[Senate Hearing 116-112]
[From the U.S. Government Publishing Office]








                                                        S. Hrg. 116-112


    THE CONSUMER FINANCIAL PROTECTION BUREAU'S SEMIANNUAL REPORT TO 
                                CONGRESS

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

                                HEARING

                               before the

                              COMMITTEE ON
                   BANKING,HOUSING,AND URBAN AFFAIRS
                          UNITED STATES SENATE

                     ONE HUNDRED SIXTEENTH CONGRESS

                             FIRST SESSION

                                   ON

   A REVIEW OF THE CONSUMER FINANCIAL PROTECTION BUREAU'S SEMIANNUAL 
                           REPORT TO CONGRESS

                               __________

                            OCTOBER 17, 2019

                               __________

  Printed for the use of the Committee on Banking, Housing, and Urban 
                                Affairs



              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]





                Available at: https: //www.govinfo.gov/




                               __________

                      U.S. GOVERNMENT PUBLISHING OFFICE
                      
39-390 PDF                 WASHINGTON : 2020 
















            COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS

                      MIKE CRAPO, Idaho, Chairman

RICHARD C. SHELBY, Alabama           SHERROD BROWN, Ohio
PATRICK J. TOOMEY, Pennsylvania      JACK REED, Rhode Island
TIM SCOTT, South Carolina            ROBERT MENENDEZ, New Jersey
BEN SASSE, Nebraska                  JON TESTER, Montana
TOM COTTON, Arkansas                 MARK R. WARNER, Virginia
MIKE ROUNDS, South Dakota            ELIZABETH WARREN, Massachusetts
DAVID PERDUE, Georgia                BRIAN SCHATZ, Hawaii
THOM TILLIS, North Carolina          CHRIS VAN HOLLEN, Maryland
JOHN KENNEDY, Louisiana              CATHERINE CORTEZ MASTO, Nevada
MARTHA MCSALLY, Arizona              DOUG JONES, Alabama
JERRY MORAN, Kansas                  TINA SMITH, Minnesota
KEVIN CRAMER, North Dakota           KYRSTEN SINEMA, Arizona

                     Gregg Richard, Staff Director

                Laura Swanson, Democratic Staff Director

                        Catherine Fuchs, Counsel

                 Sarah Brown, Professional Staff Member

                   Jan Singelmann, Democratic Counsel

                      Cameron Ricker, Chief Clerk

                      Shelvin Simmons, IT Director

                    Charles J. Moffat, Hearing Clerk

                          Jim Crowell, Editor

                                  (ii)








                            C O N T E N T S

                              ----------                              

                       THURSDAY, OCTOBER 17, 2019

                                                                   Page

Opening statement of Chairman Crapo..............................     1
    Prepared statement...........................................    27

Opening statements, comments, or prepared statements of:
    Senator Brown................................................     3
        Prepared statement.......................................    28

                                WITNESS

Kathy Kraninger, Director, Consumer Financial Protection Bureau..     4
    Prepared statement...........................................    29
    Responses to written questions of:
        Senator Brown............................................    40
        Senator Toomey...........................................    52
        Senator Scott............................................    53
        Senator Moran............................................    54
        Senator Menendez.........................................    58
        Senator Warren...........................................    59
        Senator Cortez Masto.....................................    76
        Senator Jones............................................    85
        Senator Smith............................................    87
        Senator Sinema...........................................    90

              Additional Material Supplied for the Record

Semiannual Report of the Bureau of Consumer Financial 
  Protection--Spring 2019........................................    92
Letter submitted by the Consumer Banker's Association............   154
Letter submitted by the Credit Union National Association........   163
Letter submitted by the National Association of Federally-Insured 
  Credit Unions..................................................   169

                                 (iii)

 
                   THE CONSUMER FINANCIAL PROTECTION
                 BUREAU'S SEMIANNUAL REPORT TO CONGRESS

                              ----------                              


                       THURSDAY, OCTOBER 17, 2019

                                       U.S. Senate,
          Committee on Banking, Housing, and Urban Affairs,
                                                    Washington, DC.
    The Committee met 10 at a.m., in room SD-538, Dirksen 
Senate Office Building, Hon. Mike Crapo, Chairman of the 
Committee, presiding.

            OPENING STATEMENT OF CHAIRMAN MIKE CRAPO

    Chairman Crapo. This hearing will come to order.
    Today we will receive testimony from CFPB Director Kathy 
Kraninger on the CFPB's semiannual report.
    On October 7, the CFPB issued its Spring 2019 Semiannual 
Report, which outlines the Bureau's significant work between 
October 2018 and March 2019, including rulemakings and 
supervisory and regulatory activities.
    The report also provides insight into what the CFPB plans 
to undertake in the coming work period.
    Since stepping into her role last December, Director 
Kraninger has demonstrated a commitment to ensuring that 
consumers have access to a wide range of financial products and 
services that meet their individual needs, fostering innovation 
and vigorously protecting consumers.
    Reflecting this commitment to the CFPB's mission, Director 
Kraninger conducted an extensive cross-country listening tour 
with the full spectrum of CFPB stakeholders during her first 
months on the job.
    Director Kraninger's conversations with consumers, 
industry, and fellow Federal and State regulators have improved 
CFPB engagement, informed their supervision and regulatory 
processes, and improved agency transparency.
    In the Semiannual Report, Director Kraninger also 
highlighted that the CFPB has taken steps to ``[strengthen] the 
consumer marketplace by providing financial institutions clear 
`rules of the road' that allow them to offer consumers a range 
of high-quality, innovative financial services and products.''
    On September 10, the CFPB issued three new policies to 
promote innovation and reduce regulatory uncertainty. These 
policies include the Trial Disclosure Program Policy, the 
Compliance Assistance Sandbox Policy, and the No-Action Letter 
Policy.
    Each of these policies are intended to contribute to an 
environment that allows innovation to flourish safely and 
ensure that consumer needs are met in increasingly efficient 
and effective ways.
    Earlier this year, the CFPB announced a proposal to update 
the mandatory underwriting provisions of its 2017 small dollar 
lending rule.
    Updating this rule is an important step toward ensuring the 
availability of credit that is essential to so many consumers 
who struggle to access or qualify for other options and basing 
rules on solid evidence and legal support.
    As the CFPB continues to move forward on this rulemaking 
process, I encourage the CFPB to coordinate with the other 
financial regulators on an approach to small dollar lending to 
create a consistent framework across all institutions in order 
to promote and expand small dollar lending and credit options.
    In July, the CFPB released an advance notice of proposed 
rulemaking seeking stakeholder comment on potential amendments 
to its Ability to Repay/Qualified Mortgage Rule.
    FHFA Director Calabria and CFPB Director Kraninger noted 
the QM patch ``exacerbates an unlevel playing field'' and that 
``Fannie and Freddie should play by the same rules as everyone 
else.''
    The CFPB's actions are a positive step, and I continue to 
encourage the Bureau's efforts to find a permanent solution to 
the Qualified Mortgage standard that provides certainty to 
consumers, lenders, and investors alike.
    Last week, the CFPB announced the formation of a task force 
that will be devoted to examining ways to modernize and 
harmonize Federal consumer financial laws, especially those 
pertaining to consumer credit.
    The Banking Committee has spent significant time this 
Congress evaluating how the Fair Credit Reporting Act, or FCRA, 
should operate in an increasingly digital economy, and other 
firms who function similar to the original consumer reporting 
agencies.
    I look forward to reviewing the CFPB's Task Force on 
Federal Consumer Financial Law's recommendations on how to 
update the FCRA so that it continues to function as originally 
intended in a digital world.
    Though I am greatly encouraged by many of the changes and 
initiatives at the CFPB under Director Kraninger's leadership, 
it remains clear that the fundamental structure of the CFPB 
must be reconsidered to make it more transparent and 
accountable.
    I continue to support transitioning the CFPB to a 
bipartisan commission from a single director, subjecting the 
CFPB to appropriations, and providing a safety and soundness 
check for prudential regulators.
    On September 17, 2019, the CFPB and the Department of 
Justice filed a brief in the U.S. Supreme Court, urging the 
Court in the case of Seila Law v. CFPB to review the 
constitutionality of the Bureau's leadership structure.
    I have long argued that the CFPB's current structure lacks 
sufficient accountability and look forward to the Supreme Court 
taking up a review of this case.
    During this hearing, I look forward to hearing more about 
key initiatives at the CFPB in the last year, Director 
Kraninger's priorities for the CFPB in the upcoming work 
period, and additional legislative or regulatory opportunities 
to provide widespread access to financial products and 
services.
    Director Kraninger, again I thank you for joining the 
Committee this morning to discuss the CFPB's activities and 
plans.
    Senator Brown.

           OPENING STATEMENT OF SENATOR SHERROD BROWN

    Senator Brown. Thank you, Mr. Chairman. Welcome, Director 
Kraninger. Nice to see you.
    We created the Consumer Financial Protection Bureau to 
stand up for students, servicemembers, and hardworking 
Americans to protect them from big banks and crooked 
corporations that rob them of their homes and their jobs and 
their savings.
    After 10 months on the job, it is clear why President Trump 
selected you to head the CFPB. We know he can count on you to 
protect Wall Street banks and payday lenders and shady debt 
collectors and other companies that prey on hardworking 
Americans.
    Under your leadership, under President Trump's leadership, 
this agency has chosen corporations over workers over and over 
again, has chosen big banks over consumers over and over again.
    Since you took over, you and your appointees have overruled 
the recommendations of consumer experts and allowed crooked 
companies to lie, to cheat, and to steal from hardworking 
Americans, and then you have let them get away with it.
    The Consumer Protection Bureau is supposed to protect 
consumers. That is your entire job, to protect consumers from 
predatory loans, from predatory payday loans that lead to 
endless cycles of debt.
    You instead chose to protect the interests of President 
Trump and his payday lending patrons.
    Consumers pay the price. Since August, when the payday loan 
rule was scheduled to go into effect, Americans have paid more 
than $1 billion in fees to payday loan sharks. That is $1 
billion out of the pockets of consumers, and it is consumers 
without a lot of money. They are using payday lending, 
obviously. A billion dollars out of the pockets of consumers 
because the agency that was supposed to look out for them 
decided to instead look out for payday lenders.
    You also could have protected servicemembers and their 
families.
    But instead the Trump administration betrayed them when you 
stopped making sure companies followed the protections for 
servicemembers and their families.
    You also could have strengthened the Bureau's enforcement 
of fair lending laws that returned hundreds of millions of 
dollars to victims of discrimination in the agency's first 7 
years.
    Instead, you continued President Trump's attacks on fair 
lending laws. In fact, instead of protecting consumers, you 
have dismantled the Bureau's Office of Fair Lending; you put a 
Trump political appointee with a history of racist and sexist 
writings--and we have explored those in this Committee before--
in charge of fair lending; you are now trying to repeal a 2015 
rule that required lenders to report basic loan information to 
ensure they are not discriminating.
    What are the results?
    Since you took over, the Bureau has not brought a single 
case against a company for discriminatory lending practices. 
Not one single case against a company for discriminatory 
lending practices. Last that I checked, discrimination has not 
ended in this country in Trump's America.
    Under the Trump administration, you have turned your backs 
on student loan borrowers.
    The Bureau could have helped protect the 44 million 
Americans with student loans from the widespread mistakes, 
errors, and mismanagement by the companies that handle their 
loans and that have cost them thousands of dollars.
    But, again, you betrayed the people the President promised 
to look out for. You are hearing that word ``betrayed'' these 
days used a lot, how the President has betrayed workers in the 
Midwest, auto workers in the Midwest, how the President has 
betrayed our allies in the Mideast, and day after day betrayed 
workers in this country. You sided with Education Secretary 
DeVos and refused to examine Federal student loan servicers to 
make sure they are not cheating people with student loans.
    The GAO and the Department of Education's Inspector General 
reported that the company that manages Federal student loans 
wrongly denied tens of thousands of teachers, nurses, 
firefighters, servicemembers, and other dedicated public 
servants the loan forgiveness they earned. And this is not my 
opinion. This is GAO and the Department of Education's 
Inspector General.
    You have protected those companies while hardworking 
American families paid the price.
    I guess I should expect nothing less from an Administration 
that consistently looks like a retreat for Wall Street 
executives.
    Under your leadership, crooked corporations have no real 
incentive to follow the law. If they get caught, they know the 
Bureau will hit them with nothing more than a slight slap on 
the wrist for ripping off consumers.
    Director Kraninger, how in the world do you explain to 
these hardworking Americans why the Bureau is not protecting 
them?
    To be sure, you have done the role asked of you by the 
President of the United States. You have protected companies, 
not workers, not consumers, and that is indefensible.
    Thank you.
    Chairman Crapo. Thank you.
    Director Kraninger, it is now your opportunity to make your 
initial statement. The floor is yours. Please proceed.

  STATEMENT OF KATHY KRANINGER, DIRECTOR, CONSUMER FINANCIAL 
                       PROTECTION BUREAU

    Ms. Kraninger. Chairman Crapo, Ranking Member Brown, 
Members of the Committee thank you for the opportunity to 
provide an update on the Bureau's important work.
    Preventing harm to consumers is the top priority of the 
CFPB. We prevent harm by educating consumers to protect 
themselves. We prevent harm by having clear rules of the road 
for regulated entities. We prevent harm by using supervision 
and enforcement to promote compliance with the law. And we 
prevent harm by supporting dynamic and competitive markets that 
provide for consumer choice.
    While prevention is not always possible, it is the right 
goal, saving consumers from financial headaches, setbacks, and 
devastation. The Semiannual Report and my written testimony 
provide a rundown of our activities in the first half of fiscal 
year 2019 and a preview of more recent initiatives, some of 
which I will take the opportunity to highlight now.
    First, our efforts to provide clear rules of the road so 
that companies and consumers know what is lawful and what is 
not.
    Just last week, the Bureau finalized a rule that provides 
needed relief to smaller lenders from collecting and reporting 
data under the Home Mortgage Disclosure Act, or HMDA, and 
codifies a key provision of the Economic Growth, Regulatory 
Relief, and Consumer Protection Act.
    Additionally, last month, the Bureau announced policies to 
facilitate innovation, reduce regulatory uncertainty, and 
enhance consumer choice. The Bureau also announced its first 
no-action letter under the new policies. It is designed to help 
keep funding streams open for our Nation's housing counselors 
who have assisted millions of Americans attain the dream of 
owning a home.
    Second, where we cannot prevent harm to consumers, we use 
our enforcement tool to hold bad actors accountable. Every case 
is managed by Bureau attorneys seeking justice in the public 
interest. In fiscal year 2019, we announced 22 public 
enforcement actions and settled six previously filed lawsuits, 
including in a public fair lending enforcement action the 
Bureau settled with one of the Nation's largest HMDA reporters 
for violating HMDA and Regulation C. We took action against an 
individual who brokered contracts offering high-interest credit 
to veterans, and we took action against a student loan 
servicing company that engaged in unfair practices that 
violated the Consumer Financial Protection Act.
    Further, the Bureau's actions in fiscal year 2019 resulted 
in orders requiring a total of over $777 million in consumer 
relief and nearly $186 million in civil money penalties. I note 
these figures not as a measure of accomplishment, but to 
underscore the fact that the Bureau continues to appropriately 
utilize its enforcement tool.
    Third, we continue to promote a culture of compliance 
through our supervisory tool and empower consumers through 
education. Earlier this year, we launched an initiative--Start 
Small, Save Up--to help prepare Americans to handle an 
unexpected financial event. As part of this initiative, we 
released a new savings booklet to help individuals create their 
path to reach their savings goals. And we are looking at other 
innovative ways to move the needle on savings in America.
    For example, the Bureau partnered with H&R Block to study 
savings of tax refunds. The study showed that encouragement 
through a simple email or a small incentive increased the 
consumer's likelihood of saving a portion of their tax refund. 
It also found that one in five consumers who took advantage of 
the specific savings feature continued to save 8 months later. 
We will continue to engage in research about what works to 
promote a habit of savings and overall financial well-being.
    Fourth, I have a few recent announcements to demonstrate 
the Bureau is committed to using the tools Congress gave us as 
effectively and efficiently as possible. Just last week, the 
Bureau handled its 2 millionth consumer complaint. To ensure 
that the Bureau's work continues to be informed by this input, 
I announced last month that we will continue the publication of 
the Consumer Complaint Data base. In addition, we will be 
enhancing the data base by providing new tools and graphics to 
analyze consumer submissions and put that data into context.
    Also last week, I announced the establishment of a task 
force to examine the existing legal and regulatory framework. 
The task force will make recommendations for improving consumer 
financial laws and regulations as well as enhancing consumer 
understanding of markets and products. We are currently 
accepting applications from individuals who are interested in 
serving on the task force and welcome recommendations from 
members of Congress.
    Just 2 days ago, I was proud to announce that the new 
private education loan ombudsman met an important congressional 
mandate given specifically to that position by issuing his 
first annual report. The report covers 2 years and analyzes 
complaints submitted by consumers. The Bureau also sent a 
signed memorandum of understanding to the Department of 
Education consistent with its statutory responsibility to share 
consumer complaint information with the Department of 
Education.
    Before I close, I would like to touch on one final issue: 
clarity around the constitutionality of the Bureau's structure. 
As you are aware, I joined the Government's recent brief in the 
Supreme Court to hear the case CFPB v. Seila Law. This matter 
is in litigation, so consistent with longstanding Bureau 
practice, I am not going to discuss it at length, but I do want 
to highlight a few key points.
    From the Bureau's earliest days, the constitutionality of 
the Director's removal provision has been raised to challenge 
legal actions by the Bureau in pursuit of our mission. 
Litigation over this question continues to cause significant 
delays in some of our enforcement and regulatory actions. I 
believe this dynamic will not change until the constitutional 
question is resolved, either by Congress or by the Supreme 
Court. My position on this question will not stop the Bureau 
from fulfilling our statutory responsibilities. We will 
continue to defend the actions that the Bureau is taking now 
and has taken in the past.
    Again, I thank you for this opportunity to discuss the 
Bureau's work and look forward to your questions.
    Chairman Crapo. Thank you, Director Kraninger.
    My first question is related to access to credit, and I ask 
it in this context. It has already been expressed by Senator 
Brown, a concern about the level of enforcement activity, and I 
appreciated your reviewing that the agency is enforcing the 
law. It seems to me that, in addition to stopping bad actors 
from harming consumers, an important thing to do to protect and 
strengthen consumers is to increase their access to safe 
credit.
    Could you discuss, first of all, whether that is one of the 
important objectives that you have and how you would seek to 
achieve that?
    Ms. Kraninger. Thank you, Senator. Access to credit is part 
of the mission of the Bureau. It comes into play in Dodd-Frank 
under innovation in particular, facilitating innovation and 
access. It is an important part of what we do. We do have to be 
thoughtful and judicious and deliberate in our rulemaking 
activities to consider the implications on access to credit of 
the actions that we take. There are certainly a number of areas 
where we are being thoughtful about that.
    I would highlight the innovation policies because that 
clearly is an area where we are seeking more innovation from 
the industry, from financial technology companies, from others 
who have ideas about how we can reach those underbanked and 
unbanked individuals in our society and bring them into 
financial services that are going to help them build their 
financial well-being. And so that opportunity is something that 
we have held symposia on. We are engaged in some work on that, 
and we look forward to providers of products and services 
continuing to come forward to talk to us about how they can do 
that.
    Chairman Crapo. Well, thank you. And I guess we have 
already both discussed this a little bit, but I would just like 
you to highlight it again. One of the most important things we 
can do for those who are not banked and who find it difficult 
to access credit is to make sure that the credit system that 
they can participate in is safe and that it is strong and 
robust, available to them.
    Could you just comment a little further on the importance 
of that?
    Ms. Kraninger. Yes, Senator. Certainly that is an important 
part of our job, that competitive, fair, transparent markets do 
promote that for consumers, and that is part of the mission 
that we are giving to more specifically.
    I think one of the things that I can talk a little bit more 
about is alternative data and the opportunity to look at that 
in underwriting. The Bureau did issue one no-action letter 
under its prior policy to a company called ``Upstart''. We have 
since had a lot of information on how Upstart has used 
alternative data, both employment and education information, to 
make credit determinations and provide greater access to 
credit. We did issue a blog recently. Our head of Fair Lending 
and our head of Innovation talked about the opportunity that 
companies like Upstart are providing to individuals who are 
unbanked and underbanked to bring them in to safer products, 
and that is something that we will continue to do.
    Chairman Crapo. All right. Thank you.
    The adoption of innovative technologies and processes by 
regulated financial entities has the clear potential to improve 
the ease, efficiency, and the cost of providing financial 
services to a wider spectrum of consumers, as we have been 
discussing. But a lack of regulatory certainty and clear 
guidance regarding the use of new financial technology and 
methods of consumer engagement can stifle the development and 
the integration of innovative practices by firms.
    Can you describe how the CFPB's recent policy guidance 
regarding its Disclosure Sandbox Program and the compliance--
the no-action letter, the Compliance Sandbox Program, can help 
our firms that do provide services get greater regulatory 
clarity and enhance financial innovation?
    Ms. Kraninger. Well, one of the premises of those policies 
is certainly encouraging some of these innovative companies and 
entities to come forward with their ideas. It is something that 
is challenging to do. A company entering this space does not 
have the same history of regulatory engagement as traditional 
institutions do, and so coming forward to ask questions, to 
look for ways to be compliant with consumer financial 
protection laws, that is what they are trying to do, and that 
is what we are trying to promote, that conversation with those 
entities.
    There is a real opportunity with the trial disclosure 
policy, I believe, to get better information to consumers, 
simple information to consumers at the right time so that they 
have what they need to make the best decision for themselves, 
and I am really looking forward to even traditional financial 
institutions coming forward with some great ideas in that 
space. For the sandbox as well, there is going to be a lot of 
back and forth over how effective the products are and what the 
opportunities are that are beneficial to consumers.
    Part of the application process is raising both the 
benefits and the risks to consumers, and that is what the 
applicants will have to articulate to us and go back and forth 
on.
    Chairman Crapo. Thank you.
    Senator Brown.
    Senator Brown. Thank you, Mr. Chairman.
    Is it reasonable to consider a payday loan rule that allows 
consumers who get into financial trouble to pay back as little 
as 1 percent of a loan?
    Ms. Kraninger. I am sorry. Are you asking about an interest 
rate on----
    Senator Brown. Well, I ask that because I think the answer 
is sort of self-evident. But this chart shows that you have let 
scammers and shady debt collectors pay just 1 percent or even 
less of the amounts they owe. CFLA paid 1.1 percent of the 
amount they owed to consumers. Howard Law paid 0.07 of a 
percent of the debt they owed, the scam they made. And McKinnon 
paid two-tenths of 1 percent. So you gave these corporations 
and these scammers a huge discount of what they owed to 
hardworking Americans whom they cheated. Why is it that you 
think scammers that take advantage of servicemembers or seniors 
or students deserve debt forgiveness but working families do 
not deserve the same treatment?
    Ms. Kraninger. Thank you for giving me a little more 
context on that question, Senator. As you know, every case is 
fact- and circumstance-specific. Cases are led by Bureau 
attorneys in terms of the opening decision of the case, the 
closing decision of the case, and the recommendation and the 
discourse that we have inside the agency over whether to sue or 
settle. There are certainly opportunity costs there with our 
decisions to sue, which we have taken in many cases under my 
leadership and prior leadership.
    Senator Brown. You can answer this for the next 5 minutes. 
But when the settlement is--when it is consumers who are hurt 
and scammers that benefit, the little bit of money they get, 
what message does this send? It is not only these consumers get 
nothing close to restitution. It is the message it sends to 
other scammers that they have a friend in the White House and 
they have a friend in the CFPB.
    Let me move to another. During your confirmation, I raised 
concerns as Director you would side with 9/11 scammers and 
other corporations that argue that the CFPB is 
unconstitutional. Do you remember that conversation?
    Ms. Kraninger. I do, sir.
    Senator Brown. OK. Good. Thank you. When I asked you about 
the constitutionality of the CFPB, you testified as Director it 
was not your position to decide whether CFPB was 
constitutional. You said, and I am quoting, ``I am aware of the 
constitutional questions, Senator. I think they are important. 
But they are not for me in this position to answer. The 
Director has the responsibility to carry out the law as it is 
written, run the agency that is established now, and that is my 
focus.''
    Based on this testimony, I was surprised when a few weeks 
ago you sent a letter to Congress stating, ``I have decided 
that the Bureau should adopt the Department of Justice's view 
that the for-cause removal provision is unconstitutional.''
    So if someone comes to Congress, commits to do one thing, 
and then does another, is that just lying to Congress?
    Ms. Kraninger. Senator, I was aware, obviously, of the 
constitutional question from the moment of my nomination. We 
discussed it at the hearing during my confirmation process, and 
it certainly was not a decision that I had to take at that 
time. I still firmly believe that in terms of settling this 
question, as I said in my opening statement, it is for the 
Supreme Court and Congress to settle it.
    At the same time, the executive branch and all of us as 
executive branch officials have a responsibility to uphold the 
Constitution. In the face of this cert petition to the Supreme 
Court in this particular case, it did come to me for a decision 
on my position and the position the Bureau would take, and that 
is the decision that is outlined in our----
    Senator Brown. I think it speaks to your credibility as a 
public official that came into this Committee and said that you 
would not speak on issues of constitutionality and then you 
did, which to me reflects on some other things you may have 
said over time.
    I want to turn back to the public service loan forgiveness. 
Congress designed the program to help hardworking Americans who 
take jobs that we hope they take to serve this country and to 
serve their communities. It is clear the management of this 
program under the company PHEAA has been a complete train 
wreck. Fewer than 1 percent of workers have received the loan 
forgiveness they earned. The CFPB has done nothing for more 
than 2 years about it.
    Will you commit to the public that you will open an 
enforcement investigation of PHEAA, the company that is 
supposed to manage these Americans' student loans?
    Ms. Kraninger. Senator, I can tell you I take very 
seriously the responsibilities we have to all consumers and 
particularly to students. We do have that responsibility. I 
hired, as I said I would, a private education loan ombudsman 
who has already issued his first annual report. We have engaged 
the Department of Education to work through what I think is 
hopefully going to be the best outcome for consumers, and that 
is to have the Federal Government agencies united in the 
understanding of our respective responsibilities and how we are 
going to move forward. So we are moving forward on the MOU that 
is statutorily required and moving forward in other areas 
including how we will carry out our responsibilities under the 
larger participant rule.
    Senator Brown. I hope so, but nothing fundamental has 
happened, that still 1 percent of workers receive the loan 
forgiveness they have earned, as they serve the public as we 
asked them to do. And keep in mind PHEAA is a Federal 
contractor using taxpayer dollars to manage Federal student 
loans. So I will just ask you again: Will you protect people 
trying to pay off their student loans, or are you going to 
protect Secretary DeVos and this company?
    Ms. Kraninger. I will carry out my statutory 
responsibilities to protect consumers.
    Senator Brown. Thanks, Mr. Chairman.
    Senator Shelby [presiding]. Senator Crapo had to go to the 
Judiciary Committee, so I will recognize myself.
    Director Kraninger, since you were sworn in, I believe that 
the Bureau has done an impressive job of putting forward 
policies that not only provide important consumer protections, 
which is in the forefront here, but also certainty and clarity 
to regulated entities. We need both. I believe that under your 
leadership you have made a lot of significant strides in 
becoming more efficient and transparent, and I want to commend 
you for that.
    Now, during your time as Director, in what areas of the 
Bureau's operations have you seen the most improvement? And 
what areas do you feel continue to be addressed? Along those 
lines, the CFPB has announced that it is looking at potential 
ways to modernize Federal consumer financial laws. And as more 
consumers--that is all of us--move to utilize digital 
technology, what are some of the challenges that you are 
facing? What road are you going down, and how do you get there?
    Ms. Kraninger. Thank you, Senator. I am particularly proud 
of, again, our commitment to transparency and to promote the 
discourse. Reasonable people will disagree over a number of 
topics, and trying to push forward advance notice of proposed 
rulemakings and requests for information to bring the public 
into the discussion as we are considering rulemaking actions 
has been important, as had holding symposia to talk through 
some of the more challenging topics. We had one on the 
definition of abusiveness. We had one on economic analysis 
factors. We have another one coming up actually on small 
business lending and our responsibilities under section 1071 of 
the Dodd-Frank Act.
    Those are all things that I think we are doing very well, 
and we are going to continue to engage in that kind of 
discourse and work with all of the stakeholders in this area to 
move forward.
    You mentioned the task force, and I am also excited about 
that opportunity to provide both the Bureau and the Congress 
perhaps some ideas from experts in this area as to where we 
should go to help modernize the laws and the regulations to 
address the digital age that we find ourselves in. That is also 
a positive thing, and I think in terms of our modernization 
efforts, we are looking at how this applies in a number of 
contexts, particularly to electronic disclosures.
    The fall rulemaking agenda has not been released yet, but 
we are going to be looking at the credit card arena. We are 
tackling some of this in the debt collection rule, just 
thinking about how we can get simpler, clearer information to 
consumers in what is a complex set of laws. So that 
modernization----
    Senator Shelby. The more transparency you have, the better 
the consumer is going to be. Isn't that----
    Ms. Kraninger. Yes, Senator, I agree.
    Senator Shelby. How important is it for the financial 
regulators to create a regulatory environment that is conducive 
to innovation? And also what impact do you foresee through your 
job here proposed policies that would have on firms offering 
new products and services? That is very important to the 
marketplace.
    Ms. Kraninger. I am excited about the innovation policies, 
and as I just spoke a little bit about disclosures with the 
trial disclosure policy bringing information to consumers at 
the right time, having it be simple and clear, providing clear 
direction to industry, as you have noted, that is what we are 
trying to do both through the innovation policies and our other 
rulemaking efforts and guidance efforts.
    With those clear rules everyone understands and can 
innovate and can grow and can provide the services that 
consumers need and want. That is something that we are going to 
continue to work our way through.
    Senator Shelby. Isn't it very important to have an informed 
consumer, in other words, that they understand what they are 
doing when they make a decision?
    Ms. Kraninger. Yes, Senator, and that is a key part of our 
responsibility as an agency. Education is part of our purview, 
and it is something that we are really working hard to build.
    Senator Shelby. I want to get into cost-benefit analysis. 
The last time you came before this Committee, we discussed 
right here the role of cost-benefit analysis at the Bureau and 
everywhere else. How can your organization utilize economists 
and economic analysis in its overall operations, including in 
the rulemaking process--in other words, weigh costs and 
benefits for any rule?
    Ms. Kraninger. Yes, Senator, as you know, that is something 
that is critically important to me, and I think part of this 
discussion with the public is to actually outline those costs 
and benefits and attempt to quantify them.
    Senator Shelby. But that should be important to everybody, 
shouldn't it?
    Ms. Kraninger. I agree, sir, and it is something we are 
committed to. I am excited that I have a new head of the Office 
of Research. They have the responsibility currently for doing 
that economic analysis to support our rulemaking. And cost-
benefit analysis should be part of all of our processes and 
decisions, and that is something that I am working to weigh 
into the process. It does not mean that the hard dollar amount 
when we can quantify is the only basis for any decision, but 
talking about benefits and costs and weighing them and trying 
to quantify them is important.
    Senator Shelby. Thank you. My time is up.
    Senator Menendez.
    Senator Menendez. Thank you, Mr. Chairman.
    Director, last time you were here before the Committee, you 
and I discussed the severe problems in the Public Service Loan 
Forgiveness Program. This is a program that Congress put in 
place to allow public workers like teachers, firefighters, and 
military servicemembers to have their student loans forgiven if 
they make payments for 10 years. But 99 out of every 100 public 
servants who apply for debt forgiveness are rejected.
    According to a recent NPR report, in 2018, the CFPB 
launched an effort to find out why the program is failing our 
public servants, but Secretary DeVos' Department of Education 
seems to have successfully stonewalled those efforts.
    Is it true that in response to a letter from Senator Warren 
and myself you confessed that, ``Since December 2017, student 
loans servicers have declined to produce information requested 
by the Bureau for supervisory examinations related to loans 
held by the Department based on the Department's guidance?
    Ms. Kraninger. Yes, Senator, that was in the letter.
    Senator Menendez. Is it also true that the Bureau submitted 
a supervisory examination request to the Department of 
Education in January of 2019, this year, and since then the 
Department of Education failed to respond to the CFPB's request 
as disclosed by the Department in a June letter to Senator 
Murray and Congresswoman DeLauro?
    Ms. Kraninger. Senator, yes, if I could give a little 
additional context----
    Senator Menendez. We will get to additional context in a 
moment.
    Ms. Kraninger. Thank you.
    Senator Menendez. But that is a true statement, correct?
    Ms. Kraninger. Yes, Senator.
    Senator Menendez. Now, Secretary DeVos, the Secretary of 
Education, has made it abundantly clear that she prioritizes 
loan servicers over teachers and public workers. But you do not 
have to follow her lead. In fact, your predecessor, Mick 
Mulvaney, was still able to examine Federal student loan 
servicers despite DeVos' opposition. When he faced similar 
obstruction by the Department, he followed the recommendation 
of career enforcement attorneys and sought a court order to 
compel some of the largest student loans servicers to turn over 
documents to the Bureau. These actions proved that the CFPB can 
still work to protect Federal student borrowers despite the 
irresponsible actions of Secretary DeVos.
    Why has the Bureau under your leadership thus far failed to 
use all the tools at its disposal, including seeking court 
orders to conduct proper oversight?
    Ms. Kraninger. Senator, I believe that it behooves the 
Federal Government to act in a more united manner that is going 
to be better for consumers. It is certainly going to be more 
consistent. I have met with Secretary DeVos. I hired the 
private education loan ombudsman. We are moving forward with 
the MOU that is statutorily required to share complaint 
information. And we are already discussing how to move forward 
in an effective way to make sure that we are overseeing 
servicers.
    Senator Menendez. Well, I agree that if we can work in 
cooperation, that is great. But let me just read to you what 
the Department of Education said 48 hours ago, and I quote: 
``The Department of Education is charged with overseeing the 
Federal student aid portfolio. The CFPB is charged with 
oversight of the private student loan industry.''
    So if you are waiting for the Department of Education to 
give you permission to oversee the Public Service Loan 
Forgiveness Program, you are going to be disappointed, and our 
public servants are going to pay a price.
    Why don't you do what your predecessor did? Why won't you 
commit to reinstating the oversight and enforcement of these 
loans?
    Ms. Kraninger. Senator, we are absolutely doing exams of 
private education loans, and we are working with the Department 
of Education on the Federal student loan portfolio to make sure 
that Federal consumer protection laws, which are the purview of 
this agency, are followed. And that is something that we are 
going to continue to work through----
    Senator Menendez. Well, it has not worked so far. They have 
not cooperated with you at all. They have stonewalled you every 
step of the way, and they have made it very clear in this 
statement 48 hours ago that they only believe that you have 
jurisdiction over the private student loan industry and not 
theirs. So who is going to get hurt here are public servants 
who deserve to have the opportunity to have loan forgiveness as 
a part of their service. And I would really urge you to do what 
your predecessor did and use the enforcement capabilities that 
you have.
    Let me quickly ask you on the QM patch, which has provided 
over roughly 6 million residential mortgage loans originated in 
2018, the Bureau estimates that roughly one-sixth or nearly 1 
million loans benefited from the QM patch. I understand that 
you are all going to allow it to just lapse. How is it that you 
are going to ensure that if you do not take steps to offer the 
type of financing that is currently available, how can you 
describe the steps that the Bureau is going to take to prevent 
the patch's expiration without causing a major disruption to 
the housing market and our overall economy?
    Ms. Kraninger. Senator, a smooth transition is what I am 
committed to. I put that in the advance notice of proposed 
rulemaking and recognizing that the patch was set to expire and 
is set to expire in January 2021, we are starting this process 
very early. We sought comment on how long of an extension would 
be necessary to support a transition, and we are looking at the 
comments back on that now, and I will be making a decision in 
terms of a next step in a proposed rulemaking process to make 
that as smooth as possible.
    Senator Menendez. Well, let me close. I hope you can commit 
that your final rule will provide the same opportunity for 
folks to get into a home as currently available, particularly 
people of color have experienced the benefit on the patch and 
have shown that they are creditworthy borrowers. They should 
not be denied simply because we want to end the patch without 
the ability to keep that opportunity available.
    Thank you, Mr. Chairman.
    Senator Shelby. Senator Toomey.
    Senator Toomey. Thank you, Mr. Acting Chairman. And, 
Director Kraninger, thanks for joining us, and I want to 
commend you on some of the very constructive work that I think 
you have been doing at the CFPB.
    I also want to pursue the line of questioning that Senator 
Menendez raised with respect to the QM patch. I always have 
been under the view that it has been inappropriate and unfair 
for the CFPB to outsource the definition of QM to the GSEs and 
their underwriting standards which occur mostly in a black box. 
As long as the ability-to-repay rule is on the books, it seems 
to me we need a qualified mortgage definition that is simple, 
fair, straightforward, and entirely unambiguous.
    So one of the ways, it seems to me, we could move in that 
direction is to make it clear that a depository institution 
that keeps a mortgage on its books has every incentive to make 
sure that that is a loan that can be repaid. I am of the view 
that banks like to get their money back when they make a loan, 
and that aligns the interest of the lender with the interest of 
a borrower to have a loan that is affordable to the borrower.
    We acknowledged that in the legislation that we passed, S. 
2155, and declared that there would be an automatic QM safe 
harbor for any financial institution that keeps the loan on 
their books, provided that they are less than $10 billion in 
size. So I am of the view that an $11 billion bank would also 
like to be repaid when it makes a loan, would rather get its 
money back than not get its money back.
    So my suggestion is one place to look--and I think you have 
the discretion and the authority to do this with your 
definition of QM--would be to allow the QM patch to apply to 
any size institution that keeps a mortgage on its books. And I 
am just wondering what your reaction is to that.
    Ms. Kraninger. Thank you, Senator, for raising it. In that 
advance notice of proposed rulemaking that we issued, we, in 
fact, raised this idea and sought comment on it, recognizing 
that S. 2155 did include that concept, and that the risk 
calculus of the entities that are intending to keep those loans 
in portfolio, you would anticipate, as you noted, would be 
doing that in a manner that they expect they are going to 
actually get their investment back. And so I am very interested 
in the comments we get back on that topic.
    Senator Toomey. Yes, I would urge you to consider that very 
seriously.
    You have also done some work on the payday rule, and I 
think you are pursuing some constructive changes. One that I am 
not sure you are focused on--and it is a question--is the scope 
of the rule, and specifically there are financial institutions 
that are concerned that the scope may capture products that 
were never intended to be captured, including, for instance, 
interest-only lines of credit that are backed by securities in 
a brokerage account--I do not think anybody really ever thought 
of that as a payday loan, but it might be captured under the 
old definition--or short-term bridge loans that assist 
customers in sequential real estate transactions. Again, I do 
not think anybody ever thought of that as a payday loan.
    So as you evaluate reforming the payday rule, could you 
address the issue of the scope and whether you intend to 
tighten up that scope?
    Ms. Kraninger. Thank you, Senator. I am familiar with the 
concerns that you are raising here now. The Bureau has received 
a petition to reconsider or address issues with the payments 
provisions of the 2017 rule, in addition to our consideration 
of the 2017 underwriting requirements. So that is something 
that at least is on our radar. We have a responsibility to 
respond to that petition within a year of it being sent to us 
so it is on the plate. The priority was the reconsideration of 
the underwriting provisions, but we will have to look at and at 
least respond to these concerns.
    Senator Toomey. Yes, I think that is important to look at 
that as well.
    Very quickly, a quick compliment on your fiscal management 
of the department. There is a cap on spending as a function of 
Federal Reserve revenue, which in the past seemed to be viewed 
also as a floor, and you have clearly not taken that approach. 
I commend you for that.
    Last point. Section 1031 of the Dodd-Frank Act gives the 
Bureau really unprecedented authority to take enforcement 
action against those it deems to be engaged in, and I quote, 
``unfair, deceptive, or abusive acts.'' As I am sure you are 
aware, ``abusive'' is not defined in the statute, nor am I 
aware of any precedent in related law that defines ``abusive.'' 
And it strikes me as an inherently extremely subjective term.
    Do you intend to take steps to provide a clearer definition 
of what would constitute ``abusive''?
    Ms. Kraninger. Senator, thank you. The definition in the 
statute is precisely something that we have talked about. We 
had a symposium on this topic and brought experts together to 
talk about whether further definition is necessary or useful to 
the process. As you noted, the only place that we have really 
provided additional definition is in enforcement actions that 
have also been quite rare. So this is something that is a 
decision before me as to whether we should put more guidance 
out there or what next steps we should take. So there will be 
news on that in the not-too-distant future.
    Senator Toomey. Thank you.
    Senator Shelby. Senator Tester.
    Senator Tester. Thank you, Senator Shelby. And I want to 
thank the Chairman and Ranking Member for this hearing, and I 
want to thank you for being here today, Ms. Kraninger.
    Going back to the payday situation, are you doing oversight 
of payday lenders now? Or are you waiting for the rule to be 
rewritten? Where are you at in that process?
    Ms. Kraninger. We absolutely continue to engage in 
investigations as well as supervision of payday lenders.
    Senator Tester. So how many actions have you brought 
against payday lenders in the last year?
    Ms. Kraninger. There is at least one, Senator, but I do not 
remember off the top of my head. We can get it for the record.
    Senator Tester. OK.

