U.S. GOVERNMENT PUBLISHING OFFICE

WASHINGTON : 

For sale by the Superintendent of Documents, U.S. Government Publishing Office

Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800

Fax: (202) 512–2104 Mail: Stop IDCC, Washington, DC 20402–0001

27–371 PDF 2018

THE 2016 SEMI-ANNUAL REPORTS 

OF THE BUREAU OF CONSUMER 

FINANCIAL PROTECTION 

HEARING 

BEFORE THE

COMMITTEE ON FINANCIAL SERVICES 

U.S. HOUSE OF REPRESENTATIVES 

ONE HUNDRED FIFTEENTH CONGRESS 

FIRST SESSION 

APRIL 5, 2017 

Printed for the use of the Committee on Financial Services 

Serial No. 115–15 

( 

(II) 

HOUSE COMMITTEE ON FINANCIAL SERVICES 

JEB HENSARLING, Texas, Chairman 

PATRICK T. MCHENRY, North Carolina, 

Vice Chairman 

PETER T. KING, New York 

EDWARD R. ROYCE, California 

FRANK D. LUCAS, Oklahoma 

STEVAN PEARCE, New Mexico 

BILL POSEY, Florida 

BLAINE LUETKEMEYER, Missouri 

BILL HUIZENGA, Michigan 

SEAN P. DUFFY, Wisconsin 

STEVE STIVERS, Ohio 

RANDY HULTGREN, Illinois 

DENNIS A. ROSS, Florida 

ROBERT PITTENGER, North Carolina 

ANN WAGNER, Missouri 

ANDY BARR, Kentucky 

KEITH J. ROTHFUS, Pennsylvania 

LUKE MESSER, Indiana 

SCOTT TIPTON, Colorado 

ROGER WILLIAMS, Texas 

BRUCE POLIQUIN, Maine 

MIA LOVE, Utah 

FRENCH HILL, Arkansas 

TOM EMMER, Minnesota 

LEE M. ZELDIN, New York 

DAVID A. TROTT, Michigan 

BARRY LOUDERMILK, Georgia 

ALEXANDER X. MOONEY, West Virginia 

THOMAS MacARTHUR, New Jersey 

WARREN DAVIDSON, Ohio 

TED BUDD, North Carolina 

DAVID KUSTOFF, Tennessee 

CLAUDIA TENNEY, New York 

TREY HOLLINGSWORTH, Indiana 

MAXINE WATERS, California, Ranking 

Member 

CAROLYN B. MALONEY, New York 

NYDIA M. VELA ́ ZQUEZ, New York 

BRAD SHERMAN, California 

GREGORY W. MEEKS, New York 

MICHAEL E. CAPUANO, Massachusetts 

WM. LACY CLAY, Missouri 

STEPHEN F. LYNCH, Massachusetts 

DAVID SCOTT, Georgia 

AL GREEN, Texas 

EMANUEL CLEAVER, Missouri 

GWEN MOORE, Wisconsin 

KEITH ELLISON, Minnesota 

ED PERLMUTTER, Colorado 

JAMES A. HIMES, Connecticut 

BILL FOSTER, Illinois 

DANIEL T. KILDEE, Michigan 

JOHN K. DELANEY, Maryland 

KYRSTEN SINEMA, Arizona 

JOYCE BEATTY, Ohio 

DENNY HECK, Washington 

JUAN VARGAS, California 

JOSH GOTTHEIMER, New Jersey 

VICENTE GONZALEZ, Texas 

CHARLIE CRIST, Florida 

RUBEN KIHUEN, Nevada 

KIRSTEN SUTTON MORK, Staff Director 

(III) 

C O N T E N T S 

Page 

Hearing held on: 

April 5, 2017 ..................................................................................................... 1 

Appendix: 

April 5, 2017 ..................................................................................................... 113 

WITNESSES 

WEDNESDAY, APRIL 5, 2017 

Cordray, Hon. Richard, Director, Consumer Financial Protection Bureau ........ 5 

APPENDIX 

Prepared statements: 

Cordray, Hon. Richard ..................................................................................... 114 

ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD

Hill, Hon. French: 

Slides ................................................................................................................. 125 

Huizenga, Hon. Bill: 

Settlement Agreement Between Consumer Financial Protection Bureau 

and National Treasury Employees Union ................................................... 126 

Hultgren, Hon. Randy: 

Notes from the Auto Finance Discrimination Working Group (‘‘AFDWG’’) 

Attended on behalf of Nonbank Supervision by Kali Bracey .................... 130 

Scott, Hon. David: 

Written statement of the Electronic Privacy Information Center ................ 133 

Letter from various undersigned organizations in support of the DoddFrank Act ....................................................................................................... 135 

Wagner, Hon. Ann: 

Slides ................................................................................................................. 138 

Williams, Hon. Roger: 

Slides ................................................................................................................. 143 

Cordray, Hon. Richard : 

Written responses to questions for the record submitted by Chairman 

Hensarling and Representatives Barr, Beatty, Crist, Hultgren, Luetkemeyer, Maloney, and Posey .......................................................................... 145 

(1) 

THE 2016 SEMI-ANNUAL REPORTS 

OF THE BUREAU OF CONSUMER 

FINANCIAL PROTECTION 

Wednesday, April 5, 2017 

U.S. HOUSE OF REPRESENTATIVES, 

COMMITTEE ON FINANCIAL SERVICES, 

Washington, D.C. 

The committee met, pursuant to notice, at 10:04 a.m., in room 

2128, Rayburn House Office Building, Hon. Jeb Hensarling [chairman of the committee] presiding. 

Members present: Representatives Hensarling, McHenry, Royce, 

Lucas, Pearce, Posey, Luetkemeyer, Huizenga, Duffy, Stivers, 

Hultgren, Ross, Pittenger, Wagner, Barr, Rothfus, Messer, Tipton, 

Williams, Poliquin, Love, Hill, Emmer, Zeldin, Trott, Loudermilk, 

Mooney, MacArthur, Davidson, Budd, Kustoff, Tenney, Hollingsworth; Waters, Maloney, Velazquez, Sherman, Meeks, Capuano, 

Clay, Lynch, Scott, Green, Cleaver, Ellison, Perlmutter, Himes, 

Foster, Kildee, Delaney, Heck, Vargas, Gottheimer, Crist, and 

Kihuen. 

Chairman HENSARLING. The Financial Services Committee will 

come to order. 

Without objection, the Chair is authorized to declare a recess of 

the committee at any time. 

Today’s hearing is entitled, ‘‘The 2016 Semi-Annual Reports of 

the Bureau of Consumer Financial Protection.’’ 

I now recognize myself for 5 minutes to give an opening statement. 

Today, we receive the testimony of Richard Cordray as he presents, again, the semi-annual report of the CFPB. 

Mr. Cordray, I know that you are here at our committee’s invitation for a statutory appearance, but I am otherwise surprised to see 

you here in that, as you well know, there have been many press 

reports saying that you would otherwise have returned to Ohio to 

pursue a gubernatorial bid. Perhaps the rumors of your political aspirations are greatly exaggerated. 

On the other hand, I am also surprised that you are here because, as you are well aware, the President, under the PHH case, 

can dismiss you at will. Under Dodd-Frank you can be removed for 

cause. 

Either way, I believe the President is clearly justified in dismissing you and I call upon the President, yet again, to do just that 

and to do it immediately. 

2 

There is no greater form of consumer protection than fostering 

competitive, innovative, and transparent markets, and then vigorously policing them for fraud, theft, and deception. In policing our 

markets, under Mr. Cordray’s leadership, the CFPB’s success 

record is anything but clear. 

What is clear, though, is that under Mr. Cordray’s leadership the 

CFPB has shown an utter disregard for protecting our markets and 

has made credit more expensive and less available in many instances. This is particularly true for low- and moderate-income 

Americans. 

What is also clear is that under Mr. Cordray’s leadership the 

CFPB has acted unlawfully, routinely denied market participants 

due process, and abused its powers. The CFPB has now finalized 

a rule that would reduce access to prepaid card products, harming 

nearly 70 million consumers who do not or cannot use traditional 

banking services. 

Thanks in part to CFPB’s oversight, credit card rates have risen 

significantly, with many would-be borrowers being priced out of the 

market entirely. Many credit-worthy borrowers could pay almost 

$600 more for their auto loans due to CFPB’s indirect auto lending 

guidance. According to researchers at the University of Maryland, 

as a result of Dodd-Frank and the CFPB, middle-income borrowers, 

‘‘not only didn’t obtain cheaper mortgages, but were cut out of the 

mortgage market altogether.’’ 

For all the harm inflicted upon consumers, Richard Cordray 

should be dismissed by the President. 

In the CFPB’s short 6-year history, the record is replete with instances where it has abused or exceeded its statutory authority. In 

the PHH case, where the CFPB structure was ruled unconstitutional, the facts show that Mr. Cordray unilaterally reversed accepted law with regards to Section 8(c) of RESPA, and did so not 

with formal rulemaking—that is, with notice, comment, and due 

process—but with an ad hoc enforcement action instead. 

Then, to make matters worse, Mr. Cordray attempted to apply 

this new rogue standard retroactively. The D.C. Circuit Court ruled 

against him in both instances. 

On March 31, 2013, CFPB issued bulletin 2013–2, attempting to 

impose control over dealer indirect auto lending compensation. In 

doing so, CFPB sought to illegally regulate companies over which 

it has no statutory authority and which, in fact, are expressly exempt under the Dodd-Frank Act. CFPB then failed to afford due 

process to regulated companies under the Administrative Procedures Act. 

For conducting unlawful activities, abusing this authority, and 

denying market participants due process, Richard Cordray should 

be dismissed by our President. 

Not only must Mr. Cordray go, but this current CFPB must go, 

as well. American consumers need competitive markets and a cop 

on the beat to protect them from fraud and deception; they don’t 

need Washington elites trampling on their freedom of choice and 

picking their financial products for them. 

Today, Mr. Cordray and his CFPB don’t just act as a cop on the 

beat; they act as legislature, prosecutor, judge, and jury all rolled 

3 

into one. CFPB represents the summit of unelected, unaccountable, 

and unconstitutional agency government. 

It represents a dagger aimed at the heart of our foundational 

principles—namely coequal branches of government, checks and 

balances, due process, and justice for all. Clearly, you can be a 

Democrat—uppercase ‘‘D’’—and believe in the CFPB, but you cannot be a democrat—lowercase ‘‘D’’—and believe in this institution. 

Thus, this debate has import way beyond the fate of fines, credit 

cards, and mortgage access. It represents nothing less than one of 

the key battles to defend and protect our Constitution. 

As James Madison wrote in Federalist 47, the combination of all 

power—legislative, executive, and judiciary—may justly be pronounced the very definition of tyranny. This tyranny must end and 

the people’s constitutional rights returned to them. 

I now recognize the ranking member for 5 minutes for an opening statement. 

Ms. WATERS. Thank you very much, Mr. Chairman. 

And I thank you, Director Cordray, for joining us again to discuss the numerous ways in which the Consumer Financial Protection Bureau continues to fight for hardworking Americans who 

have been harmed by illegal predatory financial schemes. 

I am delighted that you are here. I am so pleased that you are 

here. I am so honored that you have done the work that you have 

done for all the consumers in America. 

I would also like to thank you for your sustained, long, strong 

leadership despite unyielding Republican efforts to impede your 

work and their unfounded desire to remove you from your position 

prior to the expiration of your term. 

The Consumer Financial Protection Bureau has successfully recovered nearly $12 billion for 29 million consumers who have been 

victim to predatory financial practices. In addition, the Consumer 

Bureau has handled over a million consumer complaints and has 

worked diligently to promote clear disclosures and root out bad 

practices committed by financial institutions. 

The Consumer Financial Protection Bureau and Director Cordray 

are doing exactly the job they are supposed to do, and they are 

doing it well. 

Following the foreclosure crisis, Congress recognized that Americans needed a new watchdog that would swiftly and effectively 

crack down on unscrupulous practices and products. In the DoddFrank Wall Street Reform and Consumer Protection Act we deliberated extensively and created a consumer agency with a single director who operates independently in order to effectively serve consumers and regulate financial markets. 

We could not have had a better person than Director Cordray. 

Despite what you will hear from Republicans, the leadership structure of the Consumer Bureau is not unique. In fact, there are other 

Federal regulatory agencies with similar structures. 

But these facts haven’t stopped Republicans and some in the industry from making legal challenges to its structure. That is why 

last week I led 40 other current and former Members of Congress 

to file an amicus curiae brief with the D.C. Circuit Court of Appeals in support of the Consumer Financial Protection Bureau’s 

independent structure and its clear constitutionality. 

4 

Republicans have been clamoring to weaken, impede, and ultimately destroy the Consumer Financial Protection Bureau since its 

creation. First, they did everything they could to block a director 

from being appointed in the first place. And since then, they have 

pushed measures to defund and dismantle the Consumer Financial 

Protection Bureau. 

The chairman has called for the Consumer Financial Protection 

Bureau to be functionally terminated, and it is unclear why. There 

are constituents in every State who have been ripped off by financial institutions. Why aren’t Republicans fighting for them and for 

their financial security? 

I reject these misguided attacks on the Consumer Financial Protection Bureau, and I will continue to stand up for the hardworking 

American consumers that the agency defends every day. The Consumer Financial Protection Bureau is an invaluable ally to consumers, and its work must continue. 

Director Cordray, I look forward to hearing your testimony. I 

can’t thank you enough for what you have done and the way that 

you have conducted yourself, the way that you have allowed everybody to come in and talk with you and share their concerns with 

you, the way that you have traveled all over this country meeting 

with consumer groups. 

I will be with you forever. And I know that legally your term 

doesn’t end until July, but I would hope that this President—even 

though I doubt it—would have the wisdom to ask you to stay on. 

I yield back the balance—well, I yield to Mr. Kildee. Is there any 

time left? 

Somebody else yield him some time along the way. Thank you. 

I yield to Mr. Kildee. 

Mr. KILDEE. Thank you. 

And, Mr. Chairman, I thank you and Ranking Member Waters 

for holding this hearing. 

Mr. Cordray, it is good to see again. I have known you for a long 

time, since you and I were both county treasurers. Your public 

service in that role and every role since has been stellar, especially 

in this role. 

The mission of the Consumer Financial Protection Bureau is to 

protect the American consumer. When Wells Fargo opened thousands of fraudulent accounts, it was the Consumer Protection Bureau that sounded the alarm. When Moneytree, a payday lender— 

[laughter] 

Mr. KILDEE. Mr. Chairman? 

Chairman HENSARLING. The committee will come to order. The 

committee will come to order. 

The gentleman from Michigan is recognized. 

Mr. KILDEE. I wonder if the chairman might reset the clock so 

I would have some time? 

Chairman HENSARLING. We will give the gentleman an additional 20 seconds. 

Mr. KILDEE. Thank you, Mr. Chairman. 

I do find it somewhat ironic that when clearly some of the success of the Consumer Protection Bureau from the work that you 

have done is noted, whether it is Wells Fargo, whether it is 

Moneytree, or whether it is Bridgepoint Education, where the ConVerDate Nov 24 2008 16:23 Apr 23, 2018 Jkt 027371 PO 00000 Frm 00008 Fmt 6633 Sfmt 6633 K:\DOCS\27371.TXT TERI
5 

sumer Bureau that you lead has restored, returned millions and 

millions of dollars to consumers, that that notation is met with 

some ridicule. 

I suppose it may be that when it comes to which side we stand 

on, institutions that have incredible influence over this community, 

this town, or the people back home, people have to choose which 

side they are on. And I am glad that in the role that you have 

taken you have always been on the side of the consumer, and I 

thank you for the work that you are doing. 

Chairman HENSARLING. The time of the gentlelady and the gentleman has expired. 

Today, we welcome the testimony of the Honorable Richard 

Cordray. Director Cordray has previously testified before this committee, so I believe he needs no further introduction. 

Mr. Cordray, without objection, your written statement will be 

made a part of the record, and you are now recognized for 5 minutes to give an oral presentation of your testimony. Thank you. 

STATEMENT OF THE HONORABLE RICHARD CORDRAY, 

DIRECTOR, CONSUMER FINANCIAL PROTECTION BUREAU 

Mr. CORDRAY. Thank you, Chairman Hensarling, Ranking Member Waters, and members of the committee. 

I am reporting today on our work over the past year. The Consumer Financial Protection Bureau was created to stand up for 

consumers and make financial markets work more fairly. Over the 

past 5 years we have returned almost $12 billion to 29 million consumers all over the country in every State, in every district, and 

imposed about $600 million in civil penalties. 

We have put in place strong safeguards against reckless mortgage practices that led to the financial crisis that hurt so many 

people in so many communities. We are arming consumers with 

unbiased information and resources so they can make better-informed decisions for themselves and their families. 

Our complaint system gives consumers a voice that matters so 

they can address their own concerns and report on broader patterns of problems or abuse. To date, we have fielded over 1.1 million complaints, so more and more people are finding this option 

to be worthwhile. 

These are just some of the ways we are standing up for consumers. 

Markets that work for consumers, as the chairman said, are also 

good for responsible businesses and the economy as a whole. Consumer lending has been ramping up in mortgages, credit cards, and 

auto loans, and delinquencies remain at historic lows. 

Last year auto sales reached record levels and consumer spending has been leading the recovery for the past 4 years, growing 

faster than GDP. Banks are showing solid profits, and community 

banks and credit unions are growing their share of the mortgage 

market. 

Still, we know that we have much more work to do to clean up 

the consumer financial marketplace. These markets are huge and 

they touch all of us in one way or another. 

Years of uneven Federal oversight on behalf of consumers allowed a lot of bad behavior to go unchecked. As the independent 

6 

consumer watchdog, we are solely focused on the job Congress gave 

us of assuring that these markets are fair, transparent, and competitive, and that consumers have access to sound financial products and services. 

Today I want to highlight some areas where people remain vulnerable without the Consumer Bureau to stand up for them. 

The first area is markets that create frustrating and harmful 

dead ends for consumers. When people are forced to deal with companies they did not choose and cannot change, they lose much of 

their power because they lack the freedom to simply take their 

business elsewhere. 

A prime example is credit reporting. If your credit report contains inaccurate information you can suffer severe and lasting 

harm. Yet, many people do not know what is in their credit report, 

and if they do find something wrong it is way too hard to get anybody to pay attention and make it right. 

The Consumer Bureau is the first Federal agency to supervise 

this industry and the companies that supply the credit information, 

and we are making steady progress to clean up these problems. 

We also recently took enforcement actions against all three major 

credit bureaus for deceiving consumers in marketing credit scores. 

But we are still flooded with credit reporting complaints, so clearly 

more work remains to be done. 

Another dead-end market for consumers is debt collection. Consumers often find their debt is sold off or its collection is 

outsourced to some new company. They often do not know what to 

do when these collectors treat them badly. 

We hear horror stories about constant harassing phone calls, relatives or employers tracked down and wrongly contacted, or even 

false threats of arrest if the debt is not paid. These tactics are indefensible and they are against the law. 

People deserve to be treated with dignity, whether or not they 

owe a debt. We have taken action on several fronts to address 

widespread abuses in debt collection, but, like credit reporting, it 

is a big problem that will take time to fix properly. 

Another area of focus is financial performance incentives which 

encourage results that hurt consumers. This systemic issue spans 

all markets and products. 

A prominent example is Wells Fargo’s practices that led to millions of consumers having accounts opened in their name without 

their knowledge. 

In 2013 the Consumer Bureau got a whistleblower tip about 

pressure to meet aggressive cross-selling goals and the problems it 

was causing. The investigation was conducted with our Federal and 

local partners that documented the widespread practice of secretly 

opening up unauthorized accounts. 

By completing a public enforcement action with a record fine we 

blew open a scandal whose far-reaching effects are being felt across 

financial markets to this day. We are keeping a close eye on these 

practices and insisting that all banks and financial companies must 

carefully monitor their incentive programs to avoid such problems. 

Issues like this demonstrate why the Consumer Bureau is so important to protect consumers. And incentive programs that cause 

improper conduct are not limited to Wells Fargo; they show up in 

7 

areas like overdraft and credit card add-on products, where we are 

rooting out bad practices and getting money back to consumers. 

We will remain vigilant and crack down on these abuses wherever we find them. 

Those who talk about weakening or destroying the Consumer Bureau are missing the importance of the work we are doing to stand 

up for individuals and families all over the country. Nobody should 

want to return to a system that failed us and produced a financial 

crisis that damaged so many lives. 

I look forward to answering your questions about what we have 

accomplished over the past year. Thank you. 

[The prepared statement of Director Cordray can be found on 

page 114 of the appendix.] 

Chairman HENSARLING. Thank you, Mr. Cordray. 

I now yield myself 5 minutes for questions. 

First, Mr. Cordray, I want to deal with the important subject of 

Congressional oversight. As I trust you are well aware, yesterday 

I reissued a subpoena for this Congress for matters that were pending from subpoenas in the last Congress that were never complied 

with. Some of these matters have been pending for 382 days. 

I just wish to remind you and all personnel at the CFPB that 

under Title 18, Section 1505, it is unlawful to influence, obstruct, 

or impede the due and proper exercise of the power of inquiry 

under which any inquiry or investigation is being had by either 

House or any committee of either House. And I suspect that you 

will find that the Justice Department will no longer turn a blind 

eye to obstruction. 

As you are also probably aware, there is a December 21st article 

that appeared in the National Review dealing with the CFPB and 

Congressional oversight. The article stated, ‘‘The unwritten policy 

of it supervising attorneys, and in particular of one former Democratic Senate staffer was, ‘Never give them what they ask for.’’’ 

It goes on to say, ‘‘Soon a career professional in the unit who had 

resisted pressure to engage in witness coaching and other unethical 

practices was reprimanded for insubordination and reassigned. The 

Inspector General investigated and issued a report to Cordray that 

concluded the reprimand was unwarranted and the supervisors had 

engaged in obstruction.’’ 

Mr. Cordray, is anything in this article true? 

Mr. CORDRAY. I have seen that article. It is filled with hearsay 

and opinion— 

Chairman HENSARLING. Okay. Is any of it true? 

Mr. CORDRAY. —and it is not fact. 

Chairman HENSARLING. Is any of it true, or do you deny all of 

the assertions in the article? 

Mr. CORDRAY. I don’t know what all of the assertions in the article are. 

Chairman HENSARLING. The ones I just quoted, Mr. Cordray. 

Mr. CORDRAY. It is not the kind of article that anybody pays close 

attention to, but I would be happy to have my staff— 

Chairman HENSARLING. Well, then let me be specific. 

Mr. CORDRAY. —on any particular issues— 

8 

Chairman HENSARLING. Mr. Cordray, has the Federal Reserve 

Inspector General ever communicated with you regarding a supervisor who worked on oversight requests? 

Mr. CORDRAY. Say that again? 

Chairman HENSARLING. Has the Federal Reserve Inspector General ever communicated with you regarding a supervisor who 

worked on oversight requests? 

Mr. CORDRAY. I do not, I am not sure what you are referring to, 

so I am not sure what to— 

Chairman HENSARLING. You don’t know the answer. Okay. 

Are you aware of any Inspector General inquiry into any aspect 

of the CFPB’s handling of Congressional inquiries? 

Mr. CORDRAY. I don’t recall that offhand, but I would be happy 

to talk to— 

Chairman HENSARLING. You are unaware of any Inspector General inquiry into your handling of Congressional inquiries? You are 

unaware of this, is that correct? 

Mr. CORDRAY. What I would tell you is I don’t always know all 

the inquiries the Inspector General is conducting. I am not supposed to know all the inquiries the Inspector General is conducting. 

So I am not sure what to tell you, but I would be happy to have 

staff— 

Chairman HENSARLING. But if I could, Mr. Cordray, the article 

states that the Inspector General issued you a report of the findings of its investigation. Have you ever received a report from the 

Inspector General detailing any aspect of CFPB’s handling of Congressional inquiries? Surely you would know if you had received a 

report. 

Mr. CORDRAY. I have gotten dozens of reports from the Inspector 

General. I try to pay close attention all of them. I am not sure what 

you are referring to, but I would be happy to talk to you— 

Chairman HENSARLING. So you don’t know if you have ever received a report from the Inspector General dealing with how Congressional inquiries are handled. This is a terribly important matter, going to the whole foundation of our Constitution and oversight, and you are unaware of any Inspector General report. 

Mr. CORDRAY. I can tell you, you started from an article that is 

based on opinion and hearsay, and there were claims made that we 

don’t provide documents responsive to— 

Chairman HENSARLING. Okay, but you are unaware of this Inspector General report. In that case, Mr. Cordray, again, if necessary, we will subpoena such report. I can’t believe that you would 

be unaware of this. In the time I have remaining— 

Mr. CORDRAY. What I am saying to you is if you want to have— 

if you want to show me the report and refresh my memory, I am 

happy to have a discussion with— 

Chairman HENSARLING. I am kind of hoping you will show me 

the report because I don’t have a copy of it. 

Mr. CORDRAY. Is it a published report? 

Chairman HENSARLING. I am asking you the question. You say 

you are unaware of the report. 

Mr. CORDRAY. I am unaware of a published report. I am not sure 

what you are referring to. I honestly am not sure what you are referring to— 

9 

Chairman HENSARLING. We will request the document. 

In the time I have remaining, Mr. Director, as I think you know, 

Section 1071 of Dodd-Frank requires financial institutions to collect 

and report women-owned, minority-owned, and small business 

credit application information. I personally don’t believe the information is necessarily of great value, but that is not the point. 

Six years ago the Bureau’s General Counsel stated the Bureau 

would not enforce the statute against financial companies until the 

Bureau issued its rules. You have been at the helm for almost 5 

years. 

Mr. CORDRAY. Yes. 

Chairman HENSARLING. You have failed in your duty to prescribe 

a rule under Section 1071. The same is true of Section 1033. 

Two years ago Democrat committee members, led by the ranking 

member, said, ‘‘Your unwillingness to prioritize implementing Section 1071 is unacceptable.’’ 

So, Mr. Director, can you cite any section of Dodd-Frank that 

permits you to ignore mandatory rulemakings for 5-plus years, 

knowing that you have engaged in discretionary rulemaking such 

as the payday rule, the arbitration rule, and the prepaid card rule, 

and why these are not grounds for removal for cause? 

Mr. CORDRAY. Okay. I am happy to address that if you want to 

give me a few moments to do so. 

Chairman HENSARLING. Please. 

Mr. CORDRAY. Section 1071 is a required rulemaking. There have 

been a number of required rulemakings; there have been more 

than a dozen or so that we have been required to enact. We have 

adopted those rules at a reasonable pace over time. 

One of those rules was updates to the Home Mortgage Disclosure 

Act reporting and collection and publication of information process. 

That also involves bringing over from the Federal Reserve the operational job of actually conducting the data collection and publication, which is a big job; there are lots of people involved with that. 

And we had made the judgment, I think reasonable, that the 

small business lending data collection and reporting, which has 

never existed before—the HMDA has been in operation for 40 

years—is something that should be in order just behind the HMDA 

rule. 

The HMDA rule has now been finalized and we are at work on 

the small business lending rule, and that is what I can tell you at 

this point. I would be happy to— 

Chairman HENSARLING. I appreciate that, Mr. Cordray but 

again, you have engaged in discretionary rulemaking for almost 

51⁄2 years; mandatory rulemakings have gone undone. And again, 

I think it, frankly, proves removal for a cause grounds. 

I now yield to the ranking member. 

Mr. CORDRAY. I will be happy to take your advice and move forward speedily on that rule as fast as we reasonably can move, if 

that is what— 

Chairman HENSARLING. I now yield to the ranking member. 

Mr. CORDRAY. —direction to be. 

Ms. WATERS. Thank you very much, Mr. Chairman. 

10 

Mr. Cordray, I would like you to absolutely ignore the National 

Review. The article was done by someone who used to work for Mr. 

Hensarling, and I just don’t think that is credible. 

And let me just say that you organized this Consumer Financial 

Protection Bureau wonderfully well in a short period of time. You 

put together what Dodd-Frank asked you to do in an extraordinary 

period of time, and I know that you have dealt with every aspect 

of organizing the Consumer Financial Protection Bureau. 

I trust you, and I believe in you, and I believe that you have 

moved as quickly as you possibly could to implement 1071. I have 

no problems with it, and if I don’t have any problems with it as 

a minority woman, I don’t think anybody else should have any 

problems with it because I have not seen some of those who complain step up to the plate to deal with the problems of minorities 

and small businesses and women, et cetera. 

Having said that, let’s get to some real issues. 

On Wells Fargo, they would like to take the credit away from you 

about what you have done to deal with the fact that Wells Fargo 

created these accounts in clients’ names without them knowing 

about it. Would you please tell us what you did and how you did 

it? And don’t let them deny what you have done and what you have 

accomplished with the Wells Fargo problem. 

Mr. CORDRAY. Sure. No, I know that there are people who just 

don’t like to see any positive work from the Consumer Bureau and 

want to try to explain it away wherever they can. 

The Wells Fargo matter was a very significant matter. We first 

began to hear about potential problems in the institution in 2013. 

We received a couple of whistleblower tips. 

At that time it appeared to be an employee-employer problem. It 

evolved over time. 

Obviously, millions of accounts weren’t opened in a day. This was 

a problem that did evolve over time. 

Our work on the problem also evolved over time. We began by 

reviewing the issues in supervision, and over time it became clear 

that they were growing and they were significant and it needed to 

move over to our enforcement area, which involved our own investigation together with our partners; we brought the OCC in and we 

worked with the L.A. City Attorney’s Office. 

But we conducted depositions of bank officials which was the 

first time that that was able to be done. We compelled the production of thousands of pages of documents, which was the first time 

those documents were able to be turned over. And we were able to 

document and specify that there were, in fact, millions of deposit 

and credit card accounts that have been opened illegally, that this 

was a widespread practice involving thousands of employees. I 

have never seen a situation like this where more than 5,000 employees were fired because of the extent of the irregularities within 

the institution. 

We completed successfully an enforcement action with our partners, which is always difficult to do and time-consuming but was 

important to do quickly because that is what exposed this matter 

to the public and has brought lots of follow-on actions by other public officials, other regulators, the Congress of the United States, the 

11 

press, and individuals who have brought their own claims. And it 

is an ongoing matter. 

We have installed a monitor at Wells Fargo that has continued 

to make sure that all consumers are being remediated properly, including ancillary issues, that the problems are being cleaned up 

going forward and will not occur again. There is a horizontal review that we are engaged in across other institutions to see if similar problems are occurring and to make sure they are being cleaned 

up. 

And we have issued a bulletin to put the entire industry—bank 

and non-bank companies—on notice that any problems of this kind 

around incentive compensation programs, whether it is in bank accounts, or credit cards, or mortgages, or debt collection, or wherever, will not be tolerated and needs to be monitored carefully. So 

that is significant work and it is ongoing. 

Ms. WATERS. The city attorney that I am referring to and you are 

referring to is Mike Feuer, in my city of Los Angeles. He has nothing but praise for you. He has nothing but praise for you because 

he has never, he said, been able to work with anyone in the way 

that he worked with you and how you moved so quickly not only 

to follow up and to further investigate and explore, to do what you 

are able to do to make sure that you sanctioned them with the 

fines in the way that you did. 

So I want you to know that I am very appreciative. My City is 

appreciative. The city attorney is appreciative. 

And don’t let anybody take credit away from the work that you 

have done to protect the consumers from the fraud that was being 

perpetrated by Wells Fargo. 

Mr. CORDRAY. Our feeling is mutual for Mike and his team and 

we look forward to working on other matters in the future as they 

may arise. 

Ms. WATERS. Thank you so very much. 

And I yield back. 

Chairman HENSARLING. The gentlelady yields back. 

The Chair now recognizes the gentleman from Missouri, Mr. 

Luetkemeyer, chairman of our Financial Institutions Subcommittee. 

Mr. LUETKEMEYER. Thank you, Mr. Chairman. 

Welcome, Mr. Cordray. 

Director Cordray, I want to start by asking you about the Bureau’s proposed amendments relating to disclosure of records information issued in August of last year. As I understand it, this 

amendment would impose what amounts to be an unprecedented 

gag order on any individual entity under investigation by CFPB. 

In your proposal, as I understand it, you allow for absolutely no 

judicial review. 

Mr. Director, even recipients of national security letters of law 

enforcement are permitted due process. No other Federal regulatory agency has an outright prohibition on the disclosure information—not the SEC, not the FTC. 

Can you provide me with a compelling reason why the Bureau 

needs this unprecedented gag order authority? 

Mr. CORDRAY. I will say two things. 

12 

Number one, I don’t think that the rule has the far-reaching effects you are describing. But let me say that we have received 

those comments from you and your colleagues. We think they raise 

legitimate concerns. We are going back to the drawing board in 

terms of what we are doing on that issue, and we will produce a 

rule that I believe that you will respect and appreciate that we 

have responded to those questions. 

Mr. LUETKEMEYER. Well, Director, I have here with me this 

morning a letter from the ACLU, of all people. And the letter is 

dated October 20, 2016; it is from the legal director. In there it delineates basically what I just said with regards to other agencies— 

they don’t have this prohibition. 

In fact, in your rule it indicates that if you look at it the recipient 

of the subpoena would not even be able to put that information on 

their own website, which you can do on your website. And even 

they recite here the concern with regards to—even in national security interests there is a very strict protocol that has to be observed in that situation even, to be able to protect that information. 

And yet, you are going beyond that. 

So again, this elimination of due process is basically unconstitutional. In fact, in their letter they cite that provision. So I am very 

concerned about that, and to me, we need to withdraw the rule. It 

makes no sense. It doesn’t have any bearing. I don’t know why you 

even are going down this road. 

Mr. CORDRAY. Yes. So I am hearing what you are saying. It is 

reinforcing the concerns that you had raised and others have 

raised. I think they are legitimate concerns and we are going back 

to the drawing board on that, and I think you will be happy to see 

that when that is completed. 

Mr. LUETKEMEYER. Okay. With regards to another issue, with regards to small-dollar lending and access to credit, you and I have 

talked about this at length over the years, and I am still very concerned about some of the actions that your agency has taken. 

The small-dollar lending rule is, in my view, so punitive that it 

will close businesses and leave consumers in my district out of options. And I will give you an example. 

Let me read a quick part of a letter that I got from a gentleman 

named Nick in Sinclair, Missouri. Nick writes, ‘‘The CFPB has 

made a rule that will really hurt people who turn to a payday loan 

to help solve the personal finances. This is not just a bad idea, this 

is a horrible one. Please do not let this rule stand, Congressman 

Luetkemeyer. 

‘‘My car broke down recently and I was worried that I wouldn’t 

be able to afford all the repairs. I went to my local cash advance 

store and was quickly approved to get a loan. I am glad I used 

these loans to help me get my car fixed and back on the road.’’ 

Director Cordray, I know you think that everybody can turn to 

other sources of credit whenever they are in—like in Nick’s situation here, he needs some immediate cash to fix an immediate need. 

But if the government decides that he can’t have this kind of loan, 

where does he go to get this? What is your solution to this? 

Mr. CORDRAY. Yes. So I want to be careful with what I say because this proposal was out for comment. We received over a million comments on it, some of them along the lines of what you just 

13 

said, some of them quite the reverse. And we are trying to work 

through that; it is a complicated subject. 

I will say there are 14 States in the union that have no payday 

lending. South Dakota is the most recent one to join their ranks 

because the voters in that State, by 76 percent, approved a ballot 

measure last fall to essentially bar payday lending in the State, 

and that is tens of millions of Americans in those States who seem 

to get by just fine. 

So, that is an interesting experiment that you have, part of the 

country that has no payday loans and part of it does. 

Mr. LUETKEMEYER. With all due respect, Director, they are still 

there. They are going offshore, and you know this as well as I do. 

And those aren’t regulated, so therefore I don’t know how you get 

around them, just saying, well, there is no access, period. 

There are other ways to do this. They increase their credit card 

debt, their prepaid cards. These are all things that are other options, but that shows that they are—in those situations they have 

higher credit card past dues and things like that. 

This is a need for immediate cash and this rule is so restrictive 

it is driving people into certain areas they don’t want to go to. 

Mr. CORDRAY. Yes, that is not what I intended to say. It is just 

that payday lending is one way to meet that need; there are many 

other ways to meet that need. And in the States that do not have 

payday lending people find many other ways to meet that need. 

But it is a legitimate discussion. It is something we are thinking 

hard about and we have gotten, as I said, many, many comments 

on both sides of that issue. 

Mr. LUETKEMEYER. I yield back. Thank you. 

