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

                        PROTECTING CONSUMERS OR ALLOWING

                         CONSUMER ABUSE? 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

                                 SECOND SESSION

                                   __________

                                FEBRUARY 6, 2020

                                   __________

           Printed for the use of the Committee on Financial Services

                               Serial No. 116-83

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                   U.S. GOVERNMENT PUBLISHING OFFICE
     42-807 PDF             WASHINGTON : 2021

                     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           FRANK D. LUCAS, Oklahoma
    WM. LACY CLAY, Missouri              BILL POSEY, Florida
    DAVID SCOTT, Georgia                 BLAINE LUETKEMEYER, Missouri
    AL GREEN, Texas                      BILL HUIZENGA, Michigan
    EMANUEL CLEAVER, Missouri            STEVE STIVERS, Ohio
    ED PERLMUTTER, Colorado              ANDY BARR, Kentucky
    JIM A. HIMES, Connecticut            SCOTT TIPTON, Colorado
    BILL FOSTER, Illinois                ROGER WILLIAMS, Texas
    JOYCE BEATTY, Ohio                   FRENCH HILL, Arkansas
    DENNY HECK, Washington               TOM EMMER, Minnesota
    JUAN VARGAS, California              LEE M. ZELDIN, New York
    JOSH GOTTHEIMER, New Jersey          BARRY LOUDERMILK, Georgia
    VICENTE GONZALEZ, Texas              ALEXANDER X. MOONEY, West Virginia
    AL LAWSON, Florida                   WARREN DAVIDSON, Ohio
    MICHAEL SAN NICOLAS, Guam            TED BUDD, North Carolina
    RASHIDA TLAIB, Michigan              DAVID KUSTOFF, Tennessee
    KATIE PORTER, California             TREY HOLLINGSWORTH, Indiana
    CINDY AXNE, Iowa                     ANTHONY GONZALEZ, Ohio
    SEAN CASTEN, Illinois                JOHN ROSE, Tennessee
    AYANNA PRESSLEY, Massachusetts       BRYAN STEIL, Wisconsin
    BEN McADAMS, Utah                    LANCE GOODEN, Texas
    ALEXANDRIA OCASIO-CORTEZ, New York   DENVER RIGGLEMAN, Virginia
    JENNIFER WEXTON, Virginia            WILLIAM TIMMONS, South Carolina
    STEPHEN F. LYNCH, Massachusetts      VAN TAYLOR, Texas
    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:
        February 6, 2020.............................................     1
    Appendix:
        February 6, 2020.............................................    69

                                   WITNESSES
                           Thursday, February 6, 2020

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

                                    APPENDIX

    Prepared statements:
        Kraninger, Hon. Kathleen L...................................    70

                  Additional Material Submitted for the Record

    Waters, Hon. Maxine:
        Letter from the Senate Committee on Banking, Housing, and
          Urban Affairs to Dave Girouard, CEO, Upstart Network, Inc..    83
        Written statement of the Student Borrower Protection Center..    87
    Kraninger, Hon. Kathleen L.:
        Written responses to questions for the record from Chairwoman
          Waters.....................................................   118
        Written responses to questions for the record from
          Representative Budd........................................   183
        Written responses to questions for the record from
          Representative Luetkemeyer.................................   185
        Written responses to questions for the record from
          Representative Porter......................................   187
        Written responses to questions for the record from
          Representative Riggleman...................................   188
        Written responses to questions for the record from
          Representative Sherman.....................................   189
        Written responses to questions for the record from
          Representative Steil.......................................   191

                        PROTECTING CONSUMERS OR ALLOWING

                         CONSUMER ABUSE? A SEMI-ANNUAL

                        REVIEW OF THE CONSUMER FINANCIAL

                               PROTECTION BUREAU

                                  ----------

                           Thursday, February 6, 2020

                 U.S. House of Representatives,
                       Committee on Financial Services,
                                                       Washington, D.C.
        The committee met, pursuant to notice, at 10:05 a.m., in
    room 2128, Rayburn House Office Building, Hon. Maxine Waters
    [chairwoman of the committee] presiding.
        Members present: Representatives Waters, Maloney, Velaquez,
    Sherman, Meeks, Clay, Scott, Green, Perlmutter, Himes, Beatty,
    Heck, Vargas, Gottheimer, Gonzalez of Texas, Lawson, San
    Nicolas, Tlaib, Porter, Axne, Casten, Pressley, McAdams,
    Wexton, Lynch, Adams, Dean, Garcia of Illinois, Phillips;
    McHenry, Lucas, Luetkemeyer, Huizenga, Stivers, Barr, Tipton,
    Williams, Hill, Emmer, Zeldin, Loudermilk, Davidson, Budd,
    Kustoff, Hollingsworth, Gonzalez of Ohio, Rose, Steil, Gooden,
    Riggleman, Timmons, and Taylor.
        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, ``Protecting Consumers or
    Allowing Consumer Abuse? A Semi-Annual Review of the Consumer
    Financial Protection Bureau.''
        I now recognize myself for 4 minutes to give an opening
    statement.
        Today, we welcome back Consumer Financial Protection Bureau
    (CFPB) Director Kathy Kraninger for her testimony on the
    Consumer Bureau's semi-annual report to Congress. Let me just
    say at the outset that I remain very concerned about Director
    Kraninger's misguided leadership of the Consumer Bureau.
        Director Kraninger, since your confirmation as Consumer
    Bureau Director, you have undertaken a series of actions that
    have undermined the Consumer Bureau's mission to protect
    consumers from harmful financial practices and products. Most
    recently, I am appalled by your decision to issue a policy
    statement that undercuts the Dodd-Frank Act's prohibition on
    unfair, deceptive or abusive acts or practices. You have made
    it harder for your own agency to crack down on abusive acts by
    financial institutions.
        With this policy statement, you made it clear that under
    your watch, bad actors will come first and consumers will come
    last. Of course, this is consistent with your track record at
    the Consumer Bureau. So while I am appalled, I can't say I am
    surprised. In fact, at this point, I would be surprised if you
    actually did something meaningful to protect consumers. You
    have only been leading the Consumer Bureau for about 14 months,
    and your track record has been decidedly anti-consumer in the
    time that you have been there.
        You delayed and weakened the Consumer Bureau's payday,
    small-dollar, and car title rule to curb abusive payday loans;
    issued a debt collection rule that only debt collectors can
    love, because it allows them to engage in abusive debt
    collection practices with few limits; weakened reporting
    requirements under the Home Mortgage Disclosure Act (HMDA),
    allowing redlining and discriminatory lending to proliferate
    undetected; and abandoned the Consumer Bureau's longstanding
    defense of the constitutionality of its structure as an
    independent watchdog.
        You have also eased up on enforcement and supervisory
    activity, taking a ``see no evil'' approach to enforcing our
    nation's consumer protection laws. In some cases, you gave bad
    actors a free pass by failing to require them to pay any
    restitution to the consumers they harmed. Under your
    leadership, it is a great time for bad actors to rip off
    consumers because you have shown that if they do, you are not
    going to do anything about it.
        To add insult to injury, as a member of the board of the
    Federal Deposit Insurance Corporation, you voted in favor of a
    harmful new rule proposed by OCC Comptroller Otting on the
    implementation of the Community Reinvestment Act (CRA) that
    would result in bank disinvestment in communities across the
    country.
        I should not need to remind you, Director Kraninger, that
    Congress created the Consumer Bureau as a stalwart watchdog to
    protect consumers from the types of harmful, abusive practices
    that caused the 2008 financial crisis and led to economic
    catastrophe. America needs a strong Consumer Bureau that is
    vigilant and effective. America needs better from you.
        Today, members of this committee will be scrutinizing and
    asking tough questions about the actions you have taken. This
    committee will continue to shine a light on the Trump
    Administration's anti-consumer activities, and we will continue
    to conduct rigorous oversight of the Consumer Bureau.
        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, Director Kraninger, for being here
    today. And I would like to first say thank you for your
    commitment to an open process, and to fairness of the rule of
    law. I think this is a long time coming for this Bureau. Though
    the structure is still a very poor one as a result of the Dodd-
    Frank Act, thank you for trying to clear this up as best you
    can, given the circumstances.
        Since Dodd-Frank's enactment, Republicans have expressed
    serious concerns over the structure of the CFPB. That remains.
    Our concerns are driven by the fear that Congress has created
    one of the most powerful, unaccountable, and unconstitutional
    bureaucracies ever. Our concerns are driven by the funding
    scheme, which comes only from the Federal Reserve without
    oversight of Congress; a lack of an Inspector General who is
    solely focused on the Bureau's activity; and a focus on
    eliminating waste, fraud, and abuse wherever it may be. Our
    concerns are driven by a Director who can only be removed by
    the President for cause.
        Those things remain. We saw the disastrous results of this
    unaccountable agency's actions firsthand, and that was under
    former Director Cordray's regime. The limitless unaccountable
    authority bestowed upon the Director resulted in small
    businesses, community banks, and others being bullied through
    arbitrary enforcement actions, purely arbitrary enforcement
    actions, unilateral enforcement actions that were the modus
    operandi of the Bureau under the previous leadership.
        However, under new leadership, under this Director's
    leadership, they have made necessary appropriate changes to the
    way the Bureau functions. That is good.
        For example, the Bureau finally provided a long-needed
    clarification for the abusiveness standard in its supervision
    and enforcement work. The Dodd-Frank Act added the word,
    ``abusive,'' to the existing statute, the Unfair, Deceptive, or
    Abusive Acts and Practices, which we call UDAAP. And while
    there are statutory definitions for ``unfair'' and
    ``deceptive,'' until recently, the Bureau was working under a
    vague and fluid definition for ``abusive.'' That is
    problematic. It is problematic for those people you regulate.
        The policy clarification that you have brought forward is
    helpful. That clarity will help focus future cases and future
    actions by the Bureau around something that is quantifiable.
        In addition, I support the Federal financial regulatory
    agencies' efforts to address and expand the use of alternative
    data in underwriting. I know there are also consumer protection
    concerns with changing underwriting standards. We debated this
    on the House Floor just last week, in fact. I share the view
    that regulators should ensure that firms understand the
    responsibility to use alternative sources of data, and they are
    consistent with consumer protection laws.
        Finally, I want to commend the Bureau on its recent
    announcement to work with the Department of Education to help
    student borrowers, particularly those borrowers who are having
    problems in the process. Working together to better support
    students is a win-win for the students, for the agencies, and
    for the taxpayers.
        But the fact remains that while we have seen more
    transparency over the last several years than we have seen
    since the inception of the Bureau, the structure of this agency
    still alarms me. It is run by a single individual with no real
    oversight or accountability. I am grateful that you are here
    today for your annual testimony. I am hopeful that you will
    follow and comply with the rule of law, and I am grateful that
    you have.
        But I understand the structure is so limited in terms of
    what we can do to have oversight of your Bureau. So, I wish you
    well. I hope you comply with the law, and I hope that you
    continue to follow the structure as best you can.
        With that, I yield back, and I look forward to the
    questions.
        Chairwoman Waters. I now recognize the Chair of our
    Subcommittee on Consumer Protection and Financial Institutions,
    Mr. Meeks, for 1 minute.
        Mr. Meeks. Thank you, Chairwoman Waters.
        The agency was named the Consumer Financial Protection
    Bureau for a reason. It is to protect consumers. Consumers
    deserve a regulator who advocates solely for their interests
    and acts against abusive companies. This stands in stark
    contrast to what I am seeing from the Administration's CFPB
    leadership.
        Instead of implementing common-sense rules, and starkly
    limiting payday loans, the CFPB is postponing crucial
    regulations. Rather than ramping up enforcement against bad
    actors, the agency has reduced the number of enforcement
    actions from 54 in 2015 to an average of 17.5 in 2018 and 2019.
    And whereas, the FHFA has defended its constitutionality in
    court, Director Kraninger has forfeited this responsibility and
    abdicated her duty to protect consumers.
        The CFPB has swerved away from its core mission of
    protecting consumers. This must change.
        I yield back.
        Chairwoman Waters. I now recognize the ranking member of
    the subcommittee, Mr. Luetkemeyer, for 1 minute.
        Mr. Luetkemeyer. Thank you, Madam Chairwoman, and thank
    you, Dr. Kraninger, for testifying here today.
        In my previous life, one of the jobs I held was a banking
    regulator, so I can tell you that any sound regulatory
    supervisory regime has to have a balance to it. On one hand,
    you must help businesses and industries comply with all of the
    rules and regulations, while on the other hand, you must ensure
    that any truly bad actors are reprimanded.
        For too long under the previous Administration, the CFPB
    was used solely to threaten and attack financial entities. I
    applaud the job you have been doing in reeling in this power
    and bringing back a responsible regulatory approach to the
    Bureau. One example of common-sense reform that has come out of
    the CFPB is the proposed change to CFPB's UDAAP authority,
    specifically how the Bureau will apply the term, ``abusive.''
        I have been fighting this vague and punitive term for
    years, and even introduced legislation in 2016 to remove it
    altogether. Conducting a cost-benefit analysis and encouraging
    entities to comply with the abusive standard before seeking
    monetary relief are the types of common-sense reform the CFPB
    was lacking for quite some time.
        I applaud your approach, and I look forward to discussing
    it, along with the other issues today.
        With that, I yield back, Madam Chairwoman.
        Chairwoman Waters. I now want to welcome to the committee
    our witness, the Honorable Kathy Kraninger, Director of the
    CFPB. Director Kraninger has testified before the committee
    previously, and I believe she needs no further introduction.
        You will have 5 minutes to summarize your testimony. When
    you have 1 minute remaining, a yellow light will appear. At
    that time, I would ask you to wrap up your testimony so we can
    be respectful of the committee members' time. And without
    objection, your written statement will be made a part of the
    record.
        You are now recognized for 5 minutes to present your
    testimony.

      STATEMENT OF THE HONORABLE KATHLEEN L. KRANINGER, DIRECTOR,
              CONSUMER FINANCIAL PROTECTION BUREAU (CFPB)