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    Senator Tester. So do you think the agency is adequately 
doing its job as far as enforcement on payday lenders at this 
moment in time?
    Ms. Kraninger. I can assure you that we are vigorously 
enforcing the law in many areas, including this one.
    Senator Tester. OK. So tell me about the thought behind 
eliminating the Office of Students and Young Consumers?
    Ms. Kraninger. Senator, we do continue to have a section 
for students, and that now has four staff members in it. It is 
about to have five, and so we have a continued commitment to 
that activity.
    Senator Tester. So you still have that office?
    Ms. Kraninger. It is called a section. This gets into a 
little semantics, but, yes, there is still a group of people 
focused on that.
    Senator Tester. So it was renamed. Compare this to--how 
many people do you have in that office?
    Ms. Kraninger. There were five total under the----
    Senator Tester. Same number of staffing, basically.
    Ms. Kraninger. They were under the private education loan 
ombudsman, so right now we have six people actually doing this, 
between the ombudsman and the students office.
    Senator Tester. And what kind of action are you seeing in 
that area as far as protecting students?
    Ms. Kraninger. There are a lot of different activities, and 
I am getting into the organizational chart, but really the 
students office is focused on education activities.
    Senator Tester. OK.
    Ms. Kraninger. We do have examiners who are examining 
student lenders as well.
    Senator Tester. So the point is here that the name of your 
agency is the Consumer Financial Protection Bureau, and we have 
student debt coming out, unbelievable amounts. I still get 
credit card apps for my kids who are now middle-aged all the 
time. So there are people that are out there preying on them. 
There is no doubt about it. I just hope that you are very 
aggressive in protecting these folks because once they get into 
debt as a young person, a lot of them are going to be poor for 
the rest of their lives, whether they have a degree or not. So 
hopefully you are putting a focus on that. I hope you do.
    I want to go back a little bit to Senator Menendez' 
question on the Public Service Loan Forgiveness Program. 
Secretary DeVos prohibited student loan servicers from sharing 
information with you. Correct?
    Ms. Kraninger. With respect to the Federal student loan 
portfolio.
    Senator Tester. And how about with respect to the Public 
Service Loan Forgiveness Program? Did she not say you could not 
get that information? She did not want the servicers to give 
you that information?
    Ms. Kraninger. Within that portfolio, yes.
    Senator Tester. OK.
    Ms. Kraninger. There is a question there that I very much 
would like to settle because we do have a rulemaking that gives 
the Bureau the ability to supervise larger participants in that 
space.
    Senator Tester. But if you do not have the information, it 
is really hard to do much, isn't it? If you do not have the 
information----
    Ms. Kraninger. It is hard to engage in our exams, which I 
think is really about promoting compliance.
    Senator Tester. So the point is--and you told Senator 
Menendez that you wanted to--you would rather work together 
than--use the carrot instead of the stick, so to speak. But the 
fact is if you do not have that information, you cannot do 
anything, right?
    Ms. Kraninger. There are other actions that we can take.
    Senator Tester. But the big one is the servicers. If you do 
not have that information from the services, you can take other 
action, but the truth is if you really want to get to the 
point, you have to have that information. Correct?
    Ms. Kraninger. To engage in what are productive 
examinations----
    Senator Tester. Right, you do.
    Ms. Kraninger. Yes.
    Senator Tester. So the question is: There are checks and 
balances in Government. This is one of those checks and 
balances. You are a law enforcement agency to enforce the law. 
We have a program here that, by the way, in rural America is 
critically important. It is probably just as important in urban 
America where we have public servants who spend 10 years of 
their life living up to this program, they make 120 on-time 
payments, and we have a Secretary who does not get what is 
going on because she has got more money than everybody in this 
room combined. So the point is if you do not get after it, 
these people sacrifice 10 years of their life, and it is a 
real--people will not go into public service. They will not go 
into Government service. They will not go into nonprofit 
service, which, by the way, plays a really important--I do not 
need to tell you this. You know this. So why not go after it 
and get it? When you have a situation where 1 percent get 
qualified, something out there does not smell right.
    Ms. Kraninger. One important distinction I should make, 
Senator, is that clearly when it applies to the Public Service 
Loan Forgiveness Program, the Bureau's responsibility is 
compliance with Federal consumer financial protection law. The 
Department of Education rightly is responsible for other 
program----
    Senator Tester. I got it. But you have the ability through 
your agency to put pressure.
    One last thing, and then I will be quiet. I think it is 
rich for anybody in this Administration to talk about what is 
constitutional and what is unconstitutional when we have a 
President that publicly invites other countries to influence 
our elections.
    Thank you.
    Senator Shelby. Senator Cortez Masto.
    Senator Cortez Masto. Thank you, Senator Shelby.
    Ms. Kraninger, thank you for being here. I do want to thank 
you for keeping the Consumer Complaint Data base public. I 
appreciate that, and I know it is important not just for us as 
policymakers but for what you do for the general public as well 
and for so many others out there.
    I am looking at your report, and if you look at the 
consumer data base, at least the complaints that you identify 
here, it shows that in Figure 1, credit or consumer reporting, 
debt collection, and mortgages are the most complained about 
consumer financial products and services. And you show credit 
or consumer reporting 39 percent and debt collection at 24 
percent. So I appreciate this because this tells us really, for 
purposes of enforcement, where we need to really focus our 
resources and efforts.
    I do want to talk about one in particular, a debt 
collection company. It is known as ``Asset Recovery 
Associates'', and I bring that up because I noticed you have a 
press release dated August 28, 2019, that the Bureau settled 
with Asset Recovery Associates.
    Now, let me just put this in perspective. In 2012, I was 
the Attorney General of the State of Nevada. In 2012, the State 
of Nevada barred this debt collection from operating in our 
State and collecting any more debts from Nevada because they 
were so egregious. And, in fact, in your settlement agreement, 
you highlight really the concerns that we had in Nevada, and 
you just Google them, you will see the number of complaints 
online. But since at least January 1, 2015, which you identify 
in your consent agreement, the company threatened consumers 
with legal action, including threats to file lawsuits against 
consumers, file liens on consumers' houses, garnish consumers' 
bank accounts or wages, and cause consumers to be arrested, all 
actions that respondent has no intention of taking. The company 
also represented to consumers that company employees are 
attorneys when, in fact, they do not even employ attorneys. And 
the company threatened that consumers' credit reports will be 
negatively affected when respondent or the company does not 
even engage in any credit reporting to any consumer reporting 
agencies about any consumer accounts. I mean, they are just the 
worst of the worst, so egregious.
    You entered into a settlement agreement with them. You were 
enforcing action against them, and I appreciate that. But here 
is my question: I am concerned about the monetary penalty, the 
level of restitution for the consumers and the oversight that 
needs to follow through. So I have a couple of questions with 
respect to that, with your indulgence here.
    I noticed that, for purposes of restitution for consumers, 
the restitution amount was $36,800, and I am curious how that 
came about. Why that amount?
    Ms. Kraninger. The amount in that case in particular I 
believe represents the number of consumers who have complained 
and the funds associated with that. So that is----
    Senator Cortez Masto. Complained to who?
    Ms. Kraninger. Complained to third party sources and 
complained to the Bureau.
    Senator Cortez Masto. So you are basing the restitution 
amount on the number of people that complained to you, that are 
even aware that you existed to complain to, along with those 
that may have complained to the company, and you are taking the 
company's word for it that they complained to the company. Is 
that right?
    Ms. Kraninger. This is really about, again, when it comes 
to trying to quantify consumer harm and identify consumers who 
have been harmed----
    Senator Cortez Masto. Believe me, I know. As Attorney 
General, we did it all the time. And here is my concern, 
because in this settlement agreement stipulation and consent 
with the company, you are basically letting the company 
determine and tell you the data and actually identify the 
affected consumers and tell you who they are, instead of 
mandating that the company actually sent a letter to every 
consumer that they ever touched or did business with to 
identify that the settlement existed and if they had a 
complaint, to identify it. Not only that, you allowed the 
company itself to be the one that is the arbiter of who decides 
the information that is being shared.
    Quite honestly, what we have normally done is have 
independent administrators or somebody coming in so there is an 
independence to it. But you do have an enforcement person. I 
understand in this complaint that you have identified somebody 
that is particularly responsible for this, and I am trying to 
find the consent agreement here. Who is that person that will 
have that oversight?
    Ms. Kraninger. It is the Director of Enforcement. They are 
typically named in the consent orders. I am not sure--at the 
time I believe----
    Senator Cortez Masto. The Enforcement Director is who?
    Ms. Kraninger. The Acting Enforcement Director right now is 
Cara Petersen.
    Senator Cortez Masto. OK, and so she is the one that will 
have the oversight, make the determination, working with this 
company.
    Ms. Kraninger. Yes, in terms of compliance with the consent 
order.
    Senator Cortez Masto. Yeah, and so my concern is you are 
relying on what they are telling you as the data to identify 
affected consumers. That to me does not even make sense as 
somebody who enforced and protected consumers. But the second 
thing is you have a monetary penalty of $200 as a civil 
penalty. Where did that come from? And how did you identify the 
200--or, excuse me, the $200,000?
    Ms. Kraninger. Senator, as you well know, because you have 
done a lot of work in this area as well, when it comes to the 
decision whether to sue or settle, when it comes to the fact 
that the settlement must be negotiated, there are a lot of 
factors that get weighed, including the ability to pay of the 
entity. We could certainly have made the decision to litigate 
this particular case, but that does not mean that the outcome 
would be any better for consumers or for justice if we had 2 or 
3 years in litigation with three or four attorneys tied up for 
that time period and then we still could not get any money out 
of a company that had no money----
    Senator Cortez Masto. Actually, typically what we do in law 
enforcement is if there is a determination of a civil penalty, 
it is based on the number of violations that have occurred 
based on the impact with the consumer. I did not hear that from 
what you said, actually----
    Ms. Kraninger. And mitigated by what the entity can pay.
    Senator Cortez Masto. It has nothing to do with that. I 
mean, clearly, this is egregious, and your role is to enforce, 
is not only to hold them accountable in violation of existing 
laws, but at the same time to protect consumers and provide 
restitution, and not allowing the individual defendant to 
actually make a determination of the rules, who the affected 
people are, and continue the conduct without any further 
oversight or penalty.
    What they have basically done and what you have given them 
is the ability to say, OK, I am just going to weigh this cost 
of $200,000 as a cost of doing business because I am going to 
make so much more and will continue down the same path. That is 
my concern. And I think what I am hearing today is the lack of 
enforcement and the lack of holding their feet to the fire and 
holding them accountable, they are just going to--any business 
is going to say, well, this is just a cost of doing business, I 
am going to incorporate it in that cost, because I am making 
good money so I will take the lumps as they come. And that is a 
problem for purposes of enforcement. That is my concern.
    Ms. Kraninger. And I agree----
    Senator Cortez Masto. And I would love to have further 
conversation with your Enforcement Division and talking with 
your attorneys as we address this moving forward because it is 
an issue across this country. Debt collection, as you identify 
in your own public data base, it is a problem for so many 
people across this country. So thank you.
    Senator Shelby. Thank you.
    Senator Cotton.
    Senator Cotton. Thank you, Ms. Kraninger, for your 
appearance here today. I want to speak about accountability. We 
hear a lot about that with companies, but, of course, it runs 
both ways, accountability of our Government to our people. The 
following is a quote from an official in an Arkansas company 
that has dealt with the CFPB. ``Consumer compliance is an 
evergreen process and it should be treated as such. Why does 
the Bureau not acknowledge issues that are self-identified and 
self-corrected that fall outside of an exam period and the 
company be given credit for properly managing risk instead of 
being treated in their examinations as not even corrected?''
    In fact, in one instance the company had made significant 
progress, and the onsite examiners were told not to put 
anything positive in the report by their supervisors offsite at 
the CFPB. I have to say I have heard other reports about 
higher-ups at the CFPB telling rank-and-file examiners to 
exclude positive information or self-identified problems and 
corrections.
    Is it the case that examiners inside the Bureau are being 
told by supervisors at a higher level not to include positive 
information in their reviews and their examination reports?
    Ms. Kraninger. Senator, I am not aware of any specific 
instances of that, and I can tell you it would be contrary to 
my direction. We have empowered the front-line examiners to 
conduct exams in accordance with their training, and that would 
certainly include a factual providing of what they saw and 
observed, positive or negative. And that is something that I 
absolutely expect, and if you have specifics on this and 
particularly a timeframe, I would absolutely like to pursue it.
    Senator Cotton. So it is your direction that your examiners 
who are out on the front line of the company should include 
positive information in reports as well?
    Ms. Kraninger. It is important that they actually report on 
their own observations any information that they have observed.
    Senator Cotton. What is the Bureau's policy on nonsystemic 
self-identified problems that have also been corrected through 
self-corrective action?
    Ms. Kraninger. That is something I am encouraging. Again, 
this is a massive ecosystem with a lot of players in it. 
Enforcement should be a last resort, and what we are trying to 
do is encourage legitimate financial services providers to 
comply with the law. And in so doing, that means they have a 
compliance management system that does self-identify issues 
where they are providing their own corrective action, and that 
is best for consumers, too. They will get restitution much 
faster, and we have then again a system that is operating and 
functioning properly. That is something I encourage.
    We are looking at ways to make sure that these policies are 
codified and clear. I have a new head of Supervision, 
Enforcement, and Fair Lending who just started this week, and 
so knows that many of these things are things that I would like 
to see us pursue in the coming months.
    Senator Cotton. Thank you. I think there is obviously a big 
difference between an isolated problem that an institution 
identifies and corrects versus a systemic problem. That is true 
in a private company, and that is true in a Government agency.
    It reminds me of a story that Bob Gates told about the 
early days of the Obama administration when he was something of 
a fish out of water, being a holdover from the Bush 
administration, and they had the usual tensions that exist 
between White House staff and Cabinet Secretaries. They had a 
summit at the White House in the early days to resolve them, 
and Bob Gates, kind of the wise man of the group, told the 
White House staff that they were very important, they 
understand the President, some of them went back to his 
campaign for the Senate, but they could not implement 
decisions, so they needed the Cabinet officials to be involved 
in the decisionmaking process so they could get by and 
implementing it. He said he heard some laughter behind him, and 
he turned around to the Cabinet officials, and he said, ``I do 
not know what all of you are laughing about because today, even 
though it is a Saturday, someone in your organization somewhere 
is doing something that you disapprove of, that is probably 
immoral and maybe illegal,'' the point being that in 
institutions as large as a Cabinet or the CFPB, there is almost 
always the possibility of someone doing something wrong. And as 
Bob Gates showed repeatedly in the Department of Defense, you 
want to try to stop isolated individual cases of wrongdoing and 
certainly have systems in place to stop systemic wrongdoing, 
but even more important is when you find those cases of 
wrongdoing, that you take corrective action immediately to stop 
them.
    We want to encourage private institutions to do that. We 
also want the CFPB to have an opportunity to do that for any 
examiners that are not doing what is consistent with your 
guidance as well.
    I appreciate your time.
    Chairman Crapo [presiding]. Thank you.
    Senator Smith.
    Senator Smith. Thank you very much, Mr. Chair. Good 
morning. Nice to see you again.
    Ms. Kraninger. Good morning.
    Senator Smith. I would like to follow up on what I 
understand are some questions that some of my colleagues asked 
a little earlier on the Public Service Loan Forgiveness 
Program, something that I am really concerned about. You know, 
there is a Minnesota story that was--she is actually a 
plaintiff in the AFT lawsuit against the Department around this 
issue. She is a public school teacher in Brainerd, and she, 
like so many others, were told by her services that she was on 
track in making qualified payments for the PSLF even when that 
was not the case, and that incorrect information was provided 
her and not addressed until years later. And, of course, she 
made all sorts of life decisions based on that bad information.
    And so here is what I want to try to understand a little 
bit better. So the CFPB and the Department of Education had an 
information-sharing agreement. Correct?
    Ms. Kraninger. Yes. Yes, on complaints in particular, and 
then there was a separate one on--I am forgetting what the 
second MOU--we will get back to you specifically on the second 
MOU because it did not get precisely to the point that I know 
you are asking about. But those were two in the past that are 
no more.
    Senator Smith. OK.
    And are you pursuing efforts to reestablish that 
information-sharing agreement with the Department of Education?
    Ms. Kraninger. Yes. In fact, 2 days ago, the private 
education loan ombudsman sent a signed copy of the complaints 
MOU that is in the Dodd-Frank Act. It is a statutory 
responsibility that we have that MOU, and he sent that over 
signed, and we very much hope to execute that imminently. Then 
we are engaged in conversations around how we can work together 
in particular to make sure that the Bureau has the ability to 
enforce consumer financial protection laws through its larger 
participant rule.
    Senator Smith. OK, because it is one thing to share 
information, and it is another thing for the Bureau to use its 
investigative authority and ability to supervise and examine 
what is happening in order to put a stop to what we see is, by 
some reports, organizations' loan servicers that are denying up 
to 99 percent of applications for loan forgiveness. So tell me 
how you are pursuing that part of this, not only the 
information sharing but also the need for supervision and 
examination.
    Ms. Kraninger. Yes, I do believe it is important. Again, 
the Bureau issued a larger participant rule in the student loan 
servicing space, so we do have a responsibility and an ability 
to examine both entities engaged in Federal student loans and 
private student loans. I believe what is best for consumers is 
for the Department of Education and the CFPB to come together 
and determine the best way to support the functioning of their 
programs and their program management oversight and their 
contract management oversight responsibilities and our ability 
to enforce consumers financial protection law. Those two things 
can coexist, and that is the path that we are on in terms of 
our conversations.
    Senator Smith. So, really, your role is to be focused on 
consumer protection, and their role--I understand what you are 
saying, but you also have two different roles, you would agree?
    Ms. Kraninger. Yes.
    Senator Smith. Yes, and do you see that part of that role 
is to go in and try to--just like you might as a bank examiner, 
for example, that you would go in and try to ferret out where 
things are not working right rather than just waiting to find 
out after the fact that something is not working right?
    Ms. Kraninger. Absolutely, yes, when it comes to consumer 
financial protection law.
    Senator Smith. OK. Thank you.
    I have a minute more. I would like to follow up on a 
question that I think when you were before the Committee in 
March I asked about, and I asked you about a proposal that the 
Bureau had published in 2017 to directly obtain data from a 
variety of entities in the student loan industry from big banks 
to the loan service providers. And this went to the OMB for 
routine review, and at the time you said you were looking into 
that to try to figure out where it stands.
    Do you have an update for me on that?
    Ms. Kraninger. Yes, Senator, I do. The conditions have 
really changed since then in particular because the Department 
of Education is engaged in its next-gen modernization. As I 
have talked to the staff at the Bureau, they assess that the 
data collection as it was submitted to OMB is not really 
relevant today given those changes. What we are looking at now 
is what makes sense going forward, and we are certainly going 
to be talking to the Department of Education about that. But we 
have left that data request at OMB just pending our discussion 
and decisions about whether to amend it, whether to pull it 
back, or what opportunities there are for data collection in 
this area.
    Senator Smith. So when do you think you will move forward 
then?
    Ms. Kraninger. I certainly hope by the next time I am back 
here that I can have an update for you on specifically where we 
are going to go with this.
    Senator Smith. OK. Well, I will look forward to that 
update. I think it is important. Thank you.
    Thank you, Mr. Chair.
    Chairman Crapo. Thank you.
    Senator Van Hollen.
    Senator Van Hollen. Thank you, Mr. Chairman. Welcome, 
Director Kraninger.
    When you were here in March, you and I had a conversation 
about the Trump administration's efforts to weaken the payday 
protection rules that were put in place by the Obama 
administration to protect consumers against unscrupulous 
practices by payday lenders. As you know, that Obama rule had 
two components. It had the payments component, the payments 
provision, and the other provision on ability to repay. That 
whole rule was challenged in court, and the stay has been 
imposed by the courts. You followed this, right?
    Ms. Kraninger. Yes, sir.
    Senator Van Hollen. And as I understand the position of the 
Bureau, you do not think there is any reason to maintain the 
stay on the payment provisions of the Obama rule. Is that 
correct?
    Ms. Kraninger. I would tell you, Senator, that our filing 
speaks to that point. One of the claims raised by the other 
party is the constitutional structure of the Bureau, and so 
that is a significant matter that is part of--I would note that 
the court knows that as well, and so I think that is part of 
the basis for the continued stay.
    Senator Van Hollen. But my understanding, I mean, I have 
got a document here that you sent to the Committee explaining 
the Bureau's position in this case, and essentially the Bureau 
said there is no legal basis to stay the compliance date for 
the payment provisions. Isn't that right?
    Ms. Kraninger. Yes, specifically on the merits.
    Senator Van Hollen. So my question is: Given that that is 
the position you have taken in court, will you file a motion to 
lift the stay in order to allow this important provision to go 
forward? Will you do that?
    Ms. Kraninger. Senator, I am definitely looking at that and 
know that that is an option. I do think the constitutional 
structure question is a significant one and one, again, that 
has been raised, and was outlined in our filing.
    Senator Van Hollen. Again, I am just reading from what you 
have written, the Bureau has written, where you disagree about 
the need for the stay on the payments provision. So given that 
that is your position, why are you still looking at the option 
of filing a motion to lift the stay? Why don't you just file 
the motion?
    Ms. Kraninger. Because, as I said, in that same filing that 
you are looking at, we did note that the constitutional 
structure question is a significant one in the case, and that 
is something that the judge is sensibly weighing, but----
    Senator Van Hollen. I understand he is weighing that, but 
as I read your own motion, the Bureau does not think there is 
any reason for delaying this provision, and so I just do not 
know why you are not using your authority and prerogative to 
file a motion to lift the stay so we can put at least this 
provision in place.
    Let me ask you about the ability-to-repay protections. At 
the hearing back in March, we looked at the analysis that the 
Bureau put forward that sort of proclaimed that the changes 
would save the payday lending industry between $7.3 and $7.7 
billion on an annual basis, and that that was money that was 
now coming out of the pockets of consumers, right? These are 
consumers who would have been protected by the Obama era rule, 
but are no longer protected. So monies that consumers would 
have saved because of protection from unscrupulous practices 
are now going to the industry. And as I looked back on how you 
went about the revision of the rule, I was struck by the fact 
that the Bureau did not present any new research in defense of 
the change. That original rule protecting consumers had been 
based on research showing the harm done the consumers.
    Can you tell us today what new research the Bureau 
developed in proposing the change to the rule, a change that 
would cause a $7.7 billion loss to consumers?
    Ms. Kraninger. Senator, a few things in response. One is 
certainly that the full record from the prior rulemaking and 
from our current rulemaking, the experiences of the States in 
terms of the laws that they have passed and the experience that 
they have had, and some newer research that is available will 
all be taken into account. This decision is before me now. I 
know I will certainly defend our proposal, but at the same time 
note that a final decision has not been made in this issue.
    With respect to additional data that we took into account 
in the proposal, it is fundamentally about the legal and 
factual basis that the first rule was based on. Legally we do 
have the discretionary ability to undertake rulemaking related 
to unfair, deceptive, or abusive acts or practices, so that was 
the basis of that rule. It is my judgment that that is 
something that we should undertake very thoughtfully and 
judiciously because there are other effects on consumers and 
other effects on the markets.
    So the availability of credit and the question, too, of the 
$7 billion, the question for each of those consumers 
individually is what their next best alternative actually was, 
whether that was the inability to pay a utility bill, the 
inability to repair a car, the next order effects that come as 
a result of that. Those are the things that I would posit at 
least as considerations when that is proposed as merely 
something that is a loss to consumers. The question is what 
else happened in their lives individually and what did the 
access to that credit afford.
    I would also note that this is an area of the market where 
there are many challenges. We have taken and will continue to 
take enforcement actions against entities that are engaged in 
illegal activity. That will continue. And that is certainly a 
challenge in this space.
    Senator Van Hollen. Well, I am listening to your answer, 
and I would just note that I do not think you mentioned the new 
research that justified the change to this rule to protect 
consumers, so I would welcome any information you can present 
to this Committee. I am glad you are still reviewing this. I 
really hope you will not take the steps that you seem to be 
headed to take, which, in my view, would significantly harm 
consumers to the tune of $7.7 billion, according to the 
estimate of the analysis by the Bureau.
    So thank you, Mr. Chairman.
    Chairman Crapo. Thank you.
    All right. Then that concludes the questioning for today's 
hearing. Again, we want to thank you, Director Kraninger, for 
coming today. I know there were a couple of Senators who had 
hoped to get back, but their schedules just are not letting 
that happen, so I know you are likely to get some additional 
questions.
    For Senators who wish to submit questions for the record, 
those questions are due to the Committee by Thursday, October 
24th. We ask, Director, that you respond to those questions as 
promptly as you can. And, again, we thank you for being here 
and appreciate the good work that you are doing.
    Ms. Kraninger. Thank you, Senator.
    Chairman Crapo. This hearing is adjourned.
    [Whereupon, at 11:17 a.m., the hearing was adjourned.]
    [Prepared statements, responses to written questions, and 
additional material supplied for the record follow:]
               PREPARED STATEMENT OF CHAIRMAN MIKE CRAPO
    Today, we will receive testimony from CFPB Director Kathy Kraninger 
on the CFPB's semiannual report.
    On October 07, the CFPB issued its Spring 2019 Semiannual Report, 
which outlines the Bureau's significant work between October 2018 and 
March 2019, including rulemakings and supervisory and regulatory 
activities.
    The report also provides insight into what the CFPB plans to 
undertake in the coming work period.
    Since stepping into her role last December, Director Kraninger has 
demonstrated a commitment to ensuring that consumers have access to a 
wide range of financial products and services that meet their 
individual needs, fostering innovation and vigorously protecting 
consumers.
    Reflecting this commitment to the CFPB's mission, Director 
Kraninger conducted an extensive cross-country listening tour with the 
full spectrum of CFPB stakeholders during her first months on the job.
    Director Kraninger's conversations with consumers, industry, and 
fellow Federal and State regulators have improved CFPB engagement, 
informed their supervision and regulatory processes, and improved 
agency transparency.
    In the Semiannual Report, Director Kraninger also highlighted that 
the CFPB has taken steps to ``[strengthen] the consumer marketplace by 
providing financial institutions clear `rules of the road' that allow 
them to offer consumers a range of high-quality, innovative financial 
services and products.''
    On September 10, the CFPB issued three new policies to promote 
innovation and reduce regulatory uncertainty. Those policies include 
the Trial Disclosure Program Policy; the Compliance Assistance Sandbox 
Policy; and the No-Action Letter Policy.
    Each of these policies are intended to contribute to an environment 
that allows innovation to flourish safely, and ensure that consumer 
needs are met in increasingly efficient and effective ways.
    Earlier this year, the CFPB announced a proposal to update the 
mandatory underwriting provisions of its 2017 Small Dollar Lending 
rule.
    Updating this rule is an important step toward ensuring the 
availability of credit that is essential to so many consumers who 
struggle to access or qualify for other options, and basing rules on 
solid evidence and legal support.
    As the CFPB continues to move forward on this rulemaking process, I 
encourage the CFPB to coordinate with the other financial regulators on 
an approach to small dollar lending to create a consistent framework 
across all institutions in order to promote and expand small dollar 
lending and credit options.
    In July, the CFPB released an advance notice of proposed rulemaking 
seeking stakeholder comment on potential amendments to its Ability to 
Repay/Qualified Mortgage (ATR/QM) Rule.
    FHFA Director Calabria and CFPB Director Kraninger noted the QM 
patch ``exacerbates an unlevel playing field'' and that ``Fannie and 
Freddie should play by the same rules as everyone else.''
    The CFPB's actions are a positive step and I continue to encourage 
the Bureau's efforts to find a permanent solution to the Qualified 
Mortgage standard that provides certainty to consumers, lenders, and 
investors alike.
    Last week, the CFPB announced the formation of a task force that 
will be devoted to examining ways to modernize and harmonize Federal 
consumer financial laws, especially those pertaining to consumer 
credit.
    The Banking Committee has spent significant time this Congress 
evaluating how the Fair Credit Reporting Act, or FCRA, should operate 
in an increasingly digital economy, and whether certain data brokers 
and other firms serve a function similar to the original consumer 
reporting agencies.
    I look forward to reviewing the CFPB's Task force on Federal 
Consumer Financial Law's recommendations on how to update the FCRA so 
that it continues to function as originally intended in a digital 
world.
    Though I am greatly encouraged by many of the changes and 
initiatives at the CFPB under Director Kraninger's leadership, it 
remains clear that the fundamental structure of the CFPB must be 
reconsidered to make it more transparent and accountable.
    I continue to support transitioning the CFPB to a bipartisan 
commission from a single director; subjecting the CFPB to 
appropriations; and providing a safety and soundness check for the 
prudential regulators.
    On September 17, 2019, the CFPB and the Department of Justice filed 
a brief in the U.S. Supreme Court, urging the Court in the case of 
Seila Law LLC v. CFPB to review the constitutionality of the Bureau's 
leadership structure.
    I have long argued that the CFPB's current structure lacks 
sufficient accountability, and look forward to the Supreme Court taking 
up a review of this case.
    During this hearing, I look forward to hearing more about key 
initiatives at the CFPB in the last year; Director Kraninger's 
priorities for the CFPB in the upcoming work period; and additional 
legislative or regulatory opportunities to provide widespread access to 
financial products and services.
    Director Kraninger, thank you again for joining the Committee this 
morning to discuss the CFPB's activities and plans.
                                 ______
                                 