Chairman HENSARLING. The time of the gentleman has expired. 

The Chair now recognizes the gentlelady from New York, Mrs. 

Maloney, ranking member of our Capital Markets Subcommittee. 

Mrs. MALONEY. Thank you. Thank you, Mr. Chairman, and 

Ranking Member Waters. 

Director Cordray, I would like to ask you about the Consumer 

Bureau’s prepaid card rule, which I believe went into effect in November. The prepaid rule requires minimum disclosures, limits the 

amount of overdraft on prepaid cards, and establishes a process for 

resolving errors and customer disputes. The prepaid card market 

is growing very, very quickly and it has a great deal of potential. 

But there are virtually no Federal consumer protections for prepaid cards, and that is why the rule coming from your agency is 

so important. 

The rule was supposed to take effect in October 2017, but the 

Bureau recently proposed delaying the effective date by 6 months, 

to April 2018. In its proposed delay the Bureau said the additional 

time would allow the Bureau to, ‘‘evaluate concerns raised by industry participants regarding certain substantive aspects of the 

rule.’’ 

So my question is, is the Bureau open to making substantial, 

substantive changes to the prepaid rule before it goes into effect? 

And if the Bureau is open to that, what aspects of the rule is the 

Bureau open to changing? I am particularly interested in the disclosure requirements and the issues that affect digital wallets. 

14 

Mr. CORDRAY. Okay. Thank you. And I will say two things in response to that question. 

The first is—and it is important to keep this in mind as some 

people are talking about trying to overturn that rule—the rule was 

finalized last fall but it has an implementation period for companies to be able to work on their packaging and other things and 

get ready, had an implementation of 12 months. We have now determined from what we have heard that that time period may be 

too short, and we have put out a proposal to reopen the issue of 

extending that period of time for 6 more months. 

Let’s understand where that rule comes from. 

Probably most Americans, almost all of those in this room, have 

bank accounts. On those bank accounts we have certain legal 

rights. We have rights to get errors corrected; we have rights to get 

disputes resolved; we have rights to certain disclosures on those accounts. Nobody wants to roll back those rights for those of us who 

have bank accounts. 

There are millions of Americans now who do not have bank accounts and for whom prepaid cards and prepaid accounts are an increasingly satisfactory solution, but they have none of those protections. This is meant to level the playing field and make sure they 

have the same protections that more privileged members of our society who have bank accounts have, that we take for granted and 

are basic. 

Now, having said that, we recently proposed to extend the effective date of the rule by 6 months and we have been hearing from 

industry during this time about a few issues that have come up as 

we have been working with them to implement the rule. 

And we have heard enough that we believe it makes sense to 

seek comment on at least two of the issues in the following rulemaking in the coming weeks, and perhaps there will be others. The 

first relates to the linking of credit cards into digital wallets that 

are capable of storing funds, and the second issue relates to error 

resolution for prepaid cards that have not been registered. 

Both of these could have disclosure implications. Both of them we 

are going to take a serious look at and we intend to try to figure 

out how to address them. 

Mrs. MALONEY. So you are open to substantial changes? 

Mr. CORDRAY. We are always open to hearing more from stakeholders—that is all sides, consumer groups and industry—about 

what else could be done to improve the functioning of our rules. 

Mrs. MALONEY. I am interested in overdraft fees, and my question is, do you plan to propose a rule on overdraft fees before your 

term expires in 2018? And if so, when can we expect to see this 

proposed rule? 

Mr. CORDRAY. As you know, and we have discussed this a number times, overdraft is an issue that the Consumer Bureau has 

been looking at from the outset. There have been some problems 

in that area. 

I think private lawsuits have demonstrated certain problems 

that have resulted in significant resolutions. The Federal Reserve 

had just tried to address this issue before we became an agency 

with its opt-in rule. 

15 

The different Federal agencies have different approaches to overdraft, which is probably not the right landing place. And it is something that we have been looking at for quite some time. 

As to when we would or would not initiate a proposed preliminary framework for rulemaking, which is what we need to do with 

small business review panels, I can’t speak to the timing on that, 

but it is something we would be happy to keep you and your staff 

posted on as we go, and it is an issue that is on our minds very 

much. 

Mrs. MALONEY. Okay. My time has expired, but I wanted to hear 

also your safeguards to mortgage products. But my time— 

Chairman HENSARLING. The time of the gentlelady has expired. 

The Chair now recognizes the gentleman from New Mexico, Mr. 

Pearce, chairman of our Terrorism and Illicit Finance Subcommittee. 

Mr. PEARCE. Thank you, Mr. Chairman. 

And thanks, Mr. Cordray, for being here. 

I appreciate your strong interest in consumer complaint filings. 

You draw out that you have had more than a million filed. Have 

you got any rough breakdown on how many of those complaints 

have been against community banks? 

Mr. CORDRAY. We don’t actually take or put in our database any 

complaints against community banks. 

Mr. PEARCE. Okay. How about from rural counties? Do you break 

it down by rural counties? 

Mr. CORDRAY. We can break down complaints, certainly, by 

State. There may be smaller divisions we could put them into. If 

you are interested in that I would be happy to have my staff talk 

to your staff about— 

Mr. PEARCE. How many complaints against the CFPB? 

Mr. CORDRAY. Beg your pardon? 

Mr. PEARCE. How many complaints against the CFPB? In other 

words, I hear quite frequently when I go to the district that the 

CFPB is intrusive: ‘‘They do this; they are limiting our access.’’ So 

how many complaints against CFPB? 

Mr. CORDRAY. I see. So our database is about consumer complaints about the financial institution with whom they have a relationship— 

Mr. PEARCE. Okay, so you don’t track when people—you don’t 

have any kind of one-star, two-star, three-star rating for yourself? 

Mr. CORDRAY. No, although we do hear— 

Mr. PEARCE. How many of the complaints—I appreciate that you 

don’t track those. 

And so now, keep in mind that when you first started our discussion here was about rural and you are defining Luna County in the 

same category as New York City. Luna County has 8 people per 

square mile and New York City has 28,000 people per square mile. 

You have a lot more options there in New York City than you 

do in Luna County. And so everything you might do which would 

choke off access we were creating tremendous friction with you, if 

you recall that. 

Mr. CORDRAY. Yes. 

16 

Mr. PEARCE. And so I am interested in page four, where you say: 

‘‘We are tailoring our approaches to financial decision-making,’’ and 

then you give all these subgroups, but you didn’t put rural in there. 

Rural is a big part of America. Why didn’t you include that in 

your list? You tell everything else that you are doing. 

Mr. CORDRAY. I should have included that on the list because we 

have actually made good progress there. 

Mr. PEARCE. Okay, fine. You should have put it there. 

Mr. CORDRAY. No, but we have also changed our definition of 

‘‘rural’’ twice in response to comments that you have made to me 

and others have made. 

Mr. PEARCE. Yes. And so I guess my point is that it took about 

3 to 4, maybe 5 years to get that change from a Member of Congress. 

Mr. CORDRAY. That is right. 

Mr. PEARCE. So when I see that you have done a million complaints I kind of wonder about those people who are not Congressman, the ones from rural areas, saying, ‘‘You are making life very 

difficult for us.’’ 

One of the things that you and I discussed—and you sent the 

lady up to my office for an hour, hour-and-a-half—was the idea of 

seller finance. You get people in New Mexico and they are making 

$25,000, $30,000 a year is kind of the average. 

Over their lifetime they end up owning five trailer houses and 

then that is their retirement. They sell a trailer and they will take 

the payments and it helps Social Security. 

We have worked with you, our office, for over 2 to 3 years on one 

sentence. Just go back to what it was before, where you can sell 

five of those and then you need to be a mortgage loan originator. 

No, you have changed it to where if you sell one, you have to be 

a mortgage loan originator, and you have taken away the possibility of people having—just comparing it to the transportation system: In the city if your car breaks down, you go out and you get 

on the subway, or you get an Uber, you get anything, you rent a 

bicycle. 

The person that we are interviewing for my office in Las Cruces 

right now lives 65 miles away. There aren’t any rental bikes out 

there; there is no Uber out there; there are no cabs out there. And 

if she has to go get a payday loan to fix the transmission, you say 

that you are going to shut off 75 percent of it. 

And so I have asked you before, the guy in the oil field who is 

just trying to get through every day says, ‘‘What business is it of 

Mr. Cordray’s if I want to borrow $100 on Monday and on Saturday, when I get my check, I am going to pay back $120?’’ 

I will guarantee you there is no one in New York City that is 

going to come out and lend that hundred bucks, and yet you are 

going to say that you can’t have seller financing of trailer houses, 

you can’t have any access to payday loans, you can’t have this. And 

so I don’t think it was an oversight on page four when you didn’t 

include rural. 

I don’t think it is in your mindset because I know the number 

of community banks that have closed down. I know the total assault on them. They are not the ones who caused the problem in 

2008. They did not. 

17 

And yet, you treated them the same in the initial definition. It 

takes 3 years to kind of unbundle that, and still they are the ones 

complaining to me. 

Go ahead, sir. I’m sorry I— 

Mr. CORDRAY. Could I have a moment to respond? 

Mr. PEARCE. Yes, sure. 

Mr. CORDRAY. Okay. 

On the rural, what you are pointing to is a success story. It took 

longer than it might have, and we worked with Congress ultimately and the rural definition has been fixed. So it is an example, 

maybe not perfect, but of us listening and responding and not just 

digging our heels in. 

In terms of New Mexico, we have two call centers to take complaints around the country. One of them is in New Mexico in the 

area you described. We are very familiar with that area. 

We are happy to talk to you further about the seller financing 

issue if you want us to follow up on that— 

Chairman HENSARLING. The time of the gentleman— 

Mr. PEARCE. The rural problem is not fixed, with all due respect, 

and I appreciate your observation. 

Chairman HENSARLING. The time of the gentleman has expired. 

The Chair now recognizes the gentlelady from New York, Ms. 

Velazquez, for 5 minutes. 

Ms. VELAZQUEZ. Thank you, Mr. Chairman. 

And, Dr. Cordray, thank you for the work you do on behalf of 

working families and consumers in the country, particularly on behalf of my—New York City’s—the people that I represent. 

Dr. Cordray, I would like to share with you and the committee 

some stats regarding small business lending practices, in terms of 

the most vulnerable population of the small business sector, women 

and minorities, to show why I strongly disagree with the chairman 

of the committee about Section 1071. 

One study found that among women who sought financing, 32 

percent received approvals, compared to 35 percent of men. They 

were also more likely to receive short-term funding with APRs 

varying from 14 to 50 percent or higher than men. 

On average, women paid a 13 percent higher interest rate for the 

same product, even on SBA loans. These are loans guaranteed by 

the Federal Government. 

Women received less funding on average than men, the average 

being nearly $60,000 for women and over $156,000 for men. The 

same ran true for minority business owners. They are approved for 

lower loan amounts and pay higher interest rates than non-minorities. 

So it is important to be able to collect data so that it shows us 

whether or not we need to come up with legislative solutions to 

level the playing field in terms of making lending credit accessible 

to every sector of the small business community. 

Mr. CORDRAY. I find that very persuasive. I also heard the chairman loud and clear when he said that he wants us to move ahead 

quickly with that small business lending rulemaking, and we will 

respond to that oversight. 

Ms. VELAZQUEZ. Thank you. 

18 

Director Cordray, increasingly, homeowners are purchasing rooftop solar panels as a way to reduce their monthly utility bills. Unfortunately, along with the growth of the solar panel market there 

have also been reported increases in consumer complaints regarding abusive or deceptive acts by solar companies in their sales, financing, and marketing practices. 

What is the CFPB doing to address consumer complaints in this 

industry? 

Mr. CORDRAY. We have been hearing two different things, and increasing amounts about both. One is that the sale of solar panels 

directly may involve abuses of consumers. There are limitations 

around our jurisdiction if it is a loan in connection with the sale 

of a retail product, so that is difficult for us. But we are talking 

to attorneys general and others to try to understand who can do 

what on that problem. 

There is a separate issue that may or may not be what you are 

referring to, which has to do so-called PACE loans, where one of 

the ways in which the solar panels are financed is that States have 

set up a superior priority tax lien on the property to be able to finance the energy efficiency changes, and that creates some real 

complexities in the real estate market that we are hearing a lot 

about from mortgage lenders and others and that we are trying to 

think about carefully and talk to FHFA and others about those. So 

we are hearing the same things you are hearing, I believe. 

Ms. VELAZQUEZ. Thank you. 

Credit unions in New York recently approached me and they expressed that it is becoming increasingly difficult to provide overseas remittances due to the escalating costs of complying with the 

associated rules and regulations. What is the CFPB doing when reviewing the remittances rules to make sure the cost has not gone 

up for consumers? And if you find it has, how will you address 

that? 

Mr. CORDRAY. I was going to a portion of my book, because I 

know we have some new data that folks provided me with on the 

issue of remittances. Ninety-six percent of that market is money 

transfer operators rather than banks and credit unions, so it is a 

market that is dominated by non-bank players. We’re talking about 

people like Western Union, MoneyGram, and now, increasingly, online products that are going to be disruptive in that market and 

perhaps beneficial to consumers, like Xoom and some others that 

we have seen. 

In terms of the credit unions, we did exempt, by creating a 

threshold, more than 80 percent of credit unions from coverage 

under our rule. But we have been talking to all the players and 

there may be more we can do on that front. That is something we 

are going to look at. 

We are doing a retrospective review of the remittance rule, as 

Congress requires us to do on all significant rules 5 years after it 

takes effect. That is going to be our first example of a— 

Chairman HENSARLING. The time of the gentlelady has expired. 

The Chair now recognizes the gentleman from Michigan, Mr. 

Huizenga, chairman of our Capital Markets Subcommittee. 

Mr. HUIZENGA. Thank you, Mr. Chairman. 

And thank you, Director Cordray. 

19 

It is my understanding that parties entering into a consent order 

with the Bureau are not actually admitting guilt, correct? 

Mr. CORDRAY. I’m sorry. There was a little noise. Are not what? 

Mr. HUIZENGA. Yes, it is a little noisy with the doors opening. It 

is my understanding that parties entering into a consent decree 

with the Bureau are not actually admitting guilt, correct? 

Mr. CORDRAY. Typically that is not the case, but I will tell you 

my perspective on it. 

Mr. HUIZENGA. I’m sorry, they are admitting guilt? 

Mr. CORDRAY. Typically it is not the case, and I will give you my 

perspective on it if you would like. 

Mr. HUIZENGA. Well, hold on. First of all, I just want to establish 

that because these consent orders normally contain a paragraph labeled ‘‘stipulation,’’ which states, ‘‘Respondent agrees to the 

issuance of the consent order without admitting or denying any of 

the findings of facts or conclusions of law, except that the Respondent admits the facts necessary to establish the Bureau’s jurisdiction 

over a Respondent in the subject matter of this action.’’ 

That is included in those consent decrees, correct? 

Mr. CORDRAY. I would be glad to offer you my perspective on 

that, if you would like. 

Mr. HUIZENGA. It is yes or no. Are those included? 

Mr. CORDRAY. That is true of many orders, yes— 

Mr. HUIZENGA. Yes, okay. All right, well, so— 

Mr. CORDRAY. —not necessarily all, but— 

Mr. HUIZENGA. —myself and many others in this committee have 

previously raised this with you, what I believe has been a significant problem with the way that the Bureau has issued their press 

releases around these consent orders. Specifically, in virtually 

every one of your settlements you don’t prove any facts alleged— 

Mr. CORDRAY. I don’t agree with that. 

Mr. HUIZENGA. —the company doesn’t admit to any violation of 

the law, yet in your press releases that you send out there is regularly alleged, again without factual basis, that the company actually violated the law. 

Mr. CORDRAY. So again, could I give you my perspective on that? 

Mr. HUIZENGA. Quickly, please. 

Mr. CORDRAY. Okay. When we complete an action it is because 

we completed a thorough investigation of the facts. We know what 

the facts are; the company knows what the facts are. That is why 

they end up— 

Mr. HUIZENGA. So you don’t believe that any of these companies 

that would sign a consent decree would feel intimidation or maybe 

the fact that this could draw out for years, that maybe they are too 

small to fight City Hall or the CFPB at this point? 

Mr. CORDRAY. I think the main reason why companies enter into 

a consent decree is we have done a thorough investigation. We 

know the facts; they know the facts. They don’t have a leg to stand 

on, all right? 

Mr. HUIZENGA. Okay, like PPH. 

Mr. CORDRAY. So we document those orders in detail— 

Mr. HUIZENGA. Well— 

Mr. CORDRAY. —so everyone knows what was done, and it 

doesn’t matter to me whether the company says they don’t admit 

20 

or deny. Does anybody doubt that Wells Fargo had the problem 

that we described when they fired 5,000 employees? 

Mr. HUIZENGA. Whoa, whoa, whoa. Hold on. Wait a minute. You 

are an attorney and you just said that it doesn’t matter what they 

signed— 

Mr. CORDRAY. It doesn’t matter to the truth— 

Mr. HUIZENGA. —as a legal document with the CFPB? 

Mr. CORDRAY. It doesn’t matter to the truth of the facts of our 

investigations. What it does matter to— 

Mr. HUIZENGA. Okay, so you intentionally know that the CFPB 

signs consent orders that lie? 

Mr. CORDRAY. No. What it does matter to is whether— 

Mr. HUIZENGA. Well, you just said they are not factual. 

Mr. CORDRAY. Do you want me to answer you? 

Mr. HUIZENGA. I would like you to answer my question, yes. 

Mr. CORDRAY. I am happy to answer you. 

Where this matters is whether facts are already established for 

follow-on lawsuits by private plaintiffs’ attorneys. I don’t feel it is 

my job to make that happen for them. 

Mr. HUIZENGA. Okay. 

Mr. CORDRAY. My job is to conclude the investigation, to lay out 

the facts as they are. The company can dispute it or not as they 

please, but the facts are the facts. They are made public— 

Mr. HUIZENGA. So the facts are the facts, okay, perfect. 

Mr. CORDRAY. They are clear. Everybody can learn from that. 

Mr. HUIZENGA. We are going to disagree. I have a minute-anda-half here, but I would call this trial by press release, but maybe 

we can put it in slightly— 

Mr. CORDRAY. No. 

Mr. HUIZENGA. —different terms here. 

Several employees have filed claims of racial and sexual discrimination and retaliation with the Bureau’s Office of Equal Opportunity and the Equal Employment Opportunity Commission 

(EEOC). You have settled some of these cases, including one with 

a whistleblower who has testified before our committee. 

I would like to enter into the record one of those settlements, 

which is dated October of 2014, if we could do that? 

Chairman HENSARLING. Without objection, it is so ordered. 

Mr. HUIZENGA. And so using your standard, the fact that you settled these cases means that you and your managers, frankly, are 

guilty of racial and sexual discrimination, correct? 

Mr. CORDRAY. No, I don’t agree with that. We have— 

Mr. HUIZENGA. Well, wait a minute. You just said it doesn’t matter what it says, that the facts supersede what the paper says. 

Mr. CORDRAY. There is a consent order that is entered which has 

specifics facts in it— 

Mr. HUIZENGA. No. 

Mr. CORDRAY. —and that is a different issue— 

Mr. HUIZENGA. Director Cordray— 

Mr. CORDRAY. —in a private settlement. 

Mr. HUIZENGA. —using your own standard, you settled claims 

and thereby admit to your crimes, but you won’t fire the managers 

responsible for that. 

21 

Mr. CORDRAY. No. No, that is not correct. When we get complaints and grievances we look to resolve those through whatever 

process we can. We use mediation quite a bit and— 

Mr. HUIZENGA. Wait a minute. So you are saying that sometimes 

signing an agreement doesn’t mean you are guilty. 

Mr. CORDRAY. No, no. You are not making a distinction— 

Mr. HUIZENGA. Wait a minute. You are either guilty of the 

things— 

Mr. CORDRAY. You are not making a distinction— 

Mr. HUIZENGA. —that you just settled, or the other people whom 

you have forced into settlement agreements might not be guilty of 

what you charged them. 

Mr. CORDRAY. No. A public consent order is an order entered by 

either the Bureau or the court, okay? It is an independent— 

Mr. HUIZENGA. It is for remediation, correct? 

Mr. CORDRAY. —independently authorized order. That is distinct 

from a settlement agreement, which may be a contractual matter. 

Mr. HUIZENGA. Here is the simple fact, Director Cordray: What 

is good for the goose is good for the gander, and you are not willing 

to accept the same standard that you apply to others on the outside 

for your own Bureau that you are— 

Mr. CORDRAY. It is apples to oranges. 

Chairman HENSARLING. The time of the gentleman has expired. 

Mr. CORDRAY. I would be happy to follow up with you further if 

you would like. 

Chairman HENSARLING. The time of the gentleman has expired. 

The Chair now recognizes the gentleman from New York, Mr. 

Meeks. 

Mr. MEEKS. Thank you, Mr. Chairman. 

And Director Cordray, let me first thank you because we voted 

62 times previously on the Affordable Care Act only to find out that 

many of my colleagues, when it came time that they were in power, 

they realized that many of their constituents benefited from the Affordable Care Act. 

And you, sir, have now, I think, testified before Congress over 62 

times. And I think that your responsiveness to Congress and who 

you are responsive to is consumers. They ask about accountability. 

Sir, isn’t, in fact, your accountability to the consumers of America? 

Mr. CORDRAY. I believe it is to the public, yes, and every member 

of the public is a consumer, so— 

Mr. MEEKS. And prior to the establishment of the CFPB, do you 

know of any such agency that would be reflective of the—and responsible directly to the public or the consumers? The corporations 

or the banks, they have—they there responsible, as they tell me, 

to their board, to their stockholders, which is a limited crew, and 

to their corporate board. 

Who is responsible to the American public, the American people? 

Mr. CORDRAY. I think this Congress did a good thing in 2010, 

and it is very important to have an independent watchdog looking 

out for consumers, standing on their side, making sure they are 

treated fairly in the financial marketplace, where it is typically not 

a fair fight when they are in a struggle with a large financial company. 

22 

Mr. MEEKS. In fact, when we had the greatest financial crisis 

since the Great Depression, the fact of the matter was because nobody was out there watching out for the consumer, many of the nodoc loans and bad products are what brought this country down. 

Is that not correct? 

Mr. CORDRAY. And do you know what that meant? That meant 

lots of people lost their jobs who had nothing to do with any of this; 

lots of people lost their homes—millions of people; and we all lost 

significant retirement savings. We all suffered because of that failure on the part of the regulatory system. 

Mr. MEEKS. And the fact of the matter is, those people who lost 

their homes and jobs, et cetera, they were not just minorities; they 

were not just people from urban America; they were not people just 

from rural America; they were not people just from the east, the 

west, the north or the south; they were all Americans. 

They were not just Democrats. They were Democrats and Republicans. Is that not correct? They all fit within that group. 

Mr. CORDRAY. That is correct, and I will give you a great example. 

Maybe some people got into irresponsible mortgage loans. Maybe 

they should have known better; maybe they were defrauded. 

In that subdivision, if there were 10 foreclosures, everybody else 

in the subdivision, even though they had fine mortgages and they 

were okay initially, was going to get hurt because their home values were going to plummet and they were going to be innocent bystanders of this. And it happened to many, many millions of Americans, as you say, from all walks of life, of all backgrounds, of all 

origins. 

Mr. MEEKS. So this is not a battle—you are not there just to represent minorities or just to represent urban America. You are there 

making sure that there are solutions for consumers wherever they 

be, no matter who they are, but you are the one agency that we 

have now to make sure that the American public has someone who 

has their back. 

That is whose back you have, right? The American public. The 

average, everyday Mary and Joe. 

Mr. CORDRAY. That is our job. It is a big job. We try to do it as 

best we can. When we don’t get it right, we look to fix it. 

Mr. MEEKS. In fact, you have something that is called the Consumer Complaint Portal. Is that correct? 

Mr. CORDRAY. We do. 

Mr. MEEKS. Can you tell me something about how many people 

have responded to your Consumer Complaint Portal? Because if 

you are not doing your job then I guess you are only getting a few 

complaints, right? Because everybody else must be accountable—if 

you get rid of this Bureau and get rid of you there must be accountability somewhere, so there must be only a few people who are 

complaining to you. Is that correct? 

Mr. CORDRAY. That is not the way it seems to be working. We 

have had over 1,150,000 complaints so far. They are coming in at 

the rate of 25,000 to 30,000 a month. 

And people have—you know what this is like. Think about your 

mothers and fathers, sisters and brothers, sons and daughters. 

They have issues. They aren’t sure how to fix them. It is a big, disVerDate Nov 24 2008 16:23 Apr 23, 2018 Jkt 027371 PO 00000 Frm 00026 Fmt 6633 Sfmt 6633 K:\DOCS\27371.TXT TERI
23 

tant financial company that may or may not be responsive immediately to their concerns. 

To have a place to turn to, to come to this Consumer Bureau, to 

say the complaint in their own voice, and to make sure we will 

work with the company to try to get it fixed and they can get relief 

in many instances, that is really important for people. It is a good 

thing. It is something that we should want to preserve and it is 

very important. 

Mr. MEEKS. And I would say it is fair to say, because I have 

looked at some of the people, where they come—some come from 

Nebraska, some come from Texas, some come from New York. So 

they have to be Democrats and Republicans and Independents and 

people who don’t vote at all. 

There is no litmus test that is utilized. Is that correct? 

Mr. CORDRAY. And in fact, we get complaints referred to us from 

Congressional offices in all districts all across the country, Democrat, Republican, it doesn’t matter, we are just trying to work on 

behalf of consumers. And we welcome those, and we encourage the 

offices to send them to us. 

Mr. MEEKS. So I would say that every Member of Congress, 

Democrat or Republican, should say thank you. Thank you for 

helping our constituents on a regular basis, because without you 

they wouldn’t have anybody. 

Chairman HENSARLING. The time of the gentleman has expired. 

The Chair now recognizes the gentleman from Wisconsin, Mr. 

Duffy, chairman of our Housing and Insurance Subcommittee. 

Mr. DUFFY. Thank you, Mr. Chairman. 

Welcome, Director Cordray. 

How long have you been the Director of the CFPB? 

Mr. CORDRAY. I first went into that position in January of 2012. 

Mr. DUFFY. So that would be 5 years and 3 months, right? 

Mr. CORDRAY. I guess that is right. 

Mr. DUFFY. And— 

Mr. CORDRAY. Time flies when you are having fun. 

Mr. DUFFY. When we are having fun it does. 

And the original intent of the Congress, a bill written by exclusively Democrats in Dodd-Frank, had the intent that the Director 

would serve for how long? 

Mr. CORDRAY. I wasn’t here then. I understand there were some 

Republicans who supported that bill in the House— 

Mr. DUFFY. Let’s not take my time. This is an easy answer. The 

answer was they intended that the Director serve for 5 years Not 

5 years and 3 months, not 6 years and 6 months, but 5 years. 

Mr. CORDRAY. No, I don’t think so. That is not what the statute 

says. 

Mr. DUFFY. And so when we look at your tenure, you were—obviously you were brought in and it was found under the Supreme 

Court that the NLRB recess appointment issue would apply to you, 

as well, so you were brought in unconstitutionally by the President 

and then were reappointed, which will then give you a timeframe 

to the middle of next year. Is that fair to say? 

Mr. CORDRAY. That is one perspective on the matter, I suppose. 

Mr. DUFFY. So you weren’t appointed unconstitutionally. Is that 

your position? 

24 

Mr. CORDRAY. I don’t know that I have ever been ruled on that, 

but I would accept that the Noel Cannon case is the holding of this 

U.S. Supreme Court, and we accept it and respect it, certainly, as 

people do— 

Mr. DUFFY. I’m sorry. You are over the 5-year time period, which 

would give you great cause right now to say, ‘‘Listen, I have done 

my 5 years. I am going to comply with the spirit of my party and 

the intent of the law. I am going to step down.’’ You have chosen 

not to do that thus far. 

Mr. CORDRAY. Could I— 

Mr. DUFFY. One second. I will give you a chance to respond. 

Mr. CORDRAY. Okay. 

Mr. DUFFY. As I look at the PHH case discussing whether the 

President has the authority to remove you, or that you serve at his 

pleasure, or if you can be removed for cause, the CFPB has appealed that case, which means you prefer the standard that you be 

removed for cause. 

And my question for you is would you prefer that the President— 

and again, we are going to note your political aspirations in Ohio— 

that we will walk through the racism, the sexism, we will walk 

through the intimidation and the retaliation—all the things that 

we did on our oversight committee and more—do that very publicly 

to have you removed for cause, or do think it is probably easier for 

you to say, ‘‘I have done my 5 years. I will step down and go?’’ 

What is the better way to do this? For you even, politically, what 

is the best way? 

Mr. CORDRAY. So to go back to your previous point— 

Mr. DUFFY. No, make this one. Answer the question first. 

Mr. CORDRAY. —I was nominated by the President and confirmed 

by the Senate on a significant bipartisan vote in July of 2013 to 

serve a 5-year term. That is what the statute provides for and that 

is where we are at the moment. 

The PHH case, as you noted, is pending. It is an interesting constitutional set of arguments that is being presented there, and the 

court will sort it out. 

Mr. DUFFY. Director Cordray, I would prefer we do this publicly. 

You have a rotting agency. We brought in women and minorities 

who have talked about the Bureau and how they treat women and 

African-American women. 

I’m sorry. I would be happy to have that public conversation because, guess what, I think Democrats even in Ohio would be aghast 

at what has happened at the CFPB. 

I want to move on. Do you know how— 

Mr. CORDRAY. You— 

Mr. DUFFY. Do you believe that 25 million people— 

Mr. CORDRAY. Do I get a chance here? 

Mr. DUFFY. Do you believe that 25 million people— 

Mr. CORDRAY. I don’t get a chance. Okay. 

Mr. DUFFY. —is a lot of people? 25 million people. 

Mr. CORDRAY. I’m sorry? I’m sorry, I was trying to respond to you 

and I missed your question. 

Mr. DUFFY. Is 25 million people a pretty good chunk of folks? 

Mr. CORDRAY. 25 million people is a pretty good chunk of folks. 

I would agree with that. 

25 

Mr. DUFFY. So on this side of the aisle in this committee, collectively we represent 25 million people right here. And as the chairman pointed out, we have sent you subpoenas for years, and you 

fail to comply with those subpoenas. 

Mr. CORDRAY. I don’t agree with that. 

Mr. DUFFY. And on occasion when you do comply, you don’t certify that you have complied with our requests. Other agencies certify that they have complied with the subpoena that has come from 

Congress, but not the CFPB. We won’t certify compliance. 

Mr. CORDRAY. I don’t know what you are referring to or— 

Mr. DUFFY. How about Ally? Have you complied with our subpoena in regard to the Ally case that goes back to 2015? 

Mr. CORDRAY. I believe that we have complied with all of your 

subpoenas— 

Mr. DUFFY. No, no. Let’s talk Ally. 

Mr. CORDRAY. —and if you send us more, we will work to comply 

with those— 

Mr. DUFFY. Have you complied with our Ally subpoena? 

Mr. CORDRAY. I beg your pardon? 

Mr. DUFFY. Have you complied with our Ally subpoena? 

Mr. CORDRAY. I believe we have, and— 

Mr. DUFFY. Have you certified— 

Mr. CORDRAY. —and let me say— 

Mr. DUFFY. No, no, no. Have you certified that you have complied? 

Mr. CORDRAY. Let me say that that— 

Mr. DUFFY. Have you certified that you have complied? 

Mr. CORDRAY. I am not sure what you are referring to, and I 

don’t know that there is— 

Mr. DUFFY. It is pretty clear. You are an attorney. 

We have a certification requirement in our subpoena that you 

certify your compliance. Have you certified to the 25 million people 

that we represent that you have complied with our subpoena? Yes 

or no? 

Mr. CORDRAY. If that is an issue for you I would be glad to discuss it with— 

Mr. DUFFY. No, my question is for you, Director. Have you certified your compliance with our subpoena? Because you have come 

in and said, ‘‘I have complied.’’ Have you certified that compliance? 

Yes or no? 

Mr. CORDRAY. What I will say is as of the end of last year we 

understood that— 

Mr. DUFFY. What I will say is that you are dodging. You haven’t 

certified compliance with any of our subpoenas. 

Chairman HENSARLING. The time of the gentleman has expired. 

Mr. CORDRAY. Could I respond for 30 seconds? 

Chairman HENSARLING. A brief response from the Director. 

Mr. CORDRAY. Okay. My understanding is that in response to 

that subpoena we have supplied yet more documents and we were 

engaged in discussions with staff, and at the end of last year staff 

said that they would engage in further discussions with us and 

they thought that would—we heard nothing until this week. 

Mr. DUFFY. Never compliance. 

Mr. CORDRAY. And so— 

26 

Chairman HENSARLING. The time of the gentleman has expired. 

The Chair now recognizes the gentleman from California, Mr. 

Sherman. 

Mr. SHERMAN. Mr. Cordray, thank you for your service. 

I want to associate myself with the ranking member’s praise of 

you, except for the part perhaps where she posited the possibility 

that Donald Trump would appoint you for another term, that nothing other than that could diminish the high esteem that I have for 

you. 

We have up behind you on the board the trade deficit statistics. 

I know that we didn’t have quite as big a trade deficit last month 

as was expected, but that was a quirk because of the Chinese New 

Year and some interruption in shipments. 

Mr. Cordray, we have the know-before-you-owe mortgage disclosures in TRID. It has resulted in transparency for consumers, and 

better accountability for financial institutions. But ongoing compliance issues remain, costing time and money for consumers and for 

the industry. 

When will the latest proposed rule be finalized, and do you plan 

to issue any additional guidance clarifying this rule that could be 

relied upon the industry as implementation continues? 

Mr. CORDRAY. It is apparently not appropriate for us to comment 

on the timing of a rulemaking since they are pending. These are 

issues somewhat like judicial opinions. They are done when they 

are done. So I am not sure what to tell you there. 

Mr. SHERMAN. But you understand the social utility of being 

done as expeditiously as you can be? 

Mr. CORDRAY. I always do, and I am sometimes disappointed at 

how slowly the Federal Government works even though I am trying 

to be there and make it work faster, yes. 

Mr. SHERMAN. And we have these PACE loans, which are home 

improvement loans for alternative energy, but they are structured 

as part of the property tax bill. Are you sure your agency can’t— 

they are basically home improvement loans—exert jurisdiction in 

this area? 

Mr. CORDRAY. It is a pretty complicated subject is what I have 

learned, because in the States where those exist typically the State 

legislature has passed State laws that provide for priority liens, 

which involves the government in both the making and collection 

of those loans, and that is a very significant complicating factor for 

us. It is something that we have a team of people looking at and 

trying to work through because we are hearing enough about it to 

be concerned, as I think you are here, as well. 

Mr. SHERMAN. I would hope that your legal staff would work 

with us. I hope that this is an area—home improvement loans is 

an area that you ought to be involved in. And if you need legislation— 

Mr. CORDRAY. Home improvement loans, we are involved in— 

Mr. SHERMAN. Well, this is— 

Mr. CORDRAY. —but where there are government tax liens 

passed by State law— 

Mr. SHERMAN. —this is a— 

Mr. CORDRAY. —that is more difficult. 

Mr. SHERMAN. —this is a special, super-duper— 

27 

Mr. CORDRAY. Yes, yes. 

Mr. SHERMAN. —home improvement loan— 

Mr. CORDRAY. Yes, it is. 

Mr. SHERMAN. —and if you need legislation I hope that we would 

work with you on this. 

Studies have shown that in some geographic areas it is possible 

to determine the identity of nearly 100 percent of the borrowers 

using the data that lenders are required to collect and report by 

the Home Mortgage Disclosure Act (HMDA). This is despite the 

fact that that Act supposedly provides for anonymous data in its 

final form. 

The revised and greatly expanded HMDA rule is slated to become effective on January 1st of next year and includes many highly sensitive data points, including the borrower’s credit score. The 

Bureau has stated in its final rule that it would propose a balancing test to determine which of many data points would be redisclosed to the public. 

What is your timeline? I realize this is another timeline question 

but— 

Mr. CORDRAY. That is all right. No, it is— 

Mr. SHERMAN. —some regulation for that process, and what does 

the CFPB plan to protect highly sensitive consumer data, like the 

borrower’s salary or their credit score, from being publicly disclosed? 

Mr. CORDRAY. I am very well aware of that issue. It is something 

we are wrestling with. 

