number of fair lending examinations specifically into 
mortgage entities engaged in mortgage origination servicing, 
looking at what data was provided, what that data might 
indicate, engaging in the back and forth with the entity over 
observations and their responses to that.
    So it is certainly useful in the process and an important 
part of the process.
    Ms. Tlaib. The CFPB's data browser unveiled with the 2018 
Home Mortgage Disclosure Act eliminated the disclosure reports 
which provided a more detailed breakdown of racial and 
ethnicity information by the lender. Is that correct?
    Ms. Kraninger. That the 2018 collection actually provided 
additional data? Yes.
    Ms. Tlaib. No, it eliminated providing that more detailed 
information about ethnic and racial background.
    Ms. Kraninger. I don't believe that is the case.
    Ms. Tlaib. Okay.
    Ms. Kraninger. But I am certainly happy to take that back 
to understand better where you are coming from, Congresswoman. 
But I believe that collection was--
    Ms. Tlaib. I would love to follow up and see if it is 
accessible to the public, the information, if you can actually 
go in there. I think in the last 20-something years, we have 
been able to, I believe, go back in there and actually see.
    So the reports have been available for more than 20 years, 
easy public access to lender data, including the mortgage data 
by race, ethnicities, is the entire purpose of the Act or just 
one--
    Ms. Kraninger. Yes. Okay. I think I understand where you 
are going now. There is some confusion over the--prior to 2018, 
the data was more limited in terms of the elements that were 
collected. But it was publicly available.
    With the 2018 data, we have additional fields, including 
the more detailed ethnicity information, and that is also still 
publicly available and, in fact, available in a much better 
manner because it is standardized now across all of the 
entities that are providing--what advocates and others who use 
the data used to have to do was go to each individual 
institution. Now, we make that all available on government 
websites, so it is something that they can get to.
    The question has been around the analytical tool called the 
Explorer that entities used to use or use, I should say, 
still--it is still available. It is still up. That is how they 
accessed the old data.
    The new data actually can't be searched through that tool. 
It is an IT upgrade issue.
    Ms. Tlaib. That is what causes frustration for advocates 
right now, Director, is that we need to address that right away 
because they are frustrated that the purpose of the whole Act 
and the data--it is kind of setting them back in not having 
easy access to that information.
    How long has it been that they haven't been able to 
reconcile that IT issue?
    Ms. Kraninger. It is only an issue with respect to the 2018 
data that was just released in full and it is just they can't 
use--
    Ms. Tlaib. When was that released?
    Ms. Kraninger. --the old analytical tool. In the end of 
August. So the old tool just can't be there. But there are new 
tools that we are continuing to build so that they will get 
back the same capabilities.
    But I know they are raising questions. This was not 
something that was intentional and it was certainly not 
something that was hidden, and it is something we will continue 
to talk with them about to make sure that we can make the 
analytical tools available, going forward, that are going to be 
robust.
    Ms. Tlaib. Thank you, Director.
    And if I may, Madam Chairwoman, I would love to be able to 
follow up. If you can follow up with the whole committee in 
regards to that.
    Again, it is really important, especially for families that 
I represent, that we have easy access to that data because 
right now it is very frustrating for advocates to be able to 
show that there is an issue with discrimination.
    Thank you.
    Chairwoman Waters. The gentleman from Arkansas, Mr. Hill, 
is recognized for 5 minutes.
    Mr. Hill. I thank the chairwoman.
    There is an old expression that where you stand depends on 
where you sit, and so it has been very amusing today to see a 
lot of outrage from your leadership of the Bureau now that my 
friends--and the shoe is on the other foot.
    We have a Republican head of the CFPB, and during my first 
4 years in Congress, we had Mr. Cordray, and it was Republicans 
who were criticizing the power of the Director of the CFPB.
    So I hope we can have some bipartisan consensus that the 
CFPB should be put on a budget and that the Director should 
have more accountability, whether that is a commission or some 
other forum.
    Thank you for being here today, and I appreciate the 
ranking member's questions about sandbox work in the FinTech 
arena. I wanted to just step just around that topic and say on 
the no-action letters that you are pursuing, have you had more 
FinTech companies now approach you for a no-action letter?
    Ms. Kraninger. There have been a lot of entities that have 
come forward in conversation with us, both when we issued the 
proposals last year and since we have gone final.
    The only no-action letter request that, I guess, has 
progressed far enough along is actually around the template 
that we had for entities that are providing funds or engaged in 
interactions with housing counselors.
    So that no-action letter that we issued with HUD's 
assistance to housing counselors is the continued more specific 
activity in this area.
    But we are certainly hoping that more entities come forward 
with some great ideas including in trial disclosures, too. 
Congressman, you didn't mention that one, but I am most excited 
about our opportunities there, too.
    Mr. Hill. And this no-action policy that you have 
undertaken here, do you see that being more broad? Because we 
had many debates with Director Cordray over the TILA-RESPA role 
and the nonbinding guidance and the very difficult-to-find 
webinars that the CFPB produced.
    Instead of just pursuing what other Federal agencies have, 
which is providing no-action guidance, and no-action that if 
they pursue it, they are not going to be pursued by compliance 
officers, are you going to extend that to other policies at the 
CFPB?
    Ms. Kraninger. Certainly, we are looking at our opportunity 
to be as transparent and clear as possible about what the rules 
are that--
    Mr. Hill. Thank you.
    I just would urge you that webinars are not guidance. 
Webinars are not helpful. Your website is not that supportive 
of the private sector.
    Real guidance that is legally binding is what allows the 
private sector to move on, and the idea of a no-action letter, 
I think is a good suggestion.
    Recently, I was at a Bank Policy Institute event and 
Covington & Burling presented a paper that they had written on 
artificial intelligence, and they made a suggestion that the 
CFPB should lead the effort to modernize the regulatory 
framework for use of artificial intelligence in credit 
underwriting in light of your authority to implement the 
nation's Federal consumer protection laws that regulate banks 
and nonbanks in this area.
    Is that position something you agree with, and is that 
something you are pursuing?
    Ms. Kraninger. I have seen the paper and it is something 
that I have asked staff to look at carefully and see what we 
can do.
    We have been engaged in conversations both with industry 
and with our interagency partners, with the States, around what 
additional clarity or actions might be needed in this area.
    So it is an ongoing conversation at this point but 
something we will certainly take seriously.
    Mr. Hill. Good. However, our FinTech and AI Task Forces, on 
a bipartisan basis, have heard really interesting testimony in 
this regard, and if that clarity could be provided by the CFPB 
and you felt that was a way for you to determine that the use 
of credit underwriting models, machine-learning models, were, 
in fact, compliant with fair credit reporting and fair lending, 
that would be a big help, and drop, I think, agency costs and 
blocks to innovation around the country.
    Recently, I introduced H.R. 4231, the Credit Access and 
Inclusion Act, which would allow public housing authorities, as 
well as utility and telecom companies to report payment data to 
the credit reporting agencies. Is that something the CFPB 
supports?
    Ms. Kraninger. I am aware of your legislative proposal, 
sir, and generally try to stay away from providing particular 
feedback on them. But we can provide technical assistance if 
you would like to get specifics back on your bill. Overall, 
though, I would say that there are opportunities, real 
opportunities that come from some of these alternative data 
models, and that is something we are encouraging in a lot of 
different ways, including with the innovation policies.
    Mr. Hill. Good. Thank you. I yield back.
    Chairwoman Waters. The gentlewoman from Virginia, Ms. 
Wexton, is recognized for 5 minutes.
    Ms. Wexton. Thank you, Madam Chairwoman, and welcome back, 
Director Kraninger. It's nice to have you back with us again.
    As you mentioned in your opening remarks, the 2019 report 
from the Consumer Bureau student loan ombudsman was released 
yesterday. Is that correct?
    Ms. Kraninger. Yes.
    Ms. Wexton. And have you had an opportunity to review that 
report?
    Ms. Kraninger. Yes, I have.
    Ms. Wexton. Okay. And I am not asking if you have committed 
it to memory, just if you had a chance to read it.
    Ms. Kraninger. That is helpful. Thank you.
    Ms. Wexton. Super. I have as well. I have it here. And I 
always like to look at the recommendations, because that is 
where we, as policymakers, see things we can make changes to. 
And there is a recommendation in the report that says, ``With 
respect to developing and sharing data analytic tools that 
support civil and criminal enforcement actions, and 
particularly with regard to the data that those tools rely 
upon, policymakers should consider providing limited exceptions 
to existing statutes which would then enable increased 
flexibility in changing data elements collected, and 
complaints, so that such data elements and complaints may be 
more reflective of, and responsive to, the changing 
environment.''
    Do you agree with that recommendation?
    Ms. Kraninger. Certainly, I appreciate the ombudsman's 
ability to make that recommendation, and I can say that we look 
forward to talking more about it. I think there is always an 
opportunity that additional data will help, and shared analytic 
frameworks, understanding each other's analytic frameworks is 
important to that.
    So, I support the principle. I just want to understand 
better what is behind it, and look at actions that the Bureau 
should take, just as you are looking at actions that lawmakers 
should take.
