U.S. GOVERNMENT PUBLISHING OFFICE

31–474 PDF WASHINGTON : 2018

IMPROVING TRANSPARENCY AND 

ACCOUNTABILITY AT THE BUREAU OF 

CONSUMER FINANCIAL PROTECTION 

HEARING 

BEFORE THE

SUBCOMMITTEE ON FINANCIAL INSTITUTIONS 

AND CONSUMER CREDIT 

OF THE

COMMITTEE ON FINANCIAL SERVICES 

U.S. HOUSE OF REPRESENTATIVES 

ONE HUNDRED FIFTEENTH CONGRESS 

SECOND SESSION 

JUNE 6, 2018 

Printed for the use of the Committee on Financial Services 

Serial No. 115–98 

( 

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(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 

SHANNON MCGAHN, Staff Director 

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(III) 

SUBCOMMITTEE ON FINANCIAL INSTITUTIONS AND CONSUMER CREDIT

BLAINE LUETKEMEYER, Missouri, Chairman 

KEITH J. ROTHFUS, Pennsylvania, Vice 

Chairman 

EDWARD R. ROYCE, California 

FRANK D. LUCAS, Oklahoma 

BILL POSEY, Florida 

DENNIS A. ROSS, Florida 

ROBERT PITTENGER, North Carolina 

ANDY BARR, Kentucky 

SCOTT TIPTON, Colorado 

ROGER WILLIAMS, Texas 

MIA LOVE, Utah 

DAVID A. TROTT, Michigan 

BARRY LOUDERMILK, Georgia 

DAVID KUSTOFF, Tennessee 

CLAUDIA TENNEY, New York 

WM. LACY CLAY, Missouri, Ranking 

Member 

CAROLYN B. MALONEY, New York 

GREGORY W. MEEKS, New York 

DAVID SCOTT, Georgia 

NYDIA M. VELA ́ ZQUEZ, New York 

AL GREEN, Texas 

KEITH ELLISON, Minnesota 

MICHAEL E. CAPUANO, Massachusetts 

DENNY HECK, Washington 

GWEN MOORE, Wisconsin 

CHARLIE CRIST, Florida 

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C O N T E N T S 

Page 

Hearing held on: 

June 6, 2018 ...................................................................................................... 1 

Appendix: 

June 6, 2018 ...................................................................................................... 43 

WITNESSES 

WEDNESDAY, JUNE 6, 2018 

Day, Steven G., President, American Land Title Association .............................. 4 

Hunt, Richard, President and Chief Executive Officer, Consumer Bankers 

Association ............................................................................................................ 6 

Prochaska, Kate (Larson), Director, Center for Capital Markets Competitiveness, U.S. Chamber of Commerce ....................................................................... 7 

Shelton, Hilary O., Director, NAACP Washington Bureau, Senior Vice President, Advocacy and Policy, National Association for the Advancement of 

Colored People ...................................................................................................... 9 

Whitaker, Elmer K., Chief Executive Officer, Whitaker Bank Corporation 

of Kentucky ........................................................................................................... 11 

APPENDIX 

Prepared statements: 

Day, Steven G. .................................................................................................. 44 

Hunt, Richard ................................................................................................... 61 

Prochaska, Kate (Larson) ................................................................................. 73 

Shelton, Hilary O. ............................................................................................. 87 

Whitaker, Elmer K. .......................................................................................... 97 

ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD

Luetkemeyer, Hon. Blaine: 

Written statement from the Association of Credit and Collection Professionals (ACA) ................................................................................................. 103 

Written statement from the Credit Union National Association (CUNA) ... 130 

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IMPROVING TRANSPARENCY AND 

ACCOUNTABILITY AT THE BUREAU OF 

CONSUMER FINANCIAL PROTECTION 

Wednesday, June 6, 2018 

U.S. HOUSE OF REPRESENTATIVES, 

SUBCOMMITTEE ON FINANCIAL INSTITUTIONS

AND CONSUMER CREDIT, 

COMMITTEE ON FINANCIAL SERVICES, 

Washington, D.C. 

The subcommittee met, pursuant to notice, at 2:04 p.m., in room 

2128, Rayburn House Office Building, Hon. Blaine Luetkemeyer 

[chairman of the subcommittee] presiding. 

Present: Representatives Luetkemeyer, Rothfus, Lucas, Posey, 

Ross, Pittenger, Barr, Tipton, Williams, Love, Trott, Loudermilk, 

Kustoff, Tenney, Hensarling, Clay, Maloney, Meeks, Scott, Velazquez, Green, Heck, and Crist. 

Also present: Representative Duffy. 

Chairman LUETKEMEYER. The committee will come to order. 

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

committee at any time. 

I apologize for the coming and going here of everybody, but we 

had votes on the floor, so there will be some more members coming 

and going. And obviously, we have got one witness that is still looking for the Rayburn building, apparently, so we will see how that 

works out. But we do thank our witnesses for being here today, 

and I think we have got a great panel of folks, and I think we are 

going to have a great hearing. 

So this hearing is entitled, ‘‘Improving Transparency and Accountability at the Bureau of Consumer Financial Protection.’’ Before I begin, I would like to thank the witnesses for appearing 

today, and we appreciate your participation and look forward to the 

discussion. 

I now recognize myself for 5 minutes for the purpose of delivering an opening statement. 

As prescribed in Dodd-Frank, the mission of the Bureau of Consumer Financial Protection is to regulate the offering and provision 

of consumer financial products or services under the Federal consumer protection laws, and to educate and empower consumers to 

make better informed financial decisions. Unfortunately, the Bureau has failed to carry out its mission. 

The Bureau of Consumer Financial Protection hasn’t regulated 

based just on Federal consumer protection laws. Under Director 

Cordray, the agency took upon itself to essentially write law 

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through guidance and regulate through enforcement. Further, the 

Bureau hasn’t worked to educate and empower consumers to make 

better informed financial decisions. This hasn’t been a partnership 

between the Government and the people. Rather, the bureaucrats 

have worked diligently to eliminate options for Americans verily 

thinking that they are better equipped than consumers to make financial decisions. 

Thankfully, Acting Director Mulvaney is striving to foster an environment that promotes transparency, legitimacy, and greater consumer choice. He also would like to have us call the Bureau by its 

correct name, which is Bureau of Consumer Financial Protection, 

instead of Consumer Financial Protection Bureau (CFPB). 

The Bureau of Consumer Financial Protection hasn’t regulated— 

excuse me. There we go. We will get ’er done. 

Mr. Mulvaney has committed to a more temperate and data-driven process. He is outlining a vision that for the first time conforms 

to Congress’ mandate. The acting director is to be commended for 

the progress he has made thus far, but we must recognize that not 

all reforms can be done administratively. 

In his latest semiannual report to the President and Congress, 

Mr. Mulvaney sent a clear message to us: Congress must act in an 

effort to establish meaningful accountability. Specifically, Acting 

Director Mulvaney first pointed to the need to fund the Bureau 

through the congressional appropriations process. Next, subject the 

Director to the full power of the President’s executive authorities. 

Further, require legislative approval of major Bureau rules. And finally, establish an independent inspector general to oversee the 

Bureau, its leadership, and its staff. 

Members of this committee have promoted these very ideas since 

the inception of the Bureau. I am very pleased to see that the 

House Appropriations Subcommittee on Financial Services and 

General Government Chairman Tom Graves included all these provisions in his Fiscal Year 2019 Financial Services bill. 

Today, our distinguished panel will discuss their views on these 

and other ideas for reform, many of which were also included in 

title VII in Chairman Hensarling’s CHOICE Act. We look forward 

to a productive conversation of initiative that will increase transparency and ensure that the Bureau focuses more intently on its 

actual mission, rather than abusing its authorities to promote a political agenda and in actuality does little to protect consumers. The 

American people deserve a Bureau of Consumer Financial Protection that enforces law rather than creates it, and that gives power 

and choice back to the consumers. 

We thank our witnesses for appearing and look forward to your 

testimony. 

With that, the Chair recognizes the gentleman from Missouri, 

Mr. Clay, the Ranking Member of the subcommittee, for 5 minutes 

for an opening statement. 

Mr. CLAY. Thank you, Mr. Chairman. Let me thank the panel of 

witnesses for being here today. 

For 6 years, America’s consumers had a bureau that won significant victories in the name of financial justice. The CFPB was so 

effective that 29 million consumers received nearly $12 billion in 

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sion, a Federal law assigned authority to accept complaints, investigate, and when warranted, take enforcement actions against bad 

financial actors. 

Rules affecting financial transactions as large as mortgages and 

as small as payday loans were finalized after extensive public hearings where lenders and borrowers alike were afforded the opportunity to share their respective views before any decisions were 

reached. And that is called transparency and accountability. Homeownership was touted by Presidents Clinton and Bush as a means 

of increasing minority wealth through home equity, but the relaxing of regulations of the housing market by Members of both parties produced the dramatic rip-off of the most vulnerable. 

Black and brown college grads lost more than 60 percent of their 

wealth during the 2007–2008 financial crisis because of laxed regulations. These homeowners have not recovered from their losses to 

this day. 

In June, the CFPB uncovered discriminatory lending practices by 

BancorpSouth. According to the Department of Justice, CFPB alleged that BancorpSouth bank violated the Fair Housing Act and 

the Equal Credit Opportunity Act by using policies and practices 

that unlawfully discriminated against African Americans and other 

residents of predominantly minority communities. 

The CFPB took the uncommon practice of using secret shoppers 

in its investigation. The settlement agreement dictates that 

BancorpSouth pay millions of dollars in relief and civil penalties. 

And that is called accountability. 

In 2014, when a company named U.S. Bank illegally billed customers for services they never received, the CFPB ordered that the 

bank refund these consumers $48 million. And that is called transparency. 

And so I look forward to this testimony, and I yield back. 

Chairman LUETKEMEYER. The gentleman yields back. 

Today we welcome the testimony of Mr. Steven Day, President, 

American Land Title Association; Mr. Richard Hunt, President and 

CEO of Consumer Bankers Association; Ms. Kate Larson 

Prochaska, Director, Center for Capital Market Competitiveness, 

U.S. Chamber of Commerce; Mr. Hilary Shelton, Director of the 

Washington Bureau and Senior Vice President for Advocacy and 

Policy, NAACP. 

And at this moment I would like to recognize the gentleman from 

Kentucky, Mr. Barr, for purposes of introducing the final witness. 

Mr. BARR. Thank you, Mr. Chairman. 

And Chairman Luetkemeyer and Ranking Member Clay, it is an 

honor to introduce my constituent, the CEO of Whitaker Bank, 

Elmer Keith Whitaker. As a third-generation banker and head of 

the largest family owned community bank in Kentucky, Mr. 

Whitaker works every day with Kentucky consumers who have 

been negatively impacted by the Consumer Financial Protection 

Bureau, and is here today to help Congress better understand what 

we can do to reform the Bureau to help consumers. 

Mr. Whitaker, his father Jack, and his late grandfather Elmer, 

who rose from the coal fields of eastern Kentucky as a coal miner 

to build a very successful banking business, really represent the 

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ers, but also as philanthropists whose charitable activities and 

community involvement reflect their strong faith and their commitment to lifting up the people of Kentucky, and we thank you for 

that. 

So from financing a car loan, donating money to establish a new 

YMCA, or helping a family purchase a home, to the University of 

Kentucky Whitaker Bankshot, which is my favorite, that supports 

the Cawood Ledford Scholarship Fund, community banks are critical to our towns, and I am pleased to welcome Mr. Whitaker here 

today. 

I yield back. 

Chairman LUETKEMEYER. I thank the gentleman. 

And we want to thank and welcome our witnesses. Just a little 

bit of a tutorial on the timing mechanism, the lights in front of you. 

Each one of you has 5 minutes to give your presentation. The light 

when it turns green, means go. Please pull the microphones to you. 

Those boxes in front of you do move forward, so please pull them 

forward because we like to have you very close to the microphones. 

It works very well that way. And when a light comes on and it is 

yellow, that means you have 1 minute to wrap up, and when it is 

red, we need to stop and move on. 

So with that, Mr. Day, you are recognized for 5 minutes, and you 

may begin. 

STATEMENT OF STEVEN G. DAY 

Mr. DAY. Thank you, Chairman Luetkemeyer, Ranking Member 

Lacy Clay, and members of the subcommittee. My name is Steven 

Day. I am the President of National Agency Operations for Fidelity 

National Title Group. I am testifying today in my role as President 

of the American Land Title Association (ALTA). 

ALTA believes that the best step Congress can take to improve 

the accountability and transparency at the Consumer Financial 

Protection Bureau is require that the agency provide the businesses it regulates with written reliable guidance on how to comply 

with the law and protects consumers in real world scenarios. 

As I travel the country talking with small business members, I 

have learned a simple truth: More information is never a bad thing 

when it comes to decisionmaking. This is why we urge Congress to 

pass H.R. 5534, the Give Useful Information to Define Effective 

Compliance Act, introduced by Representatives Sean Duffy and Ed 

Perlmutter. This bipartisan bill creates a process for the Bureau to 

ensure formal and reliable written guidance on how to comply with 

its regulations. 

In May, Acting Director Mulvaney spoke to our members. He 

mentioned his philosophy that the Bureau should tell companies 

the rules of the road and provide concrete guidance and examples 

prior to enforcement. Guidance helps people and businesses make 

more informed decisions on how to comply with law in real life. 

This differs from former regulations that implement and prescribe 

laws. 

Guidance can come in the form of advisory opinions, bulletins, no 

action letters, statements of policy, and answers to frequently 

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dustry like a bulletin or be narrow and specific to a single person, 

like an IRS private letter ruling. 

Clear reliable guidance and examples are important for two reasons. First, it provides businesses with a solid basis for making decisions and investments that they know will not harm consumers 

or lead to potential enforcement actions and fines. Second, guidance improves the effectiveness of regulators’ supervision by providing a reference point for judging business practices for compliance. 

Our industry acutely felt the need for guidance when implementing TRID, where both the quality and quantity of the Bureau’s guidance was lacking. Hundreds of questions arose as we 

implemented this rule. Rather than answer these questions in writing, the Bureau hosted five webinars. The problem with these 

webinars is that from onset, staff read a disclaimer telling us not 

to rely on their answers. At the same time, the Bureau drafted 11 

sample disclosures reflecting generic real estate transactions. Despite their usefulness, the Bureau refused to develop additional 

samples of more complex transactions, such as construction loans 

and FHA (Federal Housing Administration) and VA (Veterans Administration) loans. 

The GUIDE (Give Useful Information to Define Effective) Compliance Act would require the Bureau to have a standard process 

for assessing these requests and timelines for responding to them. 

In the past, the Bureau refused to publish guidance under the 

belief that saying less to the companies it regulates will provide 

them with more flexibility. This was the case with the Bureau’s 

three-page memo that reminded banks they needed to oversee their 

third-party service providers. 

Instead of providing flexibility, it had the opposite effect and led 

to confusion. Lenders tried to read the Bureau’s tea leaves and developed compliance processes that reduced consumer choice or 

treated small businesses the same as large national firms. 

A more valuable bulletin would provide banks and nonbanks 

with examples of vendor management programs based on different 

risks. This is what the OCC (Office of the Comptroller of the Currency) and the FDIC (Federal Deposit Insurance Corporation) did 

in their comparable bulletins. 

I also mention to you ALTA’s support of a commission for more 

bipartisan leadership at the Bureau. 

And last, we want to applaud this committee and the House for 

passing the bipartisan TRID (TILA RESPA Integrated Disclosure) 

Improvement Act. The TRID Improvement Act fixes one of the 

most confusing requirements of the Bureau’s mortgage disclosure 

rule and a main topic of questions the Bureau did not address in 

guidance. We urge the Senate to follow the House’s lead on this important bill. 

Thank you for offering us this opportunity to share our views on 

how to improve the Bureau. Compliance is about more than protecting consumers; it protects a company’s reputation, financial 

well-being, and employee morale. As an industry predominantly 

made up of small and medium-sized businesses, we need a regulator that helps remove the gray. We need a regulator that matches 

simple and clear regulations with helpful and illustrative guidance 

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and examples. The GUIDE Compliance Act makes us part of the 

Bureau’s DNA, and we urge Congress to pass this legislation. 

Thank you. 

[The prepared statement of Mr. Day can be found on page 44 of 

the Appendix.] 

Chairman LUETKEMEYER. Thank you, Mr. Day. 

And one little housekeeping thing right quick before we move on. 

Without objection, each of the written statements will be made part 

of the record. 

So with that, Mr. Hunt, you are recognized for 5 minutes. 

STATEMENT OF RICHARD HUNT 

Mr. HUNT. Chairman Luetkemeyer, Ranking Member Clay, and 

members of the committee, a very good afternoon. Thanks for the 

invitation to discuss the importance of bringing increased transparency and accountability to the Bureau of Consumer Financial 

Protection. My name is Richard Hunt, and I am President of the 

Consumer Bankers Association (CBA). Our members operate in all 

50 States, provide $4 trillion in consumer loans, serve 140 customers, and employ 1.7 million people in the United States. 

Let me say from the onset, CBA and our members support the 

mission of the Bureau, the mission to protect consumers and take 

action against companies that break the law. That is why I am 

happy to be here today to talk about the ways to strengthen and 

to depoliticize the Bureau. 

When Congress created the Bureau, it was granted jurisdiction 

of over 11,000 banks and credit unions, as well as countless nondepository institutions. It was given unprecedented rulemaking, supervision, and enforcement powers for nearly every financial institution and virtually every financial consumer product. 

All that power was given to one single director, which means one 

person decides all enforcement actions. One person decides all 

rules. One person controls every dollar of their $600 million budget 

and has the power to adjudicate appeals of their own enforcement 

decisions. It also means the next director has the sole authority to 

undo every one of these actions, like a political pendulum, swinging 

with each new Administration. 

As Congress contemplates changes to the Bureau, any meaningful discussion should start with the Bureau’s leadership structure. 

Congress should create a bipartisan Senate-confirmed commission 

to ensure all views, voices, and opinions are given a seat at the 

table. Also to achieve greater balance and stability for consumers 

and the industry and in an attempt to depoliticize the Bureau. 

I want to thank Representatives Ross, Sinema, Wagner, Scott, 

Luetkemeyer, Gonzalez, and McHenry for their bipartisan approach in introducing and supporting legislation to achieve this 

goal. They are not the only ones who believe the commission is the 

right way to go. 

The House of Representatives recently passed legislation to enact 

a commission at the Bureau, and as a reminder, as the then DoddFrank bill was moving through the House and this committee in 

2009, it contained a five-person bipartisan commission. Acting Director Mulvaney; former FDIC Chair, Sheila Bair; members of this 

committee; and the American people in a recent Morning Consult 

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poll all support or have supported a commission over a sole director. 

In Mr. Mulvaney’s testimony before this committee in April, he 

expressed support for a commission and also outlined four other 

recommendations. 

Number one, he recommended creating an independent inspector 

general at the Bureau. CBA fully supports that endeavor. He also 

recommended placing the Bureau under congressional appropriations. In the absence of a bipartisan commission and other meaningful reforms, CBA supports this recommendation. He also recommended making the director fireable at will. We believe this 

would increase the overt political nature of the Bureau. Finally, he 

recommended congressional approval of major rulemaking. Our 

member institutions need clarity, and requiring congressional approval could create uncertainty. Also, Congress already has the 

Congressional Review Act authority to overturn rulemaking. 

Looking beyond those four recommendations, CBA also supports 

the Protecting Consumers from Frivolous Claims Act, the GUIDE 

Act, and ECOA (Equal Credit Opportunity Act). Improving the financial lives of consumers is a goal that unites lawmakers, regulators, and the industry. There are many changes that can be made 

to enhance the functioning of the Bureau and increase access to 

credit for consumers. But improving the Government structure of 

the Bureau underpins them all. 

A bipartisan commission of the Bureau would depoliticize it, 

bring long-term stability, and benefit consumers and small businesses. We stand ready to work with Congress, and I am happy to 

answer any questions you may have. 

[The prepared statement of Mr. Hunt can be found on page 61 

of the Appendix.] 

Chairman LUETKEMEYER. Thank you, Mr. Hunt. 

Ms. Prochaska, you are recognized for 5 minutes. 

STATEMENT OF KATE (LARSON) PROCHASKA 

Ms. PROCHASKA. Good afternoon, Chairman Luetkemeyer, Ranking Member Clay, and members of the subcommittee. My name is 

Kate Larson Prochaska, Director at the Center for Capital Markets 

Competitiveness (CCMC) at the U.S. Chamber of Commerce where 

I lead consumer finance issues. 

The Chamber is the world’s largest business federation representing the interests of more than 3 million businesses of every 

size, sector, and region. Thank you for holding this important and 

timely hearing about improving transparency and accountability at 

the Bureau of Consumer Financial Protection. We at the Chamber 

have long advocated for improvements to this influential agency 

and are grateful for the opportunity to share our views here today 

on behalf of the businesses we represent. 

Title X of the Dodd-Frank Wall Street Reform and Consumer 

Protection Act created the Bureau to consolidate consumer protection functions under one roof. We strongly believe in the Bureau’s 

statutory mission to, quote, seek to implement and, where applicable, enforce Federal consumer financial law consistently for the 

purpose of ensuring that all consumers have access to markets for 

consumer financial products and services, and that the market for 

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consumer financial products and services are fair, transparent, and 

competitive. 

However, we believe the Bureau lost sight of portions of their 

mandate, namely the directives to foster transparent and competitive markets and to ensure that all consumers have access to markets for the consumer financial products. Indeed, the lack of accountability of the Bureau led to an abuse and lack of process that 

made it difficult to meet this mandate and to provide certainty 

needed for consumer protection. 

Since the Bureau’s inception, we tried to work with the new leadership and create a trustworthy dialog between industry stakeholders and policymakers. However, we were disappointed to find 

our insight seemed more perfunctory rather than seriously considered. With new leadership there is an opportunity to make the Bureau a more mature, transparent, and accountable agency. Only 

with this approach will the Bureau adequately fulfill its entire 

mandate. 

The Chamber deeply supports strong consumer protections and 

a robust, transparent marketplace of consumer products and services. This is why this past March, we released a comprehensive 

agenda to reform the Bureau. 

In the report, we noted that any consumer protection agency, including the Bureau, has a three-part mission: One, ensure consumers have access to the marketplace and choice in products and 

services. Two, promote the availability of information that consumers can use to make informed decisions. And three, provide 

protection against bad actors. 

We made six principal reforms that encompassed 23 individual 

recommendations to offer a series of concrete steps to improve the 

Bureau. One, provide clear rules of the road. Two, enforce the law 

fairly. Three, educate consumers with accurate data-driven information. Four, commit to transparency. Five, avoid regulatory duplication and burden. And six, structure the Bureau for long-term 

success. The 23 recommendations are discussed extensively in my 

written testimony, and the full report can be found on the CCMC 

website. 

We have also been providing feedback to the Bureau on how to 

create a more transparent and accountable agency through recent 

comment letters. We thank the Bureau for releasing their call to 

evidence, which is a compilation of 12 separate requests for informations to audit the agency. To date, we filed six comment letters 

addressing civil investigative demands, adjudication proceedings, 

the enforcement process, supervision process, external engagements, and the complaint database. We look forward to filing our 

rulemaking comment tomorrow and the subsequent comments 

through July 16. 

This brings me to the Bureau’s 13th semiannual report that was 

issued in April. In his opening letter, Acting Director Mulvaney 

suggested four statutory changes to the Bureau: One, fund the Bureau through appropriations. We have long supported putting the 

Bureau under true congressional oversight and included this in our 

reform agenda. A CCMC Morning Consult poll found that 66 percent of those surveyed recognized the importance of appropriations 

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to provide effective checks and balances over Governmental agencies. 

Two, require legislative approval of major Bureau rules. While 

we do not take a position on this legislation, we do think there 

should be more oversight. 

Three, ensure the Director answers to the President in the exercise of executive authority. We also believe that a commission 

structure would be a more balanced approach, however, there 

should not be insulation from the Presidential authority. Create an 

independent inspector general for the Bureau. Just based on sheer 

bandwidth, an IG would be better instead of looking at the Federal 

Reserve as well. 

I look forward to working with the committee and this subcommittee on legislative proposals that make the Bureau more mature, accountable, and transparent. Thank you again to the Chairman, Ranking Member, and committee for holding this hearing and 

for the opportunity to testify. I am happy to take any questions. 

[The prepared statement of Ms. Prochaska can be found on page 

73 of the Appendix.] 

Chairman LUETKEMEYER. Thank you, Ms. Prochaska. 

And, Mr. Shelton, you are welcome. I saw from your bio you are 

from Missouri, so welcome to a fellow Missourian. You may begin. 

Five minutes. Please turn on your microphone, sir. 

STATEMENT OF HILARY O. SHELTON 

Mr. SHELTON. Thank you. 

Good afternoon, Chairman Luetkemeyer, Ranking Member Clay, 

and esteemed members of this subcommittee. Thank you so much 

for inviting me here today to testify and requesting the input of the 

NAACP (National Association for the Advancement of Colored People). We currently have more than 500,000 card-carrying members, 

2,200 membership units across the Nation. We have members in 

every one of the 50 States, as well as units on military bases 

throughout the world. 

Earlier this year, the National Fair Housing Alliance released a 

report which demonstrated that racial and ethnic minorities are, on 

average, charged a higher interest rate, offered fewer financial options, and subjected to submissive and disrespectful treatment 

more frequently than their Caucasian counterparts who had lower 

credit scores. In fact, on average, non-White testers who experienced discrimination would have paid almost $2,700 more over the 

life of a loan than well-qualified White testers. 

The important study demonstrates the continuing economic discrimination faced by people of color every day. It is because of this 

ongoing bias and the resulting persistent wealth gap between people of color and Whites in America that financial empowerment 

and the economic security of communities served and represented 

by the NAACP has been and continues to be a cornerstone of our 

national policy agenda. 

We need a strong, robust, and vibrant Consumer Financial Protection Bureau which operates as it was intended by law. Americans need facts and data which they can make informed decisions. 

We also need protections from unscrupulous predatory individuals 

and companies; industry needs to know where corrections and their 

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practices are needed. The policymakers need to have concrete indisputable facts from which it makes laws and regulations. 

In my written testimony, I have made 10 suggestions which, if 

taken, will allow the CFPB to continue on its current important 

trajectory to protect and educate Americans everywhere. By 

brevity’s sake, I will summarize my suggestions with this: 

Suggestion No. 1, do not subject the CFPB to congressional appropriations process. This will threaten its independence and effectiveness. 

No. 2, promulgate the short-term loan rule which covers payday 

and car title loans as originally crafted and implemented in the 

time set. Payday and car title lenders tend to concentrate their 

abusive operations which charge an average of almost 400 percent 

equivalent of interest and fees for a 2- to 3-week loan in communities of color. 

No. 3, Reassert the enforcement powers of the Office of Fair 

Lending. By moving the Office of Fair Lending, the CFPB is 

demonstratably weakening its efforts to fight discrimination in the 

consumer financial marketplace, even as the Bureau returned over 

$400 million from discriminatory financial institutions to American 

families who have been overcharged and denied credit. 

No. 4, do not require explicit congressional approval of any proposed regulation in order for the rule to take effect. This requirement will create crippling barriers to administrative actions necessary to protect the public and implement the law. 

No. 5, do not revise or reduce access to CFPB’s complaint database. The current public complaint database is a tool that empowers individuals to inform and protect themselves in the financial 

services marketplaces. 

No. 6, retain and reinvigorate the Office of Student and Young 

Consumers. To close this office is an incredibly short-sighted move 

with far reaching consequences which will harm millions of students who are already struggling with debt or those who are seeking an affordable higher education. 

No. 7, increase, do not decrease, the amount of information and 

the number of mortgage lenders required to make public their 

loans under the Home Mortgage Disclosure Act. Without this crucial data, regulators and others like the NAACP are once again left 

without the full information we need to determine patterns in loan 

terms and loan amounts that could increase costs and risk of foreclosure for borrowers. 

No. 8, retain a single director of the CFPB as opposed to a commission. A single director facilitates effective decisionmaking and 

ensures a clear point of responsibility. A single director can often 

move quickly to respond when a new national threat has been discovered. 

No. 9, do not create a situation in which the director of the CFPB 

must be responsive to the whims of a President. Make sure that 

he or she retains independence. 

And No. 10, reject efforts to establish an independent inspector 

general for the CFPB. You see, the CFPB already has an IG shared 

with the Federal Reserve within which the CFPB is housed. To create an independent IG would be of questionable value and debatable as to the use of taxpayers’ money. 

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In closing, I would just like to say, reemphasizing the need of a 

CFPB to stay on course, to remain a strong, transparent, and robust tool for protecting all consumers in the often confusing and too 

often predatory world of financial services. 

Dodd-Frank was enacted and the CFPB was created to respond 

in response to the economic crisis of 2008. As of late, we appear 

to be going backward in a pre-Dodd-Frank deregulation much to 

the detriment and the potential economic ruin of the American consumer. 

We have not forgotten that many of our people and communities 

are still hurting from the recession of 2008. Many will never own 

a home again, have a nest egg pass or be able to pass the nest egg 

on to future generations as a result. We have not forgotten many 

of our people were targeted by unscrupulous, nefarious lenders who 

had no concern for the economically destructive— 

Let me just say in closing, sir, I look forward to your questions. 

I think you get my point. 

[The prepared statement of Mr. Shelton can be found on page 87 

of the Appendix.] 

Chairman LUETKEMEYER. Mr. Whitaker, you are recognized for 5 

minutes. 

STATEMENT OF ELMER K. WHITAKER 

Mr. WHITAKER. Chairman Luetkemeyer, Ranking Member Clay, 

and members of the subcommittee, my name is Elmer Whitaker. In 

addition to being CEO of Whitaker Bank, I am President of 

Whitaker Bank Corporation of Kentucky, a family owned bank 

holding company founded in 1978 and located in Lexington, Kentucky. We operate two banks and Kentucky Trust Company, which 

offers wealth management and insurance services with 45 locations 

in 17 counties and total assets of $1.75 billion. 

I am pleased to be here today to share my views on improving 

transparency and accountability at the Bureau of Consumer Financial Protection. Before speaking on this subject, I would like to first 

commend Chairman Hensarling and Members of the House of Representatives for their support of the Economic Growth, Regulatory 

Relief and Consumer Protection Act. This commonsense legislation 

is long overdue. This new law will help community banks like mine 

better serve our customers and communities. 

I would also like to thank Congressman Andy Barr for his steadfast support on a number of provisions in the bill. In particular, his 

leadership on creating a safe harbor for qualified mortgage products. As a community banker, I fully support effective consumer 

protection. 

As you are aware, proposals have been introduced to replace the 

position of director of Consumer Financial Protection Bureau with 

a bipartisan five-member commission, similar to other financial 

regulatory agencies. We believe a commission would broaden the 

perspective on rulemaking and enforcement activity of the Bureau. 

It would provide appropriate checks and balances and a better appeals process. The Bureau has been given the broad authority that 

can alter financial markets, but it lacks accountability that comes 

with budget oversight. 

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Today, the Bureau is funded by a fixed portion of the Federal Reserve’s total operating expenses. I believe this should be changed 

to have the Bureau funded through the regular congressional appropriations process. This would allow the very consumers who the 

Bureau was designed to protect to hold it accountable through their 

elected officials. 

Similarly, we support efforts to create transparency by creating 

an independent inspector general. The inspector general’s function 

is to serve as an independent unit that conducts audits, investigations, and reviews programs and operations. I would hope the 

CFPB would welcome an independent review of its operations. This 

is generally deemed a best practice by the other regulatory agencies. 

Mr. Chairman, as I noted, my bank supports consumer protection. However, even the best intended regulations must be reviewed to ensure they are meeting their intended purpose. Bank 

regulatory changes have a big impact on the cost of providing 

banking products and services and can adversely impact consumers. In many communities, appraisal costs alone for a home 

loan have doubled since the implementation of Dodd-Frank. 

Many community banks simply lack the resources and staffing to 

stay up to date with the rapidly changing rules. The cost to implement training is overtaxing, but the time it takes to conduct the 

training is worse. This is time taken away from serving the daily 

needs of their customers. It is the consumer that suffers in that 

scenario. The rules in Dodd-Frank have caused some banks to stop 

offering certain loan products, and some banks have been forced to 

merge with other banks. 

As reported by the Federal Reserve Bank of St. Louis, from the 

first quarter of 2011 to the first quarter of 2018, the number of 

commercial banks in Kentucky has been reduced by 20 percent. 

The number of commercial banks nationally has been reduced by 

24 percent. 

Simply stated, community banks continue to be the backbone of 

Kentucky and hometowns all across America. My bank’s presence 

means we have a personal stake in the economic growth, health, 

and vitality of the communities we serve. By eliminating unnecessary impediments and ensuring that the agencies that oversee our 

products are fully transparent, Congress can help stem the tide of 

the community bank consolidation driven by unnecessary regulation which negatively impacts every community across the United 

States. 

Thank you again for the opportunity to testify today, and I welcome your questions. 

[The prepared statement of Mr. Whitaker can be found on page 

97 of the Appendix.] 

Chairman LUETKEMEYER. Thank you, Mr. Whitaker. I appreciate 

your input this afternoon. 

And with that, I recognize myself for 5 minutes as we begin our 

questioning portion of the hearing. 

Let me just begin by asking you a question with regards to data 

collection. I know that Director Mulvaney made the comment—or 

when he first came in, suspended the ability or the collection of information. And recently I think as last week, he went back to benshattuck on FSR297 with DISTILLER

13 

ginning to collect some information again because of their concerns 

with regards to protecting information. 

Are any of you concerned about that? Do any of you have some 

ideas about that particular action of the Director? 

Ms. PROCHASKA. Sure. I will start. We definitely have concerns 

about that. We all know that the Federal Government is not immune to data breaches, and to have everything in one spot for the 

hackers to come in I think is a huge concern. I think for most consumers who are getting a mortgage, they would be surprised that 

all of their mortgage data is then put into a giant database. So I 

think for a lot of folks that would be a little bit upsetting to them, 

so I do hope that the privacy protections are adequately in place. 

Chairman LUETKEMEYER. I know that Director Cordray made the 

statement that he collects 80 percent of all the credit card transactions of this country, which is very, very, very disturbing to me, 

so I appreciate the comment. 

Ms. Prochaska, you made the comment during your discussion 

here in your presentation, and I went back through your testimony 

because I was concerned when you didn’t indicate that you were 

supporting a cost-benefit analysis of something. But in your testimony, you did make that comment as one of your recommendations. So would you like to elaborate on the importance of having 

a cost-benefit analysis on all the rules and regulations? 

Ms. PROCHASKA. Absolutely. I think a lot of the rule writers formerly at the CFPB, it is hard to know how it is going to happen 

in practice, and so a robust cost-benefit analysis, which is conducted at most of the other agencies, is critical to see how this is 

actually going to impact consumers and small business organizations. So I think that is a preeminent concern that we have at the 

Chamber, especially because we are so focused on economic growth 

and how that is going to be in the marketplace. 

Chairman LUETKEMEYER. Mr. Whitaker, would you like to elaborate on how much it costs you to comply with some of these rules 

and regulations and guidance that the CFPB has put out? 

Mr. WHITAKER. I would simply state that as a small bank, in 

terms of national presence, it has significantly changed my cost 

structure. Hundreds of thousands of dollars a year just in compliance staff has been added since the beginning of Dodd-Frank. 

Chairman LUETKEMEYER. Have you changed your business model 

as a result of this? 

Mr. WHITAKER. I’m sorry? 

Chairman LUETKEMEYER. Have you changed your business model 

as a result of this? 

Mr. WHITAKER. I have been forced to, yes. I have had to add locations just to house the staff to process work. 