        Ms. Kraninger. Chairwoman Waters, Ranking Member McHenry,
    members of the committee, thank you for this opportunity to
    provide our semi-annual update on the Bureau's important work.
        It is my honor and privilege to serve and protect American
    consumers. To best achieve our mission for consumers, the
    Bureau is focused on preventing harm in the first place. We
    prevent harm by building a culture of compliance throughout the
    financial system while supporting free and competitive markets
    that provide for informed consumer choice.
        My remarks this morning will largely focus on key recent
    actions the Bureau has taken to protect consumers. To start,
    earlier this week, the Bureau and the Department of Education
    announced a new Memorandum of Understanding (MOU) regarding
    consumer complaints about private and Federal student loans.
    The MOU will better serve America's students by allowing for
    subject matter experts from both agencies to work together to
    more efficiently resolve complaints.
        The staff of both agencies will meet regularly to discuss
    trends they are observing, including the nature of the
    complaints received, the characteristics of borrowers, and
    available information about resolution of complaints. The staff
    of the Department of Education will have the same near real-
    time access to the Bureau's complaint database that other
    Government partners have.
        The MOU also provides for the sharing of analysis,
    recommendations, and data analytics tools. I am confident that
    this increased collaboration will better protect consumers and
    result in better resolutions for students.
        In addition, the Bureau will soon launch a revamped tool
    aimed at helping students understand their financial aid
    packages. The Paying for College Toolkit will help prospective
    students with financial aid offers to better understand the
    terms of their loan and then be able to put together a
    financing plan to cover the remaining cost of attendance.
        By helping students understand their financial aid package,
    we are enabling them to make better-informed financial
    decisions today, and putting them in a better position for
    their financial future.
        Another way the Bureau aims to protect consumers is by
    issuing clear rules of the road. Specifically, I want to point
    out our efforts on the QM patch. As you know, the Bureau issued
    an Advance Notice of Proposed Rulemaking (ANPR) last year that
    reiterated that the patch was intended to, and will, expire.
        After reviewing public comments, we have decided to propose
    to amend the QM rule by moving away from the 43 percent debt-
    to-income ratio requirement. Instead, the Bureau would propose
    an alternative, such as pricing thresholds, to better ensure
    that responsible, affordable mortgage credit remains available
    to consumers.
        While we are moving forward with the rulemaking, we would
    welcome legislation through which Congress could better weigh
    the important policy objectives at issue.
        Finally, we prevent harm by using supervision and
    enforcement to promote compliance with the law. To be
    effective, the Bureau must be consistent and transparent about
    our expectations of such compliance. To that end, the Bureau
    recently announced our policy providing a common-sense
    framework on how we intend to apply the abusiveness standard in
    supervision and enforcement matters.
        For too long, this has been a gray area, creating
    uncertainty and hampering consumer beneficial innovation.
    Moving forward, the Bureau intends to cite or challenge abusive
    conduct when the harm to consumers exceeds the benefits. When
    alleging abusiveness violations, we intend to clearly
    demonstrate the nexus between cited facts and our legal
    analysis in a way that supports the development of the metes
    and bounds of abusive acts and practices as distinguished from
    unfair and deceptive acts and practices.
        Further, we intend to seek certain types of monetary relief
    only when the entity has failed to make a good-faith effort at
    compliance. Restitution for consumers will be the priority in
    these cases.
        Before closing, let me note an important effort led by our
    Office of Minority and Women Inclusion (OMWI). The Bureau has
    conducted outreach to mortgage finance organizations to assess
    the diversity and inclusion practices of the entities we
    regulate.
        The outreach strategy was multipronged to engage entities
    to participate in the voluntary self-assessment process. From
    that process, the Bureau has developed an online data
    collection tool to collect and manage the submitted assessment
    data. That tool is now available on the Bureau's website.
    Appropriate protection of the data provided will be critical to
    the success of this initiative.
        Again, thank you for this opportunity to discuss the
    Bureau's important work to protect consumers and put them
    first, as well as hold bad actors accountable. I look forward
    to your questions.
        [The prepared statement of Director Kraninger can be found
    on page 70 of the appendix.]
        Chairwoman Waters. Thank you.
        I now recognize myself for 5 minutes for questions.
        Following the financial crisis more than a decade ago,
    Congress determined that consumer financial protection needed a
    major upgrade when we created the CFPB, both with respect to
    the rules of the road, but also which agency was tasked with
    enforcing the law and protecting consumers in the financial
    marketplace.
        Director Kraninger, before the CFPB was created, do you
    know which Federal agency was the consumer financial protection
    watchdog?
        Ms. Kraninger. Congresswoman, the responsibilities prior to
    the Dodd-Frank Act were distributed both at the Federal level
    and certainly at the State level, and many of those agencies
    retain some of those authorities. The prudential regulators,
    the Federal Trade Commission, and, as noted, the State
    attorneys general, banking regulators at the State level, and
    other regulators in the financial services space at the State
    level.
        Chairwoman Waters. So, you do understand that it was
    generally shared between six Federal agencies: the Federal
    Trade Commission; the Federal Reserve; the Federal Deposit
    Insurance Corporation; the Office of the Comptroller of the
    Currency; the Office of Thrift Supervision; and the National
    Credit Union Administration. Which of those agencies do you
    think did the best job of protecting consumers?
        Ms. Kraninger. Congresswoman, I don't want to speak to the
    things that happened before, but I will say it is certainly
    Congress' conclusion in the Dodd-Frank Act and the actions
    taken that there was a need for the Consumer Financial
    Protection Bureau to really help coordinate and oversee
    compliance at least within the financial services sector. But
    we continue to hold very close partnerships with the other
    Federal agencies and certainly with the States.
        Chairwoman Waters. You do believe, however, that there was
    a need for the Consumer Financial Protection Bureau?
        Ms. Kraninger. I believe that Congress set out the mission
    very clearly for this agency. I take that mission very
    seriously, and I endeavor to carry out the law and carry out
    our responsibilities, supporting the staff--
        Chairwoman Waters. You do believe that there was a need to
    establish the Consumer Financial Protection Bureau? Is that
    what you are saying?
        Ms. Kraninger. Chairwoman, I would say it is very clear
    that Congress determined that, and my job is to carry out the
    law and to carry out the important responsibilities that
    Congress gave to this agency, in addition to overseeing the
    many staff members who are dedicated to this mission.
        Chairwoman Waters. So despite what you believe--because you
    won't say that you believe there was a need for it--do you
    believe that since you have the job, you are going to do what
    the job is supposed to be all about? Thank you.
        Do you believe your predecessor, Director Cordray,
    fulfilled the agency's purpose to be a strong watchdog for
    consumers?
        Ms. Kraninger. I believe that Director Cordray absolutely
    took seriously the oath that he took, that I took, and that he
    was seeking to carry out the agency's mission to the best of
    his ability and to his understanding.
        Chairwoman Waters. Do you think he did a good job?
        Ms. Kraninger. I think he absolutely carried out the things
    that he intended to carry out, and I am not going to levy
    judgment. Congresswoman, you know that I have not done that in
    general on anything--
        Chairwoman Waters. Okay. Thank you very much.
        Ms. Kraninger. Yes.
        Chairwoman Waters. I would think that you would know
    whether or not he carried out the mandate for the Consumer
    Financial Protection Bureau. Do you know how much he obtained
    for our consumers through enforcement actions?
        Ms. Kraninger. Chairwoman, certainly the enforcement powers
    that we have are important. That includes getting the best
    remedies possible in the interest of justice. That includes
    restitution, which I guess is where you are going with this.
        Chairwoman Waters. Do you know how much he was able to--
        Ms. Kraninger. Restitution and civil money penalties are
    two different means, but there are certainly millions of
    dollars in both.
        Chairwoman Waters. Let me just remind you that Mr.
    Cordray's leadership obtained for consumers, through
    enforcement actions, $12 billion for 30 million consumers. I
    think that is important for you to know, because I would
    suspect that you want to make some determination about whether
    or not you are able to have the same kind of strong consumer
    protection actions that he had, and whether or not you are able
    to return to consumers who have been harmed the kind of
    restitution that they deserve.
        And so, under your leadership during the past year, the
    CFPB has a laundry list of unhelpful actions, including a
    troubling decline in consumer financial protection enforcement
    actions, especially with respect to fair lending. Do you agree
    with that statement?
        Ms. Kraninger. I agree that we have continued to carry out
    our enforcement actions. We have had now 25, as of yesterday,
    public enforcement actions announced during my tenure. And it
    remains, again, my commitment that we will seek the appropriate
    remedies in each case. That includes restitution for consumers,
    which, in most cases, is what we obtain. Certainly, not in all,
    again, fact- and circumstance-based.
        Chairwoman Waters. Thank you very much. And I would advise
    you to see if you can answer the Members' questions directly
    rather than getting around a commitment in your answers.
        With that, the gentleman from North Carolina, the ranking
    member, Mr. McHenry, is recognized for questions.
        Mr. McHenry. I think what we are hearing this morning is a
    little bit of buyer's remorse about the structure. You are
    Senate-confirmed, are you not?
        Ms. Kraninger. Yes.
        Mr. McHenry. The President nominated you. The Senate
    confirmed you. Is that correct?
        Ms. Kraninger. That is correct, sir.
        Mr. McHenry. Are there other folks at your agency who are
    Senate-confirmed?
        Ms. Kraninger. No.
        Mr. McHenry. And under the structure of this agency, you
    are the sole decision-maker, is that correct?
        Ms. Kraninger. Yes, it is.
        Mr. McHenry. You can delegate this authority under statute
    to other people, but your responsibility is to be the final
    arbiter of these cases?
        Ms. Kraninger. Yes, it is.
        Mr. McHenry. So if we don't like it, what can we do? We can
    go to the courts, can't we? But you don't have a public
    hearing, do you? Are you required to have any public hearings
    about your rulemakings?
        Ms. Kraninger. No, Congressman, I am not.
        Mr. McHenry. Okay. What is my venue by which to comment
    about your rulemakings?
        Ms. Kraninger. I will say it is important, and it is
    certainly important to me, as you well know, to engage in
    rulemaking appropriately using the Administrative Procedure
    Act, to actually have a notice-and-comment process, to carry
    that out, to take those comments into consideration, as I make
    the best decision possible moving forward on any particular
    issue.
        Mr. McHenry. Okay. So, notice and comment, you can take
    that into consideration. If we don't like it, there is not a
    public hearing. There is not a place for maybe Members of
    Congress to show up and protest at your hearings like some of
    them did at the FDIC and OCC. There is not that venue.
        Okay. What I am hearing is there is buyer's remorse among
    Democrats because a Republican President appointed the Director
    of the CFPB, and they never foresaw that that could ever
    happen. So, there is a little bit of buyer's remorse on this. I
    am not asking you to opine on it, because you are a Senate-
    confirmed Presidential appointee.
        It is our role as Members of Congress to make the policy,
    to make the law which you are to follow. And the way I see it,
    I appreciate that you are following the law. I also appreciate,
    as a Presidential appointee and being in an independent agency,
    that you don't spend time commenting about your predecessor's
    actions.
        I can, because it is my role, my proper role here on
    oversight, and they did an atrocious job with the management of
    that team they built. And so, if you look at Mr. Cordray's
    regime, there was a movement to unionize because of such bad
    workplace practices. And we have public reports about those bad
    workplace practices and, on top of that, a toxic work
    environment that many whistleblowers had called out.
        What I appreciate is your undertaking to fix those
    problems, to make this agency work, and that means hiring
    practices, good procedures so you can have staff development
    that is commensurate with an agency with your enormous power.
        Along the lines of accountability, you are the first
    Director of the agency who was appointed via a recess
    appointment. Is that correct?
        Ms. Kraninger. Yes.
        Mr. McHenry. Okay. And didn't the Court, in a 9-0 ruling,
    strike that down as unconstitutional?
        Ms. Kraninger. Yes.
        Mr. McHenry. Okay. Now, you said before you were Senate-
    confirmed, that you believed the structure of this Bureau was
    unconstitutional. Is that correct?
        Ms. Kraninger. Yes, Congressman, we did certainly submit
    our request to the Supreme Court to actually hear the case--
        Mr. McHenry. No, no. But before you were appointed, you
    said it was unconstitutional and the structure. And after you
    were appointed, you kept the same view.
        Ms. Kraninger. Just to be clear, Congressman, beforehand, I
    did say that it was something that I knew would come before me,
    but that I had not prejudged it until I was in the position.
        Mr. McHenry. Okay. And so, based on the information you got
    in this big public hearing, because you were required--I'm
    sorry, you are not required to hear anything. But you decided
    after reviewing what, that the agency is unconstitutional?
        Ms. Kraninger. That is really the position that the Bureau
    had taken in prior court proceedings, the position that the
    Government had taken in prior court proceedings, and it was
    certainly the opinion of judges in many prior proceedings.
        Mr. McHenry. Okay. So based off of that, you, in court
    filings, were saying this Bureau is unconstitutional?
        Ms. Kraninger. That the removal provision associated with
    the Director of the agency is unconstitutional and that the
    Supreme Court really is the one that should opine on that or
    Congress.
        Mr. McHenry. So getting to that, if the Supreme Court rules
    that that process is unconstitutional--I think it would be good
    to hear from my Democrat friends who have been so focused on a
    single Director to come up with a form of compromise so this
    Bureau can continue to function. And if they are interested in
    legislating along those lines, we are all ears over here to
    come around to things that we proposed when it was a Democrat
    who held this seat, and we have been consistent about our
    policy with a Republican in the seat.
        We look forward to this compromise because I believe the
    Supreme Court will demand it of us before the summer's end.
        And with that, thank you for being here today. Thank you
    for your openness in the process, and thank you for adhering to
    the rule of law, and thank you for opining about the things you
    should and staying away from the things you shouldn't, that are
    perfectly in our political arena to hash out and fight about.
        So, with that, thank you, and I yield back.
        Chairwoman Waters. The gentlewoman from New York, Mrs.
    Maloney, is now recognized for 5 minutes.
        Mrs. Maloney. Thank you. Welcome, Director.
        Director Kraninger, are you generally familiar with the
    Bureau's 2016 consent order with Wells Fargo over the fake
    accounts scandal?
        Ms. Kraninger. Yes, Congresswoman.
        Mrs. Maloney. So you know that the Bureau penalized Wells
    Fargo for conduct that it had determined was abusive under the
    law, and the Bureau also found that Wells Fargo's actions were
    both unfair and deceptive. The Bureau fined Wells Fargo $100
    million for these violations, and that fine would have been
    substantially lower if the Bureau hadn't charged Wells Fargo
    with abusive conduct also.
        But just 2 weeks ago, the Bureau released a policy
    statement on its abusiveness authority, which said that the
    Bureau would no longer penalize a conduct as abusive if it is
    already penalizing the same conduct as either unfair or
    deceptive. Under this new policy statement, would the Bureau
    have charged Wells Fargo with abusive conduct, or would Wells
    Fargo have gotten off even easier under your new policy?
        Ms. Kraninger. I appreciate the question, Congresswoman,
    because it gets to the heart of this matter. What I am seeking
    to do with the policy statement is make sure that we clarify
    abusiveness and separate it from deceptiveness and unfairness,
    because Congress explicitly gave us those three authorities to
    determine those kinds of acts and practices separately or
    provide claims to the courts and allow them to do that.
        And so, we are looking at distinguishing the facts
    associated, but in no way should that policy be read to say
    that we would not bring abusiveness claims. The very intention,
    though, is to make sure that we are continuing to build on a
    clarity and an understanding that abusiveness is what it is.
    The ability to take unreasonable advantage of a consumer is
    something that we absolutely should go after. That is what
    Congress said.
        But having an unreasonable advantage over a consumer and
    taking unreasonable advantage of a consumer is something that
    clearly needs some distinction and distinguishment. And so in
    terms of the Wells Fargo priors, I looked very carefully when
    we wrote this policy statement, and I signed it at the prior
    position the Bureau had taken to make sure that we are able to
    again distinguish those things.
        But the goal going forward is just to say that we--
        Mrs. Maloney. Okay, reclaiming my time, it seems pretty
    obvious to me that Wells Fargo would have gotten off even
    easier under your new policy statement, and I find that deeply,
    deeply disturbing.
        But I do want to get to overdraft. At one of our previous
    hearings, I asked if you would pledge to crack down on unfair,
    abusive, and deceptive overdraft policies, and I asked you to
    crack down on transaction reordering, which is where banks
    reorder their customers' transactions solely for the purpose of
    maximizing the number of overdraft fees they can charge. You
    agreed that this practice was unfair, and you said you would
    look into using every tool you had to combat this practice,
    including enforcement.
        So my question is, have you brought any enforcement actions
    for unfair overdraft practices since the last time you were
    here?
        Ms. Kraninger. Congresswoman, there are no public
    enforcement actions specifically on that, but I pledge to you
    that I absolutely--
        Mrs. Maloney. The answer is no. Have you brought any
    enforcement actions over unfair overdraft practices at all
    since you took over as Director?
        Ms. Kraninger. No public actions, Congresswoman.
        Mrs. Maloney. So, the answer is no. I find that very, very
    disappointing. You are the nation's top consumer financial
    regulator, and yet you refuse to take strong action on one of
    the most abusive practices facing consumers. When can we expect
    action from you on overdraft fees?
        Ms. Kraninger. Congresswoman, I cannot manufacture cases.
    They are fact- and circumstance-specific. I absolutely am,
    hrough the enforcement staff, carrying out the rigorous
    investigation of facts in cases that come to us through
    whistleblowers, through complaints, and through our own
    supervisory efforts. And we will continue to monitor those
    things and carry through our responsibilities.
        Mrs. Maloney. I am just a Congresswoman, and I get
    overdraft complaints all the time. You are the Director of
    Consumer Protection for the entire country, and you are telling
    me that you have not received any complaints on overdraft
    practices, that many people tell me trap them in never-ending
    debt?
        You haven't gotten any complaint on it to act? No one has
    complained about it in the country?
        Ms. Kraninger. To clarify that, yes. You know that we have
    the complaint database. We do take in complaints. There have
    been complaints in that area of the market. But we take those
    complaints, and we handle them accordingly, getting a
    resolution for the individual consumer with their financial
    institution, and then taking that information to analyze it to
    decide whether there should be actions on the supervisory front
    or the enforcement front. So, that is where we are.
        Mrs. Maloney. But you testified there has been no action.
        I yield back.
        Chairwoman Waters. The gentleman from Oklahoma, Mr. Lucas,
    is recognized for 5 minutes.
        Mr. Lucas. Thank you, Madam Chairwoman.
        And Director, thank you for attending today's hearing.
        You mentioned in your testimony that a critical component
    of preventing harm to consumers is to help them gather
    financial know-how and to empower consumers to choose products
    and services that best serve their needs. Could you elaborate
    on how the Small Start, Save Up Initiative encourages people to
    hit savings goals? And while you are doing that, could you
    update us on the work of the Research and Evaluation Working
    Group?
        Ms. Kraninger. Absolutely, and thank you, Congressman.
        It is an important area. Bolstering savings is really the
    number-one way that people can build their financial well-
    being, can build up their ability to address setbacks that
    happen in life, and their ability to really think through and
    make the best decisions for themselves is having that savings
    cushion.
        When I came to the Bureau, we launched Start Small, Save
    Up. We have been having extensive meetings and outreach across
    the nation with employers, with communities, and bringing
    together all of the constituencies with communities, whether
    that is the consumer advocate groups, the legal aid community,
    the faith community, or the business community, and talking
    about the things that are affecting them at their community
    level.
        And then also, financial institutions and our fellow
    regulators, who have a really good eye in what is the savings
    activity that is happening in the country? What are the
    barriers to savings for people? We are really looking
    holistically at this and trying to tackle it, again to raise
    the savings levels in the nation.
        We're also looking at a lot of the marketing and influencer
    means of reaching people. The CFPB has produced fantastic
    financial education materials, but trying to make sure that we
    get those materials out is really one of the focuses, too, of
    this effort.
        And the research is part of that, too, understanding
    consumer behavior, understanding what consumers see in the
    marketplace and what motivates those kinds of things. So, we
    are really looking at it from all facets.
        Mr. Lucas. During your last visit, we discussed the fact
    that I represent 16 different Native American tribes in the
    Third District of Oklahoma, and we discussed the Bureau's
    tribal consultation policy. Can you touch on that for just a
    moment?
        Ms. Kraninger. Absolutely. And I have since had the
    opportunity to visit Oklahoma. I visited with tribal members
    while I was there and have had extensive conversations about
    where we go with this.
        The tribal consultation policy is around our rulemaking
    efforts. We do have a specific responsibility to engage and
    ensure that entities that could be affected by our rulemaking
    have the opportunity to weigh in on them. That is where that is
    specifically ongoing, but we are looking at other ways to make
    sure that we are engaging with tribes and understanding what
    their particular needs and issues are so we can help them, and
    help them help their constituents and all consumers.
        Mr. Lucas. In my few remaining moments, is there anything
    that you would like to address before my time expires?
        Ms. Kraninger. I think, Congressman, I understand the
    concerns and questions around abusiveness. But I will say that
    there is no lack of ability to bring forward cases. I think
    recognizing the uncertainty that is here, there is also a
    responsibility to make sure that we are bringing the strongest
    cases forward around defining abusiveness so that we don't get
    bad court rulings on this.
        That is another risk. It is imperative when you bring an
    enforcement case forward that you have the assurance of the
    facts and the basis for those cases, and so I am happy to be
    trying to provide clarity, happy to be moving forward in a way
    that is going to, again, add to the case law on abusiveness.
    And certainly, thinking towards--I did not rule out a
    rulemaking on this, but I think we need a little more time to
    work through some of the issues around how the Bureau sees
    abusiveness, recognizing some of the uncertainty.
        Mr. Lucas. Thank you, Director.
        And certainly, being a Member of Congress, we understand
    the concept of wanting to win with intensity.
        With that, I yield back, Madam Chairwoman. Thank you.
        Chairwoman Waters. The gentlewoman from New York, Ms.
    Velazquez, is recognized for 5 minutes.
        Ms. Velazquez. Thank you, Madam Chairwoman.
        Director Kraninger, I was pleased by the Bureau's decision
    to extend the QM patch, which will help millions of borrowers
    attain the dream of home ownership. According to media reports,
    the Bureau is also considering broader changes to the ability
    to repay qualified mortgage rule, which will be released in a
    Notice of Proposed Rulemaking no later than May.
        How is the Bureau working to ensure that borrowers from
    low- to moderate-income (LMI) communities, particularly African
    Americans and Latinos, will not be disproportionately impacted
    by this proposal?
        Ms. Kraninger. Congresswoman, it is an important question
    and one that we struggled with as we looked at this. We knew
    that the patch was intended to expire. There was some
    expectation that the nonqualified mortgage space would actually
    expand, and therefore, again, you would deal with some of the
    very borrowers that you are concerned about through perhaps
    nonqualified mortgages, in addition to qualified mortgages. But
