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THE CONSUMER FINANCIAL PROTECTION 

BUREAU: THE FIRST 100 DAYS 

HEARING 

BEFORE THE

SUBCOMMITTEE ON FINANCIAL INSTITUTIONS 

AND CONSUMER CREDIT 

OF THE

COMMITTEE ON FINANCIAL SERVICES 

U.S. HOUSE OF REPRESENTATIVES 

ONE HUNDRED TWELFTH CONGRESS 

FIRST SESSION 

NOVEMBER 2, 2011 

Printed for the use of the Committee on Financial Services 

Serial No. 112–80 

( 

(II) 

HOUSE COMMITTEE ON FINANCIAL SERVICES 

SPENCER BACHUS, Alabama, Chairman 

JEB HENSARLING, Texas, Vice Chairman 

PETER T. KING, New York 

EDWARD R. ROYCE, California 

FRANK D. LUCAS, Oklahoma 

RON PAUL, Texas 

DONALD A. MANZULLO, Illinois 

WALTER B. JONES, North Carolina 

JUDY BIGGERT, Illinois 

GARY G. MILLER, California 

SHELLEY MOORE CAPITO, West Virginia 

SCOTT GARRETT, New Jersey 

RANDY NEUGEBAUER, Texas 

PATRICK T. MCHENRY, North Carolina 

JOHN CAMPBELL, California 

MICHELE BACHMANN, Minnesota 

THADDEUS G. McCOTTER, Michigan 

KEVIN McCARTHY, California 

STEVAN PEARCE, New Mexico 

BILL POSEY, Florida 

MICHAEL G. FITZPATRICK, Pennsylvania 

LYNN A. WESTMORELAND, Georgia 

BLAINE LUETKEMEYER, Missouri 

BILL HUIZENGA, Michigan 

SEAN P. DUFFY, Wisconsin 

NAN A. S. HAYWORTH, New York 

JAMES B. RENACCI, Ohio 

ROBERT HURT, Virginia 

ROBERT J. DOLD, Illinois 

DAVID SCHWEIKERT, Arizona 

MICHAEL G. GRIMM, New York 

FRANCISCO ‘‘QUICO’’ CANSECO, Texas 

STEVE STIVERS, Ohio 

STEPHEN LEE FINCHER, Tennessee 

BARNEY FRANK, Massachusetts, Ranking 

Member 

MAXINE WATERS, California 

CAROLYN B. MALONEY, New York 

LUIS V. GUTIERREZ, Illinois 

NYDIA M. VELA ́ ZQUEZ, New York 

MELVIN L. WATT, North Carolina 

GARY L. ACKERMAN, New York 

BRAD SHERMAN, California 

GREGORY W. MEEKS, New York 

MICHAEL E. CAPUANO, Massachusetts 

RUBE ́ N HINOJOSA, Texas 

WM. LACY CLAY, Missouri 

CAROLYN MCCARTHY, New York 

JOE BACA, California 

STEPHEN F. LYNCH, Massachusetts 

BRAD MILLER, North Carolina 

DAVID SCOTT, Georgia 

AL GREEN, Texas 

EMANUEL CLEAVER, Missouri 

GWEN MOORE, Wisconsin 

KEITH ELLISON, Minnesota 

ED PERLMUTTER, Colorado 

JOE DONNELLY, Indiana 

ANDRE ́ CARSON, Indiana 

JAMES A. HIMES, Connecticut 

GARY C. PETERS, Michigan 

JOHN C. CARNEY, JR., Delaware 

LARRY C. LAVENDER, Chief of Staff 

(III) 

SUBCOMMITTEE ON FINANCIAL INSTITUTIONS AND CONSUMER CREDIT

SHELLEY MOORE CAPITO, West Virginia, Chairman 

JAMES B. RENACCI, Ohio, Vice Chairman 

EDWARD R. ROYCE, California 

DONALD A. MANZULLO, Illinois 

WALTER B. JONES, North Carolina 

JEB HENSARLING, Texas 

PATRICK T. MCHENRY, North Carolina 

THADDEUS G. McCOTTER, Michigan 

KEVIN McCARTHY, California 

STEVAN PEARCE, New Mexico 

LYNN A. WESTMORELAND, Georgia 

BLAINE LUETKEMEYER, Missouri 

BILL HUIZENGA, Michigan 

SEAN P. DUFFY, Wisconsin 

FRANCISCO ‘‘QUICO’’ CANSECO, Texas 

MICHAEL G. GRIMM, New York 

STEPHEN LEE FINCHER, Tennessee 

CAROLYN B. MALONEY, New York, 

Ranking Member 

LUIS V. GUTIERREZ, Illinois 

MELVIN L. WATT, North Carolina 

GARY L. ACKERMAN, New York 

RUBE ́ N HINOJOSA, Texas 

CAROLYN MCCARTHY, New York 

JOE BACA, California 

BRAD MILLER, North Carolina 

DAVID SCOTT, Georgia 

NYDIA M. VELA ́ ZQUEZ, New York 

GREGORY W. MEEKS, New York 

STEPHEN F. LYNCH, Massachusetts 

JOHN C. CARNEY, JR., Delaware 

(V) 

C O N T E N T S 

Page 

Hearing held on: 

November 2, 2011 ............................................................................................. 1 

Appendix: 

November 2, 2011 ............................................................................................. 53 

WITNESSES 

WEDNESDAY, NOVEMBER 2, 2011 

Date, Raj, Special Advisor to the Secretary of the Treasury, Consumer Financial Protection Bureau (CFPB) ............................................................................ 9 

APPENDIX 

Prepared statements: 

Date, Raj ........................................................................................................... 54 

ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD

Maloney, Hon. Carolyn: 

Assorted newspaper articles ............................................................................ 61 

Letter from the National Association of Attorneys General ......................... 74 

Westmoreland, Hon. Lynn: 

Compliance documents ..................................................................................... 78 

Date, Raj: 

Written responses to questions submitted by Representatives Fincher 

and Manzullo ................................................................................................. 88 

(1) 

THE CONSUMER FINANCIAL PROTECTION 

BUREAU: THE FIRST 100 DAYS 

Wednesday, November 2, 2011 

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 10:01 a.m., in room 

2128, Rayburn House Office Building, Hon. Shelley Moore Capito 

[chairwoman of the subcommittee] presiding. 

Members present: Representatives Capito, Renacci, Royce, Manzullo, McCotter, Pearce, Westmoreland, Luetkemeyer, Huizenga, 

Duffy, Canseco, Grimm, Fincher; Maloney, Gutierrez, Watt, McCarthy of New York, Baca, Miller of North Carolina, Scott, Meeks, and 

Carney. 

Ex officio present: Representatives Bachus and Frank. 

Also present: Representatives Posey and Green. 

Chairwoman CAPITO. This hearing will come to order. 

This morning’s hearing marks the second oversight hearing this 

subcommittee has conducted regarding the newly created Consumer Financial Protection Bureau, the CFPB. 

Today, we are joined Mr. Raj Date, Special Advisor to the Secretary of the Treasury for the Consumer Financial Protection Bureau. 

I would like to welcome Mr. Date to his first hearing before this 

committee in his capacity. And I also would like to thank him for 

his willingness to participate. 

Thank you. 

Created by the Dodd-Frank Act, the CFPB has officially been 

operational for a little over 100 days. However, absent Senate confirmation of the Director, the CFPB does not have its full powers. 

The focus of this morning’s hearing will give members of the subcommittee the opportunity to learn more about the operations of 

the Bureau since the designated transfer date. These types of hearings are critical as the drafters of Dodd-Frank allowed for little 

oversight of the CFPB. 

As my colleagues know, the CFPB is funded through a unique 

mechanism that allows them to draw a percentage of the Federal 

Reserve’s operating expenses each year. They do have the ability 

to draw on $200 million in additional Federal appropriations if 

they exhaust the Federal Reserve funds, which they have not done, 

as we speak. 

2 

However, they have not drawn on these funds so it is very difficult for the U.S. Congress to have oversight about how they are 

spending taxpayers’ dollars. 

Bringing the CFPB into the annual appropriations process is just 

one of the several reforms that Republicans have offered to improve 

the structure of the CFPB and make it more accountable and a 

more transparent agency. 

Earlier this year, the House passed commonsense reforms to convert the leadership structure of the CFPB to a five-person committee, which is reflective in several other committees and throughout the government, and allow for greater balance between consumer protection and the safe and sound operation of United 

States financial institutions. 

The U.S. Senate should adopt these reforms so that we can move 

forward with ensuring that American consumers are protected by 

a balanced and transparent agency. 

I look forward to hearing from Mr. Date about the operations of 

the CFPB. And I thank him also for his visit to my office since the 

designated transfer date. 

I know Members will have many questions for him, so I will save 

my time for further questions and statements. 

In case the Members do not have sufficient time for their questions, I would encourage them to submit their questions in writing. 

There are many important issues to discuss and we may not have 

enough time to cover them all today. 

I would like to say that on the issue of consumer protection, Republicans and Democrats agree that consumer protection is an extremely important aspect as we make sure that our fellow Americans have access to credit, have fair and transparent disclosures 

when signing agreements in securing credit, and that oversight of 

consumer products is an extremely important aspect. 

Again, I would like to thank Mr. Date for appearing before the 

subcommittee. 

And I will now yield to the ranking member of the subcommittee, 

the gentlelady from New York, Mrs. Maloney, for the purpose of 

making an opening statement. 

Mrs. MALONEY. Thank you so much. 

Today, I applaud the CFPB for a remarkable string of achievements in its first 100 days of existence. It has already formed two 

special offices to help advise and educate segments of the market 

that have been especially vulnerable to predatory practices. 

The Bureau is already helping seniors through the Office of 

Older Americans headed by Skip Humphrey, a former Minnesota 

State AG and State chair of the AARP. 

The Bureau is already looking out for members of our military 

services through the Office of Servicemember Affairs headed by 

Holly Petraeus, whom we are honored to have with us today. 

Thank you, Holly, for working and responding so swiftly to complaints that mortgage servicers were illegally foreclosing on the 

homes of servicemembers while they were deployed. She reached 

out to the CEOs of 25 companies and got them to stop these abusive practices. 

The Bureau is already working to help students. It drafted a new 

financial aid form last week that breaks down the real cost of stuVerDate Nov 24 2008 17:26 Jun 15, 2012 Jkt 072621 PO 00000 Frm 00008 Fmt 6633 Sfmt 6633 K:\DOCS\72621.TXT TERRIE
3 

dent loans into an easy-to-understand sheet. It features a total tuition cost, projected monthly payments, and the loan default rate 

from each university. 

Yesterday, the Financial Services Roundtable issued a statement 

strongly supporting the ‘‘Know Before You Owe’’ student initiative 

saying, ‘‘It will help strengthen students’ knowledge about student 

loans.’’ 

And I request unanimous consent to place their letter in the 

record. 

Chairwoman CAPITO. Without objection, it is so ordered. 

Mrs. MALONEY. The Bureau is already makings some regulations 

simpler. It will also begin a targeted review of regulations it inherited from seven different agencies to eliminate unnecessary rules. 

It has proposed two versions of a new simplified mortgage disclosure form as part of their ‘‘Know Before You Owe’’ program, and 

posted them on a crowdsource for comments. 

And the Bureau combined two federally acquired mortgage disclosure forms, TILA and RESPA, and made it simpler. And these 

are the forms that you can literally go on the Internet and vote for 

the one you think would work the best for you. 

The Bureau and its nominee have strong support from the attorneys general around the country. Thirty-seven AGs recently urged 

the Senate to approve Richard Cordray as the Bureau’s first Director. They described him as a brilliant, well-qualified leader, who 

has defended consumers while also working to find fair and reasonable solutions for the financial industry. 

And I ask unanimous consent to place in the record the statement by 37 different attorneys general. 

Chairwoman CAPITO. Without objection, it is so ordered. 

Mrs. MALONEY. And also the statement from Treasury Secretary 

Geithner that talks about all the areas that will be unregulated, 

that caused the financial crisis, if the CFPB is not up and running. 

They have been with us for only 100 days and look at the difference they have made in the lives of so many Americans. I wish 

it had been 100 years. 

My time has expired. 

Thank you for what you have achieved under remarkably difficult circumstances. Many seniors, members of the military, and 

students are better served, and mortgages are simpler. 

Thank you for your efforts. 

Chairwoman CAPITO. Thank you. 

I would like to recognize the chairman of the full Financial Services Committee, Chairman Bachus, for 2 minutes for an opening 

statement. 

Chairman BACHUS. Thank you, Chairwoman Capito. 

All of us, Republicans and Democrats, support strong consumer 

protection. After all, we are all consumers. Our family members are 

all consumers. Our constituents are all consumers. And they all deserve consumer protection. 

In fact, I proposed a subprime lending bill back in 2005, and 

credit card reform in 2007, and I sponsored the FACT Act. 

Then-Ranking Member Frank and I, I think agreed on many 

things. But one thing that we disagree on, I think, across the aisle 

4 

is the structure of the CFPB. My fear is that there are simply no 

checks and balances. It could easily become a loose cannon. 

Now, that would be the worst-case scenario and it may not happen. But the CFPB is headed by a single Director who answers to 

no one. The Director exercises sole authority over the agency and 

its staff, a staff that according to the President’s budget will be 

comprised of over 1,200 individuals. 

The Director has unprecedented power to ban financial products 

and services based on whether or not he deems them unfair, deceptive, or abusive under a highly subjective standard that has no legally defined content. 

I looked at the 800-page document that was recently released 

and there are still a lot of loose ends. The Director has singular authority to spend hundreds of millions of dollars with no congressional oversight. 

For all these reasons, and the fact that it actually was originally 

designed by Elizabeth Warren, who first proposed it, as a commission, Republicans have supported a commission and will continue 

to do so, and urge the Senate to take it up and have a commission. 

Thank you, Madam Chairwoman. 

Chairwoman CAPITO. Thank you. 

I would like to recognize the ranking member of the full Financial Services Committee, Mr. Frank, for 3 minutes for an opening 

statement. 

Mr. FRANK. First, I want to comment on the incongruity of people 

at an oversight hearing lamenting the lack of oversight. This is an 

oversight hearing. 

Apparently, it is a figment of some people’s imagination, because 

they tell us there was no oversight. So I guess I am wasting the 

morning. 

We are also told that it is unprecedented. 

That comes from people who have been on this committee for 

many years and apparently never heard of the Comptroller of the 

Currency, because it is structured very much like the Comptroller 

of the Currency, who was formerly independent of anybody. 

This is the same individual with, frankly, greater powers over 

the bank system of America than this agency has. 

We are also then told, there is no oversight here because it gets 

its money from the Federal Reserve. 

If that is the case, if there is no oversight here because it gets 

its money from the Federal Reserve, then there must not be any 

oversight of the Federal Reserve, because the Federal Reserve is 

not subject to appropriation. 

The Federal Deposit Insurance Corporation is not subject to appropriation. The Office of the Comptroller of the Currency is not 

subject to appropriation. 

In other words, my Republican colleagues did not object to financial institution regulators being exempt from the appropriations 

process until the Consumer Bureau came up. 

It was okay for the Comptroller of the Currency, a single individual; okay for the Federal Reserve—I have never heard that we 

didn’t have any oversight over the FDIC or over the Comptroller 

of the Currency. 

5 

And I think that gets to the point where my colleagues, two of 

them have said that Republicans are all for consumer protection. 

If the consumers could be protected by that kind of rhetoric, I 

guess they would be in great shape, but they can’t be. 

And what we should be very clear about is that among the major 

changes that the Republicans were insisting on before they will 

confirm people, is a total wrenching out of shape of the Constitution. 

The Constitution sets forward ways to legislate and then it has 

a confirmation power. And because the Republicans don’t have the 

power to get their legislation through, they are using the confirmation power inappropriately to try and coerce us into adopting legislation. 

And the commission is a small part of it. The big thing they want 

to do is this: They want to put the bank regulators back in charge 

of consumer protection. 

Now, my colleagues have said they are for consumer protection, 

but they seem to have forgotten how to do that when they were in 

power. I don’t remember a single effort to do anything about 

strengthening consumer protection in general when they were in 

power. 

Yes, the gentleman from Alabama did propose a subprime bill, 

and we tried to work with him. But the then-Majority Leader, Mr. 

DeLay, sent word to this committee that it should not be taken up. 

And it wasn’t until we took the Majority that we were able to get 

legislation on subprime, first in this committee, although the Wall 

Street Journal denounced our bill as a Sarbanes-Oxley, which to 

them is a swear word. For the Wall Street Journal, Sarbanes-Oxley 

is even worse than hacking people’s telephones. 

