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






 
                      PROTECTING CONSUMERS DURING
                      .
                      THE PANDEMIC? AN EXAMINATION

                       OF THE CONSUMER FINANCIAL

                           PROTECTION BUREAU

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

                             HYBRID HEARING

                               BEFORE THE

                    COMMITTEE ON FINANCIAL SERVICES

                     U.S. HOUSE OF REPRESENTATIVES

                     ONE HUNDRED SIXTEENTH CONGRESS

                             SECOND SESSION

                               __________

                             JULY 30, 2020

                               __________

       Printed for the use of the Committee on Financial Services

                           Serial No. 116-106
                           
                           
                           
                           
 [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]    
 
 
 
 
                           ______                       


             U.S. GOVERNMENT PUBLISHING OFFICE 
43-343 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           PETER T. KING, New York
WM. LACY CLAY, Missouri              FRANK D. LUCAS, Oklahoma
DAVID SCOTT, Georgia                 BILL POSEY, Florida
AL GREEN, Texas                      BLAINE LUETKEMEYER, Missouri
EMANUEL CLEAVER, Missouri            BILL HUIZENGA, Michigan
ED PERLMUTTER, Colorado              STEVE STIVERS, Ohio
JIM A. HIMES, Connecticut            ANDY BARR, Kentucky
BILL FOSTER, Illinois                SCOTT TIPTON, Colorado
JOYCE BEATTY, Ohio                   ROGER WILLIAMS, Texas
DENNY HECK, Washington               FRENCH HILL, Arkansas
JUAN VARGAS, California              TOM EMMER, Minnesota
JOSH GOTTHEIMER, New Jersey          LEE M. ZELDIN, New York
VICENTE GONZALEZ, Texas              BARRY LOUDERMILK, Georgia
AL LAWSON, Florida                   ALEXANDER X. MOONEY, West Virginia
MICHAEL SAN NICOLAS, Guam            WARREN DAVIDSON, Ohio
RASHIDA TLAIB, Michigan              TED BUDD, North Carolina
KATIE PORTER, California             DAVID KUSTOFF, Tennessee
CINDY AXNE, Iowa                     TREY HOLLINGSWORTH, Indiana
SEAN CASTEN, Illinois                ANTHONY GONZALEZ, Ohio
AYANNA PRESSLEY, Massachusetts       JOHN ROSE, Tennessee
BEN McADAMS, Utah                    BRYAN STEIL, Wisconsin
ALEXANDRIA OCASIO-CORTEZ, New York   LANCE GOODEN, Texas
JENNIFER WEXTON, Virginia            DENVER RIGGLEMAN, Virginia
STEPHEN F. LYNCH, Massachusetts      WILLIAM TIMMONS, South Carolina
TULSI GABBARD, Hawaii
ALMA ADAMS, North Carolina
MADELEINE DEAN, Pennsylvania
JESUS ``CHUY'' GARCIA, Illinois
SYLVIA GARCIA, Texas
DEAN PHILLIPS, Minnesota

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

                              ----------                              
                                                                   Page
Hearing held on:
    July 30, 2020................................................     1
Appendix:
    July 30, 2020................................................    75

                               WITNESSES
                        Thursday, July 30, 2020

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

                                APPENDIX

Prepared statements:
    Kraninger, Hon. Kathleen L...................................    76

              Additional Material Submitted for the Record

Waters, Hon. Maxine:
    ``Consumer Financial Protection in the COVID-19 Crisis: An 
      Emergency Agenda,'' by Richard Cordray, Diane E. Thompson, 
      and Christopher L. Peterson................................    90
    Written statement of the National Association of Consumer 
      Advocates (NACA)...........................................   100
    Written statement of U.S. PIRG...............................   102
Budd, Hon. Ted:
    Written statement of the Heritage Foundation.................   130
McHenry, Hon. Patrick:
    Written statement of the Association of Credit and Collection 
      Professionals (ACA)........................................   119
    Written statement of the Consumer Bankers of America (CBA)...   122
    Written statement of the National Association of Federally-
      Insured Credit Unions (NAFCU)..............................   127
Mooney, Hon. Alexander X.:
    Written statement of the American Bar Association (ABA)......   147
Kraninger, Hon. Kathleen L. :
    Written responses to questions for the record submitted by 
      Chairwoman Waters..........................................   156
    Written responses to questions for the record submitted by 
      Representative Cleaver.....................................   204
    Written responses to questions for the record submitted by 
      Representative Kustoff.....................................   212
    Written responses to questions for the record submitted by 
      Representative Tipton......................................   214


                      PROTECTING CONSUMERS DURING

                      THE PANDEMIC? AN EXAMINATION

                       OF THE CONSUMER FINANCIAL

                           PROTECTION BUREAU
                              ----------                              


                        Thursday, July 30, 2020

             U.S. House of Representatives,
                   Committee on Financial Services,
                                                   Washington, D.C.
    The committee met, pursuant to notice, at 12:38 p.m., in 
room 2128, Rayburn House Office Building, Hon. Maxine Waters 
[chairwoman of the committee] presiding.
    Members present: Representatives Waters, Velazquez, 
Sherman, Clay, Cleaver, Himes, Foster, Heck, Vargas, 
Gottheimer, Gonzalez of Texas, Lawson, Tlaib, Porter, Axne, 
Casten, McAdams, Wexton, Lynch, Adams, Garcia of Illinois, 
Garcia of Texas, Phillips; McHenry, Wagner, Lucas, Posey, 
Luetkemeyer, Huizenga, Stivers, Barr, Tipton, Williams, Hill, 
Emmer, Zeldin, Mooney, Davidson, Budd, Kustoff, Hollingsworth, 
Gonzalez of Ohio, Rose, Steil, Gooden, Riggleman, and Taylor.
    Chairwoman Waters. The Financial Services Committee will 
come to order.
    Without objection, the Chair is authorized to declare a 
recess of the committee at any time.
    Before we begin today's hearing, I want to remind Members 
of a few matters, including some required by the regulations 
accompanying House Resolution 965, which established the 
framework for remote committee proceedings.
    First, I would ask all Members on the Webex platform to 
keep themselves muted when they are not being recognized by the 
Chair. This will minimize disturbances while Members are asking 
questions of our witnesses. Members on the Webex platform are 
responsible for muting and unmuting themselves. The staff has 
been instructed not to mute Members except when a Member is not 
being recognized by the Chair, and there is inadvertent 
background noise.
    Members on the Webex platform are reminded that they may 
only attend one remote hearing at a time, so if you are 
participating today, please remain with us during the hearing. 
Members should try to avoid coming in and out of the hearing, 
particularly during the question period.
    If, during the hearing, Members wish to be recognized, the 
Chair recommends that Members identify themselves by name, so 
as to facilitate the Chair's recognition.
    I would also ask that Members be patient as the Chair 
proceeds, given the nature of the online platform the committee 
is using.
    In addition, the Chair informs the Members participating in 
person that in enforcing order and decorum in the hearing room, 
the Chair has a duty to protect the safety of the Members.
    The attending physician provided the following guidance: 
``For U.S. House of Representatives meetings in a limited 
enclosed space, such as a committee hearing room, for greater 
than 15 minutes, face coverings are required.'' Accordingly, 
the Chair will treat wearing masks as a matter of order and 
decorum, and all Members should wear masks.
    The Chair has a strong preference for Members to wear masks 
even while being recognized. Members who do not wish to wear 
masks may participate virtually through the Webex platform.
    Today's hearing is entitled, ``Protecting Consumers During 
the Pandemic? An Examination of the Consumer Financial 
Protection Bureau.''
    I will now recognize myself for 5 minutes for an opening 
statement.
    I would like to welcome Director Kraninger to what I hope 
will be her last appearance before this committee as Director 
of the Consumer Financial Protection Bureau (CFPB).
    Ten years after we passed the Dodd-Frank Act to end the 
predatory and discriminatory practices that caused the 
financial crisis, we find ourselves in the midst of an economic 
and health crisis caused by incompetence and exacerbated by 
narcissism, that once again hits the most vulnerable Americans 
the hardest. The scale of the crisis is unprecedented.
    Today, we learned from the Bureau of Economic Analysis that 
the gross domestic product (GDP) decreased at an annual rate of 
32.9 percent in the second quarter of 2020, which is the 
largest drop ever recorded. Our consumers need a strong 
Consumer Bureau that provides robust protections on their 
behalf and holds financial institutions accountable when they 
commit abuse. A record number of people have filed complaints 
about financial institutions with the CFPB during the COVID-19 
crisis.
    We know that consumers are reporting major hardships in 
working with payday lenders, mortgage servicers, credit card 
companies, and the credit reporting bureaus. They are reporting 
long wait times, inconsistent information from consumer 
representatives, and a lack of follow-up.
    Unfortunately, our witness today, CFPB Director Kathy 
Kraninger, has done next to nothing of substance about any of 
this. Instead, she has focused the Consumer Bureau on weakening 
critical consumer protections, relaxing enforcement against 
financial institutions, and undermining the agency from the 
inside.
    Director Kraninger, let's review some of the harmful 
actions you have taken since March, when the pandemic began. 
You issued a final rule, rolling back key safeguards for 
payday, car title, and installment loans, exposing consumers to 
high-cost predatory loans. It is shameful to open the 
floodgates to predatory loan products to trap consumers in a 
cycle of debt at any time. But to do so during a pandemic is 
egregious. It is hands-down the most anti-consumer action you 
have taken as Director, and given your record, that is saying a 
lot.
    You also weakened the reporting requirements under the Home 
Mortgage Disclosure Act (HMDA), willfully hindering the ability 
of the Consumer Bureau researchers, journalists, advocates, and 
the public to detect redlining and patterns of discrimination 
in mortgage lending.
    An investigation by Reveal News found evidence of modern-
day redlining in 61 metropolitan areas across the country, 
using the public data set that you are now degrading. It is 
deeply irresponsible and malicious to undermine this important 
tool.
    In addition, you have issued an Advance Notice of Proposed 
Rulemaking (ANPR) to make substantial changes to the agency's 
Qualified Mortgage (QM) rule, which is the rule implementing 
the standards with which lenders first demonstrate that a 
borrower can repay a loan before signing mortgage documents.
    It is, unfortunately, all too fitting that you seek to 
undermine the standard on the 10-year anniversary of Dodd-
Frank. You may not remember the financial crisis, but I and the 
members of this committee do. We included the standard in Dodd-
Frank because the proliferation of unaffordable and predatory 
mortgage loans was an essential driver of the 2008 financial 
crisis, and caused millions of families, and especially 
borrowers of color, to unfairly lose their homes.
    These actions are just the latest that you have carried out 
to sabotage the very agency you have been entrusted with 
leading. Your actions are betrayals of the consumers you are 
tasked with protecting.
    And so, having said that, I am a little bit disturbed that 
I am missing the television portrayal of the funeral of John 
Lewis, with magnificent speakers there today, but we have to 
carry on with the business.
    And I now recognize the ranking member of the committee, 
the gentleman from North Carolina, Mr. McHenry, for 5 minutes 
for an opening statement.
    Mr. McHenry. Thank you, Madam Chairwoman. I would point out 
that the Majority schedules the timing of these hearings. But 
the partisan nature of the Chair's opening comments, I think, 
belies the seriousness of our current politics in the midst of 
this pandemic, sadly.
    But, Madam Chairwoman, I want to welcome Director Kraninger 
for the first of what I hope are many appearances before the 
committee in the coming years. If I were not wearing a mask, 
you would see that I say that with a smile and in an attempt to 
be lighthearted in the midst of what is a pretty disastrous 
political discussion we are having here in Washington.
    Look, to me, Democrats are asking questions. The CFPB is 
protecting consumers both during and outside of the pandemic. 
If you look at the facts in a fair-minded way, and recent 
actions by the Bureau, I can safely answer my colleagues' 
questions with, yes, they are. Despite what the Democrats say 
to score political points, this CFPB, under your leadership, 
Director Kraninger, has worked diligently to provide resources, 
guidance, and protection for consumers most at risk in these 
unsettling times.
    The reorder has encouraged financial institutions to work 
with borrowers; provided increased flexibility for supervision 
enforcement activity; clarified guidance to mortgage servicers 
to comply with the Coronavirus Aid, Relief, and Economic 
Security (CARES) Act forbearance requirements; created an elder 
fraud prevention response network development guide; released 
an updated COVID-19 consumer complaint data bulletin; and 
outlined the roles and responsibilities of credit reporting 
companies and furnishers to create a consumer relief guide for 
mortgage payment forbearance and foreclosure protection.
    Pretty darn good work, I must say, and at the same time, 
keeping your workforce safe. These are just a few of the CFPB's 
pandemic-related initiatives.
    Apart from its response to the pandemic, this Bureau, under 
your leadership, has approached difficult and polarizing topics 
with a steady hand over the last year-and-a-half. And I want to 
thank you for that.
    You have increased clarity in the market for consumer 
lending. One example is the Bureau's recent rulemaking to 
revise the 2017 small-dollar lending rule.
    We know that small-dollar loans are a lifeline for millions 
of Americans in need. They help consumers cover unexpected 
expenses or income shortfalls during periods of economic 
stress, like we are currently experiencing now.
    The decision to revise that 2017 rule is a necessary step 
to increase clarity and access in a market that serves millions 
of Americans trying to make ends meet. We must continue to 
review and right-size burdensome regulations that inhibit 
lending into the real economy at a time when the American 
people need it most, and they can at least afford that 
inhibited lending.
    Lastly, Director Kraninger, as we have discussed in the 
past, my colleagues and I believe you have too much power.
    The structure of the Bureau is unchecked by Congress and 
the President. And you have even agreed with me on that 
consistently, both before and after your confirmation. And 
since Dodd-Frank's enactment, Republicans have argued that the 
Bureau's structure is unconstitutional; the funding mechanism 
leaves it unaccountable to anyone. This past June, the Supreme 
Court agreed with what Republicans have been saying all along.
    In striking down a structure created by the Democrats in 
2010, the Supreme Court found that the Director holds too much 
power and violates the separation of powers.
    We now have a real opportunity to work together on 
necessary statutory reforms to the Bureau, reforms that will 
benefit consumers and bring clarity and clear guidance. A 
leader in that effort is my colleague and friend, Blaine 
Luetkemeyer.
    Director Kraninger, I want to thank you for your 
leadership. And I want to yield the balance of my time to Mr. 
Luetkemeyer.
    Mr. Luetkemeyer. Thank you.
    Thank you, Ranking Member McHenry, and thank you, Director 
Kraninger for being here today. Just a few weeks ago, the 
Supreme Court confirmed that the structure of the CFPB is 
unconstitutional. The Director can be fired at will by the 
President of the United States. The structure and in-person 
authority of the CFPB have turned into a political football 
that will no doubt swing back and forth, on a political 
pendulum, creating uncertainty and confusion for financial 
institutions and consumers for decades to come.
    That is why I have introduced legislation that changes the 
leadership structure of the CFPB from a single Director who can 
be fired at will, to a bipartisan five-member commission.
    Last Congress, this legislation enjoyed bipartisan support 
in this committee. However, in the 116th Congress, this 
solution only garners support from my side of the aisle. 
Changing the leadership structure and increasing government 
oversight of the CFPB are vital to protect businesses and 
consumers.
    I look forward to discussing these issues with you today.
    With that, Madam Chairwoman, I yield back.
    Chairwoman Waters. It is now time to hear from Director 
Kathy Kraninger. Director Kraninger has testified before the 
committee previously, so I believe she needs no further 
introduction.
    You will have 5 minutes to summarize your testimony. When 
you have one minute remaining, a yellow light will appear, and 
at that time, I will ask you to wrap up your testimony so we 
can be respectful of the committee members' time. And without 
objection, your written testimony will be made a part of the 
record.
    You will now be recognized for 5 minutes to present your 
oral testimony.

