[Senate Hearing 116-441]
[From the U.S. Government Publishing Office]


                                                    S. Hrg. 116-441


                     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

                             SECOND SESSION

                                   ON

            RECEIVING UPDATES ON THE CONSUMER FINANCIAL PROTECTION 
                      BUREAU'S SEMIANNUAL REPORT TO CONGRESS

                               __________

                             JULY 29, 2020

                               __________

  Printed for the use of the Committee on Banking, Housing, and Urban 
                                Affairs
                                
                                
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                Available at: https: //www.govinfo.gov /

                               __________

                                
                    U.S. GOVERNMENT PUBLISHING OFFICE                    
44-519 PDF                 WASHINGTON : 2023                    
          
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            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

                 Sarah Brown, Professional Staff Member

          Jan Singelmann, Democratic Professional Staff Member

                      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

                              ----------                              

                        WEDNESDAY, JULY 29, 2020

                                                                   Page

Opening statement of Chairman Crapo..............................     1
    Prepared statement...........................................    30

Opening statements, comments, or prepared statements of:
    Senator Brown................................................     2
        Prepared statement.......................................    30

                                WITNESS

Kathleen L. Kraninger, Director, Consumer Financial Protection 
  Bureau.........................................................     5
    Prepared statement...........................................    32
    Responses to written questions of:
        Senator Brown............................................    43
        Senator Toomey...........................................    73
        Senator Menendez.........................................    77
        Senator Warren...........................................    79
        Senator Cortez Masto.....................................    87

              Additional Material Supplied for the Record

The Spring 2020 Semi-Annual Report of the Bureau of Consumer 
  Financial Protection...........................................    89

                                 (iii)

 
                   THE CONSUMER FINANCIAL PROTECTION
                 BUREAU'S SEMIANNUAL REPORT TO CONGRESS

                              ----------                              


                        WEDNESDAY, JULY 29, 2020

                                       U.S. Senate,
          Committee on Banking, Housing, and Urban Affairs,
                                                    Washington, DC.
    The Committee met by videoconference at 10:02 a.m., Hon. 
Mike Crapo, Chairman of the Committee, presiding.

            OPENING STATEMENT OF CHAIRMAN MIKE CRAPO

    Chairman Crapo. This hearing will come to order.
    This hearing is another remote video hearing. I will go 
through quickly some of the standard reminders to remind 
everybody that once you start speaking, there will be a slight 
delay before your picture shows on the screen.
    To minimize background noise, please remember to click the 
mute button until it is your turn to speak. And as always, if 
there is a technology issue, we will move on until that gets 
resolved.
    Again, I remind all Senators and the witness that the 5-
minute clock still applies, and you do have a box on your 
screen labeled ``Clock'' that will show how much time is 
remaining. Some Senators have said they do not seem to be able 
to find that. If you go to the right-hand side of your screen 
and move your cursor, your mouse, some options will show up, 
and one of them is the grid view. If you click grid view, you 
will see a grid of everybody, and one of the things you will 
see as a part of that grid is the clock. And, again, I will try 
to remember to gently remind people because some Senators have 
asked for that reminder because they cannot see the clock.
    Again, to simplify the speaking order, Senator Brown and I 
have agreed to go by seniority in this hearing.
    Today we are receiving testimony from CFPB Director Kathy 
Kraninger on the CFPB's semiannual report.
    On July 2, the CFPB issued its Spring 2020 Semiannual 
Report, which outlines the CFPB's significant work between 
October 2019 and March 2020, including rulemakings and 
supervisory and regulatory activities.
    The report also provides insight into what the CFPB plans 
to undertake in the coming work period.
    Director Kraninger last appeared before this Committee on 
March 10, 3 days before President Trump declared a national 
state of emergency related to the COVID-19 outbreak.
    Shortly thereafter, the CARES Act was signed into law, 
which included measures to help families directly, provide aid 
to small businesses, and to stabilize our markets.
    In implementing the CARES Act, the CFPB has taken important 
actions related to mortgage origination and servicing, consumer 
credit reporting, and data reporting to further address the 
economic impact of the ongoing pandemic.
    The CFPB has also announced several policies and valuable 
educational initiatives intended to help consumers take steps 
to protect their finances during the COVID-19 emergency, and to 
ensure that regulated entities can take reasonable and prudent 
steps to assist communities impacted by the coronavirus.
    I commend Director Kraninger and her staff for taking these 
steps to help consumers, families, and small businesses as they 
continue to weather this global coronavirus pandemic.
    Last month, the Supreme Court issued a ruling on Seila Law 
v. CFPB that found that the agency's structure, led by a single 
director only able to be removed ``for cause,'' is 
unconstitutional.
    The Court's decision on this case is consistent with what 
many in Congress have long said: The CFPB's structure lacks 
sufficient accountability and transparency.
    I continue to advocate for establishing a bipartisan board 
of directors to oversee the CFPB; subjecting the CFPB to the 
annual appropriations process, similar to other Federal 
regulators; and establishing a safety-and-soundness check for 
the prudential regulators.
    On July 7, the CFPB finalized a rule rescinding the 
mandatory underwriting provisions of its small dollar loan 
rule.
    The availability of short-term, small dollar credit is 
essential to millions of Americans.
    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.
    The changes made by the 2020 small dollar loan final rule 
carefully balances ensuring the widespread availability of 
credit to all Americans while preserving strong protection for 
all consumers.
    During this hearing, I look forward to hearing more about 
the impact of the COVID-19 emergency on consumers and the 
financial marketplace; key COVID-19 response initiatives 
undertaken by the CFPB in recent months; additional regulatory 
and legislative changes that can further support the economy; 
and Director Kraninger's priorities for the CFPB in the 
upcoming work period.
    Director Kraninger, thank you again 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, for holding this 
virtual hearing, and thank you, Director Kraninger, and 
welcome. Thanks for participating in this remote hearing and 
practicing social distancing to prevent the potential spread of 
coronavirus, which is still spreading, and is still taking the 
lives of hundreds of Americans every day.
    Across the country, in big cities and small towns alike, 
Americans are calling for their Government to work for them. 
Nearly everyone has had their lives upended by this pandemic, 
but this disease is not spreading in a vacuum.
    You know, Ms. Kraninger, that workers have seen their wages 
stagnate for years, while Washington shovels more tax cuts to 
their wealthy friends and to the largest corporations.
    Families' expenses have only grown. The cost of housing, 
child care, prescription drugs, all those costs have gone up, 
leaving 40 percent of Americans unable to come up with $400 in 
an emergency.
    Black and Brown Americans have never had their hard work 
pay off like it should, and they live every day with systemic 
racism that threatens their health and their safety and their 
lives.
    From Jim Crow to redlining, you know that Black families 
have never had the same freedom and opportunity to choose where 
they live. They have watched this administration dismantle a 
critical element of the Fair Housing Act.
    We have the widest homeownership gap in 50 years. The Urban 
Institute said this: ``The gap in homeownership rate between 
Black and White families in the U.S. is bigger today than it 
was when it was legal to refuse to sell someone a home because 
of the color of their skin.''
    The racial wealth gap has actually increased: the average 
White family now has 10 times the wealth of the average Black 
family.
    Director Kraninger, you know that Black and Brown consumers 
disproportionately lack access to basic financial services, 
forcing them to rely on risky and costly alternatives.
    This leads to so-called reverse redlining, where companies 
target minority communities for exploitative loans and other 
abusive financial products.
    That is why it is easier to find a payday lender in 
communities of color; it is easier to find a payday lender than 
to find a bank branch.
    For years, American workers and families have watched the 
people who are supposed to serve them look out for the biggest 
corporations while their financial problems continued to mount.
    People are angry and they are frustrated.
    Americans watch CEOs pay themselves while laying off 
workers. They see corporations scam people and get away with it 
while people of color spend their entire lives paying for one 
wrong move. They are told to pull themselves up by their 
bootstraps while Wall Street gets bailouts and handouts.
    Americans feel like no one is on their side, especially in 
this administration.
    That is where the Consumer Financial Protection Bureau is 
supposed to come in.
    Your job, Director Kraninger, is to look out for everyone 
else--the workers and families without lobbyists, who do not 
have wealth and connections to throw around. That is why we 
created this agency a decade ago.
    In a moment when Americans of all ages and backgrounds are 
demanding justice for our Black and Brown neighbors and 
accountability for the corporations that exploit them, you have 
the power as the Director to actually do something about it.
    The CFPB has the tools, the resources, and a legal 
requirement to root out discrimination in lending and to 
protect communities of color from shady financial products that 
strip away their wealth.
    Under Director Cordray, the Bureau wielded these tools to 
hold banks, credit card companies, and other corporations 
accountable when they engaged in illegal discrimination, 
returning more than $500 million to Black, Latinx, and Asian 
Americans.
    Under Director Kraninger and Acting Director Mulvaney, the 
Consumer Bureau did not bring one single action, one single 
case of illegal discrimination for more than 2\1/2\ years.
    Sadly, that is about what we would expect from a President 
who seems to have made it his mission to roll back civil rights 
protections and a President of the United States who openly 
uses race to divide us.
    We might have hoped that in this moment of national crisis, 
we might have hoped, with 150,000 Americans who lost their 
lives and 30 million Americans have lost their jobs, we might 
have hoped that in this moment of national crisis President 
Trump and his appointees would rise to the occasion.
    Instead, Director Kraninger, like other Trump appointees, 
you have exploited the coronavirus pandemic to roll back 
protections for American families instead of actually 
strengthening them.
    During the pandemic, Americans have reached out in record 
numbers seeking your help. We have seen an 86-percent increase 
in complaints about credit reporting. But instead of cracking 
down, Director Kraninger announced the CFPB would do nothing to 
punish banks or debt collectors or other corporations that make 
mistakes on consumers' credit reports.
    Millions of Americans have fallen behind and missed 
mortgage payments because of the President's failure to get 
this pandemic under control. But instead of helping struggling 
homeowners, the Consumer Bureau weakened requirements that 
banks and lenders contact homeowners to help them avoid 
foreclosure.
    Last, families have been forced to turn to credit cards to 
make ends meet. The CFPB, the agency that is supposed to look 
out for them, has made it easier--easier, not harder--for these 
credit card companies rip off consumers, making it easier for 
credit cards to hide their terms and true price.
    Director Kraninger also decided that a worldwide pandemic 
just seems to be the right time to push consumers into 
predatory payday loans.
    In March, the Bureau released guidelines encouraging banks 
to get into the payday business.
    In May, the Consumer Bureau released information on how 
banks that offer payday loans can apply for prospective 
immunity from Bureau oversight or enforcement.
    And in July, despite extensive evidence of a corrupted 
rulemaking process and bicameral calls for an Inspector General 
investigation, the CFPB released a new payday rule that 
eliminated the basic requirement that lenders make sure a 
consumer can pay back the loan.
    Director Kraninger has gone so far as to tell financial 
firms that it will give them a pass when they break the law, so 
long as they make a ``good faith'' effort to comply.
    This is exactly why most people think our system is broken.
    If your utility payment is withdrawn before your paycheck 
clears and if you overdraw your account, the bank does not 
waive the fee because you made a ``good faith'' effort to 
deposit that check.
    We have one system for corporations and the powerful and 
the wealthy and the well-connected, one where you get away with 
just about anything in this town and around the country, and a 
different one for everyone else, where your ``good faith'' 
effort never seems to be enough.
    Director Kraninger, we did not need a Supreme Court 
decision to tell us you would not be independent from President 
Trump.
    I have got to hand it to you. You have done exactly the job 
the President of the United States asked you to do. You have 
protected a system where corporations play by one set of rules 
with a different set for everyone else.
    Thank you, Mr. Chairman.
    Chairman Crapo. Thank you, Senator Brown.
    Director Kraninger, thank you again for being here today. 
We appreciate your attendance and look forward to our 
discussion with you. I would like to ask you to remember to 
honor the 5-minute rule for your oral testimony so that 
Senators have time for their questions and also remind our 
Senators that we have the 5-minute rule and we have the clock 
and I intend to stick to it.
    With that, Director Kraninger, please begin your statement.