But what we have is a failure to do anything when they were in 

power. 

The argument is that we need better balance. I have to say my 

colleagues in this committee may be the only people in America 

who think that the danger is that we will over-protect consumers. 

The history of the relationship of consumers to financial institutions, and the role of the regulators, hardly supports the argument 

that there is a danger that the consumers will be overprotected. 

This is the one chance we have to give them the kind of protecting they ought to have. 

Chairwoman CAPITO. Thank you. 

I would like to recognize Mr. Royce for 11⁄2 minutes for the purpose of making an opening statement. 

Mr. ROYCE. Thank you. Thank you, Madam Chairwoman. 

The distinction is that our concern is that the danger in this 

process is that we will not protect in terms of safety and soundness. 

Our distinction, our concern, is that the prudential regulator 

doesn’t have the seat at that table that the prudential regulator 

needs in order to offer the advice on safety and soundness. 

And the reason we are concerned about this is because we have 

gone down this road before. The reason we are concerned about 

this is because this committee has heard time after time after time 

from Fannie Mae and Freddie Mac’s regulators, both past and current, on this subject. 

6 

They have said that the bifurcated regulation contributed to the 

failure of Fannie and Freddie. 

And the CFPB, frankly, expands this problem throughout the financial system. So what we have suggested, which doesn’t sound 

radical to me, is that we go back to the original House legislation 

introduced by Mr. Frank that had a commission, and allow for the 

input of the prudential regulator. 

That is the ground we are fighting on right now. We are trying 

to make certain that at least in the process, we don’t go down the 

road again that we faced with respect to the GSE regulation. 

And I think that the notion that an independent regulator with 

no oversight or opportunity for dissent is good for consumers is 

simply flawed. At the end of the day, the likely result will be higher cost and less access to credit in a market for consumers, and the 

way this is structured, less input from the prudential regulator. 

Chairwoman CAPITO. Thank you. 

I would like to recognize Mr. Gutierrez for 2 minutes. 

Mr. FRANK. Will the gentleman yield for 10 seconds first? 

Mr. GUTIERREZ. I would be happy to yield. 

Mr. FRANK. I thank him. 

I would say this, the gentleman talked about my objection to my 

original bill. Yes, there was a commission, although I preferred it 

individually. 

But the biggest difference is not the commission. It is the Republican bill, to put the bank regulators back in charge by abetting 

them under more easily achieved basis overrule the Bureau. 

That was never in my bill. This power of the bank regulators by 

majority rule, to overrule the Bureau in any particular case, that 

is the heart of my objection to their approach. 

Mr. ROYCE. Will the gentleman yield? 

Chairwoman CAPITO. It is time for the gentleman from Illinois to 

make his opening statement. 

Mr. GUTIERREZ. Thank you very much. 

Mr. Date, it is wonderful to have you here. I hope they receive 

you warmly over in the Senate for your confirmation hearing. I 

know that at least on this side, we are receiving you warmly. 

It astonishes me what can happen a year later, after we passed 

the bill. I don’t remember a single one of my colleagues on the 

other side of the aisle voting for the bill that created the consumer 

protection. 

I remember being there working day in and day out. And I don’t 

remember anybody saying, ‘‘We are for the consumer.’’ 

As a matter of fact, I really like my colleague from California, 

Mr. Royce, because the American public just heard the Republican 

response—the prudential regulator. We are concerned about the 

prudential regulator making sure. 

I am sure that makes everybody in America feel so warm and 

fuzzy about the Congress of the United States and what we are 

doing, because the prudential regulator is being defended here in 

this fine committee hearing. 

Let me tell you why I think this is a great hearing to have. 

I don’t know about the prudential regulator, because Bank of 

America had to cancel the $5 fee, and that is saving the American 

people—it will save the American people millions of dollars. 

7 

Safety and soundness, yes, the safety and soundness of your 

debit card and your debit card and your account each and every 

month so that you have extra dollars in your account in order to 

access your money. 

Why? Because we passed this legislation that said, guess what? 

You have to tell everybody because you know what? It is dangerous 

at banks and it is dangerous out there when people take a gun and 

stick somebody up. That is true. 

But you know what you are doing? You are making sure that the 

electronic stick-up of the banks on American consumers is stopped 

in America. 

How do you do that? By telling people about what these mysterious fees are. 

And everybody in America may not know what the prudential 

regulator is, but let me tell you what they do know. They know 

about the mysterious fees that show up on their checking and 

banking accounts. 

Mr. Date, I am excited that you are finally going to have an opportunity, hopefully, to get confirmed by the Senate. 

Chairwoman CAPITO. Thank you. 

The gentleman from Georgia, Mr. Westmoreland, for 11⁄2 minutes 

for an opening statement? 

Mr. WESTMORELAND. Thank you, Madam Chairwoman. 

Mr. Date is, hopefully—did you know that Georgia banks have 

been hit very hard for failures? Most of these banks would not be 

directly supervised by the CFPB, but would still have to comply 

with CFPB rules and regulations. 

Recently, a banker gave me this 10-page document of forms that 

had to be filled out if somebody was trying to purchase a home. 

And, Madam Chairwoman, I would like to ask unanimous consent that these documents be submitted for the record. 

Chairwoman CAPITO. Without objection, it is so ordered. 

Mr. WESTMORELAND. And they must be selling houses to firstgraders with all the different things that have to be given to the 

purchaser. 

I know that CFPB is committed to reducing paperwork for borrowers. However in its zeal to reduce paperwork, the CFPB must 

be mindful not to increase regulatory burdens on community banks 

and credit unions. 

The CFPB must make sure that both consumers and businesses 

get the benefits of streamlined disclosures. 

Finally, I have serious concerns that the CFPB will use its unchecked authority to create a backdoor, plain vanilla product. 

CFPB must not steer borrowers to certain approved products. If 

a person is responsible enough to buy a house, they must be responsible enough to decide what mortgage product works best for 

them, not the one that the government tells them is best for them. 

And with that Madam Chairwoman, I yield back. 

Chairwoman CAPITO. Thank you. 

I would like to recognize Mr. Scott for 2 minutes for the purpose 

of making an opening statement. 

Mr. SCOTT. Thank you very much, Madam Chairwoman. 

8 

Let me just say how important this hearing is because of the 

timeliness of it. I was one of the co-sponsors who created the CFPB 

through the Dodd-Frank bill and was very proud to do so. 

I think what we have to ask ourselves at this time is what is in 

the best interest of two things: the consumer; and our financial institutions. 

And the CFPB is designed at this time to do both. But most importantly right now, I think we have to look at the plight that the 

consumer is in. 

We started this about 2 years ago. And the plight of the consumer is in a worse situation today than even then. 

We have staggering unemployment and joblessness. In my State 

of Georgia, it is 10.2 percent. In many parts of my district, it is 15 

percent to 16 percent. 

And when you combine that with the loss of mortgages, never 

has there been a more significant time to offer the consumer what 

the CFPB has to offer. To give them the education that is needed. 

To give them the protective armor that they need as they go and 

they battle these two twin hurricanes that are hitting them simultaneously: joblessness; and loss of their homes. 

In the midst of this, you still have predators out there, predators 

who are willing to take advantage of this double whammy that the 

consumer is in. 

Now, we are arguing here. But as the old saying goes, ‘‘While we 

are arguing, Rome is burning.’’ 

Consumers often look at us up here, trading back and forth, back 

and forth in here. 

We have the CFPB. It is in place. It is an excellent foundation. 

Is it perfect? What is perfect? 

But it is certainly the best vehicle to go about what we need to 

do at this time, to do the essential good of providing our consumers 

with the information and the protections that they need to be able 

to deal in this whirlwind of economic downturn that they find 

themselves in. 

Thank you, Madam Chairwoman. 

Chairwoman CAPITO. Thank you. 

I would like to recognize Mr. Luetkemeyer for 11⁄2 minutes for 

the purpose of making an opening statement. 

Mr. LUETKEMEYER. Thank you, Madam Chairwoman. 

I appreciate you holding this hearing today because I believe it 

is important that Congress examine the CFPB at every opportunity, particularly given that there is little or no oversight of 

the—our concerns that the authorities given to the CFPB are far 

too broad. 

The CFPB, in my judgment, will undoubtedly change the way the 

private sector offers financial products to consumers. And I remain 

unconvinced that it will do so in a way that truly benefits the 

American people. 

Before the July 21st transfer date, CFPB examiners were collecting information and participating in examinations. They have 

already undertaken major rulemakings that will no doubt change 

the way the private sector operates. 

We understand that regulations are meant to protect consumers. 

However, in the past few years, we have seen numerous examples 

9 

of overly burdensome regulation that has and will continue to hurt 

consumers. 

In some ways, we seem to be missing the goal of consumer protection, and in doing so, we are compromising safety and soundness 

over financial institutions. 

People in the financial services industry are very apprehensive 

about the CFPB. From the rules already proposed and the areas 

of those yet to be promulgated, it gives us all cause for great concern. 

I thank Mr. Date for testifying today—for participating, and I appreciate that he has requested feedback from the private sector. 

I would encourage the Bureau to continue to engage with the industry and consumer groups to encourage that all points are taken 

into account. 

Thank you, Madam Chairwoman, and I yield back the balance of 

my time. 

Chairwoman CAPITO. Thank you. 

I would like to recognize Mr. Canseco for 11⁄2 minutes for the 

purpose of making an opening statement. 

Mr. CANSECO. Thank you, Madam Chairwoman. 

The 2,300-page Dodd-Frank legislation created the Consumer Financial Protection Bureau, an incredibly powerful agency giving 

sweeping powers to carry out its well-intended, but vaguely defined, mission of consumer protection. 

Like many other members on the Financial Services Committee, 

I have serious concerns with the CFPB. Nonetheless, it is the law 

of the land. 

As Members of Congress, we have a duty to ensure that this new 

agency is operating correctly and appropriately. 

The CFPB reached a milestone earlier this year when on July 

21st, it stood up and officially acquired consumer protection rules 

and authorities from seven other agencies. 

Given the vast mandate and power of the CFPB, the decisions 

it makes will have an enormous impact on our Nation’s financial 

institutions and the consumers they serve, as well as our economy. 

I look forward to hearing from Mr. Date. 

And I thank Madam Chairwoman for holding this important 

hearing. 

I yield back. 

Chairwoman CAPITO. Thank you. 

That concludes our opening statements. 

I would now like to introduce our witness for the purpose of giving a 5-minute opening statement, Mr. Raj Date. Mr. Date is the 

Special Advisor to the Secretary of the Treasury for the Consumer 

Financial Protection Bureau. 

Welcome, Mr. Date. 

STATEMENT OF RAJ DATE, SPECIAL ADVISOR TO THE SECRETARY OF THE TREASURY, CONSUMER FINANCIAL PROTECTION BUREAU (CFPB) 

Mr. DATE. Thank you, Chairwoman Capito. 

Chairwoman CAPITO. Pull the microphone closer to you. I know 

how fast you talk, so I want to make sure I get it all. 

Mr. DATE. I’m ready. 

10 

Thank you, Chairwoman Capito, Ranking Member Maloney, 

Chairman Bachus, Ranking Member Frank, and members of the 

subcommittee for inviting me today. 

I am eager to testify about the Consumer Financial Protection 

Bureau. 

My name, again, is Raj Date. I serve as the Special Advisor to 

the Secretary of the Treasury for the Consumer Financial Protection Bureau, where our mission is to help consumer financial markets work by making rules more effective, by consistently and fairly enforcing those rules, and by empowering consumers to take 

more control over their economic lives. 

Before the Dodd-Frank Act, responsibility for administering and 

enforcing the various Federal consumer financial laws was scattered across seven different Federal agencies, but not one of those 

agencies was solely focused on consumer financial protection. 

The CFPB is the first agency whose mission is making sure that 

consumer financial markets work for American families. 

In our first 100 days, we have been hard at work to promote a 

consumer financial market where consumers know what they are 

getting into, where firms follow the rules, and where specific populations are protected and empowered. 

The Bureau is creating more transparent financial markets starting with mortgages and student loans. With our ‘‘Know Before You 

Owe’’ mortgage initiative, we are creating a single, shorter, more 

useful mortgage disclosure form to replace two overlapping documents that Congress asked us to combine. 

Our work in this area will not only reduce regulatory burden, but 

it will also make the cost, and the risk of a loan, more clear and 

allow consumers to comparison shop for the best loan. 

Before we began the regulatory process, we displayed those prototype forms on our Web site. And we invited comments from the 

public, from industry participants, and from market experts. 

We have conducted five rounds of testing. And we have received 

more than 22,000 comments to date. 

Just last week, we announced another ‘‘Know Before You Owe’’ 

initiative, this time on student loans. We partnered with the Department of Education to develop a draft, one-page financial aid 

shopping sheet that would improve the way schools communicate 

loan and repayment information to students. 

The Bureau is also working to create a market where firms follow the rules. One thing made clear in Dodd-Frank was that the 

Bureau is to make mortgage markets work for all consumers irrespective of the charter that a business happens to fall under. 

To this end, we recently released our supervision and examination manual, and our examination procedures for mortgage servicing. Both of those documents are meant to provide direction to 

our examiners in how to determine providers of financial products 

and services are following the law. We consider both to be evolving 

documents and we welcome feedback. 

Over the coming months, we will release more guides like these 

that explain examination procedures for different products and 

lines of business. 

We have also been hard at work building up the Bureau to protect and empower specific groups of consumers. 

11 

Dodd-Frank directs the Bureau to create offices and positions focused on the needs of servicemembers, seniors, and students. Our 

Office of Servicemember Affairs, headed by Holly Petraeus, has 

been traveling across the country hearing from servicemembers 

and their advocates about the unique challenges that they face. 

With that on-the-ground information, Mrs. Petraeus has already 

brought attention to important issues like aggressive marketing by 

for-profit colleges to military personnel. She has also brought attention to the difficulties of servicemembers who are underwater, but 

not delinquent on their mortgages, and then they receive military 

orders to move. 

We recently brought on Skip Humphrey to head our Office of 

Older Americans. That office will help seniors navigate financial 

challenges by educating them about their options in areas like 

long-term savings, and planning for retirement, and long-term 

care. 

The Bureau will work with senior groups, financial institutions, 

law enforcement offices, and other Federal and State agencies to 

identify and prevent scams targeting seniors. We also recently 

named Rohit Chopra as our private education loan ombudsman. 

The Bureau will work with the Department of Education to receive, review, and attempt to resolve complaints of borrowers of 

private student loans. In July, the CFPB and the Department of 

Education will provide a report on private student loan complaints 

to Congress. 

At the same time, we are also working to fill other important positions like the head of our Office of Minority and Women Inclusion. 

Finally, and perhaps most importantly, the CFPB will tackle our 

mission knowing that we are singularly accountable for it. 

Consumer protection in financial services is a hard job. And by 

enacting Dodd-Frank, Congress recognized that if you do not make 

someone singularly responsible for a hard job, you should not expect that it gets done well. 

You can count on us to make sure that consumer financial markets actually work for families, for the honest firms that serve 

them, and for the economy as a whole. 

Thank you again for this opportunity. I look forward to your 

questions. 

[The prepared statement of Mr. Date can be found on page 54 of 

the appendix.] 

Chairwoman CAPITO. Thank you. 

We will now start the question-and-answer portion of the hearing, and I will begin with the first question. 

You mentioned just at the end of your statement about your 

agency being singularly responsible for consumer protection. And in 

the Dodd-Frank bill, it actually says, ‘‘Section 1064 requires that 

the prudential regulators cede that authority to the CFPB.’’ 

But in fact, in talking anecdotally with you and others, it seems 

to me as though the prudential regulators have still held on to consumer protection staff and responsibilities. 

So are you really singularly responsible or is it still spread out 

over the seven prudential regulators? 

12 

And what are you doing to makes sure those silos, that Mrs. 

Warren talked about consistently, are still not erected and serve as 

barriers? 

Mr. DATE. In very important ways, that authority has been consolidated from the seven different agencies into the CFPB. For example, we have rulemaking authority across the Federal consumer 

financial laws that transferred to us on July 21st. 

But you point out a very important point, and one that informs 

our efforts, which is that our supervisory authority extends only to 

those depositories—banks, thrifts, and credit unions with more 

than $10 billion in assets. So that translates into about 100 of the 

largest bank, thrifts, and credit unions. 