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

    Ms. Kraninger. Chairwoman Waters, Ranking Member McHenry, 
and members of the committee, thank you for this opportunity to 
provide you with an update on the fantastic work the CFPB has 
been doing since we last met.
    I appear before you as the country is engaged in the 
national conversation on racial inequality and confronting the 
unprecedented pandemic. Today, I would like to discuss both of 
these topics with you.
    Under my leadership, the CFPB is taking steps to help 
create real and sustainable changes in our financial system so 
that African Americans and other minorities have equal 
opportunities to build wealth and close the economic divide.
    Earlier this week, I authored a blog outlining the Bureau's 
important fair lending work. We also issued a request for 
information on how best to create a regulatory environment that 
prevents credit discrimination in all aspects of the 
transaction and expands access to credit. The information that 
is submitted will help us Enforce the Equal Credit Opportunity 
Act (ECOA).
    Among the topics the public can comment on are how to 
better protect consumers with limited English proficiency, as 
well as applicants who derive income from any public assistance 
program. I encourage the public to respond so that we can build 
a financial system that treats everyone fairly and provides 
clear rules of the road.
    Having clear standards helps us identify any violations in 
fair lending laws. Recently, the Bureau filed a lawsuit 
alleging a lender had violated ECOA by discouraging African 
Americans from applying for loans through its advertising.
    The Bureau also announced a settlement last year with the 
mortgage corporation that violated the Home Mortgage Disclosure 
Act and Regulation C by intentionally submitting years of 
mortgage loan data that contained errors in the fields of race, 
ethnicity, and sex.
    Since my last testimony before the committee, I have 
requested critical authority from Congress to allow the Bureau 
to compensate whistleblowers. In our enforcement work, we have 
seen firsthand that whistleblowers can provide key information 
on fair lending violations.
    I want to thank Congressman Green for introducing 
legislation similar to what I requested. I stand ready to work 
with Congress to secure this important authority.
    Now, let me take a moment to discuss how we are protecting 
consumers during the pandemic.
    We have worked to expand our reach to consumers to provide 
them with actionable, useful information about their rights, 
options, and expectations in the market for consumer financial 
products and services. We have produced over 70 blogs and 
videos that have been accessed directly by more than 3 million 
users.
    Through our social media reach, staff estimates our 
materials have been sent to 41 million unique users. These 
materials are available in seven different languages and have 
been constantly updated to adapt to the changing dynamics.
    We have also promoted our consumer complaint system. When 
consumers submit complaints to the Bureau, they help inform our 
work in supervision, enforcement, regulation, and education. 
Specifically, in response to complaints and other market and 
stakeholder feedback, we worked with interagency partners to 
quickly address a student loan-related credit reporting issue, 
as well as CARES Act mortgage forbearance lump sum payment 
concerns.
    From January 1, 2020, through July 26, 2020, consumers have 
submitted more than 270,000 complaints to the Bureau, of which 
more than 14,000 complaints specifically referenced the 
coronavirus. Each month, from March through June, set a new 
monthly record for complaints. Our consumer contact center and 
our online portal have operated efficiently and effectively 
throughout the pandemic to take those consumer complaints and 
refer them to companies for response and ensure those responses 
are received.
    We also partnered with other Federal agencies to develop 
and launch a unified housing website to provide consumers with 
comprehensive and accurate information on their rights during 
this time.
    The Bureau has also developed a new targeted supervisory 
approach called Prioritized Assessment to focus on those 
markets and institutions that pose the greatest risk to 
consumers as a result of pandemic-related issues.
    We remain fully engaged in the execution of the Bureau's 
critical mission, including continued progress on our 
regulatory agenda, which is relevant to the pandemic and 
ultimate economic recovery, as well as our supervisory and 
enforcement work.
    We work closely with partners and stakeholders, recognizing 
the important roles that others play in supporting our consumer 
protection mission and preventing harm.
    I am particularly proud of the Bureau staff's excellent 
work during these challenging and unprecedented times. And 
thank you again for allowing me the opportunity to testify 
today. I look forward to the questions.
    [The prepared statement of Director Kraninger can be found 
on page 76 of the appendix.]
    Chairwoman Waters. Thank you very much. I now recognize 
myself for 5 minutes for questions.
    Director Kraninger, under your leadership, the Consumer 
Bureau has brought fewer lending enforcement options, rolled 
back consumer protections against predatory and payday lending, 
scaled back data used to combat discriminatory practices like 
redlining, and engaged in inappropriate personnel practices, 
such as allowing political appointees like Thomas Ward to 
burrow into the Agency and take what should be a nonpartisan 
career position, and in hiring Eric Blankenstein, who has well-
documented racist views, and Paul Watkins, who was affiliated 
with an anti-LGBTQ hate group.
    Director Kraninger, when we were in a financial crisis more 
than a decade ago, Congress determined that consumers needed an 
agency solely dedicated to protecting them from the abusive 
practices and products that contributed to the crisis.
    When Congress passed the Dodd-Frank Act and created the 
Consumer Bureau, we clarified the rules of the road and tasked 
the Agency with enforcing the law and protecting consumers in 
the financial marketplace. The pandemic has only heightened the 
need for the Consumer Bureau to protect struggling consumers.
    Unfortunately, the Consumer Bureau has engaged in 
deregulation without facts or reasoning and seems to be 
protecting the interest of industry over the interest of 
consumers.
    Director Kraninger, what proactive supervisory and 
enforcement steps has the Consumer Bureau taken to protect 
consumers who have lost income due to COVID-19 and are 
struggling through no fault of their own? How are you utilizing 
the authorities at the Consumer Bureau's disposal to protect 
consumers against bad actors that are taking advantage of our 
communities during this crisis? What have you done?
    Ms. Kraninger. Chairwoman, our supervisory and enforcement 
work continues through the pandemic. I will say briefly about 
supervisory actions, because I think it is a very different 
approach than we have had. Typically, examiners go to an 
institution and look at loan files from 2 years ago, and assess 
compliance against the law, which is important.
    We instituted, as a result of the pandemic, a prioritized 
assessment process. We are going to hundreds of institutions 
across the spectrum in a risk-based approach to look at what 
they are doing with respect to the pandemic.
    What are their operational challenges? Are they following 
the guidance to accommodate their customers? Are they following 
the CARES Act processes? Are they providing clear information 
to consumers? And we are looking to again prevent consumer harm 
by addressing that right at the issue and right at the point 
where that activity--
    Chairwoman Waters. Director Kraninger, after you do all of 
those reviews and ask those questions, then what do you do?
    Ms. Kraninger. Chairwoman, if we find violations, we will 
act on them. But I will say that the vast majority--
    Chairwoman Waters. Give us an example of one of those 
actions you have taken?
    Ms. Kraninger. I'm sorry, Madam Chairwoman, I didn't 
understand that.
    Chairwoman Waters. After you have done your reviews making 
sure that people are doing what they are supposed to do, when 
you find that they have not been doing it, what do you do, and 
give us an example of one that you have taken care of?
    Ms. Kraninger. That is a confidential process through the 
examination, but we do get restitution for consumers through 
supervision. There are a bunch of examples in the semi-annual 
report of the amount of restitution that has been gotten 
through supervision.
    We also certainly believe there are bad actors or if this 
is a sustained issue with respect to violations, that is 
referred to enforcement. We also independently take enforcement 
actions. And in the pandemic, we have been incredibly active 
with all of our law enforcement partners from State Attorneys 
General to the Justice Department and the FTC and--
    Chairwoman Waters. Director Kraninger, are those 
enforcement options that you have taken available to Members of 
this Congress? Can we see what you have documented that you 
have done when you have done your reviews and discovered that 
you have people in departments who are not doing what they are 
supposed to do? Can we review what you have done?
    Ms. Kraninger. Yes, Madam Chairwoman--
    Chairwoman Waters. Thank you. Let the record indicate that 
the chairwoman is interested in reviewing actions taken by the 
Director of the Consumer Financial Protection Bureau after she 
has done reviews in which she has determined that those who 
have not been following the rules, the laws, the procedures, et 
cetera, so we can understand exactly what she has done.
    Also, while I have a few minutes here, consumer complaints 
during the COVID-19 period have surged. Nearly half of all 
complaints, 46 percent, were related to credit reporting. 
Nevertheless, in April, the Consumer Bureau announced that it 
would allow much greater flexibility in how long credit 
reporting agencies may take to investigate consumer report 
disputes.
    Do you think it is appropriate for the Consumer Bureau to 
announce that it would weaken enforcement of the Fair Credit 
Reporting Act's requirements for credit reporting agencies, 
like Equifax, to investigate disputes in a timely fashion?
    My time is up. You do not have time to answer that. I will 
submit that question to you in writing for further answers.
    The gentleman from North Carolina, Ranking Member McHenry, 
is recognized for 5 minutes.
    Mr. McHenry. Thank you, Director Kraninger, for being here, 
and thank you for managing this process. I know it is awkward 
to speak with a mask on and to sit behind, effectively, a salad 
guard, or whatever those things are that you are behind, but we 
are trying to do our best.
    And there are a couple of broad things I want to talk 
about. Obviously, a Supreme Court decision, which is something 
I brought up in my opening statement--you have consistently 
said that you believe that the Director is given too much 
power, and that Congress should remedy this. And I appreciate 
the fact that you have continued to have that same view, even 
though you have this enormous power and it sort of lacks 
accountability standards as well.
    Has your view of your role shifted since the Supreme Court 
decision?
    Ms. Kraninger. Congressman, certainly, we reviewed the 
case. I was very gratified that the Supreme Court took up that 
case and made the decision on it. It created a lot of 
uncertainty in the Agency's enforcement actions and around the 
Agency's mission. And I think that is incredibly helpful to the 
process.
    I will say with respect to additional changes in structure 
or otherwise, I leave those in the hands of Congress. To the 
extent that you all decide to make changes to that, and that it 
becomes law, we will certainly work to institute those changes.
    Mr. McHenry. I also mentioned a small-dollar lending rule. 
There are details of this that I agree with, and there are 
details of it with which I disagree. But why did you take the 
action on the small-dollar lending rule?
    Ms. Kraninger. Congressman, there was a lot of concern. 
Frankly, we were in litigation over that rulemaking. There was 
a lot of concern about the dramatic impact that would have on 
the availability of small-dollar credit.
    We know there is significant demand and need and interest 
in small-dollar credit. That has been documented, and Congress 
has even taken action, funding a small-dollar program through 
CDFI.
    So, trying to promote competition in that space is an 
important aspect of it. And there were a lot of issues with 
respect to the payday rule that were undermining that.
    Most pointedly, though, we followed the Administrative 
Procedure Act and noted and documented that the initial rule 
did not have the robust evidence and legal basis given that 
dramatic impact on small-dollar credit availability.
    Mr. McHenry. So, there are benefits in terms of credit 
availability and benefits for certainty, right? Regulatory 
certainty? And that will have a positive impact on consumers 
and their access. Will you continue to ensure that there is 
diligent oversight of the industry?
    Ms. Kraninger. Absolutely. Our enforcement actions have 
continued apace in this industry as in others. We know there 
are bad actors in every market. And so, we will continue to 
enforce the law and engage in examinations of payday lenders, 
which we have done.
    But in addition to that, we are doing work on disclosure 
testing to ensure that consumers do understand this product. 
There is a lot of evidence that they understand it, but let's 
actually continue to do the disclosure testing as well. So, 
there are a lot of different aspects of this.
    Mr. McHenry. Director Kraninger, I want to thank you for 
reviewing Section 1033 of Dodd-Frank, and reaching out to the 
industries about this, and consumers. That section focuses on 
consumers' ability to access their financial information. I 
know Congress, we want to do our work for data privacy for our 
jurisdictions. I think there is consensus between all parties 
on the need, and then we can dial down in terms of changes.
    But this statutory requirement is interesting in light of 
the massive change that is happening in banking, and the 
feedback we have gotten.
    For example, Fintech companies offer improved personal 
financial management, faster loan underwriting, and better 
payment services. And those are positive developments. And I 
want to make sure that we continue to foster that exact sort of 
innovation.
    Is that the reason why you are undertaking this? What are 
the benefits for review of the regulatory framework?
    Ms. Kraninger. Certainly, one key priority and principle of 
the activity is continuing to promote innovation in this case. 
And we had a symposium just a few months ago to talk through 
this issue and bring experts together. It was truly a robust 
conversation.
    The Agency has allowed the industry and all stakeholders 
and the public to continue to take advantage of those 
innovations in the marketplace. But we are at the point now 
where we really should examine the way in which that data 
transmission occurs, and that is why we are moving to an 
advance notice of proposed rulemaking.
    Mr. McHenry. And let me close by saying, thank you. You 
have been a good public servant, and you continue to act in 
accordance with the law, you have been open to feedback, and I 
appreciate that. I very much appreciate it.
    Madam Chairwoman, I ask unanimous consent to insert into 
the record two letters. The first is a July letter to the 
Financial Services Committee from the Consumer Bankers 
Association articulating a number of thoughts on the CFPB's 
rulemaking and actions. And the second is a July letter from 
the Association of Credit and Collection Professionals opining 
on the CFPB's rulemaking as it relates to the Fair Debt 
Collection Practices Act.
    Chairwoman Waters. Without objection, it is so ordered.
    Mr. McHenry. Thank you, Madam Chairwoman.
    Chairwoman Waters. The gentlewoman from New York, Ms. 
Velazquez, is now recognized for 5 minutes.
    Ms. Velazquez. Thank you, Madam Chairwoman, and Ranking 
Member McHenry, for holding this important hearing, especially 
at this time.
    Director Kraninger, earlier this month the CFPB finalized 
its revision to the payday lending rule, keeping out a key 
provision of the regional rule developed by Dr. Cordray, the 
ability-to-repay requirement.
    Do you believe the Bureau's revised rule will leave low-
income borrowers and those of color more or less protected from 
unscrupulous payday lenders during this pandemic?
    Ms. Kraninger. Congresswoman, the mandatory underwriting 
provisions are having the impact of a substantial reduction in 
the availability of small-dollar credit for all communities, 
and particularly the communities you mentioned, vulnerable 
communities who are really in need of access to responsible 
products for small-dollar loans. And that was the primary 
consideration. If protections continue with respect to the 
payments provision--
    Ms. Velazquez. I hear you. I disagree with you in terms of 
access to credit. Basically, smaller institutions are the ones 
that are providing loans to individuals and small businesses, 
not the--so how would you respond to the president of the 
Center for Responsible Lending, Mike Calhoun, who said that the 
pain caused by the CFPB regarding the payday rule will be felt 
most by those who can least afford it, including communities of 
color who are disproportionately targeted by payday lenders?
    Ms. Kraninger. Congresswoman, the availability of credit 
had--and that rulemaking did have a broader impact. The number 
of banks that are issuing small-dollar products was 
substantially limited. There are no mitigating factors to 
support that--
    Ms. Velazquez. You are saying that Mr. Calhoun is wrong, 
but you are right?
    Director Kraninger, a review of the CFPB's consumer 
complaint database shows that consumer complaints have 
increased dramatically in the start of the pandemic. However, 
CFPB rules still allow companies up to 60 days to respond to a 
consumer complaint.
    Given the rising number of complaints and the economic 
uncertainty many individuals and households are facing, why has 
the CFPB not started to shorten this response time?
    Ms. Kraninger. Congresswoman, I should, off the top of my 
head, have the response time, but it is substantially shorter 
than that. I believe we are basically in a week for most 
turnarounds. The 60-day allowance is really because of some of 
these more complicated issues, in terms of what the complaint 
is and making sure it is addressed. So, I think we have a 
fantastic record of actually getting a meaningful response--
    Ms. Velazquez. So, why not shorten the 60-day requirement, 
or the 60 days timeline, given the fact that consumers are 
suffering in this country? These are people who are in trouble 
right now, so why not shorten the 60 days?
    Ms. Kraninger. Congresswoman, the vast majority--we will 
get back to you with an actual number--
    Ms. Velazquez. It would be great to have some empathy.
    Director Kraninger, mortgage-related concerns represent the 
highest percentage of COVID-related complaints received by the 
Bureau. Earlier this month, we held an Oversight Subcommittee 
hearing in which we learned that some mortgage servicers are 
failing to notify borrowers of their right of forbearance under 
the CARES Act.
    Is the CFPB concerned that some servicers are failing to 
accurately represent borrowers' rights under the CARES Act? How 
is the CFPB working to address this issue?
    Ms. Kraninger. We have produced a significant amount of 
material in cooperation with HUD and FHFA scripts for servicers 
so they have very clear messages that they are supposed to 
provide to their customers. We have done videos for customers. 
And, in fact, many of the servicers are pulling the information 
off the CFPB's website and sending it to their customers in 
multiple languages. This is all available--
    Ms. Velazquez. Do you have any data as to any complaints 
coming from individuals who feel that their rights have not 
been protected?
    Ms. Kraninger. There were complaints right around the CARES 
Act passage about concerns about being able to pay their 
mortgages, and concerns about the messages that they were 
getting. We acted expeditiously, really, since March-April 
complaints and address them through a lot of different actions 
and they have gone down substantially since that time.
    We are certainly still monitoring, and if we see an 
increase, or if we see any bad action, working really closely 
with FHFA, actually, we were looking at all of this, and we are 
acting.
    Ms. Velazquez. Thank you.
    Chairwoman Waters. Thank you.
    The gentlewoman from Missouri, Mrs. Wagner, is recognized 
for 5 minutes.
    Mrs. Wagner. Thank you, Madam Chairwoman.
    And welcome back, Director Kraninger. I want to just first 
thank you for your service to our country and for your service 
to all of the consumers in Missouri's Second Congressional 
District. I appreciate your leadership now, and I look forward 
to it in the future.
    Before I begin my questions, I also wanted to thank you for 
all the work that you have done, not only increasing 
transparency at the CFPB, but also streamlining and tailoring 
regulations to better protect and provide, I think, clarity for 
consumers and the private sector. So, thank you for that.
    While I am proud of your efforts to increase transparency 
and accountability, the CFPB issues regarding its structure go 
beyond that of any one Director. Now that the Supreme Court has 
made its decision regarding the structure of the Bureau, it is 
time for Congress to work together to put the Bureau on a 
budget, overseen by Congress, and run by a bipartisan board.
    Director Kraninger, would you please discuss how the credit 
reporting provisions in the CARES Act are working to protect 
consumers who have been impacted by COVID-19?
    Ms. Kraninger. That is a very important issue, and I think 
we are in a much better position than we were after the 
financial crisis in recognizing the importance of the credit 
reporting system, and our ability to act very quickly on issues 
as they occur, and address them so that they don't impact 
consumers.
    The CARES Act provision first requires that those who are 
affected by the pandemic be reported as, ``current,'' when they 
are in a forbearance program under the CARES Act. And that is 
something that we are monitoring. I mentioned earlier the 
prioritized assessment that includes a constant presentation 
that the CFPB has with the national credit reporting agencies. 
We are looking at, specifically, what they're doing with the 
information that comes in. We are also doing examinations of 
furnishers on the other side to make sure they are reporting 
the right way.
    Of course, ``current,'' is not the only thing that is in 
the data that gets transmitted by the furnishers. There are a 
lot of different details about how precisely you continue to 
comply with FCRA in terms of accuracy and otherwise. But we are 
all working very closely together to keep that intent of 
Congress implemented.
    Mrs. Wagner. Recently, the Bureau announced that it would 
be issuing an advance notice of proposed rulemaking regarding 
consumer-authorized access to financial records. How does the 
Bureau intend to address privacy and security concerns in an 
environment where many unregulated or underregulated companies 
are eager to, as we know, obtain and resell consumers' 
financial data?
    Ms. Kraninger. Section 1033 is, of course, what you are 
referencing, and Congress anticipated there might be a need for 
rulemaking. We are still looking at that. The primary driver is 
that the consumer should be the one who authorizes the data 
use. But to your point, privacy and security issues are 
intertwined with that, and are incredibly important.
    The means by which many of the data aggregators have been 
accessing that data is by consumers providing their banking 
credentials. And that, of course, means the entity can go in 
and screen scrape the data and take it out. That has caused a 
lot of concerns by those who believe they are stewards of that 
data.
    So, we have a lot of technical data access issues there 
with respect to how that happened. And it was not pre-decided 
that there needs to be a rule, but it will be a challenging 
rulemaking to take precisely the privacy and security, and make 
it lasting so that it doesn't change based on technology 
changes as well. So, we are really looking to do that right.
    Mrs. Wagner. I think so, too. How will the Bureau ensure 
that the password's enhanced data portability does not lead to 
consumer exploitation or an uneven playing field between 
depositing holding institutions and potentially underregulated 
Fintech companies? I have concerns about that, too, as you move 
forward.
    Ms. Kraninger. No, you are outlining precisely the 
challenge here. Again, the consumer is front and center in 
Section 1033, but there also needs to be information to that 
consumer about what they might be opening up.
    Mrs. Wagner. Okay. Thank you. My time has expired, and I 
yield back.
    Chairwoman Waters. Thank you. 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. I have five quick, easy questions. First, 
paced loans: Congress passed a law in 2018 requiring 
regulations, including the ability to repay. In March 2019, you 
issued a proposed rule. In October 2019, and February 2020, I 
had a chance to ask you about the status. We need to protect 
the consumers. When do we get the regulations?
    Ms. Kraninger. Congressman, I can give you a slightly 
better answer than I did in February. The data collection that 
we need to predicate that notice of proposed rulemaking will 
begin in September, early September. The Paperwork Reduction 
Act requirement does take a significant amount of time. But by 
early September, that data collection will happen. We will have 
the data this year.
    Mr. Sherman. So, the work you promised in February will 
start in September. Next, I want you to be as quick as possible 
on that.
    Ms. Kraninger. Understood.
    Mr. Sherman. Next, consumer credit scores: People lose 
their jobs because of COVID. They have negative--they are 
unable to pay this or that bill. Is that a fair entry on their 
credit report and a good predictor of how well they will be 
able to pay their bills once the crisis is over?
    Ms. Kraninger. Congressman--
    Mr. Sherman. Can we prevent these negative items during the 
COVID crisis from being on the credit report?
    Ms. Kraninger. I know you are asking a critically important 
question that you in Congress are actually thinking about and 
looking at now.
    Mr. Sherman. You could solve the problem for us. You could 
simply prohibit--I hope you will look at preventing these 
negative items from being on the credit report.
    But one particular area where Congress has acted, the CARES 
Act, said that mortgage forbearance is allowed to homeowners 
and prohibits negative credit reporting from using that 
forbearance.
    But FHFA charges premiums on mortgages to borrowers who 
have accessed the forbearance, which means that that is being 
reported and it is disadvantaging the homeowner.
    What can you do to make sure that the forbearance that the 
CARES Act indicates should not be on the credit report, is not 
reported in a way that causes FHFA to raise the premiums?
    Ms. Kraninger. I can't speak to the premium aspect, 
Congressman, but I can in the overall context of this. We are 
working very closely with the NCRAs and with the furnishers to 
understand what else they are reporting--
    Mr. Sherman. Can you call the folks over at the FHFA and 
say, ``Hey, it is my job to make sure that you don't get this 
information on the credit report, so where are you getting 
it?''
    Ms. Kraninger. We will talk about this because you are the 
first person to mention the premium issue, so I will go back 
and look at that, and we will certainly get back to you on what 
the decision is there.
    Mr. Sherman. The next issue is Facebook. The entities you 
regulate are supposed to make sure they don't discriminate 
based on age, gender, race, et cetera. Facebook has this 
complicated algorithm, so that when you buy an ad on Facebook, 
you don't quite know whom you are reaching.
    Facebook probably isn't going to reveal its algorithms. But 
if one of the entities being regulated by your Agency gets a 
certification from Facebook saying, you have opted for an ad 
campaign that we are making sure does not discriminate against 
the people you are not supposed to discriminate against, would 
that be adequate, or do the entities that you regulate have to 
not be on Facebook unless Facebook reveals the algorithm?
    Ms. Kraninger. There are a lot of facts and circumstances 
behind, obviously, the premise to your question. And I wouldn't 
want to answer that in this unique case. I will tell you 
overall that we do engage in fair lending examinations of the 
institutions. That certainly includes looking at their 
advertising. And beyond that, I can't get into too much more 
depth here, that--
    Mr. Sherman. I hope you will look at the specifics. Back in 
the old days, you would put an ad in the newspaper, and that 
would be the way--the town had one big newspaper.
    Now, you have so many different choices. When you advertise 
with Facebook, it is one big entity, but you have thousands of 
different advertising campaigns you can ask for. And I would 
assume that you would create a circumstance where if you 
specify nondiscrimination, that it is on Facebook if they 
violate that.
    One last thing is these Fintech companies that ask you to 
give them all of your information so they can access your bank 
