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August 16, 20 12
The Honorab le Richard Cordray
Director
Consumer Financ ial Protection Bureau
1700 G Street, NW
Washington, D.C. 20552
Dear Director Cordray:
We are writing to express our deep concern with linal CFPD rules implementing Section
1073 of the Dodd-frank Act. The intent of Section 1073 is to (i) provide co nsume rs with
transparency and certainty regarding the costs of low va lue , international transfers, (ii) establish
co n ~umer error resolution ri ghts with respect to such transfers, and (iii) expand access to low
cost, Jinancial institution services ror such trans fers. Unfortu nately, the finaJ rules impose
arbitrary and unworkab le requi rements on consumer-i nitiated international trans fers of all sizes
and purposes thai will drasticall y cUI1aii the availabil ity o f internat iona l transfers 10 consumers.

We urge you to delay th e effective d ate of these rules and to undertai;:c a co mprehensive
study of thei r impact before moving fonvard to ",void ir repa ra ble ha rm to consum ers.
The fina l rules are fu ndamentally misa ligned wi th the pr imary way ill which financi al
institutio ns conduct in.ternational transfers today. As a res ult, consumer access to international
funds transfers through thei r banks, credit uni ons, and b.roker-dealers is now in serious j eopard y
due to the nearly impossible co mpl iance challenge that financia l illstitu tions must solve by next
February.
1n particular, although not required by Section l073, the final rules require remittance
transfer provide rs to disclose (i) exchange rates and fees charged by other entities re gardless of
whether providers have any abi lity to know or control those rates and fees nnd (ii) taxes to be
charged by foreign governments. Such disclosures are feasihle only for money transmitters that
use "closed networks ," i.e., those that own the infi·astructure from end -to-end of a transact ion.
However, all financ ial institutions primarily use open networks (e .g. wire, ACH, and card-tocard transfers) fo r consumer-initiated international fund s transfe rs . Whi le these networks enable
consumers to send funds account to account to altnosr anywhere in the world, they do not enable
a fi nancia l institutio n in the U.S. to access to the exact exchange rate, third party fees, <lnd
foreign tax.es req uired by tJle fi nal ru le.
Additionally, Section 1073 specifica ll y d ircctcd regu latory pOli cymakers "to expand the
use of the automated clearinghouse system ... for remi ttance transfers to foreign countries" and
required biennial reports to Congress on the status of sllch cffOlts. I However, due to the
fundamental misalignment of the rules with ACH networks, the fina l rules will work against this
\ See Dodd -Frank Act § 1073(b). See also 77 Fed. Reg. at 6 198.

 directive by hampering the grO\-\1h and diminishing thc lise of this cost-efficient means of
international funds transfer.
To comply with the requirements of the final rules financial institutions will have to
create their own closed networks, which could take several years to develop, p,lrtner with an
existing closed network, or exit the international funds transfer business. We estimate that
thousands of banks, credit unions, and broker-dealers will no longer send consumer-initiated
international funds transfer because of the final rules. We further believe that the financial
institutions that remain in the market will be required to severely limit their consumer service
offerings. Therefore, wc urge the CFPH to study the impact of such an exodus and service
contraction on consumers and on the financial institution industry.
Lastly, the final rules could result in a significant fcc burden for consumcrs. Fcwcr
options will result in higher fees, especially for higher dollar transfers for amouMs greater than
$1,000, where open networks currently have lower fees and morc competitive exchange rates.
Lack of competition could cause prices to spike. Last, enhanced compliance costs and a strict
new liability standard with a ISO-day resolution period will increase risk for providers and drive
prices even higher.
We are very conccrned that whatever price certainty and transparency that the final rule
imparts will come at the cost of a significantly higher price and drastically reduced product
availability. I-Icncc, international transfers may no longer be feasible for consumers who support
relatives overseas, for parents of students studying abroad, and for consumers who purchase
products and services overseas. Importantly, the unbanked and underbanked populations who
disproportionately use remittance services wi!! be forced to rely incrcasingly on scrvices
provided by less-regulated entities. Such an outcome is contrary to the imp0l1ant public policy
goal of integrating these populations into the mainstream financial system. Further research into
the pricing impact on consumers is needed before the final rules go into effect. 2
These outcomes were clearly not intended by Congress in passing Section 1073 of thc
Dodd-Frank Act. Rather than confer control over a product of significance to millions of
consumers in the U.S. and a lifeline to familics abroad to a small sct of closed network providers,
we urge CFPB to delay the effective date of the final rules by two years, until F ebr1..lary 2015.
During this time thc CFPB should undertake a comprehensive study of how international
transfers are used today for all segments of the consumer population, and the impact of the
current rule on consumers, pricing for international transfers for a range of dollar amounts, and
product accessibility.

2 See Dodd-Frank Act § 1022(a). The Bureau must considerthe potential benefits and costs to consumers ill1d
covered persons, including the potential reductions of access by consumers to conslImer financial products or
services, when prescribing a rule Linder the Federal consumer financial laws.

 Thank you for your consideration of these concerns. We look forward 10 your reply and to
continuing this important conversation.
Sinc~rely,

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M ay 24, 2013
M s. KeliV Cochran
Assistant Directo r Regu lat ions
Consumer Financial Pro tection Bureau
1700 G Street, N.W.
Washington, D.C. 20552
Dear Assistant Director Cochran:
We stro ngly encourage the Consumer Financia l Protection Bureau (CFPB) t o rationally integrate
t he three-day waiting period In the proposed rule to combine d isclosures required under the Real Estate
Settlemen t Procedu res Act (RESPA) and t he Trut h in lend ing Act (filA) t o better assist homebuyers. We

apprecia te the Bureau's intended goal of giving consumers a meaningful o pport un it y to review t heir
closing discto5ures in adva nce of t hei r closing. However, we are concerned t hat without greater
fl ex ibility that enabl es co nsumers to accept change s within three days of closing, the Bureau's proposal
co uld cause costly delays to closing that actually wind up harming con sumers by missing contractual
dea dlines and potentially lo se the opportunity to finance the purchase of their hom e.
Under the Bureau's proposed ru le, t he Closing Oisclosure must be delivered to and received by
th e borrower t hree business d ays prio r to the "consummation" o f the t ransaction l . If d uring this th ree
day period a cost the borrower w il l pay increases or decreases (subject to very limited e)(ceptions), the
borrower must be give n a new updated Closing Disclosure and wait three addit ional business days
before closing'.
Arriving at the "clo sing table" concludes a long process, and the comin g togethe r of a number of
moving parts and part ies including, buyers, seliers, len ders, real estate agent s, appraisers, home
inspecto rs, t it le professiona ls and o ther service providers . In m any cases, the rea l esta te t ransaction is
being renegotiated w i th the seiter and selVices t hat are paid for at closing are be ing purchased by the
consumer right up to the time o f the closing. If t hese changes cause t he closing to be delayed for an
add itio nal t hree days, consume rs wi lt face a f rus trating home buying e)(p erience, bea r addit ional costs
such as expired rate locks or the potential collapse of the ir transaction and loss of their earnest money
deposit ilthe real estate co ntract expires.
Like the Bureau, w e be lieve "consumers may be mo re aware of and better understand t hei r
transactions if consumers rece ive the disclosures re fl ecting all of the terms and costs associated with
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their tra nsactions t hree days befo re consummation . Consume rs should have sufficien t t ime to review
' 77FR5 111 7
277FR51117

 their disclosures, ask the appropriate questions and obtain the advice of a trusted advisor so that they
are aware of and understand the transactions. However, the strict application of the Bureau's proposed
three day rule (including the very limited exceptions) will work to the consumer's detriment. Federal
regulation should not put consumers in the position of having to choose between having their dosing
delayed for three days (and paying the associated increased costs) or not buying a product for their
protection (such as a home warranty or title insurance).
We urge the Bureau to provide consumers with needed flexibility to prevent the strict
application an additional three business day waiting period before dosing and explore options that
balance the intent of the rule with how it would apply to consumers in the market. We look forward to
your response and stand ready to work with you on this issue.
Sincerely,

Steve Stivers
Member of Congress

Steve Cha bot
Member of Congress

Steve King

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The Honorable Steve Stivers
U.S. House of Representatives
1022 Longworth House Office Building
Washington, DC 20515

Dear Representative Stivers:
Thank you for your letter about the Consumer Financial Protection Bureau's
(Bureau) proposal to integrate the mortgage disclosure requirements of the
Truth in Lending Act (TILA) and the Real Estate Settlement Procedures Act
(RESPA). As you know, the Dodd-Frank Wall Street Reform and Consumer
Protection Act of 2010 (Dodd-Frank Act) requires the Bureau to publish a
single, integrated disclosure for mortgage loan transactions that includes
mortgage disclosure requirements of both TILA and RESPA. The Dodd-Frank
Act required the Bureau to propose an integrated disclosure and rules by July
21,2012, one year Clfter stCltutory Cluthority for TILA Clnd RESPA transferred to
the Bureau from the Board of Governors of the Federal Reserve System and the
U.S. Department of Housing and Urban and Development, respectively. The
Bureau issued the proposal on July 9, LOlL, which was published in the Federal
Register on August 23, 2012. 77 FR 51116 (Aug. 23, 2012). The comment
period for the proposal ended on November 6, LOlL.
In addition to integrating the disclosure requirements of TIL A and RESPA, the
Bureau had to reconcile some differences between the two statutes to provide
for one integrated disclosure. One of those differences is that TILA and RESPA
currently have different timing requirements for the disclosures consumers
receive shortly before closing. In 2008, the Mortgage Disclosure Improvement
Act amended TILA to require that consumers generally receive revised
statements of costs no later than three business days before closing. However,
Congress did not amend the RESPA requirement that the person conducting the
settlement provide consumers with the HU 0-1 at or before closing.
Prior to issuing the proposal, the Bureau conducted broad outreach with
industry and consumer groups. Based on what we have heard from consumers,

 lenders, and settlement agents, there is widespread frustration with the way
closings are conducted today. One major source of this frustration is that
consumers are presented with critical information about their loan at the
closing table. To reconcile the statutory differences between T1LA and RESPA
and deal with this frustration surrounding closings, the proposal we issued
would require that consumers receive the final disclosure at least three days
before closing, so they have the time to review the disclosure in an unpressured
environment. This is intended to ensure that all consumers have time to review,
question, and understand their transaction, before they enter into what may be
the largest financial transaction of their lives. The proposal also would require
an additional three-day waiting period if the loan terms or costs change, to
ensure consumers have adequate time to review the changes.
However, the Bureau understands that sometimes things will change during the
three-day period between disclosure and closing. We also understand that not
all changes justify delaying the closing date. Therefore, the Bureau proposed
several exceptions specifying situations that would not trigger an additional
three-day waiting period. One of these exceptions is for buyer and seller
negotiations. For example, when a home is being purchased, the buyer typically
performs a walk-through inspection the day before the closing. !fthe buyer
identifies repairs that need to be made, the buyer and seller may negotiate a
change in the transaction to cover the cost of those repairs. Our proposal would
not delay the closing for these types of changes. We also proposed an exception
tor increases in costs up to one hundred dollars. In addition, we proposed to
allow consumers to waive the three-day period in situations of personal
financial emergencies.
The Bureau understands your concern about delayed closings. We specifically
solicited comment on this issue in the proposal, and numerous commenters
expressed similar concerns. Many of the comments suggested modifications to
the proposed exc.:eptions or the addition of new exceptions. The Bureau is
reviewing these comments carefully to determine the most appropriate way to
provide meaningful consumer disclosure while, at the same time, avoid
unnecessary delays in closings. We appreciate your offer to work with us on
this issue.
Sincerely,

r...h
Ric.:hard Cordray
Director
cc: The Honorable John Campbell

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Honorable Steve Chabot
Honorable Steve King
Honorable Lynn Westmoreland
Honorable Ken Calvert
Honorable Spencer Bachus
Honorable Walter Jones
Honorable Steve Pearce
Honorable Joe Wilson
Honorable Jo Bonner
Honorable Tom Petri
Honorable Jim Sensenbrenner
Honorable Tim Griffin
Honorable Kevin Cramer
Honorable Billy Long
Honorable Mick Mulvaney
Honorable Trey Radel
Honorable Sean Duffy
Honorable Bill Huizenga
Honorable Randy Neugebauer
Honorable Mo Brooks
Honorable Dennis Ross
Honorable Pete King
lIonorable Kerry Bentivolio
HonorClhle MClrshCl Blackburn
Honorable Randy Hultgren
Honorable Jim Renacci
Honorable Keith Rothfus
lIonorable Glenn Thompson
Honorable Bill Posey
Honorable Cory Gardner
Honorable Aaron Schock
lIonorable Erik Paulsen
Honorable Michael Grimm
Honorable Robert Hurt
Honorable Michele Bachmann
Honorable Frank Lucas
Honorable Mike Coffman
Honorable Gary Miller
Honorable Don Young
Honorable Blaine Luetkemeyer
Honorable Tom Latham
llonorable Tom Cotton
HonorClble Andy Harris

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Ho no ra ble Jeff Fortenberry
Hono rable Da vid Schweikert
Honorable Rick Crawford
Honorable Andy Barr
Honorable Stephen Finch er
Honorab le Adrian Smith
Hono rable Susan Brooks
Honorable Richard Nugent
Honorable Patrick Tiberi
Honorable Rodney Alexander
Honorab le Ann Wagner

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~1s. Patrice r:icklin
Assistant I)in:clor

Oftic!.' or hlir Lending and Equal OPPOrtlll1lty
Consumer Financial Protection Bureau
1700 G Street :..lorthwcst
Washington. D. C. 20SS:?
Dear Ms. Ficklin:
o c
We ar..: \\Titinf2. \\Ilh Clll1n:rn n:oardin
that the Consumer Financial
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Protection Bureau (C!:PB) issued un l\larch 21. 2013 10 indirect ulIllllcndcrs on the n:::quin:menls
for compliance with the fair lending provisions 01" till' Equal Credit UpPorLunity Act. \,'c an: ull
stfongly opposed tll any uiscrimination in lending. I hl\\l'\'CL 11 is highly C(ll1ccrning that the
agency is issuing slich signiticant new dncc!l\cs without arJ(l]'(lmg lhc public a proper
opportunity 10 comment on Its methodolng) and analysis for determining \\helher discriminatlOll
has occurn:d and without addressing the elTect ofilS directives lHl consumer financing and choice
in the intensely eompctiliH' {lulo knding I11drket.
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['he CF1'13's guidallce appears tn stelll from the cllnecpt or "disparu1c imp'H.:t" ,md focuses
on whethel' a linance source's policy fur compensating (kalers I'm ,\JTanglllg
linancing I'm conSllnH.'l'S results 111 pricing disparities on a prohlhited hasis Because alkgatlOl1s
ordisparale impact do not ill\olve any intel1linnal conduct. hut instead consist sokly oj'slal1stlcal
analysis or past transactions. it is esscntial that the l1111deluscd I'or thiS purpose have (\ very high
degree ofaeeuracy and dernonstratl'd n:JiabiJity. To allow Congress tnevaluate th.: statistical
model that till: CFPB used to justify the nc\v directivcs, wc rcqucst that the agl'ncy provid.: us
with the full set of details concerning its statistical disparate impact mcthodology. including (i)
the proxies used to determine the hackground ofconsulTIer credit applicants: (il) thc /'aetors held
cunstant to isolate the applicant's background as the soil' reason for any alleged pricing.
disparity: (iii) the metric used to measure whether pricing disparities eXists (e g., baSiS points. thc
dollar amount of the linancl.' charge, etc.): and (iv) the l1umericalthreshold at which it \vas
deterlllined that a pricing dispurily on a prohibited basis constitutes an LCOA viubtion.
Ihc guidance sta1l's that indircct autu linance sources should "cnsurc that th.:y are
llpcratlllg in compliance \\ilh I':C 'Oi\" hy l'it)h.T II ) illlj)()sing a serics llJ' clll1truls un the
consumer's ahility' to negotiate \\-ith the dealer to detcrmine the anl(lunt the dcaler carns for
arranging linancing I'ur thc CUnSllll1l'r: or 1=) simp!: eilminatlllg thl' cunsumcr's ~lh!lit) to
negotiate with thc dealer altogether and instl'ad ctlmpl'nsatlllg dealers through anllthl'r
mechanism such as a "l1al il·c per transaction." I'1lC controls stnke us as onerous and
unreailstll', and r.:stricting conSUll1l'r chOIce is highly prohlematic. \\\: request that the ( I PI3
forward all studies, analysis. ami inl(mndtion it fl'lil'd upon in develnpll1g its guidance

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 documen t. o r spe..: ial intc n.:sl is Imy analysis dune o n thc impact o f the d in,.'ct i\ l'S nn thl' a u to
linancing markctplacl: , suc h as higher r..:osl$ fur c..;tHlSll!llerS seeki n g au to credi t or the poss ihili ty
thutll1wer-in eom c car huyers may be pushed Oll! nfthe cred ilmark.et l'ntin.: ly, In addit ion. we
n:q ucst that the (,FPH detai l (I ) the extent nfit s cOl)rdimltion with th e federa l age ncies thai
C{) ng ress granted authority to implement and cn Jtm.:c 1:(,0/\ as it rel att.:s to motor veh iek lkakrs
(the Hoard ofCuVl'!'11ors 01' 1111.: J-'ederal ReStT\,.t: tl1lJ the rederai Trade Cumm ission) prior to
issui ng its March 21 1 ~l i r lend ing gu idal1i.:e. and ( ii) why the standard n J!\.'m'lk ing proC('ss. wh ich
con ta ins important ::;" l c~ lIa rds lo r Ihe public. appa rent ly was no l utili /,ed,
In S li m, il appcClrs 10 LI S that a loss 10 consu mers would occ ur i r thL' CF PB lI SC S
its su perv isory and/o r cnl'on:ellle nt aUlhority to \\cakcn the intense eomp<.: litioll that resul ts Irum
t\1(' ab ility t(1 l1e g(1 ti<l tl.' wi th the dealer 10 obta in linmH.:ill!! lenns thai arc Ilwrc e~lmpl'ti ti \T

til<ll1 thl' best Wrm s the l.'U llSlll11er can securc 1'1'1l111 any nlhel' source . 11 is t1'(lLlhling that the
:Igl'ncy has ini tiated this prnco..:ss without a puhll e hear in g, without pub lic clllnme nl. and without
r('lcasinf.! the data. Im'thodo](lgy . or ~l n a ] y ... is it I'd ied Upllilto SU pPtl rt sllc h a n importan t ch ange in
po li cy. rhe puh li e pllq1(l"'~' is ,\I\\<lY'" hl:st Sl'lYo..:d hy c('m pktc Irall span:IK~ :md aCCtlll ll labilil~ III
regard to the m:m n\.'!' in \d uch dce is i(lIls are mad\., by tlh:i r govo..:rn nH:nl agl.'IK ks ,
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look 1()n\";lrd to re\'iewing lhi ~ in tCl!'Ina tlo11 a mi wou ld app n:cia tc your response
within 30 days n f the n:eeip\
this lelle\'.

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Thank yo u fo r you r co nsido..:ratioll .

Sincerely.

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August 2, 2013

The Honorahle Spencer Bachus
U.S. House of Representatives
2138 Rayburn House Office Building
Washington, DC 20515

Dear Chairman Bachus,
Thank you for your letter about indirect auto lending practices and compliance with antidiscrimination laws, such as the Equal Credit Opportunity Act (ECOA). The Consumer Financial
Protection Bureau (Bureau) shares your commitment to ensuring that lending practices arc fair
and equitable and that credit markets function competitively and efficiently for ull consumers and
honest businesses. We appreciate the opportunit~y to vl'Ork v.ith you on these important goals.
The Equal Credit Opportunity Act
In April 2012, the Bureau published a Lending Discrimination Bulletin in which \....e issued
guidance about compliance with the fair lending requirements of the ECOA and its implementing
regulation, Regulation B.1 In the Lending Discrimination Bulletin, the Bureau reaffirmed,
consistent with other federal supervisory and lav, enbrccment agencies, including the Department
of .Justice (00.1) , Federal Trade Commission (fTC), and each of the federal prudential agencies
with regulatory authority over financial institutions, ~ that the legal doctrine of disparate impact
remains applicable as the Bureau exercises its supervision and enforcement authority to enfurce
compliance with the ECOA and Regulatiun B.

In the Dodd Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd~Frank),
Congress gave the Bureau the authority to supervise depository institutions with more than $10
billion in assets and their affiliates, and certain nonbank financial institutions that provide
consumer financial products and services, including mortgage, payday, and student lending. The
Bureau's supervision for compliance with ECOA includes coverage of indirect auto lending. The
Bureau's ongoing supervision of depository' institutions and their affiliates currently includes
examinations of ECOA compliance in indirect auto lending. Subject to certain exceptions, the
Bureau also has enforcement authority over both banks and nonbanks in the auto lending market,
and it will use that authority wherever appropriate to address discrimination,
The Bureau's Indirect Auto Bulletin

I

Lending Discrimination, CFPB Bulletin 2012-04 (Fair Lending), Apr. 18, 2012 ami/ah!t' al

hilI': II k). CS)I.I) 1I11WI~ll il;_I~~CC '_!~!}\_'_ L?G 1-IIi-j eJIIQ. 11_l.d.l~1.LI1 kll~l.rllg d.l>.<.:_Ll_1.l_U.1.1JI.l11)_1I.-.l2slf
c Intcmgency Task Force un Fair Lending, r()fic~' ,<;"llIlemt'IJl on Discriminalio/J ill LendillK, 59 Fed. Reg. 18,266 (Apr.
15,19(4),

consumerfinaJlce gcv

 As you know, we published CFPB Bulletin 2013-02, Indirect Auto Lending and Compliance with
ECOA, on March 21, 2013 (Indirect Auto Bulletin) to offer guidance to all indired auto lenders
\'.1thin the jurisdiction of the Bureau, including both depository institutions and nonbank
institutions.: 1 The Bulletin explains that the standard practices of indirect auto lenders likely make
them "creditors" under ECOA and that a lender's discretionary markup and compensation policies
may alone be sufficient to trigger liability under ECOA if the lender regularly participates in a
credit decision and its policies result in discrimination. By describing the relevant laws and
regulations that apply to indirect auto lending, the Bulletin aims to help indirect auto lenders
recognize and mitigate the risk of discrimination resulting from discretionary dealer markup and
compensation policies.
You have asked why the notice-and-comment rulemaking process was not utilized in publishing
the Bureau's lndirect Auto Bulletin. That process was not necessary for the Bulletin because the
Administrative Procedure Act, which sets out the basic principles by which federal agencies engage
in regulatory actidty, does not mandate notice and comment for general statements of policy, nonbinding informational guidelines, or interpretive memoranda.
Certain policies and practices that nllow discretion in pricing can create a signiticant risk of
discrimination on the basis of race, national origin, and other prohibited bases such as sex. This
risk is acknowledged in the Bureau's Supervision and Examination Manual. Historically, the
failure to properly or consistently monitor such policies and practices fur eompliance v.1th antidiscrimination lav'is has been a contributing factor in discrimination, hoth in auto lending and in
other product markets like mortgages. In developing the Bulletin, the Bureau considered <l variety
of materials, such as ECOA," its implementing regulation, Regulation B,s the Official Staff
Commentary to Regulation B,t' CFPB Bulletin 2012-04 (Fair Lending),7 CFPB Supervisory
Highlights,!l and other materials.
The Bureau's Indirect Auto Bullctin addresses the specific risk of discrimination caused by indirect
auto lenders' discretionary dealer markup and compensation policies. In the course of the
Bureau's supervisory work, we have found frequent instances \vhere lenders had robust fair
lending compliance programs for mortgage lending, but weak or non-existent fair lending
compliance programs for other t:ypes of consumer lending. Yet, the ECOA prohibits
discrimination in credit transactions, reaching many different types of consumer lending. As the
Bulletin states, lenders may choose to address the risk of discrimination resulting from certain
markup and compensation policies in a variety of ways, including: imposing controls on dealer
markup and compensation policies; revising these policies to address unexplained pricing
disparities on a prohibited basis; eliminating dealer discretion to mark up buy rates and fairly
compensating dealers using another mechanism that does not result in discrimination. For all
lenders, the Bulletin also emphasizes the need for self-monitoring as a tool to address fair lending
risk. It contains additional suggestions for monitoring and corrective action to mitigate that risk,

Indirect Aulo Lcnding and Compliancc with ECOA. CFl'B Bulletin 2013-02, Mar. 21. 2013 aWlI"lahfe at
(;('TLillllCi"li il'tiilV.lU"· I ~Ii I J I i.' l" frio llldl·i.il . ;\u[n ·llT1illllL-llul kl i II.pel I.
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691 el seq. - _ . _ - .. _.
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, 12 C.I".R. pI. 1002.
~ 12 C.I'".R. pt. IOU2 Supp.

Lending Discrimination, CI:PB Bulletin 2012-04 (!'air I.ending). Apr. 18.2012 (J\!(/i/ahfe ill
1 dph hulk[il'J kl1ding discrirnilldli,m.l'ul·.
~ Consumer Financial Protection Bureau, S'uperl"isOfl" llighlighls: Fall 2IJ 12 (Oct. 3 1. 2(12), availahle III
h['1;>:.\\\\ \ .... li\Thlll11<: r flllillll",'.~O\rq)(\rh".; LLI'Cl\'i,;or) -high li~hl ,. 1".1 II· 21 IJ ::'
7

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cons u m e rfi n all ce.9 ov

 including regula r ana ly~cs to dett:rmine whether th ere a re pridng disparities on a prohibited hasis
across the ind irect a uto lender's overall po rtfoliOo r at the individ ual dea ler level. If d ifferences are
fo und, those a na lyses may help lend ers understand t h~ ca use of the dispa rities as well as potential
solutio ns.

The Ind irect Auto Bullet in ex pre..<;sly e mphilsizes that dea lers shou ld be fairly (.u mpemmted and the
guida nce offered does not foreclose co nsumers' ability to negoti ate their interest rate on an auto
loa n .
Analysis of Dealer Markup
Your lcUt!r in4uired about the details of th e "disparate impact methodology" that we usc. Our
agency h; committed to being open and tran sparent, includin g in our review of indirect auto
le ndi ng. The evaluation of whether an indirect auto lender is in compliance with ECOA requires
multi ple steps.
Wh ile fair lending analyses of mortgage lending are simplified by the avail ability of lender data
reported under the Home Mort gage Disclosure Ad, thi ~ is not the case with indirect auto lending.
Info rm ation un race, ethn ici ty, and gender is typically not co llected as part of an au to len d ing
l ra n ~ ac l iun. Therefore, the Bureau uses a proxy methodology to di ffe rentiate among consu mers
b<lsed upon these cha racteristics. The concept of using proxies for una \lailahlc da ta is a widely
accepted mathema tica l a nd stac)sti cal a pp ro<lch used across many d isc iplines, including, to our
unde rsta ndi ng, by the <luto ind ustry itself for ma rketing purposes. Va rious proxy methodologies
are puhlicly C:I \'<:I. i1ablc a nd ha ve been lISL'<i for dccadc:-; in u num ber of d iffere nt Ci\il Rights
co ntex ts, includ ing voting rights cases, Title VI I cases, a nd cu nsti tut iunal challe nges, includi ng
j ury select io n a nd t..'f( lwl pro tection matters. In ad dit ion, federal ba nking regulato rs have made
d ear th at prux y met hods may be used in fair le nd ing cx<l ms to esti mate p rotected cha racteristics
where dirt..'<.:t ev ide nce of the protected cha racte ri!sti<.: is una vai l ab l e.~ In keeping with o ur
com mi t men t to transparency, and in line \',o'i th the approaches of other federal regulators, the
Bureau haS previously indicated that when we utiJi z;~ proxy data, we use surnames and geograph ic
location. Th e Bureau conducts its proxy analysis by ll sin g puhlicly ava ilahle data fr om the Social
Securi ty Administration and the Census Bureau. We und erstand that many responsible lenders
regul arly usc proxies in their own fair lending analyses where self-reported race, ethnicit)', and
gender data arc unava ilable. There are a variety of proxy 111Cthods. and the Bureau has encouraged
lenders \.,.ho are nut currently doing so to select a rcaso nablt! proxy method that is suitable for
their na ture, si;;:e, and complexity and to monitor their data fo r fair lending risk.
Each supervisory I;.: xam ination or enforcement investigation is based on the particular facts
prese nted . Thus, in our a nalyses we t:Onsider analytical controls which are apllropriate to each
particu la r case in reviewing data to determine whether a s pecific policy res ults in disparities.
When lenders share .....rith LI S the nature and results of thei r own a nalysc.... , we are open to hea ring
specific expla nations fo r the decisions they have made to include particula r analytica l controls that
reflect a legit imate bus iness need. In evalu<lting whether pricing dis parities ex ist in deale r
ma rku p, we typica lly louk to whether the re is a statistica lly signifi ca nt basis point d b parity in the
de<i ler ma rkups rc(..-eiw d by the prohibited hasis group as co mpa red to the cont ro l group. The

' • .)C:'(' /' Jlel'<I!;cm y Vail' '.'.'I1cimg Exum ilJafioll " wcedllre.\", at I ::! -13. (watlable (If !illV. ;.;.:i~l~~Y . Ui£Lg~!.l_"!'J)IJ I.i!l! k ll.Jpu r
(e"ptll in ing th ut ''lal 1iurrogate fo r a prohih ited ha~ i ~ group may be used" in a comparative li le review and providing
c"a mp lcs o f sumamc proxies for race.iethn icity and !ir~t lHime rru" i e~ for sex ); s(~e also
III l[1 ... I I' \I' \I" r I', i I ~I(k Iph i:! k.' L' H:~l~i!.I!.1 :['''.;!'.l! fl \.'~p II h 11<.:& i uns I' , I !b.t m!y !".~£~:u' Ii an \.~l.!l!! 10(,1\:' I:L~.· i i i', t -_l!~I_~Irt..t! )i1.11k Il Jill;: · \,~ h il1a l L·rm.

c o ns u m od i 11 an ce . 9 o v

 Bureau considers on a case-by-case basis whether disparities identified in the data, when
considered in vie"" of all other evidence, support a violation of ECOA.
Interagency Coordination
Finally, you have asked for information about the Bureau's coordination with other federal
agencies with ECOA responsibilities. The Bureau coordinates closely with the DO.J and other
federal agencies to ensure that our fair lending enforcement efforts are consistent, efficient, and
effective. For example, the Department of .Justice and the Bureau signed a Memorandum of
Understanding on December 6,2012 to strengthen coordination on fair lending enforcement and
avoid duplication of our respective federal law enforcement efforts, III The FFIEC agencies all
report substantial outreach and interagency activity aimed al ensuring creditors' compliance with
ECOA and Regulation B, and that fair lending laws arc enforced in a consistent and fair manner.
The CFPB, along wilh the DOJ and the Federal Reserve Board of Governors, among others, serve
as co-chairs of the Federal Financial Fraud Enforcement Task Force's Non-Discrimination
Working Group, v·,..hich is presenting a webinar on auto lending in August. The CFPB meets
regularly with the DO.J, the prudential regulators, and the FTC to discuss ongoing fair lending
supervision and enforcement acthities, as appropriate. These regular discussions are designed to
ensure that supef\ision and enforcement efforts are well-coordinated.
Thank you for bringing )'our concerns to the Bureau's attention and for the opportunity to
respond. We look forward to working w'ith you on this important issue of economic fairness as \ve
continue to work to help markets uperate more effectively for consumers and businesses alike.
Sincerely,

Richard Cordray
Director

cc: The Honorable Shelley Moore Capito
The Honorable Gary Miller
The Honorable Lynn A. Westmoreland
The Honorable Scott Garrett
The Honorable Randy Neugebauer
The Honorable Patrick 1'. McHenry
The Honorable ,John Campbell
The Honorable Peter T, King
The Honorahle Edward R, Royee
The Honorable Michele Bachmann
The Honorable Stevan Pearce
The Honorable Blaine Luetkemeyer
The Honorable Bill Huizenga
The Honorable Sean P. Duffy

Ii) Memorandum of Understanding bet\\·een the Consumer Finanriall'rotection Bureau and the United States
Department of J llstice (Dec. 6, 2012). availahh: <If hHp ,liJ,l~"-~':!l.'Jl!lhT Jilld.!..llV .~~J__ ';I) L2...L~_ ..'oJ:l_l, dnJ- h II ic-lIdi l'Ig'

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Honorable Robert Hurt
Honorable Michael G. Grimm
Honorable Steve Stivers
Honorable Stephen Fincher
Honorable Marlin A. Stutzman
Honorable Mick Mul va ney
Honorable Dennis A. Ross
Hunorable Robert Pittenger
Honorable Ann Wagner
Honorable Garland "Andy" Harr
Honorable Tom Cotton
Honorable Kei th l. Rothfus
Honorable Tom Latham
Honorable ,Jack Kingston
Honorable Steve King
Honorable Mark Mcadov."s
Honorable Steve Stockman
Honorahle Ceorge Holding
Honorable Walter .Jones
Honorable Tom Marino

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August 5, 2013

The IIollorable Richard Cordray
Director
Consumer Financial Protection Bureau
1500 Pennsylvania Avenue, NW
Washington, DC 20220
DcaI' Director Cordray:
We arc writing to urge that you stand up a Consumer Financial Protection Bureau
("CFPB") Advisory Board madc up of non-bank lenders, including payelay lenders, who
currently serve the short-term CHsh advance needs of millions of working Americans.
The demand for small denomination short-term credit is significant and growing, while
supply is increasingly restricted. As Members of Congress from both parties have pointed out, in
this area of great consumer need, it is imperative that CFPB's findings and subsequent
regulations are based on a comprehensive view of how consumers use these products in the
contcxt of othcr available choices.
The iss lies we raise here have two critical components. First, non-depository community
financial service providers, including payday lenders, have been denied standing within the
efPB, even as specifically called for by the Dodd-Frank Act, which directs that you assemble
experts in eonSllmer financial products <HId services, and seck representation of the interests of
covered persons. When the Consumer Advisory Board was being formed in 2012, Members of
Congress and others submittcd the nominations of several highly qualified industry leaders. All
of these eminently qualified industry nominees were rejected. Furthermore, as it has operated
during its first year, our concern regarding fair representation of these non-dcpository financial
service providers is heightcned. Several meetings, at which issues affecting this industry have
been covered, were conducted in closed session, without participation by the industry. This is
hardly the manner in which an agency dedicated to fact-driven, opell, and transparent,
supervision of covered industries should operate.
Second, we arc concerned that CFPH's recent "Payday Loans and Dcposit
Advance Products: A While Paper of Initial Data Findings" ("White Paper"),
demonstrates a onc dimensional and biased approach, lacking a thorough, data drivcn and
open process. The White Paper docs not reflect mainstream business practices by the
vast maj ority of vendors who (lrc honest and SCI'llPUIOllS, nor the millions of conSllmers
who use their regulated products responsibly. It ignores the fact that millions of
Amcricans acccss small dollar short-term credit at non-depository community financial
service providers ill thc form of payday loans and, in many cases, payday loans are the

 least expensive or the only form of credit avaibble to them. The vast majority of these
lenders adhere to existing comprehensive statc laws, and most subscribe to best practices
such as extendcd payment plans dcsigncd to protcct the few customers who call not repay
on time. Our concern is that absent a scienliJic and credible process with peer reviewed
data and inclusion of all stakeholders, millions of payday advance consumers could be
left with no short term credit option other than illegal off shore lenders whose business is
alrcady booming in arcas where regulated lending is absent.
In an effort to conduct a more credible process, the I3l1reall should create an Advisory
Board reprcsenting nOll-depository community lenders, including payday and other slllali dollar
loan providers. This Advisory I30ard should operate in a Jashion similar to CfPB Advisory
Boards representing credit unions and community banks. It should complement the existing
Consnmer Advisory I30ard which currently lacks representation of these stakeholders. The
establislul1ent of this Advisory Board is essential to fulfill the mandate or the Dodd-Frank Act,
engaging all appropriate and necessary stakeholders in the CFPH's regulatory process.
All regulated entities, including non-depository community lenders, must know that the
regulations imposed on their businesses have been developed using sound methodology, accurate
information, and a transparent process. We strongly encourage you to take this important step to
ensure the rulemaking process is thorough, transparent, data-driven, impartial, and engages all
appropriate stakeholders throughout the process.

Sincerely,

¥~0tIICongressman Gary Miller

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Congressman Steve Stivers

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Congrcsr, Spencer Bachus

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Co ngressman Scott G<1['['ell

Congressman Randy Nt:ugt:bauer

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Congressman Kevin McCarthy

Congressman Steve PCl"lrcc

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Congressman Andy Barr

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 September 9, 2 01: ~
The II o norable P:ltri ('k :vI rI -l c nr~'
U.S. Ii o ll se of R c pr('s(' nt ~ ti n's
:l12 9 Ra\ burIl Ho use Office HlIilrtinr.,
Was hington , DC 205 15
Dear Reprcs cntatiYE': Mc ll e nry,

Tha nk you for your letter requesting tha t the ConSllmer Financil} Protection Hureau
(Bureau) crcatC' all Addso ry Board made up of non-bank lende rs . inc! udin g payda~
Icndns. The Burt'au s ha res your eommi t me nt to (,l1snring thOlt its " '0 1"1\ is informed hy Ol
wide \-a riet~' of ex te rna l st a keholde rs H.-fl eet ing di\'erse pers pecti H's, incl udi ng those of
Il on banks .
For that reason . t'he Bureau made ccrta in to indud e nonbanks on th e Bureau's ConSll m er
A<l\"isory Boa rd (CAB). O ur CA1-fs m embership includes represe ntation from both
d('p (l~itory and n yari et~· of nonbank finan ci,l J in stitutiolls, with al must o ne-third of tlH~
CllTTcnt metnbe rsh i p of the CAB representing t h(:,' nonbank finandal se n 'ices industry.
The Bureau ant ieipat('s t hat nominations to replace current tim C' -li11li t€'d me mbers of th e
CA l{ will begin in ea rl." 20 14.
In £ldJiti oll , t he Burea u regul a rl y mects with no nba nk prudde rs offin ancia l products
scn -ices of all kind s to receiH' t he ir input ..Ind feed bac k o n our \'·01'1.: . We recent l ~
established the Office' of Fina ncialln.:;ti tut io ns and Bus in ess Li a ison, to prodde
rep rest'ntativcs of bot h bank and non ba n k enti ti es wi th a singl e point of contact and t o
help coordinate th e BI.1n.:a u·s cngagem ent:-; wit h the priv<1tc scctor .
~n d

T hc Bureau be li e\"f'~ th at collaborati on and dhlioguE' with all stakpho lcicrs. incl uding
industry partners, is ('rit ieal in th e deYe\opmen t of \n~ l l-ba1aJ1('_cd pu blic policy. Th e
Bureau eontinu a ll ~· in teracts with s ma ll d olla r k nd ing inst itutio ns and th (~ i r trade
o rg.a niz.a tio ns. In fact, tilt' Burea u rout inely meets wit h the Community Fina ncia l
Se n -jees A.-'.;soci;:l t ion (C FSA), Fi nam:ia l Se n ·ic(' Cc nters of Amer ica (F ISCA) , and their
me mbers. The CFSJ\ has met with RurC'a tl stnff o \·e r 3() ti me s sinc(' sprinr., Of2011.
As th is diaiogl.lC' continu es. it would be b (~ ll c fjc:ial t o all parti es ill\·oh'ed if pa rt icipants in
thc markd would share the ir insight and data to hel)) proYide a well-ro und ed and
thorough anal~'s i s of the nVlrkct place. The Hurea u cncouraxcs and welco mes continu ed
and fulsom c discuss io ns.

 As you noted , the success of our efforts to make fin nn cin! markets work bettC'r for
(~,on Sll mers depends on thorough, tran spa renl, i.1tld data-drin'll proeesses that rcslX'nd to
consumer credit needs. We will continu e to wo rk to ensure that " 'e i11(~o rporatc the d ews
and pcrspcctiyes of ll o nbanks in those processes. Thank you for yOllr co ntinuing interest
in the Bureau's work.
.
S ince rely.