              PREPARED STATEMENT OF SENATOR SHERROD BROWN
    Thank you, Chairman Crapo.
    We created the Consumer Financial Protection Bureau to stand up for 
students, servicemembers, and other hardworking Americans and protect 
them from big banks and crooked corporations that rob them of their 
homes and their jobs and their savings.
    After 10 months on the job, it's clear why President Trump selected 
you to head the Consumer Financial Protection Bureau--because he can 
count on you to protect Wall Street banks, payday lenders, shady debt 
collectors, and other companies that prey on hardworking Americans.
    Under your and President Trump's leadership, this agency has chosen 
corporations over workers over and over again.
    Since you took over, you and your appointees have overruled the 
recommendations of consumer experts and allowed crooked companies to 
lie, cheat, and steal from hardworking Americans--and get away with it.
    The Consumer Protection Bureau is supposed to protect consumers--
that's your entire job. To protect consumers from predatory payday 
loans that lead to endless cycles of debt.
    But you instead chose to protect the interests of President Trump 
and his payday lending patrons.
    Consumers are paying the price. Since August, when the payday loan 
rule was scheduled to go into effect, Americans have paid more than one 
billion dollars in fees to payday loan sharks. That's a billion dollars 
out of the pockets of consumers because the agency that was supposed to 
look out for them decided to look out for payday lenders instead.
    You also could have protected servicemembers and their families.
    But instead the Trump administration betrayed them when you stopped 
making sure companies followed the protections for servicemembers and 
their families.
    You also could've continued and even strengthened the Bureau's 
enforcement of fair lending laws that returned hundreds of millions of 
dollars to victims of discrimination in the agency's first 7 years.
    Instead, you continued President Trump's attacks on fair lending 
laws. In fact, instead of protecting consumers:

    You dismantled the Bureau's Office of Fair Lending.

    You put a Trump political appointee with a history of 
        racist and sexist writings in charge of fair lending.

    And you are now trying to repeal a 2015 rule that required 
        lenders to report basic loan information to ensure they are not 
        discriminating.

    And what are the results?
    Since you took over, the Bureau has not brought a single case 
against a company for discriminatory lending practices. Last I checked, 
discrimination hasn't ended in this country over the past 11 months.
    Under the Trump administration, you've also turned your back on 
student loan borrowers.
    The Bureau could have helped protect the 44 million Americans with 
student loans from the widespread mistakes, errors, and mismanagement 
by the companies that handle their loans, and that have cost them 
thousands of dollars.
    But again, you betrayed the people the president promised to look 
out for. You sided with Education Secretary DeVos and refused to 
examine Federal student loan servicers to make sure they're not 
cheating people with student loans.
    The GAO and the Department of Education's Inspector General 
reported that the company that manages Federal student loans wrongly 
denied tens of thousands of teachers, nurses, firefighters, 
servicemembers, and other dedicated public servants the loan 
forgiveness they earned.
    You've protected the companies, while these hardworking American 
families paid the price.
    But I suppose we should expect nothing less from an Administration 
that looks like a Wall Street executive retreat.
    Under your leadership, crooked corporations have no real incentive 
to follow the law. Even if they get caught, they know that the Bureau 
will hit them with nothing more than a slap on the wrist for ripping 
off consumers.
    Director Kraninger, how do you explain to these hardworking 
Americans why the Bureau isn't protecting them? You can't.
    You've done the role asked of you by President Trump--you have 
protected corporations, not workers and consumers.
    And it's indefensible. Thank you, Mr. Chairman.
                                 ______
                                 
                 PREPARED STATEMENT OF KATHY KRANINGER
             Director, Consumer Financial Protection Bureau
                            October 17, 2019
    Chairman Crapo, Ranking Member Brown, and distinguished Members of 
the Committee thank you for the opportunity to present the Consumer 
Financial Protection Bureau's most recent Semiannual Report to 
Congress.
    The Bureau presents these Semiannual Reports to Congress and the 
American people in fulfillment of its statutory responsibility and 
commitment to accountability and transparency. The Bureau's Spring 2019 
(October 1, 2018, to March 31, 2019) Semiannual Report meets this 
mandate. My testimony is intended to highlight the contents of this 
Semiannual Report (Report).
1. Significant problems faced by consumers in shopping for or obtaining 
        consumer financial products or services
    In each Report, the Bureau identifies relevant trends affecting 
consumers shopping for, or obtaining consumer financial products or 
services. In this Report, the Bureau highlights three trends detailed 
in two Quarterly Consumer Credit Trends (qCCT) reports and a Research 
Brief.
    First--Natural disasters can result in substantial property 
destruction and personal injury, and tragically, loss of life. They can 
also result in negative shocks to household finances, including lost 
income and major unexpected expenses. \1\ Many financial institutions 
offer financial relief or assistance that often includes payment relief 
for customers affected by natural disasters. The qCCT report about 
Natural Disasters and Credit Reporting documents current practices for 
natural disaster reporting as reflected by comment codes entered in 
credit records.
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     \1\ One recent study of the economic effects of natural disasters 
on consumers and households estimates that checking account inflows 
fall by 20 percent and outflows fall by more than 30 percent after a 
natural disaster. See JPMorgan Chase & Co. Institute (2018), 
``Weathering the Storm: The Financial Impacts of Hurricanes Harvey and 
Irma on One Million Households''. Available at https://
institute.jpmorganchase.com/institute/research/cities-local-
communities/report-weathering-the-storm. Another study finds a general 
increase in consumers' credit utilization after an event and, for some 
groups, an increase in bankruptcies. See Tran, B., and T. Sheldon 
(2018), ``Same Storm, Different Disasters: Consumer Credit Access, 
Income Inequality, and Natural Disaster Recovery''. Available at 
https://www.aeaweb.org/conference/2018/preliminary/paper/KaN3Ar6t.
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    The Bureau recognizes the serious impact major disasters or 
emergencies have on consumers and the operations of many supervised 
entities. Existing laws and regulations provide supervised entities 
regulatory flexibility to take certain actions that can benefit 
consumers in communities under stress and hasten recovery. The Bureau 
will also consider the impact of major disasters or emergencies on 
supervised entities themselves when conducting supervisory activities. 
In September 2018, the Bureau issued its ``Statement on Supervisory 
Practices Regarding Financial Institutions and Consumers Affected by a 
Major Disaster or Emergency''. \2\
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     \2\ https://files.consumerfinance.gov/f/documents/bcfp_statement-
on-supervisory-practices_disaster-emergency.pdf
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    The Bureau currently also produces a significant range of 
educational material on the financial aspects of preparing for a 
disaster. For example, the Bureau recently worked with the Federal 
Emergency Management Agency (FEMA) to develop a disaster checklist to 
help consumers prepare for a natural disaster. This material is made 
available to the public both in print and online.
    Second--Understanding Servicemembers options in obtaining a 
mortgage is important in determining how the Bureau can best support 
Servicemembers and veterans. Servicemembers have a range of options for 
obtaining a mortgage. The qCCT report about Mortgages to First-time 
Homebuying Servicemembers discusses how loan choices for first-time 
homebuyers have evolved from 2006 to 2016. This report shows that 
Servicemembers' reliance on VA loans for first time homebuying 
increased from 2006 to 2016. The Bureau is also focused on supporting 
Servicemembers in the mortgage loan process.
    The Bureau's Buying a House tool is a useful guide in helping 
Servicemembers and veterans become aware of how to navigate the path to 
achieving home ownership.
    Third--Bureau research has consistently demonstrated that having 
control of personal finances is an important element in financial well-
being. Our Research Brief Consumer Insights on Paying Bills looks at 
common challenges related to bill payment. The Brief outlines a range 
of steps that consumers can consider to enhance timely debt servicing 
and maximize their cash flow.
    The Bureau's approach to consumer protection includes five 
principles \3\ for effective financial education, and the steps 
discussed in this Research Brief flow from the principle of helping 
consumers make good decisions and to follow through. This review is 
illustrative of the proactive approach we intend to continue in order 
to foster the financial well-being of American consumers.
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     \3\ https://www.consumerfinance.gov/about-us/blog/effective-
financial-education-five-principles-and-how-use-them/
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2. Justification of the budget request of the previous year
    The Bureau is funded principally by transfers from the Federal 
Reserve System, up to the limits set forth in Section 1017 of the Dodd-
Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-
Frank Act) (12 U.S.C. 5497). As of March 31, 2019, the Bureau had 
received two transfers for Fiscal Year (FY) 2019 in the amounts of 
$172.9 million (October 1, 2018) and $122.8 million (January 2, 2019) 
for a total of $295.7 million. Additional information about the 
Bureau's finances, including information about the Bureau's Civil 
Penalty Fund and the Bureau-Administered Redress programs is, available 
in the annual financial reports and the Chief Financial Officer (CFO) 
quarterly updates, published online at www.consumerfinance.gov. Copies 
of the Bureau's quarterly funds transfer requests are also available 
online.
    As of March 31, 2019, the end of the second quarter of FY2019, the 
Bureau had spent approximately $281.9 million in 2019 funds to carry 
out the authorities of the Bureau under Federal financial consumer law. 
This includes commitments, obligations, and expenditures. A commitment 
is a reservation of funds in anticipation of a future obligation. The 
Bureau spent approximately $154.9 million on employee compensation for 
the 1,452 employees on board at the end of the second quarter.
3. Significant rules and orders adopted by the Bureau, as well as other 
        significant initiatives conducted by the Bureau, during the 
        preceding year and the plan of the Bureau for rules, orders, or 
        other initiatives to be undertaken during the upcoming period 
        \4\
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     \4\ Separate from the Bureau's obligation to include in this 
report ``a list of the significant rules and orders adopted by the 
Bureau . . . during the preceding year'' 12 U.S.C. 5496(c)(3), the 
Bureau is required to ``conduct an assessment of each significant rule 
or order adopted by the Bureau'' under Federal consumer financial law 
and issue a report of such assessment ``not later than 5 years after 
the effective date of the subject rule or order,'' 12 U.S.C. 5512(d). 
The Bureau will issue separate notices, as appropriate, for each rule 
and order that qualify as significant for assessment purposes; these 
notices will seek information required by statute and other information 
to assist the Bureau in the assessment.
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3.1--Significant rules: \5\
---------------------------------------------------------------------------
     \5\ The statutory requirement under 1016(c)(3) calls for the 
Bureau to report a list of the significant rules and orders adopted by 
the Bureau. This list includes significant notices of proposed 
rulemakings.
---------------------------------------------------------------------------
    The Bureau did not adopt significant final rules or orders during 
the preceding year. The Bureau issued two significant notices of 
proposed rulemaking:

    Payday, Vehicle Title, and Certain High-Cost Installment 
        Loans \6\
---------------------------------------------------------------------------
     \6\ https://www.consumerfinance.gov/policy-compliance/rulemaking/
rules-under-development/payday-vehicle-title-and-certain-high-cost-
installment-loans/

    Payday, Vehicle Title, and Certain High-Cost Installment 
        Loans; Delay of Compliance Date \7\
---------------------------------------------------------------------------
     \7\ https://www.consumerfinance.gov/policy-compliance/rulemaking/
final-rules/payday-vehicle-title-and-certain-high-cost-installment-
loans-delay-compliance-date-correcting-amendments/
---------------------------------------------------------------------------
3.2--Less significant rules: \8\
---------------------------------------------------------------------------
     \8\ This list includes less significant rules, and it is not 
comprehensive. This list may exclude nonmajor rules, proposed rules, 
procedural rules, and other miscellaneous routine rules such as annual 
threshold adjustments. More information about the Bureau's rulemaking 
activities is available in the Unified Agenda at https://
www.reginfo.gov/public/, and on the Bureau's public website at https://
www.consumerfinance.gov/policy-compliance/rulemaking/.
---------------------------------------------------------------------------
    Final Rule: Federal Mortgage Disclosure Requirements under 
        the Truth in Lending Act (TILA) (Regulation Z) \9\
---------------------------------------------------------------------------
     \9\ https://www.consumerfinance.gov/policy-compliance/rulemaking/
final-rules/federal-mortgage-disclosure-requirements-under-truth-
lending-act-regulation-z/

    Final Rule: Amendment to the Annual Privacy Notice 
        Requirement Under the Gramm-Leach-Bliley Act (Regulation P) 
        \10\
---------------------------------------------------------------------------
     \10\ https://www.consumerfinance.gov/policy-compliance/rulemaking/
final-rules/amendment-annual-privacy-notice-requirement-under-gramm-
leach-bliley-act/

    Final Rule: Partial Exemptions from the Requirements of the 
        Home Mortgage Disclosure Act under the Economic Growth, 
        Regulatory Relief, and Consumer Protection Act (Regulation C) 
        \11\
---------------------------------------------------------------------------
     \11\ https://www.consumerfinance.gov/policy-compliance/rulemaking/
final-rules/partial-exemptions-from-requirements-of-home-mortgage-
disclosure-act-under-regulation-c/

    Final Rule: Summaries of Rights under the Fair Credit 
        Reporting Act (Regulation V) \12\
---------------------------------------------------------------------------
     \12\ https://www.consumerfinance.gov/policy-compliance/rulemaking/
final-rules/summaries-rights-under-fair-credit-reporting-act-
regulation-v/

    Final Rule: Home Mortgage Disclosure (Regulation C) 
        Adjustment to Asset-Size Exemption Threshold \13\
---------------------------------------------------------------------------
     \13\ https://www.consumerfinance.gov/policy-compliance/rulemaking/
final-rules/home-mortgage-disclosure-regulation-c-adjustment-asset-
size-exemption-threshold/

    Final Rule: Truth in Lending Act (Regulation Z) Adjustment 
        to Asset-Size Exemption Threshold \14\
---------------------------------------------------------------------------
     \14\ https://www.consumerfinance.gov/policy-compliance/rulemaking/
final-rules/truth-lending-act-regulation-z-adjustment-asset-size-
exemption-threshold/

    Final Rule: Civil Penalty Inflation Adjustments \15\
---------------------------------------------------------------------------
     \15\ https://www.consumerfinance.gov/policy-compliance/rulemaking/
final-rules/civil-penalty-inflation-annual-adjustments/

    Final Rule: Technical Specifications for Submissions to the 
        Prepaid Account Agreements Database \16\
---------------------------------------------------------------------------
     \16\ https://www.consumerfinance.gov/policy-compliance/rulemaking/
final-rules/technical-specifications-submissions-prepaid-account-
agreements-database/
---------------------------------------------------------------------------
3.3--Significant initiatives:
    Final Policy Guidance: Disclosure of Loan-Level Home 
        Mortgage Disclosure Act (HMDA) Data \17\ (December 2018)
---------------------------------------------------------------------------
     \17\ https://www.consumerfinance.gov/documents/7051/HMDA-
Disclosure-FPG-Final-12.21.2018-for-website-with-date.pdf

    Advance Notice of Proposed Rulemaking: Residential Property 
        Assessed Clean Energy \18\ (March 2019)
---------------------------------------------------------------------------
     \18\ https://www.consumerfinance.gov/policy-compliance/notice-
opportunities-comment/archive-closed/advance-notice-proposed-
rulemaking-residential-property-assessed-clean-energy-financing/

    Assessments of Significant Rules pursuant to Section 
---------------------------------------------------------------------------
        1022(d) of the Dodd-Frank Act

      Remittance Rule assessment report \19\ (October 2018)
---------------------------------------------------------------------------
     \19\ https://www.consumerfinance.gov/documents/7561/bcfp-
remittance-rule-assessment-report-corrected-2019-03.pdf

      Ability to Repay and Qualified Mortgage Rule assessment 
        report \20\ (January 2019)
---------------------------------------------------------------------------
     \20\ https://files.consumerfinance.gov/f/documents/cfpb-ability-
to-repay-qualified-mortgage-assessment-report.pdf

      2013 Real Estate Settlement Procedures Act (RESPA) 
        Mortgage Servicing Rule assessment report \21\ (January 2019)
---------------------------------------------------------------------------
     \21\ https://files.consumerfinance.gov/f/documents/cfpb-mortgage-
servicing-rule-assessment-report.pdf

    Trial Disclosure Proposed Policy \22\ (September 2018)
---------------------------------------------------------------------------
     \22\ https://www.consumerfinance.gov/policy-compliance/notice-
opportunities-comment/archive-closed/policy-encourage-trial-disclosure-
programs/

    No-Action Letters and Product Sandbox Proposed Policies 
        \23\ (December 2018)
---------------------------------------------------------------------------
     \23\ https://www.consumerfinance.gov/policy-compliance/notice-
opportunities-comment/archive-closed/policy-no-action-letters-and-bcfp-
product-sandbox/

    Start Small, Save Up Initiative \24\ (February 2019)
---------------------------------------------------------------------------
     \24\ https://www.consumerfinance.gov/start-small-save-up/

    Suspicious Activity Reports on Elder Financial Exploitation 
        \25\ (February 2019)
---------------------------------------------------------------------------
     \25\ https://www.consumerfinance.gov/data-research/research-
reports/suspicious-activity-reports-elder-financial-exploitation-
issues-and-trends/

    Classroom Activities for Teaching the Building Blocks of 
        Financial Capability \26\
---------------------------------------------------------------------------
     \26\ https://www.consumerfinance.gov/practitioner-resources/youth-
financial-education/teach/activities/

---------------------------------------------------------------------------
    Consumer Education (Ask CFPB) Milestones

    Your Money, Your Goals (financial empowerment tools and 
        resources)

    Memorandum of Understanding with the Federal Trade 
        Commission \27\
---------------------------------------------------------------------------
     \27\ https://files.consumerfinance.gov/f/documents/cfpb-ftc-memo-
of-understanding-2019-02.pdf

---------------------------------------------------------------------------
    Director's Listening Tour (December 2018-March 2019)

    CFPB Advisory Committees Enhancements

    Guidance Documents \28\ (bulletins and guidance documents 
        in the last year)
---------------------------------------------------------------------------
     \28\ The Bureau posts many documents relating to compliance and 
guidance on its website at https://www.consumerfinance.gov/policy-
compliance/guidance/.

      Summer 2018 Supervisory Highlights \29\
---------------------------------------------------------------------------
     \29\ https://consumerfinance.gov/f/documents/bcfp-supervisory-
highlights-issue-17-2018-09.pdf

      Winter 2019 Supervisory Highlights \30\
---------------------------------------------------------------------------
     \30\ https://files.consumerfinance.gov/f/documents/cfpb-
supervisory-highlights-issue-18-032019.pdf

      Bulletin 2018-01: Changes to Types of Supervisory 
        Communications \31\
---------------------------------------------------------------------------
     \31\ https://files.consumerfinance.gov/f/documents/bcfp--bulletin-
2018-01-changes-to-supervisory-communications.pdf

      Statement on Supervisory Practices regarding Financial 
        Institutions and Consumers Affected by a Major Disaster or 
        Emergency \32\
---------------------------------------------------------------------------
     \32\ https://files.consumerfinance.gov/f/documents/bcfp-statement-
on-supervisory-practices-disaster-emergency.pdf

      Interagency Statement Clarifying the Role of Supervisory 
        Guidance \33\
---------------------------------------------------------------------------
     \33\ https://files.consumerfinance.gov/f/documents/interagency-
statement-role-of-supervisory-guidance.pdf

      Prepaid Account Examination Procedures \34\
---------------------------------------------------------------------------
     \34\ https://files.consumerfinance.gov/f/documents/cfpb-
supervision-and-examination-manual-prepaid-account-exam-procedures.pdf

      Short-Term, Small-Dollar Lending Examination Procedures 
        \35\
---------------------------------------------------------------------------
     \35\ https://files.consumerfinance.gov/f/documents/cfpb-payday-
manual-revisions.pdf

      TILA Examination Procedures \36\
---------------------------------------------------------------------------
     \36\ https://files.consumerfinance.gov/f/documents/cfpb-
supervision-and-examination-manual-tila-exam-procedures-2019-03.pdf

      Electronic Fund Transfer Act (EFTA) Examination 
        Procedures \37\
---------------------------------------------------------------------------
     \37\ https://files.consumerfinance.gov/f/documents/cfpb-
supervision-and-examination-manual-efta-exam-procedures-incl-
remittances-2019-03.pdf

      CFPB Supervision and Examination Process \38\
---------------------------------------------------------------------------
     \38\ https://files.consumerfinance.gov/f/documents/cfpb-
examination-process-section.pdf

      Examination Report Template \39\
---------------------------------------------------------------------------
     \39\ https://files.consumerfinance.gov/f/documents/cfpb-
examination-report-template.pdf

      Supervisory Letter Template \40\
---------------------------------------------------------------------------
     \40\ https://files.consumerfinance.gov/f/documents/cfpb-
supervision-and-examination-manual-supervisory-letter-template.pdf

      Examination Scope Summary Template \41\
---------------------------------------------------------------------------
     \41\ https://files.consumerfinance.gov/f/documents/201703-cfpb-
Scope-Summary-Template.pdf
---------------------------------------------------------------------------
3.4--Plan for upcoming initiatives:

    Home Mortgage Disclosure Act Data Release \42\ (August 
        2019)
---------------------------------------------------------------------------
     \42\ Additional activity has occurred with this matter since the 
end of this reporting period. On August 30, 2019, the Bureau released 
the Home Mortgage Disclosure Act (HMDA) data along with two Data Point 
articles. One Data Point article is the second in an annual series of 
Bureau articles describing mortgage market activity over time. It 
summarizes the historical data points in the 2018 HMDA data, as well as 
recent trends in mortgage and housing markets. The other Data Point 
article introduces the new and revised data points in the 2018 HMDA 
data and provides some initial observations about the Nation's mortgage 
market in 2018 based on those new or revised data points. More 
information can be found here: https://www.consumerfinance.gov/data-
research/research-reports/data-point-2018-mortgage-market-activity-and-
trends/ and https://www.consumerfinance.gov/data-research/research-
reports/introducing-new-revised-data-points-hmda/.