account and your brokerage statement, and then, they can sell 
the information they know about you; they are providing this 
free service at the cost of your privacy.
    What is your perspective? What can we do to protect 
consumer privacy?
    Ms. Kraninger. Certainly, we have some limitations on our 
oversight of privacy. But I will say on this point, we do have 
Section 1033 to look at what the data aggregators are telling 
consumers in terms of the product what they are getting from 
it.
    And there are a number of things that we are doing on that 
front for the disclosure and access.
    Mr. Sherman. Thank you.
    Chairwoman Waters. The gentleman from Oklahoma, Mr. Lucas, 
is recognized for 5 minutes.
    Mr. Lucas. Thank you, Madam Chairwoman.
    Director, can you detail the resources that CFPB has 
provided to consumers experiencing financial hardship during 
the COVID-19 pandemic?
    Ms. Kraninger. Certainly. We have announced public 
enforcement--in terms of educational resources, I will admit, 
my mind went to money. But I will say, educational resources 
are extensive. We have issued over 70 blogs and videos in 
multiple languages, extensive information on how to manage your 
finances and think about them, and what questions to ask your 
servicers.
    As soon as the CARES Act was passed, we issued that video 
and that information within a week, which was a significant 
accomplishment in moving mountains here to make sure we clearly 
and concisely told consumers what they were entitled to. And we 
have had millions of people watch that video in English and in 
Spanish, and that is something that I think we are particularly 
proud of in terms of, again, making sure consumers understand 
their rights.
    And I commend the financial institutions and other consumer 
advocates, and Members of Congress, who are also sharing that 
very same information with their constituents or with their 
customers.
    Mr. Lucas. It is important, because many of our 
constituents have never faced the kind of challenges they are 
facing economically as a result of a pandemic, just as 
virtually no one alive has had to deal with this kind of a 
circumstance before.
    Continuing my line of questioning, you mentioned in your 
testimony that the Bureau will launch a website with HUD and 
FHFA for consumers to find accurate information about relief 
options. Do you outline what consumers should expect when 
seeking out a forbearance or mortgage relief as provided in the 
CARES Act?
    Ms. Kraninger. Yes, Congressman, that website is launched. 
It has a lot of the resources I just talked about on it. 
Consumers can expect that they can contact their servicer and 
say, I have experienced a hardship, and therefore they are 
entitled to forbearance if it is either a federally-backed loan 
or a GSE-backed loan. So, that is clear to them.
    In addition, even those that are privately-funded loans, 
certainly, they have direction from all of us as regulators to 
accommodate their customers, and many of them are also 
providing different kinds of forbearance, again, consistent 
with their contractual obligations and abilities.
    But a significant, overwhelming number of institutions are 
providing options to their customers, and the first step is 
having those customers contact them.
    The second is to come to us, the CFPB, if they have any 
issues or questions or complaints, and we are expeditiously 
addressing those.
    Mr. Lucas. I very much appreciate that, Director. As I 
mentioned earlier, there are many of my constituents, our 
constituents out there who are facing the kind of economic 
challenges we have never faced before, and this is a whole new 
terrifying experience to them.
    With that, Madam Chairwoman, I yield back the balance of my 
time.
    Chairwoman Waters. Thank you.
    The gentleman from Missouri, Mr. Clay, who is also the 
Chair of our Subcommittee on Housing, Community Development, 
and Insurance, is recognized for 5 minutes.
    We will move on. I think there is some technical difficulty 
with the gentleman from Missouri.
    The other gentleman from Missouri, Mr. Cleaver, who is also 
the Chair of our Subcommittee on National Security, 
International Development and Monetary Policy, is recognized 
for 5 minutes.
    Mr. Cleaver. Thank you, Madam Chairwoman.
    I appreciate very much this subject today with Director 
Kraninger, because I don't know if there are very many other 
issues that are in the same area of importance.
    I am wearing my protective gear because someone close to me 
has now contracted the virus, and so I am trying to be as 
protective of others as I can possibly be.
    Director Kraninger, I have a couple of questions, and I 
will try to make them as clear as I can. I think everybody has 
already been mentioning about how things are difficult 
economically.
    And so, I am concerned about minority consumers, who are 
frankly, hemorrhaging, right now and are at heightened risk of 
attack by financial predators. There is a saying that a sign of 
blood in the water is a sign that someone can be attacked, 
especially because they are already in a weakened state, and 
that is the case right now.
    Last Friday, July 24th, the CDC released a report, and the 
first sentence read, ``Longstanding systemic health and social 
inequities have put many people from racial and ethnic minority 
groups at increased risk of getting sick and dying from COVID-
19.''
    The report goes on to highlight discrimination as a primary 
factor and the heightened rate of death of minorities, and 
especially noted housing and financial discrimination.
    We know that the access to emergency relief to help 
communities of color who are being disparately impacted is not 
being equitably distributed.
    A national online survey of 500 African Americans and 
Latinx who owned small businesses conducted by the Global 
Strategy Group released a report, and they said that after the 
second round of funding for the program was allocated, they 
found that just 12 percent received the full assistance they 
requested, and two-thirds reported that they had not received 
any.
    If you go to the Center for Responsible Lending, 100 
percent of businesses owned by people of color were shut out of 
the Paycheck Protection Program, and of the pending evictions, 
that 40 million Americans may have been evicted.
    So, I think the first issue is, it would be helpful for me 
to find out your belief as it relates to systemic racial 
discrimination. Director, do you believe that it exists in this 
country?
    Ms. Kraninger. Yes, Congressman, I know that it exists in 
this country, but it is abhorrent, and it is certainly part of 
my duty to root that out in the financial system.
    Mr. Cleaver. Yes, I agree with you, and thank you. Do you 
think that consumers of color and women have been experiencing 
this disparate impact during the crisis, or do you think they 
have been harmed by discrimination?
    Ms. Kraninger. Certainly, the evidence that you stated does 
show that they are not starting in precisely the same place.
    And we have been doing everything we can to make sure that 
they do. And I will say that CFPB, specifically, is supporting 
our fellow agencies in trying to get the word out on economic 
impact payment entitlement, and on forbearance options, to 
limited English proficiency groups, and to African-American 
communities.
    And even on the Paycheck Protection Program, again, I have 
had significant outreach as well with communities of color to 
make sure that they have the information they need, and then we 
can increase access to these programs.
    Mr. Cleaver. I believe my time is running out. But maybe, 
you understood that the enforcement and supervisor authority of 
the Office of Fair Lending and Equal Opportunity, that that 
might be an adequate response to the problems we are having. 
What say you?
    Ms. Kraninger. I'm sorry, Congressman. I didn't quite catch 
the last question.
    Mr. Cleaver. Have you considered restoring the supervisory 
and enforcement authorities of the office?
    Ms. Kraninger. I'm sorry, you are asking about the 
supervisory enforcement activities we are doing in fair 
lending, is that--
    Mr. Cleaver. Yes, of the Office of Fair Lending and Equal 
Opportunity.
    Ms. Kraninger. The Supervision, Enforcement, and Fair 
Lending Division still engages very deeply in supervisory 
enforcement matters across-the-board, including fair lending, 
and we can get you some more information on that.
    Mr. Cleaver. I think my time is up. Thank you.
    Chairwoman Waters. Thank you.
    The gentleman from Florida, Mr. Posey, is recognized for 5 
minutes.
    Mr. Posey. Thank you very much, Madam Chairwoman, for 
calling this hearing, and I thank the ranking member as well.
    For a number of years now, I have tried to get the CFPB to 
issue advisory opinions. [inaudible] Pretty much [inaudible] 
Filing that [inaudible] I am afraid to ask that [inaudible] 
Comply [inaudible] Rules and regulations of the agency. 
[inaudible] What they are asked to deal with [inaudible] 
Eliminate so many problems of the plans with them. As we 
[inaudible] Emphasis should be on the recovery, the economic 
woes [inaudible] And our hard-working Americans [inaudible].
    Regulation should not be a burden to society, [inaudible] 
Recovery before this vicious virus brought so much [inaudible] 
Imposed for the nation's economy [inaudible] Across this 
nation.
    President Trump's policies to reduce taxes and regulations, 
we are finally bringing, coming back from the long stop 
national luggishness that we suffered.
    Getting government off the backs of our hard-working people 
gave us the strongest economy in our history. There are 
important lessons to learn, moving forward. My first question 
for you, Ms. Kraninger, is, what your early experience 
[inaudible] advisory [inaudible].
    Ms. Kraninger. I'm sorry, Congressman, you broke up a 
little on the question. The experience with, what, 
specifically?
    Mr. Posey. The advisory opinion [inaudible].
    Ms. Kraninger. With the advisory opinion program we have 
launched, what has come in, I am guessing, you would like to 
know?
    Mr. Posey. Yes, ma'am.
    Ms. Kraninger. Okay. Thank you, sir. As you know, we are 
engaged right now in the pilot, and we are in a Paperwork 
Reduction Act process to get comments on the full program. We 
have not gotten anything in yet, specifically, but it has only 
been a few weeks since we launched that. And we do anticipate 
it.
    And as I told you, the biggest part about this is, it is 
making formal and transparent interpretive rules that we have 
essentially been giving to individuals as they have asked along 
the way. So, it's incredibly useful.
    Mr. Posey. Thank you.
    Many of us believe that the rules and regulations must be 
applied with [inaudible] Overregulate credit in such a way that 
[inaudible] Approach [inaudible] And puts a burden on families 
[inaudible]. Please tell us about your strategy to carry out 
the standard [inaudible] Without unduly constraining our 
economic recovery from this pandemic as we go forward.
    Ms. Kraninger. I'm sorry, Congressman, your sound is 
cutting in and out, so it is hard to actually gather the 
question.
    Mr. Posey. I don't know why. Maybe the lowest bid here is 
not the best bid for communications. [inaudible]
    Ms. Kraninger. That I heard, of course.
    Mr. Posey. What metrics and policies would give you 
[inaudible] To ensure that we protect consumers but 
[inaudible].
    Ms. Kraninger. I have no idea. I'm sorry, sir.
    Chairwoman Waters. We are having technical difficulties, 
and I can't hear Mr. Posey either. So, we are going to come 
back to him.
    And we are going to move on, so that he can finish the 
remainder of his time.
    With that, we will start the clock over. The gentleman from 
Missouri, Mr. Clay, who is also the Chair of our Subcommittee 
on Housing, Community Development, and Insurance, is recognized 
for 5 minutes.
    Mr. Clay. Thank you, Madam Chairwoman, and let me thank 
Director Kraninger for her testimony today.
    Director Kraninger, the CARES Act includes important 
foreclosure forbearance protections for homeowners struggling 
to pay their mortgages.
    Given these protections, it is very concerning that 55 
percent of COVID-19-related mortgage complaints identified 
struggling to pay the mortgage as a primary issue, according to 
the most recent Bureau report. Consumers reported that some 
mortgage servicers are providing information that conflicts 
with guidance regarding lump sum payments.
    What are you doing to ensure that mortgage servicers are 
complying with the CARES Act?
    Ms. Kraninger. Thank you, Congressman. That is obviously a 
significant issue right now. The complaint that you are 
referencing came in very significantly, particularly, in March 
and early April. We actually looked carefully at those. And we 
took a bunch of actions with FHFA and with HUD, including 
producing scripts for servicers to make sure they are clearly 
conveying their CARES Act rights to consumers who contact them.
    In addition, with respect to the complaints, we noted that 
a lot of them came around what happened after the forbearance 
period.
    So we worked together, and actually the CFPB issued an 
interim final rule enabling servicers who offer consumers a 
beneficial outcome, which is a lump sum payment at the end of 
the mortgage term, rather than having a question over what loss 
mitigation options would be there.
    And under the mortgage servicing rules, the fact of the 
matter is that servicers would have to literally start a full 
application process that was probably going to confuse 
consumers.
    So we gave them this option, and acted very quickly with 
that, in partnership with the other Federal regulators.
    I can say we are working very closely on an ongoing basis 
to monitor those complaints, to monitor what the servicers are 
concerned about or hearing, and what consumer advocates are 
saying in terms of concerns they are hearing, as well as 
housing counselors.
    And I will say, it seems as though those primary early 
issues have been addressed, and we will keep monitoring as 
things dynamically change.
    Mr. Clay. Last month, the Bureau released a proposed rule 
that would dramatically change the definition of ``qualified 
mortgage'' (QM) and weaken consumer protection by replacing the 
debt-to-income (DTI) threshold with a standard based on a 
loan's pricing.
    Many consumer and industry groups have expressed concerns 
with such a QM definition that only relies on the price of the 
loan and the broad, Dodd-Frank statutory product restriction, a 
definition that relies on pricing reflects investors' 
assessment of risk, but does not assess an individual 
borrower's ability to repay. Can you address that?
    Ms. Kraninger. Gladly, Congressman. I think that is a 
critically important misunderstanding. The Dodd-Frank statutory 
requirements remain in effect. That includes consideration and 
verification of debt and income and the ability to repay. That 
is still very much a critical part of the process.
    The question is, in addition to that, how would you 
determine what is a qualified mortgage? As we looked at the 
hard, 43 percent debt-to-income ratio requirement out there, 
many consumer organizations and financial institutions have 
supported our approach, as a pricing approach. It takes into 
account wider aspects about the applicant and their 
creditworthiness, but it is not a replacement of consideration 
and verification of debt and income. That is in the statute, 
and that continues.
    Mr. Clay. I guess, as a final question, have you been able 
to prevent foreclosures of any great number, or have you been 
able to err on the side of the homeowner to keep people in 
their homes? Is there any anecdotal or documentary evidence of 
that?
    Ms. Kraninger. Congressman, I certainly believe that 
Congress took the right action, and I supported HUD and FHFA 
actually prior to the CARES Act when they put in place a 
foreclosure and eviction moratorium on the properties that they 
back. It is critically important during this uncertain time, 
and I know it is something that you are all looking at again 
now.
    Mr. Clay. Thank you so much.
    And Madam Chairwoman, I yield back.
    Chairwoman Waters. Thank you. The gentleman from Missouri, 
Mr. Luetkemeyer, is recognized for 5 minutes.
    Mr. Luetkemeyer. Thank you, Madam Chairwoman.
    Thank you for being here today, Ms. Kraninger. I appreciate 
your testimony.
    As you heard in my opening statement, I am supportive of 
changing the CFPB structure and putting a commission in charge 
of the CFPB. I was just curious as to your thoughts on whether 
the commission, if structured correctly, would be able to 
complete the mission of the CFPB, and whether you thought it 
would stop it from being a political football, which we had 
another example of yet today in our opening statement?
    Ms. Kraninger. Congressman, I certainly would support 
things that would take down the political temperature. I think 
you will recall that that is something I have talked about 
since my nomination, and that has certainly been my intent with 
the actions I have taken.
    But I do think there are some inherent issues that are 
stacked against a single director in this dynamic.
    In terms of the solutions to put into place, I respectfully 
defer to Congress and what actions you all decide to take 
there, and I would look forward to helping the Agency 
transition to the extent that such changes are enacted.
    Mr. Luetkemeyer. I think in response to Mrs. Wagner's 
concerns with regards to data and screen scraping and things 
like that, you articulated some concerns and indicated you are 
watching and looking at it and looking to try and do some 
things.
    Could you articulate a few ideas that you have with regards 
to how we can do certain things?
    I was a part of a group today that discussed this very 
issue of privacy, how do you protect, where do you draw the 
line, who owns the data, and how much access should you allow? 
Can you give us just some of your thoughts of directions you 
might be going on some of this stuff?
    Ms. Kraninger. Yes. Certainly, we have been talking 
extensively to all of the stakeholders who care about this, 
including the industries that are running the technical back-
and-forth of the data.
    Progress has been made at least to reduce screen scraping 
as the primary method. There are now APIs that are agreed-upon 
between entities that allow you to actually have a transmission 
of that data in a more secure way.
    That doesn't mean the consumer needs to hand over their 
banking credentials to accomplish that data-sharing, but I 
think in our symposium discussion, we found a lot of questions 
around, what truly is the consumer's financial data? There are 
concerns by institutions, likely for competitive reasons, over 
what data might be proprietary around pricing and otherwise.
    At the same time, the consumer may very well think that 
data is their own, because it is what they are paying, it is 
what they are getting, it is the servicers that they have.
    So, I think there are some legitimate questions around 
that, that really do get to why we decided to do the advance 
notice of proposed rulemaking step as our next step on this 
topic.
    As I noted to the Congresswoman, this is going to be a 
complicated area for rulemaking, and to the ranking member as 
well, there is a broader conversation happening around data 
privacy and data security that also complicates it. But we will 
endeavor to again get feedback and think about the smartest way 
to proceed in this issue.
    Mr. Luetkemeyer. Okay, very good. I want to talk a little 
bit about the breadth of the ideas today about some of the 
pandemic problems that we are having with regards to consumers 
being able to pay back their debts and the concern with regards 
to reporting on it.
    One of the concerns I have is with regards to forbearance. 
To me, I am concerned that if the regulators don't give the 
banks and credit unions and those lenders the ability to give 
forbearances, I am concerned that we are going to wind up with 
an elongated recovery here that is going to be very difficult 
to get out of.
    And it will destroy local economies, destroy businesses, 
and take away jobs, much as it did in 2008 and 2009, whenever 
the regulators came in and basically got rid of lots and lots 
of the lines of business.
    Although your area of oversight is a little bit more 
narrow, it still is in the area where forbearance would be a 
big help to some of the consumers. Would you like to comment on 
that just a little bit?
    Ms. Kraninger. Congressman, you are very correct, and that 
is certainly something that many consumers would benefit from, 
and have frankly benefitted from. The first action that we took 
with prudential regulators was an FFIEC-issued statement about 
accommodating consumers.
    I do think that my fellow regulators have sent that clear 
message. So if you are hearing otherwise, we would love to get 
some specifics on that, so that we can make sure that is done.
    I recognize it gets to safety and soundness issues 
potentially that are outside of my--
    Mr. Luetkemeyer. I appreciate your comments, but my concern 
is, I have been a former regulator, and I know that the 
regulators themselves are hamstrung by the rules and 
regulations that they have to operate under.
    So when you go in, much as they did in 2008 and 2009, they 
said, okay, well, my rules say I have to do this, so therefore, 
I have to classify this loan, which means I classify the loan. 
Then, you have to reserve more against it, you have to have 
more capital, whatever the case my be. And at some point, you 
turn around and force the banks to liquidate those loans.
    We are in a position where if we allow the time that it 
takes to get these loans back up, because of the uniqueness of 
the recession that we are in, I think we can get back out of 
this with minimal damage to a lot of our businesses and, 
therefore, our jobs and our local economies. So, to me, I have 
a bill to fix this problem, and I appreciate your comments. 
Thank you very much.
    With that, I yield back, Madam Chairwoman.
    Chairwoman Waters. The gentleman from Illinois, Mr. Foster, 
is recognized for 5 minutes.
    Mr. Foster. Thank you, Madam Chairwoman, and Director 
Kraninger. The Bureau's proposed definition of a qualified 
mortgage would remove the 43 percent debt-to-income limit from 
the QM loan definition and instead use a price-based approach 
that creates a new limit on the spread between a loan's annual 
percentage rate (APR) and the average prime offer rate (APOR).
    Now, as someone who has lived through the financial crisis 
and saw firsthand how much havoc was wreaked on the economy 
from shoddy underwriting practices, this, to me, shows an 
amazing confidence in the ability of a mortgage crisis to 
appropriately price risk.
    The proposed rule itself identifies several shortcomings 
with relying on pricing. It says, ``The Bureau anticipates that 
a price-based approach would incentivize some creditors to 
price some loans just below the threshold in order to receive 
QM status. More broadly, a lender's pricing of a mortgage 
reflects many factors outside of a borrower's individual risk 
profile, including prepayment speeds, balance sheet capacity, 
business goals, as well as broader economic conditions.''
    I am very concerned with having a definition that could be 
so easily manipulated. So, Director Kraninger, how will you 
ensure that this rule does not just incentivize an 
irresponsible race to the bottom, reminiscent of what we saw in 
the lead-up to the 2008 financial crisis?
    And if the CFPB acknowledges that the APR can be 
manipulated by lenders, ``to meet the mark,'' then how can this 
serve as an effective measure of a borrower's ability to repay?
    Ms. Kraninger. Congressman, the nature of a rulemaking 
process, of course, is that you put a proposal forward, and you 
acknowledge all sides of the argument, so you are definitely 
doing that with the quote in there. But I will say, just taking 
one step back, that the requirements of the Dodd-Frank Act 
remain in effect. So, the features that were so concerning 
during the financial crisis that are precluded from being 
qualified mortgage and precluded from being offered this way, 
are still statutorily-prohibited features.
    In addition, the statute still requires debt and income to 
be considered and verified. So, that is part of the proposal as 
well as a premise of the pricing approach. The pricing approach 
is then what we get to. The 43 percent DTI cap, well, we 
frankly found in 2018, a third of the loans that the GSEs 
backed had DTIs that were higher than 43 percent, and many of 
these loans are performing, and many of these loans are also to 
those in minority communities.
    And so, again, thinking holistically about what a pricing 
approach benefit has, and that is that it really does take 
away--it provides that opportunity above that DTI threshold 
that is so hard and it will go into effect in January without 
additional action by me, which is why we put the rule out, but 
we are trying to alter that effect.
    Mr. Foster. I am very worried about the word, ``consider.'' 
While the CFPB's proposal does eliminate the 43 percent DTI, it 
does, as you say, require lenders to consider a borrower's DTI 
as part of the underwriting process. But it also emphasizes 
that lenders would be given great latitude in how they 
considered a borrower's DTI. And I am concerned that, 
``consider,'' is just so loose that people are going to drive a 
truck through it, and we are going to see this all over again.
    Do you have any--
    Ms. Kraninger. Congressman, if I could, there are 
standards--I know you probably have other questions, but there 
are standards proposed in the rule for the debt and income 
consideration, and we are open to industry and consumer groups 
coming together and coming up with other standards.
    So, there does have to be a standard, to be clear.
    Mr. Foster. I think that having some clarity on exactly 
what, ``consider,'' means, would help a lot in this, and so 
that is--I am close enough to being out of time, that I think I 
am just going to yield back the balance of my time. I don't 
really have time to get the next question out.
    Thank you, and I yield back.
    Chairwoman Waters. The gentleman from Michigan, Mr. 
Huizenga, is recognized for 5 minutes.
    Mr. Huizenga. Madam Chairwoman, at this point, I would 
prefer if you could go to the next person and then come back to 
me, if that is okay?
    Chairwoman Waters. The gentleman from Ohio, Mr. Stivers, is 
recognized for 5 minutes.
    Mr. Stivers. Thank you, Madam Chairwoman. And thank you, 
Director, for being here today. I want to thank you for 
everything you do on behalf of consumers. I am really sorry to 
see that the nature of your agency has gotten so partisan. I am 
convinced that is driven by the structure of your agency.
    Recently, the Supreme Court, in a Supreme Court opinion, 
said that your structure violates the constitutional separation 
of powers.
    I am curious what action the agency is either taking or 
planning to take, to ensure some certainty and stability, given 
the recent Supreme Court decision, certainty and stability in 
your actions, decisions, and the things you do?
    Ms. Kraninger. Congressman, as I said, I welcomed the 
decision and the action in this because bringing that stability 
and certainty is certainly what I was hoping to do.
    And we have looked at prior actions, litigation that is 
ongoing, and prior rulemaking actions, and I did ratify those 
prior actions again, just in an abundance of caution, to make 
sure that those can continue to be relied on, because they have 
been relied on appropriately, and certainly going forward, I 
don't know that it changes a lot, but we are certainly looking 
at the opinions still and talking to the Justice Department 
about anything else that that may impact.
    Mr. Stivers. Thank you, Director.
    Second, there has been a lot of talk today about your QM 
rule, and you also temporarily extended the sunset on the GSE 
Patch that is out there. The Bureau is proposing to extend that 
patch for 6 months after the publication in the Federal 
Register of the final rule.
    Do you believe 6 months is an adequate time for the 
mortgage market participants to develop, test, and implement 
new standards, models, and business operations?
    Is it possible that maybe 12 to 18 months might be a better 
transition, especially given everything that is going on with 
COVID-19 and the pandemic?
    Ms. Kraninger. It is a proposal in terms of the time 
length, and we asked for comments on it. I think, again, based 
on experience, the 6 months seems appropriate.
    I will say the pricing threshold is not new. It is actually 
part of the current safe harbor and rebuttable presumption of 
the qualified mortgage. So it is not a new concept, and 
institutions are already doing those calculations.
    DTI--they are still considering debt and income as required 
under statute, so it is not precisely a DTI ratio necessarily--
    Mr. Stivers. It is because of the change. It is a change.
    Ms. Kraninger. It is a change.
    Mr. Stivers. You take the DTI, safe harbor, add a 
percentage, take it away. It is still considered. You look at 
costs more than you are in today's--and it is a little more--it 
is a change.
    I want to ask you to think about how long that transition 
will take for folks, that's all.
    Ms. Kraninger. Absolutely.
    Mr. Stivers. The next issue I wanted to bring up is online 
security. With the pandemic, more people are doing everything 
online. And according to the FBI, in 2019, victims lost over 
$221 million to real estate scams and fraud, and that is based 
only on crimes that were reported.
    I have had individual constituents who had mortgage 
closings where the entire proceeds of the closing have been 