    that has not happened.
        So I think that is really where this is. How expansive
    should qualified mortgages be? How do we balance the issues
    that you are raising? And we are really looking carefully at
    that.
        Ms. Velazquez. The most important question for me is, how
    will considerations of this community be reflected in the
    proposed rule?
        Ms. Kraninger. I can tell you that I personally, and Bureau
    staff, have met extensively with consumer advocate groups and
    other community groups on this topic, and on other topics, and
    we are taking all of those things into account as we move
    forward.
        Ms. Velazquez. Well, we are watching, and any proposal that
    negatively impacts Blacks and Latinos to purchase a home will
    be unacceptable.
        So, Director, the last time that you were here, I expressed
    to you my concern and the concerns I was hearing from consumer
    lending and fair housing groups about the CFPB's decision to
    retire the HMDA Explorer tool. Since that time, what steps have
    you taken to address the concerns of these groups, and what
    remedies have you considered?
        Ms. Kraninger. There are myriad conversations that have
    been happening since that time. The HMDA Explorer tool remains
    available, but as you might recall, it is not something that
    can be used because it is just not supported anymore. We don't
    even have staff who can support that technology because it is
    older and was stood up pretty quickly to meet some of the
    needs.
        We have a new tool that is working with the new data, and
    we are talking to the advocacy community and others to make
    sure that we get the right features into that tool that are
    needed for them to do the analysis they would like to do.
        Ms. Velazquez. After you issued your new tool, what do you
    hear from the groups?
        Ms. Kraninger. It has been well-received because we have
    continued to build on the capabilities that are available
    there--
        Ms. Velazquez. Yes. Excuse me. I have a letter here that
    was sent to you by 80 groups, including NCRC, and I am going to
    quote: ``Our members and allies are concerned that the CFPB is
    implementing public dissemination of HMDA data in a manner that
    thwarts its statutory purpose.''
        What is your response to that?
        Ms. Kraninger. I can tell you, Congresswoman, I am familiar
    with the letter. I responded to it very quickly. We are talking
    about more data than has ever been available before and--
        Ms. Velazquez. What did you say in your letter to them?
        Ms. Kraninger. Noting the substantial changes that were
    made in the rulemaking and the data collection is really what
    this is about. And it is hard for basic users of a system to
    understand all the analytical capabilities. We are going to do
    some webinars to help them understand how to use the new tool.
    We are going to talk to folks again about what kinds of things
    in terms of reports they want to see, but I can tell you they
    have better reports than they have ever had available to them
    before.
        Ms. Velazquez. Ma'am, in your response, you agreed that the
    data browser posed some challenges for users, but that you were
    looking to breach the information gaps that users face and
    develop additional resources for them to use the data. This is
    the letter that you sent to them on Tuesday. How exactly are
    you working to breach this information gap, and what additional
    resources are you considering?
        Ms. Kraninger. We have a really talented team of people
    working on this and talking to consumer groups.
        Ms. Velazquez. Yes, yes, yes.
        Ms. Kraninger. We are going to do some webinars.
        Ms. Velazquez. Director, I know that, and I know that as
    Director of the CFPB, you are also a member of the FDIC Board
    of Directors, correct?
        Ms. Kraninger. Yes.
        Ms. Velazquez. So did you vote in favor of the FDIC signing
    onto the OCC's recent CRA proposal?
        Ms. Kraninger. I did.
        Ms. Velazquez. By eliminating the HMDA Explorer tool and
    making it more difficult for public dissemination of HMDA data,
    how are you expecting fair housing groups and even us elected
    officials to have access to that information? Is that how you
    empower consumers? That is what you said to Carolyn Maloney,
    that you were holding a lot of meetings around--
        Chairwoman Waters. The gentlelady's time has expired. Thank
    you.
        The gentleman from Missouri, Mr. Luetkemeyer, is recognized
    for 5 minutes.
        Mr. Luetkemeyer. Thank you, Madam Chairwoman, and welcome,
    Director Kraninger.
        The chairwoman keeps talking about, and a number of other
    Members continue to throw out the figures of the amount of
    money that was recovered by your predecessor, Director Cordray.
    I have been here through this entire time, and I can tell you
    that the money, a lot of it, was not necessarily as a result of
    finding bad actors. It was about issuing guidance and enforcing
    that and extorting the money from those entities.
        The previous Director played very fast and loose with the
    law. He played very fast and loose with the rules and created
    guidance with which he could enforce and then beat over the
    head the various entities. I have had numerous meetings with
    those individuals and groups, and that is the case. So it is
    very disconcerting to me to continue to hear these numbers
    being thrown out whenever it is very disingenuous, and
    misreporting actually went on.
        I am very thankful that you are trying to do something with
    abusiveness. I have always argued that this is a very nebulous
    term. I don't think there is even a definition in law anywhere
    that actually tells you what abusiveness is. It is whatever you
    deem it to be. And for you to come in and give us an
    explanation of what you believe it to be and how you are going
    to enforce it, I think is very instructive, and I thank you for
    that.
        To me, this is a great way to begin to rein in some of the
    egregious behavior that was there in your predecessor's
    Administration. So, with that, let me begin with regards to the
    small-dollar rule.
        Last year, I, along with 24 of my colleagues, sent you a
    letter regarding the payments provision of the small-dollar
    rule. Can you give me an update on where this rule stands, and
    are you making changes to the payments provision?
        Ms. Kraninger. Congressman, the rulemaking, the NPRM
    comment period closed last year. We are working our way through
    an extensive number of comments, frankly, on that rule, which
    is understandable. We have aimed for a determination on a final
    rule that would be issued in April.
        So, that is where that stands. There was a petition on the
    payment provisions that is still pending, and I expect to be
    able to provide clarity on that petition and response to it at
    the same time. So, that is the timeline for that small-dollar
    rulemaking effort.
        Mr. Luetkemeyer. Okay, thank you.
        With regards to TRID, I want to thank you for your action
    reviewing the TILA-RESPA Integrated TRID rule. I think it is
    important to ensure that this rule is achieving its goal of
    combining certain mortgage disclosures. I think the amount of
    paperwork in a mortgage is a major issue that this committee
    needs to address.
        If you look at the stack of papers that it takes to make a
    loan today, from State-mandated forms, federally-mandated
    forms, and lender-mandated forms, I think we need to get
    everyone together and really simplify the process and think
    about redoing it. We had an individual representing one of the
    entities in here not too long ago, and he had a stack of papers
    literally this tall.
        All of the folks behind me were kind of giggling about it,
    saying, ``I wonder how may pages are there?'' So I asked him,
    and he said, ``Congressman, we no longer measure by the page.
    We measure by the pound.''
        This has to stop. Nobody reads it. You get writer's cramp
    initialing all the pages. They are superfluous. They don't mean
    anything. We have to get together and find a way to do this.
        I guess, to my point, are you examining the rules to try
    and find ways that you can consolidate this? And if so, how are
    you doing? Can you point to some of them that you are refining
    or getting rid of or whatever?
        Ms. Kraninger. Yes, two things. One, you mentioned the
    assessment. We are in the midst of the 5-year assessment of
    TRID since it has been issued, and we are getting comments back
    from a lot of entities around the cost of compliance and the
    utility of some of the requirements there, matching that
    against what is in the statute and making sure that we are
    meeting the statute.
        But there has to be a better way to do this. I completely
    agree with you and the many who have noted this to me. I would
    offer the trial disclosure policy, which is one of the
    innovation policies that we issued in September. We are having
    a lot of conversations with different entities around that,
    including consumer advocates. I think we all want better
    understanding by consumers of what financial terms and
    agreements they are making, their ability to understand that,
    the ability to provide, frankly, the information at the right
    time.
        Closing is not the best time for all of these types of
    disclosures. Looking at the timing elements of TRID, what is
    statutorily required and what is not, and see if we can do this
    in a much more simplified way. So, the disclosure policy
    process through our innovation policies is where I hope to be
    able to test some different ways to get simplified and better
    disclosure.
        Mr. Luetkemeyer. Are you looking at technology perhaps to
    be able to improve some of the things, either put stuff online
    or make it available or streamline it that way? Is that a
    possibility?
        Ms. Kraninger. Yes. There are a number of companies that
    are looking at electronic disclosures, again, for those
    consumers who want them. We know younger consumers absolutely
    want it electronically, and so giving them that option and
    figuring out again how we can match that with the timing
    element will be really useful.
        Mr. Luetkemeyer. To me, I think the criterion used to be,
    is this necessary? What are we trying to accomplish with this
    firm? Are you protecting the consumer, or are you protecting
    the lender, and is there a reason for this? And I think,
    hopefully, we can find a way to get through that.
        I thank you very much, and I yield back.
        Chairwoman Waters. The gentleman from California, Mr.
    Sherman, who is also the Chair of our Subcommittee on Investor
    Protection, Entrepreneurship, and Capital Markets, is now
    recognized for 5 minutes.
        Mr. Sherman. Director, as often, when you come here, I
    remind you of Dodd-Frank Section 1022, which allows you to
    scale regulations, particularly when you are dealing with
    smaller institutions. Many have talked about the importance of
    having a clear QM rule and QM patch, and I think you understand
    that. I hope that you act well in advance of any deadline.
        But I notice from your testimony that you are moving in a
    particular direction that I am not sure is supported by the
    law. You say you are moving away from a debt-to-income
    threshold, which looks at whether the borrower can afford the
    loan, to a pricing mechanism where you focus on, is the loan at
    a fair price?
        This would lead you to the conclusion that a billionaire
    does not have the ability to repay a million-dollar mortgage if
    it is a 7 percent mortgage. And that someone working at minimum
    wage does have the ability to repay a million-dollar mortgage
    if it is offered at 4 percent.
        Does the statute allow you to ignore whether this borrower
    can repay and substitute what could have been the rule and what
    in many areas perhaps should be the rule, and that is, is the
    interest rate a good interest rate?
        Ms. Kraninger. Congressman, first and foremost, the
    statutory provisions obviously carry forward and remain, so
    consideration of debt-to-income ratio is actually in the
    statute. It is a requirement.
        In terms of the way that is articulated, the challenge has
    been with the threshold of 43 percent. And some of this gets to
    again whether a loan will actually end up performing well, and
    what is the best measure of that?
        Mr. Sherman. If I can reclaim my time and make a couple of
    comments, you are kind of saying it must be something the
    borrower can't afford to repay, or the bank wouldn't make the
    loan at a good interest rate. The only way you can stay in
    business making loans to people who can't afford to repay is if
    you charge so much in interest rates that you make up for a
    high level of defaults.
        I would also point out that there is a regional variation
    that certainly affects our City of Los Angeles. People in L.A.
    make $7,000 a year more, and we spend it all on housing. That
    is the L.A. family. And so, with that lifestyle being one where
    you spend less on heating and some other costs, and you spend
    more on your house, you may want to look at regional
    variations.
        I want to look at PACE loans. In March, you issued a Notice
    of Proposed Rulemaking, but you don't seem to have taken any
    steps since then. The law signed in May 2018, whose title
    exceeds the amount of time I have to repeat it, requires you to
    have regulations setting out requirements, implementing at
    least the purposes of TILA and ability to pay requirements.
        What is the stall on PACE loans? It has been about 10
    months.
        Ms. Kraninger. The latest, Congressman, is actually a data
    collection that we are engaged in now to get better information
    from PACE lenders about the marketplace. That is where we are
    right now, and we are going to use that, that data collection,
    to form the basis of the rulemaking.
        And we are moving as expeditiously as we can. I know it is
    not satisfactory, but defining the unique nature of PACE, which
    is what Congress asked--
        Mr. Sherman. It is very similar to any other trust deed you
    get on your house. If you encumber your home to build a new
    bedroom, maybe you can afford that, maybe you can't. Say it is
    the same answer whether it is a new air conditioning system or
    a new bedroom.
        Do you have an estimated time of arrival on this?
        Ms. Kraninger. I don't at this particular moment,
    Congressman, but we will get back to you. The next step is
    really the Notice of Proposed Rulemaking after this data
    collection, though.
        Mr. Sherman. It has been several months since the comment
    period closed regarding the January 2021 expiration of the QM
    patch. What other information can you give us about your plans
    regarding the pending sunset, and what assurance can you give
    the mortgage markets?
        Ms. Kraninger. Yes. I sent the letter back to Senator
    Warner and others on this and made that available more broadly
    because I wanted to make sure we were sending signals to the
    marketplace about this very important market in mortgages. I
    know time is running out--
        Mr. Sherman. I will ask you to pick up the pace on PACE.
        Thank you very much.
        Chairwoman Waters. The gentleman from Wisconsin, Mr. Steil,
    is recognized for 5 minutes.
        Mr. Steil. Thank you very much, Madam Chairwoman.
        And thank you, Director Kraninger, for being here.
        We are about an hour into this hearing, and I think my
    colleague from North Carolina's comments at the beginning that
    there might be buyer's remorse on the structure of the CFPB
    just continues to get reiterated in this room. As I look at the
    battling PowerPoints going back and forth, it seems like there
    is a desire on both sides to have more transparency and
    accountability in the CFPB, and I think there is an opportunity
    for us at some point to come together and actually put the CFPB
    under an appropriations process and to set up a commission
    structure.
        That is not for you. That is more editorial for the
    committee as a whole, that there is a real opportunity for us
    to improve the structure that was set up for the CFPB. Let us
    dive in.
        The UDAAP rule in particular, Director Kraninger--your
    predecessor declined to clarify what the CFPB considers to be
    an abusive act or practice in the context of the Bureau's UDAAP
    authority. And previously, the CFPB exploited this ambiguity to
    stretch its enforcement authority. Among other things, it
    caused a lot of confusion for covered firms, to the detriment
    of American consumers.
        With that in mind, I want to commend you for issuing a
    policy statement last month clarifying how the Bureau intends
    to exercise its supervisory and enforcement authority with
    respect to abusive acts and practices. If I can, I would like
    you just to clarify something a step further that was footnoted
    in the remarks, that I think has an opportunity for further
    clarification.
        The Bureau, I think, very clearly intends to apply this
    policy statement on a going-forward basis. But it left some
    ambiguity as to the discretion that the Bureau would be using
    in regards to those that are currently pending in court. Can
    you comment on how the CFPB will review prior cases in which an
    abusive claim has previously been made, and how cases will be
    prioritized?
        Ms. Kraninger. Certainly, looking at the history of abusive
    claims was part of the process of coming up with this policy,
    and at this point, we have not amended any filings in court and
    don't intend to related to this specifically.
        Mr. Steil. Thank you very much, and thank you for putting
    forward a statement as to how you guys are going to be
    analyzing those. I think those were real ripe for abuse
    previously.
        Let me ask you a question that I think you have been asked
    before and you have stated before, but I think it is just
    important to get it on the record. In particular, can you say
    that the CFPB does not have the legal authority to regulate the
    business of insurance?
        Ms. Kraninger. Yes. That is explicitly excluded from our
    jurisdiction in the Dodd-Frank Act.
        Mr. Steil. I appreciate it. I just think it is important to
    continue to reiterate that because, as noted, we don't have the
    full transparency and authority in the event that you are no
    longer Director, and we end up with another Director in the
    future.
        First, thank you for working with the Department of
    Education on a new Memorandum of Understanding regarding how
    student borrower complaints information will be handled. Do you
    anticipate the CFPB and the Department of Education negotiating
    additional agreements to clarify jurisdictional issues on
    supervisory services, for instance?
        Ms. Kraninger. Yes. Our conversation on that is ongoing,
    and I think as an important note in terms of where we are going
    with this, the Department of Education is changing through
    their next-gen process the way that they deal with contractors
    who are doing servicing of Federal loans. We want to work with
    them on that and support them, which is what we have tried to
    do all along in terms of carrying out the supervision, I guess
    oversight, through our examination process, making sure that we
    are consistent with their policies. And so that is what we are
    going to work with them on.
        They are looking to develop a more rigorous oversight of
    their contractors. We are looking to do that jointly with them
    so that we can carry out our responsibility for overseeing
    Federal consumer financial law, and they can carry out their
    extensive responsibilities over how program execution works and
    the Higher Education Act and their other authorities. So I
    think there is a good path forward for us to provide that
    certainty for students.
        Mr. Steil. Thank you very much. I appreciate your work in
    this area, and I yield back.
        Chairwoman Waters. 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, let me just go back briefly to a question
    that I think Chairwoman Waters asked. I know what the intent of
    Congress was. The reason they created the CFPB was to have
    someone to speak and to protect consumers. You are absolutely
    right. But her question to you was, what do you believe, not
    what Congress believes is the mission of the CFPB?
        Ms. Kraninger. I believe the Federal Government has a
    responsibility to protect consumers in the marketplace,
    consistent with the authorities that Congress has given us.
        Mr. Meeks. So you can't say that you believe in the
    mission--because most folks, when they take these jobs, whether
    you are working for the President or whomever, you do that
    because you believe in what that mission is. You want to make
    sure that you are fighting for a specific outcome. And if you
    can't state here that you believe in the mission of the CFPB,
    then it seems to me, Madam Director, you have taken a job that
    you are not committed to.
        Ms. Kraninger. Congressman, let me just clarify. I
    absolutely believe in the mission of the CFPB. I have been
    tasked with carrying it out. That is what I am definitely
    doing.
        Mr. Meeks. So, now, the Consumer Financial Protection
    Bureau--it was not named the Financial Services Protection
    Bureau. It was not named the Business Protection Bureau. It was
    not named anything else. It was named specifically the Consumer
    Financial Protection Bureau, because there was no other agency
    that had the sole mission of protecting consumers. Do you
    understand that?
        Ms. Kraninger. Yes, sir.
        Mr. Meeks. Okay. So, therefore, if you are the head of the
    Consumer Financial Protection Bureau, then part of your job
    would be to advocate for and to protect the rights of the
    consumers who may complain before your Bureau that they have
    been taken advantage of by a product, that might not have been
    an appropriate product, that is the reason why we had the
    financial crisis of 2008, because a lot of individuals were put
    into products that they should not have been put into. Is that
    correct? Do you understand that?
        Ms. Kraninger. I do, sir, yes.
        Mr. Meeks. Okay. So, now, it seems to me that what we have
    going on--let's take the industry of payday lending. It has
    been brought out that a number of consumers across this country
    have been victimized and put into debt forever because of some
    of the payday lenders' bad practices. Would you admit to that?
        Ms. Kraninger. I would tell you, sir, that we have taken
    enforcement actions against small-dollar lenders that are
    public and well-discussed.
        Mr. Meeks. But if you are an advocate for consumers, if you
    are focused on them, why would the number of cases that you
    bring have substantially declined over the last couple of
    years, as well as the fact that you have decided not to
    continue some of the regulations that have been put forward in
    regards to protecting consumers, like first principle, making
    sure that someone has the ability to pay back, and that you
    cannot, as Mr. Cordray had, you can cap the number at three of
    loans that lenders use in quick succession. This would be
    something to protect consumers so that they won't go down that
    path.
        And it seems to me that you have decided to suspend moving
    in that direction those items that will protect a consumer,
    which is the very reason that this agency was created in the
    first place. And the number has gone down, and there seems not
    to be any advocacy, because from what I am hearing you say, it
    sounds to me that you are more interested in protecting the
    financial institutions as opposed to protecting and advocating
    for the very reason why you have a job, to protect consumers.
        Chairwoman Waters. The gentleman from Colorado, Mr. Tipton,
    is recognized for 5 minutes.
        Mr. Tipton. Thank you, Madam Chairwoman. Director, thank
    you for taking the time to be here today. I was pleased to hear
    you say that you want to be able to stand up for the mission of
    the CFPB. I think part of it is we need to be able to make sure
    that all people have access to capital as well, to be able to
    meet their needs. You had a fair conversation, one side coming
    at you. Would you like to maybe make a couple of responses back
    to my colleagues?
        Ms. Kraninger. Yes. Thank you, sir, for that opportunity.
    The mission of the CFPB is critical. We are carrying that out
    using the tools that you all gave us: education; regulation;
    supervision; and enforcement. Enforcement is not the only tool.
    We are not standing beside consumers when they make every
    decision, so we need to empower them with the best information
    possible. That is why that education tool is incredibly
    important.
        Regulation, again, and supervision are around, setting up
    clarity in the rules so that entities that are engaged in
    financial services understand their responsibilities and are
    providing consumers with the information that they need.
        And then, absolutely, rigorous enforcement is part of the
    mission. We continue to carry it out. I will not manufacture
    cases. So we are absolutely doing our due diligence in
    investigations, but ongoing cases are being worked. I can
    assure you of that. There are clearly bad actors in the system
    and we will go after them.
        But we clearly have a difference of opinion regarding how
    the mission should be carried out.
        Mr. Tipton. Thank you for that, and I did also want to--
    there has been a fair amount of scrutiny on the CFPB in terms
    of some of the hiring. A little bit of irony. There was no
    concern when Director Cordray was making his hires. Do you have
    the authority, as Director of the CFPB, to be able to hire the
    people to fulfill the mission that you have been granted?
        Ms. Kraninger. I do. The authorities given to the CFPB are
    the same in Title 5 that were given to every other agency in
    the Federal Government, and I am utilizing the hiring
    authorities that I have been given. It's also worth noting, and
    appropriate to the stand-up of the agency, that the first 3
    years of the agency, they had a transition authority to hire
    outside of civil service protections. So again, that was never
    criticized, to my knowledge, and was appropriate to support the
    stand-up. But it is not as if every employee at the Bureau was
    selected under civil service processes.
        Mr. Tipton. Great. I think it is notable, admirable, right
    now that the CFPB is priding itself on being a modern, data-
    driven, government agency. I think that this needs to be an
    integral part of being able to move forward. What is the
    proposal that you are seeing under the CFPB to be able to
    actually promote something that I have always felt is critical
    for government at all levels, in terms of decision-making when
    it comes to cost-benefit analysis?
        Ms. Kraninger. I do think it is critically important, too.
    We have economists in our agency. I have looked at the number
    of them. I would frankly like to bring in a few more to help us
    with cost benefit-analysis and more rigor. That doesn't
    necessarily mean quantified. There is a qualitative aspect to
    this as well. But there is a rigor to the analytic process of
    actually determining what the impacts are.
        Very much, Congressman, you mentioned access to credit, and
    that is something that I think we need to better incorporate
    and understand as we are looking at regulatory actions, what
    impact that will have on the availability and access to
    responsible credit for consumers, the impact of any rulemaking
    on that.
        Mr. Tipton. I just wanted to be able to get your thoughts.
    We have had a number of conversations over an extended period
    of time in this committee, structurally, on what should the
