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EXAMINING LEGISLATIVE PROPOSALS 

TO PRESERVE CONSUMER CHOICE 

AND FINANCIAL INDEPENDENCE 

HEARING 

BEFORE THE

SUBCOMMITTEE ON FINANCIAL INSTITUTIONS 

AND CONSUMER CREDIT 

OF THE

COMMITTEE ON FINANCIAL SERVICES 

U.S. HOUSE OF REPRESENTATIVES 

ONE HUNDRED FOURTEENTH CONGRESS 

FIRST SESSION 

JUNE 11, 2015 

Printed for the use of the Committee on Financial Services 

Serial No. 114–31 

( 

(II) 

HOUSE COMMITTEE ON FINANCIAL SERVICES 

JEB HENSARLING, Texas, Chairman 

PATRICK T. MCHENRY, North Carolina, 

Vice Chairman 

PETER T. KING, New York 

EDWARD R. ROYCE, California 

FRANK D. LUCAS, Oklahoma 

SCOTT GARRETT, New Jersey 

RANDY NEUGEBAUER, Texas 

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 

ROBERT HURT, Virginia 

STEVE STIVERS, Ohio 

STEPHEN LEE FINCHER, Tennessee 

MARLIN A. STUTZMAN, Indiana 

MICK MULVANEY, South Carolina 

RANDY HULTGREN, Illinois 

DENNIS A. ROSS, Florida 

ROBERT PITTENGER, North Carolina 

ANN WAGNER, Missouri 

ANDY BARR, Kentucky 

KEITH J. ROTHFUS, Pennsylvania 

LUKE MESSER, Indiana 

DAVID SCHWEIKERT, Arizona 

FRANK GUINTA, New Hampshire 

SCOTT TIPTON, Colorado 

ROGER WILLIAMS, Texas 

BRUCE POLIQUIN, Maine 

MIA LOVE, Utah 

FRENCH HILL, Arkansas 

TOM EMMER, Minnesota 

MAXINE WATERS, California, Ranking 

Member 

CAROLYN B. MALONEY, New York 

NYDIA M. VELA ́ ZQUEZ, New York 

BRAD SHERMAN, California 

GREGORY W. MEEKS, New York 

MICHAEL E. CAPUANO, Massachusetts 

RUBE ́ N HINOJOSA, Texas 

WM. LACY CLAY, Missouri 

STEPHEN F. LYNCH, Massachusetts 

DAVID SCOTT, Georgia 

AL GREEN, Texas 

EMANUEL CLEAVER, Missouri 

GWEN MOORE, Wisconsin 

KEITH ELLISON, Minnesota 

ED PERLMUTTER, Colorado 

JAMES A. HIMES, Connecticut 

JOHN C. CARNEY, JR., Delaware 

TERRI A. SEWELL, Alabama 

BILL FOSTER, Illinois 

DANIEL T. KILDEE, Michigan 

PATRICK MURPHY, Florida 

JOHN K. DELANEY, Maryland 

KYRSTEN SINEMA, Arizona 

JOYCE BEATTY, Ohio 

DENNY HECK, Washington 

JUAN VARGAS, California 

SHANNON MCGAHN, Staff Director 

JAMES H. CLINGER, Chief Counsel 

(III) 

SUBCOMMITTEE ON FINANCIAL INSTITUTIONS AND CONSUMER CREDIT

RANDY NEUGEBAUER, Texas, Chairman 

STEVAN PEARCE, New Mexico, Vice 

Chairman 

FRANK D. LUCAS, Oklahoma 

BILL POSEY, Florida 

MICHAEL G. FITZPATRICK, Pennsylvania 

LYNN A. WESTMORELAND, Georgia 

BLAINE LUETKEMEYER, Missouri 

MARLIN A. STUTZMAN, Indiana 

MICK MULVANEY, South Carolina 

ROBERT PITTENGER, North Carolina 

ANDY BARR, Kentucky 

KEITH J. ROTHFUS, Pennsylvania 

FRANK GUINTA, New Hampshire 

SCOTT TIPTON, Colorado 

ROGER WILLIAMS, Texas 

MIA LOVE, Utah 

TOM EMMER, Minnesota 

WM. LACY CLAY, Missouri, Ranking 

Member 

GREGORY W. MEEKS, New York 

RUBE ́ N HINOJOSA, Texas 

DAVID SCOTT, Georgia 

CAROLYN B. MALONEY, New York 

NYDIA M. VELA ́ ZQUEZ, New York 

BRAD SHERMAN, California 

STEPHEN F. LYNCH, Massachusetts 

MICHAEL E. CAPUANO, Massachusetts 

JOHN K. DELANEY, Maryland 

DENNY HECK, Washington 

KYRSTEN SINEMA, Arizona 

JUAN VARGAS, California 

(V) 

C O N T E N T S 

Page 

Hearing held on: 

June 11, 2015 .................................................................................................... 1 

Appendix: 

June 11, 2015 .................................................................................................... 39 

WITNESSES 

THURSDAY, JUNE 11, 2015 

Ireland, Oliver, Partner, Morrison & Foerster LLP ............................................. 7 

Miller, Hon. Brad, former Member of Congress, and Senior Fellow, the Roosevelt Institute ..................................................................................................... 8 

Peirce, Hester, Director, Financial Markets Working Group, and Senior Research Fellow, the Mercatus Center, the George Mason University ............... 5 

Sharp, Jess, Managing Director, Center for Capital Markets Competitiveness, 

U.S. Chamber of Commerce ................................................................................ 3 

APPENDIX 

Prepared statements: 

Ireland, Oliver .................................................................................................. 40 

Miller, Hon. Brad .............................................................................................. 49 

Peirce, Hester .................................................................................................... 52 

Sharp, Jess ........................................................................................................ 58 

ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD

Neugebauer, Hon. Randy: 

Written statement of the American Bankers Association ............................. 69 

Written statement of the Conference of State Bank Supervisors ................ 81 

Written statement of the Independent Community Bankers of America .... 87 

Joint written statement of the American Bankers Association, the American Financial Services Association, the American Land Title Association, the Consumer Bankers Association, the Credit Union National 

Association, the Financial Services Roundtable, the Independent Community Bankers of America, the Mortgage Bankers Association, and 

the National Association of Federal Credit Unions ................................... 90 

Written statement of the National Association of Federal Credit Unions .. 93 

Guinta, Hon. Frank: 

Joint written statement of the National Automobile Dealers Association, 

the American Financial Services Association, the National Independent 

Automobile Dealers Association, the Recreation Vehicle Industry Association, the American International Automobile Dealers Association, 

the National Auto Auction Association, the Alliance of Automobile Manufacturers, the Motorcycle Industry Council, and the National RV Dealers Association .............................................................................................. 95 

Letter from Alan and Stacey Jope .................................................................. 98 

Written statement of the National Automobile Dealers Association ........... 99 

Written statement of the New Hampshire Automobile Dealers Association, Inc. ......................................................................................................... 114 

Poliquin, Hon. Bruce: 

Letter from the National Child Support Enforcement Association, dated 

March 18, 2015 .............................................................................................. 116 

Rothfus, Hon. Keith: 

Letter from the American Bankers Association, dated April 15, 2015 ........ 117 

Page

VI 

Rothfus, Hon. Keith—Continued 

Letter from Enterprise Bank, dated June 10, 2015 ....................................... 119 

Letter from the Independent Community Bankers of America, dated April 

27, 2015 .......................................................................................................... 122 

Letter from the Pennsylvania Association of Community Bankers, dated 

April 21, 2015 ................................................................................................ 123 

Williams, Hon. Roger: 

Letter from the Conference of State Bank Supervisors, dated June 10, 

2015 ................................................................................................................ 124 

Responses to questions for the record submitted to Oliver Ireland ............. 126 

(1) 

EXAMINING LEGISLATIVE PROPOSALS 

TO PRESERVE CONSUMER CHOICE 

AND FINANCIAL INDEPENDENCE 

Thursday, June 11, 2015 

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 3:08 p.m., in room 

2128, Rayburn House Office Building, Hon. Randy Neugebauer 

[chairman of the subcommittee] presiding. 

Members present: Representatives Neugebauer, Pearce, Lucas, 

Fitzpatrick, Westmoreland, Luetkemeyer, Mulvaney, Pittenger, 

Barr, Rothfus, Guinta, Tipton, Williams, Love, Emmer; Clay, Scott, 

Maloney, Sherman, and Heck. 

Also present: Representative Poliquin. 

Chairman NEUGEBAUER. The Subcommittee on Financial Institutions and Consumer Credit will come to order. Without objection 

the Chair is authorized to declare a recess of the subcommittee at 

any time. 

Today’s hearing is entitled, ‘‘Examining Legislative Proposals to 

Preserve Consumer Choice and Financial Independence.’’ I would 

like to thank our witnesses for taking the time to testify today. 

This is the Subcommittee on Financial Institution’s first time in 

the newly remodeled hearing room. 

Before we begin, I ask unanimous consent that members of the 

full Financial Services Committee who do not sit on the subcommittee be recognized for questioning at the conclusion of the 

subcommittee members’ questions. I also ask unanimous consent to 

recess this hearing at any time to be resumed at the call of the 

Chair. 

I now recognize myself for 3 minutes. 

Good afternoon. Today’s hearing provides an opportunity for 

Members to continue the discussion of regulatory relief for community financial institutions and the protection of consumers’ financial choices. Many Members here today have put in a tremendous 

amount of work to build bipartisan coalitions for their legislation. 

Today, we will consider legislation that covers a wide array of financial services and issues: legislation amending the bank examinations and supervision process; legislation addressing consumer 

lending concerns; and legislation facilitating a healthy child supVerDate Nov 24 2008 16:58 Feb 22, 2016 Jkt 096992 PO 00000 Frm 00007 Fmt 6633 Sfmt 6633 K:\DOCS\96992.TXT TERI
2 

port system. I thank each of you and your staffs for advancing the 

ball and helping us move one step closer to our committee markup. 

In my time today, I would like to focus on H.R. 1266, the Financial Product Safety Commission Act of 2015. This bill will restructure the Consumer Financial Protection Bureau (CFPB), turning 

its leadership into a five-person, bipartisan commission. 

In this Congress, I have been honored to see this legislation become bipartisan with two members of this committee signing on as 

cosponsors, Ms. Sinema of Arizona, and Mr. Scott of Georgia. Many 

of you are continuing to constructively participate in ongoing negotiations. I have committed to each of you that we will work together to find an acceptable budget offset and an acceptable transition structure, and to consider this legislation separate from the 

CFPB appropriations discussion. 

As we consider this new CFPB structure, I would like to remind 

Members who are still formulating a position on the long-time 

Democratic support of a five-person bipartisan commission at the 

CFPB that first, in 2008, Professor Elizabeth Warren, now Senator 

Warren, proposed creating a five-person bipartisan commission in 

her article, ‘‘Unsafe At Any Rate.’’ In the wake of the financial crisis, President Obama publicized a regulatory reform White Paper 

that advocated for the commission at the CFPB. 

In 2009, Barney Frank introduced the Consumer Financial Protection Agency Act, which created a five-person board at the CFPB. 

I am pleased to thank one of our witnesses, Mr. Brad Miller, for 

having been one of the original cosponsors and supporting the 

CFPB commission on two occasions. At the end of the day, to ensure a sustainable, effective, and balanced CFPB, we need to reform its structure, not get rid of it, but reform it. Ultimately, the 

consumers’ experience in the financial marketplace will be significantly enhanced. I now recognize the gentleman from Missouri, Mr. 

Clay, for 2 minutes. 

Mr. CLAY. Thank you very much, Mr. Chairman, and thank you 

to each of today’s witnesses for your testimony. I want to especially 

welcome back our former colleague, Mr. Brad Miller of North Carolina. It is good to see you again. Today, we consider a number of 

legislative proposals that will purportedly work to preserve consumer choice and financial independence. Upon closer examination, 

however, very few of the bills under consideration actually preserve 

consumer choice or independence, or protect consumers or provide 

meaningful relief to community banks. There are two proposals, 

however, that I believe will preserve consumer choice and provide 

relief to our community financial institutions: H.R. 1553, which will 

provide meaningful relief for well-managed and well-capitalized 

community banks; and H.R. 1660, which would allow Federal savings and loans to charter flexibility to adjust to consumer demand. 

I would urge my colleagues to spend more of the subcommittee’s 

time considering H.R. 2642, the Community Lender Regulatory Relief and Consumer Protection Act of 2015, a bill that is supported 

by every Democratic member of this committee, and on the Senate 

Banking Committee, that would actually solve the problems that 

consumers and institutions face. And I look forward to hearing 

each of the witnesses’ testimony. I yield back the remainder of my 

time. 

3 

Chairman NEUGEBAUER. I thank the gentleman, and now the 

gentleman from Kentucky, Mr. Barr, is recognized for one minute. 

Mr. BARR. I thank the chairman for yielding. No one should be 

satisfied with our weak and unimpressive economic recovery. If 

this recovery had equaled the recovery of the 1980s, the economy 

today would be $2 trillion larger than it actually is. That works out 

to about $6,000 per family per year. The housing sector represents 

between a quarter and a third of the economy. Despite pent-up demand, the housing sector has recovered in fits and starts, and this 

unevenness is due in part to the lack of available credit, a problem 

being addressed by this subcommittee. 