wired to different accounts through fake emails and scams.
    And I am curious what the agency is doing to build 
awareness on this massive consumer problem, and what you are 
doing to help potentially address real estate fraud and scams, 
and prevent them in the future?
    Ms. Kraninger. The particular scheme that you mentioned is 
one that we were aware of. I don't recall precisely when. It 
has been at least a year-and-a-half, I feel like, so that is 
something that we, right away, worked with industry on. We 
actually, I believe, produced a video on that frankly, that 
REALTORS were sending out to their customers close to closing 
to make sure they are aware of that, make sure they know 
precisely how they should be contacted and where they should be 
sending closing money. So, that is a significant issue.
    It highlights the need in general to make folks aware of 
the frauds that are out there and certainly to use our 
enforcement actions to go after fraudsters. I will say a lot of 
those things, like those online frauds, are particularly hard 
because they are--
    Mr. Stivers. They use offshore accounts, they do lots of 
other things. This happened to my constituent about 18 months 
ago, and it is something I have become aware of, and I am 
trying to build an awareness of, and I would ask you to 
continue to build awareness.
    We are talking about a quarter billion dollars of reported 
real estate scams and fraud in 2019, and probably it is higher 
today, and given that more things are moving online, I hope you 
will continue to look after those consumers because they need 
protection, and we are talking about in many cases, somebody's 
biggest asset and the entire proceeds scammed from them.
    Ms. Kraninger. You are absolutely right. I will say, the 
Department of Justice, the Federal Trade Commission, all of us 
are pretty engaged in this.
    Mr. Stivers. Thank you, I yield back.
    Chairwoman Waters. Thank you.
    The gentleman from Connecticut, Mr. Himes, is now 
recognized for 5 minutes.
    Mr. Himes. Thank you, Madam Chairwoman, And Director 
Kraninger, thanks very much for being with us today.
    I would like to follow up on the question that Ms. 
Velazquez was talking to you about, which is the revised payday 
lending rule.
    You commented to her that it was your opinion that the rule 
promulgated under Director Cordray resulted in a lower 
availability of credit, and I think you implied that the new 
rule would, therefore, make credit more available.
    I understand that, and if I can just frame my question--and 
I think you agree with this framing--financial regulation is 
hard because it is always a balance. And always, availability 
of credit is on one side of the balance, and the safety of 
consumers, somehow defined, is on the other side of that 
balance.
    So, I want you just to elaborate, please, for us--
presumably you did a lot of quantitative work, and we don't 
have the time to get into all of the quantitative work, but I 
am really interested, if you could give us a minute or two on 
how the revision to the rule will provide how much more credit 
out there at the cost of how many more people who may find 
themselves in difficult financial straights?
    Whether that is defined as personal bankruptcy or finding 
themselves in a situation where debts spiral. I am interested 
in what the quantification was of finding that revised balance 
point.
    Ms. Kraninger. And I appreciate you framing it as a balance 
point, because I have often found in my public policy life that 
that seems to be the spectrum we talk on. I certainly believe 
it is my job to protect consumers while increasing availability 
of credit. And I don't think it is an either/or.
    I think with respect to this, I would offer a few other 
things. The rulemaking itself did have a substantial and 
dramatic impact on small-dollar credit availability, as its own 
terms said. So, roughly 70 percent of branches would be closed 
or those locations would be closed by the rules assessments. 
But there were other factors to the effect of credit--
    Mr. Himes. I'm sorry, 70 percent of locations of what?
    Ms. Kraninger. Of the payday and title loan outlets, and so 
the distance that people had in terms of availability.
    But what I want to get to is also banks and credit unions 
and others who were also due to other actions, but also 
influenced by the rule, other guidance issued by regulators 
that reduced their interest in engagement in this area. And so 
I think it is not an either/or.
    There are a couple of things that we are trying to do, and 
one is, disclosure testing, to look at--for those individuals 
who may be more vulnerable, is that something that will help? 
There are clearly consumers who understand the product well. 
There are consumers who pay within the term. The data that we 
produced in the rule demonstrated that. There is a substantial 
portion.
    And there is a substantial portion who also defaulted on 
the loan very early in the term, very early in the process. 
That also demonstrates understanding of the product. So, how do 
we support and help that last group?
    Mr. Himes. Director, I'm sorry, I do want to get an answer 
to my question. You partly answered it.
    You said that your work indicated that 70 percent of payday 
loan locations would be closed under the old rule. Thank you. 
That is a very specific, checkable fact.
    But before you go on to the other stuff you are doing, tell 
me what the CFPB's analysis showed in terms of the increase 
associated with bad outcomes, however defined, under the new 
rule? Or is it your belief that there actually won't be an 
increase in irresponsible borrowing or negative effects as a 
result of the newly promulgated rule?
    Ms. Kraninger. I would say the way that was--it was the 
total lending under payday loans that was in that original 
rulemaking, and I think that is where you start to get to a 
challenge, because parsing out what was lost, you don't 
understand what choice that individual consumer was making--
what outcome did they get that might have made it worse to 
them, in terms of that loan, and what was the alternative they 
had at the time?
    And so that is something that, again, additional research 
could probably bear out, but there is data in the rule that 
gets to the point that you are making. I just don't have it at 
my finger tips here.
    Mr. Himes. I have one last question--I really would like to 
understand. I really do believe there is a balance here, and I 
really would like to hear from you as to kind of what the 
implications are if this form of credit is more available, how 
many more people get themselves in trouble with it?
    But in my very short remaining time, I am having a hard 
time--this gets pretty technical, but basically, the revised 
rule eliminates the necessity for a payday lender or other 
lender to come to a conclusion that there is a reasonable 
ability to pay on the part of the borrower. And just for the 
people watching at home, why does that make any sense at all? 
Why shouldn't a lender undertake a very basic process to 
determine that there is a reasonable ability to repay?
    Ms. Kraninger. Madam Chairwoman, I know time is out, so I 
can--
    Chairwoman Waters. The gentleman's time has expired. Could 
you please respond to the gentleman in writing?
    Ms. Kraninger. Yes, certainly.
    Chairwoman Waters. Thank you, Mr. Himes. She will respond 
to you in writing.
    The gentleman from Kentucky, Mr. Barr, is recognized for 5 
minutes.
    Mr. Barr. Thank you, Madam Chairwoman, and welcome back to 
the committee, Director Kraninger.
    Thanks also for your work to give consumers access to fair, 
transparent, and competitive markets by focusing your work on 
clarifying the rules of the road.
    I do think giving consumers access to competitive markets 
and clear rules of the road is, by definition, consumer 
protection, and because of that good work, I certainly hope 
this is not your last time in front of this committee.
    Last July, in my capacity as the ranking member of the 
Oversight and Investigations Subcommittee, I wrote to the 
Inspector General of the Federal Reserve asking for details 
about how the Fed reviews the Bureau's budget request prior to 
approval. This week the Fed IG published its report. This is 
it. This is the report--I think you have probably seen it--in 
response to my letter.
    The report and the ensuing briefing with my staff confirmed 
what I initially suspected, which is that it is more or less a 
rubber stamp. The Fed only reviews whether the request is 
within the statutorily-mandated cap. If the request is under 
the cap, the Fed approves the request. There is no back-and-
forth between the Bureau and the Fed. There is no discussion of 
any line item. It is just a version of a blank check.
    And given the fact that Dodd-Frank gave the Bureau 
extraordinary powers--rulemaking, enforcement, adjudicatory 
powers, including the authority to conduct investigations, 
issue subpoenas, civil investigative demands, initiate 
administrative adjudications, prosecute civil actions in 
Federal court, and issue binding decisions in administrative 
proceedings--
    And given the fact that the Bureau can seek restitution, 
disgorgement, injunctive relief, and significant civil 
penalties for violations of 19 Federal statutes under its 
purview, it is troubling that the Bureau's budget and funding 
process lacks any meaningful external oversight.
    Of course, the Supreme Court, as many of my colleagues have 
noted here today, recently held that the Dodd-Frank law 
violated the separation of powers, concluding that the Bureau's 
structure, limiting the President's power to remove the 
Bureau's single Director, is unconstitutional.
    In my view, this decision properly vindicates the 
President's power under Article II to supervise and, if 
necessary, remove those who exercise the President's authority 
on his behalf.
    The Court's decision holds that the Bureau must be 
accountable to the President, but I would argue that the Bureau 
should also be accountable to Congress. And the Supreme Court 
recognized this in its opinion, noting that the lack of 
accountability is alarming.
    And the majority opinion said this, ``The CFPB's receipt of 
funds outside the appropriations process further aggravates the 
agency's threat to Presidential control.''
    So, there is clearly a lack of accountability at the Fed, 
and as you know, I have been a frequent and vocal critic of 
this lack of transparency and accountability in the Bureau's 
spending. I have a bill, the Taking Account of Bureaucrats' 
Spending Act (TABS Act), which would place the Bureau under the 
congressional appropriations process.
    Unfortunately, my colleagues in the Majority refuse to 
consider this common-sense measure. But I want to ask you, 
Director Kraninger, do you believe that subjecting the Bureau 
to the congressional appropriations process would enhance 
accountability and fix this lack of external check, and would 
it in any way diminish your ability, or the Bureau's ability, 
to protect consumers?
    Ms. Kraninger. Congressman, I certainly appreciate where 
you are coming from in asking this. I respectfully defer to 
Congress on determining how best to operate this. I do take 
seriously, of course, the internal controls that I put in place 
in our budget process and I believe I am accountable for the 
fund, but--
    Mr. Barr. And the IG recognized that good work, by the way. 
The IG recognizes that good work, and that is encouraging. I 
just think that we shouldn't leave it just to the agency and 
your leadership. We, as representatives of the American people, 
owe it to the taxpayers, I think, to also hold the Bureau 
accountable as well.
    Let me ask one final question also about the QM rule and 
the change to the loan definition, the QM loan definition. Can 
you detail what impacts the rule might have on the portfolio 
lending market and how might the changes proposed help 
struggling borrowers especially during this time?
    Ms. Kraninger. Certainly, providing that certainty with 
respect to the Patch replacement is part of what we think will 
be helpful coming out of--hopefully, coming out of the 
pandemic.
    In addition, in terms of helping struggling borrowers, we 
did take into account and ask about how this time period should 
be treated in terms of that consideration and verification of 
debt and income for borrowers who may have experienced a 
hardship. So, that is also something that will be part of the 
ultimate rule, to address that issue that you raised.
    Mr. Barr. Thanks for your testimony and your work, and I 
yield back.
    Chairwoman Waters. Thank you. The gentleman from 
California, Mr. Vargas, is recognized for 5 minutes.
    Mr. Vargas. Thank you very much, Madam Chairwoman, and 
thank you for holding this hearing. I appreciate it very much. 
I also want to thank the Director for being here. Thank you 
very much, Director.
    You did say earlier that it would be nice to take the 
political temperature down a bit. I don't know if you witnessed 
when Director Cordray was here, the yelling and screaming that 
would normally come from this side, including some of my good 
friends, who now find it to be political. It sounds like the 
old Captain Renault in, Casablanca, ``Gambling, I am shocked.''
    The truth of the matter is that in cases like this, we do 
have different views, and I think that plays out. I thank God 
that we have some people who have real tenacity, like our 
Chair, who made sure that Dodd-Frank was in place.
    One of the things that would be disastrous right now is if 
the banks were failing. If we had all of what we have right now 
because of the pandemic, and if our banks were crumbling and 
failing at the same time, we would be falling into a deep 
depression. So, I thank God that we put these regulations in. I 
wasn't here at the time, but I am very thankful, and, of 
course, oftentimes that comes because of the rub of politics.
    I wasn't going to state that, but I think I had to because 
of some of the comments that were made earlier about politics. 
But I did foreshadow what I was going to ask you about, and 
that is the issue of these networks and how to prevent fraud 
and capture fraud.
    As you know, the agencies have shown an alarming increase 
in financial crime and exploitation during this pandemic. The 
Financial Crimes Enforcement Network (FinCEN) has issued two 
advisories since late May on the medical scams, imposter scams, 
and money-mule schemes targeted at consumers.
    The FBI has also recently stated in a hearing before the 
Senate Judiciary Committee that the pandemic has also only 
served to increase the number of stimulus, healthcare, bank, 
elder and government fraud schemes.
    The CFPB has ordered a solution to reduce the victimization 
of elderly individuals. I am sure you would agree this solution 
could also be used to prevent victimization of low-income 
minority groups that tend to be vulnerable to these schemes as 
well.
    Could you comment on that? Because I do think that these 
networks could be something that could become very helpful.
    Ms. Kraninger. With respect to the elder fraud prevention 
and response networks, a really fantastic groundswell at the 
ground level between financial institutions, social service 
providers, and law enforcement, sharing information about what 
they are seeing, and absolutely I take your point.
    I would say one of the things that we find, though, with 
respect to older Americans, is the isolation that is further 
compounded by the pandemic, which is why putting out additional 
resources at this time on how to build and sustain those 
networks has been a particularly valuable undertaking.
    There are a lot of different fraud schemes, certainly, that 
we are keeping an eye on, but that is one population in 
particular that is further isolated by the pandemic.
    Mr. Vargas. I agree, it is a very vulnerable population. 
You also spoke, though, earlier, about having information in 
Spanish, too. Obviously, language can be a real issue as well 
in these fraud schemes.
    In your opinion, have these networks been worthwhile? I 
know the coordination and everything costs money to do, but 
have they been effective?
    Ms. Kraninger. Yes. We actually have done a couple of 
reports around that, and we are certainly encouraging financial 
institutions to continue to do the Suspicious Activity Reports 
(SARs) to FinCEN, and to their partners, making sure partners 
have access to that information that is happening too, and so 
we are really rapidly increasing the--or I guess shortening the 
time, I should say, for people to be made aware of the 
different schemes and then be able to intervene.
    Mr. Vargas. And lastly, I guess I would ask about 
forbearance. I know a couple of my colleagues and friends have 
asked about this already. Under the CARES Act, forbearance is 
not supposed to be held against you. In fact, I know that now 
over at the FHFA, the Director there has stated--and I have 
language here from his note of 5/19/20--that they are going to 
attempt to not have this be a negative if you are going to 
refinance or buy another house, if you are in forbearance 
because of the great interest rates at the moment.
    But again, I would ask you to take a look at this, because 
this is an extraordinary moment in our history, and a lot of 
people who could normally pay their mortgage are in trouble 
because of the pandemic, and hopefully we can get over this, 
and get back to normal.
    But anyway, I would ask you, as my colleagues did, to 
follow up on that. And again, I thank you for being here.
    Thank you, Madam Chairwoman. I yield back.
    Chairwoman Waters. The gentleman from Michigan, Mr. 
Huizenga is recognized for 5 minutes.
    Mr. Huizenga. Thank you, Madam Chairwoman. I appreciate 
that. And it is good to have you here today, Director, and I 
appreciate your time.
    I would remind my colleague and friend--and he is a 
friend--from California, that there are a number of us who have 
been amazingly consistent in our belief that the structure of 
the CFPB needs to be a commission. And whether it was the Duffy 
legislation in previous Congresses or the TABS Act, as my 
colleague, Mr. Barr, was talking about, I do believe that this 
is the right way to organize the CFPB.
    And Director, I guess I will ask a question along the lines 
of what my colleague, Mr. Barr, was asking about--refinement. I 
understand you don't want to get into the, ``what should 
Congress do'' question, but let me ask this: Do you believe 
that somehow the ability to protect consumers would be 
diminished under a commission structure, and would consumer 
protections be lessened under such a commission approach?
    Ms. Kraninger. Congressman, I will certainly say there are 
other organizations that have commissions, and that is 
something that I am sure could be looked at or compared. I will 
say at this point, it is a similar answer to you--I know it's 
not fully satisfying--that I will allow you all to make that 
call yourselves, and I will certainly take any action that 
Congress directs us to take by law.
    Mr. Huizenga. I fully understand that. I guess that is one 
of our jobs, is to ask those types of questions, to find out 
whether those involved and engaged believe that there would be 
a diminished ability for them to do their jobs. And the nature 
of my question is really more along those lines, trying to make 
sure that based on your professional experience and your 
opinion, whether you could effectively do your job with a 
different structure.
    Let's say Congress decided to move away from the 
dictatorial structure that they currently have and decided to 
make it that every single decision you made would be subject to 
a vote of Congress. I don't think that would be a wise move. I 
would assume professionally, you would maybe discourage that.
    I am reminded that, in the previous Administration, 
Director Cordray had no problem sharing his opinion on the idea 
of whether or not there should be a commission structure.
    So, I will give you one last shot at that, if you care to 
expand. Do you think that you could make that type of structure 
work or--
    Ms. Kraninger. Congressman, how about I tackle it this way? 
Certainly, if I see legislation that I think would be 
detrimental to the agency in terms of a miss, and it is 
progressing, I will certainly let you know my views. And I 
welcome the action on structure by Congress, generally 
speaking, and I do believe that Congress would come to a good 
conclusion on that.
    Mr. Huizenga. Great, okay. That is helpful. And unlike the 
Chair, I guess, I hope this isn't your last appearance before 
this committee.
    Let's move on to credit reporting and debt collection 
here--and sorry, I don't see the clock right in front of me, so 
I will try to move quickly. We know, and I think there was 
[inaudible] In the CARES Act about [inaudible]. But we know 
that that may be a temporary fix, but what might [inaudible] 
Long-term [inaudible]. Could that adversely affect consumers?
    Ms. Kraninger. Congressman, I think you were asking about 
credit reporting, but you did cut in and out. So if there is a 
specific question, I know we don't have a lot of time left.
    Mr. Huizenga. Okay. So, what type of negative effect might 
there be on credit for consumers if there is not accurate 
credit reporting that is allowed at all?
    I believe that there is a proper time and is a proper time 
under the CARES Act to suspend that, but if this becomes a 
long-term solution, which I know some of my friends on the 
other side believe ought to happen, that there should never be 
any sort of actual, accurate credit report, and I am curious 
about the negative effects?
    Ms. Kraninger. Yes. Accuracy in the system is hugely 
important. I would at least agree with that, and I know--
    Chairwoman Waters. The gentleman's time has expired.
    The gentleman from Florida, Mr. Lawson, is recognized for 5 
minutes.
    Mr. Lawson. Thank you very much, Madam Chairwoman, and to 
you, Madam Chairwoman and Ranking Member McHenry, I appreciate 
you having this hearing. My question centers around student 
lons, because I have so many students in my area. As you know, 
the CARES Act provides student loan relief that includes 
suspending payments, interest, and collection of the 
government-held, Federal student loans from, I think March of 
2019, through September 3, 2020.
    I am especially concerned about how credit reporting 
bureaus are not complying with the Federal coronavirus relief 
requirements under the CARES Act. Some student loans servicers 
appear to be reporting the student loans and the language in 
nonpayment status to national credit bureaus.
    On May 20th, students loan borrowers filed a class action 
lawsuit against Great Lakes and the major credit bureaus for 
their erroneous credit reporting.
    Director, what are you doing to ensure that credit 
reporting bureaus and the lenders that furnish data are 
complying with the CARES Act, and holding accountable the 
companies that do not?
    Ms. Kraninger. Congressman, thank you. It is an important 
issue with respect to credit reporting agencies and the 
furnishers that, of course, provide the data to the credit 
reporting agencies. And so, we are actively engaged in ongoing 
oversight over FCRA compliance, with respect to accuracy and 
dispute resolution, and the CARES Act requirement is certainly 
an overlay of that.
    One thing we are doing under the pandemic is a prioritized 
assessment, which is a kind of special exam, going in and 
looking at what is happening right now. So, we are going into 
furnishers, and looking at their compliance overall, in all 
product areas. We did an assessment of risk. We recognized that 
the student lending space, given CARES Act requirements, was an 
area that should be looked at, and so we are going in and 
looking at the furnishing side.
    We are also talking to the credit reporting agencies about 
how they are engaging on their side as well to make sure that 
there is compliance happening.
    With respect to, I think, Great Lakes, there were some 
mistakes made that were caught very quickly, both through 
complaints to the Bureau and things that consumer advocates and 
financial institutions noticed. And there was a very quick 
resolution, both in how scoring happened and the data that was 
provided by the furnishers. So, that was something that was 
addressed very quickly.
    And I think it is a good example of how quickly we can act 
when we see mistakes are made.
    Mr. Lawson. That is great. What is the status of that 
lawsuit at this point? Or is it too early to make any comments 
on it?
    Ms. Kraninger. I'm sorry, Congressman. Was there a question 
there?
    Mr. Lawson. Yes. I was trying to see if you could elaborate 
on the status of the lawsuit at this time, or is it too early 
to comment on it?
    Ms. Kraninger. Oh, understood. The Bureau is not a party to 
that lawsuit, so I am aware of it, but I do not know the status 
of it.
    Mr. Lawson. Okay.
    With that, Madam Chairwoman, I yield back.
    Chairwoman Waters. Thank you very much.
    The gentleman from Colorado, Mr. Tipton, is recognized for 
5 minutes.
    Mr. Tipton. Thank you, Madam Chairwoman. And Director 
Kraninger, thanks for being here, and I hope you have an 
opportunity to do it 8 more times, if you so choose.
    We recently had--and this is a little follow-up to Mr. 
Huizenga's questions--Secretary Mnuchin was here before the 
committee a few weeks ago, and he had noted that the credit 
reporting agencies, in order to be able to function properly, 
need to be able to maintain a complete profile of the 
consumers' credit history, especially during this pandemic.
    Some proposed legislation that we have would suspend 
negative consumer credit reports during the COVID-19 pandemic 
and any other future disaster for a period of 120 days, or 
until the emergency ends. My view is, this would weaken, not 
increase, access to credit, as lenders would lose confidence in 
the accuracy of the information before them.
    And I guess my question is, do you agree with Secretary 
Mnuchin, that it is important to be able to maintain complete 
credit profiles and not alter credit-related data during this 
pandemic?
    Ms. Kraninger. Let me answer it this way, Congressman, the 
Fair Credit Reporting Act actually holds accuracy in the system 
as a high priority, and the Bureau is tasked with compliance 
with those FCRA requirements around accuracy in the system. It 
is hugely important.
    I appreciate why you are raising the question, because 
there is a concern with respect to the system itself. If those 
lenders who are seeking to do a creditworthiness assessment, 
can't actually access information, or trust the system to give 
them good information, then there is a problem.
    But we also have a situation where we are looking for 
alternate data and other sources of information that is going 
to give a more robust credit picture of a creditworthy 
borrower. And so, there are a lot of discussions around what 
happens in the credit reporting system. I clearly recognize 
that as well.
    And certainly with respect to making sure that those 
minority communities as well, that individuals actually have 
information in the credit reporting system that will enable 
them to get credit if they are creditworthy.
    Mr. Tipton. Great. Thank you.
    As we previously discussed, responsible debt collection is 
an important part of maintaining access to credit for 
consumers, and ensuring good access to credit is more important 
now than ever, especially in rural places like the ones I 
represent.
    But the technology has changed dramatically since the last 
time the debt collection rules were updated, and the CFPB has 
proposed common-sense reforms, allowing mandatory disclosures 
in the body of an email, to ensure that consumers have access 
to important information in a timely manner.
    But communication is a two-way street, and both collectors 
and consumers should be able to communicate with one another 
electronically, especially during this pandemic.
    My question is, would the Bureau consider allowing an 
exemption from the Electronic Signatures in Global and National 
Commerce Act (E-Sign Act) requirements for validation notices 
for companies who are otherwise complying with the Fair Debt 
Collection Practices Act (FDCPA) requirements and rules?
    Ms. Kraninger. Congressman, we have recognized some of the 
challenges with the E-Sign Act requirements, pursuant to the 
pandemic and did provide some flexibility. I am not aware of a 
concern or a conflict with FDCPA or other challenges with 
respect to that.
    But I can tell you that our debt collection Notice of 
Proposed Rulemaking does address electronic communications, in 
addition to, obviously, continuing to preclude harassing 
communication, trying to facilitate that two-way communication 
that you talked about is important, setting some bright-line 
rules for it, and enabling individuals to communicate the way 
they want to communicate, whether that is receiving texts or 
receiving emails, rather than getting phone calls, for example.
    So those things are all addressed in the rule, and we are 
poring through comments right now to think through the right 
approach going forward.
    Mr. Tipton. Okay. Thank you. And Mr. Stivers brought up 
some issues in regards to technology and fraud. Could you maybe 
expand a little bit on the financial technology and how it has 
changed during the pandemic, and how you are monitoring the 
regulatory environment around the technology to make sure that 
consumers can safely access the important tools?
    Ms. Kraninger. That is critically important. Clearly, we 
have a number of processes that contemplated in-person 
interactions or expect that, and we have done a lot to address 
it in terms of appraisal processes and other processes in terms 
of, particularly, mortgage loans and mortgage origination. So, 