We do not want to be increasing the re-disclosure possibility for 

consumers, and it is something we are working on. We are mindful 

of the fact that although people would be reporting starting in January—and that, of course, was a mandatory rule that Congress required—we need to give guidance about the privacy aspects of this, 

and we are very sensitive to it. 

So I don’t have a timeframe for you, but we are well aware of 

how these things fit together and the need for people to— 

Mr. SHERMAN. And let me just quickly urge you to use your authority to have a simpler version of many of your rules applying 

to smaller financial institutions. 

Mr. CORDRAY. Yes. 

Mr. SHERMAN. Otherwise they are driven out of the market and 

everybody has to go to Wells Fargo, and then you end up with 20 

accounts. 

Mr. CORDRAY. We are trying to do that where we can, and I believe that is a sentiment shared on both sides of the aisle and it 

is something we hear quite a lot. 

Chairman HENSARLING. The time of the gentleman has expired. 

Now, pursuant to clause d(4) of committee rule three, the 

gentlelady from Missouri, Mrs. Wagner, chairwoman of our Oversight and Investigations Subcommittee, will be recognized for an 

additional 5 minutes upon the conclusion of the time allocated to 

her under the 5-minute rule. The gentlelady is now recognized. 

Mrs. WAGNER. Thank you, Mr. Chairman. 

And, Director Cordray, thank you for appearing here today before us. I want to ask you today about the widespread failure in 

consumer protection that occurred at Wells Fargo over a number 

28 

of years regarding fraudulent sales practices in which Wells Fargo 

fired 5,300 employees for opening, gosh, up to 1.5 million deposit 

and credit card accounts without the customers’ knowledge or consent. 

Sir, despite receiving more than 140,000 pages of responsive 

records from Wells Fargo, the OCC, and the CFPB, this committee 

to date has seen no evidence that the CFPB had an ongoing independent investigation relating to Wells Fargo sales practices prior 

to May 8, 2015. This is 4 days after Wells Fargo informed the 

CFPB that the L.A. city attorney filed a civil complaint against the 

bank that same day, and over 500 days, sir, after the original article by the L.A. Times first broke the story about fraudulent accounts at Wells. 

Director Cordray, there is a binder just to your right, sir. It has 

a Congressional seal on it. Will you grab it please? 

The binder to your right, sir. You don’t care to take the binder? 

All right. It is in front of you. There are documents, sir, I am 

going to be referencing. Perhaps you would like to reference them 

also. 

And I would like the record to reflect that the gentleman has ignored the binder that Congress has put in front of him. 

I will be referencing—and I would appreciate it if you would keep 

your answers very, very short, sir. Simply yes or no on most of 

them. 

Mr. CORDRAY. I am quite familiar with the background— 

Mrs. WAGNER. Sir, do you recall when you first read the December 2013 L.A. Times article I am referring to? 

Mr. CORDRAY. I beg your pardon? Have I read that article? 

Mrs. WAGNER. When did you first read the article? 

Mr. CORDRAY. I do not know when I first read that article. 

Mrs. WAGNER. At the Senate Banking Committee’s hearing in 

September 2016 on Wells Fargo—well let me ask you, did you read 

it? 

Mr. CORDRAY. I have read that article. 

Mrs. WAGNER. All right. 

Mr. CORDRAY. I don’t recall when I first read it. 

Mrs. WAGNER. All right. At the Senate Banking Committee’s 

hearing in September 2016 on Wells Fargo, L.A. City Attorney Michael Feuer noted in his testimony that upon reading the L.A. 

Times article, he ‘‘immediately instructed his staff to investigate 

the allegations.’’ 

Do you believe that was an appropriate response? Yes or no? 

Mr. CORDRAY. I believe that Mike Feuer and his team conducted 

themselves— 

Mrs. WAGNER. Was that an appropriate response? Yes or no? 

Mr. CORDRAY. —in an exemplary fashion throughout this case. 

Mrs. WAGNER. Did you also instruct your staff to immediately investigate the allegations made in the L.A. Times article after you 

read it? Yes or no? 

Mr. CORDRAY. Actually, we had had previous indication that 

there might be problems at Wells Fargo— 

Mrs. WAGNER. Did you instruct them? Yes or no? 

Mr. CORDRAY. We had two whistleblower tips earlier— 

29 

Mrs. WAGNER. Did you instruct them? Yes or no? I will get to 

that in a moment, sir. I am asking you a yes-or-no question. 

Mr. CORDRAY. So it wasn’t the L.A. Times article that tipped us 

off to the fact— 

Mrs. WAGNER. All right. I will— 

Mr. CORDRAY. —that there might be a problem. 

Mrs. WAGNER. Let me reclaim my time. Did the CFPB first initiate a supervisory review of Wells Fargo branch sales practices on 

May 8, 2015? 

Mr. CORDRAY. No, that is not correct. That is not a correct— 

Mrs. WAGNER. Exhibit one in the binder that you prefer not to 

look at in front of you is a letter dated March 3, 2016—it is up here 

for review, also—from Edwin Chow, an employee of yours, a CFPB 

regional direct for the west region, where he indicated to Wells 

Fargo that the CFPB, ‘‘initiated a supervisory review of Wells Fargo’s branch sales practices on May 8, 2015.’’ 

Mr. Chairman, I would like to enter this letter in the record. 

Chairman HENSARLING. Without objection, it is so ordered. 

Mrs. WAGNER. Are you denying that the CFPB initiated its supervisory review of Wells Fargo’s branch sales practices on May 8, 

2015? Yes or no? 

Mr. CORDRAY. We actually had engaged in supervisory activity 

prior to that time. 

Mrs. WAGNER. Did the CFPB notify Wells Fargo on March 3, 

2016, that the CFPB had decided to— 

Mr. LYNCH. Mr. Chairman? 

Mrs. WAGNER. —refer this matter to enforcement, sir? 

Mr. CORDRAY. That is the key point that I want to make sure you 

are clear on, okay? 

Mr. LYNCH. Mr. Chairman? 

Mr. CORDRAY. We were engaged in—what is happening? 

Mr. LYNCH. Just a point of parliamentary— 

Chairman HENSARLING. The clerk will suspend. 

For what purpose does the gentleman from Massachusetts seek 

recognition? 

Mr. LYNCH. Mr. Chairman, I am just wondering, according to the 

rules, am I entitled to any of the documents that we are questioning the witness on? Because I would really like to get copies of 

the documents, if I could. 

Chairman HENSARLING. They will be provided to all Members. 

Mr. LYNCH. But we are doing the investigation now, and I was 

just wondering if I could get copies of—if copies of the documents 

have been provided to all the Members as is required under the 

rules? 

Chairman HENSARLING. Members may request copies of the documents and they will be provided to Members after the request. 

Mr. LYNCH. May I make a formal request to get the documents, 

please? 

Chairman HENSARLING. I’m sorry, would the gentleman repeat 

the question? 

Mr. LYNCH. May I get the documents then? I guess I have to ask 

for them. 

Chairman HENSARLING. Apparently, they are being provided to 

you as we speak. 

30 

Mr. LYNCH. Thank you, Mr. Chairman. I appreciate that. 

Chairman HENSARLING. The clerk will start the clock again. 

The gentlelady is once again recognized. 

Mrs. WAGNER. Are you denying, sir, that the CFPB initiated a 

supervisory review of Wells Fargo branch sales practices on May 

8, 2015? Yes or no? 

Mr. CORDRAY. Well, no. A moment ago you said, ‘‘enforcement investigation,’’ and as I said— 

Mr. CLAY. Mr. Chairman— 

Mr. CORDRAY. —in my introductory— 

Mr. CLAY. Excuse me. 

Mr. Chairman, is it possible for— 

Chairman HENSARLING. The gentlelady will suspend. 

For what purpose does the gentleman from Missouri seek recognition? 

Mr. CLAY. I would love to see these documents, too. The gentlewoman has raised some interesting points and I think that the documents should be shared with the committee. 

Mr. HUIZENGA. Mr. Chairman? 

Mr. CORDRAY. Mr. Chairman? 

Ms. WATERS. Will the gentleman yield? 

Mr. CORDRAY. Mr. Chairman— 

Mr. CLAY. I will yield. 

Ms. WATERS. Mr. Chairman, why don’t we just give the documents to all the Members over here? 

Chairman HENSARLING. They will be provided in a timely fashion. They are not violative of any committee rules, and I think so 

far what the gentlelady has alluded to is also put onto the committee screens. 

The gentlelady from Missouri is recognized yet again. 

Mrs. WAGNER. Can I have my time restored, Mr. Chairman, 

please? 

Chairman HENSARLING. The time was stopped. 

Mrs. WAGNER. Did the CFPB, sir, notify Wells Fargo on March 

3, 2016, that the CFPB had decided to refer this matter to enforcement? Yes or no? 

Mr. CORDRAY. Yes. When that happened there had been previous 

work done on the matter. 

Mrs. WAGNER. Okay. But you do not deny that the CFPB represented in writing that it referred this matter to enforcement on 

March 3, 2016, correct? 

Mr. CORDRAY. So let me clarify this for you. The letter—and I 

am— 

Mrs. WAGNER. Sir, my time is limited and I have a lot of question. 

Mr. CORDRAY. I understand. The letter dated March 3rd is a 

point at which we decided that the matter had risen to a level 

where it was no longer a supervisory matter and, in fact, had become an enforcement matter. 

Mrs. WAGNER. Reclaiming my time, did the CFPB refer this matter to enforcement around the same time that the L.A. city attorney began settlement negotiations with Wells Fargo? 

Mr. CORDRAY. Yes, but that is not when we initiated work on the 

matter. 

31 

Mrs. WAGNER. Wow. What an amazing coincidence because, in 

fact, the CFPB referred this Wells Fargo matter to enforcement on 

March 3rd, 2016. The L.A. city attorney referred it on March 2nd, 

2016. What an amazing coincidence. 

Did the CFPB, sir— 

Mr. CORDRAY. These aren’t coincidences. We are in contact with 

local officials— 

Mrs. WAGNER. Sir, reclaiming my time— 

Mr. CORDRAY. We are in contact with officials around the country— 

Mrs. WAGNER. —did the CFPB first request— 

Mr. CORDRAY. —and we work cooperatively with them. 

Mrs. WAGNER. Director Cordray, did the CFPB first request that 

Wells Fargo delay the destruction of records relating to its branch 

sales practices on May 8th, 2015? 

Mr. CORDRAY. I’m sorry, say that again? 

Mrs. WAGNER. Did the CFPB first request that Wells Fargo delay 

the destruction of records relating to its branch sales practices on 

May 8th, 2015? 

Mr. CORDRAY. Consistent with the fact that it had become—it 

had migrated and graduated into an enforcement action, yes. 

Mrs. WAGNER. I would like to enter into the record Edwin Chow’s 

letter from the CFPB, Mr. Chairman, as exhibit three. 

Chairman HENSARLING. Without objection, it is so ordered. 

Mrs. WAGNER. Sir, so you agree. So you do not deny that the 

CFPB first requested on May 8, 2015, that Wells Fargo delay the 

destruction of records pertaining to its branch sales practices. Yes 

or no? 

Mr. CORDRAY. So that is just a reminder of obligations— 

Mrs. WAGNER. Is that a yes or no, sir? 

Mr. CORDRAY. —that already exist under the law, so. 

Mrs. WAGNER. Is that when you sent the request? Yes or no? 

Mr. CORDRAY. That is a reminder of the obligations that already 

exist under the law, yes. 

Mrs. WAGNER. I will take the reminder as a yes. 

If this was the first time that the CFPB made this request to 

Wells Fargo, then why didn’t the CFPB produce those records to 

this committee, given the fact that such records would be responsive to the committee’s record request of September 16, 2016, 

which is exhibit five, Mr. Chairman—that is in your binder—that 

I would also like to have entered into the record. 

Chairman HENSARLING. Without objection, it is so ordered. 

Mr. CORDRAY. So, I’m sorry, we have given you documents, and 

if there are more documents that you want we are happy to work 

with your staff. 

Mrs. WAGNER. We have been asking for documents, as everyone 

on this side of the aisle has referenced, for hundreds and hundreds 

and hundreds of days, sir, and you are in woeful compliance. 

Let me move on. 

Mr. CORDRAY. If there are documents you don’t have, I would be 

happy to try to provide them. 

Mrs. WAGNER. Director Cordray, I want to stay on this measure. 

Did the CFPB first request on May 8, 2015, that Wells Fargo 

produce items such as sales practice policies and actions taken by 

32 

the bank regarding fraudulent sales practices at the bank? Yes or 

no? 

Mr. CORDRAY. Those are the compelled production of documents— 

Mrs. WAGNER. Yes or no, sir? 

Mr. CORDRAY. —that became very significant to this investigation. 

Mrs. WAGNER. Yes or no, sir? 

Mr. CORDRAY. Yes. 

Mrs. WAGNER. All right. Good. So you do not deny that the CFPB 

first requested that Wells Fargo produce this information on May 

8, 2015? 

Mr. CORDRAY. No. I don’t, and that is not correct. And you are 

conflating things, and I don’t want you to build on that in an erroneous fashion. 

Mrs. WAGNER. Well, let me move on then. If you are saying that 

this— 

Mr. CORDRAY. They are already— 

Mrs. WAGNER. —isn’t the first time— 

Mr. CORDRAY. No. 

Mrs. WAGNER. If you are saying this isn’t the first time the 

CFPB requested this information from Wells Fargo, then why 

didn’t the CFPB produce those records to this committee— 

Mr. CORDRAY. Look, first— 

Mrs. WAGNER. —given that such records would be responsive to 

the committee’s request of September 16, 2016, which is exhibit 

five that has been put in. I have a few more. 

Mr. CORDRAY. First of all— 

Mrs. WAGNER. Director, did the CFPB ever contact Wells Fargo 

about its fraudulent branch sales practices before Wells Fargo informed the CFPB on May 4, 2015? Yes or no? 

Mr. CORDRAY. We had had supervisory activity prior to that time 

and subsequent to that time, which ultimately resulted— 

Mrs. WAGNER. I will take that as a yes. Were you aware that the 

earliest correspondence between the CFPB and the Wells Fargo 

that you have produced is the Edwin Chow letter of May 8, 2015? 

Mr. CORDRAY. There was supervisory activity prior to that time— 

Mrs. WAGNER. All right. Let’s get to that. 

Mr. CORDRAY. —and subsequent to that time. 

Mrs. WAGNER. Is this the earliest correspondence between the 

CFPB and Wells Fargo pertaining to the bank’s sales practices? 

Mr. CORDRAY. I don’t know exactly, but— 

Mrs. WAGNER. All right. Well, I will leave it at that. 

Did the CFPB depose or interview only three Wells Fargo employees in connection with the fraudulent accounts scandal? 

Mr. CORDRAY. The CFPB took the only depositions that occurred 

in this case. 

Mrs. WAGNER. Were there three? Yes or no, three? 

Mr. CORDRAY. The only ones that occurred in this case— 

Mrs. WAGNER. Were there three, sir? 

Mr. CORDRAY. —we took them. 

Mrs. WAGNER. Is that correct? That is correct then. Yes. 

Wow. You tout CFPB’s investigation as both independent and 

comprehensive. Director Cordray, only interviewing 3 employees for 

33 

such widespread cases of fraudulent practices where 5,300 employees were fired does not seem very comprehensive to me, sir. 

In your letter to this committee on September 23, 2016, you indicate that Bureau staff first became aware of some related issues 

around Wells Fargo. This was well over a year before either initiating a supervisory review or containing the bank about fraudulent 

practices, sir. It is most concerning. 

I don’t have much time left. 

Mr. CORDRAY. So, let me— 

Mrs. WAGNER. No, I am going to close here, sir. And then— 

Mr. CORDRAY. Okay. You don’t want to give me a chance to respond? That is okay. 

Mrs. WAGNER. —can yield or not. 

Director Cordray, from the minimal records you have given to 

this committee thus far, and based on your testimony, the only conclusion there is to draw regarding the Wells Fargo scandal is that 

the CFPB was asleep at the wheel, Director Cordray, under your 

leadership— 

Mr. CORDRAY. That is not correct. 

Mrs. WAGNER. —and that your investigation— 

Mr. CORDRAY. That is not correct. 

Mrs. WAGNER. —in this matter was far from independent and 

comprehensive, sir. 

You have claimed that the CFPB was created to root out this 

kind of widespread consumer harm, but the L.A. Times, the OCC, 

and the L.A. city attorney all got there before you did, sir. I would 

encourage you— 

Chairman HENSARLING. The time— 

Mrs. WAGNER. —after your testimony to— 

Chairman HENSARLING. The time of the gentlelady— 

Mrs. WAGNER. —revise your remarks, sir. 

Chairman HENSARLING. The time of the gentlelady has expired. 

Mrs. WAGNER. I yield back my time. 

Chairman HENSARLING. The Chair now recognizes the gentleman 

from Massachusetts, Mr. Capuano. 

Mr. CAPUANO. Thank you, Mr. Chairman. 

Mr. Cordray, boy, they really hate you, don’t they? 

Mr. CORDRAY. They don’t want to give us— 

Mr. CAPUANO. I don’t know if it is you or the agency. 

Mr. CORDRAY. —any credit for anything good that we do. I understand that. That is part of the game. 

Mr. CAPUANO. I think I have entered the bizarro world now. We 

have already had somebody call for you to get fired, call the agency 

a rotting agency. 

First, they complained that you enforced too much. Now we just 

heard a 10-minute rant that you didn’t enforce enough. 

And, bizarro of all bizarros, the people on the other side of the 

aisle have now become the sole and perfect defenders of workers’ 

rights, women’s rights, and minority rights. Unbelievable. 

We had better stay here a little longer because eventually they 

are going to be in favor of the health care law and all the other 

good things of America. 

34 

Mr. Cordray, we have had many interactions, and sometimes I 

disagree with you, and sometimes I disagree with the agency. And 

I would love to sit here and talk about those things. 

But let’s be honest: You and your agency are called here 62 times 

not to have the typical oversight that is our responsibility, but to 

beat the hell out of you and to try to make sure we get rid of this 

agency. That is why we are here. 

That being the case, a thoughtful presentation here is really not 

called for. And with that, since nobody on that side of the aisle 

seems to want to give you the opportunity to actually address a 

misleading question based on wrong facts, I will lend you 31⁄2 minutes to address— 

Mr. CORDRAY. All right. 

Mr. CAPUANO. —you can pick a bunch. Which one of the most ridiculous assertions that were just made would you like to address? 

Mr. CORDRAY. That is fine. And I’m sorry that the previous questioner has left the room, but— 

Mr. CAPUANO. Well, it doesn’t matter. 

Mr. CORDRAY. —let me recap. 

Mr. CAPUANO. They weren’t going to listen to you anyway. 

Mr. CORDRAY. Maybe. 

Let me recap the events. So we had the first whistleblower tips 

in the middle of 2013 before the L.A. Times story, although I will 

say that was a splendid piece of investigative reporting, and investigative reporting often aids government law enforcement investigations and did so here, as well as follow-up stories by the L.A. 

Times. 

At the time there were issues around whether employees were 

being abused by the employer, whether they were being held to unrealistic sales goals, and the like. Over time this problem migrated 

into something bigger and our look at it migrated into something 

bigger as the problem itself evolved. 

We were engaged in supervisory activity through 2014 and in 

2015, and at that point, as the Congresswoman noted, the matter 

had become serious enough and clear enough that it migrated and 

was graduated into an enforcement action. That is a very serious 

matter and it involved taking depositions. 

We didn’t need to take hundreds of depositions here. We took 

three key depositions that had not been able to be taken in the 

case because of evidentiary restrictions on what the L.A. city attorney’s office could do. They shared with us information from other 

interviews they had had. We didn’t need to duplicate that work. 

We also compelled the production of documents from Wells Fargo 

that were very significant to detailing and documenting, and nobody denies this. We established it through this joint investigation, 

and it is clear and no one denies that millions of accounts were 

opened illegally, improperly, in the name of consumers who didn’t 

know a thing about it and were often hurt by it, in terms of costing 

them fees or affecting their credit reports or the like. 

We worked with the L.A. city attorney’s office and brought the 

OCC into a joint work with the L.A. city attorney’s office, and we 

resolved the matter—not just on the basis of the boundaries of 

California, which is what the L.A. city attorney could have done, 

but nationwide and with broad injunctive relief that this will not 

35 

happen again at Wells Fargo. And because it is a public enforcement action and all the facts are detailed—when the Congresswoman talks about 5,300 employees fired and millions of accounts 

opened, we know that because of the public enforcement action. 

That is what broke this matter open. Nobody was talking about 

it before then. 

That is leading to the entire industry taking a look and being 

more careful about whether they are engaging in any of the same 

kind of fraudulent practices toward their own customers. So this 

will have cleaned this up throughout the entire industry and put 

everyone on notice that this is a very serious matter; it is not to 

be taken lightly. You can’t just put out these sales goals and say 

you should meet them and we will turn a blind eye to how you 

meet them even if it violates the law. 

And if we establish that principle there will be a lot of problems 

avoided in the future and a lot less work for the Consumer Bureau, 

and I will be glad of it. 

Mr. CAPUANO. Thank you, Mr. Director. 

And with that, I am going to yield the committee back 8 seconds. 

Chairman HENSARLING. The gentleman yields back. 

The Chair now recognizes the gentleman from Kentucky, Mr. 

Barr, chairman of our Monetary Policy and Trade Subcommittee. 

Mr. BARR. Thank you, Mr. Chairman. 

And, Director Cordray, in your response to my friend, Mr. Capuano from Massachusetts, I think you said this is just, ‘‘part of the 

game.’’ Well, let me tell you what is not a game. 

What is not a game is your agency denying vital financial services to servicemembers serving abroad from my commonwealth in 

communicating with their families back home. 

Mr. CORDRAY. Well, we are not— 

Mr. BARR. As you may know—let me ask you the question. 

Mr. CORDRAY. Okay. 

Mr. BARR. As you may know, the Bureau has issued regulations 

on international remittances. And in Kentucky we have a number 

of military bases; Fort Knox, Fort Campbell, the National Guard 

headquarters is located in my district. Credit unions are no longer 

able to offer their members this product, and here is why—I’ll give 

you a real-life story from a constituent. 

Fort Knox Federal Credit Union has members all across the 

world and they have discontinued offering this much-needed service due to fear of not being compliant after 100 remittances a year. 

Now, you can imagine that for this credit union it doesn’t take long 

to reach 100 when you have over 85,000 members, many of whom 

are deployed overseas. 

Mr. CORDRAY. Yes, I see that. 

Mr. BARR. When the Kentucky Credit Union contacted you about 

the rule and its unintended consequences it is reported to me that 

your comment was, ‘‘No, this is the intended consequence,’’ and 

that you were not concerned about these customers— 

Mr. CORDRAY. I don’t know about that statement— 

Mr. BARR. —hardworking military men and women who are now 

having to pay much higher fees to remit funds home to their families because their credit union can’t comply with this onerous regulation. 

36 

Why won’t you provide relief to servicemembers and their families? 

Mr. CORDRAY. We are doing a lot of great work for 

servicemembers and their families, and I would be happy to detail 

it if I am given a chance. In terms of remittances in particular, are 

you aware of who required there to be that rule? 

Mr. BARR. What I am telling you— 

Mr. CORDRAY. Congress required that rule. That is in the law. 

We are merely following the law and carrying it out. 

Mr. BARR. Director Cordray, I will reclaim my time. The Bureau 

has the discretion to provide the relief to these credit unions who 

are no longer able to deal with a workable rule that would allow 

these remittances and have priced these members out of their credit union and, as a result, these credit unions are no longer able to 

provide. 

And I want you to revisit that. That is a request of you to revisit 

that rule to provide relief to these servicemembers. 

Mr. CORDRAY. We would have the discretion to do that if Congress provided it in the law. It is not in the law, so— 

Mr. BARR. No. Well, once again— 

Mr. CORDRAY. —that is my problem. 

Mr. BARR. Once again, I think the Bureau is taking an overly restrictive view of your administrative—certainly you exercise a 

whole lot of discretion to take away financial services and products 

from the American people. I think you could probably revisit this, 

and I would love to continue that conversation, but let me move on 

to another problem. 

Mr. CORDRAY. We will be glad to continue that— 

Mr. BARR. Another problem: In March of 2015, Director Cordray, 

you testified before this committee and you said you needed data 

showing that the CFPB rules related to ‘‘high-cost loans’’ were, in 

fact, constraining the manufactured housing market. 

Well, according to Home Mortgage Disclosure Act data, manufac- tured housing loans from $50,000 to $75,000 have decreased by 

about 14 percent as a result of your regulation. There is clear 

data— 

Mr. CORDRAY. According to data from whom? 

Mr. BARR. The Home Mortgage Disclosure Act data. 

Mr. CORDRAY. I’m sorry, the data from— 

Mr. BARR. The government’s data. The government’s data is telling you that the manufactured housing credit is down because of 

your regulations. 

Why in the world, when we have an affordable housing crisis, 

when many rural Americans struggling in Kentucky and elsewhere 

need access to affordable housing, why don’t you provide relief to 

working Americans who need access to manufactured housing credit when the government’s own data is telling you that your regulations are hurting low-income Americans? 

Mr. CORDRAY. So, first of all, I don’t think the government data 

says that. The government data doesn’t— 

Mr. BARR. 14 percent. 

Mr. CORDRAY. The government data doesn’t ascribe causation, so 

there are a lot of reasons why this could be, but I would be happy 

to follow up with your office. 

37 

I know this is a point of particular importance to you and to 

other members of the committee, and we have talked about it before and I would be glad to talk about it further. 

Mr. BARR. I think we should because I think you have the discretion to stop these rules that are contributing to the affordable housing crisis and making it harder for Americans, particularly in rural 

areas, to afford manufactured homes. 

Finally, on October 7, 2016, the Office of Advocacy of the U.S. 

Small Business Administration—another government agency—submitted a comment letter to the Bureau related to your proposed 

rule regarding small-dollar consumer loans. The comments pointed 

out that the economic impact of the proposed rule on small entities 

and consumers would be greater than what is indicated in the Bureau’s analysis pursuant to the Regulatory Flexibility Act. 

This is corroborated by my own constituent small businesses who 

say that the SBREFA process was a joke. They went and told you 

that they were going to go out of business and you ignored them. 

So you have our constituents saying they are going out of business because of your rule and another government agency saying 

that that is true, and you are ignoring it. 

Mr. CORDRAY. No, no, no. Not at all, Congressman. We are not 

ignoring that. And the reason we have that process and hear from 

everyone is to hear what they say and to process it and digest it 

and analyze it. 

Just because we don’t necessarily agree with every single thing 

people say to us—often they are saying conflicting things so we 

can’t agree with it all. 

Chairman HENSARLING. The time of the gentleman has expired. 

Mr. CORDRAY. I would be glad to follow up with your office on 

these points if you would like, on the remittances and the manufactured housing— 

Chairman HENSARLING. The time of the gentleman has expired. 

The Chair now recognizes the gentleman from Missouri, Mr. 

Clay, ranking member of our Financial Institutions Subcommittee. 

Mr. CLAY. Thank you, Mr. Chairman. 

And thank you, Director, for being here. 

I really don’t know where to start today. My neighbor from Missouri, Mrs. Wagner, sounded as though she was sounding the 

alarm, that you had done something wrong and that she was in defense of Wells Fargo. Then my friend from Wisconsin, Mr. Duffy, 

brings up the issue of race. 

So let’s focus on race first. 

I noted in your semiannual report that mortgage companies and 

auto loan companies continue to charge higher interest rates to African-American and Hispanic borrowers than to non-Hispanic, 

White borrowers. In the case of PNC, $35 million has already been 

recovered to the injured and given back to the injured, as well as 

Ally auto loans with about $80 million in damages already recovered. 

And I would hope my friends on the other side of the aisle would 

understand that this has a severe financial impact on AfricanAmerican and Hispanic families that prevents them from building 

wealth for their family. It keeps them in a hole. 

38 

And so I want to commend CFPB for finding these atrocities and 

making these companies pay. And that is part of why you were created, and I appreciate the job you do. 

Can you speak to that and what you are finding in these industries? 

Mr. CORDRAY. Sure. 

Let me start just by correcting the record on one point on PNC. 

The discrimination there was by National City Bank. PNC later 

took them over, but they weren’t really responsible for any of that; 

they actually helped us clean it up. 

But the point you are making is, we think, really important. A 

lot of people would like to think discrimination is a thing of the 

past and it is a vestige of the past, and we have found ongoing instances of discrimination, some of them significant, some of them 

involving redlining, which a lot of people want to think is a practice 

that went out of fashion decades ago, but we have found that it 

hasn’t. And we have taken action where that was appropriate and 

where the evidence demonstrates that action is needed. 

And what is this about? It is about making sure that people are 

treated fairly and equally in the financial marketplace where they 

live so much of their lives, that they are seeking a mortgage that 

they are going to be able to get credit and be charged the same interest rate that they would if they had a different ethnic background or a different racial or skin color. 

That is a very American principle but it requires enforcing the 

law to make it happen and make it stick. And it makes people uncomfortable. 

Now, some of the law in this area is complicated. I will grant 

that. We try to work through it as best we can. 

The U.S. Supreme Court reinforced the validity of that law 2 

years ago in the Inclusive Communities decision, and we do our 

best to faithfully follow all of those decisions. But it is important 

work. 

Our Office of Fair Lending and Equal Opportunity does that 

work on a daily basis. They have encountered obstacles at times in 

doing that work, but they have been splendid in persevering and 

getting justice for Americans in so many circumstances, and I am 

very proud of their work. 

Mr. CLAY. And I am proud of the work that you do, also. 

Just out of curiosity, I noticed that you describe some of your 

public meetings and community roundtables with stakeholders like 

community banks and credit unions. Do you get many complaints 

from the public about the creation and existence of the CFPB? 

Have you gotten many of those? 

Mr. CORDRAY. No, I don’t think so. We do hear—everybody comes 

before us in a variety of forums, and we encourage that. And they 

all have different things to say, and some of them are complimentary and some of them are critical, and we try to listen to them 

all. 

Frankly, it is the critical things they say that are often the most 

helpful because they tell us where we should think about doing 

something differently. The complimentary things, of course, we love 

to hear them when people are willing to say them, but that just 

39 

means keep doing what you are doing, which is a good message, 

but we don’t learn quite as much from that. 

So we do try to be very accessible, and I think nobody can complain about the fact that they can’t get their voice heard at the 

Consumer Financial Protection Bureau, and that is the way it 

should be— 

Mr. CLAY. And it seems to be pretty effective. Looking at the 

chart on the screen, it looks like people from all around the country 

participate and bring their complaints to you. 

So I see my time is up, but thank you. 

Chairman HENSARLING. The time of the gentleman has expired. 

The Chair now recognizes the gentleman from California, Mr. 

Royce, chairman of the House Foreign Affairs Committee. 

Mr. ROYCE. Thank you. 

Director Cordray, Mr. Luetkemeyer raised some concerns along 

the same line that I have here, and one of the things in particular 

that I am concerned about is the largely unchecked power that the 

CFPB has to issue the civil investigative demands, or CIDs, to inquire about a company’s activity. 

And what is unusual here, I think, is that the CFPB is not required to possess evidence of wrongdoing before initiating a probe. 

And I wanted to talk to you about that. 

I think he was making this argument basically: Companies deserve due process. They deserve the ability to appeal to a body 

other than the CFPB itself, and I think companies deserve the assurance that the agency will objectively review any petition or set 

aside or limit a CID. 

In terms of my questions, I am interested in your selection process for CIDs. 

Do you look at this number of complaints that come up in the 

database? Is that how you do it? And specifically, if a company has 

zero complaints or has been proactively taking steps to address 

concerns, would you launch an investigation under that situation? 

Mr. CORDRAY. Let me just say that you just talked for a minute 

and 40 seconds and I agreed with everything you said, including 

that companies have a right to due process. They do under our 

Constitution. 

We do not open investigations where there is no evidence of 

wrongdoing. That would be a waste of our time. We have limited 

resources. 

Mr. ROYCE. Okay. Let me explain the only reason I am going to 

interject here. 

Mr. CORDRAY. Yes. 

Mr. ROYCE. I want to ask an additional question, but there are 

examples— 

Mr. CORDRAY. Yes. 

Mr. ROYCE. —where you have had an investigation without complaints that I am— 

Mr. CORDRAY. No, no, but we would have some sort of evidence 

of wrongdoing or some reasonable basis for—and— 

Mr. ROYCE. Right, but I am just explaining, without any complaints— 

40 

Mr. CORDRAY. —that can be appealed to the courts, and some 

have been appealed to the courts and sometimes the courts disagree. That is a check. That is fine, yes. 

Mr. ROYCE. Right, but I am pointing out that you have opened 

up the investigations without any complaints. 

When you make the decision to initiate a probe, you refer to the 

company as a ‘‘target.’’ Do you think that type of language creates 

an adversarial posture at the outset or presumes wrongdoing on 

the part of the— 

Mr. CORDRAY. Actually, we changed that very early on. 

Mr. ROYCE. I appreciate that you changed— 

Mr. CORDRAY. We talk about companies as ‘‘subjects’’ because we 

don’t want to prejudge. 

Mr. ROYCE. I appreciate— 

Mr. CORDRAY. And by the way, let me also say, it is important 

to note, we have opened a number of investigations that we later 

closed because we did not find enough basis to proceed. And so we 

do that. We are willing to do that. 

I tell our lawyers when that happens, ‘‘Don’t be disappointed. 

You looked at it and there wasn’t anything and that is the right 

outcome. Don’t feel like you have wasted your time. You did the 

right thing there.’’ 

But there has to be a reasonable basis for thinking that something is amiss before we would open an investigation at all, and 

courts can and do check us on that if they think we didn’t get that 

right. 

Mr. ROYCE. Right, in your opinion, but that is, again, with zero 

complaints in some of these cases. 

Now, let me just go to— 

Mr. CORDRAY. Yes. 

Mr. ROYCE. —a company that visited my office recently— 

Mr. CORDRAY. Okay. 

Mr. ROYCE. —which explained that as part of the initial inquiry 

in the CID process the second question they were asked was about 

their annual revenue. Why is such a question relevant to the initial 

inquiry, I would ask? 

Mr. CORDRAY. So it could go to scope, trying to figure out how 

big the problem is. If it is a small problem at a small institution 

it is probably not the right expenditure of resources by the Bureau. 

If it is a smaller problem at a larger institution then it can look 

a lot more like a larger problem at a smaller institution. These are 

just things you try to make your best judgments about. 

Mr. ROYCE. I just want to explain how it seems to some smaller 

institutions. 

Mr. CORDRAY. Yes, and I understand. That is not how it was intended. 

Mr. ROYCE. With all due respect, Director, let me explain how it 

seems. It seems to them a little like the car mechanic in ‘‘National 

Lampoon’s Vacation.’’ I will just give you this example as he relayed it to me. 

Mr. CORDRAY. I have lived through those examples myself. 

Mr. ROYCE. Yes, he says, you know, when Clark Griswold asks, 

‘‘How much is the bill for repair?’’ he responds, ‘‘How much you 

got?’’ 

41 

That, at least for many of these smaller companies, is the way 

they view it. And we need to restore, I think, some balance or sanity in the process, right? 

Mr. CORDRAY. Actually, sir— 

Mr. ROYCE. Let me just close with this: An investigation or an 

examination is not supposed to be a ‘‘gotcha’’ moment or a hold-up, 

and I am just explaining, in terms of many companies in cases 

where there were zero complaints, their feeling about the attitude 

when somebody comes in and says, ‘‘You are a target.’’ 

Mr. CORDRAY. Ten seconds? Zero complaints is one bit of evidence; there may be other bits of evidence that point in a different 

direction. 

The other thing is sometimes when we are asking about resources it is because we would limit any kind of penalty based on 

their ability to repay because we don’t want to send that company 

out of business. 

Chairman HENSARLING. The time— 

Mr. CORDRAY. We just want— 

Chairman HENSARLING. The time of the gentleman has expired. 

Pursuant to clause d(4) of committee rule three, the gentleman 

from Massachusetts, Mr. Lynch, will be recognized for an additional 5 minutes upon the conclusion of the time allotted to him 

under the 5-minute rule. The gentleman is now recognized. 

Mr. LYNCH. Thank you, Mr. Chairman. 

Mr. Cordray, thank you very much for your hard work and for 

your attention. Do you need a couple more seconds to finish your 

thought on that? I know we were speaking when you ran out of 

time. 

Mr. CORDRAY. No, I don’t think so. I think Congressman Royce 

and I— 

Mr. LYNCH. All right. 