My legislation, H.R. 1210, the Portfolio Lending and Mortgage 

Access Act, would allow loans held on a bank or credit union’s portfolio to satisfy the Dodd-Frank Act’s qualified mortgage regulation. 

This simple adjustment will enable financial institutions to return 

to their traditional business of relationship mortgage lending in 

their communities, while preventing the murky securitizations and 

taxpayer backstops that led to the financial crisis. Today, I look forward to discussing solutions like H.R. 1210 to empower consumers 

and support economic growth. And, again, I thank the chairman for 

organizing this hearing and I yield back the balance of my time. 

Chairman NEUGEBAUER. I thank the gentleman, and now we 

look forward to hearing from our panel today. I welcome Mr. Jess 

Sharp, managing director of the U.S. Chamber of Commerce Center 

for Capital Markets and Competitiveness; Ms. Hester Peirce, director of the Financial Markets Working Group, and senior research 

fellow at the Mercatus Center at George Mason University, thank 

you for being here; Mr. Oliver Ireland, a partner at Morrison & 

Foerster; and the Honorable Brad Miller, former colleague, and 

senior fellow at the Roosevelt Institute. 

Mr. Sharp, you are now recognized for 5 minutes to summarize 

your testimony. 

STATEMENT OF JESS SHARP, MANAGING DIRECTOR, CENTER 

FOR CAPITAL MARKETS COMPETITIVENESS, U.S. CHAMBER 

OF COMMERCE 

Mr. SHARP. Thank you, sir. Chairman Neugebauer, Ranking 

Member Clay, and members of the subcommittee, my name is Jess 

Sharp, and I am the managing director of the Center for Capital 

Markets Competitiveness at the U.S. Chamber of Commerce. 

Thank you again for inviting me to testify this afternoon on behalf 

of the hundreds of thousands of businesses the Chamber represents. Today, I will discuss one goal on which the subcommittee 

rightly continues to focus: ensuring that consumers have access to 

the products they want through safe and competitive marketplaces. 

The Chamber firmly supports consumer protection that deters and 

punishes financial fraud and predation and ensures that consumers 

receive clear, concise, and accurate disclosures; but consumers 

must be served as well as protected, and too often our regulatory 

agencies have failed to strike this careful balance. 

Every day I hear from companies, big and small, banks and 

nonbanks, that struggle to understand these agencies directives or 

that offer a product that these agencies have targeted for elimination. So these experiences have emphasized five principles that 

4 

we advocate: first, companies and consumers benefit from clear 

rules of the road; second, rationing credit does not protect consumers; third, if everyone is in charge, then no one is in charge; 

and the fourth and the fifth are particular to the CFPB. The fourth 

is that the CFPB must respect the clear limits on its authority; and 

the fifth is that the CFPB must be transparent to consumers and 

to Congress. Now, these principles likewise obviously have informed Congress’ oversight of the Bureau and its fellow banking 

regulators. Indeed, many of the proposals under consideration 

today would help address the problems businesses wrestle with 

every day in the consumer financial services marketplace. My testimony addresses most of the bills that are the subject of today’s 

hearing, but in my statement, I am going to focus on four in particular. 

The first is, Mr. Chairman, your H.R. 1266, the Financial Product Safety Commission Act of 2015, which would bring the CFPB 

in line with other independent agencies by codifying the commission structure that was originally proposed by this committee. The 

Chamber strongly supports this legislation and believes that by incorporating the controls and oversight that apply to other Federal 

regulatory agencies, Congress will ensure far greater stability over 

the long term for those who provide and rely upon credit. 

In addition, the inclusion of a variety of viewpoints in a more 

structured decision-making process will better inform complex policymaking and cure some of the transparency and jurisdictional 

issues that have emerged in the Bureau’s development. 

The second is H.R. 1737, the Reforming CFPB Indirect Auto Financing Guidance Act, which would bring clear rules of the road 

to the indirect auto lending market. As this subcommittee well 

knows, the Bureau has created enormous uncertainty in the indirect auto lending market by issuing guidance without notice and 

comment and undertaking enforcement and supervisory actions 

based on post hoc statistical models. They failed to share its analysis or assumptions, thus depriving lenders of the ability to anticipate the Bureau’s analysis. The Chamber strongly supports this 

legislation which would eliminate the Bureau’s 2013 guidance, and 

impose reasonable conditions on any future guidance on this topic. 

Next is H.R. 1941, the Financial Institutions Examination Fairness and Reform Act which would help eliminate ambiguities and 

delays in the exam process by requiring better communication between bank examiners, including the bureaus and financial institutions. It would also create an office of independent examination review within the Federal Financial Institutions Examination Council (FFIEC) that would hear appeals of material supervisory determinations contained in a final examination. 

The Chamber strongly supports this legislation because it would 

address a number of well-documented problems with the supervision process, freeing up these institutions to provide the liquidity 

and capital that Main Street businesses need to grow. 

H.R. 766, the Financial Institution Consumer Protection Act of 

2015, would establish clear standards that the Federal banking 

agencies must abide by when using their leverage to effectively 

shut down lawful businesses by denying them banking services, a 

program called ‘‘Operation Chokepoint.’’ Government agencies have 

5 

the tools to root out fraud and predation, and the Chamber supports their efforts to do so, but under Operation Chokepoint, government officials strongly discourage financial institutions from 

providing banking services to entire categories of lawful businesses 

based on reputational risk. This has left banks with little choice 

but to terminate longstanding relationships with customers because of explicit or implicit threats from their regulator. H.R. 766 

would ensure that the government’s power to terminate banking 

relationships would be used only where there is a material reason 

for doing so. 

Again, the Chamber supports a number of other bills on the 

docket for this afternoon, but I wanted to call attention to these 

four in particular. Thank you again, and I am happy to answer any 

questions you may have. 

[The prepared statement of Mr. Sharp can be found on page 58 

of the appendix.] 

Chairman NEUGEBAUER. I thank the gentleman, and now Ms. 

Peirce, you are recognized for 5 minutes. 

STATEMENT OF HESTER PEIRCE, DIRECTOR, FINANCIAL MARKETS WORKING GROUP, AND SENIOR RESEARCH FELLOW, 

THE MERCATUS CENTER, THE GEORGE MASON UNIVERSITY 

Ms. PEIRCE. Thank you, Chairman Neugebauer, Ranking Member Clay, and members of the subcommittee. It is a pleasure to be 

here today. I commend the subcommittee for undertaking to reform 

the financial regulatory system so that financial markets can work 

effectively, efficiently, and safely for the American public. I can’t 

recommend that you take a particular position on any of these bills 

today, but I can point out some areas in which I think the bills 

could have a positive effect on the financial regulatory structure, 

specifically related to increasing regulatory accountability, making 

sure that decisions lie with people who have the interests, have the 

right incentives, and who have the right information to make those 

decisions, and, also, adjusting some rules where there have been 

changed circumstances or where there are unintended consequences of the existing rules. 

Turning to the first of these potential benefits, increasing regulatory accountability, some of the bills before us today would enhance the requirements on regulators to be transparent about what 

they are planning to do and why they are planning to do it, and 

would then hold them accountable for the decisions that they 

make. Among these bills is the bill that would require the exam 

process to be revamped, and specifically the change that would require there to be an outside place for a financial institution that 

felt there was a mistake in an examination report. That financial 

institution could go to this outside entity for an objective thirdparty opinion, and I think that would be a valuable way to increase 

regulatory accountability. 

Another bill related to the National Credit Union Association 

(NCUA) would provide some sunlight on the NCUA’s budget. It is 

not the same as the congressional appropriations process, but at 

least it would allow the public to have some input in the priorities 

of the NCUA and how it is spending its money, and it would guard 

against fears of regulatory capture. 

6 

The bill that would change the CFPB into a commission would 

also increase regulatory accountability by making policy more consistent over time and also by ensuring that different views of how 

consumers could be protected would be brought into the debate. 

And similarly, the bill that would require the CFPB to do the indirect auto lending through a rule rather than through guidance 

would ensure not only that the public would have a chance to see 

what the Bureau was doing, but also to comment on it, and the Bureau would be required to conduct some cost benefit analysis as 

well. Efforts to increase regulatory accountability are designed to 

help regulators to be more effective and more consistent, to spend 

their money more wisely, and also to take into account more opinions about how objectives can be achieved. 

A second way that today’s bills could improve the financial regulatory structure is by shifting responsibility for decisions away from 

regulators who don’t have access to the on-the-ground information 

and putting those decisions with the financial institutions that actually have the on-the-ground information and have an incentive to 

make a good decision, because they could lose money if they don’t. 

So, for example, the qualified mortgage bill, which would expand 

the definition of qualified mortgages to include mortgages that are 

held on portfolio, recognizes the fact that when a financial institution is going to hold a loan in portfolio, it has an incentive to do 

good underwriting. 

Similarly, the Operation Chokepoint bills recognize that it is not 

regulators who can make a decision about what customers a bank 

should and should not deal with, but the bank itself, which has a 

real interest in maintaining its reputation, and can make those decisions itself. 

Finally, today’s bills could improve regulation by taking into account changed circumstances and unintended consequences of existing regulations. Both regulators and the regulated industry have 

raised some issues with implementation and administration of 

some of the current regulations. So, for example, the bill that 

would facilitate communication between the FBI and State regulators regarding criminal backgrounds could streamline that relationship. 

Another bill that would allow there to be a grace period for new 

mortgage disclosure requirements is a reflection of the fact that 

much of the industry is not ready to comply, and this could result 

in dislocation for consumers as they try to get loans. 

And finally, the bill that would extend the examination period to 

18 months for banks of $1 billion or below, recognizes the regulatory burdens on small banks. Regulatory reforms like the ones 

that are before us today will not fix the financial crisis, but they 

are positive steps towards creating a financial structure that works 

better for the American economy and the American consumer. 

Thank you. 

[The prepared statement of Ms. Peirce can be found on page 52 

of the appendix.] 

Chairman NEUGEBAUER. Thank you. Mr. Ireland, you are now 

recognized for 5 minutes. 

7 

STATEMENT OF OLIVER IRELAND, PARTNER, MORRISON & 

FOERSTER LLP 

Mr. IRELAND. Thank you, Chairman Neugebauer and Ranking 

Member Clay. It is a pleasure to be here today. My name is Oliver 

Ireland. I am an attorney in the financial services practice at Morrison & Foerster. I have been an attorney in the financial services 

area for over 40 years: 26 years with the Federal Reserve, 15 years 

as an Associate General Counsel at the Board in Washington; and 

the last 15 years in private practice. 

The subcommittee has a dozen proposals before it today. They 

are detailed. Like any legislative proposals, people can quarrel 

about details, but I think the thrust of all of these proposals, the 

basic purposes, are good purposes, and they ought to be pursued. 

I am going to try to say a couple of words about each one, because 

I don’t want to leave anything out because they are all important 

to their sponsors, and they are all important to a constituency. 

I spent a long time with the Federal Reserve Board, a collegial 

board, and collegial board decision-making, I think, has vast benefits over an individual director and individual secretary decisionmaking. You get stability. You get continuity. You get expertise. I 

think strongly that H.R. 1266 is a very good bill. 

H.R. 1737 would deal with the issuance of guidance and suggests 

that auto lending guidance, indirect auto lending guidance be done 

through notice and comment. I think all guidance put out by the 

Bureau would benefit from notice and comment. I think that is a 

good proposal. 

H.R. 1941, on changes to the examination process, I have been 

on both sides of that process. Examiners are expert at what they 

do, but they are not infallible. I think an alternate review process 

is in everybody’s interests. 

The safe harbors from the QM rule, both the short-term safe harbor for implementing the rule, and the safe harbor for held-on balance sheet mortgages, I think, are important. When you hold mortgages on balance sheet, two things happen: one, the institution realizes it is going to retain the risk of that mortgage and has a 

stronger incentive for underwriting; and two, it is more readily 

available for examiner scrutiny and examiner criticism if there is 

any problem with the underwriting standards. 

The bills on Operation Chokepoint, if businesses are engaged in 

illegal activity, the appropriate solution is to go after the business 

and prosecute the business, not to cut off its banking services. 

Banking services are the lifeblood of businesses, and without building in the protections for that lifeblood, things like Operation 

Chokepoint, whether implemented by the Justice Department or 

bank regulators under the guise of reputational risk, I think are a 

disservice. 

The increase in size for the 18-month exam cycle allows for more 

risk-based exams. It not only helps the institutions; I think it helps 

the agencies in the process. 

The charter change without having to do a charter change but 

the powers change for thrifts through the OCC, I think is an option 

that makes a lot of sense. It is streamlines what would otherwise 

be a complex regulatory process. 

8 

H.R. 2287 on the NCUA budget, greater transparency in budgeting is a good public policy, and I think that should be pursued. 

H.R. 2091 is an amendment to the FCRA that deals with child support orders, again, a streamlining process to make the administration of child support by States more efficient. That makes a lot of 

sense. 