Chairman LUETKEMEYER. Mr. Hunt, I know you have lots of 

members that are dealing with these additional costs. Can you give 

us a little—elaborate on some of the costs that your members are 

incurring, or the total amount perhaps, of what CFPB is costing? 

Mr. HUNT. Yes. I don’t have the total amount, but I will tell you, 

in the first quarter of next year, we are going to be giving to the 

regulators all the new HMDA (Home Mortgage Disclosure Act) requirements that is going to increase it two- to threefold from previously. So we are collecting information. 

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14 

There was a report earlier by the inspector general a couple—8 

months ago, I believe, saying there were not enough safeguards. 

We fully supported Mr. Mulvaney taking down the collection of the 

data for a while until those safeguards are there. Thankfully, he 

has concluded the safeguards are now in place. 

Chairman LUETKEMEYER. One of the questions I have got is, several of you have all advocated for the commission. And I know that 

Mr. Shelton’s testimony actually made the comment that he supported, actually, something that would be illegal, quite frankly, because the Congressional Review Act says that Congress should be 

presented with all rules and guidance to be able to be approved, 

and in his testimony he suggests that that not happen, which quite 

frankly, would be illegal. So I would point that out to Mr. Shelton 

and to all of you. 

From the standpoint that I know recently we passed in the Senate and now in the House a couple weeks ago, and it was signed 

a week before last by the President, with regards to the congressional Review Act, a recision—a rescinding of a rule that was done 

by CFPB with regards to indirect auto lending. 

So would any of you have some other rules or regulations that 

you are familiar with that need to be reviewed under the CRA and 

perhaps rescinded? And if you don’t, I have got a homework assignment for each one of you. 

Mr. HUNT. Well, I don’t think there are any more rules that fall 

within the 60-day calendar. They just obviously lead to arbitration 

last year by a landslide 50 to 50 vote in the Senate. I can’t think 

of any rule that is forthcoming by the Bureau that will require a 

CRA rule. 

Chairman LUETKEMEYER. OK. 

Ms. PROCHASKA. One guidance I think that might be worth looking at is the vendor management guidance. I think that that might 

be tantamount to a rule, and GAO might want to take a look at 

that. 

Chairman LUETKEMEYER. OK. All right. Very good. Well, thank 

you. 

So again, I will make mention of that when we close the hearing 

that we do have a homework assignment for you. OK. 

Thank you very much. My time is up. 

With that, I recognize the gentleman from Missouri, Mr. Clay, 

the Ranking Member, for 5 minutes. 

Mr. CLAY. Thank you, Mr. Chair. 

I just wanted to point out that I wanted to welcome a young man 

from my hometown, St. Louis, and our State of Missouri, back to 

the committee, Mr. Shelton, who I will start with. 

As you know, the Center for Investigative Reporting recently 

published results from their extensive analysis of lending throughout America, and found modern-day redlining in more than 60 

metro areas across the country. And this is despite the fact that 

most banks, some 99 percent of banks get passing grades on their 

Community Reinvestment Act, or CRA exams, even though that 

law was intended to help combat discriminatory lending practices. 

And now, Mr. Mulvaney is reorganizing the CF—the Consumer Bureau’s Fair Lending Office, eliminating its enforcement capabilities 

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and diminishing fair lending as an important priority of the Bureau. 

So, Mr. Shelton, will Congress be helping to combat discriminatory lending or weakening those efforts if we advance proposals to 

radically reform and weaken the Bureau? 

Mr. SHELTON. Well, it would certainly weaken them, Congressman. And it is very good to see you. 

Indeed, we have not forgotten the challenges and problems that 

we had that actually pushed us to create a Consumer Financial 

Protection Bureau or pass the Dodd-Frank reform bill as we did. 

We saw what happened with the so-called protections that were in 

place and, quite frankly, the disparate impact that they had on racial and ethnic minorities, women-owned houses and other properties, and other problems in our communities. 

Anything can be done to actually step back or put back in place 

the lack of oversight and protections would be derelict, to say the 

least. In essence, it has not been that long. It has not been that 

long since we sat before this very committee, quite frankly, with 

other victims of those who were not provided the protection of regulatory oversight that lost their homes, that found themselves victim 

to predatory lending processes and practices throughout the country. We need these protections to prevent this from happening 

again. 

Mr. CLAY. OK. The regulators are discussing modernizing CRA, 

though some seem to be more focused on making those CRA exams 

easier. Does that make sense to you that now is the time to make 

CRA exams easier, even though most banks pass their exams, and 

yet we have pervasive redlining throughout this country? 

Mr. SHELTON. Clearly, with the problems that we have now, 

doing anything to weaken those very protections, again, would be 

extremely problematic. It is moving in the wrong direction. The 

reason we need a robust, powerful, comprehensive, and transparent 

process that is covered by the CFPB is for these very reasons. 

You were, I believe, here when we heard from many of the victims of the forms of discrimination that we are very well trying to 

provide protections for. It would be outrageous to make things 

weaker and easier for this kind of discriminatory practice to continue. 

Mr. CLAY. Thank you for that response. 

Mr. Hunt, do you believe that the time has come and gone for 

the Fair Housing Act and collecting HMDA data or have we—or do 

you think we have closed the disparity gaps in mortgage lending 

and the way it impacts certain communities of color? And is everything OK in the mortgage lending? 

Mr. HUNT. Mr. Clay, thank you very much for the question. First 

off, let me say, discrimination is just morally wrong. It should not 

be allowed, and it cannot be allowed. It is totally unacceptable. 

There is no place for it. 

Credit profile is what we are looking at when we are trying to 

find somebody who is creditworthy. We are about to send to the 

regulators tons of information under HMDA. We were not exempt 

under the Crapo bill, like other institutions were, so we are fully 

in compliance. We are fully in compliance with the ECOA and the 

fair housing law as well. 

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So, look, we don’t want to have any discrimination. We want to 

make sure our customers are happy and being served, and if they 

choose to have a mortgage, make sure they are creditworthy to 

make sure they can afford the monthly payment. And I go back to 

what you addressed in your opening comments. We want the Bureau to be very strong and diligent as well with us, so we are not 

trying to weaken the Bureau at all in this regard. 

Mr. CLAY. So can we do both? Can we ensure that we close the 

disparity gap, while still correcting, making corrections at the Bureau? Can those both run simultaneously? 

Mr. HUNT. I have no doubt in my mind that Acting Director 

Mulvaney is going to make sure no one is discriminated against. 

Mr. CLAY. Thank you for that response. 

Chairman LUETKEMEYER. The gentleman’s time has expired. 

With that, we go to the gentleman from Pennsylvania. The Vice 

Chairman of the committee, Mr. Rothfus, is recognized for 5 minutes. 

Mr. ROTHFUS. Thank you. Thank you, Mr. Chairman. 

Mr. Day, in your testimony, you discussed the importance of having clear rules of the road. Unfortunately, until Acting Director 

Mulvaney took over, the Bureau tended to prefer ambiguous rules 

that provided a platform for broad regulation by enforcement. 

Can you provide an example of how uncertainty about the rules 

of the road has hurt the members of the American Land Title Association? 

Mr. DAY. Certainly. Probably the prime example is with regard 

to, in my testimony, the three-page memo with regard to lenders; 

just reminding lenders as to the requirements to police their thirdparty vendors. There was not a lot of explanation concerning that, 

and it left two issues in that regard. One from the lending community. They were unsure as to the best way to control that. Are we 

able to control based on a sizing of that? Do we treat an agent who 

has five employees in a rural community the same way we do with 

someone who has locations in 45 States and hundreds of locations? 

So lenders tended to shrink their controls and actually impact the 

consumer choice. 

On the other side, with our members, they look at it and say 

which—where do we have to go to be able to be in compliance? And 

some sought out our best practices as a way of going forward. We 

could not get clarification from the Bureau as to whether or not 

this was a viable way for the lenders to feel comfortable that thirdparty vendors, our members were going to be in compliance with 

the Act. So it added additional expenses, additional concerns, the 

threat of enforcement. So it just—that uncertainty really impacted 

a number of especially small businesses. 

Mr. ROTHFUS. Mr. Hunt, in your testimony, you wrote that the 

Bureau, quote, ‘‘has an unprecedented scope of authority over almost the entire universe of consumer financial service providers, 

ultimately touching almost all Americans.’’ Can you describe some 

of the consumer impacts that have followed from the Bureau’s aggressive use of its broad authority? 

Mr. HUNT. Sure. There are many I could describe. I will start 

with small dollar lending. They just wrote a rule not too long ago 

that would not make it desirable for our banks to get into small 

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dollar lending. You have to keep in mind, some 50 percent of all 

Americans in this country do not have $500 in their bank account 

to meet an emergency need. We need to be in that space. I think 

they also played politics with that rule. They exempted in financial 

institutions doing less than 2,500 loans. 

Now, when it comes to consumer protection, I think every consumer should be protected, not based upon where you bank. So you 

can bank at Bank of America and have one set of rules, but if you 

go to the local community in Kentucky, there will be a different set 

of rules over there for the consumer. Not for the bank, but for the 

consumer. So I think that has severely impacted the short-term liquidity needs when Americans need it most to meet a financial 

need. 

Mr. ROTHFUS. Ms. Prochaska, we are all committed to ensuring 

that the rules and enforcement actions taken by the Bureau are 

fair to all parties and maximize consumer protection. Putting the 

Bureau on appropriations will go a long way toward improving the 

responsiveness of this agency and enhancing the integrity of its 

rulemaking. Do you believe that putting the Bureau on appropriations would in any way harm consumer financial protection? 

Ms. PROCHASKA. Thank you very much for the question, first. 

And second, I do not think it would harm consumer protection in 

any way, shape, or form. The rules are on the books. Mr. Mulvaney 

has made it absolutely clear that he is a steward of the law, that 

he is going to execute the law fairly and accurately. 

Just because the Fair Lending Office has now been rolled into 

the Director’s office doesn’t necessarily mean that a ECOA has 

been repealed, the Fair Housing Act has been repealed, HMDA has 

been repealed. I think there is a discussion, and there can be an 

argument made that that has actually made it even more of a priority. So I think that having some sort of oversight over the Bureau 

would be much better in the long term for everyone. 

Mr. ROTHFUS. I have long been an advocate of putting it on the 

appropriations process and also having a commission, because this 

goes to some of the core principles of our country, our republic. 

There is a whole notion of self-rule and self-government, and recalling Abraham Lincoln even talking about Government of the people, 

by the people, and for the people, and this does happen through 

elected representatives. It has to do with the nature of law in this 

country and the three branches of Government we have. The Executive branch, to enforce the law; the Legislative branch, to make 

the law; the Judiciary branch, to adjudicate. 

And when you see an agency that would make rules that the people are not making, that really goes against, to me, the principles 

of self-rule and self-government. Certainly, a commission I could 

think be as effective as a single director, perhaps more effective at 

going after discrimination. You have a diversity of ideas that are 

going to be exchanged among multiple commissioners. 

So again, I thank everybody for participating in this hearing, and 

it has been very informative. Thank you. 

Chairman LUETKEMEYER. The gentleman’s time has expired. 

With that, we go to the gentleman from Georgia. The distinguished Mr. Scott is recognized for 5 minutes. 

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18 

Mr. SCOTT. Thank you very much, Chairman. This is a very important and very timely, timely hearing. And I have been sitting 

here and I have been very impressed by the diversity of thought 

on this most pressing of financial services industry. 

The CFPB represents the interests and the protections of over 

330 million Americans. They cover the entire waterfront of our financial services system. It is the greatest financial service system 

in the world, but it is a very complex system. It is a very diversified system. 

Now, the CFPB has done some great things, no question about 

that, but here is the situation. The CFPB has become a political 

fire pit. Now, let me explain what I mean. And I hear Mr. Shelton 

who brought some excellent points, but here, we have a CFPB that 

is constructed to shift and sway with political winds. All of what 

Mr. Shelton was so grateful for occurred when the sole director reported to and was authorized by President Barack Obama, but he 

is no longer President. And so we have another President. And 

they have another sole director that is coming in and trying to 

erase everything that the previous Administration did. That is why 

we are in the fix we are in. And that is why when we worked hard 

to put the CFPB together, we did it as a commission for a reason: 

So it wouldn’t be subjected to this every 4 years. That Administration comes in, changes what it does. 

Here is a headline my staff just handed me, and it just came 

over from the Associated Press: Mulvaney disbands Consumer Advisory Board. The only simple thing there. That is gone. There has 

been a lessening of the fair housing; changes made. 

So here is my point: We worked hard to put this together, this 

commission, and let me just say, Elizabeth Warren, the President, 

Barney Frank, all of us here, most of us, all of us here for sure, 

worked on this, passed it out as a commission. But when it got over 

in the Senate, something happened. That was, in my estimation— 

and even Barney Frank came back and said, man, this is deceitful 

what they have done, they changed this. And you know what happened? They never even had the courtesy or the decency in the 

Senate to bring it back over here. They passed it at that. But President Obama is not going to be President for life. It changes, and 

so we have a measure that is bipartisan. 

Let me just tell you, let’s suppose the Securities and Exchange 

Commission wasn’t a commission or the Commodities and Futures 

and Trading Commission wasn’t a commission. Look, if you want 

stability, if you want accountability, that has to come from the entity that birthed it. We did in Congress. We must in Congress reclaim our position of responsibility in bringing that accountability. 

And so we have a bill I want to mention. It is House Resolution 

5266. Now, we all can come together and figure this out with this 

piece of legislation and do it the way it should have been in the 

first place and make it a commission with direct responsibility, 

shared responsibility and authority with the Executive branch and 

us, but the buck will stop here where it was born. 

Chairman LUETKEMEYER. The gentleman’s time has expired, and 

we appreciate his eloquence. 

With that, we go to the gentleman from Oklahoma. Mr. Lucas is 

recognized for 5 minutes. 

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Mr. LUCAS. Thank you, Mr. Chairman. 

If I could, I would like to, with our witnesses, turn back to the 

issues I hear back at home. And, with this, I would like to begin 

with you, Mr. Hunt. 

I hear frustrations from our bank and credit union folks that 

multiple regulators are in their offices asking the same questions. 

And this has the appearance of a lack of coordination and redundancy. 

Could you share with us what you hear from your members with 

respect to regulatory coordination? And do you think more can be 

done to improve the communication or, at the very least, try to reduce some of the duplication of effort? 

Mr. HUNT. So thank you very much for the question. 

I will tell you, unfortunately, there is or there has not been any 

regulatory coordination. I do believe, in the last couple of years, 

each of the agencies has been trying to justify their existence, trying to prove their value. 

I will give you a perfect example under cross-selling. The OCC 

and the CFPB and the FDIC took upon themselves, rightly so, to 

go to our banks and examine cross-selling practices. I understand 

that. It was very important. It was something that needed to be 

done. 

However, at several of our banks, you would have the OCC and 

the CFPB in the bank at the same time asking sometimes for the 

same identical documents. Sometimes one of the agencies would 

hear what the other agency wanted, ask for the same information, 

and said, ‘‘We need more than that.’’ That is absurd. There is no 

reason you can’t have one regulator in there supervising us at all 

times. And I am hoping, under the new heads of the agencies, that 

is something they will address quickly. 

Mr. LUCAS. Follow up on that, if I could, Ms. Prochaska. 

I believe your report included a little bit about the CFPB in particular duplicating the activities of the other agencies. Can you describe some of your findings and ways in which the Bureau might 

improve on that duplication? 

Ms. PROCHASKA. Yes. Thank you so much for the question, Mr. 

Lucas. 

To echo Richard’s point, I think we get a lot of feedback from 

bankers that there is inconsistent guidance within the agency, different standards. So that can be incredibly confusing, especially 

from an examiner level. And then one note, at least—actually, two 

examples, one of which being the small dollar rule. As we know, 

the OCC and the FDIC eradicated the deposit advance product 

back in 2013 with their guidance. The OCC has now repealed that 

guidance, and we hope that the FDIC will follow suit. 

But then the CFPB has their small dollar rule hanging out there 

as well. And so then that creates confusion in the marketplace. 

When, as Mr. Hunt mentioned earlier, according to the Federal Reserve, 40 percent of the country can’t foot an emergency $400 expense, that, to me, is a travesty. And the fact that there still is 

going to be that demand, even if there isn’t the small dollar loans 

out there. So we need to be able to get consumers into those small 

dollar loans. 

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Another piece of duplication that I think has been a little bit 

frustrating for industry both in banks and in online lenders and 

other innovative companies is the confusion around no action letters and who is minding the store when it comes to innovation? Is 

there going to be an OCC fintech charter? Is the FDIC going to get 

into the space. So those are two things that have been very confusing. 

Mr. LUCAS. Mr. Whitaker, in your testimony, you also mention 

whether there might be some duplication by the Bureau when it 

comes to HMDA disclosures. 

If someone were to do an analysis to the rule surrounding 

HMDA, do you, as a community banker, manager think that the 

analysis would find significant duplication between CFPB and the 

other agencies? 

Mr. WHITAKER. What we have seen is the trickle down of CFPB 

guidelines trickling down into the other agencies. While they are 

not always applicable to a financial institution of my size, I am 

often held to the standard of larger institutions because of that 

trickle-down effect. 

Mr. LUCAS. Mr. Whitaker, one last question to you. And there is 

lots of discussion in different quarters about the idea potentially on 

the table of establishing an independent inspector general at 

CFPB. 

As a regulated entity of CFPB, do you have any sense of how an 

inspector general would affect institutions like yours when interacting with the Bureau? 

Mr. WHITAKER. I think it would add stability. That is the number 

one thing. It adds accountability to the CFPB so that perhaps we 

don’t have the trickle down, and the rules stay on the levels and 

platforms they were intended to stay when the CFPB was created 

out of congressional law. 

I think ultimately you have to have that accountability. I have 

internal auditors. I have external auditors. I have State regulators. 

I have the Federal Reserve as my primary regulators. And it adds 

accountability. And I think you have to have the inspector general 

to run those audits for the CFPB just for that same checks-and-balance system. 

Mr. LUCAS. One last thought, Mr. Chairman, if you will tolerate 

me. Being one of those folks who was here for the conference committee process on Dodd-Frank, I would simply note to my colleagues everything in Dodd-Frank has worked exactly the way I 

think the authors intended at the time. None of this has been accidental. 

I yield back, Mr. Chairman. 

Chairman LUETKEMEYER. The gentleman’s time has expired. 

With that, we go to the gentlelady from New York. Ms. Velazquez is recognized for 5 minutes. 

Ms. VELAZQUEZ. Thank you, Mr. Chairman. 

Mr. Shelton, whenever Republicans talk about the need to structurally reform the CFPB to make it more accountable, I always like 

to remind people of where we have come from. The American consumers lost $19.2 trillion in wealth, $3.4 trillion in retirement 

money. 

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21 

So can you describe the factors that led to the 2008 financial crisis and why it was so important to create the strong consumer 

watchdog in the first place? 

Mr. SHELTON. Thank you very much, Congresswoman, for that 

question. 

The issues and challenges that we had at that time were we had 

so many Americans, and disproportionately racial and ethnic minority Americans, women-owned households, the elderly, that were 

actually being abused by many of the financial services institutions 

because of a lack of protection and regulation. Many of them were 

approached by not only the lending institution themselves but, in 

many cases, actually by brokers that actually came forward offering them great deals to address other challenges happening at that 

time. 

That was also a time in which fuel costs were surging. And as 

such, we had a number of Americans that were on fixed incomes 

that had paid off their mortgages who were approached by brokers 

telling them that they could refinance their homes to put in everything from systems to provide more insulation, windows, new heating systems, and the like. 

I sat next to a woman at this very table whose husband had 

worked hard his entire life for a rather large tire company in Ohio. 

He had retired with a pension and with other retirement funds and 

Social Security. He passed away. Fuel prices began to go up. She 

needed to do something about the home in which she lived in, that 

she owned. 

What they brought her was a mortgage that started out at about 

$25,000 as a loan. But before things were over, it had compounded 

to over $100,000 in something we call an exploding ARM. Let me 

just say the sadness of those problems went far beyond her just losing her home. The day that the marshals came to take her home— 

her furniture out on the side of the street. One of the other things 

her husband left behind was an old shotgun. Sadly, she used that 

shotgun on herself as well. 

That was simply one indication of how extraordinary those circumstances were and how clear it was to us that the protections 

that everyday American consumers need in the financial services 

arena are not there. 

Ms. VELAZQUEZ. Thank you. 

Mr. SHELTON. There is so much more that needs to be done. 

Ms. VELAZQUEZ. Thank you. 

Mr. Shelton, when OMB Director Mulvaney was here in April, I 

questioned him on his dual role as head of OMB and the CFPB. 

During our exchange, he did nothing to reduce my concern that his 

dual roles present a conflict of interest and potentially undermines 

the independence of the Bureau. 

Do you share my concerns? 

Mr. SHELTON. Absolutely. I know what the job is like at the 

CFPB. I have had an opportunity to spend much time with Rich 

Cordray, our former Director. We have been in and out of that office addressing the many issues of the communities that the 

NAACP serves. It is very clear to me: If one person can handle that 

job well, it is extraordinary. But suggesting a man can run two 

major U.S. agencies at the same time is rather concerning. 

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22 

Ms. VELAZQUEZ. And we all know that Mulvaney’s mission is to 

basically deconstruct the CFPB. They cannot eliminate it. They will 

gut it. 

Mr. SHELTON. Exactly. 

Ms. VELAZQUEZ. And today’s announcement is a clear example of 

that. 

So according to—well, yes, we heard, and I echo the concerns expressed by Mr. Scott regarding the announcement of Mr. Mulvaney 

today. 

Mr. Day, in your testimony, you talk about the Bureau needing 

to provide more regulatory guidance in the form of examples of 

what will be permissible and impermissible business practices. 

Could you explain a situation in which more examples from the 

Bureau will be helpful? 

Mr. DAY. Thank you for the question. 

Yes, the example again concerning TRID when we were involved 

with, we had—and I would say that the department was very forthcoming with assisting the—giving information. But having clarity 

as far as the examples, we have an industry that wants to do the 

right thing. But, it is like getting a speed limit guidance to understand where directions should you follow or a street map. If we had 

more information on this is how the disclosure should read on a 

more complicated situation, be it a construction loan, be it a VA 

loan, an FHA loan, it would be helpful for our members to then 

have that and to be able to share that information with the consumers. So that is all we are really looking for is to have better 

information that we can best serve the consumer as far as the information we share. 

Ms. VELAZQUEZ. So that is not an argument to say that the 

CFPB should be restructured in a way that will be unable to provide the protections to consumers. 

Mr. DAY. Certainly we support the department and what—and 

the Bureau in what they have done relative to consumers, because 

we share that concern. And so we are looking forward to just having that clear guidance which will be necessary for our operations. 

Ms. VELAZQUEZ. I yield back, Mr. Chairman. 

Chairman LUETKEMEYER. The gentlelady yields back. 

With that, we go to Mr. Ross. The gentleman from Florida is recognized for 5 minutes. 

Mr. ROSS. Thank you, Chairman. And I thank the panel for being 

here. 

All of us here have experienced the adage that elections have 

consequences, and to the victor goes the spoils, and usually at the 

detriment of the electorate. And I think this example that we have 

talked about today with a single Director of CFPB is a shining example of that; as has been explained by my colleague Mr. Scott so 

well, that it has been not only the desire of this committee but the 

sense of this House that the CFPB be a commission, that no one 

person, especially with no accountability to Congress or anyone 

else, should be in this position, not only for purposes of a denial 

of due process but also for protection of the consumers. 

And so my concern has been, and why I filed H.R. 5266, which 

creates a commission, a five-member commission, is that we need 

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23 

to have continuity and stability in the decisionmaking process and 

the rule-promulgation process of the CFPB. 

As members of this panel have discussed today, there is a sense 

of uncertainty because of whomever is in power will appoint whomever they want to do whatever is necessary to implement their desires, and then the next Administration who is contrary to that will 

appoint something just differently. And as a result, we have seen 

an investment in capital that would otherwise be used to help the 

commerce of this country to now be tied up in the regulatory compliance arena. 

And so my first question to Mr. Hunt, this pendulum swing, 

what effect does it have on consumers and small businesses from 

a banking perspective? 

Mr. HUNT. Sure. 

It has tremendous effect on everything they do, every financial 

product, every loan they make. What are new rules? What are the 

new regulations every single time? 

I actually am going to agree with Mr. Shelton here for a second. 

He said it is hard for one man to run the agency. One person. He 

is correct. You can’t have one person with all this power under 

them to run this agency, this Bureau. So we concur it should be 

a five-person commission from day one. 

It is not just the rules but examination mentality, enforcement 

mentality. One person gets to get up out of bed every day with all 

that power. 

You are having a great debate right now. There is no debate at 

the Bureau about— 

Mr. ROSS. And can you estimate how much capital is tied up in 

trying to just being able to anticipate the uncertainty of who may 

be next Director of CFPB without any continuity? 

Mr. HUNT. Sure. 

S&P had an estimate that came out of about $30 billion in the 

United States that is tied up in complying with all the different 

rules and regulations. 

Mr. ROSS. That could be used to oil the wheels of commerce and 

allow for innovators to start news businesses and expand and employ more people and grow this economy. 

Now, my concern about one person. Look, I know my limitations, 

and I think everybody knows, to some degree, their limitations. 

And it is why we rely on others to assist us in performing our obligations. And so a commission might have certain expertise in one 

area different from another commissioner, different from another 

commissioner that would allow even a safety net so that those commissioners can oversee that what one may have missed in their expertise would be found in their expertise. 

So my concern is, would not there be a greater sense of accountability and maybe even a better sense of innovation for consumer 

protections if you have a commission of five as opposed to a person 

of one? 

Mr. Shelton— 

Mr. SHELTON. Oh, I would be delighted. Thank you so much for 

giving me the opportunity to respond to that. 

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24 

Our biggest concern is the lack of flexibility. Having five people 

trying to make decisions as we play a game of whack-a-mole that 

we— 

Mr. ROSS. But we do that in the SEC. 

Mr. SHELTON. May I finish? 

Mr. ROSS. We do it in FSOC. We do it in all types of— 

Mr. SHELTON. And we also have the President— 

Mr. ROSS. We do it with the Supreme Court. 

Mr. SHELTON. We have an Attorney General that runs an incredible agency. We have many single people that run Government 

agencies throughout this country that do an excellent job. A commission under these circumstances, in our opinion, would create 

the same kind of problems we had before. 

Mr. ROSS. But it would not abridge the rights of the individuals 

and consumers. 

Mr. SHELTON. —lending products that pop up looking just like 

the last lending product with a different name and expect the commission to respond as flexibly as it needs to be, as quickly to respond to these kinds of problems is exactly the situation we found 

ourselves in prior to the 2008 economic downturn. 

Mr. ROSS. I appreciate that, Mr. Shelton. 

Mr. Hunt, do you want to respond? 

Mr. HUNT. I do. 

The Attorney General was appointed by the President, can be 

fired by the President, fired at will. So that is not an independent 

agency. 

Mr. ROSS. And there’s congressional oversight there too— 

Mr. HUNT. Yes. The CFTC, the NCUA. Remember, the NCUA is 

a commission of three. Just three. So they can operate with three. 

We are looking for five. Maybe we go down to three. I don’t know. 

But also the FDIC, the FCC (Federal Communications Commission), even the Consumer Product Safety Commission, a commission the Bureau was modeled after, a commission. 

Mr. ROSS. Correct. 

I see my time is up. I yield back. 

Chairman LUETKEMEYER. The gentleman yields back. 

With that, we go to the gentleman from New York. 

Mr. Meeks is recognized for 5 minutes. 

Mr. MEEKS. Thank you, Mr. Chairman. 

And I thank you, each and every one of you, for your testimony. 

And I think that, just for the record, what I want to do is to make 

sure—I will start with Mr. Day and just go down the line. 

Do you agree that there is a need for the CFPB? 

Mr. DAY. I do. 

Mr. MEEKS. Mr. Hunt? 

Mr. HUNT. We do indeed. 

Mr. MEEKS. Ms. Prochaska? 

Ms. PROCHASKA. We do. 

Mr. MEEKS. Mr. Shelton? 

Mr. SHELTON. Yes, sir. 

Mr. MEEKS. Mr. Whitaker? 

Mr. WHITAKER. Yes. It doesn’t apply to my community banks, but 

I do think we have a need for it in the country, yes. 

Mr. MEEKS. Right. Because what happened after— 

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Mr. WHITAKER. Just because of my size. Just because of my asset 

size. Someday maybe. 

Mr. MEEKS. And I think I want to subscribe to some of the things 

that Mr. Scott said and the reason why we worked hard and created the CFPB, because there was a need. We didn’t have one, and 

we looked at it. And we saw that there were, in fact, individuals 

who could not deal with and comprehend a lot of the complicated 

issues that come to consumers. Because we would agree that financial services, and at times, I know even here in Washington, we 

have members on the committee who have not been in the business 

of financial services; they don’t understand. So we need somebody 

at least that can give people advice on what is or is not predatory 

because I think we would also agree that certain individuals, individuals—and this is whether you are Democratic or Republican or 

not, you don’t understand a product, and you can be taken advantage of. You can be gouged. And I think Mr. Shelton indicated that 

it seemed to be particularly prevalent with people of color where 

they were gouged. And I think that was clear when we talked 

about the financial crisis that we had and the mortgages. It was 

clear that a lot of the high mortgages were steered toward people 

of color when people had equal credit ratings. 

So, if we can agree, and I think we can all agree, in the history 

of our country, there has been redlining and things of that nature. 

Will everybody agree with that? So there have been some bad actions that have taken place that I don’t think that anybody that 

has a reputable bank or credit union or financial institution, you 

want to get rid of the bad guys so that you can continue to do your 

business. I think the chamber would be in accord with that. 

Ms. PROCHASKA. Absolutely. 

Mr. MEEKS. Is that correct? 

Ms. PROCHASKA. Absolutely. 

Mr. MEEKS. And I know here the argument that we are having 

now, whether or not we are going to—whether it is a single person 

or a commission, I think Mr. Scott was right in that, when it initially left the House—I worked on it—we did talk about a commission at the time so that we did not get into the kinds of headaches 

and the problems that we are having now so that it swings—the 

pendulum swings one way or the other so drastically as the result 

of who is in power, because for me the Consumer Financial Protection Bureau is to protect the American citizen, and it shouldn’t be 

part of the politics. But it is difficult. 

And then I think that the problem that we have and how we are 

in this now, when we look at—well, Mr. Hunt, I think you just said 

in your testimony, we just spent a lot of money complying with this 

new Government agency, complying with the rules. The last thing 

we want to do is spend the same amount of money going 180 degrees in the opposite direction, which I think gives everybody a 

problem, because what you want to do is—really is—we may have 

some arguments whether or not a rule is too stringent or too loose, 

et cetera. But I think that it will benefit everyone if you just know 

what the rule is so that you can comply by the rule. And, so those 

arguments are going to go back and forth. But if we know what the 

rule is, then I think that makes it easier for everybody. And it is 

easier to give the consumer the advice because we know what those 

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26 

rules are. So we got to set those rules. And I think that is what 

we are trying to do other than—because what we see now, rules 

were set. Whether you like commission, whether you not, or an individual person, rules had been set. That is what Mr. Hunt had 

said. And to apply by those rules, you spent a lot of money. And 

now we want to change the rules. 

Mr. HUNT. Please don’t mistake what I meant by that. There are 

some rules that need to be turned 180 degrees but not every 4 

years by a new Administration. 

Mr. MEEKS. Right. But there is going to be some debates on that 

already. You look at sports. There are the rules. When you play the 

games, some people say that shouldn’t be the rule. They want to 

change the rules. But the game—the rules are the rules, and you 

got to abide by the rules, right? 

That is what this thing is all about. And I think that what Mr. 

Shelton was talking about was that we have some rules; let’s abide 

by the rules because if you get rid of the rules, guess who gets 

hurt? What did you say it was? The 330 million Americans that are 

dependent upon the CFPB. If we don’t abide by rules that have certain rules, 330 million American citizens, American consumers, are 

the ones that will get hurt. That is who I think that we should all 

be here to protect. They are our constituents. 

I yield back. 

Chairman LUETKEMEYER. The gentleman’s time has expired. 

With that, we go to the gentleman from North Carolina, Mr. 

Pittenger. He is recognized for 5 minutes. 

Mr. PITTENGER. Thank you, Mr. Chairman. 

And thanks to each of you for your willingness to come and offer 

your advice. 

I would like to say that my concerns related to the CFPB in its 

inception, that they have essentially pushed the envelope on the 

enforcement of regulatory matters, which, in many cases, has done 

more harm than good, in any opinion. Director Mulvaney, I believe, 

has done a very good job in addressing many of these matters, but 

there is a lot of work left to be done. 

In that light, Mr. Hunt, I would like to ask you what can be done 

at this time by regulators to encourage banks to offer short-term 

credit to our constituents? 

Mr. HUNT. Go back and look at the small dollar rule offered by 

the Bureau. First off, as Ms. Larson mentioned earlier, A, the OCC 

has removed its guidance. That is terrific. I am hoping, under Ms. 

McWilliams, the FDIC will do the same thing. We had six of our 

banking institutions offering short-term liquidity needs. Once our 

Federal Government did that through the OCC and FDIC, all six 

exited that business. Now, the OCC is trying to get our banks back 

in because we have a much better product than payday lending trying to help people meet their financial emergency needs. 

The CFPB needs to craft a rule that does not require banks to 

underwrite a $500 loan as they would a $500,000 mortgage. That 

is absurd to do that. 

Allow us the flexibility to work with our customers. The deposit 

advance product, sir, was one of the most favorably rated products 

we had at the bank. Once it was removed from the bank, guess 

what happened? Complaints at the CFPB rose, and the CFPB then 

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27 

got on us for having more complaints. It was a circular firing 

squad. So we need to be in this arena. We need to do so very quickly. 

Mr. PITTENGER. Thank you. 

Mr. Day, I am curious about something that you highlighted in 

your testimony about the Bureau’s third-party service provider bulletin. You mentioned that some small businesses were pushed to 

exit the market because of confusion among the lenders whether 

they met the Bureau’s service provider requirements. 

What exactly were lenders concerned about which led them to 

end these business relationships? 

Mr. DAY. Thank you for the question. 

And, actually, that was part of the confusion in our request for 

improving on as far as guidance because the lenders were given 

just a three-page edict of ‘‘you have to be concerned’’ but not a lot 

of guidance of, what should they be concerned about? 

So the natural recourse of that is to be very restrictive. And in 

doing that, one, as I mentioned earlier, it eliminated consumer 

choice as to being able to select a provider for title insurance because they were no longer on an approved lenders list. It also made 

it difficult for those who were lenders who came up with creating 

standards to the same degree for an entity that was doing 2,000 

loans a month for someone who does two or three loans. And we 

think there is an appropriateness for scalability to be able to say 

this is a provider that I have a notice and comfort with that I 

should be able to allow that provider to service and not have to put 

them under the same constraints and restrictions and all of the expense to meet the guidelines, many of them either merged out or 

just closed their businesses because they could no longer engage in 

that expense. 

Mr. PITTENGER. Very good. Thank you. 

Mr. Hunt, I am concerned about the effects of section 1071, 

which requires HMDA-like reporting for business loans, and what 

that will have on the small business community and the availability of capital. 

What are your thoughts on the timing of future rulemaking mandate about section 1071? And in your view, is it even possible to 

construct a rule that will not impede business lending and stifle 

economic growth? 

Mr. HUNT. Yes, sir. We are very concerned about this rule that 

may be coming down from the Bureau within, I don’t know, the 

next 4 to 5 years. Who knows. 

I think this is a tough one. The Bureau has been working on developing some type of rule for the last 6 years under Director 

Cordray, and they could not reach a favorable conclusion as well. 