I do want to revisit the whole Wells Fargo scenario just for a second. According to my records, you testified before the Senate Banking Committee and your testimony was that you had received whistleblower complaints regarding fraudulent accounts being opened 

up. And that was in, I believe, July of 2013. 

Mr. CORDRAY. Correct. 

Mr. LYNCH. And the expose written by the L.A. Times wasn’t 

until December, 6 months later. 

Mr. CORDRAY. And it detailed certain aspects of the situation, but 

again, it’s important to understand the situation itself unfolded 

over time. There weren’t millions of accounts opened in a single 

day. 

Mr. LYNCH. Right. 

Mr. CORDRAY. This was a practice that started in a very limited 

way and then maybe spread to other employees and then spread 

through the grapevine that this is the way you can make your bonuses. It became exponential over time. 

And so as the problem evolved and our look at it evolved, that 

is why anybody can look back and say, ‘‘You should have known 

everything on day one.’’ 

Mr. LYNCH. Right. 

Mr. CORDRAY. Well, everything wasn’t even happening on day 

one, so that is kind of a misplaced criticism, I think. 

42 

Mr. LYNCH. And there was an active effort by Wells Fargo to conceal this. They had originally, if I am correct, back in 2011 fired 

hundreds of employees allegedly for opening fraudulent accounts. 

Mr. CORDRAY. Yes. The timing on the firings is not entirely clear. 

Mr. LYNCH. Okay. 

Mr. CORDRAY. There was a suggestion that there was a same 

pace of firings all along. I think the firings accelerated later in the 

process because the problem became greater and the awareness of 

the problem became higher. 

But we do not think that the company came forward in a responsible way to let the regulators know about anything that they were 

seeing. And as I say, some of it occurred and magnified later on. 

Mr. LYNCH. And I do appreciate that it was CFPB that made 

that a global settlement and— 

Mr. CORDRAY. I would say that working together with our partners. The L.A. city attorney’s office brought things to the table that 

were critical; the OCC brought things to the table that were helpful; and I think the CFPB brought things to the table that were 

essential in making it, as you say, a national resolution with injunctive relief to make sure they stopped it going forward and 

didn’t just throw some money at it and then go on about their business. 

Mr. LYNCH. Okay. 

I want to shift attention now to our veterans and to our 

servicemembers. Ironically, President Trump, when he came into 

office, put a hiring freeze on in the Federal Government, and a lot 

of people don’t realize that the Federal Government is the largest 

single employer of veterans in this country. 

We have 632,000 veterans who work for the Federal Government. And of those 632,000 veterans who work for the Federal Government, 145,000 of those veterans have a disability rating of 30 

percent or greater. So I am very proud of the Federal Government’s 

willingness and eagerness to hire our veterans. 

Now, the problem is that with the President’s hiring freeze we 

block these kids coming back from Iraq and Afghanistan from going 

to work at the V.A. and DOD; DOD is the single largest department, in terms of hiring our veterans. 

So with the situation we have right now, with these young veterans coming home after multiple tours of duty—I was in Camp 

Leatherneck in Afghanistan a while back and I had a chance to 

chat with a rifle company there, and one of the young fellows told 

me that this was his seventh tour of duty. 

So we have these veterans coming home after multiple tours of 

duty; we have an elevated suicide rate—highly elevated suicide 

rate among our returning veterans. Very tough situation. Substance abuse, and other issues. 

And so what we do? What do we do to welcome our veterans 

home? We put a hiring freeze at the largest employer of returning 

veterans so they can’t come back and go to work. 

And coming back and transitioning to civilian life, that job is 

critical. That is the difference-maker. 

And so when I hear Members here say that you are not doing 

enough as a Federal agency to take care of our servicemembers, 

and I know that I had a young veteran in my office last week tryVerDate Nov 24 2008 16:23 Apr 23, 2018 Jkt 027371 PO 00000 Frm 00046 Fmt 6633 Sfmt 6633 K:\DOCS\27371.TXT TERI
43 

ing to go to work at the Federal Government and he can’t get a 

job because of the hiring freeze, it just—not only is it unfair, but 

it is so hypocritical of what we are doing today. 

I have a bill, H.R. 1001, that would waive the ban on hiring in 

the Federal Government as respects returning veterans. Basically 

what the bill would do was, as the largest employer of veterans it 

would exempt any qualified veteran—and one of the veterans I had 

a couple of weeks ago was a radiologist, so they have been trained 

well within the military—it would allow any qualified veteran to go 

to work in spite of the fact of having the President’s freeze on hiring within the Federal Government. 

I think it is the right thing to do, but I am still waiting for some 

Republican cosponsors. I am still waiting for some Republican cosponsors. I have a lot of Democrats on the bill with me, but I would 

love to get some Republican support because I know my brothers 

and sisters across the aisle agree with me on this issue. I know 

they do. I know they do. I am certain of it. 

Mr. CORDRAY. Could I— 

Mr. LYNCH. What I wanted you to do—and you have more than 

3 minutes here—I wanted you to talk about what we are doing at 

the Office of Servicemember Affairs for our military veterans and 

our active military and their families. I want you to take your time. 

I know you have a 25-year veteran over there, I forget his name, 

who is running that Veteran Services program. 

Mr. CORDRAY. Paul Kantwill. 

Mr. LYNCH. That is right, Paul Kantwill. And I get high remarks 

on it from my veterans. I have three big V.A. hospitals in my district; I have a ton of veterans in my area, and he gets high marks 

from them. 

So I would like you to talk for as long as you would like about 

what you are doing on behalf of our servicemembers, our veterans, 

and their families. 

Mr. CORDRAY. All right. Thank you. 

And by the way, first of all, that is a very powerful point you just 

made about the Federal Government as an employer of veterans, 

and that blocking hiring, blocks employment of veterans. I had not 

heard that before. I think it is worth pressing. 

The hiring freeze, which we are honoring—we have been told is 

a temporary freeze. They are reconsidering what to do either later 

this month or next month. 

I think that is a powerful point to make in terms of returning 

veterans having access to jobs, and it is true across the entire Federal Government. 

So in terms of servicemembers, we do have an Office of Servicemember Affairs. That was a good idea by Congress. It is in the 

statute, so we were required to do that. 

We have embraced it with enthusiasm. As you know, Ms. Holly 

Petraeus ran that office and set it up for the first 5 years or so. 

She did an extraordinary job, and has left a legacy of helping veterans—not just servicemembers, but veterans and their families 

have a better understanding of financial matters and assistance 

and support. 

And she helped us deal with specific problems, such as people 

who had change-of-duty-station orders who were not able to sell 

44 

their home during the financial crisis were given different treatment than they otherwise would have been because we intervened 

and made it clear that they were in a tough situation and they 

should be treated as hardship cases. That is just an example. 

And the ending of the military allotment system, which had been 

set up back in the 1950s or 1960s as a means of convenience to pay 

your bills. Now all the banks have bill pay and so you don’t necessarily need it for that purpose, but it was being used, especially 

by predatory lenders, to be able to have leverage over military borrowers, and it was very problematic what was happening there. 

I would also say that the new head of the office, Paul Kantwill, 

the person you referenced, came to us from the Pentagon, where 

he had worked on some of these issues there. And he is first-rate, 

and he is having us think about the entire military lifecycle and 

how it fits. 

And we have work that we are doing on—it is called delayed 

entry, where we help servicemembers as they go into service to understand financial issues. Think about this: It is a lot of 18-, 19- 

year-old kids, young men and women, leaving home for the first 

time, going into the military, positioned away from home, have a 

guaranteed paycheck. They are magnets for predatory lenders and 

they often can get into trouble, and giving them a sort of foundation before they go into the service is very important. 

We are also helping transitioning veterans coming out of the 

service back to civilian life, which poses enormous challenges as 

well. 

So we are doing a lot of good work. There was testimony from 

each of the branches of the military in the Senate recently where 

they talked extensively about how important the CFPB’s work was 

and how helpful it was to them because they are not experts in the 

area themselves. 

I’m sorry, Mr. Chairman. 

Chairman HENSARLING. The time of the gentleman— 

Mr. CORDRAY. I have a hard time cutting myself off on this. 

Chairman HENSARLING. The time of the gentleman has expired. 

The Chair now recognizes the gentleman from Florida, Mr. 

Posey. 

Mr. POSEY. Thank you very much, Mr. Chairman. 

Director Cordray, the last time you were here, we discussed legislation that I introduced in the past few Congresses to create an 

advisory opinion process at the Bureau. 

Mr. CORDRAY. Yes. 

Mr. POSEY. A process which exists at many other executive agencies today, it would allow companies to seek out the CFPB’s particular detailed view of a regulation and receive a response to the 

inquiry to interpret the regulation. 

The companies would cover the cost incurred by the Bureau by 

issuing the opinions, and ultimately they would have a better understanding of how to comply with the law and serve consumers. 

This bipartisan, commonsense idea that would bring certainty, 

clarity, predictability, whatever you want to call it, to the supervision and enforcement process at the CFPB. 

45 

Unfortunately, instead of working with me towards this goal, the 

Bureau has actively sought to undermine the legislation. For example— 

Mr. CORDRAY. I don’t— 

Mr. POSEY. —when asked by the Congressional Budget Office 

about my proposal you claimed the Bureau would be tasked with 

issuing nearly 50,000 advisory opinions over a year, and that seems 

not to pass a straight— 

Mr. CORDRAY. That doesn’t sound right to me, but yes. 

Mr. POSEY. And that wildly inflated number is just as absurd as 

the no-action letter policy you created, which is so restrictive that 

the CFPB estimated issuing only one to three letters per year. 

Now, that is not an effective policy, I don’t believe, and it is a 

pretense to avoid taking meaningful steps to address uncertainty 

surrounding the agency. 

When I questioned you about the limited policy last year you 

said it was a fair line of questioning and you intended to do more 

than the expected one to three letters, if you recall. You also said 

that you created the no-action letter policy to, ‘‘capture the spirit 

of the bill you are talking about in terms of people being able to 

get their questions answered and have some clear space forward.’’ 

It has been over a year since the no-action letter policy was finalized, and so the question is, how many of these letters has the Bureau issued at this time? 

Mr. CORDRAY. So I thank you again for digging in on this issue, 

and I remember we talked about it last year and here we are this 

year. And I would say we continue to struggle with it. 

But let me set the framework. We actually respond to people’s 

request for advice in three different ways, okay? 

One is we get guidance calls all the time from people in the industry wanting to know how they can comply with this, what can 

they do about that, if they have two ways in mind can they do one 

rather than the other, et cetera. We field those calls, often hundreds of calls per week, certainly a steady stream of calls, thousands per year, and we do our best to answer those. 

That is one way in which we deal with this. And you wouldn’t 

want to write all those into advisory opinions because you would— 

that would eat up all the time we have. 

On the other end, when they raise issues to us and it becomes 

clear it is a systematic issue—it is not something specific to that 

institution but it is the kind question others might be wanting to 

ask and might be wanting to know the answer to—we work 

through rulemaking processes to amend and clarify our rules. And 

we have done that numerous times. It has been not dozens but 

hundreds of different issues we have addressed in that manner. 

But it is clunky. It takes time; it takes resources. We do that and 

we are willing to do that, but it is not always the best answer, although it sometimes is a good answer. And we have some 

rulemakings like that pending right now. 

The in-between is what you are describing, the advisory opinion 

or the no-action letter, and we have now instituted that policy. It 

has been a lot harder than I would have thought to get that done 

within the Bureau, and it has not yet generated a lot of demand. 

46 

And so maybe it is not working right. I don’t know what to make 

of that as it stands. 

I am not hostile to advisory opinions. When I was attorney general in Ohio we issued them under the State law, 80— 

Mr. POSEY. Have any— 

Mr. CORDRAY. —to 100 a year. 

Mr. POSEY. Have any requests been denied by the agency? 

Mr. CORDRAY. No, I don’t believe so, although I think there are 

discussions where sometimes people decide it is not the best approach, or maybe they get their questions answered informally and 

they are satisfied with that, or maybe it leads to us undertaking 

a rulemaking to amend our rules, so— 

Mr. POSEY. I have been to the website and I have tried to search 

for this— 

Mr. CORDRAY. Yes. 

Mr. POSEY. —and I can find nothing at all. So I would think 

even— 

Mr. CORDRAY. Yes. I would say it is— 

Mr. POSEY. —if you have issues that you wanted to clarify— 

Mr. CORDRAY. We haven’t— 

Mr. POSEY. —you would post them on the site to save you from 

the redundancy— 

Mr. CORDRAY. Yes. 

Mr. POSEY. —of having to do it again, and also providing easily 

accessible certainty. 

Mr. CORDRAY. Yes. Look, I would say to you we have not yet satisfactorily found that in-between. We do thousands of questions 

that we answer and we do a lot of issues through rulemaking; the 

in-between we have not yet—we haven’t mastered that yet. 

We could perhaps use some help and working back and forth 

with the Congress to try to figure that one out. 

Chairman HENSARLING. The time of the gentleman has expired. 

The Chair now recognizes the gentleman from Georgia, Mr. 

Scott. 

Mr. SCOTT. Thank you, Mr. Chairman. 

I just want to say, Mr. Cordray, that the first thing I want to 

say is thank you. Yours is a difficult job. It is probably the most 

challenging job in Washington, quite honestly. 

Mr. CORDRAY. Probably not right, but— 

Mr. SCOTT. And I am particularly anxious to say a few words 

about this job you are doing because people need to know. This is 

a free enterprise system; it is a free financial system. And when 

you live in a free system you are free to do good and you are free 

to do bad, and that is why we need organizations and agencies like 

yours in the middle there to separate the wheat from the chaff. 

Now, Mr. Cordray, I want to thank also your staff who has 

worked with me in my office. As you know, you and I have had 

some differences, but these differences have been done in a way to 

make sure that those elements, particularly of the low-income and 

poor people, because they are taken advantage of by some of those 

unsavory characters. 

And you know, Mr. Cordray, I just love the book of Psalms. And 

in that 44th Psalm it says: ‘‘Blessed is that man, all right, that 

helps the poor, and the Lord will be with him in his time of trouVerDate Nov 24 2008 16:23 Apr 23, 2018 Jkt 027371 PO 00000 Frm 00050 Fmt 6633 Sfmt 6633 K:\DOCS\27371.TXT TERI
47 

ble. The Lord will deliver him. The Lord will preserve him and 

keep him alive and he will be blessed in all the Earth.’’ 

And since I have been working with you, you and I share that 

common bond of caring about the poor, and I think it is important 

because we got to working together and you and the CFPB came 

up with an excellent program, the safe harbor. That needs to be 

known—the safe harbor for those qualified mortgages, the Q.M.s. 

We also came up with the exemption that the CFPB gave for remittance to those small creditors. And so I want to commend you 

for that work, and it has been a joy to work with you on it. 

And as I said, my deep concern is—and I have found out is 

yours—that we have to make sure in this immensely complicated 

and competitive financial system that the poor, that those at the 

lower income, are not taken advantage of, that we give them a seat 

at the table. And I appreciate you for having an open mind as I 

have pursued that. 

So with that in mind, let me ask you, what steps are you taking 

in your rulemaking now to make sure that we are not putting an 

unfair burden on those that have to serve the poor, those—because 

there are so many of them. We have 70 million who are unbanked 

and underbanked. So what are you doing to make sure that the 

credit unions, the small banks, the—and the predatory lenders, 

they serve them, pawn shop operators—what are you doing to 

make sure that there that your rulemaking is not putting any unfair burdens on them? 

Mr. CORDRAY. I thank you for those comments and for the question. 

It is pretty much a daily concern at the Bureau for how our rules 

apply to community banks and credit unions, and in many cases 

under our mortgage origination rules, our mortgage servicing rules, 

our remittance rules, we have created thresholds that have exempted thousands of community banks and credit unions in each instance because we recognize—and I agree with them when they tell 

me—they can’t bear the same burden of rules as larger institutions 

can, and they may not be as necessary in their cases because they 

know their customers, they are rooted in the community, they are 

subject to community norms. Those things are powerful. You and 

I have talked about that. We know that. 

So that is something that we are trying to do all the time, and 

we are always open to hearing input from any of you, and these 

oversight hearings are valuable in that respect, about how we can 

go back and do a better job on that. Because I know what we hear 

you hear, as well; and when you tell us about it that matters to 

us. 

The prepaid card rule is also very important in this respect because, as I said, many Americans have bank accounts, most Americans have bank accounts, but there are many Americans who do 

not and are shut out of that system, and the prepaid cards can 

make all the difference in the world to them. 

They can transact safely on them; they don’t have to carry cash 

around. And having the basic protections there that bank account 

holders have feels to me like equal justice and a very important 

principle. 

Chairman HENSARLING. The time of the gentleman has expired. 

48 

The Chair now recognizes the gentleman from North Carolina, 

Mr. McHenry, vice chairman of the committee. 

Mr. MCHENRY. Director Cordray, are you aware of any confidential leaks from the CFPB that led to insider trading? 

Mr. CORDRAY. Say that again. Am I aware of any what? 

Mr. MCHENRY. Are you aware of any confidential leaks from the 

CFPB that have led to insider trading? 

Mr. CORDRAY. I don’t believe I am aware of any, but something 

that I have learned is critical to be careful about all the way back 

to when I served as a law clerk on the D.C. Circuit and got our 

very first— 

Mr. MCHENRY. Sure, I know you are versed in this, so— 

Mr. CORDRAY. Yes. 

Mr. MCHENRY. —unfortunately, the committee staff has learned 

of suspicious trading activity for the Navient Corporation the morning before the announcement of CFPB’s enforcement action. Are 

you aware of this unusual trading activity? 

Mr. CORDRAY. I am not, and if there is something, I would be 

very concerned about it, so I would be glad to hear more. 

Mr. MCHENRY. I know you take it seriously. And so specifically 

on this, you are not aware of any suspicious trading activity or 

market activity connected with any CFPB enforcement actions? 

Mr. CORDRAY. As far as I know, this is the first I have heard that 

there might be any such concerns. But if there are concerns and 

if there is some basis for it, I would like to know it and like to 

know what we can do to make sure that none of that is happening. 

Mr. MCHENRY. Sure, sure. 

Mr. CORDRAY. We just saw the Federal Reserve Chair in Richmond had to step down, I think yesterday, because of this kind of 

thing. And it is not the first time these things have happened in 

the Federal Government, and— 

Mr. MCHENRY. So has anybody at the CFPB been investigated 

for insider trading? 

Mr. CORDRAY. Not that I am aware of. I am— 

Mr. MCHENRY. Okay. And you would be willing to cooperate with 

an investigation, obviously, if there were one? 

Mr. CORDRAY. I would. I actually thought you might be getting 

at a different point, whether maybe some sort of information 

leaked out somewhere and somebody else did trading, or are you 

actually suggesting any CFPB employees were engaged in trading 

because— 

Mr. MCHENRY. It is unclear at this point. 

Mr. CORDRAY. —they would be barred from doing anything to affect a company that was under their work or their purview. And 

we have good ethics lawyers who are very zealous in this regard, 

I can tell you that. 

Mr. MCHENRY. And so you would pledge the Bureau’s full cooperation with the Securities and Exchange Commission, the Department of Justice, and this committee if there were an investigation of these trades? 

Mr. CORDRAY. I would. 

Mr. MCHENRY. Okay. And thank you for that. 

49 

It is really a twofold question: one, insider trading and Bureau 

employees doing that themselves; the other is the sharing of confidential information. 

Mr. CORDRAY. I think just any kind of trading in stocks in any 

company that you were involved in doing work on or had information about would be—that would be illegal regardless of whether 

you have leaked information— 

Mr. MCHENRY. And I would like to yield the balance of my time 

to the chairman. 

Chairman HENSARLING. I thank the gentleman for yielding. 

Director Cordray, I want to go— 

Mr. CORDRAY. I would be glad to follow up with you offline, sir, 

if there is something we should know. 

Mr. MCHENRY. Sure. 

Chairman HENSARLING. I would like to go back and follow up on 

a line of questioning by the gentleman from Michigan, Mr. 

Huizenga. 

My review of the records shows that there have been 181 enforcement actions in the history of the Bureau. Does that sound about 

right to you? 

Mr. CORDRAY. I think it is closer to 200 now, but maybe depending— 

Chairman HENSARLING. Approximately 200. 

Mr. CORDRAY. Yes. 

Chairman HENSARLING. Our review of this shows that of those 

enforcement actions, four have been adjudicated, and the others 

have ended in settlement agreements or consent orders. Does that 

sound about right to you? 

Mr. CORDRAY. Well, no. That is a partial picture because we have 

a lot of matters pending in the courts and they don’t all get to final 

resolution very quickly. So there are a lot of matters— 

Chairman HENSARLING. Settlement agreements or consent orders, I have yet to find one where the company admitted to wrongdoing. Do you have records on consent orders or settlement agreements where the company that has paid the fine has admitted to 

wrongdoing? 

Mr. CORDRAY. So again, I gave my perspective on this issue earlier but I will state it again. We conduct an investigation. When a 

matter is resolved— 

Chairman HENSARLING. I understand that, but I am just asking 

a simple question because I have not been able to find in any of 

the settlement agreements or consent orders where there has been 

an admission of guilt. And if I am reviewing the records incorrectly, 

do you have records showing where the parties have admitted 

guilt? 

Mr. CORDRAY. Again, it is not that simple an issue. I would just 

like to give you little bit of background on it, which is— 

Chairman HENSARLING. Can we start with either a yes or no and 

then give the perspective, Mr. Director? Do you have in your possession settlement agreements or consent orders where the party 

that has paid the fine has admitted to wrongdoing? 

Mr. CORDRAY. I would be happy to have my staff follow up with 

your staff on that, but I will say— 

Chairman HENSARLING. So you are unaware— 

50 

Mr. CORDRAY. —when we do orders we have completed an investigation— 

Chairman HENSARLING. No, I understand that, Mr. Cordray. It 

is a simple question. 

Mr. CORDRAY. —and we specify all the facts. 

Chairman HENSARLING. You are avoiding a simple question. Either you don’t know the answer or the answer is yes or no. Do you 

have them in your possession? Because I am unaware of any. 

Mr. CORDRAY. I am here at the committee. I don’t have any in 

my possession, but I would be glad to follow up with your staff on 

that and get you answers on that. 

But I will say again, when we issue orders that is one of the 

paragraphs of an order. 

Chairman HENSARLING. I understand— 

Mr. CORDRAY. The order details exactly— 

Chairman HENSARLING. The time— 

Mr. CORDRAY. —what we found in our investigation—could I just 

for moment—and that stands as the law of what happened. 

They can say, ‘‘Oh, I didn’t do it,’’ but it speaks for itself. 

Chairman HENSARLING. Okay. I understand that, Mr. Director, 

but that is exactly the same thing you did at accusations of gender 

discrimination and racial discrimination. 

Mr. CORDRAY. No, that is— 

Chairman HENSARLING. The time of the gentleman has expired. 

The Chair now recognizes the gentleman from Missouri, Mr. 

Cleaver, ranking member of our Housing and Insurance Subcommittee. 

Mr. CLEAVER. Thank you, Mr. Chairman. 

Thank you for being here, Mr. Cordray. I also want to express 

here that the rural definitions were, in fact, changed and Marshall, 

Missouri, the three Houston banks that were—that came to me 

complaining, are, of course, very appreciative. I actually have a letter from the president of the bank expressing appreciation for that 

rule change. 

But let me talk about FinTech, the financial technologies. We are 

not going to be able to hold back progress that is going to happen, 

and there is nothing that we can do and perhaps there is nothing 

we should try to do. 

The problem, of course, is that with each new technology we have 

new challenges. And studies are showing that algorithms are not 

necessarily unbiased, that they can be biased. 

And so, as small businesses are trying to get these online loans 

through FinTech, is there something that the Consumer Protection 

Bureau can do to assure that these algorithms are not used exclusively to the detriment of minorities? 

Mr. CORDRAY. So it is an excellent question, and I know we just 

had an exchange of correspondence on this. 

Let me first go to your first point, though, because you made the 

point that the rural definition issues did get cleared up. 

Mr. CLEAVER. Yes. 

Mr. CORDRAY. And maybe it took longer than it should and 

maybe we were too narrow to begin with, but we listened and we 

worked with the Congress on it and we got it fixed. And if people 

are still having any concern about that rural definition, I would be 

51 

glad to hear it or to deal with any particular institutions, because 

I think it is now in pretty solid fashion, and I would thank the 

Congress because your intervention mattered on that. 

As to the FinTech issues that you are raising, we have just put 

out a request for information because we are very interested in 

these issues around the data that is used to underwrite loans, and 

there are some new opportunities to look at different data. We are 

not imprisoned within the narrow lines of the old credit reporting 

system, which often was kind of clunky and only—like it only 

counted, your housing if you had a mortgage because then that was 

a loan and it was ‘‘credit.’’ But if you paid rent faithfully for 20 

years they gave you no credit at all for that on your credit report, 

so it was like you didn’t exist. That doesn’t feel like the right answer. 

The algorithms that are being used and other methods that are 

being used now pose risks. They also create opportunity, and we 

have put out a request for information to hear from all sides. I 

think that is open until—I can’t remember. There are two that are 

open and this one may be open until May. 

We want to hear what the risks are, the same kind of issues you 

raised with us, how they can be mitigated, and we also want to 

think about whether this might open up the credit box for more 

Americans. We did a report—a very notable report that got a lot 

of interest—on the fact that there are 45 million Americans who 

are essentially credit-invisible. They either don’t have enough in 

their credit file to offer them any credit or it has maybe been inactive too long—45 million Americans are shut out of the credit system and they can’t get loans, and they can’t have opportunity from 

loans. That is a bad thing. 

We are in favor of access to credit, access to sound credit, and 

the issue here is whether there are other ways to look at other data 

and underwrite these loans so that more people could—and many 

of them are in minority communities or disadvantaged communities—that they could be really understood more fully to be good 

credit risks. At the same time, that could pose risk and we want 

to be careful about that. 

So I think we are embarked on an inquiry of exactly the kind 

that I think you are interested in and we will be glad to keep you 

posted on that as we go. We either have just heard or are going 

to hear a lot from people by mid-May, and then that is going to 

spawn further conversations and possible actions, I would guess, 

depending on what we hear. 

Mr. CLEAVER. You probably won’t have time to respond to this, 

but I am becoming increasingly concerned looking at these young 

people out here behind you in the green shirts. They look collegeage and we are having a problem that I think is going to eventually explode. 

Right now there is $1.3 billion in defaults. 

Mr. CORDRAY. Yes, yes. 

Mr. CLEAVER. I don’t have time to go any further, but it is a big 

problem. We have over 3,000 student loans defaulting every day. 

That is one every 28 seconds. Thank you. 

Mr. ROSS [presiding]. The gentleman’s time has expired. 

Would you like to respond? 

52 

Mr. CORDRAY. Just 10 seconds. 

Mr. ROSS. Absolutely. 

Mr. CORDRAY. We hope to work with the new Administration’s 

Department of Education, just as we had worked with the prior Administration’s Department of Education on those issues, and we are 

open to having further productive dialogue and action around that 

problem. It is a significant problem. 

And it is not just young people. We did a report. Many older 

Americans actually owe student loans, either for their children or 

grandchildren, and it is a broadening concern throughout our society. 

Mr. ROSS. Thank you, Director. 

The Chair now recognizes the gentleman from Illinois, Mr. 

Hultgren, for 5 minutes. 

Mr. HULTGREN. Thank you, Mr. Chairman. 

And thank you, Director, for being here. 

I want to follow up on my friend’s comment on bipartisan work, 

just to get your thoughts on student loans and specifically student 

loan disclosure. To your knowledge, is there any other form of consumer loan other than Federal student loans, a consumer loan that 

is not required to disclose the annual percentage rate before 

issuance? 

Mr. CORDRAY. So you are asking if there are any other loans— 

Mr. HULTGREN. Consumer loans, yes, that don’t disclose annual 

percentage rate before issuance? 

Mr. CORDRAY. I think that is typically required by statute under 

the Truth in Lending Act for most loans. There may be some exceptions or exemptions here and there so I don’t want to be categorical, but that is— 

Mr. HULTGREN. Yes. Again, something that we are doing in a bipartisan way is—and I would ask, would you agree that all borrowers of student loans, including those issued by the Federal Government, would benefit from the disclosure of the annual percentage rate when making the decision to assume student loan debt? 

Mr. CORDRAY. People have different views on that. I will just say 

it is typically required by statute. But when we did testing with 

consumers on the APR on our Know Before You Owe forms, consumers were quite confused by that. 

Mr. HULTGREN. Let me move on to my next thing. And we agree 

in a bipartisan way, many of us, that it is helpful. Transparency 

is important and there is a problem there. 

Mr. CORDRAY. Yes, I am just— 

Mr. HULTGREN. Let me move onto something else— 

Mr. CORDRAY. —not everybody agrees— 

Mr. HULTGREN. Mr. Director, in past hearings in the committee, 

staff reports we have alleged that the true purpose of your indirect 

auto activities was to regulate auto dealer compensation, over 

which you have no jurisdiction under the Dodd-Frank Act. The 

Campbell-Brownback Amendment could not have been more clear 

on that. 

You have always testified to the effect of saying that you are only 

addressing lenders and that you are careful not to step over that 

line, but we now know that— 

Mr. CORDRAY. Yes. That is right. 

53 

Mr. HULTGREN. —answer is hogwash. 

Mr. CORDRAY. No, no— 

Mr. HULTGREN. You may ask, how do we know this? And, well, 

because we have your documents, Mr. Director. 

I want to enter into the record a document dated July 9, 2012, 

entitled, ‘‘Notes from the Auto Finance Discrimination Working 

Group (‘AFDWG’) Attended on Behalf of NonBank Supervision by 

Kali Bracey.’’ Mr. Director, this document— 

Mr. ROSS. Without objection, it is so ordered. 

Mr. HULTGREN. —has not been previously released by this committee. It contains a detailed summary of the second ever meeting 

of a special working group put together to discuss Direct Auto. According to this document, the working group was chaired by Patrice 

Ficklin and Rick Hackett. 

The document describes the Bureau’s preliminary research efforts, and then comes the smoking gun. The document says, ‘‘To 

figure out what to do to prevent disparate impact the thought is 

that we should eliminate dealer markup.’’ 

So, Mr. Director, there you have it. Notwithstanding your prior 

testimony, the operating theory behind all of your agency’s indirect 

auto efforts from the beginning has been to ‘‘eliminate dealer markup.’’ Mr. Director, aren’t you alarmed that your agency planned to 

regulate dealer compensation in clear violation of the law? 

Mr. CORDRAY. No, no. I think there are several things that aren’t 

correct about that account, okay? First of all, when you are referring to a document from 5 years ago, I am not familiar with it offhand, but I will say this— 

Mr. HULTGREN. We will make sure you get— 

Mr. CORDRAY. —we have never— 

Mr. HULTGREN. It is from your office. 

Mr. CORDRAY. We have never taken any enforcement or supervisory activity against any dealership unless they were buy-herepay-here, which is within our jurisdiction. We have been very careful to observe that line. 

But we do have responsibility over auto lenders, and we had the 

dilemma of how to deal with that responsibility when, in fact, they 

and dealers often work together in making the loans. 

Mr. HULTGREN. Well, that is not what this document says. Again, 

it says, the intent here— 

Mr. CORDRAY. No, it says— 

Mr. HULTGREN. Let me keep moving on. I only have a minuteand-a-half left. 

Mr. CORDRAY. If I could— 

Mr. HULTGREN. Other people have 10 minutes; I have 5 minutes. 

According to the other Bureau documents, on May 20, 2013, you 

held a meeting with your senior staff in preparation for which a 

briefing memorandum was circulated stating the meeting’s purpose 

was to, ‘‘continue discussion around a market-tipping settlement 

that would resolve the discriminatory practices caused by dealer 

markup by eliminating markup at many major automotive dealers.’’ 

Do you recall this memorandum? 

Mr. CORDRAY. I don’t offhand, but that would refer to dealer 

markup as part of lenders lending— 

54 

Mr. HULTGREN. Again, we will provide that to your staff. And we 

actually did provide it to your stuff ahead of the hearing to help 

you refresh your recollection. We also released it publicly as part 

of our staff report in 2015. 

Mr. CORDRAY. Yes. 

Mr. HULTGREN. At the time, your Bureau was pursuing a consent 

order with Ally. Isn’t that right? 

Mr. CORDRAY. We did pursue and conclude a consent order with 

Ally. I am not sure exactly what timeframe you are referring to. 

Mr. HULTGREN. Your own Bureau documents say that you were, 

on October 7, 2013, a draft decision memorandum states that your 

Bureau sent Ally a proposed action response request letter informing the company that an enforcement— 

Mr. CORDRAY. I don’t dispute that. 

Mr. HULTGREN. —action was likely on January 15, 2013. 

Director Cordray, your Bureau reached its indirect auto lending 

settlement with Ally at a time when it had an unprecedented leverage over Ally. At the time, Ally had an application pending before 

the Federal Reserve for status as a financial holding company. 

The CFPB sent notice of its intent to bring an enforcement action 

against Ally on January 15, 2013. Ally would have to divest its insurance and used-car remarketing operations if the Federal Reserve did not approve its application for holding company status by 

December 24, 2013. 

At the same time, the FDIC was conducting a Community Reinvestment Act review of Ally. Your staff drafted the decision memorandum dated October 7, 2013, showing that your Bureau was fully 

aware of the implications of this. 

I think there are real problems here. Again, using authority at 

a time to force auto dealers and to push an agenda. 

My time is about to expire. I yield back. 

Mr. CORDRAY. If I could? Can I? 

Mr. ROSS. Please. 

Mr. CORDRAY. Okay. 

Mr. ROSS. Briefly. 

Mr. CORDRAY. When we bring an action we always hope to resolve it on appropriate terms. Sometimes the institution is not willing to resolve it and sometimes they are. 

That is up to them. That is a choice they make. That was a decision that they made. 

It is not a decision that affected—that involved dealerships. We 

have never brought an action against dealerships that are not buyhere-pay-here; that is not within our jurisdiction. It is the case— 

it is an unfortunate thing in this market—that lender programs 

and dealer programs kind of intersect and you can’t— 

Mr. HULTGREN. What bothers me is that—it is stated—and using 

power to force— 

Mr. ROSS. The gentleman’s time has expired. 

Mr. CORDRAY. I don’t think that is what we did. Not what we 

did. 

Mr. ROSS. The gentleman’s time has expired. 

The Chair recognizes the gentleman from Illinois, Mr. Foster, for 

5 minutes. 

Mr. FOSTER. Thank you. 

55 

And thank you for appearing today, Director Cordray. It has 

been too long since you have been before this committee. 

Mr. CORDRAY. I missed you, too. 

Mr. FOSTER. Thank you. I was on the Financial Services Committee both during the financial collapse at the end of the Bush 

Administration and the regulatory response, the Dodd-Frank bill, 

to ensure that families in America never had to undergo this sort 

of catastrophe again. 

The catastrophe was caused by the simultaneous collapse of all 

three legs of our financial system: the collapse of Republican monetary policy; Republican fiscal policy; and Republican regulatory policy. 

And if you look more closely at the regulatory failures that led 

to this, there were really two parts. The Wall Street collapse was 

driven by largely inadequate bank capital requirements and huge 

off-balance sheets, unregulated driven exposures. But more important to the middle class was the part that was driven by inadequate consumer protection that drove a housing bubble that 

decapitalized the middle class and injected trillions of dollars of 

questionable mortgages into our financial system and ultimately 

destabilized it. 

As a result of that, the average American family lost over $100,000 and millions of Americans lost their jobs. 

During the debate over the Dodd-Frank Act we considered 

whether the agency should be headed by a single director or be a 

commission, and obviously that debate continues both in the courts 

and perhaps in legislation. 

But no matter how this debate turns out, there should be no debate that the CFPB has been just a tremendous victory for the 

American consumer and a victory for the long-term financial stability of this country. 

And a previous questioner brought up your work on FinTech, 

which was—I had intended to make the main line of my questioning. And I just want to comment that that is government regulation at its best when you are looking around the corner at future 

threats that will destabilize the financial system in the U.S. and 

future threats to consumer safety. 

And so the fact that you are looking ahead of the curve on that, 

I think, is just an indication of the high quality of the operation 

that you have set up. So I thank you for that. 

There has been a lot of discussion in the previous questioning 

about rural and community banks, and small community banks are 

under stress. And I think that it is important that we not mistake 

the financial stress that small-town America has been under for 

decades and, frankly, is likely to continue. It is due to fundamental, 

long-term economic trends and it breaks my heart, and I don’t 

know an easy solution. 