Finally, the Williams bill, which would streamline background 

checks that are currently available for the Conference of State 

Bank Supervisors mortgage database for other State regulatory 

purposes, is also an efficiency in the regulatory process that ought 

to be pursued. Thank you for your attention. I would be happy to 

respond to any questions. 

[The prepared statement of Mr. Ireland can be found on page 40 

of the appendix.] 

Chairman NEUGEBAUER. I thank the gentleman, and I recognize 

Mr. Miller for 5 minutes. 

STATEMENT OF THE HONORABLE BRAD MILLER, FORMER 

MEMBER OF CONGRESS, AND SENIOR FELLOW, THE ROOSEVELT INSTITUTE 

Mr. MILLER. Thank you, and good afternoon, Chairman Neugebauer, Ranking Member Clay, and members of the subcommittee. 

I am Brad Miller. I served for an eventful decade in the House of 

Representatives and as a member of the House Financial Services 

Committee. I am now a senior fellow at the Roosevelt Institute and 

Of Counsel to the firm of Grais & Ellsworth. The invitation to appear today asked me to assess 12 legislative proposals—I got the 

list on Tuesday—on a variety of topics, and to do that in 5 minutes. 

Like the other witnesses, I will not really attempt that. But there 

is an organizing principle. This pudding does have a theme. The 

bills are based on a narrative of the financial crisis that industry 

participants were victims, not perpetrators. Lending practices that 

might appear predatory to the unsophisticated, like me, were really 

an honest effort to meet consumer needs. 

So, the industry should now be relieved of any annoying regulatory requirement that was based on an unjust accusation to the 

contrary. That narrative has been dutifully repeated in Washington 

and on Wall Street for years, but it is not credible with most Americans, because it is not true. The bills would unlearn the real lessons of the crisis. Here are some examples: There is an old joke 

that a man jumped off the Empire State Building, and as he 

passed the 60th floor, he said, ‘‘So far, so good.’’ H.R. 1941 would 

codify ‘‘so far, so good’’ as the examination standard for commercial 

real estate loans held by federally-insured institutions, large and 

small alike. If a developer made payments on the loan, the examiner would treat the loan as performing and look no further. It 

would not matter if the loan was interest-only and had an impending balloon payment, if the collateral for the loan had collapsed in 

value and the loan was now deeply underwater, if the project for 

which the developer had borrowed was in deep trouble and the loan 

was very large, if that bank and other banks had many other such 

loans, or the developer’s creditworthiness had declined and the developer could not now qualify for a rollover loan, the legislation 

would obviously make it very difficult for regulators to keep a probVerDate Nov 24 2008 16:58 Feb 22, 2016 Jkt 096992 PO 00000 Frm 00014 Fmt 6633 Sfmt 6633 K:\DOCS\96992.TXT TERI
9 

lem from becoming a catastrophe, not just for a given institution, 

but for the financial system. 

The bill also creates an appeal from any supervisory determination that provides far more process than is due. There is already 

an appeal process. An appeal would not just review the agency’s 

decision for error or caprice, but would be a de novo review with 

no deference to the agency’s fact-finding, expertise, or judgment. In 

other words, it would be a second bite of the apple. In extremis, 

too-big-to-fail banks would hire lawyers to block supervisory actions by appeal after appeal and cripple efforts to prevent or contain a crisis. 

H.R. 1210 exempts depository institutions, again, large and small 

alike, from the ability-to-repay rules, for mortgages held in an institution’s portfolio not sold to the securitization market, which is 

still comatose anyway. The argument is that the purpose of the requirement was to prevent foolish mortgages that create systemic 

risk, and lenders would not let credit standards slide again if they 

kept the mortgages. That argument is not supported by the experience of the financial crisis. Washington Mutual and Wachovia, 

among others, got in deep trouble because of portfolio mortgages. 

More important, the purpose of the ability-to-repay rule is equally to protect consumers against predatory, equity-stripping mortgages. Asset-based predatory mortgages are no less predatory if 

held in portfolio, and homeowners can lose all of the equity in their 

home, which for most homeowners is the bulk of their life’s savings, and still pose no risk to predatory lenders, even if held entirely in portfolio. 

Finally, the failure of government agencies to investigate misconduct in the financial sector, including criminal fraud, and hold 

powerful institutions accountable economically has offended the 

sense of justice of millions of Americans, including me. Important 

government powers to investigate criminal conduct have gathered 

dust while Americans seethed. H.R. 766 provides a surprising solution to that problem. It strips the Department of Justice of much 

of the power to investigate and hold financial institutions accountable for misconduct in which they had a role. We have disagreed 

in talking amongst ourselves on the panel and in our conversations 

with staff on exactly what H.R. 766 does, but there is no question 

that it limits—the bill sponsor is here and perhaps can explain it— 

the important investigative and enforcement powers of the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA) 

for financial crimes in which institutions played a role. 

The narrative of the financial crisis that I described earlier is 

very popular at political fundraisers in Washington, but go home 

this weekend and ask the people you represent, ask them if they 

think Wall Street was unjustly accused of wrongdoing in the financial crisis and since, and that law enforcement agencies and government regulators have bullied them. You probably will get a very 

different response than what you get at fundraisers. Thank you, 

Mr. Chairman. 

[The prepared statement of Mr. Miller can be found on page 49 

of the appendix.] 

10 

Chairman NEUGEBAUER. Thank you, gentlemen. I would remind 

the panelists that your full written testimony will be made a part 

of the record, and I thank you. 

I now recognize myself for 5 minutes to begin questions. This is 

a simple question: Do you think replacing the single director with 

a five-person, bipartisan commission as leadership structure weakens consumer protection. Mr. Sharp? 

Mr. SHARP. No. Absolutely not. Again, our view of the world is 

that the more viewpoints you have in the decision-making process, 

the more likely you are to arrive at a decision that balances the 

equities on both sides so consumers are protected, and they are 

still served. There are still products and services out there for 

them. 

Chairman NEUGEBAUER. Thank you. Ms. Peirce, do you think it 

weakens consumer protection? 

Ms. PEIRCE. No. I think it strengthens it by ensuring, as Mr. 

Sharp said, that there are multiple perspectives, but also ensuring 

continuity over time so you don’t see massive swings in policy as 

the Administration changes. 

Chairman NEUGEBAUER. Mr. Ireland, does it weaken consumer 

protection? 

Mr. IRELAND. No. For the reasons already stated, it strengthens 

it. 

Chairman NEUGEBAUER. Mr. Miller? 

Mr. MILLER. Yes, it does weaken the agency. There are some 

downsides to it, as Ms. Peirce said, in the possible lack of continuity; but a single agency director is obviously a stronger and 

more agile agency. I have been interested in hearing the description of the original proposal in which I did play a very significant 

role, as I think Mr. Neugebauer said. And the idea that Elizabeth 

Warren and Bill Delahunt and Barney Frank and I sat around and 

thought, we really need a five-agency commission, no. We said we 

really needed an agency, not the seven agencies that have some 

consumer protection powers, but it is always secondary to safety 

and soundness. 

Chairman NEUGEBAUER. But the question is, do you believe that 

a single director is the better solution? Initially, everybody thought 

that the five-person commission was. And so I want you to explain 

then how from the five to the one, how you felt like that strengthened consumer protection? 

Mr. MILLER. It was, as you have noted, Elizabeth Warren’s idea. 

What did she know about how Washington works? She was a professor at Harvard Law School. Bill Delahunt and I got involved. I 

was a relatively junior Member. I didn’t know how Washington 

worked either, really. And, yes, Barney Frank was one of the original cosponsors of the bill that Bill Delahunt and I introduced. But 

he was the one who said if you want that agency to work, you need 

a single director for a variety of reasons. One is it is going to be 

involved in turf battles, particularly with the OCC, which has a 

single director. And they would be at a huge disadvantage. They 

are going to need to be quick on their feet to respond to new practices in industry, and a five-member commission will not be quick 

on its feet. And what he did not say— 

11 

Chairman NEUGEBAUER. I thank the gentlemen. My time is limited. And I think it is interesting that the President of the United 

States, the Chairman of the Financial Services Committee and a 

number of its members, and the original author of the concept of 

the CFPB all thought that a five-person commission was a better 

synopsis. 

Mr. MILLER. I had more, by the way. 

Chairman NEUGEBAUER. Some of my colleagues, and even Ranking Member Waters, who is not here, is, so if that is a good solution, so then I am thinking about in the next Administration, 

should it turn to be a Republican Administration, that you have 

the CFPB Director be Randy Neugebauer; and what would be the 

impact of the direction of that agency where you had another, basically a little bit different perspective on consumer protection and 

how we elect consistency because now you have this person who is 

trying to take the agency obviously in a much different direction. 

So I think the argument that I would make is that if you have a 

five-person commission, where there is a bipartisan commission, 

that the continuity is a little bit more appropriate. 

Mr. Ireland, you spent 15 years as an Associate General Counsel 

at the Federal Reserve, where undoubtedly you saw firsthand how 

boards operate at a regulatory agency. Can you elaborate a little 

bit more? You mentioned it a little bit in your testimony, how you 

felt like that brought continuity at the Federal Reserve. 

Mr. IRELAND. First of all, as you mentioned, agility is great as 

long as it is going in your direction. If it goes in the other direction, 

it goes in the other direction just as quickly. The seven-member 

board at the Federal Reserve brought expertise from every board 

member, and we were able to divide up the board into committees 

to address particular, different areas of the board’s responsibility 

and take advantage of the seven board members and their expertise, and by their open debate in board meetings arrive at far better decisions than any one of them could arrive at by themselves. 

Chairman NEUGEBAUER. I thank the gentleman. My time has expired. And now the gentleman from Missouri, Mr. Clay, is recognized for 5 minutes. 

Mr. CLAY. Thank you, Mr. Chairman. You know, other regulators 

governed by bipartisan commissions often fall victim to dysfunction 

and infighting that undermines their ability to act decisively. Some 

examples are the SEC, the FEC, and a number of other agencies 

governed by bipartisan commissions are frequently subjected to periods of gridlock that prevent the agencies from acting. 

Furthermore, the single directorate is common by banking regulators, such as the OCC and the FHFA, and the Bureau has been 

able to do its work to date effectively through a single director. Mr. 

Miller, we often hear from the Majority that if the Republicans 

were to win the White House, Democrats would prefer a bipartisan 

commission to a single director. How do you respond to this particular critique of the CFPB’s governance structure? 

Mr. MILLER. I have a long list of horrors if Republicans won the 

White House. This would be on it. I think that the lack of continuity is a problem. As I said earlier, I think that there is obviously a tradeoff. There are some advantages of a five-member commission. But a single, Mr. Clay—as she said correctly, some of the 

12 

five-member commissions don’t work that well. And by the way, 

five-member commissions can turn over fairly quickly as well. 

There is not necessarily a huge amount of continuity with respect 

to five-member commissions. Not everybody serves out their full 

term. 

Also, with the D.C. Circuit having interpreted ‘‘arbitrary and capricious’’ for their standard of review to mean, ‘‘would I have done 

exactly the same thing?’’ it becomes much harder for agencies to 

present a rule in a coherent, tight way, to survive judicial review 

because some members of this committee probably have no experience at all with compromise, but I have, as a Member of the House, 

and as a member of the State legislature in North Carolina, and 

it is sometimes kind of ugly. And sometimes the only explanation 

I had for certain sections of the bill was, yes, I thought that was 

stupid, but I needed votes, and that was the only way I could get 

them. That is not really what you want to take to the D.C. Circuit 

in trying to defend an agency rule on judicial review, but that is 

what you end up with when you have to put together three votes 

on a five-member commission. 

Mr. CLAY. Let me shift to H.R. 1737, the reforming CFPB Indirect Auto Financing Guidance Act. Mr. Miller, according to the 

Center for Responsible Lending, African-Americans receive higher 

interest rates on car loans obtained from car dealers than similarly 

situated Caucasian borrowers, even after controlling for several 

credit measures, while those who receive loans directly from banks 

or credit unions do not. 

In addition, African-Americans pay higher purchase prices for 

their cars, even after actively negotiating with the seller. In light 

of the longstanding and well-documented concerns about car-buying experience from minorities, do you think our time is better 

spent seeking to nullify guidance that clarifies the CFPB supervisory expectation for indirect auto lenders, or should our time be 

spent actually rooting out discriminatory practices? 

Mr. MILLER. Yes. With respect to auto loans, just as with mortgages, I think it is the HMDA data which shows that it costs about 

25 percent, or about a quarter of a basis point more for ‘‘borrowing 

while Black.’’ It costs, according, according to CRL, 29 to 40 basis 

points more, which could be several hundred dollars over the 

course of a car loan for ‘‘borrowing while Black.’’ It is perhaps not 

quite as expensive to ‘‘borrow while Brown,’’ but Latinos are also 

discriminated against. What the CFPB did is—no. CFPB cannot 

regulate car lending by a dealer to a purchaser, but then they sell 

those to banks, and banks end up with discriminatory loans, and 

they have liability for that. And what CFPB did in their guidance 

is say failure gently—you know you are going to have a problem, 

and instead of using that kickback that you are paying dealers if 

they talk somebody into a higher interest rate than what they 

should have gotten, which ends up with a discriminatory lending 

portfolio, maybe you should consider paying them a flat fee instead. 