Richard Cordray
Director
cc: Th" Honorahlc Ga ry M iller, Member of Congress
The Hono rable Stcye Sth e rs, Me mh(' l' of Co ng rcs.<O
The Ho no rahlc PetC'r Ki ng, Membe r of Co n ~ ress
Th e I IOllo rable Spe nce r Ba('hlls, Mcmber of Congress
The Honorahle Ed Royce. Mcmbe r ofCo ngrE'ss
Th e lTono ra blC' Scott Gar rett, Mcmhe r of Congress
The Hono rable Lynn vVt:'stmoreland , Member of Congress
'rlw Honorablc Randy Neugebaue r, Memher of Congress
The Iioll orabl e 13l,) ine Luetkemcycr, Membe r of Congress
The Honorabl e Mi chele Bachman, Member ufCo ngress
Tlw Ho no ra ble Bill Iiui zenga , Membe r of Congress
The Honora hle Ke\'in M cCa rth ~', Me mbe r of ('ong res..."
The Hono rahl(' Spa n Duff\", Member of Co ng ress
TIl(' Il ono1"<) b lE' StE'\ 'E' Pea ret'. Member of Congress
Th l' Honor:.h lc' Kohert HI ll"t . Member of Congress
The Hon orable Mike Fitz patrick, Me m bN of Co ngress
The Honorab le Michae l Grimm, Me m ber of Co ngress
The Honorabl e Bi ll Posey, Membe r of Co ngress
The IIonorable Ste ph e n Findwr, Member of Congress
The Honorable Marlin Stutzman. Member of Co ngress
The Ho no rable An n Wagner, Me mbe r of Con ?, l'(~ss
The I-Io no l"able Mit h MlIh--ane~ ', Me mbe r of Co ngress
The Ho nor<lblc An d~' Ka IT, Me mber of Cu ngress
The Ii onorn bl€' Ra ndy I Iullgren. Me ml)('r of Congress
The I-l onorahlp 1'l1ol11:1s Cotton, Meml>N of Co ngress
The Ilon orablc- DC'l1n is Ross, Membc r of Co ngress

 THE HONORABLE DENNIS

Ross (FL-1S)

229 Cannon House Office Building

Washington, DC 20515
Office: 202-225-1252

http:// den n is ross. h ou se ,gov

United States House of Representatives
Committee on Financial Services
September 12, 2013
The Semi-Annual Report of the Consumer Financial Protection Bureau
Questions for the Record
Thank you Director Cordray your testimony. I welcome your response to my questions
listed below.
1) The CFPB white paper on payday loans and deposit advance products states that
"High-intensity borrowers are more likely to be sampled based on usage in a given
month than low-intensity borrowers." Approximately what percentage of
borrowers who took out 12 or more loans per year were sampled? What
percentage of borrowers who took out one loan per year were sampled?

2) The Bureau's Information quality guidelines (as found on
http://www.consumerfinance.gov/informationquality) state that" ... After review of
the information disseminated by Bureau, the Bureau does not believe that it
currently produces or sponsors the distribution of influential scientific, financial, or
statistical information within the definitions promulgated by OMB." According to
OMB, '''Influential' when used in the phrase 'influential scientific or statistical
information' means the agency expects that information in the form of analytical
results will likely have an important effect on the development of domestic or
international government or private sector policies or will likely have important
consequences for specific technologies, substances, products or firms."

3) Taken together, this indicates that the CFPB does not believe that any of the
information it disseminates, including the payday loan white paper, should have an
important effect on the development of policy nor consequences for specific
products. Yet you cited the report in your testimony, and the Bureau cites the
report in a number of places on its website and elsewhere that have important
consequences for short-term lending products. Please explain this inconsistency.

 4)

You testified in response to one of my questions that the CFPB has data on the 13
states that effectively prohibit payday loans. Will the Bureau make that data
publicly available? What does that data show with respect to the usage of
unregulated online loans in those states?
• Has the Bureau examined the Kansas City Fed's study on payday loan
restrictions?
• Has the Bureau examined the New York Fed's study on Georgia and North
Carolina which found higher rates of bounced checks, complaints about debt
collectors and Chapter 7 bankruptcies after those states banned payday loans?
• Has the Bureau examined the rates of consumer complaints to state regulators
about unlicensed lenders after payday lending was banned or severely restricted
in Washington State, Oregon, Montana and New York

5) In your mission of enforcing the federal laws governing regulating short term credit,
money service business activity or payday lending, it is important that you make it
clear to those businesses who follow Florida's and other state laws that regulators
will only be pursuing those businesses that operate illegally, and outside of the
regulatory system. How do you plan to both pursue illegal. unlicensed operators
and conduct rule making related to licensed payday lending while at the same time
ensuring that your efforts will not cause harm to those following the law or preempt
the stable and effective regulatory environment we have in Florida?

Honor~ble

Dennis Ross IFL-15)

Page 2

 Questions for the Record
Committee on Financial Services
U.S. House of Representatives
Hearing held on September 12, 2013
"The Semi-Annual Report of the Consumer Financial Protection Bureau"
Witness: The Honorable Richard Cordray, Director, Consumer Financial Protection Bureau

Rep. Steve Stivers
Director Cordray, having now been up and running for 2 years, the CFPB has only issued
final rules where mandated by Congress. This includes remittances, Qualified Mortgages
and a number of other mortgage rules. During this same time, we have seen several
enforcement actions and the issuance of bulletins or Guidance. As we all know, Bulletins,
guidance and enforcement actions make policy but do not include the thorough process of
gathering input from all stakeholders as is required by the Administrative Procedures Act
(APA).

Congress put the APA in place to ensure agencies collect information from all parties and is
thorough during that process and can provide clarity having listened to everyone across
the spectrum. It appears the CFPB, to-date, has taken every effort to get around using the
APA except on those issues specifically laid out in Dodd-Frank. Further, I often hear
enforcement actions, Bulletins and Guidance are not as clear and transparent as the rule
writing process.
Doesn't the rule writing process provide clear & transparent rules for the banking industry
which are not as clear with bulletins or other actions?

1

 Rep. Pittenger
Where in the process is the rule for Section 1071 ofthe Budd-Frank Act?

Rep Luetkemeyer
1. In your testimony before the Committee, you stated that a lender or other entity in
full compliance with state and/or federal law should be allowed to operate as long
as that entity remains in accordance with the law. Our understanding is that
licensed and regulated lenders have had banking relationships threatened. Under
the Dodd-Frank Act, the CFPB was given explicit authority to supervise entities that
offer or provide non-bank small dollar loans to consumers. As the regulator of many
of the products being threatened, what specific actions have you taken or will you
take to ensure that these products remain viable and that these entities remain able
to offer them?
2. What steps are you taking to ensure that the FDIC and other banking regulators
issue proper guidance on this matter without infringing on CFPB authority? Will the
CFPB issue guidance on this matter?
3. As the regulator for the payday loan industry your agency has spent considerable
time and investment assembling data and reviewing the practices of the cash
advance industry. Has the Bureau asked the FDIC, the OCC or the Department of
Justice to deny basic banking services to companies in the industry? Does the
bureau support the efforts by the agenCies to encourage financial institutions not to
bank legally licensed lenders in the space?
4. Do you believe that tribal governments have the right to use the Internet to make
loans?
S. Does the CFPB believe that the comprehensive array of federal consumer financial
laws and regulations are generally adequate to protect consumers from improper
lending practices? If not, please detail what additional provisions or changes are
needed and why.
6. It is widely recognized that many states have quite restrictive lending laws that limit
the type of small-dollar, short-term credit products that nonbank lenders may offer.
It would be very helpful to have a better understanding of this patchwork of state
lending laws. Please provide the Committee with a detailed comparative
breakdown of what each state's law allows concerning offering specific types of
small-dollar products including such things as any minimum or maximum
limitations on the length of the loan, the total interest allowed (noting what fees and
charges are counted) as well as any exceptions from such limitations for certain fees
or loan types, and any prohibited loan terms or conditions that apply with respect to
any such loan product. Also, please include a state-by-state breakdown of state
licensing requirements that apply to each such product.
7. Millions of under served consumers are moving rapidly to meet credit needs via the
Internet. What is the CFPB doing to promote even greater credit access for
3

 underserved consumers through online sources while also ensuring that online
lenders comply with applicable federal laws and regulations?
8. The CFPS's Semi-Annual Report notes that consumers may have difficulty
comparing small-dollar loan products on an "apples-to-apples" basis and points out,
for example, that APRs are not provided in all cases and may not include all fees.
Has the CFPS collected any data through focus-groups, surveys and other methods,
to determine whether consumers truly understand what an APR means when used
to disclose the cost of various small-dollar credit products with a term of less than
one year? Has any research been conducted to determine whether consumers
understand the costs of such short-term credit options better when all costs
(interest, fees and other charges) are expressed as a dollar figure and as a
percentage of the total loan amount instead of an APR? If not, will you collect such
data and provide this Committee with your analysis of it?

4

 Rep. Fincher
Nearly 8.7 million American families depend on manufactured homes for reliable, safe, and
sustainable housing. However, smaller-sized manufactured home loans are at risk of being
adversely impacted by HOEPAjhigh cost mortgage provisions and loan originator
guidelines in Dodd-Frank Without regulatory relief tailored to this form of housing, the
manufactured housing market will be facing loss of financing available to low- and
moderate-income families, particularly in rural and underserved areas.
As you may know, the manufactured housing industry has been working with consumer
advocates to develop a consensus approach to resolve the regulatory challenges facing this
market. I understand that much progress has been made between the groups, and they
have begun the process of communicating their joint concerns to members of your staff.
To the extent that you are able to comment on the Bureau's rulemaking processes, do you
anticipate that there might be some accommodation made for the areas highlighted by
these groups? What additional feedback do you think would be necessary from the
Committee to underscore that there is concern for preserving access to credit in this
market?

5

 Rep. Scott Garrett
1)
Dodd-Frank contains provisions limiting the CFPB's authority to collect "personally
identifiable financial information," yet the law does not define this term. How does the
(FPS define "personally identifiable financial information" and does it include such
information as a name, Social Security number, and address?
2)
How many U.S. consumer accounts the CFPB is monitoring as part of its data
collection activities?
3)
It has been reported that the CFPB has requested account-level details regarding
consumer credit card data from nine banks. Can you tell the committee which banks the
(FPB is collecting this information from? Are there currently any plans to increase the
amount of banks that the (FPS will obtain this information from?
4)
In the strategic plan that the CFPB issued in April of this year, the CFPB said that it
seeks to "acquire and maintain a credit card database ... covering approximately 80% of the
credit card marketplace" by the end of FY 2013. According to the U.S. Census Bureau,
Americans hold approximately 1.2 billion credit cards. That would mean that the CFPB is
planning to monitor about 960 million credit cards. Why is it necessary to monitor such a
high number of credit card accounts?
5)
How many people have access to CFPB databases containing personal consumer
financial data? And who are the people that have access?
6)
Section 1022 (c)(4)(C) of Dodd-Frank is a limiting provision on the CFPB's general
power. The provision reads "The Bureau may not use its authorities under this paragraph
to obtain records from covered persons and service providers .. .for purposes of gathering
or analyzing the personally identifiable information of consumers." As the head of the
(FPS and an attorney, do you believe that the CFPB has the authority to collect personally
identifiable information as part of its examination process from supervised entities and
then use that information for market monitoring? And if not, upon what authority does the
(FPS rely for collecting personally identifiable information in an examination and using it
to monitor markets?
7)
The Statement of Record Notice for the (FPS's "Market and Consumer Research
Records" database indicates that personally identifiable information is being collected and
able to be retrieved by reference to such information. But the CFPB has not yet issued a
privacy impact assessment (PIA), which is mandated by the E-Government Act in order to
ensure that agencies are in compliance with laws and regulations governing privacy of any
personal information the agency stores, collects, uses, and shares. Why hasn't the CFPS
issued a PIA for this database and will you commit to issuing this PIA?

6

 8)
As you know, the CFPS is largely shielded from congressional oversight and
appropriations. Does the CFPS believe that it has a blank check to collect information on
consumer activities?

7

 Rep. Royce
In setting up the (FPS and the Supervision, Enforcement & Fair Lending Division, it is clear
from reports - that negotiations between supervision and enforcement on how best to
conduct examinations initially resulted in one or two enforcement attorneys being
assigned to examination teams in the field. These enforcement "ride alongs" have been met
with much criticism - including from the (FPS's own Ombudsman who has cited "the
potential for the policy to be a barrier to a free exchange during the examination." The
Ombudsman also recommended "(FPS review implementation of the policy to have
enforcement attorneys present at supervisory examinations." I am wondering if you can
comment on the status of this practice. Has the (FPS decided to no longer have
enforcement staff accompany examiners during examinations?

8

 Rep. Pearce

Rural Definition
Has the agency begun studying ways to improve their definition of "rural"?
What steps with the agency take to develop a new definition? What timelines can be
expected?
Data Collection
Does the agency's data collection effort include Personally Identifiable Information such as:
name, address, social security, zip, property and credit score of an individual?
Has the CFPB carried out case studies or analyzed cases of agencies, consumer groups or
credit card companies, where information has been distributed, leaked, shared or hacked?
Has the Director or Deputy Director of the (FPB discussed, at length, the implication of a
security breach with staff?
What actions are being taken to ensure that sensitive information, from millions of
consumers, is not being leaked or used inappropriately? Please provide a detailed update.

Contractors
Who made the decision to hire ASR Analytics?
Please describe the decision process for hiring contractors.

9

 Rep. Bachus
•

Director Cordray, the current Qualified Mortgage rule includes fees paid to affiliated
title insurance companies. However, fees paid to an unaffiliated title insurance
company are not included. Will you please explain why you differentiate between
fees paid to affiliated and unaffiliated title insurance companies?
o !fthe title insurance fees are equal, is there a benefit to the consumer if title
insurance is purchased by an unaffiliated title agent?

•

There have been news articles and reports that federal agencies, such as the FDIC
and DOl, have been pressuring banks and third-party payment providers to stop
doing business with online lenders. This leads to several questions.
o Has the Bureau asked the FDIC, OCC and DOJ to deny basic banking services
to companies in the industry?
o Does the bureau support the efforts of these agencies to encourage financial
institutions not to bank legally licensed lenders in the space?
o As the primary regulator, is the CFPB planning on issuing a rule on shortterm lending for storefront and internet lending business?
o Do you think it is appropriate for any federal agency to seek to deny access to
banking and payments systems to lawfully operating businesses?
o Does the CFPS need or want the FDIC to assume its responsibilities to ensure
online nonbank lenders are complying with applicable law?
o Has the CFPS, or FDIC, through any formal or informal action lead banks to
believe that they should not provide banking and payment services to the
online lending industry?

10

 Rep. Mulvaney
Question #1: Has the Inspector General responsible for CFPB oversight inquired
specifically about the discrepancy between the CFPB's funding requests and its outlays?
• If so, what was the nature of the inquiry?
• Please provide any relevant documentation relating to such an inquiry.
Question #2: Has any other entity inquired specifically about the discrepancy between the
CFPB's funding requests and its outlays?
• If so, what was the nature of the inquiry?
• Please provide any relevant documentation relating to such an inquiry.
Question #3: What is the current balance of the Bureau of Consumer Financial Protection
Fund ("Bureau Fund")?
Question #4: What has the Bureau Fund earned, either from interest or from the sale of
investments/obligations, since its inception?
Question #5: Do you plan to draw down, increase, or maintain the amount held in the
Bureau Fund?
• Please describe how you intend to achieve that goal and include a proposed
timeline.
Question #6: In your recent testimony before the Committee, you discussed the CFPB's
authority to regulate debt collectors. Do you believe that it is the CFPB's responsibility to
promote additional state regulation?
• Please describe all contacts by CFPB officials with state regulators and state
legislative officials on issues related to the debt buyer and debt collection industry.
• Please include specific state legislative initiatives and proposed legislation that the
CFPB supports.

11

 Questions for the Record - Full Committee
From: Congresswoman Kyrsten Sinema
To: CFPB Director Richard Cordray

Date: Thursday, September 12, 2013
Name: Semi-Annual Report of the Consumer Financial Protection Bureau

1. The state of Arizona is one of several states that prohibit payday lending. In the semiannual report it is noted that in states where payday loans are prohibited (and others)
residents may be obtaining internet payday loans. Are internet payday lenders subject to
the same oversight and regulation as storefront payday lenders?
2. In the absence of payday lending Arizona has robust auto title lending. Has the CFPB
assed the risks posed to consumers by these products? Has the CFPB considered whether
and how to supervise auto title lenders?
3. There are some obvious alternatives to payday loans, such as borrowing from a bank or
credit union, taking a loan from a consumer finance company, using a credit card, or
getting assistance from a friend or relative. However, I am concerned that low-to
moderate-income households have difficulty accessing the small dollar loans they need to
meet basic expenses. What other alternatives do Arizonans have'?
4. This past March, the CFPB issued guidance on indirect auto lending and compliance with
the Equal Credit Opportunity Act (ECOA). Auto lenders in Arizona have concerns with
this guidance in part because the CFPB has not provided sufficient information on how
the industry is to comply. Does the CFPB plan to issue additional guidance or
clarification around this issue?

 Congressman Patrick E. Murphy (FL-l g)
Questions for the Record
9-12-13 Hearing on: "The Semi-Annual Report of the Consumer Financial Protection Bureau"
I. CFPB is charged with protecting American consumers from bad financial products and bad
actors. I want to understand more about your priorities. No one likes when consumers are
taken advantage of, but I have absolutely no patience when our veterans, the men and women
willing to give everything for our country, are targeted. The New York Times recently
reported that service members were being charged excessive interest on their student
loans. This is unacceptable in the United States. What is eFPB doing to prioritize actions
against those who deliberately go after the patriotic men and women who served?

2. I am honored to represent a district that's home to over 160,000 seniors, including a proud
few from the Greatest Generation. As you know , our seniors aren't cynics - they trust this
great nation they buill. What is the bureau doing to protect Florida seniors ii'om people who
are taking advantage of that trust and their all too limited income stream?
3. That young family in my district looking to buy their first home will benefit from CFPB
responsiveness to industry concerns in the qualificd mortgage sphere. While I still believe
more can be done to preserve access to affordable mortgages for middle class families, I
continue to hem that uncertainty remains one of the biggest burdens, particularly for
community banks. As we all know, every time that QM gets better, it's another large stack
of guidance that mom and pop community bankers have to sort through. In terms of pending
improvements to QM, what certainty can you give the smaller banks in my district, many of
whom are ready to quit mortgages altogether?

 Rep. Bill Foster (IL-ll)
Question for the Record - Director Cordray
Full Committee Hearing: September 12, 2013
1)

Director Cordray: as you know, Section 1024 of Dodd-frank grants the CFPB the authority to
supervise nonbank covered persons of all sizes in the residential mortgage, private education
lending, and payday lending markets. In addition, the Bureau has the authority to supervise
nonbank "larger participant(s)" of markets for other consumer financial products or services, as
the Bureau defines by rule. Can you provide the committee with a sense of when the Bureau
intends to exercise this authority with respect to the supervision ofthe nonbank online lending
industry? It is my understanding that there are other agencies currently regulating this space, is
it your intention to exercise your regulatory authority over these financial products? If so, when
do expect to do so?

 ([lllqlrl'~;~; lI i tI) l

Huitt'll §lil t l'~;

ltril ;; I " iH ~ltoll , DC!: ~1l3 1.3
November 5, 20 13

The Honorable Richard Cordray

Director
Bu reau ofCon ~ um e r Financial Protection
1700 G Street, NW

Washington, DC 20552
Dear Director Cordray:
We are w rit ing you today to express concern about the implementat ion peri od fo r the mOl1gage
ru les that arc schedu led lO be effective in January 20 14.
Pursuant' to title XIV of the Dodd Frank Wall Street Reform and Consumer Protection Act, the
Consu mer Financia l Protection Bureau (CFPB) promulgated six rules providin g new regulations for
mortgage products and services in January of this year.
These rules will fund amentally change our
natio n 's mortgage market. Most notable is the Ability (0 Repay and Q ualifi ed Mon gage Standards under
the Truth in Lending Act (Regu lation Z). In add ition the C FPB re leased fou r amendments to the rules,
the most recent being Septem ber 13,2013.
The mOl1gage rules released in January combined with the am endments released in May, July,
and September present fi nanc ial inSlitulions with over 4,000 pages of new regu lations that they m ust be in
compliance by January 2014. This task is especially d iffi cult for comm unity fin ancia l institutions that
may only hm'e one or two comp liance officers. Furthermore, many financial institutions re ly on software
system s for managing their operations. We have heard concern s from many community fin ancial
institutions that they s imp ly will not be a ble to meet the Janua ry 201 4 d ead line to have their systems on
line and in p lace.
If finan cial institutions are unable to comply with these rules by the January 201 4 deadline there
could be signifi cant distortions in the mortgage market affecting the availabi lity of credit for consumers.
Therefore, we urge you 10 defer implementat ion of these ru les until January I , 2015 in order to ensure
fin anc ial institu tions (Ire able 10 transition their systems to be in full compliance wilh the rules.

We thank yo u in advance for your consideration o[ lhis matter and look forward to your response
by December I , 2013.
Sincerely,

/ --1,

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 '_I
C -.l)ecember2,2013
The Honorable Shdlcy Moore Capito
U.S. House o f Rcprc:sentati vcs
22 66 Rayburn House Offi ce Building
Washington, D.C. 205 15
Dear Chairman Cupito.
Thank you t(lf yom letter about the impleme ntation of ou r mortgage rules. I apprec iate the
opp0l1uni ty to address th is issue w ith you and your colleagues in more detail.
The Cons umer Financial Protectio n Bureau's mortgage ru les wi ll be importa nt in addressing some
o f th e most serious probl ems that had undermined the mortgage markd during the tinancial
crisis. Congress established a specifi c deadline: fo r the effecti ve dalc the rules it directed the
Bureau to \-vrite, an d the effecti ve date refle cts that deadline. The Ahility-tn- Repay rule, in
particular, has heen broad ly expected sin!.:t! the passage o f the Dodd-Frank Wu ll Stree t J{ efO nll ,md
Consumer Protecti on A!.:I in Jul y 20 10 and actually requ ires little more than the so un d un derwriting
practi(;es that havc become standard in the ye;Jrs sin!.:e the crisis. And the gencral !.:onto llrs ufthe
mortgage servicing rules track the problem s that have been identified in thi s ind ustry for mo re than
five years, most of which were squarely addressed in the standards sct by the Natio nal Mortgage
Servicing Settlement ad(l pted in 201 1.

or

The Hureau s hares yo ur concern that regulations should not pl ace unnecessary burdens on
community banks. We n:cogni ze that, \vith lew exceptions, !.:omm unity bank s and credit union s
did not engagt: in tht: type of ri sky le nding that led to the mortgage crisis. To that end, the Rureau
took special l.:are to ensure Ihat o ur rul es are ba lanced for community banks and credit unions and
the consumers they serve. For instancc. the Bureau has tuilorcd the Ability·to· Repuy rule and the
standard s for Qualified Mortgagcs 10 encou rage sm all creditors to continue providing certain credit
products. whi le carefull y halancing consume r protections.
iss ues with the rul es, W~
have addressed thelll . The Huft!au made a commitment to respond to suhst,mtial inlerprdivc
questions that signilicant ly affect implementation dec isi ons in wri ting through amendments to the
officia l interpretati ons and. if need be. to the rules themse lves. ·rhe Hureau issued vario us
amendments over the course of the year with a sin gle aim in m in d: to ensure the effe ctiveness of
O UT rules by mak ing it easier for industry to compl y. By addressing and clarifyi ng industry
questio ns. th e Hureau has reduced the need fo r ind ivi dual in stitutions to spend time reaching th eir
own uncertain judgments on these matters.

In addition, as we became aware of crit ical operational or

interp re tiv~

The Bureau has al su embarked on an imple1l1t:ntl:'ltion plan to prepare mortgage husinesses lin the
rules that take effect in January. To that end, we pub li shed p lai n·lan guage compl iance guid es that
cons um e rfin allce .gov

 will be urdmed as necessary. We launched a series of videos explai ni ng our rules. \\'e worked
d o se ly w it h the o thcr linaneial l'<;.'g uiato l's to d\:: \'cJop ,-.'xam inalio n gu idc1int:s that rc lket <\ commo n
und erst anding of \\'hal the ru le s do and do not n.:q uin:, which were published well in adV<l!1c~ o f the
effective date. \'i~ intend thesc e llorts 10 be especiall y hclpfu llo smalle r i n stitlltiun ~ where
reg ul atory hurdell v;c ighs more heavil y on Ic \,\cl' empl{lyecs.
We undcrslHnd th is poses a cha lle nge fo r indu stry. j ust as the \\riling o f slIc h a substi.lntia l se l of
mO!1gage rules hy l<lsl January po sed a sign ificant challenge fo r our new agency. J lad \,n.: railed In
do so. many ke.y stat utory provi s ions th at Co ngress haJ enacted. wou ld have taken effect in thei r
own righ t. \\' hich in many respects \\'ou ld have been ha rde r I~) r industry to compl y" ilh and m m:h
\V Ol'S\::" ji)r th e 111011gage ll1arket.
Add itionall y. o\l..'rs ight orthc n~w mortgage rules in th e carl) months will be sen ~itiv e to Ih e
prQgress m ade by Ihos e knd er~ and serviccrs who h,\\ '\:: heen squardy roc ll s ~d on ma ki ng good1~li t h e lTorts to comc inlo suhstalUial co m p li anc~ o n timt.' - a point th:lt " 'c h<l \<=" ab o bee n
discli ssin g w ith our fellow regulntors.

It is <.: rilical that \\\..' mo ve tn r\\'ard so these ruk's can deliver the nc\\ protect ions ink'ndcd for
con s umers and pwvi de the certainty that indu stry representmi\'cs k we been seek in g. Thank you for
yOUI' conti nuing imcrcst i n Ihe l3ure-au' s work.
Since rel y.

~~
I)ircdor

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Honorable- Charles Dent
HOl1orahh.' Erik Pa ul sen
110110rable .Io s~ J1h R. Pilts
Il ono rabJc Keith.!. R(Jlhfus
The Honorable Doug l.a t\'l a ll ~1
rhe I lonorahle Cieorge J lolding
rhe Honorable Y1 iehnel (irimm
The Ii onon.lhlc Dou g Co ll ins
The Il onora b le tvlario J)im:- 8<1lart
The Honorable An n Wagner
rhe I ionorablc TOI11 Graves
The Honorab le Rich:lrd Hudson
The Honorahle Scott C. Ri gel l
llle J lonorah le Bill y J .ung
The Ii onorable Da \' id P. J O) ec
T he I Innom b1c And y I Jarri s
Thl' I lonorahlc .lim .I ord an
T he Hnnorabk Vli !..t> Kell y

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 The Ho no rable Ma rk Meado\.vs
Tht' Ilo norahle .kl1' Fort e nherry
The I llmorabl e Diane Blw.:]..:

['he Honorable Susan Brooks
The Honora ble Reid .l . Ribble
The Ii onorahic Andy Barr
Honorable C harles W. Boustan y . .It'.
Ilo norabk A lan Nunlle lee
Ilonorab le Randy l\eugdlauer
Ii onorabl e Trey Go wdy'
Il onorabk Kristi L. l\oem
The Ii o llorabic Tim G rinin
["he Honorab le Uilil lui 7enga
lhe Ilonnrabl c Sca n Dlln ~'
T he Honorabl e \tlick M ul v<IllCY
The Iionorab!...' "I rey Radel
Th e I ionorabl e Lyn n Jen kins
T h(.' Il onorab le Stcyr \Vollli1ck
The I ionorable Stc.: phen rinc her
The Il nnorahk Dennis Ro ss
The HO!lorabl .: Ke lTY I " l:k ntiH)li()
The J-hmombk J<.ul1es Lank ford
The Il ollorahlc Da,-id Scott
The Ii onorable Rohert Pittenger
The ll nt10rabk Scott R. Tipton
The Ii onorahk Ma rs hn Blw.:kbum
The Honora ble J im Brid en stin e
The Il o!1orabl c Cory (Jardn er
T he Honorable Sren: I)n incs
The Ilonorah h: Jose ph J. I leek
The Illl!1orable 'I im Hu elsk'lm p
The 11 l1 llorabl e Murkw:lyne Mu llin
The Ho norable SIeve Stivers
The llono rah lc Toud C. Yo ung
The Honnrablc I.nny Bucshol1
Th e I Jonorabk .I 'llnes Scnse nhrcnncr
The Il o !1orable ·' o m Cole
The Hnl1orabll.: Thnmns E. Petri
Thl.: f ionornblc Mic hael Conaway
-'· hc Honorab le J im (icri 'J(.:h
The Honorable .Jo hn Kl ine
The I hmorahle Blaine Luetkemeyer
The I !onora ble Gary \1illcr
The Ii onorablc Robcrt Ilurr
The J ]tl llnt"<lblc l1i ll Po ')e~
Th e Honorab le J,lllleS B. Rcnaeci
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 ["h e Ii o norahl e Jeff DLl!1l:an

Th e Honurable LOll Barletta
The I IOlwrablc tvlikt' Pompeo
T he Il onorahJe POllri c !.: J. J'i bt-ri
Thl.' Il o llora blc \-Iarli n Stut71l1<111
TIle Ho no rable Ro bc!"1 Woodall
Th e Ii o no rable rvli chi.wl Ci . Fitzpatri c k
["he HOJlorable Eri c A . C rawford
["he Ho norahle Ch ristop her P. (Jihsol1
T hl.' Il ollo rabJe Tom ( 'ollon
The Ho no ra ble Sl.:ol1 Ik.l al"l ai s
Til.: Ii ollorablc Da \'jd H. Mc K inlcy
The I [o no rab lc Tom Ma rino
The Il ol1orablc Da vid P. Roe

The 11 ollorahlc Pel('r T. King
The I innorable Rand) Hult g ren
T he Ho nora ble Stc\cn M. Palazzo
T h(' Iiollmanlt:' Aaron S.: hock
The Honorable Tom Hiee
The Il ollorablc \'t ark. Sanford
I"ht' Il ull orablc Krell Guth ri e

Tk HOlhu<.lble Jason T. Smi lh
r h.; Ho norah le "1om L llham
The I ionorah le
The Ho no rable
The 1lo no rablc
t he l lunorahlc

Joe W ilso n
Jo hn Hamm·

Ldward R, Royce
Randy ,J. I:orbcs

The Iiollorable M ike \k ltllyn:
T he I (' )[lorab le Mi chc k I ~Jc hm an
The I hmorable Robert E. Latta
The Honorab le Jim Mmheso n
The 1hmorah le St eye Sca li se
The ! IOllorahlc Ci reg W al den
T he Iionorab le S tcnm Pea rc e
T hl' I io nora hic I _ynll Weslmoreland
The Honorab le Virgini ll Foxx
l"hi:: I ionurabk .lack. Ki ngston
The 1[a norah le Patri c k T . Mellen!")
T he Ii ollorablc M ichae l K, Simpson
Th!: I lollornhlc Fred 0 , i ,lIl'<:ls
·,'Ill' 11'I Il(lra hlc Ilob G()od lat ll'
The Honorable N ick J. Rahall
1"hI: 1i(1llorablc Lee ["",rry
T il .; Ho no ra ble Spe ncer Bachus

I he 110lwrahk Sl'oH U<ln ett

c on s umcrfin a tlc e .gov

 February 18, 2014

Thank you for testify-ing at the January 28, 2014, ('A)mmittee on Financial Services
hearing entitled, "The Semi-Annual Report of the Consumer Financial Protection Bureau."
A copy of your transcript has been provided should you wish to make any
corrections. Please indicate these corrections directly on the transcript. Due to the
disruption of mail service to the House of Representatives we ask' that you fax or
e-m.ail your corrections in lieu of mailing them. Please send your corrections
within (15) business days upon receipt to!
Terrie Allison, Editor
Committee on Financial Services
Fax (202) 225-4254
terrie.allison@maiLhouse.gov
Phone (202) 225-4548
Rule XI, clause 2(e)(I)(A) of the Rules of the House and Rule 8(a)(I) of the RuJes of
the Committee state that the transcript of any meeting or hearing shall be "a substantially
verbatim account of the remarks actually made during the proceedings, subject only to
technical, grammatical, and typographical corrections authorized by the person making the
remarks involved." We therefore ask that you keep your corrections to a minimum.

Also included are questions for the record submitted by Chairman Hensarling and
Representatives Huizenga, Mulvaney, Barr, Stivers, Luetkemeyer, and Velazquez. We ask
that you respond to these questions in writing for the hearing record within 15 days of
receipt.
If during the hearing you: (1) offered to submit additional material; or (2) were
requested to submit additional material; please submit this material via electronic mail by
sending it to terrie.allison@mail.house.gov. If you are unable to submit the material
electronically, please contact the Committee staff to arrange for submission.

 "The Semi-Annual Report of the Consumer Financial Protection Bureau"
House Committee on Finandal Services Hearing
January 28, 2014
Qyestions for the Record Submitted by Chairman reb Hensarline:

Qyestion 1: Director Cordray, page 39 of the Bureau's Financial Report for Fiscal Year 201.3.
released December 16, 2013, disclosed that the Bureau has entered into an "interagency
agreement between the General Services Administration.uto provide for services related to
the planned renovation of CFPB's Headquarters office space located in Washington, D.C."
Additionally, on December 19, 2013, the Bureau released its "CFO update report for the
fourth quarter of fiscal year 2013," the first page of which disclosed that Bureau obligations
made during the fourth quarter included:
"$145.1 million to the General Services Administration to provide for a range
of services related to the renovation of CFPS's headquarters building. In
addition to the actual renovation of both the interior and exterior of the
building. services also include project management, contract management,
environmental management, construction oversight and administration, and
other techni cal services."
(a) Please produce a copy of the interagency agreement that the Bureau has entered
into with the GSA regarding the Bureau's planned renovation.
(b) Please produce copies of all renovation-related documents the Bureau has filed with
the National Capital Planning Commission and U.S. Commission on Fine Arts.
(c) When do you plan to file the Bureau's final plans with the National Capital Planning
Commission?
Question 2: The Occupancy Agreement between the Office of the Comptroller of the
Currency (OCC) and the Bureau was signed on February 17, 2012, the month following
your recess appointment as Director of the Bureau, which occurred on January 4, 2012. Yet
in your testimony. you stated "That was an agreement signed before I became directo r."
Were you mistaken about the date upon which the Occupancy Agreement was signed. or
were you indicating that the drcumstances of your recess appointment did not yet endow
you with the legal authority to act as the Director of the Bureau?
Question 3: The Occupancy Agreement between the OCC and the Bureau proVides that "The
CFPB will be responsible for the cost of any Improvements it may make to the Premises"
and "The CFPB bears the responsibility for the cost of operation, maintenance, repair of the
space as well as the capital improvement cost of replacement of all base building structures
and systems necessary to keep the building structures and systems in good maintenance
and repair." Why wou ld you agree to these contra ct terms for a building the Bureau does
not own?

1

 as

Question 4: In you r testimony, you described your headquarters buHdi ng
a "tough
building," a "deteriorated building" and a "classic white elephant" that "must have been
used pretty heavily." You further stated that "ff 1 were a consumer I would be complaining
a lot about the building If I owned it."
(a) Did you have any inspection or appraisal reports or other informati on available to
you at the time you co mmitted the Bu reau to its lo ng-term Occupancy Agreement
wi th the DeC that would have given you an indication of the co ndition of the
buiJding? ff so, please produce dated copies of any such documents.
(b) If not, why d id yo u not conduct due d iligence on the cond ition of the building before
committing the Bureau to an investment of over $250 million in total annual rent
payments ave)' the Occupancy Agreement's 20-year term?
Question 5: Regarding the Bureau's Occupancy Agree ment with the OCC:
(a) Which specific Burea u employees were responsible for negotiati ng and approving
the Bureau's Occupancy Agreement with the aCC?
(b) Does the buck stop wi th you or were other Treasury or Bureau employees also
responsible for co mmitting the Bureau to this Occupancy Agreement?
Question 6: According to an audit report released by the Treasury Depa rtment's Office of
the Inspector General on December 20, 2013, the acc engaged a private consulting firm in
2011 to perform a study to value the building at 1700 G Street, NW for sale and rental
purposes. The Treasury IG report further states that:
"The study val ued the building at approximately $153.7 milli on. At the time
of th e study, acc knew that CFPS was willing to occupy the entire building
under triple-net ren t terms, which requires the lessee to pay for net real
estate taxes on the leased asset, net bu il ding insurance, and net common area
maintenance. The results of the study fou nd that the net present value of
renting th e property under a triple net rent contract for 10 years slightly
exceeded the net present value of selling the building."
This IG report wo uld seem to indicate that the Bureau's will ingness to enter into lease
terms favo rable to th e OCC ind uced the ace to rent the bu ildi ng to the Bureau rather than
se ll it to another party. Do you agree or disagree with the Treasury IG's characterizati on of
these events?
Question 7: The study referenced in the Treasury IG report was cond ucted by Ernst &
Young and completed on February 4, 2011.
(a) Which individual served as the Jead er or acti ng Director of the Bureau on this date?
(b) Which Bureau or Treasury employee (s) negot iated or communicated with th e ace
on behalf of the Burea u regard ing lease terms during this time period?

2

 Question 8: In your testimony regarding the Bureau's decision to lease the DCC building at
1700 G Street, NW, you indicated that "we worked with GSA to try to understand what
space was available in Washington, D.C., and there's very limited space for an agency with
over a thousand employees." You also stated that "we looked around at surrounding areas
as well." Please provide this Committee with copies of all documents prepared by the
Bureau, the General Services Administration or any private contractor or consultant prior
to February 17,2012 that reference or evaluate the Bureau's commercial real estate lease
or purchase opportunities,
Question 9: In your testimony regarding the Bureau's planned renovation of the OCC
bUilding at 1700 G Street, NW, you indicated that "We're going to have to vacate the
building while this is going on,"
(a) When will the Bureau relocate its first employee from the headquarters building?
(b) How many total employees will be reassigned to another office location while the
building at 1700 G Street NW is under renovation?
(c) Will all impacted employees be reassigned to a new location on a rolling basis or all
at once?
(d) How long will CFPB employees currently working at 1700 G Street NW be
reassigned to a temporary location?
(e) What will be the total costs of vacating the building and renting an alternate facility?
(f) What alternate office location has been selected for vacated employees?
(g) When was the contract for an alternate office location signed?
(h) Please provide us with a copy of these lease agreement.
(i) How many square feet of office space will be occupied by the Bureau and at what
,
cost?
OJ Please prOVide this Committee with all relevant details and documents
substantiating your responses to these questions.
Question 10: Please provide this Committee with copies of the Bureau's contract(s),
including all amendments, with the architecture firm Skidmore, Owings & Merrill LLP.
Question 11: Please provide this Committee with copies of any documents, including but
not limited to any architectural or design plans, renderings, illustrations, electronic files
and e~mail communications, provided to the Bureau by Skidmore, Owings & Merrill
concerning the renovation 1700 G Street, NW.
Question 12: Regarding the Bureau's planned renovations:
(a) When does the Bureau expect to award a design build contract to renovate 1700
Street, NW?
(b) What procurement process will be used?
(c) When will construction commence?
Question 13.: During your testimony before the Committee on September 12, 2013, Rep.
Rothfus asked you about salary levels for Bureau employees, and you responded by stating:
3

 "Again, the federal banking agencies are on a different pay scale than the GS
scale. One of the things I want to note that's ve ry important here - our statute
requires us, it requires LIS - this is the law of the land that we're bound to
follow - that we are to have a pay scale comparable to that of the Federal
Reserve. Last I checked on our statistics, we're one percent lower average
salary tha n the Federal Reserve. $0 we're co mplying with the law."
(a) So tha t the Comm ittee may properly co mpa re the Burea u's compensation structure
with that of the Board of Governors of the Federal Reserve Syste m, please provide a
copy of the Bureau's salary structure, includ ing all pay classes, grades, steps, and
locality adjustments.
(b) Additionally, please provide a Micro soft Excel file containing Bu reau employee
salary data, organized by the followin g column headings:
•

Employee, Fellow. Inte rn Name,

•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•

Title,
Pay Class,
Pay Grade,
Division,
Office,
Hire Date,
Starting Salary or Hourly Wage at Hire Date,
Amount of any Signing Bonus Awarded,
Amou nt of a ny Relocation Incentive Awarded,
Amount of a ny additiona l financial incentive awarded,
Date(s) of any Raises(s) Awarded
Amount(s) of any Raise(s) Awarded
Da te of Promotion (if appli cable),
New Title after Promotion (if applicable),
New Salary or Hourly Wage after Promotion (if applicable),
Current An nual Salary or Hourly Wage,
Departure Date (if applicabl e),
Annual Salary or Hourly Wage at Departure Date (if applicable),
Annual Bonus awarded in 2011 (indicate calendar or fiscaJ yearl
Annual Bonus awarded in 2012, and
Annual Bonus awarded in 2013.

Question 14: The Bureau's contract service inventory list for FY 2013 shows that the
Bureau paid Harvard University for two different programs held in Cambridge,
Massachusetts: $37,500 for a "Harvard Law School Executive/Lega l Ed ucation Program"
and $69,000 for "regi stration fees for Burea u staff members to a ttend senior execu tive
seminar(s)."