    STATEMENT OF KATHLEEN L. KRANINGER, DIRECTOR, CONSUMER 
                  FINANCIAL PROTECTION BUREAU

    Ms. Kraninger. Thank you, Mr. Chairman.
    Mr. Chairman, Ranking Member Brown, Members of the 
Committee, thank you for this opportunity to provide you with 
an update of the CFPB's important work.
    I appear before you as the country is engaged in a national 
conversation on racial inequality as well as confronting the 
unprecedented pandemic. Today I would like to discuss both 
topics with you.
    Under my leadership, the CFPB is taking steps to help 
create real and sustainable changes in our financial system so 
that African Americans and other minorities have equal 
opportunities to build wealth and close the economic divide.
    Yesterday I authored a blog outlining the Bureau's 
important work on fair lending. We also issued a request for 
information on how best to create a regulatory environment that 
prevents credit discrimination in all aspects of a transaction 
and expands access to credit. The information that is submitted 
will help us enforce the Equal Credit Opportunity Act, or ECOA.
    Among the topics the public can comment on are how to 
better protect consumers with limited English proficiency as 
well as applicants who derive income from any public assistance 
program. I encourage the public to respond so that we can build 
a financial system that treats everyone fairly and provides 
clear rules of the road.
    Having clear standards helps us identify any violations in 
fair lending helps us identify any violations in fair lending 
laws. Recently the Bureau filed a lawsuit alleging a lender had 
violated ECOA by discouraging African Americans from applying 
for loans through its advertising.
    The Bureau also announced a settlement last year with a 
mortgage corporation that violated the Home Mortgage Disclosure 
Act and Regulation C by intentionally submitting years of 
mortgage loan data that contained errors in the fields of race, 
ethnicity, and sex.
    Since my last testimony before the Committee, I have 
requested critical authority from Congress to allow the Bureau 
to compensate whistleblowers. In our enforcement work, we have 
seen firsthand that whistleblowers can provide key information 
on fair lending violations.
    I want to thank Senator Cortez Masto for introducing 
legislation similar to what I requested, and I stand ready to 
work with the Congress to secure this important authority.
    Now let me take a moment to discuss how we are protecting 
consumers during the pandemic. We have worked to expand our 
reach to consumers to provide them with actionable, useful 
information about their rights, options, and expectations in 
the marketplace for consumer financial products and services. 
We have produced over 70 blogs and videos that have been 
accessed directly by more than 3 million users. Through our 
social media reach, staff estimates our materials have been 
sent to 41 million users. These materials are available in 
seven different languages and have been constantly updated to 
adapt to the changing dynamics. We have also promoted our 
consumer complaint system. When consumers submit complaints to 
the Bureau, they help inform our work in supervision, 
enforcement, regulation, and education.
    Specifically in response to complaints and other market and 
stakeholder feedback during the pandemic, we worked with 
interagency partners to quickly address a student loan-related 
credit reporting issue as well as CARES Act mortgage 
forbearance lump sum payment concerns.
    From January 1 through July 26, 2020, consumers have 
submitted more than 270,000 complaints to the Bureau of which 
more than 14,000 complaints specifically referenced 
coronavirus. Each month from March through June set a new 
monthly record for complaints, yet our consumer contact center 
and our online portal have operated efficiently and effectively 
throughout the pandemic to take consumer complaints and refer 
those complaints to companies for response.
    We also partnered with other Federal agencies to develop 
and launch a unified housing website to provide consumers with 
comprehensive and accurate information on their rights during 
this time. The Bureau has also developed a new targeted 
supervisory approach called ``Prioritized Assessments'' to 
focus on those markets and institutions that pose the greatest 
risk of consumer harm as a result of pandemic-related issues.
    We remain fully engaged in the execution of the Bureau's 
critical mission, including continued progress on our 
regulatory agenda, which is relevant to the pandemic and 
ultimate economic recovery, as well as our supervisory and 
enforcement work. We work closely with partners and 
stakeholders recognizing the important roles that others play 
in supporting our consumer protection mission and preventing 
harm. I am particularly proud of the Bureau's staff and its 
excellent work during these challenging times, and I thank you 
for the opportunity to testify today and look forward to your 
questions.
    Chairman Crapo. Thank you, Director Kraninger.
    This month, the CFPB issued a final rule amending the 2017 
small dollar loan rule by rescinding the mandatory underwriting 
provision. The CFPB justified revising the rule after 
determining that the evidence underlying the mandatory 
underwriting provisions is not sufficiently robust and reliable 
to support their continued inclusion in the rule.
    I appreciate the CFPB for taking action to ensure that 
regulations that could affect consumers' access to credit are 
based on solid evidence and legal support rather than flawed 
analysis. Can you explain why the 2017 analysis on mandatory 
underwriting provisions was flawed and limited rather than 
facilitating consumer choice?
    Ms. Kraninger. Thank you, Senator, for raising this 
important issue. We have seen that the demand for small dollar 
products is substantial. Consumers need that access to credit. 
That absolutely includes responsible small dollar products from 
banks and credit unions. And in the past decade, a number of 
different policy and actions by governments and others have 
limited the availability of that kind of credit and limited the 
number of market participants that are offering that kind of 
credit.
    The payday rule, as we looked at it and reconsidered it, 
looking at again the evidentiary base and the impact that it 
had on the availability of small dollar credit was substantial. 
By the Bureau's own analysis in that 2017 rule, it would reduce 
the availability of that credit by at least 70 percent.
    So looking again holistically at this, taking a step back 
at what is available in that market and really taking a look at 
the evidence that was there, promoting competition and enabling 
consumers to understand the products that are available to 
them, a huge part of where we are today, both rescinding the 
mandatory underwriting provisions that were very specific and 
did not really avail themselves to small dollar lending, 
putting forward the payment provisions so those--it is my 
intention, working through the litigation that we are in now, 
to have those payment provisions go into effect, and also doing 
the work we are doing on testing disclosures to again see if we 
can promote greater understanding of those products, that is, I 
think, the best approach for how to proceed in the small dollar 
marketplace.
    Chairman Crapo. Well, thank you. In fact, to me the notion 
that the previous rule, the 2017 rule would reduce access by 70 
percent by the Bureau's own statistic, that is correct, right? 
That is what you found or what the Bureau found?
    Ms. Kraninger. Yes, Senator.
    Chairman Crapo. That is remarkable. Now, the Bureau and you 
are being criticized for this adjustment to the rule, claiming 
that it is pushing people into the laps of predatory lenders. 
How would you respond to that?
    Ms. Kraninger. Senator, I think as I noted, the desire to 
increase competition and ensure that there are fair and 
transparent markets, as is part of the Bureau's mission, that 
is our focus. I can tell you we still are very much engaged in 
supervision and enforcement in this space. We have taken public 
enforcement action against bad actors in this market. There are 
bad actors in every market that the Bureau supervises and 
enforces against. But that is not something that should 
preclude the actions of those that are seeking to comply with 
the law and are seeking to provide options to consumers, in 
addition to recognizing that the States have made their own 
determinations about what kinds of products should be available 
to their consumers and continuing to enable the States to, you 
know, again, oversee those aspects of the market.
    Chairman Crapo. Will the proposed new rule open access to 
companies, financial institutions that are currently not 
providing small dollar loans but give them the opportunity to 
provide those small dollar loans?
    Ms. Kraninger. That is absolutely part of the intent, 
Senator. In addition to that, we issued a no-action letter 
template to encourage banks to offer responsible small dollar 
products, and we anticipate that a number of them will do that 
in the coming months, so looking forward to, again, continuing 
to promote that. There are also credit unions that offer 
similar products, and we are trying to, again, facilitate that 
kind of availability of credit for consumers who are going to 
need that.
    Chairman Crapo. So it seems to me that the intended outcome 
here is that we maintain protection and security against 
predatory practices, but significantly increase access to 
credit.
    Ms. Kraninger. Absolutely, Senator. That is the intent.
    Chairman Crapo. Thank you.
    Senator Brown.
    Senator Brown. Thank you.
    Ms. Kraninger, I would like to ask you about the payday 
rule that cuts protections for consumers. I have an internal 
CFPB memo about the payday rulemaking that was made public in 
April. This memo was written by a senior career employee who 
was closely involved in the payday rulemaking. Have you read 
this memo, Director?
    Ms. Kraninger. Senator, I have.
    Senator Brown. Thank you. The memo, as you know, describes 
repeated efforts by your political appointees to manipulate 
economic research. The memo contains details, specific dates, 
the names of individuals involved, identifies corroborating 
emails and other documents. According to the memo, your 
political appointees ignored research they disagreed with in 
order to repeal the rule.
    Is it appropriate for CFPB to ignore research to repeal 
this rule?
    Ms. Kraninger. Senator, the full record is available in the 
rulemaking process, both the 2017 process and the updated 
process.
    Senator Brown. I know you are really good at testimony. You 
are very good. But, you know, the question is: Is it 
appropriate to ignore research as this memo claims? Is it 
appropriate to ignore it?
    Ms. Kraninger. Senator, the memo----
    Senator Brown. Is it appropriate to ignore the research?
    Ms. Kraninger. We have a full record of research that we 
relied on in the entire process, and it is----
    Senator Brown. You are obviously not going to answer. The 
fact that you proceeded to finalize a rule, Director, despite a 
clearly corrupted process, again, this that you have read, 
raises questions about whether you have followed the law. So 
let me ask some quick basic questions.
    Under the Administrative Procedures Act, should the CFPB 
determine the outcome before it begins the rulemaking process? 
Yes or no.
    Ms. Kraninger. That has never occurred. The process and the 
public back-and-forth are critical to it. I have certainly 
testified to that with respect to this topic and others 
before----
    Senator Brown. Certainly from this memo it certainly did. 
Let me ask another question. Under the APA should it ignore 
research that reaches a conclusion that the agency head 
disagrees with? Yes or no.
    Ms. Kraninger. Senator, the full record, again, is out 
there for public comment, and my decision was based on that.
    Senator Brown. OK. According to this, not. But I just asked 
the basic question: Should the Director overturn what 
recommendations? So if the CFPB had done any of these things 
during the payday rulemaking process, would it violate the APA? 
Yes or no. If, in fact, they had ignored, they had overridden, 
they had ignored, they had not taken into account, is that a 
violation of the APA?
    Ms. Kraninger. Senator, some of this is hypothetical, but 
the full record is available for the public to review, and that 
is the basis upon which I made the decision.
    Senator Brown. Thank you. Your nonanswer raises questions 
about your leadership. It confirms my concerns and the concerns 
of so many about the corruption of the rulemaking process. It 
again shows that you are doing the bidding of the President of 
the United States, the President who always sides with 
corporate interests and with big banks and with payday lenders 
against the public.
    Let me shift to fair lending. I have been highly critical, 
as you know, of your decision to reorganize and strip the 
Office of Fair Lending of its oversight duties. I warned you 
this decision would cripple the Bureau's ability to bring fair 
lending cases. You assured us this was not the case. Well, look 
how things have turned out. During Director Cordray's tenure, 
CFPB returned more than $500 million to consumers who had been 
discriminated against by credit card companies, auto lenders, 
and mortgage lenders.
    During your tenure, how much has the CFPB returned to 
consumers who were discriminated against by credit card 
companies? What is the figure?
    Ms. Kraninger. Senator, I do not know that there has been a 
continuation of the kinds of cases you are noting. I would like 
to note that could be read as a success of the original 
enforcement actions----
    Senator Brown. No, I----
    Ms. Kraninger.----make sure that those companies have 
actually corrected----
    Senator Brown. In fact, there was $500 million with Cordray 
and zero dollars with Kraninger. It is not that the world got 
cleaned up when President Trump came to town and drained the 
swamp. It is clear that people are still being cheated, and 
this Bureau is not doing anything.
    So let me ask a question specifically. How much has CFPB 
returned to consumers discriminated against by auto lenders? Is 
the number also zero?
    Ms. Kraninger. Senator, all of our restitution and 
enforcement
actions that are public are out there. I take your point. Fair 
lending cases are actually incredibly challenging to bring. 
That is why I have sought whistleblower compensation authority, 
but we----
    Senator Brown. Ms. Kraninger, they are challenging to bring 
against auto lenders, mortgage lenders, credit card companies, 
but they were not so challenging that Director Cordray could 
recover $500 million. So we have seen the CFPB has not returned 
a single dollar to victims of discrimination since you became 
Director. That record speaks for itself.
    Thank you, Mr. Chairman.
    Chairman Crapo. Thank you.
    Senator Kennedy, are you there?
    [No response.]
    Chairman Crapo. Senator Kennedy?
    [No response.]
    Chairman Crapo. I think we have several of the other 
Senators who are not yet--they have had to go check in at other 
hearings. I am going to wait another 5 or 10 seconds, then go 
from Senator Kennedy to Senator Menendez. Is Senator Menendez 
available?
    [No response.]
    Chairman Crapo. Senators who are available, click your 
camera on so I can see you. I see Senator Cortez Masto. Senator 
Tester is on. He beat you, Senator Cortez Masto. Senator 
Tester, we will go to you.
    Senator Tester. Thanks, Mike. Thank you, Mr. Chairman. I 
appreciate you having this hearing, and thank you to the 
Ranking Member also.
    I want to kind of follow up on the Ranking Member's 
questions, because the statistics out there, I mean, you talked 
about in your opening statement what a fine job that is being 
done on supervision and enforcement. But in 2015, there were 55 
enforcement actions taken, and these figures may be incorrect. 
If they are, let me know. In 2018, there were 11. That is an 
80-percent cut, if my math is correct.
    What do you attribute that to, if, in fact, as you have 
stated previously, you are aggressively taking action against 
bad actors?
    Ms. Kraninger. Senator, I can tell you certainly in 2018 I 
was not at the Bureau, but the transition in leadership is 
something that I have testified to is logically requires folks 
getting up to speed, getting comfortable. Every enforcement 
action is a decision by the Director, and it is one that I can 
tell you I take seriously.
    Last year, we had 22 public enforcement actions in addition 
to resolving a number of prior litigation actions, and I expect 
that that number at the end of this fiscal year will be notably 
higher. We continue to work our way through appropriate 
enforcement
actions, and one real focus area for me is actually making sure 
we have timely action both for those who are potential victims, 
but also----
    Senator Tester. So let us just follow this up. I had a 
friend that worked for an auto dealership that was a lender, 
and he quit the job because he did not feel right because he 
knew he was taking advantage of people. This was long before I 
got to the Senate.
    The Ranking Member brought up the fact that there were zero 
dollars returned to consumers from auto lenders. Can you tell 
me why? Is it you do not think auto lending is within your 
purview, or you do not think they are doing anything wrong? 
What is the reason for that?
    Ms. Kraninger. Senator, the question that Senator Brown 
asked was with respect to----
    Senator Tester. This is a question that I am asking.
    Ms. Kraninger. Oh, yes. I would like to distinguish the 
questions, though, because you are asking in general about auto 
lenders as opposed to a fair lending case, just to be clear and 
related to discrimination. But there have been enforcement 
actions against auto lenders, including restitution and 
compensation through our supervisory activities as well. Some 
of that, certainly what we get through public enforcement 
action is public, and I can get you that number.
    Senator Tester. Is any of that returned to the consumer, 
any of those dollars?
    Ms. Kraninger. Yes. Yes, they have been.
    Senator Tester. Can you tell me how much?
    Ms. Kraninger. Off the top of my head, I am sorry, sir, I 
cannot. But we will absolutely get back to you on that number.
    Senator Tester. OK. I would appreciate that.
    Senator Tester. Has the Bureau changed its enforcement 
actions during this crisis?
    Ms. Kraninger. Yes, Senator. Well, we continue to robustly 
engage in it. We are very mindful of interagency discussions 
around fraud, particularly fraud and scams, and keeping an eye 
out for those kinds of activities in our slice of the market.
    Senator Tester. Have enforcement actions increased because 
of this crisis?
    Ms. Kraninger. I can tell you that the number of 
investigations ongoing has increased related to that. We are 
moving as swiftly as we can.
    Senator Tester. By how much?
    Ms. Kraninger. The number of investigations that we have 
open is not a public number. I am actually looking at that, 
Senator, because I----
    Senator Tester. I am asking for a percentage.
    Ms. Kraninger. Percentage increase? Again, I would not want 
to give you a percentage increase off the top of my head, but 
we can certainly talk about numbers with your office that are 
appropriate given the confidential nature of enforcement 
actions.
    Senator Tester. Mr. Chairman, I will tell you that Director 
Kraninger is very, very good at not answering questions. By the 
way, that is not a good quality. I did that once on a news 
show, and I had a manager of mine call me up and say, ``You are 
an idiot.'' And I never did it again.
    These hearings with Director Kraninger have been a total 
waste of time. I hope this administration goes away because, 
quite frankly, we need somebody who will protect consumers and 
not just give us a spiel.
    Thank you, Mr. Chairman.
    Chairman Crapo. Thank you.
    Senator Menendez.
    Senator Menendez. Thank you, Mr. Chairman.
    Census survey data indicates that about 17 percent of Black 
homeowners and 8 percent of Latino homeowners reported having 
missed their mortgage payment in May compared to about only 4 
percent of White homeowners. Adding to this hardship is the 
fact that Black and Latino households are much less likely than 
White homeowners to access foreclosure prevention measures like 
entering into forbearance plans, leaving minority communities 
out of home-saving relief.
    The numbers are clear. Black and Latino homeowners are 4 
and 2.2 times, respectively, more likely to report completely 
missing mortgage payments than deferring payments. White 
homeowners, however, are only 1.4 times more likely to miss 
payments than defer mortgage payments.
    It is clear there is a major problem with minority families 
accessing mortgage forbearance. So, Director Kraninger, what 
are you doing to address this problem and ensure that minority 
homeowners are taking advantage of mortgage forbearance and 
loan modification options?
    Ms. Kraninger. Thank you, Senator. It is a crucial question 
during the times we are facing now. Two responses.
    One is making clear that servicers are held to the 
requirements under the CARES Act. We are doing that in 
partnership with the other Federal regulators so we send a 
clear message to them. We have worked on scripts so that when 
borrowers call them, they have the right information, clear 
information about their rights.
    The second aspect of this is, in addition to the unified 
housing website that we pulled together, really doing 
everything we can to reach consumers through consumer advocate 
groups and other community organizations, through their 
lenders, we have produced videos and blogs of what their rights 
are under the CARES Act and the questions that they should ask 
their servicers when they contact them, so really trying to 
provide both sides of that.
    Senator Menendez. Let me just say the CFPB released its 
joint supervisory statement regarding mortgage servicing rules 
back in April. Black and Latino homeowners have not entered 
into mortgage deferral programs at the same rate as White 
homeowners since the beginning of this pandemic. Now, this 
could be for myriad reasons. Perhaps their mortgage is not 
covered by the CARES Act. But perhaps they are not aware of 
their rights under the CARES Act. The fact remains that 
minority homeowners are missing mortgage payments at a higher 
rate than they are entering into forbearance, including since 
the time the CFPB's joint supervisory statement, as well as 
that in terms of consumer education, that website has been up 
for months. So it is clear that your consumer
education efforts are not closing the gap here to ensure all 
homeowners receive necessary relief. And I would also note that 
you still do not encourage homeowners to file a fair lending 
complaint with you. People are always sent to HUD for fair 
housing complaints and told to call the CFPB only if the 
servicer does not fix the problem first, which makes it seem 
that the CFPB does not want to hear about discrimination, and, 
frankly, that does not inspire much confidence that you will 
take a racial disparity problem seriously.
    So I will ask you again: What are you going to do to make 
sure that Black and Hispanic homeowners do not fall into 
greater dire circumstances, lose their homes? Are you ready to 
be more proactive? Because if not, we are going to see a 
tsunami of foreclosures on communities that can ill afford that 
the one element that they have for wealth is their home.
    Ms. Kraninger. Senator, again, I agree with you that this 
is a critical issue. I do want to distinguish between the Fair 
Housing Act and the Equal Credit Opportunity Act. We do not 
have jurisdiction over the Fair Housing Act. So that is the 
distinction we are trying to make.
    I welcome any of your ideas or thoughts with respect to how 
we can continue to be as proactive as possible in getting 
consumers the information they need. They have rights. They 
have options. And we have, you know, again, tried to reach--we 
have reached over 3 million people directly, including 
specifically that video on CARES Act options.
    Senator Menendez. Evidently, you are not reaching Black and 
Hispanic homeowners, I can tell you that right now.
    One final question. The COVID-19 health crisis also created 
an economic crisis. Current unemployment is 11.1 percent. 
According to the Federal Reserve, nearly 40 percent of 
households earning less than $40,000 a year had already lost at 
least one job by May. As indebted consumers begin to face 
delinquency or defaults, it is only a matter of time before we 
see financially insecure Americans suffer abuse and harassment 
by some debt collectors.
    Do you expect debt collectors to go after more Americans 
given the current state of affairs? And what----
    Chairman Crapo. [Inaudible] has left his desk.
    Senator Menendez. If I may just finish my question, 
Chairman. And what are you going to hold them to in terms of 
the standard?
    Ms. Kraninger. Mr. Chairman, I guess very quickly I can 
respond. Senator, it is an important question, and we are 
working hard to address the issues you raised and to see where 
we can go. So these are important issues, but I know I am out 
of time here.
    Senator Menendez. Well, it deserves a better answer than 
that.
    Chairman Crapo. Thank you.
    Senator Kennedy, are you on?
    [No response.]
    Chairman Crapo. Senator Moran?
    Senator Moran. Mr. Chairman, I am here. This is Jerry 
Moran.
    Chairman Crapo. Go ahead, Jerry.
    Senator Moran. Thank you.
    Ms. Kraninger, good morning. I want to talk about data 
privacy for a moment. I chair a Subcommittee in the Commerce 
Committee that has jurisdiction over data privacy. I have 
worked with a number of my colleagues, Republicans and 
Democrats, trying to develop a data privacy bill. Let me talk 
about it in the fintech arena, which our Subcommittee would not 
have jurisdiction, would not want Chairman Crapo to think that 
we are stepping on his toes. But he, too, has a great interest 
in data privacy based upon the conversations we have had.
    Nontraditional financial service providers have grown 
significantly in past years as Americans have increasingly used 
mobile devices for banking, for investing, or for borrowing 
services. And many of those financial technology companies 
aggregate significant amounts of data from bank websites after 
being given authorization by the bank customer, by the 
consumer.
    Given the rise of third-party access to this sensitive 
consumer financial information, data privacy and security has 
become even more important and a topic that we need to deal 
with.
    Section 1033 of the Dodd-Frank Act ensures that consumers 
have access to and the ability to leverage the data in their 
records subject to rules by the CFPB. And on July 24th, the 
CFPB announced plans to issue an Advance Notice of Proposed 
Rulemaking related to consumer-authorized access to financial 
records.
    Ms. Kraninger, what are the goals of the CFPB in this 
rulemaking process? What are the specific data privacy risks 
that are posed that you are attempting to address? And what 
voluntary actions have companies taken to date to better ensure 
consumer data is protected?
    Ms. Kraninger. Thank you, Senator. Section 1033, of course, 
Congress anticipated an issue in this area, did note that 
consumers should have the ability to authorize access to their 
own financial data, and there has been quite a bit of activity 
in this space, as you noted, with fintech providers being 
engaged in it.
    Congress anticipated rulemaking. I would say the Bureau has 
issued principles in the past that remain true today, certainly 
allowing consumers to provide that permission. But there are 
security and cybersecurity implications and privacy 
implications for some of that data, as well as proprietary 
issues that some of the financial services providers have with 
what data is accessed and certainly what data aggregators can 
do with that data when they access it. And we had a symposium 
earlier this year where we pulled together experts. I was truly 
impressed with the conversation because we were able to in just 
a few hours really encapsulate a lot of the different dynamics 
that are happening in this space. But it is clear, at least to 
the Bureau at this point, that we want to move forward in a way 
that is slightly more formal with that Advance Notice of 
Proposed Rulemaking to get some more fidelity over whether we 
should do a rulemaking.
    It is a challenging area. Again, the principle that 
consumers should control their own data is clear. But precisely 
what that means, particularly if consumers are providing their 
credentials to particularly their bank and their bank 
information to a third party and what that means in terms of 
the bank's ability to fulfill their responsibilities to protect 
that data. So those are some of the dynamics that are at play 
here, but I think it is clear that consumers want to share 
their data. They like the services that a lot of the fintech 
providers are providing them, and the CFPB was told by Congress 
to engage in this space, and so there is an opportunity for us 
to continue to move forward to make sure that it is operating 
the way it should.
    I would say just with respect to industry action, there has 
been progress on, rather than screen scraping that data away, 
using APIs to get to that data. And so we are, again, following 
that dynamic as well in the market.
    Senator Moran. I cannot see the clock, so I am going to 
just follow up. But what your answer suggests to me is that 
this is very early in the process in what you are going to 
develop?
    Ms. Kraninger. I am sorry, Senator. Is what in what I am 
going to develop?
    Senator Moran. What I take from your answer is that the 
CFPB is just beginning the process to determine what its rules 
might be.
    Ms. Kraninger. Yes.
    Senator Moran. And, therefore, there is nothing that you 
could announce as where you are headed. It is not that specific 
or that known.
    Ms. Kraninger. That is correct, Senator, other than the 
principles that the CFPB issued several years ago remain the 
principles at play here.
    Senator Moran. Thank you.
    Thank you, Mr. Chairman.
    Chairman Crapo. Thank you.
    Senator Warner.
    Senator Warner. Thank you, Mr. Chairman. Director 
Kraninger, it is good to see you, albeit it remotely.
    You and I have spoken a couple of times on the CFPB's 
proposed changes to the ability to repay and the QM rule, and I 
do appreciate your engagement with me on this issue because I 
really think the Bureau needs to work to make changes that will 
help increase access to borrowers of color, and particularly 
gig workers, who I think have been disproportionately 
challenged in a variety of rulemakings.
    We all know that consumer groups have said that efforts to 
eliminate a hard DTI and Appendix Q, while adding a pricing 
limit or cap would really benefit consumers while maintaining 
appropriate loan quality. I actually think, again, eliminating 
the strict DTI cap would particularly help those lower-income 
borrowers. Gig workers in particular, as we have talked about, 
have a difficulty at times in documenting their earnings, who 
under the current rule, let us face it, have been really 
excluded from getting mortgages. QM has really hurt them. And I 
think those folks are particularly suffering right now in the 
midst of the pandemic.
    So I have got a couple of questions about where I hope we 
are headed. While the rule that you proposed appropriately 
proposes moving away from a hard DTI cap for QM, I would hope, 
though, that the Bureau still plans to maintain the 
responsibility on lenders to consider and verify debt and 
income of borrowers. Is that correct? Can you speak to that?
    Ms. Kraninger. Yes, Senator, and that is specifically in 
Title 14, so that is statutory, and a little bit of devil in 
the details as to what that means, as you noted, for self-
employed people and gig workers. But the requirement to 
consider and verify debt and income is essential.
    Senator Warner. And to be clear, while you are going 
through this proposal, the CFPB is not planning on eliminating 
any of the other consumer protections that are part of 
qualified mortgages, including provisions that bar interest-
only loans or those with excessive balloon payments. Both of 
those have been estimated to have really hit about half of the 
foreclosures during the financial crisis. So you are not going 
to move away from these consumer protections in your final 
rule, are you?
    Ms. Kraninger. Here again, statutory precluded features in 
qualified mortgages would continue.
    Senator Warner. How are you going to make sure, again, on a 
more generalized basis, are you going to make sure that 
responsible credit is available particularly in these low-
income communities and, again, a particular interest of mine, 
and I see Senator Schatz on the line as well, of gig workers?
    Ms. Kraninger. Senator, I think it comes down to--and this 
is a conversation we are very interested in getting comments 
on--what verification and consideration of debt and income look 
like, what standards the stakeholders can come together on, 
definitely encouraging industry and consumer advocates to come 
together in some kind of stakeholder group to develop standards 
that would get to the issues that you are raising, you have 
raised and are concerned about. We have not had enough time, 
frankly, to do that ourselves, and I do not know that the 
Bureau should do that. I think there is an opportunity here for 
other standards, but also rely on the other Federal standards, 
in addition to asking for comment on whether Fannie and 
Freddie's standards should be considered as acceptable under 
the rule as well. So that is where this really comes into play. 
But as you noted, Appendix Q was fairly limited and strict and 
really did--if it were to be applied more broadly than it was, 
would affect gig workers and self-employed folks pretty 
severely.
    Senator Warner. Well, we want to keep working with you on 
both getting rid of the DTI cap, working with you on Appendix 
Q, but also not at the price of sacrificing the consumer 
protection.
    I have only a moment for one more question. You know, we 
have seen a huge uptick, I think, increased by 86 percent, of 
complaints about credit reporting agencies, and as a matter of 
fact, in March I sent a letter to the Big Three credit 
reporting agencies and you guys, urging you to make sure that 
consumers that have been disproportionately hurt by the 
coronavirus do not have permanent marring of their credit.
    Unfortunately, one of the few actions CFPB has taken is 
simply to give the credit bureaus more time to pursue these 
actions, so I really hope we can expect more. We have seen this 
uptick in negative comments. I think we need to make sure that 
we do not bar people permanently from their credit during the 
coronavirus. And I know our time has expired, but this is an 
issue that I want to come back and visit with you in great 
detail. It is terribly, terribly important.
    Ms. Kraninger. Senator, it is incredibly important, so 
thank you.
    Senator Warner. Thank you, Mr. Chairman.
    Chairman Crapo. Thank you.
    Senator Kennedy.
    Senator Kennedy. Thank you, Mr. Chairman.
    Ms. Kraninger, good morning. Can you hear me OK?
    Ms. Kraninger. I can.
    Senator Kennedy. How many entities do you regulate?
    Ms. Kraninger. Many thousands. It depends on whether we are 
talking about the regulations we issue, the entities that we 
examine directly, all of them--thousands upon thousands.
    Senator Kennedy. What percentage of them do you think are 
honest?
    Ms. Kraninger. Senator, that is a tough one to put a number 
on. I think it probably gets to how many people you generally 
think are honest and those you associate with or those in the 
world generally. I think there are many who are, and there are 
some who are not.
    Senator Kennedy. How many of them intentionally abuse 
consumers?
    Ms. Kraninger. I would say, Senator, unfortunately, more 
than we would like there to be.
    Senator Kennedy. Well, is it most of them?
    Ms. Kraninger. I certainly do not believe that, no, sir.
    Senator Kennedy. Is it 40 percent?
    Ms. Kraninger. Again, I would hesitate to put a number on 
this specifically, and that is why I said ``more than we would 
like there to be,'' because clearly there are some. And some of 
the challenge is in sorting those out who are intentionally 
seeking to do that and those who make mistakes and those who 
are absolutely complying with the law. So that is our job to 
sort that out.
    Senator Kennedy. Has anybody ever checked?
    Ms. Kraninger. In terms of checking compliance across, we 
certainly are doing our best to tackle that in a layered 
approach way. We have continued to----
    Senator Kennedy. I am not interested in a layered approach. 
I am interested in whether any academic, or otherwise, or the 
agency, have ever assessed what percentage of the entities you 
regulate intentionally abuse consumers.
    Ms. Kraninger. I am not aware of anything, Senator, in 
terms of an actual analysis of that. It may very well exist, 
but I am not aware of it.
    Senator Kennedy. How much money did your agency spend last 
year?
    Ms. Kraninger. Roughly about $500 million for our own 
activities.
    Senator Kennedy. All the rules and regulations and actions 
that your agency takes, what is the cost of that on our 
economy?
    Ms. Kraninger. Well, Senator, again, I do not know that 
there has been a full analysis of the cost on that, much less 
the benefit of consumer protections. It is a fair question, but 
I think there is a little bit of cost and benefit there as 
well.
    Senator Kennedy. Well, if you were in the private sector 
and you went to your bank and asked to borrow half a billion 
dollars, I think they would ask you, ``What for?'' And you 
would tell them. And they would ask a question that, in effect, 
would be: ``What are your costs and benefits?'' We have not 
done that for your agency?
    Ms. Kraninger. Not specifically in those terms, sir. I 
certainly would concede that in the wake of the financial 
crisis there was certainly a conclusion that consumer 
protection needed to be done by one agency, and so that 
consolidation----
    Senator Kennedy. Let me ask you one last question, 
Director, because I am about to run out of time. How does the 
United States of America and its businesses rank against the 
other economies throughout the world in terms of honesty and 
consumer abuse, in your opinion?
    Ms. Kraninger. Senator, I really have not done a good 
comparative across the world, but I would certainly say that we 
have a robust set of laws and regulations intended to protect 
consumers and promote that fair----
    Senator Kennedy. I know that, but how do we rank with other 
countries? This is my final comment. It looks to me like we are 
flying blind here.
    That is all I have, Mr. Chairman.
    Chairman Crapo. Thank you.
    Senator Warren. Thank you, Mr. Chairman.
    So in 2008, when the bottom fell out of the economy and 
people were cheated on their mortgages and credit cards and 
auto loans and other financial products, there was no cop on 
the beat to protect them, and that is why 10 years ago last 
week, President Obama created the Consumer Financial Protection 
Bureau to protect consumers from abusive financial products.
    And so now here we are in the middle of another financial 
crisis, this time caused by a global pandemic, and now more 
than at any time since the last crisis, consumers need strong 
leadership at the CFPB.
    Now, one of the ways that the CFPB monitors problems is 
through its consumer complaint hotline. Director Kraninger, do 
you know how much the volume of consumer complaints that the 
Bureau receives every month has increased since this pandemic 
started?
    Ms. Kraninger. It is close to 30 percent. As I noted in the 
opening, March, April, May all did set records in terms of how 
many complaints we have received in an individual month.
    Senator Warren. So I actually looked at your numbers and 
thought it was about 50 percent, and those, as you say, are the 
highest monthly complaints ever in the Bureau's history. So let 
us talk about what those complaints show.
    Today the biggest category of COVID-related complaints to 
the CFPB are coming from people struggling to pay their 
mortgages. It is the CFPB's job to ensure that the companies 
that handle mortgages are following the law so that families do 
not end up in foreclosure when the law says they should not.
    So, Director Kraninger, over 9 million people lost their 
homes to foreclosure during the last crisis, and now we have 
rules to guard against those foreclosures. But instead of 
enforcing those rules, you issued guidelines to tells servicers 
that so long as they act ``in good faith,'' the Bureau will not 
step in if they break the law.
    Director Kraninger, can you give me other examples of when 
law enforcement says, for example, to a thief that, ``As long 
as you claim you are in good faith, you are not going to be 
held responsible when you break the law''?
    Ms. Kraninger. Senator, if I could, the number of mortgage 
complaints were early in that process in March and April, and I 
think they are actually a great example of the Bureau 
responding to that and working with our Federal partners to do 
that, so the number of complaints----
    Senator Warren. But I would just like an answer to my 
question. Can you give me another example in law when 
enforcement steps in and says, ``As long as you guys are in 
good faith, we are not going to enforce the law''?
    Ms. Kraninger. Senator, that is not what the guidance says. 
Our guidance says that compliance with the law is critical. 
However, again, you know well the discretion that all law 
enforcement entities have with respect to the cases they take 
on and where they spend their energy. And so the ability to----
    Senator Warren. Let me just stop you right there. Actually, 
the guidance specifically says that the rules that are written 
into law will not be enforced so long as the mortgage servicer 
claims that it is in good faith. And I am just asking, because 
I know of nowhere else that guidances like that are put out. If 
Congress had wanted to write into law a good-faith exception, 
we certainly could have done that. But we did not do it. Not 
enforcing the law has a real impact, and in the 2 months since 
you handed out a ``Get Out of Jail Free'' card to every 
mortgage servicer, consumer complaints related to foreclosures 
have gone up, not down. The Bureau even acknowledged this in 
the latest bulletin it put out this month to summarize the 
coronavirus compliance complaint.
    So let us move on to credit reporting. Errors on 
individuals' credit reports can cost consumers thousands of 
dollars, hurt their scores for years to come. People are under 
a lot of financial pressure right now, so let us take a look at 
what you have done.
    Director Kraninger, you told the credit reporting companies 
they did not need to bother complying with the law when a 
consumer disputes something on a credit report. So why do you 
think your job is to write the rules to allow credit reporting 
companies to break the law?
    Ms. Kraninger. Senator, I would also say that is false. The 
point of fact with respect to dispute resolution is that it 
needs to be done, but it is difficult to resolve a dispute if, 
for example, the merchant in a small business that could be a 
subject of this is actually closed and the credit reporting 
agency cannot reach them. So we still--that is where the good-
faith example comes into play.
    Senator Warren. Director Kraninger, I just read what it is 
that you actually put out. Now, what you put out said you are 
not going to enforce the 30- or 45-day deadlines that are 
written into law under the Fair Credit Reporting Act so long as 
the credit reporting agencies are making a good-faith effort. 
For me, you did not limit it to small businesses. You did not 
say we will take one-off advice on when we think someone is in 
good faith. You just sent it out there across the board, and to 
me that is an invitation to break the law. And it matters 
because we know now there has been an 86-percent increase in 
the complaints about credit reporting since the pandemic 
started. Your own data shows that since you put out this 
guidance, complaints have continued to go up, not down.
    So let us recap. You are getting more and more complaints 
from desperate consumers, but instead of using the Bureau's 
full authorities to enforce the law, you just told companies 
you are going to help them when they cheat consumers. And these 
are the same companies that had no problem screwing over 
consumers during the last financial crisis. There is no doubt 
that consumers are in a better position because the CFPB is out 
there, and I am grateful to the employees who do this every 
day. But your leadership has been a miserable failure based on 
your actions in this pandemic. You should resign.
    Chairman Crapo. Senator Scott.
    Senator Scott. I hope you are doing well, Director 
Kraninger. Thanks for being with us today.
    I have a couple questions as it relates to home ownership. 
I think it is really important for us to recognize from our 
perspective that as many people pursue the American dream, part 
and parcel of achieving that dream really is home ownership. 
And so that is one of the ways that we can build wealth in 
homes throughout this country and in families and in family 
systems throughout the country. So I think it is really 
important for us to maintain a strong focus on home ownership.
    One of the questions I have is I know that there is a 
proposal for us to go from, as we call it, the DTI, the debt-
to-income ratio, 43 percent, to more of a pricing model. So my 
question for you is: Can you explain the rationale behind 
leaving the safe harbor at the 150 basis points while the QM 
status moves to 200 basis points? Because from my perspective, 
that might actually make it more challenging for some folks to 
become homeowners if we go from the debt-to-income of 43 
percent to a pricing model.
    Ms. Kraninger. Thank you, Senator. Certainly the intent--it 
is a Notice of Proposed Rulemaking that is out for comment, but 
the intent is to address many of the issues in the original 
ATR/QM rule that just did not quite bear out. The patch had a 
distortionary effect because 43 percent DTI was not a hard and 
fast cap for the GSEs, and roughly a third of the loans that 
the GSEs backed in 2018 had DTIs that were higher than 43 
percent, and that data is in our rulemaking.
    So looking at that and understanding that the intent here 
is that pricing is actually more holistic, it is not just debt-
to-income ratio alone, but it is other factors that might allow 
particularly minority borrowers to come into the system, again, 
if they can demonstrate the ability to repay, and they are 
getting loans that are meeting the QM features in the statute. 
So I think there is an opportunity here to look at all of that, 
but we are taking comment.
    I take your point on the 200 basis points versus the safe 
harbor and rebuttable presumption standards. The thresholds for 
safe harbor and rebuttable presumption are actually the current 
thresholds, but it is something that we are taking comment on 
and looking at and thinking about, again, how all of this works 
together. But the intent is to balance that. Congress clearly 
told us ability to repay is critical, so we are balancing that 
against making sure that we can continue to enable home 
ownership, particularly for minority communities in particular.
    Senator Scott. I would agree with you. I think we should do 
all that we can for creditworthy borrowers to become homeowners 
when it makes sense. I think harmonizing the QM and the safe 
harbor might make it easier for financial institutions to not 
go to the default position of the safe harbor that is 50 points 
lower.
    Let me hop to another question as my time starts to seep 
away so quickly in these hearings. I know our friends in the 
House, so to speak, passed the HEROES Act, and a part of the 
HEROES Act is this notion of suppressing bad debt during the 
pandemic. And it is hard to argue that you would not want to 
give some leeway, some flexibility to borrowers to catch up, 
hence the 120-day provision afterwards.
    Here is my question to you, and you will have to work with 
me if I do not say it as artfully as I would like to. If we 
suppress bad debt, especially indefinitely, after the pandemic 
is over, don't we start distorting the market? And if we 
distort the market, doesn't that make it harder for 
decisionmakers at institutions to make good, sound judgments? 
And if that happens, won't many creditors decide to pull back 
away from extending credit as opposed to leaning into 
creditworthy folks because there is clarify in the marketplace? 
Am I missing that point or not?
    Ms. Kraninger. You are raising a very important point 
because that is why accuracy is so important in the law with 
respect to the credit reporting system. But we are, to your 
point, making at least some accommodations. For example, even 
in the QM Notice of Proposed Rulemaking, we asked for comment 
on how income and debt during this time period should be 
treated and how we can think about that. So I think there are 
perhaps other ways to get at this than reducing the accuracy in 
the credit reporting system.
    But I would also note obviously any action Congress takes 
on this that becomes law will be something we would enforce.
    Senator Scott. Well, let me just use my final 20 seconds, 
Mr. Chairman, to say this: Ultimately I hope that the CFPB will 
commit to ensuring that, absent any congressional action, they 
will administer no rule that requires credit market 
participants to suppress or delete credit data. That will make 
it harder for creditworthy borrowers, not easier, in the long 
run.
    Thank you so much.
    Chairman Crapo. Thank you.
    Senator Schatz.
    Senator Schatz. Thank you, Director Kraninger, for being 
here. Credit reporting agencies under the CARES Act are 
supposed to report consumers as current if they receive any 
accommodation under the CARES Act. What is the CFPB doing to 
make sure that actually happens?
    Ms. Kraninger. So, Senator, we have actually worked very 
closely with the big national credit reporting agencies as well 
as with furnishers, so we have had a number of webinars; we 
have worked with them on the direction that they send out to 
furnishers. You know well there are thousands of entities 
across the country that furnish data. So trying to make sure 
they understand what current means is important. So we have 
worked----
    Senator Schatz. So you do some sort of--I mean, you have to 
do this education process with furnishers and the agencies and 
all the rest of it. What happens if there is noncompliance? 
What happens if someone who has received an accommodation under 
the CARES Act is reported as not current? If there is an error 
on their credit report, then they go to the CFPB and complain. 
Then how do you dispose of that complaint?
    Ms. Kraninger. We have got a good example in the student 
loan space because there were also other provisions related to 
student loans in the CARES Act. There was a student loan 
servicer that was actually reporting information inaccurately 
that was affecting credit scores that was immediately seen by a 
number of students and other borrowers who submitted 
complaints. We also heard from stakeholders in the market 
saying, ``What is going on with this?'' It was with respect to 
one particular scoring mechanism.
    We intervened very quickly with the Department of 
Education, figured out what was going on. It was corrected both 
on the front end of that process in terms of how that was 
reported, and it was corrected in the model.
    Senator Schatz. OK. So does this worry you as sort of a 
global problem? Do you think that this is no longer occurring 
except in individual instances? Or do you think you need to 
continue--because I am all for getting the word out, but I do 
think that, you know, that is fine but you need a stick. And 
just educating these furnishers may not be enough.
    Do I have your commitment to lay eyes on this problem from 
the perspective of being an enforcement agency as well as 
everything else that you do?
    Ms. Kraninger. Senator, I would give you one quick example, 
too, is our prioritized assessments. We are sending examiners 
into furnishers, and we have a constant presence at the NCRAs 
to look at particularly this.
    Senator Schatz. OK, great. The CARES Act establish a 
national eviction moratorium for federally supported rental 
properties spanning multiple agencies, and it also prohibits 
fees and penalties for missed payments during that time. You 
sort of have the same problem here, small landlords who may not 
exactly know what their tenants' rights are, or even big 
landlords who want to systematically ignore the CARES Act for 
their own financial reason.
    So here is the question: Are you collecting any data on 
eviction actions taken? Are you collecting any data on 
penalties assessed so that you cannot just--you know, you and I 
can characterize the scale of this problem as a percentage of 
the whole, but we are just supposing how big this problem is. 
Do you have your arms around this in terms of actual data?
    Going back to what Senator Kennedy said, his question was 
more global and, I would argue, unanswerable. This is not an 
unanswerable question. Are you collecting data on the extent of 
compliance with this sort of pillar of what the CARES Act was 
all about, which is everybody is supposed to get a little bit 
of, both officially speaking, forbearance but also a little bit 
of kindness, a little bit of room, right? And the room that I 
see you providing is to the big boys, right? It is to the 
credit reporting agencies. It is to the lenders. And I am 
wondering to what extent are you aggressively collecting data 
on the legislative intent of the CARES Act originally, which is 
you have got to give regular people a little bit of room and 
not just assume that the big boys are complying with the 
statute. So are you collecting the data necessary to ensure 
compliance?
    Ms. Kraninger. Let me quickly answer you on that. There was 
not an enforcement mechanism for any Federal agency, and I will 
say this is outside the purview directly of the CFPB in terms 
of any enforcement or data collection on that. What we have 
done, though, is made sure, again, through education efforts 
and with the interagency partners engaged in education of 
landlords, of renters, what their rights are, we have 
facilitated complaint submission, again, making sure that State 
Attorneys General are connected, and so that is----
    Senator Schatz. All right. You go through this education 
process. I am all for that. I think that is part of that. But 
it is not that you--just because the CARES Act did not direct 
the CFPB to collect data that you have, therefore, pivoted from 
collecting data or acting on behalf of consumers. That is 
actually the statutory mandate of the agency. You do not need 
specific instructions from the CARES Act to go ahead and 
protect mortgage holders and renters. That is your job.
    Thank you.
    Chairman Crapo. Senator Cotton.
    Senator Cotton. Thank you, Mr. Chairman. Thank you, 
Director Kraninger.
    My office has been in touch with your Bureau about 
encouraging transparency and feedback around exams. We also 
spoke about that at your last appearance here in March. At the 
time you said the Bureau was going to be implementing a new 
feedback mechanism housed in your Ombudsman's Office that would 
allow financial institutions to provide feedback on their exams 
and bring problems to the agency's attention. At the time in 
March, you predicted the new process would be implemented in 
roughly 2 to 3 months. I, of course, understand the pandemic 
might have delayed this new procedure from starting as quickly 
as you would have expected, but can you please give me an 
updated timeline on when this feedback mechanism will be 
implemented?
    Ms. Kraninger. Yes, Senator. It is certainly my hope that 
we can do that in the fall. Part of the dynamic is that we need 
to have the traditional exams in place to facilitate that, and 
our Ombudsman is very dedicated to working with industry to 
understand, you know, what their challenges might be and what 
they would like that feedback mechanism to look like. She has 
very robust processes, and she has a measure of independence, 
too. But I will say that this is something that we are 
committed to doing, and I think it is an excellent idea.
    Senator Cotton. Can you be a little more specific than 
``the fall''? That is anywhere from September 20th to December 
20th, roughly.
    Ms. Kraninger. I agree. As I said, the Ombudsman's measure 
of independence means that she did not even want me to say 
``the fall.'' I will acknowledge to you that I fully believe we 
should be able to do it in that timeframe, and we will get you 
some more specificity and some, you know, activities that she 
is undertaking to make that happen so you have more assurance 
on progress.
    Senator Cotton. OK. Thank you. You do agree that there 
would be fewer problems with, say, the use of guidance if 
everyone involved knew at the end of the exam the financial 
institution had a chance to fill out a survey with specific 
questions like: Was the guidance used appropriately? Was it 
used inappropriately?
    Ms. Kraninger. I think it is an important mechanism to get 
this feedback, and I do think that the examiners have clear 
guidance and are following it about the use of her application 
of guidance that would be inappropriate. We are there to ensure 
compliance with the law, which includes regulations but does 
not include guidance.
    Senator Cotton. And that is because--I mean, most people 
tend to behave somewhat differently if they know that there is 
going to be transparency and accountability for their actions 
as opposed to if there is no transparency, no accountability. 
Would you agree with that?
    Ms. Kraninger. I would like to think people generally would 
comply with the law in general because they need to. But, yes, 
I would say that is one principle of examination. We send the 
examiners in expecting institutions to comply and that that 
will, again, foster greater compliance because they know they 
are being watched.
    Similarly, to your point, the fact that there could be 
feedback on the examiners' activity should have a similar 
effect.
    Senator Cotton. Has the Bureau given any thought to 
allowing regulated institutions to record their interactions 
with regulators?
    Ms. Kraninger. Senator, no one has raised that with me in 
the past, so I--this is new one, at least for me.
    Senator Cotton. OK. And how do you assess the performance 
of your examiners and whether or not they are behaving and 
acting properly and performing their job in accordance with law 
and regulations and your expectations of professionalism? Is 
there any kind of rating system for examiners the way, say, the 
military will provide annual performance reviews and senior 
commanders can only rate so many so high and so many so low?
    Ms. Kraninger. We have a performance system at the Bureau 
that is really pass-fail at this point in time. But that does 
not mean that we do not value the feedback that we provide. We 
have got a good field manager structure in place. We have 
liaisons to institutions that are separate from the exam team, 
so there is that opportunity again to try to get feedback. And 
I think the mechanism that we have been talking about of doing 
surveys, post-exam surveys, that will be another mechanism to 
kind of get that good feedback. But I would say our training 
regime as well as our commissioning process of trying to 
continue to build the skills and capabilities of the 
examination force is important, too.
    Senator Cotton. Thank you very much for your answers, Dr. 
Kraninger--Director Kraninger. I will give you a doctorate if 
you want one.
    Chairman Crapo. Senator Cortez Masto.
    Senator Cortez Masto. Thank you.
    Director Kraninger, thanks for being here. Thanks for the 
report that you provide to the Congress as well.
    So let me start with enforcement. You and I have had this 
conversation quite often, and I appreciate you engaging with me 
on this. At least the data that I show since December of 2018 
when you arrived at the Bureau, it looks like there have been 
39 enforcement actions, which include multiple companies and 
individuals. Is that about right?
    Ms. Kraninger. I think that is right.
    Senator Cortez Masto. OK. And this is what you and I have 
talked about, and we continue, I think, to talk about because 
this is a concern of mine. I have noted a number of these cases 
resulted in suspended judgments, meaning that--and particularly 
as I look at the debt collection companies along with auto 
title companies and travel companies, they paid much smaller 
fines than was agreed to in the original judgment, and let me 
give an example. In Florida, a debt collection company was 
charging illegal fees to 7,300 customers. And to resolve their 
case, which went to court, the company was ordered to pay a 
$3.8 million judgment.
    However, the Bureau suspended that nearly $4 million 
judgment and required the company to pay only $5,000, and the 
two business owners to pay only $7,000 and $10,000, 
respectively. So I guess--not I guess. I know my question to 
you is: Why was 99 percent of the fine suspended if the Bureau 
found that customers, 7,300 of them, were illegally overcharged 
$4 million that those responsible only paid $23,000?
    Ms. Kraninger. Senator, I do greatly respect your interest 
in this issue, and it is an important one for how we carry out 
our enforcement tool. I think you know well, too, that settling 
some of these judgments is something that does happen 
frequently in the law enforcement context in trying to get to 
resolution, particularly when it is determined, as is part of 
actually our statutory process for mitigating factors, if the 
entity does not have the resources to pay. So there is----
    Senator Cortez Masto. So is that what you looked for in 
this particular case as to whether this payday lender has the 
ability to pay the judgment?
    Ms. Kraninger. Senator, I do not want to stipulate anything 
with that particular case in mind. We can come back to you on 
it if there is anything more that needs to be said or could be 
said there. But, generally speaking, yes, that is a significant 
part of it. It is the estimation of how much time we want to 
spend continuing to litigate, which, of course, is our 
resources, and how much effort there would need to be to go 
after funds from an entity that does not have the funds to pay.
    Senator Cortez Masto. And so in making that determination, 
do you get some sort of official document from them? Do you get 
an affidavit or some sworn affidavit verifying why that 
company--that they do not have the ability to pay? Is that how 
it works?
    Ms. Kraninger. It is a conversation, I know, between the 
enforcement attorneys and the other party. So, again, depending 
on where the case is or what case--I do not want to hold myself 
to that particular case. But it absolutely is a career staff 
conversation that generally I am not even involved in.
    Senator Cortez Masto. So can I ask you this: How do the 
customers get redress? If the companies, the bad players, are 
not--the $4 million judgment is not followed through, how do 
customers get redress then?
    Ms. Kraninger. In many cases that is why we are charging a 
civil money penalty of a dollar, I know, which does get them 
attention or of a more--a lesser amount so that they can access 
the civil money penalty fund that we have at the Bureau. So 
that is a means by which at least--again, I do not want to 
specify in this case, but in cases generally, we continue to 
get redress for consumers we can identify.
    Senator Cortez Masto. So do you see the hypocrisy here? You 
have bad players that payday lend, that they literally--you 
determine whether they have the ability to pay their judgments, 
and then you bail them out by using this civil monetary fund. 
But then actually the borrower, the payday lender, we do not 
look at their ability to pay. And there are predatory lenders 
out there. I mean, do you see the hypocrisy there and why some 
of my colleagues are saying this is absolutely ridiculous? You 
are looking at the big corporations. You are bailing them out 
with this civil monetary penalty fund. But when it comes to the 
actual borrower, you are saying, no, these payday lenders do 
not have to look at their ability to pay? It is hypocritical, 
and I think that is the concern that you see from my colleagues 
at all of this enforcement action and why we are talking about 
why are all these bad players getting away with taking 
advantage of consumers and the consumers are not being 
protected.
    I know my time is up. I will submit the rest of my 
questions for the record.
    Senator Cortez Masto. Thank you, Mr. Chairman.
    Chairman Crapo. Thank you, Senator.
    Senator Van Hollen.
    Senator Van Hollen. Thank you, Mr. Chairman, Ranking Member 
Brown. Director Kraninger, thank you for your testimony.
    I really just want to pick up really where my colleague 
Senator Cortez Masto left off with respect to the payday 
lending rule changes that you made reversing the earlier 
protections. And I must say it is outrageous that in the middle 
of this pandemic, when so many people are struggling to make 
ends meet, you provided this big payday to payday lenders at 
the expense of consumers. I think it is about a $7 billion 
payday for those that make loans knowing that the people who 
are receiving the loans cannot repay them, and then coming 
after them. And it is bad at any time, but especially egregious 
at a moment when so many families are struggling to make ends 
meet.
    This has been a conversation you and I and others have had 
since the beginning of this administration, really, really 
outrageous that this rule was finalized and consumers will be 
badly hurt.
    Let me turn to the flip side of that, which is the debt 
collection part, because many of these people who received 
predatory loans and are victims of predatory lending, of 
course, end up on the debt collection end of the spectrum. I 
understand that you are working on a debt collection rule that 
I am also worried will undermine, you know, the rights of 
consumers. But we are in the middle of a pandemic. Many people 
are, of course, out of work. It is hard to pay their bills. 
Senator Murphy and I just introduced a bill in the Senate 
yesterday that says that during this pandemic hospital systems 
and major medical providers that are receiving hundreds of 
millions of dollars in taxpayer assistance to do important 
work, but they should not be turning around during this 
pandemic and garnishing people's wages for medical debt.
    Have you considered issuing any emergency protections 
against collection of--practices like garnishment of wages or 
seizing bank accounts for the collection of medical debt during 
this pandemic?
    Ms. Kraninger. Senator, we have given very clear direction 
as the financial regulators and with the prudential regulators 
that accommodation of their customers of consumers and 
borrowers during this time is paramount. That is balanced by 
safety and soundness considerations and certainly the continued 
compliance with consumer protection law, but that is the 
requirement at play that we provided in terms of direction. And 
I would also note on the rulemaking that we are engaged in, the 
continued enforcement of abusive activities around debt 
collection continues to be the case. So that is something that 
has been established by courts, and so the more abusive 
activities--or, I should say, unfair and deceptive activities 
and constant harassing phone calls or otherwise contacts, that 
is still precluded and will be.
    Senator Van Hollen. So my understanding--and correct me if 
I am wrong--at least the current drafts of this rule would 
actually make it easier for debt collectors to sort of harass 
people, things like text messaging and instant messaging. Is 
that true?
    Ms. Kraninger. Not harassing contacts, because that, again, 
continues to be precluded. What we are trying to at least 
support is clarity around how consumers can be contacted and 
letting consumers, frankly, dictate how they would like to be 
contacted. There are a measure of consumers who would prefer a 
text to a phone call or would prefer an email to a phone call. 
And so it is using the contact mechanism that the consumer used 
with their creditor before that we are trying to provide some 
clarity around. No final decision has been made on what that 
threshold is. It is very much something that we got a lot of 
comments on, which I welcome. And so we are poring through 
those comments.
    Senator Van Hollen. All right. As you said, if the purpose 
is to prevent harassment, people can be harassed via text 
message as well as they can by phone calls.
    Let me just close--I see I have just a few seconds left--by 
asking you either to get back to us on the issue of zombie 
debt--this is debt where it is past the statute of limitations, 
but my understanding is the way the current rule is shaping up, 
you would open the door to people who are coming after debtors 
for zombie debts. So if you could get back to me on that issue, 
it is something that we are following closely.
    Chairman Crapo. Thank you.
    Senator Jones.
    Senator Jones. Thank you, Mr. Chairman. Thank you, Director 
Kraninger, for being with us today. I appreciate it.
    You know, I know that there have been a number of my 
colleagues that asked about the payday lending situation here 
and the payday lending rule, but it is so important to my 
State. And I know you have got a lot of other things on your 
plate as Director, but that is just so important, I do not want 
to let it go.
    In Alabama, there are more payday and title lenders in my 
State than we have got hospitals, high schools, movie theaters, 
county courthouses combined. That is a significant number. They 
can charge up to 456 percent APR, and Alabamans paid more than 
$100 million in fees for these payday lenders just last year. 
Even before the coronavirus, three-fourths of American workers 
were living paycheck to paycheck with little or no savings.
    So I want to pick up kind of where we went off--and you 
have touched on it, and we have had some questions about it, 
where we left off in March about the ability to repay, which 
has now been removed from your rule. When I asked about that in 
March, you said, ``Well, Senator, in fairness this is a 
proposed rescinding of the underwriting provisions, and so I 
cannot give you a fulsome articulation of a decision on that 
because it is an ongoing rulemaking process.''
    Well, the rule was finalized July 7th, as you know, so I 
would like to give you this chance to give a fulsome response 
as to how the payday lending rule that does not include a 
review of the ability to pay is going to affect 200,000 people 
in Alabama that now get these payday loans and how it will not 
keep them from spiraling into a financial death spiral.
    Ms. Kraninger. Senator, thank you for that. I know you are 
interested, and I would tell you that we continue to supervise 
and enforce particularly UDAP requirements against payday 
lenders, because there are bad actors in this market, as I have 
said, as there are in every market. So that is the important 
action that will continue, that has continued, and has actually 
affected the enforcement actions that relate to activities in 
Alabama and entities in Alabama.
    But with respect to the rule, the mandatory underwriting 
provisions were particularly onerous. The access to small 
dollar products in general is something that consumers clearly 
have demonstrated a need and demand for. And so what we are 
trying to do is promote competition in this space, make it 
clear that we want banks and credit unions, fintech companies, 
to be offering small dollar credit options to consumers so they 
have the ability to access those types of products in a 
responsible way, and also that consumers understand the 
tradeoffs of the products that are available to them in the 
marketplace. So we are engaging in disclosure testing around 
this.
    I would say a lot of the research that is in the full 
rulemaking record demonstrates that there are a number of 
consumers who do understand their engagement with payday 
products. Again, the data showed that you had a significant 
portion of borrowers who paid within the term of the loan, so 
within that payday loan. There were a number of consumers who 
defaulted on those loans very pointedly early in the process, 
which, again, demonstrates some knowledge and understanding of 
the product as a rational decision based on where they might be 
financially.
    Senator Jones. Can I follow up on that real quick? Because 
I know that there is like the credit union--and I am running 
out of time. The credit unions have this payday alternative 
program. But they require the credit unions to look at 
somebody's ability to pay to see what risk would be associated 
with that. So if a consumer who has no ability to pay but yet 
needs the money, that is not a real--that is a false choice for 
them, it would seem. So I am not sure the movement that way and 
the competition is really competing with folks who just really 
need the money. I appreciate your answer. I may follow up to 
get a more complete answer in writing since I am running out of 
time.
    The other thing I want to ask real quick, in the CARES 
package, we deferred student loan obligations to September 
30th. We had hoped that this virus would be on the downside. 
You know, we had deadlines coming up like this week concerning 
unemployment and those things, but we put the deadline off for 
student loans a little bit longer knowing the financial 
hardships. But now this virus is still with us. It is still a 
serious problem. Would you support extending what we have done 
on the moratorium for student loans? Would you support 
extending that for a period of time beyond September 30th?
    Ms. Kraninger. Senator, I appreciate what you are asking. I 
tend to try to stay out of these particular--giving particular 
feedback on particular legislation. I defer to Congress' 
judgment on that, and we will carry out anything that Congress 
pushes, passes, and the President signs.
    Senator Jones. All right. Thank you.
    Thank you, Mr. Chairman.
    Chairman Crapo. Thank you.
    That concludes the questioning. Are there any other 
Senators logged in I am not aware of who have not asked 
questions yet?
    [No response.]
    Chairman Crapo. All right. Well, Director Kraninger, I 
appreciate you being with us today. That does conclude the 
questioning for the hearing. And for Senators who wish to 
submit questions for the record, those questions are due to the 
Committee by Wednesday, August 5. And, Director, we ask that 
you respond to those questions as promptly as you can.
    Again, we thank you for being here. I thank you for your 
service, and this hearing is adjourned.
    [Whereupon, at 11:33 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 July 2, the CFPB issued its Spring 2020 Semiannual Report, which 
outlines the CFPB's significant work between October 2019 and March 
2020, including rulemakings and supervisory and regulatory activities.
    The report also provides insight into what the CFPB plans to 
undertake in the coming work period.
    Director Kraninger last appeared before this Committee on March 10, 
3 days before President Trump declared a national State of emergency 
related to the COVID-19 outbreak.
    Shortly thereafter, the CARES Act was signed into law, which 
included measures to help families directly, provide aid to small 
businesses, and to stabilize our markets.
    In implementing the CARES Act, the CFPB has taken important actions 
related to mortgage origination and servicing, consumer credit 
reporting, and data reporting to further address the economic impact of 
the ongoing pandemic.
    The CFPB has also announced several policies and valuable 
educational initiatives intended to help consumers take steps to 
protect their finances during the COVID-19 emergency, and to ensure 
that regulated entities can take reasonable and prudent steps to assist 
communities impacted by the coronavirus.
    I commend Director Kraninger and her staff for taking these steps 
to help consumers, families, and small businesses as they continue to 
weather this global coronavirus pandemic.
    Last month, the Supreme Court issued a ruling on Seila Law v. CFPB 
that found the agency's structure, led by a single director only able 
to be removed ``for cause,'' is unconstitutional.
    The Court's decision on this case is consistent with what many in 
Congress have long said: The CFPB's structure lacks sufficient 
accountability and transparency.
    I continue to advocate for establishing a bipartisan board of 
directors to oversee the CFPB; subjecting the CFPB to the annual 
appropriations process, similar to other Federal regulators; and 
establishing a safety-and-soundness check for the prudential 
regulators.
    On July 7, the CFPB finalized a rule rescinding the mandatory 
underwriting provisions of its Small Dollar Loan rule.
    The availability of short-term, small dollar credit is essential to 
millions of Americans.
    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.
    The changes made by the 2020 Small Dollar Loan final rule carefully 
balances ensuring the widespread availability of credit to all 
Americans while preserving strong protection for all consumers.
    During this hearing, I look forward to hearing more about the 
impact of the COVID-19 emergency on consumers and the financial 
marketplace; key COVID-19 response initiatives undertaken by the CFPB 
in recent months; additional regulatory and legislative changes that 
can further support the economy; and Director Kraninger's priorities 
for the CFPB in the upcoming work period.
    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, Mr. Chairman, for holding this virtual hearing, and 
thank you, Director Kraninger, for participating in this hearing 
remotely to practice social distancing and to prevent the potential 
spread of coronavirus, which is still spreading, and is still taking 
the lives of hundreds more Americans every day.
    Across the country, in big cities and small towns alike, Americans 
are calling for their Government to work for them. Nearly everyone has 
had their lives upended by this pandemic--but this disease is not 
spreading in a vacuum.
    You know, Ms. Kraninger, that workers have seen their wages 
stagnate for years, while Washington shovels more tax cuts to their 
wealthy friends and the largest corporations.
    Families' expenses have only grown--the cost of housing, childcare, 
prescription drugs has all gone up, leaving 40 percent of Americans 
unable to come up with $400 in an emergency.
    Black and Brown Americans have never had their hard work pay off 
like it should, and live every day with systemic racism that threatens 
their health and their safety and their lives.
    From Jim Crow to redlining, you know that Black families have never 
had the same freedom and opportunity to choose where they live. And 
they've watched this Administration dismantle a critical element of the 
Fair Housing Act.
    We have the widest homeownership gap in 50 years. As the Urban 
Institute put it: ``The gap in homeownership rate between Black and 
White families in the United States is bigger today than it was when it 
was legal to refuse to sell someone a home because of the color of 
their skin.''
    The racial wealth gap has actually increased: the average White 
family now has 10 times the wealth of the average Black family.
    Director Kraninger you know that Black and Brown consumers 
disproportionately lack access to basic financial services, forcing 
them to rely on risky and costly alternatives.
    This leads to so-called reverse redlining--where companies target 
minority communities for exploitative loans and other abusive financial 
products.
    That's why it's easier to find a payday lender than a bank branch 
in communities of color.
    For years, American workers and families have watched the people 
who are supposed to serve them look out for the biggest corporations, 
while their financial problems continued to mount.
    People are angry and they're frustrated.
    Americans watch CEOs pay themselves, while laying off workers. They 
see corporations scam people and get away with it, while people of 
color spend their entire lives paying for one wrong move. They're told 
to pull themselves up by their bootstraps, while Wall Street gets 
handouts and bailouts.
    Americans feel like no one is on their side. Especially in this 
Administration.
    That's where the Consumer Financial Protection Bureau is supposed 
to come in.
    Your job, Director Kraninger, is to look out for everyone else--the 
workers and families without lobbyists, who don't have wealth and 
connections to throw around. That's why we created the agency.
    And in a moment when Americans of all ages and backgrounds are 
demanding justice for our Black and Brown neighbors and accountability 
for the corporations that exploit them, you have the power to actually 
do something about it.
    The CFPB has the tools, the resources, and a legal requirement to 
root out discrimination in lending and protect communities of color 
from shady financial products that strip away their wealth.
    Under Director Cordray, the Bureau wielded these tools to hold 
banks, credit card companies, and other corporations accountable when 
they engaged in illegal discrimination, returning more than $500 
million to Black, Latinx, and Asian Americans.
    Under Director Kraninger and Acting Director Mulvaney, the Consumer 
Bureau did not bring a single case of illegal discrimination for more 
than 2\1/2\ years.
    Sadly, that's about what we would expect from a president who seems 
to have made it his mission to roll back civil rights protections, and 
openly uses race to divide us.
    But we might have hoped that in this moment of national crisis, 
when more than 150,000 Americans have lost their lives and 30 million 
have lost their jobs, President Trump and his appointees would rise to 
the occasion.
    Instead Director Kraninger--like other Trump appointees--you have 
exploited the coronavirus pandemic to roll back protections for 
American families, instead of strengthening them:

    During the pandemic, Americans have reached out in record 
        numbers seeking the Consumer Bureau's help. We've seen an 86 
        percent increase in complaints about credit reporting. But 
        instead of cracking down, Director Kraninger announced the CFPB 
        would do nothing to punish banks, debt collectors, and other 
        corporations that make mistakes on consumers' credit reports.

    Millions of Americans have fallen behind and missed 
        mortgage payments because of the president's failure to get 
        this pandemic under control. But instead of helping struggling 
        homeowners, the Consumer Bureau weakened requirements that 
        banks and lenders contact homeowners to help them avoid 
        foreclosure.

    Families have been forced to turn to credit cards to make 
        ends meet. And the CFPB, the agency that's supposed to look out 
        for them, has made it easier--easier, not harder--for these 
        credit card companies rip off consumers, making it easier for 
        credit cards to hide their terms and true price.

    Director Kraninger also decided that a worldwide pandemic is the 
right time to push consumers into predatory payday loans.

    In March, the Consumer Bureau released guidance encouraging 
        banks to get into the payday loan business.

    In May, the Consumer Bureau released information on how 
        banks that offer payday loans can apply for prospective 
        immunity from Bureau oversight or enforcement.

    And in July--despite extensive evidence of a corrupted 
        rulemaking process and bicameral calls for an Inspector General 
        investigation--the Consumer Bureau released a new payday rule 
        that eliminated the basic requirement that payday lenders make 
        sure a consumer can pay back the loan.

    Director Kraninger has even gone so far as to tell financial firms 
that it will give them a pass when they break the law, so long as they 
make a ``good faith'' effort to comply.
    This is exactly why most people think our system is broken.
    If your utility payment is withdrawn before your paycheck clears, 
and you overdraw your account, the bank doesn't waive the fee because 
you made a ``good faith'' effort to deposit that check.
    We have one system for corporations and the wealthy and the well-
connected, one where you get away with just about anything--and a 
different one for everyone else, where your ``good faith'' effort never 
seems to be enough.
    Director Kraninger, we didn't need a Supreme Court decision to tell 
us you would not be independent from President Trump.
    I've got to hand it to you, you've done exactly the job he asked of 
you--you have protected a system where corporations play by one set of 
rules, with a different set for everyone else.
    Thank you, Mr. Chairman.
                                 ______
                                 
              PREPARED STATEMENT OF KATHLEEN L. KRANINGER
             Director, Consumer Financial Protection Bureau
                             July 29, 2020
    Chairman Crapo, Ranking Member Brown, and distinguished Members of 
the Committee, thank you for the opportunity to present the Consumer 
Financial Protection Bureau's (Bureau's or CFPB's) most recent Semi-
Annual Report to Congress.
    Today, I am happy to present the Bureau's Spring 2020 Semi-Annual 
Report (October 1, 2019-March 31, 2020) to Congress and the American 
people in fulfillment of our statutory responsibility and commitment to 
accountability and transparency. My testimony is intended to highlight 
the contents of this Semi-Annual Report (Report).
    I remain committed to strengthening the Bureau's ability to use all 
of the tools provided by the Dodd-Frank Wall Street Reform and Consumer 
Protection Act (Dodd-Frank Act), and I remain resolved that the most 
productive use of Bureau resources is the prevention of harm to 
consumers in concert with our many partners. The Bureau's mission, as 
you are aware, is to ensure access to fair, transparent, and 
competitive markets for consumers, and we are committed to executing 
the mission through:

    Empowering Consumers and Turning Financial Education into 
        Action,

    Ensuring Clear Rules of the Road,

    Ensuring a Culture of Compliance, and

    Holding Bad Actors to Account and Deterrence through 
        Enforcement.

    Preventing harm to consumers, I believe, is the most effective, 
efficient way to carry out our mission of ensuring consumer access to a 
fair, transparent and competitive market. To me, prevention of harm 
comes through helping consumers gather financial know-how, fostering a 
culture of industry compliance where consumers know their rights and 
industry knows their responsibilities and limitations, and maintaining 
a back stop of enforcement.
    Clearly, the COVID-19 pandemic had a profound impact on the 
Bureau's work during the reporting period, one that will continue well 
into the future. These remain challenging times facing our Nation and 
the world. Yet the uncertainty and dramatic change underscore the 
importance of the Bureau's mission on behalf of American consumers. 
Further, this Report and my testimony today give me the
opportunity to highlight the fantastic work of our incredibly talented 
and dedicated staff in facing this emergency.
    Under the banner of ``Safety First, Mission Always,'' the 
professionals at the CFPB tirelessly work to protect, promote, and 
preserve the financial well-being of the American consumer.
    To further our statutorily driven objectives, we have teamed, and 
will continue to work, with our stakeholders, particularly our Federal 
partners, to ensure consumers are armed with accurate facts and helpful 
warnings in this unprecedented time.
    Since the first days of the pandemic, the Bureau has taken swift 
action to protect consumers and ensure financial institutions have the 
direction and flexibility to work with their customers in need. Those 
actions range from efforts to empower older Americans, to guidance 
offered about how to avoid potential scams related to the virus, to 
roadmaps of what relief is available to renters and mortgage holders 
under the Coronavirus Aid, Relief, and Economic Security Act (CARES 
Act) legislation. In April, the Bureau worked with Federal partners to 
launch a new mortgage and housing assistance website.\1\ The Bureau 
also released timely information on new programs aimed at helping 
struggling consumers during this time. These programs include stimulus 
payments;\2\ student loan payment suspension;\3\ mortgage 
forbearance;\4\ and the paycheck protection program.\5\ Additionally, 
the Bureau has established a centralized webpage with information on 
how consumers can protect their finances during the pandemic.\6\ 
Trusted, authoritative Government sources are critical conduits for the 
distribution of information to the public. As such, I am proud to note 
that as of this month, over 3.1 million users have accessed our 
educational web content in response to COVID-19.
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    \1\ See https://www.cfpb.gov/housing/.
    \2\ See https://www.consumerfinance.gov/about-us/blog/guide-covid-
19-economic-stimulus-checks/.
    \3\ See https://www.consumerfinance.gov/about-us/blog/what-you-
need-to-know-about-student-loans-and-coronavirus-pandemic/.
    \4\ See https://www.consumerfinance.gov/about-us/blog/guide-
coronavirus-mortgage-relief-options/.
    \5\ See https://www.consumerfinance.gov/about-us/blog/help-small-
businesses-during-covid-19-pandemic/.
    \6\ See https://www.consumerfinance.gov/coronavirus/.
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    The Bureau also has taken a number of actions to provide guidance 
to the financial industry to ensure their resources are aimed at 
assisting consumers in need.\7\ The Bureau has and will continue to 
actively engage with regulated entities, consumer advocates, State 
partners, and other stakeholders to ensure we are providing appropriate 
flexibilities to support consumers during this time.\8\
---------------------------------------------------------------------------
    \7\ See https://www.ffiec.gov/press/PDF/
FFIEC%20Statement%20on%20Pandemic%20Plan-
ning.pdf; https://files.consumerfinance.gov/f/documents/
cfpb_interagency-statement_small-dollar-lending-covid-19_2020-03.pdf; 
https://files.consumerfinance.gov/f/documents/cfpb
_hmda-statement_covid-19_2020-03.pdf; https://
files.consumerfinance.gov/f/documents/cfpb_data-collection-
statement_covid-19_2020-03.pdf; and https://files.consumerfinance.gov/
f/documents/cfpb_supervisory-enforcement-statement_covid-19_2020-
03.pdf.
    \8\ See Section 3.4 of the Report for the items released in 
response to COVID-19 after the reporting period ending on March 31, 
2020.
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    During this emergency, the mechanisms of rulemaking, our 
supervisory examinations, enforcement of Federal consumer financial 
law, and the handling of consumer complaints have continued. The Bureau 
also has developed ``Prioritized Assessments,'' which consist of high-
level inquiries designed to obtain information from entities to assess 
the impacts on consumer financial product markets due to pandemic-
related issues. These Assessments will allow the Bureau to identify 
potential risk to consumers across a large number of entities, while 
continuing to reduce the burden on institutions and allowing examiners 
to continue to work safely from their home-duty stations. The Bureau is 
monitoring the marketplace in real time and coordinating on an ongoing 
basis with fellow Federal and State regulators in order to take swift 
action when we identify companies or individuals that violate the law 
to take advantage of the pandemic and resulting economic uncertainty. 
While so many aspects of our daily life were effectively shut down this 
spring, the Bureau's efforts on behalf of impacted consumers never 
slowed.
    I am uniquely proud to share with you our semiannual report and 
welcome your questions and thoughts about our efforts outlined here, 
and our mission overall.
Empowering Consumers and Turning Financial Education into Action
    As I have said before, the Bureau cannot be everywhere, with 
everyone, at every transaction--nor should it try to be. Therefore, 
empowering consumers to help themselves, protect their own interests, 
and choose the financial products and services that best fit their 
needs is essential to preventing consumer harm and building financial 
well-being.
    To carry out its financial education mandate, the Bureau seeks to 
enhance the financial knowledge and skills of all Americans, from 
childhood to later life, so that individuals can effectively use these 
skills to build their financial well-being. The Bureau is employing a 
three-part strategy to accomplish this task. The three elements of the 
strategy are:

    Providing financial education to the public, directly and 
        by expanding and augmenting the local delivery of financial 
        education;

    Sharing research on effective financial education and 
        financial well-being with financial educators and others; and

    Addressing needs for inclusion and financial security of 
        servicemembers and veterans, older Americans, traditionally 
        underserved consumers and communities, and students.