    Ms. Wexton. So do I, because this recommendation, to me, 
sounds like a bunch of gobbledy-gook. It sounds like something 
that somebody might say in a term paper when they are trying to 
get a bunch of buzzwords in, but it doesn't seem to have much 
substance. Can you give me an example of what kind of exception 
to an existing statute you think needs to be made?
    Ms. Kraninger. The ombudsman does have a measure of 
independence, so I would say that this is his recommendation, 
that I know he would be happy to come to talk to the committee 
more about further. But I would say that I believe there might 
be some reference to--
    Ms. Wexton. You are not aware of any particular statutes or 
any particular datasets that he is recommending be changed?
    Ms. Kraninger. Not at this time, no.
    Ms. Wexton. Thank you. So continuing on the issue of 
student loans, how many people are currently working in CFPB's 
student loan ombudsman office?
    Ms. Kraninger. Currently, there is just one, but in 
addition to that, we have four staff in the student section, in 
the consumer education division.
    Ms. Wexton. So there is just one, and that is Robert 
Cameron, correct?
    Ms. Kraninger. That is correct.
    Ms. Wexton. All right. And are you aware that under the 
previous Administration, there were between five and seven 
full-time staff in addition to the Director?
    Ms. Kraninger. I am aware that there were never seven full-
time staff. There were, in fact, five. We are going to 
ultimately have seven between the student section and the 
ombudsman's office, so that when we look at comparing apples to 
apples in terms of the functions there will be more staff 
dedicated to that activity.
    Ms. Wexton. When do you expect to make those hires?
    Ms. Kraninger. The fifth hire in the student section is 
underway now. It always takes longer than I wish that it would, 
but that position has been posted. So that should be done 
probably in the next 2 to 3 months--
    Ms. Wexton. Great.
    Ms. Kraninger. In 2 months, I hope.
    Ms. Wexton. Before Mr. Cameron was appointed the CFPB's 
student loan ombudsman, he was one of the top attorneys at the 
Pennsylvania Higher Education Assistance Agency, or PHEAA. Is 
that correct?
    Ms. Kraninger. That is correct, in addition to 20-plus 
years of public service to the State of Pennsylvania, and 
military service.
    Ms. Wexton. And that is the same PHEAA that has been sued 
by the Commonwealth of Massachusetts and the State of New York 
for unfair practices with regard to their student loan 
servicing?
    Ms. Kraninger. That is correct, and it is also, again--
    Ms. Wexton. And this is the same company that operates 
FedLoan Servicing?
    Ms. Kraninger. Yes. They are a contractor to the Department 
of Education.
    Ms. Wexton. And FedLoan Servicing is accused of mismanaging 
the Public Service Loan Forgiveness Program. Is that correct?
    Ms. Kraninger. Again, you are citing what is public 
information about ongoing litigation.
    Ms. Wexton. So it is correct.
    Ms. Kraninger. Yes.
    Ms. Wexton. Okay. And you do understand, just for the 
record, that the role of the ombudsman is to serve as an 
advocate for for student loan borrowers, not the student loan 
industry, right?
    Ms. Kraninger. And again, we are talking about a person who 
has decades of public service experience and military service 
experience and who actually knows how this process works.
    Ms. Wexton. I understand that. But I am just asking you, as 
the Director of this agency, for the record, to say whether it 
is your opinion that the ombudsman is there to represent 
consumers, not the agencies.
    Ms. Kraninger. And I understand that you are saying that, 
but I am understanding, also, why you are asking this question, 
and I don't appreciate the impugning of Mr. Cameron's motives 
or experience.
    Ms. Wexton. I am not impugning anybody. I just wish that 
you would answer the question. So is it the role of the student 
loan ombudsman to act on behalf of borrowers, to represent 
them?
    Ms. Kraninger. Yes, just as I have said, it is the mission 
of the Bureau to protect consumers and that is a mission to 
which we are dedicated.
    Ms. Wexton. Very good. So that was not so difficult.
    So what happens if Mr. Cameron observes evidence of 
misconduct from PHEAA? Would he recuse himself? Have you had 
any discussions about that?
    Chairwoman Waters. The gentleman from Georgia, Mr. 
Loudermilk, is recognized for 5 minutes.
    Mr. Loudermilk. Thank you, Madam Chairwoman. Director, 
thank you for being here. I know it has been a long day. As you 
can see, after we get a chance to ask our questions many are 
going to leave, but you are kind of stuck here.
    I appreciate your transparency. We did have an issue with 
the previous Director, Mr. Cordray, with transparency. There 
were quite often references made that he was not required to 
share with us. I don't know whether that is true or not, but 
under the development of the CFPB, with very little oversight 
from Congress, it appeared that, at least under his belief, he 
didn't have to be as forthright.
    I thank you for your transparency. Transparency is 
important, but it is also important for transparency that you 
are given the opportunity to actually be transparent by 
answering the questions. And I want to apologize to you for--I 
mean, there have been insinuations made that you have taken 
certain actions without being given the opportunity to expand 
upon those.
    Believe it or not, some have political narratives, that if 
you are going to bring up information contrary to what they 
perceive to be true, or what they want to be true, sometimes 
they will just shut you down. We are seeing that take place not 
only on this committee but in other committees dealing with 
other issues going on here today. I can promise you I am going 
to give you plenty of opportunity to answer the questions, 
because it is important not only for us to know but for the 
American people, to know what is going on.
    Something else I observed is there are some who have taken 
the idea that being fair to business is somehow anti-consumer, 
and I don't see that as being so. Most businesses--not all, but 
most businesses--highly value their customers. Because of the 
competitive free market environment we are in, if they don't 
concern themselves with the welfare and the service they 
provide to their customers, their customers will ultimately go 
somewhere else. And so, I think that is important for us to 
understand, that part of your role to ensure that consumers are 
being taken care of is to make sure that businesses are treated 
fairly as well. And I think it is important to bring that up.
    With that, there is a concern I had--and I wrote you a 
letter a couple of weeks ago--about the Bureau's remittance 
rule. We are coming up on a situation where, for international 
money transfers, Dodd-Frank requires the banks to provide full 
disclosure of exactly what the cost of that transfer is going 
to be, and in most cases, or in a lot of cases, they don't 
know, because it is out of their hands. And so, there has been 
an exemption that is going to expire in July of next year, for 
that rule.
    That is a concern of mine because ultimately it is going to 
affect consumers, because if these banks are required to report 
something factually that they have no way of doing, many of 
them will just get out of the business, which will reduce the 
competition, which will ultimately affect the consumers.
    So my question is, the Bureau has the authority under 
Sections 904 and 919 of the Electronic Fund Transfer Act, and 
Section 1032 of the Dodd-Frank Act, to provide other types of 
exemptions for this. Do you plan on using any of those 
authorities or other rulemaking procedures to ensure consumers 
don't lose access to these services?
    Ms. Kraninger. Congressman, I appreciate you raising the 
question. As you know, we issued a request for information 
where we pointed out the fact that this ability to estimate is 
expiring next July. We wanted to make sure that was widely 
known, and that Congress certainly knew that provision and that 
particular exception would be going away, consistent with the 
law.
    We also asked for input about the thresholds, frankly, of 
what--as you recall, the Dodd-Frank Act talks about, in the 
manner--or in the course of normal business, that was the 
amount of remittance transmission that would require this kind 
of reporting and subject the entities to the rule. So we are 
looking precisely at that. The fall regulatory agenda has not 
been issued yet, but you will see an action associated with 
this on it. And we are looking carefully at what we can do, 
again, consistent with our authorities and the rulemaking 
process, to reduce this burden, recognizing that we want to see 
entities continue to provide remittances to their customers who 
need that service.
    Mr. Loudermilk. Historically, if there are fewer businesses 
providing a service, there is less competition. Generally, the 
effect that I have seen on the consumers is without 
competition, which keeps prices low, businesses can and often 
do raise their prices. Is that a concern?
    Ms. Kraninger. Yes. Generally, yes.
    Mr. Loudermilk. Thank you. I yield back.
    Chairwoman Waters. The gentlewoman from Pennsylvania, Ms. 
Dean, is recognized for 5 minutes.
    Ms. Dean. Thank you, Madam Chairwoman. And thank you, 
Director, for being here and reporting to us again.
    I looked, with interest, to your report that ends spring of 
2019, and I wanted to renew my conversation with you about a 
particular area that I believe is within your jurisdiction, 
that I am concerned about.
    The report struck me in a couple of ways. Number one, I was 
struck by the significant problems issue. You have a section 
that begins the report, really, with significant problems faced 
by consumers. And in there you have three pages: natural 
disasters in credit reporting; first-time homebuying 
servicemembers; and consumer insights on bill paying. I was 
struck by the lack of information in there. I was struck by the 
lack of depth or density. And I was also struck by the absolute 
absence of a conversation about the student loan debt crisis.
    Do you know the total student loan outstanding debt in this 
country? Do you know that number?
    Ms. Kraninger. Yes. It is approximately $1.6 trillion.
    Ms. Dean. Yes. And you didn't think that that earned a 
place in significant problems for consumers, under your 
jurisdiction?