4

 (a) Please produce copies of all records associated with these programs, including but
not limited to any pre-solicitati on requests for quotes, the quotes sub mitted to the
Bureau by Harvard. a ny con tracts signed betwee n Harvard and the Bureau, any
travel, lodging, and meal vo uchers associated with any Bureau employee, a complete
list of every Bureau employee who attended either of th ese programs, and any
materials provided to program participants.
(b) Why were these programs not mentioned in the Bureau's December 2013 report on
"Growing our Human Capita]," even though the report listed fifteen other "training
and workforce development initiatives" instituted by the Bureau in 20 13?
(cj Why did you select Harva rd to provi de this program?
(d) There are many nationally-recognized Universities in the greater DC area with
similar capabilities, the selection of which would have minimized travel expenses.
Did you not consider these universities to provide the programs fo r your senior
employees? Why was it necessary to send your se nior employees to Cambridge, MA
to receive this tra ining?
(e) Why was thi s seminar not held at the Bureau 's headquarters instead of in
Cambridge, MA?
(f) How much money would have been saved if th e Bureau had hosted this program
rather than sending its employees to Harvard?
Question 15: On May 28, 20 13, the CPFB published a pre-solicitation notice to solici t qu otes
for "vario us Senior/Executive Manager wo rkshops similar to the Harvard Kennedy School
of Government programs."
(a) Was this the pre-solicitation notice that resulted in the awards and programs
referenced in question 14 above?
(b) How many quotes did the Bureau receive?
(c) With a pre-solicitation notice phrased in this way, it would appear that the Bureau's
selection of Harvard's quotes was a foregone conclUSion, was it not?
Question 16: The Bureau's contract service inventory lists for FY 20 12 and FY 2013 list a
number of contracts th e Bureau has awarded to co mpanies for "paid search marketing
services." Please produce copies of any such contracts, induding but not limited to the
contracts associated with the [oHowing awards.
•
•
•
•

$122,513 paid to Fleishman-Hillard, Inc. on 3/16/2012;
$94,692 paid to peG Enterprises on 6/8/2012;
$237.300 paid to Digital Firefly Marketing on 8/21/2012; and
$280.637 paid to Fleishman-Hillard. Inc. on 6/14/2013.

Question 17: The Bureau's contract service inventory lists for FY 201 2 and FY 2013 list a
number of contracts the Bureau has awarded to a company named IDEO, LLC for "brandi ng
services." Please produce copies of any contracts awarded to any company for "branding
services," including copies of all contra cts awarded to IDEO, LLC.

5

 Question 18: Please produce copies of any contracts awarded to GMMB, Inc., the
Corporation for Enterprise Development, and the National Consumer Law Center.
.ili!.estion 19: Section 1017(d)(2) of the Dodd-Frank Act provides that amounts deposited in
the Bureau's Consumer Financial Civil Penalty Fund may be used only for "payments to the
victims of activities for which civil penalties have been imposed" or "for the purpose of
consumer education and financial literacy programs," However, page 25 of the Bureau's
Fiscal Year 2013 Financial Report discusses the Bureau's Civil Penalty Fund and states that
in Period 1, "$1.6 million was set aside for any administrative costs."
(a) What is the legal authority upon which the Bureau relied for using funds in the Civil
Penalty Fund for "any administrative costs"?
(b) Please provide a full accounting of all administrative costs incurred specifically
related to the Civil Penalty Fund.
(c) Please indicate whether the administrative costs will solely be used for purposes of
the Civil Penalty Fund.
Question 20: On a subpage of the Bureau's website entitled "Doing Business With Us," the
Bureau discloses that it plans to build a "national database on US households' use of
consumer financial products," Further, the Bureau discloses that it planned to solicit bids
for this database in the first quarter of Fiscal Year 2014. Please produceall records
referencing or relating to this "national database on US households use of consumer
financial products."
Question 21: On April 24, 2013, the Bureau released a "White Paper" on Payday Loans and
Deposit Advance Products. Page 4 of this document states: "This white paper summarizes
the initial findings of the CFPB's analysis of payday loans and deposit advance." (Emphasis
added).
(a) In light of the fact that the Bureau's White Paper only presented "initial findings:'
why does the Bureau's unified rulemaking agenda already list "Payday Loans and
Deposit Advance Products" in the Bureau's "Prerule" stage of rulemaking?
(b) Why is the Bureau, according to the Office of Information and Regulatory Affairs
(DIRA), "considering whether rules governing these products are warranted under
CFPB authorities, and if so what types of rules would be appropriate" without first
completing its research and issuing a White Paper containing finalized research and
findings?
(c) Will you commit to finalizing the Bureau's research before proposing any rule to
regulate these products?
(d) The Bureau often cites its objective, data-driven approach to policy research and
analysis, In the name of transparency, will you immediately make all data,
methodologies and analysis underlying the Bureau's initial research and findings
available to the public for peer review?
Question 22: On December 12, 2013, the Bureau released a report entitled "Arbitration
Study Preliminary Results." The Committee understands that the Bureau obtained
6

 information that formed the basis of its findings by issuing orders to financial institutions
to provide it with copies of their standard-form consumer account agreements.
(a) To how many financial institutions did the Bureau issue these orders?
(b) Why was this information collection not noticed in the Federal Register?
Cc) Why was this collection not first approved by the Office of Information and
Regulatory Affairs [DIRA)?

Cd) Why did these orders not contain a valid OMB approval number?
ee) When does the Bureau plan to release a follow-up or subsequent study regarding
arbitration?
(f) Will you make all data, methodologies, and analysis underlYing this report available
to the public for peer review?
Question 23: Will you please provide the Committee with a current list of every Bureau
employee or contractor who has access to information contained within the Bureau's credit
card database, national mortgage database, loan-level database, and consumer credit
panel?
Question 24: Has any data collected as part of the Bureau's market monitoring efforts,
including data collected or retained in its credit card database,national mortgage database,
loan-level database, and consumer credit panel, ever led directly or indirectly to a Bureau
investigation or enforcement action? If so, please fully describe all such instances in which
this has occurred,
Question 25: Does the Bureau have a memorandum of understanding (MOU) with the
Financial Stability Oversight Council, Office of Financial Research, U.S, Department of the
Treasury or Internal Revenue Service? If so, please provide copies of all such memoranda
to this Committee.
Question 26: Are you open to creating an advisory opinion process whereby lenders and
other regulated entities can petition the Bureau for an opinion on whether a proposed
product or service is likely to be found lawful and compliant by the Bureau? This process is
used by many other regulatory agencies and proVides greater certainty to market
participants and encourages product innovation, which benefits consumers. In your view,
could the Bureau adopt such an advisory opinion process by rule, or is legislation required?
Question 27: Are you open to providing the public advance notice of the release of any
enforcement bulletin and regulatory gUidance and affording the public the chance to
comment on any such bulletin or guidance? Such a process could provide the public with an
additional opportunity to prOVide the Bureau with helpful feedback, even in instances
where the Bureau is simply restating its view of existing law and regulations. If you do not
support providing the public with this opportunity, please articulate your reasons for
opposing such a process. In your view, could the BUreau adopt such a notice-and-comment
process by rule, or is legislation reqUired?

7

 Question 28: I am concerned that the Bureau is undertaking investigations that duplicate
similar efforts undertaken by other state and federal agencies, which is an inefficient use of
limited law enforcement resources.
(a) Without revealing the identity of any company under current investigation, please
state the number of Bureau investigations currently underway in which another
state or federal agency is conducting an investigation of the same company or of the
same or similar activities.
(b) Please state the percentage of Bureau investigations in which another state or
federal agency issued a subpoena, civil investigative demand, or otherwise obtained
information from the same company being investigated before the Bureau did so?
(e) Finally, is the Bureau currently investigating any company that is not currently
considered to be a financial services company? If so, please describe the products or
services provided by any such company and the legal basis for the Bureau's
authority to investigate such companies.

8

 Questions for the Record Submitted by Rep. Bill Huizenga
"The Semi-Annual Report of the Consumer Financial Protection Bureau"
January 28, 2014
Questions for the Hon. Richard Cordray, Director, Consumer financial Protection Bureau

Thank you for your appearance before the January 28, 2014, House Financial Services
Committee hearing 10 discuss (he semi-annual report of the CFPB. Tofollow up on the
discussion, J would like 10 submit the below background ond questions to the aforementioned
witness and have the answers included ill/he officio/hearing record
On January 14, 20 14, the Financial Services Subcommittee on Financial Institutions and
Consumer Credit held a hearing on the recently cnacted Ability to Repay rule and its Qualified
Mortgage (QM) definition.
In testimony, Bill Emerson, the Vice Chairman of the M011gage Bankers Association (MBA) and
CEO of Quicken Loans, which is headquartered in my home statc of Michigan, made a series of
recommendations fo r how the CFPB could improve the Ability to Repay rule so it better serves
consumers and promotes the vibrant fl ow of safe and affordable mortgage credit. Among MBA '5
recommendations are increasing the threshold for smaller balance loans, establishing a "right to
cure" calculation en·ors and other processing mi stakes, providing better written guidance, and
raising the APOR tolerances.

1 understand the CFPB is considering making adjustments to the Ability to Repay rule later this
year.
•

What is the Bureau's timeframe for publishing amendments to the Abil.i ty to
Repay (APRlQM) rule?

•

Is the CFPB considering revising the "points and fee" threshold for smaller loans?
Currently, loans with a balance of less than $100,000 are able to qualify as QM
loans with higher "points and fees," ranging from 3 percent to as high as 8
percent for the smallest loans. Would you agree that setting the definition closer
to the national average of$219,000 would improve access to credit for low- and
moderate-income Americans?

•

Is the CFPS considering providing lenders with the abihty to "cure" mortgages
that were intended to be QMs but, through a calculation error or other processing
mistake, did not fit into the strict defin ition? Without such a procedure, lenders
will tend to avoid transactions at the boundaries of QM - an outcome at odds with
your stated goals for the new rule.

•

Is the
considering establishing a better process for the provision of written
guidance? In his testimony, Mr. Emerson noted that the absence of timely,
authoritati ve written guidance has resulled in industry confusion and
understandable reluctance to offer conswners certain beneficial loan features such

erps

1

 as bona fide discount points that help them reduce their interest rate and monthly
payment.
•

Is the CFPB considering raising the APOR!APR thresholds to qualify as QM safe
harbor loans? Only mortgages where the APR is less than 150 basis points over
the applicable benchmark APOR qualify. Increasing the spread to 200-250 basis
points would extend QM loans to a greater number of borrowers, satisfying their
credit needs with sustainable and affordabJe loans.

2

 Quest.ions for the Record sub mitted by Rep, Mick Mulva ney (R-SC)
Com mittee on Financial Services
Hearing on "The Semi-Annual Report of t he Consumer Financial Protection Bureau"
Witness: The Honora ble Richard Cordray, Director, Consumer Fina ncia l Protection Burea u
Hearing Date: J a nua ry 28, 2014
Question #1:
A recent l'e pOl1: issued by t h e Philadelphia Federal Reserve Ba nk u nde r its WOl'J..-ing Paper
Series fou n d t ha t stricter regula tion of t hird-par ty collectors is associa ted wi th creditors
extending fewer lines of credit and red ucing the a mount of credit offered - all of which
ultimately ha rms consumers. The repor t concluded that "finan cial regula tion t hat institutes
strong consumer protection must be balance d with creditor rights in order for the latter to
extend cons umer credit in the first place." As the Bureau enga ges in its r ulemaking on the
debt collection in d ~l stry. how will you ensure t hat t here is balan ce between strong consumer
protection and creditor rights?

Question #2:
In l'esponse t.o a question from Rep, Meeks a bout the importance of ensuring access to
smaH-dollar credit, you ment.ioned severa l diffcl'ent products, includin g payday loans a nd
"ce rtain types of insta llm en t loans." I share your understanding that small-dollar lendin g
serves an impor tant function for many borrowel's, especially t hose who m ay not utilize
tra ditiona l banking services, and hope t he Bureau will work to en sure the continued
via bility a nd ava ila bility of these products.
You indicated tha t t he BUl"ea u plans to "move ahead with m ak in g some policy judgme nts
and regulations in this area ." As you do so, plE'!ase provide to me:
•

•

The Bureau's definition of "installment loan" a nd how the Bureau is distinguishing
between t he different. types of installment loa ns that you referred to during the
hearing.
The features of installment loans th at, in tlle opinion of the Burea u, provide value to
con sumers.

•

The features of ins tallme nt loa ns that al'e of concern to the Burea u.

Question #3:
In response to questions from Rep. Luetkemeycr, you emphasized that "online lenders that
are legitimate and valid deserve protection against onlinc lenders that ar e undercutting
them, violating t he law. not complying wit h t he same requirements t hat they comply with."
I a pplaud you for this state ment, a nd for your recognition t h at "t here's a lot of onlin e
le nding that is perfectly prope r a nd va lid, a nd may even cut some costs ove r physical, in person lending."

1

 You also mentioned that you have been working with state attorneys general to resolve
issues that arise from the complex nature of online regulation. Tn addition to state
attorneys general, are you working on these issues in cooperation with the Federal Deposit
Insurance Corporation or the Department of Justice?
As the primary regulator for payday lenders, how will you ensure that recourse is available
to legitimate online lenders who may have been negatively impacted by enforcement or
regulations intended to stamp out illegitimate lenders?
Question #4:
The CFPB's April 2013 white paper on "Payday Loans and Deposit Advance Products" looks
at "sustained use" of payday loans, and then states that such use "may become harmful for
consumers when they are used to make up for chronic cash flow shortages."
•

If "chronic cash flow shortages" are the underlying problem, it seems unlikely that

regulating "sustained use" is the solution. Do you agree?
•

Isn't the potential regulation of sustained use simply another way of regulating the
cost that consumers may pay for a particular financial product, in this case payday
loans?

•

Doesn't Dodd-Frank, by prohibiting the CFPB from setting a usury rate, prohibit
regulation of the cost of a financial product?

The same white paper also fails to provide sufficient granular data to explain the measure
of sustained use, which is necessary in order to determine if such usc is beneficial or
harmful to the consumer.
•

How do you respond to this significant oversight, and don't you agree it must be
addressed before the white paper can be part of the basis for CFPB rule making?

•

Do you foresee any other research being released by CFPB regarding payday lending
prior to any rulemaking?

Question #5:
The Bipartisan Policy Center published a report in September 2013 that listed several
concerns with the CFPB's transparency efforts. In part, EPC found that after a June 2013
forum, "CFPE held an ostensibly public follow-up meeting. The meeting, however, was open
only to those consumer groups, industry members and government officials who received a
personal invitation from the CFPB."
BPC also noted that CFPB fails to publish notices of its field hearings in the Federal
Register and often referred to hearings in blog posts just a few days in advance of a hearing
without providing the level of disclosure found in Federal Register notices from other
regulators. EPC also criticized the CFPB for occasionally providing vague descriptions of
the hearing topics.
2

 Alarmingly, BPC found tha t there were i nsta nces wh ere CFPB did not provide any notice
a t all o(public hearings, including for its heal'i ngs on overdraft fees a nd payday lending.
•

What federa l regul a tions must CFPB comply with regarding notice of public
meetings a nd hearin gs?

•

Does CFPB have a ny additional interna l requirements for publishing notice of public
meetings?

•

How does the CFPB define a public meeti ng? Does a meeting where a ttendance was
limited to invitees meet the definitio n of a public meeting?

•

If the public is excluded from CFPB meetings, either directly by exclusive invitati ons
or indirectly by ina dequate notice, how is the Bureau a ccomplishin g your stated goal
of increased t ra nspa rency?

•

Are you willing to submit to t he Committee a pla n of action for the upcoming months
to improve tra nspare ncy at t he CFPB?

3

 Rep. Andy Barr. Questions for the Record
Pertaining to the 1/28/14 Cordray Hearing
Director Cordray As the CFPB is aware, many community banks originated ba ll oon loans as the bulk of their
constuner real estate lending portfolio. These bill1ks must take action when a balloon loan they
currently have in their portfolio matures.
Unfortunately some borrowers may not. show a verifiable income sufficient to qualify fOT a new
loan under the ability-ta-repay standards, even though they have never actually missed a
payment on their existi ng balloon loan and have a clean credit history.

•

The commuDity banks in my district are wondering whether the ability-to-rcpa)'
rule requires them to foret:lose on a borrower who has never missed a payment.
Should the community bank, mindful of past performance of the loan , willfully
disregard the ability-to-repay rule and rewrite the loan based on its best judgment
and close knowled ge of the borrower, or should the bank begin foreclosure
proceedings, no"",,ithstanding the borrower's prior record, since the borrower
cannot pay off the matured loan?

•

G iven these concerns, would you support a legis lative fix that would grandfather
into the qualified mortgage safe harbor balloon lo ans with a history of performance
and which are currently held in portfolio by the community bank?

rn addition, during the hearing, I asked you about a series of nondiscriminatory factors that could
explain why one consum er might pay less for an auto loan obtained through an auto deale.-,
compared to another consumer. If one of these factors is the reason why prices vary from
consumer to consumer, there is no unlawful discrimination. Hence,to do a proper comparison,
these variables need to be pulled out of the CFPB's analysis when alJegin g disparate impact.
You conceded during the hearing that some of these factors are "relevant." My question
concerns whether these "relevant" factors were properJy considered in CFPB ' s ana Lysis of
disparate impact.
P1ease answer Yes or No to the following (if"No" please stale a reason why):

•

Is the amouoi financed considered when CFPB' s is alleging disparate impact
discrimination in indirect auto financing?

•

[s borrower creditworthiness considered, including thc efforts by the dealer to
arrange financing for the consumer?

•

Is the presence of a competing offer from another financing source considered?

•

Is the length of the loan considered ?

 •

Is the presence of a manufacturer's discount of the rate considered?

Finally. the Bureau has repeatedly asserted , including in a response to my office, that the Indirect
Auto Bulletin is exempted from the Administrati ve Procedure Act' s (APA) Notice of Proposed
RuJemaking (NPRM) requirements. Specifically. the Bureau stated that the Bulletin falls under
the exemption ufor general statemenls of policy, non-binding infonllational guidelines., or
interpreli ve memoranda."

•

Under which of these exceptions to the APA does the Bureau feel it can circumvent
the standard rulemaking procedures, particularly NPRM? Simply, which of the
following categories does the Bulletin fall under: a general statement of policy, a
non-binding informational guideline, or interpretive memoranda?
o

Even under this exemption, the APA requires agencies to publish these rules
within the Federal Register. Has the BUI·cau published a notification of the
issuance of the Bulletin in the Federal Register? If not, does the Bureau
intend to?

o It is clear from the legislative history of the APA that Congress did not
intend for these exceptions from the law's notice and comment requirements
to be a loophole for the agencies to expedite the promulgation of rules. What
is the agency's rationale for usin g this exception?
o Since tbe BuUetin appears 10 be intended to cbange bchavior with the force
of law, how can the Bureau claim that it only applies to intra-agenq
behavior in the manner of a statement of poHcy, infomlatiooal guidelines, or
rules of agency organization, procedure or practice?
o How does the agency intend to keep Congress, the public, and industry
stakeholders notified on the proposal, promulgation, and implementation of
rules addressing disparate impact and the justification of these rulcs?

 Congress man Steve Stivers
Ques tions for the Record
"Semi-Annual Report of the Consumer Fi nancial Protection Bureau"
January 28,2014
Questions for Dir, Cordray:
1.) A recen t Washington Post story qu oted Oeepak Gupta, the Burea u's fo r mer
Litigation Cou nsel and Senior Co unsel for Enforcement Strategy as saying:
"Sometimes you couldn't write down your thinking, because it
coul d wi nd up in front of some hostile congressional
committee .. .! would use the word paranOia, except paranoia
implies that it's not justified,"
This admiss ion comes on the heels ofa July 20 13 re port that the Burea u is coach ing
its employees to "FOI A-p roof' thei r Outlook calenda rs by instructing them to "avoid
annotating entries with agend<;ls, de tail ed discussions," and "minimize attachments
to your calendar appoi ntments,"

•

Is it a widespread practice a t the Bureau to avoid documenting its
activities so as to evade Congressional scrutiny? Was Professor Gupta
acting co ntrary to Bureau policy? Have you mad e it clea r to Bureau staff
that it is not in the Bureau's jnter est to frustrate a Congressional
inquiry?

•

I have a bill that creates a Senate confirmed inde pende nt inspector
ge neral for the CFPB (H.R. 3770). Would you agree or support this bill
which would provide Congress additional oversight of your agency?

2,) rn the same Washingto n Post story, Leonard Cha nin, the former heJd of rule making

at the CFPB made the foll owing comme nts about your organization: "I lost fa ith
that the agency wo uld beco me a truly independ ent entity and ca refully balance
cons umer costs and access to credit with consumer protection," Chan in said ... "
There is great r isk in assu ming you know what is best for the consumer","

•

Do these comments trouble you in any regard? Do yo u se e it as your job
to re move decision making a bility from consumers a nd transfer it to
the Burea u sta ff! Why would Mr, Chanin make these comments if this
was not a n issue at the Burea u?

 3.) In response to questions about forms of "nondiscretionary compensation" of dealers
that indirect auto lenders can evaluate, Bureau staff has indicated that "flat fees" are
but one form of such compensation. At the auto finance forum in November 2013,
Bureau staff said that other forms of "nondiscretionary compensation" could include
flat percentages per amount financed and/or tying dealer compensation to the
amount financed and the loan term. Both of these options seem like variation of flat
fees.
•

Are there examples of "nondiscretionary compensation" that the CFPB
can share with industry?

•

Should the vehicle finance industry expect a "large participant"
rulemaking in 2014?

 Proposed Questions
Rep. Blaine Luetkemeyer (MO-03 )
"The Semi-Annual Report of the Consumer Financial Protection Bureau"
Committee on Financial Services
January 28, 2014

1. The No FEAR Act requires federal agencies to post quarterly summaries On its public
website pertaining to EEO complaints fi led with the agency. Is it correct that in the most
recent No FEAR Act report 23 employees tiled an Equal Employment Opportunity complaint
against the bureau?
2. The No FEAR Act disclosure indicates 11 out of the 23 complaints are either pending or
have been withdrawn. This means that 12 of these complaints have been disposed of in some
manner. 'What happ'c ned with these complaints, and were they resolved favorably for the
employees?
3. The Bureau seems to have taken it upon itself to regulate certain financial products based on
the notion that they could contain an element of discrimination. Should Congress be
conducting more rigorous oversight of CFPB to ensure the Bureau is not violating principles
it claims to represent?

4. After meeting with officials from both the Department of Justice (DOJ) and the Federal
Deposit Insurance Corporation (FDIC) , both agencies have admitted to some sort of
\vrongdoing by tbeir respective staffs regarding online lenders. DOl and FDIC have both
clarified in writing that legal lenders should have no problem maintaining relationships with
financial institutions. Will you issue any fonnal or in fo rmal guidance or correspondence
which indicates that it is acceptable for institutions to do business with online lenders
operating withi n the law?

5. A report recently released by the Inspector General of the United States Postal Service
(USPS) suggested that USPS move into the lending space and offer small dollar short~tenn
loans. How do you respond to this report? Does CFPB support the notion that USPS is a
qualified lender or should consider entry into the lending and/or financia l services space? If it
was to move into this or a similar business, how would CFPB oversee USPS?
6. I found several of your responses to my Questions for the Record. submitted following your
appearance before the Commi ttee on September 12th , troubling and nonresponsive. Below,
you will find one such response illustrating my concern:
Luetkemeyer Question: "Do you believe that tribal govenunents have the right to
use the internet to make lOallS",

Cordray Response: «All lenders should be mindful of state and federal law and
must comply with aU of the laws applicable to them. Full compJiance with the law
is essential to the operation ofa fair, transparent, and competitive market."

 Please answer the following question with either "yes" or "no": Do you believe tribal
governments have the rig bt to use the Internet to make loans?
7. ft has come to my attention that there has been and continues to be coordination between
the Department o[Labor (DOL) and CFPB 00 Ule DOL fiduciary rulemakiog. Please
explain in detail the coordination that exists on Lhis matter between DOL and your
Bureau, and all roles, including fonnal and information roles, CFPB is taking in
conjunct ion with this rulemaking.

8. Has CFPB coordinated with the Securities and Exchange Comm ission (SEC) on the SEC
fiduciary rulemaking? If so, in what capacity?

 Name: Nydia Ve lazquez
Hearing: The Semi-Annual Report of the Consumer Financial Protection Bureau
Date of Hearing: January 28, 2014, 10 am
Question for the Record :

We have learned th at as a consequence of CFPB implementation of Dodd -Frank requ irements for
background checks under the Loan Officer Compensation provisions, lenders and loan servicing
com panies have started to add additional employee validation requirements as a sta ndard for any and
all vendors, including subc.ontractors and their sub-agents. In fact, such requirements are now being
app lied to such routine property preservation services as mowing lawns or inspections of vacant
property that are performed by thousands of small businesses. These activities are well outside the
normal duties performed by a loan officer. Overly-broad application of the background checks policy is
costly to small businesses and does not materially affect the quality of lending practices. Can and will
CFPB issue a guidance document that will clarify the intent and scope of th e OFA loan Officer
Compensation provisions regard ing background checks, clarifying that the employee validatio n
requirements are limit ed to loan officers and individuals who perform the normal duties of loan
officers?

 <!rongre55 of tire Unitell §tute5
IDusl!il1gtolt, l!IQ; 20515
February 3, 2015

The Honorable Richard Cordray
Director
Consumer Financial Protection Bureau
1700 G Street, NW
Washington, DC 20552
Dear Director Cordray:
The Consumer Financial Protection Bureau (CFPB) has begun to use the authority granted to it
under the Dodd-Frank Act to regulate the short-term lending industry, we feel that certain key principles
should be adhered to in any rulernaking.

As you have staled yourself, the short-term lending industry provides a vital service to consumers
in states that have enacted laws allmving this product. Consumers choose short-term loans to meet their
needs, often as their best option compared to their other product choices. Having a well-regulated shortterm lending industry is important to both consumers and the US economy.
With that in mind, Vie believe there are five key principles that the Bureau must adhere to as it
drafts its short-term lending rules. Adhering to these principles will result in rules that protect consumers
while maintaining their access to credit, and protect jobs and small businesses. These five principles arc:
I.

MAINTAIN A DATA-DRIVEN APPROACH
All rules or rcgulations for the short-term lending industry, or any other industry, should be
based on quality and transparent research and data. Supervisory and regulatory deeisionmaking needs to result from large scale data analysis and tested research, not anecdotal or
agenda-driven rhetoric. Where such clear data-driven results are not present supporting the
need for regulatol)' intervention in certain areas of the short-term lending market, the CFPB
should engage in additional research and data collection before beginning the rulemaking
process.

2.

CONSIDER THE IMP ACT ON SMALL BUSINESSES
As the CFPB formulates rulemaking for the short-tern) lending industry, we urge you to
consider any potential impact on small businesses. When businesses have to devote excessive
time and energy to keep up with compliance costs. this lessens their ability to provide access
to credit to consumers, and everyone loses. Our neighborhoods need to continue to have
access to all of these services, and they need to be provided by regulated and licensed
companies. We \vant to continue to see neighborhood financial centers that provide stability
and employees that consumers can trust. These small businesses not only provide access to
credit through use of their own capital, but also employment opportunities.

1

 3. CONSIDER THE IMPACT ON RURAL COMMUNITIES
As part of the Dodd-Prank Act, in prescribing a rule, the eFPB must consider the impact on
consumers in rural areas (See Sectioll 1022 (b)(2)(Aj(ii)). Overzealous regulations can have
the unintended consequence of disproportionately impacting rural or underserved areas. If the
CFPB restricts options for consumers within their neighborhood or area, they will often tum
to illegal, unscrupulous lenders to meet their credit needs.

Colorado is slich an example where recently-enacted short-term lending laws have led to rural
areas being disproportionately adversely impacted. After new regulations in Colorado went
into effect, the number of stores in Colorado was cut in half. This has resulted in consumers
being forced to travel great distances to receive loans, or losing the benefit of this type of
credit because of lack of access in their area.

4.

CONDUCT COSTIBENEFIT ANALYSIS
Any proposed rule for the short-term lending industry must contain a thorough qualitative and
quantitative cost-benefit analysis. We are concerned that overly aggressive restrictions on the
short-term lending industry will reduce access to credit in the marketplace. Excessive
restrictions could create a business environment that is not economically viable for many
lenders, and one that disproportionately impacts companies, including small businesses,
forcing them to shut down operations. Such a result would eliminate a critical choice for
many consumers who rely on short-term credit.

5. CONSIDER STATE MODELS
As the CFPB studies payday loans and how consumers use them, we ask you to review the
many states that have passed short-term lending laws and use these as a model for any
national regulations. We believe that these states have set an example for regulators of
successfully balancing the dual needs of consumer protection and access to credit. The shortterm credit market is well-regulated in many states due to years of study and discussion by
lawmakers and regulators who have worked with consumer groups, the industry and other
stakeholders to ensure the right balance of access to credit with consumer protections. The
CFPB should be careful to consider state laws, which reflect the wishes of American citizens
using the product within their state.
We encourage the CFPB to continue to study the short-term lending industry with the goal of
being able to provide workable and sustainable regulation for this needed source of consumer credit.
Going forward, it is important for you and for all of us to continue to learn about the nuances of this
industry, and how we can all work together to better serve consumers in need of short-term loans.
Sincerely,

~--

Steve Stivers
Member of Congress

Member of Congress

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Scott Garrell

Member of Congress

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Lynn Westmoreland
Member of Congress

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Member of Congress

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'I'he Iionorable M iek Mulvcllley

U.S House of Representatives
2419 Rayburn Iiouse OHice Building
\Vashing-toll, DC 20515

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to S,IIIlL'r IllpLiI 1"]"\1111 rcprc:-;ClIl<l1 i\cs ot" :-;Tll,i! I busincsscs 1hal wULlld he a Ilccl cd
/\s till' BUt"l',llI c\ll1:mlers ,lppnlprintt:: rt::gul:l1iull I~lr Ihe shot-i-term kl1dlllg I1lClt'ket. wc ,lls() look to
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lending, including both thc kSSllllS th,lt GIll b<.: dnlWll from stat...: C'\PCl"lCIIU'S rcgulnting this lllnrkcl
and tilc pOkllWll lnkradlOIlS bet\\'ecn possibk CI'PB rllks ,md CXISI1llg st'lle frameworks,
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thi_; iIllPlll't,lnt issuc ,IS tile Hurcdu C(lIltlllll<':S to hdp m,lrkcts \York hetter for COIlSUlllcrs"

Ull

Sinccrely.

Richard ( ordra\
Dlrectur

 HOUSE CC'/'/TTEE ON
FINANCIA__ S E~ VICES

STEVE STIVERS
15TH [,-, -- 8 " ,c

HOUS E

(!J:ougre.s.s of t4e lluitell
lI!OUB~

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ON RULES

~tnte.s

of lR~pnBentatiu~B

April 17, 2015
The Honorable Richard Cordray
Director
Consumer Financial Protection Bureau
1700 G Street, NW
Washington, D.C. 20552

Dear Director Cordray:
We write to express our concern about the Consumer Financial Protection Bureau's
(Bureau) Notice of Proposed Rulemaking for prepaid cards and similar products. As you know.
one aspect orlhe Bureau's statutory mission is to facilitate consumer access to financial products
by promoting innovation and competition in the market. This aspect of the Bureau's mission is
critical for unbanked and underbanked consumers, who all too often have less access to financial
products and services. We, too, support improving access to financial services for this group of
consumers and believe the Bureau is uniquely positioned to help facilitate this goal.
The proposed prepaid card rule, however, could needlessly increase the cost of prepaid
cards for consumers and limit their access to new and innovative features and services. We
therefore encourage you to develop clear and practical regulations that empower consumers who
use prepaid cards, rather than relegating them to a second tier financial system with limited
access and choice. In particular, we are concerned that the proposed rules for opt-in overdraft
protection and other similar services may eliminate companies' ability to offer these features that
consumers have said they want and at times need access to in order to meet their spending needs.
hlrthermore, this could directly impact the roughly 68 million unbanked or underbanked
consumers in the United States who already have little or no access to traditional financial
servIces.
Prepaid cards can provide secure, cost-effective, and l1exible payment options for
consumers, businesses, and federal, state, and local governments. Consumers value the
accessibility of prepaid cards, including the fact that they can obtain these products at rctail
stores, and that they are often less expensive than other products, such as check cashing services.

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 We are also concerned that the breadth of the Bureau's proposed rule has the potential to
stitle innovation in the prepaid market and limit consumer choice. The proposed rule as
published m the Federal Register is approximately 235 pages and covers a broader range of
products than the Bureau considered in its Advance Notice of Proposed Rulemaking (ANPR).
For example, the proposed rule, unlike the ANPR, covers more than just general-purpose
reloadable cards, products like mobile and other electronic prepaid accounts, peer-to-peer
payment products, virtual currency and other products that are still in development.
The expansive scope of the proposed rule raises a real risk that the final rule may stine
ilmovation in the prepaid market by imposing a one-size-iits-all approach t.o a highly diverse and
flexible range of financial service products that serve a critical need. This could hamper
competition and ultimately harm the access that all consumers - and especially unbanked and
underbanked consumers - have to financial products and services.
As you finalize your prepaid rule, we would appreciate your attention to these important
issues. Prepaid, mobile and peer-to-peer products provide consumers with convenient, cost
etfective, and diverse payment options. It is important that your final rule preserve the benefits
that consumers seek when they choose to use prepaid cards.
Thank you for your consideration.

Sincerely .

•

Member of Congress

DAVID SCOTT
Member of Congress

:Jktt;JJAMiJb
Member of Congress

~" ... ~
BILL HUIZENGA
Member of Congress

SCOTT GARETT
Member of Congress

Member of Congress

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Member of Congress

RUBEN HINOJOSr
Member ofCongres

Member of Congress

Mi.~;
Member of Congress

MI'
VANEY
• lember of Congress

Member of Congress

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Member of Congress

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Member or Congress

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3

  

i EH SHARLHCI ASTUTZEMAE

ROGER WILLIAMS
Member of Congress

          

- PEARCE
Member of Congress

t.

Member of Congress

'-- ,
C "r
May 7. 20 15
The Ho norahle M ick Mu lvaney
U. S. House or Rcprcscliia li vcs
Bui lding
24 19 Ra yburn House

omce

Washington. D.C 205 15

OIJClr C(lI1gressman Mu l v<ll l ey:

Thank

YOll

for your conuncnt icUl:r on Ihe (\)JJs ull1 cr finam.:ia l Prnt ectioll

Bllrc~u' s

Not ice of

Proposed Ruk mak ing r...gard ing prepaid accoull ts. We etpprcciatc your Ii.::cdbad regarding {he
impol1 ancc o r access \( 1 fin ancial products Ih,,! ca n hel p consumers mccl lhci r sp~llding needs. We
remai n cOlllm itted TO e nsuring Ihal unbankcd and undcrhank ed consu mers 1Ire ab le 10 parlicipatc in
a fin ane i,, 1 syste m w ilh ;K:CC~S to a vari!;::!y or lin aneinl products and servi.;:es. incl udi ng prep aid
a{.;counls.

As detailed ill th e pro posed , the [3ureau ha s cv,ll Ll alcd a range of potential apPwClchcs In {lVerdrClft
slT\ ices (lIld credit fentul'l.!S Oil prepa id accounts ill conn ection with th is ru lellHlklllg. The apprmll.:h
we proposed in the N~l\i l:t ur Propm:ed Rul el11 ak ing was designed to appn1pri<lH.: ly balance the Ilcc(i
and desire of som e C t)nS UnH~ r~ 10 access cred it in connec ii oll wit h prepai d p rNlucls and the need ft"lr
g uard ra il s to Illake:: sure such ..: rr.:d it is o lTcH.'d w ith p rOICCIIt"lns sim il;u' 10 those thai app ly 10 other
ca rd-basal c ru lit (u'.. c redi l cards). As W I; work t(l\\'Hrds fi nal iz in g the prepa id p roposa l. WI; will
,,:olllinue to c"aluatr.: the lik dy impilet o f:;::uch pnwisio!ls. including t hei r impac t Oil (.llhtr types (If
products that may be o ffered in compliance \.... ill1 <l li nnl ru le .

We also appreci<lte your cOIll.:erns about over-regulation and the nsk that it eou ld ~ tine innovation
or competit10n in the linancial serv ices m arket. At the Bureau. we bdicvc that consumer-friendly
innovation hold s greclt p0tcntinl n,)r achievin g our m ission ofmaklllg thl." C(JnSlllner finance lll(l rket
work fo r consumers. We a lso bel icve thaI n:gulali(11) uf l he prcp ai d market sho uld he clear and
c()I1s is1l:nt across dille rem prudud typ es. In dcvelopi ng the proposal. we engag.ed in an in-depth
out reach p roc e ~s with n va riety or rel evant st akeho lders. indud ing through the publicouion of an
A(l\'anctxl No tice o f Pro pos cd Rulcma king.. Although thc Ad vanct:d Notict! o f Proposed
Rulcmak ing 1i.II.:uscd (Ill gClh:ral-puq)()SL: rL:loadab le cards. it also asked hro ad er questions n:garding
the potentia l ddinitillna l scope Ii.)]" a prepaid ru lcmakln g. \A/h ile an Ad vanccd N(lt lCC 01" Propns.:d
Rul emak111g] s not a required part of the rulcmakin g process under the Administrative Pn.xedurcs
Act. the over no comment s we reccived in respolls,,: helpcd infi.l1"lll the scope Clf thc Bureau's
proposal.
We nrc com m itt ed to t!l1 su ring t hat our rule on prCJl!Ii d accounts and a ll

orour r~gu l a ti (lns refl ect

th.::- Hun:au ' s tho ro ug h and na la lKcd l'onsidcrat iO]10 " re lc\ <l nl vit wpo inl5. As such. \\'1:: are plcas.cd
lha t t he proposa l has gi.ll"Ilcrl-xl SLlch a robust and IIlcfln ing.fi.1i pub lic responsc: in add ition to you r
leiter. the Bureau is ill l he PI"(lCCSS o f rc\'ic\\ ing more tha n 35.000 comments submitted on the

 prepaid proposa l by c{)nsum ers. industry membc r ~. trad e asstl(: iat ions. con sumer advoc ac y groups.
go"emment agencies, rlnd other interested pm1 i!.!s. We an:: revicwlllg these l.:om11lcnts now. as we
co ntinue to evaluat e lww co nsllmers' spendin g, needs (.;an be met sale)y and lran sp'lrently.
Once ilgain. 1 appreciate yn ur interest m providing feedba ck on our propos:d. and I would hI: happy
to meet with you to d iseu :-.:-. your conce rns at any ti me.

Si lll.;crd y.

?~
Richard Cordray
Director

 Questions for the Record submitted by Rep. Mick Mulvaney (R-SC)
Committee on Financial Services
Ilcaring entitled "Examining Regulatory Burdens - Regulator Perspective"
Witness: Mr. David Silberman, Associate Director, Office of Research, Markets & Regulations,
Consumer Financial Protection Bureau
Hearing Date: April 23, 2015

Question #1: During your appearance before this Committee, I asked you about the CFPB's
report entitled "Small Business Advisory Review Panel For Potential Rulemakings for Payday,
Vehicle Title, and Similar Loans Outline of Proposals Under Consideration and Alternatives
Considered." In that rcport, on pages 44-45, the CFPB found:
'The two potential requirements, amortization and off-ramp, have similar estimated
effects on the number ofloans that could be made. Total loan volume is estimated to
dccline by between 55 perecnt and 62 pcrcent ...
The amortization requirement is estimated to have a larger effect on principal and fees
because the second and third loans in a sequence \vould be required to be smaller than the
first loan. The impact on total fccs ofthc amortization rcquiremcnt is estimated to be
between 71 percent and 76 percent, while the impact of the off-ramp requirement is
estimated to be between 60 percent and 65 percent. ..
This may affect monolinc lenders, those specializing in payday lending, particularly
severely. Given those impacts, it is likely the case that the number of monoline stores that
could operate profitably within a given geographic market would decrease. Some stores
might diversify their product offerings, including offering other fOTITIS of covered loans,
while others might close. The proposals under consideration could, thercfore, lead to
substantial consolidation in the short-term payday and vehicle title lending market."
Specifically, I asked about the process the CFPB used and the data relied on to develop a
proposed rule that would cause consumers to lose acccss to 60% or morc of available short tern1
credit, effectively depriving customers of a needed line of credit.
You testified that the CFPB engaged in a three year process with the "largest data set of loan
levcl anonymizcd data" to develop this rule. When I asked for this data, you said it was
confidential supervisory data and you were not sure if you could provide it to our Committee.
Sir. I have been infonned by staff that such data is routinely provided to our Committee for
oversight and invcstigation purposes. As such, please provide thc data you rclied on to develop
the proposed rule and report mentioned above. In addition to that data, please provide the data
used to determine that the perceived harm to consumers from short term credit, such as payday
loans, justified eliminating consumer access to 60% of loans in the marketplace and driving a
majority of lenders out of business.

 Questions for the Record submitted by Rep. Mick Mulvaney (R-SC)
Committee on Financial Services
Hearing entitled "Examining Regulatory Burdens - Regulator Perspective"
Witness: Mr. David Silberman, Associate Director, Office of Research, Markets & Regulations,
Consumer Financial Protection Bureau
Hearing Date: April 23, 2015
Question #1: During your appearance before this Committee, I asked you about the CFPB's
report entitled "Small Business Advisory Review Panel For Potential Rulemakings for Payday,
Vehicle Title, and Similar Loans Outline of Proposals Under Consideration and Altematives
Considered." In that report, on pages 44-45, the CFPB found:
"The two potential requirements, amortization and off-ramp, have similar estimated
effects on the number of loans that could be made. Total loan volume is estimated to
decline by between 55 percent and 62 pereent. ..
The amortization requirement is estimated to have a larger effect on principal and fees
because the second and third loans in a sequence would be required to be smaller than the
first loan. The impact on total fees of the amortization requirement is estimated to be
between 71 percent and 76 percent, while the impact of the off-ramp requirement is
estimated to be between 60 percent and 65 percent..
This may affect mono line lenders, those specializing in payday lending, particularly
severely. Given those impacts, it is likcly the case that the number of monoline stores that
could operate profitably within a given geographic market would decrease. Some stores
might di versify their product offerings, including offering other forms of covered loans,
while others might close. The proposals under consideration could, therefore, lead to
substantial consolidation in the short-term payday and vehicle title lending market."
Specifically, I asked about the process the CFPB used and the data relied on to develop a
proposed rule that would cause consumers to lose access to 60% or more of available short term
credit, effectively depriving customers of a needed line of credit.
You testified that the CFPB engaged in a three year process with the "largest data set of loan
level anonymized data" to develop this rule. When I asked for this data, you said it was
confidential supervisory data and you were not sure if you could provide it to our Committee.
Sir, I have been infonned by staff that such data is routinely provided to our Committee for
oversight and investigation purposes. As such, please provide the data you relied on to develop
the proposed rule and report mentioned above. In addition to that data, please provide the data
used to determine that the perceived harm to consumers from short term credit, such as payday
loans, justified eliminating consumer access to 600b of loans in the marketplace and driving a
majority of lenders out of business.