    Credit Card Market Report \43\ (August 2019)
---------------------------------------------------------------------------
     \43\ Additional activity has occurred with this matter since the 
end of this reporting period. More information can be found here: 
https://files.consumerfinance.gov/f/documents/cfpb-consumer-credit-
card-market-report-2019.pdf.

---------------------------------------------------------------------------
    Start Small, Save Up Initiative (ongoing)

    Consumer Complaint Database \44\ (ongoing)
---------------------------------------------------------------------------
     \44\ Additional activity has occurred with this matter since the 
end of this reporting period. More information can be found here: 
https://www.consumerfinance.gov/about-us/newsroom/director-kraningers-
speech-national-consumer-empowerment-conference/.

    Misadventures in Money Management (MiMM) for Active Duty 
        Servicemembers \45\ (ongoing)
---------------------------------------------------------------------------
     \45\ Additional activity has occurred with this matter since the 
end of this reporting period. Misadventures in Money Management (MiMM) 
became available for all active duty Servicemembers on May 23, 2019.

    Savings Booklet \46\
---------------------------------------------------------------------------
     \46\ Additional activity has occurred with this matter since the 
end of this reporting period. More information can be found here: 
https://www.consumerfinance.gov/about-us/blog/start-saving-today-our-
new-savings-booklet-and-email-boot-camp/.

    Director Stakeholder Engagement \47\ (ongoing)
---------------------------------------------------------------------------
     \47\ More than 700 meetings with consumers, staff, and 
stakeholders have occurred. Remarks provided to the Bipartisan Policy 
Center, Washington, DC, on April 17, 2019, are provided through this 
link: https://www.consumerfinance.gov/about-us/newsroom/kathleen-
kraninger-director-consumer-financial-protection-bureau-bipartisan-
policy-center-speech/ and https://www.consumerfinance.gov/about-us/
newsroom/kathleen-kraninger-director-consumer-financial-protection-
bureau-bipartisan-policy-center-speech/.

    Bureau Symposia Series \48\ (ongoing)
---------------------------------------------------------------------------
     \48\ Additional activity has occurred with this matter since the 
end of this reporting period. More information can be found here: 
https://www.consumerfinance.gov/about-us/newsroom/bureau-announces-
symposia-series/.

---------------------------------------------------------------------------
    Guidance Documents (ongoing)

      Equal Credit Opportunity Act (ECOA) Baseline Review 
        Examination Procedures \49\
---------------------------------------------------------------------------
     \49\ Additional activity has occurred with this matter since the 
end of this reporting period. More information can be found here: 
https://files.consumerfinance.gov/f/documents/cfpb-supervision-and-
examination-manual-ecoa-baseline-exam-procedures-2019-04.pdf.

      HMDA Examination Procedures \50\
---------------------------------------------------------------------------
     \50\ Additional activity has occurred with this matter since the 
end of this reporting period. More information can be found here: 
https://files.consumerfinance.gov/f/documents/cfpb-supervision-and-
examination-manual-hmda-exam-procedures-2019-04.pdf.

      Statement on Collection of Demographic Information by 
        Community Development Financial Institutions \51\
---------------------------------------------------------------------------
     \51\ Additional activity has occurred with this matter since the 
end of this reporting period. More information can be found here: 
https://files.consumerfinance.gov/f/documents/20190627-cfpb-statement-
on-collection-demographic-information.pdf.

      Automobile Finance Examination Procedures \52\
---------------------------------------------------------------------------
     \52\ Additional activity has occurred with this matter since the 
end of this reporting period. More information can be found here: 
https://files.consumerfinance.gov/f/documents/201908-cfpb-automobile-
finance-examination-procedures.pdf.

      Summer 2019 Supervisory Highlights \53\
---------------------------------------------------------------------------
     \53\ Additional activity has occurred with this matter since the 
end of this reporting period. More information can be found here: 
https://files.consumerfinance.gov/f/documents/cfpb-supervisory-
highlights-issue-19-092019.pdf.

      Annual Report to Congress on TILA, the Electronic Fund 
        Transfer Act (EFTA), and the Credit Card Accountability 
        Responsibility and Disclosure (CARD Act) \54\
---------------------------------------------------------------------------
     \54\ In production at the time of publishing.
---------------------------------------------------------------------------
3.5--Plan for upcoming rules:
    The Bureau published its Spring 2019 Rulemaking Agenda as part of 
the Spring 2019 Unified Agenda of Federal Regulatory and Deregulatory 
Actions, which is coordinated by the Office of Management and Budget. 
\55\ As an independent regulatory agency, the Bureau voluntarily 
participates in the Unified Agenda. The Unified Agenda lists the 
regulatory matters that the Bureau reasonably anticipates having under 
consideration during the period from May 1, 2019, to April 30, 2020. 
\56\
---------------------------------------------------------------------------
     \55\ https://www.consumerfinance.gov/about-us/blog/spring-2019-
rulemaking-agenda/
     \56\ https://www.reginfo.gov/public/do/
eAgendaMain?operation=OPERATION-GET-AGENCY-RULE-
LIST&currentPub=true&showStage=active&agencyCd=3170
---------------------------------------------------------------------------
    The Bureau is considering further prioritization and planning of 
the Bureau's rulemaking activities, both with regard to substantive 
projects and modifications to the processes that the Bureau uses to 
develop and review regulations. The Bureau expects the Fall 2019 Agenda 
to issue a more comprehensive statement of priorities to reflect 
ongoing statutorily mandated market monitoring and the Bureau's other 
activities discussed in the Report.
    During the reporting period, the Bureau was engaged in a number of 
rulemakings to implement directives mandated in the Economic Growth, 
Regulatory Relief, and Consumer Protection Act of 2018 (EGRRCPA), the 
Dodd-Frank Act, and other statutes. As part of these rulemakings, the 
Bureau is working to achieve the consumer protection objectives of the 
statutes while minimizing regulatory burden on financial services 
providers, including through facilitating industry compliance with 
rules.
    Prerulemaking initiatives, as reflected in the Bureau's Spring 2019 
Unified Agenda:

    Equal Credit Opportunity Act (Regulation B) Business 
        Lending Data Collection and Reporting Requirements

    Remittance Transfers \57\
---------------------------------------------------------------------------
     \57\ Additional activity has occurred with this matter since the 
end of this reporting period. In April, the Bureau issued a Request for 
Information (RFI) on the Remittance Rule seeking comments on measures 
to consider adopting to address the expiration in July 2020 of the 
Rule's temporary exception. More information can be found here: https:/
/www.consumerfinance.gov/about-us/newsroom/cfpb-issues-request-
information-remittance-rule/.

    Home Mortgage Disclosure Act (Regulation C) Data Collection 
        and Reporting Requirements \58\
---------------------------------------------------------------------------
     \58\ Additional activity has occurred with this matter since the 
end of this reporting period. In May 2019, the Bureau issued an Advance 
Notice of Proposed Rulemaking (ANPR) that solicits comments about the 
costs and benefits of collecting and reporting the data points the 2015 
HMDA Rule added to Regulation C and certain preexisting data points 
that the 2015 HMDA Rule revised. In June, the Bureau extended the 
comment period. More information can be found here: https://
www.consumerfinance.gov/about-us/newsroom/bureau-proposes-changes-hmda-
rules/ and https://www.consumerfinance.gov/about-us/newsroom/bureau-
extends-comment-period-anpr-hmda-data-points/.

    Proposed rules for the upcoming period, as reflected in the 
---------------------------------------------------------------------------
Bureau's Spring 2019 Unified Agenda:

    Debt Collection Rule \59\
---------------------------------------------------------------------------
     \59\ Additional activity has occurred with this matter since the 
end of this reporting period. In May 2019, the Bureau issued a Notice 
of Proposed Rulemaking (NPRM) to address such issues as communication 
practices and consumer disclosures. More information can be found here: 
https://www.consumerfinance.gov/policy-compliance/rulemaking/rules-
under-development/debt-collection-practices-regulation-f/. Additional 
Note: The NPRM provided a 90-day comment period that was set to close 
on August 19, 2019. To allow interested persons more time to consider 
and submit their comments, the Bureau determined that an extension of 
the comment period until September 18, 2019, was appropriate.

    Home Mortgage Disclosure Rule (Regulation C) \60\
---------------------------------------------------------------------------
     \60\ Additional activity has occurred with this matter since the 
end of this reporting period. In May 2019, the Bureau issued a Notice 
of Proposed Rulemaking to increase the thresholds for reporting data 
about closed-end mortgage loans and open-end lines of credit. More 
information can be found here: https://www.consumerfinance.gov/policy-
compliance/rulemaking/rules-under-development/home-mortgage-disclosure-
regulation-c/.

    Public Release of Home Mortgage Disclosure Act Data \61\
---------------------------------------------------------------------------
     \61\ Policy guidance was issued in December 2018. The Bureau 
announced in that guidance its intention to conduct a notice-and-
comment rulemaking to seek input on the public release of data going 
forward; that proposal has not yet been issued.

    Final rules for the upcoming period as reflected in the Bureau's 
---------------------------------------------------------------------------
Spring 2019 Unified Agenda:

    Payday, Vehicle Title, and Certain High-Cost Installment 
        Loans; Delay of Compliance Date \62\
---------------------------------------------------------------------------
     \62\ Additional activity has occurred with this matter since the 
end of this reporting period. https://www.consumerfinance.gov/policy-
compliance/rulemaking/final-rules/payday-vehicle-title-and-certain-
high-cost-installment-loans-delay-compliance-date-correcting-
amendments/.

    The Expedited Funds Availability Act (Regulation CC) (EFA 
        Act) \63\
---------------------------------------------------------------------------
     \63\ https://www.consumerfinance.gov/about-us/newsroom/agencies-
issue-final-amendments-regulation-cc-regarding-funds-availability/. 
This Rule was finalized after the reporting period (June 2019).
---------------------------------------------------------------------------
4. Analysis of complaints about consumer financial products or services 
        that the Bureau has received and collected in its central 
        database on complaints during the preceding year
    The Bureau's Office of Consumer Response analyzes consumer 
complaints, company responses, and consumer feedback to assess the 
accuracy, completeness, and timeliness of company responses. The Bureau 
uses insights gathered from complaint data to scope and prioritize 
examinations and ask targeted questions when examining companies' 
records and practices to help understand problems consumers are 
experiencing in the marketplace, to provide access to information about 
financial topics and opportunities to build skills in money management 
that can help consumers avoid future problems, and to inform 
enforcement investigations to help stop unfair, deceptive, or abusive 
practices.
    During the period April 1, 2018, through March 31, 2019, the Bureau 
received approximately 321,200 consumer complaints. \64\ This was an 
approximate 2 percent decrease from the prior reporting period. \65\ 
Consumers submitted approximately 82 percent of these complaints 
through the Bureau's website and 5 percent via telephone calls. 
Referrals from other State and Federal agencies accounted for 8 percent 
of complaints. Consumers submitted the remainder of complaints by mail, 
email, and fax. The Bureau does not verify all of the facts alleged in 
complaints but takes steps to confirm a commercial relationship between 
the consumer and the company. During this time period the Bureau sent 
approximately 257,300 (or 80 percent) of complaints received to 
companies for review and response. \66\ Companies responded to 
approximately 95 percent of complaints that the Bureau sent to them for 
response during the period. The remaining complaints were either 
pending response from the company at the end of the period or did not 
receive a response.
---------------------------------------------------------------------------
     \64\ All data are current through March 31, 2019. This analysis 
excludes multiple complaints submitted by a given consumer on the same 
issue and whistleblower tips. The Bureau does not verify all the facts 
alleged in complaints, but takes steps to confirm a commercial 
relationship between the consumer and the company. For more information 
on our complaint process, please refer to the Bureau's website, https:/
/www.consumerfinance.gov/complaint/process.
     \65\ The prior reporting period--which spanned October 1, 2017, to 
September 30, 2018--reported 329,000 consumer complaints. See Consumer 
Fin. Prot. Bureau, ``Semiannual Report Fall 2018'' (Feb. 2019), 
available at https://www.consumerfinance.gov/documents/7266/cfpb-semi-
annual-report-to-congress-fall-2018.pdf.
     \66\ The Bureau referred 14 percent of the complaints it received 
to other regulatory agencies and found 4 percent to be incomplete. At 
the end of this period, 0.5 percent of complaints were pending with the 
consumer and 0.6 percent were pending with the Bureau. Note: 
Percentages in this section of the report may not sum to 100 percent 
due to rounding.
---------------------------------------------------------------------------
    The Bureau also publishes the Consumer Response Annual Report, \67\ 
which provides a more detailed analysis of complaints. A detailed chart 
breaking down the complaints received by type is included in that 
Report, along with a discussion about how we use and apply the data.
---------------------------------------------------------------------------
     \67\ These reports can be viewed at: https://
www.consumerfinance.gov/data-research/research-reports/.
---------------------------------------------------------------------------
5. Public supervisory and enforcement actions to which the Bureau was a 
        party during the preceding year
    The Bureau's supervisory activities with respect to individual 
institutions are nonpublic. The Bureau has, however, issued numerous 
supervisory guidance documents and bulletins as described in the 
Report.
    The Report also outlines a range of public enforcement actions from 
April 1, 2018, through March 31, 2019, detailed in descending 
chronological order by filing or issue date. This section also 
identifies those actions involving Office of Administrative 
Adjudication Orders with respect to covered persons that are not credit 
unions or depository institutions.
6. Actions taken regarding rules, orders, and supervisory actions with 
        respect to covered persons which are not credit unions or 
        depository institutions
    The Bureau's Supervisory Highlights publications provide general 
information about the Bureau's supervisory activities at banks and 
nonbanks without identifying specific companies. Between April 1, 2018, 
and March 31, 2019, the Bureau published two issues of Supervisory 
Highlights. All public enforcement actions are listed in Section 5.2 of 
the Report, and actions taken with respect to covered persons which are 
not credit unions or depository institutions are noted with the summary 
of the action.
7. Assessment of significant actions by State attorneys general or 
        State regulators relating to Federal consumer financial law
    For purposes of Dodd-Frank Section 1016(c)(7) reporting 
requirement, the Bureau has determined that any actions asserting 
claims pursuant to Section 1042 of the Dodd-Frank Act are 
``significant.'' The Bureau is unaware of any State actions asserting 
Dodd-Frank Act claims that were initiated during the April 1, 2018, 
through March 31, 2019, reporting period.
8. Analysis of the efforts of the Bureau to fulfill the fair lending 
        mission of the Bureau
    The Report provides an update on the Bureau's work to fulfill 
requirements mandated by the Dodd-Frank Act related to fair lending, 
noting highlights from the Bureau's fair lending enforcement \68\ and 
rulemaking \69\ activities from April 1, 2018, through March 31, 2019. 
We continued our efforts to fulfill the fair lending mission of the 
Bureau through supervision, interagency coordination, and outreach in 
the period October 1, 2018, through March 31, 2019.
---------------------------------------------------------------------------
     \68\ Dodd-Frank Act 1016(c)(5).
     \69\ Dodd-Frank 1016(c)(3). The Bureau's fair lending rulemaking 
activity pertaining to HMDA and Regulation C is discussed in Section 3 
of the Report.
---------------------------------------------------------------------------
8.1--Fair lending supervision:
    The Bureau's Fair Lending Supervision program assesses compliance 
with Federal fair lending consumer financial laws and regulations at 
banks and nonbanks over which the Bureau has supervisory authority. As 
a result of the Bureau's efforts to fulfill its fair lending mission in 
this reporting period, the Bureau's Fair Lending Supervision program 
initiated 10 supervisory events at financial institutions under the 
Bureau's jurisdiction to determine compliance with Federal laws 
intended to ensure the fair, equitable, and nondiscriminatory access to 
credit for both individuals and communities, including the ECOA and 
HMDA. For exam reports issued by Supervision during the reporting 
period, the most frequently cited violations were:

    Section 1003.4(a): Failure by a financial institution to 
        collect and accurately report data regarding applications for 
        covered loans that it receives, originates, or purchases in a 
        calendar year, or, failure to collect and accurately report 
        data regarding certain requests under a preapproval program in 
        a calendar year; and

    Section 1002.12(b)(1)(i): Failure to create and preserve 
        records and other documents required by the regulation.

    In the current reporting period, the Bureau initiated 10 
supervisory events, which is fewer than the 13 fair lending supervisory 
events reported as initiated during the reporting period reflected in 
the ``Fall 2018 Semiannual Report''. \70\ In the current reporting 
period, the Bureau issued fewer matters requiring attention (MRAs) or 
memoranda of understanding (MOUs) than in the prior period. MRAs and 
MOUs direct entities to take corrective actions and are monitored by 
the Bureau through follow-up supervisory events. Consistent with BCFP 
Bulletin 2018-01, \71\ the Bureau issues Supervisory Recommendations 
(SRs) to address supervisory concerns related to financial 
institutions' compliance management systems. SRs do not include 
provisions for periodic reporting nor expected timelines for 
implementation. During the current reporting period, the Bureau 
provided SRs relating to supervisory concerns related to weak or 
nonexistent fair lending risk assessments and/or fair lending training.
---------------------------------------------------------------------------
     \70\ The Bureau is using a new measure to identify the number of 
on-site supervision exams or reviews. See Fiscal Year (FY) 2019 Annual 
Performance Plan (February 2019). The ``Spring 2019 Semiannual Report'' 
update complies with this new measure. Therefore, the number of 
initiated examination events reported here is not comparable to the 
number of events reported in the Fall 2018 Semiannual Report. For 
comparison purposes, had the Bureau employed this new measure for 
initiated supervisory exams for the reporting period reflected in the 
Fall 2018 Semiannual Report, which indicated that the Bureau initiated 
13 fair lending supervisory events, would instead have indicated that 
the Bureau had initiated 12 fair lending supervisory events.
     \71\ https://files.consumerfinance.gov/f/documents/bcfp-bulletin-
2018-01-changes-to-supervisory-communications.pdf
---------------------------------------------------------------------------
8.2--Fair lending enforcement: \72\
---------------------------------------------------------------------------
     \72\ Section 1016(c)(5) of the Dodd-Frank Act requires the Bureau 
to include in the semiannual report public enforcement actions the 
Bureau was a party to during the preceding year, which is April 1, 
2018, through March 31, 2019, for this report.
---------------------------------------------------------------------------
    The Bureau has the statutory authority to bring actions to enforce 
the requirements of HMDA and ECOA. In this regard, the Bureau has the 
authority to engage in research, conduct investigations, file 
administrative complaints, hold hearings, and adjudicate claims through 
the Bureau's administrative enforcement process. The Bureau also has 
independent litigating authority and can file cases in Federal court 
alleging violations of fair lending laws under the Bureau's 
jurisdiction. Like other Federal bank regulators, the Bureau is 
required to refer matters to the U.S. Department of Justice (DOJ) when 
it has reason to believe that a creditor has engaged in a pattern or 
practice of lending discrimination. \73\
---------------------------------------------------------------------------
     \73\ See 15 U.S.C. 1691e(h) and 15 U.S.C 1691e(g) and (h).
---------------------------------------------------------------------------
    During the reporting period, the Bureau did not initiate or 
complete any fair lending public enforcement actions. In addition, 
during this reporting period, \74\ the Bureau did not refer any matters 
to the DOJ with regard to discrimination pursuant to Section 706(g) of 
ECOA. During the reporting period, the Bureau continued to implement 
and oversee compliance with the pending public enforcement orders that 
were entered by Federal courts or issued by the Bureau's Director in 
prior years.
---------------------------------------------------------------------------
     \74\ April 1, 2018, through March 31, 2019.
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8.3--Fair lending outreach:
    The Bureau is committed to hearing from and communicating directly 
with stakeholders. The Bureau regularly engages in outreach with Bureau 
stakeholders, including consumer advocates, civil rights organizations, 
industry, academia, and other Government agencies, to: (1) educate them 
about fair lending compliance and access to credit issues, and (2) hear 
their views on the Bureau's work to inform the Bureau's policy 
decisions. Outreach is accomplished through meetings and the delivery 
of speeches and presentations addressing fair lending and access to 
credit issues as well as issuance of Reports to Congress, Interagency 
Statements, Supervisory Highlights, Compliance Bulletins, letters and 
blog posts, as well as through meetings and the delivery of speeches 
and presentations addressing fair lending and access to credit issues. 
During the reporting period, Bureau staff participated in twenty-one 
(21) outreach events involving fair lending and access to credit 
issues.
8.4--Fair lending coordination:
    The Bureau's fair lending activity involves regular coordination 
with other Federal and State regulatory and enforcement partners. 
During the reporting period, Office of Fair Lending and Equal 
Opportunity (OFLEO) staff continued to lead the Bureau's fair lending 
interagency coordination and collaboration efforts by working with 
partners on the Interagency Working Group on Fair Lending Enforcement, 
and chairing the Interagency Task Force on Fair Lending and the Federal 
Financial Institutions Examination Council (FFIEC) HMDA Data Collection 
Subcommittee.
9. Analysis of the efforts of the Bureau to increase workforce and 
        contracting diversity consistent with the procedures 
        established by the Office of Minority and Women Inclusion 
        (OMWI)
    The Bureau issued the Annual Report of OMWI activities on April 3, 
2019. \75\ Throughout the reporting period the Bureau continued 
executing on objectives and strategies outlined in the Bureau of 
Consumer Financial Protection Strategic Plan FY2018-2022, \76\ which 
complements and reinforces the Diversity and Inclusion Strategic Plan 
2016-2020. The Bureau began developing a Diversity and Inclusion 
Strategic Plan Update in March, which was published in July. \77\
---------------------------------------------------------------------------
     \75\ https://www.consumerfinance.gov/data-research/research-
reports/fy-2018-office-minority-and-women-inclusion-annual-report-
congress/
     \76\ www.consumerfinance.gov/about-us/budget-strategy/strategic-
plan
     \77\ Additional activity has occurred with this matter since the 
end of this reporting period. More information can be found here: 
https://www.consumerfinance.gov/data-research/research-reports/cfpb-
diversity-and-inclusion-strategic-plan-update-2019-2022/.
---------------------------------------------------------------------------
    As of March 2019, an analysis of the Bureau's current workforce 
reveals the following key points:

    Women represent 49 percent of the Bureau's 2019 workforce 
        with no change from 2018;

    Minorities (Hispanic, Black, Asian, Native Hawaiian/Other 
        Pacific Islander (NH/OPI), American Indian/Alaska Native (AI/
        AN) and employees of two or more races) represent 40 percent of 
        the Bureau workforce in 2019 with no change from 2018; and

    As of March 31, 2019, 12.7 percent of Bureau employees on 
        permanent appointments identified as an individual with a 
        disability. Out of the permanent workforce, 3.4 percent of 
        employees identified as an individual with a targeted 
        disability. As a result, the Bureau continues to exceed the 12 
        percent workforce goals for employees with disabilities and 2.0 
        percent for employees with targeted disabilities--in both 
        salary categories, as required in the EEOC's Section 501 
        regulations.

    The Bureau seeks to increase diversity through efforts in 
recruiting and workforce engagement. During the reporting period, the 
Bureau was under a hiring freeze. \78\ However, the Bureau onboarded 
nine (9) hiring exceptions, including six (6) women and four (4) 
minorities. The Bureau also utilized the student volunteer internship 
program, other professional development programs, and recruitment 
efforts directed to reach veterans and applicants with disabilities. To 
promote an inclusive work environment, the Bureau focuses on strong 
engagement with employees and utilizes an integrated approach to 
education, training, and engagement programs that ensures diversity and 
inclusion from nondiscrimination concepts are part of the learning 
curriculum and work environment. Employee resource groups, cultural 
education programs, and diversity and inclusion training are key 
components of this effort.
---------------------------------------------------------------------------
     \78\ Additional activity has occurred with this matter since the 
end of this reporting period. The hiring freeze was lifted in August 
2019.
---------------------------------------------------------------------------
    The Bureau's Diversity and Inclusion Strategic Plan describes our 
efforts to increase contracting opportunities for diverse businesses 
including Minority-owned and Women-Owned Businesses (MWOBs). The 
Bureau's OMWI and Procurement offices collectively work to increase 
opportunities for participation by MWOBs. These efforts include 
actively engaging Bureau business units with MWOB contractors 
throughout the acquisition cycle, developing a ``How To Do Business 
with the CFPB'' series and a supplier diversity guide. These resources 
are available on the Bureau's website.
    Additionally, in the reporting period, the Bureau participated in 
four (4) national supplier diversity conferences that help to foster 
business partnerships between the Federal Government, its U.S. prime 
contractors, minority-owned businesses, and advocacy for women business 
owners and entrepreneurs. As a result of these efforts, 36.7 percent of 
the $49 million in contracts that the Bureau awarded or obligated 
during the reporting period went to MWOBs. In accordance with the 
mandates in Section 342(c)(2) OMWI has developed Good Faith Effort 
(GFE) standards for the collection and assessment of documentation of 
contractor's workforce and subcontractor diversity practices. These 
standards were updated in FY2019 to better align with Federal 
Acquisition Regulations. The GFE clause has been included in all CFPB 
contracts since FY2018.
Legislative Reform
    In the invitation letter to testify before the House Financial 
Services Committee, the Committee requested that I identify any 
legislative reforms needed to better protect consumers. I know that 
Servicemembers and military families matter greatly to all of you just 
as they do to me. Earlier this year, the Bureau requested that Congress 
provide us with clear legal authority to supervise financial 
institutions for MLA compliance, and we transmitted proposed 
legislative language that would achieve this goal. I stand ready to 
work with Members of this Committee to provide us with this authority 
to assist the Bureau's ongoing efforts to prevent harm to our 
servicemembers and their families.
Task Force on Federal Consumer Financial Law
    Last week the Bureau announced the will establish a task force to 
examine ways to harmonize and modernize Federal consumer financial 
laws. The Task Force on Federal Consumer Financial Law will produce new 
research and legal analysis of consumer financial laws in the United 
States, focusing specifically on harmonizing, modernizing, and updating 
the enumerated consumer credit laws--and their implementing 
regulations--and identifying gaps in knowledge that should be addressed 
through research, ways to improve consumer understanding of markets and 
products, and potential conflicts or inconsistencies in existing 
regulations and guidance. I believe that a logical and important part 
of the Bureau's maturation is to evaluate how best to harmonize these 
laws to ensure their efficient operation for the benefit of consumers. 
The Bureau is currently accepting applications from individuals who are 
interested in serving on the task force. The members will have a broad 
range of expertise in the areas of consumer protection and consumer 
financial products or services; significant expertise in analyzing 
consumer financial markets, laws, and regulations; and a demonstrated 
record of senior public or academic service.
Conclusion
    Since my confirmation, I have met with more than 800 stakeholders 
in the realm of consumer protection. This outreach is exceptionally 
valuable in building productive relationships and to hear the fullest 
possible range of insight and perspective. Building on my March 
testimony, I remain committed to strengthening the Bureau's ability to 
use all of the tools provided by Congress to protect consumers. 
Factoring in all of the input and counsel that I have received, I 
remain resolved that the most productive use of Bureau resources is to 
be focused on preventing harm to consumers. Empowering consumers to 
protect and further their own interests must be at the core of our 
mission. I have established and communicated clear priorities to Bureau 
staff for our work using the authorities provided by Congress. The 
Bureau's mission is to ensure access to fair, transparent, and 
competitive markets for consumers. We will work to execute this mandate 
through: (1) providing ``clear rules of the road'' to make clear what 
is lawful and unlawful behavior; and, (2) using supervision to foster a 
``culture of compliance'' and as an opportunity to prevent violations: 
(3) vigorous enforcement; and (4) robust education efforts that empower 
consumers to make the best possible financial decisions.
    Thank you again for the opportunity to present this Semiannual 
Report of the Bureau's work in support of American consumers.
        RESPONSES TO WRITTEN QUESTIONS OF SENATOR BROWN
                      FROM KATHY KRANINGER

Q.1. During the October 17, 2019, hearing, Director Kraninger 
testified that the Bureau is in the process of attempting to 
reestablish the Memorandum of Understanding with the Department 
of Education. Please provide the following information:
    When did the Bureau send the Department a draft MOU?

A.1. On October 15, 2019, the Bureau sent the Department of 
Education a copy of a Memorandum of Understanding (MOU) 
intended to ensure coordination in providing assistance to 
borrowers seeking to resolve student loan complaints. The 
Department of Education responded and discussions are ongoing.

Q.2. Has the Department responded to the Bureau's draft MOU, 
and if so, on what date?

A.2. On October 15, 2019, the Bureau sent to the Department of 
Education a copy of a MOU intended to ensure coordination in 
providing assistance to borrowers seeking to resolve student 
loan complaints. The Department of Education responded and 
discussions are ongoing.

Q.3. What is the expected timeline to finalize the MOU?

A.3. On October 15, 2019, the Bureau sent to the Department of 
Education a copy of a MOU intended to ensure coordination in 
providing assistance to borrowers seeking to resolve student 
loan complaints. The Department of Education responded and 
discussions are ongoing. The Bureau hopes to reach an agreement 
as soon as possible.

Q.4. In December 2017, the Department issued guidance 
prohibiting Federal student loan servicers from providing 
access to student borrower loan information, including to the 
Bureau and State regulators. In your April 2019 letter, you 
stated that, because the Department had cut off access to this 
information, the Bureau had not conducted full, complete 
examinations of Federal student loan servicers, including of 
the Public Service Loan Forgiveness (PSLF) program. Please 
provide the following information:
    What is the most recent date that the Bureau conducted a 
full, complete examination of a Federal student loan servicer?

A.4. Since December 2017, student loan servicers have declined 
to produce information requested by the Bureau for supervisory 
examinations related to Direct Loans and Federal Family 
Education Loan Program (FFELP) loans held by the Department of 
Education based on the Department of Education's guidance. 
Additional information responsive to this request is 
Confidential Supervisory Information.