    Ms. Kraninger. The semi-annual report is really providing 
Congress a laundry list of things that we had done.
    Ms. Dean. Did you think student--did that come across your 
desk?
    Ms. Kraninger. The private education loan ombudsman did 
issue his report and address very specifically a couple of 
areas that--
    Ms. Dean. Well, let's talk about the ombudsman. So, in any 
event, I am just letting you know, I was puzzled by the 
absolute lack of a conversation about student loan debt, and 
noticed that you did not describe any major actions that you or 
your agency had taken to protect student buyers, other than two 
legal actions you note in here that were started before your 
tenure. They were from 2017. I think you started in December of 
2018.
    So just the absence of a conversation around such a crisis, 
and a borrower's issue, instead devoting half a page to helping 
people pay their bills by maybe changing a date of the bill. It 
just looked like an absence of content, frankly.
    Finally, hiring a student loan ombudsman, you did hire--and 
I am going to piggyback on Representative Wexton's good 
questions--Robert Cameron. The position was left open for 300 
days, is that correct?
    Ms. Kraninger. It was open for 300 days, yes.
    Ms. Dean. And then you hired him, you put him in place, and 
he has no support staff at this point. He is alone, as the 
ombudsman? You just told us that.
    Ms. Kraninger. That is correct, that he is an office of 
one, and I have asked him to provide--
    Ms. Dean. Again, the gravity of the problem--
    Ms. Kraninger. --the body of support that he needs.
    Ms. Dean. --300 days of vacancy, and a single man sitting 
in an office trying to deal with a $1.6 trillion problem.
    Also, the appearance of impropriety. The mission is to be a 
protection for the borrowers, and yet the appointee, after a 
300-day search, is somebody who comes from the servicing side 
of the world. No impugning of the gentleman's credentials, but 
it doesn't seem like a good fit for the mission of what this 
ombudsman should be doing.
    I noted another thing. You said he is ombudsman for the 
private market. Is that correct? Private loans only?
    Ms. Kraninger. That is the title that the statute gave him.
    Ms. Dean. Okay. Do you know the breakdown between Federal 
student loan percentage and private student loan percentage?
    Ms. Kraninger. The private student loan origination as of 
now is roughly around 9 percent of the market.
    Ms. Dean. That is correct, leaving 91 percent of the market 
Federal jurisdiction--Federal origination of loans.
    Are you asking us to change this title so that it would 
include, and give jurisdiction to that ombudsman, of Federal 
student loans as well? Since he has 100 percent of the problem, 
or we have 100 percent of the problem, why would he be looking 
at only 9 percent of the problem?
    Ms. Kraninger. I will tell you his report does articulate 
certainly what is happening on the Federal side as well as the 
private side, so that is in there.
    Ms. Dean. Okay, but that is apparently not his charge, 
according to you.
    Ms. Kraninger. It is his title, as Congress gave it to him.
    Ms. Dean. Does the CFPB, outside of the ombudsman, have 
jurisdiction over the Federal student loan debts?
    Ms. Kraninger. We have jurisdiction over consumer financial 
protection law, which does apply in, again, all of the cases 
that we could say around student loans.
    Ms. Dean. So you take ownership of that, in the absence of 
the ombudsman statute saying all student loan debt. Would you 
advocate for us to change the statute, and make sure the 
ombudsman actually oversees all student loan debt complaints?
    Ms. Kraninger. I defer to Congress. If Congress wants to 
take that action--
    Ms. Dean. Don't you see, as the leader of this agency, 
there is a huge gap, a 91 percent gap?
    Ms. Kraninger. As I noted already, we do actually engage 
with the Department of Education on Federal student loans, as 
well as the private education.
    Ms. Dean. Thank you. I renew my concerns. Thanks.
    Chairwoman Waters. The gentleman from Ohio, Mr. Davidson, 
is recognized for 5 minutes.
    Mr. Davidson. Thank you. I appreciate, Director Kraninger, 
your testimony. I appreciate the work of you and the team there 
at the Consumer Financial Protection Bureau really looking 
after America's consumers, and doing it in a way that, as one 
of my colleagues asked, not a trick question, that is in 
accordance with the law. Frankly, some of us did share concerns 
that there were activities that were taking place there, while, 
maybe not inherently illegal, because of the vast authority 
directed to the Director of the CFPB or the agency, or applying 
standards that were clearly not spelled out in law.
    So I think that as a matter of course, most people would 
agree that when consumers have clearly defined laws, they are 
better protected. Would you agree with that assessment?
    Ms. Kraninger. Yes, I would.
    Mr. Davidson. I feel particularly concerned about a body of 
law that is just void in the United States, which is with 
respect to digital assets. When you think about blockchain, a 
lot of that space, and the innovation around the world, is 
taking place in the United States of America. The innovators 
are here, they are doing research here, they are coming up with 
great companies here, but a lot of them are finding that they 
need to raise capital outside the United States. They are 
leaving the United States, not to avoid our laws but to find 
some laws where they have legislative certainty.
    And, unfortunately, the SEC has a backlog of hundreds of 
requests for no-action letters, with companies that want to 
just be clear that the SEC is not going to come back after the 
fact and say, this is a security that you are involved in. They 
have only issued two, and when Director Clayton was here, I 
referred to that process as essentially, all of the charm and 
inefficiency of a Third World power structure. And in some 
ways, all of the CFPB structure suffers from that same flawed 
power structure, as you and others have alluded to, frankly, a 
lot of concerns about the constitutional structure of it, but 
even the efficacy of it. The base structure of the CFPB could 
improve.
    When you look at this void in digital assets, I applaud you 
for recognizing it and creating this process for the prospect 
of no-action letters from the CFPB. But I have the same 
concerns, frankly, that on a company-by-company basis, we are 
still going to look at a patchwork. And what we really need 
here is a law. Do you think legislative certainty that would 
spell out what is and is not a security could protect consumers 
who were, in many cases, defrauded by initial coin offerings? 
And some people share the same concerns about initial exchange 
offerings today.
    Ms. Kraninger. Congressman, I recall well your interest in 
this topic, and I share it. It is an important one. As you 
know, the Dodd-Frank Act stipulated that things identified as 
securities and commodities under the jurisdiction of the SEC 
and the CFTC are outside of the CFPB's purview. So in many 
respects, I also am at the tail end of that, looking at the SEC 
and the CFTC's leadership, in terms of how they define where 
they are playing in this arena.
    It is something that the interagency is discussing, and the 
CFPB is there, appropriately, for that conversation. So that is 
at least the status of the way that this arena is looking.
    Mr. Davidson. Yes, and thanks for respecting the boundaries 
that are there. To some respect, it is not like the SEC, the 
CFPB, and the FTC aren't supposed to protect consumers as well. 
It is not like the United States suddenly realized we should 
protect consumers, and in the Dodd-Frank Act, created the CFPB. 
We were already supposed to be protecting consumers with 
numerous other agencies, but, of course, creating the CFPB 
highlighted that, and, frankly, gave a lot of extra resources 
to that cause.
    When I think about UDAAP and your reference to that, one of 
the ways is that you can't just put whatever you want in the 
terms and conditions. Are there abuses of these terms and 
conditions? And top of mind for me is privacy. So when we look 
at lending, for example, we have all kinds of laws there, but 
in the United States we also have a regulatory void with 
privacy. Who owns the data? Can somebody just say, in a 6-point 
font and 400 pages, that in exchange for free access or free 
stuff, you give over your freedom and your right to privacy?
    Are you looking at privacy in any way as a consumer 
protection?
    Ms. Kraninger. Again, certainly, I am personally concerned 
about privacy, and we are looking at, and very carefully 
protecting the privacy rights under the Act, consistent with 
the data that we collect. When it comes to privacy regulation, 
the Dodd-Frank Act specifically excluded from our jurisdiction 
the Gramm-Leach-Bliley Act safeguards. So, there are some 
limits to our authority.
    Mr. Davidson. Clearly, for Gramm-Leach Bliley, but for the 
individual consumer, perhaps this body, this robust body that 
passes and makes our laws will get to privacy and digital 
assets.
    With that, I yield back.
    Chairwoman Waters. The gentleman's time has expired. The 
gentlewoman from Massachusetts, Ms. Pressley, is recognized for 
5 minutes.
    Ms. Pressley. Thank you, Madam Chairwoman. Director 
Kraninger, it is estimated that debt collectors contact 
consumers over a billion times a year, a billion. We need 
solutions of scale to address this problem. Millions of 
Americans find themselves behind on one bill, then two, then 
three, usually because of a disruptive life event: a death; 
illness; being laid off; or predatory loans. And before they 
know it, they are debt-trapped. CFPB's proposed debt collection 
rule falls short of anything that an agency with ``consumer 
protection'' in its name should feel comfortable offering.
    Director Kraninger, there has been quite a bit of 
correspondence between my office and yours, so I am 
appreciative of the opportunity to follow up on that 
correspondence in person. As you are well aware, Chairwoman 
Waters, Representative Porter, and myself wrote to you 
outlining our many concerns about your proposal. This proposed 
rule would allow debt collectors and collection attorneys to 
attempt to collect old, expired debt, decline to translate 
important notices, and claim a safe harbor from liability if 
they make false, deceptive, or misleading statements in court 
filings, among other things.