There are 15,000 depositories in the country, and so supervision 

authority with respect to those—everyone else not the biggest 

100—remains with the prudential regulators. 

That is important for us in at least two ways. One is to make 

sure—as any right-minded person would I think—that we are coordinated with the other regulators. To me, that is just common 

sense and good hygiene. 

But also it means that we lack, to my mind, the critical feedback 

loop between community bank supervision and the policy apparatus. 

So we have to make sure as we have been doing to date that we 

get out in the field, and we talk to community banks and credit 

unions about issues that they are seeing on the ground. 

Chairwoman CAPITO. So then, let me follow up here because that 

is—we were just in Wausau, Wisconsin. We have been in Georgia. 

I live in West Virginia. 

And as you know, there is a great concern amongst small financial institutions. You have already said you are going to have—I 

think if I am interpreting correctly, that you have the rulemaking 

authority over these institutions but you don’t have the supervisory 

role. 

And so, the carve-out doesn’t really exist. Then I think there is 

a lot of angst out there—even though I realize that you have been 

out talking with them—as to what kind of role the CFPB is going 

to be playing over the institutions we know were not the ones doing 

the subprime loans or the ones who are helping the lady down the 

street buy a car for her family etc., etc. 

And there is a lot. And these institutions are hiring new compliance officers because they are not sure where they are going to fall 

in this spectrum of authority including your agency. 

So what would you say to that? 

Mr. DATE. It is certainly true that community bankers are not 

subject to a different set of rules as the rest of the marketplace. 

But in my experience, community bankers are not looking for a 

special handout or special treatment. What community bankers are 

looking for is for everybody to play by the same rules. 

So in other words, if I run a small bank and I am in the business 

of providing auto finance, it doesn’t feel particularly fair, oftentimes, that someone who is a finance company, not a depository, is 

not subject to supervision on exactly the same laws that I am subject to supervision on. 

13 

To my mind, that is a fair complaint. And one of the beauties to 

my mind of the Bureau— 

Chairwoman CAPITO. I think the concern—if I could just—because I only have a minute left. The concern, and I share this concern, is that small institutions are face-to-face with the consumer 

every single day. 

They know their families, they know their backgrounds, they 

know their businesses. They are able to make some, on the face of 

it, kind of calls, some flexibility. 

I think they are concerned about that flexibility, because it could 

be a one-size-fits-all consumer financial product that will exclude 

them from being able to offer that to their customers. 

But at the same time, I think what they are also worried about 

is their margins are so thin they don’t have—if they have to hire 

two or three compliance officers to make sure that they are complying with a lot of the things that they comply with anyway, that 

takes money out of their ability to loan to a small business, to 

make a car loan or whatever kind of loan they might be making. 

And this is the concern that we are hearing especially in the 

downturn of the economy—high unemployment. The jobs that are 

being created are—it even said in the study of the Bureau of Labor 

Statistics that increasing financial regulations will spur employment growth of financial examiners and compliance officers by 31 

percent over the next 10 years. 

I think that is what is happening in Wausau, Wisconsin, and in 

Charleston, West Virginia, and that is a source of concern. 

But my time is up. I am going to recognize the ranking member 

for 5 minutes for questions. Thank you. 

Mrs. MALONEY. Thank you. 

Mr. Date, do you think that there is anyone out there in the consumer finance world who has studied the regulatory structure of 

the last decade and thinks, that works, let us keep doing that? 

Mr. DATE. Congresswoman, I know a great many people within 

the business, and I have yet to find a person who says, ‘‘Yes, what 

we were doing over the last decade seems to work, so let us stick 

with that.’’ 

The status quo, to any reasonable person who has been around 

this business, is untenable. 

Mrs. MALONEY. Then why do you think there is still such resistance to the creation of a Bureau which is so clearly needed and everyone says they want to protect consumers, where we have a Bureau that is doing just that as their prime responsibility and focus? 

Why do you think there is still such resistance? 

Mr. DATE. My sense is that it is because talk is cheap. And when 

it comes time that the Bureau—as we do all the time—talks about 

how it is that we are focused on making regulation more efficient 

and more effective. 

How in the case of the mortgage disclosure forms, we are trying 

to make things cheaper to comply with and simpler for management teams at the same time that it is more effective for consumers. 

When we talk about all that, sometimes people are a little bit 

skeptical, because they have heard things that sound like that before. 

14 

And for me, I view it this way, at some level if you don’t believe 

what we say, look at what we do, because that which we have done 

in the first 100 days is very much in the spirit of reducing the burden and making things better. 

Mrs. MALONEY. So you have been reducing the burden and making the financial markets work better and the economy improve in 

addition to helping our consumers. 

I really would like to ask the question of, whose side do you 

think the opponents of the CFPB are on? 

We know from your testimony and reports that Holly Petraeus 

jumped right in defending servicemembers—our men and women 

serving overseas for being evicted, foreclosed. 

So whose side are they on when they say they don’t want the 

CFPB or such an outstanding advocate to help our men and women 

in the services? 

Whose side do you think they are on when they are not supporting the work of the Bureau to protect our seniors? 

And I must say I was very pleased to see the support of the business community for your efforts on the student loans. 

So whose side are they on when they are objecting and fighting 

what you are obviously doing to help our seniors, our members of 

the military, and now our students? 

Mr. DATE. Congresswoman, of course I wouldn’t speculate on 

anything like that. 

All I know is that the Congress has given us a set of authorities 

to be able to make this market better, and to make sure that somebody is on the side of American families in this very important 

marketplace. 

And we have the tools to be able to do that. We have a team that 

we have assembled that is smart because we are dealing with 

tough problems, energetic because we work very hard, and that has 

guts because it takes guts to stand up for ordinary people. 

And, that has sacrificed, where they come and they work hard 

for the public good. 

Mrs. MALONEY. I have been told that I cannot place into the 

record editorials in support of the CFPB at this hearing. So I hope 

many of my colleagues on the panel will join me on the Floor for 

a special order tonight where we can read editorials in support for 

the record. 

Chairwoman CAPITO. If I could interrupt—you can ask for unanimous consent. I don’t recall who—I am the chairman, and I didn’t 

say— 

Mrs. MALONEY. I was told we couldn’t put them in. 

Well then, let us put into the record a statement from the Consumer Federation of America that outlines all of the areas that 

there is oversight of the CFPB. 

Chairwoman CAPITO. Without objection, it is so ordered. 

Mrs. MALONEY. And, Mr. Date, in your own finances, would you 

want to put the financial management and the protection of your 

assets and your finances in a committee to decide how to handle 

your finances? 

Or would you like to have one person, like a Mr. Cordray, who 

is in charge, who is accountable, who has to respond to Congress, 

the President, and consumers in this country? 

15 

Would you put your finances—I wouldn’t. I don’t think other 

members in this panel would. 

Could you comment on that? 

Mr. DATE. Congresswoman, I have been a bank regulator for 102 

days, so most of my career has been spent in the private sector investing shareholder money and my money over time. 

And I will confess, I typically look for management teams that 

are headed by a person who knows that they are on the hook, so 

that you know who to credit and who to blame, so that you know 

who to help or who to try to influence. Somebody has to be on the 

hook for her job. That has always been my perspective. 

Mrs. MALONEY. My time has expired. 

Thank you for your 102 days of service. Thank you. 

Chairwoman CAPITO. Thank you. 

I would say in terms of the mortgage form, I welcome a one-page 

or two-page mortgage form, having just refinanced our house. That 

would be great. 

But we know that the other 50 pages are still going to be there. 

And I think that in order to—I am not being critical so much of 

just the way you are stating it, I guess, to say one page on top of 

the 50 pages that you are still going to have. 

Mr. FRANK. Madam Chairwoman, pardon my—whose time is this 

coming out of? 

Chairwoman CAPITO. I am the chairwoman. I took about 30 seconds because I was modeling after you. 

Mr. FRANK. No, I always ask unanimous— 

[laughter] 

I take exception to that. I abide by the rules and ask for unanimous consent— 

Chairwoman CAPITO. Okay, with unanimous consent, I will— 

post-unanimous consent, I will recognize the chairman of the full 

committee, Mr. Bachus, for 5 minutes. 

Chairman BACHUS. Thank you. 

Mr. Date, Congressman Gutierrez said he hoped you would get 

approved by the Senate. But now, you haven’t even been nominated. I guess he was talking about Richard Cordray? Was that— 

I didn’t know? 

Mr. GUTIERREZ. Yes, you are right. 

Chairman BACHUS. Okay. 

You were the number two person at the agency. Do you know 

why you weren’t nominated? 

Mr. DATE. Mr. Chairman, I would not presume to have any opinions about something that is solely in the discretion of the President of the United States. 

Chairman BACHUS. Okay. 

Let me ask you this, the commission form, do you see any advantages to a bipartisan commission as opposed to a single Director? 

Mr. DATE. My perspective on governance of the Bureau is that 

it seemed to me, very much as an outsider at that time, that the 

Congress deliberated and debated various different governance 

mechanisms, various means by which to provide accountability and 

real leadership for the Bureau and its important task, and came 

to a conclusion. 

16 

And my job, as a Special Advisor to the Secretary, is to take that 

structure and make it work, and to make it work in every dimension. And that is what I am doing. 

Chairman BACHUS. But could you do that under a commission 

form? 

Mr. DATE. As I mentioned to the Congresswoman a moment ago, 

it has been my experience—and again, I have mostly been on the 

private sector side of this business—that if you want something 

hard done, you really should have someone singularly accountable 

for it. 

But again, that is my experience. I would not presume to tell the 

Congress what to do— 

Chairman BACHUS. Sure, okay. Thank you. 

The term ‘‘abusive,’’ that is really a new term in consumer protection as far as financial products. How would you define that? If 

it is unfair, if it is not unfair, if it is not deceptive according to 

you—could it still be abusive and could you give me some examples? 

Mr. DATE. In a way, the advantage that we all have is that the 

Congress set out the definition for ‘‘abusive’’ in the statute. It 

seems to me to be one that makes sense, and one that over time, 

we will be able to evaluate against actual fact patterns that we see 

in the marketplace. 

One of our commitments at the Bureau is to make sure that 

what we do is evidence-based, participatory, and transparent. And 

the evidence-based part of that means nothing if we pre-judge facts 

before we actually see them. 

But I look forward to being able— 

Chairman BACHUS. Are you going to issue regulations? Let us 

say you go in and you start an enforcement action. Will there be 

at least a regulation or a guideline that someone will have violated 

before they are found to have committed abuse? 

Mr. DATE. The statute, of course, provides contours for what it— 

the term ‘‘abusive’’ amongst our other responsibilities— 

Chairman BACHUS. So the statute defines ‘‘abusive?’’ 

Mr. DATE. Yes, the statute defines ‘‘abusive.’’ 

Chairman BACHUS. Do you know what that definition is? 

Mr. DATE. Sure. There are two prongs essentially. One has to do 

with—I will paraphrase. These are my words and not those of the 

statute precisely—materially interfering with the consumers’ ability to understand something. 

And, by the way, that takes us back to what I was saying earlier 

about the substance of transparency. A market works if consumers 

and providers— 

Chairman BACHUS. So if they don’t understand it, it could be 

abusive just because they didn’t understand it? 

Mr. DATE. The words in the statute, I think, relate to a provider 

materially interfering with the consumers’ ability to understand— 

Chairman BACHUS. Okay. 

Mr. DATE. And that is one prong. But, there is some level of detail in the statute. 

Chairman BACHUS. Okay. What is the other prong? 

Mr. DATE. The other prong which itself has various features is 

about—and again, these are my— 

17 

Chairman BACHUS. Sure. 

Mr. DATE. —paraphrasing of the words. But you will recall that 

it talks about unreasonably taking advantage of the consumers’ 

lack of understanding in particular moments. And there are various prongs, sub-prongs, within that definition. 

It is quite detailed. There are a lot of words there. And hopefully, 

I have given some credit to that in my paraphrasing. 

Chairman BACHUS. You keep getting back to that term that ‘‘a 

consumer doesn’t understand.’’ 

Would a financial institution be liable if the consumers simply 

didn’t understand the agreement, if it was not unfair or deceptive? 

Mr. DATE. I think the experience of the past few painful years 

is that it is in the financial institutions’ interest to have consumers 

who understand what they are getting into. 

When we look at the explosion in the most troubling credit performance in mortgages in the United States, it is quite disproportionately those structures that realistically consumers at that 

time—not in retrospect but even at the time—probably had difficulty truly appreciating— 

Chairman BACHUS. I understand that. But would you determine 

that on a case-by-case basis or would you have some regulation 

on— 

Chairwoman CAPITO. The gentleman’s time has expired. 

Mr. Frank, for 5 minutes, for questions. 

Mr. FRANK. Thank you, Madam Chairwoman. 

Thank you for making clear that the gentlewoman from New 

York is able to put that material into the record. 

I said before I thought it was interesting that we were having 

an oversight hearing to in part denounce the lack of oversight, and 

I misspoke. 

This is the second oversight hearing we have had this week to 

denounce the lack of oversight, because there was a field hearing. 

And I look forward to many more hearings in which we denounce 

the lack of oversight while we are overseeing this agency. 

I am also struck again by the fact that two of my colleagues ever 

appeared to have heard of the Comptroller of the Currency, an individual appointee independent of any other check and self-financed. 

It is apparently only when consumers are the beneficiary of that 

independence that it upsets some of my colleagues. 

Then I should also add that procedurally, this hearing comes 2 

days too late. It should have been on Halloween, because we have 

conjured up a series of spooks, and ghosts, and goblins, and nonexistent creatures. 

My colleague from Georgia said, this is going to be a backdoor 

way for them to do the plain vanilla product. 

In fact, the ability of this agency to order financial institutions 

to produce a so-called plain vanilla product was proposed by the 

Obama Administration and specifically and explicitly rejected. 

There is no such power, and that was a conscious decision by this 

committee. 

They are talking about banning. There will not be a lot of things 

banned. 

18 

As a matter of fact, the model we have here—and people talk 

about the Bank of America—the model of this agency assumes the 

competitive nature of the American financial system because most 

of what they will do will be to give people information. And it is 

no use getting information unless you have options. 

The Credit CARD Act, which the gentleman from New York took 

the lead on and which we passed, did not set rate limits. Some of 

my colleagues wanted to put rate limits. 

What we said was you cannot retroactively raise the interest rate 

on people which is unfair. They should have the benefit of the bargain they made at that time, but you have to give them notice of 

any future rate increase. 

Now, the notice of a future rate increase wouldn’t do any good 

if you didn’t have options. So, I stress again that is essentially our 

model. 

Now, as to ‘‘abusive’’, let me say to the gentleman from Alabama, 

no, the fact that a consumer couldn’t understand it is not in itself 

a reason to be declared ‘‘abusive.’’ And ‘‘abusive’’ came forward, and 

the gentleman from Texas, Mr. Hensarling, and I had a colloquy 

about that. 

And he pointed out it was an undefined term, unfair and deceptive have a history. And we did define ‘‘abusive.’’ There are things 

that could be neither unfair nor deceptive that could be abusive, 

and it is not that the consumer didn’t understand it. But there 

were two categories. 

First of all, that if not quite deceptive but framed in a way that 

made it very hard for the consumer to understand and it wasn’t the 

consumer’s fault. That is why it says, as Mr. Date says, materially 

interferes with the ability of the consumer to understand the term. 

Secondly, it says that you should not take unreasonable advantage of lack of understanding. 

Is it case-by-case? Yes, there are mortgage products that are suitable for some people that are not suitable for an 89-year-old woman 

who has never had her own experience in economic affairs. 

There are things that are reasonable for some people and not for 

others. And we make that distinction also. 

We are about to pass legislation today that says you can offer 

things to ‘‘qualified investors,’’ but you can’t offer them to, presumably, unqualified investors, although we don’t quite rudely say so. 

What makes you a qualified investor? 

Apparently, that you have $1 million. That is less of a guarantee 

of wisdom than people seem to think. 

But this distinction, and that products offered by financial communities will be subject to different rules depending on the personality of the individual, is already in law. And we do say, yes, particularly in the mortgage area. 

Now, let me just ask Mr. Date a couple of quick questions. 

You have already moved in the Bureau to deal with the congressional problem of a split between the Real Estate Settlement Procedures Act (RESPA) and the Truth-in-Lending Act (TILA). 

Talk briefly about what you did there and what the reaction was 

in the lending community. 

Mr. DATE. Sure. Again, the disclosure forms associated with the 

Truth-in-Lending Act and the Real Estate Settlement Procedures 

19 

Act are actually quite similar in their content, but almost confusingly similar, but they are separate requirements to date before 

Dodd-Frank. 