Chairman NEUGEBAUER. The gentleman’s time has expired. 

Mr. MILLER. That is a fairly modest bit of advice. 

Mr. CLAY. Thank you for your response. 

Chairman NEUGEBAUER. I now recognize the gentleman from 

New Mexico, the vice chairman of the subcommittee, Mr. Pearce. 

13 

Mr. PEARCE. Thank you, Mr. Chairman. I appreciate all of the 

testimony. Mr. Miller, it is good to see you again in front of this 

committee. 

Mr. Sharp, the CFPB announced last week regarding TILARESPA that they were going to be sensitive. Is that going to really 

impact the responses of the institutions as they move forward in 

this process? 

Mr. SHARP. I can tell you based on conversations not just about 

this particular instance, but other instances of sort of take our 

word for it, we will tread lightly here and give you a reasonable 

grace period, that doesn’t build a lot of confidence in the business 

community. 

Mr. PEARCE. So the result of not having confidence—Mr. Ireland, 

do you have an opinion about businesses that don’t have any confidence? 

Mr. IRELAND. They are not going to make loans. 

Mr. PEARCE. Yes. So, Mr. Miller, do you have any opinion on 

those two opinions? 

Mr. MILLER. I think it is better business as confidence. I did not 

hear your question; I’m sorry. I have both my hearing aids— 

Mr. PEARCE. I apologize. The question was the TILA-RESPA, and 

across the country, the companies have said, hey, we don’t mind 

which way you are going, but you are just moving too fast. One 

small company, a very small company in my hometown—my hometown has 30,000 to 40,000 people—spent $100,000 for the software 

that they are going to need, and they are not sure that is going to 

cure the problem. So we have been pressing—Mr. Sherman and 

myself actually put in legislation saying that hold harmless until 

the end of the year at least. Give people some breathing room. And 

so my question was, and the CFPB came out this week as a good 

example of the agility you mentioned that they are going to have 

under the single director, they finally announced that they are 

going to be sensitive to the people. So my question is, is sensitive 

going to work? 

Mr. MILLER. What Rich Cordray has said is that if a lender is 

acting in good faith, they are not going to bring enforcement measures. They are going to look at— 

Mr. PEARCE. I think he said he is going to be sensitive. We asked 

him to roll off of the thing, and you just heard two people say it 

probably isn’t going to work. 

Mr. MILLER. I think it depends on the circumstances. What he 

said is if someone is acting in good faith and makes an innocent 

technical violation, they are not going to bring an enforcement action. 

Mr. PEARCE. Trust us. Mr. Ireland, I think, hits the nail on the 

head. They are not going to make loans. 

Mr. MILLER. It has also been 2 years. It seems like that is a long 

time to comply. You said they have been moving really quickly, but 

the— 

Mr. PEARCE. I was interested in your comments. So many of the 

small banks in my district feel like they didn’t cause the problems 

in 2008, but they feel like the bulk of the regulation has hit on 

them. Mr. Miller, my question is, do you see the community bankers as perpetrators? I find your comments to be leading in that diVerDate Nov 24 2008 16:58 Feb 22, 2016 Jkt 096992 PO 00000 Frm 00019 Fmt 6633 Sfmt 6633 K:\DOCS\96992.TXT TERI
14 

rection. You seem to be a student of the CFPB. Are the community 

banks perpetrators? 

Mr. MILLER. No. Community banks were relatively innocent actors, but it has been the experience of the last decade or more, 

probably actually the experience of all of human history, that the 

worst actors will migrate to the least regulated portion of the market. 

Mr. PEARCE. Just follow me on this if you would, that the community banks in my district make loans for—50 percent of the 

homes in my district are manufactured housing. And many banks 

won’t give loans for them. They weren’t listed because they have 

to have a balloon note, they are not listed as qualifying mortgages, 

so they hold them in portfolio. But your testimony seems to assume 

that portfolio loans indicate that it is out there holding people up. 

Your testimony has a bias against the portfolio loans. Nobody else, 

nobody from Washington, nobody from New York, is going to come 

out and lend money for mobile homes in my district. 

The only way they can do it is hold in portfolio, and yet you decide that is predatory lending. You decide that somehow these people are perpetrators. All they are trying to do is figure out how to 

loan money to poor people who need a place to live. So I am not 

sure about the bias that your testimony presents toward the community bankers. 

Mr. MILLER. I do have a little bit of time to respond to that. No. 

I think community bankers were better actors in the last decade 

than the nonbank lenders. The nonbank lenders were not regulated. They were not subject to consumer protection. One of the 

things the GAO has found is that actually that aspect of DoddFrank has helped community bankers because their nonbank competitors are now actually subject to regulation. 

Mr. PEARCE. Personally, I don’t find that, because they are saying, we are choked under the regulatory burden, and we are going 

to quit lending to poor people, basically is what is going to happen. 

Thank you, Mr. Chairman. I yield back. 

Chairman NEUGEBAUER. The time of the gentleman has expired. 

The gentleman from Georgia, Mr. Scott, is recognized for 5 minutes. 

Mr. SCOTT. Thank you, Mr. Chairman. I would like to continue 

that line of questioning because I think it is a real centerpiece of 

this hearing, dealing with credit unions and the small banks. There 

is actually no question, Mr. Miller, and I think you will agree—it 

is good to have you back with us, my friend—but look, credit 

unions and banks need more certainty that their good faith efforts 

do comply. While they are still meeting their consumer demand, 

that does not expose lenders to litigation during the initial period 

after the regulations become effective. 

I think anybody looking at this would agree that it appears that 

this industry does need more time to implement this regulation, 

and I want a comment from the whole panel on this. Because these 

credit unions and small banks carry a tremendous load and a tremendous burden. They didn’t cause the Wall Street breakdown. 

Now what you have that is so devastating is this rule and regulation is 1,888 pages. Why is there a problem not—and they are saying it is difficult to meet the August 1st deadline, and all they are 

15 

asking for is more time and a safe harbor through the end of the 

year. Now, what is wrong with that? Can anybody—I guess there 

is nothing wrong with it. Thank you. 

Mr. MILLER. Is that me? Mr. Scott? 

Mr. SCOTT. Yes, sir. 

Mr. MILLER. As I said earlier, Rich Cordray has said—and I 

think he has generally acted pretty reasonably and has been consultative with the regulated community as well as with consumer 

groups—that they are going to take into account the circumstances 

and the nature of the conduct, and are not going to bring enforcement actions where there is good faith conduct, where there might 

be a technical violation. With respect to civil liability, there has 

really not been a whole lot of litigation under either RESPA or 

TILA. RESPA does not create a private right of action. 

Mr. SCOTT. Can’t we get some attention to the major concern 

that these stakeholders are not able to test the process that is used 

to develop these new disclosures and real-life transactions before 

this implementation date? They are saying this. I don’t understand 

why there is this hesitation if the consumer protection agency is 

there to protect us. Don’t you see where if we don’t give this safe 

harbor, that it could cause human error? We are not talking about 

a rule or regulation of 10 pages. We are talking about 1,888 pages. 

I don’t see why there is this objection to this bill to provide, what 

is it, 5 months maybe from August to December? I don’t understand that, particularly if the industry itself is crying out and has 

legitimate concerns. So if the result is, and they say that this could 

bring about human errors, that ought to be enough of an alarm bell 

to say, okay, we don’t want to harm the consumers. We want to 

protect the consumers. 

Mr. MILLER. Mr. Scott, again, with respect to enforcement actions, I have said already what Richard Cordray, the Director of 

the CFPB has said. With respect to civil liability, you can’t sue at 

all under RESPA. There is no private right of action. Under TILA, 

you have to show damages. To get damages, you have to show you 

were damaged. It is pretty hard to imagine a borrower showing significant damages for a technical, innocent violation of the rule. No 

lawyer is going to take that case. No court is going to award damages. 

Mr. SCOTT. Then why would you object to the safe harbor? Why 

would you object— 

Mr. MILLER. Because if a consumer has been damaged and the 

conduct was not in good faith, was not innocent, was not technical, 

then we should not strip consumers— 

Mr. SCOTT. Mr. Miller, that is just speculation. 

Chairman NEUGEBAUER. The Chair now recognizes the gentleman from Kentucky, Mr. Barr, for 5 minutes. 

Mr. BARR. Thank you, Mr. Chairman. Ms. Peirce, I was particularly impressed with your testimony relating to the impact that the 

QM rule has had on availability of affordable mortgage credit, and, 

in particular, your remarks that a third of the National Association 

of REALTORS® survey respondents reported being unable to close 

mortgages due to requirements of the Qualified Mortgage Rule in 

the first quarter of 2015, and that, obviously, this has led to some 

mortgage originators and lenders exiting the mortgage business alVerDate Nov 24 2008 16:58 Feb 22, 2016 Jkt 096992 PO 00000 Frm 00021 Fmt 6633 Sfmt 6633 K:\DOCS\96992.TXT TERI
16 

together. What do you have to say about the combination of these 

restrictive QM rules with a GSE exemption that allows banks to 

originate non-QM loans and then sell them off into a taxpayer-supported Fannie Mae or Freddie Mac? What does that do to the financial system? 

Ms. PEIRCE. I think it perpetuates the problems that we saw 

leading to the crisis, which was that the GSEs were too involved 

in our mortgage market, and rather than paring back their role, it 

is sort of perverse, but we have seen their role increase since the 

crisis, and we really need to address that. 

Mr. BARR. So Ms. Peirce, Mr. Ireland, would you say that the 

QM rule, coupled with the GSE exemption, encourages risk being 

removed from shareholders of banks and on to the backs of taxpayers? 

Ms. PEIRCE. I think that is exactly the opposite of what we want 

to do. We want to make sure that the banks who are making the 

loans are taking the care when they are making the loans because 

they know they are going to hold them. Or even if they are going 

to sell them to a private market participant, they know they have 

to prove that they are good loans. 

Mr. BARR. Mr. Ireland, I was impressed with your testimony 

when you said that the portfolio lending and mortgage access legislation that I have introduced would not only encourage better, 

more sound underwriting, because the institution would retain the 

risk, but also the second point you made that it would allow for 

better exam scrutiny, regulator scrutiny of the banks or the credit 

unions mortgage loan portfolio. Can you elaborate on that? 

Mr. IRELAND. Depending on the size of the bank, the examiners 

are going to come in on a yearly basis, or an 18-month basis, and 

look at the loan portfolio and look at the underwriting standards, 

and they are going to be able to see how those loans are performing. They are going to see how those loans are being paid back, 

and they are going to see whether or not the bank has good or 

predatory lending standards. That is not where our problem is, and 

it wasn’t where our problem was in the financial crisis. 

Mr. BARR. Let me jump into Mr. Miller’s argument or concern 

that he has with my legislation. It is the same concern expressed 

by Director Cordray, and they cite Washington Mutual and 

Wachovia. My view is that if you are an institution, a regional institution, a large institution like Wachovia, and you are loading up 

with subprime mortgages, you are probably an institution that 

should fail, frankly. But my question to you, Mr. Ireland, is in light 

of the scrutiny that a lot of these institutions are under right now 

with the rigorous exams, what is the likelihood that Mr. Miller’s 

parade of horribles would come to pass post-financial crisis? And 

what do you say about the criticism of an institution loading up on 

subprime mortgages? 

Mr. IRELAND. First of all, there were a lot of mistakes that led 

up to the financial crisis, and some of them were regulatory. There 

were some oversights by some regulators, but, by and large, the 

problem was not due to held-in-portfolio mortgages. I think that 

the regulators today are making every effort not to make those 

mistakes again. And what we are seeing is rigorous examination 

processes, questions being asked wherever there are underwriting 

17 

issues or regulatory issues; and I think the likelihood that a regional institution builds a substantial portfolio badly underwritten 

residential mortgages is vastly smaller than it was in the past. 

Mr. BARR. Mr. Miller, welcome back to the committee. Since we 

have addressed your particular concerns, I want to give you a 

chance here, but one of the things that you also were worried about 

was these equity-stripping mortgages. When you were in the committee—I will just have to quote you here—in a hearing in 2005 

entitled, ‘‘Legislative Solutions to Abusive Mortgage Lending Practices,’’ you actually advocated for access to the subprime market, 

and for individuals to borrow money against their home. Isn’t that 

exactly the kind of equity-stripping product that you are now criticizing? 

Mr. MILLER. Mr. Barr, I think you have an incomplete knowledge 

of my record on that issue. I introduced legislation in 2004 to regulate subprime mortgage lending, predatory mortgage lending. The 

argument by the industry and by their advocates, their allies in 

Congress, was that you are going to take away all of our ability to 

make loans to people who need credit. And I said there is a place 

for loans with different terms. But what was happening by then 

was that almost the entire market for subprime had displaced that 

legitimate differences based upon underwriting standards. 

Chairman NEUGEBAUER. I’m sorry. The gentleman’s time has expired. The Chair is going to be pretty strict on this because we are 

going to have votes soon. So if the Members have questions, make 

sure that within your 5 minutes, you leave time for the witnesses 

to answer those questions. I now recognize the gentlewoman from 

New York, Mrs. Maloney, for 5 minutes. 