it is something that we are looking at.
    The Bureau also is engaged in technology sprints, to think 
about, again, how do we promote electronic disclosure? But the 
point that you raise is a real one, and that Congressman 
Stivers did, that you have to take into account fraud and other 
cybersecurity issues, privacy issues, with that data.
    Mr. Tipton. Thank you. I yield back.
    Chairwoman Waters. Thank you.
    The gentleman from Texas, Mr. Gonzalez, is recognized for 5 
minutes.
    Mr. Gonzalez of Texas. Thank you.
    And thank you, Director Kraninger, for being here before 
us.
    Our nation has a patchwork of mortgage protections in 
place, and this fact is reflected on the Consumer Financial 
Protection Bureau website, which highlights that we have one 
system in place for at least the federally-backed mortgages. 
And up until now, we have relied on the tendency of non-
federally-backed loans to simply follow along the path.
    While many lenders have voluntarily given similar relief as 
the federally-backed programs, consumers are not protected in 
this lending space for COVID-induced foreclosures and financial 
problems.
    First, how is the Consumer Financial Protection Bureau 
helping consumers with non-federally-backed mortgages, and do 
you have the tools and authority that you need to help these 
folks?
    Ms. Kraninger. Thank you, Congressman. There are obviously 
distinctions there with respect to CARES Act treatment. One 
thing that we did very early on in the pandemic was to provide 
clear direction to all of the entities subject to our 
responsibility, our regulated entities, that their first 
responsibility is accommodation of customers during this time, 
consistent with safety and soundness and compliance with 
consumer protection law.
    So, that does send the strong signal to all those that are 
regulated, including those entities that are servicing non-
federally-backed loans, about those requirements.
    And I would say, generally speaking, the information that 
we have is that the right steps are being taken there, but we 
also have the backstop of our supervision and enforcement 
activities to ensure that that is the case and that they are 
complying with the law.
    Mr. Gonzalez of Texas. Okay. Changing the subject just for 
a second to landlords, what can a landlord do who is not 
getting their rent but has eviction problems, and foreclosure 
is looming? How are they getting help, especially smaller 
landlords?
    Ms. Kraninger. I will say, Congressman, that the landlord-
tenant issues are a little bit outside of our purview.
    We took on the responsibility, recognizing the need for one 
Federal Government website to provide that avenue for 
landlords, tenants, borrowers, and everyone, to get information 
from one site.
    So, we do have CFPB.gov/housing, but it is really HUD and a 
few other dynamics there in the States that have the avenues 
for and resources for folks to follow. But we were trying to be 
at least a conduit, as one place to go for that information, so 
we are housing that information.
    Mr. Gonzalez of Texas. Yes. That is the concern, 
particularly for smaller landlords.
    Do you feel like the Home Mortgage Disclosure Act, which 
requires many financial institutions to maintain, report, and 
publicly disclose loan-level information about mortgages, is 
useful in detecting discrimination in the marketplace?
    Ms. Kraninger. That is one of the purposes of the Home 
Mortgage Disclosure Act. Certainly, the collection of that 
information does provide transparency to the marketplace and to 
the public and is useful to agencies. We do use that 
information on a regular basis to engage in fair lending 
analysis and to understand what is happening in the 
marketplace.
    Mr. Gonzalez of Texas. Are there improvements that you 
believe could be made?
    Ms. Kraninger. We are continuing to improve the way that we 
make that data available. I have also looked to work with our 
partner agencies around how we do the fair lending analysis.
    Each agency does it slightly differently, and frankly, I 
would like to better understand that. So, we have been trying 
to get the economists together from each of the agencies to see 
how they are doing that analysis, frankly to help also 
institutions, because many of them do the analysis themselves, 
to also ensure compliance with the law.
    I think there is a real opportunity to look at how we 
analyze that data, thinking about it, sharing it, understanding 
what it means, and understanding what we are looking for. So, 
that is a dialogue that I have sought to further.
    Mr. Gonzalez of Texas. Thank you, and we look forward to 
working with you on that.
    And I yield back.
    Chairwoman Waters. Thank you. The gentleman from Texas, Mr. 
Williams, is recognized for 5 minutes.
    Mr. Williams. Thank you, Madam Chairwoman, and thank you, 
Director, for being here today. And before I begin my 
questions, I just want to echo what we have heard quite a bit 
today about the Supreme Court and their decision that said the 
current structure of the CFPB is unconstitutional.
    I think you have been a 100 percent improvement over the 
first Director, but I still think it would benefit everyone if 
there was greater oversight and less power concentrated in one 
individual.
    Now, Director, the economic recovery from the coronavirus 
is going to be driven by small businesses, Main Street America, 
opening the doors and hiring back workers. These businesses are 
going to need to adjust their storefronts and business models 
to make the necessary changes to make this happen, and to 
satisfy State and Federal safety guidelines.
    The ability of a business to access capital will be 
critical during this time. The CFPB is under a settlement 
agreement to adhere to a predetermined timeline to issue a rule 
regarding small business data collection in the course of Dodd-
Frank Section 1071. As I have mentioned to you before--you and 
I have talked about this--I have serious concerns with the 
effect that this rule will have on the cost of capital for 
small businesses.
    So, could you please give us an update, a timeline, on the 
implementation of this rule, and tell us how you will ensure 
that these actions will not inhibit small businesses and Main 
Street from getting loans?
    Ms. Kraninger. Yes, Congressman, I absolutely understand 
your concerns and frankly share some of them as well. I will 
say that Section 1071, of course, is a mandatory rulemaking in 
the Dodd-Frank Act. Even in my confirmation process, I pledged 
to make that a priority because it is a required rulemaking.
    So, we are engaged in that effort. We are issuing a Small 
Business Regulatory Enforcement Fairness Act (SBREFA) outline 
by September 15th. That is the small business regulatory relief 
process where we sit down with a panel of affected small 
businesses, with the Small Business Administration (SBA), and 
with the Office of Management and Budget (OMB), and go through 
that outline and get comments.
    It is a kind of early stage in the rulemaking process. So, 
we will have a draft proposal out by September 15th, and this 
fall, we will really engage in that process of discussion of 
that draft.
    And then, the next step after that would be a Notice of 
Proposed Rulemaking, but we have not come up with any firm 
timeline for that.
    Mr. Williams. Thank you. On June 18th, the Bureau announced 
a Pilot Advisory Opinion Program that would allow businesses to 
try new products and services without fearing that the CFPB 
would come down with some enforcement actions for trying 
something new.
    This is a welcome step towards providing more certainty to 
the private sector, as they are often fearful that they will be 
targeted by your agency.
    So, Director, how have you been publicizing this pilot 
program to industry participants, and can you give us an update 
on how many people have submitted requests to be a part of this 
program?
    Ms. Kraninger. Congressman, I am sorry. Which pilot 
program?
    Mr. Williams. It is called the Pilot Advisory Opinion 
Program.
    Ms. Kraninger. Oh, the advisory opinion--absolutely. I 
wanted to make sure I had the right pilot program.
    Mr. Williams. Sorry.
    Ms. Kraninger. That's okay.
    The Advisory Opinion Program is out for comment right now. 
So it will go final. We are just--when we collect data from an 
entity, we need to actually do the Paperwork Reduction Act.
    So needless to say, we launched the pilot, but we expect it 
to be fully going soon. It is an interpreted rule that we would 
be issuing. We have not gotten any applications yet, but any 
entity that is seeking an interpretation or additional 
information about how to comply, because they have a 
particularly challenging issue.
    What happened prior to this program is, they would send us 
an email through our site, and we would send them back an 
answer. Right now, though, I think that process should be 
transparent.
    I think all of the entities that are equally situated 
should actually benefit from getting that information, and it 
should happen formally from the agency and not just informally 
through trade groups or otherwise when someone actually gets 
that useful piece of paper.
    So, that is what we are hoping for with the Advisory 
Opinion Program.
    Mr. Williams. Thank you.
    I am in the credit business. And when this whole pandemic 
began, I said I did not want to see a person's credit score, 
like we saw in 2008, ruined as a result of the pandemic and the 
mandated government shutdown.
    As you know, the CARES Act--and we have talked about this--
included provisions for lenders to work with their customers 
who make changes to their credit accommodations, such as 
adjusting or delaying certain payment agreements, while at the 
same time ensuring the integrity of the credit reporting system 
is kept intact, which is very important.
    Last week, TransUnion released a report that showed 
delinquencies decreased in June on a month-to-month basis, 
which makes it seem that people are still managing their 
finances and debt with responsibility throughout this pandemic 
and that the CARES Act provisions have been working.
    So quickly, Director, does this data point released by 
TransUnion align with what your Bureau has seen?
    Ms. Kraninger. Yes, it does.
    Mr. Williams. Thank you.
    I yield back.
    Chairwoman Waters. Thank you.
    The gentlewoman from Michigan, Ms. Tlaib, is recognized for 
5 minutes.
    Ms. Tlaib. Thank you, Madam Chairwoman. And thank you, 
Director Kraninger, for being here. I appreciate your time. I 
am actually in the people's business. That is what I do, is 
help people. And I know during this pandemic, your Bureau 
received quite a number of complaints, I think 42,000, a little 
bit over 42,000 in April, and a little over 44,000 complaints 
in May.
    I want to talk to you a little bit about this. I know it is 
about a 60-percent increase, Director. So I just want to know 
if my resident is calling and, of course, they qualify for a 
forbearance, they are calling over to the mortgage company, and 
they call you all, what is the process that they go through to 
get your help and your advocacy to make sure that this mortgage 
servicer is complying?
    Ms. Kraninger. That complaint is processed immediately, and 
sent to the relevant company, and we do a little bit of quality 
control on that in terms of making sure it is something that 
can be responded to, but that is sent to the company. And I did 
get a little bit of an update from a prior question about the 
average response time. Our average response time of the 
consumer getting an answer from the company is 9 days. So, that 
is what is generally happening in terms of the issue they are 
raising.
    Ms. Tlaib. That is great in some cases. Do you know what 
the resolutions are? Are they just contacting via email, or are 
they resolving the issue? Because what I am hearing from 
residents is they qualify for forbearance, but the mortgage 
servicers are kind of giving them the runaround.
    Ms. Kraninger. It is a response. We do quality control and 
the responses back. We also, particularly with respect to 
mortgage servicers and the CARES Act forbearance and the issues 
that are happening right now, we are looking at all of those to 
see if there is an issue with a particular servicer.
    Ms. Tlaib. --Give me an example of one that you all 
resolved, and it doesn't have to be a mortgage. I know the next 
number-one issue folks call about is credit cards, and then 
issues with their consumer report or credit report.
    Ms. Kraninger. The one that has gotten a lot of attention, 
and it certainly got my attention, was in late March and early 
April, we did get a significant number of complaints submitted 
about payment of mortgage payments, and around the forbearance 
option that was given to servicers, and when they would have to 
pay. Because the initial information from servicers was, we put 
you in 90-day forbearance, and you are going to have to pay 
that full 90-day deferral after the 90 days, because that is 
the way the process tends to work in normal times. So, that 
concern came through loud and clear. And people said, ``If I 
can't pay now, I am sure not going to be able to pay in 90 
days.''
    That is something that we took very seriously. I talked to 
FHFA, in particular, but HUD, all of us came together as 
Federal partners and said, that really doesn't make sense. That 
resulted in some guidance from them, but also an interim final 
rule adjusting our mortgage servicing rules to make clear that 
the option that can be offered is deferred to the end of the 
mortgage period.
    So, that is to the end of the loan, a lump sum payment at 
the end. And that was, I think, a demonstration of how this can 
work and how it should work.
    Ms. Tlaib. And, Director, in that case, that service, it 
was just that mortgage servicer, it wasn't any other companies, 
they just tried to find--so we have to actually school them and 
get the actual accurate guidance that that is not how they have 
to do it? What happens to them when they do that? What do you 
do? Smack them on the hand? What exactly happens? My worry is, 
what else are they doing that, if they can get away with it, or 
maybe we don't find out about it, some people don't even know 
to call you, your Bureau. I am just curious what happens in 
that case, do they get fined or something?
    Ms. Kraninger. Absolutely. If they are not complying with 
the law, they can have to pay restitution. And there are other 
outcomes.
    Also, the example I gave you is a good example of where 
they were doing what they should do, but it was not the outcome 
that any of us would want.
    Ms. Tlaib. Yes.
    Ms. Kraninger. I think there are a lot of examples across-
the-board. But making sure we address servicers who are not 
taking compliant action with the law is important, too.
    Ms. Tlaib. And my last question is, do you work with other 
departments? One of the things I have noticed is if there is a 
huge--do you all ask or see a pattern of complaints maybe from 
communities of color? And do you work with the civil rights 
division within the Department of Justice if you see a pattern 
of discrimination based on someone's ethnic background, faith, 
or things like that? But, primarily, I would say, there is a 
huge impact on the African-American community and people of 
color, and I am wondering what your Bureau is doing to work 
with other agencies to push back on that?
    Ms. Kraninger. Definitely, if we see a pattern or practice 
there, we have our own authority, obviously, to act under ECOA, 
but we also do make referrals to DOJ and work with them 
closely.
    Ms. Tlaib. Thank you, Madam Chairwoman.
    Chairwoman Waters. Thank you. The gentleman from Arkansas, 
Mr. Hill, is recognized for 5 minutes.
    Mr. Hill. Thank you, Madam Chairwoman. I appreciate the 
opportunity to have this hearing.
    Director Kraninger, I want to commend you for leading the 
Agency during this very difficult time of COVID-19. Given the 
current economy, many of us in Arkansas, many of our families 
have been really navigating a tough financial space. I want to 
thank you and the Agency for doing a number of good updates and 
adding helpful information to your website. We have been using 
these newsletters you send out several times a week on the 
COVID-19 crisis, and the materials have been very beneficial to 
consumers. So, please thank your team for the extra efforts to 
communicate.
    I want to touch, Director, on the topic that Dr. Foster 
spent quite a bit of time on, which is your revisions for the 
qualified mortgage rule. You walked through, I think, the 
background quite clearly, and a lot of us are concerned about, 
will this rule approach that you are taking, that you put out 
for comment, lead us down a road towards weaker credit 
underwriting by the banks or by the Federal entities that 
insure or purchase those loans?
    You did a good job answering these questions, so I won't 
belabor that point, but the DTI is just one of many 
considerations to be taken in underwriting. But since that is 
true, what is your philosophy--all bankers take into account a 
variety of compensating factors when underwriting a loan. Why 
is what you viewed that it is necessary to replace the DTI 
definition with something that appears pretty open-ended?
    Ms. Kraninger. I think, Congressman, and I appreciate your 
interest in this important marketplace, clearly, for mortgages 
for many Americans, the point that you just made is precisely 
why we are moving from DTI solely to a pricing approach, 
because it really does bring in the more holistic 
considerations of the borrower's creditworthiness. And, 
certainly, you would expect and want responsible lenders to be 
pricing in the risk that they see, and that is a different 
approach than a hard debt-to-income ratio that, frankly, at 43 
percent, but, frankly, as we looked at, what would be an 
acceptable DTI threshold if you were going to stay at that? And 
we, in fact, asked that question in the rulemaking.
    But clearly, at 43 percent, we know we are keeping a lot of 
creditworthy borrowers and, particularly, borrowers of color 
out of the qualified mortgage market.
    Mr. Hill. Thank you for that. Do you have any concern that 
granting a safe harbor to underwriting standards of third-party 
guidelines could be too open-ended? Are you concerned about 
that?
    Ms. Kraninger. No, it isn't just third party--arbitrarily, 
it is third-party guidelines that we would have to actually 
recognize. So, there is that check in the process.
    Mr. Hill. And you would approve those guidelines?
    Ms. Kraninger. Yes.
    Mr. Hill. Okay.
    Ms. Kraninger. That is what is proposed.
    Mr. Hill. Let me switch subjects and talk about the 
difference between the 150-basis points pricing range that you 
considered, and, yet, for the safe harbor, you think it should 
be 200 points for the QM. Don't you think that spread could do 
two things: One, create a potential for misunderstanding in 
lawsuits, and that it would actually deter private sector 
players from making the loan, and could they even be shifted 
more to a government-type loan, such as an FHA loan? Are you 
concerned about that spread?
    Ms. Kraninger. Ccertainly, it is a proposal, Congressman, 
so we absolutely won't comment on that to the extent that 
anyone in the public has data that would demonstrate a greater 
risk. We outlined why we chose that threshold, and that it is 
not too different from the thresholds that are already 
recognized in the current QM. Because there is a pricing 
threshold differential between the safe harbor and the rebuttal 
presumption now. So, the APR APOR spread is something that is 
in the current system. But, again, we looked closely at 
performance over the last many years. That data is in the rule, 
and we welcome comments on alternate concepts or risks that 
might be introduced here.
    Mr. Hill. Thank you, Madam Chairwoman. I yield back.
    Chairwoman Waters. Thank you. The gentlewoman from Iowa, 
Mrs. Axne, is recognized for 5 minutes.
    Mrs. Axne. Thank you, Madam Chairwoman. And thank you, 
Director Kraninger, for being here. I would love to start with 
some positive news by thanking you and your staff for taking 
some time to give us some feedback on a bill I introduced a 
couple of months ago to create a working group with the CFPB 
and the SEC to help protect consumers and investors from fraud. 
So, thank you for that. I do hope we can move forward to get 
your two agencies working together to prevent Americans from 
being taken advantage of.
    And I also appreciate the website you set up with 
information on the prepaid debit cards that a lot Americans 
received. I wish that had been communicated earlier, and then 
my colleagues and I may not have had to push the Treasury to 
make those improvements. But thank you for those two pieces.
    I want to go back to the last time you were here. You had 
just signed an information-sharing agreement with the 
Department of Education on student loan servicers, marking the 
first time in more than 2 years that that information was 
properly being shared. But 2 years is far too long to go 
without full compliance information that we need to understand 
how the $1.6 trillion of student loan debt is being handled. I 
am glad that part is resolved, but it should have been done 
much sooner. However, not only did the agreement not restore 
the supervisory memorandum of understanding (MOU), the last 
time you were here, you couldn't even tell me when that would 
be done.
    In September, just a month from now, we will be at 3 years 
without the Consumer Financial Protection Bureau properly 
supervising student loan servicers for the 40 million Americans 
with these loans.
    So, I am going to ask you again: When are regular exams of 
student loan servicers going to resume?
    Ms. Kraninger. Congresswoman, I am happy to be able to tell 
you that they have already resumed. We started in that--that 
was the lag time, frankly, between the February House hearing 
and the March Senate hearing. I managed to get that done in 
February, so that the supervisory exams commenced, and there 
are no barriers to us doing the supervision work that we need 
to do in the student loan space. We are working very closely 
with the Department of Education so they can continue to do 
their contractual oversight, but we are pursuing our own 
information requests, we are getting that information, and we 
are engaging in those exams.
    Mrs. Axne. Perfect. From what I have heard, though, I 
believe that there has been one exam done, and that was in 
March. Is that correct?
    Ms. Kraninger. Congresswoman, we do not stipulate what 
exams are happening and in what product areas. I made the 
exception by at least trying to show Congress, recognizing the 
great interest in this--
    Mrs. Axne. I appreciate that, but have you done any exams 
since that March exam?
    Ms. Kraninger. There are no barriers in our way. We are 
doing all of the exams that we would like to do. That is what I 
can say at this point in time. And I know that is not 
satisfactory to you, but we don't talk about the number of 
exams that we do in any given industry.
    Mrs. Axne. I am going to take that as a no, because if you 
can't tell me that you have more than one exam, and you won't 
answer the question, I am assuming that is a no. I would like 
the question answered, when will regular exams resume?
    Ms. Kraninger. Congresswoman, I don't want to parse words 
with you, but it is definitely not a no. We are engaged in 
every exam that we need to be in the student loan space.
    Mrs. Axne. How many exams have you had?
    Ms. Kraninger. Again, that is not a publicly disclosed 
number. It is not in any area except our total number of exams 
conducted. We don't issue exam numbers publicly in each 
industry.
    Mrs. Axne. So, you don't issue it for each industry? How 
then are we supposed to get the information that we need?
    Ms. Kraninger. And we never have. So again, I am--
    Mrs. Axne. That is certainly a problem that we are going to 
have to figure out, because how are we going to make sure that 
there is oversight of these 40 million loans that people in 
this country need to have oversight of, if we can't get that 
information, and you are not willing to tell me how many you 
have done within this industry? That was the specific question.
    Ms. Kraninger. I understand. It is not a publicly available 
number. It is something that I--I think is appropriate given 
the confidential nature of supervision. It's the same with the 
number of investigations that we have ongoing in any industry; 
we don't actually disclose that publicly, given the 
confidential nature. Certainly, when it is public, we do have a 
number of ways to do that, and I am absolutely looking at this. 
But I am trying to tell you that it is not any obfuscation, 
this is important, and we are engaged in every exam that we 
need to be.
    Mrs. Axne. Listen, from what I have been told, there has 
been one examination. And I believe there should be around--
there are about 12 servicers, 10 to 12 that would need an 
examination. So, I think we are failing the people in this 
country right now. I yield back.
    Ms. Kraninger. You were told there was one exam, because I 
am the one who actually publicly released that there has been 
at least one exam.
    Mrs. Axne. We just went all through that, and now you just 
said that there has been one exam. I yield back.
    Chairwoman Waters. We will explore that a little bit 
further, Mrs. Axne.
    The gentleman from Minnesota, Mr. Emmer, is now recognized 
for 5 minutes.
    Mr. Emmer. Thank you, Madam Chairwoman. I appreciate the 
opportunity. Thank you, Director Kraninger, for being here 
today and for the great work you are doing. Unfortunately, 
under the Obama Administration, Democrats created an agency 
which is completely unaccountable to the American people. 
Outcomes and oversight of the agency were, by no means, 
transparent. We have also, unfortunately, faced unnecessarily 
partisan attempts to reform the structure of the Bureau by 
putting it on a budget and creating a bipartisan forum.
    On a brief personal note, Director Kraninger, I want to 
sincerely applaud you for being open and accessible to every 
Member. My staff and others constantly praise your efforts to 
be responsive to our requests for input and feedback. I know 
this willingness to meet and discuss policy occurs across the 
aisle as well, so I just wanted to take a moment to thank you 
for your service.
    I also appreciate Paul Watkins, and the work you are doing 
to advance inclusion through Fintech innovations. This is one 
of our top priorities at the committee, and the FinTech Task 
Force. He didn't receive the most welcoming comments from the 
Majority when he came before us. But advancing Fintech 
innovation to help those in need should be a nonpartisan issue.
    Now more than ever, families need to have access to options 
to cover unexpected costs. For many, short-term lending can be 
a lifeline in difficult times. Abuse cannot occur, but this 
must remain an option. Your work to ensure that borrowers have 
access to loans will increase competition and choice in the 
marketplace at a time when it is so desperately needed.
    Turning for a moment to ongoing litigation started by the 
past Administration, Director Kraninger, I noticed that in your 
budget request, there is no mention of the funds the Bureau 
expends to continually pursue Cordray-era litigation. Can you 
please speak to the cost of that ongoing litigation?
    Ms. Kraninger. Certainly, the Bureau continues to engage in 
litigation, both before and under my term, and also litigation 
that Director Mulvaney approved at the time that he was 
Director. There is a cost, obviously, as you noted, and we do 
include in the budget lines for expert witnesses and document 
production, and things like that. But I don't think, 
Congressman, I can give you a specific delineation for which 
Director signed off on which enforcement action, and what the 
litigation costs have been. But, certainly, there are some 
complex litigation cases that we are still involved in that are 
costly, but I deem them necessary to continue,
    Mr. Emmer. I would move to follow up with you outside of 
the hearing on that.
    Listen, I share the concerns of my colleague, French Hill, 
and I also share the praise that Mr. Hill was giving you for 
your work to update the qualified mortgage rules. But I do 
share his concerns that he raised with you, and I am not going 
to go over those again. I appreciate you being aware of them, 
and appreciating the concerns.
    And now that we have a definitive answer that CFPB's 
leadership structure does violate the separation of powers, I 
am curious about your plans regarding transparency and 
accountability. Given these developments, and under your 
leadership, where do you plan to take the CFPB?
    Ms. Kraninger. Congressman, certainly since I was named and 
testified before you all for the first time, that has been 
something that is significantly important to me, given my 
public service career. We are endeavoring to engage in that 
transparent dialogue in every aspect of what we do. I would say 
the Advisory Opinion Program that was recently launched is a 
great example of that. Again, we are providing guidance or 
essentially, interpretations to one entity that asks. But 
through that advisory opinion process, we are making that 
public, and we are providing that interpretive rule to 
everyone, so that they can see what the rules of the road 
actually are, and it is not just benefiting one entity, or who 
that entity decides to share that with.
    So that is one example. And certainly, our rulemaking 
efforts as well, and I am trying to ensure that we are fully 
transparent there.
    Mr. Emmer. My colleague, Andy Barr, was asking about 
congressional oversight of the budget. And I know you didn't 
want to step into Congress' role. But could you answer the 