A small business loan is completely night-and-day different than 

a mortgage loan. A mortgage loan is actually quite simple. But a 

small business loan is very complex determining the definition of 

a small business, how many people own the small business, and 

the different types of loans as well. We will continue working with 

the Bureau. But I think, sir, at the end of the day, this is going 

to be tricky. What I don’t want to see happen is it to become so 

complex and erroneous that our banks exit the small business area. 

Mr. PITTENGER. Thank you. 

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One last quick question. I would just like to know, do enforcement actions provide companies with enough information to know 

how to operate within the law? How do these companies respond 

to an enforcement action against another company in your industry? Mr. Day. 

Mr. DAY. Yes. I am sorry. Thank you. 

No. Unfortunately, a lot of these enforcement actions are negotiated resolutions. They are also fact-specific. So although they may 

have reached a result, it is hard to glean guidance from that to 

really understand that, how do I conduct my business so as to not 

be subject to a future enforcement action? 

Mr. PITTENGER. Thank you. 

My time is expired. 

Chairman LUETKEMEYER. The gentleman’s time has expired. 

With that, we go to the gentleman from Texas. 

Mr. Green is recognized for 5 minutes. 

Mr. GREEN. Thank you, Mr. Chairman. I thank the Ranking 

Member as well. I welcome the witnesses. 

Mr. Chairman, it appears to me that Mr. Mulvaney has indicated 

that he would like to ensure that the Director answers to the President in the exercise of executive authority, the Director being the 

Director of the CFPB, Consumer Financial Protection Bureau. 

The law currently, as codified, allows the President to remove the 

Director of the CFPB for cause. For cause. And I must tell you that 

I am adamantly opposed to the President who would ban the 

LGBTQ from the military with a tweet. The same President who 

would ban Muslims from this country. The same President who refers to professional athletes as SOBs, meaning their mothers are 

dogs. The same President who found that there was some very fine 

people among those at Charlottesville who were saying Jews will 

not replace us, blood and soil. One can only imagine if one of them 

happens to be a banker how he would treat a loan from a person 

of African ancestry or a Jewish person. 

The same President who says that countries in Africa refers to 

some of them as s-hole countries. The same President who would 

fire the current AG, but for his belief that it would impact his future; has already fired one AG. I am adamantly opposed to this 

President having the ability to fire the Director of the CFPB at 

will. 

This President has already demonstrated that he is including, integrating, if you will, his bigotry into policy. This President, if he 

had complete authority over the CFPB, given the way he is treating the Justice Department, one can only imagine what he would 

require of the CFPB. I am adamantly, absolutely, totally, and completely opposed to this President having that kind of authority to 

interfere with the independence of the CFPB. 

Now, let’s talk about discrimination. Everybody says: I am opposed to discrimination. I don’t think anybody ought to be discriminated against. As a matter of fact, let’s do this quickly, if you think 

that people should be discriminated against in lending, raise your 

hand, please. 

Let the record reflect that no one has raised their hand. 

Now the question becomes, do you believe that discrimination in 

lending exists? If you believe that it exists, raise your hand, please. 

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Only one person on the panel—let the record reflect that of the 

persons on this panel, but one person has raised his or her hand 

indicating a belief that discrimination exists in banking. 

For fear that someone may have misunderstood my question, 

allow me to ask it again politely. Sirs and ma’am, do you believe 

that discrimination exists in lending in banking institutions? If you 

do, would you kindly raise your hand. 

Mr. HUNT. I don’t think it is a yes-or-no question. 

Mr. GREEN. Again, there is only one hand. And we have one person who believes that it is not a yes-or-no question as to whether 

or not discrimination exists in lending in this country today as I 

speak. 

The empirical evidence shows it. Testing has revealed it. It exists, and we know it. And what we do is deny the existence so that 

we don’t have to do anything about it. And for prominent persons 

such as yourselves to, by and through your testimony, indicate that 

you don’t believe that invidious discrimination exists in banking— 

maybe I didn’t use ‘‘invidious.’’ Permit me to ask again. 

Do you believe that invidious, harmful—that is what ‘‘invidious’’ 

means—harmful discrimination exists in lending in the United 

States of America today? If you do, raise your hand. 

Let the record show that Mr. Shelton is the only person who has 

raised his hand. 

Ms. PROCHASKA. I will second Mr. Hunt. I don’t think it is a yesor-no question. 

Mr. GREEN. You don’t think it is a yes-or-no answer. 

We have come a long way. But, my friends, we have a long way 

to go because you control what happens. And if you control what 

happens, you control what happens, and you sincerely believe that 

there is no discrimination in lending, we have come a long way, but 

we have a long way to go. 

I will yield back the balance of my time because there is not 

enough time to go into the behavior that has manifested itself 

today in this testimony. It is a sad day for this House. 

I yield back. 

Chairman LUETKEMEYER. The gentleman’s time has expired. 

With that, we go to the gentleman from Kentucky, Mr. Barr. 

Mr. BARR. Thank you, Mr. Chairman. 

And since my colleague did not offer the opportunity for Mr. 

Hunt to offer an explanation and testimony, I will provide that to 

him right now. 

Mr. HUNT. Thank you very much for that opportunity to respond. 

I will tell you, our banks move Heaven and Earth to make sure 

there is no discrimination, period. We do not support it. Obviously, 

we work with the regulators all the time through examinations, 

through the ECOA, through the Fair Housing Act. On and on 

again, we do not—we totally—condone any type of discrimination 

at our banks. As I mentioned earlier, I hope the only profile we 

look at is the credit profile, that and that alone. 

Mr. BARR. Mr. Whitaker, again, welcome to the committee. And 

as a constituent, I am honored to have you here in front of us. And 

as I said in my introduction of you, I have had the privilege of 

meeting your father. I had the privilege of meeting your late grandfather. And they were pillars of our community. And as I said, we 

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30 

are so grateful for the philanthropy, not just the business and 

banking services that you provided to the consumers of central and 

eastern Kentucky all these many years, protecting consumers by offering them opportunities of credit and giving them the American 

Dream, but also, sir, for the charitable work that you and so many 

in your industry offer to your communities. 

The YMCA that you built in Hamburg and Lexington, the 

Whitaker Bankshot, the scholarships that your institution has provided for years and years and years. So not just protecting consumers but lifting people up. Lifting people up. Thank you to you 

and your industry for helping people. That is the business you are 

in. And I know you have learned humility from your dad and your 

grandfather. I know that about your family. 

But I want you to just put that humility aside for a minute. And 

I want to just confirm what I read in your written testimony was 

that, when your grandfather started that bank in 1978, he started 

it with about $59 million in assets. Is that about right? 

Mr. WHITAKER. That is correct. 

Mr. BARR. And today your bank has grown to $1.7 billion in assets. Is that correct? 

Mr. WHITAKER. That is correct. 

Mr. BARR. So, by my reading, in over about 40 years, you have 

grown about 30 times. Is that about right? 

Mr. WHITAKER. That is correct. 

Mr. BARR. You are still a relatively small institution relative to 

the banking sector. You are a community bank still. But let me just 

ask you this, asking you to set that instinctual humility aside. How 

did you grow? How did your bank grow? 

Mr. WHITAKER. We grew primarily through acquisition and product development and through integrity and our reputation of treating people fairly and honestly. 

Mr. BARR. Yes. And so you picked up customers because you offer 

good service, because you offered affordable products, because you 

provided folks with opportunity that they didn’t have before. 

Let me ask you this: What would happen if one of your competitors didn’t do that? What would happen if one of your competitors 

mistreated or discriminated against a customer? What would happen then? 

Mr. WHITAKER. To your question, Congressman, that is why I always say that community banks like mine, we function without 

regulation because our reputation is our regulation. And if I had 

a competitor that treated people unfairly, my company would grow. 

Mr. BARR. And so you grew by offering good services, by serving 

your customers well, and by not—and by performing with integrity. 

Let me ask you this: Does it help or hurt consumers when banks 

consolidate? When there are fewer community banks, does that 

help or hurt customers? 

Mr. WHITAKER. That hurts our customers because it makes credit 

less accessible, especially in our rural communities where, if you 

close down the only bank in town, it is very challenging for them 

to obtain the credit they need to help recover that economic condition in those communities. 

Mr. BARR. And so that just counsels in favor of exactly what we 

are saying. Reform the CFPB, give you all more flexibility, encournshattuck on FSR297 with DISTILLER

31 

age greater competition and choice, and guess what the result is? 

Better consumer protection. 

Mr. Whitaker, as you know, and you pointed out, the Bureau is 

not subject to the congressional appropriations process. And you 

have supported putting it on the congressional appropriations process. I introduced a bill, H.R. 2553, the Taking Account of Bureaucrats’ Spending Act, which would subject the Bureau to the congressional appropriations process. 

Let me quickly go back to Mr. Hunt. 

Mr. Hunt, you testified that the current Bureau receives direct 

funding from the Federal Reserve at the request of the Director 

capped at 12 percent of the Federal Reserve’s operating expenses. 

And you said, as long as the budget request falls below this cap, 

the budget request cannot be denied. 

Mr. Hunt, does that mean that Acting Director Mulvaney has the 

legal discretion to make a budget request well below its budget 

today? 

Mr. HUNT. He can, and he has. 

Mr. BARR. And so I would like to finish with Mr. Shelton. 

Mr. Shelton, would you or the NAACP have a grievance if Acting 

Director Mulvaney did what is in his legal authority to do, which 

is request a much lower budget? 

Mr. SHELTON. I would say that we would want to make sure that 

the budget that is being requested is one that would actually fulfill 

the task and needs of the— 

Mr. BARR. And so Mr. Shelton— 

Mr. SHELTON. —in the communities we serve. 

Mr. BARR. —this is the whole point. 

Mr. SHELTON. —demonstration— 

Mr. BARR. Why wouldn’t you want Congress to have the authority to appropriate? 

You have no—and your organization has no input into the process. If you have a grievance, we want your grievance to be recognized by your elected Representatives in Congress. 

My time has expired, and I yield back. 

Mr. SHELTON. And, Mr. Chairman, if I might respond to the 

question he left on the table with the time that is not left for him 

at this point. 

We had no problems whatsoever with the previous CFPB Director in getting our points, our concerns, and the issues of our communities heard by that very important agency. And as a result, we 

were able to get much done to prevent the kinds of discrimination 

that led to the economic downturn and the discriminatory impact 

in the African American community and— 

Chairman LUETKEMEYER. We are going to allow a little bit longer 

to go here because we are running out of folks here, and we do 

have some time this afternoon. 

So, Mr. Barr, if you would like another minute or two, I see— 

Mr. SHELTON. Well, we could go for a drink. 

Mr. BARR. Mr. Shelton— 

Chairman LUETKEMEYER. OK. Mr. Barr, you are recognized to 

continue. 

Mr. BARR. Very quickly, Mr. Shelton. 

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So I recognize we have a difference of opinion on some of these 

things. But I do think we have an agreement here. And the agreement is that you would have—the point is you would have a grievance with Acting Director Mulvaney. And you have expressed some 

of those grievances today. 

And my only point is this. Let’s go back to the Founding Fathers, 

the two of us together, and look at what James Madison said. 

James Madison wrote in Federalist No. 58 that the power of the 

purse may, in fact, be regarded as the most complete and effectual 

weapon with which any constitution can arm the immediate representatives of the people for obtaining a redress of every grievance 

and for carrying into effect every just and salutatory measure. And 

so the point is this: I want you, as a citizen of the United States, 

to be able to hold this Congress accountable for this grievance that 

you have. Under the current law, you cannot do that because the 

statute says you have no say in your Government. 

And I yield back. 

Mr. CLAY. Would the gentleman yield before he yields his time? 

Mr. Barr, could I engage you just— 

Chairman LUETKEMEYER. You have 1 minute left, guys. 

Mr. CLAY. Thank you. 

Just to bring your attention. You talk about the power of the 

purse string. You talk about antidiscrimination measures. 

When you look at how much wealth was stripped from the minority communities during the Great Recession—I am from Missouri. And in Missouri, we have a saying: You have to show us. 

Anybody on this panel that would not answer Mr. Green’s question, all I ask for is the data to show me that you are being fair, 

that you are being fair with your customer, that you actually can 

show me by ZIP Code, not by credit score, by ZIP Code, that you 

are lending into these ZIP Codes. And not tell me about credit 

scores. A lot of that is discretionary. And you know it, Mr. Hunt. 

But that is the point I raise to Mr. Barr. 

Look, the numbers tell it all. 

I see our time has expired. 

Chairman LUETKEMEYER. The gentleman’s time has expired. 

With that, we go to Mr. Tipton. He is recognized for the next 5 

minutes. He is from Colorado. You may begin. 

Mr. TIPTON. I thank the panel, and I appreciate you taking the 

time to be able to be here. 

Interesting listening to the conversation because I think there is 

a lot of common ground. Nobody is antiregulation. We just want to 

make sure that we have got sensible regulation that people can actually understand. 

I would like to actually go back. Mr. Hunt, if you speak to this 

just a little bit. My colleague Mr. Ross brought up the ultimate impact ultimately on consumers of overregulation—or regulation that 

can’t really be understood and some of the costs associated with 

that. 

What are the real impacts ultimately on the ultimate consumer? 

Mr. HUNT. I think it is consumer choice, consumer financial 

product choices. There are only so many products that we will be 

able to offer to our consumer. So, when they need—short-term liquidity needs or a mortgage, the rules set forth by the Bureau may 

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be too draconian for us to stay in that business, so they have less 

choices to do it. 

Mr. TIPTON. In some of the cases where you do stay, it is marginal. Does it increase the cost for the consumer? 

Mr. HUNT. Of course, it does. In Economics 101, if you drive the 

cost up in one, somebody has to feel the cost, whether it is higher 

interest rates or fees or whatnot. 

Mr. TIPTON. So not having clarity and regulations, not understanding what the field is actually is hurting access to capital for 

the very people that you would like to be able to help. 

Mr. HUNT. Sir, we can handle bad news. What we don’t like to 

talk about is uncertainty. Just tell us the clear rules of the road, 

and we can adjust. 

Mr. TIPTON. Great. 

Now, when we go back, and we are looking at TRID right now, 

Mr. Day, you had spoken to this a little bit in your testimony. And 

when I looked at your written testimony, you noted that webinars 

were held to try and be able to give some clarity to the proposed 

rule that was coming out, but the Bureau staff reading the disclaimer stated this presentation does not represent legal interpretation, guidance, or advice from the Bureau. Did you say, why are 

we here? 

Mr. DAY. Thank you for the point. It was exactly the—why we 

support the GUIDE Act in saying that it is very important to have 

guidance, but it needs to be guidance we can rely upon. We can’t 

just have a conversation and then have our members go forward 

and then have a contrary result come back because, well, that really wasn’t what we meant. 

And there have been a few examples where we have had these 

kinds of discussions with the Bureau, and they would go so far but 

then not continue it. And I think—I share with Mr. Hunt, we are 

an industry that is very willing to take guidance and to understand 

what the rules are that we need to follow. We just need that level 

of certainty which the GUIDE Act would provide to us in being 

able to not only have the guidance but be able to rely upon it. 

Mr. TIPTON. Great. 

And I think that led, actually, to my question. You have spoken 

to that, the importance of being able to have actual clarity for you. 

And, Mr. Hunt, would you maybe like to be able speak to the importance of what the GUIDE Act, Mr. Duffy’s bill, can actually 

achieve? 

Mr. HUNT. Yes. I think the overarching theme of the GUIDE Act, 

obviously, is to make sure that we know the rules of the road. It 

is one thing to issue a rule, but a rule could be 800 pages long. We 

want to know what the Bureau was thinking at all times. 

I love the debate we are having today. We don’t have that at the 

Bureau today. I don’t think there is anything wrong with a fiveperson commission at 2 p.m. on a Wednesday saying why they 

brought out this rule; here is exactly what we are thinking; and 

here is why we are thinking, to bring more clarity to it. Right now, 

all the person has to do is get up and issue a press release, and 

it is over. 

Ms. PROCHASKA. Mr. Tipton, could I add to that really quickly? 

Mr. TIPTON. You bet. 

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Ms. PROCHASKA. I just wanted to tie something back to Mr. 

Meeks’ point earlier about sports and how there are certain rules 

and regulations. 

What the Bureau has been doing for the past 6 years, 7 years 

now, is calling a strike after the fact and not delineating what the 

actual strike box is and then moving the goalpost. So I am mixing 

metaphors now. But you know what I mean. There hasn’t been 

clear delineation. 

Chairman LUETKEMEYER. They are all sports, so you are OK. 

Ms. PROCHASKA. Yes. Exactly, right? 

So there haven’t been clear delineations, and that is exactly our 

point. If there were clear regs that institutions could follow and 

clear guidance on how to actually implement them, we would think 

that is wonderful, and at least we will know how to meet that. 

The problem is when you do enforcement actions after the fact, 

the disparate impact, the auto cases are a perfect example. Not exactly knowing what the rules of the road are and then, on the 

aftermath, getting slapped on the wrist because of it. 

Mr. TIPTON. Well, I know my colleague Mr. Williams will be 

more than happy to be able to cover some of the auto industry 

rules and regulations as well. 

Ms. PROCHASKA. Happy to chat any time. 

Mr. TIPTON. He is a humble, small businessman. 

But I do appreciate you all taking time to be able to be here, and 

I do appreciate that concept of—I come from the small business 

world. And we had a regular review process in business and a very 

simple philosophy that if it isn’t working, fix it. If you can’t, stop 

doing it. Not a bad policy. And I think we are making some good 

moves and do applaud the efforts by Mr. Duffy with the GUIDE 

Act. 

And, with that, Mr. Chairman, I yield back. 

Chairman LUETKEMEYER. The gentleman yields back. 

And, with that, the gentleman from Texas is also recognized now 

for 5 minutes. Mr. Williams. 

Mr. WILLIAMS. Thank you, Mr. Chairman. 

And thank you for holding today’s hearing. While the regulatory 

relief package recently signed into law by President Trump is a 

major win for all America, work remains particularly concerning to 

CFPB reform. For too long, the CFPB has undertaken a mission to 

impose big Government, one-size-fits-all policies with far-reaching 

implications for businesses and consumers. While I am glad Acting 

Director Mulvaney has begun to take steps to rein in this unaccountable Bureau, the burden falls on Congress to ensure that lasting reform occurs. 

Ms. Prochaska, I gather you are a baseball fan. 

You mentioned it. 

Ms. PROCHASKA. I sure am. I played softball for 10 years. 

Mr. WILLIAMS. First question. Should Pete Rose be in the Hall 

of Fame? 

Ms. PROCHASKA. I am a Padres fan. 

Mr. WILLIAMS. Let me get to more matters at hand. 

Acting Director Mulvaney recently appeared before this committee and offered his perspectives on how to best reform the 

CFPB. Among these reforms, Acting Director Mulvaney identified 

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the CFPB through congressional appropriations as a way to successfully subject the CFPB to congressional oversight. 

So my question to you: Do you feel that subjecting the Bureau 

to true congressional oversight would impede the Bureau’s ability 

to successfully carry out statutory consumer protection obligations? 

Ms. PROCHASKA. Absolutely not. I think that Mr. Barr made a 

very good point earlier. Earlier this year, Mr. Mulvaney actually 

did request zero dollars from the Fed. He indicated that, because 

he already had the money allocated in his budget, he was able to 

keep operations going. Theoretically, under law, he doesn’t have to 

do that. He could ask for zero yet again and yet again, and that 

can go on for 5 years. 

So, although he is going to be asking for more money in the future, the fact that we don’t have congressional oversight—and I 

will reference again a poll that we conducted—66 percent of Americans said that actual checks and balances of appropriations are 

what we need to have over our Governmental agencies. Most people, when I go back home to California, don’t understand what is 

going on in the regulatory State, and that is something that we 

need to have some purview over. 

Mr. WILLIAMS. Thank you. 

Mr. Hunt, one of the most concerning past actions of CFPB was 

their process for creating and implementing rulemakings. Past 

rulemakings have lacked robust industry input, adherence to formal rulemaking processes, and a flexible implementation process 

following the issuance of a final rule. 

So, without clear, predictable regulations, the Bureau cannot 

issue proper guidance to ensure compliance across countless industries. The CFPB’s practice of issuing rules and worrying about implementation later has caused damaging effects for the consumer 

and businesses alike. 

So how did the CFPB fall short in previous rulemakings? And 

what must be done to prevent the shortcomings in the future? 

Mr. HUNT. Yes. If I could point to one specific, I think it would 

be the TILA-RESPA implementation. We were not opposed to the 

rule. We understood the rule. But they basically want us to implement it overnight. And they did not understand what takes place 

in the banking industry. I would have to guess at the Bureau probably less than 10 percent of their 1,600 employees have real-world 

banking experience. 

Now, I am not saying the Bureau should be 90 percent. They 

wanted to create a different type of bureau than other regulators, 

and they have accomplished that. But I do believe you need to have 

real-world experience both from the consumer protection side and 

on the banking side within the Bureau itself. 

Mr. WILLIAMS. OK. Thank you. 

Mr. Whitaker, as a small business owner myself for over 47 

years, I know all too well that banks like yours are the backbone 

of Main Street America and continue to struggle under the weight 

of an overly burdensome regulatory environment. One of the main 

ways that we can fix this is through reforms offered in my bill, the 

Community Financial Institution Exemption Act, that would 

strengthen already existing language within Dodd-Frank by exempting credit unions and community banks under $50 billion in 

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consolidated assets from CFPB’s rulemakings unless the Bureau 

and other Federal regulators have cause to include them. 

So would this kind of reform ease the regulatory burden at institutions like yours? 

Mr. WHITAKER. It absolutely would. I will say that with my current regulators, we have a great working relationship. And I would 

like to see that continued, and that bill would certainly help accomplish that. 

Mr. WILLIAMS. Thank you. 

Mr. Day, thank you for being here on behalf of the land title professionals, many of whom I represent back home in Texas. And 

these small businesses are critical to communities across the Nation. And the lack of clarity from the CFPB has left them with too 

many unanswered questions. 

So, briefly, do you feel that enforcement actions of the CFPB provide companies with enough information to know how to operate 

within the law? And how do companies respond to an enforcement 

action against another company in your industry? 

Mr. DAY. Thank you for the question. 

No, unfortunately, it is difficult to glean from the enforcement 

actions how they would like to proceed, and so that is why our 

focus on the—getting improved guidance. And, in fact, you could 

have an improving factor as far as the consumers in having better 

guidance because we get the rules of the road. Our small businesses can follow what are the appropriate actions, and then the 

CFPB would have less enforcement actions because it would not be 

necessary. The guidelines would be clear, and we could follow it, 

and we can move forward and protect the consumer. 

Mr. WILLIAMS. Thank you. 

I yield back my time. 

Chairman LUETKEMEYER. The gentleman’s time has expired. 

With that, we go to Mr. Kustoff. The gentleman from Tennessee 

is recognized for 5 minutes. 

Mr. KUSTOFF. Thank you, Mr. Chairman. 

I do want to thank all the witnesses for appearing this afternoon. 

Ms. Prochaska, the years before the Bureau was established, 

prudential regulators collected and helped to resolve complaints 

but refrained from publishing comments as many of them contained unsubstantiated and false claims. 

With the enactment of Dodd-Frank, the Bureau was mandated to 

collect complaints. Despite this—I don’t think anywhere in the statute does it even allude to making these comments public, public 

comments. The Bureau did so regardless of whether there was a 

statutory mandate. In fact, there wasn’t. And the fact that many 

times, sometimes the complaints, frankly, they are unverified. They 

provide questionable—in my opinion, questionable utility to consumers and certainly could compromise consumer privacy. 

With all that, do you think it is appropriate to publish these comments or these complaints even though they could be a serious 

threat to consumer privacy and there could be a likelihood of misinterpretation? Your response. 

Ms. PROCHASKA. Congressman Kustoff, thank you for that very 

important question. I can’t tell you how many comment letters I 

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have written to the Bureau about this exact topic. So very nice to 

speak about it. 

Nowhere in the statute does it say that it needs to be public. And 

as you mentioned, the OCC, the Fed, the FTC, the FCC, all of the 

alphabet soup, keep those complaints private for the exact reasons 

that you just mentioned, one being privacy and, two, that it is 

unverified. 

Another issue is that it is not normalized. It is no surprise that 

the four largest banks generally get the majority of the complaints 

because they have the largest consumer base. 

A couple years ago, the CFPB was producing monthly reports 

that were saying the 10 most complained about companies, while 

in reality, of course, it is the 10 largest companies, and it was the 

same people every month. I don’t really think that is going to be 

valuable information for consumers. 

Another point I would like to make as well is in the CFPB’s annual reports on complaints, 75 percent are closed with explanation. 

So that could be inquiries. So that means that there was theoretically nothing wrong that the institution did. I have spent hours 

reading that complaint portal. I am probably the only person who 

does. And, oftentimes there are complaints about bank hours or 

that—there are just so many different things that it wasn’t an actual issue that arose with the bank. 

So I think in the interest of keeping consumer information private, we should have the Bureau just for market monitoring purposes at the agency for the time being. 

Mr. KUSTOFF. I do appreciate the response. 

Earlier, I introduced legislation, and the title of it is Protecting 

Consumers from Frivolous Claims Act. And it seeks to prevent the 

CFPB from making public these consumer complaints. 

Do you have—and I don’t know if you are familiar with the proposed bill. Do you have any opinion about this bill and whether it 

would, in fact, lead to the prevention of those complaints? 

Ms. PROCHASKA. I am not familiar with the exact text. But as 

you summarized it, it seems like something we would be definitely 

supportive of. I think it has been a large concern of industry that 

it is actually misleading customers by thinking that, if you get a 

complaint, which it may actually be an inquiry that you are a bad 

institution when, in reality, that is definitely not the case. 

Mr. KUSTOFF. Thank you very much. 

Mr. Day, again, I appreciate you being here as well. I have listened to all of your comments, your statements. And most of you, 

if not all of you, talked about the complexity of having a single inspector general and multiple inspector generals. 

The Bureau and the Federal Reserve, of course, share an inspector general. He or she is tasked with conducting the audits and investigations relating to the program and the operations of each of 

the agencies. Your opinion, given the size, the scope, the complexity 

of the Bureau and the Federal Reserve, do you think—is it hard 

for a single inspector general to have the bandwidth, if you will, 

to identify problems within both agencies? Your response. 

Mr. DAY. Thank you for the question. 

I certainly support Acting Director Mulvaney’s request that there 

be an independent inspector general for the department. It is a Bunshattuck on FSR297 with DISTILLER

38 

reau that is quite diverse with a lot of activities and feel it would 

be very appropriate to have an independent inspector general in 

supporting that effort. 

Mr. KUSTOFF. Thank you, Mr. Day. 

And I have got 2 seconds. I yield back the balance of my time. 

Chairman LUETKEMEYER. The gentleman’s time has expired at 

this moment. We thank him for that. 

Ms. Tenney is now recognized, the gentlelady from New York, for 

5 minutes. 

Ms. TENNEY. Thank you, Mr. Chairman. I appreciate it. And 

thank you so much to all of you for being witnesses here today. It 

has been a little bit more entertaining than most Financial Services Committee meetings. 

We have gotten into some sporting events, and now we are going 

to talk a little bit about constitutional issues, which I think is one 

of the most important issues in dealing with the new bureau which 

has a new name, but I will still refer to it as CFPB for simplification. And I am just going to follow a little bit on what my colleague, Mr. Barr from Kentucky, said. And I know I discussed this 

with Mr. Mulvaney when he was here, and this is why I think the 

constitutional issue is really important. 

And I like to look at another section of James Madison’s Federalist Papers, which is Federalist No. 10 that states, ‘‘Enlightened 

Statesmen will not always be at the helm.’’ And that is the very 

reason we need to have checks and balances like we do with every 

other agency and why we have checks and balances in our Government. If we do have an unenlightened person, and God forbid we 

ever have that happen, never happened in the history of the republic, but we have an opportunity to vote that person out or we have 

an opportunity to deal with a funding issue. And so I really appreciate your comments. 

I come from a small business community and also an owner of 

a small business, so I know how crushing regulatory burdens can 

really hurt a small business and make it unfair for us to compete 

against larger entities, and also how unfair it is when often our 

competitors who are larger are getting subsidies from Government, 

which makes it even harder. But I wanted to ask Mr. Day, because 

I was really compelled by some of the testimony you had. 

First of all, I am a bank attorney. I used to represent a number 

of small business. I was examining counsel until January 3, 2017, 

for a small title insurance agency in New York State, which, is an 

attorney State versus a title State, so we are still trying to have 

dominion over title insurance as lawyers in New York. 

But some of the issues that I am just shocked to find out how 

big the tentacles are with the Bureau in being able to regulate an 

industry, such as title insurance, where so many of your small 

businesses are really trying to—they are exceedingly careful in trying to make sure their loans are—they are the ones insuring the 

actual title, which is really important in New York, our property 

rights are important. 

So can you tell me just a couple of things or maybe an example 

of how the rules have made it difficult for your industry to function? And you can choose a title or attorney State, whichever you— 

nshattuck on FSR297 with DISTILLER

39 

Mr. DAY. Well, we will stay with New York and certainly the 

practices there. Thank you for the question and the opportunity. I 

believe where the difficulty is with the level of uncertainty is that 

as businesses look to try to align themselves with other professionals. Is this an appropriate structure? Is this a new venture that 

will be supportive of regulators? When business has looked to get 

into a new area, how much capital do they have to invest to make 

sure they are in full compliance? Can there be a scalability as I 

startup or do I have to be, as you mention, competing with the big 

boys and have to come in and have a SOC 2 audit and be at that 

level to just be able to be approved by a lender? 

So, yes, in our industry, the title end does not fall into it, but 

the settlement practices do. And so with the confusion with our 

lender partners, it then trickles down to confusion as to our title 

entities who are just trying to proceed with their settlements and 

not truly understanding. So that is really a level of difficulty as far 

as—how far do I have to go? Can I go and invest here? Will I be 

subject to constraints or controls or possibly enforcement and not 

have any ability to get guidance in that regard? 

Ms. TENNEY. And I appreciate your comments and your testimony where you are distinguishing between the Administrative 

Procedures Act in the laws versus guidance and the failure on the 

part of the Bureau to really give good guidance and tutorials and 

the ability of these businesses to comply. So I do appreciate that. 

And also, I do believe that the old RESPA form, the Real Estate 

Settlement Procedures Act, I had a friend that worked in Albany 

and said they are all in a storage house somewhere in Albany and 

no one has ever looked at them again. But that is the essence of 

overregulation is we regulate to the point where we are preventing 

the most needy, and some people who maybe aren’t being treated 

fairly, for having the opportunity to have a loan, to buy a house. 

And as Mr. Williams talked about, to be able to buy a car, which 

is really important. 

So I am going to be running out of my time, but I thank you very 

much all of you. This has been really informative. And I am just 

going to say go Yankees, and I hope you all have a great day. 

Mr. DAY. Thank you. 

Chairman LUETKEMEYER. Keeping up with our baseball theme. 

Thank you for your yielding back. 

And with that, we go to the gentleman from Michigan, Mr. Trott. 

He is recognized for 5 minutes. 

Mr. TROTT. I want to thank the Chairman for organizing this 

most interesting hearing today. And for the record, I don’t believe 

Pete Rose belongs in the hall of fame. 

So I apologize I didn’t hear the opening statements. We have the 

CEO from Ford Motor in today, so I was listening to him. 

But let me start with you, Mr. Shelton. You said you spent some 

time with Director Cordray. And Mr. Scott in his 5 minutes said 

that the CFPB has created a political fire pit, and I would agree 

with him. And I think it is in part because it is not on budget and 

it is not accountable. But I would also suggest that Director 

Cordray really had a political—who is now running for Governor of 

Ohio, really had a political agenda that he pursued while he was 

the director. 

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Did you ever have occasion to read some of his press releases 

that he issued after he entered into a settlement with one of the 

targets of his investigation? 

Mr. SHELTON. Yes, sir. 

Mr. TROTT. So isn’t it interesting that in the settlements, if you 

look at those, almost always the defendant never admitted any 

guilt or responsibility or culpability, but all of the press releases 

made it sound like the CFPB had brought this terrible big, bad 

company to justice and the consumers can be safe once again? 

Don’t you think that contributed to the political fire pit problem? 

Mr. SHELTON. I am not convinced I agree with your characterization of those press releases, though I appreciate your right to have 

the positions you do. Let me say that my experiences were quite 

different. 

Mr. TROTT. OK. I appreciate your comment, and we will agree to 

disagree. 

Mr. Day, let me go to you. And so one of the arguments proffered 

by those who oppose any attempt to hold the CFPB accountable is 

that it will lead to rampant pillaging and abuse of consumers. So 

let me give you a hypothetical. You have been at Fidelity and Chicago before that for a few years, so you would be able to answer 

this perhaps better than anyone. 

Let’s assume that one of your members entered into an MSA 

with a real estate broker that clearly violated and they knowingly 

violated RESPA. If the CFPB was now on budget and accountable, 

do you think that member would have nothing to worry about? 

Mr. DAY. Thank you for the question. No, absolutely not. It is— 

I think as several of the witnesses here have talked today, the intent is still for the protection of the consumer and the focusing. 

And our industry is very much focused on that. And the bad practices are the ones that aren’t actually being controlled through this. 

It is—the good practitioners who are being forced out, the bad practitioners may still be engaged in it. I don’t think the accountability 

or—in any way creates a limitation that still would restrict the Bureau from enforcing the law. 

Mr. TROTT. How many lawyers do you have at Fidelity who are 

trying to make sure your company does things right? 

Mr. DAY. We have a multitude of lawyers that are— 

Mr. TROTT. Thirty, 30 lawyers, 50 lawyers? 

Mr. DAY. Probably closer to 50. 

Mr. TROTT. Yes. And those lawyers are not only worried about 

the CFPB in compliance with their ambiguous directives, but they 

are worried about State licensing authorities. They are worried 

about litigation. They are worried about whistleblowers. They are 

worried about class action lawsuits. They are worried about shareholder liability. They are worried about State attorney general, 

other Federal bodies. Isn’t that a fair statement? There are an 

awful lot of people, aside from the CFPB, that you are worried 

about making sure you do things right with? 

Mr. DAY. And I wouldn’t—I don’t know if I categorize this as 

worried about, but I would say that, yes, we have a multitude of 

regulators and watchdogs through either private actions or public 

regulators that our industry is subject to and regulated by in its 

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41 

rules and regulations, which we have been living up to through our 

careers. 

Mr. TROTT. So the Democrats want this discussion to be about 

the Republicans’ desire to return to the wild frontier where consumers can be abused and discriminated against, but your answer—I have a prop; I am glad I went toward the end here, Mr. 

Chairman. 

This is what this discussion is about. This is the oversight of the 

financial services industry. Every one of those little dots is a regulatory body or rule that they have to worry about. 

Mr. Hunt, I don’t know how your members are in business. How 

can you possibly comply with this kind of regulatory oversight? 

Mr. HUNT. I will tell you that the fastest growing department 

within a bank is in compliance. If you are a lawyer— 

Mr. TROTT. And that doesn’t generate any money, does it? 

Mr. HUNT. No, sir, it doesn’t. If you are a lawyer in this country, 

you are going to be wealthy and fully employed for many years. 

Mr. TROTT. Let’s go back in the remaining seconds here, Mr. 

Day. Let’s talk about TRID and the 1,900-page rule. So that lack 

of ambiguity and direction, no advisory opinion, no guidance whatsoever, what impact did that have on your members, on mortgage 

companies, and on consumers with respect to real estate closings 

that were either delayed or having to be postponed due to the lack 

of clarity relating to a 1,900-page rule? 

Mr. DAY. Well initially, it delayed the closing process significantly. And as Mr. Hunt noted, that a lot of it was put forward 

without really a consideration of what all of the pieces are that 

needed to be put into play as to allow for its implementation. Costs 

from our members, all of new forms, new procedures, understanding with the disclosures, the fear of getting it right, and not 

having a real clarity or guidance as to how to go forward. So it was 

a major disruption, but our industry stepped forward, our association and the trade association led the charge and I think helped 

the industry overall to comply with it and move forward. 