Q.5. What is the most recent date of the Bureau's full, 
complete examination of a Federal student loan servicer's 
management of the PSLF program?

A.5. See response above. To be clear, the Bureau examines 
Federal student loan servicers for compliance with Federal 
consumer financial laws pursuant to its regulation on larger 
participants in the student loan servicer market.

Q.6. What steps has the Bureau has taken to regain access from 
the Department to student borrower information necessary for 
the Bureau to conduct examinations of Federal student loan 
servicers? Please include in your response a description of any 
letters you have sent, the dates of those letters, and your 
expectation if, or when, the Bureau expects to regain access to 
this information. Please also provide any responses from the 
Department to letters sent by the Bureau.

A.6. The Bureau is engaged in discussions with the Department 
of Education to reestablish a MOU regarding supervision of 
student loan servicing, and those discussions are ongoing.

Q.7. Explain the legal reason why the Bureau has not requested 
to lift the stay and implement the payment provisions of the 
2017 Payday, Vehicle Title, and Certain High-Cost Installment 
Loans (Payday Rule) in Consumer Financial Services Association 
of America v. CFPB, Case No. 1: 18-cv-295 (W.D. TX). In your 
August 19, 2019, letter, you explained that the Bureau has not 
lifted the stay because of a separate challenge to the CFPB's 
constitutionality in CFPB v. All American Check Cashing, Inc., 
which was pending a decision before the Fifth Circuit. That is 
a separate case, however, and does not require the Bureau to 
stay the payment provisions of the Payday Rule. Please provide 
answers to the following requests:
    Is the Bureau legally required to stay the CFSA action in 
the Western District of Texas, or could the Bureau seek to lift 
the stay but is choosing not to? Please provide legal authority 
to support your response.

A.7. The Bureau is considering its options and has stated its 
position in public filings to the Court. The Bureau generally 
does not comment on ongoing litigation beyond what the Bureau 
states in its court filings.

Q.8. Identify each Bureau case that is currently in litigation, 
including the court in which the case is pending, and whether 
the case is stayed because of a constitutional challenge to the 
Bureau.

A.8. Community Financial Services Association of America v. 
CFPB, No. 1:18-cv-295 (W.D. Tex.), is the only case against the 
Bureau currently in litigation in which the plaintiff has 
raised a constitutional challenge to the Bureau. That case is 
currently stayed. In other cases against the Bureau, the 
plaintiffs have not raised a constitutional challenge. There 
are also cases currently in litigation in which the Bureau is 
the plaintiff. These include enforcement actions and petitions 
to enforce civil investigative demands. In some cases where the 
defendants have raised the constitutional argument, the court 
has stayed the litigation. In other cases, litigation has not 
been stayed. The Bureau's position on a stay in any given case 
depends on the circumstances of that case.
    The following list includes civil actions in which the 
Bureau is a party (and, if it is party defendant, in which it 
has been served) pending as of December 2, 2019. Cases which 
have been stayed or otherwise delayed for reasons the Bureau 
understands to be related to the Supreme Court's grant of 
certiorari in Seila Law v. CFPB are noted with an asterisk.

CFPB v. Access Funding, LLC, No. 1-16-03759 (D. Md.)

*CFPB v. All American Check Cashing, Inc., No. 3:16-cv-356 
        (S.D. Miss.), stayed pending appeal \1\ on 
        constitutional issue, No. 18-60302 (5th Cir.), pet'n 
        for cert. filed, No. 19-431 (S. Ct.)

     \1\ While this litigation is stayed in district court pending 
appeal, appellate proceedings have not been stayed

---------------------------------------------------------------------------
Allied Progress v. CFPB, No. 19-cv-582 (D.D.C.)

American Oversight v. CFPB et al., No. 1:19-cv-3435 (D.D.C.)

Baker v. CFPB, No. 18-cv-2403 (D.D.C.)

Burke et al. v. Ocwen Financial et al., No. 19-13015 (11th 
        Cir.)

California Reinvestment Coalition v. Kraninger, No. 4:19-cv-
        02572 (N.D. Cal.)

*CFPB v. CashCall, Inc., Nos. 18-55407, 18-55479 (9th Cir.)

BCFP v. Center for Higher Excellence in Higher Education, No. 
        2:19-cv-877 (D. Utah)

BCFP v. Certified Forensic Loan Auditors, LLC, et al., No. 
        2:19-cv-07722 (C.D. Cal.)

CFPB v. Global Financial Support, Inc., No. 3:15-cv-2440 (S.D. 
        Cal.)

*Community Financial Services Association v. CFPB, No. 1:18-cv-
        00295 (W.D. Tex.), stayed.

BCFP v. Consumer Advocacy Center, Inc., et al., No. 8:19-cv-
        1998 (C.D. Cal.)

Democracy Forward Found. v. CFPB, No. 19-cv-1515 (D.D.C.)

Democracy Forward Found. v. CFPB, No. 19-cv-270 (D.D.C.)

Democracy Forward Found. v. CFPB, No. 19-cv-3370 (D.D.C.)

BCFP v. Fair Collections & Outsourcing, Inc., et al., No. 8:19-
        cv-2817 (D. Md.)

*BCPF v. Forster & Garbus, LLP, No. 2:19-cv-2928 (E.D.N.Y.)

Frank, LLP v. CFPB, No. 19-cv-1197 (D.D.C.)

BCFP v. Future Income Payments, LLC, No. 6:19-cv-2950 (D.S.C.)

Jones v. Kraninger, 18-cv-2132 (D.D.C.)

CFPB v. Klopp, No. 18-1694 (4th Cir.)

Lawyers' Committee for Civil Rights Under Law v. CFPB, No. 
        1:19-cv-1981 (D.D.C.)

BCFP v. Progrexion Marketing, No. 2:19-cv-00298 (D. Utah)

CFPB v. National Collegiate Student Loan Trust, et al., No. 
        1:17-cv-1323 (D. Del.)

CFPB v. Nationwide Biweekly Admin., Inc., Nos. 18-15431, 18-
        15887 (9th Cir.)

CFPB v. Navient Corp., et al. No. 3:17-101 (M.D. Penn.)

CFPB v. Nexus Services, Inc., No. 17-2238 (D.D.C.)

CFPB v. Ocwen Financial Corp., No. 9:17-cv-80495 (S.D. Fla.)

BCFP v. Premier Student Loan Center, et al., No. 8:19-cv-01998 
        (C.D. Cal.)

*CFPB v. RD Legal Funding, No. 18-2743 (2d Cir.)

Seila Law LLC v. CFPB, No. 19-7 (S. Ct.)

Shepherd v. CFPB, No. 18-cv-2004 (D.D.C.)

BCFP v. Snyder, No. 6:19-cv-2794 (D.S.C.)

Student Debt Crisis v. CFPB, No. 2:19-cv-10048 (C.D. Cal.)

CFPB v. The Mortgage Law Group, LLP, et al., No. 14-cv-513 
        (W.D. Wis.)

CFPB v. Think Finance, No. 4:17-cv-127 (D. Mont.), stayed 
        pending related bankruptcy proceedings.

CFPB v. Universal Debt & Payment Solutions, LLC, et al., No. 
        1:15-cv-859 (N.D. Ga.)

Q.9. On October 11, 2019, the CFPB announced the formation of 
the Task Force on Federal Consumer Financial Law.
    How many members does the CFPB expect to include in the 
task force?

A.9. The Taskforce will have approximately five members. The 
Bureau is currently finalizing membership selection and the 
number of members.

Q.10. What are the criteria for selection to the task force?

A.10. The Bureau plans to select members with demonstrated 
records of both senior public service and expertise in consumer 
finance, including: expertise in consumer protection and 
consumer financial products or services, significant experience 
researching and analyzing consumer financial markets, laws, and 
regulations, record of senior public or academic service, and 
recognition for professional achievements in economics, 
econometrics, or law.

Q.11. What is the expected allocation of representatives from 
consumer advocacy organizations, civil rights organizations, 
academia, and industry?

A.11. The Bureau will be seeking to fill the Taskforce with 
members possessing a broad range of expertise in the areas of 
consumer protection and consumer financial products or 
services, significant expertise in analyzing consumer financial 
markets, laws, and regulations, and a demonstrated record of 
senior public or academic service.

Q.12. The Bureau's investigation of Enova, an online payday 
lender, found that the company had illegally withdrawn millions 
of dollars from consumers' bank accounts. According to 
documents that were recently made public:
    Career staff in the Bureau's Office of Enforcement 
recommended that the Bureau require Enova to refund to 
consumers approximately $2.16 million that Enova had illegally 
withdrawn from consumers' accounts. \2\
---------------------------------------------------------------------------
     \2\ See ``Settling for Nothing: How Kraninger's CFPB Leaves 
Consumers High and Dry'', Report Prepared by Majority Staff of the 
Committee on Financial Services, Oct. 2019, at 10-11, available at 
https://financialservices.house.gov/uploadedfiles/cfpb-report-settling-
for-nothing.pdf.
---------------------------------------------------------------------------
    During settlement negotiations, Enova offered to provide 
$1,367,567 in refunds to impacted consumers. \3\ Eric 
Blankenstein, one of your political appointees, raised 
questions about the legal basis for the Bureau to order Enova 
to refund amounts it illegally withdrew back to consumers. \4\
---------------------------------------------------------------------------
     \3\ Id. at 11.
     \4\ Id. at 11-12.
---------------------------------------------------------------------------
    In response, the Bureau's Legal Division researched the 
matter and concluded in a 39-page memorandum that it would be 
``legally appropriate'' to require Enova to refund consumers 
the amounts debited from their accounts with their 
authorization. \5\
---------------------------------------------------------------------------
     \5\ Id. at 12-13.
---------------------------------------------------------------------------
    Mr. Blankenstein directed Enforcement to not seek refunds 
of the amounts illegally debited despite: (i) the Bureau's 
Legal Divisions opinion that it would be ``legally 
appropriate'' to seek this restitution; and (ii) Enova's offer 
to pay $1,367,567 in restitution. \6\
---------------------------------------------------------------------------
     \6\ Id. at 13-15.
---------------------------------------------------------------------------
    You ratified Mr. Blankenstein's decision and on January 22, 
2019, signed a consent order with Enova that lacked any redress 
for consumers. \7\
---------------------------------------------------------------------------
     \7\ Id. at 15.
---------------------------------------------------------------------------
    In light of these facts, please respond to the following:
    Enforcement and the Legal Division provided a legal basis 
to support requiring Enova to refund amounts it had illegally 
withdrawn from consumers' bank accounts. Please provide the 
legal support, including case law or other legal precedent, to 
support your decision to forego requiring Enova to provide 
restitution (refund amounts it had illegally withdrawn from 
consumers' bank accounts.).

A.12. The Bureau is committed to seeking all appropriate relief 
for consumers and considers whether redress or restitution may 
be appropriate in each case on the facts presented and in light 
of applicable law. The Consumer Financial Protection Act 
authorizes the Bureau to seek redress for consumers in 
appropriate cases as a matter of discretion. Particularly in 
the context of a negotiated settlement, the Bureau may choose 
to pursue the relief it determines best serves the public 
interest. In the Enova matter, the Bureau determined that the 
appropriate resolution in light of the company's conduct 
included imposition of a $3.2 million civil money penalty and 
injunctive relief to benefit consumers.

Q.13. The Bureau's summary of the Enova case stated that the 
Bureau decided not to pursue restitution for harmed consumers 
because ``the amount of fees and penalties for each consumer 
could not be calculated with certainty.'' Identify all case law 
and other legal precedent, including all consent orders entered 
into by the Bureau or FTC, that support this legal standard for 
restitution.

A.13. See the response above.

Q.14. To the extent your decision was based on concerns that 
consumers may have lawfully owed the amounts to Enova that were 
illegally withdrawn from their accounts, did you consider 
requiring Enova to refund the amounts it had illegally 
withdrawn, but allowing Enova to then seek to collect any 
amounts lawfully owed (as set forth in the Legal Division memo 
and proposed by career staff in a prior enforcement action 
against American Express)? \8\ Why did you not pursue this 
alternative?
---------------------------------------------------------------------------
     \8\ Id. at 13.

---------------------------------------------------------------------------
A.14. See the response above.

Q.15. Is it the CFPB's position under Director Kraninger that 
companies do not have to provide restitution to consumers if 
they violate the law and withdraw money from consumer's bank 
accounts without their authorization if the consumer owes the 
money?

A.15. As I have testified before Congress, under my leadership, 
the Bureau will seek the appropriate relief based on the facts 
and circumstances of each particular matter.

Q.16. On August 28, 2019, the Bureau announced a settlement 
with Asset Recovery Associates (ARA) for violations of the 
Consumer Financial Protection Act (CFPA) and Fair Debt 
collection Practice Act (FDCPA). \9\ In the consent order, the 
Bureau found that Asset Recovery Associates had regularly 
engaged in unlawful debt collection practices, including 
threatening consumers since at least January 1, 2015. \10\ Yet, 
the Bureau decided to limit restitution to just $36,800 for 
only those consumers who affirmatively complained about a false 
threat or misrepresentation by Asset Recovery Associates. \11\ 
In your October 11, 2019, letter to me, you explained that 
``the available evidence made it infeasible to determine the 
complete set of consumers who received verbal false threats.'' 
Please provide the following information:
---------------------------------------------------------------------------
     \9\ See ``Consumer Financial Protection Bureau Settles With Asset 
Recovery Associates'', news release, Aug. 28, 2019, available at 
https://www.consumerfinance.gov/about-us/newsroom/bureau-settles-asset-
recovery-associates/.
     \10\ In the Matter of: Financial Credit Services, Inc., d/b/a 
Asset Recovery Associates, File No. 2019-BCFP-009 (Aug. 28, 2019) 
available at https://files.consumerfinance.gov/f/documents/cfpb-asset-
recovery-associates-consent-order-2019-08.pdf.
     \11\ Id. 3.a.
---------------------------------------------------------------------------
    State the legal standard that the Bureau applied to 
determine who would receive restitution (consumers who 
complained) and the total amount of restitution.
    Identify all case law and other legal precedent, including 
all consent orders entered into by the Bureau or FTC, that 
support the legal standard the Bureau applied for restitution.
    Identify all case law and other legal precedent that 
require the Bureau identify ``with certainty'' the impacted 
consumers or calculate the amount of harm ``with certainty'' in 
order to provide restitution to those consumers.
    Explain why the Bureau chose not to attempt to establish 
either a defendant-administered or Bureau-administered redress 
process that could have been used to identify consumers harmed 
by ARA's unlawful collection practices. \12\
---------------------------------------------------------------------------
     \12\ In prior cases where the Bureau could not specifically 
identify all harmed consumers, it established defendant-administered 
and Bureau-administered redress processes to identify and compensate 
harmed consumers. For example, in the Bureau's settlement with debt 
relief provider Morgan Drexen, Inc., the Bureau affirmatively contacted 
potential impacted consumers, set up a website, and established a 
claims process for victims to receive compensation for their harm. See 
https://files.consumerfinance.gov/f/documents/201708-cfpb-morgan-
drexen-victim-compensation.pdf.

A.16. The Bureau weighs many factors to determine the precise 
mix of restitution, penalties, and injunctive relief 
appropriate in each case. Generally, when analyzing 
remediation, the Bureau considers all relevant facts and 
circumstances and seeks to make consumers whole for losses 
caused by a party's illegal conduct. While the Bureau is 
committed to seeking all appropriate relief for consumers, not 
every case lends itself to restitution for all potentially 
affected consumers, particularly in the context of a negotiated 
settlement. Given the evidence available to identify consumers 
who were subject to the verbal false threats, this resolution 
reflects the Bureau's assessment of what is an appropriate 
---------------------------------------------------------------------------
outcome under the circumstances and consistent with the law.

Q.17. In April, eight of my Senate colleagues and I wrote to 
you about the termination of the Bureau's existing Home 
Mortgage Disclosure Act (HMDA) Explorer and associated Public 
Data Platform Application Programming Interface (API) and the 
transfer of these data display functions to a new platform on 
the Federal Financial Institutions Examination Council (FFIEC) 
website. We are particularly concerned about the ability of 
individuals and organizations without sophisticated software to 
access and interpret HMDA data through the new portal. During a 
staff briefing pursuant to that letter, CFPB staff indicated 
that, based on their conversations in developing the new HMDA 
disclosure tool, 80 percent of HMDA data users wanted to be 
able to access data in Microsoft Excel format. While the 
functions on the new HMDA data website have improved since its 
launch, it remains impossible to download certain filtered data 
in a usable Excel format, filtering functions remain limited, 
and aggregate reports are no longer provided.
    Please provide responses to the following:
    What outreach has the Bureau done over the past 6 months to 
consumer advocates and local organizations to receive feedback 
on the new HMDA data tool?

A.17. The Bureau undertook efforts to engage with stakeholders 
in Summer 2018 when staff conducted user research with nine 
community groups to determine how HMDA data was being used and 
whether HMDA aggregate and disclosure (A/D) reports were 
useful. The results of this engagement created the key 
requirements for changes to HMDA data publications in 2019, and 
led to changes in A/D reports and the development of the HMDA 
Data Browser. These organizations included the National 
Community Reinvestment Coalition, Reinvestment Partners, Unidos 
US, National Consumer Law Center, Empire Justice Center, 
National Fair Housing Alliance, Association for Neighborhood 
Housing Development, Woodstock Institute, and Chattanooga 
Organized for Action.
    As the HMDA Data Browser was being developed, structured 
usability testing was conducted in July 2019 in order to test 
designs and data outputs. The structured usability testing was 
conducted with both internal and external users and allowed the 
Bureau to learn about our end users' behavior, needs, and 
expectations.
    The following community groups participated in the user 
testing sessions in July 2019: Association for Neighborhood and 
Housing Development, Empire Justice Center, Woodstock 
Institute, Illinois Peoples Action, National Community 
Reinvestment Coalition, National Consumer Law Center, National 
Fair Housing Alliance, Prosperity Now, and Unidos US.
    Most recently, on November 6, 2019, Bureau staff held a 
call with approximately 10 local community organizations, who 
are members of the National Reinvestment Coalition (NCRC), to 
discuss their concerns and to solicit feedback with the 
availability of certain A/D reports. The feedback provided 
during the Summer 2018 and 2019 and November 2019 engagements 
provided important feedback to the Bureau for helping to 
identify further refinements to HMDA usability.

Q.18. What feedback has the Bureau incorporated, and what 
feedback has the CFPB been unable to incorporate?

A.18. User testing identified an opportunity to provide clearer 
descriptions and instructions. Additionally, feedback revealed 
participants wanted columns in the data to be reordered so that 
similar data would be grouped together. Groups also requested 
easy access to a data dictionary in order to better understand 
the definitions of filters and individual data elements in the 
CSV download. These features were all incorporated into the 
released version of the HMDA Data Browser.
    Comments from the user testing sessions not only informed 
the current version of the HMDA Data Browser but also provided 
us with a set of additional features that will be developed in 
the future. This includes, but is not limited to, the ability 
to filter by more than two variables and the addition of 
predefined, presentation-ready visualizations based on common 
queries.

Q.19. What updates does the Bureau intend to make in the coming 
months that will make HMDA data more accessible for individuals 
and small- and medium-sized organizations that depend on HMDA 
data to analyze market access trends?

A.19. The HMDA Data Browser is being developed in an iterative 
fashion. The Bureau will provide additional functionalities and 
plans to gather user feedback and suggestions for improvements 
to the HMDA Data Browser on a regular basis. In the next 
updates to the HMDA Data Browser, the Bureau will provide the 
ability to create custom tables and datasets on a particular 
HMDA reporter and will allow for filtering the data by county, 
in addition to current MSA and State filters. Before the end of 
this year, the Bureau will also provide on the HMDA Platform 
additional documentation for the HMDA Data Browser that will 
assist users to isolate particular data within custom datasets 
that the Browser produces. The Bureau will continue its 
outreach to community groups to inform the development of 
resources to aid users in obtaining the data they need via the 
HMDA Data Browser.

Q.20. Has the Bureau conducted or received any additional 
research as part of its decision to delay the implementation or 
repeal certain portions of the Payday, Vehicle Title, and 
Certain High-Cost Installment Loans? If so, please identify the 
research, including the name of the researcher, and where the 
research is available to the public.

A.20. The Bureau decided to delay the implementation date of 
the mandatory underwriting provisions of the 2017 Payday, 
Vehicle Title, and Certain High-Cost Installment Loans final 
rule in order to allow the Bureau to consider whether to 
rescind those provisions as the Bureau has proposed. The basis 
for the delay is set out in the preamble to the Bureau's June 
2019 rule, 84 FR 27907 (June 17, 2019). The Bureau is currently 
considering approximately 190,000 comments regarding its 
proposal to rescind the mandatory underwriting provisions. The 
Bureau has made these comments available in the public 
rulemaking docket at https://www.regulations.gov/
docketBrowser?rpp-25&so-DESC&sb-commentDueDate&po-0&D-CFPB-
2019-0006. As the Bureau stated in its June 2019 delay rule, 
the Bureau remains open to the possibility that those comments 
may reveal other data, research, or arguments to confirm or 
refute the Bureau's proposed rescission of the mandatory 
underwriting provisions.

Q.21. Director Kraninger completed the reorganization of the 
Office of Fair Lending and Equal Opportunity that began under 
Acting Director Mulvaney, which included stripping OFLEO of its 
supervisory and enforcement authority. Under your and Mr. 
Mulvaney's leadership, the Bureau has not brought a single 
enforcement actions alleging violations of the Equal Credit 
Opportunity Act (ECOA). Please provide responses to the 
following:
    How many enforcement investigations into potential 
violations of ECOA did the Bureau open in 2018 and 2019?

A.21. The Bureau's specific supervisory and investigatory 
enforcement activity is confidential. In 2018 and 2019, the 
Bureau had a number of ongoing fair lending investigations of 
institutions involving a variety of consumer financial 
products. One key area on which the Bureau has focused its fair 
lending enforcement efforts is addressing potential 
discrimination in mortgage lending, including the unlawful 
practice of redlining. At the end of Fiscal Year 2019, the 
Bureau had a number of pending investigations in this and other 
areas.

Q.22. Describe in detail the resources, if any, that the Bureau 
has dedicated to the enforcement of fair lending laws.

A.22. The Office of Enforcement is responsible for the 
enforcement of fair lending laws. As of September 2019, 
Enforcement has an allotted headcount of 150 full time 
employees. All Enforcement attorneys can participate in the 
investigation of any potential violation of Federal consumer 
financial law, including those focused on fair lending. The 
resources the Office of Enforcement deploys on fair lending 
matters is dependent on a number of factors, including the 
facts and circumstances of particular investigations.
    The Office of Supervision Examinations is responsible for 
supervising entities for compliance with fair lending laws. 
Every Bureau examiner is trained to conduct fair lending 
examinations. During the course of a fair lending examination, 
the assigned team of examiners reviews the institution's books 
and records for compliance with fair lending laws using the 
Bureau's fair lending examination procedures. In addition, the 
Office of Supervision Examinations operates a National Fair 
Lending Examination Team, which includes a representative from 
each of the four regions, in addition to a senior examination 
manager, who are fully dedicated to fair lending examination 
work. This national team creates fair lending job aids and 
serves as an expert resource on fair lending matters for 
examiners across the country as they engage in fair lending 
work. The Office of Supervision Policy's fair lending team 
currently includes five attorneys and two analysts who are 
devoted to fair lending supervision matters.

Q.23. Describe the Bureau's fair lending goals, how it intends 
to achieve those goals, and how it will measure success.

A.23. The Bureau is committed to fair lending and will continue 
to vigorously enforce fair lending laws within our 
jurisdiction. By utilizing the tools of education, regulation, 
supervision, and enforcement, the Bureau can focus on 
preventing harm to consumers, which includes protecting 
consumers from unfair, deceptive, and abusive acts or practices 
as well as from discrimination. The Bureau's purpose is to 
ensure all consumers have access to consumer financial products 
and we will continue that purpose while exploring ways to 
increase access to credit for all, especially those in the 
unbanked and underbanked communities.

Q.24. The Bureau's proposed rule to implement the Fair Debt 
Collection Practices Act (FDCPA) would allow debt collectors to 
send unlimited text messages to consumers. But as the Bureau 
recognizes, millions of consumers do not have unlimited text 
messaging plans and would incur a charge for text messages from 
debt collectors. \13\ The Bureau also recognizes that 
``receiving a text message from a debt collector may be similar 
to accepting a collect call from a debt collector,'' which is 
expressly prohibited by the Section 808(5) of the FDCPA. Please 
provide answers to the following:
---------------------------------------------------------------------------
     \13\ See Notice of Proposed Rulemaking at 114 and at n. 255, 
available at https://files.consumerfinance.gov/f/documents/cfpb-debt-
collection-NPRM.pdf.
---------------------------------------------------------------------------
    Has the Bureau conducted a cost-benefit analysis to 
quantify the amount of potential charges to consumers text 
messages from consumers? If so, please provide the results of 
that analysis.

A.24. The Bureau's proposed debt collection rule does not allow 
for unlimited text messaging. Since 1977, the FDCPA has 
prohibited debt collectors from engaging in harassment, abuse, 
and unfair practices regardless of method of communication, 
including text messages. Debt collectors would continue to be 
prohibited from engaging in such conduct if the proposed rule 
were made final. In particular, even though the proposed rule 
does not include a specific limit on the number of texts a debt 
collector could send, if the rule were adopted a debt collector 
who sends too many texts would still violate the FDCPA. 
Further, the proposed rule would give consumers the power to 
stop future texts or emails as soon as they receive the first 
message. The proposed rule sought comment on the issue of text 
messages, and the Bureau is carefully reviewing and considering 
all comments.
    The Bureau is not aware of representative data that could 
be used to quantify the amount of potential charges to 
consumers who receive text messages from debt collectors, 
either today or under the proposed rule. As part of the process 
of seeking public comment on the proposed rule, the Bureau 
asked for data or studies that could help quantify the costs 
and benefits to consumers of the proposed rule's provisions, 
including those related to communication attempts, but did not 
receive representative data that could quantify costs to 
consumers from receiving text messages. While the absence of 
representative data means that the Bureau is not currently able 
to quantify potential costs to consumers, the Bureau notes that 
under the proposal these costs would be limited in part by 
consumers exercising their option under the proposal to opt out 
of text messages if they do not wish to receive them because 
they would incur a charge to receive them.

Q.25. Did the Bureau consider whether consumers could opt-in to 
receiving text messages so that, among other things, they could 
avoid text messaging charges? If it did, please explain why the 
Bureau did not include it in the proposed rule.

A.25. The FDCPA does not explicitly prohibit debt collectors 
from sending text messages to consumers, nor does it require 
consumers to opt-in to such communications. Consequently, debt 
collectors may currently be sending text messages to consumers 
without offering them any opportunity to opt-out. In contrast, 
proposed 1006.6(e) would require debt collectors to notify 
consumers how to opt out of receiving electronic debt 
collection communications or communication attempts directed at 
a specific email address, telephone number for text messages, 
or other electronic-medium address. This proposal would enhance 
the ability of consumers to not receive electronic debt 
collection communications, for example, if they believe they 
receive too many such communications or if they are incurring 
charges from them.
    Proposed 1006.6(e) also would require a debt collector who 
communicates or attempts to communicate with a consumer 
electronically in connection with the collection of a debt 
using a specific email address, telephone number for text 
messages, or other electronic-medium address to include in each 
such communication or attempt to communicate a clear and 
conspicuous statement describing one or more ways the consumer 
can opt out of further electronic communications or attempts to 
communicate by the debt collector to that address or telephone 
number. Proposed 1006.6(e) also would prohibit a debt 
collector from requiring, directly or indirectly, that the 
consumer, in order to opt out, pay any fee or provide any 
information other than the email address, telephone number for 
text messages, or other electronic-medium address subject to 
the opt-out. The proposed rule sought comment on issues related 
to text messages and the Bureau is carefully reviewing and 
considering all comments.

Q.26. The Bureau's proposed FDCPA rule would allow debt 
collectors to send consumers emails or direct messages that 
contain hyperlinks with required disclosures under Section 
1692g(a). But the FTC has spent years educating consumers about 
the dangers of clicking on links from unfamiliar sources 
because they can lead to phishing attacks or malware downloaded 
onto consumers' computers or devices. \14\ The FBI's Internet 
Crime Complaint Center reported that consumers lost $30 million 
to phishing schemes in a year. \15\ Please providing the 
answers to the following:
---------------------------------------------------------------------------
     \14\ See, e.g., https://www.consumer.ftc.gov/articles/how-
recognize-and-avoid-phishing-scams.
     \15\ Id.
---------------------------------------------------------------------------
    Did the Bureau conduct or receive any studies or analyses 
to determine whether the proposed rule would increase the 
incidents of phishing or other attacks by consumers clicking on 
harmful hyperlinks? If so, please provide the studies and 
analyses.

A.26. The Bureau is aware of concerns about consumers accessing 
disclosures through hyperlinks; the proposed rule states that 
``[f]ederal agencies have advised consumers against clicking on 
hyperlinks provided by unfamiliar senders'' and cites to two 
Federal Trade Commission (FTC) articles and a Federal Deposit 
Insurance Corporation (FDIC) publication on this topic. \16\ 
Because of these concerns, proposed 1006.42(c)(2)(ii) and 
1006.42(d) describe consumer notice-and-opt-out processes meant 
to ensure that, before a debt collector sends a required 
disclosure by hyperlink, the consumer expects to receive it and 
does not object to such receipt. By helping the consumer 
identify the sender in advance, a notice-and-opt-out process 
may also reduce the risk that the consumer will treat an email 
containing a hyperlink as spam.
---------------------------------------------------------------------------
     \16\ Debt Collection Practices (Regulation F), 84 FR 23274, 23363 
(May 21, 2019).
---------------------------------------------------------------------------
    The Bureau is not aware of representative data that could 
be used to predict how the proposed rule's provisions related 
to providing disclosures via an emailed hyperlink would affect 
incidents of phishing.

Q.27. Given the FTC's warnings on the dangers of clicking on 
hyperlinks, did the Bureau conduct or receive any studies or 
analyses to determine whether consumers would not click on 
hyperlinks and therefore not receive the required disclosures 
with information on consumers' rights? If so, please provide 
the studies and analyses.