    During the previous year, the Bureau has continued to put thought 
into action and made strides in consumer education. A few key examples 
outlined in the Report are:

    Start Small, Save Up Initiative.\9\ The Start Small, Save Up 
initiative aims to increase opportunities for Americans to save and 
achieve their financial goals. Through Start Small, Save Up, the Bureau 
is working to help consumers build emergency savings over the next few 
years by working with employers to prioritize emergency savings and 
automated solutions in the workplace; engaging with partners to 
highlight emergency savings products that work and make more accessible 
products available; and partnering with trusted community institutions 
to tailor savings solutions to unique audiences. The Start Small, Save 
Up initiative includes a robust research and evaluation component to 
ensure the Bureau is learning about its own efforts, as well as the 
efforts of others who are also working toward a similar goal of helping 
consumers save. The Bureau launched a series of saving resources 
including the CFPB Savings Boot Camp, a multiweek email course to guide 
people through the fundamentals of saving. The Bureau also released the 
fourth in a series of booklets for social services providers to talk 
with people about money topics that are important to them: ``Building 
your Savings? Start with Small Goals.'' The booklet contains colorful, 
engaging tools to support people in setting savings goals, preparing 
for the unexpected, finding a place to save, and making the most of tax 
services providers, financial coaches, and financial educators. The 
Bureau also hosted a convening with several financial institutions to 
engage them in a dialog about helping consumers and their workforce 
build emergency savings, exploring new research opportunities, 
understanding successful ways to market savings solutions to consumers, 
and seeking opportunities to collaborate with the Bureau on these 
efforts.
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    \9\ See https://www.consumerfinance.gov/start-small-save-up/.
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    Convening Communities To Build Elder Fraud Prevention and Response 
Networks Report.\10\ This report describes the Bureau-facilitated 
convenings in Florida, Oklahoma, Tennessee, Montana, and Oregon, which 
informed our efforts during the reporting period and sparked the 
creation of new elder fraud prevention and response networks or the 
enhancement of existing networks. The lessons learned from these pilot 
convenings can help other communities develop networks that improve 
coordination and collaboration between responders and service providers 
to protect older people from financial harm. Although outside of the 
reporting period, in June 2020, the Bureau built upon this effort and 
released an online resource to help communities form networks to 
increase their capacity to prevent and respond to elder financial 
abuse.\11\ The Elder Fraud Prevention and Response Networks Development 
Guide (Networks Development Guide) offers planning tools, templates, 
and exercises to help communities create a collaborative network to 
fight elder fraud or refresh or expand an existing network. We hope 
this resource will help launch networks in fighting elder financial 
exploitation in communities where networks do not currently exist. For 
those communities with an existing network, the Networks Development 
Guide can help to refresh or realign its priorities and activities or 
expand the diversity of its membership to include new stakeholders. We 
encourage the use of the guide by communities across the Nation to 
build their capacity to prevent and respond to elder financial 
exploitation.
---------------------------------------------------------------------------
    \10\ See https://www.consumerfinance.gov/data-research/research-
reports/convening-communi-
ties-build-elder-fraud-prevention-and-response-networks/.
    \11\ See https://www.consumerfinance.gov/practitioner-resources/
resources-for-older-adults/elder-protection-networks/.
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    Misadventures in Money Management for Active Duty Servicemembers. 
The Bureau made Misadventures in Money Management (MiMM) available for 
active duty servicemembers reporting to their first service station. 
MiMM is an online training that engages servicemembers with real life 
financial choices in a fun and interactive manner and provides a just-
in-time financial curriculum. MiMM is also available to future 
servicemembers in the Delayed Entry Program (DEP), as well as future 
leaders in the Junior Reserve Officers' Training Corps (JROTC) and 
Reserve Officer Training Corps (ROTC).
Ensuring Clear Rules of the Road
    Another tool for preventing consumer harm is rulemaking and 
guidance--articulating clear rules of the road for those we regulate. 
Rules that promote competition, increase transparency, and preserve 
fair markets for financial products and services. The Spring 2020 
Report includes information on significant rules and orders adopted by 
the Bureau, as well as other significant initiatives conducted by the 
Bureau, during the preceding year. In addition, the Spring 2020 Report 
includes a plan for rules, orders, and other initiatives we expect to 
undertake during the upcoming period. I would like to highlight just a 
few of our activities in this space.
    Request for Information, Proposed Rule, and Final Rule: 
Remittances.\12\ In April 2019, and December 2019, respectively, the 
Bureau issued a Request for Information (RFI) and a Notice of Proposed 
Rulemaking (NPRM) on remittance transfers. Although outside of the 
reporting period, it is worth noting that in May 2020, the Bureau 
issued a final rule, which allows certain banks and credit unions to 
continue to provide estimates of the exchange rate and certain fees 
under certain conditions, where otherwise they generally would have had 
to provide exact amounts due to the expiration of a statutory exception 
on July 21, 2020. The final rule also increases the annual threshold 
that determines whether an entity makes remittance transfers in the 
normal course of its business and is subject to the Remittance Rule 
from 100 to 500 remittance transfers. Entities making 500 or fewer 
transfers annually in the current and prior calendar years will not 
need to comply with the Rule. This increase will reduce the burden on 
over 400 banks and almost 250 credit unions that send a relatively 
small number of remittances--less than .06 percent of all remittances.
---------------------------------------------------------------------------
    \12\ See https://www.consumerfinance.gov/about-us/newsroom/cfpb-
issues-request-information-remittance-rule/; https://
www.consumerfinance.gov/about-us/newsroom/cfpb-issues-notice-proposed-
rulemaking-remittance-rule/; and https://www.consumerfinance.gov/about-
us/newsroom/cfpb-issues-final-remittance-rule/.
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    Debt Collection Notices of Proposed Rulemaking. In May 2019, the 
Bureau issued an NPRM, which would prescribe rules under Regulation F 
to govern the activities of debt collectors, as that term is defined 
under the Fair Debt Collection Practices Act (FDCPA).\13\ The Bureau's 
proposal would, among other things, address communications in 
connection with debt collection; interpret and apply prohibitions on 
harassment or abuse, false or misleading representations, and unfair 
practices in debt collection; and clarify requirements for certain 
consumer-facing debt collection disclosures. The proposal builds on the 
Bureau's research and pre-rulemaking activities regarding the debt 
collection market; the conduct of debt collectors remains a significant 
source of complaints to the Bureau. The Bureau expects to take final 
action in October 2020 with regard to the May 2019 NPRM. The Bureau has 
also engaged in testing of time-barred debt disclosures that were not 
addressed in the May 2019 proposal. In February 2020, after completing 
the testing, the Bureau issued a supplemental NPRM related to time-
barred debt disclosures.\14\
---------------------------------------------------------------------------
    \13\ See https://www.consumerfinance.gov/about-us/newsroom/bureau-
proposes-regulations-implement-fair-debt-collection-practices-act/.
    \14\ See https://www.consumerfinance.gov/about-us/newsroom/cfpb-
issues-supplemental-nprm-on-time-barred-debt-disclosures/.
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    Advance Notice of Proposed Rulemaking: Home Mortgage Disclosure 
Act.\15\ In May 2019, the Bureau issued an Advance Notice of Proposed 
Rulemaking (ANPR), seeking information to determine whether to propose 
changes to the data points that the Bureau's 2015 Home Mortgage 
Disclosure Act (HMDA) rule added to Regulation C or revised to require 
additional information. The ANPR sought information regarding the costs 
and benefits of these data points. Additionally, the Bureau solicited 
comments relating to the requirement that institutions report certain 
business- or commercial-purpose transactions under Regulation C. The 
Bureau expects to issue an NPRM following up on the ANPR later this 
year.
---------------------------------------------------------------------------
    \15\ See https://www.consumerfinance.gov/about-us/newsroom/bureau-
proposes-changes-hmda-rules/.
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    Final Rules: Home Mortgage Disclosure (Regulation C)--2019 Final 
Rule and 2020 Final Rule.\16\ In May 2019, the Bureau issued an NPRM to 
reconsider the thresholds for reporting data about closed-end mortgage 
loans and open-end lines of credit under the Bureau's 2015 HMDA rule. 
In October 2019, the Bureau issued the first of two final rules 
amending these thresholds. The October 2019 final rule amended 
Regulation C to adjust the threshold for reporting data about open-end 
lines of credit by extending to January 1, 2022, the current temporary 
threshold of 500 open-end lines of credit. The Bureau also incorporated 
into Regulation C the interpretations and procedures from the 
interpretive and procedural rule that the Bureau issued on August 31, 
2018, and implemented further Section 104(a) of the Economic Growth, 
Regulatory Relief, and Consumer Protection Act (EGRRCPA). Although just 
outside of the reporting period, it is worth noting that, in April 
2020, the Bureau issued a second final rule adjusting Regulation C's 
institutional and transactional coverage thresholds for closed-end 
mortgage loans and open-end lines of credit. Effective July 1, 2020, 
the final rule permanently raises the closed-end coverage threshold 
from 25 to 100 closed-end mortgage loans in each of the two preceding 
calendar years. Effective January 1, 2022, when the temporary threshold 
of 500 open-end lines of credit expires, the final rule sets the 
permanent open-end threshold at 200 open-end lines of credit in each of 
the two preceding calendar years.
---------------------------------------------------------------------------
    \16\ See https://www.consumerfinance.gov/about-us/newsroom/bureau-
issues-final-hmda-rule-provide-relief-smaller-institutions/; https://
www.consumerfinance.gov/about-us/newsroom/cfpb-issues-final-rule-
raising-data-reporting-thresholds-under-hmda/.
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    Final Rule: Payday, Vehicle Title, and Certain High-Cost 
Installment Loans; Delay of Compliance Date; Correcting Amendments.\17\ 
In June 2019, the Bureau issued this final rule to delay the August 19, 
2019, compliance date for the mandatory underwriting provisions of the 
regulation promulgated by the Bureau in November 2017 governing Payday, 
Vehicle Title, and Certain High-Cost Installment Loans. Compliance with 
the mandatory underwriting provisions was delayed by 15 months to 
November 19, 2020. The Bureau also made certain corrections to address 
several clerical and nonsubstantive errors it identified in other 
aspects of the rule.
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    \17\ See https://www.consumerfinance.gov/policy-compliance/
rulemaking/final-rules/payday-vehicle-title-and-certain-high-cost-
installment-loans-delay-compliance-date-correcting-amendments/.
---------------------------------------------------------------------------
    Advance Notice of Proposed Rulemaking and Notices of Proposed 
Rulemaking: Ability-to-Repay and Qualified Mortgages.\18\ In July 2019, 
the Bureau issued an ANPR asking for information relating to the 
expiration of the temporary Government-Sponsored Enterprise (GSE) 
provision (GSE Patch) of the Bureau's Ability-to-Repay and Qualified 
Mortgage Rule. Under the GSE Patch, while the GSEs operate under the 
conservatorship or receivership of the FHFA, mortgages that are 
eligible for purchase or guarantee by one of the GSEs and that satisfy 
certain statutory criteria relating primarily to features of the 
mortgage are generally deemed to be Qualified Mortgages (QMs). This 
provision is scheduled to expire in January 2021. The Bureau's ANPR 
sought information to determine whether to propose changes in the 
General QM loan definition considering that expiration. Although 
outside of the reporting period, it is worth noting that in June 2020 
the Bureau issued an NPRM to propose amendments to the General QM loan 
definition that would remove the General QM loan definition's 43 
percent debt-to-income (DTI) limit and that would instead establish a 
pricing threshold (i.e., the difference between the loan's annual 
percentage rate and the average prime offer rate for a comparable 
transaction) for loans to qualify as General QM loans. General QM loans 
would still have to meet the statutory criteria for QM status, 
including restrictions related to loan features, upfront costs, and 
underwriting. The Bureau also issued a second NPRM that proposed to 
extend the GSE Patch until the effective date of the final amendments 
to the General QM loan definition to help ensure a smooth and orderly 
transition away from the GSE Patch by (among other things) allowing the 
Bureau to complete this rulemaking and to avoid any gap between the 
expiration of the GSE Patch and the effective date of the proposed 
alternative. The Bureau did not propose to amend the provision stating 
that the Temporary GSE QM loan category would expire if the GSEs exit 
conservatorship. Finally, the Bureau is considering adding a new 
``seasoning'' definition of QM, which would be proposed in a separate 
NPRM. This definition would create an alternative pathway to QM safe-
harbor
status for certain mortgages when the borrower has consistently made 
timely payments for a specified period.
---------------------------------------------------------------------------
    \18\ See https://www.consumerfinance.gov/about-us/newsroom/bureau-
releases-qualified-mortgage-anpr/; see also https://
www.consumerfinance.gov/about-us/newsroom/cfpb-takes-steps-address-gse-
patch/.
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    Assessment of Significant Rule: TRID Rule (the Truth in Lending Act 
and Real Estate Settlement Procedures Act).\19\ In November 2019, the 
Bureau publicly initiated the assessment of the TRID rule by requesting 
public comment on its plans to conduct the assessment. Section 1022(d) 
of the Dodd-Frank Act requires the Bureau to conduct an assessment of 
each significant rule or order adopted by the Bureau under Federal 
consumer financial law. Under Section 1022(d)(2), assessment reports 
must be published not later than 5 years of the effective date of the 
significant rule or order. As part of its assessment, the Bureau 
intends to address the TRID rule's effectiveness in meeting the 
purposes and objectives of Title X of the Dodd-Frank Act, the specific 
goals of the rule, and other relevant factors. The public was invited 
to comment on the feasibility and effectiveness of the assessment plan, 
recommendations to improve the assessment plan, and recommendations for 
modifying, expanding, or eliminating the TRID rule, among other 
questions.
---------------------------------------------------------------------------
    \19\ See https://www.consumerfinance.gov/about-us/newsroom/bureau-
to-assess-integrated-mortgage-disclosure-rule/.
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    Business Lending Data (Regulation B). The Bureau is working to 
develop rules to implement Section 1071 of the Dodd-Frank Act. Section 
1071 amended the Equal Credit Opportunity Act (ECOA) to require 
financial institutions to collect, report, and make public certain 
information concerning credit applications made by women-owned, 
minority-owned, and small businesses. The Bureau resumed pre-rulemaking 
activities on Section 1071. In November 2019, the Bureau conducted a 
symposium on small business loan data collection. In addition, the 
Bureau has developed, and earlier this month started conducting, a 
survey of lenders to obtain estimates of one-time costs lenders of 
varying sizes would incur to collect and report data pursuant to 
Section 1071. The Bureau's next step will be the release of materials 
in advance of convening a panel under the Small Business Regulatory 
Enforcement Fairness Act, in conjunction with the Office of Management 
and Budget and the Small Business Administration's Chief Counsel for 
Advocacy, to hear from representatives of small businesses on which 
Bureau rules to implement Section 1071 may impose costs.
    Although also outside of the reporting period, the Bureau recently 
took several notable steps in our ongoing rulemaking activity.
    Notice of Proposed Rulemaking: Amendments to Regulation Z to 
Facilitate Transition From LIBOR.\20\ In June 2020, the Bureau released 
a NPRM concerning the anticipated discontinuation of LIBOR, including 
proposing examples of replacement indices that meet Regulation Z 
standards for both open-end and closed-end credit products. Some 
consumer credit contracts use LIBOR as a reference rate. This proposed 
rule would facilitate creditors for home equity lines of credit 
(HELOCs) (including reverse mortgages) and card issuers for credit card 
accounts transitioning existing accounts away from LIBOR if certain 
conditions are met to an alternative index on or after March 15, 2021, 
well in advance of LIBOR's anticipated expiration at the end of 2021. 
The proposed rule also would address change-in-terms notice provisions 
for HELOCs and credit card accounts and how they apply to the 
transition away from LIBOR, to ensure that consumers are informed of 
the replacement index and any adjusted margin. The Bureau's work is 
also designed to facilitate compliance by open-end and closed-end 
creditors and to lessen the financial impact to consumers by providing 
examples of replacement indices that meet Regulation Z standards. The 
proposed rule also would address how the rate reevaluation provisions 
applicable to credit card accounts apply following the transition from 
LIBOR to a replacement index, to facilitate compliance by card issuers. 
Commencing a notice-and-comment rulemaking will enable the Bureau to 
facilitate compliance by creditors with Regulation Z as they transition 
away from LIBOR.
---------------------------------------------------------------------------
    \20\ See https://www.consumerfinance.gov/about-us/newsroom/cfpb-
facilitates-libor-transition/.
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    Notice of Proposed Rulemaking: Higher-Priced Mortgage Loan Escrow 
Exemption.\21\ In July 2020, the Bureau released a proposal to amend 
Regulation Z, which implements the Truth in Lending Act (TILA), as 
mandated by section 108 of the EGRRCPA. The amendments would exempt 
certain insured depository institutions and insured credit unions from 
the requirement to establish escrow accounts for certain higher-priced 
mortgage loans. Prior to the enactment of the Dodd-Frank Act, the 
Federal Reserve Board (Board) issued a rule requiring the establishment 
of escrow accounts for payment of property taxes and insurance for 
certain ``higher-priced mortgage loans,'' a category which the Board 
defined to include what it deemed to be subprime loans. Pursuant to the 
Dodd-Frank Act, the Bureau in 2013 issued a rule creating an exemption 
from the escrow requirement for creditors with under $2 billion in 
assets and meeting other criteria. Section 108 of the EGRRCPA, codified 
at 15 U.S.C. 1639d, directs the Bureau to conduct a rulemaking to 
exempt from the escrow requirement loans made by certain creditors with 
assets of $10 billion or less and meeting other criteria. In 
anticipation of future rulemaking activity, the Bureau conducted a 
preliminary analysis of the number of lenders potentially impacted by 
implementation of Section 108 of EGRRCPA. The Bureau released the 
analysis in late summer 2019 and it showed that a limited number of 
additional lenders would be exempt under Section 108 of EGRRCPA once 
implemented by rule. The comment period for the July proposed rule is 
60 days from its upcoming publication in the Federal Register, and the 
Bureau plans to consider the comments and move expeditiously to issue a 
final rule providing the new exemption.
---------------------------------------------------------------------------
    \21\ See https://www.consumerfinance.gov/about-us/newsroom/cfpb-
issues-proposed-rule-escrow
-exemptions-high-priced-mortgage-loans/.
---------------------------------------------------------------------------
    Final Rule: Payday, Vehicle Title, and Certain High-Cost 
Installment Loans, Revocation.\22\ Earlier this month, the Bureau 
issued a final rule concerning small-dollar lending in order to 
maintain consumer access to credit and competition in the marketplace. 
The final rule rescinds the mandatory underwriting provisions of the 
2017 rule after reevaluating the legal and evidentiary bases for these 
provisions and finding them to be insufficient. The final rule does not 
rescind or alter the payments provisions of the 2017 rule. In addition, 
the Bureau denied a petition for rulemaking from a provider asking to 
exclude debit cards from the Payment Provisions of the 2017 rule and 
issued a statement on the Bureau's approach to the payment provisions 
for loans large enough to exceed the Regulation Z coverage threshold.
---------------------------------------------------------------------------
    \22\ See https://www.consumerfinance.gov/f/documents/
cfpb_supervisory-highlights_issue-19_092019.pdf.
---------------------------------------------------------------------------
Ensuring a Culture of Compliance
    Another tool for the prevention of harm is the Bureau's supervisory 
authority, which can keep violations of laws and regulations from 
happening in the first place. Supervision is the heart of this agency--
something underscored by the percentage of our personnel and resources 
dedicated to conducting exams. I am focused on ensuring we use this 
tool as effectively and efficiently as possible and that we apply it in 
a consistent way. Heading trouble off at the pass may not grab big 
headlines, but it will prevent a lot of headaches for consumers and 
industry.
    During the period covered by the Spring 2020 Report, the Bureau 
published three issues of Supervisory Highlights:\23\ Winter 2020, 
covering supervisory findings in the areas of debt collection, mortgage 
servicing, small-dollar lending, and student loan servicing; Consumer 
Reporting Special Edition, covering supervisory findings in the 
consumer reporting area; and Summer 2019, covering supervisory findings 
in the areas of automobile loan origination, credit card account 
management, debt collection, furnishing, and mortgage origination.
---------------------------------------------------------------------------
    \23\ See Winter 2020, https://files.consumerfinance.gov/f/
documents/cfpb_supervisory-highlights_issue-21_2020-02.pdf; Consumer 
Reporting Special Edition, https://files.consumer
finance.gov/f/documents/cfpb_supervisory-highlights_issue-
20_122019.pdf; Summer 2019,
https://files.consumerfinance.gov/f/documents/cfpb_supervisory-
highlights_issue-19_092019
.pdf.
---------------------------------------------------------------------------
    In addition, 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 14 supervisory events at financial 
services 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. In the current reporting 
period, the Bureau issued more 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.
Holding Bad Actors To Account and Deterrence Through Enforcement
    Education, rulemaking, and supervision alone will not prevent every 
violation. A purposeful enforcement regime can foster compliance, deter 
unlawful conduct, help prevent consumer harm, and right wrongs. Public, 
decisive action against wrongdoers sends a clear message to the 
marketplace--one that should deter unlawful behavior and support a 
level playing field--all while reaching a just outcome for harmed 
consumers. However, I am also committed to ensuring that we move as 
expeditiously as possible to resolve enforcement matters, whether 
through public action or a determination that a particular 
investigation should be closed.
    During the period covered by the Spring 2020 Report, the Bureau 
brought, or continued ongoing litigation in, numerous public 
enforcement actions for violations of Federal consumer financial law. 
These activities included: an action against a bank for violating the 
Consumer Financial Protection Act's (CFPA) prohibition against unfair 
and abusive acts or practices, as well as TILA and the Truth in Savings 
Act and their implementing regulations;\24\ three actions against 
brokers of contracts offering high-interest credit to veterans, many of 
whom were disabled, and to other consumers for violating the CFPA's 
prohibition against deceptive and unfair acts or practices and against 
providing substantial assistance to deceptive and unfair acts or 
practices of others;\25\ an action against a bank for violating TILA 
and its implementing Regulation Z, including TILA provisions passed 
under the Fair Credit Billing Act (FCBA) and the CARD Act;\26\ an 
action against certain entities and individuals for violating the Fair 
Credit Reporting Act (FCRA), the CFPA, and the Telemarketing Sales Rule 
(TSR) by wrongfully obtaining consumer report information, charging 
unlawful advance fees, and engaging in deceptive acts and practices in 
connection with the marketing and sale of student loan debt relief 
products and services;\27\ an action against a company and its owner 
for violating the CFPA by misrepresenting the true cost of credit for 
loans for airline tickets to servicemembers and their families, failing 
to provide certain required disclosures about the terms of credit in 
violation of TILA and Regulation Z, and failing to disclose the total 
costs of purchasing airline tickets through financing in the course of 
telemarketing the loans in violation of the TSR;\28\ an action against 
a company for engaging in deceptive practices in violation of the CFPA 
by overcharging servicemembers and their families for a debt-
cancellation product that was offered in connection with loans for 
airline tickets, and for violating Regulation V, which implements 
FCRA;\29\ an action against an employment background screening company 
for violating FCRA;\30\ an action against debt relief companies for 
engaging in deceptive practices and charging unlawful advance fees in 
connection with the marketing and sale of student loan debt relief 
services to consumers;\31\ an action against a debt collection company 
and its owner for violating the CFPA, FCRA, Regulation V, and the 
FDCPA;\32\ an action against a foreclosure relief services company, its 
CEO, and its auditor, for engaging in deceptive and abusive acts and 
practices and charging unlawful advance fees in connection with the 
marketing and sale of financial advisory and mortgage assistance relief 
services to consumers;\33\ an action against a debt-collection company 
for violating the FDCPA and CFPA;\34\ an action against a remittance 
transfer services provider for violating the Remittance Transfer Rule 
under Electronic Fund Transfer Act (EFTA), and the CFPA;\35\ an action 
against a credit reporting agency for engaging in unfair and deceptive 
practices in connection with a data breach that impacted approximately 
147 million consumers;\36\ an action against a company set up to hold 
and manage private student loans for providing substantial assistance 
to unfair acts and practices;\37\ an action against a mortgage lender 
for violating HMDA and Regulation C by submitting mortgage-loan data 
for 2014 to 2017 that contained errors;\38\ an action against a 
mortgage servicer for violating the CFPA, the Real Estate Settlement 
Procedures Act, and TILA;\39\ an action against a debt collection law 
firm for violating the FDCPA and CFPA;\40\ an action against a company 
for violating the TSR by requesting and receiving payment of prohibited 
upfront fees for their credit repair services and for violating the TSR 
and CFPA by making deceptive representations or substantially assisting 
others in doing so;\41\ and an action against a student loan servicing 
company for engaging in unfair practices in violation of the CFPA by 
failing to adjust in a timely manner principal balances of student 
loans made under the Federal Family Education Loan Program.\42\
---------------------------------------------------------------------------
    \24\ See https://www.consumerfinance.gov/about-us/newsroom/cfpb-
files-suit-against-fifth-third
-for-allegedly-opening-unauthorized-accounts-enrolling-consumers-in-
unauthorized-products/.
    \25\ See https://www.consumerfinance.gov/policy-compliance/
enforcement/actions/candy-kern-fuller-howard-sutter-iii-and-upstate-
law-group-llc/; https://www.consumerfinance.gov/policy-compliance/
enforcement/actions/snyder-et-al/; https://www.consumerfinance.gov/
about-us/newsroom/cfpb-arkansas-state-ag-settle-brokers-high-interest-
credit-offers/.
    \26\ See https://www.consumerfinance.gov/about-us/newsroom/cfpb-
announces-action-against-citizens-bank/.
    \27\ See https://www.consumerfinance.gov/about-us/newsroom/cfpb-
settles-monster-loans-thomas-chou-sean-cowell-and-related-companies/; 
see also https://www.consumerfinance.gov/about-us/newsroom/cfpb-
announces-action-against-monster-loans-lend-tech-loans-and-student-
loan-debt-relief-companies/.
    \28\ See https://www.consumerfinance.gov/about-us/newsroom/bureau-
settles-military-travel-lender-and-servicer/.
    \29\ See https://www.consumerfinance.gov/about-us/newsroom/bureau-
settles-military-travel-lender-and-servicer/.
    \30\ See https://www.consumerfinance.gov/about-us/newsroom/bureau-
settles-employment-back
ground-screening-company/.
    \31\ See https://www.consumerfinance.gov/about-us/newsroom/bureau-
announces-action-again
st-student-loan-debt-relief-operation/.
    \32\ See https://www.consumerfinance.gov/about-us/newsroom/bureau-
files-suit-against-fair-collections-outsourcing-and-michael-e-sobota/.
    \33\ See https://www.consumerfinance.gov/about-us/newsroom/cfpb-
files-suit-andrew-lehman-michael-carrigan-proposed-settlement/.
    \34\ See https://www.consumerfinance.gov/about-us/newsroom/bureau-
settles-asset-recovery-associates/.
    \35\ See https://www.consumerfinance.gov/about-us/newsroom/bureau-
settles-maxitransfers-corporation/.
    \36\ See https://www.consumerfinance.gov/about-us/newsroom/cfpb-
ftc-states-announce-settlement-with-equifax-over-2017-data-breach/.
    \37\ See https://www.consumerfinance.gov/about-us/newsroom/bureau-
settles-student-cu-connect-cuso-over-itt-private-loan-program/.
    \38\ See https://www.consumerfinance.gov/about-us/newsroom/bureau-
settles-freedom-mortgage
-corporation/.
    \39\ See https://www.consumerfinance.gov/about-us/newsroom/bureau-
settles-bsi-financial-ser-
vices/.
    \40\ See https://www.consumerfinance.gov/about-us/newsroom/bureau-
files-suit-against-forster-garbus-llp/.
    \41\ See https://www.consumerfinance.gov/about-us/newsroom/bureau-
files-suit-against-lexing-
ton-law-pgx-holdings-and-related-entities/.
    \42\ See https://www.consumerfinance.gov/about-us/newsroom/bureau-
settles-conduent-educa-tion-services/.
---------------------------------------------------------------------------
    In addition to the actions taken above, the Bureau referred four 
matters to the U.S. Department of Justice (DOJ) about discrimination 
pursuant to Section 706(g) of the ECOA. The referrals involved 
redlining in mortgage origination based on race and/or national origin, 
discrimination in mortgage origination based on receipt of public 
assistance income, and discrimination in auto origination based on race 
and national origin. Like other Federal bank regulators, the Bureau is 
required to refer matters to the DOJ when it has reason to believe that 
a creditor has engaged in a pattern or practice of lending 
discrimination.
    During the reporting period, the Bureau continued to pursue ongoing 
litigation, as well as implementation and oversight of compliance with 
the pending public enforcement orders that were entered by Federal 
courts or issued by the Bureau's Director in prior years.
Activities and Data Supporting All of the Tools
    The mission of the Bureau is to protect consumers, which, as I have 
discussed today, we carry out through education, regulation, 
supervision, and enforcement. These tools are all provided in the Dodd-
Frank Act, and I am determined to use the Bureau's capabilities to 
achieve the best results for American consumers. That includes using 
research, market monitoring, stakeholder outreach, and the complaint 
process to inform the use of our tools. Complaints, along with other 
inputs, give us insight into consumer experiences in the marketplace 
that we analyze and use to improve our mission execution. Related to 
the pandemic, the Bureau has experienced record numbers of complaints 
that underscore this point. In March 2020, we saw a notable increase in 
inquiries related to trouble making mortgage payments. Those inquiries 
also highlighted concerns about when deferred payments would be due 
after the CARES Act forbearance period. The complaints, in addition to 
stakeholder feedback from the mortgage industry and consumer advocates 
among others, led the Bureau to work expeditiously with our interagency 
colleagues to address the lump sum payment issue and the concerns 
regarding consumer confusion around CARES Act forbearance options.
    During the reporting period, we also continued to roll out 
enhancements to the complaint database announced in September 2019. 
Those enhancements included integration of financial information and 
resources into the complaint process to help address questions and 
better inform consumers before they submit a complaint, as well as 
modification of disclaimers to provide better context to the published 
data. Although outside of the reporting period, it is worth noting that 
in April 2020 and July 2020, respectively, the Bureau unveiled a 
geospatial and trends view. The new trends and map views build upon the 
existing capability to filter and search, and emphasize aggregation and 
analysis of information, while continuing to make all the underlying 
data available for closer examination. These new capabilities allow 
users to gain deeper insight into changes in the location, type, and 
volume of complaints over time, which provides valuable context into 
consumers' experiences in the financial marketplace.
    While the Bureau publishes complaint data and reports on complaint 
trends annually in the Consumer Response Annual Report, here is the 
data for the period April 1, 2019, through March 31, 2020. The Bureau 
received approximately 372,700 consumer complaints.\43\ This is an 
approximately 9 percent increase from the prior reporting period.\44\ 
Consumers submitted approximately 84 percent of these complaints 
through the Bureau's website and 7 percent via telephone calls. 
Referrals from other state and Federal agencies accounted for 6 percent 
of complaints. Consumers submitted the remainder of complaints by mail, 
email, and fax. The Bureau sent approximately 304,200 (82 percent) of 
complaints received to companies for review and response.\45\ 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. Company responses typically include 
descriptions of steps taken or that will be taken in response to the 
consumer's complaint, communications received from the consumer, any 
follow-up actions or planned follow-up actions, and a categorization of 
the response. Companies' responses describe a range of relief. Examples 
of relief include correcting inaccurate data provided or reported in 
consumers' credit reports; stopping harassing calls from debt 
collectors; correcting account information; issuing corrected 
documents; restoring account access; and, addressing formerly unmet 
customer service issues. Ninety-nine percent of complaints sent to 
companies received timely responses.
---------------------------------------------------------------------------
    \43\ 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 and does not 
publish complaints in the Consumer Complaint Database until the company 
responds, confirming a commercial relationship with the consumer, or 
after it has had the complaint for 15 days, whichever comes first. For 
more information on our complaint process refer to the Bureau's website 
at https://www.consumerfinance.gov/complaint/process.
    \44\ The prior reporting period, October 1, 2018, to September 30, 
2019, reported 342,500 consumer complaints. See Consumer Fin. Prot. 
Bureau, Semi-Annual Report Fall 2019 (Feb. 2020), available at https://
files.consumerfinance.gov/f/documents/cfpb_semi-annual-report-to-
congress_fall-2019.pdf.
    \45\ The Bureau referred 13 percent of the complaints it received 
to other regulatory agencies and found 5 percent to be incomplete. At 
the end of this period, 0.4 percent of complaints were pending with the 
consumer and 0.4 percent were pending with the Bureau. Percentages in 
this section of the report may not sum to 100 percent due to rounding.
---------------------------------------------------------------------------
Legislative Reforms
    Earlier this year, the Bureau requested that Congress advance 
proposed legislation \46\ that would authorize the Bureau to award 
whistleblowers who report violations of Federal consumer financial 
law.\47\ The proposal would amend Title X of the Dodd-Frank Act and 
provide authority to establish a whistleblower award program. The 
incentive created for employees to report wrongdoing to the Bureau will 
assist in advancing enforcement cases, especially as it relates to fair 
lending violations. Under the proposed legislation, in cases where a 
whistleblower provides voluntary information that leads to a successful 
enforcement action, the Bureau will be able to pay an award based on a 
percentage of the monetary sanctions collected in the action. The 
legislative proposal was part of a suite of initiatives to advance one 
of my key priorities: prevention of consumer harm.
---------------------------------------------------------------------------
    \46\ See https://www.consumerfinance.gov/documents/8627/
cfpb_whistleblower-proposed-statutory-text_2020-03.pdf.
    \47\ See https://www.consumerfinance.gov/about-us/newsroom/cfpb-
takes-key-steps-prevent-consumer-harm-proposes-whistleblower-award-
program/.
---------------------------------------------------------------------------
    In addition, in 2019, the Bureau requested that Congress provide us 
with clear legal authority to supervise financial institutions for 
Military Lending Act compliance. As part of that request, the Bureau 
transmitted proposed legislative language that would achieve this goal. 
I continue to stand ready to work with Members of this Committee to 
provide the Bureau with this authority to assist in our work to prevent 
harm to our servicemembers and their families. The Bureau continues to 
use its education and enforcement tools in this space, but the 
authority to supervise would make these efforts even more effective.
Conclusion
    My testimony today does not attempt to cover all the things the 
Bureau does to meet our mission. The full Report, which is enclosed 
with my testimony, covers more than I can highlight in the time I have 
today. As reflected in my opening message in the Report, I want to 
close my testimony today by commending the work of all Bureau 
employees. During this global health emergency, our team truly rose to 
the occasion as they grappled with challenges in their own lives, 
protecting their health and the health of their loved ones, and working 
from home. In the midst of COVID-19, the Bureau staff continue to be 
focused on protecting consumers in the financial marketplace. That 
effort entails ensuring consumers have information on their rights, 
protections, and options as well as ensuring financial institutions are 
in compliance with Federal consumer financial law. We will continue to 
monitor the evolving landscape across all the markets we regulate. And 
lest I forget, the work of this Committee helps all of us at CFPB meet 
our mission. I look forward to our continued work in the next year on 
behalf of American consumers.
    Thank you again for the opportunity to present this Semi-Annual 
Report of the Bureau's work in support of American consumers.