Mr. TROTT. I appreciate it. I am out of time. 

But I will close, Mr. Chairman, I would have raised my hand 

when Mr. Green was asking about whether there is discrimination 

today. Clearly, there is discrimination, unfortunately, in all aspects 

of our society, but the solution that Mr. Green was headed toward 

was to have a member of the central State Federal Government be 

the last decisionmaker on any and all loans, because that is the 

only way he could solve it through a Federal bureaucracy. 

Thank you for your time today. I yield back. 

Chairman LUETKEMEYER. The gentleman’s time has expired. 

And with that, we have exhausted all of our witnesses in more 

ways than one. 

We also thank you, our witnesses, today for being here. It has 

been a very lively and entertaining and informative afternoon, and 

we appreciate your participation. 

Just a couple closing thoughts on my part here. Throughout the 

hearing, I think we have heard a theme of less choice of services, 

more costly services is what has happened as a result of some of 

CFPB’s actions. I think we all know, and we have had testimony 

before, with regards to the numbers of banks and credit unions are 

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42 

going down one a day. I have even got a county or two in my State 

that no longer have any banks or credit unions headquartered in 

that county whatsoever, so all we are left with is so much as a facility or two. 

So what has to happen? Even the director himself was here and 

testified in committee recently and had four suggestions on how to 

improve it. He himself made the comment, he said, I am one of the 

most powerful guys in D.C., and I shouldn’t be. And so we need to 

take look at this long and hard as to how we continue to work with 

the CFPB, what we need to be doing. 

Mr. Barr, I think it was, and Ms. Tenney both made some good 

comments with regards to what the Founders believed. They believed in checks and balances. That is the nature of our system 

here. You have got the three branches of Government, and each 

one of them should be a check and balance, and the CFPB should 

fall under that same situation, in my judgment. I appreciate your 

comments to that effect. 

And it is kind of interesting because, imagine, if you would, the 

Federal Reserve or the FDIC with no commission over it. What 

would happen if they had a single—if the Federal Reserve chairman would be the president of the Federal Reserve and he had nobody to answer to, or the chairman of the FDIC would have nobody 

to answer to? That is on the banking side. Would you like to have 

that? I think not. So why would we allow the director of the CFPB 

to be that independent? I struggle with that. 

And I think Mr. Hunt made some great points with regards to 

the amount of uncertainty that is caused by this pendulum effect 

that goes back and forth, back and forth. And Mr. Whitaker made 

a comment to that effect as well that, how do you prepare for that? 

How do you as somebody in business sit there and try to invest either in services or in people to try and figure out how you are going 

to position yourself to be able to, with a crystal ball on your desk, 

figure out what is the next rule and regulation coming down from 

above that you are going to have to figure out? 

This is where we are with this particular agency, and I think we 

have got to look at ways to find—to allow the pendulum to swing 

back where it needs to be where you protect the consumers, but 

you don’t run the businesses out, provide the services. And so we 

want to find that sweet spot, and we appreciate what you have 

done today as witnesses to give us your information. It has been 

very helpful. 

The Chair notes that some Members may have additional questions for this panel, 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 these witnesses and to place their 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. 

With that, the hearing is adjourned. 

[Whereupon, at 4:15 p.m., the subcommittee was adjourned.] 

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(43) 

A P P E N D I X 

June 6, 2018 

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House Committee on Financial Services 

Subcommittee on financial Institutions 

Tuesday, June 6, 2018 

2:00p.m. 

Written Testimony Submitted By Steven G. Day NTP, President 

AMERICAN 

LAND TITLE 

ASSOCIATION 

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TESTIMONY OF STEVEN G. DAY, NTP 

PRESIDENT, AMERICAN LAND TITLE ASSOCIATION 

ON 

IMPROVING TRANSPARENCY AND ACCOUNTABILITY AT THE BUREAU OF 

CONSUMER FINANCIAL PROTECTION 

BEFORE 

THE HOUSE FINANCIAL SERVICES COMMITTEE 

SUBCOMMITTEE ON FINANCIAL INSTITUTIONS AND CONSUMER CREDIT 

WEDNESDAY, JUNE 6, 2018 

WASHINGTON, D.C. 

Chairman Luetkemeyer, Ranking Member Clay and members of the subcommittee, my 

name is Steven G. Day NTP. I am President of National Agency Operations for Fidelity National 

Title Group, a subsidiary of Fidelity National Financial. 

I also have the privilege of serving as the President of the American land Title 

Association (ALTA). ALTA is the national trade association representing more than 6,400 title 

insurance companies, title and settlement agents, independent abstracters, title searchers, and 

real estate attorneys. I am here today testifying on behalf of ALTA. 

I have been in the title insurance and settlement business for nearly 37 years. I started 

my career as an attorney and title agent in a small town in Rhode Island. From there, I became 

a state underwriting counsel for Chicago Title in Providence, R.I. Over the years, I've held a 

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variety of positions, including state manager assisting our agents build their business in New 

York and New Jersey, and division manager overseeing our direct, agency, and commercial 

operations in the Northeast and Mid-Atlantic. In February, I assumed the role of president of 

agency operations. 

Through these experiences, I have gained unique insight into how the small and micro 

businesses that make up the bulk of the title and settlement industry make decisions to help 

them not only comply with the law but also grow their company. 

The title and settlement industry is primarily made up of small businesses that serve 

their local communities and operate in every county in the United States. The average title 

agency has fewer than five employees and revenue between $250,000 and $500,000 annually. 

Even with our large nationwide footprint, the bulk of Fidelity's business comes from these 

small- and mid-sized title agencies. 

The Best Way to Improve Transparency at the Bureau is to Ensure it Provides Reliable 

Guidance to Businesses 

As in every industry, change is happening in the title and settlement industry at an everincreasing and unpredictable pace. As I travel the country talking with our small business 

members, I hear how changes in regulations and waves of innovation are threatening to disrupt 

businesses. Our members feel like they are in a holding pattern- testing the winds and biding 

their time to make just the right move. 

Whether in business or in life, I've learned a simple truth, more information is never a 

bad thing when it comes to decision making. This is especially true when it comes to making 

decisions that can cost your business millions of dollars. 

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In his appearance before the committee in April, Acting Bureau Director Mick Mulvaney 

made four recommendations to Congress to improve accountability and transparency for the 

agency. These include: 

1. "Fund the Bureau through Congressional appropriations; 

2. Require legislative approval of major Bureau rules; 

3. Ensure that the Director answers to the President in the exercise of executive 

authority; and 

4. Create an independent Inspector General for the Bureau." 

These proposals are designed to provide Congress and the President with stronger 

oversight over the Bureau. These may be beneficial steps, but what would help the most is a 

Bureau that consistently provides the businesses it regulates with written, reliable guidance on 

how to comply with the law and protect consumers in real-world scenarios. 

This is why the American Land Title Association believes the most important step 

Congress can take to improve the Bureau of Consumer Financial Protection is to pass H.R. 5534, 

the Give Useful Information to Define Effective Compliance (GUIDE Compliance) Act. 

Introduced by Reps. Sean Duffy (R-WI) and Ed Perlmutter (D-CO), the bill creates a process for 

the Bureau to issue formal and reliable written guidance on how to comply with its written 

regulations. In other words, the bill requires the Bureau to provide businesses with more 

information and examples of how to comply with regulations. Additionally, the bill requires the 

creation of a civil money penalty matrix similar to those used by all other federal financial 

regulators. 

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Consumers benefit when regulators discourage bad acts through enforcement while 

also encouraging good behavior through guidance. Today, the Bureau takes its enforcement 

role seriously; we encourage the Bureau to take its ability to promote good practices seriously, 

too. 

In May, Acting Director Mulvaney spoke to our members at our ALTA Advocacy Summit. 

He mentioned his philosophy that the Bureau should tell companies the rules of the road and 

provide concrete guidance and examples prior to enforcement. We believe this should not just 

be Acting Director Mulvaney's philosophy but rather the approach of the Bureau itself. 

Congress can help ensure this through passage of the GUIDE Compliance Act. 

What is Guidance? 

According to the Government Accountability Office, the purpose of regulatory guidance 

is to, "clarify statutes or regulatory text and to inform the public about complex policy 

implementation topics'." Under the Administrative Procedures Act2, guidance differs from a 

rule. Rules are defined as "an agency statement of general or particular applicability and future 

effect designed to implement, interpret, or prescribe law or policy." Such rules must go through 

a public, notice of proposed rulemaking (NPRM). 

Guidance is considered a class of interpretive statements of policy. These statements 

advise the public of an agency's plans for exercising its authority. They also inform the public 

about how to comply with applicable law and regulations. 

1 https:ljwww.gao.gov/assets/670/669688.pdf 

2 5 USC §500 et. seq. 

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Guidance highlights how laws and regulations apply in real-life scenarios. It provides 

examples and explanations that help people and businesses make more informed decisions on 

how to comply with law in real life. 

Guidance can come in the form of advisory opinions, bulletins, no-action letters, 

statements of policy and answers to frequently asked questions. They can apply widely and 

guide an entire industry. An example of this type of guidance would be bulletins published by 

the Office of the Comptroller of Currency. Guidance can also be narrow and specific to a single 

set of circumstances and apply only to the requesting person. An example of this would be 

private letter rulings from the Internal Revenue Service. 

The GUIDE Compliance Act encourages the Bureau to publish more of these 

interpretative examples. Unlike with the Bureau's Bulletin on Indirect Auto Lending, guidance 

developed under the GUIDE Compliance Act is designed to interpret requirements of a 

regulation that was adopted as part of a formal Administrative Procedures Act (APA) process. 

Guidance Provides Businesses and Regulators with Valuable Information to Make Better 

Decisions 

It is in providing businesses with more information to use when making decisions that 

guidance proves its value. Clear, reliable guidance and examples are important for two reasons. 

First, clear reliable guidance makes it easier for businesses to comply with regulations. As 

opposed to regulations that tend to be written in more universal language, the best guidance 

provides businesses with clear examples of acceptable practices that provide parallels to the 

decisions businesses make every day. This type of guidance gives businesses a solid basis for 

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making decisions and investments that they know will not harm consumers and not lead to 

potential enforcement actions and fines. 

Second, guidance improves the effectiveness of regulators' supervision and 

enforcement processes. It provides examiners with more reference points for judging business 

practices for compliance purposes. For an agency like the Bureau, this can be invaluable 

because of the myriad industries and business products its examiners oversee. 

Guidance also provides common language for businesses and examiners to discuss their 

compliance practices and how they make decisions. Effective supervision programs often focus 

on the way businesses make decisions and the types of information they rely upon along with 

the potential outcomes of those decisions. Guidance provides a stronger basis for those 

conversations among businesses, consumers and regulators than just regulation alone. The 

result would be a supervision program with lower examination costs and shorter examination 

timeframes (allowing examiners to visit more companies), ideally leading to fewer enforcement 

actions and improved consumer protections. 

The GUIDE Compliance Act 

The purpose of the bipartisan GUIDE Compliance Act is to streamline and improve the 

Bureau's process for supporting implementation and compliance efforts for new and existing 

regulations. The legislation requires the Bureau to: 

1. Issue guidance that is necessary or appropriate to carry out the purpose of the law it is 

responsible for, including facilitating compliance; 

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2. Publish in the Federal Register within one year of enactment the definitions, criteria, 

timelines and process for issuing each type of guidance the Bureau shall provide, with a 

final rule required within 18 months of enactment; 

3. Allow industry to rely on guidance in good faith; 

4. Establish a process and timeframes for requests for guidance, including time limits to 

provide answers in response to requests for guidance; 

5. Create a process for amending or revoking guidance, including a process for public 

notice and comment; 

6. Develop guidelines for determining the size of any civil money penalties. 

This simple five-page bill will help improve the way the Bureau works with the title and 

settlement industries. 

The Title and Settlement Industry' Experience with CFPB 

ALTA members provide two primary services to consumers and financial institutions. 

First, the industry prepares and writes title insurance policies protecting both purchasers and 

mortgagees of real property. This service falls outside the Bureau's regulatory and supervisory 

authority as it is part of the business of insurance. 

Second, our members act as third-party settlement agents in real estate and mortgage 

transactions. This service is within the Bureau's authority and is the subject of the Real Estate 

Settlement Procedures Act (RESPA). 

While the Bureau does not directly supervise AlTA members, it is important to 

remember that supervision and regulatory drafting are two sides of the same coin. This is 

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particularly apparent given the complexity of the Bureau's TllA-RESPA Integrated Disclosure 

(TRIO) or Know Before You Owe (KBYO) rule. 

The Bureau Provided Some Guidance on TRIO But More Would Have Made Implementation 

Easier 

At 1,888 pages, the Bureau's final TRIO rule included a lot of detail and discrete 

instructions for completing the new consumer mortgage disclosures. Along with the regulatory 

text, the Bureau produced more than 100 official staff interpretations. These staff 

interpretations provided helpful guidance about how to correctly complete the new disclosures 

in different transactions scenarios. 

The problem was that despite that forethought while drafting the regulation, there were 

still hundreds of questions that arose only after the industry began to develop systems to 

implement the regulation. 

The Bureau provided our industry with 21 months to develop processes and technology 

to implement TRIO. This was extremely helpful because of the time it took to update software 

needed to produce new mortgage documents. Unfortunately, during this 21 months the Bureau 

missed opportunities to provide meaningful guidance that would have made implementation 

much easier. 

Prior to TRIO's effective date, the Bureau hosted five webinars to review and respond to 

frequently asked questions. The webinars were intended to provide information to help 

businesses make compliance decisions. However, the webinars didn't achieve their objective 

because of the way they were designed. 

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Each webinar began with Bureau staff reading a disclaimer that said, "This presentation 

does not represent legal interpretation, guidance, or advice of the Bureau. While efforts have 

been made to ensure accuracy, this presentation is not a substitute for the rule. Only the rule 

and its Official interpretations can provide complete and definitive information regarding 

requirements. This document does not bind the Bureau and does not create any rights, 

benefits, or defenses, substantive or procedural, that are enforceable by any party in any 

manner." This disclaimer made it impossible for industry to rely on the information provided in 

the webinars. They essentially said, "Trust us, but don't rely on us." 

While webinars are a helpful way of disseminating information to a large group at one 

time, the Bureau refused to provide written public answers to the questions they addressed 

during the webinars. This decision is difficult to understand because Bureau staff produced 

written answers that they read during the webinars. 

Our customers rely on title professionals to lead and serve as the authority in real estate 

transactions. During implementation and every day since, our members get questions from rea I 

estate agents, mortgage lenders and attorneys about compliance with the TRID disclosures. 

The failure to provide answers in writing made the webinars extremely difficult for the 

industry to use. Title professionals had to find a way around these limitations. Publicly available 

written guidance is ideal because it makes it easy for title professionals to copy and paste their 

source of information when answering customer questions. It also allows them to provide 

others with a citation to the guidance. 

Instead of providing a simple answer, title professionals had to send links to the 

recording of the webinar. They then provided instructions for the listener to fast forward to 

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specific time frames in the recording to hear the answer. This method was time consuming but 

it also intruded more opportunity for mistakes as people needed to get both the time stamps 

and transcript of the recording correct before discussing a topic. 

Guidance is most effective when it is in written format and published on an agency's 

website. This is a central requirement of the GUIDE Compliance Act. 

Another area where more guidance would have been helpful in TRIO is with sample 

completed disclosure forms for different transactions. Over the course of the 20-plus months of 

implementation, the Bureau wound up producing 11 sample completed disclosures. These 

included samples of a Loan Estimate and Closing Disclosure for a simple fixed-rate purchase and 

refinance mortgage loan, along with samples showing closing costs increasing in excess of the 

good-faith requirement, the issuance of a simultaneous second mortgage loan and disclosure of 

funds paid outside of the closing. 

These 11 samples were hugely helpful for the title and mortgage industries. They 

especially helped the software vendors, who used the samples to test their systems through 

the upgrade process. Mock-ups also are valuable training tools for understanding compliance, 

especially given the various permutations of real estate transactions across the country. 

The problem was not the quality of the samples, but rather the volume. Prior to the final 

rule being implemented and during the implementation period, ALTA and the lending trade 

associations asked for model forms showing both simple transactions (like those produced by 

the Bureau) and more complex ones involving construction loans, loans with specific fee limits 

and requirements like Federal Housing Administration and Veterans Administration loans, and 

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loans on properties that required unique fees, such as homeowners association transfer fees 

and flood zone determination fees. 

The Bureau declined to provide these mock-ups. The rationale conveyed to us was that 

the Bureau wanted to be flexible and not limit the industry by suggesting there was only one 

way to complete the disclosures. The problem with this flexibility is that the lack of examples 

only made it harder to make decisions. The GUIDE Compliance Act would require the Bureau to 

have a standard process for assessing these requests and timelines for responding to them. 

The Best Example of How the Market Reacts When Guidance is Not Available is the Bureau 

Bulletin on Third-Party Service Providers 

ALTA members are indirectly supervised by the Bureau's oversight of both depository 

and nonbank mortgage lenders. Our industry acutely feels this indirect supervision due to CFPB 

Bulletin 2012-03, Service Providers. 3 

The bulletin simply reminded supervised banks and nonbanks that they are expected to 

oversee their business relationships with service providers in a manner that ensures compliance 

with federal consumer financial law. It restated longstanding guidance from other federal 

regulators. However, given the lack of examples in the bulletin, it shook the title insurance 

industry and our lender customers. 

Unlike similar guidance from prudential regulators, the Bureau's bulletin provided little 

direction to banks and nonbanks. The Bulletin was two and a half pages long, compared with 

the 16 pages of guidance from the Office of the Comptroller of the Currency (OCC) and 14-page 

3 Bureau of Consumer Financial Protection, CFPB Bulletin 2012-03, Service Providers; Apri/13,2012. 

https:/lfiles.consumerfinance.gov/f/201204 cfpb bulletin service-providers.pdf 

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document from the Federal Reserve Board. Examples of more useful guidance on this topic 

include the OCC in 2001, the Federal Deposit Insurance Corporation (FDIC) in 2006, as well as 

subsequent guidance from the OCC and Federal Reserve Board in 2013, and the Mortgage 

Servicing Settlement and accompanying consent judgments in 2012. 

This lack of guidance provides businesses with many unanswered questions about how 

to demonstrate compliance. Because of the bulletin, some lenders require small title companies 

only doing a handful of closings with them a year to follow the same processes as a large 

company doing thousands of closings. This uncertainty pushed some small businesses to exit 

the market, reducing consumer choice. 

Another area of uncertainty was on oversight of consumer versus lender-selected 

providers. Commonly, the consumer-and not the lender-selects their title and settlement 

company (with the advice of a real estate agent, attorney or other trusted party). Given the lack 

of guidance, most lenders treated vendors they selected and vendors selected by the consumer 

the same. To manage the risk, some lenders chose to severely limit consumers' options. This is 

the wrong outcome and created a conflict in states where the law limits a lender's right to restrict 

consumer choice. 

The title industry stepped up and attempted to deliver clarity to its customers by creating 

the Title Insurance and Settlement Company Best Practices in 2012. This standard compliance 

management system for title companies provides lenders with a framework for understanding 

how the title companies they work with do the right thing, the right way-before, during and 

after the transaction. Today, fenders use this tool to manage and mitigate the risks inherent 

within the vast national network of more than 20,000 settlement companies. 

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Many lenders have adopted the Best Practices as part of their compliance management 

program. However, due to lack of guidance, lenders are unsure whether the Best Practices keep 

them in compliance with regulatory requirements. A public statement in support of the ALTA 

Best Practices from the Bureau would provide much desired clarity and guidance to supervised 

entities. 

After more than four years of discussions with Bureau staff, they made a few minor 

clarifications in October 20164• The guidance clarified that a lender's risk-management program 

for service providers may be scalable depending on several factors. This has been helpful, but 

more is still needed, especially regarding the collision between consumer choice and vendor 

management. 

A more valuable guidance bulletin would provide banks and non-banks with examples of 

vendor-management programs based on different risks. It should highlight ways to review a 

potential vendor's operations, while not limiting consumer choice. It should note that the vendor 

management program should be tailored to the specific consumer risks posed by each type of 

vendor. Additionally, the Bureau could call out companies with good vendor management 

programs in its supervisory highlights publication. These are all options that the Bureau would be 

required to consider if Congress passed the GUIDE Compliance Act. 

Advisory Opinions 

Guidance that is applicable to the entire industry is helpful. However, Congress should 

also consider establishing an advisory opinion program at the Bureau. Advisory opinions allow 

4 Bureau of Consumer Financial Protection, Compliance Bulletin and Policy Guidance; 2016-02, Service Providers; 

81 FR 74410; October 26, 2016. 

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the Bureau to provide specific guidance to individual companies about individual products or 

process. While only that company can rely on the opinion, they provide more clarity and 

certainty for companies looking to launch new products. 

The use of advisory opinions is widely used by other federal agencies including the 

Internal Revenue Service and Securities and Exchange Commission. They analyze how the 

applicable laws apply to a specific set of facts or a proposed design, operation or maintenance 

of a consumer financial product or service. Publishing redacted versions can help other 

companies make better decisions. This proposal was included as Section 721 of the Financial 

Choice Act sponsored by Chairman Hensarling and passed by this committee last year. 

Financial Product Safety Commission Act of 2018 

Lastly, we believe the committee should consider legislation to change the leadership 

structure of the Bureau from a single director to a five-member bipartisan commission as 

proposed by H.R. 5266, the Financial Product Safety Commission Act of 2018. We believe the 

bipartisan bill sponsored by Reps. Dennis A. Ross (R-FL), Kyrsten Sinema (D-AZ), Ann Wagner (RMO) and David Scott (D-GA) would make the Bureau a more open, transparent and accessible 

regulator. Experience demonstrates that a commission lends itself to better collaboration 

between regulator and industry. We can see good examples of this collaboration at other 

financial regulators, such as the Federal Deposit Insurance Corporation, the Federal Reserve 

Board and the National Credit Union Administration. This ultimately benefits consumers and 

business. 

Last year, ALTA commissioned a poll with the Consumer Bankers Association and 

Independent Community Bankers of America. The poll found that 58 percent of registered 

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voters in key battleground states believe entities run by a commission are more transparent 

and accountable. Commissions help ensure that minority viewpoints have a strong voice during 

the regulatory process. They also help ensure that an agency's leadership better reflects the 

industry and consumers its serves. 

TRIO Improvement Act 

We applaud this committee and the House for passing H.R. 5078, the bipartisan TRIO 

Improvement Act. The TRIO Improvement Act fixes one of the most confusing requirements of 

the Bureau's mortgage disclosure rule. It is a simple one-page bill that allows title insurance and 

settlement companies to accurately disclose available discounts for title insurance on the 

Bureau's required disclosure forms. This ensures that those disclosures match the rates for title 

insurance filed with state insurance regulators. 

This problem spawned much confusion for consumers, over 40 percent of American 

homebuyers feel taken advantage of or are confused by the Bureau's rule. It also causes 

significant confusion for industry about how to compliantly account for this discrepancy in 

prices. Despite these questions about how to ensure consumers understand the costs of their 

transaction, the Bureau did not address the topic through reliable guidance. We urge the 

Senate to follow the House's lead on this important bill. 

Conclusion 

Thank you for offering this opportunity to provide input. Our experience with the 

Bureau gives us a unique view on how it can improve its processes. 

Compliance is about more than protecting consumers. It protects a company's 

reputation, financial well-being and employee morale. 

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As an industry predominantly made up of small- and medium-sized businesses, we need 

a regulator that helps remove the gray. We need a regulator that matches simple and clear 

regulations with helpful and illustrative guidance and examples. A regulator that makes it easier 

for us to protect our reputation, bottom line and ultimately our consumers. 

I think everyone would agree that the more reliable information you have available, the 

better decision you are likely to make. The GUIDE Compliance Act is narrowly tailored to do just 

that. It requires a process to provide more information and examples so businesses can make 

better decisions and comply with the law. This helps not only businesses like ones that ALTA 

represents, but also the consumers our members strive to protect every day. The GUIDE 

Compliance Act also makes providing reliable guidance a part of the Bureau's DNA, ensuring 

that industry will have the information it needs regardless of changes in administration. 

The best step this committee and Congress can take to improve transparency and 

accountability at the Bureau is to pass the GUIDE Compliance Act. 

I appreciate the opportunity to discuss the need for a formal guidance mechanism at the 

Bureau. ALTA is eager to serve as a resource to this subcommittee, and I am happy to answer 

any questions. 

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CBI\ CONSUMER 

BANKERS 

ASSOCIATION 

Testimony of 

Richard Hunt, President & CEO 

Consumer Bankers Association 

Before the 

U.S. House of Representatives Financial Services Committee 

Subcommittee on Financial Institutions & Consumer Protection 

Hearing Titled, "Improving Transparency and Accountability at the Bureau of Consumer 

Financial Protection" 

June 6, 2018 

Introduction 

Chairman Luetkemeyer, Ranking Member Clay, members of the committee, my name is Richard 

Hunt and I am the President and CEO of the Consumer Bankers association. Thank you for the 

opportunity to testifY in front of the House Financial Services Subcommittee on Financial 

Institutions and Consumer Credit's hearing titled, "Improving Transparency and Accountability 

at the Bureau of Consumer Financial Protection." 

CBA preserves and promotes the retail banking industry as it strives to fulfill the financial needs 

of the American consumer and small business. As the voice of the retail banking industry, CBA 

represents nearly 70 members whose products and services provide access to credit to millions of 

consumers and small businesses. Our members operate in all 50 states, serve more than 150 

million Americans and collectively hold two-thirds of the country's total depository assets. 

Additionally, our members operate nearly half of all the bank branches in the country, and 

employ over 1.6 million Americans. CBA members serve their communities by extending over 

$3 trillion in consumer loans and $275 billion in small business loans. 

Today's hearing examines an important topic in the retail banking space as the Bureau of 

Consumer Financial Protection (BCFP or the Bureau) has vast jurisdiction over a multi-trillion 

dollar financial services industry, including over 11,000 depository and countless non-depository 

institutions, regulating more entities than all other federal financial regulators combined. To put 

it into perspective, the Office of the Comptroller of the Currency has jurisdiction over just 1,600 

institutions. 1 In addition to supervisory authority over each depository institution with assets over 

$1 0 billion, the BCFP has supervisory authority over all those in the business of origination, 

brokerage, or servicing of consumer loans secured by real estate, and related mortgage loan 

modification or foreclosure relief services; private education loans; and short term liquidity 

products. Additionally, the agency has the ability to define, by rulemaking, its own scope of 

1 The BCFP supervises compliance v.,'ith consumer protection laws; the OCC's supervisory authority mcludes prudential supervision, CRA, and 

consumer protection for national banks with assets of $10 billion or less. 

CONSUMER BANKERS ASSOCIATION 11225 EYE STREET, NW, #550 I WASHINGTON, DC 20005 I consumerbankers.com 
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supervisory authority, which it has so far defined to include authority over larger consumer 

reporting agencies, debt collectors, nonbank student loan servicers, and international money 

transmitters. Overall, the Bureau's vast jurisdiction includes an entire sector of American finance 

from banks and credit unions, to innumerable financial services companies of all sizes, including 

larger participants in the American financial system. 

But the Bureau's authority does not end there. It also has the authority to write the consumer 

financial services regulations that apply to virtually all consumer financial service providers, 

whether or not they are supervised by the Bureau. These include rules applying to almost all of 

the consumer laws transferred to the Bureau when it was created, and any new rule it creates 

under its Dodd-Frank statutory authority to regulate "unfair, deceptive or abusive acts or 

practices." In short, it has an unprecedented scope of authority over almost the entire universe of 

consumer financial service providers, ultimately touching almost all Americans. 

Pursuant to the Dodd-Frank Act, the Bureau is led by a sole director, who enjoys unprecedented 

authority with very little oversight and accountability. We applaud Acting Director Mick 

Mulvaney and his leadership at the BCFP in seeking to make the Bureau more accountable, 

identify rules that are outdated or burdensome, improve the efficacy of rules, and enforce federal 

consumer financial protection law. However, the Bureau continues to be too politicized, 

unaccountable, and lacking in transparency. It is crucial that Congress legislate to bring greater 

bipartisanship, transparency, and credibility to an agency that has such an important mission and 

broad jurisdiction. CBA has provided the below recommendations to Congress that would bring 

long-lasting and meaningful reforms to the Bureau, improve transparency and accountability, 

and increase consumer and small business access to credit. 

Bringing Greater Transparency and Accountability to the Bureau 

Despite the Bureau's vast jurisdiction, it is subject to very little Congressional or presidential 

oversight. Unlike most independent regulatory agencies, the BCFP is led by a sole director rather 

than a multi-member, bipartisan commission. The unchecked power and decision making 

authority vested in one person hyper politicizes every decision it makes. The sole director has 

budgetary authority to request funding for the Bureau from the Federal Reserve without 

Congressional approval. The sole director has the ability to steer rulemaking in one direction or 

another without regard to stakeholder input. The sole director enjoys great autonomy over 

enforcement actions having the unilateral authority to start and cease actions at will. The sole 

director can regulate through enforcement, providing very little clarity to financial institutions 

that want to comply, which results in stifling product development and limiting consumer access 

to credit. Moreover, the sole director adjudicates appeals of their own enforcement decisions. As 

such, the sole director has enormous, autonomous power over an industry that affects a major 

part of our economy, and therefore, it is critical improvements be made to increase its 

transparency and accountability. 

Included below are a number of suggested reforms that Congress should consider that will 

increase accountability and transparency at the Bureau. 

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Bipartisan Commission at the Bureau of Consumer Financial Protection 

A bipartisan, Senate confirmed commission would increase accountability and transparency at 

the Bureau. CBA strongly supports H.R. 5266, the "Financial Product Safety Commission Act," 

which would create a bipartisan, five-member commission to lead the BCFP. H.R. 5266 is a 

bipartisan bill cosponsored by Reps. Dennis Ross, Kyrsten Sinema, Ann Wagner, David Scott, 

Blaine Luetkemeyer, Vincente Gonzalez, and Patrick McHenry. We urge the committee to 

quickly pass this bipartisan legislation to bring much needed stability, accountability, and 

certainty for consumers and industry stakeholders. 

A lack of certainty and long-term consistency in leadership at the Bureau adversely affects 

consumers, our economy, and the financial services industry. As the past months have indicated, 

the BCFP's current governance structure is subject to dramatic political shifts with each change 

in presidential administration, making it difficult for the fmancial services industry to plan for 

the future, which ultimately stifles innovation, limits access to credit, and hurts consumers. A 

bipartisan commission would bring more certainty and stability to the highly regulated financial 

services marketplace so that banks can properly plan for the future and better serve consumers. 

A commission would also bring much-needed transparency to the BCFP as it would provide an 

open forum for dissenting voices and viewpoints from multiple stakeholders. A sole director can 

unilaterally make decisions, oftentimes behind closed doors and without public debate. 

Alternatively, a commission structure would require open debate of opposing ideas, viewpoints, 

and solutions, encouraging both sides to work together to come to moderated rulemakings that 

can better stand the test of time. 

Furthermore, the concept of a commission has historically shared bipartisan support. Under 

President Obama, the Department of Treasury issued a report stating, "The CFPA [Consumer 

Financial Protection Agency] should be structured to promote its independence and 

accountability. The CFP A will have a Director and a Board. The Board should represent a 

diverse set of viewpoints and experiences."2 Under the Trump Administration, Acting Director 

Mulvaney testified, " ... A five person commission could help smooth out some of the variations 

from one director to another, Mr. Cordray and I are very different people and we plan to run the 

agency very differently, and a five person commission might bring some stability." 3 Treasury 

Secretary Steve Mnuchin testified he does "support the concept of a board to oversee [the 

Bureau]" in a recent House Appropriations Subcommittee hearing. 4 

In Congress, bipartisan legislation establishing a commission has passed the House Financial 

Services Committee six times and passed the House of Representatives four times, with 

Democrats and Republicans voting in favor. When Dodd-Frank passed the House in 2009, under 

the leadership of then-House Financial Services Committee Chairman Barney Frank (D-MA), it 

included a provision that would establish a five-member commission at the Bureau. And just last 

1 Department of Treasury, Financial Regulatory Reform, A New Foundation: Rebuilding Financial Supervision and Regulation, p. 58. 3 Senate Banking Committee, BCFP Semi~Annual Hearing, April 12, 2018. 4 House Appropriations Subconunittec Hearing, FY19 Budget Hearing, Department of Treasury, March 6, 2018. 

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Congress, the House Financial Services Conunittee passed on a bipartisan basis, legislation that 

would establish a bipartisan, five-member conunission at the BCFP. 

Importantly, the American people are supportive of a bipartisan conunission at the Bureau. A 

recent Morning Consult poll found that by a margin of three to one, registered voters support a 

bipartisan conunission over a sole director, with only 14 percent of those polled stating they 

prefer to keep the Bureau's current leadership structure. 5 Additionally, two-dozen trade 

associations representing thousands of banks, credit unions, financial institutions, and businesses 

of all sizes support this needed change. 

Single Director, Removable At-Will 

In the Bureau's April2018 Semi-Annual Report to Congress, Acting Director Mulvaney 

reconunended changing the structure of the Bureau to allow for the President to remove the 

Director at-wilL CBA appreciates the Acting Director's goal to make the Bureau more 

accountable to the taxpayer, but it is our belief that making the Director removable at-will could 

increase the overt political nature of the BCFP. Right now, it is possible for a Director from one 

party serving a five-year term to continue on even under new presidential leadership. If the 

Director is removable at will, the direction of the Bureau will only ping-pong more frequently, 

creating greater uncertainty for industry and consumers. CBA therefore believes the only course 

of action to reduce political volatility is for Congress to pass H.R. 5266, which would foster 

bipartisanship and increase certainty and stability, so banks and credit unions can properly plan 

for future investment in technology, innovate new products, all resulting in better service for 

consumers. 

Independent Inspector General 

In its semi-annual report, the Bureau requested Congress establish an independent Inspector 

General at the BCFP as opposed to sharing one with the Federal Reserve. CBA agrees this is an 

appropriate step to providing some independence and oversight at the Bureau. We strongly 

support H.R 3625, the CFPB-IG Act of2017, a bill that would create an independent Inspector 

General at the BCFP. The adoption of an independent Inspector General is of paramount 

importance to ensure the operations of the agency are audited by an independent and impartial 

entity. Most fmancial services regulatory agencies, and more than 30 other federal agencies, have 

their own dedicated Inspector GeneraL Having a third-party auditor will bring increased 

accountability to the Bureau and provide Congress with important information on the internal 

workings of the BCFP. 

Clarify Guidance 

In addition to the BCFP's four legislative requests outlined in the semi-annual report, CBA 

believes the Bureau should define and clearly establish procedures for guidance. CBA strongly 

supports H.R. 5534, the Give Useful Information to Define Effective (GUIDE) Compliance Act, 

which would provide greater clarity to what constitutes guidance, improve compliance with 

consumer financial protection laws, and bring predictability to the Bureau's rulemaking. 

5 Morning Consult Poll, May 3, 2017. 

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The Bureau has been historically slow to issue guidance, which has created an environment of 

uncertainty in the financial services industry. The bill would require the Bureau to issue !,>uidance 

necessary or appropriate to comply with consumer protection laws. It would provide for public 

notice and comment period for the issuance, amendment, or revocation of guidance, with clear 

timelines for industry. It would provide for protection from liability for acting in good faith in 

accordance with guidance. The bill would also create a penalty matrix that would require the 

Bureau to publish penalty guidelines that determine the size of any civil monetary penalties 

issued by the Bureau based on the severity of the violation of Federal consumer law. By 

requiring the Bureau to issue clear guidance and rules, the practice of regulation through 

enforcement could be reduced. 

