over leverage more than ten to one the consequences are catastrophic when to let regulator misses something like that the cattle consequences catastrophic when for example were leverage choice but to sell only one size fits all product also the plan put forward here that we're discussing would add an additional layer of bureaucracy on top of the current regulatory patchwork with broad undefined an arbitrary powers which more here in this committee today i'm afraid would impose new tax on consumer financial transactions increase the cost of borrowing create a new government bureaucracy and frankly what we should be doing is providing regulators with more investigative  of the banks big and small about how they weren't responsible for the current financial crisis and consumer protection should be left with the regular well the existing regulators have had fourteen years and what have they done in forty years to fix the problem sixty percent of the subprime borrowers would have qualified for mortgages but they didn't get them they talked about how the consumers must have choice and access innovative financial products products about how a consumer financial protection agency is somehow going to shut down access to credit for consumers drive the price of credit sky high about how they were would be subject to fifty different standards these arguments are scare tactics intended to delay action until the economy starts to recover as it inevitably will and the political will for the choice of innovation argument only works when parties tell me that a kindergarten teacher buying a firefighter who has been offered a teaser rate to transfer a large balance from one credit card to another is on an even playing field with a phalanx of lawyers deployed by city or b of a or wells who write thirty pages of legally so small that even reading glasses aren't enough to reveal the real term a consumer financial protection agency will not limit creative or innovative products it will however limit the ability to run roughshod over the consumers terms will have to be clear and fully disclosed and the consumer may have to opt in and although opt in seems to be a dirty word to those in the financial industry it simply means  you for having this hearing our financial regulatory system is broken and our job is to clean it up make it more efficient and effective however as i expressed during yesterday's hearing i fear that we're moving in the wrong direction when we stripped from the banking regulators their mission to protect consumers our country got into this financial mess because there were simply too many regulators that weren't doing their job and we're not talking to one another so the logical answer to this problem of too many regulators not doing their job should be to consolidate and require more efficient frequent and effective regulators instead of thirty one twenty six in the administration's proposal  goes one hundred eighty degrees in the opposite direction by placing the responsibility to protect consumers with a new government bureaucracy and agency that i think should be called credit rationing and pricing agency and why do i say this because the new agency that tells consumers what they can and cannot do and businesses large and small what they can and cannot offer to consumers can only result in one or more of three things first many consumers that enjoy access to credit today will be desired credit in the future second riskier consumers will have access to affordable products or plain vanilla products but who will pay for that risk that's the less risky consumer who cost of credit will certainly increase and third financial institutions will be told to offer certain products at a low cost to risky consumers which will jeopardize the safety and soundness of the financial institution secretary g last week couldn't really answer the question with a safety and soundness banking regulator a new consumer regulator at the consumer consumer's regulator or a policy would put the bank in an  unsafe territory maybe some of our witnesses today can explain what would happen in that situation in addition maybe some of our witnesses today can better explain why we should keep with the prudential regulator but not consumer but not the consumer protection regulation i'm very skeptical that for consumers the answer is making the government bigger and eliminating federal preemption i think that we could very well be detrimental to consumers businesses and the u s economy at a time when we can least afford it we must first do no harm and we must find a balanced approach to financial regulation i think our republican plan that puts all of the banking regulators and consumer protection functions under one roof is a better answer for the consumer and really gets to the heart of preventing another financial meltdown that i would yield back the balance of my time th over the course of these last couple of hearings and listening to some of the opening statement is clear that we are witnessing a clash of principles and there is much at stake i think the question is in a free society how does the fairness and justice but in order to receive all of this somehow consumers are expected to yield their right to the state in order to protect most of us on this side of the something else  we believe the best form of consumer protection comes from competitive markets competitive market sleep police force and fraud it's not business we i simply cannot understand how you protect the consumer consumer rights i simply don't get it i don't understand how passing legislation offering on a credit card by stifling innovation or you somehow protect the consumer i don't i don't get it we look at the turmoil the economic turmoil that we find ourselves in massachusetts how the investment corporation