 (!ungre55 uf tire liInitell §tates
l'IIas~in9Ion,

Il<!l 20515

May 20, 2015
The Honorable Richard Cordray
Director
Consumer Financial Protection Bureau

1700 G Street, N.W.
Washington, D.C. 20552
Dear Director Cordray:
The undersigned Members of Congress acknowledge that the Consumer Financial
Protection Bureau (CFPB or Bureau) has done significant work on the TILA·RESPA Integrated
Disclosure (TRID) regulation. Nevenheless. this complicated and extensive rule is likely to
cause (:haJlenges durtn}; implementation, which is currenlly scheduled for August 1, 2015, that
could negatively impact consumers. As you know, the housing market is highly seasonal, with
August, September, and October consistently being some of the busiest months of the year for
home sales and settlements. By contrast, January and February aTe consistently the slowest
months of the year for real estate activity. We therefore encourage the Bureau to announce and
implement a "grace period" for those seeking to comply in good faith from August 1st through

the end 0[2015.
Even with significant advance notice. understanding how to implement and comply with
this regulation w ill only become clear when the industry gains experience using these new forms
and processes in real-life situations. As the TRIO regulation does not provide lenders an
opportunity to start using the new disclosure form prior to the August 1st implementation date.
market participants will not be able to test their systems and procedures ahead of time, which
increases the risk of unanticipated disruptions on August 1st. That is why we believe that a grace
period for those seeking to comply in good faith from August 1st through the end of2015 would
be panicularly useful in these ci rcumstances . During this time, industry can provide data to the
CFPB on issues that arise so that the Bureau and industry can work together to remove
impedimenlS to the effectiveness of the rule.
Thank you for your time and consideration. If we may be of assistance, please do not
hesitate to contact us.
Sincerely.

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The Honorabl e Andy l1arr
U.S. H (IUSC (I f Rc prcscntalivcs
143 2 Lungw()I1h House Ofti ce Bui lding

T he Honorable Ca rol yn B. \1a\ollcy
U.S. House o f Representatives
2308 Ra yh urn HOll se Office Building

Washington. D. C. 205 J 5

Washinbl1on, D.C. 205 15

Dear Rcpn::scntativc:; Burr <lnd Mu]oney:

Thank you till" yo ur Jetter nbOU111llplementatioll llflhc TILA· RESPA Integrated Dlsclosure Rule,
which WI;! tin uJil.cd mllctccn months ago to carry out the law enacted by Congress. We share your
desire for tl smooth and successful implcmcnt atHm o1'lhe Ru le, and we continue to work closel ).'
wllh all stukdltllders to support that gna!. LIke yo u. \Ve rel.:ogn izc that succcss ful11nplcmentat ion
poses ch alknges 10 industry and benetits both industry and C(l n ~ U Ill~ r ~ . hut in any even! requi res
cl ose coll ahorat io n between ind ustry and the Ct) n S lIlllCr rini.l ncinl P ro l ~..: ti() n Bu reau.
As yo u ma y knnw. rhe Bu rea u has l<lkcn many s1ep ~ to !"upporl industry imp lementat ion ami to
help crC!<.i iltlrs. vendo rs. and o lhers aftcclcd by the Rult' 10 heller understand. opcral ionali ze. and
prt'parc 10 ("ol11pl y with the Rule's ncw ~trcam li ned d i scl()s llr~s. Since Ihe Rule was fi rst publ ished
in \ Iovem bcr 20 13, we have made it a po inllo cng<lgc di re..:tly and intensively with fi nancial
institu tions and vendo rs through a Ic.mna l regul atory impic mcntat ion proj\,.·c l. 1"tH,' Hureau' ,S
reg lll ~l to ry implementat ion project l()I' the Ru le incl udes the 1011(lw ing:
,.

Int cr·agcncy coordination. In-depth eX<lm pr()cr.::durcs werc approved by the Federal
Financial Institutions Examinatwl1 Council in February 2() J 5 and published by CFPB on
April J, 20J S, "l'he Bureau's own examinat ion pWL'L'durts illl.:l) rpnraling the FFIEC exam
procedul't:!s wt:!rt: published Oil Ma:y 4.2015,

,.

Puhlish "readiness guide." plain-hmgllagc guides, and other resources. The "readiness
guid(;" inc lu de s a broad check-li st oJ'lhin gs for industry to do prior to the Rule's cllCcti vt:
date. The (1urcau has abo published a complianc(: guide. a gui de 10 the new llltegratcd
discl (lsli rc fo rms, <l nd an ill ustrativc limciinc, I

,

IJublish a mendments and updates 10 1he Rule in r~s pons {' (0 indu s1ry r{'quests. In
Januury 20 15. a fter eX lens ivc ou trc<lch 10 stakeho lders. the Bu rea u uJ opled Iwo minor
Illudilicalions ,md technicHI amcndmcn ls 10 the Rul e 1\"'1 smooth comp li ancc fo r inJust ry.?

\ 'I hc~c rl',,(lUn'C, are o:\\'ai l:lbl" <It \n~'\\',com\lllle!'fillanct' , g(\\' rl'g uI Clw fy-i lllpl eml' n!al io l1 , ti ' a -r..'''P<I
"KU I' f{ .'OA7 (I :t"b , 19, ~U I 5),

 ,.

P,'ovidc unofficial staff guidance. Bureau staff attorneys have provided oral guidance in
response to over 750 regulatory interpretatIon inqu11"1es, received from trade assocIatIons
and through the ( I Ill; 1<l.:glll~LI.]I·~t,.: ::::'~Jj~iI\ enUlil address since the Rule ",·<lS issued.

,.

Engage with stakeholders. Bureau S\ntTlHlve provided remarks and addressed questions
ahout the Rule and related ll11plementation matters at over 40 t(mnal events and over 50
inf(mllal stakeholder meetings since the Rule was issued.

,. Conduct wchina.'s. The Bureau has conducted a series of fi ve fl·ee, publicly available
1
\\cbinars. available for viewing lhl"llugh thc Bureau·s \vebsitc: that provide guidance on
how to lllterpret and apply· specific provisions.

,. Clarify misunderstandings. Today \,"e arc releasing a fact sheet explaining the limited
circumstances when the Rule reqU1res that the consumer be pnl\/lded un additional threeday reVle\>.,' period. Only three specific changes require an uclditionaJ three-day revic\v
period: (1) un II1creuse in the APR uf greater than 1/8 of a percentage POlllt for a tixed-rate
loan or LA of a percentage P01l1t t(l]. an adjustable-rate loan (decreases 111 the APR based on
a decrease in the interest ralc or fees charged do not trigger a dcla y.'): (2) the addilwn of a
prepayment penalty: and (3) changes in the loan product. hom a tixed-rate tn an adjustablerate loan , ttW example. Importantly. I/O olhcl" c!wngcs requIre a delay iell" re-disclosure.
Your letter n.llSeS a fUl1her 11l1pOl1ant matter. As you have suggested, the Bureau's \vork to support
the llnplementation of the Rule does not end on the effective date of August 1. as we eontll111C to
work with industry, consumers, and other stakeholders to answer questions. pnwlde guidance. and
SUpp0l1 a smooth tr<lI1s1tion for the nl0l1gage market. As \ve do so, and in response to considerable
mpul we have l"Cce]vcd hom you and your constituents. I have spoken with our fellow regulators to
clarify that our oversight of the implementation ofll1e Rule will be senSitIve to the progress made
by those entitles that have squarely f(lCUsed on making good-faith efforts to come into compliance
with the Rule on timc. My statement herc of this approach is intended to ease some of the concerns
we have heard about this transition to ne\',.' processes in the coming months and is consistent with
the approach \ve took to implementation of the Title XIV m0l1gage rules in the early months aner
the clTcctive dales in January 2014, \'I-"hich has worked out well.
As always, thmlk you for your strong interest in the Bureau·s work, and J personally apprecHlte
your oversight efforts. I hopc you can sec, here again. that \ve listen closely and consIder carefully
lww we can best address the ISSUCS that you raise as \ve a1\ pursue this important advance in
consumer protection and disclosure authorized hy Congress. Please contact me if you have any
adl.htinnal questions or Bureau staff can meet w·ith your staff should that be helpful tn you.
Sincerely.

~
Richard Cordray·
Director
;J·he~e \\"ebin<lr~ <Ire aV<liJabJe <It http: W\\W.coIlsulll e rfiIl<lllce.gl1\ · ·n: gIlJ<lwr~-implc:mL·ntati(lnlita-rc:spa
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T he Honorable Juh n Lewis, Vl.cmhcr o f (' o ngn.~s::.
T he Hon(lrah le Ted Lieu. ~1cm bcr of Co ngress
T he! IUll0rabie Dan Lipin:.;ki. Memher n f Collgrcss
The! lonorablc Frank A. LoBiondo. Member ofC'() ll !:,'Tes:.;
The Il onorahlc Dave Loebsack. Member of Congress

The
T he
T he
The
T he
The
The
The
'\ he
Tht::
The
T he

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T he HOllorable Tod d ) 'oung. Mcmhcr o f" Congress

 Consumer Financial
Protection Bureau

Will the new mortgage
disclosures delay my closing?
The answer is NO for just about everybody.
For mortgage applications submitted on or after August 1, 2015, lenders must give you
new, easier-to-use disclosures about your loan three business days before closing.
This gives you time to review the terms of the deal before you get to the closing table.
Many things can change in the days leading up to closing. Most changes will not require
your lender to give you three more business days to review the new terms before closing.
The new rule allows for ordinary changes that do not alter the basic terms of the deal.

Only THREE changes require
a new 3-day review:

NO OTHER changes require
a new 3-day review:

1. The APR (annual percentage rate) increases by
more than 1/8 of a percent for fixed-rate loans or
1/4 of a percentfor adjustable loans. 1 A decrease
in APR will not require a new 3-day review if it is
based on changes to interest rate or other fees.

There has been much misinformation and mistaken
commentary around this point. Any other changes
in the days leading up to closing do not require a
new 3-day review, although the lender will still have
to provide an updated disclosure.

2. A prepayment penalty is added, making it
expensive to refinance or sell.

For example, the following circumstances do not
require a new 3-day review:

3. The basic loan product changes, such as a
switch from fixed rate to adjustable interest rate
or to a loan with Interest-only payments.

• Unexpected discoveries on a walk-through
such as a broken refrigerator or a missing stove,
even if they require seller credits to the buyer.

1

Lenders have been required to provide a 3-day
review for these changes in APR since 2009.

• Most changes to payments made at closing,
including the amount of the real estate
commission, taxes and utilities proration, and
the amount paid Into escrow.
• Typos found at the closing table.

Learn more at consumerfinance_gov.

 Qrollgrcss of tlTc 1111itclt ,§itatcs
llGa.r.l,ingiolt, 13(£ 20515

June 17, 2015

The Honorable Richard Cordray
Director
Bureau of Consumer Financial Protection
1700 G Street, NW
Washington, DC 20552
Dear Director Cordray:
We write to express our concerns with the ArbUration Study! that was recently released by the
Consumer Financial Protection Bureau.

Under the Dodd-Frank Act, Congress delegated to the Bureau the authority to issue a rule
regulating the use of arbitration agreements in consumer financial agreements, but required the
Bureau to conduct an arbitration study as a prerequisite to regulation such that the "findings in
[any] such rule shall be consistent with the study.,,2 Thus, the decision as to whether the Bureau
should prohibit consumer arbitration agreements is based on the findings and veracity of the
study.
Unfortunately, the process that led to the Bureau's Arbitration Study has not been fair,
transparent, or comprehensive. The Bureau ignored requests from senior Members of Congress
for basic infonnation about the study preparation process. The Bureau also ignored requests to
disclose the topics that would be covered by the study, and failed to provide the general public
with any meaningful opportunities to provide input on the topics. Because the materials were
kept behind closed doors, the final Arbitration Study included entire sections that were not
3
included in the preliminary report that was provided to the pUblic.
As a result, the flawed process produced a fatally-flawed study. Rather than focusing on the
critical question - whether regulating or prohibiting arbitration will benefit consumers - and
devising a plan to address the issues relevant to resolving that question, the Bureau failed to
provide even the most basic of comparisons needed to evaluate the use of arbitmtion agreements.
For example, the Bureau failed to estimate the transaction costs associated with a consumer
pursuing a claim in federal court as compared to arbitration. The Bureau also failed to estimate
the ability of a consumer to successfully pursue a claim in federal COUli without a lawyer, despite
the fact that consumers often are self-represented successfully in arbitration proceedings. The

I Consumer Financial Protection Bureau, Arbitration Stlldy Rl!pol't to Congress, Plirsuant/o Dodd-Frank Wal!
Street Reform and ConsulIJel' Protection Act § f 028(a) (20 15) [hereinafter Arbitration Study], ffilailable at
hl~·ill!cs .consumerfi ]lance. goy/flO 15 03 c fp barb itralion-stud v-rcporHo-co]l !2rcss-20 15 .pd f.
2 Dodd-Frank Wall Street Reform and Consumer Protection Act, 12 U.S.C. § 5518(b) (2015).
3 See Arbitration Study at 9.

 Hon. Richard Cordray
June 17,2015
Page 2
absence of comparison to even these basic data points throws suspicion on where other useful
information has been sidestepped, if not willfully ignored.
For ninety years, since the enactment of the Federal Arbitration Act in 1925, there has been - as
the Supreme Court explained in a recent unanimous opinion - "an 'emphatic federal policy in
favor of arbitral dispute resolution. ",4 When the consumers' path to justice is impeded by a
court system that is slow and costly, it is clearer than ever that Americans need alternative
dispute resolution procedures that are fair, more accessible, less costly, and more efficient.
We therefore call upon the Bureau to reopen the study process, seek public comment, and
provide the necessary cost-benefit analysis for understanding how a similarly situated consumer
would fare in arbitration versus a lawsuit. Any rulemaking proceeding in the absence of such
minimally fair procedures would be premature, biased, and fail to comply with Congress's intent
in conferring this authority on the Bureau.
Sincerely,

Mem.ber of Congress
~<

(.-I,umf4'l1,~"..,n",,&1lember of Congress

.,

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Member of Congress

United States Senator

at~~restM1
J0J~
Member of Congress

KPMG LLP v. Cocchi, 132 S.Ct. 23, 25, (2011) (per curiam) (quoting Mitsubishi Motors Corp. v. Sale,. ChryslerPlymouth, Inc., 473 U.S. 614, 631 (1985)).

4

 Hon, Richard Cordray
JUDe 17, 20 15

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Member of Congress

 Han. Richard Cordray
.lune 17, 2015
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 "'Examining Regulatory Burdens - Regulator Perspective"
House Committee on Financial Services,
Financial Institutions and Consumer Credit Subcommittee
Questions for the Record
April 23, 2015

Questions for David Silberman, Associate Director for Research, Markets, and
Regulations, from Congressman Royce:
Question I
Mr. Silberman, the Dodd Frank Act includes several provisions designed to exclude the business
or insurance from the purview or the Consumer Financial Protection Bureau. The Act defines
the term the business of insurance to include not only underwriting and reinsurance of risk, but
also all acts necessary to the underwriting and reinsuring and the activities related to
underwriting and reinsuring, including acts and activities conducted by officers, directors,
agents, employees and other persons authorized to act on behalf or such persons. The "acts and
activities" under that definition clearly include, and were intended by Congress to include, the
sales and marketing of insurance. Since there should be no confusion of Congressional intent on
this issue, have there been any internal CFPB conversations to the contrary?
Response

As you note, the Consumer Financial Protection Act (CFPA) of the Dodd-Frank Wall Street
Reform and Consumer Protection Act, which created the Consumer Financial Protection Bureau
(Bureau) and sets out its authority, includes provisions relating to the "business or insurance."
The CFPA refers in several places to "financial products or services," and, in partieulm,
"consumer financial products or services.") The CFPA provides an "exclusion" from the
defi.nition (:~ "financia,l,frodu~t. or service" that in?ic~tes that th~, term "does not include ..: . the
busmess olmsuranee. AddItIOnally, the CFPA mdleates that ·[t]he Bureau may not del me as a
financial product or service, by regulation or otherwise, engaging in the business of insurance. ,,3
In addition to the provisions of the CFPA that refer to the "business of insurance," which appear
to be the subject of your question, the CFPA also contains provisions relating to "insurance."
For instance, the CFPA limits the Bureau's authority over "persons regulated by a State
insurance regulator.,,4

I See 12 U.s.c. 5481 (15) (defining "financial product or service"): 12 C.S.c. 5481(5) (defining "consumer financial
product or service"): sec also, e.g., 12 U.S.c. 5531(a) (providing Bureau authority to take certain action "to prevent
a covered person or service provider from commilling or engaging in an unfair, deceptive. or abusive act or practicc
under Federal law in connection with any transaction with a consumer for a consumer financial product or service,
or the offering of a consumer financial product or service").
~ 12 USc. 548I(l5)(C).
, 12 USc. 5517(m).
4 See 12 U.s.c. 5517(t).

 The CFPA defines the "business of insurance" as "the writing of insurancc or thc reinsuring of
risks by an insurer, including all acts necessary to such writing or reinsuring and the activities
relating to the writing of insurance or the reinsuring of risks conducted by persons who act as, or
are, officers, directors, agents, or employees of insurers or who are other persons authorized to
act on behalf of such pcrsons."s You indicate that the "acts and activities" under this definition
"clearly include, and were intended by Congress to include, the sales and marketing of
insurance," and ask whether there have "been any internal CFPB conversations to the contrary."
To the best of my knowledge, I am not aware of internal conversations within the Bureau
indicating that the sale and marketing of insurance arc not included in the "business of
insurance" for the purposes of this definition.
Questions for all witnesses, from Congressman Luetkemeyer:
Question 1
As you know, the Riegle Community Development Act of 1994 requires federal banking
regulators to conduct a cost-benefit analysis for any rule promulgated. Has your agency adhered
to this statutory requirement on all rules promulgated?
Response

The Consumer Financial Protection Bureau (Bureau) is not subject to the Riegle Community
Development and Regulatory Improvement Act of 1994 (Act). Section 30 I of the Act defines
"Federal banking agency" as having the same meaning as in Section 3 of the Federal Deposit
Insurance Act (FDIA). Under Section 3 of the FDIA, "Federal banking agency" means: 1) the
Comptroller of the Currency; 2) the Board of Governors of the Federal Reserve System; or 3) the
Federal Deposit Insurance Corporation. (1
Please also see response to Question 2.
Question 2
Has your agency conducted the requisite cost-benefit analyses for rulemakings associated with
and stemming from the Dodd-Frank Wall Street Reform and Consumer Protection Act?
Response

Yes. As required under Section 1022 of the Dodd-Frank Wall Street Reform and Consumer
Protection Act (Dodd-Frank Act), when the Bureau prescribes a rule under the Federal consumer
financial laws, it considers the potential benefits and costs of the regulation to consumers and to
persons engaged in offering or providing consumer financial products or services, including the
potential reduction of access by consumers to such products or services, the impact on depository
institutions and credit unions with $10 billion or less in total assets, and the impact on consumers
in rural areas.

" 12 USc. 5481(3).
~ 12 USc. 1813(z).

 In addition, Section 1022 of the Dodd-Frank Act requires that within five years after the effective
date of any significant rule or order adopted by the Bureau under Federal consumer financial
law, the Bureau must publish a report of its assessment of the rule or order's effectiveness in
meeting the purpose and objectives of the Consumer Financial Protection Act of 20 10 and any
other stated goals for the particular rule or order. 7 The Bureau is committed to this review and,
as required under the Dodd-Frank Act, will seek public comment before publishing such reports.
Moreover, shortly after opening our doors in 2011, the Bureau issued a Request for Information
to help identify priorities for streamlining inherited regulations. As a result of this early initiative
the Bureau identified certain requirements regarding delivery of annual privacy notices under the
Gramm-Leach-Bliley Act as unduly burdensome to financial institutions. As a result, in October
2014, the Bureau finalized a rule to allow bank and nonbank financial institutions under certain
conditions to post privacy notices online instead of distributing an annual paper copy. As part of
the Bureau's commitment to achieving tailored and effective regulations, the Bureau engages in
a rigorous process to ensure that its regulations are not outdated, unnecessary, or unduly
burdensome.

Questions for David Silberman, Associate Director for Research, Markets, and
Regulations, from Congressman Luetkemeyer:
Question 3
CFPB's payday lending White Paper and Data Point research paper have many defects, many of
which have been recognized by the Bureau. The recent payday proposal points to a small,
parochial Pew study that lacks objectivity. The CFPB claims to be a data - driven agency. How
docs the CFPB select data on which it bases its studies? Docs CFPB analyzc all data on a givcn
subject, or all data provided to the Bureau on a given subject? Finally, how does the CFPB
utilize and/or incorporate data that does not support a proposed rule?
Response
The Bureau has published two reports detailing its analysis of borrowing pattems with payday
loans and deposit advance products.
o

In April 2013, the Burcau published a Whitc Paper with initial findings on consumer usc
of short-term payday loans and deposit advance products.'s

o

In March 2014, the Bureau published a Data Point containing further analysis of the data
on short-term payday loans.\!

Both the Whitc Paper and Data Point contained analysis of dc-identified data obtained from a
number of storefront payday lenders through the supervisory process. The dataset used includes
information on over 12 million loans in 30 states, and each lender provided data for a 12-month
time period occurring within 2011 and 2012 .
. 12 U.s.c. § 5512(d), Pub. L. 111-203, Title X, § lO22(d) (July 21, 201).
~ A vai/able (/1: http://files.consllmerfinance.gov/fJ201304 (fpb pavdav-dap-whitepaper.pdf.
~ A vai/able (/1: http://files.consllmerfinance.gov/fJ201403 (fpb repOlt pavdav-lendinl!:.pdf.

 The Bureau has received another set of data on high-cost installment loans offered by a
combination of online and storefront lenders. The Bureau has conducted analysis on this dataset
that may inform its rulemaking. We are also analyzing various additional data sources regarding
auto title and installment lending, as well as additional sources on payday lending. We are
continuing to supplement these analyses. The Bureau will make the results of this research
available so that all stakeholders can comment on it as part of the rulemaking process.
As part of its study of the markets for payday, vehicle title and simi 1m loans, the Bureau-in
addition to its own research, market monitoring, and supervisory experience-has reviewed
relevant academic studies, policy papers, and various other sources of evidence about the impact
of these loans on consumers. The Bureau has reviewed academic studies and survey data which
industry representatives have cited as supportive of their view that payday borrowers benefit
from usc of the product. The Bureau has also reviewed a number of studies that draw different
conclusions regarding consumer welfare. Bureau staff will continue to review available
literature and other evidentiary sources and review and analysis of these sources will inform and
be reflected in our rulemaking proposal.
Bureau staff continues to study these markets. When the Bureau issues a formal rulemaking
proposal, a detailed discussion will be provided of the evidence the proposal is based on and the
underlying legal authority. Members of the public will have a chance to consider the proposal
and provide comments and additional information before the Bureau issues a final rule.
Question 4
Why did the CFPB select August 1,2015, as the date for TRID implementation?

Response
On June 24th, the Bureau issued a proposed amendment to the TILA-RESPA Integrated
Disclosure rule, which proposes to move the rule's effective date to October 3, 2015. The
Bureau is issuing the proposal to conect an administrative enor that would have delayed the
effective date of the rule by at least two weeks.
The Bureau is proposing a new effective date of Saturday, October 3. The Bureau believes that a
brief delay until emly October would minimize the delay-related costs to consumers and those
institutions that have workcd the hardcst at getting ready. We also belicve that a bricf delay
would allow all institutions a chance to adjust to the new effective date and provide for smoother
implementation, benefitting both industry and consumers. The Bureau further believes that
scheduling the effective date on a Saturday may facilitate implementation by giving industry
time over the wcekend to launch new systems configurations and to test systems. A Saturday
launch is also consistent with existing industry plans tied to the original effective date of
Saturday, August I. The proposal will be open for public comment until July 7.
Prior to making the decision to correct for an administrativc error, the Bureau had carefully
considered the appropriate effective date when issuing the final rule titled, "Integrated Mortgage
Disclosures Under the Real Estate Settlement Procedures Act (Regulation X) and the Truth in
Lending Act (Regulation Z)" (Integrated Disclosures Rule or Rule) in November of 2013.
Becausc the Intcgratcd Disclosures Rule, also known as the Know Bcfore You Owc rule, will
provide important benefits to consumers, the Bureau was interested in making it effective as

 soon as possible. However, the Bureau also understood that the Integrated Disclosures Rule
would require creditors, mortgage brokers, and settlement agents to make extensive revisions to
their software, to change their dealings and information sharing practices with each other and
other settlement service providers, and to retrain their staffs. The Bureau solicited comment on
when the Integrated Disclosures Rule should be effective. In particular, the Bureau sought
comment on how much time industry needed to make these changes, and specifically requested
details on the required updates and changes to systems and other measures that would be
required to implement the rule and the amount of time needed to make those changes. After
careful consideration, the Bureau decided that August 1,2015, was an appropriate effective date
for the rule.
In making that decision, the Bureau believed that the implementation period was consistent with
the statutory purposes of the integrated disclosure requirements in Dodd-Frank Act Sections
1098 and II OOA and past periods provided by Federal regulatory agencies for the
implementation of mortgage disclosure rulemakings. The Bureau also believed that this period,
on balance, would afford industry sufficient time to implement comprehensive systems changes,
integrate business practices into the new regulatory requirements of the Integrated Disclosures
Rule, and train staff, all of which will ensure the final rule fully provides the substantial benefits
for consumers intended by the Bureau.
The Bureau recognizes that successful implementation poses challenges to industry, provides
benefits to both industry and consumers, and in any event requires close collaboration between
industry and the Bureau.
As you may know, the Bureau has taken many steps to support industry implementation and to
help creditors, vendors, and others affected by the Integrated Disclosures Rule to better
understand, operationalize, and prepare to comply with the Rule's new streamlined disclosures.
Since the Integrated Disclosures Rule was first issued in November 2013, we have made it a
point to engage directly and intensively with financial institutions and vendors through a formal
regulatory implementation project. The Bureau's regulatory implementation project for the Rule
includes the following:
., Inter-agency coordination. In-depth exam procedures were approved by the Federal
Financial Institutions Examination Council in February 20 I 5 and published by the
Bureau on April I, 2015. The Bureau's own examination procedures incorporating the
FFIEC exam procedures were published on May 4,2015 .

., Publish "readiness guide," plain-language guides, and other resources. The
"readiness guide" includes a broad check-list of things for industry to do prior to the
Rule's effective date. The Bureau has also published a compliance guide, a guide to the
new integrated disclosure forms, and an illustrative timeline. 1o

III

These resources are available at www.consumerfinance.gov!regulatory-implementationltila-respaJ.

 .. Publish amendments and updates to the Rule in response to industry requests. In
January 2015, after extensive outreach to stakeholders, the Bureau adopted two minor
modifications and technical amendments to the Rule to smooth compliance for industry. II
"

Provide unofficial staff guidance. Bureau staff attorneys have provided oral guidance
in response to over 1100 regulatory interpretation inquiries, received from trade
associations and through the CFPB Reglnquiries@cfpb.gov email address since the Rule
was issued.

"

Engage with stakeholders. Bureau staff have provided remarks and addressed questions
about the Rule and related implementation matters at over 40 formal events and over 50
informal stakeholder meetings since the Rule was issued.

,. Conduct wehinars. The Bureau has conducted a series of five free, publicly available
webinars, available for viewing through the Bureau's website, 12 that provide guidance on
how to interpret and apply specific provisions.
As previously stated by Director Cordray, the Bureau's oversight of the implementation of the
Rule will be sensitive to the progress made by those entities that have squarely focused on
making good-faith efforts to come into compliance with the Rule on time. This approach is
consistcnt with thc approach the Bureau took to implementation of the Title XIV mortgage rules
in the early months after the effective dates in January 2014.
Question 5
The CFPB's response to an April 8, 2105, letter from Chairman Hensarling and thc Financial
Services subcommittee chairs reads "Your letter also stresses the importance of clarity for
financial institutions and examinations staff. .. The Bureau shares this view, and for this reason
we make our Supervision and Examination Manual public on our website." The acc sent a
letter to its exam force, as has thc NCUA. The FDIC has changed its examination procedure.
Why does the CFPB refuse to issue a simple memorandum?
Response

I understand that Director Cordray's May 7, 2015 letter to you may have touched on this matter.
As the Director noted in that letter, this matter relates to reputational risk, which "goes to the
safety and soundness of a financial institution[,] ... [a] primary concern for prudential
regulators, but onc outside the Bureau's principal responsibilities and expertise." Hence while
guidance on this matter could be of substantial relevance to examiners at the prudential
regulators, it would be of much less relevance to Bureau examiners, who do not conduct safety
and soundness examinations.
As the Director noted in his letter, he shares your view that supervisory decisions should be
made on a case-by-case basis rather than through judgment of an entire industry. This point was
made by the Director to the Bureau's entire workforce during an All-Hands call in May.
1180 FR 8767 (Feb. 19,2015).
12 These webinars are available at http://www.consumerfinance.govlregulatory-implementationltila-respa/.

 Questions for David Silberman, Associate Director for Research, Markets, and
Regulations, from Congressman Mulvaney:
Question J
During your appearance before this Committee, I asked you about the CFPB's report entitled
"Small Business Advisory Review Panel For Potential Rulemakings for Payday, Vehicle Title,
and Similar Loans Outline of Proposals Under Consideration and Alternatives Considered." In
that report, on pages 44-45, the CFPB found:

"The two potential requirements, amortization and off-ramp, have similar estimated
effects on the number of loans that could be made. Total loan volume is estimated to
decline by between 55 percent and 62 percent. ..
The amortization requirement is estimated to have a larger effect on principal and fees
because the second and third loans in a sequence would be required to be smaller than the
first loan. The impact on total fees of the amortization requirement is estimated to be
between 71 percent and 76 percent, while the impact of the off-ramp requirement is
estimated to be between 60 percent and 65 percent..
This may affect mono line lenders, those specializing in payday lending, particularly
severely. Given those impacts, it is likely the case that the number of monoline stores that
could operate profitably within a given geographic market would decrease. Some stores
might di versify their product offerings, including offering other forms of covered loans,
while others might close. The proposals under consideration could, therefore, lead to
substantial consolidation in the short-term payday and vehicle title lending market."
Specifically, I asked about the process the CFPB used and the data relied on to develop a
proposed rule that would cause consumers to lose access to 60% or more of available short term
credit, effectively depriving customers of a needed line of credit.
You testified that the CFPB engaged in a three year process with the "largest data set of loan
level anonymized data" to develop this rule. When I asked for this data, you said it was
confidential supervisory data and you were not sure if you could provide it to our Committee.
Sir, I have been infonned by staff that such data is routinely provided to our Committee for
oversight and investigation purposes. As such, please provide the data you relied on to develop
the proposed rule and report mentioned above. In addition to that data, please provide the data
used to determine that the perceived harm to consumers from short term credit, such as payday
loans, justified eliminating consumer access to 600b of loans in the marketplace and driving a
majority of lenders out of business.
Response

On December 12, 2013, the Consumer Financial Protection Bureau (Bureau) produced a number
ofrecords to the House Financial Services Committee (Committee) including analyses relied
upon in the Bureau's own work in developing its proposed rule and previous white papers on this

 issue. Committee staff have made clear that thcy makc sueh records available to Committee
Members for review. Some of the data relied upon by the Bureau in developing its proposed rule
is highly sensitive and confidential supervisory information and business infonnation belonging
to lenders. This data is secured in a database on a protected server at the Bureau. In Febmary
2014, in rcsponsc to a letter request from Chairman Hensarling, Bureau staff briefed Committee
staff on the contents of this database. This briefing, held at the Bureau, included demonstration
of the database's operation as well as electronic access to some of the secured data. Routine
production of this confidential data would not be feasible or permissible.

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The H ()Ilorable Patri ck McHenry

T he Honorabl e T im Scott

U.S. House of R e pr~ s c n ta t i vcs

Unit.ed Stalt;:s Senate

13:\4 Ra yl1llnl HOllse Oflice Building
Washin gton. D.C. 205 15

250 liarl SCl1nte Offit:t: Building
Wa shington , D.C'. 2051 n

De<:!1" Congressman McHenry and Senator Scott:

Tl1all1\ you for yo ur ktter regarding the Consum er Finan cia l Protec ti o n fiurea u' s study and report
to Co ngress 0 11 pre-di sp ute arbitr(J( ion daLises. The Bureau welcomes feedback on these issues as
we continue to e ngage with yo u and other stakeholders on (lur work.

The Dodd- hall k Wa ll Street Refo rm and ConSUlller Prol cdion Ac t o f 201 0 directed the fi urcau to
1I1ldel1ake ,1I1d puh li sh a numher o f stud ies. incl ud ing a stud y ;lnd repo l1 10 Congress on prc-dl spu1e
arbi tratio n clau ses. In our A rhitrat ion Study. 1 we exa mi ncd l')]"c-d i splll~ a rh itrat ion cla uses in a
number of d ifferent prod uc tl1la rkets . slle h as: cred it ..:;mls. c hc..:k ing accounts. payda y and other
small do llar loans. genera l purpose re loadable pn:paid ca rds. private s tudent loans. auto purchase
loa ns. and Illohil e wirel ess agreemcnls.
Thl:' Bureau's proCI:'SS for the Arhitration Study has been fair. trillls panmt, and comprehcn slve.
incl udi ng suli(.;itu tion Dr st<lkeholder feedba ck at multipl e st:.l gl-'S thru Llghout the process. T he
Bureau began work on th e study in 20 11 with a Request for Infol1nat ion to the general publi c,
seeki ng speelfh: suggesti ons to help identify the appropriat e scopc of the study, as well as
appropri atc m cthods and sources ofinfonnation fi.)f conducti ng the stud y, The 8 ureau received
more than 60 cOlllments in response.
The Arbi tration Stud y retlects many of the comments n:ccivcd ['rom ollt sid e stakeholders. For
in stance. <.:el1a in commentutors s uggested thut th e Bureau not (lnly stud y arbitration but also rcvil:w
li tigation in <.:ouns. In tiKI. the Bureau's review of stare. fede ral. ,1Ild small claim htigat loll records
sign ificilll l1 y (lutnumbered its revi ew of consumer arbitrarinll rc..:~)rd s. Bureau ~:>I afr exam ined the
rr cv~l l c n ce (I f nrhitrnti oll cl auses and their terms in nea rl y S50 COIlSUlllCr·t1 mlllee ngreements.
Burea u stuff a lso rev iewed Illore than 1.800 cunsumer fina nce aroitnll ioll di sputes filed over a
three-year pe ri()d. more than 3,400 indi vidual fe de ra l cuurt lawsu its. 562 consumer finance cl ass
aetiolls in st<l te and fed e ra l cou rt s. 400 consumer finan c ia l cl ass u(.;t ion sett lements, and 42.000
l.Tedit ca rd c<l ses ti led ill Se k'l:tLxI sm a ll claims court in 2012. Add itiona l commentcrs urged the
Il un:au to study the rela tive effecrivcness of pub lic cn fo rccmc lU act io ns and private class act ion
li tigut ion , T he Bureau's Arhi tra tioll Study incl udes a compJ ra tive :1sst!ssmc nt through an analysis
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 of more than I, I 00 state and federal public enforcement actions and associated class action filings,:
Commenters also recommended that the Bureau release a dral1 study plan. identifying the
substantive topics the study would encompass. As part of the 13ureau's ongoing elTorts in this
undertaking and to lllform the public and lllterested stakeholders of our progress in December
2013, the Bureau released over 160 pages ofPrelllllinary Results. The Preliminary Results included
a detailed roadmap ofthc Bureau's plans for future work and presented detailed findings on three
specific \vorkflo\1,'s that were further refined in the release of the Arbitration Study. 3
(liven the breadth of the Hureau' s analysis. as well as our solicitation of stakeholder feedback at
multiple stages throughout the process, r am confident that the Bureau's Arbitration Study
represents the single most comprehensive empirical analysis of consumer financial arbitration and
litigation ever conducted,4
Ultimatcly, thc Arbitration Study found that lcns ofmilliuns of consumers arc covered by
arbitration clauses, but few know that this is the case or understand the impact on their ability to
bring claims. The Bureau also fi)und that consumers rarely consider bringll1g claIms against
companies on their own, particularly small claims. Morcovcr. no evidence was found that these
clauses lead to lo\\.'er prices for (;OnSllmers. The Dodd-Frank Act granted the Bureau the authority
to prohibit. limit. or impose wnditions on the llse of arbitration clauses in consumer finance
agreements by regulation if the Bureau lincls thai dOlllg so is in the public interest and for the
protection of consumers. After consldenng the findmgs
the ArbItration Study. the Bureau has
decided to commcnce a rulemaking process rcgarding pre-dispute arbitration agreements uscd in
connectIon with consumer financIal products or services. As the Burcau moves forward with this
process, \ve welcome the oppot1unity to hear hom you and other stakeholders.

or

During the process of conducting the ArbitratlOl1 Study. the Bureau met "".'ith and received
feedback trom stakeholdcrs. mclucllllg 1I1dustry organizations, consumer advocates, and provided
briefings to CongresslOnal staff to ensure that the Bureau was producing the most (;omprehens1\'e
and balanced work possible. Moreover. before the Gurcuu issues a regulatory proposal, the Bureau
\",ill put t()J"\vard an outline of proposals under consideration and convene a Smull Business Review
Panel to receive input from Small Entity Representatives regarding the proposals under
consideration. This process \",i11 also provide an oPP0l1unity t()r fl1l1her input from other
stakeholders. Following the conclusion oflhat process. the Bureau anticipates issuing a regulatory
CId at Sedion 'J,
'Sec Arbitration StLJd~ Preliminary Re~LJlt~ (Dec. 12.20(3) at Chapter 6 (""Future \\"ork"): availabk at
lillJ~·.Jj k~,t,:'-'.I!>l.lIl~·.!J.iIJ.!'!'~ ·lC~2I.E.(.!J1l2._di!b._~lD!J)l'J_I~'Jtl'LJ' rc' i i 111111:1 1':" rL'\ Ii It \ .]'.1 f
'The Arbitration Study doe~. 111 {act. estimate the transal·tion costs associatcd with pursuing a cl<lim ill lederal court as
Clllllpared to arbitration. SCc' Study at Sect](lll 4. pages 1(J·12 (comparing fee requireme1l1s nnd the possibility of wain:d
or adnll1ccd fees. involved with filing a dispute in federal c(Juli. small claims court. and before the Ameril'an
Arbitrati(ll1 Association). Slluilarly. the Arbitration Study' notes that consumers rarely brought pro Ie claim~ in kdcral
C('url. S,,<' Study at Section 6 {rcporting that (lnly ".f,o·(1 (,rthc individual disputes We studied in federal court and nnl)'
tW(' class actions wcre tiled hy tim .Ii' plaintiffs)_ Finally. the Study contains e:'\tell~l\e comparative data. for cxample.
there were roughly 600 consumer arbitration ca~es per year in the productmarkels that \\l' studlcd and only' about ~.'i
case~ per year ill\'lll\'ed affirlllatiH~ claims ofS I.OUO or less. C(\n~umers filed an annual a\'Cnlgc: of ah,lut 1.20()
individual feder::illawsuits about the same produch (except auto purchasl' loall~) <llId rardy h]"(lught d<lilll~ in small
claims C(lur"h against maJor credit card issuers, !n marked c(lJllpari~on. wughly 3~ millwn (On'iUlllCrS wcrc cli12ible j(lr
relid'tllrough COll~umer financ ial cla~~ actJllIl settlements ill kckral court caL"ll ycar.
COI1SUlTlcriillanCE' gOY

 proposal, nt whicll time, the procedures governing notice-and-comment rulemnking and the
Bureau·s rulcmaking practices \\'ill provide additiomll oppot1unity for stakeholder patiiclpation.
The Bureau is dedicated to a marketplace characterized by j~1ir, tmnsparent, and responsible
business practices. \\ie believe that strong consumer protection is an asset to honest businesses,
because It ensures that everyone is playing by the same rules, which supports (nir competition and
fnir treatment of consumers. We will endeavor to mainta111 those pnoritles nnd goals as \vc move
1'or\\'nrd.
Sincerely,

Richard Cordray
Director

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Honorable Steve Stl\u·s. Memher of Congress
Honorable Krisli Noel11. \;lember of Congress
Ilonorablc Robert Aderholt. Member or Congress
Honorahle Lamar Smith, Member of Congress
Honorahle Steve Womack. Memher of Congress
Honorahle Tom Graves, Member of Congress
Honorable Peter King. Memher ofCollgress
Honorable Trent Franks. Member of Congress
Honorable Paul (iosar. Member of Congress
Ilollorahlc \;lnrk Walker, \;1ember of Congress
Honorahle Bradley Byme. Member of Congress
Honorahle Bret Guthrie. Member of Congress
Honorahle Boh Goodlatte. Memher of Congress
Honorable :'1arsha Blackburn. Memher of Congress
Honorable Robert Pittenger, Member of Congress
Honorable Sean Duffy. Member of Congress
lIonorablc Randy Neugebauer, Member of Congress
I lonorablc Scott Rigel!. \;1cmber of Congress
Honorahle Bill HLllzenga, Member of Congress
Honorable Andy Barr, Memher of Congress
Honorable Dave Trott, Memher of Congress
Honorable Mid.: Mulvaney, Member of Congress
Honorable Tom Cole. Memher of Congress
Honorable Ann \~/agner, Member of Congress
Honorable Jaime Herrera Beutler, Memher of Congress
Honorable Martha Roby, Member of Congress
Honorable Richard Hutison, Member of Congress

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Honorable Luke Messer, Member of Congress
Ilonorablc Rod Blum, Member of Congress
Honorahle French IIill, Member of Congress
Honorable John Ratcliffe, Member of Congress
Honorable Blaine Luetkemeyer, \t1cmber of Congress
Honorable Tom Marino, Member of Congress
Honorable Blake Farenthold, \1emher ofCon6'TesS
Honorable Frank Guinta, Member of Congress
Iionorahlc I,ouie Gohmert Member of Congress
Honorable Roger Williams, Member or Congress
Honorable Frank Lucas, Member of Congress
Honorable Scott Garrett, Memher ofCol1f:,:rress
Honorable Stephen hneher, Member OfCOllh,'TeSS
Honorable Darrelllssa, Member of Congress
Iionorablc David Seh\\'eikerL t\1ember of Congress
Honorable Pete Olson, Member of Congress
Honorable Ron DeSantis, Member of Congress
Honorable Mia Love, Member of Congress
Honorable Lynn VV'estmnreland, Member OfCOl1J:,.'Tess
Honorable Diune Black, !\'1ember of Congress
Honorable Chris Collins, Member of Congress
Iionorable Ed Royce. Member of Congress
Honorable Tom Emmer, Member of Congress
Honorahle Steve Pearce, \;1cmber of Congress
Honorahle Mike Fitzpatrick, \1ember ofCol1gress
Honorable Bill Posey, Member of Congress
Honorable Keith Rothfus, Member of Congress
lIol1oruble Kevin Yodel', Member of Congress
Ilonornb1c Robert JJ urt. Member of Congress
Honorable Dennis Ross, Member of Congress
Honorable Doug Collins, Member of Congress
Honorable Randy Hultgren, Memher of Congress
Honorable Seott Tipton, Member of Congress
Honorable Marlin Stutzman. Member of Congress
Honorable Bruce PobqulI1. Member of Congress
Honorable Andy Hurris, Member of Congress
Ilollorahlc Peter Roskam, Member of Congress
HOllorable Mark Meadows, Member of Congress
Honorable David Vitter. United States Senator
Honorable Thom Tillis, United States Senutor
Honorable Tom Cotton, United States Senator
HOJwrable Roy Blunt, United States Senator
Honorable t>.1ichael Enzi. United States Senator
Honorable }.like Rounds. United States Senator
Honornble David Perdue, Ul1lted States Senator
Honorable Patrick Toomey, United States Senator

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Honorable John Barrusso. United States Senator
Honorable Jerry Moran. United States Senator
HOllorabJc DaJl1e1 Coats, United States Senator
HonorahJc Mike Crapo, United States Senator
Honorable Kelly Ayotte, United States Senator
Honorable John Cornyn, Lnited States Senator
Honorable Mark Kirk. United States Senator
Honorable Orrin Hatch. United States Senator
Honorable John Boozman. Lnited States Senator
HOllorahJc Johnny Isakson, United States Senator

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Jul y 31, 2015

Tbt: Honorable Richard Cordray
Director
United States Consumer Financial Protecti on Bureau
1700 G Street, NW
Wa, hington, DC 20552
Dear Director Cordray:
We writt: concerning the Consumer Financial Protection 13urcau's (CFPB) impending
ntlemaki ng process designed to regulate short -term lending opt ions. Each of us recognizes the
importance of preventing predatory lending practices in this market, and strongly supports robust
sateguards to ensure that consumers are protected. At the same lime, we also appreciate the
signi f"u.:ancc of ensuring thut knv to modcratc-inCllmc Ameri cans, who olien do not qual ify for
mon.: traditional tinancia l products, maintain access to a variety or legal and regulated credit
options.