We have the mandate by the Congress—and I am glad to have 

that mandate—to be able to figure out how to combine that into a 

single document, one that, therefore, will be not confusingly similar 

and, therefore, less confusing. 

Mortgages are a gigantic— 

Mr. FRANK. What is the process of—where are you in that process? 

Mr. DATE. We have taken what I believe to be a fairly unique 

approach in terms of really developing, before proposing a rule, a 

prototype and getting public feedback on it. 

Mr. FRANK. What is the feedback you have gotten quicker from 

the lending community so far? 

Mr. DATE. In general, I think it has been quite helpful. 

Mr. FRANK. All right. I am going to be—my time is up. 

So, let me say—and the gentlewoman has been holding us to the 

time, the gentleman from Georgia mentioned the long forms. 

In fact, the one case where you have done anything about the 

forms, you are in the process of consolidating two very different 

forms. And my feedback from the lending community is they are 

really quite happy with it. 

Thank you. 

Chairwoman CAPITO. The gentleman’s time has expired. 

Mr. Renacci, for 5 minutes? 

Mr. RENACCI. Thank you, Madam Chairwoman, and thank you 

Mr. Date for being here. 

Mr. Date, the CFPB has taken over responsibility for the Secure 

and Fair Enforcement for Mortgage Licensing Act, SAFE, including 

determining whether State laws are consistent with SAFE. 

In this capacity, I understand the CFPB has been asked to provide its views on whether State enactment of transitional licensing 

would be acceptable. 

Such a proposal would allow State-regulated lenders to hire and 

immediately put to work well-qualified, experienced registered loan 

originators employed by depository institutions or by out-of-State 

lenders while they complete any additional State education and 

testing formalities. 

This is a very important issue for many State-regulated lenders. 

And I understand there is a legal opinion from a major law firm 

that found it within the State’s authority to enact transitional licensing provisions. 

When does the CFPB expect to provide its views on this important issue? 

Mr. DATE. Thank you, Congressman. 

This is obviously not the first time I have heard of the issue. It 

has been voiced in a number of different forums as we have 

reached out across the marketplace. 

It is one of these issues that actually touches on a lot of the 

things that really are core to the structure of the Bureau. So the 

competitiveness on an even playing field as between depositories 

and non-depositories. 

20 

Frankly, the mobility or lack thereof of talent from one kind of 

institution to another; the efficiency of front-line sales staff, because, after all, complicated financial products have to be explained 

and sold by someone. 

They are all very important issues in a very important market 

that appear to be unfortunately quite dysfunctional for some period 

of time. 

So we are going to take seriously the issues that have been 

raised and I know that the team is aware of it. 

Mr. RENACCI. Okay. Thank you. 

You stated many times that the CFPB will be making decisions 

based on data. We both know that data can be manipulated in 

favor of a point of view. 

What quality control measures are you putting in place to ensure 

that the data collected is done so objectively, and that the subsequent decisions made based on that data are also done in an objective manner? 

Mr. DATE. It is a great question, because it gets not just to the 

commitment to be able to use fact-based analytics to inform policy, 

but the process by which you hardwire that into the decision-making of the Bureau. 

We have approached it both through structural means and 

through processed means. 

By structural I mean there is a single person who is the associate director for research, markets and regulations at the Bureau 

whose job it is to integrate the points of view generated by empirical research, by market-based pragmatism—understanding how 

money is actually made in the marketplace and what operational 

constraints exist—and by technical legal regulatory expertise. A 

single person is responsible for that. 

That integrated point of view in which different views can and 

should be aired is very much core to the structure of what we are 

doing. 

And as you might imagine, there is also governance processes by 

which internally, even before the various right-minded administrative procedures that we have to undertake to publish a rule, even 

before those kick in within the Bureau. We have decision-making 

processes that we will refine presumably over time to make sure 

that what we are doing is sensible, fact-based, pragmatic, and effective. 

Mr. RENACCI. In your testimony earlier, you said that the Bureau 

has—actually in your written testimony, you said the Bureau has 

the unique opportunity to streamline and simplify rules. You have 

also, of course, indicated you have released some manuals and 

guides already. 

My question is, and I am hearing this already, that there is a 

lot of duplication. What are your—you know duplication of efforts 

by other organizations. 

How is the CFPB going to make sure that we eliminate these duplication of efforts which are going to hamper banks and financial 

institutions when there are multiple people asking for similar information? 

Mr. DATE. I would like to take credit for consolidating a lot of 

the activity. But really it was the Congress that consolidated a lot 

21 

of this duplicative effort by moving the authority for the administration of some 18 Federal consumer financial laws into a single 

place from 7 different places. 

Mr. RENACCI. But what are you going to do to make sure that 

those other organizations don’t continue to ask for similar things 

or will be talking about similar issues that you are going to be talking about? 

Mr. DATE. Both the statute and common sense, I suppose, dictates that our exam reports for example will typically be available 

to the prudential supervisors. There is no reason why sister agencies should not be able to see what it is that we work on and conclude in the course of our exams. 

And so, that prevents the need for somehow redoing work or seeing data that otherwise— 

Mr. RENACCI. I am running out of time. 

But what if they did? Are you going to pull back that authority 

at some point in time? 

Mr. DATE. I am not sure I understand the question. 

Mr. RENACCI. What if they are asking for duplicative information? And, you are saying you are giving them information. 

But what if the other organizations are asking, are you going to 

be the single authority that says here is the information and here 

is where you get it from? 

Mr. DATE. I personally have never been especially shy about my 

perspective on such things. But they are independent agencies. 

Chairwoman CAPITO. The gentleman’s time has expired. 

Mr. RENACCI. Thank you, Madam Chairwoman. 

Chairwoman CAPITO. Mr. Gutierrez for 5 minutes? 

Mr. GUTIERREZ. Thank you very much. 

I would like to yield the first 30 seconds to Congressman Frank 

so we can continue this line of questioning. 

Mr. FRANK. Well, briefly, I appreciate what the gentleman said 

because he is telling you to defend your turf, and I think that is 

reasonable. 

The one thing that I just wanted say, and this literally is genuinely bipartisan, the gentleman from Ohio began his questioning 

with reference to this Federal—to give credit, that was a proposal 

that came from the chairman of the full committee, Mr. Bachus. 

So that is a duty that you have as a result of a very good idea 

from Mr. Bachus which we incorporated. I just, in his absence, 

wanted to make clear that insistence on that being harmonized was 

Mr. Bachus’ idea that we were very pleased to incorporate. 

Mr. GUTIERREZ. Thank you. I thank the gentleman. 

I want to read a quote from the president of the American Bankers’ Association: ‘‘Unsound, unscientific and dangerous.’’ Don’t 

worry. It is not about the CFPB. 

It is from 1933, about none other than the Federal Deposit Insurance Corporation. And the banks railed against it in 1933. 

But today, I think you would be pretty hard-pressed to find anyone that thinks that ensuring deposits is somehow unsound and 

dangerous. 

And I think the fact is that the CFPB won’t be doing anything 

dangerous either, or unscientific, or unsound. And hopefully, you 

won’t have to wait 70 or 80 years because none of us will be here. 

22 

Hopefully, it won’t be long before they say—well, maybe you have 

that hope. 

But I would like to just ask you, simplified forms, valuable guidance so customers can actually understand what they are buying 

and repaying. Can you tell us a little bit about that in terms of a 

mortgage? 

Mr. DATE. Sure. 

Mr. GUTIERREZ. What is different? 

Mr. DATE. Absolutely. So if you were to—and I think it is useful 

to reground this in terms of the credit bubble and the ensuing crisis. 

Mr. GUTIERREZ. Okay. 

Mr. DATE. So during the course of the mortgage credit bubble, 

some of the fastest growing products were precisely those products 

that were the most difficult to understand. 

For example, auction ARMs which are potentially negatively amortizing, interest-only loans. Other products where in order to 

evaluate the risk and the cost of the product, you have to have a 

relatively sophisticated understanding of rate spreads, and rate 

movements, some perspective of the forward curve. 

I have known bond traders who have difficulty with those concepts. And as a result, we should not be surprised that a number 

of people who got into these loans didn’t fully appreciate the risk 

of what they were looking at. 

And we should not be surprised that credit performance on those 

loans—which is bad for investors and terrible for borrowers—has 

been terrible, really quite remarkably awful. 

So nobody wins if products are structured in a way and communicated in a way that the borrowers don’t really understand what 

they are getting into— 

Mr. GUTIERREZ. My friends on the other side of the aisle say that 

they love consumers and are—they say there is going to be a lot 

more paperwork created and that is going to actually stop consumers from getting a mortgage. 

Mr. DATE. I think the opposite is true. 

There is a point at which more information, more tiny little micetype, 10-font type in sheet after sheet of paper, not only does not 

provide any affirmative good in terms of understanding, but it affirmatively destroys whatever understanding otherwise would have 

been there. 

Mr. GUTIERREZ. How about reverse mortgages? 

Because we have this growing population, the Baby Boomers, 

right? I am one of them. And it is growing. It is going to continue 

by millions and millions of people. 

Reverse mortgages, are you going to take a look at those? 

Mr. DATE. We are. It is one of these products that on its face, 

actually it is quite an ingenious thing. The demographics look quite 

positive. There might be a real productive use for the product and 

its growth over time. 

It is also something that is obviously definitionally the most relevant for a potentially vulnerable population, and one that we are 

specifically charged with. 

And we also have the duty to perform a study and publish it 

with respect to reverse mortgage. It is important. 

23 

Mr. GUTIERREZ. So we will learn—because reverse mortgages 

sound great. But if you have to pay the taxes, and you have to fix 

the leaky roof, and you don’t understand all of the conditions, a reverse mortgage could literally put you on the street without a 

stream of income. 

So you are going to take a look at that both from—because of 

your requirement that we put that you look at senior citizens and 

protect them with a special capacity and in terms of mortgages in 

a general capacity. 

Mr. DATE. Absolutely. 

Mr. GUTIERREZ. I think that I am looking forward to those studies and making sure that the public has a broad understanding of 

those studies so that they can be better protected. 

And I thank you very much for your testimony today. 

Mr. DATE. Thank you. 

Chairwoman CAPITO. Thank you. 

Mr. Luetkemeyer, for 5 minutes for questions? 

Mr. LUETKEMEYER. Thank you, Madam Chairwoman. 

Mr. Date, in your testimony this morning you were talking about 

basically, you have supervisory authority on anything over $10 billion and rulemaking authority over everybody else, is that basically 

correct? 

Mr. DATE. Rulemaking authority across the marketplace. 

Mr. LUETKEMEYER. Right. 

Mr. DATE. Banks, non-banks. 

Mr. LUETKEMEYER. Right, right. 

It is that area I would like to discuss with you just a second here. 

With regards to the mortgage loan originator rule as issued by 

the Fed in last year and finalized in April, that issue has been 

transferred to you, the CFPB. And basically, the rule is intended 

to predict mortgage borrowers from unfair, abusive, and deceptive 

lending practices that can range from loan originator compensation 

practices. 

Many financial institutions feel the rule has been unclear and 

confusing, and has led to a lot of compliance problems. 

And my question is, because of these concerns, are you in the 

process of looking at and trying to clarify this rule at all? 

Mr. DATE. I absolutely appreciate the purpose for the rule which 

is that, in the long of the day, you should expect problems if frontline sales staff are incented to sell products in a way that is affirmatively not in a consumer’s best interest. So I understand the purpose of the rule. 

I also know that it is new. And I also know that there has been 

a significant amount of friction associated with implementing it. 

We also have the ability, and I think the obligation, to revisit 

pieces of loan originator compensation in terms of our work to be 

done. And I think that will create an anchor point to be able to 

evaluate how it is that the new rules are actually working. 

We have no particular pride of authorship over something. If 

something isn’t working, we will make sure to try and make it better— 

Mr. LUETKEMEYER. The question is—are you going to revisit this 

rule? 

24 

Are you looking it right now to try and see if there is a way that 

you can just clarify it to make sure that everybody is in compliance 

with it and that it is continuing to do the job it is supposed to do, 

which is to protect consumers, yet do in a way that enables the 

folks to comply with it and make sure it is done correctly? 

Mr. DATE. As a general matter, that is true of what we do. And 

with respect to this specific example, the answer is quite clearly, 

yes, because let us say— 

Mr. LUETKEMEYER. Okay. 

What is the timeframe on getting that done? 

Mr. DATE. You know what? I would have to look at the specific 

kind of deadline that is set out in the statute if there is one, and 

how it fits in to our overall work plan. 

But it is definitely on that agenda. There is no question about 

it. 

Mr. LUETKEMEYER. All right. Do you mean 2 weeks, 2 months, 

2 years? 

Mr. DATE. Certainly, between 2 weeks and 2 years. 

[laughter] 

Mr. LUETKEMEYER. Okay. Okay, you must work for the government. 

Mr. DATE. I have never heard that before actually, so thank you. 

Mr. LUETKEMEYER. Okay, very good. Thank you. 

With regards to—the gentleman from Georgia a minute ago held 

up a whole stack of papers that had to do with home mortgage 

loans. 

I know one of the concerns that a lot of originators of home mortgage loans have is the Home Mortgage Disclosure Act, HMDA. It 

is a very cumbersome rule, a group of regulations to deal with. 

The FDIC, whenever they supervise it are very arbitrary in the 

way that they look at discrepancies in those things. And I am wondering if—is that a rule that you are looking at as well? 

Mr. DATE. There are modifications to the HMDA disclosure regime that are required under the statute that will have to be promulgated under regulation. That again, as per your other question, 

Congressman, creates a logical anchor point to see whether or not 

the overall kind of reporting regimen makes sense and how it can 

be streamlined. 

It is a source of data that is astonishingly important, and is otherwise not replicable. 

Mr. LUETKEMEYER. I am not talking about the data itself. I am 

talking about the way that it is interpreted by the FDIC, and the 

way that they supervise. 

If you have one error within one loan, and there are 27 things 

that have to be checked off, little boxes that have to be checked off 

with this one loan and if you miss one, your whole loan is considered non-compliant instead of one twenty-seventh of a problem. 

And so, suddenly, instead of one loan out of 100 or one loan out 

of—or 10 loans out of 100 being 10 percent problems, it actually 

is less than four-tenths of a percent, if you have one problem for 

each one of those loans. So it is a supervisory issue with the FDIC. 

But I was curious if you are looking at trying to streamline that 

because, again, in discussing these situations with my local financial institutions, the last guy I talked to said he is having to hire 

25 

five people for compliance now, when he hires four people to do 

work in the bank—five compliance to four people he hires. 

That is where we are headed. If you can streamline that, it 

would be wonderful. That, to me, should be your charge, just to go 

and try to find a way to do things easier, simpler, and still protect 

all the parties involved. 

With that, I yield back. 

Thank you, Madam Chairwoman. 

Chairwoman CAPITO. Thank you. 

Mr. Watt, for 5 minutes? 

Mr. WATT. Thank you, Madam Chairwoman. 

I confess that when I first heard of this hearing, I was a little 

troubled. But I want to thank the Chair for convening the hearing, 

because I think the more we learn about what the Consumer Financial Protection Bureau is doing, the more the American people 

understand why it was created and why it is so important to have 

such an agency. 

So the more hearings we have about this agency, I think the better off we are, especially when we have outstanding witnesses like 

Mr. Date come and talk about what they are doing. 

I am going to presume that my colleagues are listening to the 

fact that well over 60 percent of the American people think this is 

an important agency to have, that despite the fact that the Senate 

has said it is not going to confirm anybody to head the agency. 

You all, obviously, are listening to the fact that the agency is important because there has been little effort to try to repeal the creation of the Consumer Financial Protection Bureau, even though 

you second-guessed it to death. 

The more of these kinds of discussions we have, maybe the better 

off we are, so I thank you for being here. 

One of the big advantages of arguments, benefits I thought of 

having such an agency was this big differential between players in 

the industry that were regulated already and had somebody overseeing, or at least pretending to oversee the consumer protection 

part of their imperative, and those players in the industry that 

were not regulated. 

Talk to us a little bit, Mr. Date, if you would, about how the 

agency has approached trying to equalize the regulatory standards 

for those who were previously unregulated, and those who were 

previously regulated. 

Mr. DATE. Thank you, Congressman. 

It gets to one of the core advantages to my mind of the Consumer 

Financial Protection Bureau structure, which is that when we have 

a Director, we will have supervisory authority over both depositories and non-depositories. 