boston i'm also the former chairman and currently a board member of the net horrible housing lenders you've got a cut copy of my written statement so i just want to summarize and make a few in literally hundreds of billions of dollars each year invested in low and moderate income community and annually funds this money into investments in low and moderate income communities financing affordable rental housing home purchases charter schools daycare facilities and small business in micro enterprise loans secondly we believe the regulator should revise the c r a regulations to update them update the rules to discourage banks participation  implement and set of eyes high impact community development activities that may fall outside of banks normal course of business for us the new consumer financial protection agency should have the authority needed to put an end to the problem of the dual mortgage market that's contributed to the mortgage meltdown if i could add a few general comments about c r a and what c r a the reason c r a has been such a tremendous success first of all i think it's important remember that the vast majority of lower income households are renters and c r a promotes lending and investing in rental housing and community development and not just in credit to consumers secondly c r a imposes an affirmative obligation on financial regulatory agencies so if we are going to revise the c r a statute we should do so very carefully so that we do no harm to a program that's been an enormous success and i'm prepared to take questions although i don't know whether i should know we  handling and members of the committee i'm a partner in the financial services practice in washington d c of office and morrison and forrester i previously spent twenty six years with the federal reserve system fifteen years as an associate general counsel of the board in washington i'm pleased to be here today to address the administration's financial regulatory reform proposals and in particular the consumer protection aspects of the proposal the current recession was sparked by problems and sub it all to a residential mortgages as a result investors lost confidence in subprime and all day mortgage backed securities the loss in confidence spread to other mortgage backed securities disrupting the flow of funds for mortgage credit and leading to a downward spiral in housing prices pan ly of new government programs and extraordinary action by federal regulators clearly these events warrant a rethinking of what has worked what does not work and why a financial regulation the administration has to propose to create a new standalone consumer financial protection agency to protect consumers of financial products and services although i strongly support the goal of consumer protection i believe that creating a separate standalone agency for this purpose ignores the increasingly vertically integrated nature of the market for consumer financial services a primary reason for regulating consumer financial services we believe these services are beneficial for consumers leading up to the current crisis excess demand for mortgage backed securities encouraged mortgage origination practices that later triggered the pranic in the secondary market the relationship between these steps in the mortgage lending process was interactive in neither is fully understood by looking at only one step in the process in order to foster an efficient market for home mortgages it is necessary to have an understanding of the entire market from the consumer borrower to the ultimate investor and the role of that market in the economy as a whole the oversight and regulation of each component of the market needs to take into consideration its effect on the other components bifurcating regulation of the market as a contemplated by creation of a dedicated consumer protection agency is likely to create conflicts between the agency and credential supervisors the expertise of each regulator will be less available to the other than under the current regulatory structure making each of their jobs more difficult rather than easier in leading to a less efficient rather than a more efficient market mortgages these considerations weigh strongly against creation of a separate agency the countervailing argument is of course the burnt system did not work in the more to prevent the mortgage crisis and the changes are needed the mortgage crisis has been a product of multiple failures at all levels both in the public and private sector the fact that regulators may have made errors suggests that we should step should be taken to prevent similar errors in the future however in my view it does not mean the architecture of the regulatory system is the problem there is a strong relationship between consumer issues prudential supervision and ultimately monetary policy in the end these interests are not in conflict rather they all seek the same goal a healthy economy and a high standard of living for all americans the goal of regulatory policy should be to ensure that preventable and consumer interests are harmonized rather than that they are in conflict the creation of a separate agency is a recipe for conflict rather than harmonization thank you for the opportunity to be here today to founding member of americans for financial reform our financial security dot org a coalition of civil society members across the spectrum supporting broad reform by written testimony goes into detail about a number of aspects of the obama plan including its new investor protections to provide for greater fiduciary responsibilities on broker dealers its limits on executive pay tying risk to longer term pay incentives rather than to the greedy short term incentives that have helped precipitate the crisis i also talk about the aspects of prudential