The GUIDE Act would create a more transparent regulatory environment and better achieve the 

Bureau's goals of compliance with consumer protection laws. 

Subject BCFP to the Congressional Appropriations Process 

CBA strongly believes the BCFP needs greater oversight and accountability. The BCFP's SemiAnnual report called for Congress to put the Bureau under appropriations to achieve these goals. 

Pursuant to the Dodd-Frank Act, the BCFP currently receives direct funding from the Federal 

Reserve at the request of the BCFP Director, capped at 12 percent of the Federal Reserve's 

operating expenses. As long as the budget request falls below this cap, the budget request cannot 

be denied. 

Placing the Bureau on budget and under the Congressional appropriations process will provide 

greater oversight and accountability. In the absence of a bipartisan commission and other 

meaningful reforms, CBA supports this recommendation by Acting Director Mulvaney and the 

passage of H.R2553, the TABS Act of 2017 that would subject the Bureau to the annual 

Congressional appropriations process. 

It is important to note that putting the BCFP under appropriations would not address industry 

concerns regarding day-to-day management of personnel, operations, supervision, and 

enforcement proceedings that require daily transparency and oversight. Only a bipartisan board 

with dedicated commissioners who are there day in and day out would provide the level of 

transparency, accountability, and stability needed at such a powerful regulator. Nevertheless, 

putting the BCFP under Congressional appropriations would make the Bureau more accountable 

to the American people, and CBA believes the Bureau requires greater transparency and 

oversight. 

Congressional Approval of Major Rules 

CBA fully respects the role of Congress as the authoritative lawmaking body that utilizes a 

deliberative and measured approach. Nevertheless, agencies do play an important role in 

developing and implementing regulations and guidance to clarify expectations of industry. 

Prolonged delays in approval of rules could slow the introduction of products and services to 

bank customers. 

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We understand and appreciate that Congressional approval could bring more accountability to 

the Bureau; however, we believe more discussion is need to get a better understanding of the 

unintended effects this could have on financial regulation. Additionally, Congress already has 

Congressional Review Act authority to overturn rulemakings with which it disagrees. It has been 

used several times; specifically, it has been used to overturn the arbitration rule and indirect auto 

guidance issued by the Bureau. 

Requests for Information 

As part of its effort to evaluate the agency's prior actions and polices, the Bureau has initiated 

several requests for information (RFis) on its functions and past actions. CBA appreciates this 

opportunity for stakeholders to comment and will continue to submit responses on the RFis, 

sharing our members' perspectives as banks regulated and supervised by the BCFP. Some of the 

comments we will be sharing with the Bureau during this comment period include the following: 

Enforcement and Supervision 

The BCFP has historically used the enforcement process as a regulatory tool. Former Director 

Richard Cordray stated on numerous occasions that companies should draw their understanding 

of the compliance and legal requirements of federal law by studying consent orders and other 

enforcement actions by the BCFP. The result is not in the best interest of either industry or 

consumers. This policy, which is often called "rulemaking by enforcement," appealed to the 

BCFP because it was swifter and did not require as much substantiation. The rulemaking 

process, as mandated by the Administrative Procedures Act and the Dodd-Frank Act, is time 

consuming for a reason: it demands the BCFP adhere to a strict process that invites those who 

are affected by a proposal to have a say in the creation of the rule. Enforcement actions do not; 

and if they are negotiated consent orders, they may not even be a very fair representation of the 

regulator's compliance expectations of others. In order to attempt to know what the law is and 

how to comply, one has to hire a team of expensive lawyers to decipher the tea leaves. We 

believe this is simply bad public policy and leads to nothing more than excess legal cost and a 

lack of clear guidance. 

The absence of regulatory agency coordination is also a concern. CBA member banks are often 

supervised by multiple federal regulators (not to mention the state regulatory bodies that 

supervise state chartered banks). A single financial services company can be examined by the 

Federal Reserve, the Office of the Comptroller of the Currency (OCC), the Federal Deposit 

Insurance Corporation (FDIC), and the BCFP. In some cases, more than one agency is 

examining a bank for similar or related issues, each with a slightly different set of lenses. The 

same documents can be requested or variations can be sought, and similar inquiries can be made 

to the same people. Better coordination is needed to minimize the cost and burden to the 

financial institutions, permitting them to better serve their customers. 

In a similar vein, enforcement can be a multiple agency process, with each agency taking on the 

same issue and imposing its own penalties for related violations. At times this appears to be 

driven by a desire to demonstrate its regulatory authority and not defer to any other regulatory 

body, but it is unnecessary to have redundancy, and it is a cost that ultimately reduces the 

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effectiveness of the entire enforcement process. The Treasmy Department, in its 2017 report on 

financial services, recommended a single entity act as a kind of traffic cop or coordinator. CBA 

would support this approach to increased regulatory coordination. 

Rulemaking 

The BCFP's record regarding discretionary rulemaking has also been concerning. The Bureau's 

small-dollar rule is a prime example. Here, the Bureau produced an overly restrictive, broadlyapplied rule based on little data. Despite industry efforts to develop a workable solution to meet 

consumers' small-dollar needs, the Bureau instead implemented a rule that will make smalldollar lending impractical and nearly impossible. This drastic approach and implementation of 

preconceived policy positions will only leave consumers with fewer options. They will now be 

forced into unregulated and unsupervised markets that offer few, if any, protections or will 

simply have their needs unmet. Consequences of this type of pre-determined rulemaking could 

be drastic for conslllllers, leaving them unable to pay rent, buy gas or groceries or meet an 

unexpected medical expense. 

CBA is strongly supportive of clear and rational regulations that promote the industry's ability to 

comply and provides consumers with access to credit. We believe these twin objectives would 

be best served by a robust public comment process, a firm adherence to the formal rulemaking 

process, and a flexible implementation process following the issuance of a final rule. Indeed, the 

Dodd-Frank Act's standards for rulcmaking require the Bureau to consider, among other things, 

"the potential benefits and costs to consumers and covered persons, including the potential 

reduction of access by consumer to consumer financial products or services resulting from such 

rule." Under this framework, we would encourage the Bureau to not focus solely on policybased rulemaking and to base new regulations on real-world data and rigorous economic costbenefit analysis, as required by the Act. 

Consumer Complaint Database 

CBA supports H.R. 3607, the "Protecting Consumers from Frivolous Claims Act" that will limit 

the public dissemination of unsubstantiated information submitted through the BCFP complaint 

portal. The authors of Dodd-Frank did not intend for the Bureau to publicly share complaints. 

In fact, plain reading of the statute demonstrates that Congress did not specifically call for it to 

be made public. Under previous leadership, the Bureau went far beyond its statutory authority of 

establishing the Database, by publishing the data publicly, adding unverified narratives, and 

proposing a subjective consumer survey on resolution satisfaction that has no proven benefit. 

First, the Dodd-Frank Act requires the Bureau to create a public data base. Second, the purpose 

of the complaint portal is to provide the Bureau with information that permits them to target 

problem areas, which does not require them to make it public. Third, a public YELP-like data 

base where comments are shared publicly, sponsored by the Government, and has not been 

shown to be of any value indeed can do more harm than good. 

Banks and credit unions have strong incentives to maintain deep, well-informed, mutually 

satisfactory relationships with customers. This is why our members have robust complaint 

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management procedures outside of the BCFP's Consumer Complaint Database to ensure they are 

resolving disputes as quickly as possible. 

With the BCPP's database exceeding I million complaints, the inclusion of potentially 

personally identifiable narrative information, and reports of insufficient data security protocols at 

the Bureau, CBA is strongly concerned about the potential for compromising consumer privacy. 

In addition, the database erodes consumer privacy by impairing the confidential nature of the 

exchange between customer and banker. The Database does not protect consumers from reidentification risks and creates consumer harm. The Bureau has in the past claimed privacy is 

not a serious concern because "modern scrubbing standards" can de-identify nonpublic, personal 

information to "acceptable levels." However, recent audits of the database have revealed many 

cases of re-identification. 

The Bureau does not currently attempt to verify the legitimacy or accuracy of the information 

provided by the consumers, except to ensure the consumer is in fact a customer of that company, 

and the company is a covered financial service provider. While this is stated on the database 

website, this fact alone does not give consumers adequate information to draw conclusions about 

the data. If the Bureau is releasing results, consumers can be excused for believing the 

information is legitimate, notwithstanding any disclaimer to the contrary. The releasing of 

narrative information on each complaint only makes this worse and does not give enough 

information for the public to draw any information on the validity of the complaints. 

CBA applauds Acting Director Mulvaney's review of whether to publicly release consumer 

complaint data. We believe this will ensure consumer privacy and prevent the dissemination of 

misleading information. Congress too has an important role to ensure future releases of consumer 

data is safeguarded by passing H.R. 3607. 

BCFP Rulemaking and Needed Congressional Action 

Small-Dollar Bank Lending 

Millions of Americans live paycheck-to-paycheck, and need help making ends meet. Yet, 

regulators in Washington have chipped away at products and services that provide short-term, 

small-dollar credit, leaving consumers with limited and more expensive alternatives. CBA 

strongly supports H.R.4861, the "EQUAL Act of2018" which would nullify guidance from the 

federal banking agencies that limit deposit advance products banks can offer customers. In 

addition, we are encouraged by the Bureau's announcement earlier this year that it will review 

the small-dollar rule for possible amendment. 

Historically, federal banking regulators have encouraged banks to help finance these small-dollar 

consumer loans, rather than sending their customers to nonbank lenders. This is a preferable 

scenario: Customers receive the services they want- and need- but remain in the well-regulated 

and supervised banking system. In response, some banks, working closely with regulators, 

developed a way to meet short-term lending needs with a tool known as deposit advance 

products (DAP). These loans were carefully designed to ensure strong safeguards, like an ability 

to repay analysis that took into account a customer's cash flow patterns and direct deposit 

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history. Additionally, deposit advance products are cheaper than payday loans, offer greater 

transparency, require substantial disclosures and compliance with federal law, receive positive 

feedback from borrowers, and have low default rates. 

Before the rule was proposed, CBA and many of our member banks worked in good faith with 

the Bureau to provide insight and counsel on how a rule could be crafted that would allow for 

banks to serve the small-dollar loan market, providing a well-regulated bank product to compete 

with payday loans. Unfortunately, the Bureau's final rule on small-dollar lending will only act 

as a disincentive for banks to enter this important market. Under the Bureau's rule, lenders will 

be required, among other things, to determine whether consumers have the ability to repay by 

applying overly complicated underwriting requirements similar to those for a home mortgage, 

which will make the product costly to consumers and unviable for depositories to offer. While 

the Bureau did provide for some very specific exceptions that would allow for lenders to make 

loans that are not subject to the rule, these exceptions offer little in the way of practical 

application and are so minimal they will fail to meet the incredible demand that exists for small 

dollar loans, forcing consumers to look to more expensive, less regulated options to fulfill their 

short term credit needs. 

CBA urges Congress to work with prudential regulators and the Bureau to revoke any rule or 

guidance that would limit consumer access to small dollar bank products and implement a 

structure that will allow depository institutions to enter the small dollar lending market 

Small Business Lending 

CBA supports H.R. 4452, the "Right to Lend Act" that would repeal Section 1071 of the DoddFrank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) that amends the 

Equal Credit Opportunity Act to increase data collected on small business loans. In brief, under 

that section, every financial institution (broadly defined in the section) must inquire of any 

business applying for credit whether the business is a small business, or a women- or minorityowned business, maintain a record of the information separate from the application, and report 

the information along with related information about the application (location of business, action 

taken, amount of credit provided, etc.), to the Bureau. The information must be made public on 

request in a manner to be established by regulation, and will be made public annually by the 

Bureau. The Bureau is given considerable flexibility to establish the requirements, define the 

scope, provide for exemptions, and protect the privacy of individuals. 

CBA and its member institutions strongly believe that although the Dodd-Frank Act mandates 

this rule, it will be more difficult than the data reporting efforts undertaken on mortgages and 

would be oflittle value in uncovering violations of law. The notion that business lending 

parallels nicely to residential mortgage lending is misplaced. Small business loans are not 

commoditized in a way that readily permits comparisons. Increasing reporting for small business 

lending, although well intentioned, is a tremendously flawed premise. Requiring institutions to 

collect more data on small business loans goes against the need to streamline the credit process 

for customers with greater speed and ease. Plus, it could decrease the ability for institutions to 

provide such loans, while increasing their liability risk. Also, the BCFP and prudential regulators 

have the authority under the ECOA to supervise for and enforce fair lending in the small 

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business market- a tool currently in use. As a result, CBA recommends that Congress repeal 

Section 1071. 

Privacy of Information- Home Mortgage Disclosure Act 

Our members are dedicated to responsibly and fairly serving the housing needs of their 

communities and are committed to the purposes of the HMDA, which are to: "1. help determine 

whether financial institutions are serving the housing needs of their communities; 2. assist public 

officials in distributing public-sector investment so as to attract private investment to areas where 

it is needed; and 3. assist in identifying possible discriminatory lending patterns and enforcing 

antidiscrimination statutes."6 

The Dodd-Frank Act mandated the expansion of information collected under Regulation C, 

HMDA's governing regulation. However, the Bureau's final HMDA rule the Director used his 

authority to almost triple the number of data fields and greatly increased the complexity of 

reporting. This is in addition to increased compliance pressures stemming from the Dodd-Frank 

Act's strengthened enforcement monitoring due to the uncertainty of what are Unfair, Deceptive, 

and Abusive Acts and Practices (UDAAP), and additional rules and requirements that have 

inundated the banking industry, including the implementation of the Qualified Mortgage rules 

and TILA-RESPA Integrated Disclosure. The compliance burden placed on banks requires 

expenditures of resources that inevitably reflect in the cost and availability of credit for 

consumers. 

CBA has long been concerned about the sensitive nature of the HMDA data and applauds 

Director Mulvaney's decision to revisit the rule to closely review the data fields that would be 

collected, stored and ultimately published. The new data fields are even more sensitive than 

many of those previously collected, with the addition of credit score, debt to income ratio, and 

property address, among other new fields. Re-identifying the consumer using existing HMDA 

data can be achieved in over 80 percent of all cases. The addition of the new data fields raises 

the probability to virtually 100 percent, particularly in rural markets. 

In addition, CBA appreciates the introduction ofH.R. 4648, the Home Mortgage Reporting 

Relief Act that will delay the enforcement of and addresses the privacy concerns with the 

BCFP's final Home Mortgage Disclosure Act (HMDA) rule. H.R. 4648 acknowledges many 

CBA member banks have already prepared for implementation and does not penalize those 

institutions that have striven to be compliant while providing those institutions not yet ready with 

one-year compliance safe harbors for collecting and reporting. 

CBA strongly supports Acting Director Mulvaney's commitment to reconsider elements of the 

rule and pursue a non-punitive approach to the new collection efforts in the meantime. Given 

the sensitive nature of the expanded HMDA data and the risk ofre-identification, CBA strongly 

believes the new data fields should be limited and not made public unless in aggregate form. 

6 CFPB Bulletin 2013~11 "Home Mortgage Disclosure Act (HMDA} and Regulation C- Compliance Management; CFPB HMDA Resubmission 

Schedule and Guidelines; and HMDA Enforcement" (October 9, 2013) htto:i/files.consumerfinance.gov/0201310 cfub hmda comoliance~ 

bulletin fair~lending,pdf 

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Debt Collection 

CBA recognizes the important role the collection of debt plays in the proper functioning of the 

consumer credit markets, as it reduces creditors' losses from non-repayment and promotes the 

availability and affordability of consumer credit. We support the Bureau's goals of updating the 

Fair Debt Collection Practices Act (FDCPA), modernizing its communication standards, and 

generally enhancing consumer protections. 

As the Bureau has acknowledged, the FDCPA is limited to third-party debt collectors and does 

not provide a valid legal basis for regulating creditors enforcing their loan agreements with 

borrowers. Congress clearly enacted the FDCP A to establish ethical guidelines for the collection 

of consumer debt by third-party debt collectors, and it never intended nor designed the Act to 

cover the collection practices of creditors. In that same vein, CBA strongly opposes placing 

FDCP A-like restrictions and requirements on creditors. They are unwarranted and incongruent 

with the lender-borrower relationship, which is usually a long standing one motivated by strong 

business incentives on the part of creditors to help borrowers successfully repay their debt 

obligations. 

CBA is also concerned by the overly restrictive communication standards set out in the Bureau's 

Outline of Proposals issued ahead of its small business panel hearing for third-party debt 

collections. We believe setting communication barriers too high between collectors and 

borrowers has the potential to significantly harm consumers. Based on our members' 

experience, consumers facing financial hardship are best served if they are able to freely 

communicate with collectors and their creditors. Doing so helps consumers avoid late fees, 

minimize negative impacts to their credit report, avoid account closures, and allows them to take 

advantage ofloss mitigation or other workout programs. As a result, we firmly believe it is 

essential that any new rules promote, not inhibit, consumer engagement with collectors and 

creditors. 

We strongly urge Congress and the BCFP to work with industry to establish debt collection 

regulations for third-party debt collectors that strike the right balance between consumer 

protection and consumer engagement. 

Harmonizing UDAP Authority 

In the !14th Congress, H.R.5112, the "Unfair or Deceptive Acts or Practices Uniformity Act"' 

was introduced that would remove the abusive standard set out in Section I 031 of the DoddFrank Act. The Federal Trade Commission Act prohibits Unfair and Deceptive Acts or Practices 

(UDAP), and this concept has been developed and refined over many decades by regulation and 

case law. The FTC employs UDAP in its enforcement of consumer fmancial service providers. 

The bank regulatory agencies-including the FDIC, OCC and Federal Reserve Board, examine 

the banks under their authority for compliance with UDAP. 

By giving the Bureau the authority to regulate unfair, deceptive and abusive acts or practices, the 

Dodd-Frank Act created an anomaly. And, by not being clear as to why an additional violation 

needed to be created, it also put all companies under the Bureau's jurisdiction in the position of 

not knowing what the law is or how to comply. It is unclear how an "abusive" standard will be 

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applied or how it is different from unfair or deceptive. We encourage Congress to pass 

legislation similar to H.R. 5112 that would provide regulatory harmony between the BCFP and 

other Federal regulatory agencies. 

Conclusion 

The retail banking industry is best able to serve its customers when there is a stable and evenhanded regulatory framework that produces clear and reasonable rules of the road. CBA stands 

ready to provide industry expertise to Congress and the Bureau in the pursuit of legislative 

changes to the BCFP that will result in reasonable regulatory rules and guidance to improve 

consumer protection and the financial services marketplace. 

Improving the fmanciallives of our customers is a goal that unites lawmakers, regulators and 

industry. The best way to ensure that shared outcome for consumers is for Congress to pass 

legislation that will bring more accountability to the Bureau. It is our belief that true, longlasting change will not be successful until a governance structure at the Bureau is established that 

promotes debate and deliberation among leaders with diverse experiences and expertise so rules 

and regulations are written for the financial betterment of consumers. A bipartisan commission 

of five, Senate-confirmed commissioners would provide a balanced and deliberative approach to 

supervision, regulation, and enforcement of rules and regulations that oversee the financial 

services sector and provide consumers needed safeguards. 

CBA stands ready to work with Congress to implement the suggested legislative improvements 

to the Bureau, and we appreciate the opportunity to submit this statement for the record. 

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CENTER FOR CAPITAL MARKETS 

COMPETITIVENESS 

STATEMENT OF THE U.S CHAMBER OF COMMERCE 

ON: Improving Transparency and Accountability of the Bureau of 

Consumer Financial Protection 

TO: The House Financial Services Committee 

Subcommittee on Financial Institutions and Consumer Credit 

BY: Kate (Larson) Prochaska, Director at the 

U.S. Chamber of Commerce 

Center for Capital Markets Competitiveness 

DATE: June 6, 2018 

1615 H Street NW I Washington, DC I 20062 

The Chamber's mission is to advance human progress through an economic. 

political and social system based on individual freedom 
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The U.S. Chamber of Commerce is the world's largest business federation, 

representing the interests of more than three million businesses of all sizes, sectors, 

and regions, as well as state and local chambers and industry associations. The 

Chamber is dedicated to promoting, protecting, and defending America's free 

enterprise system. 

More than 96% of Chamber member companies have fewer than 100 

employees, and many of the nation's largest companies are also active members. We 

are therefore cognizant not only of the challenges facing smaller businesses, but also 

those facing the business community at large. 

Besides representing a cross-section of the .American business community with 

respect to the number of employees, major classifications of American business--e.g., 

manufacturing, retailing, services, construction, wholesalers, and finance-are 

represented. The Chamber has membership in all 50 states. 

The Chamber's international reach is substantial as well. We believe that global 

interdependence provides opportunities, not threats. In addition to the American 

Chambers of Commerce abroad, an increasing number of our members engage in the 

export and import of both goods and services and have ongoing investment activities. 

The Chamber favors strengthened international competitiveness and opposes artificial 

U.S. and foreign barriers to international business. 

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Testimony of Kate (Larson) Prochaska 

Director, Center for Capital Markets Competitiveness of the U.S. 

Chamber of Commerce 

Before the House Committee on Financial Services, Subcommittee on 

Financial Institutions and Consumer Credit 

June, 6, 2018 

Chairman Luetkemeyer, Ranking Member Lacy Clay, and members of the 

Subcommittee on Financial Institutions and Consumer Credit: 

My name is Kate (Larson) Prochaska, director at the Center for Capital Markets 

Competitiveness ("CCMC") at the U.S. Chamber of Commerce ("Chamber") where I 

lead consumer finance issues. The Chamber is the world's largest business federation, 

representing the interests of more than three million businesses and organizations of 

every size, sector, and region. I appreciate the opportunity to testify before the 

subcommittee today on behalf of the businesses and financial institutions that the 

Chamber represents. 

Thank you for holding this important and timely hearing about "Improving 

Transparency and Accountability at the Bureau of Consumer Financial Protection" 

("Bureau"). We at the Chamber have long been advocating for improvements to this 

influential agency and arc grateful for the opportunity to share our views here today. 

Creation of the Bureau 

Consumers, small businesses, and the American economy rely on the 

availability of credit to meet their fmancial needs. Every day, fmancial institutions arc 

working with their customers to try to get them the best loan that fits their goals 

whether it is fmancing a dream home, finally starting a business, or fmancing their 

daughter's education. Since each consumer's needs are different, it is critical that 

there arc a diverse set of credit products available and that consumers are able to build 

credit within the mainstream banking system. Diverse fmancial products and ample 

credit supply are heavily influenced by financial institutions' ability to irmovate, and 

the presence of a strong, competitive consumer marketplace. 

Title X of the Dodd-Frank Wall Street Reform and Consumer Protection Act 

(the "Dodd-Frank Act") created the Bureau to consolidate the consumer protection 

functions of multiple regulators under one roof. We strongly believe in the Bureau's 

statutory mission to "seck to implement and, where applicable, enforce Federal 

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consumer fmanciallaw consistently for the purpose of ensuring that all consumers 

have access to markets for consumer financial products and services and that markets 

for consumer financial products and services arc fair, transparent, and competitivc."1 

Consumer protection and a strong regulator to implement consumer fmance laws are 

critical for a highly functioning and fair consumer marketplace. However, we believe 

the Bureau had growing pains and, as a result, lost sight of its mandate to foster 

"transparent" and "competitive" markets, and to ensure "that all consmners have 

access to markets." The lack of accountability to Congress has exacerbated problems 

at the Bureau. 

Within consumer fmancial services, the Bureau is instructed to ensure that: 

(1) Consumers are pwv-ided with timely and understandable information to 

make responsible decisions about financial transactions; 

(2) Consumers are protected from unfair, deceptive, or abusive acts and 

practices and from discrimination; 

(3) Outdated, unnecessary, or unduly burdensome regulations arc regularly 

identified and addressed in order to reduce unwarranted regulatory burdens; 

(4) Federal consumer financial law is enforced consistently, without regard to 

the status of a person as a depository institution, in order to promote fair 

competition; and 

(5) Markets for consumer financial products and services operate transparently 

and efficiently to facilitate access and innovation. 2 

To be clear, rooting out unfair, deceptive, or abusive acts and practices and 

discrimination ("UDAAP") is imperative to protect consumers and to foster a robust 

and fair consumer marketplace. However, the Bureau's focus should not stop there. 

Under the past leadership, the last three prongs seemed to have lower prioriry, which 

is why we urge the new leadership to promote all aspects of the Bureau's mandate and 

make recommendations on how to do so throughout this testimony. 

1 Dodd-Frank Act §1021(a). 2 ld. at §1021(b). 

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Chamber Advocacy for Changes to the Bureau throughout the Years 

Years ago, the Chamber urged the Bureau to: promote access to credit, 

competitiveness, and choice for consumers and small businesses; reduce regulatory 

burden to spur economic growth; and produce policy in a data-driven and transparent 

manner. These important tenants help to create a fmancial marketplace that provides 

the diverse financial products and services consumers and small businesses need, 

while also protecting borrowers and guarding against unintended consequences. 

Unfortunately, the Bureau's past leadership often did not prioritize these goals to the 

detriment of the financial marketplace and ultimately consumers. 

After the Bureau opened its doors in 2011, we tried to work with the new 

leadership and create a trustworthy dialogue between industry stakeholders and 

policymakers. Naturally, practitioners in this industry can explain how certain 

products work and how best to avoid unintended consequences in the real world 

when creating policy. These practitioners are on the front lines and understand how 

words in a guidance or rulcmaking translate into the real world, which makes them 

valuable resources during the policymaking process. However, we were disappointed 

to fmd that our conversations, comment letters, and meetings seemed more 

perfunctory rather than seriously considered by the Bureau. 

Here arc some illustrations to describe our interactions further: 

TILA/Rl<:SPA Integrated Disclosure (TIUD): The Chamber advised the 

Bureau that the new mortgage systems would not be ready in time due to a small 

number of vendors equipped to implement the change. This was not for a lack of 

trying on the part of financial institutions - it was simply due to a backlog and 

complex system integration. The Bureau did not heed these concerns until 

immediately before the compliance date. The Bureau extended implementation 

because, as industry had stressed, not every institution was able to be compliant. 

While we were grateful the implementation date was fmally extended, it was after 

years of stressing the issue to a regulator that seemingly did not trust our concerns. 

Much stress and confusion could have been avoided if there was an open and trusting 

dialogue. 

Arbitration rulemaking: Throughout the arbitration rule-writing process, 

industry came to the table to propose solutions to address the Bureau's concerns 

surrounding arbitration, however it seemed that the Bureau had settled on its 

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preferred approach (banning class action waivers) before discussions even began. The 

Bureau's final arbitration rule was based on faulty data, and would have effectively 

banned the use of arbitration even though it is faster and cheaper for consumers. 

Unfortunately, due the high cost of attorney fees our legal system does not lend itself 

to consumers getting their "day in court" over small dollar amounts. While the 

attorneys profit, consumers are left with pennies on the dollar or coupons in the mail. 

Thankfully, Congress acted to overturn the Bureau's harmful rulemaking last fall so 

consumers will still have access to the arbitration system. 

Complaint database: The complaint database can be a valuable tool for the 

Bureau when assessing markets; however, data that has not been verified or 

normali?:ed should not be released to the public. Out of context data may lead 

consumers to think the companies that have the most individual complaints are the 

worst companies, when in reality they are the largest companies and could have a 

relatively low number of complaints compared to their number of customers. 

Previously, the Bureau would release monthly reports that included the "most 

complained about companies," even though that data had no value and would only 

serve to lead consumers to needlessly distrust those companies. After multiple 

meetings and discussions, the Bureau discontinued using this flawed practice. 

With new leadership, there is the opportunity to make the Bureau a more 

mature, transparent, and accountable agency. Only with this approach \vill the Bureau 

adequately serve and protect consumers, while still promoting a competitive and 

transparent marketplace that fosters access to credit to all consumers. 

Chamber Reform Agenda to Improve the Bureau 

The Chamber deeply supports strong consumer protections and a robust, 

transparent marketplace of consumer products and services. This is why, on March 

28, 2018, we released a comprehensive agenda to reform the Bureau ("Chamber 

Reform Agenda"). The report includes numerous recommendations to promote 

consumer protection, create dear rules of the road for market participants, improve 

the management of the agency, and ensure that the Bureau is accountable to 

Congress. 

In the report, we noted that any consumer protection agency, including the 

Bureau, has a three-part mission: 

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1. Ensure consumers have access to the marketplace and choice in products 

and services; 

2. Promote the availability of information that consumers can use to make 

informed decisions; and 

3. Provide protection against bad actors. 

Further, we outlined six principle reforms comprised of 23 individual 

recommendations that constitute a series of concrete steps to ensure that the Bureau 

fulfills its statutory mandate to faithfully implement and enforce federal consumer 

financial laws, while putting in place the controls necessary to be a properly managed 

and effective agency. Each recommendation is discussed below. 

1. Provide Clear Rules of the Road 

Recommendation 1: Promulgate regulations. Notice-and-comment 

rulemaking under the Administrative Procedures Act ("APA") 3 is the best tool for 

setting regulatory policy because it gives stakeholders an opportunity to engage in the 

policy-making process. Companies can thrive when they have clear rules to follow. 

Uncertainty creates confusion in the marketplace and consumers ultimately lose out 

because responsible, compliance-minded companies hesitate to invest in new 

products and services when they are unsure of the potential legal ramifications. 

Recommendation 2: Avoid rulemaking by enforcement. We applaud Acting 

Director Mulvaney for declaring that the "CFPB has pushed its last envclope"4 and 

for committing to refrain from "regulation by enforcement." Businesses work hard to 

understand and comply with the countless rules governing consumer fmancial 

services. It is unreasonable and inappropriate to expect companies to draw generally 

applicable legal principles from the limited facts included in a consent order, especially 

because every company and fact scenario is different. 

Consumers agree. On the same day we issued the Chamber Reform Agenda, 

we also released a CCMC/ Morning Consult poll that found consumers 

overwhelming preferred the current administration's approach to rulemaking. A 

resounding 66% of those surveyed across party lines indicated they prefer the current 

3 5 u.s.c. §§ 500 to 596 4 Acting Director Mick Mulvaney, Wall Street Journal ''The CFPB Has Pushed Its Last Envelope" (Jan. 23, 2018) 

https://www. wsj .com/a rticles/the-cfpb-has-pushed-its-last -envelope-15167 43561 

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approach of writing rules instead of governing by enforcement actions because it 

"creates rules that protect consumers and provides businesses with the certainty of 

clear guidelines."5 

Recommendation 3: Limit the use of informal guidance. Clarifications about 

existing rules, whether in guidance or exam manuals, can be helpful for institutions to 

better understand a policy that is already in place. However, these tools should not be 

used to create new policy since, unlike the AP A process, they do not afford an 

opportunity public input. 

Recommendation 4: Use sound economic analysis in the rulemaking process. 

Rulcmaking must be based on sound economic analysis to anticipate unintended 

consequences that might arise in the real world. Only with a true cost benefit analysis, 

instead of subjective conclusions, can policymakers understand the practical 

ramifications of a new policy. 

Recommendation 5: Eliminate areas of substantial legal uncertainty. We urge 

the Bureau to clear up areas of uncertainty, such as outlining the types of practices 

that are considered "abusive" under UDAAP. Also, we urge the Bureau to work with 

industry when areas of uncertainty arise to ensure institutions understand the rules of 

the road, and all companies arc playing by the same standard. 

Recommendation 6: Adopt a robust no-action letter and advisory opinion 

process. Companies need legal certainty to create new products and services. To 

promote this critical component of innovation, we urge the Bureau to create a robust 

"no-action" letter policy that gives companies legal certainty. To be clear, this docs 

not just apply to "ftntech" innovation, but all types of innovation in various areas of 

products and services from small dollar loan offerings to marketing and disclosures. 

Purthcr, we ask the Bureau to start issuing advisory opinions if there arc 

repeated questions from industry on a particular policy. This is a practice that was 

successful at the Federal Reserve Board, and can serve as a method to clear up 

confusion. 

5 https:/(www.centerforcapitalmarkets.com/wp-content/uploads/2018/04/CCMC CFPB-Infographic final.pdf 

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2. Enforce the Law Fairly 

Reconunendation 7: Respect the bounds of the Bureau's authoricy. Congress 

gave the Bureau clear boundaries on what offices to create and what to regulate.6 We 

ask the Bureau to respect these boundaries in the types of activities and institutions 

they try to oversee. 

Reconunendation 8: Give companies fair notice of what the law requires. We 

urge the Bureau to adhere to clear regulations, instead of inconsistent interpretations 

in the enforcement and supervision functions. Only by adhering to concrete 

rulemaking will companies have the due process they are legally entitled to. 

Reconunendation 9: Respect statutes of limitations. Congress imposes statutes 

of limitations so companies arc not potentially subject to lawsuits in perpetuity. In the 

past, the Bureau has taken the position that statutes of limitations do not apply to 

administrative actions. We urge the Bureau to clearly state that it has abandoned this 

position. 

Reconunendation 10: Reform the investigative process. We urge the Bureau 

to refonn the investigative process to ensure that enforcement actions are only 

brought based on clearly articulated violations, instead of hunches or "fishing 

expeditions;" avoid regulation by enforcement; promote a fair marketplace by 

enforcing clearly established legal principles; enforce the law within the limits of the 

Bureau's authority; and avoid regulatory duplication in enforcement activities. We 

also ask that the timeframes and data to be collected arc more reasonable. 

Reconunendation 11: Ensure the adjudication process is fair. We hope the 

Bureau will develop internal policies limiting the use of administrative adjudication to 

ministerial cases that can be resolved expeditiously; allow a respondent company to 

have a limited right of removal to move more complex cases to federal district court; 

and institute safeguards to avoid abuse in any matter that proceeds an administrative 

adjudication. 

6 Dodd-Frank Act§ 1022. 

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Recommendation 12: Reform supervision. We ask the Bureau to refrain from 

treating supervision as a pipeline to enforcement; reform supervisory processes to 

promote consumer protection and reduce unnecessary burdens; and implement 

supervisory authorities clearly, consistently, and fairly across companies. 

3. Educate Consumers with Accurate, Data-Driven Information 

Recommendation 13: Emphasize consumer financial education. Consumers can 

better protect themselves from bad actors if they have access to valuable fmancial 

resources and education. We ask the Bureau to treat financial education as a top 

priority, and work in public/ private partnerships and across governmental bodies to 

ensure consumers receive meaningful and pertinent information. 

Recommendation 14: Reform the complaint database. The complaint database 

can be a helpful resource for the Bureau to monitor markets, but individual 

complaints should not be shared publicly. A federal government agency has the 

responsibility to ensure the data they are making public does not mislead the public or 

violate privacy protections. Until the Bureau can ensure these two critical pillars are 

met, the complaint database should be kept private. 

Moreover, the vast majority of regulators keep complaint data private because the 

issues are not verified and there are privacy concerns \Vith releasing the data. We ask 

the Bureau to follow the lead of other regulators by refraining to publish the data, at 

least until these concerns can be resolved. 

4. Commit to Transparency 

Recommendation 15: Facilitate appropriate congressional oversight. We hope 

the Bureau's new leadership can foster a relationship of trust with Congress. An open 

dialogue will hopefully create a more collaborative environment and foster better 

policy for Americans. 

Recommendation 16: Facilitate meaningful public dialogue. We urge the 

Bureau to usc its megaphone to facilitate meaningful, constructive public dialogue 

with stakeholders. Previously, the Bureau took an adversarial tone with midnight 

embargoes and hyperbolic press releases. Consumers deserve accurate, not one-sided, 

information and we hope the Bureau will provide that going forward. 