But we should not confuse the stress of small-town American 

and—with—and the stress of small financial institutions with the 

need to adequately regulate them, that just as much damage is 

done to someone in a rural area where—when they are subject to 

financial abuse. 

And I didn’t see a big difference when they displayed the number 

of complaints you have had from rural States to urban States. I 

56 

think that you get a comparable number of complaints per person 

from either area, and I think that you have to keep your eyes open 

in both, so thank you for that. 

There is a trend that has been important in trying to ensure the 

survival of small community banks, for which there is a lot of support on both sides of the isle, and that is because of the economies 

of scale for things like cyber defense and everything else, small 

community banks are more and more using third-party data—backoffice data systems. 

And this provides an opportunity to really lessen the burden of 

regulation on them when the data can be extracted in a standardized way from the third-party data vendors directly. And there are 

two things. I have heard, actually, from some of the State-regulated banks that there are difficulties in the data-sharing between 

Federal and State regulators that cause some duplicity—not duplicity, but duplication of inspections. 

And so this is something where I think some positive improvement can be made to take advantage of those economies of scale. 

And I was wondering, have you started to experiment using direct 

data extraction so that the compliance can be verified using the 

third-party vendors? And is that a promising avenue for lessening 

the regulatory burden on us? 

Mr. CORDRAY. I think it is. And we have started to put even 

more emphasis on technology in our examination processes. 

We also collaborate closely with the Conference of State Bank 

Supervisors and we have a very productive relationship with them. 

They are very helpful to us and we try to be very helpful to them, 

and we try to share a lot of information. 

So to the extent that was true in the past, I think it is less true 

now that we have any difficulties in sharing information. 

I think Federal-State has been a problem area in the past. I 

know it from the State Government side before. 

But what I would say is we are also now starting to look directly 

at some of these large technology service providers to the banks 

and credit unions, understanding that going to look at the bank or 

credit union may be less useful than looking at back-office operations that supply the same function for hundreds or even thousands of institutions, and if we can make sure that they get it right 

then it is that much easier for the bank or credit union to know 

that they are getting it right, and that becomes a technology issue. 

Mr. ROSS. The gentleman’s time has expired. 

I now recognize myself for 5 minutes. 

Mr. Director, one of the things that I think is impressive about 

financial regulations in our country has been the State-based system of insurance regulation. With regard to capital requirements, 

with regard to rate-making, and with regard to consumer protections, our State-based system of regulation over insurance has been 

somewhat successful, and I would say probably a model throughout 

the world. 

Would you agree that under Dodd-Frank the CFPB has no jurisdiction over the business of insurance? 

Mr. CORDRAY. Correct. As a basic matter, mortgage insurance 

within the mortgage market can be relevant but— 

57 

Mr. ROSS. And specifically with regard to the proposed arbitration rule, which seeks to broaden the scope to take in life insurance 

policies to require arbitration with regard to the extension of credit 

on whole life policies, is that not a little bit over-reaching? 

Mr. CORDRAY. I think if we were trying to dictate something for 

the life insurance industry, that would be over-reaching and— 

Mr. ROSS. Because actually the contract of insurance is in and 

of itself the policy. Without the contract there would be no insurance; without the collateral, the cash value, there would be no loan, 

and any loan taken against it would be really just offset from the 

proceeds of the insurance. 

Mr. CORDRAY. I may not be capturing all of the nuances, but I 

do generally agree with you. Insurance is typically regulated at the 

State level and it is outside the preview of the CFPB by a specific 

exception. 

Mr. ROSS. And so you would agree, then, that the proposed arbitration rule would not apply to the scope of life insurance policies? 

Mr. CORDRAY. As a general matter, I think that is right. Whether 

there is some sort of corner issues here I am not entirely sure, but 

I think that is right. 

Mr. ROSS. And are you aware of anything else going on within 

the CFPB to regulate insurance products whatsoever? 

Mr. CORDRAY. Again, mortgage insurance, when it is caught up 

as part of the mortgage transaction, there are some issues there 

around disclosures and the like. I believe, in fact, the PHH case 

has to do with the captive reinsurance program that we believe violated the RESPA statute. And, of course, the company disagrees, 

and that is in front of the courts and the courts will decide it. 

Mr. ROSS. Let me change— 

Mr. CORDRAY. But basic insurance is not part of our— 

Mr. ROSS. Right. 

Mr. CORDRAY. It is in some countries; it is not in the United 

States. 

Mr. ROSS. Not. And therefore, the CFPB should really not participate in that— 

Mr. CORDRAY. And if you have—if there are issues you are hearing about that we should know about, feel— 

Mr. ROSS. You got it. 

Mr. CORDRAY. Feel free to have— 

Mr. ROSS. You will be the first. 

Mr. CORDRAY. Yes. 

Mr. ROSS. Let me ask you with something with regard to payday 

lending. This has been an industry that has been, again, regulated 

predominately by some States. Some States regulate it; some 

States outlaw it. 

Mr. CORDRAY. Yes. 

Mr. ROSS. Some States just don’t have any regulation on it at all. 

And yet, you have a proposed rule, and I think to date you have 

received over 1,334,000 comments— 

Mr. CORDRAY. Sounds about right. 

Mr. ROSS. —and I think 600,000 have come from Florida. 

When do you anticipate the rule to be released and implemented? 

Mr. CORDRAY. I don’t know. I can’t tell you. 

58 

As you just described it, digesting and analyzing those comments 

is a big job and they are supposed to influence what we would 

think about the rulemaking, and they will. 

Mr. ROSS. My concern is that if this essentially annihilates this 

particular supply of credit that is being used by millions of Americans every day, what is the recourse? 

And specifically, here is a comment made, sent to Monica Jackson, Office of Executive Secretary, from a lady in Florida, a Ms. 

Pritchard from Leesburg, Florida. And she says, ‘‘I am a single parent and lately there have been issues with my child support payments posting to my card on time. Unfortunately, my kids still 

have to eat and whatever necessities they are in need of. 

‘‘The cash advance is a big help to me. I can only borrow what 

I can pay back and I have a steady job. If these new laws take 

place this would place me in a financial hardship, and my credit 

is poor so I can’t get a loan through a bank or other lender. Please 

don’t punish us with these changes.’’ 

How would you respond to Ms. Pritchard if the payday lending 

industry was eliminated by way of rule? 

Mr. CORDRAY. Yes. And, by the way, I have had a number of 

these discussions with your banking supervisor from Florida, Drew 

Breakspear, who is a very capable— 

Mr. ROSS. Very good man, yes. I agree. 

Mr. CORDRAY. —a strong regulator. And essentially— 

Mr. ROSS. She has to have a— 

Mr. CORDRAY. Yes, I know. 

Mr. ROSS. This is a demand-driven industry that requires a supply. 

Mr. CORDRAY. Understood. 

The proposal here was an effort—and we may not have gotten it 

right, and this is something we are thinking about in light of comments—to make sure that people could get access to a loan when 

they need it, but that they wouldn’t get trapped into this cycle of 

8, 10, or 12 loans— 

Mr. ROSS. I agree, and I think Florida has been a good example 

of that. But then again, if the rule effectively eliminates this particular industry, where else do they go? 

If they can’t go to a bank, do they go online? Do they go overseas? Do they go to a loan shark? 

We are not eliminating the demand, and I think that is what we 

have to be very compassionate about. 

Mr. CORDRAY. You are absolutely right on that. It is an absolutely fair and very good question. 

And again, a notable point here is there are 14 States in which 

these particular kinds of loans are outlawed. That is not something 

the Bureau is proposing to do, but it is true of 14 States, tens of 

millions of Americans, and there are other credit products that 

they access, including pawn loans or including credit card loans, 

advances, or other things. And there does not seem to be any particular harm to those consumers in those areas and they avoid that 

prolonged debt trap. 

These are the kind of hard issues that have brought us to this— 

Mr. ROSS. I agree. And again, I ask you just to take a look— 

Mr. CORDRAY. Yes. 

59 

Mr. ROSS. —at the State of Florida. I think it has done a very 

good job as a State regulator in that industry. 

My time has expired. 

The Chair now recognizes the gentleman from Maryland, Mr. 

Delaney, for 5 minutes. 

Mr. DELANEY. Thank you, Mr. Chairman. 

And thank you, Director Cordray, for your exceptional public 

service. The job you have done across the last several years has 

been a very difficult job, considering some of the opposition you 

have received, obviously, and considering the scale of the undertaking you had to assume. 

But it has been a very important job, and I think you have done 

it to a remarkably high standard, and I applaud you. I hope you 

do stay on, but if that doesn’t happen I am sure you will be incredibly successful in whatever field of endeavor you choose in the future. So I just wanted to start by thanking you for your service. 

Mr. CORDRAY. That is very kind. 

Let me just say, the so-called opposition doesn’t bother me. I always hope that I can be persuasive and we can see eye to eye and 

find common ground— 

Mr. DELANEY. And you seem run at criticism, which I think is 

a good— 

Mr. CORDRAY. That is all right. That is okay. Criticism is fine because criticism we can learn from, and I try to do that. 

Mr. DELANEY. And they— 

Mr. CORDRAY. It is a hard job because there are all these markets and all this—all these difficult issues and— 

Mr. DELANEY. And you have had to stand up this agency. 

Mr. CORDRAY. —many of the—many of your colleagues have 

raised today, so— 

Mr. DELANEY. And you have had to stand up to this agency, 

which I applaud you, too, because I think the work of the agency 

has been terrific. 

I wanted to kind of ask you about kind of a more of a kind of 

a pure public policy question, which is one area that I have worked 

on is trying to create nonprofit financial institutions, nonprofit 

banks, which are not technically allowed under banking regulations 

right now because banks—and you can understand why regulators 

feel this way; they would like to see banks make a profit because 

that contributes to capital and makes them safer and more sustainable. 

But it seems to me in some of these markets that have been underserved by traditional financial services, where unfortunately 

consumers or citizens in those markets really do have to turn to 

some of these financial products that we know really entrap 

them—very high rates and things that they can’t get off of—that 

if we could create a mechanism for philanthropists, many of which 

want to invest in these communities, and they do substantially— 

they do it through investing in low-income housing; they do it 

through financial literacy programs; they do it through a whole variety of ways where they are trying to actually help some of these 

people who have largely been left behind. 

But at the center of anyone’s kind of normal financial life is a 

bank. And so many of these people are unbanked. 

60 

And it seems to me if we could create banking institutions that 

had a nonprofit charter that had a revenue model—in other words, 

they charge interest and fees, normal kind of levels—but that their 

operations were further supported by philanthropic dollars probably coming from that community so that they could add that layer 

of financial literacy, so that they could go into markets where the 

cross-sell opportunities aren’t available to make the business model 

work, that that would actually create an alternative for these citizens in some of these markets. 

But they can’t do it right now. They have to work around it. 

There have been some efforts to do it. It has been very, very 

hard. 

So I am just interested in your thoughts on, as a matter of public 

policy, do you think this is an interesting direction for us to be 

thinking about? Because I want to not only think about appropriate 

regulations to rein in, but also stimulating more appropriate, prudent, fair financial services in some of these communities that desperately need them. 

Mr. CORDRAY. Yes, it is an interesting question. And I know from 

your background you have an unusually sophisticated perspective 

on these kinds of issues, and we do not deal with the setting up 

or the licensing or the structure of banks— 

Mr. DELANEY. Right. That is why it is more of a question of policy. 

Mr. CORDRAY. But we do deal with the credit unions, which are 

nonprofit financial institutions, and they do tremendous good work 

across this country on behalf of their members and often in rural 

communities. And then we have the CDFIs, which have a particular focus more along the lines of what you describe, and they 

do tremendously good work if they get support and have the support that they need. And I would say that those things are very 

helpful. 

We also have been trying to think about in these markets—and 

it goes to the questions Congressman Scott was asking earlier 

about what about those who are shut out of the banking system or 

shut out of the credit system? How can we provide access for them? 

Is it possible to do that on a responsible basis? 

And the prepaid cards and accounts are one way if they have the 

right protections. That is important. 

And also, I would say that safe accounts at banks and credit 

unions that don’t necessarily involve overdraft or that kind of risk. 

Many banks and credit unions are offering those accounts and they 

are getting a lot of take-up, especially among millennials who are 

worried about these kinds of fees and things that surprise them. 

So anyway, it is an ongoing problem in America: How do you 

open more opportunity in more places where people don’t necessarily share in the same opportunities as others? We don’t like 

to think our lives are bounded by our zip code that we come from, 

whether in education or anything else. 

And if there are ways that we can help on that, we want to do 

so. We are glad to work with both sides of the aisle on those kinds 

of issues. 

And your idea might be a good one. I just don’t know enough to 

say one way or the other. 

61 

Chairman HENSARLING. The time— 

Mr. DELANEY. Thank you again, Director. 

Chairman HENSARLING. The time of the gentleman has expired. 

The Chair now recognizes the gentleman from North Carolina, 

Mr. Pittenger. 

Mr. PITTENGER. Thank you, Mr. Chairman. 

Director Cordray, good afternoon. 

Director Cordray, I come as one who is here to— 

Mr. CORDRAY. Congratulations on the national championship, by 

the way. 

Mr. PITTENGER. Yes, sir. Thank you. I had my Carolina towel on 

yesterday. It was a great day. 

But I come as one who has his responsibilities in oversight 

through Article One. I have my responsibilities to the taxpayers of 

my district and this country. And knowing that, I realize that your 

appointment as Director, given through the Dodd Frank Act, gives 

you really unlimited power and basically unchecked. You are not 

responsible to us except to come twice a year for a few hours to— 

Mr. CORDRAY. I take that very seriously. 

Mr. PITTENGER. Thank you. And I— 

Mr. CORDRAY. And hope you see that. 

Mr. PITTENGER. —I am glad that you do. But essentially, you get 

your budget from the Fed—your funding. There is really no budget. 

And there is essentially no accountability. The President can’t 

fire you except for some egregious fraud or abuse. 

So in that context, I would like to ask you a few questions. 

Mr. CORDRAY. Okay. 

Mr. PITTENGER. The GAO conducted a study recently of the advertising and public relations funds that were spent by the various 

agencies in the government. Maybe it is known by you, but the 

CFPB won. You were the big winner in terms of percentage overall 

spent from your budget. 

Mr. CORDRAY. I’m sorry, spending on what? 

Mr. PITTENGER. On advertising and public relations. 

Mr. CORDRAY. Okay. All right. 

Mr. PITTENGER. Yes, sir. 

And this is an amount that equaled about 2.5 percent, a very significant amount of money. And there was no other agency that 

came close to you. In fact, you were greater than the Department 

of Defense. 

I guess I would like to ask you, do you feel like the mission of 

your agency is more important than the Department of Defense, 

whose objective, of course, is to recruit— 

Mr. CORDRAY. No, I certainly don’t. I certainly don’t think so. 

Mr. PITTENGER. So you would— 

Mr. CORDRAY. And by the way, we read that report differently. 

It pointed out that there are 10 agencies of the Federal Government that do 95 percent of the advertising of the Federal Government, and we are not one of those. 

We do devote a small percentage of our budget— 

Mr. PITTENGER. The ones studied, sir— 

Mr. CORDRAY. —to marketing. 

62 

Mr. PITTENGER. —I must say—let me claim my time. The ones 

that were studied showed that you spent more than any other 

agency. Now, point of fact there. 

Mr. CORDRAY. Depending on how you— 

Mr. PITTENGER. Your budget had $20 million for advertising that 

went to one firm, GMMB. This is a well-known, progressive advertising firm with close ties to the Obama Administration, and then 

Clinton came— 

Mr. CORDRAY. I don’t know anything about that. 

Mr. PITTENGER. —Jim Margolis. He was a senior partner for the 

GMMB and served as senior advisor for President Obama and senior immediate advisor for the Clinton campaign in 2016. 

Mr. CORDRAY. So— 

Mr. PITTENGER. In that context, do you— 

Mr. CORDRAY. I don’t— 

Mr. PITTENGER. —do you feel like— 

Mr. CORDRAY. I don’t have anything to do with making those 

awards. That is done through competitive bidding and through the 

proper processes— 

Mr. PITTENGER. It just happened that the— 

Mr. CORDRAY. —and we get scrubbed regularly by the I.G. and 

GAO on those processes. 

Mr. PITTENGER. That is about 3 percent of your budget. Your ad- vertising budget was $20 million. It is a huge amount that just 

happened to be— 

Mr. CORDRAY. No, it was less than that. 

Mr. PITTENGER. —that you were aligned with a very progressive, 

known group. Does this reflect that you are biased, or does it really 

mean that your message is fundamentally progressive and Democrat activists are really the best ones to carry the message? 

Mr. CORDRAY. I didn’t know anything about that until I read articles making that point. Again, these are awarded competitively. 

I don’t even know who these people are. 

I am not trying to make an award to some crony or something, 

if that is the implication. I just think, if you look around, almost 

all the contracts of the Federal Government may have—they 

helped someone or other. I don’t know who they are. 

We do competitive bidding. I— 

Mr. PITTENGER. Sir, there are a lot of things— 

Mr. CORDRAY. —pretty much stay out of those things. 

Mr. PITTENGER. —today that you have not been familiar with 

that we have brought to your attention many times, so I guess we 

have to take that in balance. 

So your budget, you spend double of what any other agency 

spends on advertising. This is a record that we have. And a substantial portion of this, of course, goes, as I said, to one firm. 

Do you feel like that there is any impropriety in this? 

Mr. CORDRAY. I think that marketing is consistent with our statutory mandate to make tools and resources available to Americans, 

which can only happen if they are aware of them. We do precious 

little of it compared to what the private sector does— 

Mr. PITTENGER. Do you understand the perception that is out 

there— 

Mr. CORDRAY. —in terms of advertising products. 

63 

Mr. PITTENGER. —in the marketplace and the concerns that we 

have in terms of the alignments with progressive groups that are 

very outspoken progressive groups that would be— 

Mr. CORDRAY. Look— 

Mr. PITTENGER. —your support for— 

Mr. CORDRAY. What I would say—we actually are— 

Mr. PITTENGER. It is consistent with— 

Mr. CORDRAY. —we are a smaller contracting agency than most, 

but you could look across all of our contracts and you could look 

and see who they are, and you might get—I don’t know what the 

picture would be. I honestly don’t know what the picture would be. 

We are just trying to do our job as best we can. We are not trying 

to reward people— 

Mr. PITTENGER. I hear that more times— 

Mr. CORDRAY. —or do favors for people. 

Chairman HENSARLING. The time of the— 

Mr. CORDRAY. It is just not what we are about. 

Chairman HENSARLING. The time of the gentleman has expired. 

The Chair now recognizes the gentleman from Texas, Mr. Green. 

Mr. GREEN. Thank you, Mr. Chairman. 

Thank you for appearing, Mr. Cordray. And I would remind persons that you are the first and only agency with a single mission 

of protecting consumers. 

You are it. There is nothing like you in the United States. When 

I say ‘‘you,’’ I mean the agency itself. 

Mr. CORDRAY. I think both sides of the aisle could agree that 

there is nothing like us in the United States perhaps, yes. 

Mr. GREEN. And some of us would be grateful that you exist. 

There may be others who would differ. 

But you are the only agency with this purpose, and you have succeeded. The empirical evidence indicates that you have succeeded: 

billions of dollars returned to consumers—by one estimate, $12 billion or more; millions of complaints having been filed, but you have 

had over a million complaints that you have processed one way or 

another. 

And as I listen to my colleagues, one might think that you are 

the culprit, that you are the entity that ought to be persecuted and 

possibly prosecuted. 

Let’s talk about Wells Fargo, for example. It was Wells Fargo 

that opened up approximately 2 million—depending on who is 

counting and how you count—accounts without authorization, not 

the Consumer Protection Bureau. 

Mr. CORDRAY. You are right. I didn’t do that. 

Mr. GREEN. You didn’t do that; it was Wells Fargo. It was Wells 

Fargo that has been fined and penalized about $185 million, not 

the CFPB. 

But listening to my colleagues, one would think that it was the 

Consumer Protection Bureau, the agency that is there to protect 

consumers, that is the culprit. 

It is Wells Fargo, quite frankly, that ought to have somebody 

prosecuted. To date, has anybody been prosecuted for what happened over at Wells, Mr. Cordray? 

Mr. CORDRAY. I am not aware of any charges, although I believe 

that a number of different agencies and prosecutors at different 

64 

levels of the government have said that they have opened investigations, so I don’t know where those stand. 

Mr. GREEN. I think that investigations ought to be opened and 

I think somebody ought to be prosecuted. We can’t have a circumstance where you open up millions of accounts without authorization and the guy at the top gets a golden parachute and he is 

out. 

People at the bottom, the entry-level employees, may end up 

holding the bag. They may be prosecuted. 

My hope is that some of these people in upper management will 

be prosecuted. The evidence is there at least for a prosecution. 

There may not be a conviction but there is probable cause, and 

I am going to write the Justice Department. I am going to ask the 

Justice Department to investigate for the purposes of prosecuting 

persons who committed crimes at Wells. 

Wells Fargo is a good company, otherwise. I am not a guy who 

thinks that Wells Fargo ought to go out of business because they 

have made some mistakes, just as I think my colleagues ought not 

want to put the CFPB out of business because of a few mistakes 

that may have been made there. 

The judiciary makes mistakes. If you would listen to some of my 

constituents and their complaints about the judiciary, you would 

think that the whole judiciary is a fiasco of some sort. But nobody 

wants to put the judiciary out of business. 

We want to see a judiciary continue to function. We want it to 

function efficaciously, but we want to see it continue to function. 

So I can’t understand, to be quite honest with you, why people 

would want to eliminate the first and only agency with the mission 

of protecting consumers. That is your sole mission: protecting consumers. 

And, Mr. Cordray, I want to compliment you for standing your ground against the odds. What kind of odds? $2.3 million per day 

being spent against the CFPB. $2.3 million per day, and you still 

stand. Sixty-plus hearings where you have had to come and testify, 

and you still stand. People are trying to sue you to get you out of 

office, and you still stand. 

I compliment you for standing for consumers, Mr. Cordray. And 

I want to give you just a few seconds, if you would, to say a few 

things about why you are standing. 

Mr. CORDRAY. Stubbornness, I guess. 

But, look, we saw what things were like in the lead-up to the financial crisis. And by the way, when we are talking about community banks and credit units, nothing kills them off faster than a financial crisis that blows up the economy and a bunch of them go 

out of business. And that happened in 2008, 2009, and 2010, and 

it happens every time we have a crisis going all the way back to 

the Depression, so— 

Chairman HENSARLING. The time of the gentleman has expired. 

The Chair now recognizes— 

Mr. GREEN. Thank you, Mr. Cordray. 

Chairman HENSARLING. —the gentleman from Pennsylvania, Mr. 

Rothfus. 

Mr. ROTHFUS. Good afternoon, Director Cordray. I would like to 

ask a few questions about the CFPB’s Civil Penalty Fund. This 

65 

committee has been trying to understand how the CFPB goes about 

identifying uncompensated victims eligible for payment and assessing the extent of damages for which the victims should be compensated. 

As far as I can tell, this is an incredibly opaque process and the 

CFPB has been less than forthcoming in response to committee inquiries. The Global Client Solutions case is a good example of this. 

The CFPB settled with GCS, a debt settlement payment processor, over its alleged involvement in facilitating the collection of 

illegal upfront service fees. It is important to note that GCS is a 

service provider for debt settlement companies and not a debt settlement company itself that would have a direct relationship with 

consumers. 

Nonetheless, CFPB reached an agreement with GCS in August 2014 requiring the firm to pay $6 million in relief to consumers 

and a $1 million civil penalty. In the consent order GCS did not 

admit nor deny allegations in the complaint. The CFPB then allocated $107.9 million from the Civil Penalty 

Fund to compensate eligible victims of the debt settlement firms 

that contracted with GCS for eligible uncompensated harm. Again, the CFPB took in $1 million from GCS, the backend service provider for debt settlement companies, and disbursed over 

$100 million to alleged victims of the actual debt settlement companies that would have had the relationship with the consumers. 

Mr. Cordray, who is responsible for allegedly charging the illegal 

upfront fees to consumers? 

Mr. CORDRAY. There were a number of companies that used 

Global Client Solutions as essentially their mechanism for succeeding in ripping off thousands and thousands of consumers 

across the country. We believed and— 

Mr. ROTHFUS. Is GCS— 

Mr. CORDRAY. —we found— 

Mr. ROTHFUS. —responsible for those upfront fees? 

Mr. CORDRAY. It depends on how much awareness and conscious 

disregard GCS would have had. Let’s say it this way— 

Mr. ROTHFUS. Okay. I have a document that the Bureau provided to this community that lists 208 of those debt relief companies that used GCS and allegedly charged unlawful advance fees 

to more than 66,000 consumers. Of these 208 companies, how many 

of them did the CFPB hold accountable? 

Mr. CORDRAY. Look, what I am saying is— 

Mr. ROTHFUS. How many of the 208 companies that were charging the upfront fees did the CFPB hold accountable? 

Mr. CORDRAY. In some instances we go after both the facilitator 

and the— 

Mr. ROTHFUS. Were any of the 208 companies held accountable? 

Mr. CORDRAY. Most of them are fly-by-night and they go in and 

out of business. 

Mr. ROTHFUS. How many of the 208 companies were held accountable? 

Mr. CORDRAY. But here is the problem that we had. You have 

these companies that are fraudulent companies, they go in and out 

of business, but they are all using in this case Global Client Solutions— 

66 

Mr. ROTHFUS. Are all of these 208 companies out of business? 

Mr. CORDRAY. —to be able to effectuate their ill-gotten deeds. 

Mr. ROTHFUS. Are all of the 208 companies out of business? 

Mr. CORDRAY. I don’t know. 

Mr. ROTHFUS. Okay. On what basis did the CFPB determine that there was $107.9 million in uncompensated damages for customers 

of these 208 firms? 

Mr. CORDRAY. So that would be through records from Global Client Solutions because they were the middle man, if you will, in 

these transactions, and they are the ones who had certain records 

that could be looked at. 

One of the problems with many fraudulent schemes is the recordkeeping is poor because they are not trying to keep records; they 

are just trying to rip people off. And it is often difficult later to 

identify who the victims are and know how much they lost. 

But in this case, you had a payment processing company that essentially was making all of this happen for these sketchy, fraudulent entities. 

Mr. ROTHFUS. How do you get from a fairly small settlement 

amount with GCS of $1 million dollars to more than a $100 million 

allocation to alleged victims? 

Mr. CORDRAY. That is the beauty of the scheme, isn’t it? So I 

am— 

Mr. ROTHFUS. That is the beauty of whose scheme? You took $1 million from GCS but you gave a whole $100 million to consumers. 

Mr. CORDRAY. Could I lay it out? You have a lot of rip-off artists, 

and they probably all talk to each other and they all realize they 

can use Global Client Solutions to sort of be their back office for 

them essentially. 

Global Client Solutions doesn’t have a lot of a lot of money— 

Mr. ROTHFUS. But you got $1 million dollars from GCS. 

Mr. CORDRAY. —necessarily. 

Mr. ROTHFUS. You got $1 million dollars from GCS. 

Mr. CORDRAY. Yes, I understand. 

Mr. ROTHFUS. Is the CFPB a piggy bank? 

Mr. CORDRAY. This is a good news story, if you give me a chance 

to tell it. 

Mr. ROTHFUS. Is the CFPB a piggy bank? 

Mr. CORDRAY. No. Global— 

Mr. ROTHFUS. Would you be offended by a characterization of the 

CFPB as a piggy bank? 

Mr. CORDRAY. No. What I would say is— 

Mr. ROTHFUS. You would not be offended by the characterization 

of CFPB as a piggy bank? 

Mr. CORDRAY. That is not a relevant question. 

Mr. ROTHFUS. Well, it is. For the record, they are—the opponents 

are depicting the CFPB as a piggy bank. 

Mr. CORDRAY. What I would say is this: All these people who 

were ripped off by these fraudulent artists never get their money 

back, expect that we can use the Civil Penalty Fund to get their 

money back— 

Mr. ROTHFUS. Okay. 

Mr. CORDRAY. —and we are getting it back for them. 

Mr. ROTHFUS. We have requested records— 

67 

Mr. CORDRAY. That is a really good thing. Don’t you want us to 

do that? 

Mr. ROTHFUS. No, here. We have requested records relating to 

GCS from you months ago. Why has the CFPB been so reluctant 

to provide records to Congress about a major allocation, $100 million dollars in funds? 

Mr. CORDRAY. I don’t know that we are reluctant to give records. 

I don’t think we are. I would be happy to work with you to give 

you all the records you want. 

Mr. ROTHFUS. We will continue to follow up with that because we 

haven’t gotten the records we have requested. 

Mr. CORDRAY. But this is a good news story. All these people who 

were ripped off— 

Chairman HENSARLING. The time of the gentleman has expired. 

The Chair now recognizes the gentleman from Minnesota, Mr. 

Ellison. 

Mr. ELLISON. Please continue, Mr. Cordray. 

Mr. CORDRAY. Okay. So you have people who were ripped off to the tune of $109 million. Global Client Solutions was the mechanism for making that happen. They never had $109 million on hand. The only way to compensate these victims is to go to our Civil Penalty fund, and that 

is what we are doing. 

That is good. That means people in your district may get money 

back that they got cheated out of. Isn’t that a good thing? I think 

it is. 

Thank you. 

Mr. ELLISON. Mr. Cordray, there is a chart that has been flipping 

around up behind you and on the sides that says for every dollar 

that your agency gets there is $4 returned to consumers. I think 

that Americans would say this is awesome, and a lot of Members 

of Congress would even say it is a great thing. 

But I can see how some people wouldn’t see that as good news 

because they might be looking at that money as money that could 

have been returned to some big financial interest and they are 

really upset because they are not getting that money that they 

could be getting. 

So far I think you might have—your agencies returned what, $11 

billion-plus to consumers. Is that right? 

Mr. CORDRAY. That is my understanding, yes. 

Mr. ELLISON. So that is what I am talking about. For every $1 

spent funding the Consumer Bureau, more than $4 is put back into 

consumers’ pockets. And I think what we are really fighting about 

today is some people think, ‘‘Well, why should that money go back 

to regular Americans when it could be going into huge financial 

firms and be divided up in stock options or dividends or bonuses 

or whatever else?’’ 

And I really believe that is what we are fighting about because 

I can’t get 2008 out of my mind. I remember we had bedlam and 

pandemonium around here. There was a week when it looked as 

though the whole financial system might collapse. 

I think that we had unemployment spiking in some areas as high as 15, 16 percent; maybe—I have heard as much as $17 trillion in 

household wealth lost; banks going out of business; businesses 

68 

going out of business. All types of trouble going on all over the 

place, neighborhoods being hollowed out. 

And yet, the level of outrage expressed against you is way higher 

than any derision that some of these companies that have ripped 

off people have ever had to experience. 

I wish we would have had at least half of this umbrage and outrage directed at CitiMortgage, Wells Fargo, Experian, Navient, 

Equifax, TransUnion, MasterCard, and the list goes on. 

But, I just think that for people watching this we need to know 

that much of what is happening is theater. It is not really about 

any of this stuff. It is about the CFPB helping regular people and 

diverting money into the pockets of ordinary working Americans 

rather than huge financial interests. 

And I am just honored to be on your side, because I am with the 

people, because as Members of Congress we are supposed to be 

working in the public interest, not the private gain. That is not 

what Congress is supposed to do. 

It is really shocking to read someone from this committee saying, 

‘‘The CFPB has acted unlawfully, routinely denied market participants due process, and abused powers.’’ Well, I am going to tell you 

there are a whole lot of companies that have acted unlawfully and 

routinely denied market access to regular working Americans. I 

don’t see any hate being thrown on them. 

And yet, here we go, an agency designed to really sort of correct 

injustice done to Americans being heaped with scorn left, right, and 

center. 

Let me ask you this, sir: Do you believe that the CFPB is helping 

regular Americans? Is it rebalancing some of the imbalance that we 

have seen accruing in this economy? 

Mr. CORDRAY. I know we are because that is what they tell us, 

and people who get helped on our compliant line and get problems 

resolved often come back and tell us about it and thank us for it. 

And I know that Congressional offices are sending us—referring us 

complaints, and we are helping work through those, and that is all 

a good thing. 

The other thing I would say, when you say that the return on 

the investment is that we have gotten $4 back to consumers, people 

out in the public, for every dollar spent on us, it is far more than 

that because that is what we got back to them for things that happened to them in the past. But in each of those instances we don’t 

just look at what happened in the past; we stop them from doing 

it in the future. 

So that means over the next period of time they are going to save 

that $4 they otherwise would have lost and it is going to be on into 

perpetuity. That is a great return on investment. And I would hope 

that people who think in those terms would recognize the value of 

the Consumer Bureau and would look to support it, and I would 

hope to change minds. I always hope to change minds. 

Mr. ELLISON. Mr. Cordray, I want to thank you for the work you 

are doing. I want to urge you not to be discouraged by the misbehavior you have seen, and I want to let you know you are doing 

a great service for the American people. 

Chairman HENSARLING. The time of the gentleman has expired. 

69 

The Chair now recognizes the gentleman from Texas, Mr. Williams. 

Mr. WILLIAMS. Thank you, Chairman Hensarling, and Director 

Cordray. 

I am going to forego any opening remarks that I might have this 

afternoon and get right down to business. 

Mr. CORDRAY. Okay. 

Mr. WILLIAMS. I think you know by now that I am still a car 

dealer in Texas. 

Mr. CORDRAY. I didn’t know you still were, but I knew you had 

that extensive background, yes. 

Mr. WILLIAMS. There you go. 

Mr. CORDRAY. A very successful one is what I hear. 

Mr. WILLIAMS. Thank you. We have talked about this numerous 

times. 

After listening to some of the testimony today I am kind of starting to think you don’t have much respect for my profession. I will 

get back to that. 

Mr. CORDRAY. I would be glad to— 

Mr. WILLIAMS. Let me make two quick comments on statements 

you previously made today really quickly. 

You said there are no protection on prepaid cards. Well, that is 

false. All funds are stored at bank partner institutions and all 

major prepaid providers have Reg E protections. 

And then you said the rule is about leveling the playing field. 

Then why create a different regulatory regime on overdraft for prepaid cards than checking accounts? 

So I don’t need a comment. That was a statement from me. 

Mr. CORDRAY. I would like to make one if I could, just briefly. 

Mr. WILLIAMS. Well, let me move on, if we have time. 

Mr. CORDRAY. Okay. 

Mr. WILLIAMS. Let me start by sharing with you some complaints 

on prepaid cards. Kimberly in Austin, Texas, says, ‘‘I chose my prepaid card and I believe I should have the right to decide to use 

services like overdraft protection for a purchase cushion. Please 

make sure the final CFPB rules allow me to choose features that 

are best for me.’’ 

Kathy in Burnet, Texas: ‘‘My prepaid card is just that. It is mine. 

The government needs to stop trying to control everything and everybody. Our country sure is turning its back on its people.’’ 

And then there is Christine in Joshua, Texas: ‘‘Overdraft is needed to help me get through paycheck to paycheck.’’ 

And then Sharon in Lampasas, Texas, says, ‘‘Why is the Federal 

Government getting involved in my personal banking decisions?’’ 

And finally, Randall in Cleburne, Texas, who simply says, ‘‘Leave 

my card alone.’’ 

So actually, these are not complaints about what the card does; 

it is about what you are doing. 

And so I believe— 

Mr. CORDRAY. Could I— 

Mr. WILLIAMS. No, let me say this, and we have a lot of comments from those kind of people. In fact, let me just show you right 

here. I have all these are comments just like the ones you just 

heard from, from hardworking Americans who have actually beneVerDate Nov 24 2008 16:23 Apr 23, 2018 Jkt 027371 PO 00000 Frm 00073 Fmt 6633 Sfmt 6633 K:\DOCS\27371.TXT TERI
70 

fited from prepaid cards, and they should sound familiar to you. 

These comments were filed during the rulemaking process. 

But apparently you didn’t listen to them when you created your 

one-size-fits-all rule on prepaid accounts, or the 67 million Americans who have turned to prepaid cards or accounts to manage their 

day-to-day financial needs. This rule doesn’t solve a problem; it just 

creates a big problem. 

But let’s for a second go back to those— 

Mr. CORDRAY. Could I have a word or not? 

Mr. WILLIAMS. Let me finish and then you can. 

Mr. CORDRAY. Okay. 

Mr. WILLIAMS. I have some questions for you. 