regulation and the notion of a new systemic risk regulator we point out that if it is to be the fed the fed needs democratization and greater transparency but i want to spend the bulk of my time first of all i also want to mention that one area where we think the proposal is extremely deficient is in the area of credit rating agencies there needs to be much more regulation of credit rating agencies we also are disappointed that it doesn't include enough on solving the mortgage and homeowner and foreclosure crisis but i want to spend the bulk of my time talking about the centerpiece of the reform and that is the consumer financial protection agency we look at this as a game changer we look at this as a critically important new solution to a failed regulatory system the system failed because the regulators had conflicts of interest the regulators did not impose the civil penalties that they had available to them the regulators did not establish rules to protect consumers in the marketplace those rules could have helped prevent the mortgage crisis as everyone knows fourteen years after the congress gave the fed authority over the homeownership and equity protection act to create rules on predatory lending didn't do anything till after the crisis it passed complaints about credit cards reached a fever pitch while they slapped the overdraft loan problem and so congress had to step in and act and the leadership of congresswoman maloney and this committee the regulators finally created some rules on credit cards but the congress fortunately had already suggested the rules and then the congress went further and made the rules into a law the issue of overdraft fees banks are now making the bulk of their income on an unfair business model overdraft fees where the regulators have allowed them to trick consumers into u sing their debit cards even when they have no money in their accounts and the regulators have allowed the banks to change the order that deposited shacks and items are cleared so that the consumer will face more overdraft charges at the end of the day we have a number of other problems that we describe in our testimony in our written testimony both this month and last month where the regulators have simply failed to go after the banks so the idea of a new regulator that has only one job protecting consumers is one of the best ideas this congress has had it will not have conflicts of interest it will not have two jobs to do it focus on consumer protection but federal law as a floor of consumer protection and allow the states to go higher the states are nimble or often they respond more quickly and they provide good ideas to the congress in one testimony i outline how in the two thousand and three fact congress allowed the states to continue to investigate identity theft forty six states and the district of columbia came up with a security model that allows consumers to protect themselves having the ability to go further is the best way that we can protect consumers from new threats because the states can act more quickly and the idea that state attorneys general can enforce the law balkanization providing state attorneys general at the enforcement level the ability to enforce the law that is an area where you want competition you want many you don't want many rule writers you don't want many agencies where banks can choose to charter shop to avoid regulation but you do want to lot of cops on the beat and you do want to give consumers the right to enforce the laws we wish the bill went  protections are not in conflict across the country credit unions community banks and nonprofits are leaders in this area they're creating an alternative to payday loans offering free checking accounts and using nontraditional credit information to underwrite loans they products even when they had high incomes and good credit borrowers continue to face real barriers to accessing safe fair and affordable credit we need strong regulators that allow borrowers fair and equal access to the banking system throughout their life cycle thank you and i look forward to your questions the next mr brown thank you mr chairman ranking member hensarling we've been asked to comment on the full range of regulatory restructuring proposals in the administration's white paper so i will offer comments on four key components of the plan first we support the administration's fairly strong set of proposals on derivatives as an essential first step but i urge you to strengthen it further by driving as much as possible of the over the counter derivatives market onto regulated exchanges the president's plan should offer much more robust reforms of credit rating regulation than it currently does for example reduce reliance on ratings by clarifying that using a credit rating does not afford a safe harbor the investor whether it's a pension fund a bank or a money market fund must remain responsible for conducting their own evaluation to determine that the investment is appropriate second recommendation on credit rating agencies is to increase rating agency accountability by eliminating the exemption from liability provided to rating agencies in the securities act third recommendation for reform to the president's proposal on credit rating agencies is to strengthen oversight by providing either the or an oversight board modeled on the public company accounting oversight board the full complement of regulatory tools including and inspections standards setting and sanction authority the regulators however should not pass judgment on rating methodolog the third major component of the president's plan were comedy on is excellent proposals to strengthen protections for retail investors in particular to create a fiduciary duty to act in the best interest of clients for investment advisers by