Mrs. MALONEY. Thank you. And I thank all the panelists, particularly my good friend and former colleague, Brad Miller. It is 

very good to see you again. I would like to ask Congressman Miller 

about the NCUA Budget Transparency Act, which would require 

the NCUA to publish its draft budget in the Federal Register and 

hold a public hearing on its budget. It is my understanding that 

no other banking regulator is required to hold these hearings, so 

it is a little unclear to me why NCUA should be singled out for this 

particular requirement. 

I also understand that NCUA voluntarily held hearings on its 

budget prior to the financial crisis, and that the industry stakeholders consistently lobbied them during these hearings to cut their 

budget. And as a result of these budget cuts, the NCUA itself admits that it wasn’t fully prepared when the crisis hit. So according 

to a letter from NCUA, these budget cuts meant that it was ‘‘insufficiently resourced’’ to address the financial crisis. I would like 

unanimous consent to place this letter into the record, Mr. Chairman. 

Chairman NEUGEBAUER. Without objection, it is so ordered. 

Mrs. MALONEY. So I guess my question is, knowing what we 

know now, do you think it is wise to make these public hearings 

on NCUA’s budget mandatory? 

Mr. MILLER. Mrs. Maloney, I hate to say this, but of the 12 bills, 

that is not one to which I have given a great deal of attention. I 

do know that, as you said, the other financial regulators, for the 

most part, certainly the safety and soundness regulators, have an 

18 

independent funding source that comes from the regulated, and 

they have all provided justifications that are fairly vague, given 

how much money is involved to Congress as part of their statute, 

but they have not had hearings, and there has been some limit to 

the extent to which Congress can intrude, which has made those 

industries, for the most part, stronger. Because those regulatory 

agencies that depend upon annual appropriations like the FTC, 

like the CFTC, like the old OFHEO, which preceded the FHFA, 

that needed annual appropriations, those regulated by that agency 

could come in and lobby Congress to cut back on their ability to investigate conduct in the industry. That was particularly true of 

OFHEO. OFHEO was probably the most captured regulatory agency in all of U.S. history. They were supposed to regulate Fannie 

Mae and Freddie Mac, and Fannie and Freddie were both very 

powerful in Washington and were able to keep OFHEO about as 

captured as an agency could possibly be. 

So I am inclined to agree with you, but I have to admit this is 

not something to which I have given a great deal of thought. 

Mrs. MALONEY. What about the requirement that they are the 

only banking regulator that is required to hold these hearings? 

Why should they be singled out? 

Mr. MILLER. Like I said, I am inclined to agree with you. Since 

the OCC does not, since the FDIC does not—I hate to say the 

CFPB, in this room—but since the OCC does not, I am inclined to 

think the NCUA should not either. 

Mrs. MALONEY. Then I would also like to ask you about H.R. 

2213, which would create a statutory safe harbor from the enforcement of CFPB’s new integrated disclosure form through the end of 

2015. And I led a bipartisan letter with Mr. Barr from Kentucky— 

I don’t think he is here right now; I don’t see him—asking for a 

grace period on the integrated disclosure requirement through the 

end of the year for lenders who make good faith efforts to comply, 

and this is what the CFPB did for the QM rule as well; and 254 

Members, including many Members on this committee, signed on 

to our letter, and last week, the CFPB responded to our letter and 

did promise to observe the same kind of grace period that they did 

for the QM rule, and I would like unanimous consent to place in 

the record the response to Andy Barr and myself from the CFPB. 

Chairman NEUGEBAUER. Without objection, it is so ordered. 

Mrs. MALONEY. Now, the CFPB’s letter was a little unclear on 

how long this grace period would last, and I hope that they will 

offer some further clarity. But given that the CFPB has already indicated a willingness to offer the industry some sort of grace period 

when the new integrated disclosure forms take effect on August 

1st, do you think it is necessary to pass legislation codifying a safe 

harbor? 

Uh-oh. My time is up. 

Chairman NEUGEBAUER. I’m sorry. The gentlewoman’s time has 

expired. 

Mrs. MALONEY. Maybe you can get back to us in writing. In any 

event, it is great to see you again. 

Chairman NEUGEBAUER. The gentleman, my neighbor to the 

north in Oklahoma, Mr. Lucas, is recognized for 5 minutes. 

19 

Mr. LUCAS. Thank you, Mr. Chairman. And I truly do appreciate 

you holding this hearing on important regulatory relief measures 

before the committee. Like many at this dais, I represent an area 

that relies heavily on community financial institutions that are basically the lifeblood of our economic success in the State and in the 

district. And I have been very focused on how we provide relief 

from the unfair and unnecessary regulatory burdens plaguing those 

small financial institutions, and I believe that this set of bills will 

work to help accomplish that, and I am very congratulatory to all 

of the authors. 

With that, Ms. Peirce, let’s discuss for a moment, in your testimony you note that, I believe in regards to H.R. 1941, ‘‘Regardless 

of their frequency, examinations are not worthwhile unless they 

are timely, thorough, rooted in carefully employed judgment rather 

than inflexible checklists, and consistent across institutions.’’ 

Could you discuss some of the problems with the current state 

of the financial institution examination environment, specifically 

regarding consistency in the quality of the exams and the examiners? 

Ms. PEIRCE. Yes. A concern I have is that because there are so 

few appeals that are ever taken on exam findings, and because 

usually the exam findings are upheld and they are done intra-agency, I don’t think there is the consistency across financial regulators. 

And I think the financial institutions are in a pretty difficult position if they want to challenge a finding, because they know that 

they have this ongoing relationship with their examiner, and so we 

are not getting the sunlight on the process and we are not getting 

the opportunity to really see and test whether these exam findings 

are accurate. 

And, again, I think most of the examiners are well-intentioned, 

they are trying to do a good job, but sometimes you do a better job 

when your work is checked from the outside. 

Mr. LUCAS. Years ago, I can think of one of my loan officers, and, 

yes, I come from a long line of debtors, who observed that examiners tend to follow the rule of focusing on whatever the past was, 

not what the future challenges might be, and that makes it rather 

difficult to be flexible enough to address these kind of matters. 

The focus of these bills is to provide relief to allow our community bankers to do their work. And many of us, like myself, believe 

that there is sufficient flexibility in the various statutes if the regulators would implement it. 

As we work to try and make sure that relief is available where 

it should be targeted, could you touch for a moment on one of the 

issues that I have been trying in my own mind to work through? 

Let’s talk about how you would define a community bank—size, activity, a combination of either? Let’s visit for a moment in a hypothetical sense. 

Ms. PEIRCE. The Mercatus Center did a survey, and we struggled 

with the issue of how to define a community bank, and we ultimately used a $10 billion cutoff. A more accurate way to define a 

community bank is to look at the activities, but trying to do a survey measuring what the activities are was too difficult. So I think 

you have to look to see is it a community lending institution, is it 

20 

taking deposits and making loans in the local community, and that 

is what I would ultimately define as a community bank. 

Mr. LUCAS. And based on our recent history of the challenges 

from 2008 forward, those institutions making loans in their community, in businesses of their experience and expertise, typically 

were not the real threat to the national economy. Is that a fair assessment, Ms. Peirce? 

Ms. PEIRCE. That is a fair assessment, as long as regulators don’t 

force them to do the kinds of loans that they are not used to doing. 

So we have to be very careful that the regulatory structure doesn’t 

force these lenders into new areas with which they are not familiar. 

Mr. LUCAS. A couple of months ago, I asked a young compliance 

officer at a community bank what the biggest challenge she faced 

was, and her response was being judged in the future by actions 

in the past based on standards that do not exist yet. I thought that 

was very telling. It is a legitimate point, wouldn’t you say, Ms. 

Peirce? 

Ms. PEIRCE. It is. And I worry that bankers are getting out of 

the business because of that very reason. 

Mr. LUCAS. Mr. Chairman, we have an obligation to try and 

make sure that process does not continue, otherwise the economic 

difficulties that it will bring to your communities and mine will do 

damage for a generation. 

With that, I yield back, Mr. Chairman. 

Chairman NEUGEBAUER. I thank the gentleman. 

And now the gentleman from Washington, Mr. Heck, is recognized for 5 minutes. 

Mr. HECK. Thank you, Mr. Chairman. I want to add my voice of 

gratitude for your holding this hearing today. I think it is important. In fact, I think it is important that we never stop asking ourselves the question of, have we struck the right balance with regulation and consumer protection and matters of safety and soundness? 

I am not one who believes that we should never touch a hair on 

the head of Dodd-Frank by any means. Indeed, I am pretty concerned that there are trends, especially among community banks, 

where we are losing some relationship-based banking and where, 

frankly, they are being channeled into certain lines of business that 

narrow them such that there is—death spiral would be too strong 

a term—but render them less able to serve as many people as they 

might like. 

Having said all that, I find one aspect of today’s hearing troubling, and it is, frankly, I think we are thinking too small bore 

here. We keep taking little, tiny shots at this thing, and, frankly, 

I am just wanting to register maybe it is time we took a big step 

back, maybe it is time we looked at something like Mr. Hoenig’s 

approach or, frankly, a brand new charter for certain institutions. 

I think a blue sky exercise is exactly what I would have taken 

my company through, especially if we wrapped our chain around 

our axle as often as we have with these tiny rifle shots, which, 

frankly, don’t end up becoming law. 

So I just wanted to register that as a suggestion. Maybe it is 

time to think bigger than we are. 

21 

Congressman Miller, I am honored that you are here today, sir. 

Thank you. I understand your concerns about the FIRREA section 

of H.R. 766 and, frankly, I share many of them. But—there’s always a but—I think Congressman Luetkemeyer deserves a lot of 

credit for the first section of the bill, which requires examiners and 

banks to look at individual companies, not just the industry they 

are from, in addressing any concern or risk of a given account. 

And I want to relate this to my own State and that of Colorado 

and Oregon, who, as everyone knows, have recently enacted adult 

recreational use of marijuana. And I am very glad to see the FDIC 

has moved to implement that kind of a business-based approach. 

Would you, sir, notwithstanding your concerns about FIRREA, at 

least acknowledge that a business-by-business approach is probably 

more commonsensical? 

Mr. MILLER. Of course I think that no Federal regulator should 

single out any business or any industry because they don’t approve, 

they don’t like that business or industry. Now, I know that has 

been the debate about Choke Point. Choke Point, the critics say, 

you are singling out businesses you don’t like or industries you 

don’t like, and the Department of Justice says, we are not, the 

FDIC says, we are not, and the critics say, yes, you are, and then 

they say, no, we are not, yes we are, no, we are not. I don’t really 

want to be involved in that debate. I don’t think I have anything 

to add to that debate. 

Mr. HECK. Then give me my last 1 minute and 37 seconds, 

please. 

Mr. MILLER. All right. 

Mr. HECK. But I do thank you. 

Mr. Sharp? 

Mr. SHARP. Yes, sir. 

Mr. HECK. I don’t have enough time left to ask the two questions 

I want, but I do want everybody in this room to know that this gentleman comes from a very distinguished lineage. I ran into Jess at 

the spectacular celebration down at the Smithsonian of fighter 

aces. I was very privileged to be the wingman to Congressman 

Johnson in passing the Congressional Gold Medal for fighter aces. 

We haven’t created a fighter ace in about 40-some years in this 

country. There are approximately 100 of them left. Mr. Sharp’s 

grandfather flew—P-51s, Jess? 

Mr. SHARP. P-51s, yes, sir. 

Mr. HECK. Over Europe. And, again, there just aren’t very many 

of those heroes left. And he and his grandfather were there. And 

we honor your family’s service. 

You have a lot to live up to. 

Mr. SHARP. Yes, I do. 

Mr. HECK. Okay. I have a few seconds. 

I have been working with Mr. Posey on a bill to set up a no-action letter, and with your office as well, and very constructively, 

and I thank you for that. I guess, in 23 seconds, what do you see 

as the most salient benefits of a working no-action letter process? 

That bill is not before us today, but I still hope we can find the 

right partisan balance and philosophical balance to be able to move 

us in this direction. Even Mr. Cordray acknowledged that what 

they came forth with was too narrow. 

22 

You started tapping, Mr. Chairman, before it reached zero. I 

yield back the balance of my time. 

Chairman NEUGEBAUER. I thank the gentleman. And I have a 

big idea. Let’s make the CFPB bigger and make a five-person commission. 

I now go to the gentleman from North Carolina, Mr. Pittenger, 

for 5 minutes. 

Mr. PITTENGER. Thank you, Mr. Chairman. 

I have served on a bank board for a dozen years, for a community bank in Charlotte, and I have really been taken aback today 

by the statements that I have heard, really the enthusiastic, zealous support for the CFPB and Dodd-Frank. I have visited countless 

numbers of our community banks in my district. I spoke 2 weeks 

ago at the annual convention of the North Carolina bankers. And 

time and again, I hear the same stories of the compliance requirements, of the restrictions, that they are not hiring the loan officers, 

they are having to hire compliance officers, that they are restricted 

in who they can loan money to. Character is no longer a box to 

check. It doesn’t matter how well you know that person, you have 

to check all the right boxes. 