But let’s for a second go back to those complaints. From 2011 to 

2016 in October, before this massive 1,700-page rule was issued, 

approximately 1 million complaints—we talked about that—were 

received by the CFPB. 

Of those 1 million complaints 6,000 had to do with prepaid cards. 

So that is just 0.6 percent. Of those 6,000 complaints just 1 percent 

of those received were related to overdraft, which represents 0.006 

percent. Additionally, only 3 percent of prepaid complaints were related to advertising, marketing, or disclosures, which represent just 

0.018 percent of all complaints. 

So you can see from this chart we have up here—or maybe you 

can’t see it, we have up on the screen—disclosure complaints and 

overdraft complaints are almost invisible. 

I have a few questions, and these are yes-or-no questions. 

Mr. CORDRAY. I would like to have a chance just to have a word 

on a few of the things that— 

Mr. WILLIAMS. Okay. Let me start here by asking yes or no. 

Did the CFPB base the prepaid rule off complaints received? 

Mr. CORDRAY. The CFPB based it off— 

Mr. WILLIAMS. Was that yes or no? 

Mr. CORDRAY. You said before that prepaid issues are already 

covered by Reg E. They are not. Banks are covered by Reg E, but 

prepaid issues are not— 

Mr. WILLIAMS. So is that a yes or a no? 

Mr. CORDRAY. —and a big part of this rulemaking was putting 

them on a level playing field. 

Mr. WILLIAMS. Yes or no? 

Mr. CORDRAY. So that is what it was responding to. 

Mr. WILLIAMS. Okay. 

Did you consider the thousands of positive comments you received from prepaid customers around the country? 

Mr. CORDRAY. Absolutely we did, yes. 

Mr. WILLIAMS. Yes or no, did the CFPB conduct a field study? 

Did you study consumer attitudes on overdraft, specifically those 

who actually use that feature? 

Mr. CORDRAY. I don’t recall offhand all the things that were covered in any field study, but we would be glad to get back to you 

on that. 

Mr. WILLIAMS. All right. 

And I am sure that you noticed, Director Cordray, I have introduced a CRA that would pull back on this disastrous rule. And I 

notice as Congressman Tipton will say, the Bureau has attempted 

71 

to distract Congress from doing their work by delaying the rule by 

6 months. You talked about that. 

Mr. CORDRAY. No. That is not— 

Mr. WILLIAMS. I am here today to tell you that I am not going 

to be distracted. This is wrong. I will continue to fight for those 

who live on a thin economic margin. I will fight for the mother who 

needs an extra $25 a day to buy food for the week and the family 

who needs $100 for a simple car repair. 

In the end, one way or another, those consumers will be heard. 

So going back to auto lending quickly, I have a form right here 

that the CFPB and the DOJ sent out to customers they felt were 

discriminated against when purchasing a car, so I want to ask you 

a quick question here about that. 

Yes or no, can the Bureau decide if someone has been discriminated against based on an account number? 

Mr. CORDRAY. Based on an account number? 

Mr. WILLIAMS. Yes. 

Mr. CORDRAY. No. 

Mr. WILLIAMS. Okay. Can the Bureau decide—okay. 

Mr. Chairman, my time is out. I yield back. 

Mr. CORDRAY. Could I just have a word, please. Kind of a point 

of privilege, if I could, just because the suggestion was that I don’t 

have respect for car dealers. That is wrong, and if you talk to my 

friends and the Ohio auto dealers— 

Chairman HENSARLING. Sorry. There is no point of privilege for 

the witness, but there is— 

Mr. CORDRAY. Okay. That is fine. 

Chairman HENSARLING. Mr. Director, there is another Member 

on this side of the aisle whom I suspect may be willing to give you 

some time. 

The Chair now recognizes the gentleman from Florida, Mr. Crist. 

Mr. CRIST. Thank you, Mr. Chairman. 

Did you need some time? 

Mr. CORDRAY. Thirty seconds? 

Mr. CRIST. Go right ahead. 

Mr. CORDRAY. Congressman Williams, I have a lot of respect for 

auto dealers. I worked with them closely in Ohio when I was Ohio 

attorney general. 

We went through the financial crisis and a lot of them were teetering; we went through the GM bankruptcy; we went through the 

Chrysler bankruptcy. There were a lot of dealers who were going 

to lose their dealerships and I fought for extra arbitration to get 

a lot of them saved. 

The auto dealers know the work I did on their behalf. I worked 

closer to them in handling complaints, gave them a chance to handle them before we took any actions against them. 

So you can talk to my friends in Ohio and they would tell you 

that I do have respect for you and your profession and all of them. 

That doesn’t mean we don’t have a job to do here, and I try to do 

it faithfully. 

And the final point on the prepaid rule is that it is often 

misdescribed as a 1,700-page rule. That is not correct. 

72 

Look in the Federal Register. It is 26 pages of rule. Six of those 

pages are forms that are model forms to follow. So it is just—I 

don’t want that to be misdescribed. 

Thank you. 

Mr. CRIST. Thank you. 

First I want to thank you, Mr. Chairman. I appreciate your kindness. 

I also want to thank Ranking Member Waters for bringing us together for this important hearing today. 

And I want to thank you, Director. I have only been a Member 

of Congress for about 3 months now, and my observation is that 

you might be one of the most disliked people in Washington, D.C., 

by the Majority, the new Administration, lobbyists, money-changers, foreclosure artists, and anyone who is in the business of taking 

a buck from the poor and working families, the people who can 

least afford it. 

I hope that you wear that with pride, sir, because I am proud of 

you and your hard work and your moral compass. People of this 

country are continuing to go through a difficult time and what you 

and your department do is very important to them. 

As a former attorney general myself, I understand being a consumer advocate and fighting for them. But for somebody like you 

in the position you have, that doesn’t happen. 

When I was Governor of Florida, Tallahassee didn’t like me a 

whole lot either. But that is okay because the Constitution says 

that we are a government of the people, by the people, and for the 

people. 

And so when I would meet people at a Publix department store 

in my State, or at the local CVS, or at a McDonalds, which I really 

don’t go to, but more so a Subway—turkey on whole wheat—they 

talk to you because you are in their comfort zone. And it is important, I think, to do that to stay in touch with them and understand 

what is of importance to them and their families. 

All of us would do well to remember that Jesus threw the moneychangers out of the temple, not the other way around. 

On that note, I want to talk about small businesses, particularly 

minority- and women-owned small businesses in my district, which 

is my hometown of St. Petersburg, Florida, but also includes Clearwater and Pinellas Park and Redington Shores and about 26 municipalities, believe it or not. 

Traveling around where I grew up in south St. Petersburg in 

particular, it is a predominately minority area. Last fall I heard a 

similar refrain every day: Mom-and-pop businesses could not get 

access to traditional capital. 

If small business lending is restricted in the primarily Black 

neighborhood in my district, that is a problem and it needs to be 

fixed. Its impact in a community that is very important to me, it 

is a disparate impact. 

And by the grace of God I got on this committee, and this committee has the opportunity in one way or another to give those people, whom I love and I work for—they pay me to represent them. 

And that is one thing I love about this job, that your title is also 

what you do. You represent. 

73 

And this is not just an economic issue. It is an economically developing area and it is an issue of fairness, frankly. And I know 

you know that. 

A Black barber shop shouldn’t have to go to a payday lender to 

finance payroll and operations. But over and over again during the 

course of last fall I heard stories from people like a Black barber 

shop owner. He wanted to expand, and every institution he went 

to told him, ‘‘no.’’ 

And the same thing happened to a small restaurant owner in the 

African-American part of St. Petersburg, Florida. They wanted to 

expand and grow and provide more jobs and be entrepreneurial, 

and every time they went to a bank, the bank said, ‘‘no.’’ 

So I guess my question is— 

Chairman HENSARLING. The time of the gentleman from Florida 

has expired. 

For what purpose does the gentleman from Georgia seek recognition? 

Mr. SCOTT. Mr. Chairman, I have a unanimous consent request 

that these two letters I have here be made a part of the hearing 

record: one from the Main Street Alliance on the ways that DoddFrank and the CFPB— 

Chairman HENSARLING. Without objection, it is so ordered. 

Mr. SCOTT. Thank you. 

Chairman HENSARLING. The Chair now recognizes the gentleman 

from Maine, Mr. Poliquin. 

Mr. POLIQUIN. Thank you very much, Mr. Chairman. 

And thank you, Mr. Cordray, for being here. 

Mr. Cordray, your Acting Deputy Director, David Silberman, has 

had direct coordination with special interest groups outside your 

Bureau to develop the payday lending rule. I am very concerned 

about any kind of cozy relationship that your people have with outside special interest groups to make rules that you folks are supposed to make. I am sure you probably share that same concern. 

Mr. CORDRAY. Yes. That is not right. That is not a fair description. 

Mr. POLIQUIN. No, that is not what the e-mails show us, sir. 

There is a direct coordination between your staff—in particular Mr. 

Silberman—and outside groups. 

Mr. CORDRAY. We are broadly accessible to all sides. 

Mr. POLIQUIN. I want to move on, sir. 

That is what the record shows. That is what the e-mails show 

from the FOIA request that we have here at the committee. 

Mr. CORDRAY. All right. 

Mr. POLIQUIN. Now, you have a law degree, sir. You are an attorney, correct? 

Mr. CORDRAY. Say that again? 

Mr. POLIQUIN. You are an attorney, correct? You have a law degree? 

Mr. CORDRAY. I am. I haven’t practiced law in some time. 

Mr. POLIQUIN. Okay. So I am sure you are aware of the Federal 

Records Act that bars any Federal Government employee from 

using a private electronic device, a communication device like a cell 

phone or e-mail or a text, to conduct official business unless within 

74 

20 days the reporting of that communication is then housed in an 

official platform. 

You are aware of that law, sir? 

Mr. CORDRAY. I am aware of that law. 

Mr. POLIQUIN. Okay, good. All right. 

Now let’s talk a little bit about this. Through freedom of information requests we know that you and about a dozen of your senior 

managers at the CFPB have, in fact, conducted communication on 

private devices to conduct official business, which circumvents the 

law unless, again, sir, unless you have reported this and it is on— 

filed on an official government platform. 

Can you guarantee to us right now that, in fact, you have complied with the law and you have done everything you said you 

can— 

Mr. CORDRAY. Yes, this is a trumped-up issue brought about by 

some special interest groups that made a request. You can look at 

the records of the Bureau and find that our government business 

is conducted on the Bureau’s— 

Mr. POLIQUIN. Can you guarantee— 

Mr. CORDRAY. Just let me, if I would—this is a personal issue 

you are raising— 

Mr. POLIQUIN. I want a yes-or-no answer, Mr. Cordray. 

Mr. CORDRAY. —and I would like to have a chance to respond. 

Mr. POLIQUIN. Yes or no, can you guarantee that neither you nor 

anybody at the CFPB has used personal communication devices— 

text, e-mail, cell phones—and have fully complied with the Federal 

Records Act? Yes or no? 

Mr. CORDRAY. So again, this is a trumped-up issue— 

Mr. POLIQUIN. Yes or no? Yes or— 

Mr. CORDRAY. —and if you look at the records you will find that 

if there were ever incidental—if there were incidental— 

Mr. POLIQUIN. Reclaiming my time, sir— 

Mr. CORDRAY. I would like to have a—you are making accusations and I think I should have a chance to respond to them. 

Mr. Chairman? 

Chairman HENSARLING. The time belongs— 

Mr. CORDRAY. Do I have a chance to respond to these personal 

accusations? 

Chairman HENSARLING. The time belongs to the gentleman from 

Maine. 

Mr. POLIQUIN. Thank you, Mr. Chairman. 

If this accusation is false, can you guarantee us that you have 

complied with the law and the folks who work for you complied 

with the law with respect to the issue I just mentioned? Yes or no? 

Mr. CORDRAY. Again, this is a totally trumped-up issue. 

Mr. POLIQUIN. Can you— 

Mr. CORDRAY. If there were ever incidental instances— 

Mr. POLIQUIN. I am going to assume— 

Mr. CORDRAY. —where a device was used because maybe the government Blackberry was—the battery was dead or something of 

that kind— 

Mr. POLIQUIN. Reclaiming my time, Mr. Chairman. 

Mr. CORDRAY. —and not to conduct government business in any 

substantive way. That is a— 

75 

Chairman HENSARLING. The time belongs to the gentleman from 

Maine. 

Mr. POLIQUIN. Mr. Chairman, if you could reset the clock, please, 

for another minute or so, because the— 

Chairman HENSARLING. The gentleman from Maine may proceed. 

Mr. POLIQUIN. Mr. Cordray, do you still use a private cell phone 

or e-mail to conduct outside business? 

Mr. CORDRAY. I think it is unfair and inaccurate to say that— 

Mr. POLIQUIN. Sir— 

Mr. CORDRAY. —using a private device to conduct government 

business. 

Mr. POLIQUIN. Do you still use— 

Mr. CORDRAY. There have been incidental instances where perhaps the government Blackberry was—the battery was dead or it 

was unavailable for some reason— 

Mr. POLIQUIN. So you confirm that, in fact— 

Mr. CORDRAY. And it is not to conduct— 

Mr. POLIQUIN. —you were using private e-mail communication 

devices— 

Mr. CORDRAY. What government business was conducted? Tell 

me what government business was conducted. 

Mr. POLIQUIN. Thank you for— 

Mr. CORDRAY. Tell me what government business was conducted. 

Mr. POLIQUIN. Now, my next question is you are probably aware 

that this committee and also folks on the Oversight and Investigations Subcommittee here, and Jim Jordan and Jason Chaffetz, who 

work in another part of government, have sent you a letter asking 

you for all of the e-mails and phone messages that you have used— 

and you just confirmed, thank you—that you have used on a— 

Mr. CORDRAY. No, I didn’t confirm that. 

Mr. POLIQUIN. —on a private— 

Mr. CORDRAY. This is a— 

Mr. POLIQUIN. —on a private communication device. Are you 

fully in compliance with this letter? Are you going to comply to this 

letter? 

Mr. CORDRAY. We— 

Mr. POLIQUIN. The request in this letter? 

Mr. CORDRAY. We respond to all requests, and we will. 

Mr. POLIQUIN. Well, when will you— 

Mr. CORDRAY. But this is a trumped-up issue. I have been in this 

job for more than 5 years, and I conduct all kinds of government 

business all the time. It is all on the system. 

There may be incidental instances where— 

Mr. POLIQUIN. Okay, so you are— 

Mr. CORDRAY. —where a Blackberry was dead so a communication was made, but it wasn’t to conduct government business. And 

I would like to know from you what government business was conducted. You seem to think that you have something. 

Mr. POLIQUIN. —all the private communication you have had— 

Mr. CORDRAY. What was it? 

Mr. POLIQUIN. —for government business based on the answer 

you have given us today sir so you are on the record that you have 

made sure that all this communication is fully housed on a government, official platform. I am considering that as a yes. 

76 

Mr. CORDRAY. We understand the Government Records Act and 

we make every effort to fully comply with it. 

Mr. POLIQUIN. Do you know what the problem is? We have— 

Mr. CORDRAY. —and that anything else is just a character assassination, and that is what it is. 

Mr. POLIQUIN. Mr. Chairman, here is the problem. Here is the 

problem. There is no character assassination here. 

Mr. CORDRAY. Yes, it is. 

Mr. POLIQUIN. Here is the problem though, Mr. Cordray: You 

have a 5-year— 

Chairman HENSARLING. The time— 

Mr. POLIQUIN. —appointment from the President. 

Chairman HENSARLING. The time of the gentleman— 

Mr. POLIQUIN. You don’t report to anybody. We don’t appropriate 

any money to you. 

We come here and ask questions and you tell us to go pound 

sand. 

Mr. CORDRAY. No, I don’t tell you to pound sand. 

Chairman HENSARLING. The time of the gentleman has expired. 

The Chair now recognizes the gentleman from New Jersey, Mr. 

Gottheimer. 

Mr. GOTTHEIMER. Thank you, Mr. Chairman. 

Director, in February the Consumer Bureau filed a lawsuit 

against RD Legal Funding for allegedly scamming 9/11 heroes out 

of money intending to cover medical costs, lost income, and other 

critical needs. Can you please elaborate on the consumer fraud the 

Bureau found in this instance? 

Thank you. 

Mr. CORDRAY. It is kind of disgusting just as you told the story 

that briefly, isn’t it? 

So you have a company that engages in structured settlements 

that targeted responders—first responders to the 9/11 attack, who 

ended up getting money from the Federal Government. And the 

structured settlement company went after them and offered them 

loans that we feel were misleading and deceptive and unfair and 

violated the law. 

They did the same with NFL players who were concussion victims and got some sort of a settlement or some sort of pot of money 

available to them, so that attracts—it is like honey; it attracts the 

flies. 

And we have brought an action to pursue relief for those consumers to make sure that they are restored the money that was, 

we think, wrongfully taken from them and that these practices are 

cleaned up and stopped for good. 

And in that case—some cases we work on our own; some cases 

we work with partners. We have heard about the Wells Fargo case 

where we worked with partners. Here we are working with the 

New York Attorney General’s Office and having a very productive 

investigation of those issues. 

Mr. GOTTHEIMER. Thank you very much. 

Mr. Chairman, I yield back. 

Chairman HENSARLING. The gentleman yields back. 

The Chair now recognizes the gentleman from Colorado, Mr. Tipton. 

77 

Mr. TIPTON. Thank you, Mr. Chairman. 

Director Cordray, I agree with the decision to be able to delay by 

6 months the prepaid card rule. And in fact, we have introduced 

legislation to be able to delay that actually for a year moving forward— 

Mr. CORDRAY. Yes. 

Mr. TIPTON. —because of the potential problems with the rule. 

But in dealing with this, as part of the announcement the Bureau said that it will be evaluating concerns with substantive aspects to it. You had mentioned in earlier questioning in regards to 

digital wallets as substantive aspects of it. Were there any others? 

Mr. CORDRAY. So these are illustrative. What happens when we 

finalize a rule is, the market doesn’t stay still and things— 

Mr. TIPTON. Right. I am just seeking, what are the other aspects 

that you— 

Mr. CORDRAY. I am just saying things can change, and we stay 

in close touch with the industry because we are helping them implement the rule. So we hear a lot even after a rule is finalized. 

Here, the linking of credit cards into digital wallets is one of the 

things we have heard enough about to recognize that we should 

consider proposing an invention. 

The other one that I mentioned had to do with error resolution 

for prepaid cards that have not been registered, which is causing 

some concern, and I think some of the companies that didn’t fully 

realize it beforehand are realizing now that— 

Mr. TIPTON. I’m sorry, I have limited time. 

Mr. CORDRAY. I’m sorry. 

Mr. TIPTON. What other one—aspects— 

Mr. CORDRAY. And there could be others, depending on what we 

are hearing and seeing as we go. 

Mr. TIPTON. Okay. 

Earlier when you were talking to Congressman Sherman in regards to the rulemaking process you had mentioned, and we wrote 

it down, ‘‘I want to be able to move as fast as possible.’’ 

Director Cordray, the American Action Forum said that the average CFPB rule takes 197 days to be able to complete. The median 

rulemaking pace, that is 31⁄2 times faster than other executive 

agencies. 

Do you believe that the Bureau can complete a thorough analysis 

of public comments and concerns in that timeframe, given that you 

are accelerating it? 

Mr. CORDRAY. It depends on the rule. Some rules are fairly 

straightforward and can be done very quickly; many of them are 

not straightforward at all. 

And I heard the chairman loud and clear earlier saying he wants 

us to move faster on the 1071 small business lending rule, which 

he thinks that we haven’t gone fast enough on. 

So, sometimes we are too fast, sometimes we are too slow. Some 

rules are harder, some rules are easier. Those are the kind of considerations that affect this. Averages tell you something, but they 

don’t really capture all the— 

Mr. TIPTON. But you are comfortable that you are doing it in a 

sensible way? 

78 

Mr. CORDRAY. I know we are trying to do all of our rulemaking 

in a sensible way. I will say that we have finalized— 

Mr. TIPTON. All right. 

Mr. CORDRAY. —a number of rules and sometimes had to go back 

and rework them, and the rural was an example and we had to rework it twice, so— 

Mr. TIPTON. I find it interesting, because you hold—and there 

are certainly an appropriate areas to be able to do that accountability, transparency— 

Mr. CORDRAY. Yes. 

Mr. TIPTON. —in terms of the process. However, the American 

Action Forum also noted that you have issued 13 corrections on 49 

rules that they have sampled. This is a 25 percent error rate effectively, and going. 

In the private sector, would you be happy with a 25 percent error 

rate when you were moving forward with rules and trying to be 

able to enforce them? 

Mr. CORDRAY. Again, I think ‘‘error rate’’ is too strong a term because, as I said, there are things that can change even after rulemaking is finalized. Should we refuse to recognize that we need to 

make a change just to be stubborn and just to have pride of authorship? 

I think it is a good thing that when we learn more that we are 

willing to go back in and change things to try to get it right. If we 

had stubbornly stood on the first definition of ‘‘rural,’’ people would 

still be complaining about it and we would be hurting people and 

it wouldn’t have come out right. 

To fix that once and then twice is a good thing, but that would 

sound like an error rate. 

Mr. TIPTON. We now actually have court cases where you have 

been overruled. We just had a North Dakota case. I think you are 

well aware that the courts have ruled against your standing on a 

variety of cases that have been moving— 

Mr. CORDRAY. I know we have two cases where—two or three 

cases now where courts have ruled against us on various things, 

and a couple of those are on appeal. But we don’t get everything 

right. We are not going to get everything right—but we do—we try 

to be very careful. Sometimes, you have the hard issues and courts 

disagree with you. That happens. 

Mr. TIPTON. I am kind of curious. You have had, as you had 

noted, I think it was over 1.3 million public comments on the proposed rule on small-dollar loans. 

Mr. CORDRAY. That is pretty much a record, I think, yes. 

Mr. TIPTON. It is. And you said on both sides of it. How are you 

weighting those? 

Mr. CORDRAY. How are we weighting those? 

Mr. TIPTON. Or are they weighted? 

Mr. CORDRAY. Well, no, I think we always—it is not just numbers of comments; it is what they have to say. 

We are supposed to take them on the merits and think about 

what they say on the merits, although I do think numbers of comments can show intensity around an issue, which is a little different from just what is said about the issue. So I think all of that 

comes into play. 

79 

And if you have other thoughts about how we should handle it, 

I would be glad to hear them because it is a hard issue. You get 

constituent calls, right? And you get them on both sides of issues 

and then you try to weigh them and figure out what is the right 

thing— 

Chairman HENSARLING. The time of the gentleman has expired. 

The Chair now recognizes the gentlelady from Utah, Mrs. Love. 

Mrs. LOVE. Thank you, Mr. Chairman. 

And thank you, Director Cordray, for being here today. 

I would like to talk a little bit about checks and balances. I believe, especially in today’s environment, we need to do everything 

we possibly can to make sure we have checks and balances so that 

the American people aren’t subject to the political environment. 

So what I would like to explore is the extent to which the Bureau 

is subject to them or not subject to them. So it is often noted that 

one of the few checks and balances on the Bureau is in the hands 

of the Financial Stability Oversight Council (FSOC). And FSOC 

can, in fact, veto final regulations promulgated by the Bureau, is 

that correct? 

Mr. CORDRAY. That is my understanding of the statute. There 

are grounds on which they are supposed to do that— 

Mrs. LOVE. I have a couple of things. I will go through that. 

Okay. 

Mr. CORDRAY. That is fine, yes. 

Mrs. LOVE. Can FSOC veto enforcement actions? Yes or no? 

Mr. CORDRAY. I don’t believe the statute provides for that— 

Mrs. LOVE. Okay. Can FSOC veto supervisory actions even if 

they find them invasive, harassing, or unnecessary? 

Mr. CORDRAY. Again, maybe we can short circuit this. I believe 

FSOC, under their statute— 

Mrs. LOVE. No. 

Mr. CORDRAY. —has the ability to veto— 

Mrs. LOVE. No. Yes or no? 

Mr. CORDRAY. —regulations on specific— 

Mrs. LOVE. Yes or no, can they super—can they veto supervise— 

we are just going to go through this. Can FSOC veto investigations 

even if they find those investigations to be arbitrary, harassing, or 

unnecessary? Can they veto your investigations? Yes or no? 

Mr. CORDRAY. They can’t do a lot of things. They can do— 

Mrs. LOVE. Okay. Can FSOC veto the Bureau’s guidance? If they 

find those guidance to be repetitive, unnecessary, can they veto 

those? 

Mr. CORDRAY. We can keep going through this if you want. 

Mrs. LOVE. No, okay. That is okay. 

Mr. CORDRAY. I am not sure where this— 

Mrs. LOVE. Is there anything that FSOC could veto, other than 

your final regulations? 

Mr. CORDRAY. So the FSOC has the ability under the statute, as 

I said—it is repetitive here, but— 

Mrs. LOVE. I am about to get there— 

Mr. CORDRAY. —to veto rules on specific statutory grounds— 

Mrs. LOVE. Can they veto— 

Sir, you might find that you agree with me later. We will get 

there. And if you—okay? 

80 

So the only thing FSOC can veto are final regulations, and FSOC 

can’t veto—issue a veto unless the regulations would put the safety 

and the soundness of the United States banking system or the stability of the financial system of the United States at risk? 

Mr. CORDRAY. That is what Congress did in the law. 

Mrs. LOVE. I understand. 

Mr. CORDRAY. I didn’t do it. Congress did it. 

Mrs. LOVE. Yes. I got it. 

So that sets the bar extraordinarily high for FSOC to take action. 

Has FSOC ever vetoed any action the Bureau has taken? 

Mr. CORDRAY. I would like to think that we would never put the 

FSOC in the— 

Mrs. LOVE. Have they done it? 

Mr. CORDRAY. —position of having to do that. 

Mrs. LOVE. Have they done it? 

Mr. CORDRAY. So they have not— 

Mrs. LOVE. Okay. That is it. 

Mr. CORDRAY. —they have not had to do that because we haven’t 

gone afoul of it. 

Mrs. LOVE. So let me get me this straight. 

So, for instance, if any of these young men and women behind 

you decide that they are going to be part of an institution, a banking institution in their community, or better yet, they decide that 

they are going to—they have their own business that they have put 

all of their money into, that they have exhausted all of their savings and they want to be able to go to a banking institution to expand or get credit, whether it is to get a car or whether it is to 

expand their business or whether it is to get a mortgage. And their 

institution is being investigated, supervised, fined by the CFPB, 

they have nowhere to turn unless the final rules find that they are 

taking down the entire financial system of the United States Government. 

Mr. CORDRAY. I am not really— 

Mrs. LOVE. What is their recourse? 

Mr. CORDRAY. I am not really following you. First of all, we don’t 

have— 

Mrs. LOVE. What is their recourse? 

Mr. CORDRAY. —the ability to fine or enforce against any community banks or credit unions. 

Mrs. LOVE. Okay, so you have no ability to fine or investigate 

any financial institutions in— 

Mr. CORDRAY. Community banks or credit unions, that is correct. 

Community banks or credit unions of under $10 million. 

Mrs. LOVE. So what you do does not affect the American people 

and their ability to get credit? 

Mr. CORDRAY. No, that doesn’t follow from that question. 

Mrs. LOVE. Okay. 

Mr. CORDRAY. But what I was saying is we don’t have the ability 

to fine or enforce against thousands of community banks and credit 

unions. 

Mrs. LOVE. What I am trying to say is that the ability—you have 

to understand that what the Bureau does actually affects the ability of the American people to get access to credit to be able to go 

out and achieve their dreams. 

81 

Here is what I am trying to say. The American people should be 

concerned— 

Mr. CORDRAY. And to be able to access responsible credit so that 

they aren’t being victimized by predatory lenders. 

Mrs. LOVE. —should be concerned, Director Cordray— 

Mr. CORDRAY. Yes. 

Mrs. LOVE. Just to take you out of the picture, for instance, and 

let’s think about this current President actually putting somebody 

else in your position. Think about that. 

And I think everybody else should think about that also, whether 

they are happy or not, right? 

Mr. CORDRAY. I have thought about that. 

Mrs. LOVE. Listen, should the American people not be concerned 

that your agency can spend hundreds of millions of dollars each 

year, employ 1,500 Federal bureaucrats who have the power to directly impact the personal finances of every single American, and 

yet, unlike any other Federal agency, is not accountable to anyone? 

Mr. CORDRAY. I don’t think we are unlike other Federal agencies. 

Mrs. LOVE. Well— 

Mr. CORDRAY. Everything people have said about us— 

Mrs. LOVE. No, you even mentioned that you are able—you enjoy 

more unilateral authority— 

Mr. CORDRAY. Not true. 

Mrs. LOVE. —than other offices and you— 

Mr. CORDRAY. Not true. 

Mrs. LOVE. —take that responsibility very seriously. 

Mr. CORDRAY. It is not true. 

Mrs. LOVE. Who is to protect the consumer from the Director of 

the Consumer Financial Protection Bureau? 

Mr. CORDRAY. That is just not true. I am no different from the 

Federal Reserve or the FDIC— 

Chairman HENSARLING. The time of the gentlelady— 

Mr. CORDRAY. Tell me how I am different. 

Chairman HENSARLING. The time of the gentlelady has expired. 

The Chair wishes to inform Members that there is currently a 

vote pending on the Floor. We will call upon one more Member, Mr. 

Hill of Arkansas, and recess, after which we will immediately reconvene, and next in the queue will be Mr. Zeldin and Mr. Trott. 

The Chair now yields to the gentleman from Arkansas, Mr. Hill. 

Mr. HILL. I thank the chairman. 

And I thank the Director for being with us today. 

Mr. Cordray, I have heard from a number of community banks 

across my State of Arkansas that no single mortgage regulation 

has been more vexing than complying with TRID, also known as 

the ‘‘know before you owe’’ disclosures regulation. 

The regulation included 1,888 pages. In your testimony this 

morning you assert that the Bureau writes clear rules of the road, 

and in your report you also noted that— 

Mr. CORDRAY. I would say we try to write clear rules of the road. 

We may not always succeed, yes. 

Mr. HILL. Your report that you released today also says that you, 

under the revised ‘‘know before you owe’’ rule, attempt to ensure 

smooth and on-time closings. But in addition to hearing from the 

82 

community bankers, I have also heard from consumers that it has 

been delays, frustration, and increased costs. 

And one issue I noted is this issue of the disclosures themselves. 

So a basic disclosure regulation of this sort might have a question 

that the Bureau attempts to ask, ‘‘Does the rule require both the 

consumer and the seller to receive a closing disclosure?’’ 

And to receive an answer to this question a community bank 

must go to the Bureau’s website, which I have on the screen, click 

the question index link, which leads you to a webpage that says, 

‘‘Thank you for visiting the ConsumerFinance.gov. You are now 

leaving the CFPB Web server.’’ 

The user then downloads an 11-page document called the TILARESPA Integrated Disclosure Rule Webinar Index. I will note that 

this document does not appear to be on the CFPB letterhead and 

uses an entirely different font and scheme. 

Having done this, the user must find the heading on page six 

that says, ‘‘Closing disclosure general questions.’’ Click another 

link, apparently, and then find question 12, which is 38 minutes 

and 37 seconds into a recording of a webinar that was conducted 

on April 12, 2016. 

But before the user can get the answer to this most basic question and view the recording on the webinar, they must enter their 

name, company, city, State, telephone number, and e-mail. If the 

user is a bank, savings, loan, or credit union, they must answer 

three questions about their institution in order to get the answer 

to this basic question, ‘‘Does the rule require both the consumer 

and the seller to receive a closing statement?’’ 

So you see where I am going here. Would you say this sounds 

like clear rules of the road? 

Mr. CORDRAY. I would say that if what you just said is all correct, I would say that that doesn’t sound as user-friendly as either 

you or I would like it to be, does it? 

Mr. HILL. I agree, Mr. Director. 

And, I really think, why can’t the CFPB just issue written guidance and rule interpretations like the Internal Revenue Service or 

the SEC or the IRS does? The GAO has an excellent report on how 

to seek written answers and get written guidance from the agency, 

and to me that is a more clear way to this. 

Webinars are not legally binding. They are not really that helpful 

to compliance departments or general counsels. 

But let me move on. I think I have— 

Mr. CORDRAY. Although, I would just say— 

Mr. HILL. Yes. 

Mr. CORDRAY. —if we write things down more people criticize 

how many pages of stuff there is and— 

Mr. HILL. No, but it is a—I got that, but you know through the 

commission and over at the IRS— 

Mr. CORDRAY. But everybody wants something to be written 

down, and once you total it all up it is a lot of stuff for people to 

read. It is just a comment— 

Mr. HILL. Yes. I understand. 

When did the TRID rule become effective, Mr. Director? 

Mr. CORDRAY. I believe it became effective in—I am confusing 

this a bit, maybe October of 2015? 

83 

Mr. HILL. And do you know—do you remember what the original 

effective date was to be? 

Mr. CORDRAY. I think it was going to be June, maybe, of 2015, 

and we backed it up a little? 

Mr. HILL. It was August 1, 2015. 

Mr. CORDRAY. Okay. 

Mr. HILL. But do you know the reason why it was delayed those 

2 months to October 3, 2015? 

Mr. CORDRAY. Yes, I know why it was delayed. It would have had 

to be delayed about 10 days because the Bureau didn’t file one— 

a piece of paperwork it should have filed with the Congress, and 

we then decided if we were going to back it up anyway we might 

as well back it up a ways into the school year because that would 

help the industry on their compliance, and I understand that it did. 

Mr. HILL. You are correct that it was delayed 2 months because 

you failed to file the Congressional Review Act. 

Mr. CORDRAY. It didn’t have to be 2 months. It would have had 

to have been like 2 weeks, but we made it 2 months to give people 

a little more time, which they— 

Mr. HILL. What would be the consequences of a banker or a title 

agency that didn’t follow the disclosure process? 

Mr. CORDRAY. We said for the first prolonged period that we 

were only going to be interested in efforts—substantial efforts in 

good faith to comply with the rule. And so in an individual instance 

or even a few instances of noncompliance, we talked to the other 

agencies and thought that the right answer would be just to help 

them correct that and not to make a big deal out of it. 

Mr. HILL. My time has expired, Mr. Chairman. Thank you. 

Chairman HENSARLING. The time of the gentleman has expired. 

Once again, votes are pending on the Floor. The committee will 

now recess. Pending completion of votes on the Floor, the committee stands in recess. 

[recess] 

Mr. LUETKEMEYER [presiding]. Okay, we will call the hearing 

back to order. We will be respectful of the Director’s time here, and 

we do have a number of Members who have returned. 

So again, we appreciate the indulgence of the Director as well as 

other members here. 

At this point we are going to recognize the gentleman from 

Washington, Mr. Heck, for 5 minutes. 

Mr. HECK. I thank you, Mr. Chairman, very much. 

Mr. Cordray, thanks so much for being here. 

Mr. CORDRAY. Sure. 

Mr. HECK. The testimony earlier in the day reminded me of a 

conclusion I had come to quite some time ago about what the best 

thing that could conceivably happen to Congress would be, and it 

would be this: fewer adjectives, more nouns; fewer decibels, more 

listening. So I am going to endeavor to listen. 

I want to first provide you an opportunity maybe to follow up on 

Mr. Lynch’s line of questioning. Members of this committee represent in the aggregate an incredible number of servicemembers at 

the following bases: White Sands, Fort Hood, Patrick Air Force 

Base, Nellis Air Force Base, and of course my very favorite, Joint 

Base Lewis-McChord, which I have the privilege to represent. 

84 

So I did, because you seemed pretty rushed at the end of that 

discussion about what it is that the Servicemembers Affairs Office 

is doing, provide you with an opportunity to expand, if you have 

anything at all to add to it. And I just have one other question. 

Mr. CORDRAY. Yes. Thank you. And I am appreciative of the 

chance to talk about this. 

I think there were high-ranking officials from each of the services who testified recently in the Senate about how helpful it has 

been for them, since they are really focused on how to do the job 

the military, to have the CFBP work with them to make sure that 

in terms of readiness the servicemembers feel supported and protected on that front so that they are not consumed with that kind 

of anxiety, and so that is quite important. 

And we are looking at the entire life cycle for the military, from 

going into the service to begin with, to coming back out, 

transitioning into society, and issues involving families, as well. So 

these are all part of our focus. 

Some of the curriculum that we have worked on with the Department of Defense is now being incorporated as a standard matter 

into some of the training and readiness work that they are doing, 

and it is just a great thing. 