    Director Kraninger, yes or no, under your proposed rule are 
consumers required to affirmatively consent to being contacted 
by debt collectors via text or email message? Do they have to 
affirmatively consent? Yes or no?
    Ms. Kraninger. That structure of consent is provided by 
virtue of the fact that we have communicated--
    Ms. Pressley. It is a simple question.
    Ms. Kraninger. --with creditors, using those modes of 
communication. So there is a limitation on the way that they 
can be communicated with via email or text.
    And I will also note, Congresswoman, that this is a 
proposal. I think the interest that we have is to set some 
bright-line rules where we can. We knew that there would be 
much feedback on this. We asked 162 questions in that proposed 
rule to get the feedback--
    Ms. Pressley. I am reclaiming my time. I appreciate that.
    Ms. Kraninger. Thank you.
    Ms. Pressley. Let me just get on to my questions. So one 
more time, yes or no, do consumers have to affirmatively 
consent?
    Ms. Kraninger. In the prior process, they probably--
    Ms. Pressley. Okay. I am going to move on. To be clear, 
under your rule, a consumer does not give a debt collector 
permission to contact them via text message or email before the 
messages start. Is that correct? Yes or no?
    Ms. Kraninger. Again, because they used that as a prior 
mode of communication, and they can unsubscribe at any point.
    Ms. Pressley. I am reclaiming my time. They can opt out, 
but they are in this before they are even aware that they are 
in it. They can opt out, but they are not affirmatively 
consenting to be contacted in this way. Those are the facts. I 
have always believed that people closest to the page should be 
closest to the power, driving and informing the policymaking, 
and it just feels to me that that is not the case here.
    So as a consumer, Director Kraninger, what kind of phone 
plan do you have? Do you have unlimited texting? Yes or no?
    Ms. Kraninger. Yes, I do.
    Ms. Pressley. Okay. So without an unlimited plan, the cost 
of sending and receiving SMS text messages can range from 10 to 
30 cents per text, costs that can quickly add up for those 
without an unlimited plan.
    Yes or no, under your proposed rule, would collectors be 
allowed to send consumers an unlimited number of text messages?
    Ms. Kraninger. Only under certain circumstances. I imagine 
someone without an unlimited plan--
    Ms. Pressley. Yes or no?
    Ms. Kraninger. --would not provide their number for any 
creditors to contact them--
    Ms. Pressley. Okay. Reclaiming my time.
    Ms. Kraninger. --through that phone and through text.
    Ms. Pressley. Would collectors pay for the costs associated 
with these texts? Yes or no?
    Ms. Kraninger. To the extent that there is a charge, the 
consumer would be charged under the scenario that you are 
painting.
    Ms. Pressley. Right. The consumer would be charged. So 
again, that is not consumer protection.
    Ms. Kraninger. Consistent with their service agreement that 
they have with their provider.
    Ms. Pressley. I want to bring into this space the consumers 
who have been contacted, harassed, 1 billion times, and often 
for debt that they didn't even incur. So let's say I am a 
consumer with a prepaid or limited phone plan and each text 
costs me 20 cents to receive. As a result of some medical event 
or other disruptive life event that happens to everyone, 
because hardship does not discriminate, I now have 4 debts in 
collection, and each collector texts me 5 times a day. This 
happens. So at 20 cents a text, I would have to pay an 
additional $120 a month. That is over $1,400 a year for people 
who are already struggling to make ends meet, and to pay these 
debts, even if they rightfully incurred them.
    Ms. Kraninger. Under the rule, they would unsubscribe, so 
they would pay $1--actually, you said 4 debts, so we are 
talking about 80 cents.
    Ms. Pressley. Reclaiming my time, that is why I introduced 
H.R. 4664, the Monitoring and Curbing Abusive Debt Collections 
Practices Act, which will prohibit the issuance of any rule 
that would allow for this type of consumer harassment. When 
debt despair is on the rise, and debt collection is the second-
most complained-about issue for our agency, this proposed rule 
is simply unacceptable.
    Thank you, and I yield back.
    Chairwoman Waters. The gentleman from Tennessee, Mr. 
Kustoff, is recognized for 5 minutes.
    Mr. Kustoff. Thank you, Madam Chairwoman, and thank you, 
Director, for being here this morning and this afternoon. I 
appreciate the CFPB's desire to replace the Qualified Mortgage 
(QM) patch that applies to the entire market and really does 
not give the Government-Sponsored Enterprises (GSEs) an 
advantage over other mortgage options. Given the importance of 
QM to lenders and consumers alike, I think we can all 
understand the uncertainties about what the future of the QM 
rule is going to be and how that affects the market.
    What do you think about the qualified mortgage, essentially 
the definition of the mortgage that is well-written and without 
the complex or risky loan features? Do you have an opinion 
about what will replace it and what it will look like?
    Ms. Kraninger. Congressman, we issued an advance notice of 
proposed rulemaking to solicit some feedback on key questions, 
including the one that you are asking, very much soliciting 
input on this and looking at what we will take as a next step. 
We have heard concerns around, frankly, the requirements that 
would meet the ability to repay under Appendix Q, that being a 
challenge, in terms of being able to issue a qualified mortgage 
in the current structure. And so, we are looking very carefully 
at those things and thinking about what a responsible path 
forward would be.
    Mr. Kustoff. Thank you, Director. I assume that one 
objective would be to provide consumers with equal or improved 
access to qualified mortgage loans relative to what we see from 
the current rule.
    Ms. Kraninger. I will say there is a natural tension 
between the ability-to-repay requirement that Congress put into 
the statute and is now very much a part of the mortgage 
process, and access to credit, in general. So, looking at that 
balance is something that is part of the process, yes.
    Mr. Kustoff. Thank you. I know you have had a number of 
questions today about the small-dollar lending rule. If I could 
ask you specifically about Subpart C in the rule, to add 
additional compliance burdens on institutions and payment 
processors due to conflicts with existing laws and regulations 
in payment system rules, could you address that and what the 
CFPB is looking at in terms of trying to address those issues?
    Ms. Kraninger. We did receive a petition on the payments 
provision to consider that, and currently the payments 
provision is stayed by the court, caught up in the larger 
issues around the payday rule and reconsideration of the 
underwriting requirement.
    I can tell you that we will look at that petition. Our 
focus right now is concerns around the factual and legal basis 
of the payday 2017 rule, and the underwriting provisions. So we 
are moving forward on that, looking at the 19,000 comments that 
we received, some of which did address the payments provision. 
So we will look at that them, too, as part of that process.
    Mr. Kustoff. I know that Congressman Barr asked you a 
number of questions about the payments provision. Do you have 
any concern that the small-dollar loan rule could potentially 
cause harm to consumers?
    Ms. Kraninger. Congressman, there is a specific assessment 
that goes along with the rulemaking, and so the access-to-
credit issue and competition in this space is something that we 
looked at and considered. It is something that we got feedback 
from. The presence of the States in this marketplace and what 
the rules are in different States, and experimentation and 
experience associated with what the States have put into place 
is also a factor, and something that we need to look at too.
    Mr. Kustoff. From a practical standpoint, what are the 
payment alternatives for consumers, if they lose the option of 
using electronic payments? Specifically, Congressman Barr asked 
about debit cards, for example.
    Ms. Kraninger. That is definitely something that has been 
raised as a concern, what the alternatives are, debit or going 
back to cash payments or other things that make this more 
challenging. That is definitely something we need to look at.
    Mr. Kustoff. In my remaining time, Congressman Davidson 
asked about UDAAP. Could you give guidance as to what is 
considered abusive? What do you consider abusive, under the 
statute?
    Ms. Kraninger. Congressman, we have actually taken 
enforcement actions in the past around that term. It is 
something that we are actively looking at right now. I don't 
want to opine here in a way that is going to mislead people in 
terms of what an ultimate decision makes, what that looks like, 
but it is something that I take seriously. It is something that 
we need to be transparent about and provide.
    Mr. Kustoff. Thank you, Director. I yield back.
    Chairwoman Waters. The gentleman from California, Mr. 
Sherman, is recognized for 5 minutes.
    Mr. Sherman. Thank you. In July of 2019, the CFPB released 
an advance notice of proposed rulemaking (ANPR) for the QM 
patch. One out of every six mortgages made last year relies on 
the QM patch. That patch is set to expire, I believe, in very 
early 2021. And the tendency in government is to maybe issue 
something else like a day before the old thing expires. 
Business can't work that way. Can you commit to keeping the 
patch in place for at least one year after you put out the 
rule, so that businesses know they can continue to operate as 
they shift their business to any new rule you issue?
    Ms. Kraninger. Congressman, I share your interest in making 
sure there is a smooth transition, and it being transparent 
about what is going to be required. That is why we issued the 
ANPR as early as we did, to forecast this. We asked 
specifically for input on how long a transition period should 
be, and we will be moving forward on sharing that perspective. 
We are still a year and a couple of months away, and I can 
pledge to you that we will be timely in getting that back out.