question: Would congressional oversight of your budget inhibit 
your ability to do the job as Director?
    Ms. Kraninger. Congressman, I have endeavored not to get 
into that. But I will certainly acknowledge that I was a long-
time appropriations staffer on both sides of the Hill.
    Mr. Emmer. I am sure we will talk more. Thank you for your 
time, Director. Madam Chairwoman, I yield back.
    Chairwoman Waters. Thank you. We have now reached the end 
of Group 1. The committee will stand in recess for 5 minutes 
while the room is cleaned.
    [recess]
    Chairwoman Waters. The committee will come to order. The 
gentlewoman from California, Ms. Porter, is recognized for 5 
minutes.
    Ms. Porter. Director Kraninger, would your proposal to 
implement the Fair Debt Collection Practices Act prohibit 
repeated calls from debt collectors?
    Ms. Kraninger. Congresswoman, it is a proposal, and it did, 
in fact, propose a limit on the number of calls that can be 
received in a week.
    Ms. Porter. Great. Good work. Would it prohibit some debt 
collectors from making calls harassing families and friends?
    Ms. Kraninger. Yes, harassment is already precluded by the 
law.
    Ms. Porter. So we can agree that harassing practices by 
debt collectors are something that you can probably pretty 
comfortably say falls within the jurisdiction of the Consumer 
Financial Protection Bureau?
    Ms. Kraninger. Yes.
    Ms. Porter. Great. In the last 4 years, has the Bureau 
taken any enforcement actions to punish medical debt collectors 
that break the law and harass consumers?
    Ms. Kraninger. We have taken public enforcement actions 
against debt collectors. I am not sure about what kind of debt, 
off the top of my head.
    Ms. Porter. I am specifically asking about medical debt 
collectors. Have you taken any enforcement actions against 
medical debt collectors that would--
    Ms. Kraninger. I understand the question, Congresswoman. I 
do not have an answer for you off the top of my head. Many of 
the debt collectors actually collect on behalf of multiple 
clients, so it is very possible.
    Ms. Porter. Okay. Let me answer that for you, the CFPB has 
taken zero actions against medical debt collectors. So, if you 
are just tuning into this hearing, here is what you have 
missed. Nothing. You have missed nothing, because that is what 
the CFPB has been doing to protect you against predatory 
medical debt collection, even in the midst of a terrible 
pandemic.
    The CFPB, Ms. Kraninger, was created to protect consumers, 
that is its mission, that and nothing else. Would you consider 
it pro-consumer to not enforce the law to prevent consumers 
from being illegally abused by debt collectors?
    Ms. Kraninger. There were a lot of caveats to that 
statement, Congresswoman. Let me just tell you that we are 
committed to enforcing the law. I am committed to enforcing the 
law. And we have taken action against a number of practices in 
the debt collection space, including through our supervisory 
effort. So, it is not just the public enforcement action that 
you are citing, certainly, through supervision, we have issued 
supervisory highlights that articulate what we have done in the 
debt collection space, we provide information to consumers 
about their expectations from debt collectors.
    Ms. Porter. But, Ms. Kraninger, just to be clear, if I am a 
medical debt collector, I can break the law under your CFPB, 
and know that there is a zero percent--if the past predicts the 
future, and we are looking back at the past 4 years, there is a 
zero percent chance that I will get sued. How is that robustly 
enforcing the consumer mission of the agency? You are not--
    Ms. Kraninger. Congresswoman, I respectfully disagree with 
you. There is certainly no guarantee that that is the case. And 
I would endeavor to have you give us information on any debt 
collectors that you are concerned about their practices. We 
absolutely will follow up on them. It is a career decision to 
open an investigation for CFPB, and I welcome any information 
that you have on bad practices.
    Ms. Porter. Ms. Kraninger, in your own database, in the 
CFPB's own database, there are thousands of complaints about 
medical debt collectors. Each time you come before this 
committee, I appreciate that you welcome me to do your job for 
you, but my job is to make sure you are doing it. I wanted to 
ask you about something else. Are you familiar with Mike 
Hodges, H-o-d-g-e-s?
    Ms. Kraninger. No, I do not believe I am.
    Ms. Porter. You aren't?
    Ms. Kraninger. I don't believe so, no.
    Ms. Porter. He is the CEO of Advanced Financial, one of the 
country's largest retail lenders. Do you know how much he has 
donated to the Trump campaign?
    Ms. Kraninger. I have no idea, nor do I care.
    Ms. Porter. So, you don't know anything about him. Let me 
read you this quote. ``I have gone to the RNC and said, `Ronna, 
I need your help on something.' She has been able to call over 
to the White House and say, `Hey, we have one of our large 
givers. They need an audience.' The White House has been 
helpful on this particular rule we are working on right now.'' 
That was Mike Hodges in October 2019. Do you know what rule he 
was talking about?
    Chairwoman Waters. The gentlelady's time has expired.
    The gentleman from Ohio, Mr. Davidson, is recognized for 5 
minutes.
    Mr. Davidson. Thank you, Madam Chairwoman. Director 
Kraninger, I thank you and your team for all of the work you 
are doing to protect America's consumers. I appreciate having 
you on the job. And I want to say a special thanks to Paul 
Watkins and the attention he has given not just to Fintech, but 
to privacy.
    In your proposed rulemaking on privacy--I guess I am 
looking at the scope of privacy. You think about the key things 
for consumer protections, their data and the use of it has 
really defined at lot of this age, whether it is data breaches 
or the way that any number of companies have monetized the 
access to data that consumers have.
    So, what is the scope that you are looking at and how do 
you use that to protect consumers?
    Ms. Kraninger. Absolutely, Congressman. I believe you are 
referencing the Section 1033 policy discussion that we are 
having now about consumer-authorized access to their own 
financial data. It is a complex issue. Certainly, the Bureau 
issued principles, and privacy and data security are part of 
that consideration for how best to enable that data access to 
consumers.
    We had a symposium a few months ago. We just issued the 
report out from that symposium and announced we would engage in 
an advance notice of proposed rulemaking.
    It is a complex area. There are a lot of issues to consider 
that we are looking forward to getting more data on. But I 
would say that there has been progress made in moving away from 
screen scraping as the means by which many aggregators would 
get consumers' financial data using their bank credentials and 
having that be provided by the consumer.
    That is something that is not a best practice certainly. 
And so moving in the direction of APIs so that there is an 
automated data transfer that can happen, and that there is more 
control on both sides. But that is something that we are really 
looking to having more extensive dialogue around, and that is 
what we announced last week.
    Mr. Davidson. When you think about the consumer protections 
with respect to data, the work you are doing there is 
critically important, in large measure because Congress has 
failed to act. We don't have a comprehensive data protection 
law for all consumer activities in the United States. We have a 
somewhat outdated Gramm-Leach-Bliley Act that I think you 
proposed to update. But there are lots of data houses that make 
use of this, that aren't covered by Gramm-Leach-Bliley. So do 
you feel like you have the authority or scope to do everything 
that you would need to do to protect consumer data?
    Ms. Kraninger. Congressman, you are raising an interesting 
issue here with respect to not just 1033, but more globally. We 
do have, I think, a number of issues around privacy and data 
security with standards in California and Europe and what 
happens in the United States. And there are many parts of this 
that are outside the CFPB's purview. Specifically, the 
safeguards in the Gramm-Leach-Bliley Act are outside the 
authority of the CFPB, generally.
    That is just to make you aware, but I am actually looking 
at privacy and data security broadly, and may have some 
requests of Congress or some suggestions around that. So, I am 
looking at that internally, particularly when it comes to 
credit reporting, because that is where we have at least a 
little more of an engagement and a responsibility there, 
particularly when it comes to our supervisory work.
    But I will certainly get back to you on that and others; I 
know it is of great interest. But with Section 1033, we do have 
the ability to take this into account, as we think about how 
best to move forward in that.
    Mr. Davidson. Thank you very much for your attention to it. 
There is really no excuse for Congress' failure to provide the 
safeguard for all of America's consumers. And I hope that I can 
collaborate broadly for a good bipartisan solution on privacy, 
not just with respect to government, warrantless surveillance 
and things like that, but consumer financial data. Our seniors 
are especially vulnerable, and I appreciate the work you are 
doing to safeguard our seniors.
    And I think the last thing I would say is, as you have 
conversations with the members of FSOC, with the Treasury and 
everything else, most of America has their assets in U.S. 
dollars. It is the store of value, it is the means of exchange. 
And this idea that we can, in an unlimited way, just continue 
to print money and not damage the value of all of the other 
dollars is foolish. We have printed an awful lot of money. We 
haven't truly borrowed it, because there is not a real lender.
    And I just urge you to weigh in where you can on the 
importance of protecting the U.S. dollar, store value, and 
means of exchange. And for that purpose, my colleagues and I 
recently formed the Sound Money Caucus. Thanks again for what 
you do to protect America's consumers, and I yield back.
    Chairwoman Waters. The gentleman from Illinois, Mr. Casten, 
is recognized for 5 minutes.
    Mr. Casten. Thank you, Madam Chairwoman. I think I probably 
speak for all of us on this committee, saying that when I woke 
up this morning, I was going through the news headlines, and I 
was completely gobsmacked, for lack of a better word, to see 
that the GDP has collapsed by almost 33 percent in the last 
quarter. That is well outside the range of challenges that I 
anticipated that I was going to be grappling with when I was 
asked to serve on this committee. I suspect, Director 
Kraninger, it is probably outside the scope of yours, as well. 
The old Monty Python sketch says nobody plans for the Spanish 
Inquisition, right?
    I think all of us knew it was going to be difficult. We did 
have leading indicators. Your own Bureau, in the case of 
leading indicators, is unfortunately the case. When the economy 
gets tight, unscrupulous actors emerge.
    And as Congresswoman Tlaib was calling out, I think you saw 
an all-time record for consumer complaints at the Department in 
March, which was then topped in April. And a new record was set 
in May, and a new record was set in June.
    During the Q2, you are basically running about 50 percent 
above historic complaints at the CFPB. In spite of that, you 
have had 13 public enforcement actions this calendar year, 
which basically puts you on track to finish about at the level 
of 24 that you did last year, which, as The Wall Street Journal 
had reported, is down 80 percent from the 2015 peak.
    My question for you is, why has the CFPB decided against 
taking enforcement actions, despite the rising complaints that 
Americans are feeling during this economic downturn?
    Ms. Kraninger. Congressman, we are taking robust actions 
using all of our tools, and, certainly, that includes 
enforcement. So, I would ask you to reserve judgment until we 
actually get to the end of the year and see where we end up. I 
will not manufacture enforcement cases, but I will take the 
right action against bad actors. And we do have a number of 
actions in the pipeline that I have authorized that I expect to 
see move forward. So, I will at least note that.
    Mr. Casten. I want to just--hang on. Because you said to 
Congresswoman Tlaib that you are averaging 9 days between when 
the complaint comes in and you respond. I just gave you data 
going back to March that is 50 percent up. You are saying you 
have gone through, and you have gotten back to people in 9 
days, but you haven't decided what to do with that yet?
    Ms. Kraninger. Congressman, complaints are different from 
enforcement actions. The complaints do get resolved in 9 days--
    Mr. Casten. I understand.
    Ms. Kraninger. --on their initial response.
    Mr. Casten. Okay. On April 1st, your Bureau issued a 
statement which said, in part, ``The Bureau specifically states 
that it does not intend to cite an examination or bring an 
enforcement action against firms who exceed the deadlines to 
investigate such disputes, as long as they make good-faith 
efforts to do so as quickly as possible.''
    It sounds like you are saying you are not taking 
enforcement actions, and the data would be consistent with 
that. What motivated you to issue that guidance?
    Ms. Kraninger. You are, specifically, talking about credit 
reporting dispute resolution. And the dispute cannot be 
resolved if the small business merchant, for example, is 
actually shuttered and cannot respond to the credit reporting 
agency. So, that is what the good faith effort is about.
    Absolutely, the mandates to respond remain in place, and 
they need to be met. But there are extenuating circumstances, 
like the closure of a small business, for example, that is a 
merchant that is the subject of the dispute.
    Mr. Casten. I am pretty sure your job is to protect 
consumers. What are you telling consumers who are sitting there 
saying, I need a response, you got a 50 percent surge in 
consumers, and what are you doing, you are calling them back 
and saying, I'm sorry, I just can't address this? Figure out 
how to pay your own rent? Figure out how to pay your medical 
bills? Figure out how to pay your car payments? The title of 
your agency is, ``Consumer.''
    Ms. Kraninger. Congressman, there are remedies that come 
after that particular example that I gave you, so it is not 
acceptable not to respond. And I noted to Congresswoman Tlaib, 
as you noted, that we do actually get initial responses, and 
for the vast majority of complaints, on average, it is a 9-day 
response. But there are responses that take a little longer.
    Mr. Casten. Let me just close the way I started. All of us 
in this hearing, yourself included, are entrusted with looking 
after the public interest. When these circumstances arise that 
are way, way outside of the range of situations that we would 
encounter, we have an obligation to make sure that we are 
adjusting our tools. There is a reason why the captain goes 
down with the ship. Because the captain has to look over the 
safety of everyone on the ship.
    I would hope that you are seriously looking at what your 
agency can do better. Because what you are doing right now is 
the status quo, which is 80 percent down from what it was when 
it was created. I think that you know you can do a better job. 
I yield back.
    Chairwoman Waters. The gentleman's time has expired. The 
gentleman from North Carolina, Mr. Budd, is recognized for 5 
minutes.
    Mr. Budd. Thank you, Madam Chairwoman.
    Director, thanks for being here today. I wanted to 
highlight a QFR response that I received from your team 
regarding a concern I had with the Bureau's marketing service 
agreement under Rezpo. Now, there is still some need for 
clarification between me and my team as far as what we 
received. But you did indicate that you are willing to receive 
some feedback on this. Is it okay if we follow up with you 
after this on that issue?
    Ms. Kraninger. Absolutely. Please do.
    Mr. Budd. Okay. I would also like to ask unanimous consent 
to submit for the record a recent article on this issue, and it 
was actually authored by your former Deputy Director, Brian 
Johnson. And I will be sure to share this with your team.
    Chairwoman Waters. Without objection, it is so ordered.
    Mr. Budd. Thank you, Madam Chairwoman. I have a few 
questions, Director. In the notice of proposed rulemaking for 
the ability-to-repay rule, the CFPB encourages stakeholders to 
develop additional verification standards that the Bureau could 
incorporate into the QM safe harbor. Given the Bureau's 
important desire to move away from the static and data 
verification standards in the appendix Q to promote and foster 
innovation, how can industry and stakeholders help inform and 
define the Bureau's definition of qualified mortgages?
    Ms. Kraninger. I think I am very much looking forward to 
the conversation around the standards, because it is a critical 
part of the ability to repay. And considering verified debt and 
income is what the statute requires. We know that alternative 
data considerations, residual income as opposed to other means 
of assessing income. And we have a challenge of the current 
Appendix Q as well with respect to self-employed or gig economy 
workers. So understanding how industry has been looking at 
that, frankly, with input from all stakeholders, it is not just 
industry, but also consumer advocates and others who pay very 
close attention to what is happening in this space, how we can, 
again, bring forward creditworthy borrowers who are going to 
have successful loans, that is part of this.
    So we are very much looking to promote that and are 
welcoming engagement with all stakeholders, frankly, on what 
standards they would propose.
    Mr. Budd. Thank you. I want to point to the CFPB's July 
10th report on debt settlements and credit counseling. And in 
that, you looked at the critical issue of options for 
consumers. You just found out they have more debt than they can 
actually handle.
    In this report, your agency found a rise in debt settlement 
since 2016, and an even more significant increase in 
settlements that are facilitated by companies that actually 
charge the consumers to settle those debts for less money than 
they owe.
    In my home State, North Carolina, we have seen a rise in 
complaints about the practices of that industry, including 
misleading advertising and high fees, that particularly targets 
the military, which is very concerning to all of us.
    So, I want to encourage you to continue to look into this 
industry and take all appropriate actions to protect our troops 
and all Americans who could be misled by false promises and 
high-pressure sales tactics from this industry. Any thoughts or 
follow-up on that?
    Ms. Kraninger. Congressman, I will tell you it is an 
important area. We have taken a number of enforcement actions, 
including with State attorneys general against bad actors in 
this space. There are clear rules about their ability to 
collect any fees prior to actually getting the outcome they 
promised to the consumer. So, that is generally where our 
actions have been taken, and we will continue to pursue that.
    Mr. Budd. Thank you. A priority of mine, and also of my 
committee Republican colleagues here, is to eliminate costly 
and confusing regulations that make it more difficult for 
businesses to thrive and innovate for the benefit of consumers 
and markets. Particularly during this pandemic, when we are 
striving to get our economy back on its feet, it is critical to 
only promulgate clear, well-founded regulations. That is why I 
believe that the failure to change the payment provisions in 
the small-dollar rule will create a patchwork of inconsistent 
standards for payment provisions based purely on the consumer 
of the product.
    For example, some products will be judged by the standards 
of the National Automated Clearing House Association (NACHA), 
and others by the CFPB rules. And when the Federal Reserve 
announces the payment standard, that rule will judge yet other 
products. This is, particularly, the type of regulatory mess 
that the Administration has sought to eliminate.
    Would it not be better to undertake an appropriate study of 
the payment provisions rather than to ratify and implement the 
flawed findings of the 2017 Cordray Rule?
    Ms. Kraninger. Congressman, we will undertake a review, of 
course, 5 years after the rule is in place, and take a look at 
how it is actually implemented. We did try to provide great 
clarity around which entities and which products are actually 
pulled into that rule. I know there were some questions about 
products that clearly were not actually even contemplated in 
the rule, so we did a lot with guidance on that,
    Mr. Budd. Thank you. I yield back.
    Chairwoman Waters. Thank you. The gentleman from Utah, Mr. 
McAdams, is recognized for 5 minutes.
    Mr. McAdams. Thank you, Madam Chairwoman. Director 
Kraninger, when you first appeared before this committee last 
March, we had a discussion then about balancing access to 
credit, while at the same time, ensuring that consumers are 
protected from harmful products. Specifically, I asked about 
CFPB's planned actions on its payday rule, and I expressed my 
concern that payday products can quickly become debt traps, 
especially if a lender doesn't ensure that the borrower has the 
ability to pay. And you noted that it was a proposal at the 
time, and you would continue to review your consumer protection 
mission as you undertook the rulemaking.
    Earlier this month, you issued a final rule that repeals 
the requirement that lenders determine a borrower's ability to 
repay those loans before making them. So I would like to ask 
you again, what role does consumer protection play as you 
undertook and finalized this rulemaking?
    Ms. Kraninger. Congressman, the mandatory underwriting 
provisions were very specific. I recognize that it is 
frequently referred to as an ability to repay, but there were 
specific stipulations there that would be particularly 
challenging. Again, by the Bureau's own estimation, it would 
have a significant reduction in the availability of credit 
there. So, that would be something that we looked at--
    Mr. McAdams. I would just say from my perspective, it seems 
like you just made it much easier to have consumers get trapped 
in that cycle of debt, that they would be cycling through over 
and over again. And I worry there are rulemaking sacrifices of 
reasonable consumer protections, and I know it is a balance, 
but it seems like the balance is against the consumers.
    And as I understand it, that part of your assertion for 
repealing the mandatory underwriting provisions is due to what 
you claim as insufficient research that went into the 2017 
rule, is that correct?
    Ms. Kraninger. Yes, Congressman, as well as the legal 
reasoning that was in that rule.
    Mr. McAdams. I would like to read you a footnote in your 
rulemaking from this month, footnote 343 buried on page 177 of 
the PDF, and it says, ``Consumer protection issues have arisen, 
and will continue to arise in the payday market, as in other 
markets as a result of a given lender's specific practices. And 
the Bureau is prepared to address those issues, for example, 
through supervision and enforcement against deceptive claims in 
advertising or marketing for payday loans.''
    So, you acknowledged in your own rule that there are 
consumer protection problems in the payday industry. And I 
would ask, is your contention that supervision and enforcement 
are sufficient tools to keep consumers safe?
    Ms. Kraninger. Congressman, that is certainly part of the 
protections that are in this basis and others. I have vented 
that there are bad actors in every market space, including this 
one. So they are a key part of it. I would also say that we are 
doing work on disclosures, because I think there is great 
evidence in those rulemakings that there are consumers who 
understand the product, and there might be some who don't quite 
understand the product when they actually get them. And that is 
something we want to look into, and are doing disclosure 
testing on.
    So, that is another example of another protection, in 
addition to the payments provisions and supervision and 
enforcement.
    Mr. McAdams. Thank you. I think if we are putting a lot of 
stock in supervision and enforcement as our means in protecting 
consumers in this regard, I would like to see what your plans 
are for beefed-up supervision and enforcement plans. And if 
not, do you intend to study the issue to put together 
sufficient research and pursue regulations that actually do 
keep consumers safe, which is the mission of the CFPB?
    Ms. Kraninger. I am committed to constant review of the 
rules. We have 5-year lookback requirements by Congress that I 
think were incredibly--there is a lot of foresight in those, 
but we will definitely do that on this rule, as we do on 
others, for example. But any feedback based on what is 
happening in the marketplace needs to inform the way we 
operate.
    Mr. McAdams. But as it stands right now, even though you 
acknowledge that there are consumer protection issues, you are 
not looking for any additional tools that would help to protect 
consumers in regards to this debt trapping in payday loans?
    Ms. Kraninger. Our disclosure testing would represent that. 
I would also note increased competition is part of what we are 
seeking, and we have been working through our innovation 
policies to get banks and credit unions to offer responsible 
products in this space, too.
    Mr. McAdams. Okay. I would like to see what research was 
used to base that conclusion, that that would be adequate and 
sufficient for consumer protections.
    Lastly--and we are about out of time, so maybe I will 
submit this in written form. But on Friday, the CFPB announced 
that it plans to release an advance notice of proposed 
rulemaking on consumer-authorized access to financial records. 
This is a topic that this committee has explored before, and it 
is of great interest to consumers, to financial institutions, 
and to Fintech companies.
    So I would love for you to elaborate on the CFPB initiative 
and what the Bureau's goals are with the NPR and rulemaking 
process. And I do see that we are out of time, so we can take 
that outside of this forum. But thank you, and I yield back.
    Chairwoman Waters. Thank you. The gentleman from Tennessee, 
Mr. Kustoff, is recognized for 5 minutes.
    Mr. Kustoff. Thank you, Madam Chairwoman. Thank you for 
convening today's hearing. Director, thank you for appearing 
today.
    I would like to follow up on Congressman Budd's question 
towards the end of his questioning. I know about 3 weeks ago, 
you did finalize the final rule as it relates to these payments 
to the small-dollar lenders. The rule that you promulgated 3 
weeks ago or so kept in place the 2017 rule provision. It 
imposed, frankly, a restrictive requirement by allowing just 
one re-presentment of a returned ACH payment. And it also 
extended the re-presentment limit to transactions not covered 
by the NACHA rule.
    So by my first question is, is there a disparity in that, 
that the NACHA rules shouldn't be applied to all lenders?
    Ms. Kraninger. Congressman, we were starting with the 
rulemaking we had in place. And so, the mandatory underwriting 
provisions were the ones that had the significant impact on the 
availability of credit, as well as the issues that we have been 
discussing here today. The insufficiency of the evidence and 
legal reasoning that underpin that part of the rule. So, that 
is where the reconsideration came into play. It was my judgment 
that the payments provisions, again, should, continue so that 
we can see how that is implemented. And as I said to 
Congressman McAdams, we can certainly look at what happens, and 
see if there are unintended effects to it.
    We did also put out some very clear guidance to try to 
stipulate what products are affected and what products are not. 
And I appreciate the point you are raising, the rulemaking that 
was promulgated, and that is the process that we engaged in.
    Mr. Kustoff. Let me ask it another way: Doesn't the final 
rule create more burdensome regulations for just some covered 
lenders?
    Ms. Kraninger. It does only affect certain lenders, that is 
very true. And that was certainly by design of the rule, and we 
will certainly take into account what impacts that has when 
that is able to be implemented.
    Mr. Kustoff. Okay. Are there plans to revise the payment 
provisions in the future, or is it your position you have to 
wait for 5 years?
    Ms. Kraninger. Congressman, I certainly respond to things 
that we see in the market. If we get evidence sooner that there 
is an issue that needs to be dealt with, I would certainly be 
happy to consider that.
    Mr. Kustoff. Thank you, Director. I was reading a report 
from Yahoo Money last week that talked about how 1 in 4 
Americans with credit cards said that they had an account 
involuntarily shut down during the span of May to July. And, 
specifically, the article talked about those consumers with 
FICO scores between 550 and 700. I think that article said that 
that roughly covers about 60 million Americans.
    I think we all know that the credit card, for so many 
Americans, is not just a lifeline; it is a necessity. Are there 
any steps that the CFPB is taking--and, again, I am talking 
about, specifically, for those consumers in the 550 to 700 
credit score range, so that they don't lose their credit cards 
due to the pandemic?
    Ms. Kraninger. Congressman, you raised an important issue. 
I am certainly aware of credit limit changes, and certain cards 
that don't have activity on them. But I was not aware of the 