And let me give you an example of why that is so important, 

which again trues back to why it is—at some level why we are here 

to begin with, which is the mortgage credit bubble and the crisis. 

Some of the mortgage products I talked about earlier that proved 

to be so problematic from the point of view of consumers understanding what they were getting into, and the point of view of ultimate financial performance of those loans. 

Most of those products were not originated and held by depositories. They were not originated by bank or thrift or credit union 

26 

employees for a bank or a thrift or a credit union balance sheet. 

They tended to be originated by non-banks, or funded in the capital 

markets by Wall Street or the GSEs, which are also non-banks. 

So if one actually wants to be serious-minded about a level playing field and fixing the problems of the past, we have to take, in 

my view, a uniform view of both depositories and non-depositories. 

And that to me is a great advantage of the CFPB. 

Mr. WATT. And I would say to my colleagues that of all of the 

handwringing about the existence of this agency that you sometimes hear, that we sometimes hear in the political arena, the comments I get from my community banks and the previously regulated entities believe that this is a tremendously important benefit 

to have somebody overseeing all of those entities out there. 

The players who were doing just terrible things in the marketplace that the regulated entities were not allowed to do because 

they were regulated. 

So I will yield back. 

Thank you. 

Chairwoman CAPITO. The gentleman’s time has expired. 

Mr. Canseco, for 5 minutes? 

Mr. CANSECO. Thank you, Madam Chairwoman. 

Thank you, Mr. Date, for being here today. 

I have the privilege of representing a huge area of Texas that 

spans from San Antonio to El Paso. There is an enormous number 

of community banks throughout the district. 

And I speak to almost every one of them and I hear the same 

thing: There is a lot of uncertainty with regards to the regulatory 

landscape. And given the number of rules and regulations mandated by Dodd-Frank, those things are foremost in their mind. 

Now, the CFPB has already undertaken several significant rulewriting initiatives such as the definition of larger participants and 

also the efforts that we talked about here to consolidate several 

mortgage disclosure forms. 

Has the CFPB made an effort to lay out a game plan, if you will, 

that will allow financial institutions to know what they can expect 

and what they should expect in the way of forms or rules and regulations in the foreseeable future? 

Mr. DATE. Thanks for the question, which I think is a good one, 

because having a sense of what is coming is very important to 

planning, and planning is very important to judicious exercise 

management bandwidth in any institution, big and small. 

As a practical matter, we have tried to communicate with financial institutions across the country in the best way that we know 

how, which is to actually get out there and spend time with associations of community bankers across the country and over time. 

So it is literally true that myself and my predecessor have met 

with the community bank associations of every State in the union. 

And what it is that I try to make clear in meetings like those is 

that the rulemaking agenda for the Bureau, over the near term 

which I define as that period of time between 2 weeks from now 

and 2 years from now, is going to be principally driven by what is 

mandated by Dodd-Frank. 

Dodd-Frank involves, to my mind, a lot of quite sensible reforms 

of a marketplace that did not appear to work particularly well. And 

27 

to do those things well, it is going to take—from a rulemaking 

point of view—the bulk of our energy and good efforts. 

Mr. CANSECO. So there is a map out there for them, is that what 

you are saying? 

Mr. DATE. Yes, that map has been helpfully provided to us by the 

Congress. 

Mr. CANSECO. Let me—in that vein, do the policies that you are 

generating take into account the regulatory costs that financial institutions could incur? And that if they incur them, they will pass 

them on to the consumer? 

Are they being factored into your rulemaking and regulatory actions? 

Mr. DATE. Yes, Congressman. 

Regulatory compliance cost is a real cost, irrespective of whether 

it is passed on to consumers or not. It is still a cost. 

And as a result, because we are obliged both by the statute and 

by common sense to consider both the benefits and the burdens associated with rules, so absolutely consider regulatory burden. 

Mr. CANSECO. So the CFPB has assumed supervisory and examination authority over large depository institutions which are defined as having $10 billion or more in assets. For those institutions 

with less than $10 billion in assets, prudential regulators retain supervisory examination authority. 

However, Section 1026(c) of the Dodd-Frank Act authorizes the 

CFPB to include its examiners on a sampling basis when the prudential regulators examine an institution with less than $10 billion 

in assets. 

Now, regulatory costs fall harder on community banks, especially 

smaller community banks. The prospect of the CFPB also participating in an examination could lead to increased regulatory costs. 

Has the CFPB taken steps to outline how it plans to use its authority pursuant to Section 1025(c)? 

Mr. DATE. That provision, to me, seems like a sensible way, one 

of several sensible ways to make sure that the overall regulatory 

approach to the sector is coordinated. 

But I will broaden out the sort of notion of regulatory cost and 

compliance cost, because it is broader than merely ride-along activity in the following way. 

We are very aware that compliance burdens are disproportionately fixed in nature. In other words, they are more like a fixed 

cost than a variable cost. 

And as a result, the arithmetic suggests that they disproportionately burden smaller institutions. It is difficult to argue with the 

arithmetic of that proposition. 

Now, the good news is that means all of our efforts which are 

multi-faceted to make regulatory burdens streamlined, that is better for institutions and a lot better for consumers, that therefore 

disproportionately benefits smaller institutions, not bigger ones, for 

exactly the same dynamics. 

So I am pleased by that. And I think we are on the right track. 

Mr. CANSECO. Thank you for your candor, Mr. Date. 

And, Madam Chairwoman, thank you. 

I yield back my time. 

Chairwoman CAPITO. Thank you. 

28 

Mrs. McCarthy, for 5 minutes for questions? 

Mrs. MCCARTHY OF NEW YORK. Thank you, Madam Chairwoman. 

And I sympathize with you because I spent a good part of Friday 

and Saturday filling out refinancing paper forms too. And I am not 

done yet. 

But with that being said, I thank you, Mr. Date, for being in 

front of us today and bringing your point of view. 

Just a couple of questions, being that the Senate has not basically brought up the nomination of the agency’s Director, has that 

implemented you in any way or has that been able to give you certainly the authority at this point to go forward on what the direction of the agency is doing? 

Mr. DATE. This is a good news/bad news answer I am afraid, 

Congresswoman. The good news, from our point of view, is that we 

have important work to do today. We are literally, today, we have 

the authority for rule making and supervision authority to transfer 

it over from the existing Federal regulators on July 21st. And that 

is an important set of work to both fix that which has been done 

poorly in the past and make sure that we operate in a surefooted 

way moving forward. 

The bad news part is that there are tens of thousands of nondepository consumer financial products, firms out there, that are 

supposed to be within the supervisory authority of the Bureau but 

are not today, absent the Director. 

So, I am pleased by where we are but obviously there is a great 

deal more that we could be doing. 

Mrs. MCCARTHY OF NEW YORK. So basically, it is almost like a 

stalling technique so you really can’t get up and running and doing 

the job that you actually need to do? 

Mr. DATE. My concern would be that—and this is not just a concern that I have had within this position, but one that I have observed about the industry over the course of time is that there no 

great right-minded reason why some firms, namely community 

banks, credit unions, thrifts should be subject to, in practical 

terms, a different set, a more exacting set of compliance burdens 

than other people who are in exactly the same business. 

It doesn’t make sense. It is bad for consumers. It is bad for the 

function in the market. 

Mrs. MCCARTHY OF NEW YORK. I am being curious— 

Mrs. MALONEY. Will the gentlelady yield for 2 seconds? 

Mrs. MCCARTHY OF NEW YORK. Certainly. 

Mrs. MALONEY. For 5 seconds, so I want to compliment her for 

raising this issue. It is one that Secretary Geithner repeatedly 

raises in his public statements on the need to confirm and get the 

CFPB running. 

And what he points out is that a vast array of non-bank financial 

institutions, that are outside the scope of consumer protection, 

which was exactly the same mistake that left us so vulnerable to 

the financial crisis we went through. 

As we know, banks and institutions are regulated but there is a 

whole other area of non-bank institutions that are very large, such 

as AIG, that are unregulated and this stops that regulation. 

29 

So your point is a very important one, and I want to compliment 

you for raising it. 

I yield back. 

Mrs. MCCARTHY OF NEW YORK. Thank you, and I take back my 

time. 

I guess the second question would be, how do you envision Congress, especially the way we seem to be in gridlock on everything 

over here, being involved in supporting the CFPB going forward as 

we go forward for our consumers? 

Mr. DATE. Well, in two principal ways. But I view the role of 

what it is that we are doing now, the role of oversight, as being 

quite key to any institution functioning well. 

That is part of the reason why I am happy that this is something 

like—it is probably the eighth. And then Mrs. Petraeus is testifying 

on the Senate side tomorrow. 

So I think that will be the ninth hearing that we will have participated in, which I am glad for that opportunity. 

The second is we are in a retail enterprise here. And so understanding issues on the ground, as they are really confronted by 

community banks on the one hand and consumers on the other, 

will help us in what we do. 

And obviously, Members of Congress have a good and appropriate kind of lens into those issues over time and we would love 

to hear about them. 

Mrs. MCCARTHY OF NEW YORK. Going back to the first part, the 

question that I had asked you, and you had mentioned the thousands of people who are out there who are going to need to do their 

job. 

Are these going to be new hires or are these coming from the different agencies coming into the new agency? 

Mr. DATE. At the CFPB today, we have something like 700 or a 

little bit more than 700 people. We were privileged to have something like 1,300 applications for people from the prudential regulators to transfer to the Bureau. 

We made something like 300 or 350 offers from those 1,300 applications. We have also been in the position—and given the clarity 

of the mission and the importance of what we are doing and the 

early team that we assembled, to really get some astonishing talent 

from other places in the government and the private sector— 

Mrs. MCCARTHY OF NEW YORK. Unemployment does that. 

Mr. DATE. I think we are the beneficiaries of the fact that the 

mission is very clear and very important. 

Mrs. MCCARTHY OF NEW YORK. I yield back the balance of my 

time. 

Chairwoman CAPITO. Thank you. 

Mr. Pearce, for 5 minutes for questions? 

Mr. PEARCE. Thank you, Madam Chairwoman, and thank you, 

Mr. Date. 

On page four of your written statement, you talk about following 

the rules and then you make a comment about the lead up to the 

worst financial crisis. 

You talk about the explosion in lending. And you talk about the 

failure of the regulatory system. 

30 

As you assess those failures, did you ever factor in the calculations or the changes in the lending standards that prohibited institutions from calculating previous payment history? 

In other words, that was one of the things that caused bad loans. 

So, did you calculate concepts like that? 

Mr. DATE. In my experience, credit underwriting has been quite 

different across different asset classes in consumer credit. And to 

the extent that mortgage has suffered disproportionately in this 

current crisis, and as the asset class were risk and return were the 

most divorced from each other, it is precisely because credit underwriting that was seen in the mortgage business was rather divorced from past commonplace, commonsense practices that— 

Mr. PEARCE. I just asked if you studied it. Have you analyzed it 

and assessed it? 

Yes or no? 

Have you analyzed the effect of telling lenders they could not calculate previous payment history? 

Mr. DATE. Which precisely—what was the prohibition on not 

using— 

Mr. PEARCE. I think if you look at the New York Federal Reserve, maybe they have made some comments that declared many 

of the subprime loans to be—oriented. They have manufactured 

data. 

Have you taken a look at that New York Federal Reserve 

issuance? 

Mr. DATE. Congressman, I am reasonably familiar with, for example, how credit scores are generated. And I am quite certain 

that payment histories are in fact used— 

Mr. PEARCE. Did you—I am asking about the New York Federal 

Reserve. 

Did you take a look at that? 

Mr. DATE. I don’t think I recognized— 

Mr. PEARCE. We will get a copy of it to you because it appeared 

to—have you looked at Members of Congress who are urging institutions that they could not discriminate on loans, they couldn’t 

charge different rates to one payer and another? 

Have you looked at that? 

Mr. DATE. I am sure I would not have devoted your resources to 

individual Members of Congress— 

Mr. PEARCE. I see. 

On page five, you talk about the Bureau’s central responsibility 

as to identify, address, update unnecessary or unduly burdensome 

regulations. 

Do you have an example of an unduly burdensome regulation 

that you all have actually have tossed out? 

Mr. DATE. Sure, as I discussed earlier, we are now developing 

the harmonization and streamlining of two very important disclosure forms that are used throughout the multi-trillion dollar mortgage business. 

Mr. PEARCE. When you talk about protecting the consumer, are 

you going to have some sort of a—you constantly talk about in your 

presentation, your written presentation, the need for better information. 

31 

Do you have a little quiz or something that you are going to give 

to consumers to make sure that they actually read the stuff that 

you provide to them? 

In other words, the consumer may have some culpability and 

maybe they didn’t and maybe they are totally innocent in the processes of this run-up that you have discussed on page four of this 

run-up of the debt. 

But maybe consumers have something to do with that. Are you 

going to have a measure to see that they are no longer playing 

their part in trying to get access to credit that maybe they 

shouldn’t get access to? 

Mr. DATE. Let me answer that in two ways, both of which are 

quite core to what the Bureau’s mandate is. 

Number one is that we, in our dealings with consumers and what 

we hear from them and what we hear from bankers, who frankly 

are on the front line of trying to sell products, is that consumers 

across America by and large are, and want to be, accountable for 

their own decisions. 

American consumers are not children. They want to be treated 

like grown-ups. 

But in order to hold people accountable for decisions and hope 

that they make good decisions over time, you have to hope that the 

right information is put before them over time. And we have— 

Mr. PEARCE. No, sure, I understand that. But then, they have 

the ultimate responsibility to take a look at it. 

In your discussions nationwide, all the comments that you have 

gotten from all the bankers, community bankers, what have they 

told you about Section 10-71? 

Mr. DATE. Across-the-board, anyone who has, in my experience, 

spent time trying to understand the availability, access, pricing, 

trends, and small business credit finds the paucity of data in small 

business credit across the United States deeply distressing. 

Mr. PEARCE. And now, you are going to implement some of 

those—are you going to do something to address those concerns, because in a meeting just yesterday with bankers, they still said that 

this is an operation that they are alarmed by and that they find 

no useful function in. 

And are you going to those or you just got the comment? 

Mr. DATE. I will follow the instruction of the United States Congress which is to implement Section 10–71 in a way that is productive to the— 

Mr. PEARCE. Thank you, Madam Chairwoman. 

I yield back. 

Chairwoman CAPITO. Thank you. 

Mr. Miller, for 5 minutes? 

Mr. MILLER OF NORTH CAROLINA. Thank you, Madam Chairwoman. 

Mr. Date, I have been described in the press in the last month, 

including the last couple of days, as a critic of the announced debit 

card fees. And that would probably be a more politically popular 

position than my real position, which is that I don’t want to be approving every fee that a bank charges. 

32 

I don’t want you, the CFPB, to be approving every fee that a 

bank charges. I don’t get the sense from you that you want to do 

that either. 

But what I would like is for consumers to have the benefit of normal, healthy competition, so that they can figure out what they are 

getting. They can shop around. And so that the normal forces of 

competition will give them the best deal available. 

And if they want to pay a debit card fee, but not pay something 

else, that is okay, but the way that these fees were announced and 

then retracted shows that is simply not happening in consumer 

banking. 

The numbers appear to be snatched out of thin air. One bank 

said $5, another bank said $3, and they both said they were just 

kidding. And that is not the way pricing happens, pricing works, 

in other areas of the economy where there is normal, healthy competition. 

And some of them are Members on the other side who have 

talked about—who have suggested that the CFPB’s rules might be 

a threat to safety and soundness of banks, also suggest that normal, healthy competition isn’t working because you don’t have the 

power to require banks to offer anything. 

If there is a product or a CFPB requirement that would make a 

line of business unprofitable they don’t have to do it. What they are 

really saying is that they need to be able to make money off consumer banking to make up for losses somewhere else. 

And that is a pretty good remarkable suggestion that the big 

banks that they are facing massive liability from selling mortgagebacked securities, where if a small bank, a community bank, many 

of which are just dirt lenders, are facing losses from commercial 

real estate that they will be able to make up that with their consumer practices. 

And other lines of business, other industries can’t do that where 

there is normal competition. You don’t see companies with several 

lines of business losing money on one hand, and just raising their 

prices on the other hand, because consumers will take their business down the street. 

And that is obviously not happening in consumer banking. 

Mr. Date, do you think there is normal competition, normal 

healthy competition in consumer banking? 

Do you think consumers really do understand currently that they 

can compare in an understandable way what services and fees are 

that different banks are offering so they can comparison shop, as 

you said earlier? 