To date, several stales have implemented regulatory regimes that have success fully
enab led consumers 10 st.!cu re desperatel y needt.!d short-tcnn credit in a regulated environment
that pro tects them from economic harm. We ask that as yo u move rorward with this rulcmak ing
process, you work in consultation with industry stakdlOJders to ensure a la ir and transparent
process. Furlhcnnore, we request that you conduct ficld trials in specific markets to gain a
deeper understanding of how any proposed regu lations wi ll work in practice. Indeed, the best
interests of the consume r can only truly be advanced when we ensure thai lending practices an::
both fair and transparent, while also making cenain that Americans most in need arc not furth er
restricted in their credit opti ons, Any rule that Ullncccssarily restricts access to credit should be
reconsidered.
In clos ing, we sincerel y hope that we can work together to ensure consumers arc
protected and also have access to a variety of short-term credit. We are concerned that
individuals who re ly on the availability of short-term and small-dollar loans to make ends meet
will be forced to turn to mo re expensive alternatives potentially resulting in a phenomenon that is
hardly the financial protection that the CFPB seeks to accomplish through this regulatory
scheme.

 We look forward to your prompt response.

Sincerely,

Alccc L. Hastings
Member of Congress

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Member of Congress

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Member of Congress

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Debbie Wasscnnan Schultz
Member of Congress

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?:1ier of Congress

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Pete Sessions
Member of Congress

David Scott
Member of Congress

Dennis A . Rll SS
Member of Congress

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Member of Congress

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Member of Congress

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Member of Congress

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David Schweikert
Member of Congress

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Member of Congress

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Alan Grayson
Member of Congress

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Corrine Brown
Member of Congress

Jim

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 Consumer Financial
Protection Bureau

1700 G Street NW W"silill~ton DC 20557

September 28, 2015

The Honorable Alcee Hastings
L.S. House of Representatives
2353 Rayhum House Office Building
Washington, D.C. 20515

The Honorable Steve Stivers
U.S. House of Representatives
1022 Longworth House Office Building
Washington, D.C. 20515

The Honorable Blaine Luetkemeyer
L .S. House of Representatives
2440 Raybum House Office Building
Washington, D.C. 20515
Dear Congressmcn Hastings, Stivers, and Luetkemeyer:
Thank you for your letter about the Consumer Financial Protection Bureau's work on payday
lending. I welcome the opportunity to continue our discussion of the Bureau's proposals and
consumers' need for affordable consumer financial products and services.
The Bureau recognizes that the states have adopted a variety of different approaches to
regulating small~dollar lending. As we consider federal regulation of these products, we have
carefully analyzed these different state models. The Bureau continues to evaluate the effects of
different state law restrictions on1imiting hanns to consumers and pennitting continued access to
credit to help consumers meet their financial needs. The Bureau would like to ensure that
consumers are offered certain minimum benefits and protections no matter where they are
located, as states are free to maintain their own parallel regulatory systems.
As the Bureau considers federal regulation of payday lending, we continue to solicit feedback
from a variety ofstakcholders, including industry participants, consumer advocates, and state
and federal regulators. We have talked directly to regulators and policy makers at field hearings
and in other settings across the country, and we appreciate the insights provided by other
regulators who have implemented state regulatory frameworks.
As you know, the outline of proposals under consideration the Bureau released in March and the
Small Business Review Panel that followed generated important carly input as the Bureau
prepares to move into a full rulemaking process. As part of that process, the Bureau will
continue to seek input from a wide range of stakeholders. Moreover, once the Bureau issues its
proposed rule, the public, including industry participants, consumer advocates, and state and
consumerfinance.gov

 fede ral regulators, will be invitoo 10 submit written comments. which will all be carefully
considered bdort: fina l reb'lliations are issued. Any fina l rule wi ll have a designated
impl ementation period for indusu y to come into compliance. Whenever the Bureau promul ga les
regul ations. the agency is required, purs uant to the Dodd-Frank Wa ll Street Refoml and
Consumer Proteelion Act, lO consider the polcntia l benefit s and costs 10 consumers and to
industry, includ ing considering any impacL<; on aece!\s In consumer fin ancial products and
servicl!s resulting from the rule.

Thank you for ),our cont inued interest in the Bureau's paydilY lending wo rk. I look forn.'ard to working
with you on this and olher consumer financial protection matters of importance to you and your
constituents.

Sincere ly,

Rkh<trd Cord ray
Director
ee:

The Honorabl e Patrick Murphy, Member u r Congress
The Honorable Debbie Wassennan Schu lt z. Member ofCongrcss
The Honorable Mid Mul vaney. Member o f Congress
The Honorable Bennie G. Thompson. Member of Congrt:ss
The Honorable Pete Sessions, Member of Congress
The !!onorable David Scott , Member of Congre~~
The Honorable Dennis Ross, Member of Congress
The Honorable Col in C. Peterson, Member ofCongJ't!ss
Tht;: Honorable Thomas.l. Rooney, Member or Congress
The Honorable Kyrstcn Sinema. Member of Congress
The Honorable Bill Posey, Member of Congress
The Honorable Lois Frankel. Member of Congress
Thc !Iollarable Patrick Mellemy, \t1emher of Congress
The Honorab le Brad Sherman. Member or Congress
'l1le Honorable David W. Jolly, Member orCongress
The Honorable Tony Cardenas. Member of Congress
The Honorable Da vid Sdnveikel1, Member of Congress
The Honorabk: Henry Cuellar, Member of Congress
The Honorahle Robe!1 Hurt_ Member of Congress
The llonorable Gregory W. Meeks. Mcmher of Congress
Tilt: Honorable Stephen Fincher, Mt:mber of Congress
The Honorable .lim Costa, \I1ember ofCongrl!ss

cons u me rfi nance .gov

 The Honorable Alan Grayson. Member of Congress
The Honorable G\ven Graham. Member of Congress
The Honorable Corrine Brown, Member of Congress

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September 29, 2015
The Honorable Richard Cordray
Director
Consumer Financial Pra tee.lion Bureau
1700 G Street, :-J W
Washi ngton, D.C. 20552

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CFPB Should Work with Stakeholders on Prepaid Account Rule

Dear Director Cordray:
We are writing today to express our concern s w ith the Consumer Financial Protection Bureau' s
(t he '''Bureau's'') Notice o f Proposed Ru lemak ing for Prepaid Accounts (the " Proposed Rule").
The Bureau should avo id imposing overly burdensome restriction s on providers that would
preve nt them from meeti ng the grm ....ing and d iverse consumer demand for innovative prepaid
products.
Prepaid cards provide a broad array of consumers, including students. workers, and government
benefit recipients, with revolutionary ways to access, spend, and manage their money. In fact.
prepaid cards are such a safe and effective payment tooL the U.S. Department of Treasury uses
them as an altcrnative to paper checks to disburse federal benefi ts saving millions of dollars on
an annual basis. Below you w ill find recommendat ions we believe will ensure that the Rureau
meets our shared goal of empoweri ng consumers with valuable fi nancial tool s while maintaining
a vibrant prepaid mark etplace.
Coverage of the Proposed Rule. The Proposed Rule casts a wide net through its extremel y
broad definition of prepaid accounts, which evcn includes products outside of the prepaid sphere
such as mobile wallets , and person to person (P2P) transfers. We believe the definition of
prepaid account should only cover prcpaid prod ucts that consumers use as primary transaction
accounts, where th ey would expect to recei\'e sim il ar protections as debi t cards connected to
trad iti onal checking accounts.
Co nsumer Disclos ures. The Bureau should work to develop a single, easy to understand preacquisition fee disclosure. The Proposed Ru le requires multiple fee di sclosures (a short· form
and long-fonn disclo surc) to be made avail able before a consumer "acquires" a prepaid card.
According to the Bureau's O\\TI research, consumers do not find the l ong~ form disclosure helpful
when comparing products. As a result, the Bureau should not mandate the use of the long~form
disclosure, and it should work with industry stak eho lders to better define the contents of the short
form d isclosure to be more useful to consumers in comparing prepaid products.
Implementation Deadline. The Bureau should extend its implementation deadline until 24
months following pub licat io n of the fina l rule. With all of the new di sclosu re and packaging
requirements for such a complex finan cial product as well as the development and operational

 changes necessary to compJy with the Proposed Rule, a nine-month effecti ve dale is unreali st ic
and does not take into account that milli ons of prepaid cards in the marketplace today will need
10 be destroyed or repl aced.
Overdraft. Lastly, the CFPB should continue to allow discretionary overdrafts on prepaid
accounts without subjecting prepaid accounts with these features to full Regulation Z coverage,
which could lead to thei r elimination from the market. Instead, the Bureau should provide
common sense guard rail s that protect consumers while enabling the continued access to shorttcnn micro credit (e.g., amounts less than $150) so that consumers have the abi lity to purchase
items, such as necessiti es, in between pay checks.
We strongly encourage the Bureau to work closely with stakeholders and Congress as your staff
drafts the final rule. We believe more external engagement with prepaid market participants will
be essential in helping the Bureau reach the appropriate balance between protecting consumers
and ensuring the continued gro wth of America's fastest growing fo nn of payment.

Sincerely,

M. Michael
U.S. Senator

Mike Crap
U.S. Senator

Tom Cotton
U.S. Senator

Michael B. Enzi
U.S. Senator

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Member of Congress

Frank Lucas
Member of Congress

Kenny Marchant
Member of Congress

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Member of Congress

Blaine Luetkeme "cr
Member of Congress

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Bi ll HUizenga
Member of Congress

Dennis Ross
Member of Congress

_uke Messer
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Scott Garrett
Member of Congress

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Member of Congress

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Sam Johnson
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•

 October 27, 20 IS
The Honorable Michael Rounds
U.S. Senate
502 Hart Senate Office Building
Washington, D.C. 20510

The Honorable Scott Tipton
U.S. House of Representallves
218 Cannon House Office Building
Washington. D.C. 20515

Dear Senator Rounds and Congressman Tipton:
Thank you for your comment letter on the Consumer Financial Protection Bureau' s \Jot ice of
Proposed Rulemaking regarding prepaid accounts. We appreciate your interest and thoughtful
feedback regardmg this imp011ant rulemaking. Like you, \'ie remain committed to ensuring
consumers have access to a variety of financial products that can help them meet their spending
needs, including prepaid accounts.
The Bureau has been revie\'iing the thousands of comme11lS submitted on the prepaid proposal by
consumers, industry members, trade associations, consumer advocacy groups. government
agencies, and other interested parties. As p3l1 of this process, we are continuing to evaluate how
consumers' spending needs can be met safely and transparently. Your letter expresses concerns
with respect to several aspects of the proposal: the scope of its coverage, disclosurc requirements,
the implementation deadline, and the provisions related to overdraft. Addressing issues of scope.
we appreciate your concern regarding the implications of covering products other than products
that act as transaction account substitutes. As stated in the proposal, the fcaturcs of non-general
purpose rcloadable card prepaid products, as well as the ways consumers can and do usc those
products, warranted their inclusion in the proposed rule. As stated in the proposal. the Bureau was
concerned that trying to carve out very specific types of products is complicated and could result in
consumer confusion as to \'ihat protections might apply to othelwise indistinguishable products.
The Bureau sought comment on the scope of coverage and is currently reviewing and evaluating
those comments.
With respect to the proposed disclosure requirements, the Bureau agrees that. whenever possible,
consumer disclosures should be concise and easy to understand. The proposed short form is
intended to meet this objective by prominently displaying important fees \\" ;th limited explanatOl)'
text. By contrast, under the proposal, the proposed long f0l111 meets a different but complementary
goal of ensuring consumers have all the intlJrmation they need to make their acquisition decisions.
Moreover, the proposal l,\.'ould provide an exception for prepaid cards Cor sale in retail stores or
over the phone. If certain conditions arc met for these products, financial institutions would not be
required to provide the long fonn disclosure in writing before the consumer agrees to acquire the
account. so long as such institutions provide consumers with the ability to access the long fonn
disclosure information by telephone or intel11et. The proposed requircment that consumers receive
both of these fonns was designed to strike the right balance between giving consumers key
infonnation about a prepaid account to aid understanding and comparison shopping and providing
',011~'lIlll(;llj""'lI'l Cj\,",'

 them with the opportunity to revie\',.' all of a prepaid account's fee information pre·acquisition. The
Bureau sought comment on the required disclosures, and is currently reviewing and evaluating
those comments.
We also appreciate your concern about the length of the proposed implementation period. As with
all of these issues. the Bureau is reviewing the comments received, and is committed to providing
consumers with necessary protections, wbile also giving tinaneial institutions adequate time 10
comply. As we do with all of our new rules, tbe Bureau plans to work closely with industry to help
it implement the rule smoothly and avoid incurring unnecessary burdens.
Finally. with respect to overdraft , the Bureau evaluated a range of potential approaches to overdratl
services and credit reatures on prepaid accounts in connection with this rulemaking. The approach
we proposed in the Notice of Proposed Rulemaking was designed to provide balanced and
appropriate guard rails to make sure such credit is offered with protections similar to those that
apply to other card·based credit (i.c.. credit cards). As we work towards tinalizing the prepaid rule,
we will continue to evaluate the likely impact of such provisions, including their impact on other
types or products that may be otlcrcd in compliance with a final rule.
Once again, r appreciate your interest in pruviding feedback on our proposaL The Bureau will
consider possible modifications to its proposal based on comments received, in accordance with its
obligations for notice·and-comment rulemaking pursuant to the Administrative Procedures Act.
Thank .you for your continued interest in the Hureau's work. I look forward to working with you
on this and other consumer financial protection matters of importance to you and your constituents.

Sincerely.

Richard Cordray
Director

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Mike Crapo, U.S. Senator
Tom Cotton, U.S. Senator
Michael B. Enzi, C.S. Senator
Randy Ncugeb::lUer, :'v1cmber of Congress
Roger \Villiams, Member of Congress
Sanford Bishop, Member of Congress
Andy Barr, Member of Congress
Mick Mulvaney, Member of Congress
Lynn Westmoreland, Member of Congress
French Hill, Member of Congress
Frank Lucas, Member of Congress
Kenny Marchant, :v1ember of Congress

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The I fono rabl e Blaine Luekemeyer, Member of Congress
The Honorable Paul C1osar, Member of Congress
Thl! Honorable Bill Huizenga, N'lcmbcr of Congress
The Honorabl e Dennis Ross. Member o f Congress
The Honorahl e luke Messer, Member of Congress
The Honorabl e Scott Garrett. Member of Congress
The Honorable Frank Guinta, Member of Congress
The Honorable Lamar Smith. Member of Congress
The Honorable Ann \Vagner. Member of Con gress
The Honorabl e Sean Duffy. Member of Congress
The Honorable Pete Sessions. Member of Congress
The Honorable Stephen Fincher, Member of Congress
The I lonorable Trent Franks, Member of Congress
The Honorabl e David Schweikert. Member of Congress
The Honorable Robcl1 Hurt. \r1ember of Congress
The Honorab le Randy Hultgren, Member of Co ngres s
The Honorable Tom Price, Member of Congress
The Honorable Keith Rothfus. Member of Congress
The Honorable Steve Pearce, Member of Congress
The Honorable Robert Pittenger, Member of Congress
The Honorable Mia Love. Member of Congress
Tht! Honorable Matt Salmon. Member o f Congress
The Iionorable Pete Olson, Member o f Congress
The HonN ablc Tom Emmcr, Member of Congn:ss
The Honorable Sam Johnson. Membcr o f Con gn::ss
The ll onorable Mike Bishop, Member of Congress
The HC'IOorabl e Patrick \t1cHenl)'. Member of Congress
The Honorable Kristi Noem. Member of Con gress

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The Honorable Ri chard Cordray
Director
Consumer Financial Protection Rureau
1700 G Street, NW
\Vashington, D. C. 20552
Re: Regulation C Annual Loan Exemption Thrt!~hold

Dcar Director Cordray:
We are deeply concerned about the consumer impact of the Consumer Financial Protection

Bureau's (CFPB) recently-finalized rule revising Regul ation C (the " fina l rule") wh ich w ill
increase requiremems under the Home Mortgage Disclosure Act ( I IMDA ). In light of the
potential of the new rul e to reduce consum er access to mortgage credit , we write to request thai
the CFPB provide analysis on the effects of applying higher exemption thresho lds based on an
institution's annual mortgage origination vo lume . Higher thresholds wou ld help alleviate the
potential adverse impacl o f the final rul e.
As you know, the fina l ru le requi res covered banks and credit unions to collect 4& unique data
fields on each m0i1gage loan they make begirming January 1,20 18. This is m ore than double the
num ber of data field s covered lenders are currentl y requ ired to co llect and goes well beyond the
number of field s requi red by Section 1094 of the Dodd-frank Act, which triggered the new
rulemaking. This large number of data field s represents a si gnifIcantly higher compliance burden
and amplifies the opportunity fo r data entry error, especially among institutions that upload thi s
infonnation manually, including many community banks and credit unions.
Currently, smaller flIlaneial institut ions continue to struggle with adapting to the post-DoddFrank regulatory environment. In recent years, a high volume of new, highl y complex rules have
beeome effective, sharply increasing the compliance challenges and costs associated w ith serving
consumers and communi ties. Th is is especiall y true of m0l1gage lend ing. Thc ability-to-repay
rule, new regulations governi ng appraisals, escrows, servicing, and loan officer compensation, as
well the complex and voluminous new TILA-RESPA Integrated Di sclosure rule, have remade
every aspect of m ortgage knding. Individuall y and cumulatively, these new rules represent a
significant increase in regulatory burden and lega l liability that is causing many community
banks and credit unions to reconsider their commitment to mortgage lending. In this
environment, any relief from the new Regulation C rule would help small lenders continue to
provide necessary access to mortgage cred it, preserving consu mer options and a competit ive
market

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As you know, certain institutions do not ft!port und er HMDA. Institutions with assets of less than
$44 million (adjusted annually) and instituti ons with no offi ces in metropo litan statistical areas
arc exempt. In addition, the Enal rule creates a new exemption for smal l vo lume mongage
lenders. Institutions that originate less than 25 cl osed-end mortgages and fewer than 100 openend lines of credit in each of the two precedi ng years are exempt from HMDA reporting. The
small volume lender exemption will cover about 1,400 institutions, accord ing to C FP B estjmates,
and a maximum of approx imately 34,000 loans, though the actual number of HMDA-exempt
loans is certainly far smaller. This represents an infin itesimal fraction of the nearly 10 million
annual mortgage applications reported thro ugh HMDA last year. We beli eve there is an
opportunity to provide relief for many more small lenders without materially impacting the
mortgage data available to the CFPB or impai ring the imp0l1ant purpose of the HMDA statute.
\\/ith this in mind, we request that you provide any analysis the CFPB may have done in the
co urse of preparing its proposed or final rule with regard to the impact of hi gher annual loan
exemption levels. Was the analysis that prod uced an estimate of 1,400 new ly exempt k nders
applied to higher exemption levels? Specifically, we request that you prov ide analysis that
est imates the number of exempt fi nancial institut ions and the data impact of using closed-e nd
mortgage thresho lds of 100. 150,250, or 500 loans. We believe higher thresholds would still
provide the required data and be consistent with the purposes of HMDA.
Thank you in advance for your timely response to this request.
Sincerel y,
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January 29, 2016

The Honorable Richard Cordray
Director
Consumer Financial Protection Bureau
1700 0 Street, NW
Washington, DC 20552

Dear Director Cordray:
We write to express concern related 10 the proposed rules the Consumer Financial
Protection Bureau (CFPB) released in March 2015 regarding short-tenn lending, South Carolina
has in place strong, proven and tested regulations that protect consumers while allowing them
access to short-tenn credit products. We arc concerned that the CFPB's recent proposal will
preempt existing laws in our state and will ultimately result in our constituents being forced to
tum to risky, unregulated fonns of credit.
State lawmakers in South Carolina have drafted, debated and passed a comprehensive set
of rules related to short term lending in recent years. These laws place limits on the maximum
amount of short-term loans, rollovers and advance terms; mandate that companies offer
consumers extended payment plan options and the right of rescission; implement a statewide
database to track borrowing; and cap fees on small dollar loan products. The result has given
South Carolina a marketplace that works for consumers and industry, and gives our constituents
short-term credit options that can help make ends meet.
The CFBP's proposed rules would push aside rules and regulations that have worked for
our constituents and replace them with a framework of overly restrictive regulations that the
CFPB itself admits would lead to "substantial consolidation" in the market - eliminating as much
as two-thirds of this industry and severely limiting consumer choice and access to credit. As you
know, the need [or credit will not simply disappear if small dollar lenders arc forced to stop
lending. For a number of our constituents, a short-term loan is their only credit option to pay an
unexpected bill, fix their car to get to work, or cover unforeseen medical expenses.

DRI" ED ON R"CYCL!Orl PI\PfcR

 We respectfully request that the CFPH not issue rules and regulations governing shorttenn credit that would interfere with what has worked to protect consumers in the state of South
Carolina. Removing this legal, regulated borrowing option will most likely force our
constituents to tum to more costly products and unprotected products, which is an outcome
which runs contrary to the CFPB's intent ofpwtecting consumers.
Respectfully,

Mick Mulvaney
~
Member of Congress_~ ____

~-

Congress

Tom Rice
Member of Congress

Ylcmber of Congress

 I

February 9, 2016
The Honorable Tom Emmer
U.S. House of Representatives
503 Cannon House Office Building
Washington, DC 20515

Dear Congressman Emmer:
Thank you for your letter about the Consumer Financial Protection Bureau's recently-finalized
Home Mortgage Disclosure Act. Regulation C, amendments establishing cel1ain rcporting
exemptions based on an instilution's mortgage origination volume. As you know, the Home
Mortgage Disclosure Act was originally enacted in 1975 and requires many lenders to report
infonnation about the home loans for which they receive applications or that they originate or
purchase.
HMDA is a "sunlight" statute intended to provide the public and policy makers with information
about the ill0l1gagc market to ensure market transparency. Many economists agree that market
transparency can lead to greater pricing fairness [or consumers. IIMDA provides financial
regulators, the public, housing officials. and industry with infonnation about the largest consumer
financial market in the world - the nation's mortgage market. This infonnation sheds light on the
mortgage market and helps the public and regulators to monitor whether financial institutions arc
serving the housing needs of their communities, to assist in distributing public-sector investment so
as to attract private investment to areas \1/here it is needed, and to identify possible discriminatory
lending pattel11s.
With more precise information and transparency in the mortgage market, market efficiency can be
fostered, and regulators and policy makers can be more alert to changes and trends in the market.
like those that led to the mortgage crisis and financial collapse. As a regulator, the Bureau needs
the appropriate level ofinfonnation to do its work and fulfill its statutory requirements to monitor
markets and develop sensible rules.
In response to the mortgage market crisis, Congress enacted the Dodd-Frank Wall Street Refonn
and Consumer Protection Act in 2010 and directed the Bureau to expand the HMDA dataset to
include additional information that would be helpful to better understand the mortgage market.
Therefore, the final rule increases the number of total data points that arc collected and reported.
As the Bureau looked at adding the Dodd-Frank Act data points and others, Bureau staff looked
closely at the infonnation that industry cun'ently collects through their core systems or reports to
the secondary market. By requiring infonnation that is generally collected by industry, the Bureau
sought to reduce the infonnation burden on industry. The Bureau also worked closely with the
prevailing industly data standard, called MISMO, to align the final rule, to the extent it could, \'lith
industry's data definitions. To fill1her put this effort in perspective, HMDA collects 48 data points,

 far less than the hundreds of data points that financial institutions report to the secondary market in
order to sell a loan.
In response to concerns about the burden imposed by HMDA repol1ing on depository institutions
that originate a low-volume of transactions, the Bureau modified the CUlTent institutional coverage
test for depository institutions to better achieve HMDA' s purposes and to reduce the burden on
lower-volume depository institutions. CUlTentiy, HMDA defines a covered financial institution as
a depository institution (a bank, savings association, or credit union) that makes a single closed-end
loan and meets the statutory asset-size, location, federally-related and loan activity tests. The final
rule keeps the statutory tests and increases the loan-volume threshold. Thus, the final rule will
provide some cost savings to depository institutions that will be excluded under the revised closedend mortgage loan-volume threshold. As you note in your letter, the Bureau estimated 1,400
depository institutions will be excluded from reporting closed-end mOl1gage loans and applications
under the closed-end reporting threshold in the final 11l1e. This estimate represents a 22 percent
reduction in the number of depository institutions that are currently reporting from the obligation to
repol1 HMDA data on closed-end mortgage loans.
In addition, the threshold is based on two years of an institution's lending. An institution must
exceed the loan volume threshold for two consecutive years in order to be subject to HMDA
reporting obligations. It is our hope that the two-year look-back period will provide consistency in
rep0l1ing obligations. The Bureau added the two-year look-back period to the loan volume
threshold in response to feedback that we received from industry and in particular from smaller
institutions.
Moreover. while most of the final11l[c is effective on JanuaJ)' I, 2018, in order to allow some
lower-volume depository institutions to gain the benefit of the change in coverage one year early,
the linal11lle includes a temporary loan-volume test that goes into effect on January 1, 2017.
Under this test, a currently rcp011ing depository institution will not be required to continue to report
unless it originates at least 25 home purchase loans (or refinancings of home purchase loans) in
both 2015 and 2016.
The Bureau received many conunents on the proposed changes to the [oan-volume threshold.
Industry commenters generally supported adopting a loan-volume threshold, but favored an even
higher [oan-volume threshold. On the other hand, many commenters highlighted the importance of
the datel repm1ed by the depository institutions that would be excluded at the community levcl with
the new thresholds, especially in 11lral and underserved areas or to low-and moderate-income
individuals or minorities. The Bureau sought to balance the burden on financial institutions with
the value of the data reported at the community level to meet 1fMDA 's three purposes.
The Bureau considered several different loan-volume threshold altemativcs and describcd the costs
and benefits or these alternatives, to the extent pennitted by available data, in greater detail in the
finallUle. As one example, Table 5 in pal1 VILF.3 of the finallUle summarizes the number of
institutions and applications that would be excluded under closed-end repol1ing thresholds of 25,

2

 50, 100, 250, and 500 loans. 1 The Bureau believes that a threshold of 25 closed-end ill0l1gage
loans provides a meaningful reduction in burden by reducing the number of small depository
institution reporters while preserving important data about communities and consumers.
Higher thresholds would further reduce burden but would produce data losses that would
undermine the benefits provided by HMDA data. Bureau estimates of the loss of data in
communities at those different closed-end m011gage loan volume tlu'esholds are also provided in
the final rule. 2 For example, Table 6 in part VII.F.3 of the final rule shows that at a closed-end
reporting threshold of 100, the number of census tracts that would lose over 20 percent of reported
data would increase from about 45 tracts to about 385 tracts, almost eight times more than the
number with a threshold set at 25 closed-end mortgage loans. The number of affected low- tomoderate-income tracts would increase from about 20 tracts to about 145 tracts, an increase of over
six times the number at the 25-loan level. The Bureau detennined that the loss of data in
corrununities at closed-end mortgage loan-volume thresholds higher than 25 would substantially
impede the public's and public officials' ability to understand access 10 credit in their communities.
Infonnation on data sources the Bureau used to identify depository institutions for these estimates
is also available in the final rule.
Thank you for your continued interest in the Bureau's work. Please do not hesitate to contact me
should you have any additional questions, or have your staff contact Catherine Galicia or Tim
Sheehan in the Bureau's Office of Legislative Affairs. Mrs. Galicia can be reached at 202-435971 I and Mr. Sheehan can be reached at 202-435-7004. I look forward to working with you on
this and other consumer financial protection matters of importance to you and your constituents.

Sincerely,

Richard Cordray
Director

ce:

The
The
The
The
The
The

Honorable Frank Guinta, Member of Congress
Honorable Andy Barr, Member of Congress
Honorable French Hill, Member of Congress
Honorable Michael G. Fitzpatrick, Member of Congress
Honorable Randy Hultgren, Member of Congress
Honorable Blaine Luetkemeyer, Member of Congress

I Scc 80 FR 66127. 66279 (Oct. ~g. ~015).
: . Jd.

3

 The Honorable Robert Pittenger, Member of Congress
The Honorable Patrick T. McHenry, Member of Congress
The Honorable Bruce Poliquin, Member of Congress
The Honorable Luke Messer. Member of Congress
The Honorable David Schweikel1, Member ofTongress
The Honorable Mick Mulvaney, Member of Congress
The Honorable Marlin A. Stutzman, Member of Congress
The Honorable Randy Neugebauer, Member of Congress
The Honorable Lynn Westmoreland. Member of Congress
The Honorable Steve Pearce. Member of Congress
The Honorable Roger Williams, Member of Congress
The Honorable Scott Tipton, Member of Congress

4

 February 11,2016
The Hononlble Mick Mulvaney
u.s. House of Representatives
2419 Rayburn House Office Building
Washington, D.C. 20515

Dear Congressman Mulvaney:
Thank you for your letter about the Consumer Financial Protection Bureau's efforts to study and
address small dollar lending practices. The Bureau is in the process of developing a Notice of
Proposed Rulemaking to address concerns in markets for payday, vehicle title, and similar lending
products. The :--JPRM will build on feedback we received from small businesses and other
stakeholders after releasing an outline of proposals under consideration last spring.
The Bureau recognizes that the states have adopted a variety of different approaches to regulating
small-dollar lending and continues to carefully consider existing state laws and regulations, as we
have throughout our research and development of options to address potential consumer hann. In
April 2013, the Bureau released a report entitled, Payday '"olJn.\" and Deposit Advance Product.'): A
White Paper of Initial Data Findings, I which references how variations in state laws may impact
how products are structured. In March 2014, the Bureau released. Data Point: Pa.vda.v Lendillg, 2
which presents findings on the impact of state laws and regulations on loan rollover rates. In
addition, in March 2015, the Burcau published the Olltline of"Proposals Under COllsideralio1l (lnd
Alternatives Considered. 3 as part of the Small Business Review Panel process, which also includes
analysis relative to state laws and regulations. Moreover, the Bureau has met with representatives
of state and local governments from around the country to hear directly about their experiences
related to payday lending regulations.
The Bureau has a number of concems about consumer injury in the markets for payday, vehicle
title, and similar loans. While these markets are, in many jurisdictions, subject to state regulation,
we remain concerned that consumers across the country face risks from practices in these markets.
Among the Bureau's goals is to ensure that consumers are oftered certain minimum protections no
matter where they are located or \vhether they receive their loans from storefront or online lenders.
State laws that afford consumers greater protection would not be preempted by a Bureau regulation
on small dollar lending.

AI"l/i/l/h/c l/I
C Al"ailahfe

01
\ Ami/aNI' al

 As the Bureau considers federal regulation of small dollar lending, we continue to solicit feedback
from a variety of stakeholders, including industry participants. consumer advocates. and state and
federal regulators. We have talked directly to regulators and policy makers at field hearings and in
other settings across the country, and we appreciate the insights provided by other regulators who
have implemented state regulatory frameworks.
As you know, the outline of proposals under consideration the Bureau released in March and the
Small Business Reviev.' Panel that followed generated imp011ant early input as the Bureau moved
i11to a fulllUlemaking process. Moreover. Ol1ce the Bureau issues its proposed IUle, the public,
including industry participants, consumer advocates, and state and federal regulators. will be
invited to submit written comments, which will he carefully considered before any final regulations
are issued. Whenever the Bureau promulgates regulations, the agency is required, pursuant to the
Dodd-Frank Wall Street Relcllm and Consumer Protection Act, to consider the potential benefits
and costs to consumers and to industry, including considering any impacts on access to consumer
financial products and services resulting from the rule. Any final rule will have a designated
implementation period for industry to come into compliance.
Thank you for your continued interest in the Bureau's payday lending work. [look fonvard to
working with you on this and other consumer financial protection matters of importance to you and
your constituents.

Sincerely,

Richard Cordray
Director

2

 <Congress of tqe 1itnitell §tates
maslliltgiolt, :am 20515
March 14,2016

The Honorable Richard Cordray
Director
Consumer Financial Protection Bureau
1700 G Street, NW
Washington, DC 20552
Dear Director Cordray:
We write to express our concern that the approach taken by the Consumer Financial Protection
Bureau (CFPB) - which does not routinely distinguish credit unions and community banks from
some of the very large financial institutions and nonbank lenders - may unintentionally burden
community based financial institutions and limit the choice and availability of consumer credit.
Credit unions and community banks provide safe and sound lending opportunities for their
members and customers. Their fOCliS on iocallending and community development and the
close-knit relationship they develop with those they serve is essential to preserve. As you
consider consumer protection regulations, \ve urge you to account for the burden associated with
compliance, particularly for smaller entities such as credit unions and community banks.
We want consumers to have all the information they need to make the right financial decisions
for themselves and their families, and to ensure that bad actors are prevented from taking
advantage of consumers. The furtherance of this mission requires CFPB not only to put in place
strong consumer protections, but also to evaluate their effect on a complex financial marketplace
made up of both very large financial institutions and much smaller entities.
The Government Accountability Office recently released a report on the impact of new
regulatory requirements stemming from the Dodd-Frank Wall Street Reform and Consumer
Protection Act (Dodd-Frank Act). The study· found that there are a number of cases where
financial services have been limited or discontinued by community based financial institutions
due to new requirements. For example, new regulations on remittance transfers, which were
imposed on al1 institutions that make more than one hundred transfers a year, have led to a
number of smaller providers limiting or ending this service altogether due to the financial
burdens associated with meeting the CFPB's new requirements.
When Congress passed the Dodd-Frank Act, It specifically recognized the need to tailor
regulations to fit the diversity of the financial marketplace. Section 1022(b)(3)(a) gives the CFPB
the authority to adapt regulations by allowing it to ex.empt "any class" of entity from its
rulemakings. As you undertake rulemakings, we urge you to consider the benefits credit unions
and community banks provide and ensure that regulations do not have the unintended
consequences of limiting services or increasing costs for credit union members or community
bank customers.

 Th ank you for your con!iideration. We look forward to working with yotl o n this important
matter.

Sincere ly,

STEVE STIVERS

RALPH ABRAHAM, M.D.

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22

([ongress of tlye 1ltnitell §tntes
lIIaslliltglnlt. lllar 20515
March 28, 2016
The Honorable Janel Yel len
Chair of the Fed
Board of Governors of the Federal RescTVe System
Twentieth Street and Constitution Avenue, NW
Washington. D.C. 2055 1
The Honorable Martin J. Gruenberg
Chaimlan
Federal Deposit Insurance Corporation
550 Seventeenth Street, NW
Washington, D.C. 20429

The Honorabl e Thomas J. Curry
Comptroller of the Currency
U.S. Department of the Treasury
400 7" Street, SW
Washington, D.C. 20219
The Honorable Deborah Matz

Chainnan
National Credit Union Administration
1775 Duke Street
Alexandria, VA 223 14-3428

The Honorable Richard Cordray
Director
Bureau of Consumer Financial Protection
1700 G Street, NW
Washington, DC 20552
Ladi es and Gentlemen:

The undersigned Members of Congress, representing a cross-section of rural , suburban and urban
districts across thi s country, write to express our deep concern over the crushing impact that
ever-expanding regulatory burdens are having on the ability of our nation' s financial institutions,
particularly community banks, to serve the economic needs of our growing economy. The
aggregate weight of these new regulations is stifling the efforts of community lending
institutions to serve the economic needs of the individuals, businesses and local communities that
are the life blood of our nation.
While opinions differ on the necessity of various regulation s, one concept of how regulations
should be structured has been unifonnly embraced - the need to "tailor" regulations so that they
arc the right "fit" for the institution involved. Rules must differentiate by business model, risk
profile and also take into account whether the institution has the resources available to comply.
Unfortunately, it is apparent from the current regulatory requirements that this is not the case.
We should not be o perating in a regulatory environment where a "best practice" for some is
applied (Q all institutions regardless of size because the practical impact for banks of various
sizes - communi ty, mid-size, regional and the like - is consolidat ion or fa ilure and as a result the
When, for example. commu nity banks are subject to
communities they serve suffer.
intemational capital rules designed for global banks. something is wrong with the way
regulations are being app lied. When regulators fail to fully grasp the compliance burdens of the
many new mortgage rules to the point that financial institutions ('xi! the mortgage business, it is
abundantly clear that tailoring efforts have fallen short.