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Recommendation 17: Reorganize the Consumer Advisory Board. Congress 

tasked the Bureau with creating a Consumer Advisory Board ("CAB") to "advise and 

consult with the Bureau in the exercise of its functions" and to "provide information 

on emerging practices in the consumer fmancial products or services industry."7 

Unfortunately, the Bureau seemed to use the CAB for publicity and policy releases, 

instead of substantive dialogue. We hope the CAB will be more balanced going 

forward with an increased amount of stakeholders who have experience in the 

fmancial services industry and can articulate how policies will affect consumers in the 

real world. 

Recommendation 18: Rescind the proposed gag order. In August 2016, the 

Bureau proposed a rule that would prevent businesses from disclosing civil 

investigative demands ("CIDs"). The Chamber and other stakeholders view this as a 

violation of businesses' free speech rights, and we ask the Bureau to formally rescind 

this proposal. 

5. Avoid Regulatory Duplication and Burden 

Recommendation 19: Coordinate regulatory activities with other agencies. The 

patchwork of federal regulators is complex and unwieldy. But don't take our word for 

it- the Government Accountability Office ("GAO") said in a 2016 report: "The U.S. 

fmancial regulatory structure is complex, with responsibilities fragmented among 

multiple agencies that have overlapping authorities."8 We hope the Bureau will work 

to minimize duplication and promote efficiencies when working 'W-ith its federal and 

state counterparts. 

Recommendation 20: Defer to regulators with primary authority. In an effort 

to minimize duplication, we hope the Bureau will defer to regulators that have clear 

authority or who have been leading an enforcement action or rulemaking instead of 

duplicating the work. Designating a lead agency will also help to coordinate efforts. 

Recommendation 21: Avoid unnecessarily burdensome information requests. 

In the supervisory, enforcement, and rulemaking process, immense data is requested 

of companies to better understand issues. There is often need for this information, 

however, requests can also be outside the scope of the pertinent questions, require 

7 Dodd-Frank Act§ 1014{a). 

'Gov't Accountability Office, Financial Regulation: Complex and Fragmented Structure Could Be Streamlined to 

Improve Effectiveness {Feb. 2016), https://www.gao.gov/assets/680/67S400.pdf 

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lengthy responses in a short timeframe, and require pulling together information from 

legacy systems that do not function together. We ask that information requests be 

thoughtful and limited to only truly necessary matters. 

6. Structure the Bureau for Long-Term Success 

Recommendation 22: Adopt a commission structure. For years, we have 

advocated a five-person bipartisan commission instead of a sole director oversee the 

Bureau. 1\ commission structure would mitigate the pendulum swing from one 

director to the next, and create more certainty for industry and better outcomes for 

consumers .. Acting Director Mulvaney has repeatedly stated he has too much powerCongress must finally remedy this by passing legislation instituting a bipartisan 

commission structure for the Bureau. 

Recommendation 23: Institute congressional control over the Bureau's budget. 

The Constitution gives Congress the power of the purse, which provides the 

opportunity for continual and meaningful oversight.9 Only with this check and 

balance will the Bureau be subject to real oversight. Again, the CCMC/Morning 

Consult poll found that consumers agreed- 66% of people polled supported 

government agencies with checks and balances.10 

The Bureau's Call to Evidence 

In addition to the Chamber Reform Agenda, we have been providing feedback 

to the Bureau on how to improve the agency through recent comment letters. \Ve 

thank the Bureau for releasing their "Call to Evidence," which is the compilation of 

12 separate requests for information ("RFis") to conduct an audit of the agency. As 

we know, this is the very first time the Bureau has transitioned power, which makes it 

incredibly important to conduct such thoughtful analysis to hopefully create a more 

mature, transparent, and accountable agency. 

In preparing our responses to the RFis, we have spent countless hours 

receiving feedback from businesses on how to best improve the Bureau, and 

identifYing concrete principles that can guide the agency for the long run. To date, we 

have filed six comment letters addressing CIDs, adjudication proceedings, the 

enforcement process, the supervision process, external engagements, and the 

9 U.S. Constitution, Article I. 10 https://www.centerforcapitalmarkets.com/wp-content/uploads/2018/04/CCMC CFPB-Infographic final.pdf 

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complaint database. We look forward to filing our rulemaking comment tomorrow, 

and subsequent comments due through July 16tl'. In the interest of time, I will not 

address each letter individually, but will provide them for the record. 

Bureau's Semi-Annual Report and Congressional Recommendations 

This brings me to the Bureau's thirteenth Semi-r\.nnual Report that was issued 

on r\pril2, 2018. In his opening letter, Acting Director Mulvaney suggested four 

suggested statutory changes, which I will address individually. 

11 1d. 

1. Fund the Bureau through appropriations: We have long supported putting 

the Bureau under true congressional oversight, which is the practice at the 

majority of federal agencies. As discussed above, the Chamber Reform Agenda 

also recommended that the Bureau come under the regular order of 

appropriations and be accountable to Congress. The CCMC/ Morning 

Consult poll found that the public agreed: 66% of those surveyed recognized 

the importance of appropriations to provide checks and balances over 

governmental agencies. 11 

2. Require legislative approval of major Bureau rules: While we do not take a 

position on whether legislative approval should be required for all regulations, 

we do believe regulations should be based upon clear statutory authority and 

subject to rigorous oversight. 

3. Ensure that the Director answers to the President in the exercise of 

executive authority: The Chamber believes that all agencies should be held 

accountable and the Bureau is no different. As I noted earlier, we support 

moving to a bipartisan commission structure to manage the agency. So long as 

a single director heads the Bureau, it is critical that the limitation permitting the 

director's ftring only "for cause" be repealed as it completely insulates the 

Director from the President's authority and accountability. 

4. Create an independent Inspector General ("IG") for the Bureau: Just 

based on sheer bandwidth, it seems logical that the IG would be more effective 

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if it had only one agency to oversee instead of having to oversee the Federal 

Reserve as well. We agree \v:ith this recommendation. 

Conclusion 

I look forward to working with the Committee and this Subcommittee on 

legislative proposals that make the Bureau more mature, accountable, and transparent. 

Thank you again to the Chairman, Ranking Member, and Committee for holding this 

hearing and for the opportunity to testify. I am happy to take any questions. 

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WASHINGTON BUREAU· NATIONAL ASSOCIATION FOR THE ADVANCEMENT OF COLORED PEOPLE 

1156 15'H STREET. NW SUITE 915 ·WASHINGTON. DC 20005 · P (202) 463-2940 · F (202) 463-2953 

E-MAIL: WASHINGTONBUREAU@NAACPNET.ORG · WEB ADDRESS WWW.NAACP.ORG 

TESTIMONY OF HILARY 0. SHELTON 

Director, NAACP Washington Bureau & 

Senior Vice President for Policy and Advocacy 

Before the Committee on Financial Services of the 

U.S. House of Representatives 

Subcommittee on Financial Institutions and 

Consumer Credit 

On 

111mproving Transparency and 

Accountability at the Bureau of Financial 

Consumer Protection" 

Wednesday, June 6, 2018 
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WASHINGTON BUREAU· NATIONAL ASSOCIATION FOR THE ADVANCEMENT OF COLORED PEOPLE 

1156 15TH STREET. NW SUITE 915 ·WASHINGTON, DC 20005 · P (202) 463-2940 · F (202) 463-2953 

E-MAIL: WASHINGTONBUREAU@NAACPNET.ORG ·WEB ADDRESS WWW.NAACP.ORG 

TESTIMONY OF HILARY 0. SHELTON 

Director, NAACP Washington Bureau & 

Senior Vice President for Policy and Advocacy 

Before the Committee on 

Financial Services 

Subcommittee on Financial Institutions and Consumer Credit 

U.S. House of Representatives 

Wednesday, June 6, 2018 

Good morning, Chairman Luetkemeyer, Ranking Member Clay, and esteemed members of this 

subcommittee. Thank you so much for inviting me here today to testify on this important topic 

and for requesting the input of the NAACP. 

Founded more than 109 years ago, in February of 1909, the National Association for the 

Advancement of Colored People, the NAACP, is our nation's oldest, largest, and most widely· 

recognized grassroots-based civil rights organization. We currently have more than 2,200 

membership units across the nation, with members in every one of the SO states as well as 

units on overseas military bases. In addition to our regular adult units, we also have youth and 

college units in any number of communities and schools across the country as well as units in 

prisons. 

My name is Hilary Shelton, and I am the Director of the NAACP Washington Bureau and the 

Senior Vice President for Policy and Advocacy. I have served as the Director of the NAACP 

Washington Bureau, our Association's federal legislative and national public policy arm, for over 

20 years. 

Financial empowerment and the economic security of the communities served and represented 

by the NAACP has, since our inception, been a cornerstone of our agenda. "Economic 

Sustainability" continues to be a priority for the NAACP in that it is one of the "game changers" 

(along with criminal justice, education, health, civic participation I voting rights, and activating, 

educating, and promoting our youth) outlined in the most recent NAACP strategic plan, 

designed to carry us through our second century in fighting against racial bias and racial and 
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ethnic inequality. To that end, we have been and continue to be active in advocating on issues 

of economic importance to the people we serve and represent, as well as all Americans, from 

supporting an increase in the federal minimum wage towards a living wage to opposing 

predatory lending of all sorts in our communities. 

Introduction 

It is therefore with great appreciation that I was honored to receive your invitation to testify 

today. The sad truth is that rampant discrimination still exists in the world of financial services. 

The extent to which you are accepted into the world of mainstream financial transactions, from 

who gets financing and on what terms on almost every issue imaginable, including mortgages, 

owning or leasing a car, is still based largely on what you look like and I or where you live. How 

much you pay depends largely on who you are: your race or ethnicity, your age, gender, station 

in life, or zip code. We as a society, led by a government that is charged with ensuring that all 

people are allowed to pursue life, liberty, and happiness can and must do better. 

We, the people, the average consumer, need more transparency and accountability from the 

financial sector. We need to know when there may be discrimination and we need a strong 

voice in stopping the devastating impact. We need to know that the government is working for 

and with us, not to our demise or on behalf of corporations and billionaires who want to make 

even more profit, regardless of the cost to others. 

In short, we need a strong, robust, and vibrant Consumer Financial Protection Bureau ("CFPB" 

or "Bureau") which operates as it was intended. Americans need facts from which they can 

make informed decisions and we need protection from unscrupulous predatory individuals and 

companies. 

I should hasten to add here that not all financial servicers are bad. In my tenure as an advocate 

for racial and ethnic minorities as well as low- and moderate-income Americans, I have 

witnessed financial institutions of all types and sizes go to great pains to help the communities 

served and represented by the NAACP. Unfortunately, I have also witnessed instances- too 

many cases- in which entire communities are not able to build wealth or establish a nest egg 

for their children because they do not have access to fair or equal credit. 

The Consumer Financial Protection Bureau from inception through today 

It is because of the bad actors in the financial landscape- an often confusing and bewildering 

world in which we must all operate- that the NAACP was instrumental in and therefore 

pleased with the creation of the CFPB by the Dodd Frank Wall Street Reform and Consumer 

Protection Act ("Dodd Frank"). Finally, there is a federal agency whose sole purpose is to "seek 

to implement and, where applicable, enforce Federal consumer financial law consistently for 

the purpose of ensuring that all consumers have access to markets for consumer financial 

products and services and that markets for consumer financial products and services are fair, 
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transparent, and competitive1." Furthermore, one of the six prime objectives of the newly 

formed bureau is to ensure that "consumers are protected from unfair, deceptive, or abusive 

acts and practices and from discrimination2." In other words, a strong CFPB would help bring 

about the fairness and equity in financial products that the NAACP and so many other 

consumer protection groups have been working for. 

Under the first confirmed Director of the CFPB, Rich Cordray, the Bureau started off strong. 

Between mid-2011 and the end of 2017, the CFPB's rulemaking process has been inclusive, 

transparent, evidence-based and comprehensive. The Bureau tackled issues including, in 

conjunction with the US Department of Education, the creation of a financial aid shopping sheet 

for potential student loan borrowers which is currently being used by more than 3,270 colleges, 

to strong mortgage rules for home buyers, to saving our hard working military families from 

potential debt traps created by unscrupulous pay-day lenders. 

Furthermore, since its establishment, the CFPB' s supervision and enforcement actions alone 

resulted in nearly $12 billion in ordered relief for more than 29 million consumers victimized by 

unlawful activity3• Working with the financial services industry, civil rights organizations, 

consumer groups, individual consumers and other interested parties, the CFPB created rules, 

regulations, procedures, and guidances, that were well informed, balanced, and which protects 

all Americans. The CFPB also engages in creating countless factsheets and helpful tip sheets on 

navigating the often complicated world of finances. The CFPB helps finance markets work by 

making rules more effective, consistent, and fair and by empowering consumers to better 

understand and take more control over their economic lives. 

Recommendations for the future 

The CFPB, and the federal government, must continue to provide more information and more 

transparency to advocacy groups, industry, researchers, and consumers. It is the role of the 

government to continue to pass laws and issue strong rules, regulations, and guidances to 

protect all of its citizens from unscrupulous financial servicers which may target particular 

groups or communities with higher terms or the outright rejection of products simply because 

of what they look like or where they live. 

As such, we recommend that the CFPB stay on its current trajectory which is built on its current 

successes. This includes a strong commitment to issuing even-handed rules and regulations to 

protect American consumers. To date, the CFPB has embraced an inclusive approach to public 

1 P .L. lll-203, Subtitle B, Section I 021 2 ibid 

3 Consumer Financial Protection Bureau, Factsheet: By the Numbers (July 2017), 

https://s3.amazonaws.com/files.consumerfinance.gov/£'documents/201707 _ cljlb _by-the-numbers. pdf; Zixta Q. 

Martinez, Six Years Serving You, CFPB (July 21, 2017).https://www.consumerfinance.gov/about-us/blog/six-yearsserving-youl. 
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outreach from the financial services industry, advocacy organizations, and consumers to 

provide additional opportunities for input from all sides in its rulemaking processes. The CFPB 

should continue its efforts to hear from consumers and other stakeholders as much as possible 

to inform its rulemaking at all stages of the process. 

It is in this vein that I offer the following recommendations for a strong, vibrant and robust 

CFPB which continues to work with all interested parties to protect and inform Americans 

everywhere. As such: 

1. Do not subject the CFPB to the Congressional appropriations process: it would be a 

serious mistake for Congress to undo the CFPB's current independent funding. like the 

other bank regulatory agencies, the CFPB is currently funded in a way that insulates it 

from the pressures Wall Street and other financial sectors can too easily manipulate. 

Making this change would leave the CFPB more vulnerable than the Federal Reserve, 

the OCC, and the FDIC to industry influence, once again treating consumer financial 

protection as a less important matter. It would give Wall Street and the worst elements 

of the financial services industry endless lobbying opportunities to deny the CFPB the 

funding to do its job if and when the regulator takes an action that a sector of the 

industry did not like. 

2. Promulgate the "Short Term Loan" rule as it was originally drafted: Americans, 

particularly Americans of color, need relief from high-interest short term loans, such as 

pay-day and car title loans, which charge an average of 400% in interest and fees for a 2 

to 3 week loan. Released in October of last year, the rule was scheduled to go into 

effect in the summer of 2019, 21 months after being published in the federal register. 

At the heart of the rule, which took years of strenuous research and input from 

stakeholders on all sides to develop, is the common-sense ability-to-repay principle 

based on a borrower's income and expenses. This means that lenders will be required 

to determine whether a loan is affordable to the borrower before making it. An 

affordable loan is one a borrower can reasonably be expected to pay back without reborrowing or going without the basic necessities of life like food or rent money. Reopening the rule, as was proposed by Director Mick Mulvaney of the Office of 

Management and Budget (OMB) in January of this year, would needlessly send more 

Americans into a debt trap. Furthermore, given that payday and car title lenders tend to 

concentrate their operations in low-income and communities of color, the NAACP 

stresses a sense of urgency in stopping this loss of wealth building. 

3. Reassert the enforcement powers of the Office of Fair Lending: The January decision 

to move the Office of Fair lending and Equal Opportunity, which was previously an 

equal division alongside supervision and enforcement, and which is now part of the 

office that handles internal agency concerns about employees sends a clear signal to 
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unscrupulous lenders that it is okay to discriminate. Stripping the office of its 

enforcement abilities appears contrary to one of the central components of the creation 

of the CFPB in Dodd Frank, which explicitly states that one of the responsibilities of the 

Bureau was "oversight and enforcement of federal laws intended to ensure the fair, 

equitable, and nondiscriminatory access to credit for both individuals and communities 

that are enforced by the bureau.4 " By moving the Office of Fair Lending, the CFPB is 

leaving neighborhoods and consumers across the country more vulnerable to bias. It is 

demonstrably weakening CFPB's efforts to fight discrimination in the consumer financial 

marketplace even as the agency returned $400 million from discriminatory financial 

institutions to American families who had been overcharged or denied credit. 

4. Do not require explicit Congressional approval of any proposed regulation, major or 

otherwise, in order for the rule to take effect: legislation currently before Congress 

would require explicit Congressional approval of any proposed "major" regulation in 

order for the rule to take effect5• While the bills would affect the full range of Federal 

regulations, including rules that ensure consumer products are safe for children, rules 

that protect worker safety in coal mines, environmental rules that protect the safety of 

our air and water, financial regulations, and many more. It has also been suggested that 

a more narrowly tailored provision be considered only for rules that safeguard the 

financial system and financial consumers. In other words, significant rules governing the 

financial sector will not go into effect unless both Houses of Congress vote again to 

approve each individual rule and the President once again approves the rule -even 

though the laws authorizing these rules have already been passed by Congress and the 

President. The implementation of administrative rules are necessary to give laws actual 

effect. This massive presumption against actually putting rules in place will be an 

enormous barrier to agency actions that protect the public from irresponsible or 

exploitative behavior by financial institutions. In short, this requirement would create 

crippling barriers to administrative actions necessary to protect the public and 

implement the law. 

5. Do not revise the bulk of the CFPB's public reporting practices: Dodd Frank considers 

"collecting, investigating, and responding to consumer complaints6" such vital tasks that 

it is specifically enumerated as one of the six statutory "primary functions" of the CFPB. 

The resulting public complaint database is a tool that empowers individuals to inform 

and protect themselves in the marketplace. It helps consumers evaluate a 

company's practices as they decide where to take their business and creates incentives 

for companies to treat their customers fairly. It helps both consumers and businesses 

4 P.L. 111-203, Subtitle B, Section 1021 5 HR 26, IS. 21, the "Regulations from the Executive In Need of Scrutiny Act of2017," also known as the REINS 

Act 

6 Dodd-Frank 5511(c)2 
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resolve problems when they arise and helps the market reward good products and 

services by providing consumers with the ability to publicly share their experiences. The 

complaint database also allows companies to identify and correct problems on their 

own without the impetus of a new rule or enforcement action. The database can also 

provide consumers, advocates and the CFPB with the substance required to prompt a 

review of business behavior that can detect and challenge abusive and discriminatory 

practices. 

The CFPB's process facilitates responses to individual complaints, which helps to hold 

companies accountable. The fact that the complaint database is available to the public is 

the deterrent some that companies need to address complaints they would otherwise 

ignore, and the impetus for other firms to resolve complaints, where possible. We 

therefore urge the Bureau to maintain public access to the complaint database and to 

include additional detailed data in its statutory reports to provide the most meaningful 

information possible for consumers to make responsible financial decisions. 

6. Retain the Office for Students and Young Consumers: In the six short years of its 

existence, the CFPB Office for Students and Young Consumers has spurred actions that 

returned $750 million to student borrowers, and helped demand answers on over 

50,000 complaints about student loans, making it a crucial contributor to fulfilling the 

Bureau's consumer protection mission. In May, OMB Director Mulvaney announced 

that he was disassembling the office and folding its duties into the CFPB Office of 

Financial Education, thereby dismantling the only unit in the federal government solely 

dedicated to protecting student loan borrowers from predatory actors in the financial 

sector. This is an ill-advised move, given that roughly 42 million Americans owe more 

than $1.5 trillion in student loans. To close this office is an incredibly short-sighted 

move, with far-reaching consequences which will harm millions of students who are 

already struggling with debt or those who are seeking an affordable education. 

7. Increase- do not decrease- the amount of information and number of mortgage 

lenders required to make public their loans under the Home Mortgage Disclosure Act 

(HMDA): The NAACP is a firm believer in the old adage that "to truly manage a 

problem, we must first accurately and fully measure it." If we as a nation learned 

anything from the 2008 financial crisis, it is that American consumers need more 

information, regulation, and protection -not less. The stark disparities in access to 

mortgage credit and the continued struggle for economic recovery in the communities 

hit hardest by the financial crisis of 2008 that still exist, call for a strengthening of our 

nation's fair lending laws, specifically HMDA, not a weakening of them. 
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For this reason, the NAACP was extremely dismayed with enactment of S. 21557• 

Specifically, we were adamantly opposed to section 104 of the legislation which 

exempted roughly 5,400 (or almost 85%) of depositories from submitting updated 

reporting on their mortgages. The higher threshold which has been newly established 

will sacrifice key data about lending in underserved communities that would help to 

ensure the flow of credit to qualified borrowers, stimulate the economy, and prevent 

future mortgage crises. Without this crucial data regulators and others like the NAACP 

are once again left without the full information we need to determine patterns in loan 

terms and loan amounts that could increase costs and risk of foreclosure for borrowers. 

8. Retain a single director of the CFPB as opposed to a commission: Making a single 

director responsible for the agency's functioning facilitates effective decision-making 

and ensures a clear point of responsibility for the CFPB's actions and performance. In 

this instance, the NAACP agrees with the wisdom of the federal appellate court in its 

decision of January 31, 2018, when it decided in favor of the current CFBP governing 

structure in the case of PHH Mortgage Corp. v. CFPB. Writing for the majority, Judge 

Cornelia Pillard said "Congress designed an agency with a single Director, rather than a 

multi-member body, to imbue the agency with the requisite initiative and decisiveness 

to do the job of monitoring and restraining abusive or excessively risky practices in the 

fast-changing world of consumer finance ... A single Director would also help the new 

agency become operational promptly, as it might have taken many years to confirm a 

full quorum of a multi-member body." "By providing the Director with a fixed term and 

for-cause protection, Congress sought to promote stability and confidence in the 

country's financial system.8" Several Bureaus and Agencies within the U.S. government, 

from the Office of the Comptroller of the Currency, to the U.S. Environmental Protection 

Agency, to the Department of the Treasury all utilize a single Director with great 

efficiency and effectiveness. 

9. Do not create a situation in which the Director of the CFPB must be responsive to the 

whims of the President. Retain his or her independence: The U.S. Supreme Court has 

held that whether the Constitution requires the president to enjoy unfettered authority 

to remove the head of an agency "depend[s] upon the character of the office. 9" The 

CFPB is characteristic of the administrative agencies for which the Supreme Court has 

upheld for-cause removal. In upholding such removal protections restrictions for the 

FTC, the Supreme Court explained that "[i]n administering the [prohibition] of 'unfair 

methods of competition' that is to say in filling in and administering the details 

embodied by that general standard - the [FTC] acts in part quasi-legislatively and in 

7 Public Law 115-174 8 PHH Corporation, et al. v. Consumer Financial Protection Bureau, 15-1177, pp.l2-13 9 Humphrey's Executor, 295 U.S. at 631; accord Wiener, 357 U.S. at 353 ("the most reliable factor for drawing an 

inference regarding the president's power of removal ... is the nature of the function that Congress vested"). 
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part quasi-judicially." The CFPB has the same quasi-legislative and quasi-judicial 

responsibilities to define and enforce the prohibition of "unfair, deceptive, or abusive 

act[s] or practice[s]" in consumer finance, as well as to make rules and enforce for the 

consumer finance statutes. 10 

10. Reject efforts to establish an independent inspector general (IG) for the CFPB: 

Congress is currently considering legislation to establish a separate IG for the CFPB11. 

This legislation is unnecessary because the CBPB already has an IG, shared with the 

Federal Reserve, within which the CFPB is housed. Since the CFPB sits administratively 

inside the Federal Reserve, it is illogical not to have it under a single shared IG with the 

board, a system that has worked well. Dodd Frank establishes that the Federal Reserve's 

Office of Inspector General presently has oversight authority for Bureau, conducting 

audits, investigations, and other necessary reviews. 

The current Inspector General's detailed work plan for CFPB oversight lays out the fact 

that the IG has completed, is conducting, and is planning a variety of CFPB oversight 

functions. In fact, in 2015 alone, the IG has issued 10 reports on CFPB operations. The 

current IG has repeatedly stated in letters to Congress and to the Bipartisan Policy 

Center, that it has the authority, resources, and independence to conduct oversight 

activities of the CFPB. There is no evidence that the existing structure is inadequate. 

Conclusion 

In closing, I would just like to reemphasize the need for the CFPB to stay on course, to remain a 

strong, transparent, and robust tool for protecting all consumers in the often-confusing and 

too-often predatory world of financial services. To that end, I would be remiss if I did not voice 

my objections to the multitude of Requests for Information (RFis) that the CFPB has issued as of 

late. Not only does this signal a change in course for the bureau, but the amount of time and 

attention required to adequately address these RFis on a wide variety of subjects in a very short 

amount of time has diverted valuable consumer advocacy and third party resources to respond 

to these requests. The very structure of these RFis, the nature of many of the questions, gives 

us grave concerns about any attempts to weaken consumer protection through this process. 

Dodd Frank was enacted, and the CFPB was created, in response to the economic crisis of 2008. 

As of late, we appear to be going backwards to a pre-Dodd Frank deregulation, much to the 

chagrin and dismay of the NAACP. Many of the people and communities we serve and 

represent are still hurting from that recession; many will never own a home again or have a 

nest egg to pass on to future generations as a result. 

lO 12 u.s.c. §§ 5481(12), 5531. 11 H.R.3625, the CFPB-IG Act of2017 
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We shall never forget. We were targeted by unscrupulous, nefarious lenders and others who 

had no concern for the economically destructive impact that their costly wares would have on 

the lives of individuals, families, and entire neighborhoods and communities. One result of the 

devastation was our clear and strong support for Dodd Fronk and the CFPB. They gave our pain 

some salve, and they worked to ensure that future generations would not suffer our fate. I 

thus urge you, in the strongest terms possible, to continue to work for a CFPB that is strong, 

transparent, and willing and able to stand up to anyone who tries to make money by targeting 

others with too-high interest rates or confusing language. 

Thank you again for inviting me here today and for requesting the thoughts and concerns of the 

NAACP. I welcome your comments or questions. 
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6, 2018 

the 
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June 6, 2018 

Testimony of Elmer K. Whitaker 

before the 

Financial Services Committee 

Subcommittee ou Financial Institutions and Consumer Credit 

United States House of Representatives 

June 6, 2018 

Chairman Leutkemeyer, Ranking Member Clay, and members of the subcommittee, my name 

is Elmer Whitaker. I am President of Whitaker Bank Corporation of Kentucky, a family-owned bank 

holding company located in Lexington, Kentucky. Our holding company owns and operates two 

banks in Kentucky- Whitaker Bank, Inc, where I serve as Chief Executive Officer and Peoples 

Bank and Trust of Madison County. We also own and operate Kentucky Trust Company, which 

provides wealth management and insurance services. 

Whitaker Bank Corporation of Kentucky was founded by my Grandfather in 1978 with five 

locations in three counties and total assets of $59 million. Today we have 45 locations in 17 

counties with combined assets of $1.75 billion. We are proud of the community banking services 

we have provided to homeowners, businesses and neighbors throughout our market in Kentucky. 

While we offer the convenience of online banking, text banking, and mobile banking, our success is 

rooted in the relationships based on honesty and trust between our bank and the customers we serve. 

I am also pleased to be before the subcommittee today to share our views on "Improving 

Transparency and Accountability at the Bureau of Consumer Financial Protection." Before 

speaking on this subject, I would first like to commend Chairman Hensarling and members of the 

House of Representatives for their support of S. 2155, the Economic Growth, Regulatory Relief and 

Consumer Protection Act. This commonsense legislation is long overdue. This new law will help 

community banks, like mine, better serve our customers and communities. I would also like to 

thank Congressman Andy Barr for his steadfast support on a number of provisions in the bill, in 

particular his leadership on creating a safe harbor for qualified mortgage products. It is these types 

of commonsense proposals that help us better serve our mortgage customers. 

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June 6, 2018 

As a community banker, I fully support effective consumer protection. We believe tbat 

Kentuckians are best served by a financially sound banking industry tbat safeguards customer 

deposits, lends those deposits responsibly, and processes payments efficiently. To achieve those 

goals, effective controls are needed to ensure that measures designed to help customers do not 

inadvertently limit credit. This committee is charged with crafting legislative proposals that provide 

the proper balance of protections to help the financial industry serve our customers. 

Since the creation of the Dodd-Frank Act, several proposals have been introduced tbat would 

replace the position of Director of the Consumer Financial Protection Bureau (CFPB) with a bipartisan five-member commission, similar to other financial regulatory agencies. We support this 

commission concept and believe that a commission structure is appropriate to address the extremely 

broad authority of a single director. We believe that a commission would broaden the perspective on 

any rulemaking and enforcement activity of the Bureau, and it would provide necessary and 

appropriate checks and balances in the exercise of the Bureau's authority. We would also like to see 

an appeals process that is reviewed by more than a single director; the commission concept could 

address tbis need. 

Bills have also been introduced tbat eliminates the direct funding of the Bureau by the Federal 

Reserve and subjects the Bureau to the regular congressional appropriations process. 

The Bureau has been given broad authority that can alter financial markets, but it lacks 

accountability that comes from budget oversight. Funding for the Bureau comes not from Congress, 

but from the Federal Reserve as a fixed portion of its total operating expenses. Oversight by 

Congress would allow the very consumers who the Bureau was designed to protect to hold it 

accountable through their elected officials. 

In my opinion, tbere needs to be an effective check and balance on the Bureau's authority. We 

support the principle of accountability and balance and commend this committee for continually 

pushing for greater accountability at the Bureau. 

Similarly, we support efforts to create transparency by creating an Inspector General. The 

Inspector General's function is to serve as an independent unit that conducts audits, investigations, 

and reviews programs and operations. The CFPB handles a large portfolio of financial industry and 

consumer issues. I would hope that the CFPB would welcome an independent review of its 

operations. 

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June 6, 2018 

Mr. Chainnan, as I noted, my bank fully supports consumer protection. We believe, however, 

that new regulations must be reviewed to ensure they are meeting their intended purpose. 

Regulation, whether by the CFPB or other regulatory agencies, shapes the way banks do business 

and can help or hinder the smooth functioning of the credit cycle and economic expansion. Bank 

regulatory changes-through each and every law and regulation, court case and legal settlementdirectly affect the cost of providing banking products and services to customers. Even small changes 

can have a big impact on bank customers by reducing credit availability, raising costs and driving 

consolidation in the industry. Everyone who uses banking products or services is touched by 

changes in bank regulation. In many communities, appraisal costs alone for a home loan have 

doubled since the implementation of Dodd-Frank. 

The mles in Dodd-Frank have caused some banks to stop offering certain products altogether, 

such as mortgage and other consumer loans. The fact is that most community banks are small 

businesses by any definition. The median sized bank in this country has only 44 employees. There 

is simply not enough capacity to read and understand what mles apply; implement, train, and test for 

compliance with those that do; and still have the time and resources to meet with individuals and 

businesses about their financial needs. Faced with the thousands of new regulations, the economics 

have forced many strong, well-mn community banks to sell or merge with another bank. As of the 

first quarter of2011, there were 179 commercial banks in Kentucky; 6,402 nationwide. By the first 

quarter of2018, this number had decreased to 143 in Kentucky; 4,852 nationwide (FFIEC, retrieved 

from FRED, Federal Reserve bank of St. Louis). 

As Congress continues to review the Dodd-Frank Act and the role of the CFPB, we would 

encourage you to take into consideration additional changes at the Bureau, as follows: 

Create CFPB Advisory Opinion Process 

Innovation and consumer protection in financial products and services is currently hampered 

because there is no effective way to obtain an advanced mling from the Consumer Financial 

Protection Bureau ("Bureau") regarding whether or not a proposed product or service would 

conform or would potentially violate the federal consumer laws. This lack oflegal and regulatory 

certainty chills innovation and prevents consumers from benefitting from such products and services 

and harms economic growth. 

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June 6, 2018 

Innovators and CFPB staff do not have a means to formally review a product before it reaches 

consumers, which unnecessarily delays important consumer protection conversations until a costly 

enforcement action is potentially undertaken. This reactionary posture creates an information 

vacuum, depriving innovators of vital compliance information and preventing CFPB staff from 

staying abreast of emerging consumer product trends·- knowledge which is important to their 

effectiveness as a regulator. 

Legislation is needed that directs the Bureau to establish a formal process for innovators to 

voluntarily ask for an opinion on whether a proposed product or service would conform or violate 

federal consumer law. The Bureau's opinion should be one that can be relied upon by the innovator 

making the inquiry as an official interpretation of the applicable underlying federal consumer law. 

Review Section 1071 of the Dodd-Frank Act 

Section 1071 of the Dodd-Frank Act requires the Bureau to prescribe rules for collecting and 

reporting data on lending to minority-owned and women-owned small businesses. Unfortunately, 

this HMDA-like data collection over-simplifies the nature of the small business lending 

environment, and will mislead community leaders, government entities and creditors from 

identifying the business and community development needs and opportunities for local small 

businesses. Moreover, there has been no analysis of whether this new data collection duplicates 

existing data on small business lending collected by the Small Business Administration (SBA) and 

the banking agencies pursuant to the Community Reinvestment Act. 

Perhaps most troubling is there has been no analysis of its impact on economic growth given 

the potential negative effects this may have on what loans are made or not made in a local 

community. The considerable burdens associated with this data collection and reporting regime 

would add significant costs and red tape to small business lending, discouraging a primary engine 

for economic growth. Moreover, the majority of small business lending is originated by community 

and mid-size banks, which try to adapt to the needs and circumstances of individual borrowers. 

Compliance with this rule, however, will impede this individualized approach due to potential fair 

lending liability concerns. This will inevitably lead to the homogenization of small business loans, 

which will hurt small businesses and the banks that want to serve them. This would be 

counterproductive to the provision's underlying goal of facilitating increased credit access and 

economic growth. 

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June 6, 2018 

To correct this, the Bureau and the Small Business Administration (SBA) should be requiredbefore the Bureau is authorized to prescribe any rule for collecting and reporting loan data-to 

conduct a joint-study to determine whether the proposed collection would be duplicative of existing 

data collections and to determine whether the costs for such data collection exceed the potential 

benefits. The agencies should also be required to submit a report to Congress on their fmdings along 

with their recommendations, if any, for prescribing rules for the collection and reporting of 

minority-owned and women-owned small business loan data. 

Conclusion 

Community banks continue to be the backbone of Kentucky and hometowns throughout 

America. My banks presence means we have a personal stake in the economic growth, health, and 

vitality of the communities we serve. 

By eliminating unnecessary impediments and ensuring that the agencies that oversee our 

products are fully transparent, Congress can help stem the tide of community bank consolidation 

driven by these unnecessary regulations which negatively impact every community across the 

United States. 

Thank you again for the opportunity to testify today. I look forward to the continued 

commonsense legislation from this committee. 

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June 5, 2018 

The Honorable Blaine Luetkemeyer 

Chairman 

Subcommittee on Financial Institutions and 

Consumer Credit 

United States House of Representatives 

Washington, DC 20515 

The Honorable William "Lacy" Clay 

Ranking Member 

Subcommittee on Financial Institutions and 

Consumer Credit 

United States House of Representatives 

Washington, DC 20515 

Dear Chairman Luetkemeyer and Ranking Member Clay: 

On behalf of ACA International (ACA), the Association of Credit and Collection Professionals, I 

am writing regarding the Subcommittee on Financial Institutions and Consumer Credit Hearing 

entitled, "Improving Transparency and Accountability at the Bureau of Consumer Financial 

Protection." We respectfully request that you accept this letter for the record. 