Would standardized plain English disclosures help them, and is 

that something that you are working on? 

Mr. DATE. Thank you, Congressman. 

We absolutely are working across the Bureau, across our various 

policy tools, towards the goal of substantive transparency which is 

that markets, as you point out, work better if consumers and providers are actually talking about the same transaction. 

And to the extent that is made opaque unnecessarily by virtue 

of regulation that exists, we can make that better. And so, we are 

absolutely oriented towards that goal. 

33 

I will say that in some very important parts of the marketplace, 

things are definitely better today than they were just a few years 

ago. 

Mr. MILLER OF NORTH CAROLINA. That is a low bar. 

Mr. DATE. I grew up for the most part around the credit card 

business, for example. The credit card business today, after the 

CARD Act of 2009, is a dramatically more transparent business 

than it was in 2008—dramatically. 

I think that is fundamentally good for franchises in the business, 

for issuers, for banks, and absolutely for consumers as well. So 

there are improvements. 

Mr. MILLER OF NORTH CAROLINA. How difficult or easy is it for 

consumers to move from one bank to another if they decide they 

are unhappy with their bank and think they can get a better deal 

somewhere else? 

Is that something that you are all looking at? 

Mr. DATE. We would examine the fact base associated with, in 

general, deposit practices like is it clear how one opens, maintains, 

and closes an account over time as part of our usual supervisory 

activities. 

Obviously, it will differ across products, and my sense is money 

market accounts, and the core DDA product, etc., have historically 

behaved quite differently from that point of view. 

My sense is they probably will behave differently going forward, 

but there is no reason why we can’t really kind of understand the 

facts on the ground. 

Mr. MILLER OF NORTH CAROLINA. I yield back. 

Chairwoman CAPITO. Thank you. 

Mr. Duffy? 

Mr. DUFFY. Thank you, Madam Chairwoman. 

One of my concerns as I sit in these hearings is the back and 

forth in regard to what we, on this side of the aisle, have done to 

actually reform the CFPB. 

I had a bill, I am not sure if you are aware of it. It was the Consumer Financial Protection Safety and Soundness Improvement 

Act of 2011. 

And one of the components of that bill that passed the House, 

that is now one of the many that is stacked up in the Senate, was 

that we would move the CFPB from a Director to a commission. 

And the commission was the original language in the Democrats’ 

bill that passed last year. 

I hear a number of comments about how now we want to defang 

the CFPB when all we are trying to do is make it work better. And 

that is one of the frustrating things as I sit here. 

I think we should have a real conversation about what we are 

trying to do. 

Are we trying to defang it? Are we trying to make it work better? 

I don’t know if some across the aisle believe that this is the one 

law that was written perfectly, and we can’t have any reform that 

can improve it, but that is the impression that I get as I listen to 

this conversation. 

And I guess I come from a district with a lot of small banks, a 

lot of small credit unions. 

34 

Is it fair to say that the work of the CFPB will no doubt have 

an impact on many small banks and credit unions? 

Mr. DATE. Yes. 

Mr. DUFFY. Okay. 

Mr. DATE. Yes, I think things will be better in the marketplace 

for small institutions. 

Mr. DUFFY. But it is going to have an impact on them, right? 

Mr. DATE. A better impact, yes. 

Mr. DUFFY. Great. And so can you give me some examples of 

what my banks and my credit unions did to help cause the financial crisis? 

Mr. DATE. That, Congressman, gets to exactly the right point, I 

think. 

Mr. DUFFY. What did they do? 

Mr. DATE. Precisely, community banks, for example in the State 

of Wisconsin. 

Mr. DUFFY. What did my community banks do? 

What did my credit unions do? 

Mr. DATE. Community banks in Wisconsin entered the crisis 

with exposure, as all community banks did, to real estate lending. 

And by virtue of an inflation of a real estate bubble, principally by, 

frankly, non-depositories due to lax underwriting standards over 

time, when that bubble burst, it disproportionately impacted community banks, of which Wisconsin has many. 

Mr. DUFFY. So is it their fault that they were following these 

standards? They were following standards, correct? 

Mr. DATE. Exactly. 

Mr. DUFFY. Were they bad actors? 

Mr. DATE. Congressman, the notion of being able to extend the 

same set of practical rules across non-depositories is exactly the 

point. 

Mr. DUFFY. Let me ask you this: Do you recall what the original 

name of the Dodd-Frank bill was? 

Mr. DATE. I would not have occasion to recall that. 

Mr. DUFFY. Would it surprise you that it was called the Wall 

Street Reform Act? 

Mr. DATE. I have no particular reason to be surprised— 

Mr. DUFFY. You think a better name for this bill would be the 

Main Street Reform Act? 

Mr. DATE. I am not in the habit of naming legislation, Congressman. 

Mr. DUFFY. Okay. And as I hear you testify, you have talked 

about how it is great that for your management background that 

you have a one person Director on the CFPB. 

Now, I wonder if you would think that the U.S. Government will 

work better without a board, whether it is Congress or the Senate, 

and we just have a one person director who manages the control 

of the country. 

Is that your philosophy as well? 

Mr. DATE. I am quite sure no sensible person would say that, 

Congressman. 

Mr. DUFFY. Great. I am happy to hear that. 

35 

Because as I look at what is happening right now, your agency— 

I wouldn’t say your agency—the CFPB has an incredible amount 

of power and 1,200 employees, with a $329 million budget. 

And as I look around, I say, who has been elected to run this 

agency? Who has been nominated to run this agency? 

Who has been confirmed to run this agency? And that is my concern. 

When we talk about oversight, we can look at these hearings and 

they are great. I think one of our concerns is there hasn’t been a 

nomination, there hasn’t been an election, there hasn’t been a confirmation. We don’t have budgetary control necessarily over the 

CFPB. 

And as I analyze the impact that this agency is going to have on 

my consumers, on my small businesses, on my small banks, and on 

my credit unions, when they really had nothing to do with the financial crisis, that gives me great concern. 

I think the original intent was to look at what went wrong on 

Wall Street, what went wrong with the big financial institutions. 

But in essence, you have admitted that that is not all that we are 

going for. We are going for every financial institution, every small 

bank, every credit union. 

And for me, that gives me pause. I don’t think we grow our economy. I don’t think—I think Mr. Gutierrez was talking about gun 

stick-ups, was what he said. 

I can tell you that my financial institutions, my banks didn’t do 

any gun stick-ups. They treat their customers fairly, openly, and 

transparently. 

Mrs. MALONEY. Will the gentleman yield? 

Mr. DUFFY. Oh, my time is up. I yield back to the chairwoman. 

Mrs. MALONEY. I ask unanimous consent to respond to his statement that there is no oversight of the CFPB. There is considerable 

oversight of the CFPB. 

Chairwoman CAPITO. Mr. Meeks, for 5 minutes for questions? 

Mr. MEEKS. Thank you, Madam Chairwoman. 

I was just listening to the colloquy also. But I do believe that 

Richard Cordray was, in fact, nominated by the President and we 

are just waiting for the Republican Senate to stop filibustering in 

the nomination so we will have a person in place there. 

Let me just say this: I am pleased to know that you mentioned 

in your testimony that a well-functioning market is one where the 

buyer and the seller both understand the terms of the deal, and 

that buyers are able to make comparisons among products. 

Markets function on the availability of information and transparency. And we see obstructions to the information so markets are 

disrupted. That is why bringing transparency into the marketing 

and sale of mortgages and consumer loans, I believe, is absolutely 

fundamental. 

I strongly support what you are doing in simplifying mortgage 

disclosure forms because if you look at my district in South 

Queens, we have the highest foreclosure rates in New York City. 

And that is partially because we have the greatest number of 

fraudulent mortgages that were sold in America. 

Countless seniors were duped into taking out reverse mortgages 

that have left them destitute and many of them homeless. And a 

36 

vibrant consumer protection agency is necessary, I believe, to protect all Americans from such predatory behavior. 

As indicated, a number of my colleagues on the other side of the 

aisle have complained that the CFPB is not subject to the congressional appropriations process. 

But I want to make two points on that. 

First, it was a result of a Republican formulation—Bob Corker, 

the Senator Corker special, as it is known on the Senate side—that 

put the CFPB in the Federal Reserve and thus not subject to the 

annual appropriations process. 

But more importantly, we see the Republican obstruction and 

funding the SEC as well as the CFTC trying to cut the budgets of 

those agencies to below pre-crisis, pre-Bernie Madoff levels. 

Why would we want to subject an agency—created solely to protect consumers and enhance transparency to enable markets to 

function properly—to the whims of anti-consumer crusaders. 

And that is not even to say that on the line of what my colleague 

was talking about before, we have many laws. Most citizens don’t 

break the law, but they still have the law that they have to abide 

by also. 

So I agree, the credit unions, a lot of the small banks, they have 

not—maybe they don’t have any real negative involvement in this. 

So they—you still have somebody to look over, doesn’t mean you 

abolish the police. And most of the individuals in a city abide by 

the law, but you still have the police there. 

So the functioning that you have is tremendously important and 

to make sure that consumers are protected and have choices and 

have in fact—one of the things that I think that you are doing and 

stories that I have read that is egregious over the last few days 

about predatory lending, targeted toward active military service 

men and women. 

Can you describe some of what you learned about this and what 

specifically, say, I think it is Ms. Petraeus and the Bureau will do 

to ensure that our folks in uniform and their families are protected 

from unscrupulous behavior? 

Mr. DATE. It is an important focus for us, and one that I am glad 

that Mrs. Petraeus is leading our efforts in. 

We are going to simultaneously make sure that we understand 

the special circumstances and particular difficulties that our 

servicemembers have today in financial services, do what we can 

to make sure that our men and women in uniform are equipped to 

be able to understand the financial ramifications of what it is that 

they are going to get into, and that we are attentive to those who 

would break the law in order to take advantage of precisely those 

men and women who don a uniform to serve the country. 

We take it very seriously. 

And I think that Mrs. Petraeus has already been shining a 

bright light on these issues that inform both our efforts as well as 

more broadly made a real difference in this marketplace. 

Mr. MEEKS. You also, in your testimony, talked about a financial 

age shopping sheet. 

What complications to an efficiently functioning market or consumer protection initially do you see in the student loan market, 

if you will, in the little time I have left? 

37 

Mr. DATE. Student lending is a very big market. And for any individual family or student making a decision to borrow money, it 

is a big, big decision. 

But those decisions are made unnecessarily complicated by the 

fact that individual schools tend to use their own terminology to 

describe exactly the same things. So in cases like that, it becomes 

difficult for a student, or his family, to really get a handle on what 

they are getting into and how to compare how various schools stack 

up. 

Mr. MEEKS. Again, so that just shows various choices. 

And the last thing I wanted to talk is checking transparency. 

Can you tell me what you see doing there so that it could be easier for voters, for constituents to move with their feet if they have 

to? 

Mr. DATE. In the PDA or that is to say in checking accounts, 

broadly speaking, it should function just like other consumer financial services. Consumers should be in the products that they understand and that they want. 

That is how a market works. And if we do our jobs right, that 

will happen. 

Chairwoman CAPITO. The gentleman’s time has expired. 

Thank you. 

Mr. Grimm, for 5 minutes for questions? 

Mr. GRIMM. Thank you, Madam Chairwoman. 

Thank you, Mr. Date, for testifying today, and I have to tell you, 

I appreciate the fact that you have a lot of zeal. 

You are coming with a perspective that is almost completely private sector. I think we do need more of that. 

But I am a little cautious because I have heard you say several 

times throughout your testimony things like ‘‘commonsense.’’ This 

is just commonsense or how the Bureau is going to be making 

things more efficient, more effective. 

And this is my first year here at the Congress, but it is my 17th 

year in the government. And unfortunately, one of the things I 

learned early on was—and it is something we need to change—to 

check common sense at the door. 

And if you think a bureaucracy is going to make things more efficient and more effective, then you probably should be medicated. 

You need to just accept the fact that more government often is the 

problem, not the answer. 

So I just want to put that out there. I know it has only been 100 

days, and I would love to have this conversation 3 years from now. 

I think you would have a totally different perspective. But I think 

you are being honest from where you sit right now and I respect 

that. 

But I do want to go back because you mentioned before about 

how someone has to be on the hook. And in the private sector 

where you come from, you are right, someone is on the hook. If you 

screw up, if you don’t do what you are supposed to do and you get 

paid for it, you get fired. 

And if you screw up badly enough, no one else is going to hire 

you. That is not how it works in the government. 

38 

The accountability is one of the biggest issues we have. It is one 

of the reasons I ran for Congress because I felt that no one is held 

accountable. 

So the idea that now all of a sudden, a new Bureau has been created, and somebody is going to be held accountable, is almost absurd. 

You were asked a question by my colleague, Mr. Duffy, as to 

what exactly did the smaller institutions, the small banks, the 

small credit unions do to exacerbate the financial meltdown, for 

lack of a better term. And you answered how they were affected by 

it. 

Did they contribute? Did they play a major role in the financial 

meltdown? Yes or no? 

Mr. DATE. No. 

Mr. GRIMM. Okay. 

Mr. DATE. And that is exactly why the— 

Mr. GRIMM. Okay, okay, hold on, hold on. 

Mr. DATE. [Off mike.] 

Mr. GRIMM. It is a yes-or-no question. Thank you. 

They didn’t. And that is why I think when I speak to my community bankers and my credit unions, they say, ‘‘We had nothing to 

do with the meltdown. We played by the rules and now we are hiring more compliance officers.’’ 

I know the intent, and I don’t think there is anyone on this 

panel, I don’t think there is anyone who was involved in DoddFrank, or in the new Bureau who doesn’t have the noblest of intentions. I believe that in my heart and soul. 

So it is not the intent that I am worried about. What I am worried about is we are talking about streamlining inefficiencies, and 

they are already hiring more compliance, and already paying more 

administrative fees knowing they had nothing to do with it. 

Do you understand at least the frame of mind, that they feel they 

are being punished for something they had nothing to do with? But 

yet, they are being told by bureaucrats—and whether you like it or 

not, now you are a bureaucrat—that don’t worry, we are going to 

make it all better. That is a problem. 

And I keep hearing about fraud and predatory lending, which are 

two different things. 

Have you personally, and has the Bureau analyzed the defaulted 

mortgages, how much of that was, in fact, fraud? How much of that 

never ever should have taken place had the rules that were already 

on the books been enforced? 

I think we had a big lack of enforcement. And adding more rules 

on top of rules that were not enforced in the first place may not 

be the answer. 

Have you analyzed that? 

Mr. DATE. That particular matter which is how many of these 

loans that were made during the 2005, 2006 integers did not conform to underwriting standards that were later attested to as the 

loans were sold to investors. 

I am quite sure it will be litigated between private parties for 

quite some time. So, the actual fact-based discovery will be continuing for some period of time. 

39 

But I would agree with the notion that an effective regulatory 

apparatus that is efficient has to include a multitude of tools so you 

can use the right one, the most efficient one for any given problem. 

And enforcement does matter. 

Consumers— 

Mr. GRIMM. I only have 20 seconds. 

So on that note, taking the military perspective, if I have a unit 

that is not working efficiently and effectively, do I throw more bodies and more resources at it, or do I fix what I have first, get that 

to operate correctly and then worry about expanding it? 

That, to me, is common sense. Yes? No? 

Mr. DATE. We are building a Bureau that is different in kind and 

dramatically better at the mission the Congress has given us. And 

we are dead serious about doing it right. 

Mr. GRIMM. Fair enough. 

Chairwoman CAPITO. The gentleman’s time has expired. 

Mr. Carney, for 5 minutes? 

Mr. CARNEY. Thank you, Madam Chairwoman. 

And thank you, Mr. Date, for coming up today. 

I am interested in your answer to the question about the community banks and the effect—they weren’t responsible maybe for the 

financial crisis, but how they might benefit from your actions because I haven’t heard that answer yet. 

Mr. DATE. Sure. Let me talk about it in two ways: one is nearterm; and one is longer-term. 

The near-term gets to the fact that compliance costs are real 

costs and they tend, not always, but they tend to be fixed cost. In 

other words, it doesn’t matter if you are a $100 million institution 

or a $100 billion institution. It doesn’t really scale with size. 

What that means is that compliance costs are disproportionately 

tough for small community banks right away. 

To the extent we can streamline regulations as we are doing 

right now on the mortgage disclosure forms, as we are kicking off 

an effort to really target and review existing regulations to do, 

well, that benefit disproportionately benefits community banks. 

Mr. CARNEY. And you think you can really have some impact 

there with that review? 

