Remarks by Director Kathleen L. Kraninger before House Financial Services Committee

Chairwoman Waters, Ranking Member McHenry and Members of the Committee, thank you for this opportunity to provide an update on the Bureau’s important work.

Preventing harm to consumers is the CFPB’s top priority. We prevent harm by educating consumers to protect themselves. We prevent harm by having clear rules of the road for regulated entities.  We prevent harm by using supervision and enforcement to promote compliance with the law. And, we prevent harm by supporting dynamic and competitive markets that provide for consumer choice. While prevention is not always possible, it is the right goal, saving consumers from financial headaches, setbacks, and devastation. 

The semi-annual report and my written testimony provide a rundown of our activities in the first half of fiscal year 2019 and a preview of more recent initiatives. I will take the opportunity now to highlight some of those initiatives.  

First, our efforts to provide “clear rules of the road” so that companies and consumers know what is lawful and what is not. Just last week the Bureau finalized a rule that provides needed relief to smaller lenders from collecting and reporting data under the Home Mortgage Disclosure Act, or HMDA, and codifies a key provision of the Economic Growth, Regulatory Relief and Consumer Protection Act. Additionally, last month, the Bureau announced policies to facilitate innovation, reduce regulatory uncertainty, and enhance consumer choice. The Bureau also announced its first No Action Letter under the new policy. It is designed to help keep funding streams open for our nation’s housing counselors who have assisted millions of Americans attain the dream of owning a home.

Second, where we cannot prevent harm to consumers, we use our enforcement tool to hold bad actors accountable. Every case is managed by our career professional attorneys seeking justice in the public interest. In fiscal year 2019, we announced 22 public enforcement actions and settled six previously filed lawsuits, including: 

• In a public fair lending enforcement action, the Bureau settled with one of the nation’s largest HMDA reporters for violating HMDA and Regulation C; 
• We took action against an individual who brokered contracts offering high-interest credit to veterans; and
• We took action against a student loan servicing company that engaged in unfair practices that violated the Consumer Financial Protection Act. 

Further, the Bureau’s actions in fiscal year 2019 resulted in orders requiring a total of over $777 million in consumer relief and nearly $186 million in civil money penalties. I note these figures not as a measure of accomplishment, but to underscore the fact that the Bureau continues to appropriately utilize its enforcement tool. 

Third, we continue to promote a culture of compliance through our supervisory tool and empower consumers through education. Earlier this year, we launched an initiative, Start Small, Save Up, to help prepare Americans to handle an unexpected financial event. As part of this initiative, we released a new savings booklet to help individuals create their path to reach their savings goals. And, we are looking at other innovative ways to move the needle on savings in America. For example, the Bureau partnered with H&R Block to study saving of tax refunds.

The study showed that encouragement, through a simple email or a small incentive, increased the consumer’s likelihood of saving a portion of their tax refund. It also found that one in five consumers who took advantage of the specific savings feature continued to save eight months later.  We will continue to engage in research about what works to promote a habit of savings and overall financial well-being.

Fourth, I have a few recent announcements to demonstrate that the Bureau is committed to using the tools Congress gave us as effectively and efficiently as possible. Just last week, the Bureau handled its 2 millionth consumer complaint. To ensure that the Bureau’s work continues to be informed by this input, I announced last month that we will continue the publication of the consumer complaint database. In addition, we will be enhancing the database by providing new tools and graphics to analyze consumer submissions and putting that data into context. 

Also last week, I announced the establishment of a taskforce to examine the existing legal and regulatory framework. The taskforce will make recommendations for improving consumer financial laws and regulations, as well as enhancing consumer understanding of markets and products. We are currently accepting applications from individuals who are interested in serving on the taskforce and welcome recommendations from Members of Congress. 

Just yesterday, I am proud to note that the new Private Education Loan Ombudsman met an important Congressional mandate given specifically to that position by issuing his first annual report. The report covers two years and analyzes complaints submitted by consumers.  The Bureau also sent a signed memorandum of understanding to the Department of Education consistent with its statutory responsibility to share consumer complaint information with Ed.

Before I close, I’d like to touch on one final issue – clarity around the constitutionality of the Bureau’s structure. As you are aware, I joined the government’s recent brief urging the Supreme Court to hear the case, CFPB v. Seila Law. This matter is in litigation, so consistent with long-standing Bureau practice, I’m not going to discuss it at length. But I do want to highlight a few key points.

From the Bureau’s earliest days, the constitutionality of the Director’s removal provision has been raised to challenge legal actions taken by the Bureau in pursuit of our mission.  Litigation over this question continues to cause significant delays to some of our enforcement and regulatory actions.  I believe this dynamic will not change until the constitutional question is resolved either by Congress or the Supreme Court. My position on this question will not stop the Bureau from fulfilling our statutory responsibilities. We will continue to defend the actions that the Bureau takes now and has taken in the past.

Again, thank you for this opportunity to discuss the Bureau’s work.  I look forward to your questions.