Without an effective collection process, the economic viability of businesses and, by extension, 

the American economy in general, is threatened. Recovering rightfully-owed consumer debt 

enables organizations to survive, helps prevent job losses, keeps credit, goods, and services 

available, and reduces the need for tax increases to cover governmental budget shortfalls. 

Furthermore, without the information that ACA members provide to consumers, they cannot 

make informed decisions that help preserve their ability to access credit, medical care, and a 

host of other goods and services. ACA members play a key role in helping consumers fulfill 

their fmancial goals and responsibilities while facilitating broad access to the credit market. 

Consumers often want and need the information that ACA members provide them and there 

should be clear and workable rules for communicating with them. 

Since the inception of the Bureau of Consumer Financial Protection (BCFP or Bureau) there 

have been many instances where it has failed to fulfill its statutory mission and obligations, 

which require it to make markets for consumer financial products and services work in a fair, 

transparent, and competitive manner. ACA has outlined detailed suggestions for improving 

transparency and accountability in several recent comment letters to the BCFP (attached) and 

plans to provide additional feedback in other BCFP Requests for Information. It is critical that 

the BCFP address the serious concerns that have been outlined about past Bureau practices, so 

that consumers and businesses can count on a fmancial services marketplace with due process, 

which includes clearly defined requirements and obligations. 

Moreover, ACA remains concerned that the Bureau's current structure, including a single 

director removable only "for cause" and funding outside the appropriations process, leads to a 

lack of accountability and uncertainty. This uncertainty is not only borne by financial services 

market participants, including the debt collection industry, but also negatively impacts American 

consumers, small businesses, and our local economies. Dramatic shifts in the BCFP's philosophy 
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and approach with each change in presidential administration make it difficult for small 

businesses to plan for the future. 

To that end, we encourage the Subcommittee to enact H.R. 5266, the Financial Product Safety 

Commission Act of2018, which creates a multi-member bipartisan commission, addressing 

many of the concerns about the BCFP's transparency and accountability. Additionally, we 

support efforts to bring the BCFP under the appropriations process, so that Members of Congress 

can provide checks and balances on the BCFP, and so that their constituents can have a voice in 

how the Bureau operates. 

Thank you for your leadership in holding today's hearing. We look forward to continuing our 

engagement with the Subcommittee about issues that are important to our industry. 

Sincerely, 

MarkNeeb 

Chief Executive Officer 

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21, 20!8 

Monica Jackson, 

Office of the Executive Secretary 

Consumer Financial Protection Bureau 

1700 G Street NW 

Washington, DC 20552 

Re: Comments of ACA International on 

Bureau's Supervision Program, Docket Number 

Dear Ms. Jackson: 

lntemational the Association of Credit and Collection Professionals, 

submits these comments in response to the request the Bureau of Consumer Financial 

Protection ("Bureau") for comments in response to for Information the 

Bureau's Supervision Program," 83 Fed. 7166 (Feb. 2018). ACA aprlre<:iates 

opportunity to provide input on the Bureau's for Information. 

I. BACKGROUND ON ACA INTERNATIONAL 

International is the leading trade association for credit and collection prc,fe~;sicmals. 

Founded in 1939, and with ofikes in D.C. and Minnesota, ACA 

represents approximately 3,000 members, credit grantors, collection 

agencies, asset buyers, attorneys, and vendor affiliates in an industry that 

230,000 worldwide. Given its and broad mt>mh,<>ronin 

oo;nn,om~a to assist the Bureau '1\ith related to debt as 

as to collaborate with the Bureau on how its policies and regulations will impact 

the credit aod collection industry. 

members include the smallest of businesses that operate within a limited geographic 

range of a single state, and the largest held, multinational that operate 

in every state. 1be mf\iority debt collection are small 

businesses. According to a recent survey, 44 of ACA organizations (831 

companies) have fewer than nine employees. 85 of members (1,624 

co1mpani:es) have 49 or fewer employees and 93 percent have 99 or fewer 

employees. 
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part of the process to recover outstanding ACA members are 

an extension of every community's businesses. ACA members businesses, large 

and small, to obtain payment for the goods and services already received by consumers. In years 

the combined eficnt of ACA members has resulted in the annual recovery of billions of 

do Uars that are returned to and reinvested by businesses and dollars that would 

otherwise constitnte losses on the tlnancial statements of those businesses. Without efiective 

collection process, the economic viability of these businesses and, by extension, the American 

in general, is threatened. Recovering rightfully-owed consumer debt enables 

prevent job losses, keeps credit, goods, and services available, 

to cover governmental budget shortfalls. 

Tmnort,.,nllv ACA members are committed to fair, reasonable, and respectful 

"'"'"'"-w·'!S debt seriously. As legitimate credit and coJJec:ncm 

role in consmuers fulfill fbcir financial goals 

""'·"'"'"'"·"!S broad access to the credit market. 

U. COMMENTS OJ;' ACA INTKRNATIONAL 

In its Request for Information ("RFI"), the Bmeau seeks comments in response to a list 

ACA's comments address both overarchlng points and specific questions raised by 

Bureau. 

members are overwhelmingly small businesses, and 

Sutlcrvision arc small entities. While some aspects of the supervision 

reviews, such as the Bureau's to cooperate in advance 

ex,uniinatio1n, to coordinate on information technology and to take reasonable ap1~roaclJes 

in the initial set of Infonnation Requests, problems predominate once the 

Those subject to the Bureau supervision broad 

requests not to relevant issues, disoq;anizaction 

level reversals takeu by ex<Lmrnalton 

excessive cost, and 

objective fact-finding instead exercise 

sh<}rt,~mmru>:s and serve a pre-ordained for improvement on the 

of best from other agencies, such as the Federal Trade 

Comrnwaicati<Jns Commission. 

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I. The timing, frequency, and scope of supervisory exan1s. 

No comments were received in response to this question. 

The timing, method or process used by the Bureau to collect information and docmnents 

from a supervised entity prior to the commencement of an examination. Typically, the 

Bureau sends an examination Information Request to a supervised entity prior to the 

commencement of an exan1ination. An IR is a list and documents that the 

supervised entity is asked to the bureau for off-site review or to make available 

when examiners onsitc at entity. An IRis typically sent to an entity at least 60 

days prior to the onsite start of an examination. 

Comments from ACA members indicate that the initiallRs were reasonable, as was the 

length oftime designated for the onsite examination. In contrast, the numerous 

requests that followed were overly bnrdensome, unnecessary, and unlikely to 

additional into the examination. The Bureau's process 

inefficient, High turnover rates an1ong exarnination top to 

bottom) created serious problems with consistency. The Bureau was unwilling to 

negotiate on the scope of its information demands, instead threatening to send the matter 

to Enforcement if anything less than full compliance was provided. 

The type and vohnne of information and documents requested in IRs. 

reviewed. Producing the requested was a major 

onerous for a small business. Another commenter 

the IRs information not relevant to the examination. 

4. The effectiveness and accessibility of the CFPB Supervision and Exan1ination Manual 

(Exam Manual). The Exam Manual provides internal direction to staff; 

including surmnaries of statues and regnlations and procedures for 

use by exan1iners in exams. It is on the Bureau's website 

promote the public in understanding how the Bureau oversees 

snpervised 

One commenter said that the Exan1 Manual does explain how the exan1ination process 

should be managed and evaluated and is useful for companies preparing for an 

exan1ination. However, one detieiency is that it does not reference the MOU with the 

Conference of State Bank ("CSBS"), nor does it indicate that the CSBS 

would bring an additional exan1iners to the same facility in the same week, 

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demanding information already to but a different format 

different manner. The two authorities did not coordinate, and to add insult to 

CSBS demanded payment its costs, totaled close to $100,000, an ""'J'v'""''~ 

burden for a business. 

The efficiency and effectiveness of onsite cxan1ination work. while 

examination teams may review documents <md data, hold management, 

conduct with staff, make observations, and conduct transaction testing. 

In the experience of one ACA member, the cxan1iners drill company representatives with 

ques1:JoJtlS, and to be for answers consistent with 

on examiners believe things work, as to 

what is statutorily mandated. The commenter objected to excessive time demands on 

employees for exan1ination interviews. Sec also response to question l above. 

The effectiveness of Supervision's communications when potential violations are 

identified, including the usefulness and content of the action and 

(PARR) letter. A PARR letter with notice 

of conduct that may violate 

entity the Bureau is considering action or a public enforcement 

action based on the potential violations in letter. Supervision invites 

the PARR letter within 14 and to set forth the response any 

reasons law or policy why the Bureau not take action against entity. 

The Bureau often permits extensions of the response time when requested. 

to were describing examiners as 

an understa.nding regulations and operations. The examination team 

had no real "say" in the outcome of the examination; decisions were made at levels 

above thos(J inspecting the operation, and more than once reversed taken by the 

examination team. PARR letters arrived in piecemeal fashion, by topic, and not 

infrequently asked for additional inionnation, rather than asking party to The 

perception was that a agenda was being pressed, rather than an 

examination 

7. The clarity, and of communications that 

supervisory including communications from ex:arntm:ers 

Letters and Examination Reports. 

Comments received ACA expressed the that the Bureau's examination process 

should follow the policies m1d of the FTC or FCC, which are required to 

evaluate the regulations, any ;uongdoing, and then frmne and pursue the 

4 
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opposed to for results regulation can 

through that companies enter into costly litigation with the Bureau, 

Other comments view lhe Supervisory as lacking credibility; for the 

Bureau's of Reg E and the reflect a lack 

recording of a phone call complies with the on 

S111ncorvis,r1rv Letter has caused ham1 companies that relied on 

8. The clarity of matters attention (MRA) and the reasonability 

requirements to satisfy An MRi\ is used to address violation(s) of Federal 

consumer financial law or compliance weaknesses. MRAs oilen require a 

written response to the Bureau and will a due date for """''""""u. 

No comments were received in response to this 

9, process 

OPTlOrtnnity to be heard 

l 0. The usc of third contracted by sur>enrlsExl 

in the sut1iciency of an 

No response to this question. 

'Inc usefulness and promote tr"''""'""'"'r.v 

The Bureau "'" '"'·11""' puvHom,o ,\'uneniiSI)YV 11i<>hhfahl< tO appriSC the 

exarnination during the course of its work. 

One eommcnter that the Bureau intends the Supervis01y Highlight pulbli(;ation to 

inlbrm regulated entities of issut:s, 

SUbjeCt (0 f"YOmtmtltl>n 

The manner and extent to 

activity F cderal and state agencies, including through use 

simultaneous exams, where consistent statutory directives. 

See response to question 4. 

5 
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6 

comments to the in response to 

Necb 

Chief Executive 
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May !4, 2018 

VIA ELECTRONIC DELIVERY TO REGULATIONS.GOV 

Ms. Monica Jackson, 

Office of the Executive Secretary 

Consumer Financial Protection Bureau 

1700 G Street NW 

Washington, DC 20552 

Re: Comments of ACA Intemational on Request for Information Regarding 

Bureau Enforcement Processes, Docket Number CFPB-2018-00()3 

Dear Ms. Jackson: 

ACA International ("ACA"), the Association of Credit and Collection Professionals, 

submits these comments in response to the request by the Bureau of Consumer Financial 

Protection ("Bureau") for comments in response to its "Request for Information Regarding 

Bureau Enforcement Processes," 83 Fed. Reg. 5999 (Feb. 12, 2018); 83 Fed. Reg. 12567 

(March 22, 2018). ACA appreciates the opportunity to provide input on the Bureau's 

for Infonnation. 

I. BACKGROUND ON ACA INTERNATIONAL 

ACA International is fhe leading trade association for credit and collection professionals. 

Founded in 1939, and wifh offices in Washington, D.C. and Minneapolis, Minnesota, ACA 

represents approximately 3,000 members, including credit grantors, third-party collection 

agencies, asset buyers, attorneys, and vendor affiliates in an industry fhal more fhan 

230,000 employees worldwide. Given its longstanding history and broad ACA is 

positioned to assist the Bureau with information gathering related to debt collection, as 

as to collaborate wifh the Bureau on how its proposed policies and regulations will impact 

the credit and collection industry. 

ACA members include the smallest of businesses that operate within a limited geographic 

range of a single state, and the largest of publicly held, multinational corporations fhat operate 

in every state. The majority of ACA-member debt collection however, are small 

businesses. to a recent survey, 44 percent of ACA organizations (831 

companies) have fewer than nine employees. 85 percent of members (1,624 

"v'"P"m"'l have 49 or fewer employees and 93 percent (1 ,784) have 99 or fewer 
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As part of the process ACA members are 

an extension of every community's these businesses, large 

and small, to obtain for the goods and services already received by consumers. In years 

past, the combined of ACA members has resulted in the annual recovery of billions of 

dollars- dollars that are returned to and reinvested by businesses and dollars that would 

otherwise constitute losses on tbe financial statements of those businesses. Without an effective 

collection process, the economic viability of these businesses and, by extension, the American 

economy in general, is threatened. Recovering rightfully-owed consumer debt enables 

organizations to survive, helps prevent job losses, keeps credit, and services available, 

and reduces the need for tax increases to cover govemmental shortfalls. 

Importantly, ACA members are committed to fair, reasonable, and respectful practices 

and take their obligations in collecting debt very seriously. As legitimate credit and collection 

proiessionals, ACA members play a key role in helping consumers fulfill their financial goals 

and responsibilities while facilitating broad access lo the credit market 

H. COMMENTS OF ACA INTERNATIONAL 

In its Request for Information ("RF!"), the Bureau seeks comments in response to a list of 

ACA 's comments address both ovcrarching points and specific questions raised by 

Bureau. 

Ovcrarching Points 

To fulfill its statutory mission and obligations properly, the Bureau must strictly adhere to 

fair, clear, and transparent enforcement processes and practices. Too often in the past, the 

Bureau's actions have fallen short of these standards. Many who have been the subject of 

enforcement actions view the experience as a one-sided imposition of the Bureau's interpretation 

of the law, with firms lacking effective recourse to put forward a contrary view and, more often 

than not, pressured into settling to avoid the high cost of contesting the allegations. This sense of 

pressure is particularly strong for small businesses that lack the resources for dealing with an 

opaque, protracted, and unresponsive process. 

Concems are widespread about the Bureau's practice of characterizing conduct as an 

unfair, deceptive, or abusive act or ("UDAAP") without notice, and then holding 

other businesses accountable under retroactive interpretation required or 

proscribed behavior. Moreover, it remains unclear how tbe Bureau defines UDAAP, with the 

"unfair" prong continuing to be a particularly subjective matter for individual enforcement 

attorneys and examiners. Objections on faimcss grounds to an enforcement action that faults a 

business for conduct in the past that was legal at the time have fallen on deaf ears. Other 

concerns relate to the Bureau's poor record on communications during the enforcement process. 

Overall, because of the Bureau's often agenda-driven rulcmaking through enforcement ar;,pn.m<;n. 

businesses sutler from a lack of due process in knowing what is expected and required 
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This harms both consumers and industry 

regulatory expectations are clear. 

more efficiently when 

ACA strongly urges the Bureau to review its enforcement policies and practices, and to 

institute fair, clear, and transparent processes that are properly implemented, as the best way to 

maximize positive results for both regulated entities and consruners. 

Specific Points on Which the Bureau Seeks Comment 

1. Communication between the Bureau and the subjects of investigations, uu:tur1ll1'£thc 

timing of those communications, and information provided by Bureau 

on the 

ACA's members who provided views on this question reported a number 

experiences with the Bureau's communications during the 

noted infrequent, unpredictable communications from Bureau 

responsiveness to questions and feedback from the subjects of investigations. Some felt 

that the Bureau was unreasonable in springing a set ofinfonnation requests without 

warning and demanding qnick responses, regardless of time, cost, or impacts to business 

operations. Others said that the Bureau made demands and then went silent for long 

periods oftime. 

Suggestions for improvement include requiring greater diligence on the Bnrcau's part to 

ensure an investigation is warranted, explaining the purpose of the investigation, 

nnw1ttnm a clear and reasonable outline of expectations and schedule at the beginning of 

the process, adopting better two-way communications and developing greater 

understanding of and consideration for business reduce unnecessary 

adverse business while achieving legitimate enforcement objectives. The Bureau 

should not be nsing enforcement process as a fishing expedition. It should clearly 

explain, at the beginning of the process, the purpose and reason for any actious taken, and 

not fill in the details later after months of rifling through sensitive documents. 

2. The of Bureau inwstigations. 

Some ACA members reported that their investigations lasted only one to two months, but 

others concem abont the extended duration of the they ,xr,eriem""i 

further to the lack of any defined timeline for of the matter. 

Resp<mclents felt that the process should have taken far less time, money, and effort, and 

that efforts to communicate with Bureau staff to speed the investigation were ignored. 

Unnecessarily drawing out the length of investigations or failing to provide results in a 

timely manner keeps industry in a state of flux, which can inhibit the ability to put time 
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3. 

and resources into initiatives can improve the consumer experience. 

lf there is a problem, the Bureau should identify it in a clear and timely manner that 

allows the collection industry to promptly address and then move forward. 

Bureau's Notice Opportunity to Respond and Advise process including: 

a. CFPB Bulletin 2011-04, Notice and Opportunity 

issued November 7, 2011 (updated January 18, 2012) 

b. The il?fi.mnation contained in the letters that the Bureau may send to of 

potential enfhrcement actions pursuant to the NORA process, as ·m·m•" 1'""··1 by the 

letter availahle at fl!.!LcY~:J:lH:-~-iJ!l"illl!.!<1JJ'.lli.!'lli:Lf;Ql'!JL£Jf.l£.'!iJC:c~Y.;c'i.l.:: 

members stressed the of making sure the NORA process is 

implemented and genuinely responsive, with objective consideration of points 

defenses presented by subjects of potential enforcement actions. There was support 

for making the NORA process mandatory. 

4. Whether the Bureau should al)brd subjects ofpotclltia! enjhrcement actions right to 

make an to Bureau personnel prior to the Bureau determining 

whether 

AC A members view the opportunity to face accusations in person as an impmiant right 

that allows lim1s to provide relevant information and defenses and "make their case'' 

before the Bureau institutes legal proceedings. Companies believe the ability to have this 

kind of discussion in person rather than by phone or email, and to offer information about 

the and size, scope, capabilities, and practices could change the Bureau· s 

view merits of the case, impacts of particular actions on the company and 

consumers. and any changes in practice or penalties to be imposed. 

5. calculation o(dvil money penalties, consistent with 

mitigatingfilctors out in U.S. C. 5565(c), including 

a monc)l penalty and 1[it adopt such what the 

include. 

Respondents viewed penalties that have been as arbitrary and based not on a 

rational basis in law such as the severity of the or the degree of hann, but rather 

on the to pay, looking to make the penalty as high as possible. Support 

a civil money penalty matrix, but those who favored it urged that it 
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include transparent and 

6. 11w standard provisions in Bureau consent orders, including conduct. compliance, 

monetary and administrative provisions. 

ACA members expressed two sets of concerns in response to this question. One view felt 

the Bureau did not make clear the standard requirements it includes in consent orders, but 

rather imposed provisions that varied considerably from one case to the next. Another 

view focused on the confidential nature of consent orders, which decreases the ability of 

other firms to understand the Bureau's evolving interpretation of the law and allow them 

to modify their practices to This concern is magoified because of the Bureau's 

history of holding other to standards imposed enforcement actions and 

applying interpretations retroactively to condnct that was lawful at the time. 

As noted previously, businesses felt this was an unfair and punitive approach that should 

be changed so that the Bureau announces new interpretations of the law and applies them 

prospectively. 

7. The manner and to which the Bureau can and should coordinate its rm'imr:r>nP1'11 

activity other Federal and/or State agencies that may overlapping jurisdiction. 

Respondents felt it was very important lor the Bureau to coordinate its enforcement 

activities with other federal agencies such as the FCC and FTC, as well as the states. In 

addition, more clarification and safe harbor rules are needed so that consumers, 

businesses, and attorneys ate all clear on and fully aware of compliance nxiuu'cnJcn 

ACA members ate very concerned with an onslaught of litigation over 

violations of various laws, and the Bureau to play an active role in ''"'"';,-~;,,n 

and working to eliminate and conflict among regulatory recluirerne11ts. 

** 

ACA appreciates the opportunity to provide comments to the Bureau in response 

to its RF! on Bureau Enforcement Processes. 

Respectfully submitted, 

MarkNecb, 

Chief Executive Officer 
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May28, 2018 

Ms. Monica Jackson, 

Office of the Executive Secretary 

Consumer Financial Protection Bureau 

1700 G Street NW 

Washington, DC 20552 

Re: Comments of ACA lnternational on 

Bureau E;;.."ternal Engagements, Docket Number 

Dear Jackson: 

ACA International ("ACA"), the Association of Credit and Collection Professionals, 

submits these conunents in response to the request by the Bureau of Consumer Financial 

Protection ("Bureau") for comments in response to its "Request for Information Regarding 

Bureau External "83 Fed. Reg. 8247 (Feb. 26, 2018). ACA appreciates the 

opportunity to input on the Bureau's Request for Infonnation. 

l. BACKGROUND ON ACA INTERNATIONAL 

ACA International is the leading trade association for credit and eollection professionals. 

Founded in 1939, and with offices in Washington, D.C. and Minneapolis, Minnesota, ACA 

represents approximately 3,000 members, including credit grantors, third-party collection 

asset buyers, attorneys, and vendor afliliates in an that more than 

worldwide. Given its longstanding history ACA is 

p01l!tl<}ne:a to assist the Bureau with information gathering related to debt collection, as 

as to collaborate with the Bureau on how its proposed policies and regulations will impact 

the credit and collection industry. 

ACA members include the smallest of businesses that operate within a limited geographic 

range of a state, and the largest held, multinational that operate in 

every state. majority debt collection companies, are small 

businesses. According to a recent survey, 44 percent of ACA member organizations (831 
117 

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companies) have fewer than nine emmi<Jve:es. 

companies) have 49 or fewer employees and 93 percent 

employees. 

of members (1,624 

(1,784) have 99 or fewer 

As part of the process to recover outstanding payments, ACA members are 

an extension of every "v'""''""''"Y ACA members work with these businesses, large 

and small, to for goods and services already received by consumers. In years 

the combined of ACA members has resulted iu the annual of billions of 

-dollars that are returned to and reinvested by businesses and dollars would 

otherwise constitute losses on the tlnancial statements of those businesses. Without an effective 

the economic viability of these businesses and, by extension, the American 

economy general, is threatened. Recovering rightfully-owed consumer debt enables 

organizations to survive, helps prevent job losses, keeps credit, goods, and services available, 

and reduces the need for tax increases to cover governmental budget shortfalls. 

Importantly, ACA members are committed to fair, reasonable, and respectful practices 

and take their obligations in collecting debt very seriously. As legitimate credit and collection 

professionals, ACA members play a key role in helping consumers fultlll their financial goals 

and responsibilities while facilitating broad access to the credit market 

U. COMMENTS OF ACA INTERNATIONAL 

In its Request for Information ("RFl"), the Bureau seeks feedback on all 

conducting future extemal engagements. The Bureau has seven areas on 

which it seeks comment. ACA's comments address ovcrarching points for the Bureau to 

consider as well as past experiences that may provide insight into the Bureau's decision-making 

on extemal engagements going forward. 

Overarching Points 

Since the Bureau's inception, ACA as an association as well as its individual members 

have had on-going engagement with the Bureau. However, often ACA and its members have 

felt that the Bureau's approach to seemed somewhat disinterested and that Bureau 

stafiwas just "going through the that their views and opinions, 

during this engagement, were not given appropriate by the Bureau. 

Overall, ACA members report being "very dissatisfied" or "dissatisfied" in the way the 

Bureau solicited feedback from extemal stakeholders. In regard to public events like field 

hearings, ACA members stale that the Bureau was not transparent in its processes, especially 

with respect to the timing, location, and representation of entities that were asked to n"'rttr·m:'t" 

the event. Members expressed fiustration that stakeholders favorable to the Bureau were 

better preparation through advance knowledge, and were more deliberately involved in those 

2 
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events. Furthermore, when Bureau to at 

times they came with a prepared script that did not any 

members. In many instances, audience members were either not permitted to ask ques!Iorts 

Bureau staff or questions had lo be approved in advance. Constmctive feedback 

Bureau and Bureau processes was discouraged. 

As it relates to the Consumer Advisory Board, members express concerns that not enough 

members were invited to be on the board, making it often nothing more than rubber 

the Bureau's activities. 

Specific Points on Which the Bureau Seeks Feedback 

!. Strategies for seeking public and private feedback from diverse 

stakeholders on the Bureau's 

ACA the Bureau's effort to seek feedback from all stakeholders. It is hard to 

measure whether Bureau is being or fair to all sides if feedback is received 

privately. ACA understands that in some due to the sensitive nature of the topic or the 

infonnation some engagement must be private. Nevertheless, all stakeholders 

should be aware is visiting or meeting with the Bureau in order to ensure that all 

vtcwL""'"'~ are equally heard. It is certainly possible to review public comments, but the Bureau 

must about ways to provide information about the ptivate feedback it receives. ACA 

suggests that the Bmeau consider publishing a monthly list that documents the meetings it has 

had and who attended those meetings. ACA does not believe that greater transparency 

forecloses opportunities to gather diverse input. 

2. Stmcluresfor convening diver:'e external stakeholders and the public to discuss 

Bureau work in ways that maximize public participation and constructive input, 

including but not limited to stmctures utilized by the Bureau to date, such asfield 

hearings, tovvn halls, roundtables, and meetings of the advisory groups. 

The Bureau would benefit from better organization and advance notice when it comes to 

public events like field town halls, roundtables, and advisory group meetings. Events 

and the topics to be should be announced at least 60-90 days in advance using a "save 

the date" notice. Additional information and can be provided as the event date 

approaches. If the Bureau truly wants diverse then ample time must he provided, 

--,·--·-··J when it comes to including the general who, more than likely, would need to 

time from work as well as travel to attend these events. While the Bureau bas done a good 

job ofbroadcasting many of these events over the internet, web participants should be able to 

provide comments and questions, in real time, that potentially could be addressed by Bureau staff 

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at the events. 

3. Processesfor transparency in determining topics, locations, timing, frequency, 

participants, and other important elements of both public and private events. 

ACA is not aware of the process the Bureau currently uses to determine topics, locations, 

timing, frequency, or participants at public and private events. However, it appears to ACA that 

consumer groups and advocates were provided advance notice or had a role in the development 

of these events prior to notice provided to the general public and certainly industry. On multiple 

occasions the Bureau announced the time and location of field hearings without including 

information about what the topic was, despite clearly knowing why it was planning to host a 

field hearing. 

Moreover, certain press outlets and other consumer advocacy groups often seem to have 

advance notice of what would be discussed at field hearings, when very often industry groups 

received the materials the day of, or the evening before, they were set to speak. Industry 

""'""'"'"ntQ in field hearings are often asked to speak about rules or policies that are 

of pages long and that are received the morning event. This creates an unfair 

playing field and at times seems like an opportunity lor the Bureau to surprise or embanass 

volunteer participants. 

ln general, there are some concerns that the Bureau's past practice of"pomp and 

circumstance" for proposing rules in with a field hearing can send the 

message to consumers that a has been committed, when there may be a number 

for proposing federal rules and Additionally, embargoed press releases that were 

HV"Y''""J shared at midnight events often sensationalized the Bureau's actions and 

industry in an unfair light 

ACA therefore recommends that the Bureau consider more public outreach and feedback 

from stakeholders regarding event topics, who should participate in these events, and where 

these events should take place. As noted in Paragraph #2, advance notice is critical to ensure 

broad and diverse audience. 

4. Vehicles for soliciting public and private perspectives from outside of 

Washington, D.C. on the Bureau's work, 

The Bureau should continue to seek feedback and information from national trade 

associations who have a diverse and board to ensure and maintain real-world 

"'"''cn,PrtivP rather than focusing solely on activities in Washington, D. C. 

The Bureau may also want to consider using its regional field offices for external 

engagement to consumers and industry, in additional to supervision activities that occur in those 

offices. Establishing relationships in regional areas and commtmities may provide opportnnities 

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for engagements that the Bureau may not have. The Bureau should also not 

be these only to favored industries or groups throughout the country. For 

example, the BCFP hosts industry roundtables in conjtmction with events in different 

cities. ·n1ese should be open to all participants in the financial services marketplace and 

regulated entities, not just certain consumer and trade groups. 

5. Strategies for promoting transparency of external engagements, including 

Advisory Board and Council meetings. 1vhi/e protecting confidential business 

information and eneouragingfrank dialogue. 

Since the begirming of the year, all Advisory Board and Cormcil meetings have been 

public. It does not appear to ACA that these public meetings have compromised the 

and discussion In general we support the concept of advisory councils because we believe is 

beneficial for Bureau staff to have more infonnation about industries, particularly if they do not 

have any specific industry experience. 

ACA also recommends that the Bureau consider having a nonbank advismy board since 

the Bureau already has broad supervision and examination authority over such entities. 

Nonbanks should not be overlooked in their ability to provide important feedback. 

Finally, ACA would encourage the Bureau to work with Board and Conncil participants 

to develop a protocol for dealing with confidential business infonnation in open meetings so that 

speakers could make general points, while providing specific, sensitive information to the 

Bureau under procedures that protect conildentiality but ensure actual supporting data is 

supplied. 

6. Strategies and channels for distributing information about external engagements 

to maximize awareness and participation. 

The Bureau does a good job of utilizing electronic communications such as email and 

Twitter to promote Bureau activities. As noted above, the Bureau would be well served if its 

activities were better organized and coordinated with all stakeholders to maximize awareness and 

participation. National trade associations representing diverse stakeholders from all areas of the 

country are more than willing to assist the Bureau in its efforts, as long as the Bureau can 

better advance notice and relevant background infotmation. As also noted above, the 

should consider using its regional offices as platfonns for more widespread engagement. 

7. Other approaches, methods, or practices not currently utilized by the Bureau that 

would elieit constructive input on the Bureau's work. 

5 
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In general we think that it Bureau streamlined its internal 

process to ensure that information discussed in industry meetings accurately represents the views 

of the agency. For example, we have seen court filings from the BCFP that conflict with 

positions expressed by BCFP staff. There are multiple departments at the Bureau that work on 

certain issues and at times it does not seem that communication betwL>en them is always timely 

and accurate. 

*** 

ACA appreciates the opportunity to provide comments to the Bureau in response to its 

RFI Regarding Bureau External Engagements. 

MarkNeeb 

Chief Executive Officer 

6 
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June 4, 2018 

VIA ELECTRONIC DELIVERY TO REGULA TIONS.GOV 

Ms. Monica Jackson, 

Office of the Executive Secretary 

Consumer Financial Protection Bureau 

1700 G Street NW 

Washington, DC 20552 

Rc: Commel!ts of ACA lntemational 011 Request for lmfnrmll•tinn li.'P<'tm1m•v 

Bureau Public Reporting Practices of Consumer 

Docket Number CFPB-1018-0005 

Dear Ms. Jackson: 

ACA International ("ACA"), the Association of Credit and Collection Prc)!e~;sicmats, 

submits these comments in response the Bureau of Consumer Financial Protection's 

("Bureau") "Request for Information Regarding Bureau Public Reporting Practices of 

Consumer Cornplaintlnformation," 83 fed, Reg. 9499 (March 6, 2018). ACA appreciates the 

nn'""tm•itu to input on the Bureau's Request Information, 

L BACKGROUND ON ACA INTERJ.'IATIONAL 

ACA International is the leading trade association for credit and collection professionals, 

Founded in 1939, and with offices in Washin,,'ton, D.C, and Minneapolis, Minnesota, ACA 

represents approximately 3,000 members, including credit grantors, third-party collection 

agencies, asset buyers, attomeys, and vendor affiliates in an that employs more than 

230,000 employees worldwide. Given its longstanding history membership, is 

uniquely positioned to the Bureau with information gatheting related to debt collection, as 

well as to collaborate with the Bureau on how its proposed policies and regulations will impact 

the credit and collection industry. 

ACA members include the smallest of businesses that within a limited 

"p''"''"'"'h''' range of a single state, and the largest of publiely multinational corporations 

that operate in every The majority of ACA-mcmber debt collection companies, however, 

are small businesses. to a recent survey, 44 percent of ACA member organizations 1(\1 '''\\ 
123 

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(831 companies) have fewer than nine employees. Additionally, 85 percent of members (1,624 

companies) have 49 or fewer employees and 93 percent of members {1,784) have 99 or fewer 

employees. 

As part of the process of attempting to recover outstanding payments, ACA members are 

an extension of every community's businesses. ACA members work with these businesses, large 

and small, to obtain payment for the goods and services already received by consumers. In years 

past, the combined effort of ACA members has resulted in the annual recovery of billions of 

do11ars- dollars that are returned to and reinvested by businesses and dollars that would 

otherwise constitute losses on the financial statements of those businesses. Without an effective 

collection process, the economic viability of these businesses and, by extension, the American 

economy in general, is threatened. Recovering rightfully-owed consumer debt enables 

organizations to survive, helps prevent job losses, keeps credit, goods, and services available, 

and reduces the need for tax increases to cover govcnunental budget shortfalls. 

Importantly, ACA members are committed to fair, reasonable, and respectful practices 

and take their obligations in collecting debt very seriously. As legitimate credit and collection 

professionals, ACA members play a key role in helping consumers fulfill their financial goals 

and responsibilities while facilitating broad access to the credit market. 

II. COMMENTS OF ACA INTERNATIONAL 

In its Request for lnfonnation ("RFl"), the Bureau seeks comments and infonnation in 

order to assess potential changes to the Bureau's public reporting practices of consumer 

complaint infonnation including the publication process and the reporting methodology. ACA 's 

comments address both overarehing points tor the Bureau to consider as well as ACA member 

concerns regarding the complaint reporting process and recommendations for future activities. 

Overarching Points 

The Bureau has repeatedly reported that debt collection receives the highest number of 

complaints. However in 2017, the Bureau received 84,500 complaints about debt collection as 

compared to 100,000 complaints regarding consumer reporting and credit repair and 3 7,300 

complaints regarding mortgages. 1 The amount of debt collection complaints reported to the 

Bureau actually decreased as compared from 2016, yet the Bureau has continued to assert 

incorrectly that this category of complaint exceeds all others. Beyond this mischaracterization, 

the Bureau fails to contextualize the number of complaints as compared to the number of 

contacts the debt collection industry makes to consnmcrs over a given year, which the 

Philadelphia Federal Reserve estimates to be well over one billion. 2 Providing better 

understanding of and perspective on the debt collection marketplace would better serve the 

Bureau- and consumers- in the Bureau's analysis of the debt collection industry. The Bureau 

should focus its resources on actual hann rather than raw numbers of complaints provided 

1 Source: CFPB Consumer Response Annual Report, January l -December 31, 2017. 2 Robert M. Hunt, PhD, Vice President and Director, Payment Cards Center Federal Reserve Bank ofPhiladelphia. 

Understanding the Model: The Life Cycle of a Debt Presented at "Life of a Debt: Data Integrity in Debt 

Collection," FTC-CFPB Roundtable (June 6, 2013) ami/able at !mps:ifwww.ftc.gov/news-eventsievents· 

ca lendari20 l 3 106ili fe-debl·t1<ttfl~inte<>ritv·debt·col!ection. 

2 
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without context. In doing do, the Bureau would realize that debt collection complaints account 

for only 0.005% of all consumer contacts made in a given year by debt collectors. 

Ironical! y, the Bureau also reports that the debt collection industry has a response rate of 

94.4% in 2017, one of the highest rates of any industry that receives Bureau complaints. 3 What 

the Bureau fails to publicize is that 84% of debt collection complaints are closed "with 

explanation," meaning the consumer's issue was specifically addressed and/or resolved. 4 This 

too is an extraordinarily high percentage. 