Mr. DATE. Absolutely. 

Mr. CARNEY. Are you getting much feedback? 

I saw in your remarks, your prepared remarks, that you have a 

survey out, if you will. 

Have you been getting much feedback about that? 

Mr. DATE. We will get, I think, a fair amount of feedback and 

we will do primary work, because not every regulatory burden is 

the same, some things cost real money— 

Mr. CARNEY. Right. 

Mr. DATE. —and impact how institutions function, and some 

things do not. 

So we want to make sure that we target the right things, that 

is what—if it were your own money, that is what you would do and 

that is what we are doing. 

Mr. CARNEY. I am glad to hear that. I have to move on. But I 

think it will be good for all our community banks. 

40 

I am also interested in—you mentioned earlier your role in regulating mortgage servicers. And there is, I guess, a release that you 

put on out on October 13th that talks a little bit about that. 

I think that there are real problems in the servicing and our offices hear that every day in terms of timing this documentation, I 

think it is a complete disaster. 

What I am interested in is what do you see as your role there? 

I have seen your press release. What are the standards you are 

going to apply for accuracy and timeliness? And then you mention 

at the end, appropriate enforcement. What does that mean in the 

context of the servicers? 

Mr. DATE. Mortgage servicing is one of these things that is simultaneously a market that is very important in terms of risk to 

consumers, but also is one that in the pre-Dodd Frank regulatory 

regime tended to attract not as much supervisory attention as it 

otherwise should have. 

The reason for that was—and these are not my words; I think 

that the GAO pointed this out earlier in the year—that mortgage 

servicing was not viewed as a safety and soundness concern, or not 

a significant one. And as a result, it didn’t attract the same kind 

of supervisory attention as did other areas of the bank. 

That has turned out to be a real problem. 

When the prudential regulators reviewed 14 institutions in a report that they published in April of this year, 14 out of 14 had serious deficiencies, which is not a great batting average. 

We have today, as of July 21st, supervisory authority over most 

of the largest mortgage servicers in the country with respect to existing Federal consumer financial laws, which means that we will 

take quite seriously the supervisory authority that we have to 

make sure that the law is followed, and that those deficiencies get 

remedied, and that consumers are not harmed. 

Mr. CARNEY. We run into this all the time, consumers not having 

a single point of contact, lost documents, documents that are really 

in bad shape. Which by the way is a whole other problem and 

issue, and maybe a subject for an oversight hearing in terms of 

mirrors and all that, but it is a disaster out there. 

And what is your role in that documentation side, if you see any 

or if you have any? 

Mr. DATE. There are real structural problems in mortgage servicing. So for example, the way that servicing compensation works, 

it is difficult for servicers to actually get paid for dealing with delinquent loans in the right way, in a thoughtful way, in a nuanced 

way. 

And as a result, there has been a systematic underinvestment in 

the right people, and processes, and technology, and we are living 

with the results now. 

But the fact of the matter is even if the compensation structures 

are not ideal, you still have to follow the law and that is what we 

can do. 

Mr. CARNEY. So what does the law say? 

And then lastly, in 30 seconds, what are the appropriate enforcement actions that you can take? 

Mr. DATE. We have an entire range of potential remedies. We 

have at the front end sort of the ability to participate in an interVerDate Nov 24 2008 17:26 Jun 15, 2012 Jkt 072621 PO 00000 Frm 00046 Fmt 6633 Sfmt 6633 K:\DOCS\72621.TXT TERRIE
41 

agency process that we are doing right now, to try to develop sensible, right-minded, practical, national mortgage servicing standards. 

The existence of a patchwork set of regulations in this area has 

not done anyone any great service. So if there can be—come to a 

conclusion on some sensible national mortgage servicing standards 

that would go a long way. 

Mr. CARNEY. Thank you. 

Chairwoman CAPITO. Thank you. 

Mr. McCotter, for 5 minutes? 

Mr. MCCOTTER. One of the questions that has been repeatedly 

asked and I think you touched upon it in your opening statement 

when you referred to—yes, here it is on page four—regulatory arbitrage, which I believe you mean to say businesses, financial entities, look for a least-regulated area to try to set up shop. 

Is that correct? 

Mr. DATE. That is the gist of it—yes. 

Mr. MCCOTTER. Could there not be a corollary related to the 

community banks and credit unions or bureaucratic arbitrage, 

where the government looks for areas that are less regulated so 

that they can expand their power and influence over them? 

Mr. DATE. In my experience, the more problematic aspect of it is 

actually the issue you were raising, that everybody knows where 

community banks are. Everybody knows the address. You know 

how many there are. You know how to find them. You know who 

runs them. 

And so as a result, they are much easier to regulate and hold to 

high standards than are non-depositories. And that is what we 

have an advantage in fixing. 

Mr. MCCOTTER. The second question is, people back home have 

difficulty in relating to the concept that the government creates 

bigger bureaucracies to streamline government. 

And you said you have hired some 700 employees, the reason for 

which and I think the reason for the existence of the agencies put 

forward is so that you can centralize the authority-making within 

the new consumer Bureau, right? 

Mr. DATE. The what Bureau? I am sorry. 

Mr. MCCOTTER. The CFPB, you can centralize— 

Mr. DATE. Consolidate— 

Mr. MCCOTTER. —the host of duplicative authorities that have 

spread out throughout the years within one central place, right? 

Mr. DATE. That is correct, Congressman. 

Mr. MCCOTTER. I think the phrase you used was ‘‘centralization 

of authority.’’ 

Mr. DATE. ‘‘Consolidation,’’ but yes. 

Mr. MCCOTTER. ‘‘Consolidation,’’ a difference without a distinction. 

To me, the question then is what happened to all the other people who were doing this in the Federal bureaucracy? Where did 

they go? 

Since you have consolidated the operations and authority, where 

did they go? 

Mr. DATE. We had something like 1,300 applications from potential transferees from existing prudential regulators. 

42 

Mr. MCCOTTER. Will all the people whose authority you have 

consolidated from their bureaucracies now work for the CFPB? 

Mr. DATE. To the contrary, we made 300 to 350 offers amongst 

those 1,300 applicants because we are building a Bureau that is 

taking off— 

Mr. MCCOTTER. I got what you are doing. 

Where will they go? 

Mr. DATE. I don’t personally know them all, Congressman. 

Mr. MCCOTTER. Where will the positions go? 

Mr. DATE. [Off mike.] 

Mr. MCCOTTER. What happens to the positions whose authority 

you have consolidated within this new bureaucracy? 

What happens to the old bureaucracy? 

Mr. DATE. Congressman, I wouldn’t be in a position to be able 

to— 

Mr. MCCOTTER. But you know that you have consolidated their 

authority? What happens to the positions that are currently tasked 

with implementing that authority within the Federal bureaucracy? 

Mr. DATE. Those people, they are individual human beings— 

Mr. MCCOTTER. The positions? 

Mr. DATE. I am sorry, Congressman. I would not have line-ofsight into the internal staffing decisions of, for example, the OCC 

or the FDIC that— 

Mr. MCCOTTER. Then how can you say you have consolidated the 

authority if they continue to do the same job in the same positions, 

despite the fact that this Bureau, this new bureaucracy has been 

created. 

Mr. DATE. I mean it in the quite literal sense that there is— 

Mr. MCCOTTER. So do I. 

How can you say you have consolidated the authority within this 

new bureaucracy if you cannot tell me whether the extant positions 

that are currently doing them have been eliminated, or have had 

new tasks assigned to them. 

Otherwise, you have just added a new bureaucracy on top of people who are continuing to operate as the old bureaucracy. 

Mr. DATE. Dodd-Frank, I think, is relatively explicit about this. 

There are authorities to administer an enumerated set of laws that 

transferred over to the Bureau on a date certain. That has happened— 

Mr. MCCOTTER. Are all those positions now, again, perhaps I 

misheard you, are all of those positions now coming into the new 

bureaucracy? And if not, what happens to them? 

Mr. DATE. As I said, Congressman, I don’t have visibility nor 

would I into— 

Mr. MCCOTTER. So you don’t know whether you have consolidated the authority because there may still be positions within the 

existing bureaucracy that are doing them? 

Mr. DATE. Congressman, I— 

Mr. MCCOTTER. So you don’t know? 

Mr. DATE. No, I am quite confident that the authority that it 

transferred to us by the Bureau— 

Mr. MCCOTTER. So what happened to the positions? 

Mr. DATE. [Off mike.] 

43 

Mr. MCCOTTER. If you take it, so the positions are sitting there 

with people in them spending taxpayer money with no specific direction at all and no plan for their subsequent phase-out or elimination in a time of massive deficits and debt, decide to save taxpayer’s money, you don’t know if that is happening? 

Or was that not envisioned by the foresight of the bill’s drafters? 

Mr. DATE. I know that I am executing in the most disciplined 

way possible for us. 

Mr. MCCOTTER. That is not what I asked you. You may be doing 

the best you can, but it doesn’t mean it is good enough. 

Chairwoman CAPITO. The gentleman’s time has expired. 

Mr. MCCOTTER. Thank you. 

Chairwoman CAPITO. Mr. Green? 

Mr. GREEN. Thank you, Madam Chairwoman. And thank you for 

allowing me to be a part of the hearing. As you well know, I am 

an interloper. 

And I would like to thank you, sir, for testifying today. I would 

also like to compliment you on getting your Office of Older Americans and the Office of Servicemember Affairs up-to-speed. It is important that we serve these two communities. 

To this end, a brief bit of information which will give you some 

indication as to why I have some concern about the question, or 

perhaps the statement that I will make. 

In my congressional district, we have the ballot now in four languages: English; Spanish; Vietnamese; and Chinese. By the way, 

that is for American citizens. 

Every person voting is an American citizen and that is the law 

in this country. So it is all pursuant to the law. 

But with reference to our older Americans, senior citizens who 

are in the twilight of life, many of whom do not understand English 

as well as you and I, are you preparing to have your materials 

printed in other languages so that they may be not only informed, 

but they may have an opportunity to benefit from much of what 

you do? 

Mr. DATE. It is a great question, Congressman. And we are trying to address that access in a couple of different ways. 

One is to test over time, if you co-develop in both English and 

another language, you get to a different result or not. Because, for 

example, if it makes just as much sense to develop in English and 

then translate after that, that is one thing. 

But you may—I don’t know—and you may in some cases, if you 

co-develop in, for example, English and Spanish at the same time, 

you might get slightly different looking things. And we are going 

to test that over time. If there is no difference, then we will just 

develop in English. 

The other important element, though, is that we have multilingual capabilities in our consumer response center today. Literally, like 150 different languages capability, which is important, 

that is the nature of America. 

Mr. GREEN. Thank you. And I celebrate this diversity. I think it 

makes us a better country. 

Now, moving to another area, it has been my opinion that where 

we have few facts, we have much speculation. There is a lot of 

speculation about the appeals process for some of our financial enVerDate Nov 24 2008 17:26 Jun 15, 2012 Jkt 072621 PO 00000 Frm 00049 Fmt 6633 Sfmt 6633 K:\DOCS\72621.TXT TERRIE
44 

tities given that you don’t have your permanent Director in place. 

They are concerned that appeals may be arbitrary, whether findings may be arbitrary and capricious. 

Now, I have met with some of the small bankers, and I have not 

heard any say that they want a process that will allow them to always prevail. They tell me that they want a fair process so that 

they can get a fair hearing such that they can have some confidence in the findings. 

To this end, what are we doing to not only have it but to make 

sure that they understand it, and that there is a desire to be fair 

so that they won’t have this speculation that can create adverse 

opinions. 

Mr. DATE. Yes, I absolutely agree, Congressman, with the notion 

that speculation about what we might do or not do doesn’t actually 

do anybody any good. 

Our supervisory process is not meant to sneak up on anybody. 

We want to be clear about what our expectations are not just to 

our field examiners but to institutions as well. 

And that is why I think we took an important step a couple of 

weeks ago in publishing our supervision and examination manual. 

It has become sort of the guidepost of what financial institutions 

can expect. 

Mr. GREEN. Does it contain within it—and I have not perused it 

but I will—information about the appeals process when there is a 

desire to challenge a decision made by the agency? 

Mr. DATE. Already, and over time, we will supplement a number 

of published guidelines about what appeals processes and administrative procedures will apply to that set of issues, which I think are 

important ones. We obviously have had the benefit of being able to 

look at what other Federal agencies have done to be able to construct something that is fair-minded. 

Mr. GREEN. Thank you. 

I have two final comments. First, I do meet with small bankers 

and they are exhibiting a lot of consternation about additional 

staffing and this appeals process. I don’t find that to be unusual 

when people are having to deal with the unknown. So if we can 

make it as much known to them as quickly as possible, I think it 

would be a great benefit to all of us. 

And the final comment is with reference to the original name of 

the Dodd-Frank Act. I have received some intelligence indicating 

that it was the Wall Street Reform and Consumer Protection Act. 

So it has always contained the notion that there would be consumer protection as a part of the Act. 

Thank you, Madam Chairwoman. 

I yield back. 

Chairwoman CAPITO. Thank you. 

Mr. Huizenga, for 5 minutes? 

Mr. HUIZENGA. Thank you, Madam Chairwoman. And I apologize 

for having to step out to get prepared for another hearing with this 

committee a little later on this afternoon that I may be a part of. 

But I was able to be here for about the first hour or so, and I 

appreciate your time again here in front of us. 

And I know you have covered a lot of ground, a lot of territory, 

but I don’t think this has been talked about much. I feel I need to 

45 

learn a little more about it and hope this is enlightening to the 

committee as well. 

I know that the CFPB has stated it had some plans to finalize 

the ability to pay rule early next year, and that it is regarding a 

regulation for lenders, what they are going to be able to do. 

Now, I have a background in real estate and developing, and am 

very concerned about how we got ourselves into this with some of 

those practices before. 

But it is requiring, or potentially requiring, a lender to do a 

‘‘good faith investigation’’ as to the ability to pay for a loan, which 

seems slightly redundant to me. I want to know why people will 

be making loans who wouldn’t have an ability to pay. But I think 

that is a part of our problem. 

I understand there are two alternatives regarding qualified mortgages. And I am wondering if you could expand on that a little bit 

regarding safe harbor, as well as, I believe, it is rebuttable presumption, what those differences would be and why we wouldn’t 

just go with the safe harbor standards so that everybody knows 

what the rules are clearly and can play by those. 

Mr. DATE. Congressman, it is a—when I get to sort of process 

setting where we are, describe a little bit about what is this qualified mortgage thing anyway, and then see if there are some subsequent points that we have time for around it. 

Mr. HUIZENGA. We will have to go quickly. We have about 3 minutes. 

Mr. DATE. You would be astonished by how fast I can talk. 

So, first, let us start with the premise, why would people be making loans where the borrower doesn’t have the ability to repay, anyway. Certainly, I grew up on the credit card business, the subprime 

auto finance business. 

Believe me, lenders in those businesses tend to care whether or 

not borrowers can pay you back. It is an important facet of the 

lending process. 

As we saw on the mortgage credit—and during the credit bubble 

though, because risk and return tended to be de-linked just given 

the fragmentation of the secondary markets around mortgages, you 

ended up with originators not necessarily having the same stake in 

the outcome. 

And as a result, it became less important in terms of how you 

actually got paid on the front end. It is whether or not the borrower had the ability to repay down that road. 

Now Dodd-Frank, appropriately in my mind, takes a sensible approach to say, there should be a good faith investigation and to 

ability to repay. 

But that alone, as your question points out, would not necessarily provide concrete guidance to the marketplace on such an 

important topic. And as a result, we are moving quickly, as quickly 

and as carefully as we can, to be able to provide some guidance 

about the so-called qualified mortgage which would be something 

that definitionally meets the ability to repay requirement. 

Process-wise, the Federal Reserve Board proposed a definition for 

the qualified mortgage. We inherited on July 21st that proposal. 

46 

We are right now evaluating the fairly extensive comments associated with it with an eye towards providing a final rule to the 

marketplace in real clarity early next calendar year. 

That is actually substantially ahead of the deadline set out in 

Dodd-Frank. The reason why this is really at the top of our agenda 

in terms of the alacrity with which we are pursuing it is that it 

is a gigantically important concept. And it is important in that it 

provides kind of a foundational element for other elements of mortgage reform that are being pursued by other agencies. 

So for example, the risk retention framework and the qualified 

residential mortgage definition in part depends on the definition of 

qualified mortgage. So that is why we are moving so quickly. 