    CFPB look like? A number of us have advocated, with all respect
    to you, and all respect to Mr. Cordray who preceded you, that
    you shouldn't be in full control as an individual, but to be
    able to have a five-member panel, was one of the proposals. Do
    you think that would be a better structural form for the CFPB?
        Ms. Kraninger. I appreciate why you are asking the question
    and I have pointedly not taken a position on this. This is
    absolutely something that is in Congress' purview to determine.
    And should Congress enact anything that the President signed
    and would become law, we will carry out, to the best of our
    abilities, whatever measures Congress wants to put in place, or
    changes.
        Mr. Tipton. Thank you. Just finally, I would like to give
    you the opportunity to be able to respond to some of our
    friends on the other side of the aisle in regards to settling
    pending lawsuits brought by the previous Bureau, and you not
    pursuing new actions. Would you like to comment on that? What
    are your policies? How are you moving forward?
        Ms. Kraninger. Again, Congress gave us broad authority to
    look at injunctive relief, restitution, to take the right
    action in any particular case, and that is what we are seeking
    to do. Thank you, sir.
        Mr. Tipton. Thank you. I yield back.
        Chairwoman Waters. The gentleman from Georgia, Mr. Scott,
    is recognized for 5 minutes.
        Mr. Scott. Thank you, Madam Chairwoman, and welcome,
    Director Kraninger. As you and I have discussed, and we have
    enjoyed several discussions, you know of my deep concern about
    financial education. It is a crisis and very much needed. And I
    have put forward two pieces of legislation, one which in
    targeting, because, as I said to you, it is the Consumer
    Financial Protection Bureau that should be at the front of the
    spear on financial education, because that is the first line of
    defense for consumer financial protection, is consumer
    financial education.
        And I am so delighted to know of the excellent program that
    is being developed at the Wharton School of Finance, my alma
    mater. I served on the Executive Board of Directors there for a
    while and I am very proud of the pilot program that they have
    going with the financial business sector in Philadelphia. And
    you and I have talked about that.
        We have this second bill that we are working on, because we
    have to get grants and help into these public-private sector
    partnerships. That is the key, to be able to develop the best
    instructional, the best kinds of curriculums to teach in our
    public schools. We have to start there.
        Our financial system is moving at a rapid pace. Technology
    is overwhelming us in that respect. I am also working very
    closely with Mr. Lynch, Ms. Waters, Mr. Hill, and others on
    making sure that we address this issue.
        I wanted to give you an opportunity to express how you are
    working with this. Our bill is being put together as we speak.
    But we have to do that. As I pointed out, and I hope people
    across this nation are listening to me, because we only have 17
    State public school systems that even offer one course in
    financial education, financial literacy. And we can sit up here
    until the cows come home, trying to write laws and legislation,
    you pass them, to target these predatory lenders. But if we do
    not put forward the kinds of innovative programs, like what the
    Wharton School is developing in Philadelphia with their
    financial business community, to get this into our schools, so
    we have the courses developed, to get them into our libraries,
    then we are putting our money where our mouth is.
        We have 28 million unbanked and underbanked families in
    this country. Not Mama, not Daddy, sister, brother, nobody even
    has a bank account. Technology is moving at warp speed. We are
    going through a financial services revolution and we have to
    get money and resources to those public-private ventures which
    are out there in the first place, to help make this happen.
        So you will be the executor of this grant-making authority,
    and in my last 45 seconds, I would love for you to comment on
    this and how much you are looking forward to getting this bill
    passed and getting resources out there into the public and
    private sector, and teach our young people financial education.
        Ms. Kraninger. Congressman, I truly appreciate and share
    your passion for financial education. We have had great
    conversations about that. Should this bill become law, we will
    carry it out. But I can tell you, regardless, the CFPB is
    committed to supporting those kinds of public-private
    partnerships, taking any actions we can, because, as you
    pointed out, we can't be with consumers when they make these
    decisions on their own.
        Mr. Scott. And you will help us get this law passed,
    correct?
        Chairwoman Waters. The gentleman from Indiana, Mr.
    Hollingsworth, is recognized for 5 minutes.
        Mr. Hollingsworth. Good morning. First and foremost, I
    wanted to associate myself with the great comments of
    Representative Scott. He and I have worked closely on this
    issue, and his passion for it is palpable in everything that he
    does. And I too believe that an informed, educated consumer is
    a consumer who is better able to protect themselves. These
    nefarious actors that frequently operate in this space are more
    creative than we are, and it seems that they can come up with
    more schemes than we can easily make illegal. And so, ensuring
    that customers are their first and foremost advocate is really,
    really important to me as well. So, I appreciate his work on
    that.
        I know, in 2015, though the law was originally passed in
    1975, the CFPB had expanded the number of data fields that were
    collected, and even expanded the scope of this to include
    multifamily properties. At the time, I believe they argued it
    should have always been included or it was always intended to
    be included, but certainly it was a surprise to many that they
    were included, and some commercial-to-commercial transactions
    were also included. In May of last year, the ANPR was seeking
    comments on whether to exempt multifamily and other business-
    to-business loans from HMDA was put forth. I think that closed
    in October of 2019. But I wanted to get a better update about
    that process, and whether, as of right now, the current
    thinking is that we should exempt multifamily properties or
    commercial-to-commercial loans from HMDA requirements?
        Ms. Kraninger. As you indicated, we actually extended the
    comment period on that ANPR on purpose, so that the respondents
    could have the benefit of the data that came in as a result of
    that rule. So, we are still going through the comments.
        Mr. Hollingsworth. Great.
        Ms. Kraninger. I believe that our unified agenda said that
    we would entertain, potentially, a notice of proposed
    rulemaking if we decide to proceed in July on this.
        Mr. Hollingsworth. Yes.
        Ms. Kraninger. And so, there is no posture I can tell you,
    but I can very much tell you we did get comments on the topic
    you are interested in and we are poring through them, to see
    what path to take on the proposed rule, should we move forward.
        Mr. Hollingsworth. I would only share with you that I have
    had a great number of meetings with people who are very
    concerned about this and want to see some relief provided or
    exemptions provided for multifamily and commercial-to-
    commercial loans, and a recognition that, though perhaps it was
    argued in 2015 that it should have been included and it was
    included, it was always intended to be included, that that
    certainly didn't seem to be the case for the first 30 years or
    40 years of the legislation itself. So, I appreciate that.
        I wanted to jump really big topics for a second, though,
    and talk about banks offering small-dollar, short-term lending
    products. This is something that I have worked on since the day
    I walked into Congress because, frankly, many Hoosiers back
    home, in very rural communities, rely on these products, or at
    one time relied on these products. And frankly, the banks that
    were offering them were offering them in good faith and
    creating better outcomes for these consumers. And in the
    absence of those products, they turned to perhaps more
    predatory and sundry characters for such loans, right? And
    ultimately, I want to ensure that they have access to these
    products going forward. It is something that I hear about from
    them on a week-to-week basis back home. And that feeling that
    they operate in a different economy, that they don't have
    access to the same products that urban and suburban consumers
    do is real. I wondered if you might talk about any notable
    points or any action that is coming on these small-dollar,
    short-term lending products?
        Ms. Kraninger. Certainly, one of the things that I talked
    about in this space is the need for competition.
        Mr. Hollingsworth. Yes.
        Ms. Kraninger. That absolutely will help. Consumers do have
    a desire for it. There is a significant demand, and I would say
    a need for small-dollar lending products, and certainly ones
    that are responsible. Credit unions did get a carve-out in the
    prior rulemaking, even. The banks did not. So there are some
    real dynamics with respect to how we can promote the kinds of
    competition that is going to be good for consumers in this
    space and give them better products to choose from.
        Mr. Hollingsworth. I love that, and in a lot of the data
    that I have seen, consumers were: (a) very aware of the prices
    that they were paying for those products--it wasn't as if that
    was being hidden from them and there was a lack of
    transparency; (b) really happy with those products--by and
    large, they were return users of the products or alternatively
    had rated very highly; and then (c) importantly, there were
    appropriate off-ramps to ensure that they weren't frequently
    using them and getting dependent on them. Right? They were
    reporting to credit bureaus as well.
        Do you have a timeline when you might make a final rule
    public with regard to that, and some of your thoughts on that?
        Ms. Kraninger. The final rule consideration, we have set in
    the unified agenda, so April would be when we are going to put
    that out. We are going to deal with a petition also on the
    payments provisions, which again, I know financial institutions
    have argued that there were some products pulled into that,
    that were--
        Mr. Hollingsworth. Unintended.
        Ms. Kraninger. --unintended. So just working through all of
    that and certainly moving forward in a way that is transparent
    in April is what I am planning to do.
        Mr. Hollingsworth. I really appreciate your efforts and
    work in that space, because it is really important to Hoosiers
    back home. Thank you so much, and I will yield back.
        Chairwoman Waters. 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. And I thank the
    Director for appearing.
        Madam Director, I too am concerned about data collection,
    and my concern has to do with why we collect the data. Would
    you give me your rationale for why HMDA data and the equivalent
    data collected, hopefully by the CFPB, is important?
        Ms. Kraninger. Yes, Congressman. The Home Mortgage Data Act
    really was a Disclosure Act. It is about disclosing home
    mortgage data so that that is available publicly, so that there
    is the opportunity for everyone to see the kinds of activity
    happening in that space. So, that was clearly part of the
    congressional intent, and as a fair lending statute as well.
        Mr. Green. I do concur. But why is the data important,
    please? Why is it important to know the race, the sex, the
    ethnicity? Why are these things important?
        Ms. Kraninger. Certainly, the intent is to demonstrate that
    that type of lending is happening, to note if there are any
    disparities in that, and that is the intent.
        Mr. Green. Do you believe that invidious discrimination
    exists in lending?
        Ms. Kraninger. Yes, I believe it does, and I believe it
    exists generally in society. It is an abhorrent thing and
    something that we should work to root out.
        Mr. Green. And because you believe that it exists, are you
    going to push the CFPB, as the Director, to make sure that we
    have the level of transparency necessary to ascertain whether
    the discrimination of which we speak exists?
        Ms. Kraninger. Yes, Congressman. That is certainly the
    intent of HMDA and the intent of other actions. I am looking at
    some things that we can do that will help in our fair lending
    enforcement cases as well, to really make sure that we are
    taking action where we see these types of issues.
        Mr. Green. Thank you. That is a great segue into the
    question that I would like to ask. Testing has proven to be a
    most effective means by which we can determine the existence or
    nonexistence of discrimination. Give me your views on using
    testing as a tool, please.
        Ms. Kraninger. Congressman, I think you might have even
    asked me about this before. We have used testing in this case,
    and I leave it to the enforcement staff to determine when or
    where or why they decide to use that as a means to suss out
    what might be happening at particular institutions. But it is
    something that is, again, a tool that we have available to us,
    that we use.
        Mr. Green. I don't see, in your report, an indication of
    the extent to which you are using testing. I don't see an
    indication as to the efficacy of your efforts. Can you give me
    some indication as to how effective testing has been and to the
    extent to which you are utilizing it?
        Ms. Kraninger. Congressman, I don't want to necessarily
    show our hand in a public setting around how much we use it or
    otherwise; that is investigative information that is sensitive.
    I am happy to talk to you about that further, though.
        Mr. Green. I will be honored to talk to you about it
    further, and I don't mean to be rude, but I have little time.
    You see, the deterrent impact is lost when we talk about it
    privately. We need to talk about the fact that there are people
    who are being tested, and that people are being caught engaging
    in invidious discrimination. So a private meeting does not help
    us with a deterrent impact of the testing itself. So again, I
    would ask, give me some indication as to the extent that we are
    doing it and the impact that we are having.
        Ms. Kraninger. I can tell you that the Department of
    Justice and the CFPB both have that ability and authority and
    that we use it.
        Mr. Green. Would you, in your next report, give some more
    definition to the impact that testing is having and the extent
    that you are utilizing it, please?
        Ms. Kraninger. I promise you, sir, I will take that back
    and we will talk about what additional information we can
    provide that will get at what you are looking for.
        Mr. Green. I would appreciate it greatly, because again, it
    is the deterrent impact, knowing that there are testers out
    there, knowing that you must abide by the rules and regulations
    or you may find yourself in litigation. That is the impact that
    we are looking for. Aside from catching people, I would like to
    deter people. I would like to prevent invidious discrimination.
    So this would be very helpful, and I thank you.
        I yield back, Madam Chairwoman.
        Chairwoman Waters. Thank you. The gentleman from South
    Carolina, Mr. Timmons, is now recognized for 5 minutes.
        Mr. Timmons. Thank you, Madam Chairwoman, and Director
    Kraninger, thank you for all the work you are doing at the
    CFPB. We appreciate you taking the time to come and speak with
    us.
        I also want to thank you for the timeline on the small-
    dollar rule. We have been asking about that, and I know it has
    been very challenging to get a final date. April sounds good.
    Could you talk about the process? How long was the public
    comment period open? How many comments did you receive? What
    use was that? Just briefly.
        Ms. Kraninger. Certainly. The notice of proposed
    rulemaking, I believe was issued last April. The precise date
    is escaping me at the moment, but it was a 90-day comment
    period. We did receive 190,000-plus comments. Many are repeat
    comments that are organized by all sides on the issue, with
    multiple people submitting it, so that is something to pore
    through. We provide all of that on the public docket as well,
    so that did take a little time, again, to get some of those
    comments on the public docket. So, those are available fully
    for everyone to review, while we are reviewing them and
    determining what responses go to which comments. And anything
    that we rely on in the rulemaking process, we must address, and
    we will address in this process.
        It is time-consuming to move through all of that, but we
    are moving smartly to come to resolution on this issue.
        Mr. Timmons. It is also productive, I imagine. There are
    some things that you may not have included in your initial
    analysis and that was a productive process.
        Ms. Kraninger. Absolutely, yes. I certainly believe fully
    in the transparency that notice-and-comment provides, and the
    opportunity to go back and forth with the public and see the
    dialogue on that.
        Mr. Timmons. Thank you. I want to move to the 2017 final
    rule on payday lending and how it would impose unnecessary
    regulations on bank loans that do not raise consumer production
    concerns. For example, bridge loans, revolving lines of credit,
    and loans secured by securities held in a brokerage account
    would all be subject to the same requirements as a two-week
    loan for $500.
        Is there any justification for using a rule targeting
    payday loans to regulate traditional loan products offered by
    banks?
        Ms. Kraninger. I can tell you, sir, that we did get a
    petition to assess some aspects of what you are outlining. I
    have certainly heard from financial institutions and others
    about products that may have inadvertently been pulled into the
    small-dollar rule. And so responding to that petition, as I
    mentioned to others, is something that we are going to do at
    the same time, in April, so that we can provide some clarity
    around some of these questions and a path forward there.
        Mr. Timmons. Great. Thank you. One last question. What
    steps have you taken to create better relationships between the
    Bureau and the industry participants, supervisors, and
    regulators?
        Ms. Kraninger. I believe it is critically important. Again,
    we need financial institutions to understand what their
    responsibilities are, to provide consumers with the information
    that they need to make good decisions in compliance with the
    law. And so that outreach and ongoing engagement is important.
        I can also tell you that I have done something a little bit
    differently here than what has happened in the past at the
    Bureau, which is bringing multiple stakeholders together so
    that we can solve a problem. It is not just about meeting with
    the financial institutions alone. It is having the advocates in
    the room as well so that they can provide their perspective,
    and the problems that they are seeing, and we can get to
    resolution and have a true conversation about the policy issues
    associated, the access issues, the problems that real
    individuals are having, and come to resolution.
        I am excited about all of the opportunities to keep doing
    things like that, to have the kinds of public hearings that the
    ranking member mentioned, as we did on debt collection. So we
    are really pulling together different parts of the country,
    frankly, even, to talk about these things and solve problems.
        Mr. Timmons. That is good. Thank you so much. I yield back.
        Chairwoman Waters. Thank you. The gentleman from Illinois,
    Mr. Casten, is recognized for 5 minutes.
        Mr. Casten. Thank you, Madam Chairwoman. It's nice to see
    you again, Director Kraninger.
        It has been a little over 2 years since Secretary DeVos
    terminated two MOUs with the CFPB to protect student loan
    borrowers. One facilitated sharing complaint information and
    one facilitated sharing supervisory information. I want to make
    sure I understand the MOU that you announced, I think on
    February 3rd. You have reestablished the MOU that allows your
    complaint information sharing. Is that correct?
        Ms. Kraninger. That is correct.
        Mr. Casten. Okay. In a letter dated April 23, 2019, to
    Senator Warren on this topic, you said, and I quote again, and
    this is almost a year ago, ``The Department continues to have
    access to the Bureau's public complaint database and Bureau
    staff continue to analyze complaint data and can provide that
    analysis as technical assistance if requested by the
    Department.''
        Does the Department of Education have more than one
    complaint database?
        Ms. Kraninger. I am not 100 percent sure on that, sir, but
    I don't think they have more than one database. I am not sure
    what their structure is. But we are absolutely continuing to
    share the information.
        Mr. Casten. I am simply asking, on April 23rd, you said
    that you already had something in place that does what the MOU
    you just issued says you have.
        Ms. Kraninger. I understand what you are saying. It is fair
    to say that we continue to work together to address complaints,
    even without the MOU in place. That is true. But what the MOU
    does is provide the certainty and clarity on how this is going
    to work, the roles and responsibilities, so that we can move
    out in a way that is more formalized and agreed to.
        Mr. Casten. Okay. I am going to take that as the current
    MOU does not in any way change your oversight authority.
        I want to turn to the second MOU that allows for
    supervisory information sharing. In this same letter, April
    23rd of last year, you said, ``It is a priority for the Bureau
    to make progress on a new MOU. I want to have the Private
    Education Loan Ombudsman in place to have that conversation.''
        Have you now put that individual in place?
        Ms. Kraninger. Yes. Bob Cameron has been on board since
    about September, and it is one of the first things he did was
    the complaints MOU, and then we have a head of Supervision,
    Enforcement, and Fair Lending, and one of the first things he
    did was move with the Department of Education on supervision.
        Mr. Casten. Who is responsible for working on the
    supervisory MOU?
        Ms. Kraninger. Bryan Schneider is.
        Mr. Casten. How long has Bryan Schneider been with the
    CFPB?
        Ms. Kraninger. I think since October, November.
        Mr. Casten. Of which year?
        Ms. Kraninger. November of last year.
        Mr. Casten. Okay. So he was there before. And what progress
    has been made on renewing that MOU?
        Ms. Kraninger. We are still in discussions on the MOU, but
    I can offer at least one thing that is very, I think, positive.
    We are going to send detailees to the Department of Education
    to work together on how we can jointly go in and conduct
    oversight. We are going to do exams for our authorities under
    Federal consumer financial law, and they are going to be doing
    their contract oversight. And so we are looking at how we set
    up the process to make that happen.
        Mr. Casten. I think that is terrific. You appreciate my
    concern that a year ago, we said we are going to work on the
    supervisory issues. A year ago, we said we are going to work on
    the data issues. And we have one MOU that essentially
    reinforces what was already done and the other one hasn't made
    any progress. I would like to do that now and not in the
    future.
        I want to turn to student loan servicers. A July report
    submitted to the White House by Secretary Mnuchin criticized
    the Education Department's oversight of the student loan
    servicing companies and reported that a number of loan
    servicing failures and inconsistent practices had caused
    financial harm to students. We, in Congress, have previously
    called on your agency to seek a court order to compel the
    Department of Education to provide access to information on
    student loans, and your agency has so far refused to do that.
        I want to follow up on your exchange with Mr. Steil.
    Secretary DeVos has said that student loan servicers face,
    ``appropriate federal oversight by the Department of
    Education.'' Do you agree with that statement?
        Ms. Kraninger. I agree it is their responsibility to
    oversee their contracts.
        Mr. Casten. Do you agree that they are currently providing
    appropriate Federal oversight?
        Ms. Kraninger. I can't opine on how well they oversee the
    contractual terms and program requirements that they put into
    place that are their statutory concerns.
        Mr. Casten. Hang on. I think you can. They are currently
    not providing information that the CFPB has requested on
    student loans. They are also, at the direction, to my
    understanding, of the White House, are not providing
    information to States attorneys general who are seeking legal
    action, in addition to the CFPB. So you, as the head of the
    CFPB, are you doing your job to protect the students or are you
    deferring to Secretary DeVos?
        Ms. Kraninger. Our purview of Federal consumer financial
    law is absolutely one that we continue to pursue. We have other
    authorities, as I have also pointed out. We have enforcement
    authority and we are using it in this space, and we have an
    education responsibility. And we are working through, as I
    said, the ability to jointly go in and oversee the services
    consistent with our rule and our authority.
        Mr. Casten. I am out of time, but we expect you, within the
    Executive Branch, to do the oversight that you were expected to
    do of other Executive Branch agencies. If you do not do that,
    we have to.
        Thank you. I yield back.
        Chairwoman Waters. The gentleman from Texas, Mr. Taylor, is
    recognized for 5 minutes.
        Mr. Taylor. Thank you, Madam Chairwoman. Director, I
    appreciate you being here. I noticed that you didn't get to
    completely respond to all of the questions that you have gotten
    so far. Is there anything you want to add, for the record, that
    you feel like you didn't quite get to?
        Ms. Kraninger. I would say, on the Department of Education
    issue, it is important, and to distinguish the responsibilities
    that we have. The Department of Education has a lot of
    authority under the Higher Education Act. They have the
    responsibility, obviously, to manage their contractors. The
    CFPB has a lot of contractors as well, and it is our
    responsibility to make sure that they are acting consistently
    with the terms of the contracts.
        When it comes to this notion of supervision and oversight,
    we do have a larger participant rule in place that gives us the
    responsibility and the ability to examine the larger
    participants in the student loan servicing space, regardless of
    which types of loans they are servicing, Federal loans or
    private loans. And so, that is what we are working with the
    Department of Education on.
        There are clearly some areas of overlap and question. They
    set the program parameters and requirements, but we are looking
    at Federal consumer financial law, and that is what we are
    working to finalize. It is complex. We continue to carry out
    our responsibility, as I said, through other means, but we will
    resolve the supervisory issue soon.
        Mr. Taylor. Are those issues statutory, or--in other words,
    has Congress given you some laws that you are not really sure
    what to do with, and do you have the authority to do that, or