 The failure to effectively calibrate the regulatory response to match the level of risk posed by the
institutions has had a real impact on the ability of institutions to serve their communities.
So that we may better understand how the regulators are addressing our concerns and what
obstacles exist that keep them from doing so, we respectfully ask that you provide us with the
following information:
•

Please identify specific major areas where regulators have taken action within your
jurisdiction to tailor rules to the business model and risk of institutions or classes of
institutions, outlining how you have done so.

•

Please identify specific major areas where regulators lack the authority to tailor
regulations to specific institutions or classes of institutions based on business model or
risk, and where you believe additional authority would be helpfuL

•

Please identify specific major areas where regulators contemplate taking additional action
to tailor regulations based on business model and risk, along with some thoughts with
how you may do so.

The undersigned recognize that regulators have been tasked with substantial responsibilities to
craft balanced regulations that address broad policy concerns while not creating unintended
consequences. Given the urgency of this issue, we need to do more, and we look for your
b'Uidance in doing so.

Respectfully,

~Q;;:a~
tpton
Member of Congress

David Scott
Member of Congress

ruce Westerman
Member of Congress

Steve Stivers
Member of Congress

Member of Congress

Ed Royce
Member of Congress

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Member of Con gress

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Rick Crawford
Member of Congress

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omas J. Rooney
Member of Congress

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Glenn Grothman
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Ron Desantis
Member of Congress

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Member of Congress

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Member of Congress

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Charles Boustany, M.
Member of Congress

Erik Paulsen
Member of Congress

Thomas Massie
Member of Congress

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Member of Congress

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Steve Pearce
Member of Congress

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Member of Congress

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Member of Congress

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Member of Congress

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Member of Congress

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......""', ..ber of Congress

Chuck Fleisdunann
Member of Congress

Bill Shuster
Member of Congress

Collin Peterson '
Member ofCon!:,'Tess

Steve Russell
Member of Congress

Ryan
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Dennis Ross
Member of Congress

Sean Duffy
Member of Conl:,'Tcss

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Questions for the Record submitted by Rep. Mick Mulvaney (R-SC)
Committee on Financial Services
lIearing on "The Semi-Annual Report of the Bureau of Consumer Financial Protection"
Witness: The Honorable Richard Cordray, Director, Consumer Financial Protection Bureau
Hearing Date: March 16, 2016

Question #1: Director Cordray, in remarks you made during a February 3, 2016 field hearing on
checking account access, you acknowledged as a "positive development" the decision some
banks and credit unions have made to provide consumers with real-time infon11ation about their
available account funds using modern communication tools, such as online banking and text and
e-mail alerts. You stated that this real-time communication can reduce the risks that consumers
inadvertently overspend their accounts.
Wouldn't the usc of modem communication methods with consumers who owe a debt offer a
similar benefit of early and effective access to important financial information, giving consumers
an opportunity to resolve their accounts in a timely way? This seems particularly helpful in
instances when they may have inadvertently missed a payment, reducing the risk of future
financial hann. Wouldn't this also be a positive development?

 <r:t1I1l'rt'li
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>

1lnitl'il §tail's

ApI'i1 8, 201G

The Honorable Richard Cordray
Director
Bureau 01' Co nsumer FinanCial Protection
1700 G Street, NW
Wa s hin gton, D.C. 20552

Dear

Dln~d()r

Cordray :

We write to yo u today regardi ng the Bureau of Cons um er Fina nci a l
P rotect.ion's ("Burea u") effOl'ts to reg ul at.e s hort· term , s ma ll do ll(1r credit
products. Specifica lly, we a re concerned with the Bureau's disregard for stutn a nd
tribal sovc l'(:ignty and the existing state -based re gul ato ry framework.
As you know, of t he 50 s tates, t he legislatu res of 35 have aLIil'matively
e nacted s ma ll dollar, s hort-te rm le nding law s of va rying pe rmutations of
protections, including a nd up to oUtl'ig ht ba ns. The l'e ma ini ng 15 sta tes a lso addres!-i
the issue, ei ther by affirm ative ly declining to enact nn a uthorizing law to govern the
indus try, or choosin g to regulate via more widely app li (:able caps on lending interest
rates. ]n fact, no state lucks the author ity to enact, repeal, 01' am en d its own shortterm , s ma ll dollar le nd in g law s in orde r to prov ide grcatcr protections to it!:!
co n s um e l'~ .

Unfortunatel y, on numerous occasions the Burea u has publicly highlighted
Its disrega rd for the cu rren t state-based regulatory fra mework. For example , in an
April 23, 20 15 hearIng in t he FinanCial Institutions and Cons umer Credit
S ubcom mittee, Actin g De p uty Directo t' Dave Silberma n said, <I\Ve have not thought
about a sta te that domm't have the authority." In a Mn rch 15, 2016 lette r to HOll!:!e
Financia l Services Commi ttee Chail'1nan J eb Hensarling you statt!J , "That is nut
how w e ap proach those issues." Your l'egulatory posture Ignores tho pop ular voice of
states lind sovereign Indian tribes thai have carefully crafted laws to balance
cons um e r protection a nd access to credit.

 The Honol'E! blc Ri(.!hanl Cordray
Apri l 8, ::!O \G
Page ::! of ~

OV(W the la st several years, numerOUl-i elected s ta le officials from both
pa rties have written to you expressm g conce rn with t he Burea u's
efforts. Specifically, t.hey ha ve hi ghlighted co ncern s with the Bureau's efforts to
pree mp t s tate law8 by setting a federal legal floor. e W'iously, t he CFPB has, on
num ero us occasions , re fused to concede t hat it will be pl'ee mpting any state laws. ]n
testimony on 1\/Iarch IG, 2016 before the Financia! Services Committee yo u stated ;'1
don't think we inte nd to preempt state lnw." Furthe r, you d i ~ag reed with Indiana
Attorney Genc l'a ! ?;odlcr's characterization of yo ur c ffOl'ts as pree mption. Yet your
own definition of preemptio n, expressed in t estimony at thc sa me hearing, would fit
the situation before us today. You said, "Preemption is when the federal
governm ent overrides state law and invalid ates st ate law." By setting a federal
legal floor, yo u will override and invalidate state laws that arc less restrictive than
your federal lega l floor. You should recognize this principle from your days m; a
state attorney ge neral as "conflict preemption". Unfo rtunately, you have failed to
adeq uately engage state and tribal officials to hea l' their concc rn s and ensure yo ur
l'ulc m tl.king respects past efforts in all 50 states a nd la nd s held in trust for the
be nefit of fcdera ll Y ~ l'ecogn i zed Indian tribes.
To ens ure that the perspective of e lected st ate a nd triba l officia ls are
aue4ualc ly considel'ed, we res pectfully request tha L the Bureau co nve ne a forum 01'
roundtahle co mprised of the se elected s tate a nd lrib a l offi cj a l ~ be foro any proposed
regul a tion is introduced. A fOl'um of this type will e ni:i lll'C that t he Bureau cal'ofully
conside rs the pe rs pect ives of these officia ls as it rela tes La ma rke t trends, access t.o
crodit iss lies, and state regulatory models a nd ex pel· ie nces. To move forward wit h a
proposed regu lation before such forum is held wou ld bc ll'l'eSpOnSlble and
disrespec tful to the princIples of the lOth AmE:: ! ndm ent or the United States
Constit.ut.ion. Please inform us of your plans to convene s uch a forum by Friday,
Apnl 20, 201 G.
Sincerely,

I"
•..1: .- '
t4""'/'" ~
(t',~/-.~
,.
j,

Mick MulVa ney
Member of Co ngress

Ra ndy Neugeba uer

Member of Congress

2

 April 13,2016

The Honorable Adam B. Schiff
U.S. House of Rcprcscntati ves
24 11 Raybum House Office Build ing
Washington, DC 205 15

The Honorable Steve Stivers
C.S. House of Represen tatives
1022 Longworth House Office Bui lding
Washington . DC 205 15

Dear Congressman Schiff and Congressman Stivers:
Thank you for your It:!ler conceming the importance ofv.'CII-tailored and effective regulations.
The Consumer Financial Protection Bureau is l:ommitted to this objective in u<.;cordancc \vith the
provisions of the Dodd-Frank Wa ll Street Rcfonn and Consumer Protectio n Al:t. As the Bureau
contillues its work. consumer financial mark ets are showing increas ing s ig ns o f health. Equally
significant is the st re ngt h being cx hi bilL't.l by community banks amI cn:dit union s.
Under Section 1021 of the Dodd-Frank Act. Iht: purpose of the Bureau is to implement and, where
applicable, enforce federal consumer finan cial laws cons istently to en sure that JII consumers have
access to markets f()r consLlIner financial produ cts and services, and that such markets arc fair,
transparent, and cmnpctiti ve. Section 1021 further provides that one of the Bureau's ohjectiyes. in
exercise ofilS authorities. is to enforce Federal consumer finaneiallav,' "consistcntlv. without
regard to the status o f a person as a depository insti tu tion. in order 10 promote fair c·ompetition." l
Section 1022 o f the Dodd-Frank Act aUlhor1 7eS the Bureau 10 engage in rulcmaking and issue
orders and guidance to adm in ister and carry oUllhe purposes and objectives o f the Federal
consumer financiallilws. and to prev'ent evasio ns thereof. In doing so, Section 1022 n:quires that
the Burcau consider the potential benefits and costs to consumers and covered persons. including
the potential reduction of access to consumer financial products and servicl!s to consumers.
Section 1022 al so requirt:s the Bureau to c("lIlsider tht: impact of a proposed ruk: on insured
depository institution s and credit unions with total assets ofS1 0 hillion or less as well as the impact
on consumers in rural areas. Moreover, Section 1022 gives the Bureau Ihe authority 10 create
exempt ions from the Consumer Financial Protection Act of 20 10 or rules issued under that Acl for
any class of covered persons, service pro viders. or consumer fin ancial products o r services if the
Bureau dctennines an exemption is necessary or appropriate to carry out the purposes and
ohjectives of the Con sumer Financial Protection Al.:t after taking into consideration a sct offaclors
specified in the statute.
As part of the Bureau' s co mmitment to achieving. tailored and etlecti vc regulations. the Bureau has
tak.en a number of steps to provide relief to small financial entities in its rulcmakings, induding:

i

Pub.!.. 111·:!03. Tille X.

*102 I (b}(4)(Juty 21. 2010) : 11 U.S .CO

~ 551 1(b)(4).

 •

Expanded sa fe harbor for small cr editor s. A small cn::ditur has a hroadcr safe harbor for
its Quali fi ed MortgJgt: (QM ) loans than nOll-smail cred itors. The Bu reau's rules provi de a
safe harbor for OMs wi th annual percentage rate (APR) spread s ovcr Average Prime Offer
Rate (AP OR) up to 350 basis points, whereas non-small creditors have a safe harbor for
spreads up to 150 basis points, The Bureau' s rules also all o\\' a small creditor to make OM s
\",i th debt-to-income ratios that exceed the otherwise applicabl e 43 pen.:ent cap. (Small
creditors must hold tht:st: loans in portfolio to r three years.)

•

Exempted small crcditon in runl and undcrserYcd arcas. C urrent ly. small cred itors
that operate predominantl y in rural or ulldt:rscrvcd areas arc exempt li'om requirements to
establish escrow acco unt s for higher pl;ced mortgage loans and ma y a fTer OMs and Home
Ownership and Equit y Protection Act (HOE PA) loans C'hi gh cost"' mOl1gages as defined in
the HOEPA ) that have balloon payment fe atures. QMs and HOEPA loan s generally cannot
have bal loon payll1cnts.

•

Implemented a " .. o-yea r pa use for sma ll creditors. The Bureau eSlab li shed a two- year
transition period (until January 10. 1016) allow ing sma ll enxli tors to make balloon-payment
QM s and ba lloon· pa yment II OE PA loans rega rdless of whet her they operate prcdollli naIHl y
in rural or und erserved areas, while the Bure au revisited and reconsillered the dd initi on of
"rural" for this purpose.

•

Expanded exemptions for rural and un ders crved areas. In connection with other
changes to amend the defin itions of "small creditor" and "rural area." the Bureau published
a fina l rule in Oct ober 201 5 that extended th is two-year transiti on period from January 20 16
until April 10 16. Tilt: Bureau's tinal rule also pro vi ded a signi fi cant ex pan sion of "rura l. "
<lS wel l as an ex pan sion of which enti ties can quali fy as "small creditors: ' The Dun:au ' s
fin al rul e look ctlect on January I, 20 16. he fore Ihe two-year transition peri od expired . In
March 20 16, the Bureau issued an int erim tinal rule that implt::mt!llts tht! Helpi ng Expand
Lendi ng PractiL:es in Rural Communiti es Act, and makes these provisions avail able to small
creditors that ex tend at least one covered trunsaction secured by propert y located in a rural
or underscrved area in the previous calendar year. About 6,000 additional small creditors
wi ll be eligib le as a result (lf thi s change.

•

Relaxed requirements for a ppraisals. Small creditors have relaxed ru le-s regarding
conflict o f in teres I in ord cIi ng appr<lisals and other valuations.

•

Exempted small scrvi eer s fr om providing per iodic stat ement s. Small servicers arc
ex empt from the Truth in Lending Act rcquirement to pro vide peri odi c statements.

•

Exempted small servicers from loss mi tigation requirements. Small scrvi ccrs arc
exempt from all of tile Rea l Estate Settlement ProcL'tiures Act prov isio ns on pol icies and
procedures: earl y intt:rvt:ntion; continuity of c ont act~ and loss miti gation. except that a
small serviccr ma y not fil e to r fort:c1osure unl ess Iht: bOITowt:r is more than 120 days
delinquent on the mortgage, Small servieers may also not fil e for fo reclosure (or move for
2

 a fo reclosure jud~n t;:n l or order o f sale. or conduct a forec losure sale) if a bOITo wer is
performing under th e terms o f a lo ss m itigation ab'feement.
•

Exempted lower-volume depository in stitutions from Home M ortgage Disclosure Act
reporting. In Octo bt::r of 20 15, the Bureau adopted a final rule revi sing Regulation C,
which implem ents H\1DA. HMDA and Regul ation C. among other things. require covered
mortgage lenders to report data conc erning their mortgage lending al.: ti vity. Changes to
coverage in the fi nJ I ru le will reduce the numher o f hanks , savings assm:iatio ns, and cred it
unio ns that are requ irtxl lo report HMDA data. The rcvis io ns will relieve ahout 22 perccnt
o f c un'cllt ly reporti ng de pository inst itutio ns fro m the burden o f re pol1ing HMLJA data .

•

Proyided r egul atory ce rtainty for sma ll entities under Regulation E. In the Bureau 's
rules impl em enting the Dodd-Frank Act ' s amend ments to the Elcctroni e Fund Transfer Act,
the Bureau dctenn ined that the rem ittance requi rements do not appl y to transfers sent by
entiti es that provide 100 or fewer rem ittanccs each year.

Also, your Jetter references the Go vernment Accountahi lity Offi ce' s recent repon on
implementation of the Dodd · Frank Act. " 'hi eh is GAO' s lirth s uch statu torily req ui red repo rt . In
its rep0!1 , G AO provi d c~ numerous examples. incl udin g the Burea u 's mOrl gagc and rem iHam:c
ru les. of \vhere the Bureau has pro vid ed exempti ons for its various rul em ak ings. specifically to
red uce the rules' impact on smaller entiti es. includ ing community banks and credit unions. GA O's
report also rccogni:les that statutory obligations uniqu e to the Bureau req uire both prospective
assessments in its rul emakings nfpotcnt lal bcnelit s and costs to consumers and covered persons as
wcU as retrospecti ve assessITIt::nts of sib'11i ti ean t ru les or orders ad opted h y the Bureau. ~
As I hJ ve consistently said in the past the Burea u recognizes that com m un ity bank s and cftxlit
un io ns d id n o l ca use the fin ancial cl;sis. Fo r th at reaso n. the Rureau is co mm itted 10 ensuring that
the regulatio ns that we pro mulgate are wel l·tailored ;:md ctlc cti vc. Should yo u have any add itional
LJ uesti ons about the I3ll reau' s ru lemaking. please do no! hesitate to contact me. or han.' your stafT
contact Catherine Gali cia in the Hun:au' s Ofli ce ufLegi s lati v'e Affai rs. Mrs. Galicia can be
reached at 202-435-97 11 .
Si ncerely.

Richard Cordra y
Di rector
cc:

1

The Honorab le Ralph Abraham, M .D .. Memh er ofCon,gres s
The Honorable Alma S. Adams. Ph.D ., Mt:mbcr OfCO llb'TeSS
The Honorab le Rohert Aderholt. Member o f ('on gress

liovemmem AecounlabililYOllice. Drxld-Fnlllk Reg llla/io", '

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 The Honorable Pele Agui lar, \IIembcr of Congress
The Honorable Rkk Allen, Member of Congress
The Honorable Justin Amash, Member of Congress
The IIonorab h:: Mark Amodei, .\1ember of Congress
The Honorabl e Hrad Ashford, Member of Congress
The Honorable Rrian Babin, Member of Congress
The Honorahle Andy Barr, Memher ofC'ongress
The Honorable Joe Barl on, Member of Congress
TIle Honorable Karen Bass, Member of Congress
The Honorable Jo yce Beatty, Member of COll6rress
The Honorahle D<ln Benishek, M.D., Member of Congress
The Honorable Ami Bera, MemberofC'ongress
The Honorabl e Donald S. Beyer, Jr., Member of Congress
The llonorable Gus Bilirakis, Member of Congress
The Honorable Mike Bishop, Member of Congress
The Honorahlc Sanford O. Bishop, Jr., Member of Congress
The Honorable Diane Black , Member of Con1,rress
The Honorable Marsha Blackburn , Member of Congress
The Honorabl e Ro b Blum , Member of Congress
The Honorable Earl Blumenauer, MemberofConh'Tess
The Honorable Suzanne Bonamiei, \1cmber of Congress
The Honorabl e Mike Bost, Member ofC'ongress
The Honorable Charles W. Boustany, Jr. , M.D.. Member of Congress
The Honorab le Brendan F. Boyle, Memher ofC'ongress
The Honorable Ke vi n Brady, Member of Congress
The Iionorable Mo Brooks, Member of Congress
The Honorable Susan Brooks, Member o f Congress
The Honorable Corrine Brown, Member of Congress
The Hon orable Juli a Brownley, Member of Congress
The Honorable Larry Bueshon, M.D., Member OfC'Oll b'Tess
The Honorable Cheri Bustos, Member of Congress
The !lonorable G.K. Butterfield, Member of Co ngress
The Honorable Bradley Byrne, Member Co ngress
The Honorahle Ken Caivcl1, Member of Congress
The Honor.tblc lo is Capps, Member of Congress
The Honorable Ton y Cardenas, Member of Con1,'Tess
The HOllomble Andre Carson, Member of Congress
The Honorable brl L 'Buddy' Carler, Member of Congress
The Honorabh::: Kathy Castor, Member of Congress
The Honorable SIeve Chabot Member of Congress
The Honorahle Yvette D. Clarke, Member OfColl!:,1feSS
The Honorable Emanuel Cleaver II, Member of ('ongress
The Honorable James E. Clyburn, Member of Congress
The H o n orab l ~ ~ik e Cotlrnan, Member of Congress
The lIonorab leTom Calc, MemberofCongn:ss
The Honorable Chris Collins, Member of Congress
4

or

 The Honorab le Doug Colli ns , Member of Congress
The Honorable Barbara Comstock, Member of Congress
The Honorable K. Michael Conaway, Member of Congress
The Honorable Gerald E. Connolly, Memht:r ofConf:,'Yess
The Honorahle Paul Coo k, Member of Co ngress
The Honorable Jim Cooper, Member of Co ngress
The Honorable Jim Cosla, Member of Congress
The Honorab le Rya n Costell o, Member of Congress
The Honorable Joe Courtney, Member of Congress
The Honomhl c Kev in Cramer. Member of Congress
The Honomblc Ri ck Crawti)rd. Member of Congress
The flo norable And er Crenshaw , Member of Congress
The Honorab le Henry Cuellar. Member of Co ngress
The Honorab le Carlos Curbelo. Member of Congress
The Honorable Rodney Davis, Mcmber of Cungress
The Honorable Petcr De Fazio, Member of Congrt!ss
The ll onorable Suzan DelBene. Mt..'m bcr of Congress
T he Honorable Jd'f Denham. Member of C('Ingrcss
T he Honorable Charles W. Dent Member of Congress
The Honorahle Ron DeSantis, Member of Congress
The Honorable Mark DeSaulnicr, Member of Congress
The Hono rab le Scott DesJ arlais. Member of Congress
The Honorab le Mario Diaz 8alal1. Membcr ofCOnb'l.·es s
The Honorable Robert J, Oold, Member of Congress
The Honomb! c Daniel M. Donovan, Jr. . Mt:mbcr of Congress
The Honorablc Seall r. Du fTy, Member of Congress
The Honorable Jeff Duncan. Mcmbcr o f Congress
The Il onorab le Joh n J. Duncan, Jr. , Member ofCongn..'ss
Thc Honorable Renee Ellmers, Member ofC'ongress
The Honorable Tom Emmer, Member of Congress
The Honorable Anna G. Eshoo. Member of Congress
The Honorahle Elizabeth Esty, Member of Congress
The Honorable Blake Farenthold, Mcmber of Congress
The Honorable Sam farr, Member of Congress
The lI onorable Stephcn Fincher. Member of ConbJfess
The Honordb le Michael Fit zpatri ck. MemherofCongrcss
The Honorab le Chui:k Fleischmann, MemberofCollb'TCSS
The Honorahl e Rill Flores, Mem ber of Congress
The Honorab le J. Randy Forhes, Member of Congress
The Honorahl e JetTFortcnberry, Member of Congress
The Honorable Bi ll roster, Member of Congress
The Honorable Lois Frankel, Member ofColl!,'TCSS
TIle Honorable Trent Franks. Member of Congress
The Honor.Jbk Marcia L. Fudge. Member of Congrcss
The Honorahle Ruben Gall ego. Member ofConh"'ess
The Honorable John Garamendi, Member of Congress
5

 The Ho norahle Scott GatTett, Member of COllb....ess
The Honorable Bob Gi bbs, Memberof Conh....ess
The I [onorable Chris Gibson, Member of' Congress
The Honorabl e Bob Go odJatte, Member of Congress
The Honorable Pau l Gas ar, D.D.S., Member o f Congress
The Honorahle Trey Gowdy, Ylembcr ofCon&,'1'css
The Honorable Kay Granger, Member of Congress
The Honorable Garret G raves. Member of Congress
The Hono rable Sam G ra ves. Member of Congress
The Honorable Tom Grav(.'S. Member of COllb'TeSS
The Honorahle Alan Grayson, Member of Congress
The Honorable Gene Green, Memher of Congress
The Honorabl e H. Morgan Griffith, Member ofCOn6'1'CSS
Thc Honorabl e Mil..:helle Lujan Gli shmn. Member of Congress
The Honorable G lenn Grothman, Member of Congress
Tilt: Honorable r nlllk G uinta, Memher of Conb....ess
The Honorable Breit Guthrit:. Member of Congress
The Honorabl e Jani ce Hallll , Member of Congress
Thc Honorable Ril:hard I-Ianna. Member of Congress
The Honorable ('resent Hardy, Member Co ngress
The Honorahl e Gregg Harper. :vtcmber of Congress
The Honorable Vicky Hartzler, \IIember ofC'ongress
The Honorab le Alcce Hastings, Member of Congress
The lIonorabh:: Joe Heck, 'v1ember of Congress
The Honorab le Jai me Herrera Beutler. Member of Conh'TcSS
nle Honorable Jad y Hice, Mem ber o f Congress
Thc Hunor.Jhlc Brian Higgins. Memher ofCongress
The Honorah le French Hill, Memberof Congrcss
The Honorable James Il imes. Member of Congress
The Honorable Ruben Hinojosa, Member of Congress
The Honorabl e Geo rge Holding, Member of Congress
The Honorabl e Mikt:: Honda, Member of Congress
The Honorabl e Richard Hudson, Mcmber of Congress
The Honorahl e T im Huel skamp, Memher of Congress
The Honorahle Jared IlulTman, Member of Congress
The Honorahle Bill Hui zenga, Member of Congress
The lIonorab le Randy Hultgren, Member of Congress
The Honorable Du ncan Hunter, Member of Congress
The Honorab le Will Hurd, Member of Congress
The Honorable Robert Hurt, Member of Congress
The Honorabl e Steve IsraeL Member of Congress
The Honorable Evan Jenkins, Member of Congress
The Honorable Lynn Jenkins, Member of Congress
The Honorable Bill Johnson. Member of Congress
The Honorable Il ank Joh nson. Memher of Congress
The Honorable David Joll y. Member o f Congress

or

6

 The Honorable Waltcr B. Jones. Member ufCungress
The Honorable Jim Jordan. Member of Congress
The Hono rable David Joyce, Member of Congress
The Ho norable Ma rcy Kaptur, Member of Congress
The Honorabl e John Katk o. Mem ber of Congress
TIle Honorab le Mikc Kell y. Member Or COnb'ft:SS
The Honorab le Robin L. Kell y, Mcmber of COnb'fCSS
The Honorable Trent Kel ly, \r1.ember ()fCongrc~s
The Honorable Dan Kildce. Member of Congress
Th~ Honorable Derck Kilmer, Member afCongres s
The Honorable Ron Kind. Mcmbcr of Congress
The Honorable Peter King. \1cmbcr of Congress
The Honorabl e Steve King. Member OfCOll!:,'TCSS
The Honorable Adam Kinzinger. Member of Congress
The Honorab le An n Kirkpatrick . Member of Congress
The Honorab le John Kli ne, Ml-lnbeT Of COllb'TeSS
The Honorable Steve Knight, Memhcr of Congress
The Honorable Ann McLane Kuster. Member of Congress
The Honoruhl e Raul R. Labrador, Member of Conf,'fcss
The Honorable Dn ri n La Hood. Member of Congress
The Honorable Doug LaMalfa, Member of Congress
The Ii onorable Doug Lamhom, Member of Congress
The Honorable Leonard Lance, Mem her of Congress
The Honorable Jamcs R. Langevin, Member ofCOllb'fCSS
The HOllorahl c Riek l.arsen. Member of Congress
The Honorable Robert E. Latta. Member of Congress
The Honorable Brenda La\vrcn cc, Member o r Congress
The Honorabk Shei la Jackson Lce, Member of Congress
The Honorable Sander Levin. Member of Congress
The Honorab le John Lewis, Member of Congress
The Hono rabl e Ted Lieu. \1ember of Congress
The Hono rab le Daniel I.ipinski, Member of Congress
The I lonorabk Frank A. LoBiondo, Mem ber of Congress
The Honorab le Dave Locbsack, Member or COl1b'TeSS
The Honorable Billy Long, Member of Congress
The Honorable Barry Loudennilk, Member of Congress
The Honorable Mia Love, Member ofCongrl-'Ss
The HOllor.thle Alan Lowenthal, Member of Congress
T he Honorable ;\ita M. Lowey, Member of Congress
The Honorable Frank Lucas, Member of Congress
The Honorable Blaine Luetkemeyer. :v1emhcr of Congress
The Honorahle Ben R. Luj an. Vl embcr of Congress
The HonoTilhlc Cynth ia Lummis, Member of Congress
The HOI1Dr(lhle Kenny Marchant, Member of Congress
The HOllorable Tom Marino, Member of Congress
The Honorable Thomas Massie, Memb er of Congress
7

 The Ilonorabh: Michael T. McCau l, Memher of Congress
The Honorable Tum McClintock, Member ufCongress
The Honorabl e Betty McCollum, Member of Congress
The Honorahle James P. \.1cGovem, Member ofCol1f:,1fess
The Honorable Patrick McHemy, Member of Congress
Thc Honorable David B. McKinley, P.E., Member of Congress
The Honorab le Cat hy McMorris Rndgers, Ylember of COl1h'TCSS
The Honorab le Jeny McNemey. Member of Congress
The Honorable Martha MeSally, Memher of Congress
The Honorable Mark Meadows, Member of Congress
Thc Iionorable Patrick Meehan, Member of Congress
The Honorabl e Gregory Meeks. Member of Congress
The Honorable Grac e Meng, Memb er of Congress
The Honorable Luk~ Messer, Member of Congress
The Honorabl e John L. Mica, Membt'T of Congress
The ilonorable Candice S. Mi1Jer, Member of Congress
The Honorab le Jeff Mi ller, Member of Congress
TIle Honorahl e John Moolenaar, VI ember of Congress
The Honorable Alex X. Mooney, McmhcrofCongress
The Honorah le Seth Ytoulton. Membcr of Congress
The Honorable Markwayne Mullin, Memher of Congress
The Honorable Mick Mulvaney. Member of Congress
The Honorabl e Patrick E. Murphy, Member of Congress
The Honorable Tim Y1urphy, Member ofC'ollgress
The Honorabl e Grace F. Napolitano. Member of Conh7feSS
The HOllordhle Rand y Neugeba uer, Vlemhcr of Congress
The Honorab le Dan Newhouse, Membt:r ofCongrcss
The I-Ionorable Kristi Noel11, \r1emher of Congress
The Honl)rahle Richard M. Nolan, Member of Congress
The Honorable Donald Norcross, Member of Congress
The Honorable Eleanor Holmes NOIion. Member of Congress
The Honorabl e Rieh I\ugent, Memher of COl1!,.'TCSS
The Honorable Devin ~uncs, Member of Congress
The Honowb!e Stcve!) Palazzo, Member of Congress
The Honorable Gary Pa lmer. Member of Congress
The Ii onorable Bill I)ascrcll, Jr., Member of Congress
The Honorabl e Erik Paulson, Member of Congress
The Honorable Steve Pearce, Memher ofCOnb'TeSs
The Honorahle Scott H. Peters. Member of Congress
The Honorable Co llin Peterson, :'v1ember of Congress
The Honorable CllcJ lic Pingree, Member of Congress
The Iionorabh:: Robert Pittenger, Member of Congress
The HOllorab le Stacey Plaskett. Member Congress
The HOllorah le Mark Paean, Memher of Congress
The HOllordhlc Bruee roli4 ui n, Memher of Congress
The Honorahl e Jared Polis. Member of Congress
R

or

 The: Honorab le Mike Pompeo, Member of Congress
The HOlloruhlc Bill Posey. Member of Congress
The Ii onorable Da vid Pri ce, Member of Cungr<.."'Ss
'fhe Honorable Tom Price, M. D., Member o f Congress
The: Honorabl e Mike Qu igley, Member of Conb>Tess
The Honorable AUl1lua Amnia Radewagen , Member o f Congre:ss
The Honorahle John RatclifTe, Member of Congress
The Honorab le Tom Reed. Member of Congress
The Honorable Dave Reichert, V1emher of Congress
The Hon orable Jim Renacci. Member of Congress
The Honorable Reid Ribble. Member of Congress
The Honorable Kathleen M. Rice. Member of Congress
The Honorable Tom Rice, Member of Congress
The Honorab le Cedric Richmond. Member of Congress
The HOllorable David P. Roc. M.D., Member of Congress
The Honorable \1ikc Rogers. Member of Congress
The Honorable Todd Rokita, Member ofCOllb>TCSS
TIle Honorable Tom Rooney, Member of Congress
The Honorable Peter Roskam , Member of Congress
The Honorable Il eana Ros-Lehtinen, M{''ll1ber ofCongn!ss
The Honorahl e Dennis A. Ross, Member of Congress
Tht! Honorahl e Keilh ROlhfus, Member ofColl!:,'TCSS
The Honorable Da vid Rou7.er. Member of Congress
The Iionorable Ed Ruyce, Memher o f Congress
The Honorabl e Raul Ruiz, Member of Congrt:ss
The Honorahle Robhy Rush. \I1ember ofC'ongrcss
Thl! HOllorable Steve Russell, Member of Congress
The Honorab le Tim Ryan, Member of Congress
The Honorahle Matt Salmon, Memher of Co ngress
The Honorable Linda T. Simchez, Member of Congress
The He'll1omble Mark Sanford. Member of C'ongress
The Honorable Steve Scalise, Memher OfCOllb'TCSS
The Honorable Kurt Schrader, Member of Congress
The Honorahle David Sclw/eikert, Member of Congress
The Honorable Austin Scott. Member of Congress
The Honorable David Scott, Member of Congr{.'Ss
The lIonofJble: James Sensenbrenner. Jr .• Member of Congress
The Honorab le Pete Sessions. Member OfCOllh1ft:SS
The Ii onorab le Terri Sewell, Member of Congress
The Honorable Brad Shennan, Memher of Congress
The HOllorab le John Shimkus, Member of Congress
The: Honorable Bill Shusler, Member of Congress
The Honorabl e Mike Simpson. Member ofCongrt:ss
Th e Honora.ble Adrian Smith, Member of Congress
The Iionorable Jason Smith, Member of Congress
The Honorable Lamar Smith. Member of COl1b'TeSS
9

 The Honorable Jackie Speier, Member of Congrl:ss
The Honorab le Eli se Stefanik , Member of Congress
'I'he Honorab le Marli n Stutzman. Member of Congress
T he Honora bl e Eri c SwalwelL Member uf Cul1!,,'T ess
The Honorable Mark Taka i. Member of Congress
The Honorable Glenn 'CiT' Thompson. \1ember ofCongrcss
T he Honorable Mike Thompson, \1cmber of Congress
The Honorable Patrick J. Tiberi, MemhcrofC'ongress
The HOl1or(loJc Scott Tipton, Member ofCongrcss
The Honorable Dina Titus. Member of Congress
The Honorable Paul Tonka, Member af Congress
The Honorable Nonn a Torres. Member of Congress
The Honorable Dave Trott. Member of Congress
The Honorabl e Ni ki Tsangas. Member of ConJ:,'Tcss
The Hono rab le \lti chael R. Tumer, Member of Congress
The Honorab lt:: Fred Upton. Member a f Congress
The lionorable David G. Valadao. Member of Congress
The Honorable Juan Vargas. Member afCongress
The HOllorable More Veasey, Member of Congn.:ss
The Honorahl e Fil emon Vela, :v1ember afCongress
The Honorable Ann Wagner. Member or Cullgress
The Ii onorab le Tim Walberg, ~e m ber o f C'oll!,,'Tess
The Honorab le Greg Wal (it:ll . Member of Congress
The Honorabl e \!lark Wa lker, Member of Congress
The Honorahl e Jackie Walorski, Member of Con gress
The Honorab le Mimi Walters. Member ofCOnh'TeSS
The J IOllorable Tim Wa1 7, Member of Congress
The !lonorable Randy Weber, Member of Congress
The Honorable Daniel Webster, Member of Congress
The Honorabl e Peter Welch , \I1ember of Congress
'I'he Honorable Brad Wenstrup. Member Of COll b'TCSS
The Honorabl e Bll.lcC Westerman . .\1ember of Co ngress
The Honorable Lynn Westmoreland, Member ofCongrcss
The Honorable Ed Whitfield. Member of'Congress
The Iionorab le Roger Williams , \I1 ember of Congress
The Honorable Frederica Wilson. Memher of Congress
The Honorab le Joe Wil so n. Member Of COllb.... ess
The Honowhl e Robert Witt man, Member of Congress
The Honorablc Steve Womack. Member uf Congress
The Honorabl e Roh Woodall, Member of Congress
The Il onorable John Yannuth. Memher of Congress
The Honorabl e Kevin Yoder. Member of Congress
The Honorahl eTed S. Voho, DVM .. \I1cmberofCongress
The Honorable David Young, Member ofConb'TcsS
The Honorable Don Young, Member of Congress
The Honorab le Todd Young. Memb er ofCo ngrt::ss
10

 The Honorable Lee Zeldin, Member ofCongress
The Honorable Ryan Zinke, Member of Congress

11

'- C-.,

~ ,,:

May 5. 2016
The Honorable Scott Tipton
C .S. House of Representative s
218 Cannon l-lousc Office Building
Washington, DC 20515

The Honorable David Scott
u.s. House of Rcprcsentatives
225 Cannon House Office Building
Washington, DC 20515

Dear Congressman Tipton and Congressman Scott:
Thank you for your letter concerning the importance of well-tailored and effective rcgulations.
The Consumer Financial Protection Bureau is committed to this objective in accordance with the
provisions of the Dodd-Frank Wall Street Rcfonn and Consumer Protection Act As the Bureau
continues its work, consumer financial markets are showing increasing signs of health. Equally
significant is the strength being exhibited by community banks and credit unions.
Under Section 1021 of the Dodd-Frank Act, the purpose of the Burcau is to implement and, where
applicable, enlorce Federal consumer financial laws consistently to ensure that all consumers have
access to markets for consumer financial products and services, and that such markets are fair,
transparent. and competitive. Section 1021 further provides that one of the Bureau' s objectives, in
exercise of its authorities. is to enforce Federal consumer finaneiallav.·' "consistentl\', \vithout
regard to the status of a person as a depository institution. in order to promote fair c-Oll1petition:' I
Section 1022 of the Dodd-Frank Act authorizes the Bureau to engage in rulcmaking and issue
orders and guidance to administer and carry out the purposes and objectives of the Federal
consumer financial laws, and to prevent evasions thereof. In doing so, Section 1022 requires that
the Bureau consider the potential benefits and costs to consumers and covered persons, including
the potential reduction of access to consumer financial products and services to consumers.
Section 1022 also requires the Bureau to consider the impact of a proposed rule on insured
depository institutions and crcdit unions with total assets of S 10 bil!ion or less as \\'"ell as the impact
on consumers in rural areas. Moreover, Section 1022 gives the Bureau the authority to create
exemptions fi'om the Consumer Financial Protection Act of 20 10 or rules issued under that Act for
any class of covered persons, service providers, or consumer linancial products or services if the
Bureau determines an exemption is necessary or appropriate to carry out the purposes and
objectives of the Consumer Financial Protection Act after taking into consideration a set of factors
speeilied in the statute.
As pari of the Bureau's commitment to achieving tailored and effective regulations, the Bureau has
taken the lollowing actions for different models and classes of institutions:
Pub. I Ill-2m, Tille X. ¢ 1021 (b)(4)(Juiy 21. 20] 0); J 2 usc.

(;ull~.llIlIl:lfll'nIILt ~i()\'

~

5511 (b)(4).

 •

Expanded safe harbor for small creditors. A small creditor has a broader safe harbor for
its Qualified Mortgage (Q\1) loans than non-small creditors. The Bureau's rules provide a
safe harbor for QMs with annual percentage rate (APR) spreads over Average Prime Oner
Rate (APOR) up to 350 basis points, whereas non-small creditors luwe a safc harbor for
spreads lip to 150 basis points. Thc Bureau's rules also allo"''" a small creditor to make QMs
with debt-to-income ratios that exceed the othen.\'ise applicable 43 percent cap. (Small
creditors must hold these loans in pOl1foJio for three years.)

•

Exempted small creditors in rural and underserved areas. CUlTently, small creditors
that operate predominantly in rural or underscrved areas are exempt from requirements to
establish eserow accounts lor higher priced mortgage loans and may offcr QMs and Home
Owncrship and Equity Protection Act (HOEPA) loans ("high cos..- mortgages as defined in
the HOEPA) that have balloon payment features. QMs and HOEPA loans generally cannot
have balloon payments.

•

Implemented a two-year pause for small creditors. The Bureau established a two-year
transition period (unti! .IanuaJ)' 10, 2016) allowing small crcditors to make balloon-payment
Q:'v1s and balloon-payment HOEPA loans regardless of whether they operate predominantly
in IUral or underserved areas. while the Bureau revisited and reconsidered the definition of
"rural"'lor this purpose.

•

Expanded exemptions for rural and underserved areas. In connection with other
changes to amend the definitions of "small creditor" and "rural area,"' the Bureau published
a finallUle in October 2015 that cxtended this two-year transition period from January 2016
until April 2016. The Bureau' s tinal rule also provided a significant expansion of "rural."
as \,'"ell as an expansion of which entities can qualify as "small creditors'" The Bureau's
tinal rule took effect on January 1. 2016, before the two-year transition period expired. In
March 2016, the Bureau issued an interim final rule that implements the Helping Expand
Lending Practices in Rural Communities Act. and makes these provisions availahle to sma!!
creditors that extend at least one covered transaction secured by propet1y locatcd in a rural
or underserved area in the prcvious calendar ycar. About 6,000 additional small creditors
will be eligible as a result orlhis changc.

•

Relaxed requirements for appraisals. Small creditors have relaxed rules regarding
conflict of interest in ordering appraisals and other valuations.

•

Exempted small scrvicers from providing periodic statements. Small scrvlccrs arc
exempt from the Truth in Lending Act requircment to providc pcriodic statcments.

•

Exempted small servicers from loss mitigation requirements. Small servicers are
exempt lI'om all of the Real Estate Settlement Procedures Act provisions on policies and
procedures: early intervention: continuity of contact and loss mitigation. except that a
small serviceI' may not file lor foreclosure unless the bOJTower is more than 120 days
delinquent on the 111011gagc. Small scrviccrs may also not file for foreclosure (or move lor
2

 a f()reclosure judgment or order of sale, or conduct a foreclosure sale) if a borrower is
perfonning under the tern1S of a loss mitigation agreement.
•

Exempted lower-volume depository institutions from Home Mortgage Disclosure Act
reporting. In October of 20 15, the Bureau adopted a final rule revising Regulation C.
which implements HMDA. HMDA and Regulation C, among other things, require covered
mortgage lenders to report data concerning their m0I1gage lending activity. Changes to
coverage in the final rule will reduce the number of banks, savings associations, and credit
unions that are required to report HMDA data. The revisions will relieve about 22 percent
of currently rep0l1ing depository institutions from the burden of reporting HMDA data.