Mr. HUIZENGA. All right, I appreciate that. And I had a chance 

with Chairwoman Capito to be in Wisconsin earlier this week, and 

talked a little bit about this. 

When I was going through and getting my real estate license 20 

years ago, I was taught that people aren’t brown, they are not yellow, they are not white, and they are not black. They are green. 

And they are green because they simply do or do not have an ability to repay. It is my hope and desire to make sure that those rules 

that you are implementing are based on that, and that it then provides that guidance. 

Because we got way outside the bounds, I believe, when we saw 

people taking on mortgages, oftentimes voluntarily, that they didn’t 

fully understand what that meant, and they had no ability to sort 

of control themselves. 

Hey, I am of that generation. We want it all. I get it. 

And I only want the third stall garage and the master bathroom 

suite, but sometimes, we can’t have that. 

So, thank you, Madam Chairwoman. I appreciate the time. 

Chairwoman CAPITO. Mr. Manzullo, for 5 minutes? 

Mr. MANZULLO. Thank you. 

I find it quite frightening that you made the statement that 

there are tens of thousands of products to be examined to see 

whether or not they should be regulated. 

I practiced law for 22 years before I came here, and closed over 

1,000 real estate transactions: commercial; agricultural; and residential. 

We made up our closing statements at that time that gave 

enough information so that people could understand. 

When RESPA came along in the mid-1970s, we had to sit there 

and pretend that the closing took place 3 days before because the 

requirements were so stupid that said that we should adjourn the 

closing, and come back 3 days later because a consumer had the 

right to vitiate the mortgage. 

And now, we have the community banks who did absolutely 

nothing to bring about this crisis, bearing the brunt of the regulations. When in fact—and I totally disagree with your statement 

that says on page four, ‘‘The regulatory system prior to Dodd-Frank 

failed to protect consumers from harmful practices in this gigantic 

lending market.’’ 

Number one, Fannie Mae and Freddie Mac could have set their 

own underwriting standards, not only to the loans that they 

collateralized, but also the crap that they bought on the open marVerDate Nov 24 2008 17:26 Jun 15, 2012 Jkt 072621 PO 00000 Frm 00052 Fmt 6633 Sfmt 6633 K:\DOCS\72621.TXT TERRIE
47 

ket, the subprimes that two Presidents said that they should buy 

up because they wanted to have more housing going on. 

The second thing is the Fed has always had the authority, as per 

Chairman Bernanke in the summer of 2009, to set underwriting 

standards and to govern documents of the institutions over which 

the Fed has had the authority. 

But you know what they did? Not until October 1, 2009, did the 

Fed come out with the outlandish regulation that you had to have 

written proof of your earnings. 

Come on. Now, we have another bureaucracy coming along, 

blaming the smaller institutions, putting more regulations upon 

them, when in fact, it was the Federal Government itself that could 

have stopped this, knowing full well that people were buying 

homes when they could not even make the first mortgage payment 

on it. 

The people are not going to read documents. When I used to close 

a real estate transaction, it was maybe this many papers. The 

mortgage was two pages. The note was one page. And now, it is 

this many pages. 

People don’t read all that stuff. The lending agent or the person 

who closes the loan hands the documents and essentially says if 

you don’t sign this stuff, you don’t get your new house. 

And now, we are going to have more and more and more and 

more and more disclosures. 

This doesn’t work, Mr. Date, going in and trying to set up a new 

Bureau to do the job that the Federal Government could have done 

adequately before. 

And my question is, you are going to redo RESPA, is that correct? 

Mr. DATE. One of our— 

Mr. MANZULLO. Tell me. Yes or no? 

Mr. DATE. We are streamlining RESPA—as we speak. 

Mr. MANZULLO. Oh, okay, no. No, there are, according to the testimony of several years ago when we fought RESPA like crazy, because it really is not that clear. It tries to add things to it. It is 

more confusing for the consumer. 

There were eight people at HUD who worked on RESPA. Are 

those eight people still doing the same thing? Do you know that? 

Mr. DATE. I wouldn’t know exactly who the eight people were— 

Mr. MANZULLO. Can you find out for me? 

I want you to make an inquiry, and get back to this committee 

within 7 days and find out if anybody at HUD is working on the 

RESPA disclosures. I want to know that. 

And if they are doing that, they should be reassigned somewhere 

else or fired because that is the authority that you say that you 

have assumed as part of the Consumer Financial Protection Bureau. 

Wouldn’t you be concerned if they were still doing the same thing 

at HUD on RESPA? 

Mr. DATE. I am across the Bureau. I am quite concerned about 

our continued ability to make sure we have absolutely the best people in the room— 

Mr. MANZULLO. That is what I am talking about. 

Mrs. MALONEY. Will the gentleman yield? 

48 

Mr. MANZULLO. No, I won’t yield. 

My question is, according to your testimony, you are going to be 

streamlining whatever it is and working over this document that 

has been beaten to death over the past several years, that continues to expand in size, scope, and makes it even more difficult 

for consumers to read. 

I want to know if the people at HUD who have been working on 

that for years are still going to be working on that same RESPA 

form. Do you know that to be a fact? 

Mr. DATE. We have a team that— 

Mr. MANZULLO. No, no. Do you know that to be a fact? Are they 

still at HUD working on RESPA? 

Mr. DATE. Congressman— 

Mr. MANZULLO. If you don’t know, you can say you don’t know. 

Mr. DATE. I have been a Federal regulator for 102 days. I don’t 

know the specific— 

Mr. MANZULLO. I am not holding it against you if you don’t 

know. If you don’t know, just say you don’t know, and that is okay. 

Mr. DATE. Of course, I don’t know. I am sorry. 

Mr. MANZULLO. Okay. But could you find out for us if they are 

still doing that work? 

Mr. DATE. I am confident that our staff will find a way to make 

sure that you have the oversight information you need. 

Chairwoman CAPITO. The gentleman’s time has expired. 

Mr. MANZULLO. Does that mean that you are going to get back 

to me with the information? 

Mr. DATE. I am entirely happy to provide you with the information that you need with respect to RESPA administration, which I 

think is a very important topic in consumer finance broadly. 

We take that job quite seriously, and I am heartened to hear 

your enthusiasm for it. 

Mr. MANZULLO. Thank you. 

Chairwoman CAPITO. Thank you. 

I asked the ranking member if—because I had one additional 

question I wanted to ask—she wouldn’t mind if I ask for unanimous consent that both of us would get another 2 minutes for questioning. 

And without objection, I think she said to go ahead. 

Mrs. MALONEY. Absolutely. 

Chairwoman CAPITO. Good. So I thank you. 

And I know you have a busy schedule, so this won’t take very 

long. 

I wanted to go to the Bank of America interchange, the debit 

card, $5 a month issue, because we heard several Members talking 

about a concern about what it is doing to consumers. 

The CFPB was made aware of this change that Bank of America 

was making to their debit card previous to the announcement that 

they made? Is that correct? 

Mr. DATE. I would, if you don’t mind Chairwoman Capito, like 

to steer clear of talking about specific conversations with specific 

supervised entities. 

But I can say that we routinely are talking to institutions that 

are within our supervisory universe across the range of consumer 

finance issues. 

49 

Chairwoman CAPITO. But transparency is what we are looking 

for here. This has been the big complaint, obviously, the transparency and previous subprime. 

And my assumption would be that Bank of America came to the 

CFPB in a disclosure and examination, saying that this was their 

intent. They have obviously since dropped this intent. 

And I guess my question, my follow-up question, would be if it 

went forward, then it was judged by the CFPB to not be deceptive, 

unfair, and abusive because it was revealed in transparent. 

Is that a safe assumption? 

Mr. DATE. I think it is broadly true that in a productive regulatory relationship, bank management teams—and I will broaden 

that—financial institution management teams ought to feel comfortable talking about what is happening in the business, plans for 

the business with their regulators, at least in part to have a sense 

of whether or not something feels like it is within the confines of 

the law. 

Chairwoman CAPITO. Okay. So let us take it a different step. 

Let us say this fee was assessed without revealing to the customer or to you, that would be judged as abusive, unfair, or deceptive? 

Mr. DATE. There are specific disclosure requirements, I believe, 

in the Truth in Savings Act with respect to pricing changes on— 

Chairwoman CAPITO. Right. 

Mr. DATE. —deposit accounts. 

Chairwoman CAPITO. Right. 

Mr. DATE. But there is an existing law and existing regulation— 

Chairwoman CAPITO. Right. 

Mr. DATE. —that govern it. 

Chairwoman CAPITO. So I am really not getting an answer, I 

guess. And maybe we can talk about this outside the scope of the 

committee hearing. 

But I am curious to know since this has caught a lot of attention, 

shall we say, and rightly so, to see what the interplay of the Bureau and this type of financial move would have been and should 

be, and would be going forward. 

So I will ask the ranking member, and I will do a little wrap up. 

Mrs. MALONEY. Just in response to your question, in Bank of 

America’s own statement that they sent out, they said they listened 

to their customers and they were repealing this. 

What happened is many customers were voting with their feet 

and going to other institutions that were not charging this additional fee. And so in a sense, the open and transparent market 

brought more competition into the area. And Bank of America said 

they listened to their customers and that is why they were withdrawing it. 

I would like to respond to my good friend who is asking you 

about regulation. And I want to compliment you for beginning a 

targeted review of all regulations that you inherited from seven different agencies that had consumer protection in them. 

But it wasn’t their first goal; they had other duties. So consumer 

protection became a secondary thought, or a third thought, or 

wasn’t even thought about at all. 

50 

That is why we need one agency which is focused on helping consumers. And I would state that when you help consumers, you help 

the overall economy. You help the financial institutions. 

So following up on his request for information, I would like you 

to bring back to this committee, and I would like a copy of it as 

well as the chairwoman, the regulations that you are seeing that 

are a duplication, that aren’t necessary, that no longer are needed, 

so that we are saving money for institutions. 

I want to document how much money we are saving for institutions by erasing unnecessary regulations. And you have come out 

with ‘‘Know Before You Owe,’’ which has received a mountain of 

applause for taking complicated documents that no one reads, 

where the fine print is so small that one can even hardly see it and 

making it understandable, so that consumers can understand the 

risk, so that they can understand the cost, and so that they can 

make choices that are appropriate for them. 

Madam Chairwoman, I request additional minutes to respond to 

what I feel was an unfair attack on the CFPB. And I think it is 

important for the public knowledge and important for this hearing. 

I request an additional 2 minutes to respond. 

Chairwoman CAPITO. And I will take another 2 minutes. 

Mrs. MALONEY. Yes, absolutely. 

This is an important hearing. This is important to our economy. 

It is important to our consumers. 

And I feel—I would like to point out that many people today 

made the allegation that there was no oversight of the Consumer 

Financial Protection Bureau. 

That is not true. There is more oversight on this facility, on this 

Bureau, than all of the other Federal regulators. 

First of all, it is accountable to the President, to the Congress, 

and to the Judiciary. The Director is appointed by the President 

and can be removed by the President for any cause that is appropriate. 

The Director must testify before Congress semi-annually. They 

are required to. They have an annual GAO audit. They have annual reports to Congress on consumer complaints and financial literacy, again, required in our law. 

Enforcement measures can be appealed. They can be appealed to 

the United States Court of Appeals. And agency actions are subject 

to judicial review. 

Now, they have incredible oversight which, I think, is—no other 

regulator has it. Other regulators have unprecedented veto over 

CFPB rules. 

Even after the CFPB finalizes the regulation, any member agency of the Financial Stability Oversight Council (FSOC) that objects 

to a regulation can petition the FSOC to get it removed. So other 

agencies can overrule the actions of the CFPB. 

No other regulator has that oversight. And there is mandatory 

rulemaking consultation with regulators and small businesses and 

information sharing on bank supervision. 

Any study they do on a financial institution, that institution has 

access to that study. 

And they also have a capped budget. They have a capped budget. 

Other regulators do not. 

51 

Like all bank regulators, the CFPB’s budget is not subject to the 

appropriations process. 

This is the standard operating procedure, but it is tied to a percentage of the Federal Reserve’s budget. So, their budget is capped. 

And I would say that there is oversight and that was misinformation. But the information that has come out today is the extraordinary help that Mrs. Petraeus is giving to help our service 

men and women keep their homes while they are defending America in Afghanistan and Iraq, that there is a new senior area to help 

the seniors who are incredibly abused by predatory practices, and 

even the business community is coming out in applause of the student loan know before you sign these contracts. 

How are you going to repay it? These are positive steps forward 

that help out young people, help our seniors, help our members of 

the service. And they are part of the solution, not the problem. 

They didn’t create the financial crisis. And I would argue that if 

they had been in place, we might have prevented the financial crisis. 

So I want to congratulate you, Mr. Date, and the dedicated members of your staff for the hard work that you are doing. And I appreciate your testimony today and your hard work. 

I yield back. 

Chairwoman CAPITO. Thank you. And I would like to also thank 

you, Mr. Date, for your very informed testimony today. 

Obviously, you know your stuff, so to say and I appreciate that. 

And I want to thank Mrs. Petraeus for joining us here today and 

for what she is doing to benefit our Armed Forces. I do think you 

have targeted, we in our legislation, in the legislation that targeted 

three extremely— 

Mrs. MALONEY. I applaud the chairwoman’s statement. But may 

I be recognized for 2 seconds on Holly Petraeus? 

Chairwoman CAPITO. Okay. 

Mrs. MALONEY. Two seconds. We agree. Everyone says Congress 

doesn’t agree. 

We agree on the fine work that they are doing to protect the men 

and women in the service. And I request a hearing on what we are 

doing in this particular area. 

Stories of what this agency has done to protect the homes of the 

men and women serving in the military, I think is something that 

is worth exploring more. Maybe there is more support we should 

give to her in her efforts. 

Chairwoman CAPITO. All right. I thank the ranking member, and 

I think that is an excellent suggestion. 

Let me just ask a quick question on TILA and RESPA, because 

we have heard a lot about that. And I mentioned and I think at 

the very beginning that I am refinancing—a lot of people here 

across America are refinancing and still finding this when you 

come in and you try to read through it. 

So, I have tried to find out what are the actual lengths of a 

RESPA and TILA agreement now, 6 to 12 pages, is that your understanding? 

Mr. DATE. I wouldn’t be able to tell you precisely—it is longer 

than it should be. 

52 

Chairwoman CAPITO. Okay. Amen to that. So it is going to go to 

two pages, but just for point of clarification for folks who go in and 

you told me when you were in my office that this final regulation 

probably will not be finalized for at least 2 years after it goes to 

the comment period, etc., etc., right in the form it gets voted on 

and all that. 

Is that pretty much essentially what— 

Mr. DATE. Yes, among other things, we actually have to formally 

propose a regulation. 

Chairwoman CAPITO. Right. 

Mr. DATE. And we will—there are all manner of quite rightminded procedural— 

Chairwoman CAPITO. Right. So it is a couple of years away. 

So if you are refinancing a couple of years away, you might have 

instead of this first 12 pages, you might have 2 which should be 

great because you can see— 

We are still going to have all this. And I think that is what Mr. 

Manzullo was alluding to as well because even as the attorney, he 

was saying he is not reading it. 

I know certainly I was not reading it, signing some things that 

are probably—not exactly sure what I signed. And I think that is 

an issue with these complex—as particularly something as valuable 

and as precious as a home. 

So we will follow that and see where you go. 

I would like to say in response to my colleague’s assertion that 

the FSOC that one certain regulator can come in and say that a 

decision by the CFPB needs to be overturned. 

The threshold to overturn is upending the entire financial system 

of the United States is one of the issues. 

And also, in order for that to be overturned it is a to what extent-thirds vote by that body which is a pretty high bar as we know 

as we try to pass some things here with two thirds votes. And it 

is very difficult. 

We had a commonsense reform to that because we liked the concept of being able to overturn a decision. 

However, let us make it a reasonable bar, a high bar, but a reasonable bar. And I think that we should look at that, maybe not 

in the first 102 days. Maybe that is not going to get all the way 

through the Senate. 

But I certainly think it is an issue that is going to be recurring 

as the CFPB grows and matures into a longer-serving Bureau. 

But essentially, I think that—no, I am going to bring it down 

here, because we have already dragged Mr. Date through a couple 

of hours, and I think he is ready to go home. 

So I appreciate you coming, and I appreciate the dialogue that 

your office has with this committee. And I look forward to seeing 

you in the future. 

Thank you very much. 

Mr. DATE. Thank you. 

[Whereupon, at 12:31 p.m., the hearing was adjourned.] 

(53) 

A P P E N D I X 

November 2, 2011 

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