    do we need to go back to the books and give you a set of laws
    that you can actually implement and understand? In other words,
    do we need to do our job here in Congress and give you the laws
    that you can work on, work with?
        Ms. Kraninger. I haven't found anything, Congressman. I
    appreciate the question. I haven't anything in this area, but
    it is certainly something we will look at. And I can assure you
    and others on this topic that I believe the Federal Government
    has a responsibility, and so that is part of the effort to work
    together to make sure that the Department of Education and the
    CFPB are sending the same message to servicers about what
    requirements are and making that clear. That is something that
    we continue to do.
        Mr. Taylor. Sure. And is there any other topic you want to
    just expand on?
        Ms. Kraninger. I would defer back to any questions that you
    have, sir.
        Mr. Taylor. Okay. One question I had, and I know we have
    discussed this in the past, but just in terms of thinking about
    Congress reasserting oversight over agencies, which Congress
    does, yours is a very unique agency in the way that it was
    originally structured. I think I have seen that you declined to
    defend the constitutional structure of your agency in court. Is
    that correct?
        Ms. Kraninger. The removal provisions associated with the
    Director that are in the statute, that is what the government's
    position was in Seila Law LLC v. Consumer Financial Protection
    Bureau when we petitioned the Supreme Court to take the case.
        Mr. Taylor. Do you want to go into why you chose to do
    that?
        Ms. Kraninger. Congressman, I can say it is something that
    I reviewed very carefully and took very seriously. Congress
    obviously provided a clear mission for this agency, but there
    are some questions around, again, this. And I want the
    uncertainty to be resolved. The Supreme Court took the case, so
    they will hear it shortly and will come to resolution on that.
    Congress will have the opportunity to make any changes or
    respond to that, and I think that is appropriate. I would very
    much like to see resolution on this question, because it has
    hampered the CFPB's ability to carry out its mission virtually
    since its inception.
        Mr. Taylor. And so that uncertainty is really created by an
    unclearly written law, so that is really on Congress to write a
    law that is clear and that everybody can understand. The less
    Congress does its job, the more the courts get used, and I
    think that reflects poorly on the legislative body's job of
    writing laws that are clear. Would you agree with that, or--
        Ms. Kraninger. I will leave that to you too, sir.
        Mr. Taylor. That was very respectful. Just shifting over,
    in my remaining minute, something that is certainly important
    to me is you putting up signposts on a regulatory basis so that
    people know what to do. And the first time somebody hears about
    what they are supposed to do should actually be from the
    signpost and not people pulling them over and saying, ``Hey,
    there was no speed limit here, but you were going too fast.''
        What are you doing, in your role as the Director of CFPB,
    to put up the signposts so that people know what the speed
    limits are?
        Ms. Kraninger. The clarity and transparency of the rules is
    critically important. We are engaging, on an ongoing basis,
    with entities to say, where is there uncertainty? Where is that
    hampering, the offering of things that are going to be consumer
    beneficial in the marketplace, and what is holding you back?
    How do we address that?
        And so, ongoing dialogue about that continued provision of
    guidance, continued work on rulemaking matters that are going
    to help provide additional clarity, all of that is very
    important.
        Mr. Taylor. My time is up. I yield back.
        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, and thank you to
    the witness for being here today.
        I won't, for the sake of time, go over some of the things
    that some of my other colleagues, especially Congresswoman
    Maloney, have asked about when we talk about the fair lending
    enforcement. But I will say that on page 63 of the report, it
    states that the Bureau filed one lending enforcement, so I
    think you have already gotten the gist of how we feel about
    that.
        Let me move on to the Financial Literacy and Education
    Commission. As you probably know, I have spent a lot of time
    talking with you, your staff, and anyone who will listen about
    financial literacy and the benefits of it, because so many of
    the ramifications for those who are the least of us, whether
    they are unbanked, underbanked, whether they are facing many of
    the issues that we deal with in this committee and with the
    work that you are doing.
        Also, as co-Chair of the House Financial and Economic
    Literacy Caucus, I spend a lot of time reading and looking at
    data. The Financial Literacy and Education Improvement Act that
    was passed in 2003, established a Financial Literacy and
    Education Commission that is chaired by the Treasury Secretary,
    and whose Vice Chair is the Director of the Consumer Financial
    Protection Bureau, so that would be you.
        The law states that the Commission shall meet at least once
    every 4 months. Can you tell me when the last meeting was held,
    how many meetings that you held from 2019 to now, and what was
    something significant that you came up with?
        Ms. Kraninger. I can tell you there have been substantial
    conversations around this.
        Mrs. Beatty. No, no. Just stick with me. The law says you
    must have meetings. How many meetings, just give me that number
    first, because the clock is going to run down, and I have
    several questions. How many meetings, by the law, have you held
    within the timeframe the law asks?
        Ms. Kraninger. Within the timeframe the law passed, I--
        Mrs. Beatty. ``Asks.'' It tells us. So, have you had the
    number of meetings, let's do a yes or no so we can move on?
        Ms. Kraninger. No.
        Mrs. Beatty. Okay. So that means, for the record, that we
    have not met what the law states on something that you talk
    about, and certainly is important to us.
        So I guess if you didn't meet as the law stated you should,
    and you are Vice Chair, you can't answer the other questions of
    what happened within those meetings or what they asked us to
    do?
        Ms. Kraninger. The Act does require reporting, and we have
    maintained the regular reporting. We have a lot of meetings
    to--
        Mrs. Beatty. If the law requires you to meet, and you are
    telling me you have had reporting, why didn't you meet? And you
    are the Vice Chair. It is not like you are just one of the
    members without any control. You are the Vice Chair of a major
    committee that we work on, and you know me. You know what my
    issues are. I am very transparent about standing up for the
    people and trying to get things done within the law, within a
    committee.
        So let me just move on to the next question. As you know,
    the civil penalty fund at your agency is used to compensate
    consumers who have been harmed by violation of consumer
    financial protection law. Some of this money may also be used
    by your organization to fund consumer education and financial
    literacy programs. Can you tell me if the Consumer Bureau has
    used any of the civil penalty money in the last 6 months for
    financial literacy education?
        Ms. Kraninger. We have not, Congresswoman, because we fund
    that through our regular operations.
        Mrs. Beatty. Okay. So can you tell me what you have used
    the money for in relationship, which would help those
    individuals who could not be helped otherwise?
        Ms. Kraninger. The primary purpose of the civil penalty
    fund is to provide restitution in cases of--
        Mrs. Beatty. I am going to cut you off again, just because
    of time.
        Ms. Kraninger. Okay.
        Mrs. Beatty. I understand what it is designed for. The
    question is, did you meet what it was designed for, and to tell
    me and elaborate on that please.
        Ms. Kraninger. Okay. Yes, we continue to pay out in the
    cases--
        Mrs. Beatty. Just tell me the things. Give me three. Just
    give me three that you paid for.
        Ms. Kraninger. There were several cases. One was a case
    with respect to veterans, and the entity was basically
    bankrupt. But we did a civil penalty fund fine of one dollar
    and then we have paid out, I believe, hundreds of thousands in
    that case.
        Mrs. Beatty. Okay. It says to fund consumer education
    programs. So tell me a consumer education program, and I am
    sorry, my time has run out. I yield back.
        Chairwoman Waters. The gentleman from Kentucky, Mr. Barr,
    is recognized for 5 minutes.
        Mr. Barr. Director Kraninger, welcome back to our
    committee, and let me just first thank you for your testimony
    that last year the Bureau requested that Congress provide you
    with clear legal authority to supervise financial institutions
    for Military Lending Act (MLA) compliance. You also said that
    the Bureau transmitted proposed legislative language that would
    achieve that goal, and I would note, for the record, that I
    have introduced that bill, H.R. 442, the Financial Protection
    for Our Military Families Act, in response to your request. I
    regret to state, for the record, that even though we sent a
    letter to the chairwoman asking for a markup on this bill that
    you have requested, we have been denied. So I want the record
    to reflect that the Majority is preventing you from having
    supervisory authority over MLA compliance.
        My question relates to UDAAP, Director Kraninger. First, I
    want to thank you for your responsiveness on the issue last
    month. I sent you a letter asking your plans to clarity the
    Bureau's definition of ``abusive'' and to outline how you would
    enforce the abusiveness standard on regulated entities. You
    responded to my letter, and I appreciate the policy statement,
    and I ask unanimous consent to enter into the record copies of
    my letter to you and your very timely response.
        Chairwoman Waters. Without objection, it is so ordered.
        Mr. Barr. First, I want to ask you to follow up on
    Representative Maloney's question about Wells Fargo's problem
    with unauthorized accounts. Her question suggests that Dodd-
    Frank Section 1031, which added the undefined standard of
    abusive to the unfair and deceptive acts and the list of
    prohibited activities, was essential to holding Wells Fargo
    accountable. Is that your position as well, or was the
    preexisting law that prohibited only unfair and deceptive acts
    and not abusive acts enough to prohibit Wells Fargo's conduct?
        Ms. Kraninger. I wanted to clarify, as well, so thank you
    for the opportunity, that the 2016 consent order did. Oh, okay.
    Understood. So there is absolutely our ability to get the same
    amount of restitution and other penalties associated with
    unfairness alone.
        Mr. Barr. Right. So in other words, opening an account
    without the customer's permission, that would have been
    prohibited under the preexisting unfair and deceptive acts law?
        Ms. Kraninger. In terms of the behavior in that case, and
    with respect to that consent order that is public, I will say
    the answer is yes. I will note, though, there are facts and
    circumstances in different cases, soI don't want it to be
    generalized.
        Mr. Barr. Let me get to the second question, because while
    the policy statement is a good first step, and you should be
    commended for attempting to clarify this, I do think there is
    still a lot of work to do to ensure that regulator firms have
    clear rules of the road, which I know is your intent, and I
    appreciate that.
        The guidance outlines generally how you will and will not
    enforce UDAAP standards, and it is intended to ensure firms
    know what is expected of them. But unfortunately, I will tell
    you, I have heard from community banks in my district that the
    policy statement does not provide the clarity they need and
    still does not fully remove the uncertainty about what
    constitutes ``abusive.''
        As you know, ambiguous regulations can cause financial
    institutions to opt out of providing certain products and
    services, and that uncertainty trickles down to consumers
    through higher prices and less choice.
        So in the policy statement, the Bureau leaves open the
    potential for a rulemaking. Do you plan to conduct a rulemaking
    to further define ``abusive,'' and what is your timeline?
        Ms. Kraninger. The policy statement leaves open the ability
    certainly to enter into a rulemaking action around this topic.
    I would say at this point, the Bureau really needs some more
    engagement on the topic to get to a rulemaking.
        Mr. Barr. Let me share some feedback from the firms that
    would be regulated by this. They certainly appreciate the
    policy statement avoiding this dual pleading idea of abusive
    with unfair deceptive violations arising from all the same
    facts. They like that.
        However, given the difficulties arising from the continued
    absence of the clear definition of ``abusive,'' would you
    consider separating abusive from unfair and deceptive and
    stipulate that practices only become abusive with higher
    penalties if the unfair and deceptive practices persist?
        Ms. Kraninger. I understand the interest in that, and that
    has been raised, but I would say that Congress gave us distinct
    authorities in these three areas, and so there is not
    necessarily a relationship between abusiveness and unfairness
    or deception that would lead to that kind of an elevated
    standard, necessarily.
        Mr. Barr. I hear you, but I think the concern is that we
    still don't know what abusive means.
        Ms. Kraninger. Yes.
        Mr. Barr. Even with the unfair and deceptive, that standard
    is well-defined in the law, and Wells Fargo's conduct was
    prohibited under that standard. Abusive, we still don't know
    what that means. I would argue that what abusive should mean is
    if that conduct persists, even after they violated unfair and
    deceptive, that would remove the ambiguity, and that's just a
    friendly suggestion. I yield back.
        Chairwoman Waters. The gentleman's time has expired. The
    gentlewoman from California, Ms. Porter, is recognized for 5
    minutes.
        Ms. Porter. Good morning, Director Kraninger. Thank you so
    much for being here. I wanted to ask you if you wouldn't mind
    sharing with the committee what is a HECM loan, H-E-C-M?
        Ms. Kraninger. Yes. It is a reverse mortgage.
        Ms. Porter. And what are the basic qualifications for
    getting a reverse mortgage or a HECM loan, HECM particularly?
        Ms. Kraninger. In terms of what?
        Ms. Porter. Could I get one?
        Ms. Kraninger. I don't know what your financial
    circumstances are, in terms of whether or not you could get
    one.
        Ms. Porter. I am 46 years old. Could I get a HECM loan?
        Ms. Kraninger. I can tell you reverse mortgages are
    commonly used when an individual would like to take the equity
    out of their home and use it, obviously, to deal with the
    expenses, particularly those who have paid off their homes and
    would like to age in place in their homes. And that is
    certainly the intended recipient of a HECM loan or a reverse
    mortgage.
        Ms. Porter. For a HECM loan, you have to be 62 years old,
    so I am getting there. I am going to get there, but I am like a
    decade-plus short.
        What happens to the title of your home when you take out a
    reverse mortgage?
        Ms. Kraninger. In terms of the lender being able to take
    the title?
        Ms. Porter. Let's back up. What happens to the title of
    your home when you take out a regular mortgage?
        Ms. Kraninger. It has a lien on it.
        Ms. Porter. Okay. So what happens to the title of your home
    when you take out a reverse mortgage?
        Ms. Kraninger. There is a lien on it.
        Ms. Porter. Is the title transferred?
        Ms. Kraninger. I will say certainly in the financial
    crisis, there were a lot of challenges around where titles
    resided, whether people had the proper documentation--
        Ms. Porter. Let me ask you about the--
        Ms. Kraninger. I am not entirely sure where you are going--
        Ms. Porter. Reclaiming my time, I want to understand--what
    I am driving at here is, the questions I have been asking you
    are drawn from the CFPB's one-sentence basic answers on their
    financial literacy page about reverse mortgages. So I am trying
    to assess your understanding of reverse mortgages, because you
    are in charge of educating the public about reverse mortgages.
    And it is a sort of particularly confusing product.
        What are the triggers for having to repay a reverse
    mortgage?
        Ms. Kraninger. Congresswoman, again, I appreciate the test,
    but that is not why I am here. We are here to talk about the
    policies that affect consumers in the marketplace. Having that
    conversation would probably be more helpful.
        Ms. Porter. With all due respect, Director Kraninger, I get
    to decide what is helpful in my time, but I appreciate your
    suggestion.
        Let's go back to my question. What are the three triggers
    for having to repay a reverse mortgage?
        Ms. Kraninger. I will stipulate to you, Congresswoman, that
    I don't have it in front of me, in terms of what the CFPB has
    on its website, how it defines the triggers, and what kind of
    questions and answers there are about reverse mortgages. Among
    the many thousands of pieces of information that we seek to
    educate consumers by, I would also offer that it is generally
    those who would be thinking about entering into a reverse
    mortgage and supporting those who are actually going to enter
    into a reverse mortgage.
        Ms. Porter. Reclaiming my time, you stipulated that you
    don't know when or what triggers require someone to have to pay
    a reverse mortgage.
        Madam Chairwoman, I would like to--
        Ms. Kraninger. I know you are looking for an answer that is
    printed on a piece of paper that I don't have in front of me,
    so that is what I would stipulate.
        Ms. Porter. Madam Chairwoman, I would like to introduce
    into the record the one-page, one-sentence answers from the
    CFPB's website about reverse mortgages.
        Chairwoman Waters. Without objection, it is so ordered.
        Ms. Porter. Let's move on to medical debt. Is it
    permissible for a debt collector to use LinkedIn to reach out
    to a consumer who owes a medical debt?
        Ms. Kraninger. With respect to debt collection and
    communication with consumers, there is clearly a lot of
    uncertainty in that space, which is why we have sought to
    engage in rulemaking. The Fair Debt Collection Practices Act
    (FDCPA) absolutely has restrictions on the communications that
    would be really abusive. They cannot be ongoing communications
    that are in the--
        Ms. Porter. Reclaiming my time, let's talk about your
    proposal, because you wanted to talk about the policies. That
    was your suggestion, so let's talk about that. Would your
    proposal prohibit sending a direct message to someone on social
    media?
        Ms. Kraninger. The only way that a debt collector could
    contact a consumer is if the consumer has used that means of
    communication in the proposal. I would tell you again, the
    proposal is still under consideration.
        Ms. Porter. I want to ask a clarifying question, if I may.
    Use that medium to communicate with the debt collector, or if I
    have a LinkedIn account, am I consenting to receive debt
    collection notifications there?
        Ms. Kraninger. Merely having that account is not approval
    or leave for anyone to communicate to you that way.
        Ms. Porter. Interesting. Thank you. My time has expired.
        Chairwoman Waters. The gentlewoman's time has expired, and
    I would say to the witness that with both Ms. Porter and Mrs.
    Beatty, you may respond to them in writing, for the record.
        The gentleman from Arkansas, Mr. Hill, is recognized for 5
    minutes.
        Mr. Hill. Thank you, Madam Chairwoman. Director Kraninger,
    thanks for being here today, and I appreciate your chance to be
    in Arkansas recently and do a roundtable with our community
    banks and also with consumer groups in the city. That was well-
    received, and I appreciate you taking the time to do that.
        I want to talk a bit about the qualified mortgage issue. I
    am sure you have addressed that this morning. With interest
    rates falling to historically low levels over our careers, and
    recently, in the last 3 years, jobs increasing and real wages
    increasing, do you find it concerning that we actually are
    seeing a deterioration in Fannie Mae's and Freddie Mac's
    underwriting standards? In other words, they are having DTIs, a
    larger percentage of the loans, well over 43 percent DTI, and
    they are making loans at lower credit scores, and, therefore,
    they are taking on more risk. And isn't that sort of
    counterintuitive to an environment where we have rising wages,
    more jobs, and the lowest interest rates in a long time?
        Ms. Kraninger. I can tell you, Congressman, we clearly pay
    close attention to what we think is happening in the mortgage
    markets. I defer to FHFA on the credit box and the policies
    they want to set with the GSEs around what type of underwriting
    they do. But I can tell you this is very much the heart of the
    question as we talk about what the patch has done in the
    marketplace and what replacement of that going forward looks
    like.
        It is evident that the qualified mortgage, in addition to
    the patch, is the vast majority of the marketplace, and so
    figuring out how we maintain affordable access to mortgages
    and, at the same time, the very clear parameters of ability to
    repay that were originally conceived of in the qualified
    mortgage, and allow for some nonqualified mortgages and that
    market to really expand is very much the challenge that we are
    looking at in this rule.
        Mr. Hill. That is true, but I think this Congress was very
    clear back during the debates after the crash that one of the
    principal contributors to the crash was the competition and the
    laxity in underwriting, including by our Government-Sponsored
    Enterprises (GSEs) sadly, leading to spiraling downward
    pressure for people to have more and more lax underwriting
    standards. Do you take this debate to mean that people want
    laxer underwriting standards?
        Ms. Kraninger. Oh, definitely not, sir, and thank you for
    going there too, so I could specifically say that the
    requirements of the statute around ability to repay,
    verification of income, consideration of debt-to-income ratio,
    remain. Regardless of what else we take into consideration in
    the rulemaking process, those things continue.
        Mr. Hill. I was looking at all the random--well, I
    shouldn't say random--all of the comments that you got in your
    Advance Notice of Proposed Rulemaking, and a lot of people
    suggest that a single factor like DTI is not satisfactory. But
    of course, banks that make loans on a regular basis, the ones
    that have an outstanding track record all have best practices
    for that underwriting.
        And what would you say when you read that somebody says
    relying on a single factor is a bad idea, using a hard DTI
    cutoff is unwise? These are some of the comments you got. How
    complicated do we want to make it for our originators in terms
    of determining credit, ability to repay?
        Ms. Kraninger. Having a bright line test is clearly what
    people are looking for. But it is clear that with respect to at
    least the 43 percent line as to what is a qualified mortgage on
    debt-to-income ratio, and the requirements in Appendix Q as to
    how you can determine that, what type of income you can take
    into account, how the debt is calculated. The challenges for
    self-employed individuals to meet the requirements that are in
    Appendix Q, we have a lot of comments that came in regarding
    that. So, that is largely the question.
        And so we looked at, where is the line? If it is not 43
    percent, if we are actually keeping out what are good-
    performing loans from being made as qualified mortgages, what
    is the right answer here? Is there another lens through which
    we can look at that? That is why I noted in the letter that in
    our proposed rule, we will propose an alternative to,
    particularly 43 percent, and look at a pricing threshold.
        Mr. Hill. Now what is your timing on responding with a
    proposal?
        Ms. Kraninger. I said that no later than May, we will put
    out our Notice of Proposed Rulemaking, and we expect and want
    rigorous comment on it.
        Mr. Hill. Good. I thank the Director, and I yield back.
        Chairwoman Waters. Thank you.
        The gentlewoman from Pennsylvania, Ms. Dean, is recognized
    for 5 minutes.
        Ms. Dean. Thank you, Madam Chairwoman.
        And thank you, Director, for being here again to report to
    us on the progress and questions that we have regarding the
    supervisory role and the mission that is the Consumer Financial
    Protection Bureau.
        I want to go back to the issue of student loans and student
    loan oversight. Does your agency have a supervisory role over
    Federal student loans?
        Ms. Kraninger. We issued a larger participant rulemaking
    that provided--
        Ms. Dean. Yes or no?
        Ms. Kraninger. --the oversight of larger participants in
    that student loan servicing space for both Federal and private
    loans, yes.
        Ms. Dean. That was really a simple yes-or-no question.
        Ms. Kraninger. It is the larger--
        Ms. Dean. Do you have supervision over Federal student
    loans? Yes or no?
        Ms. Kraninger. We supervise the larger participants in that
    Federal student loan--
        Ms. Dean. That is a strange place to start. I want to
    follow up on my colleague's questioning, and talk about your
    ongoing failure to do your duty in conducting oversight of
    student loan servicers specifically.
        On the heels of you coming here, you did, I think 3 days
    ago, enter into a Memorandum of Understanding (MOU) with the
    Department of Education for information sharing. I believe that
    is correct? On February the 3rd, you entered into that, because
    the Department of Education had torn these up previously.
        I want to talk to you about the MOU that my colleague, Mr.
    Casten, referenced. That is the second MOU, the supervisory MOU
    that you have been promising us so that you could resume your
    oversight responsibilities. Where are you on entering in the
    second MOU?
        Ms. Kraninger. We are still discussing that. But what we
    are doing is working on a joint examination program. We are
    going to detail some examiners to the Department of Education
    so that we can work together on exactly how we are going to do
    this. They want to go in and oversee their contractors and all
    of the contract requirements.
        Ms. Dean. Can I stop you for just a moment?
        Ms. Kraninger. And we want to oversee Federal consumer
    financial law.
        Ms. Dean. Let us layer in that last May, you revealed that
    the Department of Education was entirely blocking your
    supervisory role over the servicers, Federal student loan
    servicers, because they were not giving you the information
    based on a decree by the Department of Education. Isn't that
    correct? Information was being blocked based on what the
    Department of Education had told servicers. Correct?
        Ms. Kraninger. Yes.
        Ms. Dean. You told us--
        Ms. Kraninger. The language is in the letter, and that is
    precisely why we are having the conversations with Education
    about the best and most productive way to go forward together.
        Ms. Dean. Did you find that categorical blocking of