A.27. The Bureau is not aware of representative data that could 
be used to predict whether or how often consumers would not 
click on hyperlinks provided by debt collectors pursuant to the 
proposal, or how this would compare with whether or how often 
consumers receive required disclosures delivered by other 
means. The Bureau has been conducting survey research on debt 
collection disclosures, and as part of that research asked 
respondents how willing they would be to receive a notice from 
a debt collector that was delivered by hyperlink. The Bureau is 
in the process of analyzing the data from the survey.
    The Bureau is aware of concerns about consumers accessing 
disclosures through hyperlinks; the NPRM states that 
``[f]ederal agencies have advised consumers against clicking on 
hyperlinks provided by unfamiliar senders'' and cites to two 
FTC articles and an FDIC publication on this topic. \17\ 
Because of these concerns, proposed 1006.42(c)(2)(ii) and 
1006.42(d) describe consumer notice-and-opt-out processes meant 
to ensure that, before a debt collector sends a required 
disclosure by hyperlink, the consumer expects to receive it and 
does not object to such receipt. By helping the consumer 
identify the sender in advance, a notice-and-opt-out process 
may also reduce the risk that the consumer will treat an email 
containing a hyperlink as spam. The Bureau requested comment on 
the use of hyperlinks to deliver disclosures and is reviewing 
those comments now. The Bureau will continue to consider 
feedback and other information in reviewing the proposed rule's 
interventions as it moves forward towards a final rule.
---------------------------------------------------------------------------
     \17\ Debt Collection Practices (Regulation F), 84 FR 23274, 23363 
(May 21, 2019).

Q.28. Did the Bureau consult with or seek input from the FTC on 
the proposal to allow debt collectors to deliver access to 
disclosures through hyperlinks? If so, please describe in 
detail which Bureau staff consulted with the FTC, with whom 
they consulted at the FTC, the dates of such consultation(s), 
---------------------------------------------------------------------------
and all feedback from the FTC.

A.28. The Bureau conducted interagency consultations with 
relevant Federal agencies, including the FTC, in advance of 
releasing the debt collection NPRM. Those interagency 
consultations included a discussion of electronic delivery of 
required notices. As part of these consultations, the Bureau 
received questions and feedback from the FTC on a variety of 
topics covered by the NPRM. FTC staff also filed a comment 
letter in response to the Bureau's NPRM.

Q.29. The Seventh Circuit Court of Appeals recently ruled that 
a debt collector had failed to comply with the FDCPA by sending 
emails with links to disclosures required under Section 
1692g(a) of the FDCPA. \18\ The court concluded that the emails 
did not `` `contain' the statutorily mandated disclosures. 
Section 1692g(a). At most the emails provide a means to access 
the disclosures via a multistep online process.'' \19\ Based on 
this ruling by the Seventh Circuit, has the Bureau reconsidered 
whether to permit debt collectors to deliver required 
disclosures through hyperlinks?
---------------------------------------------------------------------------
     \18\ Lavallee v. Med-1 Solutions, LLC, 932 F.3d 1049 (7th Cir. 
2019).
     \19\ Id. at 1050.

A.29. The Bureau is closely following case law related to 
topics covered by the proposed debt collection rule. The Bureau 
is also in the process of reviewing the many public comments 
received on the proposed debt collection rule. The Bureau will 
continue to consider feedback and other information in 
reviewing the proposed rule's interventions as it moves forward 
towards a final rule.
                                ------                                


        RESPONSES TO WRITTEN QUESTIONS OF SENATOR TOOMEY
                      FROM KATHY KRANINGER

Q.1. Because of the unique legal status of tribes, there 
appears to be a frustrating lack of clarity regarding what 
constitutes a legitimate tribal lending entity. Bad actors 
could seek to exploit this regulatory uncertainty to take 
advantage of consumers. Good actors could remain on the 
sideline, denying consumers access to credit. What steps have 
you taken or are you considering taking to provide clear rules 
of the road to tribal lenders?

A.1. The Bureau has not issued any guidance on this topic but 
is sensitive to the concerns you are raising and will continue 
to consider input from relevant stakeholders on the subject. 
The Bureau has investigated tribally affiliated lending 
entities in the past and will continue to do so. A few years 
ago, the Ninth Circuit held, in the context of a CID 
enforcement action, ``that the Consumer Financial Protection 
Act, a law of general applicability, applies to tribal 
businesses.'' Consumer Fin. Prot. Bureau v. Great Plains 
Lending, LLC, 846 F.3d 1049, 1054 (9th Cir.), cert. denied, 138 
S. Ct. 555, 199 L. Ed. 2d 436 (2017). In our opposition to the 
petition for certiorari the Bureau (through DOJ) maintained our 
position that the CFPA applies to tribally owned lenders. 
Accordingly, we expect all lenders, including tribally 
affiliated lenders to comply with Federal consumer financial 
law.
                                ------                                


        RESPONSES TO WRITTEN QUESTIONS OF SENATOR SCOTT
                      FROM KATHY KRANINGER

Q.1. On March 12, 2019, when directly asked whether you view 
the CFPB as an agency with regulatory authority over insurance 
products, Director Kraninger, you testified that ``no, [ . . . 
] I do not. Dodd-Frank stipulated in Title X that we [the CFPB] 
do not regulate State-regulated insurance.''
    Given your testimony and your position that the CFPB has 
statutorily limited responsibilities in this space, can the 
CFPB explain how it handles the receipt and referral of 
consumer complaints received regarding insurance related 
products. The CFPB ``Consumer Complaints Database'' contains a 
number of consumer complaints that include the term 
``insurance.'' As of October 17, 2019, the term ``insurance'' 
is referenced 22,026 times across the spectrum of complaints 
received since the database was established on June 19, 2012 
(reflecting an over 1.5 percent share of total complaints). 
Specific insurance products are referenced 6,237 times, such as 
``life insurance,'' ``credit insurance,'' and various 
iterations of homeowners insurance.
    Acknowledging that the Bureau may be perceived to have a 
jurisdictional nexus on some of these circumstances by the 
consumer, with regard to the business of insurance as it 
applies to these complaints, how are such complaints handled 
and how are consumers notified to file their compliant with a 
State insurance regulator? Furthermore, is it the CFPB's 
position that it has taken the necessary steps to notify 
consumers seeking to file a complaint that the agency has 
limited jurisdiction on matters related to the business of 
insurance?

A.1. The Bureau's complaint submission process is designed to 
centralize the collection of, monitoring, and response to 
complaints about consumer financial products and services. \1\ 
The Bureau's complaint process is not designed to collect 
complaints about insurance products and services and it does 
not send complaints to bona fide insurance companies for 
response. A keyword search of the public, Consumer Complaint 
Database for terms related to insurance will return complaints 
that the Bureau has sent to financial companies for response, 
such as complaints about a mortgage servicer's handling of a 
consumer's escrow account or a title insurance agent's handling 
of a real estate loan closing.
---------------------------------------------------------------------------
     \1\ See Dodd-Frank Wall Street Reform and Consumer Protection Act 
of 2010, Pub. L. No. 111-203 (Dodd-Frank Act), Section 1013(b)(3)(A).
---------------------------------------------------------------------------
    When consumers submit complaints online or over the phone, 
the Bureau asks them to identify the consumer financial product 
or service with which they have a problem, the type of problem 
they are having with that product or service, and the company 
about which they are submitting the complaint. This submission 
process does not provide consumers with options to submit 
complaints about a bona fide insurance company. In 2018, more 
than 86 percent of the complaints submitted to the Bureau were 
submitted by consumers through the Bureau's website (81.5 
percent) and by calling the Bureau's toll-free telephone number 
(4.9 percent). If consumers call with questions about insurance 
companies or attempt to submit a complaint about an insurance 
company over the phone, the Bureau's contact center agents 
direct consumers to contact their State insurance commissioner. 
The Bureau also receives complaints through referral from the 
White House, congressional offices, other Federal and State 
agencies (8.1 percent), mail (3.5 percent), fax (1.9 percent), 
and email (< 0.1 percent). In the rare instances that the 
Bureau receives a complaint about an insurance company through 
one of these channels, the Bureau notifies the consumer that it 
cannot process the complaint and that the Bureau has added the 
complaint to the Consumer Sentinel Network, a secure online 
database operated by the Federal Trade Commission for civil and 
criminal law enforcement authorities.
                                ------                                


        RESPONSES TO WRITTEN QUESTIONS OF SENATOR MORAN
                      FROM KATHY KRANINGER

Q.1. The CFPB is in the midst of sorting through the 12,000 
plus comments submitted on the proposed debt collection rule. 
There are some concerns by banks that they might be 
inadvertently (and inappropriately) subject to the rule due to 
UDAAP commentary in the proposal. Can you confirm whether the 
rule will explicitly only be for third party debt collection, 
and not apply to first party lenders, as the Bureau has 
previously indicated?

A.1. The proposed rule applies only to ``debt collectors'' as 
defined in the Fair Debt Collection Practices Act (FDCPA). 
FDCPA section 803(6)'s definition of debt collector does not 
typically cover creditors who are engaged in their own 
collections. The Notice of Proposed Rulemaking (NPRM) defines 
the term ``debt collector'' by restating FDCPA section 803(6)'s 
definition. Consistent with this definition, the preamble to 
the proposed rule states repeatedly that the rule would cover 
only debt collectors as defined in the FDCPA. Note that the 
question as to creditor coverage often arises in connection 
with the proposed call caps in the NPRM. The NPRM's preamble 
focuses on consumers' experiences with, and complaints about, 
telephone calls from FDCPA-covered debt collectors.
    Many industry stakeholders have requested increased 
clarification surrounding the potential application of the 
proposed rule or the reasoning in it (especially its 
application of UDAAP principles) to creditor collections. 
Creditors in collections may have different incentives than 
debt collectors in collection because concerns about 
reputational harm may be more of a constraint on the conduct of 
creditors, a key consideration underlying Congress' decision 
not to include creditor collections within the FDCPA. Moreover, 
there may be other facts and circumstances that would warrant 
different treatment of creditors and debt collectors when 
engaged in collections. The Bureau is carefully considering the 
request for clarification that creditor collections are not 
covered by any final debt collection rule it issues.

Q.2. Bankers across the country have indicated that supervision 
and enforcement teams are ``pushing the envelope'' by exceeding 
their mandates, making onerous information requests and 
creating their own policy determinations.
    At financial institutions, the importance of CEOs setting 
the appropriate ``tone from the top'' is often stressed. How is 
the Bureau doing so? How is the message delivered and carried 
through to the field offices and representatives executing the 
exams and enforcement activity?

A.2. As Director, I establish the tone and expect my leadership 
team to communicate that tone and my priorities to staff 
whenever addressing examiners, supervision staff, and 
enforcement staff. Specifically, the tone is set by:

    the Director,

    the Deputy Director,

    the Supervision, Enforcement, and Fair Lending 
        Associate Director,

    the Supervision Assistant Directors, and

    the Assistant Director of Enforcement.

    The Bureau senior executives convey their intent, goals, 
and strategy during regular scheduled meetings and calls, as 
well as semiannual conferences with the examiners and staff. 
Enforcement also has a Policies and Procedures Manual that is 
periodically updated and that sets forth guidance and policies 
that govern Enforcement's work. I believe in being visible and 
accessible as a leader and including staff interactions in my 
travels, walks around headquarters, and open-door office hours.

Q.3. Since there are various regional offices throughout the 
country, how do you create consistency to ensure all 
institutions are subject to the same interpretations of the 
rules and compliance standards and, in turn, consumers have the 
same equal consumer protections?

A.3. Supervision senior leaders (including regional directors) 
meet monthly in person and weekly via teleconference to discuss 
Bureau goals and strategies. Moreover, the Bureau's examination 
process is generally centralized. All examination reports and 
citations of violations are reviewed by attorneys at our 
headquarters to ensure the law is applied and interpreted 
consistently across institutions.
    Enforcement also has staff across the regional offices. All 
Enforcement staff coordinate their work through headquarters in 
Enforcement and all Enforcement staff are subject to 
Enforcement's Policies and Procedures Manual.

Q.4. The CFPB held a symposium on the ``abusive'' prong of 
UDAAP this past summer. The ambiguity that currently exists 
creates difficulties and harms for lenders and consumers by 
deterring new/beneficial offerings and features. Does the 
Bureau plan to define abusive or issue any guidance in this 
area?

A.4. Although Congress provided some indication of the meaning 
of abusiveness through a definition in the Dodd-Frank Wall 
Street Reform and Consumer Protection Act (Dodd-Frank Act), 
abusiveness does not have the long and rich history of 
unfairness or deception. Substantial concerns have been raised 
about the uncertain and indeterminate meaning of abusiveness 
under the Dodd-Frank Act, including during the Bureau's June 
2019 symposium. The Federal Trade Commission has used its 
authority under the Federal Trade Commission (FTC) Act to 
address unfair and deceptive acts or practices for over 80 
years, and the prudential regulators have also enforced this 
prohibition since before the Bureau's existence. Ultimately 
this uncertainty is not beneficial to the marketplace: 
businesses that want to comply with the law face great 
challenges in doing so and these challenges can impose large 
costs, including impeding innovation. And consumers ultimately 
may lose the benefits of improved products and lower prices if 
lack of clarity imposes such costs.
    During our symposium, we heard considerable feedback to 
help inform the Bureau's path forward regarding the myriad of 
complex considerations. The Bureau has a responsibility to 
provide greater clarity on how it plans to implement or apply 
this standard. At the same time, the Bureau recognizes the need 
for the jurisprudential environment to build the common law 
around abusiveness. We are looking to do both with a concrete 
step in the near future.

Q.5. In your testimony, you stated: ``The Bureau's fair lending 
activity involves regular coordination with other Federal and 
State regulatory and enforcement partners. During the reporting 
period, Office of Fair Lending and Equal Opportunity (OFLEO) 
staff continued to lead the Bureau's fair lending interagency 
coordination and collaboration efforts by working with partners 
on the Interagency Working Group on Fair Lending Enforcement, 
and chairing the Interagency Task Force on Fair Lending and the 
Federal Financial Institutions Examination Council (FFIEC) HMDA 
Data Collection Subcommittee.'' Depending upon the financial 
sector being evaluated for bad actors, in some cases it seems 
that the Bureau appears to be inserting itself in areas where 
the FTC, OCC, and FDIC have primary jurisdiction but are still 
pursuing enforcement actions.
    Can you explain the clear lines of policy, regulatory, and 
oversight demarcation where the Bureau and these agencies 
differ? Furthermore, please explain which agencies have the 
lead in monitoring, oversight and enforcement over such 
financial institutions such as community banks, etc.

A.5. The Bureau, the prudential regulators, and the FTC have 
separate, distinct, and independent statutory mandates. The 
Bureau has exclusive authority to supervise certain 
nondepository institutions engaged in certain product markets 
to assure compliance with Federal consumer financial law. \1\ 
While the Bureau's authority to enforce the Federal consumer 
financial law with respect to such institutions is generally 
exclusive, the Bureau shares authority with the FTC and is 
required to (and does) coordinate with the FTC on such matters. 
\2\ Pursuant to that statutory requirement, the Bureau recently 
renegotiated its coordination MOU with the FTC. Additionally, 
the Bureau works closely with State regulators to coordinate 
and reduce burden.
---------------------------------------------------------------------------
     \1\ 12 U.S.C. 5514(d).
     \2\ 12 U.S.C. 5514(c).
---------------------------------------------------------------------------
    With respect to insured banks and credit unions with more 
than $10,000,000,000 in total assets, the Bureau has exclusive 
supervisory authority to assess their compliance with Federal 
consumer financial laws, obtain information about their 
activities subject to such laws and associated compliance 
systems or procedures, and detect and assess associated risks 
to consumers and markets for consumer financial products and 
services. \3\ To ensure consistency and minimize regulatory 
burden, we coordinate our supervisory activities with the 
prudential regulators. Moreover, to the extent the Bureau and 
another Federal agency are authorized to enforce a Federal 
consumer financial law against such a bank or credit union, the 
Bureau has primary enforcement authority. \4\ Similarly, the 
Bureau also works closely with State regulators to coordinate 
and reduce burden.
---------------------------------------------------------------------------
     \3\ 12 U.S.C. 5515(b)(1).
     \4\ 12 U.S.C. 5515(c).
---------------------------------------------------------------------------
    The Bureau generally lacks supervisory and enforcement 
authority over insured banks and credit unions with 
$10,000,000,000 or less in total assets. Instead, the 
prudential regulators, and not the Bureau, would have the 
relevant supervisory and enforcement authority over these 
smaller banks and credit unions.
    In keeping with statutory requirements that the Bureau 
coordinate with the prudential regulators, the Bureau works 
with the Federal prudential regulators on examination planning 
and policy considerations, as outlined in a May 2012 
interagency MOU. We also meet with the prudential regulators 
periodically to coordinate supervisory and other activities. 
Bureau supervisory staff and the Federal prudential regulators 
also confer on a routine basis to discuss examinations and 
other supervisory matters regarding particular institutions. 
Overall, I am engaged with the prudential regulators on ways to 
ensure consistency, help minimize regulatory burden and 
duplication on all supervised institutions, and accomplish our 
separate, distinct, and independent statutory mandate.

Q.6. There is some concern that the Bureau's Enforcement 
division continues to target businesses, particularly small 
businesses in sectors where the Bureau's own data shows that 
the number of complaints are small or nonexistent and the 
monetary impact on consumers is grossly overshadowed by the 
expense that the Bureau incurs in 2-3 year CID process, not to 
mention the cost of litigation should the business choose not 
to settle. While the cost to the taxpayer for these endeavors 
are of concern, the most concerning thing is the tremendous 
impact that the CFPB with its $500 million annual operating 
budget is having on CIDs for small businesses with annual 
operating budgets that are 1-2 percent of that number. Many of 
us on the Committee have heard stories where the Bureau's 
Enforcement division has exercised its broad CID powers to the 
detriment of many small businesses in the pursuit of alleged 
violations that are in some cases 5 to 7 years old.
    Can you please explain how the Enforcement Bureau and CFPB 
leadership is prioritizing cases to invest its time and 
taxpayer resources on?
    Is there a materiality focus and timeliness prioritization 
that focuses on stopping current bad actors and reducing future 
consumer harm?
    As the Director, what direction are you providing to the 
Enforcement staff with respect to the following:
    Focusing on matters that effect present day consumers 
versus historical and outdated claims;
    The impact that the immense power and weight of the Bureau 
has on small businesses; and
    The amount of consumer harm (dollars and impacted 
individuals) that merits a Federal action.

A.6. The Consumer Financial Protection Act (CFPA) specifies the 
objectives of the Bureau, which include ensuring that:

    Consumers are protected from unfair, deceptive, or 
        abusive acts and practices and from discrimination;

    Consumers are provided timely and understandable 
        information to make responsible decisions about 
        financial transactions (i.e., through enforcing the 
        Truth in Lending Act, Gramm-Leach-Bliley Act, Fair 
        Credit Billing Act, and other enumerated laws with 
        disclosure obligations); and

    Federal consumer financial law is enforced 
        consistently in order to promote fair competition. 
        Using these overall objectives, Enforcement regularly 
        evaluates strategic priorities, and uses a variety of 
        sources in that process. Some of those sources of 
        information include:

    Consumer complaints--CFPB's Consumer Response and 
        the FTC's Consumer Sentinel;

    The Bureau's whistleblower hotline;

    Other agency referrals/leads--including from State 
        Attorneys General, State regulators, prudential 
        regulators, and other Federal agencies;

    Information gathered from industry or market 
        developments; and

    The results of exams by Supervision.

    In addition, if there is a particular group of consumers--
like servicemembers, or older Americans--that are being 
targeted or particularly impacted by certain practices, that 
may lead Enforcement to prioritize those issues too. 
Enforcement actions are intended to get to the bottom of any 
misconduct and the impact on consumers and to evaluate the 
appropriate amount of civil money penalties that may be 
imposed.
    Whether to prioritize a particular set of issues can depend 
on the level of consumer or market harm as well as an 
assessment of the need for specific and general deterrence.
                                ------                                


               RESPONSES TO WRITTEN QUESTIONS OF
             SENATOR MENENDEZ FROM KATHY KRANINGER

Q.1. The Court of Appeals for the 7th Circuit recently ruled 
that debt collectors using hyperlinked disclosure did not meet 
the requirements of the Fair Debt Collection Practices Act. In 
light of the ruling, is the CFPB reconsidering allowing debt 
collectors to use hyperlinked disclosures as part of the 
Bureau's proposed debt collection rule?

A.1. The Bureau is closely following case law related to topics 
covered by the proposed debt collection rule. The Bureau is 
also in the process of reviewing the many public comments 
received on the proposed debt collection rule. The Bureau will 
continue to consider feedback and other information in 
reviewing the proposed rule's interventions as it moves forward 
towards a final rule.

Q.2. There is a significant problem of older consumers being 
targeted for financial exploitation. CFPB's own Spring 2019 
Semiannual Report found that, from 2013 to 2017, more than 
180,000 suspicious activity reports involved senior citizens 
being victims of attempted or suspected fraud.
    Dodd-Frank's Section 989A(b) gave the CFPB a tool to help 
address this problem by requiring the CFPB to establish a grant 
program to allow eligible States to identify bad actors, 
provide educational materials and training to seniors, and 
enhance State law to provide protections for seniors against 
misleading or fraudulent marketing.
    In order to ensure senior citizens are protected from 
financial exploitation and abuse, please provide answers to the 
following questions:
    Is the CFPB planning on starting its senior grant program, 
pursuant to Section 989A(b) of Dodd-Frank?

A.2. Currently, the Bureau does not have plans for the 
disbursement of grants or the implementation of Section 989A of 
the Dodd-Frank Wall Street Reform and Consumer Protection Act 
(Dodd-Frank Act), As previously noted, no appropriations were 
provided to implement these grants, nor did Congress mandate 
that grants be provided.

Q.3. Under your leadership, what steps has the CFPB taken to 
implement Section 989A(b) of Dodd-Frank?

A.3. See previous answer.

Q.4. Can you provide a timeline as to when the CFPB expects to 
launch its senior grant program?

A.4. See previous answer.
                                ------                                


        RESPONSES TO WRITTEN QUESTIONS OF SENATOR WARREN
                      FROM KATHY KRANINGER

Q.1. Rulemaking--On July 31, 2019, the Bureau released an 
Advanced Notice of Proposed Rulemaking (ANPR) that clarifying 
its intentions to let the Qualified Mortgage Patch to expire in 
January 2021 or after a short extension, if necessary. \1\ The 
Bureau's analysis stated ``approximately 957,000 loans--16 
percent of all closed-end first-lien residential mortgage 
originations in 2018--fell within the Temporary GSE QM loan 
definition but not the General QM loan definition.''
---------------------------------------------------------------------------
     \1\ Consumer Financial Protection Bureau, Federal Register Notice, 
``Qualified Mortgage Definition Under the Truth in Lending Act 
(Regulation Z)'', July 31, 2019, https://www.federalregister.gov/
documents/2019/07/31/2019-16298/qualified-mortgage-definition-under-
the-truth-in-lending-act-regulation-z.
---------------------------------------------------------------------------
    In anticipating how the market would respond if the patch 
were removed, the notice stated that ``some borrowers who would 
have sought High-DTI GSE loans might not obtain loans at all.''
    What is the dollar amount and percentage of total loan 
origination volume in 2018 that were qualified mortgages only 
because of the QM Patch?

A.1. The ANPR states that the Bureau estimates that 16 percent 
of all closed-end first-lien residential mortgage origination 
volume fell within the Temporary GSE QM loan definition, but 
not the General QM loan definition, due to DTI ratios exceeding 
43 percent. This estimate does not include Temporary GSE QM 
loans which may fall outside the General QM loan definition due 
to documentation incompatible with Appendix Q requirements. The 
Bureau estimates that the total amount of these loans was 
approximately $240 billion. Some of those loans likely could 
have been originated as QM loans under other elements of the QM 
Rule and of the QM rules promulgated by other governmental 
agencies.

Q.2. What is the total number and percentage of total borrowers 
in 2018 that were able to obtain qualified mortgages only 
because of the QM Patch?

A.2. Given the alternative categories of qualified mortgages 
available to High DTI borrowers in 2018, particularly FHA 
loans, VA loans, and Small Creditor QMs, the Bureau believes 
that most borrowers in 2018 whose loans fell within the 
Temporary GSE QM loan definition, but not the General QM loan 
definition, would have been able to obtain qualified mortgages. 
In addition, some borrowers obtaining High DTI GSE loans would 
likely have been able to lower their DTI by, for example, 
paying off or restructuring other debts or increasing their 
down payment in order to obtain loans within the General QM 
loan definition.

Q.3. How many borrowers does the Bureau estimate will no longer 
obtain loans once the QM Patch has expired?
    How many of these individuals are low-, moderate-, and 
middle-income borrowers?

A.3. The number of borrowers who may be unable to obtain loans 
once the QM patch expires will depend on a wide range of 
factors including the number of consumers seeking to purchase a 
home or refinance a mortgage at any given period of time and 
the credit standards of Government agencies (including FHA), 
the GSEs, and lenders originating non-Government, non-GSE 
loans. Also, relevant will be the definition of Qualified 
Mortgage when the patch expires, an issue the Bureau has 
announced it will be reconsidering. Given all this, the Bureau 
cannot estimate with precision the number of consumers who may 
no longer be able to obtain loans once the QM patch expires.

Q.4. How many of these individuals are first time home buyers?

A.4. Please see previous answer.

Q.5. How many of these individuals are people of color?

A.5. Please see previous answer.

Q.6. For those borrowers who are currently covered by the QM 
Patch and are estimated to still be able to borrow on the 
private market or via a loan guaranteed by FHA (Federal Housing 
Agency) following the expiration of the patch, will the 
borrowing costs for any of these individuals increase?
    If so, by how much?

A.6. Whether borrowers who are currently covered by the QM 
patch and would still be able to borrow on the private market 
or via a loan guaranteed by FHA will pay more than they would 
absent the expiration of the patch depends on a number of 
factors, including the profile of those consumers (e.g., their 
credit score, loan-to-value ratio, assets) and of the 
properties they seek to purchase and pricing decisions made by 
FHA, the GSEs, and lenders originating non-Government, non-GSE 
loans. Also, relevant will be the definition of Qualified 
Mortgage when the patch expires, an issue the Bureau has 
announced it will be reconsidering. Given all this, the Bureau 
cannot estimate with precision whether, and to what extent, the 
expiration of the QM patch would increase the cost of credit 
for future borrowers. However, based on current and historical 
pricing patterns, it is likely borrowing costs would increase 
for some borrowers if they cannot obtain a GSE or portfolio 
loan and instead take out an FHA loan.

Q.7. The analysis also says that other borrowers who obtained 
loans covered by the GSE Patch ``may simply adapt and make 
different choices,'' including ``adjusting their borrowing to 
result in a lower DTI ratio.''
    How many individuals and by what dollar volume will these 
individuals be forced to ``adjust'' their borrowing?

A.7. Given the alternative categories of qualified mortgages 
available to High DTI borrowers, particularly FHA loans, VA 
loans, Small Creditor QMs, and the expanded portfolio QM 
amendments created by the 2018 Economic Growth, Regulatory 
Relief, and Consumer Protection Act (EGRRCPA), the Bureau 
believes that, absent changes in those alternative categories, 
most borrowers who obtained loans covered by the GSE Patch 
would still be able to obtain qualified mortgages at the same 
DTI ratio even if the Bureau did not adjust the General QM 
definition. The number of borrowers who would be required to 
adjust their borrowing upon the expiration of the patch, and 
the dollar volume of such adjustments, will depend upon the 
same set of factors listed in response to Part C of this 
questions as well as any changes in the credit standards of 
other Government agencies (including FHA and VA). For the 
reasons stated therein the Bureau cannot estimate these numbers 
with precision.

Q.8. What are some of the ``other choices'' that these 
borrowers might make?

A.8. As noted above, the Bureau believes that most borrowers 
who obtained loans covered by the GSE Patch would still be able 
to obtain qualified mortgages at the same DTI ratio even if the 
Bureau did not adjust the General QM definition under the 
current QM standards maintained by the Bureau and other 
agencies. To the extent there are borrowers for whom that is 
not true, the choices available to them will depend upon the 
types of products offered on the market, the underwriting 
criteria for those products, borrowers' personal preferences 
and financial capabilities, and the parameters of the General 
QM definition. For example, if the market did not offer higher 
DTI loans, high DTI purchase loan borrowers could most directly 
decrease their loan amounts to obtain a General QM loan by 
either increasing their down payment, negotiating a lower 
purchase price or purchasing a lower-priced home. Cash-out 
refinance borrowers would likely be required to extract less 
equity from their home. Rate and term refinance borrowers would 
likely be required to pay down additional loan principal prior 
to refinancing. In each of these cases, borrowers with other 
nonmortgage debts could also pay off or restructure these 
debts, reducing or eliminating the required payments on these 
debts in their DTI ratio.

Q.9. Is it your view that removing a key mechanism for which 
many borrowers, particularly low-income borrowers and borrowers 
of color, rely on to access credit can appropriately be 
characterized as a ``simple'' adaptation?

A.9. The Bureau believes that, absent changes in the 
alternative qualified mortgage options described above, most 
borrowers would still be able to obtain High-DTI loans through 
alternative qualified mortgage options, or through non-QM 
mortgage options. For some borrowers with sufficient financial 
assets or flexibility, reducing their DTI may require a simple 
adjustment whereas for others, including LMI borrowers who are 
disproportionately borrowers of color, that would not be true. 
The Bureau intends to carefully consider all of the potential 
effects of the expiration of the patch in determining what 
changes, if any, to propose to the definition of General QM.

Q.10. On May 21, 2019, the CFPB issued a proposed rule that 
would amend Regulation F, which implements the Fair Debt 
Collection Practices Act (FDCPA). \2\
---------------------------------------------------------------------------
     \2\ Consumer Financial Protection Bureau, Federal Register Notice, 
``Debt Collection Practices (Regulation F)'', May 21, 2019, https://
www.federalregister.gov/documents/2019/05/21/2019-09665/debt-
collection-practices-regulation-f.
---------------------------------------------------------------------------
    The proposal does not include an explicit cap on email and 
text message contact attempts in the same way that phone 
contacts are limited even though many consumers pay their cell 
phone providers per message. Is there a certain number of 
message attempts within a certain time frame that the CFPB 
would consider harassment? If the proposal is enacted as is, 
would the Bureau pursue companies that engage in email or text 
message harassment under its authority to go after Unfair, 
Deceptive, and Abusive Acts of Practices (UDAAP)?