proposing an examination of reform of the compensation practices that encourage financial professionals to act in ways that do not benefit their clients we do have a recommendation here as well though we are concerned that the legislation is drafted at least the f c c with too much leeway to adopt a watered down to do sherry duty light that would deny vulnerable investors the protections they both need and deserve the f c c has created this problem that has to be fixed and so congress is going to have to step in to tell them how to do this because at least until now they haven't been willing to do so on their own finally we very strongly support the administration's proposal to create a federal consumer protection agency focused on credit banking and payment products because it targets the most significant underlying causes of the massive regulatory failures that have led to harm for millions of americans federal agencies did not make protecting consumers from lending abuses a priority as you heard repeatedly they appeared to compete against each other to keep standards low and reduce oversight of financial institutions they ignored many festering problems that grew worse over time if agencies did act to protect consumers and they often did and the process was cumbersome and time consuming as a result agencies did not act to stop some abusive lending practices until it was far too late and short regulators were not truly independent of the employments of the financial institutions they regulate it's particularly important that the proposal would ensure that consumer protection oversight is no longer subjugated to safety and soundness reg elation at regulatory agencies combining safety and soundness supervision with a focus on bank profitability in the same regulatory institutions consumer protection magnified an ideological predisposition or anti regulatory bias by federal officials that led to unwillingness to rein in abusive lending before it triggered the housing and economic crisis for example why curb abusive credit card or overdraft lending that may be harming millions of consumers if it's boosting the bottom lines of the banks you're regulating this is the inherent conflict that the objections i'm hearing from the banking industry did to this proposal don't really address their regulators often safety and soundness regulation as in conflict with consumer protection we now know that had took taken the side of consumers they would have better protected the financial institutions they were charged with and consumers as well finally let me just respond to some of the criticism we've heard by the financial industry they're  threatening broadscale harry and louise type ads against this proposal they've offered an elaborate defense of the status quo they're minimizing the harm that the current regulatory regime has caused americans to so distorting specifics of the proposal and making the usual threats that improving consumer protection will increase cost and impede access to credit let me just finish by saying we're in a credit crunch right now we're in an equal economic crisis right now the deregulat the committee on financial services john taylor president c e o of the national community reinvestment callers i'm here representing six hundred organizations from across the country and my remarks reflect the views of the current crisis demonstrates the need for comprehensive regulatory reform and the establishment of a federal agency focused on consumer protection if we had had adequate protection against predatory lending then we would have had the would not have had the current foreclosure crisis  supports empowering the c f o to administer and force all of the consumer protection to fail lending laws in particular we agree with the administration that the c f o must have jurisdiction over the community reinvestment act we urge the house financial services committee to re insert c r a on the c f in thirteen twenty six commonly the bank regulatory agencies charged with enforcing the c r a have shown a feeble interest in forcing this important legislation weaken them for products to people low and moderate income needs that's between one thousand nine hundred ninety four from two thousand and two to two thousand and seven a period of which we had the absolute worst lending where we really need these lenders in these communities offering safe and sound and quality products the group the c r a grades given by these regulators went down from eight percent to one percent near absence of public hearings on marriages we've had over the last eighteen years all of thirteen public hearings on marriages of every institution the opportunity for the public for members of congress for the press the other they have a conversation about what this merger means for underserved communities what what the deposit is and others who do business with these from low income communities of color i mean why is it that the basic banking of choice in minority in low income communities is payday lenders check cashers and pawn shop because all the regulators sat by and allowed all those banking institutions to close those branches one after one asked the one after the next and by the way don't know this we've gone from fifteen thousand financial institutions down to less than ten thousand in that same period of time the number of branches of actually gone up but not in low income a minority communities and they were charged with enforcing that twenty five percent greatest supposed to be the servicing what is the history of opening closing branches we have the biggest regulator has been the mislead that they hel even the feds consumer advisory council this congress passed a law that required them to have a consumer advisory council to advise the fed board governors i had the honor