And I am quite confident that Paul Kantwill, who has now taken 

over this position, is a great person to show the leadership in succeeding Ms. Petraeus, who was a truly great leader, and that we 

won’t miss a beat on that front, so— 

Mr. HECK. Thank you. 

And my acknowledgment to Holly, who did, I thought, a spectacular job. 

So one of the aspects of the standing of the Consumer Financial 

Protection Bureau that I always found appealing was its effort in 

effect to level the playing field between financial institutions and 

nonbank institutions so that theoretically they could compete on a 

more even footing in the marketplace on the basis of their innovation and their efficiency and the like. We don’t ever seem to talk 

about that in here, and I am just interested in your reflections several years later about the degree in which you think we are making 

progress in that regard. 

Mr. CORDRAY. Yes. Actually it is a great point and it gets lost 

a little bit, but one of the things that was done with the CFPB was 

we are supposed to try to put the banks on a level with the 

nonbank financial companies that often compete against them in 

same markets, such as mortgage lending, mortgage servicing, auto 

lending, a number of others. And we have been working to do that 

from the beginning. 

And that is unique to this agency. Nobody was in a position to 

do this before because the banking agencies deal with the banks, 

and the NCUA with credit unions, and then other agencies, including the Department of Justice, have dealt with everybody else. 

And you want them to be supervised in the same way, subject 

to the same standards and the same expectations. If not, some of 

that falls back to the State level where there is some very good 

work done but it can be uneven depending on different State laws 

or different State authorities or State resources. 

85 

And so we work closely with the States, but for us to try to make 

that playing field level is an important thing. And the way I say 

it is if you only regulate part of a marketplace and leave part of 

it unregulated it is going to be a recipe for failure because a lot of 

things are going to gravitate to that end that is not under the same 

microscope. 

Plus, it is unfair to these financial companies. They should be 

competing on the level, and we are trying to make that happen 

more and more. 

Mr. HECK. Thank you, sir. 

Mr. Chairman, with that, I yield back the balance of my time. 

Mr. LUETKEMEYER. The gentleman yields back. 

Next we go to the gentleman from New York, Mr. Zeldin, who 

is recognized for 5 minutes. 

Mr. ZELDIN. Thank you, Mr. Chairman. 

Director Corday, we have asked you before about the Bureau’s 

$200 million expenditure on wasteful renovations to a headquarters building it does not own. But one fundamental question 

remains: Who is responsible? In other words, who authorized the 

renovations? 

Getting an answer to this simple question has been surprisingly 

difficult. At one of your prior appearances before this committee, 

Representative Wagner—now Oversight and Investigations Subcommittee Chair Wagner—asked you to identify the individual responsible for giving the official go-ahead to renovate the headquarters building. You responded, ‘‘And why does it matter to you?’’ 

I cannot recall a more dismissive answer by an agency witness, 

especially one who goes to great lengths to stress his agency’s accountability and transparency. 

And yet, we did deduce several facts from your testimony. You 

claimed that the decision was made before your tenure as Director, 

which began January 4, 2012. You also said that it was someone 

at Treasury, that, ‘‘There are people in Treasury who contributed 

to that decision.’’ 

Well, we asked Treasury, and they only pointed us to the bill of 

contract, which was signed on your watch but which tells us nothing of who committed the CFPB to renovation in the first place. 

But here is another fact: In 2011, Elizabeth Warren, while serving at Treasury and while responsible for standing up the CFFB, 

announced that she had selected 1700 G Street as the location of 

the Bureau’s headquarters. 

We also know from documents provided to us by the Office of the 

Comptroller of the Currency that at the time this location was selected it was known that renovations would be needed. 

So now logic would dictate that the one person who, A, selected 

the location, B, knew of the need for renovations and, C, had the 

power at Treasury to authorize the renovations is, in fact, the person who authorized the renovations. 

Yet strangely, the Office of the Inspector General of the Federal 

Reserve, in its investigation found no documents to substantiate 

the decision, and you have not provided any such documents to this 

committee either. 

So let me ask plainly: Did Elizabeth Warren authorize the renovations to the CFPB headquarters building at 1700 G Street even 

86 

though she was never given this authority through the advice and 

the consent of the Senate or appointed to run the CFPB? 

Mr. CORDRAY. So that was about 2 minutes of narrative. I had 

several points about it. 

Mr. ZELDIN. Well, first answer my question. 

Mr. CORDRAY. Okay. So I don’t know who made that decision initially, as I have answered before. 

I feel that I was misquoted or taken out of context by some—not 

by you, but by others who have made it sound like I thought that 

inquiring into the expenditures for the building was, ‘‘Why does 

that matter to you?’’ I know why that matters to you. It is a lot 

of money and it does matter to you. 

It was the issue of who originally authorized that decision that 

after the question was asked three or four times I think I got a little impatient in answering it. But I don’t know who made that decision. 

But I have also said since that I have reaffirmed the decision. So 

I treat it as it is basically my decision, so if people have a problem 

with it, I am quite happy to be here and answer the questions 

about it. 

Mr. ZELDIN. Reclaiming my time, I have a limited amount of 

time. Just to be clear, did Elizabeth Warren authorize the renovations? 

Mr. CORDRAY. As I said, I don’t know. I don’t have any way of 

knowing that. I wasn’t in the leadership of the Bureau at the time. 

I wasn’t privy to those decisions. 

But I will say it is— 

Mr. ZELDIN. Reclaiming my time— 

Mr. CORDRAY. —it is also an increasingly good news story about 

the building. It is coming in on time and under budget—or on 

budget, and— 

Mr. ZELDIN. I’m sorry, it is— 

Mr. CORDRAY. —and will be— 

Mr. ZELDIN. That is a different line of questioning. 

Reclaiming my time, Mr. Director, a cynic would say that you are 

carrying water for Senator Warren to prevent her political embarrassment and you don’t want the American people to know the 

truth about who was behind the throne both before or after you 

took over the CFPB. 

Are you answering this question, as far as who authorized the 

renovations, under any duress, coercion, or compulsion at all, any 

type of threat? 

Mr. CORDRAY. From whom? I don’t even know what you are talking about here. 

Mr. ZELDIN. Have you ever discussed the CFPB renovations with 

Senator Warren? 

Mr. CORDRAY. Have I ever discussed the renovations with Senator Warren? I don’t know if I have or haven’t. I have discussed 

it with many of you. Maybe I have. 

But in terms of who made that decision, I don’t know. I have 

never seen any records on that, whether someone else at Treasury 

was the one who had to authorize that. I honestly don’t know. 

Mr. ZELDIN. So you are unable to tell this committee— 

87 

Mr. CORDRAY. But I ratified the decision, and I believe it has 

been a good decision and the project has gone well and GSA has 

done an exemplary job. 

Mr. ZELDIN. Reclaiming my time, you do not recall whether or 

not you had any conversations with Senator Warren with regards 

to CFPB renovations? 

Mr. CORDRAY. I may have. That is different from the issue of who 

made the decision about the building. 

Mr. ZELDIN. I have 20 seconds left. I have one quick question. 

Director Cordray, 2 weeks ago Chairman Hensarling sent you a 

letter asking a very simple question: Absent action by the Administration, will you fulfill your term as CFPB Director? 

You replied saying, ‘‘I have no insights to provide.’’ 

Mr. Director, there has been a lot of speculation about your future so you owe it to the public and this committee to state your 

intentions. I will ask you, absent action by the Administration, will 

you fulfill your term as CFPB Director? 

Mr. CORDRAY. I have no insights to provide on that. 

Mr. ZELDIN. You are unable to give your assurance right now 

that you will fulfill your term as Director? 

Mr. CORDRAY. The whole issue isn’t even within my control. We 

have this court case pending; we are all watching to see what happens with that. So, your speculation about that is as good as mine. 

Mr. ZELDIN. No, no, no. I asked you— 

Mr. LUETKEMEYER. Time has expired. 

The gentleman from Michigan, Mr. Kildee, is recognized for 5 

minutes. 

Mr. KILDEE. Thank you, Mr. Chairman. 

And thank you, Mr. Cordray. I will have a couple of questions 

for you and I will apologize in advance if this is redundant because 

I have not been able to participate in the entire hearing, although 

I have been able to catch a good deal of it— 

Mr. CORDRAY. I may be the only who has— 

Mr. KILDEE. —on the closed circuit. It is— 

Mr. CORDRAY. —been able to participate in the entire hearing. 

Mr. KILDEE. It is must-see TV, I will tell you. 

But I want to express to you something that I mentioned earlier, 

and that is your public service. As I said earlier, I have known you 

for a long time in a variety of roles, and one of the things that you 

bring both to this position and especially to this hearing is a seriousness and a calm that would serve this town really well if people 

adopted your approach. 

Some of the tone that I witnessed, both when I was here and on 

television, is not becoming of this committee. And that is not on 

you to respond to, but I will say that I am very pleased that you 

continue to take the position and the work that you do very seriously and answer questions fully to the extent that you can and in 

a manner that is quite becoming of public service. So thank you for 

that. 

Mr. CORDRAY. Could I just say— 

Mr. KILDEE. Sure. 

Mr. CORDRAY. I am not bothered by any of the tone. I know that 

people on both sides of the aisle have strong feelings on some of 

these subjects and they care a lot about it, and so there is going 

88 

to be a certain amount of tone. And I do hope that I can remain 

calm amidst all of that, but I am listening hard and what they 

have to say substantively is why I am here, and that is important 

oversight. 

And I just want to stress again to everybody that I take that very 

seriously. Our Bureau takes it seriously. There are many things 

that we have changed or done differently as result of discussions 

we have had in these committee hearings and in your offices, and 

I am sure that will continue in the future. 

Mr. KILDEE. Thank you. I appreciate that. 

The one editorial comment that I will make is that what frustrates me in watching some of the questions is the attempt to confuse what is policy difference, which is legitimate and actually 

something that we ought to accept as a—as part of a normal process of democratic governance, but to confuse policy differences with 

questions that are raised about integrity, while on the other hand 

this body, and particularly the Majority, seems to ignore legitimate 

questions of integrity in the Executive Branch as if they were only 

differences of policy. And I appreciate the tone that you take. 

I wonder if you—and when I opened I raised a reference to what 

the Bureau did in the case of Bridgeport Education, which is a forprofit college chain that deceived students into taking out high-cost 

private loans. And you may have already answered this question 

in previous— 

Mr. CORDRAY. No, I haven’t. 

Mr. KILDEE. I wonder if you could just describe to us that case 

or what you can recall from that case and what the outcomes have 

been as a result of the CFPB’s intervention? 

Mr. CORDRAY. Yes. There have actually been three such cases, 

and so I may sometimes have some of the facts confused among 

them, but they are of the same genre. 

One involved ITT, one—a chain of schools; one involved Corinthian, which was also a chain of schools; and Bridgepoint, which 

I believe is a chain of a number of schools, as well. And the concerns we have are that loans are being made to prospective students and their families where everything that is supposed to be 

disclosed is not disclosed and some facts are hidden on the back 

end, and so there is misleading marketing of the loans. 

Also, the loan may be marketed against a backdrop of graduation 

rates and job placement rates which are being misrepresented to 

the students and their families so that they end up paying a lot 

and not getting very much out of the education, but the loan is premised on those predicates. 

That is a real problem, and we have pursued several of these 

cases and we have done well in the courts on them, and they have 

led to significant relief for students and their families and to significant disruption of what were very bad business practices at 

some of those places. 

Bridgepoint is not the same as ITT and Corinthian, and I don’t 

have all the nuanced distinctions in mind here, but that is the general concern that we have had, and we continue to look for those 

kinds of problems and we will continue to address them as they 

arise. 

Mr. KILDEE. In the last few seconds— 

89 

Mr. CORDRAY. And if the rest of the for-profit college marketplace 

is cleaning up as a result, that is a very good thing. 

Mr. KILDEE. I suppose—you can just answer yes or no if you 

would like—had it not been for CFPB’s intervention, the practices 

that caused your intervention would still be ongoing, people would 

still be basically being ripped off by those sorts of loans, and it 

would just continue and be encouraged by inaction by any other 

agencies. 

Mr. CORDRAY. It is hard to know for sure, the road not taken. 

But I think what we can know for sure is what happened because 

of our actions here, and I think that it was in the public interest. 

Mr. KILDEE. Thank you very much. 

Mr. LUETKEMEYER. The gentleman’s time has expired. 

We will recognize next Mr. Trott, from Michigan, for 5 minutes. 

Mr. TROTT. I thank the chairman. 

And thank you, Director, for your time today. 

And I want to go back to a line of questioning that was pursued 

by Mr. Huizenga and the chairman of the committee. And in defending some of your press releases regarding the resolution of enforcement actions you said a couple of times, ‘‘I know the facts.’’ 

It kind of reminded me of Jack Nicholson’s line from, ‘‘A Few 

Good Men.’’ He said, ‘‘You can’t handle the truth.’’ And suffice it 

to say, your statement suggests to me that you are quite comfortable being judge and jury. 

So let’s look at one of the press releases. It was issued August 

26, 2016. It regarded the resolution of First National Bank of 

Omaha. 

Mr. CORDRAY. That isn’t how I intended the statement, but I will 

go with your question. 

Mr. TROTT. You can somewhat see my point, perhaps. 

But anyway, in your press release you said, ‘‘First National Bank 

of Omaha violated the trust of its customers by illegally signing 

them up for credit card add-on products.’’ Let’s look at the actual 

agreement, section two: ‘‘Respondent agrees to the issuance of the 

consent order without admitting or denying any of the findings of 

fact or conclusions of law except that the respondent admits the 

facts necessary to establish subject matter jurisdiction over this 

matter.’’ 

So do you think that is an accurate press release? They didn’t 

make an admission of guilt, but your press release sure sounded 

like they did some bad things. Wouldn’t you agree? 

Mr. CORDRAY. Absolutely, it did. And they did do some bad 

things. 

Again, distinctions between what I know—and I don’t know it because I am just dreaming it up. What I know is that we conducted 

an investigation. We uncovered the facts, documentary evidence; 

talked to employees; talked to people. And this is what it showed. 

Mr. TROTT. Got you. Reclaiming my time— 

Mr. CORDRAY. And they don’t really dispute that— 

Mr. TROTT. I have heard that answer before. I am going to reclaim my time. 

Let me suggest a different scenario for you. 

So you have settled a number of actions with employees who 

have been treated unfairly by the CFPB. How would you feel if I 

90 

issued a press release that said, ‘‘Director Cordray today apologized 

and admitted responsibility for sex and racial discrimination 

against the employees and the rampant retaliation against his employees. He will not change the behavior because none of the folks 

that were guilty of this conduct are going to be fired, but this is 

my press statement.’’ 

Is that an accurate press statement? What would you think—if 

you read that, would you say, Trott did a good job on that? 

Mr. CORDRAY. Well, if it were an inaccurate press statement I 

would not like it because it is inaccurate. And if it were an accurate press statement, I wouldn’t like it because— 

Mr. TROTT. In your admission, though—in your settlement you 

never admitted guilt to these employees, so it is analogous to the 

First National Bank of Omaha. 

Let’s talk about— 

Mr. CORDRAY. No, I don’t think it is. 

Mr. TROTT. Let me continue. So let’s continue to talk about another incidence of hypocrisy. 

Mr. CORDRAY. I would be happy to explain. 

Mr. TROTT. So I want to continue. Last summer the Supreme 

Court decided the Sheriff v. Gillie case. Maybe you are familiar 

with it. The CFPB joined in an amicus brief. 

Mr. CORDRAY. Yes. It came out of Ohio, I believe. 

Mr. TROTT. It sure did. And it involves an Ohio attorney general 

who was able to appoint a special contractor for the purposes of collecting debt owed to the State of Ohio. And you filed an amicus 

brief on behalf of the CFPB supporting the government’s position 

that the use of attorney general letterhead by the special contractor 

violated Section 1692(e) of the Fair Debt Collection Practices Act. 

Isn’t that correct? 

Mr. CORDRAY. Actually, the Justice Department filed that brief. 

We worked with them on it, but the Justice Department controlled— 

Mr. TROTT. The CFPB joined in the amicus brief. Isn’t that correct? 

And isn’t it also true that as attorney general of Ohio you used 

special contractors to collect debts owed the State in the same 

exact fashion? 

Mr. CORDRAY. I did. And I know that you have a lot of background in this area and know it well. So, yes. 

Mr. TROTT. Okay. So your amicus brief wouldn’t have been something you would have been supportive of when you were attorney 

general of Ohio. Is that fair to say? 

Mr. CORDRAY. Some of the details of that particular case may or 

may not have come to my attention during my time as attorney 

general. I am not entirely sure about that. Yes. 

Mr. TROTT. So let’s continue on. You said earlier in response to 

one of the Democratic questions, ‘‘No one can complain that they 

can’t get their voices heard at the CFPB.’’ I go home every weekend 

and I hear from REALTORS®, mortgage brokers, community bankers, title agents, small business owners, attorneys—they are terrified by the CFPB. 

One person a couple of weeks ago—you are not going to be at all 

pleased with this comment—he made an analogy and said the 

91 

CFPB is like the mafia. They show up at your business and say, 

‘‘This is a nice place; hope nothing happens to it.’’ 

So how do those people get their voices heard? Do you think you 

have given proper guidance to those small business owners who are 

honest people trying to do right by the consumer? 

Certainly Mr. Hill’s question referencing the website that is this 

convoluted web to get an answer to a simple question, that is indicative of how people feel about getting answers out of the CFPB. Is 

that a fair statement on my part? 

Mr. CORDRAY. I don’t think so, but I am sure that it depends 

very much on who we are talking about and different reactions in 

different places around the country by different people—320 million Americans, after all, not all the same experiences, I am sure. 

Mr. TROTT. I appreciate your time, sir. 

And I yield back to the Chair. 

Mr. LUETKEMEYER. The gentleman yields back. 

Next, I will recognize the gentleman from Georgia, Mr. 

Loudermilk, for 5 minutes. 

Mr. LOUDERMILK. Thank you, Mr. Chairman. 

And thank you, Mr. Cordray. It has been a long day. It looks like 

a little more intimate setting here now, so maybe we can get 

through a few things. 

I have another line of questioning but I wanted to continue on 

with something Mr. Trott said. I work a lot with what is left of the 

community banks in the State of Georgia. We lost more banks than 

any other State. And as we are working on repealing some of the 

onerous regulations brought in by Dodd-Frank and other—what in 

my opinion and most people is bad law that has closed off the economy from the average American, provided protection for those who 

are on the inside, I have learned one thing: The people out there 

are more afraid of you and the CFPB than any other element of 

our Federal Government. 

I am getting that from the banks, the bankers, every financial 

institution. And it just reminds me of something that Thomas Jefferson—I believe it was Thomas Jefferson—was quoted as saying, 

‘‘When the government fears the people there is liberty, but when 

people fear the government there is tyranny.’’ 

And it almost feels like in this financial services sector that is 

where we are. But I just wanted to throw that out there. You don’t 

have to respond to that. 

I actually want to talk about the reports that we have received. 

I actually have some honest-to-goodness questions. 

I have been reading over the report that was left on our desk and 

the latest numbers that we received from your office this week, and 

in the most recent report that we received your numbers show that 

in 2016 the CFPB handled 291,000 consumer complaints, I believe. 

Does that sound about right, the 291,000 in 2016? 

Mr. CORDRAY. Yes, running about 25,000, 30,000 a month. Yes, 

something like that. 

Mr. LOUDERMILK. Okay. Thank you. 

And of that, according to your report, 17,000 of those were resolved with monetary relief for the consumer, which is about 16 

percent—or 6—I’m sorry, 6 percent of all the complaints have monVerDate Nov 24 2008 16:23 Apr 23, 2018 Jkt 027371 PO 00000 Frm 00095 Fmt 6633 Sfmt 6633 K:\DOCS\27371.TXT TERI
92 

etary relief for the consumer and 94 percent resulted in no monetary relief. And that is what I believe was in the report. 

Mr. CORDRAY. So what I would say is they can—there can be 

monetary relief; there can be non-monetary relief, which is often 

quite significant. 

Mr. LOUDERMILK. I understand. 

Mr. CORDRAY. If something comes off your credit report, suddenly 

you can get a mortgage you couldn’t have gotten. That is— 

Mr. LOUDERMILK. I understand that. 

Mr. CORDRAY. Or a debt collector who is harassing you, you get 

them to stop. Those things matter a lot to people. 

Mr. LOUDERMILK. One thing I didn’t see in the report that I was 

looking for is what percentage of those had civil penalties? I didn’t 

see that in the report anywhere. 

Mr. CORDRAY. We can’t impose civil penalties— 

Mr. LOUDERMILK. In your report here you outline several civil 

penalties on actual cases. 

Mr. CORDRAY. In enforcement actions, yes. 

Mr. LOUDERMILK. But in your report you never show what percentage was civil penalties or a penalty that was imposed upon the 

business. Do you have those percentages of those 291,000 cases? 

Mr. CORDRAY. I am getting a little lost here. We don’t impose 

civil penalties on consumer complaints at all. We don’t have the authority to do that. We would not do that. If we did that, we would 

be struck down by a court or something. 

We can only do it in cases where we file an enforcement action 

and it is potentially reviewable by a court or—and that is when— 

Mr. LOUDERMILK. So in a judicial or administrative action. 

Mr. CORDRAY. Could be either, but it is all subject—it is either 

in a court or it can be reviewed by a court. 

Mr. LOUDERMILK. What happens to those penalties—the monetary value? I am wondering. I am asking. I know that you are allowed to keep some of that. 

Mr. CORDRAY. Yes. No, they go in—it is all whatever— 

Mr. LOUDERMILK. I am not trying to get at anything. I am trying 

to ask an honest question. 

Mr. CORDRAY. I am just fumbling a little on the answer. 

It is all specified by law, and Congress provided for it. Those penalties go into a penalty fund, and they can either be used to compensate victims in other cases who were unable to receive compensation because, say, a fraudulent company went out of business 

so they never got their money back, or they can be used for—the 

statute says two things—the other is financial education programs. 

In our instance more than 90 percent of the money has gone to 

victims from other cases, and a small amount has gone to one financial education program which is helping veterans transitioning 

back into—servicemembers transitioning back— 

Mr. LOUDERMILK. Let me reclaim my time, because I am quickly 

running out of time and I want to follow up on the previous question I had. 

Mr. CORDRAY. That is fine. Okay. 

Mr. LOUDERMILK. Are you indicating that only in 6 percent of the 

cases you can actually have consumer relief? Or is it just you are 

unable to do it— 

93 

Mr. CORDRAY. No, we have two different things here that are getting— 

Mr. LOUDERMILK. That seems like an awfully low number to— 

Mr. CORDRAY. No, no. These are two different things. 

We have complaints that people file with us that we try to get 

those resolved and get relief where we can. Then there are matters 

where we bring a case, which is an entirely different thing, on behalf typically of thousands or even millions of consumers, and in 

those cases that are subject to review by a court we can impose 

penalties and we can get money back for people. 

So in those matters almost always we are getting money back for 

people, and if we—if they don’t get paid we can go to the Civil Penalty Fund and get their money back that way if it is available. 

Mr. LOUDERMILK. I yield back, Mr. Chairman. 

Mr. CORDRAY. Sorry. Sorry about that. 

Mr. LUETKEMEYER. The gentleman’s time has expired. 

Next, we go to Mr. MacArthur, the gentleman from New Jersey, 

who is recognized for 5 minutes. 

Mr. MACARTHUR. Well, thank you. 

Good afternoon, Director Cordray. 

Mr. CORDRAY. Good afternoon. 

Mr. MACARTHUR. I think everyone in this hearing wants to protect consumers. I don’t know anyone who wants to see bad actors 

run roughshod over the people that we represent. 

Mr. CORDRAY. All right. That is a good start. 

Mr. MACARTHUR. Getting it right, obviously, I think is critical. 

I just want to explore a little bit about who pays the penalties that 

are imposed on the companies that you go after—the enforcement 

penalty. Who pays those penalties? 

Mr. CORDRAY. The companies do, or the individuals if it is individuals at fault. 

Mr. MACARTHUR. Is it fair to say that most of those companies 

are publicly held companies? 

Mr. CORDRAY. There is a mix, but a lot of them are, yes. 

Mr. MACARTHUR. And those companies typically, like all public 

companies, are owned by shareholders, pension funds, 401(k) 

funds—just ordinary Americans who invest in the stock market 

and try to put money away for a rainy day. 

Is it fair to say that these penalties erode, decrease, have some 

impact—whether it is fair or not, that is not the point, but they 

have some negative effect on the value on those companies? 

Mr. CORDRAY. Look, it depends on a lot of things, I imagine, but 

I think logically, they have to be paid by the company. And that 

is the accountability. 

Mr. MACARTHUR. In the public markets historically earnings 

times about 15 is the value of the company. It is running a little 

higher now. But if you reduce your earnings by $1 million, you 

have probably affected the value of that company by about $18 million dollars. Typically, that is the case. I’m not looking for a response, but— 

Mr. CORDRAY. Could I— 

Mr. MACARTHUR. —the reason this matters—we will come back 

to it and you will have a chance to respond, but the reason this 

matters is we can’t have conflicting guidance from different parts 

94 

of the Federal Government. And I want to talk about captive mortgage insurance in particular. 

In 1996 and 1997 the Office of the Comptroller of the Currency 

and HUD both issued guidance to the mortgage industry about providing mortgage insurance. And both of them—OCC’s interpretive 

letter number 743 and then HUD gave later guidance—they laid 

out where companies could get involved in providing captive mortgage insurance. And dozens of companies got involved. 

You took a different approach. In 2013 you decided that you 

didn’t think that was appropriate and you went after a number of 

companies. I won’t list them all because I want to focus on one, but 

I have a list in front of me of a half a dozen companies that you 

imposed fines of $50.6 million. Times 18, that is about $300 million 

of market value that evaporated because of those— 

Mr. CORDRAY. For captive mortgage insurance? 

Mr. MACARTHUR. For captive mortgage insurance. 

Mr. CORDRAY. Reinsurance? I am only familiar with one case, 

which is the PHH case. 

Mr. MACARTHUR. Well, there are others: Republic Mortgage, 

Genworth Mortgage, Mortgage Guaranty Insurance, Radian Guaranty, United Guaranty— 

Mr. CORDRAY. Oh, that is right. They were an aspect of the PHH 

case. Fair enough. Okay, got it. 

Mr. MACARTHUR. Okay. But all of these fines have a negative 

value on these companies. 

I want to focus on PHH for a moment. They are domiciled in my 

district, southern New Jersey; 3,500 employees, and you set up a 

process where basically they were tried inside CFPB, a court of 

your making. You didn’t go to the Federal court to do it. And that 

resulted— 

Mr. CORDRAY. Congress provided for that. 

Mr. MACARTHUR. —in a penalty of $6.4 million. 

Mr. CORDRAY. Yes. 

Mr. MACARTHUR. You then overruled that penalty and you imposed a penalty of $109 million on a company that entered the 

market with guidance from the Office of the Comptroller of the 

Currency and the National Bank Act, I am forgetting who that 

came—oh HUD. HUD was the other agency. 

I understand you disagreed with that guidance, but you then 

went back 10 years— 

Mr. CORDRAY. No. 

Mr. MACARTHUR. Let me finish—went back 10 years, applied no 

statute of limitations, took a judgement of $6.4 million and turned 

it into $109 million. Do you know what the market value of that 

company was on the day you opened that investigation? 

Mr. CORDRAY. I do not. 

Mr. MACARTHUR. It was $7 billion. Do you know what it is 

today? 

Mr. CORDRAY. I do not. 

Mr. MACARTHUR. It is $1 billion. Now, I am not suggesting that 

all of that is due to this action. Frankly, I don’t know. 

Mr. CORDRAY. That would be quite erroneous, yes. 

Mr. MACARTHUR. I don’t know. But I do know this, that how you 

go after companies in the name of the consumer is vitally imporVerDate Nov 24 2008 16:23 Apr 23, 2018 Jkt 027371 PO 00000 Frm 00098 Fmt 6633 Sfmt 6633 K:\DOCS\27371.TXT TERI
95 

tant. You are not just exacting a price from some ethereal entity 

out there; you are exacting a price— 

Mr. CORDRAY. I understand that. 

Mr. MACARTHUR. —that affects 401(k) plans, pension funds, ordinary Americans. You say you are collecting in their name— 

Mr. CORDRAY. Am I going to have a chance to come back on this? 

Mr. MACARTHUR. —and they are the ones—if I am out of time. 

If the chairman allows you to respond that will be fine. 

Mr. CORDRAY. So if that company violates the law, how do you 

hold them accountable? 

Mr. MACARTHUR. My time has expired. 

Mr. CORDRAY. Should we never hold them accountable? 

Mr. MACARTHUR. What I am asking you, sir— 

Mr. CORDRAY. Can they violate the law with impunity? 

Mr. MACARTHUR. —is in your remaining time as Director I am 

asking you to be extraordinarily careful about punishing companies 

who relied on other Federal agencies for guidance, and you had a 

different opinion and you cost real people real money. 

Mr. CORDRAY. Could I speak to that? 

Mr. LUETKEMEYER. Let him answer the question. No more questions. Let him answer the question. 

Mr. CORDRAY. I didn’t just sort of make something up because I 

don’t like the company or I thought it should be more money. There 

was a specific legal point in the case that had to decided one way 

or the other, and the issue was whether, since they violated the 

law, which is what the administrative law judgment had held on 

the factual record and what I agreed with—and others may disagree, and it is in the courts and the courts will ultimately decide 

it; we will all abide by their decision. 

Either the right amount that they had to pay was what they got 

on contracts after a specific date—contracts that were entered into 

after a specific date, or everything they were paid on contracts 

after a specific date even though the contracts might have been entered into earlier. 

It was a tough—it is a tough legal issue. It is not obvious one 

way or the other. I made the judgment that it was the other issue. 

It could either be $6 million or $109 million, one or the other. 

Mr. LUETKEMEYER. The gentleman’s time has expired. 

Mr. CORDRAY. There can’t be anything in between. And if a court 

thinks differently then we will abide by that. 

Mr. LUETKEMEYER. The gentleman’s time has expired. 

Mr. MACARTHUR. The court overruled you. 

Mr. CORDRAY. It wasn’t done cavalierly, though, yes. 

Mr. LUETKEMEYER. Okay. Time has expired. 

Next we will go to the gentleman from North Carolina, Mr. 

Budd, who is recognized for 5 minutes. 

I’m sorry? 

Mr. BUDD. Thank you, Mr. Chairman. 

Mr. LUETKEMEYER. My mistake. Mr. Davidson from Ohio is next 

for 5 minutes. 

Mr. DAVIDSON. Thank you, Mr. Chairman. 

Director Cordray, you were attorney general in the State of Ohio. 

Is that correct? 

Mr. CORDRAY. I was, yes. 

96 

Mr. DAVIDSON. Did you ever have a case that the—as attorney 

general that the State prosecuted where the defendant was found 

not guilty? 

Mr. CORDRAY. I don’t recall specific cases, but I am sure we did. 

Mr. DAVIDSON. You didn’t win all of them. 

Mr. CORDRAY. Correct. 

Mr. DAVIDSON. So in your role as Director Cordray, in this new 

role, when you do these settlements you are doing press releases 

that say effectively you have won every case. You have a perfect 

record in your case. Then the courts come over and in the case of 

PHH, as my colleague just referred, you are overturned because 

due process is finally given the opportunity to prevail. 

Mr. CORDRAY. Actually— 

Mr. DAVIDSON. Director Cordray, does the CFPB have the authority to conduct informal or formal investigations without a court 

order? 

Mr. CORDRAY. We can commence an investigation without a court 

order, yes, but ultimately to bring an enforcement action— 

Mr. DAVIDSON. Does CFPB give notice to the target when an investigation is initiated? 

Mr. CORDRAY. Could I answer the question? 

Mr. DAVIDSON. No, I just—you answered it. You said yes. 

And I said, so now the question is, does the CFPB give notice to 

the target when an investigation is initiated? 

Mr. CORDRAY. Typically we commence an investigation by issuing 

CIDs to the subject, not the target—we don’t use that language. 

Mr. DAVIDSON. So the target of the investigation is not advised 

that you are initiating an investigation once you commence, and 

then— 

Mr. CORDRAY. No, no, they typically are— 

Mr. DAVIDSON. —to determine which investigation to pursue? 

Mr. CORDRAY. They typically are because they get a civil investigative demand, which is—and that is when we start to engage 

back and forth. 

Mr. DAVIDSON. So when you send a civil investigative demand, 

or a CID, one of the criticisms has been that you have this unlimited power of discovery and the person is never—or the entity is 

never advised as to whether they are the target of the investigation 

or merely answering a question where they could have data related 

to it. 

Mr. CORDRAY. So, again, a couple of times now, we don’t have unlimited power of discovery. If they don’t agree with what we are 

doing they can take us to court. That has happened a number of 

times. 

Mr. DAVIDSON. In the case of PHH, when they followed the procedure, in the next case they disagreed with the proceedings and 

then they appealed to the administrative judge. Do you appoint the 

administrative judges? 

Mr. CORDRAY. I do, but they can also— 

Mr. DAVIDSON. And then when they disagree with that and then 

they— 

Mr. CORDRAY. They can also— 

Mr. DAVIDSON. —then they bring it to the Director. And in the 

case of PHH, they—that proved to be very high risk. Did that— 

97 

Mr. CORDRAY. They can also appeal to the court, and they have 

done so and this matter is in the courts. And by the way— 

Mr. DAVIDSON. So let me understand this is the path. I just want 

to understand the path here because you are saying, ‘‘Well, but let 

me explain.’’ 

So I have it down. I say the Director, you, sign off to investigate 

the target; the Director assesses the case and issues a penalty; the 

target will either sign a consent order or appeal to an administrative judge that you appointed, and if the target loses the appeal the 

case is brought back to you where you will no doubt reject and, as 

we have seen, perhaps even increase the penalty. 

The target can then appeal to the Federal court, but not before 

its reputation has been tarnished and legal fees in the millions of 

dollars or, in the case—sometimes over $100 million. And you 

present it as if you have already won, not that there has been a 

verdict issued, not that full due process this case, but simply that 

it is alleged—you present it as if you have achieved a victory. 

Is that an accurate description of what goes on here? 

Mr. CORDRAY. No, I think it’s not accurate in a number of ways, 

but if you want me to I will spell them out. But among other 

things, Congress has provided for different ways to take an enforcement action. 

A company at any time can take us to court. They can take us 

to court over the civil investigative demand, as a number have 

done. They can take us to court and refuse to settle a case, if they 

think that they have grounds to do so. 

Mr. DAVIDSON. Okay, so reclaiming my time, they do have a path 

to the courts, but long after their reputation has been severely 

damaged. 

Mr. CORDRAY. Not— 

Mr. DAVIDSON. —and you have served as judge, jury, and executioner. You have already said that when we have determined the 

facts, we are right. 

Clearly, you don’t have a perfect track record, so you are not always right. But you present it in the media as if it is, and then 

when the same exact set of facts has been stated over and over 

again by my colleagues, you refuse to concede the point that you 

are guilty as charged when you are on the exact opposite side of 

the same settlement. 

Mr. CORDRAY. That is not correct. We don’t present it in the 

press until a matter is final and it is concluded and we have concluded investigation, we know what the facts are, all right? 

Mr. DAVIDSON. You present it as if they have— 

Mr. CORDRAY. If anybody wants to challenge us— 

Mr. DAVIDSON. —been found guilty when, in fact, the consent orders clearly say that they have not admitted guilt. And— 

Mr. CORDRAY. We know— 

Mr. DAVIDSON. —I do look forward to you producing one that 

says something other than that. 

Mr. CORDRAY. There is no guilt. There is no guilt in a consent 

order. It is not a criminal matter; it is a civil matter. And we know 

what the facts are and we set the facts, all right? 

But they can always— 

Mr. DAVIDSON. But always your facts are right. 

98 

Mr. CORDRAY. Like every other part of the— 

Mr. DAVIDSON. That is your assertion, that your facts are always 

right. 

Mr. CORDRAY. Like every other part of the Federal Government, 

and it is no different for us, what we do can be challenged in the 

courts and— 

Mr. DAVIDSON. Reclaiming my time, I need to mention that all 

agencies really need a better appeals process, and I think what 

we—what I have seen concluding as a new Member, is that we 

really need to address due process, particularly in your agency. 

I yield back. 

Mr. CORDRAY. Okay. 

Mr. LUETKEMEYER. The gentleman’s time has expired. 

The gentleman from North Carolina, Mr. Budd, is recognized for 

5 minutes. 