I think what is lost in context, to me, is where we are in our 

economy, we are at 2.2 percent economic growth; where we are in 

access to capital in the market. Most major developers are having 

to go to private equity, because capital is not available in the commercial banking, and it is much more costly and much more costly 

to consumers. 

So what is done, with good intentions, I think has been very misguided, particularly as it relates to community banks, who have 

provided nearly half of the small business loans in this country. 

And to me, it is that entrepreneur that is the lifeblood of our economy, that is the building block, and that beginning entrepreneur 

can’t get access to capital because his character doesn’t mean a 

hoot to that banker he has known for 25 years. 

So I am really amazed that there is not a consideration for reality, that there is maybe no context of conversations with reality. 

And I would like to see a reaction maybe from Mr. Ireland, and 

maybe you, Mr. Miller, if you want to say something else. As I hear 

my friends out there struggling, there are no new banks, community banks being chartered, and they are consolidating today. 

Mr. IRELAND. Increased regulatory burden favors larger banks 

who can spread the cost of the new regulatory requirements over 

a larger base. There are some exceptions, capital rules work a little 

bit differently, but most regulatory requirements work that way. 

I don’t know how a small bank can comply with the new mortgage rules. Look at those 1,800 pages. You want the small banker 

to be out evaluating credit for loans in their community rather 

than reading an 1,800-page rule. That is what you want them to 

do. And as we react, and in some cases overreact, with regulatory 

requirements, it makes it harder to be a small bank, it makes the 

break-even point, the size of a bank go up, and I think you have 

a real problem, the bankers start to lose touch with their communities. And the character loans that you referred to, which would 

have started, historically, many of the great businesses in the 

United States, don’t get made anymore. 

23 

Mr. PITTENGER. Including my own. 

Mr. Miller, have you had any occasion to talk to any bank presidents, small bank presidents, the community banks, midsized 

banks, in the last year or two? 

Mr. MILLER. Last year or two—my brother spent his career in 

banking, and a large part of that is at a community bank. My father went to NC State, my brother was a banker. I have now aired 

all my family’s dirty linens. 

Mr. PITTENGER. No, let’s be really specific. I don’t have much 

time. How many banks have you visited in the last year? 

Mr. MILLER. As a customer would be the only reason I would 

visit. 

Mr. PITTENGER. Okay. So you really haven’t had any— 

Mr. MILLER. When I was a member of this committee, I frequently visited banks and credit unions. 

Mr. PITTENGER. I know. A law was passed. Don’t you think it 

makes sense to go back and say, now, I wonder what the impacts 

have been of that law? 

Mr. MILLER. Sure. 

Mr. PITTENGER. Let me encourage you to do that. 

Mr. MILLER. I think it makes perfect sense to see what is working, and what is not. 

Mr. PITTENGER. Mr. Sharp, what has been your observation in 

terms of the credit markets, availability of capital in the business 

community? 

Mr. SHARP. It absolutely is constricted. And you touched on a 

point that, if you don’t mind, I want to expand on for just a quick 

second. 

Mr. PITTENGER. Quickly. Ten seconds. 

Mr. SHARP. And that is that a lot of small businesses in the marketplace act as consumers. They use their credit cards, they borrow 

against their home. And to the extent we are limiting access to 

credit for consumers, there is also a knock-on effect for small businesses. That is very important. 

Mr. PITTENGER. Thank you. I yield back. 

Chairman NEUGEBAUER. I thank the gentleman. 

We have a vote started, but there is not a big rush to the Floor 

right now; 23 people have voted. We are going to try to get a couple 

more in, and we are going to go to the gentleman from California, 

Mr. Sherman, for 5 minutes. 

Mr. SHERMAN. Mr. Miller, welcome back. Meetings of the Brad 

caucus have not been interesting since your departure. 

We are going to focus on two bills. Mr. Pearce and I have the bill 

to provide a temporary safe harbor from the integrated disclosure 

requirements, and of course there is the NCUA Budget Transparency Act that I would like to focus on first. A simple bill, it says 

the budget will be transparent, people have a right to comment on 

it. Can anybody think of a reason that is a bad idea? 

Mr. SHARP. Not here. 

Mr. SHERMAN. What? 

Mr. SHARP. I said, not here. 

Mr. SHERMAN. Not here. 

Any response? 

24 

Mr. IRELAND. I operated in the Federal Reserve for years, and 

my rule of thumb was I never wanted to be a part of anything that 

I wasn’t prepared to discuss before this committee on C-SPAN. So 

I don’t see why discussing it in a hearing to the public should be 

a problem. 

Mr. SHERMAN. Gotcha. 

Let’s move on to the bill on the TRID form. A cruise ship is a 

very complicated piece of machinery, and if I buy a cruise ship I 

want it delivered on time, I want it to depart on time, I don’t want 

any delays, but I expect the first use of the cruise ship to be a 

shakedown cruise, because a cruise ship is complicated and one expects that there will be some difficulties. That is why I would not 

invite 3,000 trial lawyers to come onto my ship on its shakedown 

cruise and invite them to bring lawsuits should there be any failure 

to meet the standards of luxury that we would aspire to. 

It occurs to me that a 1,888-page regulation might be as complicated as a cruise ship and that perhaps we ought to take it on 

a shakedown cruise, not delay it, but say that if people comply in 

good faith, do their best job to comply, that they shouldn’t face the 

lawsuits or the harsh regulatory action. 

There has been a letter issued that has a sentence that doesn’t 

help me sleep at night. We have a bill that would, but I am concerned on the lawsuit side. 

Mr. Sharp, can you imagine a mortgage lender or escrow or title 

company screwing up and getting a lawsuit because things didn’t 

go smoothly in August and September? 

Mr. SHARP. Yes, absolutely, I can certainly imagine that. And, 

Congressman, I feel like a 5-month accommodation is a pretty reasonable thing to ask for given the complexity that you have just described. 

Mr. SHERMAN. It is only 1,888 pages. 

And I will ask any witness here, are there folks in the industry 

who are backing away from opening files or opening as many files 

as they might otherwise do so in August and September because 

they are concerned about whether they will be in full compliance 

with these rules? Ms. Peirce? 

Ms. PEIRCE. I have read that is what people are predicting will 

happen, that there will be a period where it will be harder for consumers to get loans. 

Mr. SHERMAN. What I have heard is that the biggest organizations might still be in the market, but some of the smaller organizations will back away. That is not good for consumers. 

Can anybody think of a disadvantage to a 5-month period in 

which those who try to comply in good faith are held harmless for 

mistakes? 

Mr. Miller, I know you had— 

Mr. MILLER. Not as you phrased it. 

Mr. SHERMAN. Good. So we have two bills, I like the two bills, 

and all four witnesses like the two bills. The motion carries. And 

I yield back. 

Mr. MILLER. As you phrased it. If there is a good faith effort by 

a lending institution to comply with the new regs, which have been 

a long time in the works. Elizabeth Warren testified before this 

committee I think probably in 2011, maybe even the fall of 2010 

25 

when she was a newly acting director, and that was the first thing 

she was working on, was trying to develop a unified RESPA-TILA 

compliance. 

Chairman NEUGEBAUER. I thank the gentleman. 

Mr. SHERMAN. If I can just comment. Just because Elizabeth 

Warren is here testifying about a proposal doesn’t mean a small or 

medium-sized bank was working on figuring out how to comply 

with the as-of-yet-not-written bill in 2011. They are just starting to 

focus now. 

I yield back. 

Chairman NEUGEBAUER. I thank the gentleman. 

The gentleman from New Hampshire, Mr. Guinta, is recognized 

for 5 minutes. After Mr. Guinta’s testimony, we will recess. 

Mr. GUINTA. Thank you, Mr. Chairman. 

Mr. Chairman, I ask for unanimous consent to submit testimony 

from the National Auto Dealers Association and letters of support 

into the record. 

Chairman NEUGEBAUER. Without objection, it is so ordered. 

Mr. GUINTA. Thank you, Mr. Chairman. 

It has been over 2 years now since the CFPB issued their flawed 

auto lending guidance, a guidance that was issued without allowing a public comment period, which I find a bit unusual. And despite 12 bipartisan letters sent to the CFPB by Congress, they have 

yet to address what I would consider the faulty and unclear guidance issued back in March of 2013. 

However, I also find it a bit interesting and coincidental to see 

that the CFPB finalized their rule to oversee nonbank auto finance 

companies just yesterday, on the eve of today’s hearing. 

What we see here is the CFPB’s attempt to go outside the formal 

rulemaking process and change the market without doing their research. On November 4, 2013, Director Cordray sent a letter in response to Senator Shaheen from my State of New Hampshire and 

Senator Portman that admitted they did not take into account the 

impact their guidance would have on consumers. 

Ironically, they are the agency that is supposed to protect consumers, but the guidance would in fact, in my view, harm them, 

and it doesn’t stop with consumers. The guidance impacts not just 

auto dealers, RV dealers, motorcycle dealers, international dealers, 

and even our manufacturers. 

My good friend and I, Mr. Perlmutter and I, have introduced 

H.R. 1737, a bill that is so simple and so narrow, that provides just 

clarity, fairness, and due process. The bill simply asks the CFPB 

to rescind their flawed guidance and reissue it under a more transparent process by consulting other regulators and allowing public 

comment. 

So I have a couple of very quick questions. Mr. Sharp, I would 

like to first address my question to you. Do you think it would be 

beneficial and helpful to allow the public to comment on guidance 

that would impact a longstanding auto loan practice that has been 

proven to benefit consumers? 

Mr. SHARP. Yes, absolutely. We strongly support the legislation 

and think that this is an area where the CFPB just got it wrong 

and it needs to start over. And a big part of getting it right is unVerDate Nov 24 2008 16:58 Feb 22, 2016 Jkt 096992 PO 00000 Frm 00031 Fmt 6633 Sfmt 6633 K:\DOCS\96992.TXT TERI
26 

derstanding the market, and they are not going to get that without 

asking the public and stakeholders what the effects would be. 

Mr. GUINTA. Thank you. I appreciate it. 

Mr. Ireland, can you tell me what your thoughts are on why H.R. 

1737 is necessary? 

Mr. IRELAND. I think it is necessary because the Bureau does not 

take advantage of the opportunity for public comment. Regardless 

of whether or not it is required, it is a fantastic research tool and 

it lets you find out what the issues are and what the problems are 

with what you are proposing. When I was at the Federal Reserve, 

I looked at public comment as an opportunity. I think the Bureau 

should view it the same way. And if they are not going to do that, 

maybe they have to be led there. And that is what this bill does, 

and I think that is appropriate. 

Mr. GUINTA. Thank you very much. 

Ms. Peirce, do you agree that the public should have the ability 

to comment on the CFPB guidance? 

Ms. PEIRCE. Yes. I think generally, and Mr. Ireland alluded to 

this before, doing material guidance of any kind is always enhanced if you have a public process. And also, if they did it by rulemaking, they would have to consider the costs, and that is really 

important. Obviously, as you mentioned, it is important for them 

to consider what the effect on consumers would be. 

Mr. GUINTA. Mr. Miller, would you concur? 

Mr. MILLER. No, not so much. 

Mr. GUINTA. You don’t think that the public should have the— 

Mr. MILLER. I think it should be consultative. I do not think it 

should necessarily require the full notice of comment of the Administrative Procedures Act, which is almost as tortured as trying to 

pass a bill through Congress. It is not all unusual for agencies to 

proceed on a case-by-case basis, recognizing they can’t anticipate 

every circumstance. And it is usually the regulated industry that 

asks for guidance, kind of tell us how you are thinking about this. 

And the guidance that CFPB issued seems to make a lot of sense 

to me. You are now buying loans, and you have a portfolio in which 

White borrowers in the same circumstances, with the same credit 

score, with the same loan-to-value, have significantly lower interest 

rates, and you have liability for that. And if you want to avoid liability, you might want to think about the way you are going about 

buying those loans. 

Mr. GUINTA. Reclaiming my time, I think that I would respectfully disagree. I think the public should have the ability to issue 

public comment, considering they are now being viewed by the 

CFPB in a very, very different way. 

Chairman NEUGEBAUER. The time of the gentleman has expired. 

I am now going to squeeze in Mr. Williams from Texas. You are 

recognized for 5 minutes. 

Mr. WILLIAMS. Thank you, Mr. Chairman. 

Before I begin discussion of my bill, the State Licensing Efficiency Act of 2015, I would be remiss if I didn’t comment on Mr. 

Guinta’s indirect auto financing bill. As all of my colleagues know, 

this is an issue that is very personal to me. As a small business 

owner, and, Mr. Miller, a car dealer for 44 years, I have never seen 

such an overreach by a Federal agency as we are seeing today with 

27 

the CFPB and indirect auto lenders. After issuing guidance in 2013 

with zero input from Congress and zero input from the industry, 

nothing the Bureau does surprises me anymore. 

As an original cosponsor of Mr. Guinta’s bill, I strongly support 

his effort, and I hope this committee and this Congress send a 

strong message to Director Cordray that his actions have not gone 

unnoticed and that the consumer knows better than the Federal 

Government what a good deal is and what a bad deal is. 

With that being said, the State Licensing Efficiency Act, H.R. 