A.10. The Bureau's proposed debt collection rule does not allow 
for unlimited emails or text messaging. Since 1977, the FDCPA 
has prohibited debt collectors from engaging in harassment, 
abuse, and unfair practices regardless of method of 
communication, including emails and text messages. Debt 
collectors would continue to be prohibited from engaging in 
such conduct if the proposed rule were made final. In 
particular, even though the proposed rule does not include a 
specific limit on the number of emails or texts a debt 
collector could send, if the rule were adopted a debt collector 
who sends too many would still violate the FDCPA. Further, the 
proposed rule would give consumers the power to stop future 
texts or emails as soon as they receive the first 
communication. The proposed rule sought comment on these issues 
and the Bureau is carefully reviewing and considering all 
comments. While it is premature to comment on the specifics of 
enforcement of a rule that is currently under consideration, as 
a general matter, the Bureau expects those covered by a 
regulation to comply with it.

Q.11. Under the proposed rule, a debt collector would be 
prohibited from contacting an individual on social media if the 
contact could be viewed by a third-party, but would still be 
allowed to privately contact an individual on social media. 
What guardrails are included in the proposal to ensure that 
when contacting an individual on social media, the incorrect 
individual is not unfairly targeted and harassed?

A.11. The proposed rule makes clear that the FDCPA's long-
standing prohibitions on harassment, abuse, and unfair 
practices apply to communications generally. In addition to 
this broad safeguard, the proposal would protect consumers as 
defined by the proposal, e.g., those who are obligated or 
allegedly obligated to pay any debt. Proposed 1006.6(e) would 
require a debt collector who communicates or attempts to 
communicate with a consumer electronically in connection with 
the collection of a debt using a specific email address, 
telephone number for text messages, or other electronic-medium 
address to include in each such communication or attempt to 
communicate a clear and conspicuous statement describing one or 
more ways the consumer can opt out of further electronic 
communications or attempts to communicate by the debt collector 
to that address or telephone number. Proposed 1006.6(e) would 
apply to all electronic communications, regardless of whether 
they are a medium of communication specified in the rule and 
regardless of whether that medium exists now or comes to exist 
in the future. Proposed 1006.6(e) also would prohibit a debt 
collector from requiring, directly or indirectly, that the 
consumer, in order to opt out, pay any fee or provide any 
information other than the email address, telephone number for 
text messages, or other electronic-medium address subject to 
the opt-out. In addition, proposed 1006.14(h)(1) would 
prohibit a debt collector from communicating or attempting to 
communicate with a consumer through a medium of communication 
if the consumer has requested that the debt collector not use 
that medium to communicate with the consumer.

Q.12. Section 1071 of the Dodd-Frank Act amended the Equal 
Credit Opportunity Act (ECOA) to require institutions to 
collect small business lending data related to credit 
applications made by businesses owned by women and minorities. 
In the semiannual report you submitted to Congress, it was 
noted that ``the Bureau expects that it will be able to resume 
prerulemaking activities on the Section 1071 project within 
this next year.'' \3\ After years of delay in implementing this 
rule, what further prerulemaking activities are needed and when 
does the Bureau anticipate being able to issue a Notice of 
Proposed Rulemaking?
---------------------------------------------------------------------------
     \3\ Consumer Financial Protection Bureau, ``Semiannual Report of 
the Bureau of Consumer Financial Protection'', Spring 2019.

A.12. I remain committed to implementing Section 1071 of the 
Dodd-Frank Act. As the Bureau's Unified Agenda reflects, this 
is now in prerule status and has been since last Spring when 
the Bureau reclassified the Section 1071 project from long-term 
status to prerule status. To move forward in this effort and 
other challenging issues facing the Bureau, I announced a 
symposia series on a variety of topics related to the Bureau's 
mission, including Section 1071.
    On November 6, 2019, the Bureau held a symposium on Section 
1071 of the Dodd-Frank Wall Street Reform and Consumer 
Protection Act (Dodd-Frank Act). The 1071 symposium was aimed 
at stimulating a proactive and transparent dialogue to assist 
the Bureau in its policy development as it works toward 
implementation of Section 1071. The symposium consisted of two 
panels of leading academic, think tank, consumer advocate, 
industry, and Government experts in the small business lending 
arena. The first panel focused on the evolution in the 
estimated $1.4 trillion small business lending marketplace. The 
discussion touched on various policy issues related to small 
business lending including new business models, delivery 
mechanisms, regulatory burden, new types of partnerships, and 
the general availability of credit and potential consumer harm, 
as well as emerging concerns in the marketplace. The second 
panel included a discussion surrounding the implementation of 
Section 1071, including issues raised in response to the 
Bureau's Request for Information. It also explored ways to 
mitigate potential costs and burdens for reporters. A recording 
of the event, along with written statements from the panelists, 
is available on the Bureau's website.
    In my opening remarks at the symposium, I emphasized that 
``small businesses, including those owned by women and 
minorities, are critical engines for economic growth,'' that 
``Section 1071 would increase public data about small business 
lending,'' and that the Section 1071 rulemaking ``needs to be 
done with great care and consideration in order that the rule 
not impede the ability of small businesses--including minority 
and women owned small businesses--to access the credit they 
need.'' As part of its rulemaking process, the Bureau is 
exploring potential ways to implement Section 1071 in a 
balanced manner with a goal of providing small business lending 
data that achieves the statutory objectives without 
unnecessarily affecting the cost or availability of credit to 
small businesses.
    In promulgating regulations, the Bureau is required to 
follow the procedures set forth in the Regulatory Flexibility 
Act (RFA), including the special RFA requirements imposed by 
the Small Business Regulatory Enforcement Fairness Act of 1996 
(SBREFA), the Administrative Procedure Act (APA) and section 
1022 of the Dodd-Frank Act. Accordingly, the next formal phase 
in implementing Section 1071 of the Dodd-Frank Act will be the 
release of materials in advance of convening a SBREFA panel, in 
conjunction with the Office of Management and Budget and the 
Small Business Administration's Chief Counsel for Advocacy, to 
consult with representatives of small businesses that may be 
affected by the rulemaking. Under this plan and consistent with 
the Bureau's special statutory obligations, the Bureau intends 
to release a detailed SBREFA outline of the proposals it is 
considering by November 2020. The outline will describe how the 
Bureau is considering implementing Section 1071, discuss other 
alternatives the Bureau has considered, and identify the 
potential impact that the proposals under consideration might 
have on small entities.
    Once the SBREFA process concludes, the Bureau intends to 
move expeditiously to issue a Notice of Proposed Rulemaking 
(NPRM) in accordance with APA procedures. At that time, the 
Bureau will be better able to identify a target date for the 
issuance of a proposed rule.

Q.13. In 2018, the CFPB indicated that it was considering 
revising the use of disparate impact under ECOA. In August, the 
Department of Housing and Urban Development (HUD) proposed a 
new disparate impact rule, which, among other things, increased 
the amount of evidence needed that must be pleaded in the 
complaint, and added new defenses making it nearly impossible 
to bring a successful case against a defendant that makes 
decisions via algorithm or makes discriminatory decisions that 
are more profitable than the nondiscriminatory alternatives.
    Cases of discrimination against defendants in mortgage 
industry are often brought under both ECOA and the Fair Housing 
Act. Does the Bureau intend to make the disparate impact 
standards consistent under ECOA and the Fair Housing Act?

A.13. In May 2018, the Bureau stated its intention to reexamine 
the application of the disparate impact doctrine under the 
Equal Credit Opportunity Act (ECOA). In anticipation, the 
Bureau is currently gathering information and discussing this 
issue with stakeholders. As part of this effort, the Bureau 
continues to closely monitor HUD's proposal to revise its 
disparate impact rule under the Fair Housing Act. In April 
2019, the Bureau announced that it plans to hold a symposium on 
disparate impact and the ECOA. The symposium is part of a 
series exploring consumer protections in today's dynamic 
financial services marketplace.

Q.14. A number of institutions under the Bureau's supervision 
and financial technology companies that the Bureau works with 
through its Office of Innovation use algorithms to underwrite 
loans. Has there ever been an instance where the Bureau has 
found that facially neutral algorithms produced a disparate 
impact on a protected class under ECOA?

A.14. In general, the Bureau does not comment publicly on 
confidential enforcement investigations or disclose 
confidential supervisory information.

Q.15. The HUD disparate impact proposal provides a defense for 
companies where the discriminatory activity is more profitable 
than the alternative. Throughout its history, the Bureau, 
together with the Department of Justice has brought a number of 
cases using disparate impact theories. In any of those cases, 
was the discriminatory behavior profitable for the company?

A.15. The Bureau cannot comment on any specific matter because, 
as noted above, the Bureau does not comment publicly on 
confidential enforcement investigations. As a general matter, 
the Bureau's enforcement actions under ECOA consider whether a 
creditor discriminated on a prohibited basis against any 
applicant, with respect to any aspect of a credit transaction, 
and not whether such behavior was or is profitable.

Q.16. Supervision and Enforcement--According to the most recent 
semiannual report ``the Bureau did not initiate or complete any 
fair lending public enforcement actions. In addition, during 
this reporting period, the Bureau did not refer any matters to 
the DOJ with regard to discrimination pursuant to Section 
706(g) of ECOA.'' \4\
---------------------------------------------------------------------------
     \4\ Id.
---------------------------------------------------------------------------
    Is the Bureau's position that violations of ECOA are not 
taking place?

A.16. No. The law mandates that the Bureau enforce Federal 
consumer financial law, including fair lending laws such as 
ECOA and Home Mortgage Disclosure Act (HMDA), and the Bureau 
will continue to do that. In 2019, the Bureau has made three 
fair lending referrals to the Department of Justice pursuant to 
the Equal Credit Opportunity Act.

Q.17. Has the Bureau modified the standards it uses to 
determine whether an act constitutes a violation of ECOA, 
including under the disparate impact theory?

A.17. The Bureau continues to evaluate the use of disparate 
impact under ECOA on a case-by-case basis based on the specific 
facts and circumstances of each matter. As noted above, the 
Bureau is currently considering reexamining the application of 
the disparate impact doctrine under the Equal Credit 
Opportunity Act.

Q.18. The Bureau is considering reducing the number of data 
points collected under the Home Mortgage Disclosure Act (HMDA). 
These data are not only incredibly valuable to outside actors 
trying to detect and fight discrimination, but also to the 
Bureau in its supervision, enforcement, rulemaking, and market 
monitoring functions. Please provide a list of publicly 
available Bureau actions, including enforcement actions, 
rulemakings, and Bureau reports that relied even partially on 
either the new data points collected under Dodd-Frank and or 
Bureau rules.

A.18. The Consumer Financial Protection Act (CFPA) amended HMDA 
to require the reporting of 13 new data points. The CFPA also 
granted the Bureau authority to use its discretion to require 
reporting of additional data points, which the Bureau did in 
2015 by amending Regulation C, HMDA's implementing regulation, 
to include 14 additional data points as well as the 13 required 
new data points. Most of the new requirements from the 2015 
HMDA Rule took effect on January 1, 2018, and reporting started 
in March 2019. There are two publicly available Bureau reports, 
both published in August 2019, that rely on this new data: 
``Introducing New and Revised Data Points in HMDA'' and ``Data 
Point: 2018 Mortgage Market Activity and Trends''.

Q.19. The Dodd-Frank Wall Street Consumer Protection Act 
requires that the Director of the CFPB holds a seat on the five 
member Board of Directors of the Federal Deposit Insurance 
Corporation (FDIC). In your capacity as CFPB Director, you 
currently serve on the FDIC Board.
    On February 7, 2019, Bank Branching and Trust Corporation 
(BB&T) and SunTrust Banks, Inc (SunTrust) announced that they 
would merge to form what would become the 8th largest bank 
holding company (BHC) by asset size in the United States. \5\ 
While the merger of the holding companies must be approved by 
the Federal Reserve, the Bank Merger Act requires that the FDIC 
also approve the merger in their role as the primary regulator 
of the newly chartered State nonmember bank owned by the 
holding company. \6\ In the future, the question of whether to 
approve the merger will come before the FDIC Board.
---------------------------------------------------------------------------
     \5\ SunTrust, ``BB&T and SunTrust To Combine in Merger of Equals 
To Create the Premier Financial Institution'', February 07, 2019,http:/
/investors.suntrust.com/news/news-details/2019/BBT-and-SunTrust-to-
Combine-in-Merger-of-Equals-to-Create-the-Premier-Financial-
Institution/default.aspx.
     \6\ Congressional Research Service, ``BB&T and SunTrust: Merger 
Approval Process and Trends'', July 19, 2019, https://fas.org/sgp/crs/
misc/IN11146.pdf.
---------------------------------------------------------------------------
    As of the date of this hearing, what type of data and 
analysis related to the proposed merger have you requested from 
CFPB career staff?

A.19. As of the date of the hearing, the merger was not before 
the FDIC Board for consideration. To the extent I feel it is 
appropriate to request data of CFPB staff I do.

Q.20. As of the date of this hearing, have you requested or 
been offered any briefings from the FDIC to keep you informed 
of the merger process and timeline?

A.20. As of the date of the hearing, the merger was not before 
the Board for consideration and the matter was still being 
reviewed at the staff level. Once staff work is complete, FDIC 
staff offer briefings at the appropriate time.

Q.21. According to a study released earlier this year that 
pulled 2018 data from the CFPB's Consumer Complaint Database 
and ordered the institutions with the largest number of 
complaints weighted by the size of the institution's deposits, 
BB&T had the 16th largest number of complaints per dollar of 
deposits and SunTrust had the 4th largest number of deposits. 
\7\ How will you use the consumer complaint database to inform 
your decision making with respect to the proposed merger?
---------------------------------------------------------------------------
     \7\ LendEDU, ``Report: Reviewing CFPB Complaints of U.S. Banks in 
2018'', https://lendedu.com/blog/banks-cfpbcomplaints-2018/.

A.21. FDIC staff review bank merger applications based on the 
statutory factors prescribed in the Bank Merger Act (BMA) and 
any other relevant provisions of the Federal Deposit Insurance 
(FDI) Act. The merger application was reviewed in accordance 
---------------------------------------------------------------------------
with the statutes.

Q.22. What are the most important factors that you believe 
should be considered to determine whether the proposed merger 
could potentially harm consumers? For each factor, please 
describe the quantitative and qualitative data you plan to use 
in your evaluation.

A.22. The most important factors in reviewing bank merger 
applications is ensuring that it is reviewed in accordance with 
the statute. As discussed above, the bank merger application 
was reviewed in accordance with the BMA and relevant provisions 
of the FDI Act. These statutes require an analysis that 
includes an assessment of the impact on consumers and 
communities, as well as a review of their programs with respect 
to consumer protection.

Q.23. Has the FDIC or any other regulator requested any 
information from the CFPB about the consumer protection or fair 
lending records for BB&T or SunTrust to inform the merger 
approval process?

A.23. Yes, information regarding BB&T and Suntrust's consumer 
protection and fair lending records were shared with FDIC staff 
in accordance with the Bureau's normal interagency information 
sharing procedures.

Q.24. On September 10, 2019, the CFPB announced the creation of 
the American Consumer Financial Innovation Network (ACFIN) to 
enhance coordination among Federal and State regulators to 
``facilitate financial innovation.'' \8\ However, there are 
uncertainties with respect to the ultimate role of ACFIN and 
how it could impact consumer protection regulations at the 
State level.
---------------------------------------------------------------------------
     \8\ Consumer Financial Protection Bureau, ``American Consumer 
Financial Innovation Network'', https://files.consumerfinance.gov/f/
documents/cfpb-CFIN-charter-2019-09.pdf.
---------------------------------------------------------------------------
    What is the purpose of ACFIN? How does it fit within the 
Bureau's mission to protect consumers? How it could impact 
State regulators of States that have and have not opted to join 
the network?

A.24. The purpose of AFCIN is to enhance coordination among 
Federal and State regulators to facilitate financial innovation 
that benefits consumers. The network also seeks to benefit 
consumers by keeping pace with market innovations and helping 
ensure they are free from fraud, discrimination, and deceptive 
practices. As with the Global Financial Innovation Network 
(GFIN) led by the U.K.'s Financial Conduct Authority, ACFIN 
members seek to accomplish their objectives through 
information-sharing and coordinating innovation-related 
policies and programs, as appropriate. There is no requirement 
that ACFIN members coordinate on no-action letters, Sandbox 
trials, or similar programs.

Q.25. The ACFIN charter states that ``none of the actions 
undertaken under the auspices of ACFIN will be for the purpose 
of preempting State law.'' Is it possible that ACFIN could 
still result in the preemption of State law, even if it is not 
the intended purpose of the action?

A.25. The purpose of ACFIN is to enhance coordination among 
Federal and State regulators. The Bureau participates in ACFIN 
because it believes that coordination with our fellow 
regulators is a crucial component of facilitating consumer-
friendly innovation. The ACFIN charter provision was intended 
to underscore--for current and potential State ACFIN members--
that ACFIN is not intended to preempt State law. The Bureau's 
innovation-related activities concern Federal consumer 
financial law, not State law, and I do not foresee how our 
activities in connection with ACFIN would preempt State law.

Q.26. On August 31, 2017, the Department of Education (ED) 
terminated its Memoranda of Understanding (MOU) with the CFPB 
regarding the sharing of information in connection with 
oversight of Federal student loans. \9\ This decision was 
unjustified, unwise, and another way to protect servicers from 
real oversight and accountability. The recently released Annual 
Report of the Student Loan Ombudsman notes that a new MOU for 
data sharing with ED is still not in place as of the close of 
the report, on August 31, 2019, \10\ preventing the CFPB from 
accessing full information needed to protect student borrowers. 
However, the report indicates the agency anticipates that a new 
MOU will be established, stating that ``[g]oing forward, when 
an MOU is in place, deeper analysis of Federal data is 
anticipated.'' \11\
---------------------------------------------------------------------------
     \9\ Inside Higher Ed, ``Education Dept. Ends Partnership with 
CFPB'', Andrew Kreighbaum, September 5, 2017, https://
www.insidehighered.com/news/2017/09/05/education-dept-rebukes-cfpb-
overreach-kills-information-sharing-agreement.
     \10\ Consumer Financial Protection Bureau, ``Annual Report of the 
CFPB Private Education Loan Ombudsman'', October 2019, p. 6, https://
files.consumerfinance.gov/f/documents/cfpb-annual-report-private-
education-loan-ombudsman-2019.pdf.
     \11\ Id.
---------------------------------------------------------------------------
    Please provide an update on the status of the negotiations 
with ED regarding a new MOU, including when you expect to 
finalize a new MOU with ED.

A.26. There are two MOUs that the Bureau is discussing with the 
Department of Education: one for complaints and one for 
supervisory information. On October 15, 2019, the Bureau sent 
to the Department of Education a copy of an MOU intended to 
ensure coordination in providing assistance to, and servicing, 
borrowers seeking to resolve student loan complaints. The 
Department of Education responded and discussions are ongoing. 
In addition, the Bureau is engaged in ongoing discussions with 
the Department of Education to reestablish an MOU regarding 
supervision of student loan servicing.

Q.27. Do you support the terms of the previous MOU? If not, 
what changes to the previous MOU is the CFPB advocating for?

A.27. As noted above, the Bureau is engaged in ongoing 
discussions. Once those discussions have concluded, the Bureau 
will provide a copy of the new MOU.

Q.28. In an April 23, 2019, letter to me, you indicated that 
since the Department of Education issued its December 2017 
Memorandum regarding the Privacy Act of 1974, ``student loan 
servicers have declined to produce information requested by the 
Bureau for supervisory examinations related to [Federal 
student] loans held by the Department based on the Department's 
guidance.'' \12\ This startling revelation means ED's policies 
have emboldened servicers to ignore requests from Federal 
regulators charged with enforcing consumer protection laws. 
Just this week, NPR reported that the CFPB launched an 
investigation of student loan servicers' implementation of the 
Public Service Loan Forgiveness (PSLF) program in early 2018, 
but was unable to obtain needed information after ED instructed 
loan servicers not to share information with CFPB 
investigators. \13\ Have you been able to complete to original 
specifications or otherwise continue conducting the 2018 
investigation into the PSLF program?
---------------------------------------------------------------------------
     \12\ Letter from CFPB Director Kathleen Kraninger to U.S. Senator 
Elizabeth Warren, April 23, 2019.
     \13\ NPR, ``Exclusive: Turf War Blocked CFPB From Helping Fix 
Student Loan Forgiveness Program'', Chris Arnold, October 15, 2019, 
https://www.npr.org/2019/10/15/769326896/exclusive-turf-war-blocked-
cfpb-from-helping-fix-student-loan-forgiveness-program.
---------------------------------------------------------------------------
    If so, based on the preliminary findings of CFPB 
investigators, what actions do you intend to take to improve 
the implementation of the PSLF program?

A.28. The NPR report does not mention any enforcement 
investigation instead alluding to supervisory examinations. In 
general, the Bureau does not comment publicly on confidential 
enforcement investigations or disclose confidential supervisory 
information. Since the letter I sent on April 23, 2019, student 
loan servicers have continued to decline to produce information 
requested by the Bureau for supervisory examinations related to 
Federal student loans held by the Department based on the 
Department's guidance. To be clear, the Bureau examines Federal 
student loan servicers for compliance with Federal consumer 
financial laws pursuant to its regulation on larger 
participants in the student loan servicer market.

Q.29. If not, what resources or access to information does the 
CFPB need in order to complete this investigation?

A.29. The Bureau needs information from Federal student loan 
servicers to complete these supervisory reviews.

Q.30. What actions has the agency taken to obtain information 
from student loan servicers in order to conduct the agency's 
oversight responsibilities? Have student loan servicers fully 
cooperated with these efforts?

A.30. The Bureau has sent supervisory requests to certain 
Federal student loan servicers. In addition, in the course of 
investigations and litigation related to student loan servicing 
practices, the Bureau has issued Civil Investigative Demands 
(CIDs) and sent Federal court discovery requests; in response 
to these demands, the Bureau has received information from 
student loan servicers. \14\
---------------------------------------------------------------------------
     \14\ See, e.g., Aug. 10, 2018, Order, Consumer Financial 
Protection Bureau v. Navient, Case No. 3:17-CV-101 (M.D. Pa. Aug. 10, 
2018).

Q.31. Operations--Please provide a list of political appointees 
currently employed, including as detailees from other agencies, 
at the CFPB, their titles, the date they were hired, and their 
salaries.
A.31. 

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Q.32. Does the CFPB have plans to hire additional political 
appointees? If so, please provide position descriptions and 
salary ranges for their jobs.

A.32. Section 1013 of the Dodd-Frank Act states, ``The Director 
may fix the number of, and appoint and direct, all employees of 
the Bureau in accordance with the applicable provisions of 
title 5, United States Code.'' This authority includes the 
appointment of employees under Schedule C hiring authority.
    Schedule C appointees are commonly used throughout the 
Federal Government, including at other financial regulatory 
agencies. The decision to classify a job as a Schedule C 
position is made by the Director of the Office of Personnel 
Management (OPM) at the request of an agency head. For all 
Schedule C positions at the Bureau, we followed the process 
established by OPM, which reviewed and approved all of the 
Bureau's Schedule C hires.
    OPM recently approved a Schedule C appointment for Jennifer 
Stalzer to serve as my Administrative Specialist starting 
January 5, 2020. The position is graded as a CN-52 and has a 
salary range of $92,166 to $133,640 including locality pay. A 
copy of the position description is attached as requested.

Q.33. The Partnership for Public Service produces an annual 
ranking of the best place to work using data from the Office of 
Personnel Management's Annual Employee Survey about job 
satisfaction. From 2017 to 2018, CFPB's ranking dropped 25 
points, from 79.9 to 51.7, twice as much the agency with the 
next highest drop.
    One manifestation of employees' dissatisfaction is 
attrition. Please provide quarterly staffing levels for the 
Bureau, broken up by Division and if possible, by office from 
2017 Q1 to present.

A.33.

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Q.34. What is CFPB's plan to improve morale among staff?

A.34. The staff of the Bureau are highly committed to the 
Bureau's mission and care deeply about the organization. I 
respect them, I take their views and opinions seriously, and 
their input is integral to my decision making. Further, I am 
committed to leading a diverse, productive, effective 
workforce.
    After I was sworn in as Director, it was important for me 
to hear input from staff directly. I made it a priority during 
the first months of my tenure to go on a ``listening tour'' and 
visit as many Bureau staff as possible, both at Headquarters 
and in all four of our regional locations. I have continued to 
engage with employees through Bureau-wide all-hands sessions, 
regular meetings with Division and Office teams, and weekly 
``office hours'' to provide updates on Bureau priorities, 
recognize individual and team efforts and achievements, and 
continue to gather staff feedback. The Bureau also regularly 
surveys staff, including through our Annual Employee Survey.
    Here are specific actions I have taken in response to some 
employee feedback as well as initiatives that reflect my 
approach to leadership and management:

    Early on, I outlined my approach to addressing the 
        hiring freeze and empowering senior managers to 
        determine skill and resource needs to address the 
        Bureau's mission priorities. During the listening tour, 
        I made clear that I was open to, and had granted, many 
        exceptions to the hiring freeze in response to requests 
        by managers who demonstrated a critical mission need. 
        Subsequent to that, in May 2019, I launched the FY2020 
        Staffing Plan process with a goal of moving the Bureau 
        towards a more sustainable and disciplined practice of 
        identifying and hiring the staff needed to accomplish 
        the Bureau's mission priorities. In August 2019, I 
        announced to staff that I had approved an FY2020 
        Staffing Plan for the Bureau and lifted the hiring 
        freeze.

    As a precursor to the FY2020 Staffing Plan process, 
        I approved a number of initiatives designed to help 
        determine optimal staffing levels for the long term. 
        These initiatives include better aligning resources 
        with my top policy priorities, improving how cross-
        Bureau legal functions are performed, and enhancing how 
        administrative and operational functions are performed 
        across the Bureau.

    I established a Workforce Effectiveness Committee 
        to ensure that the Bureau takes a holistic, consistent 
        approach to considering workforce-related plans and 
        initiatives with a particular view towards improving 
        workforce effectiveness, employee engagement, and 
        diversity and inclusion efforts.

    I created a Customer Experience Office to focuses 
        on improving our internal staff experience through 
        enhanced operational services enabling the workforce to 
        be more effective and efficient in meeting the Bureau's 
        mission.

    I have continued to strongly promote diversity and 
        inclusion by refreshing the Bureau's Diversity and 
        Inclusion Strategic Plan, enhancing the focus on strong 
        engagement with employees, and utilizing an integrated 
        approach to education, training, and engagement 
        programs that incorporate diversity and inclusion 
        concepts into the learning curriculum and work 
        environment. Employee Resource Groups, which are 
        networks of Bureau employees with similar interests, 
        backgrounds, or experiences, cultural education 
        programs, and diversity and inclusion training are key 
        components of this effort.

    I presented the Director's Mission Achievement 
        Award to recognize staff leadership and team 
        contributions towards the Bureau's mission. The award 
        is CFPB's highest honor. In accordance with my 
        priorities, this year I recognized both leadership 
        excellence and outstanding team contributions. Twenty 
        leaders and over 200 team members across 29 teams were 
        nominated by a joint committee of representatives from 
        the union and CFPB management.

    I promoted the Bureau's focus on data and 
        information governance and management by creating a new 
        Office of the Chief Data Officer, combining it with 
        related functions such as Records, FOIA and Privacy, 
        and elevating it to report directly to the Chief 
        Operating Officer.

    I opened a regional office in Atlanta, Georgia, so 
        that the Bureau's Southeast Region can collaborate more 
        effectively with other partner financial regulators who 
        also have their regional office in Atlanta; the 
        Southeast Regional Office will feature a regional 
        learning and development center for Bureau examiners 
        and Federal and State partners.

    I launched the consolidation of all Washington, 
        D.C.-based staff from two office buildings into one to 
        increase the effectiveness of the organization and to 
        significantly improve the collaboration across all 
        teams and divisions. Moves are underway and planned to 
        be completed in January 2020.
                                ------                                


               RESPONSES TO WRITTEN QUESTIONS OF
           SENATOR CORTEZ MASTO FROM KATHY KRANINGER

Q.1. Civil Penalty Fund--Please answer the following questions 
regarding the Civil Penalty Fund's fiscal status for FY19.
    How much money was collected in FY19? Please provide a list 
of defendants, the civil penalty imposed, and the civil penalty 
that was collected.

A.1. In Fiscal Year 2019, the Bureau collected civil penalties 
from 24 defendants totaling $131.2 million. Below is a list of 
defendants, the amount of the penalty imposed, and the amount 
collected.

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Q.2. How much money was spent on victim compensation in FY19? 
Please provide a list of cases that had classes of eligible 
victims for compensation, how many victims were eligible for 
compensation per case, the total amount of uncompensated harm, 
how much was provided for compensation per case, and the 
average amount of compensation per victim.

A.2. During Fiscal Year (FY) 2019, the Bureau had eight active 
Civil Penalty Fund distributions. Below is a list of cases, 
amount distributed per case, number of consumers (at the time 
of initial distribution) and average payment per consumer. 
While eight cases were active during FY19, distributions 
related to seven of the cases listed in this table were 
initiated prior to FY19.

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Q.3. In Fiscal Years (FY) 17 and 18, the Bureau allocated $0 
towards consumer education and financial literacy programs. In 
Fiscal Year 2019, how much will you allocate from the Civil 
Penalty Fund to consumer education and financial literacy 
programs?

A.3. No allocations were made to financial literacy from the 
Civil Penalty Fund in FY19.

Q.4. How much money was left unallocated and returned to the 
fund in FY19?

A.4. Three Civil Penalty Fund matters concluded in FY19 (Global 
Client Solutions, Student Loan Processing, and Student Aid 
Institute). Total allocated to those three cases was $127.6 
million. Of that amount, $127.3 million was mailed to 
consumers, 92 percent of issued checks were cashed and $10.6 
million is available for return to the fund for future 
allocations.

Q.5. How much money is left for future allocation after FY19?

A.5. As of September 30, 2019, the Civil Penalty Fund had an 
unallocated balance of $553.2 million.

Q.6. Home Mortgage Disclosure Act--At a hearing before the 
Senate Committee on Indian Affairs, one of the witnesses, 
Patrice K. Kunesh, presented the results of a report by the 
Federal Reserve Bank of Minneapolis, The Higher Price of 
Mortgage Financing for Native Americans. The report found that 
Native Americans were twice as likely to have a high cost 
mortgage loan. Native Americans will pay about $107,000 more on 
average than other homebuyers. The report also found that about 
35 percent of Native Americans who bought homes on reservation 
land during the study's timeframe bought a manufactured home. I 
am concerned by the Bureau's recent proposals to exempt more 
banks and credit unions from reporting Home Mortgage Disclosure 
Act (HMDA) data.
    The Bureau still collects HMDA data but does not publish it 
on the HMDA site. Will the Bureau allow researchers access to 
the nonpublic HMDA data? If so, how and which researchers?