•

Provided regulatory certainty for small entities under the Electronic Fund Transfer
Act. In the Bureau's rules implementing the Dodd-Frank Act's amendments to the
Electronic Fund Transfer Act, the Bureau detennined that the remittance requirements do
not apply to transfers sent by entities that provide 100 or fewer remittances each year.

With regard to future actions the Bureau might take to tailor rulemakings, the I3ureau is one of only
three federal agencies that are subject 10 the Small Business Regulatory Enforcement Fairness Act.
SBREFA requires the Bureau to convene Small Business Review Panels in rulemakings unless the
rule will not have a significant economic impact on a substantial numbcr of small entities. The
Burcau has consistently sought the input of small businesses as part of the SBREF A panel process
through pm1icipation by small business entity rcpresentatives. The Bureau gives serious
consideration to the feedback it receives from small businesses as it prepares a proposed rule.
Small businesses are a critical growth engine for our larger economy and an essential source of
tinancial services for many consumers. The Bureau believes strongly in the value of getting input
from and about small providers to ensure regulations do not impose more burdens on them than
necessary to meet statutory objectives. In order to create better public policy, the Bureau strives to
integrate the direct input and advice from small businesses into the Bureau's work.
Small business pands arc just one part of the Bureau's broader initiatives to address the unique
issues facing small linancial institutions. The CFPB has created an Office of Financial Institutions
and Business Liaison, within its Division of External Affairs, to ensure that the Bureau considers
the perspectives of financial institutions. induding small businesscs, banks and credit unions,
during thc policy-making process. to communicate relevant policy initiatives, and to identify
potential areas for regulatory simplification.
The Bureau also has a number of resources on our \vcbsitc, consul11erfinancc.gov, to help financial
institutions undcrstand oul" rules, including our mortgage rules. 2 the KnO\v Before You Owe TILARESPA Integrated Disclosure rule,·l the remittance transfer rule,4 and most recently our rule on the
Home Mortgage Disclosure Act, ~ and their implications, as well as links to various other helpful
~ SC(' :llql. \1 \\ II .cl'II~UIl,' :ill;:.'!~·.~:J.~..':.C~~~~JJiJ.l-'.'.~:~l.h:~~Ii!.IJ\'IUiJI-':·\i \ .
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3

" .

 resources because timely and efficient regulatory implementation of new rule!; is an important
factor in delivering consumer protections to the market. (,
Whether writing regulations, redesigning fonTIs to be easier to understand, or follo\ving new trend!;
in consumer finance, the Bureau looks to stakeholders for advice and insight. In addition to our
day-to-day work of gathering input, the Bureau also convenes independent groups for formal input
on everything from consumer engagement and policy development, to research. The Community
Bank Advisory Council advises us on regulating consumer financial products or services and
specifically to share the unique perspectives of community banks. They share information,
analysis, and recommendations to better infann our policy development rulemaking, and
engagement work. The Credit Union Advisory Council also advises us on regulating consumer
financial products or services, specifically to share the unique perspectives of credit unions.
I

As I have expressed in the past, the Bureau recogniLes that community banks and credit unions did
not cause the tinancial crisis. For that reason, the Bureau is committed to ensuring that the
regulations that we promulgate are well-tailored and effective. Should you have any additional
questions about the Bureau's rulcmaking, please do not hesitate to contact me, or havc your starr
contact Catherine Galicia in the Bureau's OtTice of Legislative Affairs. Mrs, Galicia can be
reached at 202-435-9711.
Sincerely,

Richard Cordray
Director
cc:

The Honorable Bruce Westennan, Member of Congress
The Honorable Steve Stivers, Member of Congress
The Honorable Blaine Luetkemeyer, Member of Congress
The Honorable Ed Royce, Member of Congress
The Honorable Filemon Vela, Member of Congress
The Honorable Mac Thornberry. Member of Congress
The Honorable Rick Crawrord, Member or Congress
The Honorable Mike Bost, ~ember of Congress
The Honorable Mike Conaway, Member of Congress
The Honorable Thomas.1. Rooney, Member or Congress
The Honorable Mil~e Bishop. Member of Congress
The Honorable Steve King, Member of Congress
The Honorable Robel1 Hurt, .\1ember of Congress
The Honorable Brad Wenstrup, Member of Congress
The Honorable Brenda Lawrence. Member of Congress
'='-'"

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4

 The Honorab le Glenn Grothman, Member of Congress
The Honorable Lynn Jenkins, Member of CO!1!:,'Tess
The Honorabl e David Rouzer, Memb er of Congress
The Iionorable Kristi Noem, \1ember of Co ngress
The Honorabl e Danid Webster, Member of Congress
The Honorahle Kevin Cramer, Member ofCOllh'TCSS
The Honorabl e Ron DeSantis, Member of Congress
The Honorabl e Lois Frankel, Member of Congress
The Honorab le Dan Newhouse, Member of Congress
The Honorab le Peter King, Member of Congress
The Honorahle Patrick McHenry, Member of Congress
The Honorabl e Randy lIult brrcn, Member of Congress
The Honorable Tom Emmer, Member of Congress
The Honorable Tom Rice, Memher of Congress
The Honorable Evan Jenkins, Member of Congress
The Honorable Jim Renacci , Member of Congress
The Honorable Andy lI aITis, M, D .. \IIember ofCongrcss
The Iionorable John Mi ca. Memher of Congress
The Honorabl e Patri t.:k E, Murphy, Member of Congress
The Honorable French Hill, Member of Congress
The Honorabl e Robert Pittenger, Member ofCongrcss
The Honorabh:: Andy BatT, Member of Congress
The Honorab le Roger Wil!Jams, Member of Congress
The Honorab le Brian Babin. Member ofCollgress
The Honorable EJi k Paul sen, Member of COl1!.'Tess
The Honorable C harles Boustany, M.D" Member ofC'ongress
The Hono rable Thomas Massie, Mt!ll1her of Congress
T he Honorable Stephen Fmchcr. Member of Congrcss
The Honorable Mark Sanford, V1ember ofC(mgress
Thc Honorabl e Alex Mooney, Member or Congress
The Honorahl e Steve Pearce, Member of Congress
The Honorabl e Randy >Jeugebauer, Memher of Congress
The Honorable John ('arter, Member of Congress
The Honorable Gregory \4eeks, Member of Congress
The Ho norable Bnui Ashford . Member of Congress
The Honorable Rohel1 Latta, Member of Congress
The Honorable Dave Loehsack, Memher of Congress
The Honorahle David W, Jolly, Member
Congress
The Honorabl e Tom Marino, Member of Congress
The Honorable Barry Loud(;lTIlilk, Member of CO nb'TeSS
The Honorable John Fleming, M,D " Member of Congress
The Honorable Dave Trott, ML'1l1hcr ofC'ongress
The Honorable Blake ):arcnthold, Member of Congress
The Honomhle Fran k LUC.1S, Member ()f Congress
The Honomble Rodney Davis, Membc:r ()f COTl b'Tess
The Honorable Renee Ell mcrs, Member ol'C(mgrcss

or

5

 The Iionorable Gus Bilirakis, Member of Congress
The Honorable Mia Love, Member of Congress
The Honorable Rod Blum, Member ofCOnb'l'eSS
The Honorab le Ralph Abraham, Mem ber of Congress
The Honorable Chris Stewart. Member of Congress
The Honorab le Pete Sessions, Member o f Co ngress
The Honorable David B. McKinley. P.E .. Member of Congress
The HOllomblc Chuck Fleishman, Member of Congress
The I !onorable Bi ll Shuster, Member of Congress
The Honorable Co lli n Peterson. Member of Congress
The Honorable SIeve Russell, Member of Congress
The Honorable Ryan Zinke, Member of Congress
The Honorabl e Jason Smith, Member of Congress
The lIonorable Dr::nni s Ross, Member of Congress
The Honorab le Sean Duffy. Member of Co ngrt:ss
The Honorable Mark Taka i, Memher of Congress
The Honontbl c Yem Buchanan. \4emhcr of Congress
The Honorable Denn y Heck, Member of Congress
The Iionorable M kk Mulvaney, Member of Congress
The Honorable Scott Desjarlais, Mcmber ofCongress
The Honorable Carlos Curbelo, Membcr of Congress
The Honorable Bruee Poliquin. Member of Congress
The Honorable l1 cana Ros-Lehtinen, Member ofConbTfeSS
The Iionorable Mimi Wal ters, V1ember of Congress
The Honorable Joe Wil son, Member o f Congrt:ss
The Honorable :viario Diaz-Balart. Mcmber of Congress
The HonorJblc Kenn y Man:hant, Memher of('ongress
The Honorable Tim Huel skamp, Member of Congress
The Honorab le BreI! Guth ri e, Member ClfCnngress
The Honorable Lou Barletta, Member of Congress
The Honorable Anne McLane Ku ster, Member of Congress
The Honorable Kun Schrader, ML'1nber of Congress
The Honorable Marsha Blackburn. Member o f Congress
The Honorahl e Mo Rroo ks, Member of Congress
The Honorabl e Mike CotTman, Memher of Congress
The Honorab le Pat Tiheri, Member o f Congress
The Honorable Frank Guinta. Member of Co ngress
The Honorable Terri SewelL Member of Congress
The Honorahle Alcee Hastings. Memb er of Congress
The Honorable Ed Whitfield, Member of COll b'Tess
The Honorable Mike Pompeo. Member ufCongrcss
The Il onorable David Young, Member of Congress
The Honorabl e Keith Rothfus. Member ofCongn:ss
The Honorable John Kntko, Member of Congress
The Honorahle Jeff Duncan, Member of Congress
The Honorab le Ann Wagner. \1ember ofCongrL'Ss
6

 The Honorable Rob Bishop, .'vIemher of Congress
The Honorable Rich Nugcnt, .\1t::mher ofCongre5s
The Honorab le Gwen Graham, Member of Congress
The Honorable Geo rge Holding, Member of Congress
The Honorable Crescent Hardy, :v1cmbcr of Congress
The Honorab! e Derek Kilmer, Member of Congress
The Honorabl e Suzan DelBene, Member of Congress
The Honorab le Gary Palmer, Member of Congress
The Honorah le Sanford Bishop, Member o f Congrcss
The Honomb!e Cynthia Lummis, Member of Congress
The Honorable Richard liudson, Memher of Congress
The Honorab!e Mike Rogers, Member of Congress
The Honorable Gam:t G raves. Memb er ofCollgress
The Honorable Dave Brat. \1ember ofCongrt:ss
The Honorabh: Bill Posey, Member of Congress
The Honorable Tren t Kell y, Member of Congress
The Honorable Adrian Smith, .Y1ember ofCOl1h>TCSS
The Ho norable l amar Smith, Member of Congress
The Honorab!e Greg Walden, Member ofCollgress
The Honorab!e Barhara Comstock. Member of Congress
The Honorable John J. Duncan , Jr., Memhcr of Congress
The Honorab!e Mm1ha Rohy. Member of Congress
The Honorab!e Markwayne Mul!in, Member of Congress
The Honorab!e Tu lsi Gabbard, Member o f Congress
The Iionorable Sam Graves, Member o f Congress

7

 \-lay 11,2016

The Honorable Mick Mulvaney
U.S. House of Representatives
2419 Rayburn House Office Building
Washington, D.C. 20515

Dear Congressman Mulvaney:
Thank you for your letter regarding the Consumer financial Protection Bureau's ongoing \\"ork
related to payday. vehicle title, and similar loans, As a fonner attorney general and state and local
elected official in my home state o[Ohio, I am deeply committed to striking the right balance
hetween the Bureau's responsibilities and those of state. tribal. and local governments. The Bureau
recognizes that state, tribal, and local governments have adopted a variety of approaches to
regulating small dollar lending and continues to carefully consider those existing laws and
regulations, as we have throughout our research and development of options to address potential
consumer harms in small dollar lending markets. The Bureau's goal is to ensure that all consumers
arc offered certain minimum protections no matter where they are located.
The Bureau released its outline of proposals under consideration for payday, vehicle title, and
similar loans at a field hearing held in Richmond, Virginia in 'v1arch 2015. I Similar to the two
prior field hearings on this subject - in Birmingham. Alahama in January 2012 and in Nashville,
Tennessee in March 2014 - the Richmond event provided the Bureau with a rich and diverse set of
perspectives from consumers, state policymakers, lenders. consumer advocates. and faith leaders.
In the o·ver thirteen months since the Bureau fonnally released the outline of proposals under
consideration, the Bureau has engaged in further outreach and engagement with a \\.'ide variety of
stakeholders. That process began by convening a Small Business Revie\',.' Panel and meeting with
27 Small Entity Representatives that included storefront payday and vehicle title lenders. banks,
credit unions, and online lenders, including tribal lenders. In addition to the Small Business
Review Panel, Bureau stalThas continued to seek input through formal and infOimal meetings and
discussions with various stakeholders. From October 14, 2014 to September 15, 2015, the Bureau
met to discuss consumer lending with state, tribal , and municipal officials a total of 17 times. and
with representatives from industry and trade associations over 30 times.
I agree with you that it is essential lor the Bureau to consider and seek feedback li'om the state and
tribal officials who regulate small dollar lending products. States have extensive experience
regulating small dollar lending, and for that reason we have reviewed existing state models. In
addition to those reviews, we have talked directly with regulators and policymakers across the
I hit P:// fi lcs.co n~ lllTIcrli nancc. go\' /Ino 1503_ cfpb _ au t Iine·o f-the· proposa Is· from-sma II· b llsi ness-revi ew ·pane 1. pd f.

 country about the proposals under consideration. Bureau staff has held briefings and feedback
sessions with the Conference of State Bank Supervisors, with the National Association of
AtlOrneys General, as well as numerous individual meetings with state regulators and attorneys
general. Bureau staff also made a panel presentation about the proposals under consideration at the
\lational Conference of State L.egislatures' 2015 I.egislative Summit. in Seattle, Washington,
Additionally, the Bureau has taken special care to acknowledge and respect the unique legal
relationship between the federal government and tribal nations. This relationship is a clitical one,
and its importance is reflected in the Rureau's Tribal Consultation Policy.2 as well as the Bureau's
extensive outreach and engagement with the tribes.
Specifically, the Bureau invited a11566 federally recognized tribes" to two Consultations related to
the Bureau's small dollar lending rulemaking proposals under consideration. These Consultations
were frank discussions that allO\\'ed tribal leaders to share their views about the proposals under
consideration with the Bureau. The first of these Consultations took place in ~ovember 2014,
before the Bureau had fonnulated the outline of proposals under consideration. The second took
place in June 2015 to discuss the Bureau's outline. The Bureau also has held a number of other
meetings with tribes at the Hureau's headquarters and across the country.4 The tribes' feedback is
being considered as the Bureau moves iom'ard on a Notice of Proposed Rulemaking.
Our ongoing and extensive discussions with state and tribal officials have significantly infOimed
our small dollar lending work. For example, state policymakers have urged the Bureau to both
protect consumers across all small dollar lending markets and to seek feedback from the states on
their regulation of small dollar lending products, while tribal policymakers have urged the Bureau
to consider the impact of any regulation on the revenue the tribes receive from these products. The
Bureau continues to receive and welcome feedback from state, tlibal, and municipal officials, as
well as others on its proposals under consideration.

, A l'ai/able IIlllttp:/ljiles.consumerfinance.go\'ifnO 1304 cfpb consultations. pdf.
11he Bureau is aware that the U.S. Department of the Interior recognized a 567th tribe on July 2, 2015 and intends to
include this additIOnal tribe In all future tribal engagements. See Interior Department Issues Final Determination for
Two Federal Acknowledgement Petitioners, Dept. of Interior, July 2, 2105 , l1)"ai/ah/e (/f
www.indianaffairs.go\·ies.'groups/pub Iie/doc uments/lex tli de 1·03 08 32. I'd f.
4 Associate Director Zixta Martinez addressed a plena1)' seSSlOll oflbe 2014 National Congress of American Indians
(NeAl) Annual Meeting, and Bureau leadership met ""'ith the NeAl Executive Committee during that event. In
addition, the Bureau has pal1nered with tt'ibes on key consumer educati on and engagement programs related to K-12
financial education and the Bureau's YOII/" Alrmn YIIIII" Goals initiative.
2

 The Bureau's next step in the rulcmaking process will be to formally issue a proposed rule. With
publication orthe notice of proposed rulemaking, the public, including state, tribal, and municipal
officials will be encouraged to submit written comments. Any final regulations issued will reflect
the Bureau's careful consideration of those comments. The Bureau v,'ill move as quickly as is
reasonable, recognizing the importance and the complexity of the subject. and will be thoughtful
and thorough as we continue this work.
Sincerely.

Richard Cordray
Director

J

 <irongresg of t~e 1!Initell

~tates
llIIusl,ington , DC! 20515

May 31, 20 16

Tht! Honorclble Richard Cordray
Director
Consumer Financial Prmection Bureau
J 700 G Street, NOr1hwest
Wa.,hington, D. C. 20552
Dear Director Cordray:

'nle undersigned Membt'Tl:i of Congress applaud the Consumer Financial Protection Bureau
(CFPB) for your recent April 28, 2016 annOUDCtmlent to i~ue an official Notice of Proposed
Rulemaking (NPRM) on the Know Before You Owe mortgage disclosure rule. We continue to
hear from our constituents in the real estate industry about the need for additional guidance and
clarification as they work to implement this important rule and provide a compliant closing
experience [or consumers.

One area the CFPB should address in this NPRM is to fix the rule's requirtmlent that is causing
consumers to receive incorrect title insurance premium disclosures. In the majority of States
across the country, consumers arc not receiving an accurate disclosure o n their title insurance
premiums. In these States, CFPB is not allowing for the calculation of a discounted rate known
as "simultaneous issue" , which j ~ a rale tille insurance companies provide to consumers when
they purchase a lenders and owners tiUe insurance policy simultanoomily. This rate provides
consumers with an effective discount on their owners title insurance policy in order to protect
their property rights for as long as they own their home. This NPRM is a great opportunity to fix
this issue and ensure that your new forms serve as II crediblesoUIcc of accu rate infonnation
about the tmc costs of buying a home for consumers.
We appreciate your willingness to clarify and corrcct the Know Before You Owe rule. We will
eagerly be watching in July for how you address this -issue and look forward to working with the
CFPB on the continued implementation of th~e important mortgage disclosures.

Sincerely,

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Ed Perlmutter
Memher of Congress

Dennis A. Ross
Member of Congress

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July 14,2016
The Honorable Dennis A. Ross
U.S. House of Representatives
229 Cannon House Oiliec Building
Washington, D.C. 20515

The Honorable Ed Perlmutter
U.S. House of Representatives
1410 Longw011h House Office Building
Washington, D.C. 20515

Dear Congressman Ross and Congressman Perlmutter:
Thank you for your letter about the Consumer Financial Protection Bureau's announccmCnl of
plans to issue a Notice of Proposed Rulemaking to add clarity to the KnO\v Before You Owe
mortgage disclosure rule. The Know Before You Owe l11o!1gage disclosure rule, which
implemented certain requirements in the Dodd-Frank Wall Street Refonn and Consumer Protection
Act, was finalized in November 2013 and took ciTeet in October 2015. The rule represents an
imp0l1ant advance in eliminating consumer confusion as homeowners and prospective
homeowners make significant financial decisions for their families. Like you, the Bureau
recognizes that successful implementation reqUires continuous monitoring and engagement. The
f0l1hcoming proposal is part of that process.

In this notice of proposed rulemaking, the Bureau is focused on addressing areas where it appears
that clarifying amendments would be helpfuL based on feedback we have received in our outreach,
webinars, and the Bureau's other regulatory implementation efTorts. The Bureau continues to
listen closely to all stakeholders as we develop that proposaL Given the cost to industry of
reprogramming systems so soon aner the effective date, \ve do not believe it \'..'ould he prudent to
require major changes in implementation. Therefore, in order to provide additional clarity to
industry on an expedited schedule, we may only be able to <lddress certain proposals.
Your lettcr inquired about the disclosure ofthc cost of title insurance on the new KnO\\' Before You
O"'e mot1gage disclosure forms, The Bureau's Kno"'" Before You Owe mortgage disclosure rule
sought to develop a uniform approach to disclosing this cost. Different states provide for different
methods of calculating and disclosing title insurance premiums in light of potential discounts when
the borrower purchases hath a required lender's title policy and an optional o"mer's title policy
simultaneously (sometimes referred to as "simultaneous issuance') Some states, including
Maryland and Ohio. require the disclosure of the incremental cost orthc owner's title policy, I This
calculation method has the advantage or showing the actual cost of the required lcnder's policy,
independcnt of any simultaneous issuance discount occasioned by the purchase of the optional
owner's title policy, Another advantage of disclosing the incremental cost of the owner's title
policy, by representing any simultaneous issuance discount in the cost of the owncr's policy, is that
it may encourage the purchase or the ov·mcr's policy. Purchasing an owner's policy can protect
homeowners' property rights for as long as they 0\\-11 their homes. Under this method of
calculation, consumers can clearly see the incremental cost of purchasing an owner's title policy In
I

Md. Ann. Code Ins. Article ~ 22-102: Ohio Admin. Code ~ 390t -7-3

 connection with the purchase of the required lender's title policy.2 Other states apply any discount
for simultancous issuance to the lender's title policy. which makes the required lender's title policy
appear less expensive, while the optional owner's title policy appears more expensive, which may
make the consumer less likely to purchase an owner's policy, As renected in the Knov.' Before
You Owe ill0l1gagc disclosure rule, the Bureau believes that the application of any simultaneous
issuance discount to the ovmer's title policy, as mandated by some states, is the most transparent
method of disclosing the costs of the required lender's title policy and the optional owner's title
policy. FU!1hennore, regardless ofvihether any simultaneous issuance discount is applied to the
purchase oCthe required lender's title policy or to the purchase orthe optional owner's title policy,
the total cost of title insurance disclosed to the consumer for purchasing both the lender's title
policy and the ov.'ncr's title policy is thc same.]
The Bureau's starr has engaged with title industry trade groups, as well as representatives f)'om
state insurance commissions, regarding the disclosure of the amount paid by the consumer for title
insurance. Based on our outreach, the Bureau provided additional guidance concell1ing the
disclosure of title insurance premiums vihen the seller has agreed to pay for the owner's title policy
as p311 of the purchase and sale contract with the consumer. The Bureau also has provided
infonnation to consumers about the nature of title insurance and the possible different methods of
disclosing title insurance eosts in the Your HOllie Loan Toolkif, the booklet that every consumer
receives when financing a home purchase, ln addition, the Bureau's online tool, Ask CFPB,
provides answers to consumer questions about financial products and services and also includes
infoll11alion about title insurance premium disclosures. 4
Thank you for your interest in the Bureau's \\'ork. Should you have any additional questions,
please feel free to contact me or have your staff contact Meredith Manna in the Bureau's OfTice of
Legislative Affairs. Ms. Manna can be reached at (202) 435-9785.
Sincerely,

Richard Cordray
Director

~ 78 Fed_ Reg. 79730. 79964 (Dec. 31, 2013)_

, For examplc. Florida and Texas havc standard disclosure forms that acknowledge that the lotal disclosed amount i~
the same. whether the simultaneous issuance discount i, applied to the I'equil'ed lender's policy. as provided for by
State law in both Florida and Texas, orthe discount is applied to the optional owner's policy, as provided for by other
States and under the Know Before You Owe mortgage disclo~ure rule. See
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The Honorable Ed Royce, Memher of Congress
The Honorable French Hill, Member of Congress
The Honorable Steve Stivers, Member of Congress
The Honorable Lynn Jenkins, Member of Congress
The Honorable Randy Hultgren, Member of Congress
The Honorable Mike Fitzpatrick, Member of Congress
The Honorable Mick Mulvaney, Member or Congress
The Honorable Patrick J. Tiberi, Member of Congress
The Honorable Pete Aguilar. Member of Congress
The Honorable David W . .Tolly, Member of Congress
The Honorable Kenny Marchant. Member of Congress
The Honorable Blaine Luetkemeyer, Member of Congress
The Honorable Frank Lucas, Member of Congress
The Honorable Bill Huizenga, Member of Congress
The Honorahle David Schweikel1. Member of Congress
The Honorable Mia Love. Member or Congress
The Honorable Scott Rigell. Member of Congress
The Honorable Mark Walker. Member of Congress
The Honorable Luke Messer, Member of Congress
The Honorable Ann Wagner, Member of Congress
The Honorable Brad Shennan, Member of Congress
The Honorable Bill Posey, Member of Congress
The Honorable Luiz V. Gutierre7, Member or Congress
The Honorable Roger Williams, Member of Congress
The Honorable Denny Heck, :\1ember of Congress
The Honorable Mike Pompeo, Member of Congress
The Honorable Kevin Cramer, Member of Congress
The Honorable Ryan A. Costello, Member of Congress
The Honorable Erik Paulsen, Member of Congress
The Honorable Tim Walberg, Member of Congress
The Honorable Steve Pearce, Member of Congress
The Honorable Robel1 Pittenger. Member of Congress
The Honorable Jim Renaeei, Member of Congress
The Honorable Stephen fincher, Member or Congress
The Honorable Tom MacAl1hur, Member of Congress
The Honorable Dave Trott, Member of Congress
The Honorable Scott (Janett, \1ember of Congress
The Honorable Joyce Beatty, Member of Congress
The Honorable Bradley Byrne, Member of Congress
The Honorable Andy Barr, Member of Congress
The Honorable Marlin Stutzman, Member of Congress
The Honorable Tom Emmer, Member of Congress
The Honorable Bill Foster. Member of Congress
The Honorable Derek Kilmer. Member of Congress
The Honorable A\cee L. Hastings, Member of Congress
3

 The Honorable Terri Sewell, Member of Congress
The Honorable Brad AshfiJrd, Member of Congress
The Honorable John Delancy, Member of Congress
The Honorable David Scott, :\1ember of Congress
The Honorable Jared Polis, Member of Congress
The Honorable Bruee Poliquin, Member of Congress
The Honorable Joe COUt1ney, Member of Congress
The Honorable Scott Tipton, Member of Congress
The Honorable Collin Peterson, Member of Congress
The Honorable Kyrsten Sinema, member of Congress
The Honorable Keith Rothfus, Member of Congress
The Honorable Peter King, Member of Congress
The Honorable Brendan Boyle, Member of Congress
The Honorable Zoe Lofgren, Member of Congress
The Honorable Randy Forbes, Member of Congress
The Honorable Mike Rogers, Member of Congress
The Honorable Patrick E. Murphy, Member of Congress
The Honorable Markwayne Mullin, Member of Congress
The Honorable Mike Coffman, Member of Congress
The Honorable Lee Zeldin, Member of Congress
The Honorable David Joyce, Member of Congress
The Honorable Gwen Moore, Member of Congress
The Honorable Garret Graves, Member of Congress
The Honorable Emanuel Cleaver, Ylember of Congress
The Honorable Cheri Bustos, Member of Congress

4

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July 20, 2016
The Honorable Richard Cordray
Director
Consumer Financial Protection Bureau
1700 G Street, NW
Washington, D.C. 20552

Re:

Fostering Online Lending and Responsible Access to Credit

Dear Director Cordray:
We urge the Bureau to encourage the evolution of online lending without slowing or hampering
innovation. As part of a careful analysis, we believe it is important 10 distinguish the companies
with best practices, extensive compliance efforts, and models which benefit customers.
Online lending has grown significantly in recent years. It is estimated that over $50 billion was
loaned cumulatively through online lending platforms by the end of 20 15,1 While this remains a
tiny fraction of overall credit in the United States, it has been invaluable to the millions or
Americans who have used such loans. This is especially true as incumbent market participants
grapple with how to invest and update their legacy technology in a vastly different regulatory
structure. In 2015 alone, online lending platforms were responsible for approximately 24% of
personal loans in the United States. 2 A recent Treasury Department study of the industry noted
that much of the personal lending goes toward "refinancing existing debts, not receiving new
credit," which suggests it does not significantly contribute towards accumulation of
3
debt. Policymakers should be careful not to take actions that would inhibit or diminish
responsible access to credit.
The Consumer Financial Protection Bureau ("CFPB" or "Bureau") has demonstrated an
increasing interest in online lending. On March 7, 2016. the Bureau began accepting complaints
on "Consumer Loans from Online Marketplace Lenders.,,4 In its Spring 2016 rulemaking
I l)ttp:!jwww .lendaeadelllV .colll/l11arketpl<g;.eJ.~!l_ding-seclirit ization compel iti ve adv<lnlalJ..e!
~ ht II' :II\\' w\\' . ore 11<1 I'd PIii t f(lJ"tll. co m/b Iowend 1I ri 11 g -tnt th s ma rkel p laee-I end in gl

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https:/!www.lreasurv.gov/eonnecUblolJ../DoclimentslOpportunilies and Challenges in Onlilw Markctpla
ee Lending white paner.pdl"
.j hit r :i! w ww SO n Sli mer Ii na nee. gOY in ho lit II s/ new sroom! c fpb- n0 \V -al;.(,':_t!:mUJ.g:.\;.Q!D P.l'!.L~l Is-on-con S lImerIpa ns~ from -on IinC-ill a rkct p Iaec-lel H.I eri

 agenda, the Bureau indicated that its next larger participant rulemaking will focus on, among
other things, consumer installment loans by non-depository lenders. 5 The Bureau also indicated
consideration of rules to require registration to facilitate supervision. We share the Bureau's
interest in ensuring that consumers are protected and treated fairly and that the participants in the
relatively new industry of online lending arc properly following the already extensive set of
federal laws.
Online lending platforms have provided numerous benefits to consumers. Those who already
have access to credit have found new levels of speed, convenience and ease online - this is a
natural evolution in the marketplace given demand for an improved consumer experience and
new technology's enabling of it. The ability to access credit online is particularly important as
brick and mortar institutions have closed branches, especially in traditionally underserved
communities, to help manage their costs. According to SNL Financial, there were 92,997
branches at the end of20 15, this is 1,614 less than a year earlier, and a continuation of a
downward trend that began in 2009. 6
For some who are unbanked, underbanked, or are simply finding it harder to get credit, the
platfonns have been a financial lifeline. A study by the Federal Reserve found that 47% of
American households would be unable to come up with $400 in an emergency.7 And with an
average US FICO score of 695, many working Americans are unable to access unsecured credit.
However, many online lenders make use of sophisticated data and innovative algorithms to make
credit available for those who might otherwise be denied. In many cases, credit scores were
improved and debt eliminated by the customers of online lending platforms. These individuals
should have options available that allow them to responsibly manage their financial needs.
Given the value and opportunity online lending platforms offer for many millions of hardv·mrking Americans, and given the industry is still in the early stages of development, we believe
policymakers should proceed thoughtfully in approaching any new governmental restrictions. In
fact, policymakers should look at simplifying and streamlining what is an already cluttered and
overlapping federal and state total regulatory environment, while maintaining responsible
oversight. Innovation and growth are being dampened by an uncertain regulatory environment,
including the growing interest of mUltiple Federal agencies.
We respectfully ask you assist in answering the following questions:
1. What formal studies and analysis have been undertaken by the Bureau to understand how

working class Americans are utilizing personal loans and the role they play in families
overall financial health?
2. What metrics. standards, or frameworks will the Bureau use to distinguish between online
lenders it views as responsible and good for consumers and those it does not?

s hltp: l\v w \\' . cons 1I III erfi nance. gOY "abo Ui-llSib Iogi spri n g-20 16-rulenwk i nl.\ -a;.;e ndal
6 http://www.[hehinoubusinessline.com/monev -and -ban kin g/bun ks-st iI1- be\-o n -br ic k -an d-11lorta rbranehcs-Io-boost-bllsiness/arlielc85 7668 1.eee
7 http://www.washingtonsblog.com!.J016/04/4 7 -pcreent-americans-cannot-cven-come-400-covereme rgenev -roo 111- vis it. ht m]

 3. Does the Bureau plan to supervise large participants in consumer installment loans by
non-depository lenders as suggested in its Spring 2016 rulemaking agenda?
4. Sec. 1024(a)( 1)C) of the Dodd-Frank Act provides authority for Supervision of
Nondepository Covered Persons only if "the Bureau has reasonable cause to determine,
by order, after notice to the covered person and a reasonable opportunity for such covered
person to respond, based on complaints collected through the system under section
1013(b)(3) or information from other sources, that such covered person is engaging, or
has engaged, in conduct that poses risks to consumers with regard to the offering or
provision of consumer financial products or services." Does the Bureau have reason to
bclicve online lenders pose risks to consumers and, ifso, what risks have been identified?
5. What process will the Bureau follow for rulemaking? Will the Bureau provide separate
opportunities to comment on rulemaking for unsecured consumer installment loans and
vehicle title loans? Does the Bureau plan 10 issue a Request for Information or an
Advanced Notice of Proposed Rulemaking? When can the public expect an opportunity
to provide its first comments?
6. What criteria will be used to detennine what non-depository lenders may be supervised
by the Bureau?
7. What is the Bureau's position on lending platforms that retain loans on their balance
sheet versus those that sell off all the loans originated on their platform?
8. Has the Bureau done any tracking or analysis of the borrowers of unsecured online loans
to see what efIect, positive or negative, it has on their credit standing?
9. If the Bureau dee ides to supervise larger market participants, what are the merits in
working with prudential regulators, such as the acc, to extend a national license?
10. What does the Bureau believe polieymakers and regulators can do to responsibly foster
innovation and partnerships among depository institutions and online lenders?

Respectfully,

~

Member of Congress

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R'oger Williams
Member of Congress

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Member of Congress

 Mic Mulvaney
Member of Congress

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Member or Congress

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Tom Emmer
Member of Congress

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August 22. 20 16

The Honorable Richard Cordray
Director
Consumer Financial Protection Bureau
1700 G Street, NW
Washington. DC20552
Director Cordray:
We write to express our concerns about the Bureau's recentl y proposed rule on
arbitration agreements in consumer financi al agreements. Given the seri ous risk of harm to
consumers from the proposed rule, we believe that the Bureau should reconsider its approach and
take steps to examine and develop alternative proposals that foster consumer choice and preserve
access to efficient mechanisms lor resolving consumer disputes.
We make this request because, whatever the Bureau' s intention, rather than giving
consumers greater access to justice. the proposa l will make it morc difticult and more expensive
for consumers to resolve d isputes with service providers. In addition , to date, the Bureau' s
process t()r deve loping. its proposal for regulating arbitration agreements r.cmands that Congress
exercise more oversight over the Bureau and to hold it more accountable for it s r.ctiol1s.
First. we are profoundly doubtful thatlhe Bureau's proposal can meet the statutory
prerequisites for regulating arbitration agreements, specifically that doing so would be "in the
public interest and for the protection of consumers," Under the Dodd·Frank Act, the Bureau was
required to ha'ie its decision to proceed with a rule on the findings of its study I)n arbitration
agreemen ts, entitled 20 l S Arbitrati on Study and Report to Congress (Arbitr'dtion Study), That
study fails to show that regul ation is required '< in the public interest and for the protection of
consumers." Moreover, we are deeply skeptical whether the proposed ru !~, if adopted,
would satisfy the basic requirement of the Administrativc Procedure Act that there must be a
rational basis for the rule. Indeed, leading se·holars have criticized the CFPB's approach as
biased and inadequate, while noting that government intervention along the lines that the CFPB
proposes could leave consumers worse off. Unfortunately, despite these problems with the study
and the adverse consequcnces of its approach, the Bureau has opted to ignore the statutory
prerequisites and proceed with a proposed rule thai represents severel y fhwed policy and
threatens to fa il Dodd-Frank 's requirements.
Second, the Bureau's unwillingness to provide substantive responses to Congressional

 Hon. Richard Cordray
August 22, 2016
Page 2
requests for a tran sparent, inclusive process for your work on arbitration agreements casts doubt
on your public commitments to work together with Congress on consumer protection. For
instance, in June 2015, 86 members of the 1·louse and Senate requested that the Bureau re-open
the Arbitration Study "to consider additional factors re levant to its inquiry and to provide an
opportunity for all interested parties to submit informed comments on the Bureau's conclusi ons."
A Bureau official responded simply that the Bureau ' s process had been " fair. transparent, and
comprehensive" without addressing the merits of their concerns. Had the Burt!3u paused lO
gather more data on consumer outcomes, conSiS1Cfl[ w ith the recommendations in that lettcr, we
believe the Bureau would have been unable to propose a reguiatiun that would elevate class
actions and effectively ban arbitration.
Third, the Bureau's proposal on arbitration agreements is at odds with its stated mi ssion
to "make consumer financial markets work for consumers." The proposal seeks to substantially
resolving disputes, forcing
reduce the use ofa highly-effective , low-cost and fair process
consume rs to address their grievances through our very expensive. overburdened legal system . or
to become a prop in a wide-reachi ng class action that generates multi-million do llar lega l fee s fo r
lriallawyers and virtually nothing for individual consumers. We fa il to see how a proposal thaI
limits consumer choice and increases legal fees is consistent with the mi ssion oflhe Bureau.

ror

In light of these troubling failure s by the Bureau and the risk ol'harm ilS arbitration
proposal presents to cons umers, we strongly urge you to reconsider your approach to arbitration
agreements, incl uding taking more time to examine and develop alternative solutions that help
consumers make their own informed choices. The regulatory process permits yo u to modify
your current approach (includ ing through , but not limited to, the usc of a re-proposal or issuance
of ad vanced noticed of proposed rulemak illg). Accordingly, we urge yo u 10 use these options to
adopt a less divis ive, more reasonable approach that preserves arbitration as a viable. available,
affordable means of dispute resolution and respect s the decisions of c()nsumcrs. In the
meantime. please provide us with a written desaiption of the alternative s the Bureau considered
and discarded in developing its proposed regulation, and the reasons for their exclusion.
Please reply to thi s letter by no later than September 23, 2016.
Sincerely,

PATRICK MCHENRY
Member of Congress

T

BEN SASSE
United States S e nator

 Hon. Richard Cordray
August 22, 2016

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September 29, 20 16
The Ii onorable Richard Cord ray
Director
United States Consumer Financial Protection Bureau
1700 G Stree t, N W
Washin gton, [)C 20552
Dear I)ircc[or Cordray:
We write concerning the Consumer Financial Protection Bureau' s (CFPB) recently
proposed r ul cmakin g regarding payday, vehicle titl e, and certain high-cost installment loans
(Do cket No, CFPB-20 16-0025). As the CFPB moves forward with the comment period, we relay
our concerns that the rul e, as currently constituted, has the potential to severely restrict access to
credit that milli ons of A meri cans rely on.
Consumers should be protected br effe ct ive regul ations that safeguard their ii nancial
wel l-bei ng; however, these proposed regu latio ns fai l to adequatel y balance the need of hardworking A m~ ri eans 10 have access to financial products that will allow them to borrow money to
cover an unex pected emergency or pay an un fo reseen bill on time.

Under the currcnt provis ions of thi s lengthy proposed rulc, it is estimated that nearly 80
percent of the sho rt-term, small do llar loan volume will disappear, throwing tens of thousands of
empl oyees ou t of wo rk and leaving millions of consumers with no place to go to access financ ial
markets. In fact, this rul emaking as proposed actually vio lates the C FPS ' s Congressionallymandated charge "to implement and, where applicable, enfo rce Federal conswner financial law
eons istentiy /br the purpose oj ensuring that all consumers have access to markets."
Compounding this problem, credit union s and communi ty banks have indicated that they,
likewise. wi ll not be able to operate in the short-tenn, small-doll ar lending space under the
regulato ry frumework set forth by the propo sed rulc. Current ly, credit unions and banks do not
generall y provide small-doll ar loans in the marketplace, an d the propo sed rule docs nothing 10
change that.
With a decimated sho rt-term , small dollar lending. ind ustry, and o ther fin ancia l service
providers not able to Jill the void, millions o f working c lass Americans will be Iell with no viable
alternative to access the credit they occasionall y need to make ends mt:et. The adve rse effects of
thi s proposa l on consumers will be devastating.

Decept ive lend ing practices have no place in our marketplaces. We all encourage rules
that serve 10 weed out and punish those that take advantage o f consumers. Yel, with this
proposed rule, in an effo rt to keep unscrupulous actors o ut o r the industry, the CFPH wi ll
si multaneo usly be bannin g the very consumers it is trying to protect by significantly reducing
their ability to access to the credit they desperately need.

I

II.

 13ccause ofthesc cone·ems, we ask that the CFPB work with stakeholders in crafting a
fina l rule that strikes the appropriate balance: protecting both consumers and their access to
credit.
Sincerely,

-~:x:;;,;~~
Blaine Luelkeme) r- { . /
Member of Co n gr~ss

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OClobc r 12, 20 16

The Honorab le Rand y Hultgren
U.S. House of Representatives
245 5 Raybum House Office Building
Washington, D,C. 20515

Dear Cu ngressman Hultgren:

Thank yo u for yO Uf letter seeking information about the Consumer Financ ial Protection Bureau' s
regu lation and oversight or lhc oolint: lending or "marke tplace lending" market. Your interest in
the potcn li<l l I,;onsumer benefits that may be deri ved from new and evolving lending pl alfonn s, as
wdl<ls your comm itment to ensuring that consumers who pa rticipate in thes!.: pl<ltlonns recei ve
basic consumer prolecti ons is notab le.

