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Statement of Director Kraninger before House Financial Services Committee

Chairwoman Waters, Ranking Member McHenry, and Members of the Committee, thank you for this opportunity to provide our semiannual update on the Bureau’s important work. It is my honor and privilege to serve and protect American consumers.

To best achieve our mission for consumers, the Bureau is focused on preventing harm in the first place. We prevent harm by building a culture of compliance throughout the financial system while supporting free and competitive markets that provide for informed consumer choice.

My remarks this morning will largely focus on key recent actions the Bureau has taken to protect consumers.

To start, earlier this week, the Bureau and the Department of Education announced a new memorandum of understanding regarding consumer complaints about private and federal student loans.

The MOU will better serve America’s students by allowing for subject matter experts from both agencies to work together to more efficiently resolve complaints.

The staff of both agencies will meet regularly to discuss trends they are observing, including the nature of the complaints received, the characteristics of borrowers, and available information about resolution of complaints. The staff of the Department of Education will have the same, near-real time access to the Bureau’s complaint database that other government partners have. The MOU also provides for the sharing of analysis, recommendations, and data analytics tools.

I am confident that this increased collaboration will better protect consumers and result in better resolutions for students.

In addition, the Bureau will soon launch a revamped tool aimed at helping students understand their financial aid packages. The "Paying for College" Toolkit will help prospective students with financial aid offers to better understand the terms of their loan and then be able to put together a financing plan to cover the remaining cost of attendance. By helping students understand their financial aid package, we are enabling them to make better informed financial decisions now, putting them in a better position for their financial future.

Another way the Bureau aims to protect consumers is by issuing rulemaking that provides clear rules of the road. Specifically, I want to point out our efforts on the QM patch.

As you know, the Bureau issued an Advance Notice of Proposed Rulemaking last year that reiterated the patch was intended to, and will, expire. After reviewing public comments, we have decided to propose to amend the QM rule by moving away from the 43 percent debt-to-income ratio requirement. Instead, the Bureau would propose an alternative such as pricing threshold to better ensure that responsible, affordable mortgage credit remains available for consumers. While we are moving forward with rulemaking, we would welcome legislation through which Congress could weigh the important policy objectives at issue.

Finally, we prevent harm by using supervision and enforcement to promote compliance with the law. To be effective, the Bureau must be consistent and transparent about our expectations of such compliance. To that end, the Bureau recently announced our policy providing a common-sense framework on how we intend to apply the abusiveness standard in supervision and enforcement matters.  For too long this has been a gray area creating uncertainty and hampering consumer-beneficial innovation.

Moving forward, the Bureau intends to cite or challenge abusive conduct when the harm to consumers exceeds the benefits. When alleging abusiveness violations, we intend to clearly demonstrate the nexus between cited facts and our legal analysis in a way that supports development of the metes and bounds of abusive acts and practices as distinguished from unfair or deceptive acts and practices. Further, we intend to seek certain types of monetary relief only when the entity has failed to make a good-faith effort at compliance. Restitution for consumers will be the priority in such cases.

Before closing, let me note an important effort led by our Office of Minority and Women Inclusion.  The Bureau has conducted outreach to mortgage finance organizations to assess the diversity and inclusion practices of the entities we regulate. The outreach strategy was multi-pronged to engage entities to participate in the voluntary self-assessment process. From that process, the Bureau has developed an online data collection tool to collect and manage the submitted assessment data.  That tool is now available on the Bureau’s website. Appropriate protection of the data provided will be critical to the success of this initiative.

Again, thank you for this opportunity to discuss the Bureau’s important work to put consumers first and hold bad actors accountable. I look forward to your questions.