    information and blocking of your oversight responsibilities
    troubling?
        Ms. Kraninger. I did, and I put that in the letter to
    Congress. But I would also note that we have continued--
        Ms. Dean. Did you put that in the letter to the Secretary
    of Education and ask her to undo what she had done in terms of
    blocking your oversight responsibilities?
        Ms. Kraninger. I have spoken with her, and we are working
    together to get to, frankly, an even more productive place
    around how we do this. They have a responsibility to oversee
    their contractors, and we need to do that in concert with them
    so that we are doing our requirements--
        Ms. Dean. I will reclaim my time, because a conversation
    with someone who said that you are not going to be able to do
    your oversight doesn't seem like the effective way to change
    that outcome.
        What have you directed your Student Loan Ombudsman, Mr.
    Cameron, to do regarding the second MOU? Is he in direct
    negotiations as well?
        Ms. Kraninger. He is certainly aware of, but he is not
    responsible for, those negotiations.
        Ms. Dean. Who is responsible for those negotiations?
        Ms. Kraninger. Bryan Schneider, who is the head of
    Supervision, Enforcement, and Fair Lending.
        Ms. Dean. And why would you not have the Ombudsman be a
    part of it?
        Ms. Kraninger. The Ombudsman responsibility under the
    statute and, frankly, this has been the case since the
    beginning of the agency--it was also the responsibility of the
    prior Ombudsman--is particularly around complaints and around
    larger programmatic issues--
        Ms. Dean. But if you are blocked from doing a supervisory
    role, how can the Ombudsman actually do that job?
        Ms. Kraninger. His MOU is concluded, and he is and has been
    doing his job, including reporting to Congress on the issues he
    sees in the market.
        Ms. Dean. Speaking of the Student Loan Ombudsman, a
    position that was left open for 300 days until it was finally
    filled last year, where does the staffing stand for the Student
    Loan Ombudsman?
        Ms. Kraninger. He is in place, and he has a plan.
        Ms. Dean. How many people are--
        Ms. Kraninger. We are going to--
        Ms. Dean. What does his support staff look like?
        Ms. Kraninger. He has partial support staff right now, and
    he is about to get a full-time person soon.
        Ms. Dean. He does not have a single staffer?
        Ms. Kraninger. But he is not the only person working on
    student loan issues at the agency.
        Ms. Dean. We have a $1.6 trillion student loan problem in
    this country. It took 300 days to appoint a Student Loan
    Ombudsman. You appointed somebody who came from the servicers
    industry.
        You now have a Department of Education who has blocked your
    oversight ability. You have been weak in being able to change
    that, and he is not staffed yet. I find that strikingly against
    the mission of your department.
        I yield back. Thank you, Madam Chairwoman.
        Chairwoman Waters. Thank you.
        The gentleman from Tennessee, Mr. Rose, is recognized for 5
    minutes.
        Mr. Rose. Thank you, Chairwoman Waters, and thank you,
    Ranking Member McHenry, for arranging the hearing today.
        And Director Kraninger, thank you for being here. It is
    good to see you again.
        I want to start off by saying that I joined my House
    Republican colleagues on the amicus brief urging the Supreme
    Court to decide that the CFPB's structure is unconstitutional,
    to give Congress the opportunity to fix it and make the CFPB
    more accountable to Congress.
        Notwithstanding these shared concerns, I do want to thank
    you for your work as CFPB Director to streamline overly broad
    regulations, to build more cooperative relationships with
    businesses and consumers, and to work with Members of Congress
    to help us protect our constituents.
        Director Kraninger, I would like to ask you about something
    the chairwoman referenced at the start of this hearing. It
    seems to me that a healthy environment and an effective CFPB is
    one that creates an environment in which the consumer isn't
    harmed to begin with, and businesses comply with the law in the
    first place. Is the amount of money collected through
    restitution, in your opinion, indicative of the efficacy of the
    CFPB?
        Ms. Kraninger. No, it absolutely is not, and it is
    certainly not the only, to the extent that it is one.
        Mr. Rose. If the CFPB under the prior Director collected
    more money than the CFPB today, does that necessarily mean that
    the CFPB is doing less to protect consumers or failing to
    fulfill its mandate?
        Ms. Kraninger. No, I certainly posit that it is not an
    indication of that necessarily.
        Mr. Rose. Thank you. I am struck that if we were to measure
    other arms of the Government, say the Justice Department, by
    perhaps measuring their success or their efficacy by the length
    of sentences handed out to those who are convicted, that might
    be an analogy, and I would submit that is probably not what we
    should be looking at as a measure of the success of our Federal
    agencies and law enforcement agencies and regulators.
        I also want to call attention to some of the lines of
    questioning that I have heard today, as I believe they might
    illustrate a concern, an ongoing concern, and maybe the concern
    I have just been expressing, kind of the pop quiz nature of
    some of the questions that get directed to you. And I realize
    you make the big bucks, so that is why you get to answer these
    questions. But I think that they kind of underscore the concern
    that I and I think other colleagues of mine have about
    regulatory approaches taken by the Federal Government, not just
    the CFPB, but other regulators.
        And that is that I don't think it is ever useful when the
    regulated feel like it is a ``gotcha'' moment when the
    regulator comes to town to visit them. And so, I would
    encourage you in that spirit, and with that experience fresh on
    your mind, to encourage your staff to think of the job that
    they have as one of helping businesses serve customers in
    compliance with the regulatory framework that has been put in
    place, helping them succeed and, thereby, helping customers
    have better experiences with the service providers that they
    seek out. So I hope you will take that to heart, and I
    appreciate that.
        I want to turn now for just a moment--in your testimony,
    you mentioned that the CFPB has asked that Congress give the
    CFPB authority to supervise financial institutions for Military
    Lending Act (MLA) compliance. But one thing I am always
    concerned about is when our regulators get a little too
    ambitious, and then we are faced with mission creep.
        Under current law, who is charged with enforcing the MLA?
        Ms. Kraninger. We do have the authority to take enforcement
    action under the MLA, but what we don't have is that
    supervisory authority. And I will say the prudential regulators
    also have the authority with respect to the institutions under
    their purview.
        Mr. Rose. If the CFPB is given this explicit authority, how
    would you assure Congress that the CFPB, under your tenure, or
    otherwise, wouldn't then try to take that authority and broaden
    its influence over DOD policies that may have a financial
    services nexus?
        Ms. Kraninger. This is an important distinction certainly,
    Congressman. It aligns to the conversation we just had about
    prevention of harm. That is what this is aimed at.
        Our supervisory tool is really the best way to work with
    institutions to ensure they understand the requirements of law
    and that they are in compliance with them without the
    ``gotcha'' moment, without the public fanfare or flogging. And
    so that is really what we are seeking is that ability to have
    examiners go in, particularly to nonbanks and just have that
    level playing field in amongst the entities that are providing
    loans and would need to comply with the MLA.
        Mr. Rose. Thank you. And with that, I yield back.
        Chairwoman Waters. The gentleman from Guam, Mr. San
    Nicolas, who is also the Vice Chair of the committee, is
    recognized for 5 minutes.
        Mr. San Nicolas. Thank you, Madam Chairwomn.
        And I thank the committee for their patience. I have a
    delegation from Guam of nearly 50 students who are here from
    the other side of the world, and I just finished kind of
    running them around the Capitol really quickly and showing them
    some special sights. So I just wanted to, for the record,
    mention them and welcome them to our Nation's Capital.
        Director Kraninger, welcome. It is nice to see you again.
        When you were last here, I brought up something that I
    thought was pretty concerning, and that was the employee
    surveys with respect to their workplace, how they felt, whether
    or not they felt supported. And in our conversation, I brought
    up how their prior surveys reflected higher figures, and their
    most recent survey showed a steep drop-off on some of those
    figures.
        Have you revisited those areas, and do you have any update
    for us on those issues?
        Ms. Kraninger. Yes, Congressman. I think I told you that we
    established a workforce effectiveness committee, and really,
    they are working through a lot of the issues that we believe
    are really root causes of that. I would say that the annual
    employee survey is important. It is a point in time. We have
    actually since had another AES conducted and released.
        And in fact, we have seen improvement. I am not fully
    satisfied with the results of the latest AES either, and I can
    assure you we won't rest on our laurels over this, but taking
    really all of that to heart, including all of the engagement
    with our employees. Replacing, frankly, a lot of staff. I think
    the end of the hiring freeze and the institution of my staffing
    planning is a big part of improvement.
        And the survey was taken right when I made that decision in
    August. So I hope that we will continue to see improvement, and
    frankly, in my engagement with employees, we regularly continue
    to see that.
        Mr. San Nicolas. I think it is very important for us to
    really pay close attention to those numbers and how they track
    towards improvement because with all of the back-and-forth that
    we can have in politically charged environments, one of the
    areas that we can definitely find solace in is when we have
    employees in the rank-and-file who are very, very confident
    that they are effective and they are able to do their jobs as
    mandated.
        And so, with respect to those areas that still need
    improvement, and with respect to your evaluation of what was
    impacting those responses, can you share with us what some of
    those general areas of concern were and what some of the
    remedies are that you are implementing to correct them?
        Ms. Kraninger. One of them certainly was leadership
    engagement with employees. And I can tell you again the way
    that I have served in Government and what I brought to the CFPB
    was very much of an approachable, accessible leader who is
    actually going to engage with staff and not beg away from any
    questions.
        I have made a point of going to staff meetings and taking
    questions and having all hands meetings, of walking around the
    building and really making sure that all of our senior leaders
    are doing that. You can get busy the higher up in an
    organization you get, and so the ability to really make sure
    that you are accessible to everyone.
        We also are doing a number of things to get more real-time
    employee feedback on problems and issues. We have made some
    real changes in just some of the main points around some of the
    issues like travel and some of the paperwork and bureaucratic
    requirements there.
        But I will say the staffing planning changes are a really
    big difference, seeing new hires come in, seeing that support,
    that is something that is already making a big difference.
        Mr. San Nicolas. Okay. One of the lessons that I learned
    from some very, very talented managers is that when you bring
    management in, you have to give them roughly half a year to a
    year to really learn the organization and begin implementing
    changes to help make things better. And you are basically
    coming along on that same track.
        But going forward, after all the implementation, all the
    analysis, I would argue that this next round of employee
    results with respect to how they come in on that survey is
    going to be a direct reflection on whether or not the
    improvements that you are speaking of are actually taking hold.
    And so I look forward to seeing those numbers and being able to
    get a firm snapshot of the effectiveness of your leadership
    with respect to how the employees perceive that.
        Thank you so much for being here, Director.
        I yield back the balance of my time, Madam Chairwoman.
        Chairwoman Waters. Thank you.
        The gentleman from Georgia, Mr. Loudermilk, is recognized
    for 5 minutes.
        Mr. Loudermilk. Thank you, Madam Chairwoman.
        Director Kraninger, thank you for being here.
        I appreciate your leadership in the organization. I think
    you are doing a good job, and your engagement with Members of
    Congress is refreshing. I know we have sent many letters and
    engaged with your office on different issues, and you have been
    very responsive and open. And I appreciate that.
        I do have three areas, and if we could hit all three of
    those, it would be great. The first is going to be remittance
    transfers. The second is going to be TRID exemptions for
    nonprofits and charities. And the last will be the rule on debt
    collection.
        So thank you for what you have been doing on the remittance
    rule. I appreciate you taking action and making rule proposals.
    It is much better than the status quo. I do have some concerns,
    though, about the proposed caps and banks being able to
    estimate the exchange rates and third parties fees.
        It could still cause some market disruption, which is
    inevitably going to affect consumers. Whenever there is a
    change in regulation, as most businesses try to operate within
    the laws and regulations, and if there is a change, it is
    usually the consumer who is affected.
        I am not sure that the number of transfers a bank makes in
    a year is exactly relevant to being able to estimate properly,
    especially when it comes to the smaller banks, which many of
    those in rural communities could have an inordinate number of
    transfers, depending on the makeup of that community. But
    really, my question is, would you consider allowing banks to
    estimate the exchange rate and fees if they are unable to
    establish a necessary relationship if it is for reasons beyond
    their control?
        Ms. Kraninger. Congressman, we are up against the
    requirement in the statute on this, as you well know. That is
    why we are seeking to mitigate it, particularly for smaller
    entities that are looking to maintain their customer
    relationship with their customers for this service. There is
    the ability with certain countries, obviously, to get the
    country list updated, and that is the mechanism by which we
    want to hopefully address this, or at least help and assist.
        But the comment period is open for the rulemaking, or maybe
    it just closed, I think. Regardless, we will take in the
    comments on this and look to final action to try to at least
    mitigate some of the impacts you are concerned about.
        Mr. Loudermilk. If you could, a big concern is especially
    in smaller banks in areas that may have a large number of
    transfers, but yet the countries they deal with there could be
    changing quite often.
        The other is the compliance deadline of July 21st. It is
    short for some banks to actually get in compliance. I didn't
    know if you were considering maybe extending the period or
    extending the compliance deadline or providing a transition
    period for some of those banks?
        Ms. Kraninger. We are working rigorously to get that final
    rule out in time to support a transition, and that deadline is
    statutory, too, so that is something that we have to maintain.
        Mr. Loudermilk. Okay. I appreciate that.
        Quickly, on the other two issues, legislation that we
    passed out of this House a couple of times that is in the
    Senate is called the BUILD Act, which would allow nonprofits
    such as Habitat for Humanity--give them an exemption from
    complying with the new TRID rules, but be able to go back and
    utilize the pre-TRID disclosures because they are providing a
    zero-interest mortgage. And there is no reason they need to do
    disclosures for variable rates and things that they are not
    involved in. But we haven't been able to get it out of the
    Senate yet.
        Would you consider providing administrative relief to those
    types of charities under TRID?
        Ms. Kraninger. We are doing the assessment of TRID now. I
    had certainly heard this issue from you and others, sir. They
    have not come entirely with us with the same articulation of
    the challenge, and so we want to work through the assessment
    process to see, what is here and get some real facts on the
    ground.
        I encourage those who are affected by this, or if your
    office has some additional data around this, we absolutely want
    to do what we can, consistent with the law, to address it.
        Mr. Loudermilk. And we will provide that data as quickly as
    possible. And quickly, the last is the debt collection. I want
    to just make sure we clarify whether or not the debt collection
    applies to first-party debt collectors. I know a lot of our
    banks and credit unions are concerned about that. Would you be
    able to clarify?
        Ms. Kraninger. The rule that the CFPB proposed is just
    third-party debt collectors under the FDCPA.
        Mr. Loudermilk. And they are just concerned that it may not
    be as clear. If you could clarify that, we appreciate it.
        Again, thank you for your service and thank you for the
    work you do.
        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. I
    appreciate it.
        I want to ask a couple more questions about the Memorandum
    of Understanding that you just signed with the Department of
    Education. Just so we are clear, that MOU just covered sharing
    information about complaints, and that is something that we
    were already doing, is that correct?
        Ms. Kraninger. There was ongoing activity, but that MOU was
    rescinded 2 years ago, and we wanted to, obviously, formalize
    the relationship and the responsibilities. So, that is what has
    been done.
        Mrs. Axne. Okay. When was the last time that the CFPB was
    able to properly supervise student loan servicers?
        Ms. Kraninger. We do supervise student loan servicers on an
    ongoing basis, particularly in the private education loans. The
    issue that I understand and know you are getting to is
    supervision of an examination of the larger participants in the
    Federal student loan space. And we are in ongoing conversations
    with the Department of Education over that. We continue to use
    our enforcement authorities in this area, but I very much want
    to work with them to make sure that we are getting the ability
    to examine because that is about preventing issues from
    happening.
        The Department of Education is going to take some detailees
    from us. So we are designing a program together where they can
    go oversee contract terms, and we can go in and oversee Federal
    financial consumer law.
        Mrs. Axne. Okay. Given the fact that the CFPB has received
    numerous complaints about student loan debt, and that is the
    biggest area where you are seeing complaints, can we get an
    answer here? Because I know a lot of my colleagues have been
    asking this as well.
        Let me be very direct. When will the CFPB resume
    supervising and examining the companies who are servicing more
    than $1 trillion of Federal loans, a date?
        Ms. Kraninger. I can tell you soon. I had pledged to you
    that by the next time I testified, which is now a little
    earlier than it was originally intended to be, that I would
    have progress. And I am excited about the fact that we have the
    MOU signed on complaints. We have an agreement that we are
    working towards on detailees and we will move forward on this.
        Mrs. Axne. Reclaiming my time, I appreciate that. I spent a
    decade in State Government implementing policy in departments
    just like yours at the highest level. So, I get what needs to
    be done. I was usually able to articulate a timeframe by which
    we would be able to deliver that service.
        Tell me a timeframe. Just give us a timeframe. Not, you
    have had these conversations. What are we talking about here?
        Ms. Kraninger. We are talking about very soon.
        Mrs. Axne. Meaning this quarter? By June? Literally, you
    say, ``very soon.'' That is --
        Ms. Kraninger. I can tell you, absolutely this year.
        Mrs. Axne. So, we could be looking at continuing to not see
    this examination, this oversight until December, is what I am
    hearing?
        Ms. Kraninger. Again, there are other tools that we are
    using. We are using our enforcement tool, and we can use our
    education tool, and we are talking to the Department of
    Education to resolve this as quickly as possible.
        Mrs. Axne. Okay. Well, please get back to us. That is not a
    good enough answer. As I mentioned, the biggest complaints to
    the CFPB come from the student loan servicing part of it. Our
    kids and adults who have gone back to school to get retrained,
    to relearn, are experiencing severe amounts of debt, as we all
    know, which is limiting them from being able to purchase homes,
    and to get the opportunities in life that they need.
        So the fact that this is the biggest issue that we are
    facing in your department, and nobody can give us any timeframe
    around when you are going to resume actually overseeing it, is
    really problematic. So, please, I expect to have an answer to
    this body in a timely manner, and I will be following up on
    that.
        Do you agree that the CFPB has the authority to supervise
    student loan servicers?
        Ms. Kraninger. We issued a larger participant rule that
    does extend to Federal student loan servicers in, again, that
    category.
        Mrs. Axne. Okay. So we have established that the CFPB has
    authority to do it. Then why is it acceptable that the CFPB has
    gone more than 2 years without the ability to properly
    supervise student loan servicers?
        Ms. Kraninger. Again, we are using other tools at play here
    to undertake our responsibilities in this space, including, as
    you noted, complaints are an area where we absolutely are
    addressing particular students' issues and what they are
    submitting to us and to the Department of Education. And we
    have transparency between those things. We continue to raise
    the issues that are programmatic around the challenges in this
    space--
        Mrs. Axne. Reclaiming my time, I absolutely appreciate that
    complaints piece. But this seems a heck of a lot like how you
    have decided to supervise the Military Lending Act. The
    Executive Branch is simply deciding that contrary to
    congressional intent, they don't want to actually supervise
    large corporations and protect consumers, based on extremely
    weak and, frankly, incorrect legal justifications.
        Ms. Kraninger. If I could tell you, though, Congress did
    not give us the ability--
        Mrs. Axne. Reclaiming my time. To be clear, Director, it
    really looks like you are abandoning your responsibilities to
    protect consumers.
        Thank you.
        Chairwoman Waters. The gentlewoman's time has expired. The
    witness is requested to provide an answer in writing for the
    record.
        The gentleman from Texas, Mr. Williams, is recognized for 5
    minutes.
        Mr. Williams. Thank you, Madam Chairwoman.
        Thank you also, Director, for being here.
        I would like to read some sections of an article that The
    Wall Street Journal's editorial board published earlier this
    week. ``Sometimes it feels as if Richard Cordray is commanding
    his former minions at the Consumer Financial Protection Bureau.
    Witness the Bureau's lawsuit last week against Citizens Bank
    for transgressions it long ago disclosed and rectified. Five
    years later, that is after Citizens Bank self-reported and then
    fixed their truth-in-lending issues, the Bureau is now
    pouncing, even though the 1-year statute of limitations that
    governs its legal claims has expired.
        ``The lawsuit recalls Mr. Cordray's drive-bys against
    businesses during the Obama administration.'' I am a small
    business owner. I can tell you about that. ``But President
    Trump's appointee, Kathy Kraninger, has promised to focus on
    preventing consumer harm and to encourage self-reporting by
    financial institutions.''
        So I guess I would say, what is that all about?
        Ms. Kraninger. Congressman, I appreciate your raising it. I
    know many people have read it. I can't comment on specific
    cases. The filings will speak for themselves. So, I encourage
    people to read them.
        I can tell you that everything you just said is absolutely
    my focus, that we are focused on prevention of harm. We
    absolutely want entities to be seeking to join us in being
    compliant with the law. But no one should mistake fairness and
    reasonableness for weakness.
        Mr. Williams. Okay, thank you.
        During Director Cordray's tenure, I was very critical
    personally of the way he ran the CFPB. And when I see things
    like this still happening, it doesn't inspire confidence that
    meaningful reforms have been made to get this agency under
    control. So I want to give you a chance to respond to this, if
    you want, or maybe you already have. But also specifically, I
    wanted to know if you personally signed off on this action
    before the complaint was filed in Rhode Island?
        Ms. Kraninger. I sign off on every enforcement action
    decision when it goes public.
        Mr. Williams. Okay, good to know. Last year, some of my
    colleagues and I wrote a letter to you in reference to a major
    threat to our economy in the securitization markets. The former
    CFPB Director and the Administration made a significant mistake
    when filing a proposed consent order against 15 securitization
    trusts known as the National Collegiate Student Loan Trust.
        This action threatens the stability of securitization
    markets and impacts all Americans, from people seeking loans
    for anything from houses to cars. The consent order wrongly
    penalizes investors in the trust themselves, which adds
    significant uncertainty that could curtail the investment,
    reduce consumers' access to credit, and have broad
    ramifications throughout the economy.
        So as I mentioned earlier, some of my colleagues and I have
    written to you on this matter, and I am concerned that it
    continues to be underaddressed. Does the CFPB have plans to
    review cases where the Bureau has improperly applied its
    mandate?
        Ms. Kraninger. Congressman, because you are asking a
    generalized question, I can respond. I cannot respond on a
    specific case here beyond the filings in court. But I can tell
    you that absolutely we are looking at every action and stand by
    every action that we have put into court, and we will continue
    to look. If facts change and as things change, we will keep you
    apprised and certainly keep the courts apprised.
        Mr. Williams. Okay. I recently introduced the Preserving
    Small Business Lending Act, which would repeal the onerous
    small business data collection requirement that was mandated
    that your agency implement in Dodd-Frank. This new rule would
    increase the cost of credit by forcing compliance with more
    regulations and more red tape for financial institutions and