 RESPONSES TO WRITTEN QUESTIONS OF SENATOR BROWN FROM KATHLEEN 
                          L. KRANINGER

Preemption
Q.1. Since you became Director, has the OCC consulted with the 
CFPB regarding a preemption determination under section 25b of 
the National Bank Act?

A.1. The OCC has not consulted with the Consumer Financial 
Protection Bureau (Bureau) regarding a preemption determination 
under section 25b of the National Bank Act. In addition, the 
Bureau is not aware of anyone raising OCC preemption 
determinations that were subject to the consultation 
requirements of section 25b.
Payday Lending
Q.2.a. On March 9, 2020, the Bureau joined other financial 
regulators to issue a joint statement encouraging 
``responsible'' small-dollar lending in response to COVID-
19.\1\ The statement did not provide any guidelines on what the 
Bureau considers a ``responsible'' small-dollar loan, such as 
an interest rate cap, a prohibition on reborrowing, or require 
the lender to determine whether the consumer has the ability to 
repay the loan.
---------------------------------------------------------------------------
    \1\  https://files.consumerfinance.gov/f/documents/
cfpb_interagency-statement_small-dollar-lending-covid-19_2020-03.pdf.
---------------------------------------------------------------------------
    Does the Bureau have any specific parameters or 
characteristic for assessing what constitutes a ``responsible'' 
small dollar loan? If so, please identify each parameter or 
characteristic.

A.2.a. The March 9, 2020, statement, which predated the 
declaration on March 13, 2020, of an emergency by the President 
due to the COVID-19 pandemic, was not focused on small-dollar 
loans. Rather, in that joint statement the Federal financial 
institution regulators and state regulators encouraged 
financial institutions to meet the financial needs of customers 
and members affected by the pandemic.
    Subsequently, on March 26, 2020, the Bureau signed on to a 
``Joint Statement Encouraging Responsible Small-Dollar Lending 
in Response to COVID-19,'' along with a number of other Federal 
agencies, recognizing the potential for the pandemic ``to 
adversely affect the customers and operations of banks, savings 
associations and credit unions (referred to in the statement 
collectively as ``financial institutions''). The statement 
specifically encouraged financial institutions to offer 
responsible small-dollar loans to both consumers and small 
businesses. In the statement, the agencies stated that they 
``recognize the important role that responsibly offered small-
dollar loans can play in helping customers meet their needs for 
credit due to temporary cashflow imbalances, unexpected 
expenses, or income short-falls during periods of economic 
stress or disaster recoveries.'' The focus of the March 26 
joint statement, which is relatively brief, is on small-dollar 
lending by financial institutions.
    The March 26 joint statement is broad enough to encompass a 
range of consumer and financial institution circumstances and a 
range of statutory authorities. Neither the Bureau nor the 
other financial regulators that issued the statement have 
defined what a ``responsible'' small-dollar loan would be 
pursuant to this statement. The joint statement provides, in 
part, that ``The current regulatory framework allows financial 
institutions to make responsible small-dollar loans. Such loans 
can be offered through a variety of loan structures that may 
include, for example, open-end lines of credit, closed-end 
installment loans, or appropriately structured single payment 
loans.''

Q.2.b. Does the Bureau consider a loan that a consumer does not 
have the ability to repay ``responsible''?

A.2.b. Please see response to Q.2.a.

Q.2.c. Is there an interest rate above which the Bureau would 
not consider a small-dollar loan ``responsible'' Does the 
bureau consider a loan with a 100 percent APR, 1,000 percent, 
or 10,000 percent APR ``responsible''?

A.2.c. Please see the response to Q.2.a. In addition, the 
Bureau notes that section 1027(o) of the Dodd-Frank Act 
expressly precludes the Bureau from ``establish[ing] a usury 
limit applicable to an extension of credit offered or made by a 
covered person to a consumer, unless explicitly authorized by 
law.''

Q.2.d. The Bureau's statement ``encourages'' financial 
institutes to consider workout strategies that ``mitigat[] the 
need to reborrow.'' Does the Bureau consider a loan 
``responsible'' if a consumer cannot repay the loan and must 
reborrow?

A.2.d. Please see the response to Q.2.a. In addition, the joint 
statement describes small-dollar lending by financial 
institutions during the COVID-19 emergency and emphasizes that 
``[f]or all products, financial institutions should offer loans 
in a manner that is consistent with safe and sound practices, 
provides fair treatment of consumers, and complies with 
applicable statutes and regulations, including consumer 
protection laws.'' The Bureau and other joining agencies 
recognize in the statement that there may be situations where 
the consumer must reborrow.

Q.2.e. Does the Bureau believe a loan product that requires 
multiple periods of reborrowing is a ``responsible'' product?

A.2.e. Please see the response to Q.2.d.

Q.3.a. On April 30, 2020, the New York Times published an 
internal memorandum written by a CFPB economist who worked on 
the payday rulemakings. That memorandum that contains detailed 
concerns regarding the conduct of your political appointees 
during the payday rulemaking process. The memorandum is 
detailed--it includes dates, specific individuals, and 
supporting emails and memoranda.
    Have you taken any steps to investigate the concerns set 
forth in the memorandum? If so, please describe, including 
whether you have taken any disciplinary or other action against 
any individual.

A.3.a. The memorandum presents the author's opinions and views 
about many different Bureau employees and many different 
actions by them. It is not clear from the question which 
employees, if any, would be subject to disciplinary action for 
what conduct described in the memorandum. Moreover, if the 
agency has taken disciplinary action against any individual 
related to the memorandum, any such action would be legally 
protected from disclosure except in certain circumstances.
    As Director, I am proud of the staff of the Bureau and 
continually impressed by their dedication to the agency's 
mission. Within any organization, there will be differing 
opinions and viewpoints among staff and with any major decision 
of the Bureau, as well as countless subsidiary decisions, there 
are often views and ideas competing for consideration. Staff at 
the Bureau know that I welcome these competing views as this 
results in better decisions. Bureau staff also know that the 
decision regarding the agency's action, after considering the 
best advice and analysis the staff brings forward, rests with 
me as the Director.

Q.3.b. One of the listed concerns is that the Bureau's front 
office ``predetermine[] . . . the course of action for the 
NPRMs'' (notices of proposed rulemakings). Do you contend that 
it is appropriate to predetermine a course of action prior to 
concluding the rulemaking process under the Administrative 
Procedures Act? Please respond with a ``Yes'' or ``No'' and the 
reasons for the response.

A.3.b. Under the Administrative Procedure Act, an agency must 
formulate a proposed rule and then seek public comment on it. 
An agency therefore must decide what issues to include in a 
Notice of Proposed Rulemaking (NPRM) for comment, such as 
decisions the Bureau made as to the issues on which to seek 
comment through the 2019 NPRM. After considering the relevant 
matter in the rulemaking record, including that which is 
provided through public comments, an agency makes decisions on 
these issues as necessary and appropriate to issue a final 
rule. The Bureau did not determine the outcome of the payday 
rulemaking process, that is, whether to revoke the rule's 
mandatory underwriting provisions, until after it considered 
the comments and other relevant matter. Specifically, the 
Bureau determined the outcome of the rulemaking when it 
finalized its 2020 Payday Rule on July 7, 2020, with the rule 
published in the Federal Register on July 22, 2020. I 
maintained an open mind throughout the rulemaking process as to 
whether and what final rule the Bureau might issue.
    When the Bureau chooses to employ its rulemaking authority, 
it engages in a serious and thorough deliberative process and 
consults broadly with other appropriate Federal agencies, state 
counterparts, and the Bureau's many stakeholders. As required 
by law, the Bureau considers the benefits and costs of any 
rulemaking on consumers and market participants, including, as 
specifically required by its organic statute, ``the potential 
reduction of access by consumers to consumer financial products 
or services resulting from such a rule.'' When the Bureau 
publishes an NPRM,
it includes its assessment of the benefits and costs of the 
proposed rule. That assessment is publicly available as part of 
the NPRM and the Bureau solicits feedback on its assessment, as 
well as the policy and legal judgments underlying any proposal, 
in the form of public comments. Those comments were considered 
and addressed in the final rule. The Bureau followed this 
process here and believes that the merits of its analysis 
should be judged on the basis of the final rule itself.

Q.3.c. According to the memorandum, the CFPB did not engage in 
any cost-benefit analysis to support the decision to rulemaking 
to reconsider the 2017 Payday Rule. Did the CFPB engage in 
cost-benefit analysis to support the rulemaking to reconsider 
the 2017 Payday Rule? If not, what is the Bureau's reason for 
not doing so?

A.3.c. Please see the response to Q.3.b.

Q.3.d. According to the memorandum, Anthony Welcher (one of 
your political appointees) informed industry participants at 
the Financial Services Center of American Annual Conference in 
Las Vegas on October 4, 2019, that the Bureau would be revoking 
the ability-to-repay provisions of the 2017 Payday Rule. 
According to the memorandum, at the time the Bureau was also 
telling Congress that the Bureau had not made a decision on 
whether to revoke the ability-to-repay provisions of the 2017 
Payday Rule.
    Did Mr. Welcher disclose to attendees at the Financial 
Services Center of American Annual Conference in Las Vegas on 
October 4, 2019, that the Bureau would be revoking the ability-
to-repay provisions of the 2017 Payday Rule?

A.3.d. This annual conference took place in October 2018 before 
I became Director in December 2018. I do not have knowledge of 
what Mr. Welcher may have said at the conference and he is no 
longer on staff at the Bureau.

Q.3.e. On what date did the Bureau decide that it would revoke 
the ability-to-repay provisions of the 2017 Payday Rule?

A.3.e. After considering comments from the public on its NPRM, 
the Bureau finalized its 2020 Payday Rule, which revoked the 
mandatory underwriting provisions of the 2017 Payday Rule, on 
July 7, 2020. The rule was published in the Federal Register on 
July 22, 2020.

Q.3.f. Do you contend that it was appropriate for Mr. Welcher 
to disclose to conference attendees that the Bureau had decided 
to revoke the ability-to-repay provisions of the 2017 Payday 
Rule? Please respond with a ``Yes'' or ``No'' and the reasons 
for the response.

A.3.f. Please see the response to Q.3.d.

Q.4.a. During my questioning at the July 29, 2020, hearing, you 
did not answer certain questions I asked about the payday 
rulemaking process. The questions below do not ask whether any 
particular conduct occurred, but instead ask for the Bureau's 
position on requirements under the Administrative Procedures 
Act.
    Under the Administrative Procedures Act, should the CFPB 
determine the outcome before it begins the rulemaking process--
yes or no?
A.4.a. Under the Administrative Procedure Act, an agency 
formulates a proposed rule and then seeks public comment on it. 
An agency issues a final rule after considering the relevant 
matter in the rulemaking record, including that which is 
provided through public comments. The Bureau did not determine 
the outcome of the payday rulemaking process, that is, whether 
to revoke the rule's mandatory underwriting provisions, until 
after it considered the comments and other relevant matter. 
Specifically, the Bureau determined the outcome of the 
rulemaking when it finalized its 2020 Payday Rule on July 7, 
2020, with the rule published in the Federal Register on July 
22, 2020.

Q.4.b. Under the Administrative Procedures Act, should the CFPB 
ignore research that reaches a conclusion that the agency head 
disagrees with--yes or no?

A.4.b. No, and the Bureau considered all the relevant research 
of which it was aware in proposing the final rule and in 
issuing the final rule. See 2019 NPRM: Payday, Vehicle Title, 
and Certain High-Cost Installment Loans, 84 FR 4252, 4281 (Feb. 
14, 2019), and 2020 Final Rule: Payday, Vehicle Title, and 
Certain High-Cost Installment Loans, 85 FR 44382, 44431 (July 
22, 2020).

Q.4.c. Under the Administrative Procedures Act, should the CFPB 
ignore comments from the public--yes or no?

A.4.c. No, and the Bureau considered all of the approximately 
197,000 public comments submitted in response to the 2019 NPRM 
before deciding to issue the 2020 Final Rule (85 FR 44382, 
44431 (July 22, 2020)).

Q.5.a. The OCC recently reaffirmed a 2003 Advisory Letter 
stating that in its experience ``a departure from fundamental 
principles of loan underwriting generally forms the basis of 
abusive lending without a determination that a borrower can 
reasonably be expected to repay the loan.''\2\
---------------------------------------------------------------------------
    \2\ https://occ.gov/news-issuances/Federal-register/2020/nr-occ-
2020-97a.pdf.
---------------------------------------------------------------------------
    Do you agree with the OCC that it is abusive to make a loan 
without a determination that a borrower can reasonably be 
expected to repay the loan? If yes, explain how you are 
ensuring that lenders determine that a borrower can reasonably 
be expected to repay the loan. If no, explain why you do not 
believe that all lenders should determine that a borrower can 
repay the loan?

A.5.a. The cited passage from 2003 OCC guidance relates to that 
agency's exercise of its statutory responsibilities in 
supervising national banks, with an emphasis on issues 
associated with mortgage lending. It does not analyze the 
specific set of issues regarding small-dollar credit products 
that were relevant to the Bureau's 2020 Payday Rule. The 
preamble to the Bureau's rule explains the basis for the 
Bureau's decision, under its statutory framework, to revoke the 
mandatory underwriting provisions for small-dollar lending. 
Among other reasons, revoking those provisions ensures that 
consumers have access to credit and ensures competition in that 
market. The Bureau is committed to ensuring that consumers can 
make well-informed choices among the small-dollar products 
available to them. To assist in achieving that objective, the 
Bureau announced that it will undertake new research focusing 
on whether and how additional information on payday loans might 
improve consumer understanding.

Q.6. You have repeatedly talked about the importance of 
consumer choice and disclosure. At the July 29, 2020, hearing, 
you stated the Bureau was ``enabling consumers to understand 
products.'' What concrete steps have you taken to ensure that 
consumers understand payday products?

A.6. The Bureau has several consumer education resources about 
payday loans. Payday loans are one of the featured topics under 
the ``Consumer Tools'' section of the Bureau's homepage. Within 
the payday loans page, consumers can learn how payday loans 
work, how to assess if a payday loan is a good option for the 
individual's circumstances, typical costs and fees associated 
with a payday loan, how to resolve common issues, and 
consumers' rights associated with payday loans.
    The Bureau has also published more than 30 ``Ask CFPB'' 
questions about payday loans. ``Ask CFPB'' is a series of 
commonly asked questions and answers about financial topics 
that are presented in an easy to understand manner. 
Additionally, there is a section on payday loans in the 
Bureau's Your Money, Your Goals toolkit that explains how 
payday loans work and how to calculate the costs and fees 
associated with the loan. Your Money, Your Goals is a suite of 
financial empowerment tools and resources that social services 
staff and volunteers who work with economically vulnerable 
consumers can use to build their own financial skills and 
confidence and help the people they serve better manage their 
finances.

Q.7. When the CFPB finalized the 2020 Payday Rescission rule, 
the CFPB press release indicated that the Bureau would be 
starting a research project on payday lending disclosures. 
Please provide details as to the number of staff working on 
that project, what their mandate is, and what the expected 
timeframe is, and what, if anything, staff have learned to 
date?

A.7. Several researchers and other Bureau staff in the Division 
of Research, Markets, and Regulation are working on the payday 
disclosure research. The proposed research focuses on whether 
and how additional information on payday loans might improve 
consumer understanding. The current disclosure testing timeline 
anticipates a completion date for the qualitative testing in 
2021. The Bureau has no findings to share at this time given 
cognitive interviews (formal testing) have not yet started, 
though the Bureau anticipates issuing the Federal Register 
notice for a 30-day public comment period this fall.
Debt collection
Q.8. The CFPB has the authority under the FDCPA to prohibit 
debt collectors from engaging in any conduct ``the natural 
consequence of which is to harass, oppress, or abuse.'' Given 
the current economic crisis, why hasn't the CFPB considered 
emergency relief to halt certain debt collection activities? 
Please state whether the CFPB will pursue the following (and if 
not, explain why not).

A.8. The Bureau will continue to use all of its tools to 
address the acts and practices of debt collectors that violate 
the law and cause injury to consumers. On March 20, 2020 (and 
updated on June 17, 2020), the Bureau published information for 
consumers specific to debt collection and the potential 
economic impact of coronavirus.\3\ Much of the other 
substantial support the Bureau has given consumers is intended 
at least in part to help them take steps that would help them 
manage their credit and prevent their debts from going into 
collection.
---------------------------------------------------------------------------
    \3\ https://www.consumerfinance.gov/about-us/blog/coronavirus-and-
dealing-debt-tips-help-ease-impact/.
---------------------------------------------------------------------------
    The Bureau is currently finishing a major update of 
consumer protections in debt collection. The Bureau issued an 
NPRM on May 7, 2019, and received over 14,000 comments in 
response. The proposal would provide consumers with specific 
protections against harassment by debt collectors and 
straightforward options to address or dispute debts. Among 
other things, the NPRM proposal would establish clear, bright-
line limits on the number of calls debt collectors may place to 
reach consumers on a weekly basis; clarify how collectors may 
communicate lawfully using technologies, such as voicemails, 
emails and text messages, that have developed since the Fair 
Debt Collection Practices Act (FDCPA) passage in 1977; and 
require collectors to provide additional information to 
consumers to help them identify debts and respond to collection 
attempts.
    The Bureau issued a Supplemental NPRM on February 21, 2020. 
The proposal would prohibit collectors from using nonlitigation 
means (such as calls) to collect on time-barred debt unless 
collectors disclose to consumers during the initial contact and 
on any required validation notice that the debt is time-barred. 
Consumer research conducted by the Bureau found that a time-
barred debt disclosure helps consumers understand that they 
cannot be sued if they do not pay. That can help consumers make 
better informed decisions whether to pay the debt or not.
    In accordance with the Administrative Procedure Act, the 
Bureau has carefully considered comments received on the May 
2019 proposed rule that would prescribe rules under Regulation 
F to govern the activities of debt collectors, as that term is 
defined under the FDCPA and expects to issue a final rule in 
October 2020. In December 2020, the Bureau also plans to issue 
a final rule on its supplemental proposal issued in February 
2020, which addressed time-barred debt disclosures, and any 
remaining proposed issues. The Bureau extended the deadline for 
comments on that proposal to August 4, 2020, in light of the 
COVID-19 pandemic.

Q.8.a. Issue an interim rule or guidance banning collectors 
from threatening or filing collection lawsuits?

A.8.a. Please see the response to question 8.

Q.8.b. Issue an interim rule or guidance banning in-person debt 
collection during the pandemic?

A.8.b. Please see the response to question 8.

Q.8.c. Issue an interim rule or guidance prohibiting bank 
account or wage garnishment during the pandemic?

A.8.c. Please see the response to question 8.

Q.8.d. Issue an interim rule or guidance prohibiting 
garnishment or offset of CARES Act Economic Impact Payments?

A.8.d. Please see the response to question 8.

Q.8.e. Issue an interim rule or guidance prohibiting car 
repossessions so that people can drive to doctors and do not 
need to risk their lives on public transportation (if public 
transport is even available)?

A.8.e. Please see the response to question 8.

Q.8.f. Issue an interim rule or guidance prohibiting 
repossessions of mobile homes and other personal property used 
as a dwelling while stay-at-home orders are in effect?

A.8.f. Please see the response to question 8.

Q.9.a. The CFPB has received record-setting levels of 
complaints, especially involving debt collection.
    What are the top issues raised in consumers' debt 
collection complaints since March 1?

A.9.a. From March 1, 2020, through August 31, 2020, the Bureau 
received approximately 266,100 complaints, including 
approximately 41,000 about debt collection. (For the same 
period in 2019, the Bureau received approximately 184,300 
complaints, including approximately 40,300 complaints about 
debt collection.)
    For debt collection complaints submitted from March 1, 
2020, through August 31, 2020, consumers submitted 
approximately 21,100 complaints about attempts to collect debt 
not owed and approximately 7,700 complaints about written 
notification of debt. These top issues are consistent with 
other complaints for the same period in 2019.

Q.9.b. How does the proposed debt collection rule address the 
issues raised in these complaints since March 1?

A.9.b. As noted in the response to Q.9.a., the top issues 
raised in consumers' debt collection complaints since March 1, 
2020, have been largely consistent with the complaints 
historically raised by consumers. The Bureau considered and 
incorporated concerns raised in consumer complaints when 
evaluating and issuing the proposed debt collection rule and 
continues to consider further feedback, including over 14,000 
public comments, in its rulemaking activities.

Q.9.c. Will the CFPB reopen the comment period on the debt 
collection rule in light of any lessons learned from the 
pandemic?

A.9.c. In accordance with the Administrative Procedure Act, the 
Bureau has carefully considered comments received on the 
May2019 proposed rule that would prescribe rules under 
Regulation F to govern the activities of debt collectors, as 
that term is defined under the FDCPA and expects to issue a 
final rule in October 2020. In December 2020, the Bureau also 
plans to issue a final rule on its supplemental proposal issued 
in February 2020, which addressed time-barred debt disclosures, 
and any remaining proposed issues. The Bureau extended the 
deadline for comments on that proposal to August 4, 2020, in 
light of the COVID-19 pandemic.

Q.9.d. What other steps is the CFPB taking to address the top 
issues for debt collection complaints during the pandemic?

A.9.d. The Bureau routes consumers' complaints about financial 
products and services--and any documents they provide--directly 
to financial companies, and works to get consumers a timely 
response, generally within 15 days. Where appropriate, the 
Bureau refers consumer complaints to other Federal agencies 
including debt collection complaints submitted about depository 
institutions with less than $10 billion in assets and 
complaints submitted about telecommunications companies, 
homeowners' associations, and landlords.
    On March 20, 2020, the Bureau posted a comprehensive guide 
for consumers who are concerned about dealing with debt and 
debt collectors during the pandemic. The guide was updated on 
June 17th. The guide describes for consumers the rights they 
have under the FDCPA, outlines steps consumers can take to 
manage debt during the pandemic, provides links to the Bureau's 
preexisting sample letters that consumers can use to 
communicate with debt collectors, and warns consumers about 
protecting themselves against debt collection scams. The guide 
is one of a number of resources created for consumers to help 
them manage and protect their finances during the pandemic.
    In addition to the Bureau's education tools, we continue to 
monitor the market for law violations. We also continue to 
process comments on our NPRM on time-barred debt as well as 
continue to work on our final rule on debt collection.