of serving on that council but it astounded me to watch all these bankers appointed to the consumer advisory council and then would be in these debate inside the federal reserve bank to give what it was supposed to be a consumer perspective hello and then by the way in case you don't know it the fed actually has a bank is council made up of all bank maybe one organization in this country comprised of two hundred national organizations we are also a part of americans for financial reform elsie's support a consumer financial protection agency because it is to protect the civil rights of the communities that represent our interest ties into what has always been one of the the civil rights movement home ownership which is how most people build wealth and improve communities l c c are in our member organizations have always worked to expand fair housing and also  credit that most people need to buy housing despite the progress since the fair housing act predatory lending has been the latest obstacle standing in the way and of course is very much the root of the crisis that we find ourselves in today for years l c c our and our allies argued that the modern lending system was working against us just to be clear responsible subprime lending is a good thing the problem is that the industry basically threw the responsible out of the window by giving countless numbers of people loans that weren't civil rights and consumer advocates have tried to get help from federal banking regulators but they ignored us and maintain the status quo seemingly they were more persuaded by the predatory loans but waited until a year ago to actually start doing so after most predatory lenders had already skipped town and left taxpayers holding the bag the o t s and o were no better even when it came to enforcing civil rights laws like the credit opportunity act during the housing bubble years neither regulator referred to the department of justice  which will be added to the record contains a lot of compelling harz stories about the lack of financial enforcement and we all know about the treasury inspector general's report on  which certainly shows what it was did or didn't do i'd say a problem with relying on federal bank regulators to protect our communities is simple its structure is inherently designed to fail consumers when regulators are financially dependent on the institutions that they police consumer interest will always be squeezed out c f p a break this pattern in the same way that our founders realized that sometimes you have to deliberately pit interest y all that's being asked here is that you take the laws that congress passed and make sure that there's an agency that protects consumers and enforces those laws tyler i don't understand that competition  aspects to way that the margins reset the way that they are disclosed to consumers and the calculation of what the consumers interest rate and monthly payment will be and how often that they can change and that really something that the current regulators have not had issued and i think some of the federal regulators somewhat late in the process about how to address all the other unconventional mortgage products that probably should have been done sooner rather than the time it was introduced  protection which i would agree that we need to enhance consumer protection but i don't think this agency is the best way to do that all right thank you very much madam chairwoman on all one thing we heard yesterday from the banks was a lot of finger pointing we didn't create these problems but we do know that the national banks regulated by the off to the controller the current issue a lot of all to do have very high default rates thank you very much mr d jurisdiction over advertisement marketing solicitation sale disclosure delivery or account maintenance or supervising depositing activities to create a loan acquisition broker servicing real estate appraisal title insurance credit insurance services and numerous other financial activity related services specifically identified by some rule that they would develop with my staff has not been able to ascertain yet because that remains unclear and so  focus a little bit better on precisely maybe a standard of care that should be offered by somebody in these positions of relationships with clients rather than kind of turning the entire business world upside down thank you for the most part the new agency doesn't get new authority new authority in one area but this is authority that exists under seventeen existing federal laws or is very similar to unfair and deceptive act authority the federal trade commission has or is regulate at the state level it's mostly consolidation it's a streamlining actually it's not a new layer of bureaucracy at all and it's a minimum standard you know the states where necessary and i think in many cases they won't find it necessary could exceed it if there's a local problem you don't anticipate any new rules being written i think  the idea is that first and foremost it'll do research it'll be it'll be focused solely on consumer protection and will should follow good knowledge of the marketplace that we've had that congresses and presidents of signed yes they'll be rule making as there is for other any of the agencies but this congress as well will have an impact on that if you perceive that they go too far not too far i mean that's that's the way the system works let me let me just say but i question it begs for an answer yes just to back to mr bloggers response you know why do we expect a new agency of bureaucrats to do the exact same job she said that seventeen agencies of bureaucrats have failed to do properly before you know what is it about i hope a brand a bureaucrat that we're going to have sure that i had a dress is going to get up every