article you just cited, so I am happy to take a look at it and 
see precisely what happened there and what action we should 
take.
    Mr. Kustoff. Thank you, Director. And with that, I yield 
back the remainder of my time.
    Chairwoman Waters. The gentlewoman from Virginia, Ms. 
Wexton, is recognized for 5 minutes.
    Ms. Wexton. Thank you. Thank you, Madam Chairwoman, and 
thank you, Director Kraninger, for joining us today. Director 
Kraninger, I did read your extended testimony, and in 14 pages, 
I saw just one reference to the Paycheck Protection Program, 
which I am sure is something that you all are very much 
involved in at this time. This is such a timely program and 
doing so much work here in our country. And you do have the 
role of supervising implementation of that program, do you not?
    Ms. Kraninger. Only a narrow slice of that, with respect to 
the Equal Credit Opportunity Act compliance by covered lenders.
    Ms. Wexton. Right. So you do have to manage and make sure 
that--you have to assess the compliance of lenders with fair 
lending laws, right?
    Ms. Kraninger. Yes. With ECOA, yes.
    Ms. Wexton. Are those assessments taking place, and what 
have you found out about Paycheck Protection Program loans?
    Ms. Kraninger. We are engaged in what we are calling 
prioritized assessments, so very targeted exams of entities 
with respect to what is happening right now, and we did include 
small business lending, ECOA compliance, as part of that 
effort, so we are engaged in that now.
    Ms. Wexton. Let me ask you, and if you need to, you can 
just ballpark it, what percentage of Paycheck Protection 
Program loans are to minority-owned small businesses?
    Ms. Kraninger. Congresswoman, off the top of my head, I 
don't know the answer to that question. I do know it is an area 
that, again, I am interested in generally, that the 
Administration has been interested in promoting, and we have 
done a lot of outreach to try to expand that availability.
    Ms. Wexton. So, I don't suppose you can ballpark what 
percentage of paycheck protection loans went to women-owned 
small businesses either?
    Ms. Kraninger. No, I cannot.
    Ms. Wexton. Okay. Well, an Inspector General report from 
May criticized the FDA for not requiring applicants to submit 
demographic data. I am sure you are aware of that. And my 
colleagues and I have repeatedly called on the SBA and Treasury 
to collect this information on loans or the loan forgiveness 
application and make it mandatory. But so far, it is only being 
collected on a voluntary basis.
    And that is concerning, because in my district, we 
performed an assessment of our own of those applications put 
out there in Virginia 10. And in my district, 95 percent did 
not provide the race or ethnicity data, and 83 percent did not 
provide gender ownership.
    So, Director Kraninger, it is probably a lot harder for you 
to do your job if you don't have the information, the 
demographic data to do your assessment with, is that correct?
    Ms. Kraninger. There were certainly other issues at play 
with trying to move quickly and get this program running, so I 
will say--
    Ms. Wexton. I understand. I get that. Reclaiming my time. I 
understand that time was of the essence and everything, but it 
is hard for to you do your job if you don't have the data to do 
your assessment. I know you don't work for the SBA or 
Treasury--well, I guess a little bit for Treasury. But have you 
communicated with them about their decision not to require 
demographic data for collection of the Paycheck Protection 
Program on either the application or the forgiveness 
application?
    Ms. Kraninger. We have talked about the data that is 
available in terms of what the reach of the program has been 
and the extent, the number of small businesses that it has 
helped. We are continuing to look at how we can promote, again, 
access, which is the core of your question, and, certainly, the 
core of my interest in understanding them better. And that is 
part of why we engaged in prioritized assessment.
    Ms. Wexton. How are you going to know what kind of access 
has been provided when 95 percent of the people, at least in my 
district, aren't even answering the questions, so that makes it 
very difficult. Now, you are responsible for implementing 
Section 1071 of Dodd-Frank, right?
    Ms. Kraninger. Yes.
    Ms. Wexton. And that does require that lenders collectively 
maintain information about a loan application by women-owned, 
and minority-owned small businesses, and that requires the CFPB 
to collect and publish that information. Is that correct?
    Ms. Kraninger. Yes, that is correct.
    Ms. Wexton. But the Bureau, under your leadership, has 
slow-walked the implementation of this section, and in February 
of this year, you settled a lawsuit seeking to compel you to 
implement the law. Is that correct?
    Ms. Kraninger. No, that is actually false. I committed 
during my confirmation process that that was a statutorily 
required regulation, and I was committed to implementing it. 
And I actually announced that in the regulatory agenda prior to 
the filing of the lawsuit.
    Ms. Wexton. But you entered into a settlement that had 
court-ordered implementation deadlocks. Is that correct?
    Ms. Kraninger. That is correct.
    Ms. Wexton. And have you started the rulemaking process?
    Ms. Kraninger. Yes. We will issue a brief outline, which is 
a small business regulatory relief process outline by September 
15th, and engage in that part of the regulatory process this 
fall.
    Ms. Wexton. And you commit to meet your deadlines under 
this section? Thank you.
    Ms. Kraninger. Yes, that is the only deadline at this time. 
Thank you.
    Chairwoman Waters. The gentleman from Indiana, Mr. 
Hollingsworth, is recognized for 5 minutes.
    Mr. Hollingsworth. Good afternoon, Director Kraninger, 
thank you for being here, and thank you for your continued work 
at the CFPB. I am sure at times today, a quarter of an inch of 
Plexiglass doesn't seem like enough protection.
    I wanted to step back and talk more generally for a second 
about some of the larger dynamics at play in our economy and 
certainly, at the CFPB as well. You recently published a blog 
post--or I should say, the CFPB generally published a blog post 
about the use of artificial intelligence (AI) and machine 
learning (ML) on increasing the financial protection laws.
    I wondered if you might venture into, do you intend to do 
more in this space? And if so, what might that look like? What 
are you trying to balance in terms of your next actions in that 
space?
    Ms. Kraninger. That is a great question. I think what we 
were seeking to do with the look that we have done at AI and ML 
and also, alternative data in underwriting is the recognition 
that there is a great opportunity there in terms of expansion 
of access, particularly for underbanked and unbanked 
individuals who have not been reached before, so taking that 
information into account.
    There is also some risk introduced in that process, again, 
understanding it. So, we are continuing to look at how lenders 
are approaching that, looking at what innovations they are 
bringing. Our innovation policies are an opportunity for them 
to engage with us, and look at either a sandbox policy or a no-
action letter policy, to have a more robust conversation about 
that, and then have data from actual operations, by an actual 
lender or a creditor, to base any additional action on.
    We are certainly looking at it with respect to our 
supervisory activity, enforcement activity too, but I think, 
largely, it is making sure we have experts inside who 
understand how it works, understand how industry is seeking to 
apply it, and looking at how that is hopefully being beneficial 
to consumers and taking action where it is not.
    Mr. Hollingsworth. Yes. Director Kraninger, I think that is 
extremely well-said. There are tremendous opportunities. There 
are also limitations in the technology certainly, but 
tremendous opportunities to increase inclusion in the financial 
sector and empower Americans in our district, and in many other 
districts across the country, to be able to live better lives 
and achieve the American Dream.
    And I think you would agree with this, but to hear you say 
it, it sounded like you also said there are real costs to 
retarding innovation in this country, retarding financial 
inclusion in this country, to families, their lives, and their 
futures. Is that true?
    Ms. Kraninger. Yes. I do see that.
    Mr. Hollingsworth. And that is something that you will 
weigh as you continue to think about what that sandbox might 
look like, and how we increase, perhaps, the pace of innovation 
while also recognizing the safety that needs to go into place 
as well?
    Ms. Kraninger. Yes.
    Mr. Hollingsworth. Great. Second question, again generally, 
I know my friend across the aisle, Ms. Wexton, touched on 
prioritized assessments. I wondered if you might talk a little 
bit about what you have learned in some of that, about how our 
financial institutions have been able to serve their customers, 
help their customers, empower their customers, during the 
course of the last 4 months.
    Ms. Kraninger. Yes. That is certainly what I expect to find 
in the vast majority of the prioritized assessments, is 
precisely that, and understanding--getting, again, some more 
information about how that is going, what practices are 
successful for consumers, and what activities, or what 
challenges are those institutions facing in trying to help 
their customers.
    Mr. Hollingsworth. But I am sure--
    Ms. Kraninger. We don't have much at the moment, but we are 
literally in the midst of it right now.
    Mr. Hollingsworth. Right. I am sure not all of their 
challenges are policy-related, but some of them may be policy-
related, regulatory-related, to ensure that they have the 
flexibility to be able to serve those customers, not just 
during more ordinary times perhaps, more ordinary 
circumstances, but also the flexibility to address their 
customers' needs during extraordinary circumstances as well. So 
providing some of that latitude and flexibility, I imagine, 
will be an important learning point going forward, right?
    Ms. Kraninger. Yes. Definitely.
    Mr. Hollingsworth. Great. And then in addition to that, I 
wanted to ask about further coordination and some of these 
exams done by multiple agencies in making sure that a company 
or an institution is providing that information as few times as 
possible, and is disseminated as widely as possible, as 
needed--not overly disseminated by the way--within the reaches 
of the Federal Government.
    Ms. Kraninger. Yes. That is something that has been a focal 
point for me as the Chair of the Federal Financial Institutions 
Examination Council (FFIEC), where we are coming together and 
coordinating on exams. Despite the challenges of the pandemic 
and other priorities that do supersede this, we have a 
continued activity going on around common technology and common 
data collection and sharing. So that is still happening, and we 
are still looking to make some progress on that.
    Mr. Hollingsworth. Right. Obviously, institutions are 
rightfully concerned about the proliferation of hours that are 
being used in submitting to exams, which they are ready and 
willing to do, but they also want to make sure it is 
coordinated and done as efficiently as expected so that they 
can spend their time serving, helping, and empowering those 
customers.
    And with that, I will yield back.
    Chairwoman Waters. Thank you. The gentleman from 
Massachusetts, Mr. Lynch, is recognized for 5 minutes.
    Mr. Lynch. Thank you, Madam Chairwoman, for having this 
hearing, and thank you, Director Kraninger, for appearing and 
helping us with our work.
    Director, last week, the CFPB announced an Advance Notice 
of Proposed Rulemaking around Section 1033 of Dodd-Frank, which 
obviously deals with the consumer authorization of access to 
financial data and records. We recently had a hearing on this 
issue, and I am following up on Mr. Davidson's concerns.
    We recently had a hearing on this issue on the Financial 
Services FinTech Task Force, and the concerns were largely in 
two areas, and they were bipartisan. First of all, Members were 
concerned about the full spectrum gathering of data from 
consumers, and whether that happens from screen scraping, which 
you mentioned, or web scraping, content scraping, or whether it 
is telematics. Right now, through our cell phones and other 
technology, financial firms and others know everything about 
our lives, who we are with, where we travel, how fast we drive, 
and those tools can be used to discriminate.
    We have seen, in some instances, where individuals who live 
in a certain census tract were discriminated against because 
they lived in a low-income area, or in public housing. So, that 
was one concern about the use of that data and the practice of 
screen scraping in particular.
    The other issue was the consent form, the so-called 
consumer consent. And you have a 19-page consent form that 
basically, the application administrator requires you to sign 
off on this 19-page item that, even as an attorney, I had a 
difficult time understanding, and that is for regular 
consumers.
    So, two questions: First, where are we on screen scraping? 
You mentioned we are moving away from screen scraping in your 
earlier comments, but we have been moving away for over a year. 
We are just not moving that fast.
    And second, the issue of those consent forms, are you 
thinking in this rulemaking that you will address both of those 
aspects? And I would just love to get your insights and your 
thoughts on both of those issues. Thank you.
    Ms. Kraninger. Thank you, Congressman. I am glad you all 
had the opportunity to talk about that and take advantage of 
that ourselves. We had our symposium where these issues came 
up, and the purpose of the Advance Notice of Proposed 
Rulemaking is to really formalize that data-gathering and think 
about what might be needed in a rulemaking and what would make 
sense.
    But the two issues you raise are important ones certainly, 
one with respect to what kinds of data is actually available 
and how it gets used, and then, certainly, what consumers know 
about the data that they have permissioned and how it is going 
to be used.
    And the disclosure aspect of this, the consent process that 
you noted, is one that has been a concern to me since I have 
been in this position, and we are going to make some progress 
on trying to do better disclosures and give people the key 
information they need, rather than giving them legalese that 
they just end up checking the box on. So that is a huge, I 
think, concern on many fronts.
    Mr. Lynch. On screen scraping, you started to address that 
earlier, but you were cut off.
    Ms. Kraninger. Oh, yes. With respect to screen scraping, 
the ``we,'' of course, is the marketplace at this point in 
time. The Bureau certainly would intervene in a UDAP 
circumstance, or other compliance issue, but the market really 
is moving away from that.
    There have been a number of agreements on API means of 
sharing that are making progress, and some real deadlines from 
financial institutions in shifting on APIs, or shutting off 
access. I won't comment, frankly, on--there are issues with 
that, for sure, on both sides, but I do think there has been 
progress, actual progress, made to reduce the screen scraping, 
so that is in the marketplace generally.
    Mr. Lynch. And what about the length and complexity of 
these consent forms?
    Ms. Kraninger. That is a concern area. It is something that 
we will take feedback on and see what we can do about that, or 
what would require rulemaking, or what might be able to be 
addressed in other ways. But that is what the ANPR will do.
    Mr. Lynch. All right. Thank you, Madam Chairwoman. And 
thank you, Director Kraninger.
    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 Kraninger, for being here today and for 
your continued service to the country. I applaud you and your 
staff for continuing to work on behalf of our country during 
the pandemic. It is not easy for anybody, and you all have 
performed well, so thank you for that.
    As you know, there is growing evidence that one of the best 
things regulators could do to expand credit access is to make 
it clear that lenders are allowed to use new underwriting 
techniques that leverage alternative kinds of data. Mr. 
Hollingsworth referenced this as well.
    Traditional credit scores are generally good predictors of 
risk for people who have high scores, but they don't work for 
people with little or no credit history, and don't work for 
many people who are creditworthy but have lower scores due to 
complex factors that the scoring process does not capture.
    Fintechs and some banks have been innovating in the use of 
non-score factors now that it is easy to capture new kinds of 
data that can be analyzed with techniques like machine 
learning. Research by the nonprofit FinRegLab and others 
supports the argument that these methods are predictive of 
risk.
    However, the industry, especially banks, has hesitated to 
adopt the methods because of concerns about regulatory 
criticism, and, especially, the potential to run afoul of the 
prohibition against unintentional discriminatory disparate 
impact.
    You and other regulators have issued joint encouragement 
that lenders consider these new methods, but have not yet 
offered clarity on how to do so in ways that regulators 
consider inside a green zone on disparate impact.
    First question, do you see this innovation as a high-impact 
way to expand credit access? I think the answer is yes. You 
sort of elaborated already, but just to say it again.
    Ms. Kraninger. Yes. Yes, I do.
    Mr. Gonzalez of Ohio. Great. And then, what plans are you 
currently working on to clarify the rules of the road to 
encourage faster adoption here?
    Ms. Kraninger. Congressman, I would point particularly to 
our innovation policies, having that opportunity to have 
engagement with an entity, understand the product, they have to 
provide the benefits that they see of the product to consumers, 
the risks that they see, the way they are mitigating those 
risks, and what regulatory issue is a barrier or is a 
challenge.
    And we can have that dialogue about that product and be 
very specific about the ability to move forward with that 
product with guardrails. So, that is certainly the top avenue.
    We are looking at what additional guidance would be useful. 
We have issued guidance on alternative data, we did on AI and 
ML use in underwriting, and I think we are very open to that in 
terms of the conversation.
    I did issue a request for information just 2 days ago on 
the Equal Credit Opportunity Act, and it did specifically ask 
about alternative data and other issues that might be posing 
challenges to entities, or where we think there might be 
opportunities. So, responses to that could lead to different 
action.
    Mr. Gonzalez of Ohio. Thank you. And is there anything that 
we can provide at the congressional level that would empower 
you even more to sort of help set up the guardrails here? And 
other regulators generally, yes.
    Ms. Kraninger. Congressman, I don't have anything at the 
moment that I would seek or suggest, but I appreciate the 
question, and I will certainly let you know if we do find 
something that would be useful.
    Mr. Gonzalez of Ohio. Okay, thank you. Because, I think, 
like a lot of my colleagues, one of my biggest fears coming out 
of this pandemic is--and you can just see this looking at what 
is happening in the markets--for very wealthy people or people 
in the upper-income scale, it is inconvenient but not 
financially devastating, certainly not. For people who are 
lower-income, especially minority communities, it's absolutely 
devastating, setting them back even further.
    And so, I see alternative data sources and different ways 
of expanding access to credit as one of the most important 
things we can do, because people are going to have to rebuild 
their lives, and we have to provide them with all of the 
opportunities necessary to do that.
    So I would encourage you to keep that work alive and to 
keep interacting with us if we can provide help, because people 
are going to need it.
    With that, I yield back.
    Chairwoman Waters. Thank you. The gentlewoman from North 
Carolina, Ms. Adams, is recognized for 5 minutes.
    Ms. Adams. Thank you, Chairwoman Waters, for convening 
today's hearing. Thank you, Director Kraninger, for being here. 
I wanted to ask a few questions regarding predatory debt 
settlement companies and the harmful settlement activities that 
are happening in my State, that are likely also happening 
across the country.
    In North Carolina, we have seen a rise in complaints about 
the practices of this industry, including misleading 
advertising, and high fees, particularly from the military and 
their families. I have gotten letters from high-ranking 
officials at Camp Lejeune and Fort Bragg in North Carolina, and 
from one of our largest credit unions, the State Employees 
Credit Union. So, yes or no, have you heard of a company called 
Freedom Debt Relief, or Freedom Financial Network?
    Ms. Kraninger. I have not heard of those companies 
specifically, Congresswoman.
    Ms. Adams. Okay. So you are not aware, then, of their 
business model or predatory practices, if you are not familiar 
[inaudible]. It is one of the largest--
    Ms. Kraninger. I will say that the concerning practices by 
some debt settlement companies is definitely something that I 
am aware of, and we have engaged in enforcement actions, I 
believe, with the State of North Carolina, with the attorney 
general of North Carolina. I believe he was a party to that, to 
one of those cases. So there are concerning practices happening 
there, and we are taking enforcement action.
    Ms. Adams. Thank you, but the CFPB, under Mr. Mulvaney, 
brought an action against Freedom Debt Relief, and secured 
about $20 million in restitution and $5 million in damages, for 
violating the law by charging customers or consumers without 
settling their debts as promised. But are you aware that the 
CFPB entered a consent order with Freedom Financial Service 
after the agency filed this complaint?
    Ms. Kraninger. Congresswoman, I do apologize that I don't 
remember that particular case, but I stipulate that you are 
probably right.
    Ms. Adams. Okay. Let me ask you, do you believe that it 
helps consumers when debt settlement companies encourage 
customer borrowers to deliberately default on credit card debt? 
Do you think that helps consumers when they do that? Yes or no?
    Ms. Kraninger. No. There are many concerning practices in 
the debt settlement space, there is no doubt. We are certainly 
paying very close attention to that and taking action. They 
cannot accept fees when they have not actually provided the 
results, and there is a requirement to actually do that several 
months after the outcome they promised has been delivered.
    Ms. Adams. Okay. In this time of COVID, with an economy 
that is hurting, it is very likely that our constituents will 
find themselves saddled with more debt. So I want to know what 
you and the CFPB will do to protect American consumers and our 
military from being misled by false promises and high-pressure 
sales tactics from the for-profit debt settlement industry, 
because they are really leaning hard on these folks?
    Ms. Kraninger. I agree with you, it is a concerning area. I 
can say we are also working with the Department of Defense. In 
addition to all of our enforcement actions, we are working to 
make sure we get information to those military personnel, and 
to consumers generally, about being cautious in the debt 
settlement space, and frankly pointing them also to nonprofit 
entities where they would get the support that they may need.
    Ms. Adams. Let me ask you, in terms of smaller lenders, 
they are probably finding it more difficult to compete in this 
kind of environment. Several industry groups and consumer 
advocate organizations have also expressed concern that a 
pricing-based definition could result in a race to the bottom.
    Based on the Bureau's own recognition that pricing can be 
manipulated, the proposed qualified mortgage standard does not 
appear to be an effective measure of a borrower's ability to 
repay. So how would you ensure that a pricing-based qualified 
mortgage does not incentivize irresponsible mortgage lending 
similar to what we witnessed in the lead-up to the 2008 
financial crisis?
    Ms. Kraninger. Congresswoman, I appreciate the question. It 
is an important one. The statutory features that are precluded 
from being part of a qualified mortgage, that continues. In 
addition, a requirement to actually consider and verify debt 
and income is part of the law.
    Ms. Adams. Okay. Thank you very much.
    I yield back, Madam Chairwoman.
    Chairwoman Waters. Thank you. The gentleman from Tennessee, 
Mr. Rose, is recognized for 5 minutes.
    Mr. Rose. Thank you, Chairwoman Waters and Ranking Member 
McHenry, for holding this hearing, and thank you, Director 
Kraninger, for appearing before us today.
    I would like to jump right into the CFPB's recently 
finalized small-dollar lending rule. The Bureau has previously 
acknowledged the key role that small-dollar loans can play in 
helping consumers meet credit needs, usually resulting from 
unexpected expenses. At the beginning of this month, the Bureau 
took a step in the right direction by rescinding the mandatory 
underwriting provisions of the Obama-era small-dollar lending 
rule.
    However, like several of my colleagues, I am very 
disappointed that the CFPB chose to leave the payment 
provisions of the original rule intact. Much like the ability-
to-repay provisions, the Bureau's own evidence didn't support 
its payment practices provisions. They were flawed, and based 
on unsupported data.
    It also imposes onerous requirements that could make it all 
but impossible for consumers to use recurring payments.
    I want to get a real answer to this question, Director 
Kraninger. Please explain to me why you kept this particular 
provision in place, choosing to enforce an Obama-era rule 
requiring overly burdensome compliance?
    Ms. Kraninger. Congressman, I recognize that that is an 
important issue for you. It has been raised by many Members. 
First and foremost, it was the reconsideration of the mandatory 
underwriting provisions that really were the focal point, given 
the dramatic impact that that would have on the availability of 
credit in this space. So, that was the priority.
    With respect to the payments provisions, it was also a 
recognition that there is some consumer protection in there 
with respect to certain products. I recognize there were also 
concerns about how broad this may be applying, and we did issue 
additional guidance when we issued the final rule that laid out 
the types of products that are covered, and are not covered 
under this rule, to try to address some of those issues.
    And the last thing I would say, that I have not mentioned 
earlier, is that we are still in litigation over these 
provisions, so that is still ongoing.
    Mr. Rose. Since we last spoke about this, I know you were 
looking again at this provision. However, it remained in the 
final rule published on July 7th. How long will the lenders be 
given to comply with this payment provision?
    Ms. Kraninger. Because of the litigation, the rule is still 
stayed. The Bureau is seeking to propose to the court that it 
lift it after a reasonable period of time. Since we have not 
done that filing, I can't tell you here what the reasonable 
period of time is, but that would be my intention, and that 
filing should happen relatively soon. So, we can answer that 
question for you relatively soon.
    Mr. Rose. So once that filing occurs, would you expect it 
to be 60 days from that time?
    Ms. Kraninger. I am looking at a reasonable period of time, 
and I can't tell you right now precisely what that will be, but 
we will get back to you.
    Mr. Rose. Keeping this provision in place will cause, in my 
view, an undue compliance burden on financial institutions and 
payment processors. Ultimately, the end result will be that 
responsible lenders, unable to manage and mitigate the risk, 
will choose to de-risk and quit, or not form relationships with 
companies offering covered loans, increasing the cost of these 
products to the consumers who need them.
    This will also drive the small-dollar lending market back 
to the storefront payday lenders, putting us in the position of 
picking winners and losers.
    Moving forward, I believe it is crucial that we maintain 
consistent payment system rules, which are grounded in 
associated laws and regulations, and I urge you and the CFPB to 
revisit this finalized rule, and roll back the payment 
provisions created by the 2017 small-dollar lending rule.
    In my remaining time, I want to just turn to another issue. 
Back in January 2017, under Director Cordray, the CFPB filed a 
suit in Federal court, alleging that hundreds of thousands of 
student loan borrowers have been harmed by steering borrowers 
away from income-driven repayment, and toward costlier options. 
In nearly 4 years, how many borrowers have been proven to have 
been steered?
    Ms. Kraninger. Congressman, that is ongoing litigation, and 
obviously in the midst of discovery and other parts of that 
process there, so I can't answer that question for you, but I 
understand why it is important.
    Mr. Rose. I am very concerned that this ongoing litigation 
that you describe, without discovering any evidence, is a bad 
use of taxpayers' dollars. And I am concerned that the CFPB is 
dragging out cases like this, in search of a problem, in order 
to justify the costs that have already been incurred. I hope 
this practice does not continue.
    With that, Madam Chairwoman, I yield back.