Q.9.e. Will the CFPB provide any guidance to debt collectors 
warning them about risks to consumers?

A.9.e. In accordance with the Administrative Procedure Act, the 
Bureau has carefully considered comments received on the May 
2019 proposed rule that would prescribe rules under Regulation 
F to govern the activities of debt collectors, as that term is 
defined under the FDCPA and expects to issue a final rule in 
October 2020. The Bureau intends to continue its debt 
collection work through enforcement, supervision, and 
rulemaking. In addition, the Bureau's supervisory findings in 
examinations of larger participants in the consumer debt 
collection market are regularly reported to the public through 
Supervisory Highlights.

Q.10. Has the CFPB reassessed the proposed debt collection rule 
in light of consumer complaints since March 1?

A.10. The Bureau's proposed debt collection rule focuses on 
debt collection communications and disclosures, as well as 
addressing related practices by debt collectors. The Bureau 
closely follows issues raised in consumer complaints that 
relate to topics covered by the proposed debt collection rule. 
As noted above, the complaints to the Bureau concerning debt 
collection during the pandemic raise issues that are consistent 
with issues raised in prepandemic complaints, and the Bureau 
reviewed prepandemic complaints closely for information 
relevant to the rulemaking. As such, no reassessment in light 
of the pandemic complaints was necessary. The Bureau will 
continue to consider feedback and other information in 
reviewing the proposed rules as it moves forward toward final 
rules.

Q.10.a. Has the CFPB received complaints about collection 
activities involving various forms of electronic 
communications? If so, what actions is the CFPB taking in 
response to these complaints?

A.10.a. The Bureau's complaint submission process is designed 
to centralize the collection of, monitoring of, and response to 
complaints about consumer financial products and services.\4\ 
When submitting complaints to the Bureau, consumers identify 
the issue-and when applicable, the sub-issue--that best 
describes the problem they experienced and provide their 
description of what happened.
---------------------------------------------------------------------------
    \4\ 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).
---------------------------------------------------------------------------
    The Bureau takes several actions in response to complaints. 
The Bureau routes complaints directly to financial companies 
and works to get consumers a timely response. The Bureau also 
analyzes and shares complaint data. These analyses support the 
Bureau's work to supervise companies, enforce Federal consumer 
financial laws, propose rules, spot and assess emerging issues, 
and develop tools that help empower consumers to make informed 
financial decisions.

Q.10.b. Has the CFPB received complaints about debt collector 
communications with employers? If so, what actions is the CFPB 
taking in response to these complaints?

A.10.b. From March 1, 2020, through August 31, 2020, consumers 
submitted approximately 200 debt collection complaints to the 
Bureau in which they identified debt collectors contacting 
their employers as the sub-issue that best describes their 
problem with debt collectors. The Bureau takes the same actions 
described in 10(a) in response to these complaints.

Q.10.c. Has the CFPB received complaints about the collection 
of time-barred debt? If so, what actions is the CFPB taking in 
response to these complaints?

A.10.c. From March 1, 2020, through August 31, 2020, consumers 
submitted approximately 900 debt collection complaints to the 
Bureau in which they identified debt collectors threatening to 
sue them for very old debt as the sub-issue that best describes 
their problem with debt collectors. The Bureau takes the same 
actions described in the response to question 10(a) in response 
to these complaints.

Q.10.d. Has the CFPB received complaints about wage or bank 
garnishment involving time-barred debt? If so, what actions is 
the CFPB taking in response to these complaints?

A.10.d. A keyword search of the database for terms related to 
wage garnishment (e.g., garnishment) returns approximately 100 
keyword matches for debt collection complaints where consumers 
described garnishment for very old debts for data from March 1, 
2020, through August 31, 2020. The Bureau takes the same 
actions described in the response to question 10(a) in response 
to these complaints.
COVID-19 response
Q.11. What research has the CFPB undertaken on the 
repercussions of COVID-19 on the consumer financial markets or 
on consumers?

A.11. On May 1, 2020, the Bureau published a report on the 
effects of the pandemic on credit applications, examining how 
the pandemic shaped the demand for credit in the early weeks of 
the crisis.\5\ The Bureau also released a report on August 31, 
2020, on the pandemic's early effects on consumer credit. Both 
reports rely heavily on the Consumer Credit Panel.\6\ As 
economic conditions evolve, we anticipate issuing additional 
research reports that track the impact of the pandemic on 
consumers and consumer financial markets using the Consumer 
Credit Panel. Also, the Bureau is fielding two waves of the 
Making Ends Meet survey during the pandemic, one wave in May, 
and the other wave this fall. This survey is linked to the 
Consumer Credit Panel and will provide additional insights into 
how the pandemic is affecting consumers.
---------------------------------------------------------------------------
    \5\ https://www.consumerfinance.gov/data-research/research-reports/
covid-19-early effects-credit-applications/.
    \6\ https://www.consumerfinance.gov/data-research/research-reports/
special-issue-brief-early effects-covid-19-pandemic-on-consumer-
credit/.

---------------------------------------------------------------------------
Q.11.a. Why has this not been a bigger priority at the CFPB?

A.11.a. This has been a Bureau priority, as illustrated by the 
research described above. The Bureau welcomes feedback on the 
research agenda described above, as well as suggestions for 
other research.
Q.11.b. How is the CFPB using the Consumer Credit Panel in 
making policy decisions during COVID, if at all?

A.11.b. The Consumer Credit Panel has been a resource the 
Bureau has relied upon for several years in its policy 
decisions, including during the pandemic. With the Consumer 
Credit Panel, we are able to monitor consumer credit markets 
with short lags, as well as to keep abreast of the status of 
the financial health of consumers. Findings from the data 
inform many of the decisions the Bureau takes.

Q.12. I wrote to you in May seeking additional information on 
the Borrower Protection Program (BPP) that CFPB and the Federal 
Housing Finance Agency (FHFA) announced in April. 
Unfortunately, several of my questions were not fully answered 
in your response. Please respond to the following questions.

Q.12.a. Has the CFPB requested or will the CFPB request 
information on race, ethnicity, and other protected classes 
under the Equal Credit Opportunity Act from FHFA under the BPP 
to
facilitate oversight of fair lending requirements in mortgage 
servicing? If not, why not?

A.12.a. Based on my understanding of the data that the FHFA 
possesses, the Bureau has not requested borrower-level 
information, including with respect to race, ethnicity, and 
other protected classes.

Q.12.b. Has the CFPB requested or will the CFPB request 
information on servicemember status from FHFA under the BPP to
facilitate compliance with the Servicemembers Civil Relief Act? 
If not, why not?

A.12.b. The Bureau did not request and does not plan to request 
such information. The Bureau does not have oversight or 
enforcement responsibilities as to the Servicemembers Civil 
Relief Act.

Q.12.c. Has the CFPB begun any prioritized assessments based on 
the information received under the BPP? If not, why not?

A.12.c. Supervision's efforts conducting Prioritized 
Assessments and the Bureau's receipt and evaluation of 
information under the BPP are both ongoing. The results of this 
analysis and the monitoring of any trends will help the Bureau 
determine whether any follow-up work at particular institutions 
is warranted. Such follow-up work could be under the 
Prioritized Assessment framework or could involve more in-depth 
supervisory work.

Q.12.d. Is the CFPB using FHFA data for any purpose other than 
determining whether to conduct prioritized assessments? If not, 
why not?

A.12.d. This servicer-specific forbearance data supplements 
other sources so the Bureau can better monitor how servicers 
are handling these forbearances, informing ongoing risk-
assessments that might inform future examinations and other 
supervisory work, as well as our market monitoring activities. 
In addition, through the Bureau's Government Portal, FHFA can 
securely view near real-time information about consumer 
complaints in a user-friendly format that allows simple 
identification of complaints referred to the Bureau or another 
Federal regulator or agency and other archived complaints.

Q.13. The HUD and Federal Housing Finance Agency Inspectors 
General found that many mortgage servicer websites had 
incomplete, inconsistent, and incorrect forbearance 
information. Has the Bureau taken any steps to penalize 
servicers that are not in compliance with the CARES Act 
forbearance requirements?

A.13. Supervision is engaging in work to assess the information 
servicers are providing to borrowers about forbearances during 
this crucial time period consistent with their responsibilities 
under the law. We do not comment on Enforcement investigations, 
and we have not announced any public actions to date on this 
topic.

Q.14. On April 1, 2020, the Bureau issued guidance regarding 
furnishers' responsibilities under the CARES Act.\7\ That 
guidance announced that ``in response to staffing and resource 
constraints on lenders and credit bureaus due to the 
pandemic,'' the Bureau ``does not intend to cite in an 
examination or bring an enforcement action against firms who 
exceed the deadlines to investigate such disputes as long as 
they make good faith efforts during the pandemic to do so as 
quickly as possible.''
---------------------------------------------------------------------------
    \7\ https://www.consumerfinance.gov/about-us/newsroom/cfpb-issues-
credit-reporting-guidance-during-covid-19-pandemic/.

Q.14.a. What evidence did the Bureau have that lenders and 
credit bureaus were suffering from ``staffing and resource 
---------------------------------------------------------------------------
constraints?''

A.14.a. The Bureau has indicated that it will consider the 
unique challenges that furnishers and consumer reporting 
agencies (CRAs) face due to the COVID-19 pandemic and that 
these challenges may depend on a company's size, 
sophistication, and the type of business in which it engages. 
As the Bureau noted, furnishers include a wide variety of 
businesses that vary in size and sophistication and can range 
from small retailers to very large financial services firms. 
The Bureau, through its market monitoring function, is in 
frequent contact with lenders and creditors to better 
understand the impact of the pandemic and other market 
influences on consumers.

Q.14.b. Please identify each lender, credit bureau, or trade 
association that submitted information that lenders and credit 
bureaus were suffering from ``staffing and resource 
constraints.''

A.14.b. The Bureau has been engaged with financial institutions 
and trade associations from almost every market as well as 
consumer advocates and other stakeholders most of whom have 
identified staffing, operational, and resource constraints 
resulting from the pandemic. Letters written to the Bureau by 
the National Association of federally Insured Credit Unions and 
the Credit Union National Association are on their websites. 
The topic has also been discussed in our advisory board and 
council meetings and other public events by affected entities.

Q.14.c. Has the Bureau determined that lenders and credit 
bureaus continue to have ``staffing and resource constraints'' 
that justify the relief the Bureau provided to lenders and 
credit bureaus from responding to consumers disputes with the 
statutorily required time period?

A.14.c. We are continuously monitoring the situation through 
our supervisory, stakeholder engagement, and market monitoring 
functions.

Q.14.d. What guidance, if any, has the CFPB provided to 
furnishers and credit reporting companies about what 
constitutes a ``good faith effort''?

A.14.d. The Bureau has stated that furnishers and CRAs remain 
responsible for conducting reasonable investigations of 
consumer disputes in a timely fashion and that it will evaluate 
individually the efforts and circumstances of each furnisher 
and CRA in determining if it made good faith efforts to 
investigate disputes as quickly as possible. The Bureau has 
indicated that it will consider the unique challenges that 
furnishers and CRAs face due to the COVID-19 pandemic and that 
these challenges may depend on a company's size, 
sophistication, and the type of business in which it engages. 
As the Bureau noted, furnishers include a wide variety of 
businesses that vary in size and sophistication and can range 
from small retailers to very large financial services firms.

Q.14.e. Since April 1, for each month, how many consumer 
complaints has the Bureau received that lenders and credit 
bureaus have not timely responded to credit reporting disputes?

A.14.e. From April 1, 2020, to August 31, 2020, consumers have 
submitted 5,900 credit reporting complaints about 
investigations that took more than 30 days. See below for a 
breakdown by month.



    On March 26, 2020, the Bureau announced that it was 
postponing some data collections ``to allow companies to focus 
on responding to consumers in need and making changes to its 
supervisory activities to account for operational challenges at 
regulated entities.'' This includes: ``Quarterly information 
reporting by certain mortgage lenders as required under the 
Home Mortgage Disclosure Act (HMDA) and Regulation C''; 
``Reporting of certain information related to credit card and 
prepaid accounts under the Truth in Lending Act, Regulation Z, 
and Regulation E''; ``A survey of financial institutions on the 
cost of compliance in connection with pending rulemaking on 
Section 1071 of the Dodd-Frank Act''; and ``A survey of firms 
providing Property Assessed Clean Energy financing to consumers 
for the purposes of implementing Section 307 of the Economic 
Growth, Regulatory Relief, and Consumer Protection Act.''

Q.15.a. For each data collection that was suspended, what 
evidence supports the Bureau's contention that postponing data 
collection was necessary?

A.15.a. The Bureau received comments from a number of trade 
associations that the COVID-19 pandemic was impacting their 
member organizations' ability to function. Standard operating 
procedures such as call-centers and other centralized staffing 
were severely impacted, when companies moved staffs to remote 
working conditions. This was not an option for all companies 
and all markets.
    The Bureau provided needed flexibility to enable financial 
companies to work with customers in need as they respond to the 
COVID-19 pandemic. As part of this effort, the Bureau postponed 
data collections from industry on certain Bureau-related rules 
to allow companies to focus on responding to consumers in need 
and made changes to its supervisory activities to account for 
operational challenges at regulated entities. Some of the data 
collections discussed above (HMDA quarterly reporting, TILA 
reporting) were not suspended, since they are required by 
statute/rule, and instead the Bureau provided supervisory/
enforcement flexibility. These flexibilities are temporary and 
targeted to support consumers by allowing financial companies 
to focus their resources on assisting consumers.
    The Bureau has resumed certain data collections, including 
the survey of financial institutions on the cost of compliance 
in connection with pending rulemaking on Section 1071 of the 
Dodd-Frank Act. Additionally, the Bureau has taken initial 
steps to field the survey of firms providing Property Assessed 
Clean Energy financing to consumers for the purposes of 
implementing Section 307 of the Economic Growth, Regulatory 
Relief, and Consumer Protection Act.

Q.15.b. Please identify each entity that requested such 
postponement.

A.15.b. Letters written to the Bureau by the National 
Association of federally Insured Credit Unions and the Credit 
Union National Association are on their websites. The topic has 
also been discussed in our advisory board and council meetings 
and other public events by affected entities.

Q.15.c. What evidence supports the Bureau's contention that 
postponing data collection would allow companies to focus on 
responding to consumers and making changes to supervisory 
activities?

A.15.c. The Bureau received anecdotal comments from industry 
indicating that postponing data collection requirements would 
allow entities to focus limited resources on serving their 
customers. Examples cited were Home Mortgage Disclosure Act 
(HMDA) and Regulation C requirements that can be resource 
intensive for those entities required to satisfy the data 
reporting requirements of HMDA. In response to this feedback, 
the Bureau announced that it will not expect quarterly HMDA 
reporting in order to provide supervised financial institutions 
with flexibility, reduce administrative burden, and allow each 
institution to focus its time and attention on serving its 
customers.
    Some entities stated that due to business conditions 
brought by the pandemic, there was not enough time to timely 
resolve error disputes (Reg E) and requested an extension to 
three or four billing cycles to resolve error disputes and 
inquiries. Another concern of both trade associations and 
individual card issuers was the ability of companies to issue 
timely resolution to billing disputes. They identified the 
challenge of accurate billing during the pandemic. Due to 
limited staff, lenders may need more than the Reg Z required 
10-day acknowledgment. Industry requested the Bureau provide a 
safe harbor for good faith efforts to comply.

Q.16.a. The Equal Credit Opportunity Act applies to lending to 
small businesses and the Bureau has supervisory and enforcement 
authority under the ECOA.
    How many examinations has the Bureau conducted to date with 
respect to whether lenders complied with the ECOA in 
implementing the PPP?

A.16.a. Information regarding specifics about the number of 
institutions the Bureau is assessing or plans to assess is 
confidential supervisory information (CSI), and the Bureau 
cannot comment on such CSI. I can say that the Bureau is 
committed to using its supervisory authorities and resources to 
fulfill its mission on a risk-prioritized basis. The Bureau's 
supervision program reviewed and analyzed current pandemic-
related market developments to determine where COVID-19-related 
issues are most likely to pose a risk to consumers. As a result 
of that review, the Bureau launched a new supervisory effort, 
called Prioritized Assessments, to focus on where it believes 
the risks are highest to consumers who have lost jobs or income 
and have trouble making loan payments that are due. The Bureau 
is also prioritizing markets where Congress provided special 
provisions to help consumers or small businesses in the CARES 
Act. Accordingly, the Bureau is deploying some of its 
resources--on a risk-assessed basis--to Prioritized Assessments 
of institutions participating in the PPP in order to evaluate 
fair lending compliance risks.

Q.16.b. Will you commit to making this a priority for 
examinations for the remainder of this year?

A.16.b. The Bureau is committed to using our supervisory 
authority to prevent violations of Federal consumer financial 
law and consumer harm, including in the context of small 
business lending. Please see the response to Q.16.a.

Q.17. As Senator Menendez made clear, there are indications 
that there are racial disparities emerging in access to 
mortgage forbearances. Please explain what actions the CFPB is 
taking to determine if there are differences in access to 
forbearance or post-forbearance outcomes by race, gender, 
national origin.

A.17. During the pandemic, the Bureau continues to be committed 
to enforcing fair lending laws in all markets under our 
jurisdiction. We are monitoring the marketplace in real-time 
and coordinating on an ongoing basis with Federal and state 
agencies and regulators. Specifically, regarding fair lending, 
the Bureau continues to enforce the Equal Credit Opportunity 
Act (ECOA). In doing so, we are monitoring the market for 
potential illegal activity in high-risk areas, including 
discrimination in the provision of forbearance, mortgage 
modifications or other accommodations. Currently, the Bureau is 
conducting Prioritized Assessments, which focus in part on 
mortgage servicing. Implemented in response to COVID-19 
pandemic, Prioritized Assessments are specifically designed to 
obtain real-time information from entities that operate in 
markets posing elevated risk of consumer harm due to pandemic-
related issues.

Q.18.a. The CFPB has promised mortgage servicers that it will 
not enforce the loss mitigation rules provided they are making 
a good faith effort to assist borrowers during the pandemic.
    What guidance, if any, has the CFPB provided to mortgage 
servicers about what constitutes a ``good faith effort''?

A.18.a. On April 3, 2020, the Bureau, along with the Board of 
Governors of the Federal Reserve System, the Federal Deposit 
Insurance Corporation, the National Credit Union 
Administration, the Office of the Comptroller of the Currency, 
and the Conference of State Banking Supervisors issued the 
Joint Statement on Supervisory and Enforcement Practices 
Regarding the Mortgage Servicing Rules in Response to the 
COVID-19 Emergency and the CARES Act (Joint Statement). The 
Joint Statement acknowledges that the COVID-19 emergency could 
pose temporary business disruptions and challenges for mortgage 
servicers, including staffing challenges and high call volumes, 
that could impede servicers' ability to assist consumers at 
this critical time. To provide flexibility during this time, 
the Joint Statement indicates that the agencies do not intend 
to take supervisory or enforcement action against servicers for 
delays in sending certain required notices or in taking certain 
required actions, provided that servicers are making good faith 
efforts to send these notices or take these actions within a 
reasonable time. The Bureau has not provided separate guidance 
to mortgage servicers about what constitutes a ``good faith 
effort.''
    The Bureau is conducting Prioritized Assessments including 
of mortgage servicers. Through Prioritized Assessments, the 
Bureau is expanding its supervisory oversight to cover a 
greater number of institutions than our typical examination 
schedule allows, gaining a greater understanding of industry 
responses to pandemic-related challenges, and helping ensure 
that entities are attentive to practices that may result in 
violations of Federal consumer financial law or consumer harm. 
To better understand these risks and better ensure institutions 
comply with their obligations, the Bureau sent Prioritized 
Assessments to a range of mortgage loan servicers. Each of the 
mortgage servicers that we selected for a Prioritized 
Assessment received targeted information requests covering 
information necessary to help us better understand how 
servicers are communicating repayment options to consumers, to 
analyze operational risk at servicers in executing on 
forbearance programs, and to review servicers' furnishing 
activities.
    Importantly, while we are willing to work with companies in 
a temporary and targeted manner to help them help their 
customers, we will not tolerate those who would exploit the 
current crisis at the expense of consumers. We are committed to 
vigorously enforcing consumer financial law in all markets 
under our jurisdiction and the pandemic does not change that.

Q.18.b. Can you identify any actions a servicer would take that 
would be inconsistent with the CFPB's interpretation of good 
faith efforts?

A.18.b. The Bureau does not anticipate issuing public guidance 
on the definition of ``good faith efforts,'' which is dependent 
on particular facts and circumstances. Supervision is currently 
conducting Prioritized Assessments and the Bureau's receipt and 
evaluation of information is ongoing now. The results of this 
analysis and the monitoring of any trends will help the Bureau 
determine whether any follow-up work at particular institutions 
is warranted.

Q.19.a. Senator Menendez asked you about your coronavirus 
webpage, and why it only offers a venue for housing 
discrimination complaints at HUD, but is silent on the ability 
of the CFPB to take fair lending complaints under ECOA.
    Do you believe the CFPB have the ability to take fair 
lending complaints under ECOA?

A.19.a. Yes, the Bureau is able to, and does, take fair lending 
complaints under ECOA. Consumers' complaints support the 
Bureau's work to supervise companies and enforce Federal 
consumer financial laws, including ECOA. The Bureau handles 
complaints about consumer financial products and services, 
including with respect to potential discrimination under ECOA. 
The Bureau has previously provided the public with information 
on warning signs for discrimination and encouraged consumers to 
submit a complaint to the Bureau if the consumer believes that 
a lender has discriminated against the consumer.\8\ When 
consumers submit complaints, the Bureau asks them to identify 
the consumer financial product or service with which they have 
a problem. Consumers describe what happened and are prompted to 
include dates, amounts, and actions they have taken or actions 
of the company about which they are submitting a complaint. 
Consumers can attach supporting documentation to their 
complaint, which often helps companies assess issues raised by 
consumers.
---------------------------------------------------------------------------
    \8\ https://www.consumerfinance.gov/fair-lending/.
---------------------------------------------------------------------------
    The Bureau also shares consumer complaint information with 
prudential regulators, the Federal Trade Commission, other 
Federal agencies, and state agencies to inform their work.

Q.19.b. Do you agree that ECOA covers mortgage servicers?

A.19.b. Yes, to the extent that they are ``creditors'' under 
ECOA and its implementing regulation, Regulation B. ECOA and 
Regulation B apply to all creditors and prohibit discrimination 
in any aspect of a credit transaction on the basis of race, 
color, religion, national origin, sex, marital status, age 
(provided the applicant has the capacity to contract), receipt 
of public assistance income, or exercise in good faith of any 
right under the Consumer Credit Protection Act. (12 CFR 
1002.2(z), 1002.4(a)). Credit transactions encompass ``every 
aspect of an applicant's dealings with a creditor regarding an 
application for credit or an existing extension of credit.''

Q.19.c. Will the CFPB take fair lending complaints?

A.19.c. Consumers can submit complaints about consumer 
financial products and services, including fair lending issues.

Q.19.d. Why is the CFPB's signature coronavirus response, the 
joint webpage with HUD and FHFA, silent on lending 
discrimination?

A.19.d. The Bureau continues to accept complaints from 
consumers involving fair lending issues. Information on how to 
file complaints with the Bureau, with direct links to our 
complaint intake system, is provided in the content on many of 
the Bureau's webpages, including our main webpage for consumer 
resources related to the coronavirus pandemic.\9\
---------------------------------------------------------------------------
    \9\ https://www.consumerfinance.gov/coronavirus/.
---------------------------------------------------------------------------
    We have also clarified on the interagency Mortgage and 
Housing Assistance portal that borrowers are protected by 
Federal law against lending discrimination.

Q.20. Do you think lending discrimination was a factor in PPP 
lending? Why or why not?

A.20. The Bureau takes seriously our responsibility for 
enforcement of the Equal Credit Opportunity Act and Regulation 
B, which includes fair lending in the small business lending 
market. Recognizing the risks of consumer harm during the 
pandemic, the Bureau is engaged in Prioritized Assessments 
across product lines and entities, including small business 
lending. It is notable that the Bureau also supported the Small 
Business Administration (SBA) and the Department of the 
Treasury (Treasury) in promoting awareness of the PPP and its 
benefits, particularly outreach to minority-owned small 
businesses and financial institutions. As part of that support, 
a senior executive with extensive knowledge of mission-focused 
small business lending and lenders was detailed to SBA soon 
after the launch of the program to help advise the agency on 
how to best use this channel to reach underserved small 
businesses. The advice provided helped inform Treasury and SBA 
on program enhancements they made which ultimately helped to 
lower the average PPP loan size and more actively engage 
Community Development Financial Institutions, Minority 
Depository Institutions and other mission lenders.

Q.21. What steps, if any, has the CFPB taken to mitigate the 
harm done to small business owners of color who were unable to 
access Paycheck Protection Program loans?

A.21. Please see the response to Q.21.b.

Q.21.a. Does the CFPB agree that it has jurisdiction over PPP 
lenders?

A.21.a. The Bureau is responsible for providing oversight and 
enforcement of certain Federal laws intended to ensure fair, 
equitable, and nondiscriminatory access to credit for both 
individuals and communities. These Federal laws include ECOA, 
which prohibits creditors from discriminating on a prohibited 
basis in any aspect of a credit transaction against any 
applicant. This statute is an enumerated consumer law over 
which the Bureau has supervisory, enforcement, and rulemaking 
authority. While the Bureau has authority to supervise large 
banks for compliance with ECOA, we do not have authority to 
assess compliance of smaller banks.
    Lenders that fit the definition of a creditor under ECOA, 
and its implementing regulation, Regulation B, must comply with 
the statute and the regulation, whether they provide consumer 
credit or business-purpose credit, including credit extended to 
small businesses. Accordingly, ECOA protects business owners, 
including applicants to the PPP, from discrimination on the 
basis of race, color, national origin, sex, and other protected 
characteristics.

Q.21.b. When did the CFPB first become aware of the racial 
disparities in PPP lending?

A.21.b. The Bureau takes seriously our responsibility for 
enforcement of the Equal Credit Opportunity Act and Regulation 
B, which includes fair lending in the small business lending 
market. Recognizing the risks of consumer harm during the 
pandemic, the Bureau is engaged in Prioritized Assessments 
across product lines and entities, including small business 
lending. It is notable that the Bureau also supported SBA and 
the Treasury in promoting awareness of the PPP and its 
benefits, particularly outreach to minority-owned small 
businesses and financial institutions. As part of that support, 
a senior executive with extensive knowledge of mission-focused 
small business lending and lenders was detailed to SBA soon 
after the launch of the program to help advise the agency on 
how to best use this channel to reach underserved small 
businesses. The advice provided helped inform Treasury and SBA 
on program enhancements they made which ultimately helped to 
lower the average PPP loan size and more actively engage 
Community Development Financial Institutions, Minority 
Depository Institutions and other mission lenders.

Q.21.c. What steps, if any, has the CFPB taken to address those 
racial disparities?

A.21.c. Please see the response to question Q.21.b.
Fair Lending
Q.22.a. During your testimony on July 29, 2020, you stated that 
there were ``challenges'' to brining fair lending actions.
    Aside from the whistleblower program, what is the CFPB 
doing to bring fair lending cases?

A.22.a. The Bureau uses a risk-based approach to prioritize 
fair lending enforcement activity. This approach helps ensure 
that the Bureau focuses on areas that present substantial risk 
of credit discrimination for consumers. The prioritization 
process incorporates a number of factors, including: emerging 
developments and trends, tips and leads from industry 
whistleblowers, advocacy groups, and Government agencies; 
supervisory and enforcement history; consumer complaints; and 
results from analysis of HMDA and other publicly available 
data. In recent years, one key area in which the Bureau is 
focusing its fair lending enforcement efforts has been 
addressing potential discrimination in mortgage lending, 
including the unlawful practice of redlining. In bringing 
enforcement actions, the Bureau engages in research, issues 
subpoenas, and holds investigational hearings. The Bureau has 
independent litigating authority and can file cases 
administratively or in Federal court alleging violations of 
fair lending laws under the Bureau's jurisdiction. Like other 
Federal bank regulators, the Bureau refers matters to the 
Department of Justice when it has reason to believe that a 
creditor has engaged in a pattern or practice of lending 
discrimination.

Q.22.b. What hurdles has the CFPB identified to bringing more 
fair lending cases?

A.22.b. Because credit discrimination is often hidden or even 
unintentional, it is difficult to identify. The Bureau's 
mission is to ensure all consumers have access to consumer 
financial products and services and that markets for consumer 
financial products and services are fair, transparent, and 
competitive. The Bureau will continue to fulfill that mission 
while exploring ways to increase access to credit for all. The 
Bureau is committed to fair lending and will continue to 
vigorously enforce fair lending laws within our
jurisdiction. To further strengthen our fair lending 
enforcement, the Bureau has asked Congress for the authority to 
compensate whistleblowers who can provide information allowing 
us to take swift action against companies for violating the 
law. While discriminatory policies can be challenging and time 
consuming to uncover in an examination or investigation, an 
employee with first-hand knowledge can be a key source of 
information to help the Bureau identify and address fair 
lending violations.