    Mr. Sherman. And you have a full appreciation of how 
difficult it is for every company, particularly the smaller 
ones, to be able to move from one system to the other.
    Another issue is the Property Assessed Clean Energy (PACE) 
loans. It is wonderful to see people get more efficient air 
conditioners, but we obviously need underwriting standards. In 
March, the Bureau issued a notice of proposed rulemaking, but 
it doesn't appear as if you have done anything since then. Are 
you moving forward to protect homeowners from perhaps signing 
up for loans they can't afford to pay back, that the industry 
says are not loans; they are just liens against your house that 
you have to pay. Are you moving forward?
    Ms. Kraninger. Yes, Congressman, we are moving forward. As 
you know, we were directed to do the rulemaking, so we are 
doing it. The next step is really going to be a data collection 
to make sure we can understand the unique nature, as Congress 
told us to, of this marketplace, and how to establish ability 
to repay, that is going to acknowledge and make use of that 
unique faction.
    Mr. Sherman. And hopefully, with all of the appropriate 
disclosures. I hope that you know, from the homeowner's 
standpoint, it does not matter whether it is a loan to build a 
new bedroom or a loan to improve your air conditioning system. 
It is true, the air conditioning system might save some 
electricity, and help the planet. But basically, from the 
homeowner's standpoint, it is a home improvement loan, and they 
need the same kind of protections, whether it is for a bedroom 
or an air conditioning system.
    Dodd-Frank Section 1022 allows your Bureau to exempt 
certain classes of rulemaking at its discretion, to exempt 
institutions of a certain size, or to have one rule applied to 
the giant institutions and a separate rule applied to smaller 
or medium-sized institutions. Are you fully using your 
authority under Section 1022 to make sure that the smaller 
institutions have rules that they can officially abide by?
    Ms. Kraninger. Congressman, I can tell you it comes up in 
every rulemaking context, and it is something that we need to 
carefully understand and weigh, in terms of what should apply, 
to which entities, and how, and what the cost burdens are. 
Congress has repeated that in many different contexts, 
including by requiring us to take into consideration 
specifically small business impacts of our rulemaking. So it is 
certainly something that we look at and examine carefully.
    Mr. Sherman. And you are working on these new debt 
collection rules. You have heard about them from my colleagues. 
It is my understanding that they are supposed to apply onto 
third-party debt collectors, or would they apply to the first 
party, where you have the institution itself collecting the 
amount of money owed to it?
    Ms. Kraninger. This rulemaking, under the FDCPA, applies to 
third-party debt collectors only.
    Mr. Sherman. Thank you.
    Chairwoman Waters. The gentleman from Indiana, Mr. 
Hollingsworth, is recognized for 5 minutes.
    Mr. Hollingsworth. Good afternoon, Director. Thank you so 
much for being here today. I really appreciate your efforts 
undertaken to reform the CFPB, but also to ensure that we 
remain focused on protecting consumers.
    I know something that we have talked a lot about today is 
the small-dollar rule, and I really appreciate, frankly, your 
work on the small-dollar rule and the continued effort to 
ensure that Americans have access to small-dollar loans that 
are really, really important to them making ends meet. Much ink 
has been spilled in conversation in this committee about the 
individuals back home, like in my State of Indiana--
occasionally, their transmission goes out, or occasionally, 
they have an unexpected bill, and they need these small-dollar 
loans in order to make ends meet, to meet the needs of their 
daily or weekly cash flow. And I know how important that is.
    As Einstein famously said, ``Everything should be made as 
simple as possible, but no simpler,'' and I think in 
government, we should try to solve the problem in its narrowest 
capacity, not too narrow but not too broad. One of the concerns 
I have about the small-dollar rule that the Bureau has 
promulgated is that it perhaps is too expansive, that it can 
include things that we wouldn't traditionally consider small-
dollar installment loans. And I wanted to inquire if you had 
any plans to further narrow the rule to try to exclude those 
things that aren't traditionally considered small-dollar 
lending.
    Ms. Kraninger. I have heard--
    Mr. Hollingsworth. I think that we have had some comments 
on this back-and-forth before.
    Ms. Kraninger. Yes.
    Mr. Hollingsworth. And I know that you have made progress 
on that since our last conversation, and I wanted to hear a 
little bit more about it.
    Ms. Kraninger. It is certainly something that we are aware 
of, and that we have received comments on. The focus at the 
moment is on the underwriting provisions and the 
reconsideration rule.
    Mr. Hollingsworth. Correct.
    Ms. Kraninger. But it is something that has been raised, 
and we have a petition specifically to look at the payments 
provision.
    Mr. Hollingsworth. Great. I really appreciate that, and I 
certainly think that the bulk of your efforts should be where 
you said it was going. But I think this is an important aspect 
as well, because the last thing I would want is for us to solve 
this problem at the small-dollar level but then have an impact 
on the medium-dollar level, right, something that was 
unintended. I find myself cleaning up a lot of unintended 
consequence messes up here, and I prefer just to get it all 
done in one fell swoop, because I think that is the best 
outcome for the consumer in the long run.
    So I really appreciate your continued efforts, and 
continued focus on this would be much appreciated.
    Thanks so much. I yield back.
    Chairwoman Waters. Thank you. The gentlewoman from Iowa, 
Mrs. Axne, is recognized for 5 minutes.
    Mrs. Axne. Thank you, Madam Chairwoman, and thank you, 
Director Kraninger, for being here again today. I appreciate 
it. Just a few quick questions to start out.
    Director, if you want to go out to eat, you can choose the 
restaurant you go to, correct?
    Ms. Kraninger. Yes.
    Mrs. Axne. And if you don't like the food there--
    Ms. Kraninger. As long as there is availability.
    Mrs. Axne. What is that?
    Ms. Kraninger. As long as there is availability there.
    Mrs. Axne. Yes. We don't have those problems in Iowa like 
D.C., I don't think. But if you don't like the service or the 
food, you have a choice to go someplace else. Is that correct?
    Ms. Kraninger. Yes, that is true.
    Mrs. Axne. And if you need a credit card, you still have 
that same exact choice, right? You can go elsewhere if you are 
unhappy with the service, correct?
    Ms. Kraninger. Yes, I would say that is correct. Again, 
there are pros and cons to every choice.
    Mrs. Axne. Got it. So, my sons are in high school. I have 
two boys, 15 and 17, just about ready to head off to college. 
If they take out a student loan, they don't get to pick which 
student loan servicing corporation they will actually be 
dealing with, do they?
    Ms. Kraninger. Again, the rules are set by the Department 
of Education, and by statute by Congress, so that is accurate, 
but it is not something for the Bureau to intervene on.
    Mrs. Axne. They don't get to pick which loan servicing 
corporation that they deal with, so we have that straight.
    What that sounds like to me is that they are not actually a 
customer. They are actually a product for a company. I can 
think of a couple of other businesses that fall in line with 
that same perspective: credit reporting; and third-party debt 
collection. And, Director, I am assuming that you are familiar 
with the CFPB's Consumer Complaint Database?
    Ms. Kraninger. Yes, I am.
    Mrs. Axne. Can you tell us where these three industries--
student loan servicers, credit reporting, and debt collectors--
rank in the number of complaints in that database, since you 
were confirmed as Director?
    Ms. Kraninger. They are continuing and prominent areas for 
complaints, but I would also put those complaints into context, 
because they are a snapshot into what is happening in the 
industry, but certainly not the totality of the picture.
    Mrs. Axne. They are actually three of the top seven 
nationally. So if you weren't aware of that, that is where--top 
three.
    Ms. Kraninger. Yes.
    Mrs. Axne. Customer choice is one of the core aspects of 
our economy. It is what allows the market to set prices 
efficiently. It is important that businesses like student loan 
servicing make sure that they give customers a choice. It seems 
to me this lack of customer choice would call for increased 
oversight and consumer protection. Does that sound right to 
you?
    Ms. Kraninger. Again, consistent with our mandates in the 
law, and consistent with the law that is set out for the 
Department of Education in carrying out their programs and the 
contracts they have with their services.
    Mrs. Axne. Okay. So do you agree that there should be some 
oversight, since this is a place where customers truly have no 
choice?
    Ms. Kraninger. There is a structure of oversight in this 
area, and I do believe oversight is appropriate.
    Mrs. Axne. Okay. So why did you appoint Robert Cameron, the 
former general counsel at one of the three for-profit student 
loan servicers, to head up consumer protection efforts for 
these student loan servicers, if you believe there should be 
good government oversight?
    Ms. Kraninger. There was a career selection process, a 
competitive process, that Mr. Cameron applied for. Actually, he 
was attracted to the position by our hearing in March. That is 
how he heard about it, because the position was competed at 
that time. And that struck a chord with him where he wanted to 
perform this job. And I can tell you that I am very proud that 
he made it through the process, and I had the opportunity to 
confirm that selection. He has decades of public service 
experience, including a military service record. In fact, he 
had just come back from a deployment when he was watching that 
hearing. So, I am grateful for Americans like that who will 
step forward.