A.6. The Bureau continues to release all of the data that was 
previously publicly available under HMDA as well as a number of 
new data elements added pursuant to the Dodd-Frank Frank Wall 
Street Reform and Consumer Protection Act (Dodd-Frank Act) 
Amendments to HMDA. The Dodd-Frank Act also directed the Bureau 
to develop regulations that modify the information made public 
in order to protect the privacy interest of mortgage applicants 
or mortgagors. Consistent with the balancing test in the 
Bureau's 2015 HMDA Rule and policy statement issued by the 
Bureau, for the 2018 data, the Bureau has not made a few of the 
new data elements, such as credit scores, available at the 
individual applicant or loan level.
    Concurrent with the release of the national snapshot and 
dynamic loan-level datasets in August 2019, the Bureau also 
released two Data Point articles summarizing the 2018 HMDA data 
(https://www.consumerfinance.gov/data-research/hmda/). The 
first article summarizes trends in historical data points. The 
second article is a comprehensive analysis of each of the data 
points collected and reported under HMDA for the first time in 
2018, including data elements that have not themselves been 
publicly released.
    The Bureau also is considering other measures to allow 
industry, community researchers, and academics to have access 
not only to the modified HMDA data discussed above, but also 
unmodified HMDA data. As the Bureau discussed in the 2018 final 
policy guidance, it believes HMDA's public disclosure purposes 
may be furthered by allowing industry and community researchers 
and academics to access not only the modified HMDA data that is 
publicly released but also to obtain for research purposes the 
unmodified HMDA data through what is sometimes referred to as a 
``restricted access program.'' The Bureau is continuing to 
evaluate that concept, including the options for such a 
program, and the risks and costs that may be associated with 
such a program. Initiating a restricted access program for 
community and industry researchers and academics would require 
that the Bureau obtain the approval of the FFIEC Agencies and 
the Department of Housing and Urban Development that share 
ownership of the HMDA data.

Q.7. What is the Bureau doing to ensure steering in lending for 
manufactured housing is not occurring?

A.7. The Bureau recognizes that manufactured housing (MH) is an 
important source of affordable housing, in particular for rural 
and low-income consumers, and that preserving access to credit 
for MH is important to rural and low-income consumers. At the 
same time, the Bureau also recognizes that MH customers may be 
more likely to belong to groups, such as older or lower-income 
families, which include many consumers who might be financially 
vulnerable.
    Regarding steering, the Bureau's Loan Originator 
Compensation rule implements the Dodd-Frank Act's prohibition 
on compensating loan originators based on the terms of the 
transaction. This prohibition is designed to eliminate steering 
incentives such as increased compensation for steering a 
consumer into a higher-priced loan. In the Dodd-Frank Act, 
Congress excluded from the definition of mortgage originator an 
employee of a manufactured home retailer who does not take a 
residential mortgage loan application or offer or negotiate 
terms of a residential mortgage loan, so long as the employee 
does not advise a consumer on loan terms. In promulgating the 
above-referenced Rule, the Bureau incorporated this exclusion 
into the definition of loan originator.
    In the Economic Growth, Regulatory Reform, and Consumer 
Protection Act of 2018, Congress expanded the exclusion to 
cover a retailer of manufactured or modular homes or an 
employee of the retailer so long as the employee does not 
receive compensation or gain with respect to a manufactured 
home sale for which credit is extended that is in excess of any 
compensation or gain received in a comparable cash transaction, 
does not directly negotiate with the consumer or lender on loan 
terms, and discloses to the consumer, in writing, any corporate 
affiliation with any creditor. If the retailer does have a 
corporate affiliation with any creditor, the exception would 
also require the disclosure of at least one unaffiliated 
creditor. If, however, a retailer of manufactured or modular 
homes or an employee of the retailer stands to gain 
compensation beyond that received in a comparable cash 
transaction, that compensation is prohibited from being based 
on the terms of the loan, and the prohibition on steering 
incentives continues to apply under the Bureau's Rule.
    In August 2019, the Bureau, along with our FFIEC partners, 
released the 2018 HMDA data, which include two new data points 
specific to manufactured housing. Under the 2015 HMDA rule, 
institutions now report whether the applicant owned or leased 
the land as well as whether the loan was secured by both the 
manufactured home and the land or only the manufactured home 
(commonly called chattel). The Bureau's accompanying report on 
new and revised HMDA data points included an analysis of MH 
lending. \1\ As part of our ongoing monitoring, the Bureau will 
continue to do research and engage with stakeholders about MH 
lending to ensure that consumers have access to credit for MH 
and that the market for MH credit operates fairly, 
transparently, and competitively.
---------------------------------------------------------------------------
     \1\ See https://www.consumerfinance.gov/data-research/research-
reports/introducing-new-revised-data-points-hmda.

Q.8. Enforcement: American Recovery Associates--Was the 
decision to levy $36,800 for restitution from American Recovery 
---------------------------------------------------------------------------
Associates a decision made by the career enforcement staff?

A.8. As has been true throughout the Bureau's history, the 
Director authorizes settlement parameters in a public 
enforcement action after considering a recommendation from 
Bureau staff.

Q.9. Were political staff, including you as the Director, 
involved in the decision to levy the restitution amount?

A.9. See response above.

Q.10. Was the recommendation of the career enforcement staff 
that restitution be limited to $36,800?

A.10. See response above.

Q.11. Was it the recommendation of the career enforcement staff 
that restitution only be provided to people who complained?

A.11. See response above.

Q.12. What other consumer cases limit restitution only to 
people who complained to a Government agency?

A.12. The Bureau weighs many factors to determine the precise 
mix of restitution, penalties, and injunctive relief 
appropriate in each case. Generally, when analyzing 
remediation, the Bureau considers all relevant facts and 
circumstances and seeks to make consumers whole for losses 
caused by a party's illegal conduct. While the Bureau is 
committed to seeking all appropriate relief for consumers, not 
every case lends itself to restitution for all potentially 
affected consumers, particularly in the context of a negotiated 
settlement. The evidence available may impact the Bureau's 
ability to identify harmed consumers and obtain all appropriate 
relief for those harmed consumers.

Q.13. How will the Bureau identify who complained about ARA? 
What are your sources to gather complaints?

A.13. The Bureau will identify who complained about ARA based 
on complaints made to the Bureau as well as complaints made to 
third party sources that report to Consumer Sentinel, which 
among other sources includes complaints made to the Federal 
Trade Commission.

Q.14. General Questions--In your answers to my question, you 
said that ARA identified customers who complained and that the 
amount of restitution depended on their ability to pay. A post-
hearing call to my staff corrected your statement to say ARA 
was not involved. Have there been enforcement decisions where 
the firm identified consumers who were harmed? If so, which 
ones? If so, did the firm recommend restitution amounts?

A.14. When resolving public enforcement actions, the Bureau 
often requires the company to submit to the Bureau for review 
and nonobjection a comprehensive written plan for providing 
redress consistent with the requirements of the consent order 
or stipulated judgment. The Bureau then has the discretion to 
make a determination of nonobjection to the redress plan or to 
direct the company to revise it. In some cases, the consent 
order or stipulated judgment also requires the company to state 
in the redress plan how the company will identify consumers who 
will receive restitution required under the order \2\ or to 
provide a report after redress is completed showing how the 
company identified and provided restitution to consumers. \3\
---------------------------------------------------------------------------
     \2\ USAA: https://files.consumerfinance.gov/f/documents/bcfp_usaa-
federal-savings-bank_consent-order.pdf.
     \3\ Santander: https://files.consumerfinance.gov/f/documents/
bcfp_santander-consumer-usa_consent-order_2018-11.pdf.

Q.15. Have officials at the White House ever contacted you or a 
member of the CFPB staff to recommend an action related to 
supervision or enforcement? If so, who and which cases? What 
was the Bureau's response to the request for a recommended 
---------------------------------------------------------------------------
action?

A.15. I am not aware of any instance in which officials at the 
White House have contacted myself or other Bureau staff to 
recommend an action related to supervision or enforcement.

Q.16. Have officials at the White House ever contacted you or a 
member of the CFPB staff to inquire into an investigation? If 
so, who and which cases? What was the Bureau's response to the 
request for information?

A.16. I am not aware of any instance in which officials at the 
White House have contacted myself or Bureau staff to inquire 
into an investigation.

Q.17. Isn't the standard for restitution supposed to be a 
``reasonable approximation of the amount lost by consumers or 
of illegal profits?''

A.17. The Bureau is committed to seeking all appropriate relief 
for consumers and considers whether redress or restitution may 
be appropriate in each case on the facts presented and in light 
of applicable law. The Consumer Financial Protection Act 
authorizes the Bureau to seek redress for consumers in 
appropriate cases as a matter of discretion. Particularly in 
the context of a negotiated settlement, the Bureau may choose 
to pursue the relief it determines best serves the public 
interest. Settlements allow the Bureau to avoid expending 
significant resources proving claims in court, mitigate trial 
risk, achieve speedier results for consumers, and provide 
certainty for companies. While the Bureau is committed to 
seeking all appropriate relief for consumers, not every case 
lends itself to restitution for all potentially affected 
consumers, particularly in the context of a negotiated 
settlement.

Q.18. Do CFPB guidelines require the company to pay a 
``reasonable approximation'' of the harm done?

A.18. While the Bureau is committed to seeking all appropriate 
relief for consumers, not every case lends itself to 
restitution for all potentially affected consumers, 
particularly in the context of a negotiated settlement.

Q.19. Please identify other debt collection settlements when 
the CFPB set up processes to identify consumers who might have 
been harmed. Has the Bureau appointed a settlement 
administrator or put up a website where people can submit a 
claim in previous enforcement cases, either debt collection or 
other types of financial products? If so, please provide some 
examples.

A.19. The Bureau has entered into a number of settlements that 
have set up processes to identify harmed consumers, including 
through the use of a settlement administrator or public 
website. Among these are Bureau of Consumer Financial 
Protection v. Equifax, \4\ United States of America and 
Consumer Financial Protection Bureau v. BancorpSouth Bank; \5\ 
United States of America and Consumer Financial Protection 
Bureau v. Provident Funding Associates, LP; \6\ and In the 
Matter of GE Capital Retail Bank, Care Credit LLC. \7\
---------------------------------------------------------------------------
     \4\ https://www.consumerfinance.gov/about-us/newsroom/cfpb-ftc-
states-announce-settlement-with-equifax-over-2017-data-breach/
     \5\ https://www.consumerfinance.gov/about-us/newsroom/consumer-
financial-protection-bureau-and-department-justice-action-requires-
bancorpsouth-pay-106-million-address-discriminatory-mortgage-lending-
practices/
     \6\ https://www.consumerfinance.gov/about-us/newsroom/cfpb-and-
department-of-justice-take-action-against-provident-funding-associates-
for-discriminatory-mortgage-pricing/
     \7\ https://www.consumerfinance.gov/about-us/newsroom/cfpb-orders-
ge-carecredit-to-refund-34-1-million-for-deceptive-health-care-credit-
card-enrollment/

Q.20. Even if the company cannot pay the full amount, can CFPB 
provide restitution to harmed consumers through the Civil 
---------------------------------------------------------------------------
Monetary Penalties Fund?

A.20. In some circumstances, the Bureau can provide 
compensation from the Civil Penalty Fund (Fund) to certain 
harmed consumers. When a person or company violates a Federal 
consumer financial protection law, the Bureau can bring an 
enforcement proceeding against such a person or entity. If that 
person or company is found to have violated the law, it may 
have to pay a civil money penalty. When the Bureau collects 
civil penalties, it deposits them in the Fund. The money in the 
Fund is pooled and might be available to compensate eligible 
victims who have not received full compensation for their harm 
through redress paid by the defendant in the case. The Bureau's 
Civil Penalty Fund rule determines whether consumers are 
eligible for such compensation. The Bureau hopes to make 
payments to all eligible victims, but whether it will be able 
to will depend on the amount of money in the Fund and other 
factors. Every 6 months, the Fund Administrator will determine 
which classes of victims will receive payments from the Fund. 
To make that determination, the Fund Administrator assesses how 
much money is available in the Fund and reviews closed cases to 
determine which victims are eligible to receive payments. As of 
September 30, 2019, the Civil Penalty Fund has an unallocated 
balance of $553.2 million.

Q.21. Military Lending On August 22, you met with Holly 
Petraeus.
    Did she share any written materials with you with regards 
to your decision to stop supervision for military lending 
violations under the Military Lending Act? If so, please 
provide those.

A.21. I don't believe Ms. Petraeus produced nor offered any 
written materials regarding the supervision for Military 
Lending Act violations.

Q.22. Did Ms. Petraeus share her views on your decision to stop 
supervision for military lending violations? If so, please 
share what she shared with you about her views.

A.22. I have asked Congress to explicitly grant the Bureau 
authority to conduct examinations specifically intended to 
review compliance with the MLA. The requested authority would 
complement the work the Bureau currently does to enforce the 
MLA. Ms. Petraeus shared with me her experience as the Bureau's 
inaugural Assistant Director for Servicemember Affairs.

Q.23. Consumer and Civil Rights Groups--In July, you met with 
consumer and civil rights groups, such as the National Fair 
Housing Alliance, the Leadership Conference on Civil and Human 
Rights, U.S. PIRO, the NAACP and National Consumer Law Center. 
In June, you met with consumer groups such as Center for 
Responsible Lending, National Coalition of Asian Pacific 
Americans for Community Development and Americans for Financial 
Reform.
    Will those be regular meetings, such as quarterly?

A.23. As of December 31, 2019, I have met with 238 consumer, 
civil rights and nonprofit organizations during my tenure thus 
far as Director of the CFPB. I intend to continue meeting and 
engaging on a regular basis with consumer, civil rights and 
nonprofit groups around the country. These interactions broaden 
my views and perspectives, and I know they do the same for my 
staff. My External Affairs Division will continue to facilitate 
opportunities to meet with consumer, civil rights, and 
nonprofit organizations whenever and however we can.

Q.24. Will you continue to meet with representatives of those 
groups individually?

A.24. Yes, I will continue to engage with leaders individually 
as well as collectively. During my tenure I have held one-on-
one meetings with many consumer and civil rights leaders from 
across the Nation, and I am committed to continuing and 
maintaining ongoing channels of communication and engagement 
with consumer and civil rights representatives, as with any 
stakeholders of the Bureau.

Q.25. Are all the financial firms you met with on your 
calendar? For example, you met with Bob Broeksmith on July 19th 
but your calendar did not note that he was the head of the 
Mortgage Bankers Association.

A.25. Yes, all official meetings with external entities are on 
my calendars, which are released to the public on the Bureau's 
website. Staff are working to ensure consistency and accuracy 
of the calendar entries for meetings with external people/
entities, to include name, title/position, and the full name of 
the entity.

Q.26. Diversity--Your June calendar noted PRIDE month. Please 
note CFPB activities related to Pride.

A.26. Each year the Bureau commemorates PRIDE Month to 
recognize the contributions of the LGBTQ+ community. In June 
2019, the following Bureau activities were hosted to 
commemorate PRIDE Month:

    The Office of Minority and Women Inclusion (OMWI) 
        created posters in honor of PRIDE Month, which were 
        displayed in CFPB's Washington, D.C., headquarters and 
        offices along with the Regional offices.

    The OMWI Office posted ``Did You Know'' facts on 
        the Bureau's internal website featuring interesting 
        facts and information about LGBTQ+ contributions to the 
        country.

    On May 30, 2019, the Bureau's PRIDE Employee 
        Resource Group (ERG) hosted a happy hour social at the 
        Bureau Headquarters open to all PRIDE members, to kick 
        off the commemoration of PRIDE Month.

    On June 4, 2019, the OMWI Director issued a Bureau-
        wide message commemorating PRIDE Month, giving the 
        history of the month and why it is observed. The 
        message also encouraged Bureau employees to participate 
        in the various events being held to celebrate PRIDE 
        Month and provided information on ways employees could 
        participate in external activities in commemoration of 
        PRIDE Month.

    On June 11, 2019, OMWI and the PRIDE ERG 
        coordinated a photo shoot entitled, ``Raising the 
        Rainbow Flag'' with the members of LGBTQ+ Bureau 
        community and allies in the Bureau's building 
        Courtyard. Approximately 90 employees joined in, 
        holding up strips of colored fabric to make a human 
        representation of the PRIDE flag for the photo. The 
        photo was displayed on the lobby monitors in 
        headquarters and Bureau-wide in the June edition of the 
        OMWI Newsletter, Perspectives, to increase awareness 
        and promote unity around the LGBTQ+ Bureau community.

    On June 11, 2019, in a Bureau-wide message 
        reflecting on my first 6 months at the Bureau, I 
        highlighted PRIDE Month and encouraged staff to 
        participate in upcoming Bureau activities commemorating 
        PRIDE Month and celebrating the LGBTQ+ community.

    On June 13, 2019, OMWI and the PRIDE ERG hosted an 
        internal panel event entitled, ``Making the Difference: 
        Being Out and Open in the Workplace'' at our 1990 K St. 
        Washington, D.C., office, which was accessible via Web-
        ex to the Bureau's Regional offices and remote workers. 
        The panel of Bureau staff shared their experiences with 
        the challenges and rewards of coming out in the 
        workplace. The PRIDE ERG's Executive Sponsor moderated 
        the event and my Chief of Staff gave opening remarks.
                                ------                                


        RESPONSES TO WRITTEN QUESTIONS OF SENATOR JONES
                      FROM KATHY KRANINGER

Q.1. CFPB Research on Tax Time Savings--Last month, the CFPB 
released research, in collaboration with H&R Block, which 
attempted to find effective methods to encourage taxpayers to 
invest more in their savings. One of the findings is that 
recipients of the earned income tax credit (EITC) were more 
likely to save than those who used the refund anticipation 
check (RAC).
    Some banks choose to charge additional large fees on RACs. 
Many users of RACs are recipients of the earned income tax 
credit. The EITC is essential to keeping families across the 
country out of poverty and helps them prepare for emergencies, 
not to be used for tax preparers to take additional fees.
    Has the CFPB considered taking action to ensure that 
financial institutions do not charge exorbitant RAC fees?

A.1. The Bureau continues to monitor the market for Refund 
Anticipation Loans and Refund Anticipation Checks to detect 
risks to consumers. Under the Dodd-Frank Wall Street Reform and 
Consumer Protection Act (Dodd-Frank Act), the Bureau seeks to 
ensure that consumers have access to consumer financial 
products and services, that the markets for those services are 
fair, transparent and competitive, and can exercise its 
authorities to ensure that consumers are provided with timely 
and understandable financial information to make responsible 
decisions about financial transactions. The Bureau also is 
tasked with ensuring that these markets operate transparently 
and efficiently to facilitate access and innovation.

Q.2. CFPB Consumer Counseling--One of my constituents brought 
to my attention issues with bank accounts after the death of 
her husband. Her husband was the primary account holder and she 
was an authorized user.
    Although she was involved in the financial dealings of the 
household, the bank still closed the account after his death, 
forcing her to reapply for credit cards and open new bank 
accounts, putting her in financial constraints during a very 
vulnerable time.
    The CFPB's website acknowledges the importance of closing 
financial accounts of passed loved ones but not the 
complications that can occur. While I recognize the CFPB cannot 
unilaterally close this information gap, I believe it can 
better educate consumers about the long-term effects of these 
kind of financial decisions.
    Have you received complaints from surviving family members 
regarding this or similar issues related to account closures, 
and what steps will you take to better educate consumers?

A.2. The Bureau is aware of difficulties that can arise 
following the death of a spouse. In a 2017 report focused on 
older consumers, the Bureau noted:

        Consumers reported difficulties navigating and 
        organizing finances following the death of a spouse or 
        family member. Consumers must often take specific steps 
        to take control of financial assets following the death 
        of a spouse or family member--these steps are dependent 
        on the unique circumstances of the individual and 
        financial product. \1\
---------------------------------------------------------------------------
     \1\ https://files.consumerfinance.gov/f/documents/
201705_cfpb_Monthly_Complaint_Report.pdf

    The Bureau has released two consumer advisories related to 
this important topic. The first is a quiz for partners to 
complete together about their current household financial 
picture. \2\ The second offers tips on classifying digital 
assets and making sure to include those items in family 
financial planning. \3\ The Bureau also has engaged in research 
to help couples prepare each other for the role of family 
financial manager. The research assessed what resources are 
currently available to surviving spouses and how to address the 
gaps that exist. Based upon this research, the Bureau will 
continue to explore how to create more robust information on 
the topic in the future.
---------------------------------------------------------------------------
     \2\ https://www.consumerfinance.gov/about-us/blog/share-financial-
information-your-spouse-now-avoid-problems-later/
     \3\ https://www.consumerfinance.gov/about-us/blog/virtual-
valuables-consider-your-digital-footprint-you-prepare-future/

Q.3. Senior Protections--Seniors usually have limited funds 
after they are retired. However, many bad actors target seniors 
to convince them to purchase unneeded financial products. The 
Dodd-Frank Act attempted to combat this with Section 989A, 
which directed the CFPB to establish grants to States to 
protect seniors from misleading sales of financial products.
    Section 989A was never fully implemented under the 
leadership of Former Director Richard Cordray. Are there coming 
plans for the disbursement of these grants or the 
implementation of Section 989A of the Dodd-Frank Act?

A.3. Currently, the Bureau does not have plans for the 
disbursement of grants or the implementation of Section 989A of 
the Dodd-Frank Act. As you may be aware, no appropriations were 
given to implement these grants, nor did Congress mandate that 
grants be provided.
                                ------                                


        RESPONSES TO WRITTEN QUESTIONS OF SENATOR SMITH
                      FROM KATHY KRANINGER

Q.1. What and when was the most recent action the CFPB has 
taken to establish a consumer complaint information sharing 
agreement with the Department of Education?

A.1. On October 15, 2019, the Bureau sent to the Department of 
Education a copy of a MOU intended to ensure coordination in 
providing assistance to and serving borrowers seeking to 
resolve student loan complaints. The Department of Education 
responded and discussions are ongoing.

Q.2. What and when was the most recent action the CFPB has 
taken to establish an information sharing agreement related to 
supervisory examinations and oversight matters with the 
Department of Education?

A.2. The Bureau is engaged in discussions with the Department 
of Education to reestablish a MOU regarding supervision of 
student loan servicing, and those discussions are ongoing.

Q.3. Do you commit to having the CFPB disaggregate complaints 
regarding PSLF and TEPSLF from other complaints it receives on 
student loan servicers in future student loan reports?

A.3. The Bureau is committed to managing the consumer compliant 
system as effectively as possible to meet its intended 
purposes. In terms of disaggregating or characterizing 
complaints, that can be a challenge. Consumers frequently 
reference more than one issue in their complaints. Regarding 
PSLF and TEPSLF, the complaint database collects this 
information in the narrative portion of the complaint. This 
means that such complaints are challenging to aggregate and 
disaggregate, and they are even more challenging when there is 
more than one issue in the complaint. Further complicating 
disaggregation, the terms in the narrative used to describe and 
identify PSLF and TEPSLF are provided directly by the consumer. 
This means that two consumers may have the exact same issue 
with PSLF, but describe the issue differently with different 
terms. The result may be that one consumer's complaint is 
identified as a PSLF issue, while the other may be identified 
as a more general servicing issue.

Q.4. Aside from any efforts to coordinate with the Department 
of Education related to establishing information sharing 
agreements, what and when was the most recent action the CFPB 
has taken to investigate the Public Service Loan Forgiveness 
(PSLF) program and the Temporary Expanded PSLF (TEPSLF)?

A.4. The Bureau's specific supervisory and investigatory 
enforcement activity is confidential. The Bureau's examination 
manual for student loan servicing guides examiners in 
conducting examinations, and it provides guidance about a 
number of specific issues, including issues that may arise 
during examinations focused on non-Federal loans (private 
student loans and commercial loans insured under the Family 
Federal Education Loan Program (FFELP)). To be clear, the 
Bureau examines Federal student loan servicers for compliance 
with Federal consumer financial laws pursuant to its regulation 
on larger participants in the student loan servicer market.

Q.5. How many oversight examinations of Federal student loan 
servicers related to PSLF or TEPSLF has the CFPB conducted 
since the TEPSLF program began in May 2018?

A.5. Since December 2017, student loan servicers have declined 
to produce information requested by the Bureau for supervisory 
examinations related to Direct Loans and Federal Family 
Education Loan Program (FFELP) loans held by the Department of 
Education based on the Department's guidance. Additional 
information responsive to this request is Confidential 
Supervisory Information.

Q.6. What process does the CFPB follow for complaints that 
specifically mention PSLF or TEPSLF? Does this process differ 
in any meaningful way from other complaints related to student 
loan servicing?

A.6. The Bureau handles PSLF or TEPSLF complaints in the same 
manner as it handles other complaints related to student loan 
servicing.

Q.7. To date, how many oversight examinations of private 
student loan servicers has the CFPB conducted in calendar year 
2019?

A.7. The Bureau's specific supervisory activity is 
confidential.

Q.8. In your testimony you referenced the ongoing Next 
Generation (Next Gen) Financial Services Environment platform 
overhaul for Federal student aid servicing as the reason for 
reconsidering CFPB's 2017 data collection request submitted to 
OMB. Because of Next Gen, you said ``the data collection as it 
was submitted to OMB isn't really relevant today.'' What data 
collected through the Next Gen platform will the CFPB use that 
makes the previous request to OMB for data collection 
irrelevant?

A.8. At present, servicing of federally owned student loans is 
handled by nine contract servicers. These accounts are hosted 
on four separate technology platforms, maintained by the so-
called Title IV Additional Servicers (TIVAS)--FedLoan 
Servicing/PHEAA, Great Lakes, Navient, and Nelnet. The five 
small, not-for-profit servicers (NFPs) use either the FedLoan 
or Nelnet servicing platform, under remote servicing 
agreements. All nine of the servicers maintain their own 
customer service centers. The data request would have required 
for data to be pulled from each of these platforms by each 
servicer.
    Under Next Gen, we understand that all federally owned 
borrower accounts will be transferred to a single servicing 
platform, which will fundamentally change the way servicing 
responsibilities are allocated across parties and move all of 
the data management to a single platform. Contracts are to be 
awarded to companies to provide specific--but not all--
servicing functions, which means that the data request would 
need to be retooled to match the contractor's functionality. 
Customer service centers may be offered by one or more 
contractors. As a result, the new system does not align with 
the design of the data request, decreasing the long-term value 
of implementing the data collection as originally envisioned. 
The Department of Education has not yet announced the 
completion of the Next Gen contract awards, the number of 
contractors and the scope of each entity's work remain unknown.
    Also, the Next Gen system has been structured to handle 
some collections activities, which are now handled under a 
separate system. The Bureau may consider how to add collections 
outcomes to the data request, considering this shift.

Q.9. Is Next Gen data included in the information sharing 
agreement you are pursuing with ED?

A.9. The discussions about the information sharing agreement 
have not concluded.

Q.10. What actions will the CFPB take should the Department of 
Education not agree to share data collected through Next Gen?

A.10. The Bureau has not made a determination about potential 
actions the agency might consider should the Department of 
Education not agree to share data collected through Next Gen.

Q.11. Because Next Gen only pertains to Federal student loan 
servicing and not the private student loan market, what 
portions of the CFPB's request to OMB to collect data do you 
and your staff believe to be still relevant?

A.11. Next Gen will not, in and of itself, affect the relevance 
of the data previously requested but the sources of that data 
will or may change. As discussed above, the source(s) of the 
data for federally owned loans will undoubtedly change. It is 
also possible that the sources of information for private 
education loans also could change as a result of the 
implementation of Next Gen. The Bureau will reassess the data 
request once it has clearer insight into how Next Gen will 
affect the collection and maintenance of private student loan 
data. In the interim, the Bureau would be able to collect the 
requested information for private education loans from the 
holders or servicers of those loans in the course of 
supervisory exams.

Q.12. What and when was the most recent action you have taken 
to revise CFPB's information collection request to OMB?

A.12. The Bureau plans to reconsider the collection request 
once the Next Gen contracts are finalized by the Department of 
Education.

Q.13. The October 2019 report from the CFPB's student loan 
ombudsman recommends ``providing limited exceptions to existing 
statutes'' regarding data elements collected in complaints to 
better reflect and respond to changing environments. What 
statutory language is this recommendation referring to and what 
type of exception would be helpful?

A.13. This recommendation refers to the Paperwork Reduction 
Act. Exceptions would include limiting statutory requirements 
that otherwise lengthen the time periods regarding making 
changes to the collection of relevant data as the markets and 
issues evolve and change.

Q.14. Please describe the actions that are already underway or 
planned ``for more in-depth analysis [of the factors leading 
to] the decrease in complaints'' related to Federal student 
loan servicers between 2017 and 2019, as reported in the 
October 2019 student loan ombudsman report.

A.14. Actions planned for more in-depth analysis include adding 
an analyst as part of the office staffing plan; reaching out to 
student loan advocacy groups, industry trade associations, and 
the Department of Education for their insights and analysis; 
and coordinating internally with Research and Markets.
                                ------                                


        RESPONSES TO WRITTEN QUESTIONS OF SENATOR SINEMA
                      FROM KATHY KRANINGER

Q.1. In past statements, you have expressed the CFPB's intent 
to ensure a smooth transition away from the Government 
sponsored enterprise (GSE) patch. There is concern that 
allowing the patch to expire will limit access to mortgages for 
many low-income borrowers, making home ownership more difficult 
to achieve. What kind of market disruption do you anticipate in 
2021 when the patch expires? What steps is the CFPB taking to 
mitigate market disruption and harm to consumers?

A.1. The Bureau is committed to a smooth transition from the 
GSE patch in order to mitigate any disruption to the market and 
to limit the potential for harm to consumers. As outlined in 
the 2014 Ability-to-Repay/Qualified Mortgage (ATR/QM) Rule, the 
patch was intended to be a temporary measure to address 
conditions in the mortgage market. The Bureau released an 
advance notice of proposed rulemaking (ANPR) in July, noting 
that it plans to allow the patch to expire in January 2021, or 
after an extension to facilitate a smooth and orderly 
transition from the patch. In the ANPR, the Bureau requested 
comments about possible amendments to the definition of 
Qualified Mortgage in the ATR/QM Rule in light of the 
expiration of the patch to facilitate a smooth and orderly 
transition away from the patch. The Bureau also sought comment 
on how long of a transition period would be necessary for the 
market to implement changes in response to any such amendments. 
The Bureau is currently considering those comments as it 
decides what steps to take to promote a smooth transition away 
from the patch.
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