day and instead of looking for a job description they're going to actually do it question and i think the difference is you will actually have an agency whose primary important roles to play but clearly this has been the stepchild legislation that's why we had all this predatory and abusive lending and that's what this is aimed to stop and i just want to as well none of us opposed to competition and i think commercializing a little bit to let all the members of the committee know that this afternoon at two o'clock there's going to be another one of these hearings focused primarily on the consumer protection financial protection agency as it relates to taking powers away from the federal reserve and transferring them to a new agency and while i don't normally do this because i think this obviously will be part of the record in the subcommittee this afternoon i did want to offer for the record   more concisely than any place i've seen goes back and talks about the regulatory history in which we operate how we ended up with this race to the  consumer protection agency financial protection agency would probably address this in the best way if i can get unanimous consent to submit that for the record and encourage my colleagues to read it protection in the existing regulatory agency responsibility any responsibility and a lot of the responsibility and give it to this new  and maybe one of the areas we could discuss a little bit you could certainly going to freddie and fannie i think a little bit if you want to talk about where there are some potential issues there that the gentleman was just talking about but let me ask you this mr allen you know the fed has often been criticized for not acting or acting too slowly in missing or issuing implementing regulations for consumer protection on credit cards on mortgages etc etc you know and warren buffett once said that the troubles of more the mortgage market that you mentioned it's only when the tide goes out that you discover who is swimming naked and is it reasonable to think that a consumer financial protection agency is a really reasonable to think that they are going to be able to assess the future risk of consumer financial products any better than the federal reserve or any other president regulatory agency to have that focus i think surely the anticipation would be they should not do as good a job would not do as good through all these different agencies that they have to deal with as an example but it is extremely frustrating i think for a lot of these organizations because we hear about the frustrating flow of credit that has to go to small businesses for job creation which we don't see happening right now and this chart clearly thank the gentleman for yielding in one point when my colleague from north carolina was searching for an example i mean nobody has to look past the fact that hud had product approval consumer protection i have a question for the entire panel and like a simple yes or no only five minutes and i'd like to ask you would you support non bank financial institution being subject to the community rei yes yes yes yes yes yes most yes well thank you i just wanted to and i want to say to you my friend anna marie as you know we've been working for nearly a decade the basic federal consumer protections and disclosure for remittances consumers i think with the c s p a i think we have an opportunity to finally put those protections in place and  i just want to ask you do you support the idea of giving the c f p a jurisdiction over consumer protection aspects of the remittance industry well you know area and we're very interested in making sure someone will take a look at that so i think this would be a good place for that to happen because what we're going to do what i'm going to try to do with the help of others is see if we can't in the context of this bill put those protections in so that they're credit card bill right i look forward to working with you on other successful consumer advocacy issues i won't make it clear for the record you know that we're friends and we're allies that we work together you know disclosure is always the best policy so i want to ask you both both of your organizations that indicated on several occasions that anything short of a thirty six percent recap on all alone products would be ineffective and many times representatives from the c f a have touted president obama's support of a thirty six percent rate cap but unfortunately the language of the white house sent to congress explicitly prohibits the f b i from implementing those recaps without legislation requiring footsteps so contrary to all our hopes and expectations the administration essentially has handed the issue back to congress do you both agree with that basic statement to both yes that's that's correct and we all know that to get it has to come from congress but aside from the thirty six but aside from the thirty six percent cap for payday loans for military families which for the record started with my amendment in this very committee congress has not had an appetite for passing was a recap as an aside i met yesterday had an opportunity to meet with an australian senator who also serves as the assistant treasurer in the current government and we discussed payday lending there at length and he indicated to me that they've put caps a forty eight percent and the payday industry is somehow gotten around them  the get the red tape that rate caps alone have not adequately dealt with the payday industry in australia and so he says they just simply extend the terms of the loan but what they will be doing soon is experimenting with ability to pay standard in conjunction with a rate cap so i'd like to ask both of you do you think it's a good idea for the c f to look at and implement ability to industry