    Mrs. Axne. I absolutely appreciate his service. We are 
talking about student loan debt here. My objective is to make 
sure that we protect student loan recipients and make sure that 
they aren't priced out of a market so that they don't enter 
into the world with so much debt loan that they can't move 
forward.
    What I see here is that the person in charge of making sure 
that we protect these people is literally the fox guarding the 
henhouse. He comes from this industry and he is overseeing his 
former colleagues, in one of the industries that is one of your 
biggest complaints.
    Moving on, our attorney general in Iowa, Tom Miller, just 
did a study of the rates offered in the private student loan 
market, and found that not only did overall interest rates vary 
widely, often the advertised rates were much lower than the 
rates consumers actually received. And I have heard this over 
and over. To make matters worse, customers' rates are going up.
    Are you willing to have the CFPB study this issue 
nationally?
    Chairwoman Waters. She is waiting for me to gavel.
    Ms. Kraninger. I didn't want to answer, Chairwoman, without 
your permission.
    Chairwoman Waters. The gentleman from Ohio, Mr. Gonzalez, 
is recognized for 5 minutes.
    Mr. Gonzalez of Ohio. Thank you, Madam Chairwoman. I first 
want to thank Chairwoman Waters and Ranking Member McHenry for 
holding this hearing, and to thank you, Director Kraninger, for 
your continued service and your attention today.
    I have the pleasure of serving both on the Financial 
Services Committee and also the Science, Space, and Tech 
Committee, so I am constantly thinking about the nexus between 
emerging technologies and how they can improve the financial 
well-being of my constituents, when I think of consumer 
financial protection. I think part of that is finding a way to 
encourage innovation that allows for more products to come into 
the market, and to give people more options, frankly.
    And then within the AI Task Force, we have been exploring 
issues related to the use of AI machine-learning tools to 
better inform credit decisions by financial institutions, 
especially to potentially help the credit-invisible population 
gain some measure of access to credit. It's a huge problem. In 
the committee and in the task force, we have explored questions 
related to the use of alternative data to help inform a 
machine-learning model and potential credit decisions.
    As a general premise, do you support the use of alternative 
data, i.e., less traditional data points, that could give 
lenders additional insight?
    Ms. Kraninger. I would say yes, and certainly Congress 
support that by providing a provision on that in the Dodd-Frank 
Act.
    Mr. Gonzalez of Ohio. Yes. And then with respect to the 
sandbox that we have talked about a little bit--which I think 
is a great idea, by the way--help me understand what you are 
looking at with respect to what is happening in the sandbox, to 
figure out whether it is being effective and it is serving the 
purpose that we have decided? How should we think about its 
effectiveness, from your perspective?
    Ms. Kraninger. We certainly did our best to keep the policy 
on the broader side, so that we would encourage applications.
    Mr. Gonzalez of Ohio. Right.
    Ms. Kraninger. At this point that is where we are, 
encouraging applications so that we can consider them and 
ensure that we can grant applications that are going to be 
beneficial to consumers.
    I think there are lots of opportunities for things to come 
forward, like what you are referencing in terms of alternative 
data, and I hope that those kinds of applications come forward.
    Mr. Gonzalez of Ohio. Great. And then, let's say they have 
come forward and now we are in the process of--let's say, fast-
forward 3 years, and we are looking back and asking, ``Is this 
successful? Do we feel like we have accomplished our goal?'' 
What would you be looking at in that world? What specifically?
    Ms. Kraninger. I do think that the sandbox gives us 
opportunities to think about future rulemaking or future 
guidance that is going to make these things clear for the 
broader market, and so that is something that may come to bear 
too, in the next steps.
    Mr. Gonzalez of Ohio. Great. And then I guess building on 
that, one thing I have heard that would be particularly useful 
to provide guidance on is what sorts of data, alternative 
datasets can be used, with respect to complying with the Equal 
Credit Opportunity Act, but also just generally. Have you given 
any thought to that specifically, and where you are on that?
    Ms. Kraninger. Yes, we have. I will say the first no-action 
letter that the Bureau ever issued to Upstart did address some 
of those issues, and there was a blog that we released this 
summer, when we came back and looked at the data that Upstart 
had collected under the no-action letter. And so, I think there 
are some opportunities there, certainly, to think more about 
that topic.
    Mr. Gonzalez of Ohio. Great. Thank you, and I yield back.
    Chairwoman Waters. The gentlewoman from North Carolina, Ms. 
Adams, is recognized for 5 minutes.
    Ms. Adams. Thank you, Madam Chairwoman, and thank you, 
Director Kraninger, for appearing before us today.
    As I mentioned, back in March your predecessor led a 
destructive campaign to weaken and destroy the CFPB from 
within, but you hold the power to right these wrongs and 
restore it to its original intent.
    Do you believe that our student borrowers are facing 
significant challenges within our private and Federal student 
loan system? And give me a yes or no, I have several questions 
I want to ask.
    Ms. Kraninger. Yes, I believe there are a lot of challenges 
in that area.
    Ms. Adams. All right. So do you believe that the student 
loan ombudsman is an important resource for student borrowers?
    Ms. Kraninger. Yes. Congress created the position with that 
intention.
    Ms. Adams. Okay. I agree with you that student borrowers 
need an ombudsman, somebody looking out for them when they 
inevitably experience servicing errors. I had the pleasure of 
teaching college for 40 years, so I understand the needs that 
students have.
    Prior to hiring Mr. Cameron, were you aware that in a 2017 
report on the Public Service Loan Forgiveness Program, the CFPB 
was sharply critical of PHEAA?
    Ms. Kraninger. I am not sure I am aware of that particular 
report or reference, but I grant you that.
    Ms. Adams. Okay. Specifically, the CFPB criticized PHEAA 
for messing up payments of borrowers who were supposed to be on 
track for loan forgiveness. In fact, PHEAA has been involved in 
a number of scandals over the years. As recently as October 
3rd, the State of New York filed a Federal lawsuit against 
PHEAA for abusive acts. The suit states that the student loan 
servicer failed in its most basic task, depriving thousands of 
borrowers of benefits.
    So now I ask, why weren't these items deeply disqualifying?
    Ms. Kraninger. I will note that filing litigation at this 
stage is not actually an indication of a guilty party. I would 
also say that there are entities that are performing consistent 
with the Department of Education's rules, and the Department of 
Education should take action when their contractors are not 
performing consistent with their rules.
    So with respect to Mr. Cameron, in particular, he actually 
earned this position through a competitive process, and has had 
decades of public service and military service, and I do 
believe that, again, he is meeting the requirements that I have 
laid out for him in this job. I issued his first annual report 
yesterday, and he is really doing a great job so far.
    Ms. Adams. Thanks very much. Let me just circle back to a 
question that Representative Wexton attempted to ask earlier, 
before her time ran out. For the Public Service Loan 
Forgiveness Program, it is particularly important that the 
Bureau has strong oversight over their conduct. Given Mr. 
Cameron's prior employment at PHEAA, will he recuse himself 
from cases that involve his former employer? Do you know, yes 
or no, if he would?
    Ms. Kraninger. He is certainly in contact with the ethics 
attorneys at the Bureau and the ethics attorneys at PHEAA, 
consistent with his responsibilities under professional 
responsibility requirements of the job.
    Ms. Adams. It is clear that a conflict of interest is at 
play here, so as the Director, will you direct Mr. Cameron to 
recuse himself from complaint cases involving PHEAA?
    Ms. Kraninger. I know that Mr. Cameron will take the advice 
of the attorneys around what the ethics requirements are in any 
future activity.
    Ms. Adams. But you are not going to give him that--okay.
    So why has the number of supervisory exams opened by the 
Consumer Bureau declined? When you last appeared before the 
committee you said, and I quote, ``I can assure you that fair 
lending is a continuing priority in the Bureau.'' So why has 
the number of supervisory exams opened by the Consumer Bureau 
declined?
    Ms. Kraninger. The reference here, I believe, is that 
historically there were 13 exams opened, and we managed to open 
10. I think by the same measure--the record will end up 
correcting me, but it is that kind of difference. I can assure 
you that I am committed to it. Part of this is also the hiring 
process of getting more examiners on board. But we have 300 
examiners who have taken fair lending training and are engaged, 
or able to be engaged in fair lending exams. And I do commit 
to, again, a similar level, not an exact level, necessarily, 
because it is based on the number of staff we have and the 
other things that are going on. But a continued commitment to 
fair lending, I pledged, and I believe I am meeting.
    Ms. Adams. Thank you very much, Madam Chairwoman. I yield 
back.
    Chairwoman Waters. The gentleman from Tennessee, Mr. Rose, 
is recognized for 5 minutes.
    Mr. Rose. Thank you, Chairwoman Waters, and thank you, 
Director Kraninger, for joining us here today.
    I would like to jump in right away with the CFPB's small-
dollar rule. The CFPB's final rule, published on November 17, 
2017, notes that the Bureau's research with respect to payment 
practices focused on online payday and payday installment 
loans, where payment attempts generally occur through the ACH 
network, and thus can be readily tracked at the account and 
lender level.
    Director Kraninger, was Automated Clearing House (ACH) data 
the primary source of data used to evaluate payment practices 
in the CFPB's small-dollar rule?