    small businesses alike.
        From your public remarks on this issue, it seems like you
    are aware of these potential negative effects of implementing
    this rule incorrectly. So while my obvious preference is that
    my bill will ultimately be signed into law and this rule never
    goes into effect, how do you plan on mitigating the negative
    consequences for the parties subjected to the new rule?
        Ms. Kraninger. Congress, in the Dodd-Frank Act, clearly
    required us to move forward with this rulemaking, and
    obviously, we will continue to do that until told otherwise, if
    told otherwise, by Congress. And we are doing this as
    judiciously as we can. I can tell you there is a lawsuit, so we
    are in litigation over precisely this issue, what is the
    timeline for issuance?
        The next step is the Small Business Regulatory Enforcement
    Fairness Act (SBREFA), that process by which small businesses
    that are impacted have the opportunity to comment on the
    proposal. We are developing the proposal to put into SBREFA. We
    have said that would happen by the fall, and so we are going to
    look to see what we can do to mitigate while carrying out what
    Congress told us to do.
        Mr. Williams. Thank you. You have a tough job. We stand
    here to work with you, okay?
        Thank you.
        Chairwoman Waters. The gentleman from Florida, Mr. Lawson,
    is recognized for 5 minutes.
        Mr. Lawson. Thank you, Madam Chairwoman.
        And welcome to the committee, Director. During an October
    17th Senate Banking Committee hearing, you stated you would
    rather have an adversarial relationship with the Department of
    Education. Since then, the Bureau and DOE released a
    memorandum. Can you go into further details on what that
    memorandum states?
        Ms. Kraninger. Yes, sir. The MOU is regarding information
    sharing of complaints from students. We outlined our
    responsibilities and their responsibilities, depending on the
    type of loan and, frankly, our commitment to work together to
    address even things that are programmatic in their space that
    touch on financial consumer protection law. And so, that is
    where we want to make sure that we eliminate any gaps there and
    that we are coordinating on how we help students in this space
    and the direction that we give to servicers.
        Mr. Lawson. Okay. I have a lot of students in my district,
    and that is the reason why I am very concerned about it. So,
    you have a plan to work with the Secretary of Education to
    ensure examiners are able to investigate problems within loan
    servicing companies?
        Ms. Kraninger. Yes. We are going to send detailees over to
    the Department of Education to work jointly on how we can carry
    this program out. They have contract terms that do relate to
    Federal consumer law, and so we need to figure out how we can
    go in together and jointly carry out our respective
    responsibilities. We are going to design a program to do that,
    which I think is really positive. So we are going to conclude
    an MOU related to that as quickly as possible.
        Mr. Lawson. Do you feel with this collaboration and
    memorandum that you will be able to get bad actors out of the
    student loan process?
        Ms. Kraninger. It will certainly help prevent harm to
    consumers. I can tell you with respect to bad actors, we
    continue to maintain our enforcement authority, and we will use
    it and have been using it.
        Mr. Lawson. Okay. With an increase of 7 percent of consumer
    complaints, why has the Consumer Bureau seen a decrease in the
    staff by 14 percent in the last 2 years?
        Ms. Kraninger. Congressman, there was a hiring freeze
    instituted as part of the transition, and I actually lifted
    that last summer. I have a staffing plan where I have empowered
    managers to tell me if they need additional resources to carry
    out the mission, and we are in the process, frankly, of
    building back up to those target staffing levels.
        We have had new hiring classes every 2 weeks. We added 10
    more people this past Monday, too. And it is a really targeted
    thing to say we want clarity over roles, responsibilities,
    resource needs, and I have empowered, as I said, the managers
    to make those decisions and to really manage that on an ongoing
    basis. Don't just fill the position because somebody is leaving
    at the same level. Let us really assess if this is what we
    need. Okay, we are going to go try to get that.
        And so it is, frankly, the flexibilities Congress has given
    us with respect to how we can manage ourselves that gives us
    the ability to do that and be really pointed and targeted. And
    that is where we are. I think, frankly, we are back on a build-
    up to get to the right staffing levels.
        Mr. Lawson. From your assessment, do you feel like it is
    difficult to retain staff in a particular area?
        Ms. Kraninger. There hasn't been any one particular area
    where it is a challenge. I can say government-wide, we have
    challenges in cybersecurity. There are challenges again with
    lawyers with particular skill sets, and because they are
    valuable to, frankly, other entities besides the government. So
    we are looking at that and making sure we are recruiting in a
    smart way as well.
        Economists can be very hard to attract, and so we are
    looking at what we can do to both build the pool and certainly
    retain them and help them have a career ladder and trajectory
    that is going to be positive for them.
        Mr. Lawson. Okay. And I will try to get that soon. I
    recognize the Consumer Bureau's commitment to staff diversity.
    However, based on the numbers, the female and minority
    workforces have remained the same. Why is this so?
        Ms. Kraninger. We actually have increased our minority
    levels and female levels. We are 50-50 in the whole agency and
    50-50 at the leadership level. Our level of minority leadership
    as well is increased. I apologize, I don't remember precisely
    what it is. But we are doing very well compared to other
    agencies, and we will continue to make that a huge priority.
        Mr. Lawson. Okay, thank you. With that, I yield back.
        Chairwoman Waters. The gentleman from Washington, Mr. Heck,
    is recognized for 5 minutes.
        Mr. Heck. Thank you, Madam Chairwoman.
        Director, I would like to resume our discussion/argument
    about whether or not you, indeed, have the authority to conduct
    supervisory exams with respect to clients with the Military
    Lending Act. You are wrong. I am right.
        And the consequence of that is that considerations related
    to national security are compromised, and servicemembers are
    hurt. But maybe we can start with something on which we agree.
    Would you agree that a 20-year-old sailor whose job it is to
    program a Tomahawk missile in the Persian Gulf should not be
    stressing out about whether their car is getting repossessed?
        Ms. Kraninger. I would agree that I definitely do not--
        Mr. Heck. Would you agree that servicemembers have
    historically, as amply documented in a Department of Defense
    study, been targeted by payday lenders with predatory
    practices?
        Ms. Kraninger. I would say they absolutely are a vulnerable
    population for precisely the scenario you mention.
        Mr. Heck. You would not agree that they have been targeted?
        Ms. Kraninger. I think that is a strong term, but I think
    there are lots of vulnerable populations who are, in fact,
    targeted.
        Mr. Heck. Then I would submit to you, that you should read
    the report of our own Department of Defense.
        Ms. Kraninger. Understood. I have seen the report, sir,
    that you are mentioning, and I understand what you are saying.
    I am just--there are dated times, there are different locations
    when vulnerable populations do get targeted. I concede that,
    absolutely.
        Mr. Heck. And would you agree that part of the
    characteristics of vulnerability for servicemembers is that we
    are talking about relatively young people who are in paid jobs
    for the first time, who are relocated often, and who, in fact,
    have stresses related to deployment and the like?
        Ms. Kraninger. Yes.
        Mr. Heck. So you maintain that you don't have the authority
    to conduct supervisory exams. Are you aware that the person who
    wrote the bill, United States Senator Jack Reed, said
    specifically that you do?
        Ms. Kraninger. Yes, Congressman, I have had that
    conversation with the Senator as well.
        Mr. Heck. Okay. Were you aware that Colonel Paul Kantwill,
    who was the former Director of the Office of Servicemember
    Affairs for your agency, said that throughout the years under
    Director Cordray that these exams were conducted, he never
    received a single complaint about them?
        Ms. Kraninger. I will concede to you, sir, that I don't
    think that is necessarily the measure of whether or not--
        Mr. Heck. Were you aware that he said that?
        Ms. Kraninger. Yes, I am aware that he said that.
        Mr. Heck. In the midst of all the litigation associated
    with CFPB as to the constitutionality of your governance
    structure and the like, can you cite a single instance during
    the 6-plus years of those exams being conducted that a lawsuit
    was ever filed against the CFPB because you did not have the
    authority to conduct them?
        Ms. Kraninger. Again, not the measure that I would as to
    whether this is an appropriate interpretation of it.
        Mr. Heck. That is not the question.
        Ms. Kraninger. But, no, it has not actually occurred.
        Mr. Heck. So the prime sponsor says it was what we
    intended, clearly. The person in your office associated with it
    has said nobody ever complained. And in fact, no lawsuit has
    been filed. Would you not also acknowledge that under UDAAP,
    you have broad but unambiguous authority?
        Ms. Kraninger. There is broad authority under UDAAP
    certainly, but the question of which markets--Congressman, this
    is a question of markets and laws.
        Mr. Heck. And here is the language under Dodd-Frank, which
    you say does not give you the authority. Dodd-Frank confirms
    that the Bureau can administer periodic exams--I am quoting the
    law, Director--``assessing compliance with the requirements of
    Federal consumer law; (b), obtaining information about the
    activities and compliance systems or procedures of such
    person--referring to an entity--and (c), detecting and
    assessing risk to consumers and to markets for consumer
    financial products and services.''
        That is the law. You have the authority, and you should
    start doing it.
        You also claim to like data. I like data, too. In my State
    alone, 737 complaints from servicemembers were sent to your
    office. It used to be that your office, under the Office of
    Servicemember Affairs, published an annual report that
    indicated the number of complaints that had been submitted. The
    last one was 13 months ago.
        Do you plan to reissue another Office of Servicemember
    Affairs' report documenting and setting forth the number of
    complaints that servicemembers have submitted?
        Ms. Kraninger. We are continuing to issue that--
        Mr. Heck. Do you plan to issue the report, as had been done
    throughout the history of the agency?
        Can she answer, Madam Chairwoman?
        Chairwoman Waters. The Chair will grant the witness time to
    answer this question.
        Ms. Kraninger. The Office of Servicemembers Affairs annual
    report will be issued actually imminently, consistent with its
    deadline.
        Mr. Heck. Thank you.
        Chairwoman Waters. The gentleman from Ohio, Mr. Davidson,
    is recognized for 5 minutes.
        Mr. Davidson. Thank you, Director. It's great to see you
    here on the Hill again. I appreciate the work you and your team
    do to protect America's consumers. And frankly, to clarify the
    law as it exists.
        Frankly, one of the concerns that we have had in the
    structure that has been shared across the aisles is everything
    depends on who the Director is. And we really do need to change
    that structure, as has been highlighted by a number of members.
    But frankly, the concern I had is the previous Director
    reflected poorly on our State of Ohio by his practices, whether
    it was hiring practices or sue-and-settle schemes or, frankly,
    ways to make companies settle even in spite of the law.
        So providing clarity not just for the consumers, but for
    the businesses that are trying in their best efforts to serve
    consumers. So thank you for that. I truly believe that a lot of
    it does go back to consumer education in terms of financial
    education. And you can really see the difference that it makes.
        Certainly, compounding interest has changed the world. It
    changes the world for all sorts of people, whether that is
    working for good to accumulate wealth over time or working for
    bad to see people get on the wrong side of that debt. So, I
    appreciate your efforts there.
        I want to highlight a couple of things. You sit in a role
    that was created in a way to kind of sit over top of, broadly,
    things that are already bad practices in every single State. So
    it is not like most of the things that I am hearing people
    criticize you for here today aren't against the law in every
    State in the United States of America, and attorneys general
    are prosecuting people for the criminal activity there.
        And so, systemically, as you look across the entire
    financial sector of the United States from the Federal level, I
    am just curious, what position are you in to assess a couple of
    things. So when you look at things that can pass as a member of
    the minority, maybe we could study something, something that is
    bipartisan.
        When you look at faster payments and you look at fintech
    and all the innovation that is out there and now the Fed's
    newfound interest in the Fed itself taking a role in faster
    payments, do you have a way to assess the transaction cost that
    consumers are paying just as a means of payment? Whether that
    is credit card fees or processing fees, money transmittal fees,
    but all the ways that people would move money between one
    another, how many fees are they paying?
        Ms. Kraninger. I can tell you, Congressman, that I can't,
    of course, answer that quite direct question at this particular
    moment. But the Atlanta Fed does do extensive research and
    surveys on payments, and they kind of have the center of
    gravity on some of this research.
        So we have been working with them on making sure that we
    are looking at what is happening in this marketplace and
    understanding, again, the dynamics. If I go too much further, I
    may misspeak. But we can get back to you with some of the
    summaries of the research and what we have seen.
        Mr. Davidson. Perfect. And one of the other areas that I
    think is a shared sense of concern in Congress and across the
    United States is consumers' data. We have really failed in
    Congress, in my opinion, to do our duty and provide a data
    privacy regulation, a standard that is really foundational
    really to our--it is supposed to be there in a sense, the right
    to privacy in the Fourth Amendment.
        But as times have changed, we haven't really updated it for
    the electronic era, for sure. And we have seen companies that
    have collected and monetized lots of personally identifiable
    information. And unfortunately, sometimes compromise that data.
        So as you look at how we know companies have monetized the
    data, when that data is compromised, what are the impacts on
    consumers? Would you be in a position to assess that?
        Ms. Kraninger. We have, with respect to a couple of
    different enforcement actions, but I can say there are some
    lines amongst the Federal agencies over authorities in this
    space. For example, Congress explicitly took the Gramm-Leach-
    Bliley Act (GLBA) safeguards out of the Bureau's purview. The
    Federal Trade Commission has that responsibility, in addition
    with the prudential regulators.
        But I will say, holistically, certainly we are looking at
    what is happening in this space, and we are certainly doing our
    part.
        Mr. Davidson. Perhaps from the consumers' perspective.
        Ms. Kraninger. Yes.
        Mr. Davidson. So, thank you for that.
        And then I think the last thing is just on the interest of
    the QM rule and the upcoming piece, you are not yet into the
    rulemaking, but you are talking about going towards it.
    Certainly, that says that you have concerns about the rule as
    it exists today. And I guess, what kinds of things are you and
    the staff there trying to balance as you look at a review of
    this, the interests, things that are broken and things that you
    want to safeguard and clarify?
        Ms. Kraninger. That is definitely a longer question
    probably than I can answer in a short period of time. I would
    say very clearly carrying out the law, there is a requirement
    to have an ability to repay and how that is determined.
        Mr. Davidson. Thank you.
        Chairwoman Waters. The gentlewoman from Michigan, Ms.
    Tlaib, is recognized for 5 minutes.
        Ms. Tlaib. Hi, Director. Thank you so much for being here.
        As you know, and I have talked to you about this in the
    last hearing, I represent a beautifully diverse community, and
    lending practices are a really critical issue for my district.
    In 2016, I don't know if you saw the study that found Black
    applicants in Wayne County, Michigan, communities were almost
    twice as likely to be denied conventional home purchase loans,
    compared to white applicants.
        The same study conducted by the Center for Investigative
    Reporting found that Detroit ranked 44th out of 48 communities
    nationally where Black people were denied loans at a higher
    rate than their white counterparts.
        So I do believe there is something happening there. We used
    to have 70 percent home ownership in the City. Now, it is down
    to 50 percent, and we continue to see that decline.
        So fair lending is important, do you agree?
        Ms. Kraninger. I do.
        Ms. Tlaib. How long have you been in your position?
        Ms. Kraninger. Fourteen months.
        Ms. Tlaib. Fourteen months. I was asking about how the
    investigative process goes, and I think it looks like you all
    opened about 32 fair lending cases or supervisory exams in
    2016, and then the number fell to 24 in 2019. Is that correct?
    Just 24 cases that were open?
        Ms. Kraninger. I will stipulate that you are probably
    looking at a report that is not in front of me, so I will just
    concede yes right now.
        Ms. Tlaib. Same here. This is something that is in front of
    me. That is why I wanted to confirm.
        Director, after reviewing the fair lending enforcement
    actions taken by the agency thus far listed on the website, it
    appears that there have been no cases where CFPB under your
    leadership has found any company violating the Equal Credit
    Opportunity Act (ECOA). Is that correct?
        Ms. Kraninger. There have not been any public enforcement
    actions on ECOA. That is correct. There was one on HMDA that is
    very much a fair lending case.
        Ms. Tlaib. What is HMDA?
        Ms. Kraninger. The Home Mortgage Disclosure Act. So, again,
    a fair lending law.
        Ms. Tlaib. So out of all of those, what happens to those?
    Are these complaints? Do they go through an intake process and
    then you all review them? How long does that take, and then you
    decide you are not going to pursue any enforcement?
        Ms. Kraninger. Actually, the decision to open an
    enforcement case is done at the lowest level.
        Ms. Tlaib. That is what I thought, yes.
        Ms. Kraninger. We are looking at research. We are looking
    at whistleblower feedback. We are looking at--
        Ms. Tlaib. So, Director, you don't even open up a case
    until there is really a cause right at the beginning, right?
    That is when it is not like somebody can call, and it is
    automatic. There has to be some wrongdoing that makes you all
    take a stronger look or a closer look at it?
        Ms. Kraninger. Certainly the allegations, yes.
        Ms. Tlaib. Yes. So according to CFPB's annual fair lending
    report issued last June, and I know you have been asked about
    this, but this is really important because that is why you
    exist, right, and accountability. The five regulatory agencies
    that make up the Federal Financial Institutions Examination
    Council, including the CFPB, made about 20 referrals in 2016 to
    the Department of Justice around enforcement, accountability,
    making sure we were protecting our families.
        And these were potential violations to the Equal Credit
    Opportunity Act. However, there was only one in 2018 to DOJ and
    none in 2019.
        Ms. Kraninger. I believe that is the case, although there
    might have been one. The bottom line here, and again, to get to
    the key here, I am looking at this very closely. Not just
    because Congress has asked me about it, but because I care
    about it and because it is important.
        I am looking at understanding better how we are getting
    information on which we can base the cases. And one thing that
    we are exploring actually is around whistleblowers. The cases
    that are most successful in this area do tend to come from that
    source in general.
        Ms. Tlaib. Absolutely. I heard from--
        Ms. Kraninger. And so, yes, understanding how we
    incentivize that kind of reporting and that kind of insight
    about what is happening inside--
        Ms. Tlaib. Yes. And how do you protect them, too, and the
    CFPB has a responsibility--
        Ms. Kraninger. I am looking very carefully at that.
        Ms. Tlaib. Yes. I believe someone from Wells Fargo did come
    before this committee and was taught to give a higher interest
    rate to someone who had an accent, who was Spanish-speaking.
        And what is interesting--and I want you to know this,
    Director--he number of lawsuits against these banks haven't--
    they are consistent to what I have been hearing from residents
    about being denied access to mortgage loans. But the Government
    is not doing its part because not all of my residents can
    afford to bring a lawsuit. They rely on CFPB to do its job and
    responsibility to push back against discriminatory practices or
    practices that are, in essence, in violation of the Equal
    Credit Opportunity Act.
        So I am asking, you want to take a closer look, but I think
    the chairwoman and others were having to continue hearings
    because we don't feel like it is doing what it is supposed to
    be doing and holding them accountable. People deserve a home,
    and they deserve access. If they are working hard, they
    shouldn't be denied.
        Thank you so much.
        Chairwoman Waters. The gentleman from North Carolina, Mr.
    Budd, is recognized for 5 minutes.
        Mr. Budd. Thank you, Madam Chairwoman.
        And Director Kraninger, thanks for being here. I appreciate
    your work.
        The Bureau has made announcements around the appropriate
    use of compliance aids and how the Bureau intends to make clear
    to entities how they could comply with the rules. One area
    where the Bureau's stance is still far from clear is the RESPA
    Section 8. In particular, the Bureau is confusing a 2015
    bulletin, I believe that predates you, but the 2015 bulletin on
    marketing services agreements under RESPA. Are you aware of
    this? It appears that you might be. But are you aware of this,
    and do you intend to revisit that bulletin?
        Ms. Kraninger. Congressman, I am aware of that bulletin,
    and we are looking at what we can do on this issue because it
    is complicated. And I know that is not a fantastic answer here,
    but looking at what makes sense, and we have had a number of
    issues in the mortgage space that just rose to higher priority
    in terms of moving on them.
        But this is very much on my mind in terms of something that
    we need to provide greater clarity on. One thing that we have
    done is, using our innovation policies, addressing some of the
    challenges at least around steering, we have issued a no-action
    letter to housing counseling agencies and to protect financial
    institutions that support them, associated with similar issues
    around RESPA, but we will continue to look at what we can do to
    provide better clarity here.
        Mr. Budd. So just to be clear, it is confusing enough, and
    you have enough feedback. It is worth recalling it, revising
    it, and reissuing it?
        Ms. Kraninger. Certainly addressing it, but I will say
    recalling it becomes more complicated in terms of what to
    replace it with.
        Mr. Budd. Understood. Thank you.
        Secondly, I want to touch on the CFPB Consumer Advisory
    Board. It is my understanding that the advisory board is a
    group of experts on consumer protection, consumer financial
    products or services, community development, fair lending,
    civil rights, underserved communities, communities that have
    been significantly impacted by higher price mortgage loans, a
    lot of the things we have mentioned.
        But given the focus, I imagine there is a very diverse
    market intelligent and expertise on that advisory board. Is
    that true so far?
        Ms. Kraninger. Yes.
        Mr. Budd. Okay. So with respect to members of the board, a
    number of banks that are in my district that I have the
    privilege to represent, they are relatively large in size, but
    they still represent both rural and urban communities. They are
    constantly working to broaden their relationships with these
    these low- to moderate-income (LMI) communities they serve.
        So my question to you, Director, is this: Why are more
    bankers who work at those larger institutions not represented,
    to my understanding, on this advisory board? And my thought is
    that it would be appropriate since they are key players in this
    LMI space.
        Do you have any thoughts on that, and do you intend to add
    any more in the future?
        Ms. Kraninger. Yes. I can tell you our Consumer Advisory
    Board (CAB) has a rotating membership, with a 2-year term, but
    every year we have some new members. So we actually have an
    application period open now. We do look for diversity. We do
    have a mid-sized bank represented right now on the CAB.
        I can tell you, though, there are many avenues by which we
    engage with different entities, and part of the calculus is,
    who do we not reach on a regular basis? Who do we not hear from
    on a regular basis? How do we engage that, that voice and that
    entity? And so those are the things that we think about and
    maintaining diversity and, of course, the statutory
    requirements for the types of representatives who need to be on
    the CAB.
        So that gives you some sense of how we think about that,
    but we encourage applications for sure.
        Mr. Budd. Thank you. How many members are on that advisory
    board?
        Ms. Kraninger. I think the CAB is 14, off the top of my
    head.
        Mr. Budd. Give or take. And how many--you said there are
    some slots open now for application?
        Ms. Kraninger. Half.
        Mr. Budd. Half are open?
        Ms. Kraninger. Yes.
        Mr. Budd. Very good. And is the 14 a number at your
    discretion?
        Ms. Kraninger. It is, but it is what makes it manageable.
    In addition, we have a Community Banking Advisory Committee and
    the Credit Union Advisory Committee. And we try to bring them
    together so we have those different perspectives brought
    together, and so it gets to be, again, a larger group of people
    to think about.
        Mr. Budd. Thank you.
        Director, I have about another half minute, plus I have
    been yielded a little bit of extra time. Do you have anything
    that you wish to clarify or go back and revisit?
        Ms. Kraninger. I do think that the fair lending question is
    an important one, and it is one that I am taking very seriously