Complaints are Defined Too Broadly and Not Otherwise Ver(fied. 

The most troubling aspect of the complaint database for ACA members is w the 

Bureau's treatment of complaints including: (1) the Bureau's broad definition of a complaint as 

"submissions that express dissatisfaction with, or communicate suspicion of wrongful conduct 

by, an identifiable entity related to a consumer's personal experience with a financial product or 

service," 5 and (2) the Bureau's failure to verify the accuracy of the complaints it receives. The 

Bureau's approach to consumer complaints in this fashion results in complaints being counted 

against debt collectors for conduct, which even if true, is not otherwise unlawful, but more 

importantly is often factually inaccurate. For example, a consumer may submit a complaint that 

his or her insurance company should have paid a medical bill. In this instance, the debt collector 

did not engage in any unlawful conduct, yet the complaint is counted against it even though the 

debt collector had the right to contact the consumer. In the same scenario, if the consumer 

makes the same complaint against the owner of the debt, the medical provider, the complaint is 

also counted against the debt collector, and thus two complaints are recorded for the one debt. 

The Bureau simply accwnulates all complaints submitted by consumers without considering the 

nature of the complaint and without regard to its accuracy or legitimate characterization as a 

complaint against a debt collector. The result is an artificially inflated amount of complaints 

against the debt collection industry which the Bureau continues to represent as the most 

complained about market 6 

1/w Lack ofStatutOJy Authority to Publish Consumer Complaint Data 

Although two provisions of the Dodd-Frank Wall Street Reform and Consumer 

Protection Act (Dodd-Frank Act) require the Bureau to report annually to Congress about the 

number of consumer complaints in general, 7 and to report semi-annually to the President and 

3 CFPB, Consumer Complaint Database. as of December 2017 available at httvs-/iwww.consumerfinance.govi<l.lllil: 

rcsearch/consumer-comp !ai ntsj. 4 Josh Adams, PhD, Director of Research, ACA International, A Review of Debt Collection Complaints Submitted to 

the Consumer Financial Protection Bureau's Complaint Database in 20 !7, ACA International White Paper 

(January 20 J 8), available at httos://\V\Vw.acainternationa~as:>ersiresearch-statistics!aca-wp-complaints~revicwf.Ol7<pdf. 

5 CFPB, Consumer Response: A Snapshot of Complaints Received (July 2014 ), available at 

!ll!P'i:!itiles.consumerflnance.govll/20 J 407 _clpb repon consumer-complaint-snanshotpdf. 

6 Josh Adams, PhD, Director of Research, ACA International, A Review of Debt Collection Complaints Submilted to 

the Consumer Financial Protection Bureau's Complaint Database in 2017, ACA International White Paper 

(January 20 18), available at https:i!www.acaimemational.org/assets!research-statistics!aca-·wp-complaints-review2017.pd[ 

7 12 U.S<C. 5493(b)(3)(C). 

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designated congressional committees, certain analyses of the complaints the Bureau has 

received and collected in its databases from the prior year.8 However, nothing in either section 

of the statute authorizes the Bureau to make the consumer complaint database public. The 

publishing of inaccurate and unverified information about any debt collector results in 

reputational harm that cannot otherwise be reversed. It also misleads consumers, which could 

lead to unfounded concerns about engat,>ing with the collections industry, despite that this 

engagement is often essential to preserve credit options and avoid other problems that result 

from unpaid debt. One academic called the complaint database a "government sponsored Yelp." 9 Analyzing complaint data on a broad scale and highlighting trends appears to fulfill the 

Bureau's statutory mandate; public shaming does not. 

ACA Member Feedback 

60% of the ACA members surveyed suggest that the Bureau endeavor to normalize 

complaint statistics across financial services industries in order to provide greater context for 

w1derstanding consumer complaints. Rather than just reporting on the sheer number of 

complaints, the Bureau would be better served in reporting that the collections industry has 

proven responsive to complaints and has an excellent record of resolving consumers concerns. 

Finally, the Bureau's complaint portal serves as a reminder that the free flow of information and 

open communication are the only way to resolve a consumer's concerns about a debt. 

Specific Points on Which the Bureau Seeks Feedback 

I. Specific, statutori~y-permissible suggestions regarding the.fi·equency of the 

Bureau's reporting on consumer complaints. 

ACA and its members have been extremely vocal in their concerns about the Bureau's 

reporting of the consumer complaint database. An overwhelming majority of surveyed ACA 

members report being "very dissatisfied" or "dissatisfied" with the overall frequency of the 

Bureau's reporting of consumer complaints. The Bureau's weekly tweets highlighting the 

number of consumer complaints it receives, especially in regard to debt collection complaints, 

paints a false light, while at the same time instilling fear about the entire financial services 

industry as a whole. While the Bureau is required to report to Con~:,>ress and the President about 

aggregate amounts of complaint data, the frequency with which the Bureau repot1s that data to 

the public along with a slanted public relations spin, does nothing to help consumers, but is 

viewed as instead bolstering the Bureau's political agenda. 10 The Bureau should discontinue its 

8 12 U.S. C. 5496(c)(4). 9 Assessing the Effects of Con.sumer Financiallnfonnation, Before the S. Comm. On Banking, Housing, and Urban 

.4jfuirs, (AprilS, 2016) (Statement of Todd Zywicki, George Mason University Foundation Professor of Law 

Antonin Scalia School of Law at George Mason University, Executive Director, Law and Economics Center), 

available at, https:/lwww.banking."'cnatc.gov/imo/media!doc!Zywicki'~{.20Testimol)v%204-5-16.pdf. 

1

° CFPB, Complaint Snapshot: Debt Collection (May 31, 2018), ami/able at, 

https:/is3.amazonaws.cgm!files.consumerfilmnce.govliidocuments/bcfp complaint-snapshot debtcollection 0520 l8.pdf., which the Bureau states "provides a high-level overview of trends in consumer complaints 

and supplements the Consumer Response Annual Report with more recent infom1ation about monthly changes in 

complaint volume." For the first time, the Bureau noied that "debt collection complaints submitted by consumers 

can be more meaningful when considered in context with other data, such as the number of consumers who have an 

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current practice of weekly tweets and its inaccurate portrayal of debt collection complaints and 

undertake a full review of how best to use the information it collects in useful and effective 

ways to serve consumers' needs. Several other financial regulators accept consumer complaints 

but do not report them publicly or promote them on social media -this has not stopped 

consumers from having the ability to register complaints or the ability of an agency to address 

any concerning trends or harm it sees in the information it collects. 

2. Spec(fic, statutorily-permissible suggestions on the content of the Bureau's 

reporting on consumer complaints, including: 

a. Whether the Bureau should include more, less. or the same amount of 

reporting on State and local complaint trends; 

Generally, ACA members did not indicate the need for any more or less information 

about state or local complaints trends. However, given that the Bureau recently reported that 

40% of all complaints received by the Bureau are forwarded to other regulators, 11 including 

state regulators and Attorneys General, ACA has concerns that state and local trends based upon 

unverified complaint data will result in unwarranted referrals to state agencies. The fact that the 

Bureau is receiving so many complaints that would be better directed to other local regulators, 

raises questions about whether the marketing and continual self-generated press about the 

Bureau's database is confusing consumers about where and who they should be directing 

complaints to. 

b. Whether it is net beneficial or net hamifitl to the transparent and efficient 

operation of markets .for consumer financial products and sen,icesfor the 

Bureau to publish the names o.fthe most-complained-about companies; 

61.1% of ACA members surveyed report that publishing the names of the "mostcomplained about" companies is net harmful for a business's reputation and problematic, 

especially given the fact that none of the complaints are verified as accurate. Furthermore, the 

Bureau does not publish the resolution rate of these same complaints against these same 

companies. Unless and until the Bureau can verify the accuracy and validity of these 

complaints, including whether the complaints are just inquiries or questions, none of this type of 

data should be published. ACA reiterates its position that the Dodd-Frank Act does not 

authorize the Bureau to publish complaint infonnation including the publication of company 

names. This information can also be misleading because the largest companies often receive the 

most complaints, which logically makes sense because they often have a presence in multiple 

states and areas and are engaged in more consumer related transactions. However, if these large 

companies continue to be highlighted in complaint reports it could unfairly paint them as bad 

actors when in fact they just have a much larger volume of contact with consumers. 

accounl in collection." The Bureau did not provide any specific data poinls but as noted above reports estimate more 

than a billion conlacts per year are made to consumers regarding debts. This is the first time the Bureau has put the 

number of debt collection complaints into perspective and ACA encourages the Bure"u to provide more context 

when publishing data on the amount of deht collection complaints. 

11 !d. 

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c. Whether the Bureau should provide more, less, or the same data fields in 

the Consumer Complaint Database; 

ACA members that expressed a view were evenly split in their opinion on whether there 

should be more or fewer data fields, stating that for the most part the data fields currently 

provided were sufficient. Some members recommended that the Bureau include field(s) that 

would better qualify the complaint as an inquiry, question or true complaint. 

d. Whether the Bureau should pro1•ide more. less, or the same amount of 

context for complaint information, particularly with regard to product or 

service market size and company share; 

ACA members overwhelmingly support efforts to provide better context regarding 

complaint information including the product complained of and the company's share of the 

market. For instance, healthcare debt has a larger share of the market than utilities or municipal 

debt. The Bureau needs to inform consumers and the public of the true nature of the debt 

collection marketplace in order for the consumer complaint data to have useful meaning. 

e. Whether the Bureau should supplement observations from consumer 

complaints with observations of company responses to complaints; 

ACA members support the publication of company responses to consumer complaints as 

a way to normalize the complaint process and provide consumers with a better perspective on 

the issues that resulted in the complaint, as well how the complaint was resolved. The complaint 

portal has significant utility in its potential to help consumers. But rather than punish a company 

for being on the receiving end of an unverified complaint, it would be better to publicize those 

companies that do a good job in addressing consumer issues in a prompt and efficient manner. 

ACA reiterates its position that the Dodd-Frank Act does not authorize the Bureau to 

publish consumer complaint data like consumer narratives. However, ACA would reconsider its 

position if the Bureau leveled the playing field in the complaint process and pennitted company 

narratives to be published as well. 

f Whether the Bureau should share more, less, or the same amount of 

information on month-to-month trends; and 

ACA members generally feel that the amount of information provided on month-tomonth trends should stay the same. ACA members provided no other additional feedback. In 

general however, we remain concerned with reporting raw number data without providing 

additional context and analysis about the numbers. 

g. Whether the Bureau should share more, less, or the same amount of 

information on particular products and services; 

ACA members recommend that more information about the product or service being 

complained about would provide more context to the complaint. If the goal of the complaint 

process is to achieve a resolution of the problem for the consumer, having the consumer better 

understand the marketplace would be more productive in informing the consumer about ways to 

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resolve a particular issue. Market information would also add value to the reports the Bureau 

generates and submits to Congress and the public by offering perspective on the complaint data. 

3. Specific suggestions on the reporting methodology, including: 

a. Should the Bureau continue to ana~vze data for seasonal fluctuations? {( 

so, how; and 

ACA members are evenly split on whether the Bureau should continue to analyze data 

for seasonal fluctuations. Half the members surveyed felt that this data was helpful while others 

saw it as meaningless. Should the Bureau continue to analyze data for seasonal fluctuations, the 

product type and service should also be included in order to provide context. 

b. Should the Bureau provide more, tess, or the same amount of context for 

complaint information, particularly with regard to product and service 

market size and company share, including what data setM or data 

source(s) the Bureau should use; 

As these ACA comments consistently show, members encourage the Bureau to add more 

context to its complaint reporting. Some recommended suggestions for data points are: 

• The number of consumers reached in a given time period to show the 

breadth of a company's output; 

• The number of accounts the company is currently working; 

• The number of contact attempts a company makes in a given time period; 

• The number of responses the company makes to complaints; 

• The kinds of services/types of collection accounts the company works; 

and 

• The nature of the communication by the consumer (i.e. inquiry, questions, 

complaint). 

4. Specific, statutorily-permissible suggestions for the publication process of 

consumer complaint information, including: 

a. Whether the Bureau should provide the public with a publication 

schedule; 

ACA members favor a publication schedule. Some comments suggest that having a set 

publication schedule will discourage the Bureau from publishing information that aligns with its 

current agenda or PR campaign. For example, if the Bureau is currently focusing on credit 

reporting, publishing an ad hoc report paints an inaccurate picture of problems in that market 

where there may be none. 

b. Whether the Bureau should notifY the most-complained-about companies 

of their inclusion in a Bureau report prior to publication and invite 

company comment; 

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100% of the ACA members surveyed agreed that the Bureau should notify the mostcomplained about companies of their inclusion in Bureau reports in advance and invite them to 

respond. The stigma of being the "most-complained-about" is harmful and can be highly 

inaccurate for no other reason than not all "complaints" are true complaints. Furthermore, the 

larger the company the more likely it will receive a higher number of complaints, but this 

number could merely reflect inquiries and not complaints at all. The Bureau should reconsider 

labeling a company as "most-complained-about" until it has established a process of verifying 

complaints. 

In the interim, some eommenters suggest that to permit and disclose a company response 

would allow the consumer to make a better informed decision about future contact with a 

company as well as provide consumers with more information that would provide context to the 

complaint. At one time the Bureau considered publishing positive comments about companies, 

which would be invaluable information for consumers in choosing companies with which to do 

business. The Bureau should revisit that initiative. 

c. Whether the Bureau should devote resources to building tools to enable 

users to analyze complaint information; and 

Several ACA members were confused by this question but overall there was support for 

better tools available to consumers in order to analyze complaint information. As noted in prior 

responses, ACA supports the idea of offering more information to consumers so that they can 

make better and informed decisions. If the database allows consumers to get a better 

understanding of the company they are dealing with, it could result in the consumer's having a 

better understanding about his or her complaint and how to resolve it. 

d. Whether the Bureau should expand, limit, or maintain the same level of 

access to complaint information available to external stakeholders such as 

financial institutions and the public. 

ACA reiterates its position that the Dodd-Frank Act does not authorize the Bureau to 

publish consumer complaint data. Therefore a majority of its members do not support expansion 

of complaint information to financial institutions and certainly not to the public. Until the 

Bureau can verify the complaints it receives, outside third parties who are not a party to the 

issue between the consumer and the company should not be given access to what is a private 

dispute. 

*** 

ACA appreciates the opportunity to provide comments to the Bureau in response to its 

RFI Public Reporting Practices of Consumer Complaint Infonnation 

MarkNeeb 

Chief Executive Officer 

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t"•~ Credit Union 

.)'"(.. National 

cuNA Association 

June 6, 2018 

The Honorable Blaine Luetkemeyer 

Chairman 

Subcommittee on Financial Institutions and 

Consumer Credit 

Committee on Financial Services 

United States House of Representatives 

Washington, DC 20515 

Jim Nussle 

President ft CEO 

Phone: 202-508-6745 

jnusste@cuna.coop 

601 Pennsylvania Avenue NW 

South Building, Suite 600 

Washington, D.C. 20004-2601 

The Honorable Wm. Lacy Clay 

Ranking Member 

Subcommittee on Financial Institutions and 

Consumer Credit 

Committee on Financial Services 

United States House of Representatives 

Washington, DC 20515 

Dear Chairman Luetkemeyer and Ranking Member Clay: 

On behalf of America's credit unions, I am writing regarding the hearing titled "Improving Transparency 

and Accountability at the Bureau of Consumer Financial Protection." The Credit Union National 

Association (CUNA) represents America's credit unions and their 110 million members. 

Credit unions are the original consumer financial protectors. Because of their not-for-profit, cooperative 

ownership structure, credit unions do not face the same market pressures and they do not have the same 

structural motives as for-profit financial services providers. This distinction, combined with decades of 

providing consumer friendly financial services, is the key reason that consumer protection regulation 

should be tailored so that it is not overly burdensome on credit unions. 

Unfortunately, the Bureau, in its first several years of existence, missed opportunities to leverage credit 

unions' mission and history to the benefit of consumers, and finalized regulations that harmed credit 

unions and their members. Consumers lose when one-size-fits-all rules force credit unions to pull back 

safe and affordable options from the market, pushing consumers into the arms of the providers engaged 

in the very activity that the rules were designed to curtail. Under its new leadership, the Bureau has the 

responsibility to examine all aspects of its activity to ensure it is fulfilling its mission without impeding 

the delivery of safe and affordable fmancial services. We applaud the process the Bureau is undertaking. 

We urge the Bureau to look closely at the impact that its rules have had on credit unions and their 

members and to streamline regulations to reduce burden or exempt credit unions entirely, as appropriate: 

the Bureau's rules should focus on Wall Street banks and the unregulated and under-regulated sectors of 

the financial services industry. If the Bureau spent less time regulating and supervising credit unions, it 

could spend more time on the abusers of consumers, which is why the Bureau should work more closely 

with the National Credit Union Administration (NCUA) to ensure credit union compliance with pertinent 

regulations and transfer supervision of the largest credit unions back to NCUA. 

Throughout its history, the Bureau has invited feedback from stakeholders on its rulemakings but there 

has been little evidence in final rules that the Bureau has heard and responded to the concerns; this should 

change and we make several recommendations related to the Credit Union Advisory Council (CUAC) 

and other feedback mechanisms. 
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We also hope the Bureau will make significant changes to the consumer complaint database to ensure 

that the complaint intake process is effective and fair. And, as the Bureau takes steps to address the rules 

that have been promulgated in recent years, it is important that it take steps to reduce regulatory burden 

while at the same time recognizing the cost to credit unions and consumers of any change in regulation. 

As the Bureau moves forward with new rulemakings, we encourage it to make use of the Advance Notice 

of Proposed Rulemaking (ANPR) process to solicit additional stakeholder views, and work with the 

Small Business Administration (SBA) to ensure that the Small Business Regulatory Enforcement 

Fairness Act (SBREFA) process is efficient and effective. Once rules are finalized, the guidance provided 

by the Bureau must be accurate, easy to understand, and timely; and, enforcement must be fair. 

Credit unions and the Bureau share a common mission related to financial health. By leveraging credit 

unions' expertise in financial education rather than implementing additional rulemaking to guide certain 

consumer choices, the Bureau could provide a strong foundation for good consumer health. Credit unions 

are ready to be partners with the Bureau in this regard. 

Credit Unions Want Change at the Bureau 

CUNA has received feedback for years from credit unions about the Bureau's regulatory burden and its 

effect on their members. In a recent survey conducted in March by CUNA, credit unions provided 

extensive feedback on how regulatory burden is negatively impacting their operations. 1 

The survey showed the following: 

• Nearly 75% of reporting credit unions "strongly agree" that the Bureau's rulemaking processes 

and procedures should be improved, and that there are aspects of the Bureau's engagement with 

credit unions and other credit union industry stakeholders that should be improved. 

Of the rulemaking changes examined, survey respondents found the following to be the most 

important, with not less than 73% and as many as 89% of credit union survey respondents 

indicating it is "very important" that a change be made with respect to each of these five 

processes and procedures: 

o More carve-outs and exemptions for credit unions; 

o Better guidance and tools for implementing rules; 

o More focus on the impact on small credit unions through the SBREF A Process; 

o More time implementing rules; and 

o More cost-benefit research and analysis to inform the rules. 

1 CUNA conducted a survey entitled, "2018 CFPB Improvements (Request for Infonnation) Survey" in March 2018; 272 

credit union professionals completed the study, which was administered by CUNA's Market Intelligence unit. The purpose of 

the study was to: (1) measure credit unions' perceptions of the rulemaking activities, policies, and procedures that have been 

undertaken by the Bureau over time, and (2) give the Bureau feedback and suggestions on ways to improve outcomes for 

credit unions and the consumers that they serve. 
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• Credit unions were asked to indicate how important it is to them that the Bureau revisit and 

change a list of already-established rules, taking into consideration the investment of resources 

the credit union has already incurred to implement the rule. Survey respondents were most 

adamant that the following rules be changed: 

o TILA/RESP A requirements; 

o Mortgage origination rules; and 

o Qualified mortgage requirements. 

When it comes to the Bureau supporting credit unions' ability to innovate, at least 90% of credit 

union survey respondents "strongly" or "somewhat agree" that the Bureau should: 

o Do more to support credit union innovation; 

o Increase financial literacy and education collaboration; and 

o Better define what is considered an unfair, deceptive, or abusive act or practice (UDAAP) 

to improve credit unions' ability to innovate. 

Among the steps the Bureau could take to encourage and support innovation: 

o Nearly 90% of credit union survey respondents believe (1) less complex rules and (2) 

more flexibility in areas where there is no pattern of consumer abuse are very important. 

o About 75% indicate that (I) fewer rules; (2) policy that aligns better with NCUA 

requirements; (3) more research and analysis before proposing a rule; and (4) more 

narrowly tailored rules focusing on culprits are very important. 

• Roughly 30% of the credit unions surveyed believe the Bureau is doing well in its (I) willingness 

to engage with the credit union industry and (2) compliance guides and other materials. 

About 15% of the credit unions surveyed believe the Bureau does well in(!) informing examiners 

and staff and (2) communicating with the credit union industry via blogs, social media, and 

websites. 

CUNA urges the Bureau to consider this feedback from credit unions, as it is illustrative of the regulatory 

burden experienced since the Bureau's inception and its ramifications for consumers. 

Bureau External Engagements 

CUNA values the outreach that the Bureau has engaged in with the credit union industry. We appreciate 

the frequent meetings, discussions, and roundtables the Bureau has conducted with credit unions 

throughout the country. We encourage the Bureau to continue to engage credit unions in its external 

outreach, as these efforts will assist in its understanding of the credit union business model and how 

regulations and additional requirements affect operations and service to consumers. 

We have the following recommendations for the Bureau moving forward: 

• The Bureau's CUAC is a valuable asset and should be preserved. Credit unions have different 

structures and business models. This Council can educate the Bureau on credit union differences 

and how various regulations and requirements affect their operations. 
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For CUAC meetings, we encourage the Bureau to maintain a balance between public and 

confidential portions of the meetings. Indeed, increasing the confidential portion of the meeting 

can lead to greater candor and frank dialogue by all parties. Former CUAC members have told 

CUNA that it would be helpful to have additional time for non-public meetings where 

constructive feedback can be more easily provided to Bureau officials and staff. 

• The Bureau should provide frequent webinars and open communication through all channels with 

industry stakeholders about new rules and requirements. This outreach is critical for smaller 

financial institutions with fewer compliance resources. 

Bureau Complaints Processing 

CUNA supports the ability of consumers to access timely and clear information on consumer financial 

products and services. Further, we recognize that the Dodd-Frank Act requires the Bureau to maintain a 

user-friendly and efficient method for consumers to lodge complaints regarding the improper activities of 

financial institutions. However, we continue to have concerns with the Bureau's consumer complaint 

database overall. 

We believe we are in an exceptionally strong position to evaluate the complaint system objectively for 

two reasons. First, the high level of consumer satisfaction with credit union services suggests that 

relatively few complaints will be filed with the Bureau concerning credit unions. As member-owned 

cooperatives, credit unions are simply less likely to offend their member-owners compared to institutions 

that serve customers only for purposes of rewarding investors. Second, only a small number of credit 

unions are large enough to have any consumer complaints included in the Bureau's database. 

Even though the number of credit union-related complaints is extremely low, to ensure the complaint 

intake process is efiective, we urge the Bureau to take steps so that the number of non-substantive and 

meritless complaints does not increase. Thus, we urge the Bureau to revisit the complaint intake system's 

process of filtering out clearly frivolous consumer complaints. While soliciting complaints via the 

Bureau's website makes the process efficient for consumers, it also has the potential of increasing 

unfounded complaints. It is important that the Bureau be aware that each complaint a credit union 

receives--regardless of merit-has a cost to the credit union and in turn its members. 

CUNA urges the Bureau to take appropriate steps to verify the legitimacy and accuracy, to the extent 

possible, of a consumer's complaint and/or compliment prior to public disclosure. Further, under the 

current system, we believe it is possible that some institutions are effectively unable to respond to 

consumers' narrative description of complaints due to privacy restrictions. We ask the Bureau to explore 

improvements to the process. 

In addition, we ask the Bureau to reexamine its marketing of the complaint system to consumers. Since 

most credit unions are not supervised by the Bureau, any complaints regarding them should be directed to 

the NCUA, not the Bureau. The Bureau's marketing directs consumers to the Bureau's complaint system, 

which causes confusion and delays in response when those consumers are then redirected to the NCUA 

and/or the credit union directly. The Bureau should explore how it can revise its marketing to alleviate 
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consumer confusion and reduce unnecessary correspondence among agencies, institutions, and 

consumers. 

Notice of Proposed Rulemaking!Advance Notice of Proposed Rulemaking 

The Dodd-Frank Act included numerous statutorily required rules with specific deadlines, most of which 

were concerning the mortgage rules that have already been issued. The only statutorily required rule 

remaining for the Bureau to implement is the Small Business Lending rule. 

As future Bureau rules, including the small business lending rule, lack a statutorily required or set 

implementation time line, we strongly urge the Bureau to employ greater use of ANPRs rather than only 

using the Notice of Proposed Rulemaking (NPR) process. An illustrative example ofrulemaking that 

would have benefited from more external stakeholder engagement before moving forward is the Bureau's 

payday and small dollar lending rule. 

Small Business Regulatory Enforcement Fairness Act (SBREFA) 

Credit unions are member-owned financial cooperatives that operate for the purpose of promoting thrift 

and providing access to credit. One-size-fits-all regulation does not work for Main Street: local credit 

unions, small community banks, and the consumers and small businesses they serve. This regulatory 

philosophy has created a rigged system favoring the largest institutions-the very institutions that caused 

the financial crisis that adversely impacted so many Americans-that can afford to comply with the 

"solutions" dreamt up in Washington. Now, over-regulation of small institutions is hurting consumers, 

costing them time and money, and limiting their financial product and service choices. 

Congress anticipated the possibility of such problems and enacted protections for credit unions and other 

small financial service providers. The Small Business Regulatory Enforcement Fairness Act of 1996 

(SBREFA) amended the Regulatory Flexibility Act of 1980, to require some federal agencies to hold a 

SBREFA panel if the agency fmds its proposed rule is likely to have a significant impact on a substantial 

number of small entities. The Bureau is one of the agencies required to engage in the SBREFA process, 

and credit union representatives have served as Small Entity Representatives (SERs) on several panels 

for its rulemakings. 

While we appreciate that SBREFA adds a layer of protection for small credit unions, we believe the 

Bureau should consider the feedback it receives during this process more seriously, including by making 

changes to rulemakings before the proposal stage instead of merely asking for public comment in 

response to SER feedback. Additionally, we believe reforms to this process are needed to ensure there is 

more accountability if Bureau rules do not reflect feedback provided prior to publication of final rules, 

including during SBREF A panels. 

Credit union employees divert time and resources from their daily jobs serving members to provide 

feedback to the Bureau on extremely complex SBREF A outlines of proposed rules. During the SBREF A 

process, these representatives are usually given less than a month to: read and digest complex outlines 

which can require legal and economic analysis, work to determine how the Bureau's proposals could 

impact their credit union, and compile data and feedback that the agency itself may not have even 

collected on a wide scale basis or analyzed. In short, SERs are often asked to do as much work as a 
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federal government agency, and meanwhile continue to operate their credit union and serve the many 

members relying on them for financial services. Moreover, they are asked to travel to Washington, D.C. 

to participate in a day long panel on their own dime, as well as participate in several conference calls 

beforehand. 

While this process can be burdensome to the small credit unions that participate, they nonetheless 

continue to volunteer in the SBREF A process because they know that rules which do not account for 

different institutions' size and structure can be catastrophic, lead to the elimination of products and 

services, and accelerate small credit union consolidation. Too often in prior SBREFA panels, Bureau 

officials have willfully ignored the feedback credit union representatives have provided about harmful 

proposals, improperly tailored to their size and structure. 

We are concerned that the Bureau views the SBREFA process as a check-the-box exercise, and often has 

not included the suggestions and feedback small credit unions have provided in proposed or final rules, 

despite the multiple sacrifices made to participate in the process. The condensed timeframe of SBREF A 

and the complexity of the outlines of rules under consideration have also made it difficult for credit 

unions to analyze and provide feedback on all aspects of multifaceted outlines within the 60-day window 

On several occasions, some of the major problems that a rule could cause for credit unions were 

identified after the SBREF A process. 

We have received feedback from many credit unions that participated on SBREF A panels that they felt 

final rules did not include enough changes and/or exemptions to limit the impact on small credit unions. 

As a result, small credit unions have had the most difficulty complying with new mortgage rules, even 

after participating in SBREF A. In August 2016, the Government Accountability Office released a report 

with observations from some of the earlier Bureau SBREFA panels, which found that out of the 57 SERs 

who participated, seven were reportedly satisfied with the Bureau's final rules. 2 

Based on CUNA' s experience and the feedback we have received from credit unions, we have the 

following recommendations for the Bureau to ensure its SBREFA process is efficient and effective 

moving forward: 

SERs should receive preparation materials well in advance of a SBREF A panel to allow them to 

gather information and feedback prior to the meeting. 

The Bureau should conduct a series of calls with SERs prior to the SBREF A panel to review 

materials and receive feedback. 

• The Bureau should thoroughly consider comments by SERs before proposing rulemakings. 

Comments made by SERs should influence a proposed rule, not merely be mentioned in the 

proposal for public comment. If the Bureau must redraft proposals based on SER feedback, it 

should do so. 

2 Government Accountability Office, Consumer Financial Protection Bureau Observations from Small Business Review 

Panels, (Aug. 2016) available at http://www.gao.gov/assets/680/678964.pdf. 
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• SERs should receive the final SBREF A report before it is published in the Federal Register along 

with the proposed rulemaking. 

The Bureau Should Work with the NCUA 

As the prudential regulator for federally-insured credit unions, the NCUA is the government expert on 

credit union operations. Because credit unions operate differently than banks and other for-profit 

financial institutions, regulatory requirements affect them differently. The NCUA understands the unique 

structure and business model of credit unions, and therefore should be engaged throughout the entire 

rulemaking process. 

The Bureau should work with NCUA and use its credit union experience on future rulemakings affecting 

credit unions. 

The Bureau Should Apply a Cost/Benefit Analysis to Rules for Credit Unions 

The Bureau prides itself on being a data-driven organization. Former Director Cordray often referred to 

the data beneath consumer complaints as the Bureau's "compass," playing a key role in identifying and 

prioritizing the agency's actions, including in the realm of rulemakings. 

Data for data's sake is insufficient, and it is critical that the agency's policy and regulatory decisions be 

wholly supported by relevant, timely, representative data. Unfortunately, it is not uncommon for a 

Bureau rulemaking to lack (or at least appear to the public to lack) sufficient evidence, data, research, or 

other information to substantiate assertions within the rulemaking. 

It is critical that the Bureau base its decisions on data. Almost equally as critical is that the Bureau be 

wholly transparent in its reliance on data, ensuring the public has access to the same information-absent 

confidential and personally identifiable information-the Bureau relies on as a foundation of its 

rulemakings. 

The Bureau Should Coordinate Future Efforts 

Under Section 1042(a)(l) of the Dodd-Frank Act, state attorneys general and state regulators are 

empowered "to enforce provisions of this title or regulations issued under this title, and to secure 

remedies under provisions of this title or remedies otherwise provided under other law." Therefore, 

subject to some exceptions, state officials can enforce both the generic ban in Title X against unfair, 

deceptive or abusive conduct and any specific rules that the Bureau enacts. Without coordination between 

federal and state regulators, enforcement of consumer protections will overlap, leading to a patchwork of 

conflicting resolutions which will create uncertainty in the industry and confusion among the public. 

Recently, several states have ramped up enforcement of consumer fmancial protections. At least two 

states, New Jersey and Pennsylvania, have created a "state-level" Bureau to spearhead enforcement. In 

December, state attorneys general from 17 states sent a letter to President Trump emphasizing their 

statutory authority to enforce state and federal consumer protection laws. The attorneys general further 

vowed to "redouble [their] efforts at the state level to root out such misconduct and hold those 

responsible to account" should the Bureau pursue a less aggressive enforcement posture. 
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While we respect the authority of the Bureau and the states to enforce Dodd-Frank Act provisions, we 

strongly urge the parties to coordinate to ensure enforcement is transparent and consistent. 

Bureau Guidance and Implementation Support 

The past several years has seen a massive increase in consumer fmancial services regulations. The 

increase in regulations is particularly burdensome for credit unions which, unlike massive banks, do not 

have dozens oflegal experts in house to assist with compliance questions. There are, however, ways in 

which the Bureau can assist the industry in complying with consumer financial services regulatory 

requirements. 

CUNA has the following recommendations to enhance the Bureau's ability to assist the industry with 

compliance with consumer financial services rules and requirements: 

The Bureau should accept inquiries regarding compliance with its regulations and guidance by 

telephone, email, or through its website. Reponses to inquiries should be provided by Bureau staff 

within 24-48 hours of receiving the inquiry. For questions that require additional research, we 

strongly encourage Bureau staff to provide an initial response at least within the 24-48-hour 

time frame. 

The Bureau should track questions it receives from the industry. These questions should be used 

by Bureau staff to make annual adjustments to regulations or commentaries to address 

ambiguities. 

If there are questions the Bureau receives frequently, we encourage it to also publish written 

guidance or Frequently Asked Questions (FAQs) with written interpretations to assist industry 

stakeholders on regulatory implementation. An example of helpful FAQs was the Department of 

Housing and Urban Development's RESP A F AQs, which the industry regularly used as a 

resource. 

• The Bureau should conduct interactive webinars on proposed and final rulemakings. Webinars 

should provide information about regulatory requirements and practical examples of how to 

comply with new requirements. Bureau staff should also take and answer industry questions 

received during the webinars. Questions can be answered during the live webinars or through 

follow-up written communications such as FAQ documents. 

We encourage the Bureau to provide both comprehensive fmal rule summaries and short one-page 

summaries for final rules. Both summaries are helpful resources and tools for industry 

compliance. When possible, we strongly encourage the Bureau to provide flow charts that 

illustrate how to comply with various regulations. These resources can be especially helpful for 

smaller credit unions with limited compliance resources. 

• The Bureau should place all its compliance resources, including recorded webinars, final rule 

summaries, and F AQ documents, in a central location on its website for easy and quick access. 
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• The Bureau should frequently update compliance guides on its website so industry stakeholders 

always have the most recent information accessible. 

• The Bureau should also conduct annual outreach with industry stakeholders, especially credit 

unions, to receive feedback on its current compliance resources and what additional resources 

would be helpful to the industry. 

Conclusion 

As CUNA indicated when the Dodd-Frank Act was enacted, 

"Consumers of financial products, especially consumers of products and services provided by 

currently unregulated entities, need greater protections and a consumer fmancial protection agency 

could be an effective way to achieve that protection, provided the agency does not impose duplicative 

or unnecessary regulatory burdens on credit unions. ill order for such an agency to work, consumer 

protection regulation must be consolidated and streamlined; it should not add to the regulatory burden 

of those who have been regulated and performed well, such as credit unions." 3 

The need for consumer protection remains. Over the last several years, the Bureau has missed 

opportunity after opportunity to ensure that its rulemakings do not adversely impact credit unions' ability 

to serve their members. We hope this process will lead the new leadership at the Bureau in the direction 

of ending one-size-fits-all regulation and bringing common sense to credit unions' regulatory 

requirements. 

On behalf of America's credit unions and their 110 million members, thank you for holding this 

important hearing and considering our views. 

Sincerely, 

3 Letter from Credit Union National Association to Members of the House of Representatives regarding H.R. 4173, the Dodd· 

Frank Wall Street Reform and Consumer Financial Protection Act (June 30, 2010). Available upon request.