As you know . tht: Bureau is acti vel y engaged in ana ly,..i ng oolh the potenti al benefits and the ri sks
o r online lending. The Oureau' s Inslallment Lend ing and Collecti ons Markets team h:ads the
Rurea u's researc h on and anal ys is o f the on lim: h:nding industry, with assistance fro m other Bu re<1u
teClln s and the Run:au's Project Catalyst. an initiative designt!<i!O em;ourage consumer-friendl y
illllov81ion <l no cntn::preneurship in markets for consumer fin ancia l products and serv ices.
As you note in your letter. in March the Bureau announced that we arc accepting complaints about
products and ser vices from marketplace lenders. Every compl ai nt the Bureau receives gives us
insight 1Il1O problems people are experiencing in the marketpl ace and helps us identify and stop
ill ega l practices and inform the I3ureau' s research agenda and use of its other regulatory tools.
Also in March. the Bureau published a consumer bulletin outlining the types of things that
consume rs should consider before applying for and obtaining a lnan Ii'om a marketplace lender or
any typt.: o f"l endcr. l The bulletin advised consumers to keep in mi nd that marketplace lending is a
young industry and does not have the same history of supt: rvis ion and oversight as banks and credit
unions. The nullelill also stated . howcver. that market place lende rs are n::quin:d to follow the same
state and i-="ederal laws as othcr lenders.
The Bureau is abo e ngaged in a varicty of rule making acti vities. some of w hich may impact the
onli ne lending industry. In your leiter. you focus specifica ll y on the fiu fcau"s rukmi1k ing on the
superv is ion of larger panic ipa nts in markets ror consumer installment loans and vchicle title loans.
as we ll as on a potenti al rulemaking requiring certain non-lh:positury le nders to registe r with the
Bureau . With respt."t:t to the fOlmer. the Bureau has to date defi ned throu gh ru lemClking several

 markets and larger participants in those markets . Larger paltieipant rulcmakings do not set f0l1il
substantive regulatory r~quirements for covered perso ns. but rather are used by Iht: Bureau.
pursuant to its authority under section 1024 of the Dodd-Frank Wall Street RefOlID and Consumer
Protection Act to include cel1a in financial mark~ts within the scope of ils supervisory authority.2
As noted in the Bureau' s Spring 20 16 regulatory agenda. the rulemaking re lated to the market for
consumer installmenl loans and vehicle title loans i5 cu rrentl y in Ihe pre-rule stage of the
ru lemaking process. 3 If the Bureau delenn ines to propose e ither a larger partic ipant rule that
encompasses ccrla in on line or marketpl ace lende rs o r a rule requiring reg istrat ion of certa in nondcpos itOly lenders. the Bureau will follow its nlicmaking rCQu irements as prescribed by statute ,
including seeking comment from industry and stakeho lders in the pot ential scope of the rule and
consulting with the appropriate prudential and OTher Federal regulators.
In addition, the Bureau has undertaken several f'()fIna l resea n.:h iniliali vcs 11.) understand consumers'
use 0fvarious types ol'personalloans. From the b ~ginning, the small -dollar lending markets.
whic h include certain online loans. have been an area of deep focus fo r the Bureau's research . In
the Ourc3u's intens ive anal ysis of these markets. we have considered the hi story o f the demand fo r
personal loans and the cond itions that create suc h demand , and have focused ca re full y on how
people a re affected by the kinds of c red it produc ts that have evolved 10 meet this demand . The
Bureau has released severa l research repol1s on these issues to date. Most l't!Cemiy. the Bureau
released a research paper specifically looking at on line lenders and the wCly thi::Y collect payments
on their loans. "
The Bureau shares your view that evol ving tcchno log ie s ~lre driving constal1l change in today' s
consumer financial markt:tplace, and that consum er-friendly innovation - including. potentially,
on li ne lending - c<ln dri ve down eo~ t s, improve transparency, and makl.: consumers' li ves hetter.
However, onli ne lending is a new, compe titi ve. and fas t-moving indust ry and. as:1 result . il is too
soon to assess to w h ~ t extent it w ill be able to deli ver I.:rtxlit 10 new groups ol' co nsumers. As the
industry con tinues to d cvdop, the Bureau encourages the industry to put cClilsumers' interests firs t
in marketing, loan underwriting. origination, serv ici ng, and co llections. In the interim, the Bureau
will continuc to closely foUow developments in the ind ustry. As it docs so. the Bureau welcomes
input from diverse stakeho lders about any actions the Bureau might cons ider taking that would
help online lendi ng realize its positive potential and mit igate the ri sks \0 consumcrs.
Thank you fo r your continued interest in the Rurc3u\ work, Please do not hes ilate to cont<lct m e
sho uld you have any add ilion<J lquestio ns, or have your sta fTcontact P<llrick O ' Br ien in the
Hurcau' s OOi('e o f Legis lat iVt' AOairs, \1 r. O ' Brie n ca n he reached at (202) 435· 7180. I look

*

: See I024(a}{ 1 )(13) o f the Dodd -Frank Act. Notc Ihm ~ 1024(a)(I)(C) of the Dodd -Frank Act, whieh you cite in
YOllr ICttCI', authOl'i l.e~ th e Aun'au to supervise enlilie.~ whom th e l3u rea u has dete rmin ed, pursua nt to a prescribed
process, pose risk s to COI1~,II11 t' r~ witl1 rega rd to the offering or provision of consumer flllancia l products or ~cn' i c e~ ,
The Aureau's larger pal1icipa llt l'u1tmaki ngs are issued pUrSUall\IC] scparall' autho rily granted lU it under sections
1024(a)(J)(R) and (a)(2){)f !hc Ac! (as well a~ other ~ ta t ul ory provisions). whie h do nol depeuc1 on ,I fi nding of
( on:.utller risk.
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 fOr"\van.llo workin g with you on thi s and otht:r consumer linanciol protcclio n mailers of importance
to YClU and your comlituent s.
Sincerely,

Richard Cordray
Direc lor

ce :

The Honorable Randy Neugebau er. Memher of Congress
The Honorable Roger Wil liams. Mcmber ufCongress
Thc Honorahle Stcve ll t:an:c, Member o f Congress
The Honorable Andy Barr, Mcmber of Congress
The Honorable Mick Mulvaney, Member of Congress
The Honorable Sean Duffy, Member o f Congress
TIle Honorahle Robcl1 Pitlenger, Member of Congress
The Honorahlc Tom Emmer, Member of Congress
The Honorable Scott Tipton, Member of Congress

3

 £C. '. r

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October 21, 2016
The Honorable Alcee L. Hastings
U.S. House of Representatives
2353 Rayburn House Office Building
Washington, D.C. 20515

The Honorable Blaine Luetkemeyer
U.S. House of Representatives
2440 Raybum House Office Building
Washington, D,C. 20515

Dear Congressman Hastings and Congressman Luetkemeyer:
Thank you for your letter regarding the Consumer Financial Protection Bureau's proposed rule on
payday, vehicle title, and certain high-cost installment loans. I We appreciate you sharing your
concerns and weighing in on this important issue. The Bureau is committed to ensuring that all of
our regulations reflect a thorough and balanced revlc\\' of stakeholder viewpoints. The Bureau \I/ill
carefully consider your comments, along with written comments submitted by the public and all
interested stakeholders, in developing a final rule.
Pursuant to s~ction 1031 of the Dodd-Frank Wall Street Reform and Consumer Prot~ction Act, the
Bureau has authority to prescribe rules to identify as unlawful and prevent unfair and abusive
practices, as well as deceptive practices that. as you point out, have no place in these markets. The
proposed rule would apply to certain short-term and longer-term credit products that are aimed at
financially vulnerable consumers and is targeted at unfair and abusive practices tbat the Bureau has
reason to believe arc occun-ing in the markets for these loans. The Bureau is concerned that risky
lender practices in the payday, auto title, and payday installment markets are pushing bon-owers
into debt traps. Chief among these concerns is that consumers are being set up to fail '.1.'ith loan
payments that they are unable to repay. Faced with unart()]"dable payments, consumers must
choose between d~raulting, reborrowing, or skipping other financial obligations lik~ rent or basic
living expenses like food and medical care. The Bureau is concemed that these practices also lead
to collateral damage in other aspects of consumers' lives such as steep renalty fees, bank account
closures, and vehicle seizures.
We agree with you thai there is a need for access to small dollar credit to handle occasional
emergencies. lIo\\'ever, the Bureau believes that certain practices in the market for such loans may
cause consumer injury. For lenders that offer responsible options for consumers who need such
credit to deal with ::mergency situations, the BureClu's proposal would seek to keep those option:;
available. Lenders that underwrite could adjust their existing pr<lclices in order to make them
consistent with the proposed ability-to-repay requirements. The proposal also would provide a
conditional exemption that would allow lenders to make a limited number of covered sh0!1-tcrm
loans wlthout following the full set of ability-to-repay requirements. In addition, the Bureau

 proposed two conditional exemptions for certain covered longer-tenn loans that share certain
features with existing loans under the 1\ational Credit Union Administration's Payday Alternative
Loan program and accommodation lending programs that arc undclwritten to produce low lcvels of
consumer defaults. Ho\\'ever, lenders that rely on fees and profits from consumers in long-term
debt traps would not be able to continue that business modeL Consumers should be able to meet
their needs without finding themselves stuck in extended debt.
Your letter also reiterates concerns raised by industry stakeholders regarding the potential impact
the Bureau's proposal could have on the payday loan industry and other providers of small dollar
credit. The Bureau shares this concern and agrees there is a need to balance consumer protection
regulation with access to eredie The Bureau has done significant outreach to industry stakeholders
and many others to solicit insight and suggestions for how to craft a proposed rule that would
preserve access to small dollar lending in underserved communities. Moreover. when
promulgating regulations. the Bureau is required pursuant to the Dodd-Frank Act to consider the
potential benefits and costs to consumers and to industry, including smaller depository institutions
and credit unions. as well as the impact on access to consumer financial products or services
resulting from the rule. The Bureau is cUlTently reviewing the comments received on the proposed
rule and will consider the comments in accordance \.,..ith its obligations /or notice-and-comment
rulcmaking.
The Bureau intends for consumers to have a fair and transparent marketplace that works both for
short-tenn and longcr-te1111 credit products. I appreciate your intercst in providing feedback on our
proposal, and the Bureau will give due consideration to the issues raised in your letter. Should you
ha\'e any additional questions, please do not hesitate to contC:lct me or have your stall' contact
Patrick O'Brien in the Bureau's Office of Legislative Affairs. \tIr. O' Brien can be reachcd at 202435-7180. I look forv,/ard to working \vith you on this and other consumer financial protection
matters of imp0l1ance to you and your constituents.
Sinccrely,

Richard Cordray
Director
cc:

The
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Honorablc Hcnry Cuellar, McmbcrofCongrcss
Honorable Stcvc Stivcrs, Member of Congress
Honor<!ble BeIUlie G. Thompson, Member of Congress
Honorable Mick Mulvaney. Member of Congress
Honorable Collin Peterson, Member of Congress
HonorC:lble Patrick McHenry, Member of Congress
Honorable Kyrsten Sinema, Member of Congress
Honorable Andy Barr. Member of Congress
Honorable Brad Ashfi)rd. Mcmber of Congress
Honorable Ann Wagner, Member of Congress
2

 October 26, 2016
The Honorable Patrick Mel Jenry
U,S. House of Representati ves
2334 Rayburn Ii oust! Office Bu ild ing
Washi ngton, D.C 205 J 5

The Honorable Ben Sasse
L.:n ited States Senate
3g6A Russel l Sena te Office Buildi ng
WashinglOn. D.C'. 205 10

Dear COI1f,'Tessman McHenry and Senator Sasse:
T hank you for your commt:llt ktte r regarding the Con~u lll e r Financi al Protect ion Bureau's recent
propos<11 to regulate pre-di spute arb itration agreements in contracts fo r consumer financi al products
a nd services. I T he Bureau welcom es your ft:t:dhack as we continue to en gage w it h you and other
stakeholders on our rulemaki ng.
A~

you know, in Ma y 20 16. the Bureau published a proposed rul e that wou ld prohib it pre-di spute
<lrbitration clauses that deny groups of consumers the ab ili ty to get relicf through the courts. The
proposal would prohibit covered providers of certain consumer finan cial products and services
from lIsing an arbit rati on agrecment to bar the consumer from filing or participati ng in a clas s
action. Under th e proposal. companies wou ld still be able to includ e pre· dispute arb itration cl aus~s
in their contracts. Howcvl:r, t(Jr contrads subject to the proposal. the clauses wu uld have to state
exp li ci tl y that the y C8m101 he used to stop consume rs from b~i ll g part of a class act ion in court .
T he pro po~ al v....ould also req ui re a covcred provider that ha~ an :uhitra tioll ngrccme nt and that is
ill volvoo in a rbit ra tion pu rsuant to a pre-di spute arb itra tion agret:mc nt to suhmit s pecified arbitra l
records to the Bureau.
This proposal is based on a number of prelim inary findings outlined in the proposed rule. Th ese
fi nd ings include the Dun:i:lu's preliminary determi !lation that compan ies widely lISC pre-thsputc
arbitration agreem ents to pre vent consumers from seeking reli ef for potcntial vi01ations of the law
on a class basis and consumers rarely fi le individual lawsuits or arbitration c:;ast;)s to obtain such
rclieL T he Bureau · S pro po ~a l is designed to protcc t consumers' right s to pursue j ustice and rel ief
a nd to deter compan ies from vio lati ng th e law . T he Bureau expects tha t the proposa l, iffi nali zed,
would allow consumers who remain subject to p re~ d i s p u tc arbitrat ion agrc~mcnl s to til e a class
ac ti on or join a cl ass actio n when someone else fi les it.
The Dodd-Frank Wall Street Ref0TI11 and Consum er Protection Act of 20 10 directed the Bureau to
co nduct a study and provide a report to Congress 011 pre-dispute arbitration clauses. As you know,
ill March 2015 , the Bureau released our Arbitration Study,2 in which we cX<lmined pre-dispute
I Arhiu3I ion A greeme n l~ N\llico::
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Prnposcd Rulc maki ng . K 1 FR 32829 tM ay 24 .10 I n). (/I'mll/Me (1/

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 arbitration clauses in a number of different product markets, such as: credit cards, checking
accounts, payday and other small dollar loans, general purpose reloadable prepaid cards, private
student loans, auto purchase loans, and mobile wireless agreements. The Bureau's Arbitration
Study found that tens of millions of consumers are subject to arbitration clauSl!S. The Bureau also
fo und that consumers rarely consider bringing cla im s against compHni es on their own, particularl y
small claim s. Moreover, no cvidence was fo und that these clauses lead to lower prices for
consumers. The Dodd·FnlOk Act granted the Bureau the authority to prohibit limit or impose
conditions on the usc of arbitmtion clauses in consumer finance agreements by regulalion if the
Bureau finds that do ing so is in the public interest and fo r the protcct ion o f consumers, and if the
fi ndings in such a rul e are consistent with th e Study. Aft er consideri ng the ana lysis in the Bureau·s
Arbitration Study, the Burcau dl.'Cided to comm ence a rulcmaking process regi!rding pre-dispute
arbitration agreements used in connection with consumer financial products or serv ices.
As part of developing the proposed rule. the Bureau considered several potential alternatives.
which it described in the proposed rule. These alt ernati ves include an exemptio n fo r small entities.
improVed consumer di sclosures, consumer ed ucation. opt- in or opl-out requ irements, a total ban on
pre-di spute arbitration agreements, and other spec ific exemptions. 3 As noted in the proposal,
consumers often lack awareness that they have a legal claim and, moreover. even when they arc
aware o f such cla ims. the cost of pursuing some cl aims may not justify the potential benefits on an
indi vidual basi s. As a result, absent the abili ty for consumers to pursue legfll cl aims as a group , th e
Bureau preliminarily found that there is an inadequClte means to both deter and remedy consumer
ham1. The proposal stated that the Bureau beli eves that none of the alternatives described in the
proposed rule accomplish the goals of the proposed rulcmaking with substantially less regulatory
burden. However, the Burcau requested comment o n these alternative po licy options. including
any evi dence that would indicate that the option could ac hieve such goal s. Thc Bureau is currentl y
revi ewing the comments received on the proposed rule and wi ll consider the comments in
at:t:ordance with its obli gations for notice-and -commenl rulemakin g.
J appreciate you r in terest in providing feed bflck on our proposal, and the Bureau will give due
consideration to the issues raised in your letter. Should you have any additi onal questions, plea se
do not hesitate to contact me or have your staff contact Catherine Gali cia in the Hureau's Office of
Legislative Affairs. Mrs. Ga licia can be reached at (202) 435-9711. I look fo rw ard 10 \vorking
with you on thi s and othcr consumer financi al pro wction matters of lmport,mce to you and your
constituents.

Sincerel y.

Richard Cordray
Director

, .'It'" Arhitration Agr.:.: m':n1:- NOliet." o f Proposed Rukma ki nl::. ~1 FR J2Q20-32Q22.
2

 ec ;

The Ii onorable John Barrasso, United States Senator
The Honorahl e Roy Blunt, Unitcd Slates Senator
The Honorable John Boozman. United States Senator
The Honorable Dan Coals, United Siaies Senator
The Honorable Thad Cochran. United States Senator
The Honorab le John COl1lyn. Cnited States Senator
The Honorable Tom Cotton, United States St!nalor
The Honorable Mikt! Crapo, Cnited States Senator
Tht.: Honorable Ted Cruz, United States Senator
The Ilooorable Steve Daines, United States Senator
The Honorable Mike Enzi, United States Senator
Tilt! Honorable Joni Emst, Lnited States Senator
The Honorabl e Orrin Hatch, United States St!nator
The Honorable Johnny Isakson. United States Senator
The Honorable Mark Kirk, United States Senator
The Honorable James Lankfi)rd. United Statt!s Senator
The Honorable Mike Lee, United States Senator
The Honorable John McCain, United States Senator
The Honorable JelTY Moran, United States Senator
The Ho norable Rand PauL United Sta tes Senator
The Honorable David Perdue. United States Sena tor
The Honorable .l ames Risch, United Slates Senato r
The Honorable Mike Rounds. United States Senator
The Honorable Tim Scott. United States Senator
The Honorable Jeff Sess ions, United Stat.:s Senator
Th e Honorable Dan Sullivan. Cnited Stat~ Senator
The Honorable Jolm Thun.:, United States Senator
The Honorable Thom Tillis. United States Senator
The Honorable David Vitter, United States Senator
The Honorable Marco Rubio_ United States Senator
The Honorable Dean Heller. United States Senator
The lI onorabl.: Jeff Flake. United States Senator
The Honorable Richard Shelby. United States Senator
The Honorable Roger Wicker, United States Senator
The Honorable Pat Roberts, United States Senator
The Honorable Lamar Smith, Member of Congress
The Honorable Michael McCaul, Member ofCongrc s ~
The HonQrab le Trent Franks, Member o f Congress
The Honorable Kevin Yoder, Member o f Congress
The Hono rable Bililluizenga. Member o f Congress
The Honordble \1ike Pompeo. .'v1ember of Congress
The Honorahle Andy Barr, Member of Congress
The Honorable John Ratcl itlc, Member of" Congress
The Honorable Randy Ilultgn:n. Member of Congress
The ll onorable Sean DufTy, Member of Congress
The Honorable Scott Gall-ett, Member of Congress
3

 The Honorable Steve Stivers, Member of Congress
The Honorable Tom Graves, Member o f Congress
The Honorabl e Frank Lucas, Member ufCongress
The Honorable Mimi Wahers, Member ofCon g r~ss
Thl.! Honorable Peler King, :v1ember of Congress
The Honorable Mia Love, Member of Congress
The Honorabl e Robert Hurt, Member ofCongrcss
Thl.! Honorable Mike Fitzpatrick, Member of Congress
The Honorab!t: Marsha Blackburn, :'v1ember of Congress
The Honorable Bradley Byrne, Member of Congress
The Honorable F. James Scnsenbrenner, Member of Congress
The Honorable Ken Buck, Member of Congres~
The Honorable Pete Olson, Member of Congress
The Honorable Mick Mulvaney, 'v1ember of Congress
The Ifonorable Mark Walker, Member of Congress
The Honorable Erik Paulsen, Member of Congress
The Honorable Kristi Nocm, Member of Congress
The! la norable Joe Barton, Memher of Congress
The Honorable Diane Bl ack, Member of Congress
The Honorable Barry Louderm ilk, Member of Congress
The Honorable Fnmk Guinta, \4embcr o r Congress
The Honorable Slcve Womack, Member of Congress
Thl.! Honorable Perc Sess ions, Member of Congress
The Honorable Lynn Westmoreland, \I1embcr of Co ngress
The Honorable Mike Bishop, Member of Congress
The Honorable Keith Rothfus, Member of Congress
Th e Iionorable Stevan Pearce, Member ofCongres ~
The Honorable Blaine Luetkemeyer, Member afCongress
The Honorable Paul Cook, Member of Congress
The Honorable Scott Tipton, Member of Congress
The Honorable Will Hurd, Member of Congress
The Honorable David Schweikert, Member of Congres s
The Honorable Edward Royce, Member of Congress
The Honorable Tom Emmer, Member of Congres s
The Honorable Billy Long, Member of Congress
The Honorable Brett Guthrie, Member of Congress
The HOllorable Mike Rogers, Member o f Con gress
The Honorable Ann Wagner, :\1ember of Congress
The Honorable A nder Crenshaw, Member of Congress
The Ii onorable Bill Posey, Member of Congress
The Honorable C<lthy McMorris Rodgers, Member or Congress
The Honorable Evan 1cnkins, Member of Congress
The Honorable Mark Amodei, Member of Congress
The Honorable Robel1 Aderholt, Member of Congress
The Honorahle Mal1ha Roby, Member of Congress
The Honorable Charles J. FleischmalID, Member of Congress
4

 The Ii ono rabl e :v1 iehacl Bu rgess. Member orCongress
The Honorable Ri.lndy ~eugeha uer. Member of Congress
The Honorab le Fl'em;h Hi ll, Member of Congress
The Honorable Barbara Comstock, Member of Congress
The Honorable J. Randy Forbes. Memher of Congress
The Honorable Tom Cole, Member ofCongn:ss
The Honorab le Roger \V ilh ams. Member ofC'ongress
The Hono rable Dav id Joyce. Member of Congress
The Honu mhl c Ken Calvert, Member of Congress
The Honorab le Duncan Hunter. \IIemhcr of Congress
The I Ionorab le Di.lniel M. Donovan, Jr., Member ofCo n.6'fess
The Honorable Leonard Lance. Mem ber of Congress
The Honorabl e Ri ll Flo res. Member ofC()nbJrt~ss
The Honorable Kevin Cramer, Member of Congress
Thc Honorable David Young. Member ofConh1feSs
The Honorab le AdriaLl Smith. Member o f Congress
The Honurab le Jaime Herrera Beut ler. \1emher of Congress
The Honoruh le Ja mes Renacei, Member o f Congress
The Ho norabl e DalTclll ssa, Member ofCongrcss
The Honorab le Doug LaM alta. Member nfCOnhl'feSS
The Honorable Michael R. Tumer, Member of Congress
The Honorable Peter J. Roskam. \1ember of Congress
The Honorab le Louie Go hmcrt, Member of'Congres s
The Honorable John Cmicr. Member of Congress
Th e Honorab le Tim Wa lberg. Member of Congress
The Ii onorable Don Young, Member o f Congress
The Honorable Stephen Fi ncher, Member of Congress
The Honorah le RobeJ1 Pittenger. Member of Co n gre~s
The Honorab le l lnrold Rogers, Member of Congress
The Honorab le Ron DeS antis, Memh er ofC'ongress
The Honorabl e Luke \1 cs scr, Member of Congress
The Honorable G lenn Grothman. Member of Congress
The Honorable Mat1ha MeSall y. Member of Congress
The Honorabl e Dav id Jo ll y, Membcr of Congress
The Honorah lc Da ve Brat. Memher of Congress
The Honorable Ryan Costell o. \IIembcr ofConb....ess
The ll onorable Steve Scalise. \.1ember of Congress
The Honorable Mark Mca d O\~'s . .\1ember ofCnngress
The Honorahl e Andy Harris, Member ofCullgrcss
The Honorable Chris Stewart. Member of Congress
The Honorab le I.ee Zeldin. Member ofConb....css
The Honorab h: Da vi d Rouzer. Member of Congress
TIle Hono rable Dan t\cwhouse. Membt:r ofConh.....ess
TIle Iionorable Boh Goodlatte. Member of COllb.....ess
The Honorable Tom \ 1ariml . Member of Congress
The Honorahle Robert Dold. \1cmbcr orcon~. rt:ss
5

 House Committee on Financial Services
Th e Semi-A""u,,/ Report of the Bureau oI Comw",er Fillancial Pmtection
Qu estions for the Recor d
March 16,20 16
Questions for the Honora ble Richard Cordrav. Director, Consumer Financial Protection
Bureau, from Congressman !\tick Mulvaney:
Quesliol1 I

Director Cord ray, in rema rks you made during 3 Fehruary 3,2016 fidd hearing on checking
account acccss, you acknow ledged as a "pos iti \'t~ J evdopmenC' the decision some banks and
credit unions have made to provide consumers wi th real,time inf()m)ation about their avai lahl c
acco unt fund s using modem communication tools. such as online banking and text and e-mail
alcns. You stated th at this real-time commun ication can reduce the risks that consumers
inadvcrtcntly overspend their accounts.
Wouldn't the use of modern communication methods with consumers who owe a debt otTer a
sim ilar benetit of carl y and efiecti ve access to impo rtant fi nancial infomlat ion. giving conSU llll!rs
an o pportunit y to resolve their accounts ill a timel y way'! Thi s seems particu larl y helpful in
instanccs when they may ha ve inadvertent ly mi ssed a pa yment, reducing the li sk of future
financial hann. Wou ldn't this also be a positive development?
Respo l1se

[n addi tion to the positive developments in the use of technology for checking accounts, man y
l,;onsumers arc taking advantage ofmodcm communication technologies offered by many credi t
card issuers. nl CSC issuers are providing consumers with real-ti me te)(t and e-mail alerts such as
transact ion and payment al..:rts ami instant well or mobil e account access to help consumers
better manage their cred it card debts and combat fraud .
Usc of thesc technologies on morc delinqu en t or charged off accoun ts may be more probl ematic

for both consumers and debt collcctors. Consumers may consider them more intrusive in tenllS
of channel and frequency, especially when th e purpose of the communications shifts !i'DIn
helping the consumer manage an active account to attempting to collect a debt. Email, text. chat,
ilnd other digital fonn s of communications are not widely used by third pal1y debt collectors
putati vely due to regulatory uncerta inty, For that rc:asnn , the Bureau is considering upd at ing
federal collcct ion regul at ions to allow for the use o r technologies 110t extalll when the Fair Deht
Colk-ction Practices Act (FDCPA) was enacted in 1977. The Bureau is ho pefu l that our deht
collection rulemakin g efforts will provide more clarity around the use of technologies for both
the banks collecting in their own name and the third pa11y vendors \vith whom they contract.

JJ

 Dece mber 1, 20 16
The Honorable Richard Cordray
Direc tor
Bureau of Cons umer Fina ncial Protection
1700 G Street, NW
Washington, D.C. 20552
Dear Director Cordray;
\Ve write to you to express our concerns regardin g the Cons umer Financial Protection
Bureau's ("CFPB" or the "Bureau") June 2, 2016 proposed rules regarding payday,
vehicle title, a nd certain high-cost installment loans l . The CFPB's framework not onty
preempts the statutory a nd regulatory frameworks currently in place in our states, but
has been constructed in a way that will result in the elimination of regulated small
dollar credit products from the market, leaving our constituents without access to credit
or forcing them to seek ris kier, illegal forms of short term credit. Furthermore, the
Burea u's proposal fails to consider the effects this constriction of credit will have on t he
co ns umers who need these financial products and will actually harm t he very same
ha rd-working Americans the Bureau claims it is trying to protect.
The CFPB's proposal a ttempts to fur ther regulate an indus try tha t is already highly
regulated by nearly a doze n federal laws including t he Tru th in Lending Act. the Fair
Credit Reportin g Act, the E qual Credi t Opportunity Act, and the Electronic Funds
Transfer Act. In addition, our states a nd tribal governments presently possess their
own regulatory frameworks governing short-term credit providers, reflecting hard
earned compromises betwee n government officials, cons umers and industry.
Unfortunately, the CFPB's proposed regulations will preempt these longstanding laws
that have protected consumers while continuing to provide them \vith access to their
products.
By the CFPB's own admission , under these rule s, lenders "i,mIose up to 75 percent of
their revenue ~hich will put most out of business, yet does not suggest where
consumers should turn to fulfill their short term credit needs. As you are well aware,
the need for credit does not simply disappear. Access to credit has, and will continue to
be, critical to millions of Americans. In fact, the Federal Reserve reported last year
that nearly 47 percent of all American consumers could not cover a $400 emergency. 2
Consumers u se short term credit to cover unexpected expenses, or to fill the gaps in
irregular income. To take what is often times the only lawful option ava ila ble to ma ke
ends meet away from individuals without offering an alternative is irrespons ible and is

l Notice of Proposed Rulema king on Payday, Vehicle Title, a nd Certain High·Cost [nstaUment
Loa ns, Docket r\o. CFPB· 201 6·0025.

_ 'I .". ' : l 'd .

 in direct conflict of t he CFPB's mission to "make consumer financial markets work for
consumers , re sponsible providers, and the economy as a ,vhole."
Of further concern is the CFPB's lack of consumer research during the drafting of this
proposed rule. During a February II, 2016 House Financial Services Subcommittee on
Financial Institutions and Consumer Credit hea ring, Acting Deputy Director David
Silberman told the Subcommittee that he had never been to a short-term lending
provider location. He had not talked to consumers about their experiences with short
term credit and how the proposed change.:; to short-term credit products may impact
their families. Millions of Americans rely on small dollar loans, and we expect the
Bureau to understand from those wh o will be affected the most by this proposed rule
what the impact will be on them.
We are also troubled by the Bureau's reporting of consumer comments during this
rulemaking process. '''hile your agency prides itself on transparency, there was a
significant delay in the opening of the electronic comment portal on Regulations.gov
which, according to your website, is the preferred mechanism for the submission of
comments. Over a month lapsed from the time the r ule proposal was announced on
June 2 to its publishing on Regulations_gov in late July. V'lhile your agency provided a
short extension on the comment period window, it was only for roughly half of this time
period. Since the comment portal opened, it has been brought to out' attention that the
majority of consumer comments submitted to the CFPB were not visible on the website,
potentially leaving thousands of voices unhea rd, including those of our constituents.
We understand the comme nt period is in tended to ~ "public" so that all interested
parties can review comments for themselves.
Accordingly, please a nswer the follow ing questions regarding the Bureau's Proposed
Rulemaking on Payday, Vehicle Title, and Certain High-Cost Installment Loans in
addition to the CFPB's rulemaking process more generally:
Why was there a delay in the opening of the electronic portal (Regulations.gov) for
public comments and why weren't all comments published in real time?
1) To date, how many comments has the Bureau received on t he rule, how many of
those comments have been published and how much time on average does it take
for comments to be published from the time they are submitted for this rule and
other rules?
2) Is not the point of t he portal to put these comments into the public domain,
allowing peop le to read them, formulate an opinion, and respond? \Ve
understand that upwa rds of 1.4 million comments hm'e been submitted, however
only a fraction are posted on the website 3. Is there in tent to hide the comments

~

LQrraine Woellert, "Payday·lending crackdown draws 1.4 million letters. of protest," Politico,

October 18, 2016: h II ,.,r' \\
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 of consumers \"ho support thc current state regulatory framework oflegal
licensed short term lending?
3) vVhat happens after public comments are received? Is there any type of
subjective analysis that occurs prior to posting? Please share any guidelines or
procedures that the Bureau may follow with respect to receiving and publishing
comments.
4) If 75 percent of revenue is lost to the lending industrj', where do our constituents
and the millions of ~4.mericans who rely on state and federally regulated short
term loans turn to for their credit needs?
\Ve look forward to your response by not later than December 1, 2016. If you have any
questions regarding this request, please contact .:.lIl(h-_:..L'_I.~JV.1.~~m~mU!!)llSe.g~ (Duffy) or
Jared Sawyer at .ill[l'd.sa\\""w,r:;i:oma i Lbous('_!r\)\ (Neugebauer).

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Member of Congress

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Sincerely,

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RANDY NEUGEBAUER
Member of Congress

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DAvlD SCHWEIKERT
Member of Congress

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FRENCH HILL

Member of Congress

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STEVE STIVERS

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Member of Congress

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Member of Congress

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Mem er of Congress

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Member of Congress

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Member of Congress

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Member of Congress

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IVlembel' of Congress

STEVEN PALAZZO

'J:Jj;gs~
FRANK LUCAS
Member of Congress

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Me ber of Congress

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W ,"ETROTT
r...Iember of Congress

~~/.~~
MICHAEL McCAUL
Member of Congress

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u~1I(~~

DANIEL M. DONOVAN. JR.

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BRUCE WESTERMA.'
Member of Congl'ess

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RALPH ABRAHAM , M.D.
Member of Congress

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C . r- •
December 15,2016
The Honomble Sean Durfy

The Honorabl e Randy ~ e ugeba u e r

1208 Longworth I louse Oflice Build ing
U.S. House o f ReprCSCtUll li ves
Washington, DC 205 i 5

U.S. House of Represe ntatives
Washington, DC 205 15

1424 Longw0I1h House O ffice Build ing

Dear Congressmen Duffy and Neugebauer:
Thank you for your letter regarding the C(ms umer Financial Protccti(m Burea u's proposed rule on
payday. vehicle ti tle, lmd cen ain high-cost installment loans. I The Bureau is committed to
ensuring Ihal all of our rt:guhlliuns reneel a thorough and hal anced review of siakcholdcr
viewpoints. and we will carefu lly consider written commeniS submillcd by the publ ic and a ll
interested stakeholders. in developing a fi nal rul e.
As pm1 of carrying oul its statutory mandate. the Bureau intends for consumers to have a fair and
transparent marketpl ace that balances consumer protection regulation with fl fto rd ahle access to
credit. The Bureau is com:erned that risky lender practices in the payday. ::lUIO title. and payday
installment markets lca ve bClITowers trapped in unaffordable loans. Faced wi th unaffordable
payments. consumt:rs musl c hoose between dduuit ing, reborrowing. or sk ipp ing other fi nanc ial
obligations like rent or basil.: li ving expenses like food and medical care. The Bureau IS conce rned
that these prac tices a lso leld 10 co llatera l damage in ot her aspects o r con<;ume rs' li ves such as SIC(,P
penalt y rees. bank account closures, and vehicl e sd zures .
Over the past four years. the Bureau has studied an enonnous amount and variety of information
<lbout the sm<lll doll ar lending market gathered fro m lcnders engaged in payday, vehicle title. and
similar lending; li'om affected consumers; from fe deraL state. tribal and loeli l government agencies
rllld offiCials; li'om acackmi cs; from advOl.:atcs; from tradc organiZ<ltlOns: and fro m others. The
pnJlXlScd rule also comes a th:r CXlI:nsive n:sea rch by the Bureau that examined how cel1ain highcosl fina ncial products aftec t consume rs. 2
O n June 2. 20 16. Ihe Bu reau pOSIOO the Ilolicc o f proposed rulcmaking to ils websil e and subm illed
lhe ~ PRVI to the O ni ci.' of the Federal Re gisl(;r by courier. Fo llowing typi cal practice. an edi!(l r at

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 the OFR revi ewed the dOl,;umcnt , and Bureau </TId OFR statT agreed upon eel1ain non-substantive,
technical edits before th e final rule was schedu led for publication in the Fed eral Register. Given
the length of tht: NPRM, this process took several w eeks. On July 11. 20 16. the OFR scheduled
the NPRM for puhli eati0n o n July 22, 2016 and notilicd the Bureau that the document would be
placed on public inspec tion on rt:gulations.gov oll .lul y 21, 2016. The NPRM was puh lished on
July 22, 2016, CIS sched uled . At that time. the Burea u ex tended the comment period 10 ensure that
we ca ptured as muc h feedback as possible.
Your letter asks about the volume o f commt!nts the Bureau has recei ved in response to the payday

N PR~ . Bureau sta ll' is work ing to process the over one million comments. Processi ng comments
takes a considerable amount of time, due to a numher of manual admini strati ve steps. For
example. tor tht: hundreds of thousands of paper comments rt:ceiv'ed, processing includes opening
envelopes, removing any staples, preparing and scanning the comments into electronic lonnat, and
uploading and po sting the comments to regu lations.gov. We \vill continue to update thc electronic
docket on regul ations.guv on a rolling basis. Tilt: Bureau is currently reviewing co mments
received during the notice a nd comment pe riod o n the propose ru le, ano w ill ~on si der and respond
to co mme nts i n the fin al rule in accordance w ith its o hligatio ns under the Administrati ve Procedure
Act.
Your leIter a lso reitemtc:s CO!lC t'I1lS regardin g the potential impact the Rure-a u' s proposal cou ld have
on the payday loan indu stry and other providers nf small dollar credit and on the ability of
consumers to have access to responsible credit options. The Bureau shares thi s concem and agrees
there is a need to bal ance consumer protcction reg ul ation \.... ith ensuring that consumers have acceSs
to sa fe, affordable credit . Moreover. when prom ulga ting regulations. the Bureau is required
pursmmt to the Dodd ·F rank Wall Street Re f01111 and Co nsumer Protection A>.: IIO consider the
poten li.1i benefits and costs to consumcrs and to ind ustry, including small er depo sitory institutions
and credit unions, as well as the impilt:t o n at:ccss to consulller finan c ia l products or services
resulting from the rule. Wt! und t::n ook this allCll ysis in promulgating the propo sed rule and arc now
considering all comments rect::ivoo. As we ll1()ve forward, we w ill continue 10 seek a balance
between consumer protection rcgulution and access to credit.
Thank you for your con tinued interest in the OlireaLI' s work. Should you have any addilioll(ll
que stions. please do not hes itatc to contac t me or have your staff conta ct Pa trick O' Brien in the
Bureau's Otlicc of Lc: g islat ivc Atfa irs. Mr. O'Brien can be reacht::d at 202 -435· 7 180.
Sincere ly.

Richard Cordray
Dircctor

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' rhe Ho norabl e BI<l inc Lut!tkcmcycr. \II embt!J" o f Congress
The Ho norable Da vid Sch weike rt. Memher ofCongn..'S.S
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Honorable Tom Emml.!r, ~...kmbt!r of Congress
Honorable fnmch Hill, Member of Congress
Ilonorable A ndy Harr, Member of Congrt!ss
Honorable Roger Williams, Member Congress
Honorable Steve Stivers, Member of Congress
Honorablt Mick Mulvaney. Member orCongress
Honorablc BarTY I.oudermilk. \I1cmbcr or Congress
Honorabl e Mia Love, Memocr of Congress
Honorable Randy Weber. \IIe mber of Congress
Honorabl e SIeve Pearce, Member ofCongrcss
Honorable Ken Huck. Member ofCongn:ss
Honorable Scott Tipton, Member of Congress
Honorab le Marlin Stutzman, Member of Congress
Honorahle Lynn Westmoreland, Member o f Congress
Honorable Bill Posey. Member of Congress
Honorable Kenny Marchanl, Member of Congress
Honora bl e Robert Pint:nger. Member of Cong ress
Honorilble Lukc Messt:L Member o f Congress
Honorable Daniel Webster, Member of Congress
Honorabl e Bill Huizenga, Member of Congress
Honorable Dennis Ross, Memher of Congress
llonorab le Chuc k Fleischmann. Member of Congress
Hom.1rablc \t1ike Rogers, Member of Congress
Honor(lb lc Tom Graves, Member of Congress
Ilonur<lble Enrl L. " Huddy"' Carter. Membe r of Congress
lI onnr<lble Robcr1 Hurt, Member o f'Congrc.::ss
Hono mhlc Keith ROlhfus, Member o f Congress
HUllorabic John R<11diffe. \-1cmher of Congress
Honorab le Patrick Mc Henry, \1cmbcr (lfTongrcss
llonorable Trey (jO\vdy, Member of Congress
Honorable Stev..:n Palazzo, Member of Congress
Honorab le Don Young. Member ofCollgrcss
Honorabl e FI"<lnk lucas, Mcmber of Congress
Honnrable Daniel M, Donovan, Jr. , MClllher of Congress
Honorable Ryan Z inke. McmOcro f Congress
HOIl{lrahle Bruce Weslen nan. Member of Congress
Ho norab le Dave Trott, Member ofCongrl.."Ss
Honorahle R<llph Abraham. M.D ., Member of Congress
Honorable Michael McCaul. Memher of Congress

or

3