2643, that I am sponsoring will expand the State’s liability to use 

a federally accepted registry, the National Multi-State Licensing 

System, to expedite the existing background check process. I would 

like to ask unanimous consent to submit a support letter for the 

record from the Conference of State Bank Supervisors and their 

president and CEO, John Ryan. 

Chairman NEUGEBAUER. Without objection, it is so ordered. 

Mr. WILLIAMS. The current NMLS has been used to oversee the 

mortgage industry since 2008, but the FBI has prevented State 

regulators, citing an absence in Federal law, from expanding to use 

its conduct background checks for other financial services, such as 

companies like MoneyGram, who support this legislation. 

My first question is for Mr. Ireland. You said in your testimony 

that using the NMLS for nonmortgage financial services could cut 

as much as 3 weeks out of the process for licensing these financial 

providers. The turnaround time for the background checks for other 

financial services providers, in fact, can take weeks, if not months. 

Please help me and this committee understand how and why 

there is such a wide discrepancy in processing background checks 

for mortgage loan originators and other financial services providers. Can you expand on how a quicker process would potentially 

improve consumer choice? 

Mr. IRELAND. The mortgage loan process that is currently in 

place is fully automated. You can scan fingerprints, you can query 

the database, and you can get a response on the background check 

in, I understand, 2 hours. 

If you don’t have access to that system, you are in a manual system. I am told by the Conference of State Bank Supervisors’ representatives that it is about a 3-week process at a minimum, and 

it obviously can take longer than that, to go through that manual 

system. And that just seems to me to be needless bureaucracy. If 

you have a more efficient system, you ought to let the States use 

it, and you ought to let them use it for all their legitimate licensing 

purposes. 

Mr. WILLIAMS. I appreciate that, and I appreciate you all coming 

today. 

And I yield back my time, Mr. Chairman. 

Chairman NEUGEBAUER. I thank the gentleman. 

The committee will now stand in recess, but resume after votes. 

I encourage Members to return as quickly as possible. This vote 

is—actually, it is about over. So I would ask our witnesses to be 

patient. We will be right back. 

[recess] 

Chairman NEUGEBAUER. The committee will come to order. 

Thanks again for your patience to our panel. 

28 

I now recognize the gentleman from Missouri, Mr. Luetkemeyer, 

the chairman of our Housing and Insurance Subcommittee, for 5 

minutes. 

Mr. LUETKEMEYER. Thank you, Mr. Chairman. 

And thank all of you for waiting. 

Let’s start out with Mr. Ireland. You have been with the Federal 

Reserve in the past for quite some time, have been involved with 

bank examinations. Have you ever seen anything like Operation 

Choke Point before in all the years of your being around the banking industry, sir? 

Mr. IRELAND. No, I never saw anything like that before, and if 

I had, I would have tried to stop it. 

Mr. LUETKEMEYER. It is interesting. We had William Isaac, the 

former FDIC Chair here, he testified some time ago, about a year 

ago, as a matter of fact, and his comment was that he had never 

seen anything like this in his 45 years being in the banking business as a consultant or even as Chairman of the FDIC. 

One of the things that Mr. Miller brought up in his testimony a 

while ago was with regards to FIRREA. It seems as though in the 

testimony of my colleagues, they like all the bill except that part 

of it. And so my thought process is, and what I have heard from 

the banking industry, is that FIRREA originally was law to be able 

to allow banks to protect themselves against fraud, but what has 

happened is DOJ has flipped that and now it has expanded and reinterpreted the law to be able to use it against them for fraud. 

What I try do in my bill is narrow it back down to the original intention. 

So, Mr. Ireland, what do you think about that part of the bill? 

Mr. IRELAND. I didn’t have any problem with that. It seemed to 

me you made the language of what it covered a little clearer and 

you elevated the subpoena power in the Justice Department to 

more senior officials, but still allowed it to be exercised within the 

Justice Department. 

I lived through FIRREA, and we were trying to get the people 

who had been cheating thrifts with that provision, and I think 

what you have done is consistent with the original intent. 

Mr. LUETKEMEYER. I think that is what we are tying to do, is 

continue to allow those agencies to do their job, but at the same 

time stop the nonsense, because, as our good friends on the Oversight and Government Reform Committee have found, in getting 

access to the emails and internal memos and offering a report on 

both agencies, DOJ and FDIC, in their own words, say that the collusion is going on and their intent is beyond that of money laundering. Their intent is to ‘‘drive them out, drive the industry out 

of business,’’ as well as these industries don’t have the moral right 

to exist. I have told the FDIC Chairman, ‘‘You are not in the business of being the moral police; you are supposed to be an enforcer 

of the existing laws.’’ 

Mr. Sharp, as a representative from the U.S. Chamber of Commerce, I know in January the FDIC put in some new protocols with 

regards to how they were using their enforcement ability with regards to banks, and said that they would stop doing Operation 

Choke Point activities. Have you seen that yet? 

29 

Mr. SHARP. Thank you, Congressman. I would say that my phone 

hasn’t stopped ringing about concerns about Operation Choke 

Point. So to whatever degree the FDIC or other government agencies have tried to give people comfort that there is nothing to see 

here, it is not giving companies the kind of comfort that we would 

all like them to have. 

Mr. LUETKEMEYER. It is interesting, because the FDIC agreed 

that the protocols that I have in the bill, H.R. 766, were what they 

put in place and actually did a little bit more, to their credit. And 

so I am excited that they are willing to work with us, but I have 

yet to see the fruitions of those changes. 

And like you, I have an email address that they can email me, 

the industry, individuals who are being hurt by Operation Choke 

Point, can actually email us and tell their stories. And so we still 

get some stories. And, unfortunately, that is why we have to have 

the bill, to be able to stop this. 

And so it is interesting from the standpoint that these agencies, 

which are supposed to be enforcing the law, are making it up as 

they go and they are taking out their own ideas and ideology and 

moral value system on our citizens. 

Ms. Peirce, I know that you probably have some experience with 

this as well. I know you testified in support of the bill. Can you 

tell me a little bit about what your opinion of that is and what your 

experience has been? 

Ms. PEIRCE. Yes. And I should clarify that I can’t either support 

or recommend against supporting a bill, but I will say that Operation Choke Point and similar programs to try to have regulators 

either indirectly or directly tell banks the businesses they can deal 

with are really damaging and really impair the ability of a bank 

to serve its clientele. And I think that is really harmful to—essentially the government is controlling access to capital. 

Mr. LUETKEMEYER. As a former regulator myself in one of my 

past careers, it is certainly disheartening to see this happen, from 

the standpoint that this is not the way we ever did it when I was 

there, and to see this punitive way of going about their enforcing 

the law is certainly disconcerting. 

With that, I yield back the balance of my time. Thank you, Mr. 

Chairman. 

Chairman NEUGEBAUER. I thank the gentleman. 

Now the gentleman from Colorado, Mr. Tipton, is recognized for 

5 minutes. 

Mr. TIPTON. Thank you, Mr. Chairman. And I would like to ask 

unanimous consent to enter into the record a letter from the Independent Community Bankers of America supporting H.R. 1553. 

Chairman NEUGEBAUER. Without objection, it is so ordered. 

Mr. TIPTON. Thank you, Mr. Chairman. I would like to thank you 

and the ranking member for holding this hearing today, and to 

thank our panelists for taking the time to be here as well. 

H.R. 1553, the Small Bank Exam Cycle Reform Act, a piece of 

legislation I introduced with Ranking Member Clay, is a targeted 

relief effort for community banks. These small banks, which did not 

cause the financial crisis, are unfortunately suffering from the regulatory blowback. 

30 

The legislation moves the asset threshold from $500 million to $1 

billion for well-run institutions to qualify for an 18-month exam 

cycle. This proposal is based on an OCC recommendation and will 

help alleviate the burdens on community banks, as well as bank 

examiners, also permitting community banks to be able to focus 

their time and resources on the surrounding community rather 

than on the exam process. 

Mr. Ireland, I appreciate your taking time to be able to be here 

today. One of the most pressing concerns that we hear from our 

constituent banks in my district is the cost of compliance, keeping 

in mind that these are small community banks that are locally 

owned and operated. Mr. Ireland, can you speak to on-site examination processes and what are some of the requirements in terms 

of preparation for an exam and resources that are used for an 

exam? 

Mr. IRELAND. Typically, what will happen is that the examiners 

will tell the institution that they are coming in. They ask them to 

get together materials to respond to what they intend to examine, 

what they intend to focus on. And then they come on-site, and they 

are going to look at the bank’s documentation, the bank’s processes, 

the bank’s procedures. Depending on how they view those, it may 

be more intensive or somewhat less intensive. 

It is a time-consuming, costly process for the institution. I would 

point out, it is a time-consuming, costly process for the agencies as 

well. And what your bill does is requires them to more risk focus 

their examination process on the larger organizations and complex 

organizations where there are real problems. It is in agencies’ interest just as well as it is in the interest of the smaller banks. 

Mr. TIPTON. So it would be just common sense to be able to extend that for well-run banks? 

Mr. IRELAND. I think it is. 

Mr. TIPTON. Great. I appreciate your comments on that. 

And I would like to be able to maybe perhaps now move to Mr. 

Sharp. You had cited in your testimony that the CFPB must respect the limits of its authority. And is it your sense that we are 

seeing the CFPB reach beyond what was original legislative intent? 

Mr. SHARP. Thank you for that question, Congressman. Yes, we 

are seeing that, not everywhere, but we are certainly seeing it in 

a number of places. In fact, I would submit that some of what we 

are seeing, again in the indirect auto lending market, is a result 

of the Bureau trying to reach beyond a limitation that Congress 

put in front of it to regulate vehicle sales. They have used the lenders that they do regulate to sort of get to the auto dealers, who are 

exempted under the law, and we have an issue with that. And 

there are several other examples that I am happy to submit for the 

record if it would be helpful. 

Mr. TIPTON. Great. And we would appreciate that. 

And I think that brings us to Mr. Miller, who had served here 

in Congress. We have one man making a decision unilaterally, U.S. 

Chamber of Commerce, others are noting, going beyond legislative 

intent. As a former legislator who had sat in this committee, following your logic, can you speak as a former member of the committee on how that would benefit us here? 

31 

Mr. MILLER. First, I would disagree with Mr. Sharp about the 

auto loan guidance. 

Mr. TIPTON. We can go on that, but I am just talking about the 

policy of having power relegated to one person. How would that 

benefit the citizens? 

Mr. MILLER. There are agencies who do it both ways. There are 

agencies that have a commission. 

Mr. TIPTON. They do, but we are dealing with the CFPB that has 

one. 

Mr. MILLER. And then there are agencies that have one. And 

there are some advantages in having a commission, as Ms. Peirce 

pointed out. And I agree with what Mr. Neugebauer said, it provides some more complex— 

Mr. TIPTON. Do you think legislative intent, as a former legislator, Mr. Miller— 

Mr. MILLER. Oh, I know very well the legislative intent. I entered into the first bill. 

Mr. TIPTON. Should it be respected, sir? 

Mr. MILLER. What is that? 

Mr. TIPTON. Should it be respected? 

Mr. MILLER. The bill as introduced is not the bill as passed. So 

the legislative intent is usually what Congress did, not what somebody earlier said. 

Mr. TIPTON. So you don’t believe or you do believe that legislative 

intent should be respected? 

Mr. MILLER. What? 

Mr. TIPTON. You do or don’t believe legislative intent should be 

respected? 

Mr. MILLER. Yes, but it— 

Mr. TIPTON. Okay. I appreciate that. 

Now, if we were to empower Mr. Neugebauer with all of the 

power in this committee to be able to make the determinations on 

which bills are going to be moving forward, what is going to be 

heard, would you be comfortable with that? 

Mr. MILLER. Actually, that was pretty much my experience. I 

didn’t always like it. 

Legislative intent is not what one or two Members thought. It is 

not how a bill is introduced. It is what Congress did. It is what the 

bill passed. So the fact that the bill was originally introduced with 

a commission does not mean it was the legislative intent to have 

a commission, when Congress in fact passed a bill with a director. 

Chairman NEUGEBAUER. The time of the gentleman has expired. 

I now go to the gentleman from Pennsylvania, Mr. Rothfus, for 

5 minutes. 

Mr. ROTHFUS. Thank you, Mr. Chairman. 

And thanks to our panel this afternoon. It is getting late here. 

Before I turn to my questions for the panel, I would like to first 

take a moment to commend Mr. Westmoreland on his Financial Institutions Examination Fairness and Reform Act, of which I am a 

cosponsor, and to offer this letter that was sent by a community 

bank in my district. The letter expresses strong support for the proposed legislation and includes examples to illustrate why changes 

to the examination appeals process are desperately needed. The letter also stresses the vital need for independence in the appeals 

32 

process, and it offers what I believe are good ideas about how we 

can go about ensuring that. 

Mr. Chairman, I would ask unanimous consent to enter this letter into the record. 

Chairman NEUGEBAUER. Without objection, it is so ordered. 

Mr. ROTHFUS. I would also like unanimous consent to enter letters of support for H.R. 1660, the Federal Savings Association 

Charter Flexibility Act, from the American Bankers Association, 

the Independent Community Bankers of America, and the Pennsylvania Association of Community Bankers. 