    Ms. Kraninger. Congressman, I know that is a primary method 
that was tackled, I suppose you could say, in that rule. I am 
not sure of the detailed analysis, but we can certainly get 
back to you.
    Mr. Rose. Banks can charge nonsufficient funds (NSF) fees 
for checks that bounce. Banks can charge NSF fees for ACH 
withdrawals when an account is overdrawn. In both 
circumstances, the borrowers do not have to give prior 
authorization for overdraft charges to occur. However, 
overdraft charges on debit cards cannot occur without the 
consumer's prior authorization. This is because of the CFPB's 
own rulemaking. It seems to me that debit cards behave quite 
differently than checks or ACH transactions.
    Director, did the CFPB undertake a comprehensive study as 
to the effects of debit card payments in addition to relying on 
ACH payments?
    Ms. Kraninger. So I understand, Congressman, what you are 
asking here, and I am not aware of how much the details of this 
were examined, but I am aware of the concern and having it 
raised, and it is certainly something we will look at as we 
proceed. The focus has really been on the underwriting 
requirements portion of the payday rule, and really looking at 
the legal and factual sufficiency of that. But as we move 
forward, we will look at the other side as well.
    Mr. Rose. Okay. I appreciate that.
    Shifting gears, Director Kraninger, I would like to ask you 
about student loan servicing. As one of the CFPB's central 
responsibilities, the Bureau is required to receive, review, 
and attempt to resolve complaints about financial products. The 
CFPB's Complaint Database was launched in 2012, and began 
publishing Federal loan servicing complaints in 2016. However, 
a report released a couple of weeks ago by the American 
Enterprise Institute noticed that the CFPB automatically 
categorizes all complaints about a Federal student loan as a 
loan servicing issue, regardless of the actual problem the 
borrower describes. Further, even though the borrower can 
select subcategories for a complaint, only the main category, 
Federal student loan servicing, is publicly displayed.
    I found this to be misleading and concerning, especially 
given the ongoing debate about the Federal student loan program 
and how frequently this database is cited, even here today, 
when making the case that loan servicers are negligent.
    Director Kraninger, as part of your efforts to make 
enhancements to the CFPB's Consumer Complaint database, do you 
intend to address this particular issue with regards to how 
Federal student loan complaints are categorized and published?
    Ms. Kraninger. I can tell you we are looking very broadly 
at many issues around how context can be provided to those 
complaints, and specific to the report you mentioned, I have 
actually asked the staff to come back to me and explain their 
perspective on those findings and observations.
    Mr. Rose. Thank you. The last time you were here, I 
mentioned that during Director Cordray's tenure as CFPB 
Director, an enforcement action was brought on what CFPB 
alleged was borrower harm in the student loan servicing arena. 
Since the action was first brought in 2017, according to court 
documents and news articles, the CFPB still has not identified 
any actual consumers who were treated illegally or harmed. You 
stated that you would be looking at all ongoing litigation and 
getting familiar with those issues. Are you familiar with this 
issue?
    Ms. Kraninger. I'm sorry, Congressman. I missed probably 
one key word in your question that is probably the key one I 
needed.
    Mr. Rose. Cases in the student loan serving arena that the 
CFPB has brought.
    Ms. Kraninger. Yes. I am familiar with at least the ongoing 
litigation in this arena.
    Mr. Rose. I am concerned that leaving cases pending since 
2017 is not the best use of taxpayer dollars. I am concerned 
that the CFPB is dragging out these cases in search of a 
problem, and a perpetrator, in order to justify the already 
sunk cost. I know you cannot comment on pending litigation, but 
I hope that you, as Director of the CFPB, will resolve this 
litigation soon.
    And then, finally, I just want to echo Congressman 
Luetkemeyer's call for an investigation--
    Chairwoman Waters. The gentleman's time has expired.
    Mr. Rose. --or a study.
    Chairwoman Waters. The gentlewoman from Ohio, Mrs. Beatty, 
who is also the Chair of our Subcommittee on Diversity and 
Inclusion, is recognized for 5 minutes.
    Mrs. Beatty. Thank you, Madam Chairwoman. To the Director, 
thank you for being here today. We have had the opportunity to 
have a number of conversations and visit, and so you won't be 
surprised by some of my questions. You know how passionate, 
like my colleagues, I am about protecting our consumers, and 
where I stand on the issue of diversity and inclusion, and 
especially having inclusion.
    But today, I want to quickly focus on two things. Last 
month, this committee held a hearing on abusive debt collection 
practices, and I brought up the CFPB's Complaint Database, 
specifically as it relates to the great State of Ohio that I 
represent. And according to your agency's Complaint Database, 
debt collection topic was the most complained about by Ohioans.
    Madam Director, do you have any idea how many complaints 
surfaced as it relates to debt collection, from Ohio?
    Ms. Kraninger. Off the top of my head, Congresswoman, I 
don't. But I think you are going to tell me, which will be 
helpful.
    Mrs. Beatty. Yes. 16,000 complaints, and more than one-
third of those 16,000 complaints about debt collection were 
specifically related to the issue of debt collection that was 
not owed to people. So when I think of protecting our consumers 
and having that number from one area, and then you find out 
that it was about dollars not owed.
    I asked the hearing panel if anything in the Consumer 
Bureau's debt collection rule addressed this issue about the 
number-one thing complained about in the State of Ohio. And do 
you think they said yes or no? They said, no.
    So I am asking you, do you believe there is anything in 
your agency's proposed debt collection rule that directly seeks 
to address the number one complaint about debt collection in 
the great State of Ohio?
    Ms. Kraninger. The question of substantiation by creditors 
and between creditors and third-party debt collectors is one 
that the Bureau, from the beginning of undertaking this effort 
in 2013, decided not to include in the rulemaking. I appreciate 
that it is a significant complaint area, and there are 
opportunities, I think, to address that through education, 
certainly through our enforcement actions as well.
    Mrs. Beatty. Let me ask you this question, because my time 
is running. I hear what you are saying. The answer is no, but 
does that mean now, knowing the volume of it, that you wouldn't 
take any consideration with the vast trove of consumer 
complaints and the data within your database? It is not 
important, 16,000 and for debt that is not owed, and we are 
protecting our consumers?
    Ms. Kraninger. It is absolutely information we use in our 
enforcement actions, or to inform enforcement actions that we 
might take, as well as education efforts. But with respect to 
this particular rulemaking, it is something that we are not 
addressing.
    Mrs. Beatty. Well, I am going to keep talking about this, 
because I don't think that is fair to the citizens of Ohio. But 
you mentioned enforcement so let me go to my next question.
    Under Acting Director Mulvaney's short time in running--or 
maybe I would like to say gutting--the Consumer Bureau, he 
stripped the agency's fair lending office of its enforcement 
powers. Now on page 8 of your written testimony, it states, and 
I quote, ``During the reporting period, the Bureau did not 
initiate or complete any fair lending public enforcement 
actions. In addition, during this reporting period, the Bureau 
did not refer any matters to the DOJ with regard to 
discrimination, pursuant to Section 706(g) of the Equal Credit 
Opportunity Act.''
    The reason I asked you this question is that this is the 
first time in its history that there has been a 6-month period 
where there was no discrimination in lending occurring in this 
country. Now, I know the number of complaints that I hear about 
and I get, and I know Congresswoman Adams talked about exams, 
but this is an enforcement.
    Do you really expect me to believe that there was nothing 
in the fair lending for 6 months, and in the history, this has 
never happened?
    Ms. Kraninger. I absolutely grant that this report is not a 
measure of discrimination happening in the markets, in general.
    Mrs. Beatty. So, there was discrimination? We just didn't 
deal with it in the fair lending practice?
    Ms. Kraninger. We have the cases that are opened by the 
Bureau attorneys in this agency, and we just did not have 
cases--
    Mrs. Beatty. So you didn't report it--
    Ms. Kraninger. --that were--
    Mrs. Beatty. --but it is actually happening.
    Ms. Kraninger. --during that time.
    Mrs. Beatty. I'm sorry, my time is up.
    Chairwoman Waters. The gentleman from South Carolina, Mr. 
Timmons, is now recognized for 5 minutes.
    Mr. Timmons. Thank you, Madam Chairwoman. It is an honor to 
serve on this committee. The people of South Carolina and the 
people of the Fourth Congressional District have wanted 
representation here for a while, and I am just excited to get 
to work.
    Director Kraninger, I want to begin by thanking you for 
taking the time to come before this committee today, and offer 
you a minute or two of my time to further expound on any 
answers that you did not have sufficient time to answer.
    Ms. Kraninger. Thank you for that, Congressman. I would 
just come back to Congresswoman Beatty's question, because it 
is an important one, and that is around enforcement cases in 
general. They definitely are not a measure of what 
discrimination is happening in the marketplace, but it is our 
best effort, looking at referrals from other agencies, looking 
at our complaints, looking at what is happening in the 
marketplace, where we are bringing investigations and career 
Bureau attorneys are taking those investigations where they 
can, based on the facts and circumstances, and carrying them 
through the conclusion, or closing them. And so the public 
enforcement actions are when we are actually able to bring a 
case or settle the claims that we have against an individual 
entity.