    the ability to understand how we get information about what is
    happening in the marketplace. I do want to assure Congresswoman
    Tlaib that when we get complaints, we address them to at least
    the best of our ability, and understand that the financial
    institution gets an answer back to the consumer.
        So we do have that mechanism, but we are also analyzing
    those complaints to say, what does that tell us about what is
    happening, and should we take further action?
        Mr. Budd. Very good. I yield back. I thank the Chair.
        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 being here.
        In 2017, your predecessor, Mr. Mulvaney, decided that the
    CFPB would no longer write rules to govern the practices of the
    large private sector financial services companies that service
    student loans for 45 million Americans, even though the Bureau
    has the authority to do so.
        I recently offered legislation, the Student Borrower
    Protection Act, to set these standards as part of the Truth-In-
    Lending Act and require CFPB to finally take action to halt
    abuses by these companies. The legislation is important, and
    borrowers deserve these protections.
        But CFPB doesn't need to wait for Congress, and our work
    doesn't excuse your failure to use your existing authority to
    protect student loan borrowers. You have been at the Bureau now
    for more than a year. You have had the chance to hire a new top
    official to help direct the Bureau's approach on student loans.
    So can you explain why the Bureau is no longer planning to
    write rules on student loan servicing?
        Ms. Kraninger. We had a rule on the larger participants and
    supervising them in the student servicer space. We are working
    with the Department of Education on how best to do that
    together. So they are going to oversee their contract terms,
    and we will oversee Federal consumer financial law.
        We are engaged in enforcement actions. I can assure you of
    that. So we are not absent, and we are also engaged in
    education of consumers to try to improve their understanding
    and ability to operate in this space as well.
        I can tell you one more thing, because I don't want to take
    your time, Congresswoman. But we are sending detailees over to
    Education so we can design that supervisory program together,
    and I am excited about that development to really make this
    clear in this space.
        Ms. Adams. I appreciate that response. I would certainly
    encourage you to use the authority that you have and would
    certainly offer to work with you on the legislation that I
    mentioned to get protection for these borrowers. It is really
    important to so many students across the country.
        Last fall, I asked Director Calabria about concerning
    changes the GSEs made to their affordable lending programs,
    Fannie Mae's HomeReady and Freddie Mac's Home Possible.
    Previously, these programs had income limits of 100 percent of
    the area median income for the property's location, but now the
    income limits are 80 percent of AMI.
        Many borrowers are precluded from using these programs to
    sensibly buy homes with conventional loan down payments and are
    ineligible for the LLPA waiver and reduced mortgage insurance
    premiums.
        Are you concerned that a pricing-based QM definition and
    the changes to the GSEs' affordable programs could shift
    significant volume to the FHA and lock many borrowers out of
    the conventional market?
        Ms. Kraninger. I can tell you I am concerned about the
    current ability-to-repay qualified mortgage rulemaking and
    precisely the outcome you are talking about. The patch for the
    GSEs, of course, expires in January, and what that would lead
    to is a 43 percent debt-to-income ratio hardline requirement,
    which we know is going to be a challenge for that population.
        At the same time, balancing that against what was clearly
    in the Dodd-Frank Act around ability to repay, verifying
    income, considering debt-to-income ratio, and kind of what the
    best way to go about this is, that is why I said I would
    propose a pricing threshold as an alternative. But we are going
    to take comments on that. That rule will be out in May, and I
    am very much interested in what comes back.
        But there are a lot of issues to weigh here, Congresswoman,
    and I also encourage Congress to weigh in on this as well in
    terms of the policy objectives that we are trying to seek here
    and how best to weigh them.
        I will move forward with rulemaking, but in the meantime,
    if Congress sought to act, that would be welcome.
        Ms. Adams. Do you agree that it is arbitrary for borrowers
    to be directed into specific loan programs based simply off of
    regulatory arbitrage or different QM standards?
        Ms. Kraninger. I would say there is a lot to pull apart in
    the answer to that question, but I could tell you there are
    policy issues at play here that need to be weighed with
    affordable housing interests as well. And so, thinking about
    that is the important part of this.
        Ms. Adams. Thank you very much. I yield back, Madam
    Chairwoman.
        Chairwoman Waters. Thank you.
        The gentleman from Ohio, Mr. Gonzalez, is recognized for 5
    minutes.
        Mr. Gonzalez of Ohio. Thank you, Madam Chairwoman, and
    thank you, Director, for being here again.
        I want to touch on the QM rule again. I know we have talked
    about it a lot. My perspective is whatever rule ultimately is
    adopted has enormous implications for the housing finance
    market, housing availability in particular, because so many
    things kind of fall off of the decision that you make on QM.
        I guess I will start with just a basic question. When you
    think through the rule, have you done a lot of analysis on
    safety and soundness and kind of what the implications are of
    the shift that you are proposing with respect to the housing
    finance market and how stable it is? Is that an analysis that
    you all have done?
        Ms. Kraninger. I could tell you that is a little out of our
    purview on this. But at the same time, we are absolutely
    looking at what market impacts there would be from various
    options in this space, and we have taken in a lot of comments
    on what the market impacts would be.
        We do talk to the prudential regulators, at least in terms
    of, to your point, safety and soundness issues that affect
    those institutions that they regulate. That is from that
    standpoint, it is part of the consideration.
        Mr. Gonzalez of Ohio. Okay. So it's fair to say it is more
    done in consultation with the prudential regulators, but not an
    expertise that is in the CFPB?
        Ms. Kraninger. That is fair.
        Mr. Gonzalez of Ohio. Yes. I think, frankly, that is a
    concern for me. Because you are going to ultimately make that
    decision with input, right? And I am sure it will be done
    thoughtfully. But again, those implications are pretty
    substantial. And so to not have that expertise in-house
    actively thinking through those implications, I think is
    something we, frankly, as a committee should be thinking about.
        Next question, what analysis, if any, have you done with
    respect to what the proposed rule shift will mean for low- and
    moderate-income borrowers and the availability of credit?
        Ms. Kraninger. Yes. That is the heart of the matter, and I
    will say that there has been a lot of discussion around
    congressional intent, frankly, with respect to Title XIV and
    the Dodd-Frank Act and what ability to repay would mean or
    could mean with respect to that. And so that is also my concern
    around just allowing qualified mortgages to revert to 43
    percent debt-to-income ratio to particularly around Appendix Q
    requirements today as to how you calculate that.
        Mr. Gonzalez of Ohio. Got it.
        Ms. Kraninger. That is a lot of things to unpack in this
    space, but we are certainly looking at that. But the law is
    first and foremost, and remaining true to those requirements in
    Title XIV is where we are starting.
        Mr. Gonzalez of Ohio. Thank you.
        I want to shift to alternative data with respect to AI
    machine learning and, again, extending credit to folks who
    currently have a lot of difficulty accessing the credit
    markets. As you think through that issue, the alternative data
    machine learning issue, what expertise currently exists inside
    the CFPB on machine learning technology specifically?
        Do you have experts on machine learning on staff? How are
    you going about analyzing these?
        Ms. Kraninger. I personally have spent a decent amount of
    time on this issue in my Federal career. I would posit that
    there aren't many experts in the U.S. Government on machine
    learning and how it works. But I would say that we do have a
    number of people who at least understand it, and we are looking
    at, again, the implications or what other capabilities we
    should grow to even get a deeper understanding.
        Mr. Gonzalez of Ohio. Okay. So would you judge the capacity
    at CFPB to be adequate in this regard? It is not a ``gotcha''
    question. I am sincerely interested.
        Ms. Kraninger. No, I would say, it is always something we
    have to keep an eye on. I do have some folks in our T&I area,
    the TIO's area that have a decent understanding of it.
        Mr. Gonzalez of Ohio. Okay. Great. Because I think
    certainly as the economy evolves, I think it has become a
    bigger part of lending decisions. I think it is incumbent upon
    all of us to make sure that we have that expertise in
    Government, or at least have access to it.
        Ms. Kraninger. Yes.
        Mr. Gonzalez of Ohio. It doesn't necessarily have to be in-
    house, right? But it certainly needs to be considered.
        And then with my final 30 seconds, I want to encourage you
    on all the things you are doing with respect to financial
    education. I think the best form of consumer protection is
    education and training and making sure that people can protect
    themselves and are self-sufficient in that regard. And I know
    you are doing a lot of work on it. I know others on this
    committee on both sides of the aisle are committed to it.
        And I just encourage you and thank you for all that work.
    And with that, I will yield back.
        Chairwoman Waters. Thank you.
        The gentlewoman from Massachusetts, Ms. Pressley, is
    recognized for 5 minutes.
        Ms. Pressley. Thank you, Chairwoman Waters, for your
    continued commitment to oversight and diligent consumer
    protection.
        Director Kraninger, just in the interest of time, if you
    could answer as many of these questions with a yes or a no, I
    would appreciate it. I am hoping just for a simple yes or no.
        Do you think that choosing to attend a Historically Black
    College or University (HBCU), should mean paying more on a
    mortgage, a credit card, or any other type of loan?
        Ms. Kraninger. No, not in and of itself.
        Ms. Pressley. Okay. And so what I am getting at and the
    issue that I have here, and I am still not sure I really
    understand that question because you sort of--
        Ms. Kraninger. Well, you are telling me attendance
        Ms. Pressley. Well, you touched on it.
        Ms. Kraninger. Attendance at an HBCU. So, again, I don't
    know.
        Ms. Pressley. Yes. Do you think that choosing to attend an
    HBCU should mean paying more on a mortgage, credit card, or any
    other type of loan? Yes or no?
        Ms. Kraninger. And I said, no, not in and of itself as one
    factor. It is not a factor in the process.
        Ms. Pressley. I have data that challenges that which you
    assert. The issue I have, Director, is that Upstart, a lending
    company that your agency effectively re-endorsed through a no-
    action letter in 2019, says on their own website that this is
    exactly what is happening to students who choose to attend a
    Historically Black College or University.
        According to research out this week of the Student Borrower
    Protection Center, an HBCU graduate is identical in every way
    to a graduate of a non-minority-serving institution, and yet
    they wind up paying more for their loans. So, no amount of
    access to credit makes that okay.
        I ask for unanimous consent to submit for the record the
    Student Borrower Protection Center's report entitled,
    ``Educational Redlining.''
        Chairwoman Waters. Without objection, it is so ordered.
        Ms. Pressley. Thank you, Madam Chairwoman.
        The Center created several hypothetical applicant profiles
    to test various credit scoring algorithms. One case found that
    controlling for all factors, a 24-year-old applying to
    refinance a $30,000 loan with Upstart would pay very different
    amounts depending on where they went to school.
        Director, have you seen this report?
        Ms. Kraninger. I am aware of it. I have not yet read it. I
    can tell you that disparities in African-American lending is
    something that is of great interest to me. Congressman Clay
    departed, but he and Congressman Cleaver at the last hearing
    actually alerted me to one particular study that found that
    there is an inexplicable 11 percent disparity there. And that
    is something that I have already asked our Office of Research
    to dig into.
        We will take this one into account, too, as we look at
    this.
        Ms. Pressley. I hope you will read this article
    specifically from the Student Borrower Protection Center on
    educational redlining. Until you have read it, I will just
    share with you, can you guess how much more this borrower in
    the hypothetical scenario that I offered a moment ago, would
    pay if she was a Howard graduate versus a graduate of NYU?
        Ms. Kraninger. I can't possibly--
        Ms. Pressley. Okay. She would pay nearly $3,500 more over 5
    years. The Howard grad would also be slammed with $729 in
    origination fees that her NYU counterpart wouldn't. Do you
    agree that this is problematic?
        Ms. Kraninger. Again, as a factor in and of itself, if I
    could pull this as part of what we need to do--
        Ms. Pressley. Yes or no, on its face, based on what I'm
    sharing, do you agree that is problematic? It is really simple.
        Ms. Kraninger. I agree it is problematic. It is something
    that we need to understand.
        Ms. Pressley. So given these findings, are you willing to
    rescind your agency's no-action letter allowing Upstart to use
    educational criteria in their underwriting algorithm that they
    are also licensing out?
        Ms. Kraninger. I can tell you that they can explain with
    respect to what is happening there as to--
        Ms. Pressley. Director Kraninger, are you willing to
    rescind your agency's no-action letter?
        Ms. Kraninger. No. And I can tell you why, what we are
    trying to do.
        Ms. Pressley. Moving on, the report also found that Wells
    Fargo continues to disappoint when it comes to equitable
    treatment of customers. I want to note to proponents of
    community college and vocational schools on both sides of the
    aisle that the pattern of more favorable payment terms extends
    to graduates of 4-year universities as well.
        Specifically, a community college borrower would pay over
    $1,130 more on a $10,000 loan than a student with the exact
    credit profile in a Bachelor degree's program. So, yes or no,
    do you agree borrowers should have protection against this type
    of discrimination?
        Ms. Kraninger. Congresswoman, I have already stipulated to
    you that we want to understand precisely what is happening in
    some of these studies--
        Ms. Pressley. Yes or no, do you agree?
        Ms. Kraninger. --and have pledged to--
        Ms. Pressley. On its face, this is very simple. Do you
    agree borrowers should have--
        Ms. Kraninger. None of it is very simple.
        Ms. Pressley. This is simple.
        Ms. Kraninger. These are complex--
        Ms. Pressley. Should borrowers have protections against
    discrimination?
        Ms. Kraninger. Yes.
        Ms. Pressley. They are being treated differently based
    upon--
        Ms. Kraninger. Consumers do have protections against
    discrimination.
        Ms. Pressley. --attending a community college or a 4-year
    college or a Historically Black College or University. The
    actions of your agency thus far don't suggest you actually do
    agree.
        Thank you, Madam Chairwoman.
        Chairwoman Waters. The gentlewoman's time has expired. The
    witness is requested to provide an answer in writing for the
    record.
        The gentleman from Illinois, Mr. Garcia, is recognized for
    5 minutes.
        Mr. Garcia of Illinois. Thank you, Madam Chairwoman, and
    thank you, Director Kraninger, for being here again.
        Over the past several weeks, we have focused a lot in this
    committee on the Community Reinvestment Act, the CRA. I am
    concerned that the recent proposal advanced by the FDIC and the
    OCC weakens the CRA objective of supporting investment in low-
    and moderate-income communities. FDIC Director Marty Gruenberg
    dissented from the proposal, as you know, warning that it would
    ``fundamentally undermine'' the CRA by relying on a single
    metric that does not take into account the quality and
    character of the bank's activities and its responsiveness to
    local needs.
        As a member of the FDIC board, you voted to advance
    Comptroller Otting's proposal. Why did you vote for it,
    briefly?
        Ms. Kraninger. I could tell you, Congressman, that
    precisely the opposite is the intent. The intent is to drive
    greater transparency and clarity over those investments and to
    drive greater investments, including with hard metrics.
        But it is a proposal, and so I voted to have a proposal
    published for comment, and we welcome those comments.
        Mr. Garcia of Illinois. Well, I am disappointed, I must
    tell you, because Chicago is the birthplace of the CRA, and I
    have worked on community reinvestment for years as an urban
    planner. As a matter of fact, I knew Gale Cincotta, who was a
    champion of the CRA.
        We should not be moving forward with a proposed rule that
    allows banks to pass their CRA exams with a handful of flashy
    high-dollar investments. One way that we could strengthen
    rather than weaken the CRA is by informing examiners with a
    richer set of data about small business lending.
        On that subject, I asked you a question last year about the
    CFPB's implementation of Section 1071 of Dodd-Frank, which
    requires financial institutions to compile and report
    information to the CFPB about credit applications made by
    women-owned, minority-owned, and small businesses. You told me
    then that you were committed to implementation of that section
    following a symposium series on that topic.
        Can you please provide me with an update?
        Ms. Kraninger. Yes, Congressman. We had the symposium. We
    covered a lot of the very challenging issues in how to
    implement this effectively. And we are currently pulling
    together the proposal for small business impact, and that is
    the SBREFA process. We have said that we would issue something
    by the fall that will launch that SBREFA process, which is the
    next required step towards rulemaking.
        Mr. Garcia of Illinois. So, September?
        Ms. Kraninger. By fall, yes.
        Mr. Garcia of Illinois. Would you commit to developing a
    rulemaking on Section 1071 that adheres to the intent of the
    Dodd-Frank Act?
        Ms. Kraninger. Yes, Congressman.
        Mr. Garcia of Illinois. Okay. I appreciate that the
    Consumer Bureau released some data in January showing some
    general trends about small business data since the Great
    Recession. But that is not what the law mandated. When will
    Section 1071 be implemented, per the law? And I like the
    report, but that is not what the law requires.
        So in September or so, we will see that?
        Ms. Kraninger. You will see the first proposal in the fall,
    yes.
        Mr. Garcia of Illinois. When you were before this committee
    last year, I also asked you about the problems of student debt,
    an enormous constraint that is affecting our entire economy.
    The student debt crisis affects young people all over this
    country. It disproportionately affects people in working class
    communities and of color, like the ones that I represent. We
    can't address issues like this if we don't have good, reliable
    data to inform us about the problem.
        Last March, I asked you if you intended to reinstate the
    MOUs that Director Cordray established with the Department of
    Education, and you said you would. I was initially pleased to
    learn that a new MOU between the board and the Department of
    Education was recently announced. However, when I looked into
    the details, I was disappointed to find that the new agreement
    is limited.
        So, what can we expect?
        Ms. Kraninger. The new agreement does address complaints,
    information sharing, and frankly is even more robust than the
    last one in terms of our ability to support programmatic
    changes and considerations by the Department of Education.
        The second MOU, with respect to how we are going to
    supervise or oversee the larger participants in the Federal
    student loan space, that MOU is not yet concluded, but we have
    an agreement with Education. We are going to send some
    detailees over, and we are going to design a program to work on
    together.
        Mr. Garcia of Illinois. Will it approximate the Cordray
    MOU?
        Ms. Kraninger. I believe it is going to be better because
    we are going to go into these institutions together.
        Mr. Garcia of Illinois. Thank you so much.
        Thank you, Madam Chairwoman. I yield back.
        Chairwoman Waters. Thank you.
        The gentlewoman from Virginia, Ms. Wexton, is recognized
    for 5 minutes.
        Ms. Wexton. Thank you, Madam Chairwoman.
        And thank you, Director Kraninger, for joining us again. It
    is great to see you, as always.
        I do want to talk a little bit more about these MOUs with
    the Department of Education, and I want to go back to kind of
    just clarify the timeline of everything because between, I
    guess, January of 2014 and August of 2017, the CFPB and the
    Department of Education were working under these two Memoranda
    of Understanding. Is that correct?
        Ms. Kraninger. I don't know precisely when they were
    signed, but I stipulate you have a date in front of you. So, I
    will say yes.
        Ms. Wexton. It sounds about right?
        Ms. Kraninger. Yes.
        Ms. Wexton. Okay, good. And there were two of them. One of
    them was the sharing MOU, and the other was the supervisory and
    oversight MOU. Correct?
        Ms. Kraninger. Yes.
        Ms. Wexton. But then those were terminated on or about
    August 31, 2017. Correct?
        Ms. Kraninger. Yes.
        Ms. Wexton. Okay. Now that predates your time at the CFPB,
    right?
        Ms. Kraninger. Yes.
        Ms. Wexton. Okay. The Department of Education, in its
    letter, said that the CFPB is using the Department's data to
    expand its jurisdiction into areas that Congress never
    envisioned. Do you agree that they were doing that?
        Ms. Kraninger. I am not going to talk about what the
    Secretary thought or didn't think. I can tell you--
        Ms. Wexton. No, no. I'm sorry. I was asking if you agreed
    that the CFPB was expanding into areas that it shouldn't have?
        Ms. Kraninger. One thing that hasn't come out clearly is
    that the Dodd-Frank Act very specifically talks about the
    CFPB's role in private education loans. Now, the CFPB has the
    ability to expand supervision by rulemaking, so we expanded
    into larger participants in the Federal student loans.
        Ms. Wexton. But Dodd-Frank also requires the Bureau, in
    Title X, to implement and, where applicable, enforce Federal
    consumer law, does it not?
        Ms. Kraninger. Yes. But we are talking specifically about
    supervision and the ability to examine entities, which does
    have a lot of different requirements in the Act. We did issue a
    rulemaking, and we actually have the authority to examine
    larger participants in the Federal student loan space. And that
    is precisely the issue around which there is conversation.
        Ms. Wexton. And you have the authority to examine them. Do
    you have the authority to open supervisory events?
        Ms. Kraninger. That is the same thing. Yes.
        Ms. Wexton. Okay, just checking.
        Ms. Kraninger. Yes, sure.
        Ms. Wexton. So, okay, very good. Now in their 2017 letter
    terminating the agreement, the Department of Education made it
    pretty clear that they took exception to the CFPB unilaterally
    expanding its oversight role to include the Department's
    contracted Federal student loan servicers. The Department has
    full oversight responsibility for Federal student loans.
        Do you agree that is still the case?
        Ms. Kraninger. They have their own authorities. We do have
    the authority and responsibility, which is precisely the one
    that we are finalizing an agreement around, to supervise the
    larger participants in the Federal student loan space. And I
    know that is the heart of the concern that is in that letter,
    but we are working through how we can do that together.
        Ms. Wexton. But from October 2017 to now, you have not had
    that kind of clarity, right?
        Ms. Kraninger. We continue to enforce in this space. We
    continue to engage in education. We continue to deal with
    complaints in this space. But, yes, there was a lack of clarity
    around the supervisory responsibilities that we have now since
    clarified, and we are jointly--
        Ms. Wexton. But if you have no Memorandum of Understanding
    that sets forth the supervisory obligations between the CFPB
    and the Department of Education, how could you enforce under
    that scheme?
        Ms. Kraninger. The MOU is specifically around examination,
    not around enforcement. We have ongoing litigation in this
    space. But what I very much want to get to is an agreement
    around supervision.
        We are going to detail some folks--
        Ms. Wexton. I know, based on your previous answers, that
    there is no real timeline for that, and you are working on it
    and all that kind of stuff. And I know you will come before us
    again, and so maybe we will get some more information in the
    future.
        But I want to talk about some of the answers that you gave
    about specific events in your previous testimony in writing
    after our event. How many fair lending supervisory events did
    the Consumer Bureau open in Fiscal Year 2019? And you answered
    24 fair lending supervisory events out of 131 total events.
        Question 14. How many supervisory events did the Consumer
    Bureau open in Fiscal Year 2019 against student loan servicers?
    The answer was the information requested constitutes
    confidential supervisory information. What is confidential
    about that?
        Ms. Kraninger. I have been round and round with my staff
    about this. There is a desire for transparency. There is a
    desire to protect confidential information. The Bureau in the
    past--
        I'm sorry, Madam Chairwoman. If I could finish, it would be
    incredibly helpful.
        Chairwoman Waters. Does the gentlewoman request an
    additional minute?
        Ms. Wexton. May she answer the question?
        Chairwoman Waters. Yes, please, answer. You may answer.
        Ms. Kraninger. The only supervisory event numbers that the
    Bureau has ever released in the past are the total number and
    the numbers for fair lending. We have not provided any numbers
    for any other type of exam, and that is something I am looking
    at.
        Chairwoman Waters. The gentlewoman's time has expired. The
    witness is requested to provide an answer in writing for the
    record.
        Thank you.
        I would like 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.
     This hearing is now adjourned.
     [Whereupon, at 1:30 p.m., the hearing was adjourned.]

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