Mr. BUDD. Thank you, Mr. Chairman. 

And thank you, Mr. Director. I want to talk a little bit about 

what appears to be, for lack of a better term, a revolving door. 

In 2013 Politico reported that dozens of CFPB policymakers, 

rulemakers, attorneys, have left in recent months, lured by opportunities in the private sector. Many have landed at law firms, compliance shops, and banks, where their insider knowledge of how the 

agency works is coveted. 

The Washington Examiner and Breitbart reported similar issues, 

with staff transitioning in your agency to take lucrative jobs in the 

private sector. Other articles just last year noted that more senior 

staff had departed for major banks like Capital One. 

A representative of Public Citizen called this pattern of departures alarming and said that the revolving door is one of the most 

pernicious influence-peddling tools that can undermine the integrity of government agencies. 

President Trump recently signed an Executive Order imposing 

an unprecedented 5-year lobbying ban on certain officials who leave 

the Executive Branch. This is it. Do you support this Executive 

Order? 

Mr. CORDRAY. The Presidents always set the—set ethics requirements that go beyond the requirements of the law, and they are 

free to do so. I don’t have any criticism of that order, if that is what 

you are saying. 

Mr. BUDD. Do you support it? 

Mr. CORDRAY. I don’t have any criticism of that order. It is not 

my jurisdiction to do the President’s job. 

Mr. BUDD. Do you think it might be good in your agency, in the 

CFPB, to use something similar to prevent the revolving door? 

Mr. CORDRAY. So what we do is we abide by all of the government ethics rules, and we take them very seriously and we follow 

them very carefully. 

It is a free country. I do not control what employees do when 

they no longer work for me, beyond the fact that they have to abide 

by ethics rules, and I assume they are doing so, and if not they are 

subject to prosecution if they fail to do that. 

So I don’t know what else to tell you. 

Mr. BUDD. Sure. 

99 

Do you think to give the appearance of a highly ethical organization that you would want to commit to require all CFPB employees 

to sign an agreement that prohibits them from lobbying and representing clients in matters before the CFPB once they have left? 

Mr. CORDRAY. They do have to do so for a period of time, and 

it is specified in the government ethics rules, and we abide by 

those very carefully and follow them closely. 

Mr. BUDD. Do you know what that—Director, do you what that 

period of time is? 

Mr. CORDRAY. I am not entirely sure. I have never left the agency myself. But it is either a year or 18 months of 2 years, depending—maybe depending upon the circumstances. But I would be 

happy to have my staff fill your staff in on what those requirements are. 

Mr. BUDD. Sure. It still gives the appearance of a highly complicated, highly regulated organization that has highly marketable 

skills once they leave CFPB. 

Mr. CORDRAY. So, what do you want these people to do? Just retire? They have to follow the ethics rules. They do follow the ethics 

rules. If the ethics rules should be changed I would be happy to 

have them be changed, and we will abide by them. But they are 

Federal Government ethics rules for the Federal Government. 

Mr. BUDD. I am going to reclaim my time. It really strikes me 

that the lack of a lobbying vantager agency has real cost in— 

Mr. CORDRAY. There is a restriction. They cannot do certain 

things for some period of time. I don’t know all the details of it, 

but I would be glad to fill you in. 

It is not as though there is no restriction. They have the same 

restrictions as everybody else in the Federal Government. 

People have set those rules thinking that they are the right 

rules. If they are not the right rules I am sure they can review 

them and change them. We abide by them. 

Mr. BUDD. Director, this is a pattern that we have seen prior to 

the existence of CFPB. This is something that we have seen with 

creation of complex regulations, and then people that created those 

going into the private sector to interpret those. 

And I really hope you are right. I hope it is not a problem, but 

it certainly appears to be a problem. 

I yield back my time. 

Mr. LUETKEMEYER. The gentleman yields back. 

Next, we recognize the gentleman from Tennessee, Mr. Kustoff, 

for 5 minutes. 

Mr. KUSTOFF. Thank you, Mr. Chairman. 

And thank you, Director Cordray, for being here this morning 

and this afternoon. 

I am, as the chairman would say, a recovering lawyer and a 

former United States Attorney, and I would like to talk to you if 

I can, some of these questions, lawyer-to-lawyer, if you will. 

Mr. CORDRAY. Okay. 

Mr. KUSTOFF. I want to talk to you about district court if I can 

for a moment. 

In the United States district court you would agree that in order 

for the court to consider a claim or a lawsuit that a party must 

submit a pleading that contains a short and plain statement which 

100 

shows that the complainant is entitled to relief. You would agree, 

wouldn’t you? 

Mr. CORDRAY. That is a requirement and it is policed by the 

courts, yes. 

Mr. KUSTOFF. Thank you. 

And in order to meet the pleading standard that is required 

under the Federal Rules of Civil Procedure, this relief must be 

plausible. It must be credible. You would agree with that as well, 

that that is an accurate statement? 

Mr. CORDRAY. I believe that is—I have no reason to contest your 

statement, although I am a little rusty on some of the procedural 

issues. But again, courts will decided whether we did that or didn’t 

do that, and we abide by it. 

Mr. KUSTOFF. Sounds right, though, doesn’t it? 

Mr. CORDRAY. It sounds like a sensible rule. I hope it is the rule, 

yes. 

Mr. KUSTOFF. And you would also agree that the Supreme Court, 

our Supreme Court, has made a point to distinguish what is called 

‘‘likely harm’’ from ‘‘conceivable harm,’’ the latter of which would 

not allowed—be allowed to proceed. Is that correct? Likely harm 

from conceivable harm. 

Mr. CORDRAY. I’m starting to wish I would have had you as a law 

school professor, but that sounds sensible to me, yes. 

Mr. KUSTOFF. Fair enough. In other words, the threshold to get 

into Federal court is a fairly low standard. You would agree with 

that as well. 

Mr. CORDRAY. To bring a case, yes. 

Mr. KUSTOFF. Okay. 

Mr. CORDRAY. Of course, it has to survive motion to dismiss or 

motion—summary judgment everything else. But that is my understanding of how the rules have been drilled, yes. 

Mr. KUSTOFF. And I would agree with what you just said. 

I do want to talk to you about the matter that the CFPB brought 

in the Eastern District in North Dakota, which I think Mr. Tipton 

touched on briefly. The— 

Mr. CORDRAY. Yes. 

Mr. KUSTOFF. —UDAAP order against Intercept Corporation— 

Mr. CORDRAY. Yes, and I am generally familiar with the case, 

yes. 

Mr. KUSTOFF. As I understand it, Intercept Corporation is a 

third-party payment processor company. 

Mr. CORDRAY. Yes. 

Mr. KUSTOFF. And the allegation was against the—against violations by its consumers, is that correct? 

Mr. CORDRAY. Well, it was against the payment processor as I 

think aiding and abetting, facilitating violations against consumers 

with enough knowledge to be held responsible. And to kind of 

maybe get to where you are going, the court found that we did not 

plead enough facts to make out a case and granted a motion to dismiss in that case. 

So it goes to show, we do not—as we have said, we do not win 

every case, and we are right now still digesting that opinion and 

trying to figure out what it means for the investigation we were 

conducting there. 

101 

Mr. KUSTOFF. In my remaining time I want to ask you about 

that because— 

Mr. CORDRAY. Yes. 

Mr. KUSTOFF. —Judge Ralph Erickson made some fairly sharp 

remarks. He said although the complaint—and I am quoting—does 

not contain detailed factual allegations, it must contain—need not 

contain detailed factual allegations, it must contain more than an 

unadorned, ‘‘the defendant unlawfully harmed me’’ accusation. You 

would agree that was what he said in the opinion, correct? 

Mr. CORDRAY. Yes. I think our complaint said much more than 

that, but if that is what—that is the way the judge viewed then 

the judge certainly decides accordingly and we have to then absorb 

that, understand it, and figure out how to deal with it. 

Mr. KUSTOFF. In fact, he said that the facts in the complaint 

must be plausible, not merely conceivable. 

Mr. CORDRAY. Yes, and he found that they were not plausible 

and merely conceivable, I guess. 

Mr. KUSTOFF. And he further cited or stated in his opinion that 

the complaint, ‘‘never pleads facts sufficient to support the legal 

conclusion that consumers were injured or likely to be injured,’’ and 

that, ‘‘it does not contain sufficient factual allegations to back up 

conclusory statements regarding Intercept’s allegedly unlawful acts 

or admissions.’’ 

Mr. CORDRAY. So to this point in that case we got it wrong to 

that degree. We have had many, many other cases that we have 

filed where motions to dismiss were filed against us and we have 

prevailed on the motion. 

So when you were U.S. attorney in Tennessee, I assume you 

didn’t win every case, even though you tried. 

Mr. KUSTOFF. The difference is I wouldn’t have brought a case 

unless I thought that I—number one, that somebody broke the law; 

and two, that I could absolutely prove— 

Mr. CORDRAY. I understand, but we didn’t bring a case where we 

thought nobody broke the law. We thought they did. The judge disagreed with us and okay then. Fair enough. 

Mr. KUSTOFF. In fact, this court found that there was no nexus 

to the consumer, no— 

Mr. CORDRAY. Agreed. That is what the court found. And I am 

sure you brought cases where you thought you were going to get 

a guilty verdict and you didn’t, or maybe there were even nolle 

prosequi or whatever. 

I am sure that—it happens. It is not a big mark of honor for us 

that we had a case dismissed on a motion to dismiss, but usually 

the vast majority of our cases that survive that threshold, and this 

time this judge felt we misjudged it. Fair enough. 

Mr. LUETKEMEYER. The gentleman’s time has expired. 

Mr. CORDRAY. We have to learn from that and figure out how 

to— 

Mr. LUETKEMEYER. The gentleman’s time has expired. 

The gentlelady from New York, Ms. Tenney, is recognized for 5 

minutes. 

Ms. TENNEY. Thank you, Mr. Chairman. 

And thank you, Director Cordray, for being here today throughout the morning and afternoon. 

102 

Mr. CORDRAY. Maybe the evening, who knows. 

Ms. TENNEY. You are getting to the end of the line here. 

I would like to just refocus a little bit. I am a small business 

owner. I come from a community that has been devastated by a 

poor economy. In fact, in many areas of my district we are ranked 

dead last in the national economy. 

And my concern is over, obviously, regulations and a lot of the 

regulations dealing with the auto industry. 

I noticed in your comments from last winter that the Bureau 

dropped its Equal Credit Opportunity Act lending enforcement for 

fair lending priorities list this year. These enforcements, in my 

opinion, were flawed auto financing guidance process issued by the 

CFPB that also barred consumers from participating in this process 

and commenting on it, and created a lot of uncertainty in the $905 

billion auto lending market. 

My question is going to be, why did the Bureau pull out of this 

type of financing guidance, and why—at some point, why was that 

a decision made by the CFPB in your— 

Mr. CORDRAY. We didn’t pull out of the guidance. That guidance 

merely, as we understood it, restated existing law and didn’t add 

anything to it. 

What we did say is, we have a fair lending program; we have 

limited resources. We set up priorities every year and at this point 

in time we were determining priorities for 2017 and we specified 

that they would be redlining mortgage and student loan servicing 

and small business lending, and that we— 

Ms. TENNEY. Let me reclaim my time and get back into the auto 

industry because that is really— 

Mr. CORDRAY. Sure. 

Ms. TENNEY. —where I would like to refocus. 

Mr. CORDRAY. Yes. 

Ms. TENNEY. In effect, what you are doing is, in my view, it looks 

like you are taking the financing industry and trying to circumvent 

the Constitution and go at the auto dealers without having really— 

Mr. CORDRAY. We’re not trying to do that. 

Ms. TENNEY. —the authority to do that is coming in on the financing side of the—I don’t see how you can justify that. And so 

I— 

Mr. CORDRAY. Well, look— 

Ms. TENNEY. I am just surmising that you pulled out because you 

realized there was an overreach constitutionally on this issue. 

Mr. CORDRAY. No, no. First of all, that is not what we are trying 

to do and that is not what we did here. 

The statute—Congress drew it, not me—says that we have no jurisdiction over auto dealers. But it says we do have jurisdiction and 

therefore a responsibility to deal with auto lenders. 

So how do you do that? It doesn’t work very well, I will agree, 

and they kind of get in each other’s way. 

Ms. TENNEY. Let me reclaim my time and ask you, aren’t there 

other agencies in government that are regulating the auto industry, including on the State level, such as New York State, which 

has a very— 

Mr. CORDRAY. So the— 

103 

Ms. TENNEY. —aggressive regulatory scheme to help consumers 

with the auto dealers? 

So to me it looks like—wouldn’t you agree that it is an overreach 

for the Federal Government to use the lending process to go in and 

go after an already regulated field? 

Mr. CORDRAY. We haven’t gone after any auto dealers, other than 

buy-here-pay-here. The FTC has that authority and they will exercise it or not as they see fit. 

I don’t have that authority. But I do have the authority, and 

therefore the responsibility and the duty, to deal with auto lenders, 

and the two get in each other’s way. That is an unfortunate way 

the statute was drawn. 

But in terms of— 

Ms. TENNEY. Hold on a second. 

Mr. CORDRAY. In terms of our decision now— 

Ms. TENNEY. Let me reclaim my time and say it is an unfortunate way the statute was drawn, so are you outside the statute in 

trying to pursue your lending against auto dealers? 

Mr. CORDRAY. No. If we pursue auto lenders— 

Ms. TENNEY. It wasn’t drawn the way that you wanted it drawn, 

so you created your own— 

Mr. CORDRAY. No, not at all. 

Ms. TENNEY. All right. 

Mr. CORDRAY. We have a responsibility to pursue auto lenders. 

That is going to affect auto dealers. I can’t help that. That is the 

way the market is. 

Either we should have had both or we should have had neither 

would have been a better way to do it, but— 

Ms. TENNEY. Right. So you are conceding, then, that the statute 

wasn’t really the way it should have been, so instead you used the 

lending mechanism to get into the dealers. 

Mr. CORDRAY. Not at all. It means that as we do our job people 

are going to be able to criticize us because it has consequences and 

ramifications down the line. 

But in terms of specifying our priorities for this year, as you 

noted, auto is not among them, and we indicated that we have proceeded with different supervisory enforcement actions against 20 of 

the largest auto lenders. We will continue to supervise around this, 

but that we needed to look at other priorities, as well. 

So that, I think, was a sound judgment that we had to make, and 

that is where we are. 

Ms. TENNEY. So couldn’t you—let me reclaim my time and say 

wouldn’t you concede that—you withdrew from having this as a 

priority program, so now you are using the regulatory process with 

lenders to try to reach into the auto industry. 

Mr. CORDRAY. I am not trying to reach into anything. I am just 

trying to do the job Congress gave us, and if Congress— 

Ms. TENNEY. Right. But you just said the job Congress gave you, 

but you just said a moment ago that Congress didn’t have that in 

the statute the way you needed it, so now you are kind of— 

Mr. CORDRAY. No, no, not the way I needed it. Just Congress did 

it. I don’t think it is very logical, frankly, to give somebody responsibility for auto lenders but not auto dealers or vice versa. 

104 

Ms. TENNEY. Right. So you are conceding that the statute really 

doesn’t cover the dealers. So— 

Mr. CORDRAY. We have never taken an action against dealers. 

We have never done that. 

But it doesn’t mean that things we do might not affect dealers, 

just like if the Federal Reserve raises interest rates that is going 

to affect dealers but they are not regulating dealers. 

Chairman HENSARLING. The time of the gentlelady has expired. 

The Chair now recognizes the gentleman from Indiana, Mr. Hollingsworth. 

Mr. HOLLINGSWORTH. Thank you, Mr. Chairman. 

And thank you, Director Cordray, for being here this afternoon. 

I know it has been wearisome so far, but I can assure you that you 

are reaching the end quickly. 

Mr. CORDRAY. Actually, quite invigorating. 

Mr. HOLLINGSWORTH. Fair enough. 

Actually something you said earlier really sparks me and I really 

liked it. You said you are responsible and accountable to the public. 

I really like that turn of phrase. 

Tell me how— 

Mr. CORDRAY. I try to be, yes. 

Mr. HOLLINGSWORTH. —how do you divine what the public 

wants? 

Mr. CORDRAY. I suppose no differently from you. I get a lot of 

input from the public. That is why we set up the consumer complaint line. Actually, we are required to do that by Congress, but 

we have set it up to be broadly inclusive. 

I try to get a lot of input from stakeholders on all sides of these 

issues, and often there are kind of two sides to the issue, but 

maybe there are more. 

Mr. HOLLINGSWORTH. Like you said, like—just like me. I do go 

to the public every 2 years, right, and an election. And I think generally we believe elections represent the will of the public, right, in 

ascertaining their will and their desire and activities. So would 

you— 

Mr. CORDRAY. A big part of our government, yes. 

Mr. HOLLINGSWORTH. Yes. 

Mr. CORDRAY. And as you know, I have a background of that sort 

myself, so— 

Mr. HOLLINGSWORTH. Exactly. No doubt. 

And if you serve and are accountable to the public, and the public duly elected officials, and those duly elected officials decided 

that it was in their best interests—in the public’s best interest— 

for you to no longer direct the CFPB, is that something that you 

would submit to, given that that is how the public expressed their 

will last November? 

Mr. CORDRAY. I think that if people follow the lawful channels 

and apply the law, then that is the way things should be. 

Mr. HOLLINGSWORTH. So if you serve the public and the public 

decided to elect an official who asked for your resignation, is that 

something that you would comply with, given that is what the public wanted? 

Mr. CORDRAY. I think that the law has to be followed. Congress 

set up this agency, not me. And Congress set this up to be an indeVerDate Nov 24 2008 16:23 Apr 23, 2018 Jkt 027371 PO 00000 Frm 00108 Fmt 6633 Sfmt 6633 K:\DOCS\27371.TXT TERI
105 

pendent consumer watchdog, as they have set up many Federal 

agencies—the Federal Reserve, the FDIC, and others. 

Mr. HOLLINGSWORTH. I don’t doubt the way it was set up. Reading the statute, you can clearly see. I guess I would push back 

against the statement that you are accountable and responsible to 

the public if you are unwilling to follow when a publicly elected official decided— 

Mr. CORDRAY. Let me say this. I am accountable to the public. 

I am also accountable to follow the law. I shouldn’t be violating the 

law just because they have something in mind of what I should do 

for the public. 

Mr. HOLLINGSWORTH. It is not a violation of the law for him to 

ask for your resignation, is it? 

Mr. CORDRAY. Not at all. 

Mr. HOLLINGSWORTH. Okay. So the only question that remains is 

whether you would tender it willingly? 

Mr. CORDRAY. I think that is correct, yes. 

Mr. HOLLINGSWORTH. Okay. And I guess in honoring the public’s 

will or wishes, it would seem that if an elected official who was 

duly elected here decided to ask for your resignation, it would seem 

in the public’s interest, given their election, for you to willfully tender that, right? 

Mr. CORDRAY. I think the public elects the Congress every 2 

years. You are now part of it. And it had prior Congresses, and 

those Congresses passed laws under our Constitution that are the 

law of the land and have to be followed, okay? 

And so the authority to remove me would have to follow the law 

of the land, and that could then be reviewed in the courts. So that 

is what I am understanding is the right framework. 

Mr. HOLLINGSWORTH. Okay. 

So I guess turning our attention to having to divine other things, 

this regulation by enforcement troubles me. And it really troubles 

me because I think as I continue to hear from others around here 

that you rarely take a course—a court—excuse me—a case to 

court—it is getting late, isn’t it—a case to court. And so rarely— 

Mr. CORDRAY. It’s not true that we rarely do. We have many 

cases pending in the courts right now. 

Mr. HOLLINGSWORTH. What percentage of those taken to court 

versus those settled outside of court? 

Mr. CORDRAY. I don’t know exactly, but we could get you those 

numbers. 

Mr. HOLLINGSWORTH. I understand the far greater proportion 

were settled outside of court, so how is it that— 

Mr. CORDRAY. No. That is up to the opposing party. They can 

contest it. Any case they can contest and go through the courts. If 

they prefer not to, they don’t have to. I don’t dictate that to them. 

Mr. HOLLINGSWORTH. Are there any constraints on your budget? 

Mr. CORDRAY. Yes. 

Mr. HOLLINGSWORTH. Okay. What are those constraints? 

Mr. CORDRAY. The constraints that Congress set by law. They 

have a fixed budget cap for us, which is not true of any other independent agency. 

Mr. HOLLINGSWORTH. What is the size of that? 

106 

Mr. CORDRAY. It is approximately $600 million before the sequester. 

Mr. HOLLINGSWORTH. $600 million—one of the things my grandfather once told me is the Golden Rule, right? He who has the gold 

makes the rules. 

And I worry that in your instance, there is a great inclination for 

them to settle because of the immense amount of resources you can 

bring to bear not only in the ability to fight cases but in their 

reputational harm that they would suffer from pushing back 

against it, even on principle. 

And so I guess what I want to better understand on this enforcement—or this regulation by enforcement—is how other parties are 

supposed to determine whether the facts that you allege are true 

and whether those facts indeed apply to them or not, and whether 

it is left to them to try to divine the tea leaves and figure out what 

is in their best interests. 

Mr. CORDRAY. I don’t know that it is divining the tea leaves. 

They should read the orders and they should think carefully about 

what they are doing and judge accordingly. 

That is the same way they read every law and try to decide 

whether it applies to them. 

Mr. HOLLINGSWORTH. Even if the facts aren’t alleged—even if the 

facts aren’t proven to be true. 

Mr. CORDRAY. The facts are true in our order as a result of our 

investigation. 

Mr. HOLLINGSWORTH. That they have agreed to them doesn’t 

make them true. 

Mr. CORDRAY. Whether they have agreed to them or not, they are 

true because they are facts, investigative facts. 

Chairman HENSARLING. The time of the gentleman has expired. 

The Chair now recognizes the gentleman from Minnesota, Mr. 

Emmer. 

Mr. EMMER. Thank you, Mr. Chairman. 

Mr. Cordray, for the past 5 years you have been the Director of 

the Consumer Financial Protection Bureau. And this right here 

that you delivered to us today is your ninth semiannual report to 

Congress on behalf of that agency, correct? 

Mr. CORDRAY. We are actually doing two of them today, covering 

two of them for the past year. 

Mr. EMMER. This is your ninth semiannual report to Congress. 

That is what it says. 

Mr. CORDRAY. Okay, fair enough. 

Mr. EMMER. I am not making it up—it says, ‘‘our ninth semiannual report to Congress and the President.’’ 

Mr. CORDRAY. I am not disputing this. I am not trying to give 

you any trouble on that. 

Mr. EMMER. All right. I didn’t think so. I am just trying to give 

you what your words are. 

In this report, it says that—I think it is—you have provided on 

page—it is 188 pages, this book, all right? And in the book it says 

you are providing your agency’s, ‘‘statutory responsibility and commitment to accountability and transparency.’’ So this whole process 

is about accountability and transparency on behalf of the CFPB, 

correct? 

107 

Mr. CORDRAY. Well, the more transparent we are the more full 

the report becomes, yes. 

Mr. EMMER. Okay. So that was a yes. Thank you. 

Now, the Consumer Financial Protection Bureau gets its funds 

from the Federal Reserve, correct? 

Mr. CORDRAY. Correct. 

Mr. EMMER. Several hundred— 

Mr. CORDRAY. Actually, we get them from—Congress initially 

sets up the framework, but they specify that they would come from 

the Federal Reserve, yes. 

Mr. EMMER. Yes. You get it from the Federal Reserve. You fill 

out a request that the Congress has put in the Dodd-Frank Act 

that created this, a limit that you can collect based on what the 

earnings are, and the Federal Reserve can send I think this year 

something north of $600 million. But you generally take about $350 million to $400 million for 

your operating expenses in the CFPB, correct? 

Mr. CORDRAY. No. It has changed over time because in 2011 

when we were created there was nothing, and the Bureau has built 

up over time, so— 

Mr. EMMER. The last couple of years, sir. I am going to try to 

get through this as quickly as possible. 

Your general operating budget is about—for the last couple of years is somewhere between $350 million and $400 million. That 

is what is documented in— 

Mr. CORDRAY. It is actually higher than that, but yes. 

Mr. EMMER. All right. Maybe it is higher than that. 

In addition, through these consent decrees that we have been 

talking about at length here the last hour and settlements that the 

CFPB does with—I think Representative Davidson identified them 

as targets—you collect hundreds of millions more. And of the dollars that you collect, you put monies into an account called the 

Civil Penalty Fund, correct? 

Mr. CORDRAY. Correct. Yes. 

Mr. EMMER. And you also allocate monies into a separate account 

called the Consumer Education and Financial Literary Programs 

account. 

Mr. CORDRAY. No. No. It goes into the Civil Penalty Fund, and 

Congress specified it could be used for either or two purposes. 

Mr. EMMER. I’m sorry. So it is one account and you allocate it— 

Mr. CORDRAY. Either to compensate uncompensated victims, 

which is where the vast majority of it has gone, or for— 

Mr. EMMER. Yes, it is one account, so you allocate between victims and education, correct? 

Mr. CORDRAY. Fair enough. Yes. 

Mr. EMMER. Now, in this you have laid it out again in this book. 

Chapter nine, starting on page 131, you give a general summary 

of the monies that you have collected and where you have put 

them. If you look at it, it is right in front of you, I think, the book. 

Mr. CORDRAY. Yes. 

Mr. EMMER. It is interesting that you put in there that you have 

allocated money, but there is no audit in this book. There is no 

audit that shows us detail of these monies. 

Mr. CORDRAY. We are audited every year by the GAO. 

108 

Mr. EMMER. Do you have an audit? Do you have an audit that 

you can provide to my office? 

Mr. CORDRAY. Absolutely. We have— 

Mr. EMMER. Fantastic. 

Mr. CORDRAY. We have an audit—we have two audits every year 

and— 

Mr. EMMER. Have you looked at that recently? 

Mr. CORDRAY. —the Inspector General reviews the fund. 

Mr. EMMER. Have you looked at the audit recently? 

Mr. CORDRAY. I look at it every year. 

Mr. EMMER. Can you tell me how many checks have been written 

to actual victims out of this Civil Penalty Fund? 

Mr. CORDRAY. I think there have been millions of checks to victims. 

Mr. EMMER. No, no, no. What you do when I read your report 

is you lump all the money together— 

Mr. CORDRAY. No, no, no. 

Mr. EMMER. —and you say you have helped millions of people. 

But what I would like to know is specific checks, rather than seeing, like I do in this report after page 131, that you gave a huge 

chunk of money to some law firm for uncompensated victims. I 

would like to know exactly who you are writing checks to. 

Mr. CORDRAY. We didn’t give any chunk of money to a law firm. 

Mr. EMMER. Then who is the firm that is identified on page 132 

or 133? 

Mr. CORDRAY. So it is victims of the—of those practices— 

Mr. EMMER. So there were four— 

Mr. CORDRAY. —that are individual consumers. Nobody gets 

some big chunk of money from us. 

Mr. EMMER. Page— 

Mr. CORDRAY. It goes to individual consumers who were victims. 

Mr. EMMER. Where is it here? Page 139, The Hoffman Law 

Group, formally known as The Residential Litigation Group. 

Mr. CORDRAY. Yes? 

Mr. EMMER. That is what I am talking about. 

Mr. CORDRAY. Yes, they are a— 

Mr. EMMER. So if there is an audit and if this is about transparency, I would like to get the audit. 

Mr. CORDRAY. They are a firm that we found—I believe that we 

found that they violated the law and this money is going to the victims that they harmed. 

Mr. EMMER. Again, I will renew it. If there is an audit and you 

can show us exactly who the money has been given to, I would like 

to see it. 

Mr. CORDRAY. I am always stunned at people disbelieving that 

this Consumer Bureau gets money back to real people— 

Chairman HENSARLING. The time of the gentleman has expired. 

Mr. CORDRAY. —and that is what we have done. And if you want 

to see the evidence of that because you don’t believe us, we will 

show you the evidence. 

Mr. EMMER. I would also like to see who educated where, how, 

with what money— 

Chairman HENSARLING. The time of the gentleman has expired. 

109 

The Chair now recognizes the gentleman from West Virginia, Mr. 

Mooney. 

Mr. MOONEY. Thank you, Mr. Chairman. 

I have different questions for you, Director Cordray. You had a 

former deputy named Steven Antonakes who left the CFPB abruptly under unknown circumstances and apparently did so just 

months shy of his pension vesting. 

Now, for all I know, his service was entirely honorable, and we 

appreciate the toll public service takes on family sometimes, so I 

may—I understand his desire to return home. But I must ask this 

question: Was Mr. Antonakes ever the subject of an inquiry or investigation by the Federal Reserve Inspector General? 

Mr. CORDRAY. This is kind of outrageous. Steve left the Bureau 

because he remarried, and in remarrying he had three small children. And although he had been commuting from Boston to Washington for a number of years he no longer could do so. 

Those are the circumstances of his departure, and if you want to 

make something of that you can, but I think that is a little beyond 

the pale. 

Mr. MOONEY. Okay. So then are you saying affirmatively that no 

investigation occurred, or that you are just unaware of details of 

an investigation? 

Mr. CORDRAY. I am not aware of what you think you are alleging. 

Mr. MOONEY. Okay, so you can’t—can you answer affirmatively 

no investigation occurred? 

Mr. CORDRAY. Of what? Investigation of what? I am not sure 

what you are talking about. 

Mr. MOONEY. Of Mr. Antonakes when he left. Was there an investigation? 

Mr. CORDRAY. He got remarried. He had three small children. He 

could no longer commute from Boston to Washington. 

He was very apologetic about it because he thought it was important to continue the work of the Bureau, but his personal situation 

meant that he needed to make a change. And I think you should— 

Mr. MOONEY. And as I said— 

Mr. CORDRAY. —leave that alone. 

Mr. MOONEY. —in my question, we understand the toll public 

service takes on family. But that is not my question. 

My question is, was he ever the subject of an inquiry or investigation by the Federal Reserve Inspector General? 

Mr. CORDRAY. I am not aware of what you are talking about, 

so— 

Mr. MOONEY. So you are not aware of any investigation that may 

have occurred? 

Mr. CORDRAY. I don’t know what you are talking about. I really 

don’t. 

Mr. MOONEY. I am asking you a question. 

Mr. CORDRAY. Yes, I am saying I don’t know what you are talking about. 

Mr. MOONEY. So you are unaware of any investigation of your 

own deputy that may or may not have occurred? 

Mr. CORDRAY. Again, I am not aware of what you are talking 

about. If you ask it again I still won’t be aware of what you are 

talking about. 

110 

Mr. MOONEY. Okay. 

Mr. Chairman, I would like to yield time to the gentleman from 

Tennessee, Mr. Kustoff. 

Mr. KUSTOFF. Thank you, Mr. Chairman. 

Director Cordray, if I could, I would like to go back, if I could, 

briefly to that Intercept Corp— 

Mr. CORDRAY. Sure. 

Mr. KUSTOFF. —action that we talked about out of the Eastern 

District of North Dakota. I am correct that the claim was dismissed, your action was dismissed, the CFPB’s action was dismissed because the court found that there was no nexus to consumer harm, correct? 

Mr. CORDRAY. That was the court’s judgment. That is— 

Mr. KUSTOFF. I am not asking whether you agree with it. That 

is what the—that is the court’s judgment. 

Mr. CORDRAY. I believe that is what the court said, yes. 

Mr. KUSTOFF. All right. 

Mr. CORDRAY. I don’t have it in front of me, but if you are saying 

so, I don’t doubt you. 

Mr. KUSTOFF. And what the court was also saying, if I am correct 

also, was that the CFPB needs to more clearly define the parameters of UDAAP and how you enforce it, correct? 

Mr. CORDRAY. I don’t recall whether the court said that but the 

court apparently found that our pleadings were not specific enough 

or convincing enough to survive the motion to dismiss and granted 

the motion to dismiss. So that is a setback and it is something we 

will take to heart and figure out what to do in response. 

Mr. KUSTOFF. Thank you very much. 

Director Cordray, I have heard from a number of my constituents 

who live in west Tennessee who told me about their struggles to 

get a small-dollar, short-term loan, whether it is for medical expenses, whether it is to make a car payment, for whatever reason. 

The rule that the CFPB—and you have testified a little bit about 

this during the hearing today—from last year that effectively reduces consumers’ ability to get those small-dollar loans, we talked 

about the number of comments that have been posted—a million 

or a million three— 

Mr. CORDRAY. A lot. 

Mr. KUSTOFF. It is a large number. 

Mr. CORDRAY. Yes. 

Mr. KUSTOFF. One comment specifically was a letter signed by 18 

State attorneys general, your former colleagues—and importantly 

for me, my attorney general from Tennessee, the Honorable Herbert Slatery. Their letter to you states that the proposed rule is, 

‘‘unnecessary and unlawful and will do more harm than good and 

ought to be withdrawn.’’ 

My question to you is that, as far as I can tell, you have not yet 

responded to that letter. Am I correct? 

Mr. CORDRAY. These are comment letters and we don’t do a response to all of the comments. We are supposed to take them and 

figure out what to do in thinking about our rule. 

And by the way, there were other attorneys general from other 

parts of the country who filed a comment letter on the other side. 

We have not responded to that one either. It is not meant to be reVerDate Nov 24 2008 16:23 Apr 23, 2018 Jkt 027371 PO 00000 Frm 00114 Fmt 6633 Sfmt 6633 K:\DOCS\27371.TXT TERI
111 

sponded to; it is meant to be telling us their thoughts for the rulemaking purposes. 

Mr. KUSTOFF. Great. So you have no intention of responding to 

those 18 attorneys general? 

Mr. CORDRAY. If attorneys general communicate with me I respond to the attorneys general. But in the notice-and-comment 

process, the 1,300,000 people who submitted comments, we are not 

going to respond to all of them. That is not required by law and 

it is not reasonable. 

So I don’t know what to tell you. They are allowed to comment 

into this process like anyone else, but they— 

Chairman HENSARLING. The time— 

Mr. CORDRAY. —don’t have a different status. 

Chairman HENSARLING. The time of the gentleman has expired. 

There are no other Members in the queue. 

The Chair wishes— 

Mr. CORDRAY. Could I just correct the record? 

Chairman HENSARLING. —to alert Members— 

Mr. CORDRAY. Mr. Chairman? 

Chairman HENSARLING. The Chair wishes to alert Members that 

there is a vote pending on the Floor. 

I do wish to thank the witness for his testimony today. It has 

been a very long day. 

The Chair notes that some Members may have additional questions for this witness, which they may wish to submit in writing. 

Without objection, the hearing record will remain open for 5 legislative days for Members to submit written questions to this witness 

and to place his responses in the record. Also, without objection, 

Members will have 5 legislative days to submit extraneous materials to the Chair for inclusion in the record. 

And I would ask Director Cordray to respond as promptly as you 

are able. 

This hearing stands adjourned. 

Mr. CORDRAY. Could I just have 1 minute—30 seconds? Because 

I wanted to correct the record on—a couple of times you asked 

about the neither admit nor deny. I am now informed that we have 

admissions in several cases. 

I am aware of the Payday Loan Debt Solutions case, the American Debt Settlement Solutions case, the International Land Consultants case, the First Alliance Lending case. There may be others, but that is what— 

Chairman HENSARLING. I thank the Director for his answer. This 

hearing stands adjourned. 

[Whereupon, at 3:24 p.m., the hearing was adjourned.] 

(113) 

A P P E N D I X 

April 5, 2017 

114 


27371.001
115 


27371.002
116 


27371.003
117 


27371.004
118 


27371.005
119 


27371.006
120 


27371.007
121 


27371.008
122 


27371.009
123 


27371.010
124 


27371.011
125 


27371.012
126 


27371.013
127 


27371.014
128 


27371.015
129 


27371.016
130 


27371.017
131 


27371.018
132 


27371.019
133 


27371.020
134 


27371.021
135 


27371.022
136 


27371.023
137 


27371.024
138 


27371.025
139 


27371.026
140 


27371.027
141 


27371.028
142 


27371.029
143 


27371.030
144 


27371.031
145 


27371.032
146 


27371.033
147 


27371.034
148 


27371.035
149 


27371.036
150 


27371.037
151 


27371.038
152 


27371.039
153 


27371.040
154 


27371.041
155 


27371.042
156 


27371.043
157 


27371.044
158 


27371.045
159 


27371.046
160 


27371.047
161 


27371.048
162 


27371.049
163 


27371.050
164 


27371.051
165 


27371.052
166 


27371.053
167 


27371.054