Q.22.c. Has the CFPB hired any additional attorneys or 
economists to conduct fair lending investigations?

A.22.c. As of August 2020, Enforcement has an allotted 
headcount of approximately 150 full-time employees including 
over 80 line attorneys to conduct its work, including fair 
lending investigations. In addition, Enforcement has economists 
and obtains outside experts as needed in its fair lending 
investigations. Enforcement attorneys are generalists who can 
participate in the investigation of any potential violation of 
Federal consumer financial law, including those focused on fair 
lending. The resources Enforcement deploys on any particular 
matter is dependent on a number of factors, including the facts 
and circumstances of that particular investigation.

Q.22.d. What does the CFPB believe accounts for the persistence 
of lending discrimination in the market and what steps is the 
CFPB taking to reduce its persistence?

A.22.d. I welcome discussion and evaluation of the possible 
cause or causes of the persistence of lending discrimination in 
the market. The Bureau will continue to enforce fair lending 
laws in our jurisdiction to prevent and deter such lending 
discrimination. The Bureau uses the tools Congress has 
provided--education, regulation, supervision, and enforcement--
to carry out its fair lending responsibilities.

Q.23.a. Director Kraninger, you referenced the CFPB blog on 
fair lending during the July 29, 2020, hearing. In that blog 
the CFPB identified consumer education and skills building 
tools as part of the CFPB's response to fair lending.
    Do you believe consumers have an obligation to protect 
themselves from discrimination in the market?

A.23.a. The Bureau plays an important role in informing 
consumers of their rights in the consumer financial 
marketplace. The purpose of ECOA and its implementing 
regulation, Regulation B, is to promote the availability of 
credit to all creditworthy applicants without regard to race, 
color, religion, national origin, sex, marital status, or age 
(provided the applicant has the capacity to contract); to the 
fact that all or part of the applicant's income derives from a 
public assistance program; or to the fact that the applicant 
has in good faith exercised any right under the Consumer Credit 
Protection Act. The regulation further prohibits creditor 
practices that discriminate on the basis of any of these 
factors. To further the intended purpose of ECOA and Regulation 
B, the Bureau continues to enforce fair lending laws within our 
jurisdiction. The Bureau uses the tools Congress provided--
education, regulation, supervision, and enforcement--to carry 
out its fair lending responsibilities.

Q.23.b. How do the CFPB's skill building tools address 
discrimination?

A.23.b. Specifically, the Bureau has several resources to 
educate and engage consumers on issues related specifically to 
lending discrimination. The Bureau's educational offerings are 
available online and in print. The Bureau has a webpage solely 
dedicated to fair lending that provides information on ECOA and 
how consumers are protected under the law.\10\ The website 
serves as a hub for information on the Bureau's fair lending 
efforts, providing access to recent blog posts, reports, press 
releases regarding fair lending public enforcement actions and 
other resources to help educate and empower consumers. The 
Bureau has also directly addressed fair lending concerns in 
three recent blog posts, pertaining to the importance of fair 
and equitable access to credit for minority and women-owned 
businesses,\11\ Bureau resources available in languages other 
than English,\12\ as well as Special Purpose Credit 
Programs,\13\ which are intended to meet the credit needs of 
underserved communities.
---------------------------------------------------------------------------
    \10\ https://www.consumerfinance.gov/fair-lending/.
    \11\ https://www.consumerfinance.gov/about-us/blog/fair-equitable-
access-credit-minority-
women-owned-businesses/.
    \12\  https://www.consumerfinance.gov/about-us/blog/cfpb-
multilingual-resources-webinar/.
    \13\ https://www.consumerfinance.gov/about-us/blog/expanding-
access-credit-underserved-communities/.
---------------------------------------------------------------------------
    The Bureau developed brochures on lending discrimination 
for consumers (in both English and Spanish)\14\ and for 
organizations that work with consumers (also in both English 
and Spanish).\15\ Because lending discrimination is frequently 
hidden, it can be difficult to identify. The brochures describe 
potential warning signs and offer specific tips on how 
consumers can help protect themselves from discrimination. Due 
to its popularity, the Bureau is currently translating the 
English and Spanish-language ECOA brochures into Chinese, 
Vietnamese, Tagalog, Korean, French Creole, Arabic, and 
Russian.
---------------------------------------------------------------------------
    \14\ https://files.consumerfinance.gov/f/documents/
201703_cfpb_handout_ECOA_
consumers.pdf and https:// files.consumerfinance.gov/f/documents/
201601_cfpb_handout_ ECOA_consumers-Spanish.pdf.
    \15\ https://files.consumerfinance.gov/f/documents/
201703_cfpb_handout_ECOA_
helping_consumers.pdf and  https://files.consumerfinance.gov/f/
documents/201601_cfpb _handout_ECOA_helping_consumers-Spanish.pdf.
---------------------------------------------------------------------------
    Further, HMDA data may be used to help identify potential 
fair lending risks. The Bureau hosted three (3) webinars on 
HMDA for community groups and consumer advocates. These skill-
building webinars provided background information on HMDA, 
including the types of mortgage transactions and the specific 
data points reported under the law, and a live step-by-step 
demonstration on how to use our HMDA Data Browser.
    The Bureau regularly engages in direct outreach with 
consumers and other stakeholders, including civil rights 
organizations, community groups, consumer advocates, industry, 
academia, and other Government agencies, to educate them about 
fair lending and access to credit issues.

Q.23.c. What is different about the CFPB's approach to consumer 
education from prior efforts at consumer education that have 
failed to eradicate lending discrimination?

A.23.c. The Bureau uses all the tools Congress provided--
education, regulation, supervision, and enforcement--to carry 
out its fair lending responsibilities. Financial education 
helps consumers make better informed financial decisions. To 
that end, the Bureau has published consumer-facing materials 
that educate consumers and practitioners on the warning signs 
of discrimination.\16\ The Bureau's approach to financial 
education is grounded in research on building blocks and 
drivers of financial well-being as well as the principles of 
effective financial education. Bureau research shows that 
financial skill, along with financial behavior are important 
factors in individual financial well-being. The Bureau's tools 
for consumers and financial educators are designed to help 
consumers understand how to find, process and use relevant 
financial information, and take actions to reach their 
financial goals. These resources include steps to take; and 
questions to ask to help empower consumers to navigate the 
financial marketplace, including information about lending 
discrimination and how to submit a complaint to the Bureau.
---------------------------------------------------------------------------
    \16\ See generally, https://www.consumerfinance.gov/fair-lending/.

Q.23.d. What measurable impact, if any, does the CFPB expect 
its consumer education to have on lending discrimination? How 
will the CFPB measure that impact to ensure it is wisely 
---------------------------------------------------------------------------
dedicating its resources to such efforts?

A.23.d. The Bureau uses all the tools Congress provided--
education, regulation, supervision, and enforcement--to carry 
out its fair lending responsibilities. Financial education 
helps consumers make better informed financial decisions. The 
Bureau's education tools are grounded in research about 
effective financial education. The Bureau hopes consumers will 
use its educational tools to help identify their own financial 
best interests and to help overcome opaqueness, discrimination, 
misrepresentations, or other obstacles to obtaining them. We 
monitor usage of the resources and work to ensure the 
information is available to consumers and organizations that 
work with consumers. For example, the Bureau's ECOA brochure is 
available in Spanish and English and is being translated in 
seven other languages, due to its high demand.
Student Lending
    During your March 10, 2020, testimony before the Senate 
Committee on Banking, Housing, and Urban Affairs, you described 
a ``pilot'' program with the Department of Education to conduct 
the Bureau's first examination of a servicer of federally held 
student loans in more than 2 years. The Department of Education 
(Department) also has described this joint examination as a 
``pilot'' program. During a staff briefing on July 24, 2020, 
Brian Schneider, the Bureau's Associate Director for the 
Division of Supervision, Enforcement, and Fair Lending, 
reiterated that the joint examination was just a ``pilot'' and 
that the Bureau and Department had not reestablished the 
Memorandum of Understanding necessary for the Bureau to examine 
servicers of federally held student loans (Supervisory MOU). 
Yet, during your testimony before the House Financial Services 
Committee on July 30, 2020, you stated that the Bureau is 
``unencumbered'' by the Department of Education in carrying out 
supervisory examinations of servicers of federally held student 
loans.

Q.24.a. Has the Bureau reestablished the Supervisory MOU with 
the Department?

A.24.a. The Bureau has not entered into a new Supervisory MOU 
with the Department of Education. Supervision is coordinating 
with the Department of Education on supervisory work at student 
loan servicers covering Federal loans. The Bureau generally 
considers the number of supervisory engagements in a particular 
product line confidential supervisory information and has only 
provided the total number of supervisory events in a given 
fiscal year rather than any subset associated with a particular 
product line or law (with the exception of fair lending).
    This quarter, our supervisory work includes Prioritized 
Assessments to obtain information from student loan servicers 
and other entities that operate in markets posing elevated risk 
of consumer harm due to pandemic-related issues.
    Through Prioritized Assessments, the Bureau is expanding 
its supervisory oversight to cover a greater number of 
institutions than our typical examination schedule allows, gain 
a greater understanding of industry responses to pandemic-
related challenges, and help ensure that entities are attentive 
to practices that may result in violations of Federal consumer 
financial law or consumer harm. To better understand these 
risks and better ensure institutions comply with their 
obligations, the Bureau sent Prioritized Assessments to a 
number of student loan servicers.
    Each of the student loan servicers that we selected for a 
Prioritized Assessment received targeted information requests 
covering information necessary to help us better understand how 
servicers are communicating repayment options to consumers, to 
analyze operational risk at servicers in executing on programs 
designed to help consumers manage financial difficulties, and 
to review student loan servicers' furnishing activities. We are 
coordinating with the Department of Education on this effort 
and look forward to evaluating the responses we receive related 
to both private and federally owned loans.

Q.24.b. As of July 30, 2020, was the Bureau under any 
restrictions from the Department in accessing borrower loan or 
other information necessary to conduct complete and 
comprehensive examinations of servicers of federally held 
student loans?

A.24.b. Please see the response to Q.24.a.

Q.24.c. Has the Department agreed to allow the Bureau access to 
all information required for the Bureau to conduct complete and 
comprehensive supervisory examinations of servicers of 
federally held student loans?

A.24.c. Please see the response to Q.24.a.

Q.24.d. If yes, please provide a copy of the MOU or any other 
document that memorializes the Department's agreement.

A.24.d. Please see the response to Q.24.a.

Q.24.e. Aside from the ``joint'' examination that the Bureau 
previously disclosed, is the Bureau currently examining any 
other servicers of federally held student loan?

A.24.e. Please see the response to Q.24.a.

Q.24.f. Does the Bureau have any other examinations of 
servicers of federally held student loans scheduled during 
2020?

A.24.f. Please see the response to Q.24.a.
Task Force/Advisory Committees
Q.25. During Director Cordray's tenure there was considerable 
controversy over the Bureau's advisory committees. Director 
Cordray chose to follow the Federal Advisory Committee Act even 
before Congress amended the Dodd-Frank Act to apply FACA to the 
Bureau. Yet when you created a Task Force on Consumer Financial 
Laws you made its members employees of the Bureau at 
considerable cost so that you could get around the Federal 
Advisory Committee Act. What are the reasons for your decision 
to establish the Taskforce outside of the requirements of FACA?

A.25. The Taskforce is an intragovernmental committee and not 
subject to the Federal Advisory Committee Act (FACA). It would 
not be appropriate for me to comment further as the Taskforce's 
creation is now the subject of active litigation.

Q.26. Please state how much the CFPB has compensated each 
Taskforce member for each month since January, as well as total 
expected compensation for their tenure as Taskforce members.

A.26. Four Taskforce members--Howard Beales, Thomas Durkin, 
William MacLeod, and Jean Noonan--are Bureau hires designated 
as Special Government Employees. These individuals serve in 
excepted service positions and are on intermittent work 
schedules. Their Special Government Employee(``SGE'') 
designations reflect the Bureau's determination at the time of 
their appointments that they would serve no more than 130 days 
during the ensuing 365 consecutive days. Their total 
compensation will depend on the number of hours they ultimately 
work and the amount of work required to complete the 
Taskforce's objectives. The compensation of these individuals 
is:
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

The remaining work (hours) and remaining compensation columns are based 
on their SGE designations noted above, assuming a standard 8-hour work 
day.

    The Bureau's Taskforce also includes Todd Zywicki. Mr. 
Zywicki was assigned to the Bureau under the Intergovernmental 
Personnel Act, and the Bureau will not provide any compensation 
to Mr. Zywicki. The Bureau will reimburse Mr. Zywicki's 
permanent employer George Mason University for Mr. Zywicki's 
labor at the Bureau. Mr. Zywicki will be on an intermittent 
schedule and is anticipated to work approximately 200 days at 8 
hours each day, for a total of 1,600 hours for the term of his 
agreement. This is approximately 75 percent of a full-time 
schedule of 2,080 working hours in a year.
    His hourly rate to be paid to the university is $141.84.
    
    
    [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
    
*The remaining work (hours) and remaining compensation columns address 
possible remaining hours given the work schedule limitations of Mr. 
Zywicki's term noted above.

Q.27. In my February 5, 2020, and March 4, 2020, letters to 
you, I raised concerns that you had only selected individuals 
for the Taskforce who represent payday lenders and other 
financial institutions or have pressed deregulatory viewpoints 
to the exclusion of consumer and civil rights advocates.

Q.27.a. Does the Bureau contend that the Taskforce has a 
``fairly balanced membership,'' as that term is used in 41 
C.F.R. Sec.  102-3.60(b)(3)--yes or no?

A.27.a. The Taskforce is composed of individuals of varying 
professional backgrounds and experiences, including past public 
service within the Federal Government advocating for fair, 
competitive, and transparent markets that work for all 
consumers. As noted in response to question 25, the Taskforce 
is not subject to FACA, including its requirement of a ``fairly 
balanced membership.'' It would not be appropriate for me to 
comment further as the Taskforce's creation is now the subject 
of active litigation.

Q.27.b. If yes, please explain.

A.27.b. Please see the response to Q.27.a.

Q.27.c. If no, please explain why the Bureau does not believe 
it needs to select a ``fairly balanced membership'' for the 
Taskforce.

A.27.c. Please see responses to Q.25.a. and Q.27.a.

Q.28. Howard Beales, one of the Taskforce members, has worked 
for a consulting firm hired by industry and provided services 
to a payday lender that the Bureau had sued for servicing and 
collecting on loans up to 448 percent Annual Percentage Rate 
(APR) that the Bureau alleged were void under state law. Mr. 
Beales argued that such loans were not ``predatory'' but 
instead were ``beneficial to consumers.''
    Do you agree with Mr. Beales that loans with a 448 percent 
APR are ``beneficial to consumers''?

A.28. As I have previously stated, I established the Taskforce 
to objectively and independently evaluate the current 
regulatory framework for Federal consumer financial law. Given 
the independent nature of the Taskforce, the views and opinions 
of the Taskforce members do not necessarily reflect those of 
the Bureau. However, it is a matter of public record that Dr. 
Beales' professional career demonstrates a commitment to 
protect and serve consumers which is consistent with the 
Bureau's mission. Notably, during his tenure as Director of the 
Bureau of Consumer Protection at the Federal Trade Commission 
(FTC), Dr. Beales was instrumental in establishing the national 
Do Not Call Registry, obtained the largest redress orders in 
FTC history, and attacked high-volume fraud. His Federal 
service, integrity, and dedication to improving the lives of 
consumers makes him a valued addition to the Taskforce.

Q.29.a. The CFPB advisory committees established during your 
tenure appear to be overwhelming White and male and not 
representative of the population of the United States.
    For each of the advisory committees (Taskforce on Federal 
Consumer Financial Law, the Consumer Advisory Board, the 
Academic Research Council, the Community Bank Advisory Council, 
and the Credit Union Advisory Council), please provide 
demographic information about committee members.

A.29.a. As noted in response to Q.25., the Taskforce is not an 
advisory committee. The Bureau strives to ensure the Consumer 
Advisory Board (CAB), the Community Bank Advisory Council 
(CBAC), the Credit Union Advisory Council (CUAC), and the 
Academic Research Council (ARC) reflect a balanced membership. 
Pursuant to the Federal Advisory Committee Act (FACA), the 
advisory committees must be fairly balanced in its membership 
in terms of the points of view represented and the functions to 
be performed. The advisory committee membership represents 
geographic and demographic diversity as well as broad socio-
economic member perspectives. On a yearly basis, the Federal 
Reserve Banks (FRB) provide CAB candidate referrals to the 
Bureau in order to meet Dodd Frank's requirements. Per the 
statute, not fewer than six members shall be appointed to the 
CAB upon the recommendation of the FRB Presidents on a rotating 
basis. Overall, 40 percent of the advisory committee membership 
is female, and the leadership of the committees also includes 
women and African Americans engaged in the consumer finance 
marketplace. Year after year, the Bureau strives to have a 
diverse advisory committee program. Our Office of Minority and 
Women Inclusion (OMWI) is a regular participant in internal 
deliberation meetings to identify highly qualified new advisory 
committee members and OMWI also assists with outreach 
initiatives to ensure the Bureau has a diverse candidate pool 
of applicants. Advisory committee membership composition 
changes annually, here is the current composition by cohort.*
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]


Q.29.b. Please identify the individual who selects members of 
the advisory committee.

A.29.b. Ultimately, I make these selections. Prior to opening 
the application window for the advisory committee vacancies, 
the Bureau engages with internal teams and offices across the 
Bureau for outreach purposes, including OMWI. Applicants for 
the vacancies on the advisory committee go through an extensive 
review process by Division leadership, a cross-Bureau selection 
committee and interviews, and are subject to a Personnel 
Security vetting process. The OMWI Director also served as a 
member of the cross-Bureau Selection Committee, which provides 
recommendations to me as the Director. The composition of the 
advisory committees is at my discretion as the Director, within 
the statutorily established parameters outlined in the response 
to Q.29.a.

Q.29.c. Please describe what efforts, if any, the CFPB has in 
place to ensure representation of racial and ethnic minorities 
on its advisory committees.

A.29.c. The Bureau strives to ensure membership of the advisory 
committees reflects balanced points of view, aligns with 
statutory membership requirements laid out in the Dodd-Frank 
Act, and represents geographic and demographic diversity as 
well as broad socio-economic perspectives. The Bureau's OMWI 
actively participates on the cross-Bureau Selection Committee, 
which is tasked with identifying highly qualified candidates 
for the Bureau's advisory committees for recommendation of 
appointment to the Director.
    Prior to the annual application window opening for 
vacancies on the advisory committees, a needs assessment is 
conducted to determine what gaps will exist at the end of the 
following term. This assessment takes into consideration 
statutory knowledge, gender, race/ethnicity, region and in the 
case of community banks and credit unions, asset size, to 
ensure there is a wide-range of experiences, views and 
expertise. This representation is based on the charter of the 
respective advisory committee, and the membership balance 
plans, and external outreach is conducted with the above in 
mind. In addition, the Bureau engages OMWI for outreach 
purposes.
Diversity and Inclusion/Hiring
Q.30. What steps are you taking to ensure a diverse and 
inclusive workforce?

A.30. The Bureau continues its commitment to ensure a diverse 
and inclusive workforce as part of the drive to achieve the 
Bureau's mission. Having a diverse and inclusive workforce 
helps to ensure that regulations and policies developed by the 
Bureau are of the highest quality and are relevant for all 
consumers. The Bureau's diversity and inclusion strategy is 
based on Section 342 of the Dodd-Frank Wall Street Reform and 
Consumer Protection Act, Executive Order No. 13583--
Establishing a Coordinated Governmentwide Initiative to Promote 
Diversity and Inclusion in the Federal Workforce, the updated 
Governmentwide Diversity and Inclusion Plan issued by the 
Office of Personnel Management (OPM) in 2016, and on existing 
regulations and guidance from the Equal Employment Opportunity 
Commission (EEOC).
Recruitment and Outreach
    The Bureau participates in diversity-focused recruitment 
and outreach activities. We include members of our Employee 
Resource Groups (ERGs) and our Diversity and Inclusion Council 
of Employees (DICE) on the teams of employees that represent 
the Bureau at recruitment and outreach events. Specifically, in 
2020, we are virtually participating in the Ascend National 
Convention and Career Fair, the largest gathering of Pan-Asian 
business leaders and professionals in North America, and the 
Prospanica National Conference and Career Expo, an association 
of Hispanic MBAs and business professionals. The Bureau has 
implemented a digitally focused recruitment strategy using the 
eQuest tool to access diverse websites and job boards. Access 
to these diversity sites will allow the Bureau to post 
positions specifically to diversity and inclusion networks, 
increase our visibility, and broaden talent pipelines.
Strategic Planning
    OMWI works with Bureau leaders to develop and implement a 
Diversity and Inclusion Strategic Plan for each Division that 
includes a focus on workforce diversity, workplace inclusion, 
and supplier diversity. The divisional plans ensure that a 
culture of diversity and inclusion is integrated into daily 
Bureau operations. Each Division, or large office, has a 
designated Diversity and Inclusion point of contact to lead the 
effort within their division. OMWI conducts meetings with each 
Division to review divisional data and explore demographic gaps 
when compared to relevant standards (Division, Bureau or 
governmentwide) and to analyze and evaluate employee experience 
on inclusion in the workplace. OMWI works with each Division to 
prioritize and explore strategies and recommendations to 
address the identified priority areas and monitors the 
implementation and results of the diversity and inclusion 
strategic plans.
Inclusion at the Bureau
    The Bureau continues to engage in a broad array of programs 
and initiatives to promote an inclusive work environment, 
foster equity, collaboration, innovation, and greater 
productivity. The Bureau recognizes heritage events and 
commemorative observances to raise cultural awareness and 
foster an environment of cultural intelligence. ERGs, Bureau 
recognized networks of employees with similar interests, 
backgrounds and experiences, and DICE are available to 
employees and play an active role in supporting the Bureau in 
hiring, retaining, and developing its diverse workforce.
    In March 2020, the Bureau created a professional-quality 
promotional video explaining what Equal Employment Opportunity 
(EEO) means at the Bureau. In the video, Bureau Senior and 
Executive leaders discuss and underscore the organization's 
commitment to a discrimination-, harassment-, and retaliation-
free work place. We state that all employees are, and will be, 
treated equally under the law and pledge to enforce civil 
rights protections for all employees and applicants. The video 
was shared with all Bureau employees via the Bureau's intranet, 
and in the weekly newsletter, to convey the Bureau's commitment 
to inclusivity.
Racial Equity
    Under my leadership along with the OMWI, the Bureau 
developed and implemented a forward-leaning action plan shortly 
after the death of George Floyd on May 25, 2020, to provide 
staff and management with tools and resources to assist them in 
dealing with the events that followed. The OMWI collaborated 
with its peers to plan and deliver a Federal multifinancial 
agencies OMWI webcast titled ``Beyond Words: Race, Work, and 
Allyship amid the George Floyd Tragedy'' on June 24. As a 
follow-up, I invited National Credit Union Administration 
Chairman Rodney Hood to speak to all Bureau employees in a 
virtual discussion on racial equity issues, which was held on 
July 10.
    OMWI created and provided racial equity learning resources 
to all Bureau employees that addressed specific racial issues 
such as bias and allyship, as well as management-focused 
guidelines and resources for addressing racial issues in the 
workplace. In addition, the Bureau launched a series of OMWI 
Dialogues centered around a variety of racial equity themes and 
topics open to all employees, and regularly posts quickly 
accessible learning resources on our intranet, that are also 
available to all employees.

Q.31. What is the racial and gender composition of the heads of 
Offices and Divisions now? How has that changed from when you 
were confirmed?

A.31. The racial and gender composition of heads of the 
Bureau's Offices and Divisions are 46.7 percent Women and 35.0 
percent Minorities (8.3 percent Asian, 21.7 percent Black and 
5.0 percent Hispanic). The diversity for the heads of Offices 
and Divisions has increased since I was confirmed.
    At the time of my confirmation on December 6, 2018 the 
Bureau's Offices and Divisions heads were comprised of 44.4 
percent Women and 28.6 percent Minorities (9.5 percent Asian, 
12.7 percent Black and 6.4 percent Hispanic). The overall 
percentage of minorities increased and specifically with the 
representation of Black employees as heads of divisions/
offices.

Q.32. What recruiting has the Bureau done for the new Associate 
Director of Research, Markets, and Regulations? What, if any 
steps, did the CFPB take to ensure a diverse pool from which to 
select the new Associate Director of RMR?

A.32. In addition to a public announcement posted on USAJobs 
from July 17, 2020-July 30, 2020, the Office of Human Capital 
worked with the Division of Research, Markets, and Regulations 
to create a recruitment flyer with a direct link to the job 
announcement and distributed it to diversity organizations and 
networks. We ran recruitment campaigns on LinkedIn, Indeed, 
Google, Bing, Yahoo, and several other digital media. We also 
reached out to many diversity organizations and networks 
including Hispanic Federation, African American Federal 
Executive Association, National Association of Asian American 
Professionals, National Society for Hispanic Professionals, 
Veterans One Stop, as well as LGBTQ and Disability 
organizations.
                                ------                                


RESPONSES TO WRITTEN QUESTIONS OF SENATOR TOOMEY FROM KATHLEEN 
                          L. KRANINGER

Q.1. Director Kraninger, I was pleased to see the Supreme Court 
hold in Seila Law v. CFPB that the CFPB's leadership by a 
single director, removable only for cause, is unconstitutional 
for violating the separation of powers. Besides the fact that 
the President can now remove the director for cause, what are 
the implications of this decision for the CFPB?

A.1. The Supreme Court made clear that the statutory 
restriction on the President's authority to remove the Director 
was unconstitutional, but that the Bureau's authorities 
otherwise remain intact. The Bureau continues to carry out its 
statutory mission.

Q.2. My understanding is that the CFPB held a symposium on July 
29th on the use of cost-benefit analysis at the CFPB. Will the 
CFPB now submit its regulations to OIRA for approval, which 
would include a cost-benefit analysis component?

A.2. On July 29, 2020, the Bureau held a symposium on cost-
benefit analysis in consumer financial protection regulation, 
including its use and agency incentives as well as 
methodological and subject matter considerations. The Bureau is 
committed to following the Consumer Financial Protection Act 
and all other applicable laws. Section 1022 of that Act 
requires that the Bureau, in prescribing a rule under the 
Federal consumer financial laws, consider, among other things, 
``the potential costs and benefits to consumers and covered 
persons . . . resulting from the rule.'' 12 U.S.C. Sec.  
5512(b)(2)(A)(i). The Bureau is currently in the process of 
assessing the consequences of the Supreme Court's decision in 
Seila Law on the Bureau's operations.

Q.3. Now that you serve at the pleasure of the President, 
shouldn't the agency that you direct follow his executive 
orders including 12866, which requires cost-benefit analysis in 
rulemaking, and 13771, which requires agencies to repeal two 
existing regulations for every new regulation? Will you provide 
us an update on where you are in the planning process for 
bringing the agency into compliance with all executive orders?

A.3. The Bureau is committed to following the Consumer 
Financial Protection Act and all other applicable laws. Section 
1022 of that Act requires that the Bureau, in prescribing a 
rule under the Federal consumer financial laws, consider, among 
other things, ``the potential costs and benefits to consumers 
and covered persons . . . resulting from the rule.'' 12 U.S.C. 
Sec.  5512(2)(A)(i). The Bureau is currently in the process of 
assessing the consequences of the Supreme Court's decision in 
Seila Law on the Bureau's operations.

Q.4. Does the CFPB intend to consult with DOJ and the White 
House Counsel's Office on important legal matters? For example, 
earlier this month, the CFPB ratified the large majority of its 
existing regulations and other regulatory actions that the CFPB 
took or finalized between January 2012 through the end of last 
month. This ratification was necessary because during that 
period, the CFPB operated under an unlawful structure.

Q.4.a. Did the CFPB consult with the DOJ or the White House 
Counsel's Office before ratifying all of these actions?

A.4.a. The Bureau collaborates with the Department of Justice, 
other Federal agencies, and the White House Counsel's Office on 
matters of mutual concern. It would not be appropriate to 
comment on any specific matter.

Q.4.b. The Supreme Court didn't opine about ratification of 
prior actions. Your agency issued a document that intended to 
ratify these actions, but it's far from clear to me that the 
director has the authority to do that. This could be unlawful 
because an action taken by an unconstitutional agency should be 
a nullity that cannot be fixed. There have to be a consequence 
for a bad act. What gives the you, as opposed to the President, 
the authority to ratify past actions?

A.4.b. I ratified the relevant regulatory actions after the 
Supreme Court made clear that I am fully accountable to the 
President. Under well-established case law, such a ratification 
resolves any constitutional defect in these prior regulatory 
actions. It is also worth emphasizing that consumers, the 
business community, State and local governments, and other 
individuals and entities all relied upon the validity of these 
actions in organizing their activities over a period of 8 
years. The ratification was important in order to avoid public 
uncertainty, which could have interfered with markets for 
consumer financial products and services.