Chairman NEUGEBAUER. Without objection, it is so ordered. 

Mr. ROTHFUS. Thank you, Mr. Chairman. 

Mr. Ireland, I would like to direct your attention for the next few 

minutes to H.R. 1660, the Federal Savings Association Charter 

Flexibility Act, which I have introduced. As you may recall, this 

legislation permits a Federal savings association to elect to operate, 

subject to supervision by the Office of the Comptroller of the Currency, with the same rights and duties of a national bank. 

On a basic level, could you please describe how Federal savings 

associations differ from other types of financial institutions and 

what sort of constraints they face as a result of their structure? 

Mr. IRELAND. Many of the savings associations are a mutual 

form of structure. They are not the for-profit corporate form of 

structure that a national bank has. And coming from a different 

charter and a somewhat different regulatory structure, their powers are different than a national bank. In some respects, they are 

more limited in the lending that they can do and they have a qualified thrift lender test, for example. 

Mr. ROTHFUS. I have heard from many Federal savings associations in western Pennsylvania and around the country that they 

would like the option of offering a broader range of services so they 

can better serve the needs of their local communities. Why 

wouldn’t these institutions just convert their charter? 

Mr. IRELAND. It costs money. You have to redo your corporate 

structure and you are going to have to go through an application 

process to become a national bank. It is going to take time and 

money. And what your bill does is it allows them to do that in a 

streamlined, seamless way without that cost and time. 

Mr. ROTHFUS. Would H.R. 1660 effectively address those costs 

and burdens— 

Mr. IRELAND. Yes. 

Mr. ROTHFUS. —particularly for smaller institutions? 

Mr. IRELAND. Yes. 

Mr. ROTHFUS. In your testimony, you state that it is important 

to appropriately balance caution and restraint with the ability to 

innovate and to provide financial services to consumers and businesses. Do you believe that H.R. 1660 achieves that appropriate 

balance of a Federal savings association? 

Mr. IRELAND. Yes, I can’t see any reason why you wouldn’t do 

H.R. 1660. I just don’t see another side to it. It is a streamlining 

of the regulatory system. You get benefits out of it. I don’t see any 

costs. 

Mr. ROTHFUS. Ms. Peirce, you state in your testimony that H.R. 

1660 is consistent with regulatory streamlining efforts that are 

33 

being undertaken by the Office of the Comptroller of the Currency 

and the Economic Growth and Regulatory Paperwork Reduction 

Act (EGRPRA) process. Can you explain this in more detail? 

Ms. PEIRCE. Sure. The EGRPRA process is intended every 10 

years to take a look at regulatory burdens on banks and to see if 

there are any ways that those can be lightened that are consistent 

with safety and soundness. And this is an area where the OCC has 

focused some attention, and it seems like this is an area where you 

could eliminate a regulatory burden, a regulatory cost without 

causing any safety and soundness issues. 

Mr. ROTHFUS. So would H.R. 1660 achieve those results? 

Ms. PEIRCE. Yes. That seems to be the purpose of the bill, is to 

eliminate regulatory cost. 

Mr. ROTHFUS. You mentioned in your testimony that financial 

regulation needs periodic updating to reflect changing conditions on 

the ground for both regulators and regulated entities. Do you believe that H.R. 1660 fits within that category? 

Ms. PEIRCE. Yes. I think it is an effort that is designed to look 

at the existing structure and say: Hey, does this make sense, can 

we make a change to it? 

Mr. ROTHFUS. Here is a question, if each of the members of the 

panel could respond. The title for this hearing is, ‘‘Examining Legislative Proposals to Preserve Consumer Choice and Financial 

Independence.’’ Do you believe that H.R. 1660 fits that description, 

advances that goal? 

Mr. Sharp? 

Mr. SHARP. Yes. 

Mr. ROTHFUS. Ms. Peirce? 

Ms. PEIRCE. Yes. 

Mr. ROTHFUS. Mr. Ireland? 

Mr. IRELAND. Yes. 

Mr. ROTHFUS. Congressman Miller? 

Mr. MILLER. I am simply not that familiar with your legislation. 

I’m sorry. 

Mr. ROTHFUS. I would invite you take a look at it. 

Thank you. And I yield back. 

Chairman NEUGEBAUER. I thank the gentleman. 

And now one of our newest members of the full committee and 

the subcommittee, Mr. Emmer from Minnesota, is recognized for 5 

minutes. 

Mr. EMMER. Thank you, Mr. Chairman. 

And thank you to the panel. Thanks for coming back. I love this 

place. You sit down, you get into something, a bell goes off, and you 

jump up and run somewhere else. 

Very quickly, there are so many places that you can go, but in 

5 minutes, I just have a few questions. First, Mr. Sharp, for you, 

representing the business community, if you will, would you agree 

with me that in order for businesses to not just survive, but to 

thrive and create new opportunities, there is a certain amount of 

certainty, stability, predictability that is required in the marketplace? 

Mr. SHARP. Yes. Absolutely. 

Mr. EMMER. And it helps businesses to plan for the future. 

Would you agree with that? 

34 

Mr. SHARP. Yep. Absolutely. Again, one of our sort of central tenets is companies need clear rules of the road. 

Mr. EMMER. And, Ms. Peirce, you have talked a little bit about 

regulation. Not all regulation and government oversight is bad. 

There is a place for it. But when you have a moving target, when 

the rules of the road, as Mr. Sharp was just talking about, are constantly on the move, that is not a good thing. Wouldn’t you agree? 

Ms. PEIRCE. Yes. It is a very difficult environment within which 

to do business, and often old rules just get left in the place and new 

rules get piled on and there is constant change. 

Mr. EMMER. And, Mr. Ireland, for you, what is important is not 

just the predictability, but competition in the marketplace is a good 

thing. And I know that the regulations that a lot of these pieces 

or these proposals are addressing, the regulations that they are 

trying to remedy or address were intended to protect the consumer, 

the customer, but, in fact, if you suffocate the ability for the marketplace to work, if you by overregulation in creating these unintended consequences eliminate competition—for instance, community banks, we have closed 1,500 community banks in this country 

since Dodd-Frank was enacted and we are consolidating countless 

numbers every month. 

That consequence related to this regulation, would you agree 

that erodes the quality that the consumer would like to get in the 

marketplace? 

Mr. IRELAND. It reduces access to financial services for consumers and small businesses and, in some cases, larger businesses. 

Personally, I think that the state of our economy and our recovery 

is in part a reaction to the way the financial services industry is 

being regulated. 

Mr. EMMER. Right. Thank you. 

Where I want to end, because this is the one area that I am 

going to touch on in my last 2 minutes, I have major concerns with 

the all-powerful, unaccountable, one-person, top-down CFPB, this 

thing called the CFPB. And I can’t believe that anyone with a 

straight face would say that absolute power is good, which is why 

I support the chairman’s bill for a board, as opposed to one person. 

But of the many examples or problems that I or my constituents 

would point out when it comes to this CFPB, not the least of which 

is the lack of accountability and oversight by Congress, one of the 

big ones I have has to do with auto loans. And I have a quick story 

in the last minute. 

I have an auto dealer in St. Cloud, Minnesota, in my district, 

who wrote to me and said: I had a referral customer come into my 

dealership. She didn’t really know what to expect, because she had 

bad credit due to student loan issues. She told the dealer right 

away that she had bad credit from student loans, but she was making partial payments. After reviewing her credit application, the 

dealer submitted it to five banks. Two turn-downs was the result, 

one conditional approval, and two approvals. One of the approvals 

came in at a rate of 13.99 percent and the other came in at a Tier 

2, which has a subvented rate of 2.9 percent. 

After showing this young lady the car and the payment with the 

interest rate that they were able to get approval for, they had a 

35 

customer on their show floor who was in tears of joy, and in his 

words, ‘‘ We had a customer for life.’’ 

What he is concerned about is this rulemaking authority and 

maybe requiring to eliminate competition in the marketplace, the 

result of a one-size-fits-all rule. I have major concerns about that 

too. That is why I am a cosponsor of the Guinta bill. 

But one of the three that I just asked—and no offense to Mr. Miller, but I think I know where he is at on this—I would like to— 

I guess I ran out of time. 

Chairman NEUGEBAUER. I thank the gentleman. 

Mr. EMMER. Maybe I could follow up with you after. 

Thank you, Mr. Chairman. 

Chairman NEUGEBAUER. Without objection, I am pleased to recognize the gentleman from Maine, Mr. Poliquin, who is not a member of the subcommittee, but is a member of the full Financial 

Services Committee, for 5 minutes. 

Mr. POLIQUIN. Thank you, Mr. Chairman, very much. I appreciate the opportunity to sit on this panel this afternoon, and I salute you and everybody else on the committee and those testifying 

before us today to address about a dozen very important bills, all 

of which are designed to help not only our hard-working families 

up in Maine’s Second District, which is the west-central, northern, 

and down east part of our great State, but all across America. 

I must speak up, Mr. Miller, and this is directed to you, sir. I 

was a little bit surprised, sir, when we were talking about, as Mr. 

Emmer did and other folks here, about the CFPB. This is an organization, a regulator that has tentacles throughout our economy 

into all of our families’ homes, all of our small businesses, and here 

is a fellow who runs this organization, who is appointed by the 

President, has a 5-year term, reports to nobody, and there is no appropriation process, so Congress has very little, if any, oversight. 

The money to run the CFPB comes from the from the Federal Reserve, so there is no oversight. 

So when you, sir, with all due respect, state that you think that 

is a great structure, well, when I was State treasurer in Maine— 

I am not done, sir—when I was State treasurer in Maine, we had 

a problem with other agencies like this, and we made sure they 

were accountable to the State legislature, accountable to other 

folks, and it corrected a lot of problems that we had. 

So I am a little bit disappointed with you, but I do understand 

that you have the right to your opinion. I just disagree with it. 

Now, moving on, if I may, Mr. Chairman, I am very pleased to 

support and cosponsor Congressman Barr’s bill. This is a very 

thoughtful bill that was put together in trying to deal with the liquidity problems in our commercial banks, our small commercial 

banks and community banks in Maine and our credit unions 

throughout the State have in extending credit and loans to families 

and small businesses they might have known for 3 or 4 generations. 

So when you have, for example, someone trying to borrow money 

to maybe buy a pickup truck up at the Quirk Chevrolet in Bangor 

and they want to borrow the money from Bangor Savings Bank, 

why should Bangor Savings Bank be under the same regulatory environment of some of our largest money center banks that have 

36 

tentacles throughout our economy, especially when this bank is 

going to assume complete control and authority and responsibility 

for that loan, not sell it to the secondary market? It doesn’t make 

any sense to me. 

So I want to salute, Mr. Chairman, Mr. Barr for trying to make 

it very simple and easy for these banks to continue to lend credit 

throughout our economy. 

Now, I would like to bring my attention in my final couple of 

minutes, Mr. Chairman, to a bill that I am sponsoring with Mr. 

Ellison from Minnesota. It is H.R. 2091. Now, this is a very, very 

important bill in that those of us who have been blessed with kids 

understand that we as parents have a unique responsibility to care 

for our kids, keep them safe, and make sure they have a safe place 

to live, they have enough to eat, and they get enough to put on 

their plate, they are well-educated and clothed. 

This bill makes a very small technical change that is so important. It is called the Child Support Assistance Act, H.R. 2091, and 

it simply makes it easy for our child support agencies to make sure 

they have the ability to collect parental, noncustodial parental assistance for families who have been designated, and parents, noncustodial parents who have been designated to provide child support to these families. And it does not impinge in any way on the 

rights that these parents have. It just makes the child support 

agencies better able to access their employment history, such that 

these payments can be made on behalf of these kids to make sure 

that they are cared for. 

So I want to thank the chairman for this opportunity to speak 

up on behalf of this bill, the Child Support Assistance Act, H.R. 

2091. And I would like to, if I may, Mr. Chairman, ask unanimous 

consent to enter a letter into the record from the National Child 

Support Enforcement Association, which supports this bill. And 

again, I give a special thanks to Mr. Ellison from Minnesota for cosponsoring this for me. And I ask everybody on this committee to 

stand up and support an opportunity to help our kids. 

Thank you very much, Mr. Chairman. I yield back. 

Chairman NEUGEBAUER. Without objection, the gentleman’s letter will be made a part of the permanent record. 

I would like to thank our witnesses for your testimony today, and 

more importantly, I want to thank you for your patience. This is 

kind of the season where things like this happen, and you have 

been great troopers and I appreciate that. 

Without objection, I would like to also submit the following statements for the record: the Conference of State Bank Supervisors; 

the Independent Community Bankers of America; the American 

Bankers Association; the National Association of Federal Credit 

Unions; and the Joint Trades in support of H.R. 1266. Without objection, those statements will be made a part of the record. 

The Chair notes that some Members may have additional questions for this panel, which they may wish to submit in writing. 

Without objection, the hearing record will remain open for 5 legislative days for Members to submit written questions to these witnesses and to place their responses in the record. Also, without objection, Members will have 5 legislative days to submit extraneous 

materials to the Chair for inclusion in the record. 

37 

And with that, the hearing is adjourned. 

[Whereupon, at 5:30 p.m., the hearing was adjourned.] 

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