thank you mr chairman that is at the essence of what this agency should be doing because you so you're so you're great yes i'm so i says only five minutes and i want to coordinate my work in two weeks during these five minutes right here so i want to add on a lot of different credit products and a lot of different a great on a lot of different credit that we should this ability to pay issue is really a big one so let's just assume for a second this fine com the house doesn't adopt the thirty six percent cap which they were not every will have the ability to do that and get members to do here what the senate has failed to do do you think in terms of payday lending i want to ask both of you would you support a ban on rollovers for payday lenders eliminate any rollovers this agency might be able to figure out a way even if it's not given the usury cap right unless congress adds it in to this agency might be able to figure out a solution to that but so what i was got was on them so i just wanted to because a thirty seconds five minutes goes when you try to help consumers five minutes less than five minutes and they go fast anyway so i got thirty seconds so i just want to say i would like you guys to please if you could put in writing yes or no maybe we should we should extend the payment that basically set up a system and a hud mission enforcement on this in which in which fannie and freddie went out and bought sub prime and a ll day long in order in order to meet that requirement now we all know that it was a weak regulator but i don't think that's the point i mean hud was a strong what regulator here regulator to allow them to do what the fed wanted them to do which was to deal leverage because at the time they said this risk to the entire financial system globally because of what's happening with the other and this is why all of our safety and soundness regulators every one of them have expressed concern over the idea put forward in this legislation action and this wasn't realized i think by the general public until after the mortgage meltdown task a separate agency with this mission then you've got to expect being decided by political interference in the market which is exactly what happened now mr arland we've got the commentary of sheila bair head of the again approach of this they've all expressed concern over this idea why do you think that well i think that as i said in my testimony the issues of safety and soundness and consumer protection are not separate environment were a very dangerous product for the safety and soundness of financial institutions and if you have an agency a consumer protection agency that creates a preference for a fixed thirty year mortgages you have a safety and soundness problem  if interest rates rise over time and institutions have to fund themselves at higher rates than they're earning on those mortgages now let me let me raise another concern i have here and that's with the legal liability exposure for businesses that really be on a massive scale right now we have of financial products to consumers it leaves open the potential for an increase in statutory damages for existing private rights of action that applies a duty of care for financial products is good for the buyer in other words it recommends the elimination of mandatory arbitrary provisions in consumer financial products and broker dealer investment contracts do you share any of my concerns with the amount of litigation that's going to come out of the the people who are most likely to benefit from arbitration mill this week where she alleged all kinds of violations of the existing consumer laws and that the company was essentially in bed with the banks and tricking consumers into signing for star against sub prime loans that are responsible for those kinds of loans can help individuals all in a home which i still believe is the greatest opportunity for  problem comes in is where the responsibility and we get into areas of predatory loans and i think for a long period of time many individuals on this side of the aisle at any different person we're talking about individuals who bought these homes to put in the great american dream of home ownership so they can raise their kids for a long period of time and to me what we're trying to do here is to say yes we have to have safety and soundness regulations but we also have to have some place to go where they may be some predatory lending going on consumer  it at the back at the expense of individuals and i think what the president's plan simply trying to do is say let's lay it out and what i would that i had hoped yesterday and what i made comment to those who testified yesterday is as opposed to people lining up dead set against something i think it helps them it would help their image if they came with some recommendations on how we can make sure consumers are also protected because one of the biggest problems in america right now is against them start allow congressional appropriations but say that the main business of the agency should be funded by industry assessments what they see happening is that those assessments which are now going to the other banking regulators would then be applied to this agency and so there would not be additional cost the consumer goods think there needs to be a mix of funding so that the agency is not reliant on any one source as stable and adequate everybody agrees with that yes i would say congressman we totally agree and for example just to be clear you know to us are virtually one hundred percent funded by industry assessments and that is part of the corruption and conflict of interest in the system because banks can charge shop move around but we think that this agency because you couldn't move around would not face that conflict of interest but diversifying the funding