Q.5. Now that you serve at the pleasure of the President as 
head of the CFPB, will you submit your budget to OMB for 
approval? Will you engage in the normal budgeting process for 
other departments and agencies?

A.5. The Bureau is committed to following the Consumer 
Financial Protection Act and all other applicable laws. We will 
appropriately evaluate any requests from the Office of 
Management and Budget.

Q.6.a. The President's budget request seeks to have the CFPB 
funded through the regular appropriations process.
    Do you support that request?

A.6.a. The Bureau is committed to following the Consumer 
Financial Protection Act and all other applicable laws in 
fulfilling its mission to protect American consumers. The 
Bureau will adhere to any legal changes regarding its funding 
provisions.

Q.6.b. The President could hypothetically order you to request 
zero dollars from the Federal Reserve for FY2021, which would 
offer Congress a choice: shut the agency down or fund it 
through appropriations. If the President made such an 
announcement, would you support him in that effort?

A.6.b. The Bureau is committed to following the Consumer 
Financial Protection Act and all other applicable laws. The 
Bureau will adhere to any legal changes regarding its funding 
provisions.

     I appreciate your leadership in directing the CFPB to 
release clarifying January 2020 guidance on the definition of 
``abusive'' under Section 1031. However, I would like further 
clarity on this issue. Earlier this year, I asked you in a 
question for the record if the CFPB intended for the guidance 
to be a standard for all new lawsuits filed after the 
guidance's issuance. In response you said that the ``Policy 
Statement describes certain aspects of how the Bureau intends 
to approach its use of the abusiveness standard in its 
supervision and enforcement matters going forward.'' You also 
explained that the CFPB does not foreclose a later rulemaking 
on abusive practices.

Q.7.a. Can you promise me now that the CFPB will follow its 
January 2020 guidance on abusive practices for the remainder of 
your time as CFPB Director?

A.7.a. I remain committed to the Policy Statement and it will 
continue to guide how the Bureau approaches its use of 
abusiveness in its supervision and enforcement matters going 
forward.

Q.7.b. Has the CFPB fully followed this guidance after its 
issuance?

A.7.b. Since the Bureau clarified certain aspects of how it 
intends to approach its use of the abusiveness standard, that 
policy has guided Bureau decisions about its use of abusiveness 
in its supervision and enforcement matters.

Q.8. I understand that CFPB may issue a rulemaking to implement 
Section 1071 of Dodd-Frank, which generally requires financial 
institutions to collect and compile demographic data and other 
information on small business lending. I'm very concerned about 
this requirement. The CFPB should be a consumer bureau, not a 
business bureau, and this requirement could prove to be 
unwieldy for small financial institutions. Can you provide a 
status update on where the CFPB is on this rulemaking?

A.8. As part of its rulemaking process, the Bureau is exploring 
potential ways to implement section 1071 in a balanced manner 
with a goal of obtaining and publishing small business lending 
data that achieves the statutory objectives without 
unnecessarily affecting the cost or availability of credit to 
small businesses and while minimizing burden and unintended 
consequences on financial institutions and small businesses.
    The next step in the Bureau's rulemaking process was the 
release of materials in advance of convening a panel under the 
Small Business Regulatory Enforcement Fairness Act (SBREFA), in 
conjunction with the Office of Management and Budget and the 
Small Business Administration's Chief Counsel for Advocacy. 
These materials 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. 
The information and feedback obtained during the SBREFA process 
will help inform the Bureau's policymaking leading to a notice 
of proposed rulemaking.
    As set forth in the settlement agreement entered in 
California Reinvestment Coalition v. Kraninger, the Bureau 
agreed to release an outline of proposals under consideration 
as part of the small business review process by September 15, 
2020, and met that deadline. The Bureau also agreed to convene 
a SBREFA panel no later than October 15, 2020 (or, if panel 
members are not available to convene, as soon as practicable 
thereafter). Pursuant to 5 U.S.C. Sec.  609, the SBREFA panel 
is required to complete its report within 60 days of the 
panel's convening.

Q.9. I have long advocated for the regulatory agencies to use 
guidance documents properly. As you know, I led the effort to 
invalidate the CFPB's Indirect Auto Lending Guidance using the 
Congressional Review Act, which was possible because the CFPB 
violated requirements under this Act when it issued its 
guidance. I believe that agencies should never sidestep the 
APA's notice and comment rulemaking process by issuing guidance 
that imposes legally binding requirements on the public. I am 
worried that your agency may have too many guidance documents 
from Director Cordray's tenure that are still in effect. When I 
asked you earlier this year in questions for the record on 
whether your agency was reviewing its guidance documents, you 
said that the CFPB was ``currently considering a number of 
issues related to its guidance documents.''

Q.9.a. Can you provide a status update on this issue?

A.9.a. I can provide two updates on the Bureau's efforts to 
ensure that guidance documents do not exceed their appropriate 
role under the Administrative Procedure Act. The first relates 
to compliance aids. The Bureau issues compliance aids that are 
intended to provide useful information to regulated entities, 
as they navigate complying with applicable rules and statutes. 
These can include resources like small entity compliance 
guides, summaries of regulation changes, flowcharts, and 
frequently asked questions. Earlier this year, I issued a 
Policy Statement on Compliance Aids. Among other points, the 
policy statement makes clear that the Bureau does not intend 
``to use Compliance Aids to make decisions that bind regulated 
entities,'' and that regulated entities ``are only required to 
comply with the underlying rules and statutes.'' 85 Fed. Reg. 
4579 (Jan. 27, 2020).
    In addition to compliance aids, another type of Bureau 
guidance is supervisory guidance, of which the Indirect Auto 
Lending Bulletin was an example. The Bureau announced in its 
Spring 2020 regulatory agenda that it is cooperating with other 
supervisory agencies to jointly propose a rule on the role of 
supervisory guidance. As the agenda noted, this includes 
providing additional clarity that supervisory guidance cannot 
``create binding legal obligations for the public.''

Q.9.b. Does the CFPB plan to rescind any Cordray-era guidance 
documents?

A.9.b. In addition to the Bureau's efforts, discussed above, to 
comprehensively address the role of these entire categories of 
guidance, I am certainly open to reconsidering specific 
guidance documents when concerns are raised about them.

Q.10. You have expressed interest in guidance for industries 
where the CFPB's position is unclear, particularly after a 
previous CFPB director's practice of guidance through 
enforcement. Could you give us a status update on the issuance 
of guidance for industries that have requested further 
clarification, particularly with tribal lending and other 
industries affected by dramatic swings in Bureau policies?

A.10. The Bureau believes that providing clear and useful 
guidance to regulated entities is an important aspect of 
facilitating markets that serve consumers. At our website we 
provide extensive regulatory guidance and compliance resources, 
as well as information and guidance about the supervisory 
process.\1\ In particular, in June 2020, I initiated a new 
advisory opinion program to address regulatory uncertainty in 
the Bureau's existing regulations, by allowing allow entities 
seeking to comply with regulatory requirements to submit a 
request where uncertainty exists.
---------------------------------------------------------------------------
    \1\ https://www.consumerfinance.gov/policy-compliance/guidance/.
---------------------------------------------------------------------------
                                ------                                


               RESPONSES TO WRITTEN QUESTIONS OF
          SENATOR MENENDEZ FROM KATHLEEN L. KRANINGER

Q.1. As more indebted consumers begin to face delinquency or 
default during the COVID-19 pandemic, it's only a matter of 
time before we see financially insecure Americans suffer abuse 
and harassment by some debt collectors.
    Director Kraninger, considering the rise in unemployment, 
financial insecurity, and debts, are you planning on releasing 
new guidance on what constitutes ``unfair and unconscionable,'' 
debt collection practices during the COVID-19 pandemic, 
including prohibiting debt collectors from starting new debt 
collection lawsuits or garnishing wages?

A.1. In accordance with the Administrative Procedure Act, the 
Bureau has carefully considered comments received on the May 
2019 proposed rule that would prescribe rules under Regulation 
F to govern the activities of debt collectors, as that term is 
defined under the FDCPA and expects to issue a final rule in 
October 2020. In December 2020, the Bureau also plans to issue 
a final rule on its supplemental proposal issued in February 
2020, which addressed time-barred debt disclosures, and any 
remaining proposed issues. The Bureau extended the deadline for 
comments on that proposal to August 4, 2020, in light of the 
COVID-19 pandemic.

Q.2. On March 10th, you informed this Committee that the CFPB 
and Department of Education would soon begin a ``joint'' 
examination of a Federal student loan servicer, finally 
restarting the CFPB's supervision over the largest student loan 
companies, after failing for more than 2 years to oversee the 
vast majority of the student loan serving market.
    Can you give us an update on how this has been handled? How 
many examinations have you conducted? How many are planned?

A.2. Supervision is coordinating with the Department of 
Education on supervisory work at student loan servicers 
covering Federal loans. The Bureau generally considers the 
number of supervisory engagements in a particular product line 
confidential supervisory information and has only provided the 
total number of supervisory events in a given fiscal year 
rather than any subset associated with a particular product 
line or law (with the exception of fair lending).

Q.3. In response to a Question for the Record by HELP Committee 
Ranking Member Murray, Secretary DeVos stated that ``In 
general, FSA considered this first joint exam to be a pilot; it 
therefore does not currently have any associated monitoring 
agreements'' with the CFPB. It appears that you have taken the 
position that ED should preapprove all CFPB oversight on a 
case-by-case basis.
    Given that there is no formal agreement between CFPB and ED 
to allow for ongoing, routine supervision, how does CFPB 
determine when and whether to examine a student loan servicer? 
In the absence of an agreement, how can CFPB exercise its duty 
under Dodd-Frank to respond to emerging risks and conduct 
independent risk-based examinations in the second-largest 
market for consumer credit?

A.3. The Bureau determines when and whether to examine a 
student loan servicer through its risk prioritization process 
and then consults with the Department of Education to determine 
the specifics of the coordination. Bureau examiners conduct our 
supervisory work under the supervision and direction of 
managers and executives of the Bureau consistent with the 
Bureau's risk prioritization process and our authorities.

Q.4. The CFPB recently released two proposed rules to redefine 
the definition of a ``Qualified Mortgage'' (QM) and to 
temporarily extend the sunset date for the GSE Patch. The 
Bureau is proposing to extend the Patch until the effective 
date for the new QM definition which would be ``six months 
after publication in the Federal Register.''

Q.4.a. Did the CFPB consider a longer timeline for 
implementation?

A.4.a. In its NPRM, the Bureau proposed to set an effective 
date for the Patch to expire 6 months after the final General 
QM amendments are published in the Federal Register. However, 
in the proposal, the Bureau requested comment on an appropriate 
implementation period for changes to the General QM definition 
and will appropriately consider those comments in determining 
the implementation period for any final rule.

Q.4.b. Is a 6-month timeframe enough time for stakeholders to 
analyze and implement the new standards?

A.4.b. In the proposal, the Bureau requested comment on an 
appropriate implementation period for changes to the General QM 
definition and will appropriately consider those comments in 
determining the implementation period for any final rule.
                                ------                                


RESPONSES TO WRITTEN QUESTIONS OF SENATOR WARREN FROM KATHLEEN 
                          L. KRANINGER

Actions of the Bureau during the COVID-19 Pandemic
Q.1. In April, the CFPB jointly issued guidance with the other 
banking regulators that said that they will not take 
supervisory or enforcement action against mortgage servicers 
for delaying early intervention and loss mitigation notices or 
``good faith efforts'' to establish live contact with 
delinquent borrowers.

Q.1.a. Please describe how the Bureau evaluates whether or not 
an effort to establish contact was made in ``good faith.''

A.1.a. The Bureau's evaluation of ``good faith'' is dependent 
on the particular facts and circumstances before it. 
Supervision is currently conducting Prioritized Assessments and 
the Bureau's receipt and evaluation of information is ongoing 
now. The results of this analysis and the monitoring of any 
trends will help the Bureau determine whether any follow-up 
work at particular institutions is warranted.

Q.1.b. Will the Bureau take enforcement actions when a servicer 
does not make any type of effort to contact a borrower?

A.1.b. While the Bureau is mindful of challenges faced by 
institutions, we will not hesitate to take public enforcement 
action when appropriate against companies or individuals that 
engage in unfair, deceptive, or abusive acts or practices, 
discriminate, or otherwise violate Federal consumer financial 
protection laws.

Q.2. On April 1, 2020, the CFPB announced that it will not cite 
in an examination or bring an enforcement action against 
lenders or credit bureaus who exceed under the Fair Credit 
Reporting Act to investigate disputes alleging incorrect credit 
reporting. In June, the Bureau also released a set of FAQs for 
furnishers and credit reporting agencies that specified that 
the guidance does not ``give furnishers or consumer reporting 
agencies an unlimited time beyond the statutory deadlines to 
investigate disputes before the Bureau would take supervisory 
or enforcement action.''

Q.2.a. How much time is the CFPB giving furnishers and lenders 
to investigate disputes beyond statutory deadlines?

A.2.a. Supervision is conducting Prioritized Assessments 
designed to obtain real-time information from entities that 
operate in markets that pose elevated risks of consumer harm 
due to pandemic-related issues. This includes risks related to 
violations of Federal consumer financial law, including the 
Fair Credit Reporting Act. If Supervision or Enforcement finds 
that a furnisher has not responded within statutory timeframes, 
we would then make a fact-based determination as to whether the 
furnisher is making good faith efforts to investigate disputes 
as quickly as possible. Supervision's Prioritized Assessment 
work is still in progress.

Q.2.b. Does that amount of time differ for different furnishers 
and lenders? If so, please describe how the Bureau determines 
the appropriate extent to which these lenders cam violate the 
law, including all factors it evaluates in each individual 
circumstance.

A.2.b. Supervision continues to conduct Prioritized 
Assessments. As noted above, if Supervision or Enforcement 
finds that a furnisher hasn't responded within statutory 
timeframes, we would then make a facts-based determination as 
to whether the furnisher is making good faith efforts to 
investigate disputes as quickly as possible.
Rulemaking
Q.3. Last month, the Bureau released its final version of the 
Payday, Vehicle Title, and Certain High-Cost Installment Loans 
rulemaking (Payday Rule), which rescinded the mandatory 
underwriting provisions in the 2017 final rule.
    The final rule states ``the Bureau believes that some 
borrowers taking out payday loans may experience additional 
defaults under this final rule than they would under the 2017 
Final Rule.'' Does the Bureau believe there will be more 
defaults than if the mandatory underwriting provisions were in 
place? If so, by how much?

A.3. As stated in the text of the 2020 Final Rule, ``the Bureau 
does not know the prevalence of the possible increased defaults 
nor can it provide an estimate of the total potential cost per 
default to consumers.'' See 85 FR 44382 at 44439.

Q.4. The final rule states ``to the extent eliminating the 
Mandatory Underwriting Provisions will increase the number of 
payday and vehicle title loans and length of loan sequences 
relative to the 2017 Final Rule, doing so likely will increase 
the frequency of delinquencies and lead consumers to incur 
costs associated with those delinquencies.''

Q.4.a. Did the Bureau provide an estimate as to the frequency 
of delinquencies and the costs customers incurred?

A.4.a. The Bureau did not provide an estimate as to the 
frequency of delinquencies and the costs consumers incurred.

Q.4.b. If not, describe the efforts the Bureau took in its 
attempt to develop such an estimate.

A.4.b. As the Bureau explained in its cost-benefit analysis 
with the final rule, the Bureau lacks representative data that 
could be used to analyze all effects of the final rule. Absent 
these data, portions of the analysis rely, at least in part, on 
qualitative evidence provided to the Bureau in previous 
comments, responses to RFIs, and academic papers; general 
economic principles; and the Bureau's experience and expertise 
in consumer financial markets. As such, many of the benefits, 
costs, and impacts of the final rule are presented in general 
terms or ranges (as they were in the section 1022(b)(2) 
analysis of the 2017 Final Rule), rather than as point 
estimates. Defaults are one of the effects of the rule the 
Bureau lacked data to even attempt to estimate.

Q.5. A memo written by a staff economist at the Bureau detailed 
an unprecedented political interference in the rulemaking 
process, including the manipulation of the agency's own 
research by political appointees.

Q.5.a. When were you first made aware of this memo?

Q.5.a. I am familiar with the memo but am not sure precisely 
when I became aware of it. It was published by the New York 
Times on April 29, 2020.

Q.5.b. When this memo was brought to your attention, what 
actions did you take in response to it?

A.5.b. At the end of April, we were finishing up the final 
rule, which we released on July 7, 2020. Unfortunately the 
reporting in the New York Times story did not represent the 
robust process the Bureau engaged in to develop the 2019 NPRM 
much less the Bureau's process to consider public comments and 
finalize the rule.

Q.5.c. Public reporting suggested that the Bureau was 
originally planning on releasing the final rule the week of 
April 29th. Was the memo a factor in delaying the release 
nearly 3 months?

A.5.c. The memo was not a factor in the timing of the release. 
Between the end of April and the release of the final payday 
rule on July 7th, the Bureau was engaged in several actions 
related to pandemic relief as well as a number of other 
regulatory and enforcement actions.

Q.5.d. Were any changes made to the text of the final rule 
during the time period between the memo being brought to your 
attention and the release of the rule in July? If so, please 
identify and describe in detail each of those changes.

A.5.d. It is not appropriate to discuss predecisional changes 
to and internal deliberations concerning rulemakings. But I 
would note that the published final rule references events that 
took place after April 29, 2020, including (1) the issuance on 
May 20, 2020, of the second interagency statement on small-
dollar lending by the OCC, FDIC, NCUA and the Board and (2) the 
Bureau's May 22, 2020, issuance of a No-Action Letter and 
template facilitating small-dollar lending by depository 
institutions to the Bank Policy Institute, as well as the 
Bureau's determination to deny a pending petition for 
additional rulemaking on small-dollar lending.

Q.6. Which political appointees assisted with developing this 
proposal? For each individual, please include exactly what part 
of the proposal they worked on, including their specific input 
in the process.

A.6. Many individual staff members from a range of disciplines, 
including career staff and political appointees, work on each 
of our rulemakings. The contribution and engagement of 
individuals varies depending on their role and function in the 
Bureau. Engagement by individuals with competing perspectives 
and insights--regardless of their status as career staff or 
political appointee--is critical to ensuring a thorough and 
informed discussion. As Director, I welcome this engagement, 
because rigorous policy evaluation and development generate 
better decisions and outcomes. Ultimately, of course, the final 
decision rests with me as the Director.

Q.7. In response to Section 1073 of the Dodd-Frank Act, the 
CFPB developed a final rule on remittance transfers (Remittance 
Rule) to require that consumers who send money abroad are 
presented with the costs, including the fees and exchange rates 
used. However, banks and remittance providers have still been 
able to evade full transparency by indicating that consumers 
will pay low fees, but can then drastically raise the exchange 
rate based on the initial estimate.
    Do you believe that the current regulations in place are 
sufficient to provide consumers with the transparency regarding 
the total cost of sending money?

A.7. In its report assessing the Remittance Rule, published in 
October 2018, the Bureau reviewed the available evidence for 
the Remittance Rule's effectiveness in meeting the purposes and 
objectives of title X of the Dodd-Frank Act (including that 
consumers are provided with timely and understandable 
information to make responsible decisions about financial 
transactions) and the specific goals stated by the Bureau.\1\ 
The assessment concluded that the information consumers 
received about the price of a remittance transfer before the 
Rule became effective varied from provider to provider. Because 
consumers generally now receive the disclosures required by the 
Rule, in at least some cases consumers are now receiving more 
information than they did before the Rule took effect. In a 
survey of remittance transfer consumers by a consumer advocacy 
group cited in the assessment report, 59 percent recalled that 
the Rule-required disclosures included information about fees 
and 63 percent recalled that the disclosures included an 
exchange rate. The Bureau notes that there are significant 
challenges in accurately determining what consumers do with 
these disclosures and that some of the available evidence is 
conflicting.
---------------------------------------------------------------------------
    \1\ The assessment report is available at: https://
files.consumerfinance.gov/f/documents/bcfp_remittance-rule-
assessment_report_corrected_2019-03.pdf.

Q.8. Has the Bureau considered, in recent or past 
deliberations, adopting the simple ``total cost'' (upfront fees 
+ exchange rate markup) model included in the new EU 
transparency rules and supported by international organizations 
---------------------------------------------------------------------------
like the World Bank and others?

A.8. Section 1073 of the Dodd-Frank Act creates a new section 
919 of EFTA and requires remittance transfer providers to 
provide specific pieces of information about a remittance 
transfer to consumers. That information includes the amount of 
currency that will be received by the designated recipient of a 
remittance transfer, using the value of the currency into which 
the funds will be exchanged; the amount of fees charged for the 
remittance transfer; and the exchange rate to be used for the 
transfer. The disclosures the Bureau adopted in the Remittance 
Rule generally reflect what the statutory framework set forth. 
The Bureau encourages entities seeking to improve consumer 
disclosures to use the Bureau's Trial Disclosure Program Policy 
(TDP Policy), through which entities may conduct in-market 
testing of alternative disclosures for a limited time upon 
permission by the Bureau.\2\ Section 1032(e) of the Dodd-Frank 
Act gives the Bureau the authority to provide certain legal 
protections for entities to conduct trial disclosure programs, 
as outlined in the TDP Policy.
---------------------------------------------------------------------------
    \2\ https://www.consumerfinance.gov/about-us/newsroom/bureau-
issues-policies-facilitate-compliance-promote-innovation/.
---------------------------------------------------------------------------
Operations
Q.9. 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.9.
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Q.10. Does the CFPB have plans to hire additional political 
appointees? If so, please provide position descriptions and 
salary ranges for their jobs.

A.10. The Bureau does not currently have any pending requests 
with OPM for additional political appointees.

Q.11. 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 2019, CFPB's ranking dropped 20 
points, from 79.9 to 58.4, putting it in the lower quartile of 
all Midsize Agencies.

Q.11.a. 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 
2017Q1 to present.

A.11.a.
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Q.11.b. What is CFPB's plan to improve morale among staff?

A.11.b. 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 decisionmaking. Further, I am 
committed to leading a diverse, productive, effective 
workforce.
    I engage regularly with employees through Bureau-wide all-
hands sessions; regular meetings with Division and Office 
teams; visits to Bureau regional staff (albeit virtually now); 
and weekly ``office hours'' to provide updates on Bureau 
priorities, recognize individual and team efforts and 
achievements, and continue to gather staff feedback. This 
effort has been well-received by employees, as indicated 
through direct communication they make with me and through 
leadership. The Annual Employee Survey (AES) is also an 
important source of that feedback that I carefully review and 
consider.
    The Bureau's overall engagement composite score from the 
2019 AES increased by 6.7 points over 2018. This increase led 
the Partnership for Public Service to designate the Bureau as 
the most improved agency among mid-sized agencies for 2019. 
This progress is noteworthy, but fostering an engaged workforce 
is an ongoing responsibility.
    Below are several steps I am taking to build and maintain 
an engaged workforce:

   LI instituted several initiatives to ensure the 
        health, safety, and well-being of the Bureau's staff 
        during the COVID-19 pandemic, which included:

   LDirecting that all examination activity of Bureau-
        supervised institutions be conducted offsite, from 
        examiners' home duty stations, through January 2, 2021.

   LManaging the agency's operating status and posture 
        starting with mandatory telework through the current 
        maximum telework position, which includes providing 
        appropriate safety conditions to support voluntary 
        return to the office for those who seek that option. 
        This position is in place through January 2, 2021.

   LInstituting additional workplace flexibilities that 
        will continue through January 2, 2021, which include:

     LAuthorizing employees to use administrative leave 
        if they are unable to perform work at home or at their 
        home duty station and (1) School or daycare closures 
        result in a lapse in childcare, which requires one to 
        provide care or (2) Other reasons one identifies as 
        related to COVID-19 such as providing care for another 
        family member in order to prevent exposure/spread of 
        COVID-19, taking any required sanitation measures, etc.

     LProviding up to 2 weeks (80 hours) of emergency 
        paid sick leave in accordance with the Emergency Paid 
        Sick Leave Act.

   LProviding Bureau employees with updates on 
        prevention measures, workplace flexibilities, telework 
        options and best practices, and notifying staff of the 
        floor and wing location of affected staff through a 
        variety of communication channels.

     LCreating several ways to hear from our employees 
        through NTEU engagements, a COVID-19 Bureau advisory 
        group, a Pandemic Inquiries Inbox, leadership 
        involvement, and through our Employee Resources Groups. 
        Additionally, we have maintained a frequent cadence of 
        communicating with FIRREA and other Federal agencies 
        for situational awareness and alignment, where 
        possible.

   LThe regional offices (New York, Chicago, San 
        Francisco, and Atlanta) will soon open to their staff 
        who desire to work in the office--mirroring the 
        policies, procedures, and posture at headquarters.

   LShortly after I became Director, I established a 
        Workforce Effectiveness Committee (WEC) to ensure that 
        the Bureau takes a holistic, consistent approach to 
        considering workforce-related issues. Since then, I 
        have charged the WEC to focus on engagement as its 
        highest priority. Issues and programs that the WEC has 
        advised on include: the use of Employee Resources 
        Groups and the Bureau's Mentoring for Success Program; 
        review and consultation on the Bureau's Barrier 
        Analysis results and compensation review; and the 
        implementation of IdeaBox for capturing staff ideas and 
        providing feedback.

   LI created a Customer Experience Office to focus 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.

   LI 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.

   LI presented the Director's Mission Achievement 
        Award to recognize staff leadership and team 
        contributions toward the Bureau's mission. The award is 
        the Bureau'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 Bureau management.

   LI approved a succession planning process that will 
        aid Bureau leaders to: optimize our current workforce; 
        invest in workforce development to meet long-term 
        needs; build a healthy management pipeline; and attract 
        and retain a diverse and inclusive workforce responsive 
        to the needs of our varied stakeholders.

   LI approved the launch of Mentoring for Success, a 
        three-part program that includes: 1) leadership speaker 
        series; 2) small group discussions, and 3) mentor/
        protege pairs. The program is open to all Bureau 
        employees.

   LThe Bureau completed the consolidation of all 
        Washington, DC-based staff from two office buildings 
        into one to increase the effectiveness of the 
        organization and to significantly improve collaboration 
        across all teams and divisions.

   LI have directed our Office of Human Capital and 
        Office of Equal Opportunity and Fairness to develop new 
        and better tools to assist managers in exercising their 
        workforce responsibilities. Recent examples include:

     LAn Organization Improvement Action Guide which 
        offers practical tips and tools for gathering, 
        assessing, and responding to employee feedback, 
        including linkages to AES categories and items and an 
        action planning template and sample.

     LA three-part series for managers on how to manage 
        employees remotely as the Bureau contends with COVID-
        19, including how to promote self-care for themselves 
        and employees, and tips on how to effectively work 
        virtually.
                                ------                                


               RESPONSES TO WRITTEN QUESTIONS OF
        SENATOR CORTEZ MASTO FROM KATHLEEN L. KRANINGER

Q.1. How many forensic accountants and other professionals who 
can trace illegally gotten gains does the Bureau have on staff? 
Do you have enough staff with the experience and ability to 
track financial transactions during investigations?

A.1. Enforcement has two forensic accountants and six financial 
investigators, all of whom have the experience and ability to 
track financial transactions including tracing illegally gotten 
gains.

Q.2. Does the Consumer Bureau have the ability to work with 
other agencies like the FBI, IRS, and others to find hidden 
accounts that may hold ill-gotten funds? If so, how are those 
collaborations working? Does the Bureau refer cases or work 
collaboratively on cases?

A.2. Enforcement effectively collaborates with numerous other 
Federal agencies, including the Federal Bureau of Investigation 
and has not encountered any issues with those relationships.

Q.3. Last month, the Consumer Bureau settled with three 
companies \1\ involved in contract for deed contracts.
---------------------------------------------------------------------------
    \1\ https://files.consumerfinance.gov/f/documents/cfpb_harbour-
portfolio-advisors-et-al_con-
sent-order_2020-06.pdf.

Q.3.a. Why did the Bureau only fine the three companies 
---------------------------------------------------------------------------
$45,000?

A.3.a. The Bureau imposed a $25,000 civil money penalty against 
Harbour Portfolio Advisors, LLC and a $10,000 penalty against 
National Asset Advisors, LLC and National Asset Mortgage, LLC 
jointly, which will be paid to the Bureau and deposited into 
the Civil Penalty Fund created by the Dodd-Frank Act. The 
Consumer Financial Protection Act of 2010 provides a framework 
for determining the amount of civil money penalties. Under the 
Consumer Financial Protection Act of 2010, the Bureau must take 
into consideration a number of factors in determining the 
amount of civil money penalties, including the size of 
financial resources and good faith of the institution, along 
with the gravity of the violation, the severity of the risks to 
or losses of consumers, any history of previous violations, and 
other matters as justice requires. The Bureau took into account 
all of these factors in this matter.

Q.3.b. It has been 30 days since the consent order. Have the 
companies submitted and instituted the compliance plan as 
required in the consent order?

A.3.b. The Bureau monitors defendants' compliance with final 
orders by verifying information received from defendants and 
assessing whether they are adhering to applicable requirements. 
Details specific to a particular consent order are 
confidential.

              Additional Material Supplied for the Record
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