    Chairwoman Waters. Thank you. The gentleman from Illinois, 
Mr. Garcia, is recognized for 5 minutes.
    Mr. Garcia of Illinois. Thank you, Madam Chairwoman, and 
Ranking Member McHenry, for convening this hearing, and thank 
you, Director Kraninger, for joining us today.
    Congress passed Dodd-Frank and authorized the Consumer 
Financial Protection Bureau 10 years ago this month. In 2010, 
our country faced high unemployment, and millions of people 
lost their homes to eviction and foreclosures. My community was 
hit hard by the last financial crisis, and many people never 
recovered.
    And now, the COVID-19 crisis has left my constituents piled 
with housing debt, medical debt, and credit card debt, and who 
knows when they will get back on their feet to pay it off.
    That is why the CFPB was established during the last 
crisis, to give ordinary people, like my neighbors in Chicago, 
their own voice against big banks, against mortgage lenders, 
and against debt collectors. But that is not what we see from 
watching the Bureau today.
    During a nationwide pandemic, when we have no idea when 
jobs can come back, and consumers have no idea how they are 
going to pay off their debt, the CFPB has been working for 
industry instead of the public. Gutting the payday lending rule 
earlier this month is a scary example.
    I represent a working-class immigrant district. There are a 
lot of payday lenders in my district, as lobbyists always like 
to point out. The CFPB's new rule eliminated the requirement 
that lenders ensure that the borrowers can pay the loan back. 
This means that a lender can now make a loan when they know 
that a borrower cannot pay it back. Director Kraninger, do you 
think that a lender should make a loan to a customer if they 
know that they cannot pay it back?
    Ms. Kraninger. Congressman, the mandatory underwriting 
provisions of the small-dollar rule have not--
    Mr. Garcia of Illinois. Can you give me a yes or no answer, 
Director?
    Ms. Kraninger. I will just say, the small-dollar space is a 
little bit different, and that ability to--
    Mr. Garcia of Illinois. Should they make such a loan if 
they know that it can't be paid back?
    Ms. Kraninger. Congressman, I appreciate the principle--
    Mr. Garcia of Illinois. Okay, you won't answer that. Are 
you worried about trapping customers in a cycle of debt that 
they aren't able to repay?
    Ms. Kraninger. Congressman, again, I appreciate the 
principle you are trying to establish. This is a complex area--
    Mr. Garcia of Illinois. Are you concerned about that?
    Ms. Kraninger. I absolutely want to make sure that 
consumers understand the products that they are engaged--
    Mr. Garcia of Illinois. Are you concerned about it?
    Ms. Kraninger. I want consumers to understand the products 
that they are--
    Mr. Garcia of Illinois. Maybe? Or not. Let's move on, if 
you don't want to answer those two questions.
    The Military Lending Act protects our servicemembers from 
getting trapped in a cycle of debt by setting a 36 percent 
interest rate cap on their consumer finance products. I 
introduced the bipartisan Veterans and Consumers Fair Credit 
Act to extend the cap to all consumers, so that all of my 
constituents can enjoy that protection. Do you support the 36 
percent interest rate cap currently in effect under the 
Military Lending Act?
    Ms. Kraninger. It is current law, Congressman, so that is--
    Mr. Garcia of Illinois. Do you support it?
    Ms. Kraninger. I don't have a role in examining that, but 
certainly, we enforce it.
    Mr. Garcia of Illinois. Do you think that the rate cap 
helps servicemembers avoid being trapped in a cycle of debt?
    Ms. Kraninger. Congressman, I believe that Congress put 
that in place for a reason that is outlined in the--
    Mr. Garcia of Illinois. Do you think it helps them? Your 
opinion, not Congress'?
    Undecided.
    Okay, my last one. Director, some of my colleagues across 
the aisle seem to be mistaken about the recent Supreme Court 
decision in Seila Law v. CFPB. I want to clarify that the 
Supreme Court did not rule that the CFPB itself was 
unconstitutional, but that only the requirements needed to 
remove the Director were unconstitutional.
    So my question is, does this case, in any way, limit your 
authority or ability to protect consumers moving forward?
    Ms. Kraninger. I continue to carry out what the Dodd-Frank 
Act empowered me to carry out, which is protecting consumers. 
So I think at this point, I would say no.
    Mr. Garcia of Illinois. Okay, thank you.
    I yield back the rest of my time, Madam Chairwoman.
    Chairwoman Waters. The gentleman from West Virginia, Mr. 
Mooney, is recognized for 5 minutes.
    Mr. Mooney. Thank you, Madam Chairwoman. So for preface, I 
am not a lawyer myself, but a lot of businesses and individuals 
have needed good lawyers when they need to exercise their legal 
rights. And in many cases, that is when money is owed to them. 
They loaned money in a fair contract, it is owed back to them, 
and it is not getting paid back, which prevents the lender from 
paying their bills, employing more people, and putting food on 
their table.
    So for hundreds of years, attorneys have been regulated and 
disciplined, primarily by State supreme courts that license 
them, and by the State court judges, not by the Federal 
agencies. I fear that the proposed rule change from the CFPB on 
debt collection could jeopardize this norm. The CFPB's safe 
harbor proposal to codify the meaningful attorney involvement 
doctrine is intended to clarify regulation for creditor 
attorneys, but I fear it would do exactly the opposite.
    The meaningful attorney involvement doctrine appears 
nowhere in the Fair Debt Collection Practices Act or the Dodd-
Frank Act. The concept has gone far beyond the statute, and 
creates uncertainty and confusion over the rules regulating 
attorneys. So Director Kraninger, I fear that the CFPB's 
proposed safe harbor rule, for meaningful attorney involvement 
in debt collection, could lead to a codification of meaningful 
attorney involvement doctrine, bringing further uncertainty.
    The American Bar Association and the National Creditors Bar 
Association have both stated their opposition to the safe 
harbor provision in this rule. Would you be open to 
reconsidering the proposed safe harbor rule for meaningful 
attorney involvement?
    Ms. Kraninger. It is a proposed rule, Congressman. I 
actually had not heard of those organizations' opposition, but 
I imagine that I will hear it soon because we are going through 
all of the comments now. We did get thousands of comments on 
this rulemaking, and as it comes forward to me, in terms of 
recommendations and decisions, I absolutely will take those 
comments into account.
    Mr. Mooney. Thank you for that. Since the founding of our 
country, up until the CFPB was created, the legal process has 
worked well. People may not always get the results they want, 
but they have legal representation, and they have a fair 
hearing. And it is regulated by the courts, and if you do 
something wrong, you get disbarred. We have all heard of 
lawyers who have been unethical and gotten disbarred. They have 
a working process. If it ain't broke, don't fix it.
    So, I am glad to hear that you want to do that. I had a 
bipartisan bill I introduced myself last Congress called the 
Practice of Law Technical Clarification Act, which would have 
amended the fair debt collection practice to exclude law firms 
and licensed attorneys engaged in litigation, from the 
definition of debt collectors.
    Had it passed, it would have made absolutely clear that 
licensed attorneys are regulated by the courts, not Federal 
regulatory bodies. But thank you for your answers. And Madam 
Chairwoman, I yield back the balance of my time.
    Chairwoman Waters. Thank you. The gentlewoman from Texas, 
Ms. Garcia, is recognized for 5 minutes.
    Ms. Garcia of Texas. Thank you, Madam Chairwoman, and thank 
you for being with us today, Director. I know it has been a 
long day, but we are down to the final stretch. First, I want 
to thank you. I want to thank you because back in March of last 
year when you first came by, I mentioned to you my concerns 
about protecting those with limited English proficiency. That 
is a real concern in my district, which is predominantly 
Latino, about 77 percent, and I have seen your Spanish-
language, COVID-related outreach, and I really do appreciate 
that, so thank you.
    However, there is so much more work to be done, not just in 
outreach, but in enforcement. You mentioned this issue in your 
oral testimony, but it is not mentioned in your written 
testimony, and only once in the agency's Spring report. I would 
like the agency to devote additional resources in this area. 
How is your agency working to target unfair practices that 
target the limited English proficiency community?
    Ms. Kraninger. Thank you, Congresswoman, for that question, 
and we have a lot of sources for the enforcement actions that 
we take. Certainly, whistleblowers come forward. We use the 
complaints, so encouraging communities--and we have many 
communities we still need to continue to reach so they know 
about us, but when they do submit complaints, we take those 
seriously. We look for any patterns or practices. We go in and 
do examinations based on that or go straight to an enforcement 
action. So, there are a lot of ways--
    Ms. Garcia of Texas. How many times have you gone to an 
enforcement action?
    Ms. Kraninger. We have hundreds of ongoing investigations 
and many other--
    Ms. Garcia of Texas. No, but how many times have you taken 
an enforcement action?
    Ms. Kraninger. There are 40 public enforcement actions that 
I have taken in my term to date.
    Ms. Garcia of Texas. And how many of those were based on 
any targeting of unfair practices against limited English 
proficiency (LEP) consumers?
    Ms. Kraninger. I will admit to you that I do not recall 
there being an LEP nexus to these cases, but that doesn't mean 
we don't have other work that we are doing in that area.
    Ms. Garcia of Texas. Okay. Can I hear from you a commitment 
to be more vigilant about that?
    Ms. Kraninger. Yes, Congresswoman. I would pledge, too, if 
there are particular entities that your constituents are 
interacting with, where you have heard about issues, raise them 
to us, and we would be happy to take that into account, too.
    Ms. Garcia of Texas. I am going to switch topics now. I am 
tremendously upset--tremendously upset--by your agency's recent 
action to allow payday lenders to continue to prey on those 
most in need. You have testified that the previous rule would 
have reduced access to credit by 70 percent, and that is why 
you changed this rule, correct?
    Ms. Kraninger. Yes. That is certainly one reason.
    Ms. Garcia of Texas. Okay. But what I don't think you 
understand is that payday loans aren't credit. They are chains 
of debt. A cycle of debt entraps--as some of my colleagues have 
described, they are tools that extract wealth from the most 
vulnerable. This isn't just my opinion; this is something we 
all know to be true.
    That is why Congress enacted the Military Lending Act 
nearly 15 years ago, to protect our servicemembers from being 
trapped in a cycle of debt. It was such a concern that the 
Department of Defense was beginning to see the impact to 
military readiness.
    Mr. McHenry calls these products a lifeline, and that is 
what people are looking for when they seek out a payday loan. 
They are seeking a lifeline, but instead, they are being thrown 
an anchor by these predatory companies. If the military felt 
that these institutions were degrading the readiness of our 
military personnel, imagine what these predators are doing to 
the very fabric of our society.
    Predatory payday lenders extract wealth from poor and 
minority communities. They perpetrate the racial wealth gap. 
They are part of a system that has let inequity grow and wealth 
accumulate to the very few, while leaving those in my community 
struggling just to maintain.
    I have always said that payday lenders just make poor 
people poorer. I am afraid that your actions have made you an 
enabler, and I am just really distressed and concerned that you 
have taken that recent action.
    Finally, one last topic, I want to talk about the stimulus 
checks. This spring, Treasury sent out about 159 million 
checks. That is a lot of people. There was a lot of concern 
about some of the calls our constituents were getting, people 
saying, ``Hey, we can get you the check, but there is going to 
be a fee. We are going to take 10 percent.''
    Knowing that there has been some fraud and some issues with 
stimulus checks, and knowing that we are looking at another 
round through this relief package, what are you doing to help 
prevent some of these scams from recurring?
    Ms. Kraninger. Congresswoman, that is an important 
question. I know we are limited here. We are already talking to 
Treasury about that, and we were with them from day one, trying 
to figure out, as soon as they made a policy decision about how 
to distribute the funds, how do we communicate that and reach 
people?
    Ms. Garcia of Texas. Thank you, and I yield back.
    Chairwoman Waters. The gentleman from Wisconsin, Mr. Steil, 
is recognized for 5 minutes.
    Mr. Steil. Thank you very much, Chairwoman, and thank you, 
Director, for being with us today. As several Members have 
mentioned, the Supreme Court finally confirmed what many of us 
have been arguing for years, that the leadership structure at 
the CFPB was unconstitutional, and to me, that is just one of 
the structural problems with the agency that was seemingly 
built to be unaccountable.
    That is not a comment to you. That is a comment to us in 
the House of Representatives, and in the United States Senate, 
who structured it to be that way, to be unaccountable.
    And one of my big frustrations is that the Bureau is set up 
to be regulated and to put forward regulation by enforcement, 
rather than allow the regulations to be developed here in this 
committee, in the House of Representatives, and the Senate, 
where I think it would be far better suited rather than an 
unaccountable agency, where I think there can often be 
disastrous consequences.
    Neither Republicans nor Democrats can do anything about it 
if we feel that the Bureau is overstepping its bounds. I have 
made this offer before, and I am going to make it again, I am 
willing to work with anybody on this committee, regardless of 
party, to do meaningful reform to the structure of the CFPB.
    I think the Bureau needs to have a leadership structure 
that respects the principles of our Constitution. I think it 
needs to be tied to the appropriations process and truly be 
accountable to the people and to Congress. Consumer protection 
is a vitally important issue, and we should be working together 
to make sure that the Bureau is lawful, built to protect 
consumers, and to respond to the concerns of the American 
people. And so, I call on our colleagues to get to work.
    Now, I would like to chat with you. Director Kraninger. I 
spent some time reading through your budget. In trying to parse 
this out--and you were asked earlier by my colleague from 
Minnesota on your litigation cost, but I think--and I 
understand you are not--and I am not asking you to speak to any 
specific piece of litigation, but trying to just get some 
clarity into the structure of your budget. In going through it, 
you had about $112 million--in Fiscal Year 2020, about $112 
million in what I viewed as salary: $47 million in benefits; 
and $107 million in what was labeled as other contractual 
services. I'm unclear if that might be additional litigation 
expenses.
    I am wondering if you can provide some level of clarity to 
me and to my colleagues here on this committee as to what, 
broadly speaking, your litigation expenses may be across-the-
board?
    Ms. Kraninger. We certainly can, and we can get back to you 
on that. There are contractual costs associated with 
litigation, as I was saying, with document production and 
sometimes data analysis efforts, in getting depositions and all 
of those kinds of things involved, generally speaking, some 
contract support. So off the top of my head, I don't have it, 
but we can get back to you on it.
    Mr. Steil. I think it is an important number, and as you go 
forward and put forward these documents, I think it is helpful 
to the committee to get a broader understanding of what the 
vast majority of the spending is inside the CFPB and what 
portion of that is in litigation.
    The reason I am concerned is, I think it is a really poor 
way to go about policymaking, when it is done through 
litigation and enforcement. I think we are far better off at 
policymaking here at this committee through a deliberative 
process where the people are represented through their elected 
representatives, rather than an unelected agency through 
litigation. That's not a comment to you, but a comment really 
to how this agency was structured, I think, to set up 
potentially disastrous consequences in the future.
    I appreciate you coming back with some additional details 
on the litigation costs.
    Let me shift gears. I am also very concerned during the 
coronavirus, in particular, about bad actors. In the ongoing 
pandemic, there are criminals taking this as an opportunity to 
take advantage of American consumers, and so, I have introduced 
bills to increase penalties on these types of criminals.
    Can you comment on what the CFPB has done to ensure that 
consumers of financial products are protected during some of 
the most challenging of times?
    Ms. Kraninger. Absolutely. We are in partnership with the 
Department of Justice, the FTC, and all of the prudential 
regulators, and State attorneys general, talking regularly 
about fraud schemes that we see, and who is handling them. 
There are certainly a lot of things happening in the healthcare 
space.
    We have seen admittedly slightly less in the financial 
products space. And I will say that the financial institutions 
are a huge help in that as well because they are keeping their 
eyes open, consumers advocates are keeping their eyes open, but 
the minute we hear about anything, we are investigating and 
moving on it. So, that is an ongoing vigilance, as well as 
making sure that we get good information to consumers so they 
are aware of it, so that it is front and center for them.
    Mr. Steil. Thank you very much. I appreciate your 
leadership in this regard, and I yield back.
    Chairwoman Waters. Thank you. The gentleman from Virginia, 
Mr. Riggleman, is recognized for 5 minutes.
    Mr. Riggleman. Thank you, Madam Chairwoman, and thank you, 
Director, for being here today. I would like to start by 
thanking you for your continued efforts to make the Consumer 
Financial Protection Bureau more accountable and transparent, 
and for many actions the Bureau has taken since your appearance 
in February.
    I also, going near the end, get some advantages to being 
near the end of these, and I would like to know, the challenges 
that you had, one of my colleagues talked about the number of 
complaints that you have had and the increase in those 
complaints from March until now. And I know you have also had 
to work under the same structure of CDC guidelines and COVID 
issues also. Is that correct, ma'am?
    Ms. Kraninger. Yes. We take that seriously.
    Mr. Riggleman. And obviously, the challenges have been 
pretty huge with your workforce, right, for either teleworking 
and things like that. You all have had to actually sort of 
navigate all the same challenges that other workforce people 
have done. Is that correct?
    Ms. Kraninger. Yes, it is.
    Mr. Riggleman. So I think you understand your civic 
responsibility, and I want to thank you for all those 
challenges and the amazing number--I know data and I know 
volume, and the fact that you are getting back to people in 9 
days, I think is commendable. And there is a difference between 
receiving the information and responding to it and doing an 
investigatory action, which I had to do when I had to process 
requests for information in intelligence analysis, so I 
appreciate that.
    I also want to talk about Section 1033, and I know you 
announced an intent to issue an ANPR on consumer authorized 
access to financial records later in the year, and I know we 
have heard that. So again, the benefit of going later--I don't 
know if anybody knows how long Section 1033 is, and I know all 
of us have probably read it, but Section 1033 is only 335 
words. I don't know if people have looked at Section 1033, and 
about 10 years ago, it would be the same with me.
    And I don't know if people have seen 1033 and what it is 
dictating, and what you have to do in that rulemaking. There 
are some challenges I don't think people really realize, even 
like somebody handing me a piece of paper that is 335 words, 
and it pretty much says, ``Hey, Denver, don't worry, you have a 
couple of years to make a missile to go between mach 5 and mach 
25, it has to reentry from space, and it has to hit a target 
with 10 meters, go ahead, you can do this.'' And that is pretty 
much how many words you have in Section 1033.
    Here are some of the challenges that I think the CFPB is 
going to have, and I have been writing these down. You are 
really talking about aggregated or interconnected banking. You 
are talking about a critical path checklist that is huge for 
1033 on rulemaking.
    You are talking about the legal issues people have to deal 
with--data transfer issues, universal API middle ware 
challenges, data translation, cloud utilization or not, policy 
on authorizations, interconnected banking like we talked about, 
and how people actually stress test interconnected banking with 
that volume of data.
    You are talking about data-volume issues because of that, 
and then you are talking about access to consumers, or 
aggregators, or consumer agents. That is just part of the 
critical path checklist that you have to worry about during 
your critical path checklist bill and when you are making 
rulemaking. Is that correct?
    Ms. Kraninger. Yes, that is the case. And I would always 
say, the distinction, of course, is that you have an end user 
who actually is building that missile. This is a distributed 
system. I am not the builder of this system.
    Mr. Riggleman. And that is why I found it so interesting, 
the challenges that you have not being the builder of the 
system, but somehow, being identified as the one responsible 
for that entire system, based on Dodd-Frank and the rulemaking 
that you worry about on 1033. And I have seen some of the 
talent that you sort of array around you, and I am really 
impressed with that.
    But this is the question I want to get at. Do you see the 
CFPB, even with you not building something--and I would never 
ask that or never even infer that--do you see yourself almost 
as the lead system integrator for this, or do you see when you 
do this rulemaking that you are just going to have a threshold 
that these private entities have to actually answer to, or bill 
to, or do you see it actually putting out specific rule sets or 
specific ways of actually approaching this technology, and you 
are going to be the final arbiter on that?
    Ms. Kraninger. You have definitely laid out a lot of 
challenges of this. I would say that we are really just taking 
a tiptoe in this direction with that Advance Notice of Proposed 
Rulemaking. We are not necessarily committing to do a 
rulemaking, because there are some who would argue that Section 
1033 and its 335 words is self-effectuating.
    But trying to put some parameters around this, and at least 
have a conversation around these complicated issues is what we 
are looking to facilitate.
    Mr. Riggleman. Even when you look at Dodd-Frank, when it 
came back over a decade ago, we have gone from things like 
relational databases to graph analytic databases, and the 
ability to parse data on a level we have never seen before, 
right, FinCEN, looking at different types of aggregators all 
across the financial sector?
    I think that is why it is such a challenge, and why I 
wanted to just express to you that I appreciate what you have 
done during the COVID pandemic, but I also hope people 
understand the challenge of rulemaking at this level, with the 
amount of technology that sort of presented before the CFPB, 
but also for those certain banks to actually do this.
    I think I would love to have seen, if I was here when that 
was made--I don't see where there is a technical solution for 
all of this embedded within Dodd-Frank. So, I appreciate the 
efforts that you have made.
    The next question would take 17 minutes to answer, so I am 
not going to ask it. I appreciate your time, and Madam 
Chairwoman, I yield back.
    Chairwoman Waters. Thank you. The gentleman from Texas, Mr. 
Taylor, is recognized for 5 minutes.
    Mr. Taylor. Thank you, Madam Chairwoman. I appreciate this 
hearing and this opportunity. And Director Kraninger, I 
appreciate you being here.
    I grew up legislatively in the Texas Senate with my 
colleague from Texas, Ms. Garcia, and I am used to a, perhaps, 
more professional environment, where when you are asked a 
question, you allow the person to answer it, rather than 
cutting them off and then accusing them of refusing to answer.
    Is there anything you wanted to add? I noticed you were cut 
off a couple of times since I have been here, and maybe there 
is some question you wanted to answer that--I will just yield 
you some time to answer a question.
    Ms. Kraninger. Thank you, Congressman, I do appreciate 
that. I would say we fulsomely have been able to cover some of 
these things along the way. I know there is a lot of interest 
certainly in the qualified mortgage effort that deserves some 
more conversation. Given that it is a proposed rule, though, we 
have time for that. We expect to get comments on it. But just 
noting that the Act requires debt and income to be considered 
and verified.
    We believe that under a rulemaking, there has to be a 
standard for that, that the CFPB would allow to be used, and so 
that is what we are trying to promote that. That is where the 
core ability to repay comes into play. Linking that, then, to 
the pricing threshold that we are proposing, it really is about 
a more holistic view than just DTI itself as that ratio that is 
a hard cap right now under the current rule.
    So at any rate, there is time on that particular topic to 
continue the conversation.
    Mr. Taylor. Thank you for answering that, and it is, again, 
frustrating to watch people not have the respect and give you 
the time to answer the question they are asking.
    Something that has come up repeatedly in this hearing is 
the recent Supreme Court ruling. I know you have had a chance 
to think about it, and I have had a chance to listen to some of 
my colleagues and some of your responses. But if you were to 
give us what we are supposed to do from here, it seems like we 
need to change some things in statute. Could you speak to that? 
What changes would you recommend, or what kind of direction 
should we start to go in hunting around to get the agency in 
constitutional compliance?
    Ms. Kraninger. I will tell you, Congressman, the decision 
with respect to, of course, the removal of the Director and the 
President's ability to do that, that is certainly the starting 
point for the conversation. I know that is, for some, the way 
the organization was created, and then there becomes some 
questions about other changes that Congress might want to 
contemplate.
    And so, I have respectfully declined to opine about 
precisely what those structural changes or proposals should 
look like, but I certainly stand ready to provide anything, as 
a process goes forward on that, that we can provide, and should 
something be enacted, I also obviously stand ready to help 
implement that.
    Mr. Taylor. Yes. I certainly hope, at a bare minimum, that 
Congress would take action to fix this. And I guess, one of my 
frustrations with this institution is its inability to act, and 
to see simple, straightforward legislative solutions go 
through, that I hope we could all agree that your agency should 
be constitutional, and that we would take some actions, and I 
hope that we could do that on a bipartisan basis. I don't think 
it is terribly difficult to say, Okay, let's let the President 
appoint and relieve the Director of the CFPB, which I think 
is--my understanding is that would basically bring you in 
constitutional compliance. Is that directionally correct?
    Ms. Kraninger. The decision essentially did that. The 
question then becomes if there are other changes that the 
Congress would want to see made.
    Mr. Taylor. Okay. And so, I look forward to working to try 
to make this institution functional, to actually be able to 
issue legislation so that it doesn't have to feel like we are 
so impotent that we must create eight new agencies that are 
then non-accountable to the institution.
    I know, again, in my time in the Texas legislature, we were 
powerful in that we could actually pass common-sense 
legislation. We could bring agencies to heel because we could 
actually wield legislation. That legislature would pass between 
1,000 and 1,500 bills in a 20-week session. Here, we are 
passing about 50 or 100 bills a year. So, the volume of 
production is just so much lower, and, therefore, the power 
that it wields is consequently reduced. And enough of my 
pontificating on that. I yield back.
    Chairwoman Waters. Thank you. And I would like to thank 
Director Kraninger for her time today. This may be her last 
presentation before this committee.
    Before we adjourn, I have statements for the record, and 
without objection, the statements will be made a part of the 
record.
    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 4:45 p.m., the hearing was adjourned.]




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