    That is, by nature, not something that is necessarily in 
the timeframe that we would like it to be in, so that is 
something that we are balancing and looking at, and making sure 
we are applying our resources effectively.
    But I can assure you that we do have fair lending 
examinations for lending investigations that are open and 
ongoing.
    Mr. Timmons. Thank you. My great-grandfather started an 
insurance company 80 years ago, and I want to ask you, what do 
you view as the CFPB's role in insurance regulation?
    Ms. Kraninger. The Dodd-Frank Act specifically took 
insurance regulated by the States out of our purview.
    Mr. Timmons. Simple enough. Thank you.
    One additional question. I know one of my colleagues may 
have already touched on this, but I represent a district where 
a large number of my constituents access capital from 
nonconventional lenders. These lenders would be significantly 
impacted by the implementation of the so-called small-dollar 
rule. I know that you and your team are working on an update to 
this rule, and I wanted to see if you could give us a sense of 
when we might expect to see the update finalized.
    Ms. Kraninger. Thank you, Congressman. It is something 
certainly that we are working very hard on. The comment period 
closed this summer, I believe, and so we are working our way 
through the 19,000 comments that we received, including some 
additional research that has come to bear, and working our way 
through that. So it is an appropriate, deliberate process, but 
one that we are working our way through.
    Mr. Timmons. Could you give any kind of a 2-, 4-, 6-, 8, 
12-month timeline?
    Ms. Kraninger. I can tell you that 12 months is definitely 
too long at this point. And I have also made folks aware 
publicly that we wouldn't get to this issue this year, so it is 
not going to come out this year. It is going to take a little 
longer than past December.
    Mr. Timmons. Thank you. I yield to the ranking member for 
the remainder of my time.
    Mr. McHenry. I thank my colleague for yielding, and welcome 
to the committee.
    Director Kraninger, student lending, student debt. Under 
the old regulations, would a debt collection agency or firm be 
able to text their customers?
    Ms. Kraninger. Yes, if they so chose to do so.
    Mr. McHenry. Okay. And how does your rule change texting, 
since this is much discussed this day, about texting?
    Ms. Kraninger. What we were trying to do is provide some 
clarity in that space, so a debt collector could only text a 
consumer if that consumer had provided that number and 
communicated with their creditor via that text messaging 
mechanism.
    Mr. McHenry. Is that written in statute?
    Ms. Kraninger. That is not written in statute.
    Mr. McHenry. Is that written in regulation?
    Ms. Kraninger. It is a real issue, and it is something that 
we are addressing in the rule.
    Mr. McHenry. It was determined by the courts, am I correct?
    Ms. Kraninger. There are 12,000 lawsuits every year around 
the FDCPA, so it is active--different courts studying different 
standards, which is why we tried to pursue--
    Mr. McHenry. To provide clarity, was this to provide 
clarity to the debt collectors or to the consumers, or both?
    Ms. Kraninger. Both.
    Mr. McHenry. Both. So those who actually want to pay their 
bills, now, perhaps, will get a text that they missed their 
payment, kind of like what I signed up for with every one of my 
utilities. What I am saying is the discussion around all this 
stuff is not the intention that I have seen from the regulation 
you have offered, and so I think it is important that Members 
understand that, and the nature of student debt as well, much 
more broadly than about the CFPB.
    Chairwoman Waters. The gentleman's time has expired. The 
gentlewoman from California, Ms. Porter, is recognized for 5 
minutes.
    Ms. Porter. Thank you, Madam Chairwoman. Director 
Kraninger, you have emphasized education at the Bureau over 
priorities like enforcement. And when you were asked, on CNBC, 
what predatory practices you were worried about you said, and I 
quote, ``It is really a buyer beware situation.'' Your Deputy 
said that the single most important policy that the CFPB is 
pursuing is ``to ensure consumers have the ability to make 
their best choices in free markets.''
    So while you have emphasized education, enforcement to 
protect consumers who are cheated under your watch has 
plummeted. I gather from this that you expect consumers to take 
personal responsibility in understanding and choosing financial 
services products, and I know you would hold yourself to that 
same standard.
    I read in the paper that you kept the calculator that I 
offered you in our last conversation. Do you happen to have it 
with you?
    Ms. Kraninger. No. I actually don't have it.
    Ms. Porter. Okay. That is fine, because most consumers 
don't carry calculators.
    Ms. Kraninger. Well, they are on every phone, so they 
actually do.
    Ms. Porter. Terrific.
    Ms. Kraninger. I have a phone.
    Ms. Porter. Feel free to use your phone. Since you are all 
about disclosures and giving consumers the information they 
need to make their own best choices in free markets, I would 
like to show you an average, simple, Truth in Lending Act 
(TILA) disclosure to help people understand the cost of a loan.
    There it is. I know it is hard to see. You are going to 
have to look to your side, because I am not allowed to show it 
this way. So if you look to your side, this is a TILA 
disclosure, and there are two boxes missing: the amount 
financed; and the amount of the payments. I would like to know 
what the amount financed is.
    Ms. Kraninger. Congresswoman, I am the first to note that I 
don't think many of the disclosures that are provided to 
consumers are all that useful, particularly when you talk about 
some of the things that have happened in the mortgage space.
    Ms. Porter. This is not a mortgage.
    Ms. Kraninger. The opportunity to actually improve on 
disclosures is where I think we have a great opportunity to 
look and--
    Ms. Porter. Ms. Kraninger, you are responsible for 
improving on those disclosures then. So before you go about 
improving them, what I am trying to assess is whether or not 
you understand them, because it is going to be very difficult 
to improve them if you don't understand what we have been 
disclosing for the last 35-plus years under the Truth in 
Lending Act. What is the amount financed? All of the 
information you need is displayed.
    Ms. Kraninger. I will tell you despite how large that is, I 
can't actually read it from here.
    Ms. Porter. Madam Chairwoman, may I give the witness a copy 
of it?
    Chairwoman Waters. The gentlewoman is given permission to 
give--
    Mr. McHenry. Will the gentlewoman provide copies for 
everyone?
    Ms. Porter. Yes, and--
    Mr. McHenry. Quite frankly, I can't see on it on the big 
screen, based off of where the cracks are. And the hectoring of 
the witness about math problems is quite insulting to all of us 
on this committee.
    Ms. Porter. Oh, to the contrary, Mr. McHenry. Math problems 
are exactly what the Bureau's, ``Your Money, Your Goals'' 
educational program is about, in which the semi-annual report 
of the Director--
    Mr. McHenry. If the gentlewoman will yield--
    Ms. Porter. I will not yield. The ``Your Money, Your 
Goals'' program is designed to use, to build your own financial 
skills and confidence, and to be able to start money 
conversations with the people that they serve. So I am asking 
Ms. Kraninger about her own skills and confidence so that she 
can administer the program that she is touting in the semi-
annual report.
    Ms. Kraninger. I would say, as point of fact, I don't 
necessarily get in the weeds of administering that program. 
There are 1,500 people at the agency and they do certainly have 
many people out in the field--
    Ms. Porter. Reclaiming my time--
    Ms. Kraninger. --who administer the program.
    Ms. Porter. I appreciate that staff do much of the work, 
but consumers in the marketplace do not have staff to 
understand these disclosures. They are out there by themselves, 
trying to figure it out. You, in fact, are in charge of making 
sure that the lenders, often entry-level, rank-and-file 
employees, fill these disclosures out correctly.
    So as the head of the Consumer Financial Protection Bureau, 
when you see these disclosures, you have to be able to know if 
they are correctly completed or incorrectly completed. 
Otherwise, you can't do the enforcement work.
    Ms. Kraninger. As a point of fact, it is not me, myself, 
who is doing that. Again, it is the enforcement attorneys and 
the examiners who have tools that actually help support them in 
actually doing that in a broad range of credit calculations and 
activities.
    Ms. Porter. So I think the answer is, you are not able to 
come up with the amount of the payments or the amount financed.
    Ms. Kraninger. I am telling you that there are a lot of 
things--
    Ms. Porter. That sounds like a no.
    So I brought the teachers' manual, and I just want to read 
to you. This is a straightforward problem that simply tests 
whether the students mastered the basics. The amount calculated 
is calculated by subtracting the finance charge from the total 
of payments, $7,604.30 minus $1,496.80. That is it. The amount 
of the payments, you take the total of the payments, $7,604.30, 
and you divide by 36. It is $211.
    Let's try this a different way. These two glasses of water 
each have 32 parts per billion of a chemical. One is 
perfluorooctanoic acid and the other is fluorosilicic acid. 
Which one of these glasses of water is safe for me to drink? 
And again, the relevance of this is important.
    Chairwoman Waters. The gentlewoman's time has expired.
    I want to thank Director Kraninger for her time today.
    The Chair notes that some Members may have additional 
questions for this witness, which they may wish to submit in 
writing. Without objection, the hearing record will remain open 
for 5 legislative days for Members to submit written questions 
to this witness and to place her responses in the record. Also, 
without objection, Members will have 5 legislative days to 
submit extraneous materials to the Chair for inclusion in the 
record.

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