[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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