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tv   Consumer Financial Protection Bureau and Export- Import Bank Confirmations  CSPAN  July 23, 2018 2:35pm-5:16pm EDT

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c-span3 or online at or listen live using the free c-span radio app. supreme court nominee brett kavanaugh continues to meet with senators on capitol hill. follow the confirmation process on c-span, leading up to the senate confirmation hearings and the vote. watch live on c-span. watch any time on or listen with the free c-span radio app. the senate banking committee last week held a confirmation hearing for the nominees to lead the consumer financial protection bureau and the export-import bank. most of the questions were directed to the cfpb nominee, kathleen. this is two hours and 40 minutes.
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>> this hearing will come to order. this morning we will consider the nomination of two individuals to serve in critical leadership roles within the administration. i welcome both of you and congratulations on your nominations to these important offices. i see friends and family here together with you today and welcome them as well. the nominees before us are cathy kraninger to be the director of the consumer financial protection and kimberly reed. these positions are critically important to protecting consumers and the consumer financial products and services marketplace and facilitating global trade of the u.s. goods and services. these nominees bring years of valuable experience at nonprofits and in the public service and will provide valued leadership in carrying out
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missions of their agencies. ms. kraninger has had a distinguished career in public service with exposure to a diverse set of federal agencies as well as developing a particular expertise in the budget and appropriations processes. since march 2017, ms. kraninger has served as associate director for general government at the office of management and budget where she oversees and monitors approximately $250 billion in budgetary resources for numerous cabinet departments and federal agencies. she has also served as omb's principal policy official for issues related to treasury department, department of housing and urban development, and federal financial regulators. prior to joining omb, she held leadership positions at the department of transportation and the department of homeland security as well as serving on the staff of several congressional committees. given her depth and diversity of public service and experience, i have the utmost confidence that
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she is well prepared to lead the bureau in enforcing federal consumer financial laws and protecting consumers in the financial marketplace. ms. reed was considered by this committee last year as the nominee to serve as the first vice president of the export import bank and today we consider her nomination to be its president. ms. reed also has had a distinguished career in public service, previously serving as senior adviser to former treasury secretaries paulson and snow. in addition, she has served on several congressional committees and has held impressive leadership positions in the private sector. ms. reed is well positioned to help move the bank forward in a positive direction. with respect to ms. kraninger, some senators have requested a long list of documents, including e-mails, schedules, involvement in memos, white house communications, et cetera. relating to ms. kraninger's role the at omb with respect to the administration's zero tolerance policy and the administration's response to hurricane maria in puerto rico.
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these requests are designed to go after certain extraneous administration policies that the requesters do not like and go far beyond the practice of this committee in document production. indeed, i would not expect this administration or any administration to release documents related to its ongoing deliberative process and furthermore, my understanding is that ms. kraninger is not the custodian of these records ands that given the request for information to the white house. as i've indicated, i don't have an expectation that the white house or the agencies involved will provide these documents but that's an issue outside this nomination process. the democratic senators of this committee asked me to delay this hearing today to seek these documents. i'm unaware of the banking committee delaying a hearing for such a reason. to be consistent, i have followed a similar time line as the committee has set for then
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nominee richard cordry in 2013. as a reminder, the senator received the nomination on february 13, 2013, approximately one month later on march 12, 2013, the committee held a hearing to consider his nomination and voted the nominee out of committee one week later on march 19th. similarly, the senate received ms. kraninger's official nomination from the president on june 20, 2018. approximately one month later, we are holding this hearing. she has provided all of the paperwork that the banking committee requires. the purpose of these hearings is to provide all senators of this committee the opportunity to ask any questions of this nominee who will be under oath. i intend to ask ms. kraninger, who will be under oath, about her role in developing policy at the omb. other senators will be given the similar opportunity to question ms. kraninger and also follow up with questions for the record as we traditionally do. i take the senate's
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constitutional authority seriously and am confident that ms. kraninger will be sufficiently vetted as have our previous nominees. for this committee to provide a recommendation to the full senate on this nomination. as a separate matter, many of us have experienced frustration with the bureau in previous years. in april 2016, former bureau director testified before this committee. senators on the committee sent questions for the record that same month. it took director cordry over 16 months to respond to this committee. it's my hope that if confirmed, ms. kraninger will be more accountable to senators on this committee than the director was. and i look forward today to a very vigorous debate and a vote on the nominees. senator brown. >> i think the chairman knows that that comparison is specious but i will get to that in a moment. it was a very simple request that's been out there four weeks
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but i want to talk more about that as i said in a moment. welcome to the nominees, especially ms. kraninger, who brought her ohio family with her. good to see you all and ms. reed, who also has some ohio ties. nice to see you and good to see you both. financial crisis started when greedy lenders lured families into scam loans they could not afford. the whole enterprise was designed to transfer wealth upwards, stripping hard earned home equity from the middle class, putting it in the pockets of shady lenders and with that, they were successful. and i see that as members of this committee are familiar with, i see that every day where i live in cleveland, and my wife and i live in zip code 44105, five or six miles from where ms. kraninger grow up. my zip code, 44105 in 2007, the first half of that year, had more foreclosures than any zip code in the united states of america, and you know or should know what that does to families and to neighborhoods.
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behind all those numbers were thousands upon thousands of painful conversations around kitchen tables, congress created the consumer financial protection bureau to prevent the need for those heartbreaking conversations ever again. like food inspectors, the cfpb hunts down scammers trying to sneak toxic products back on to our kitchen tables. the consumer bureau isn't just a response to the last crisis. it's one of the most important tools we have to prevent the next crisis. though 2008 should have served as a wake-up call for watch ddo and ceos, inspectors have still found plenty rotten in the banking industry. from 2012 to 2017, cfpb won $12 billion in relief for 29 million americans. 12 billion reasons for wall street to hate the cfpb. lucky for them, lucky for wall
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street, they were able to install one of their own, mick mulvaney to head the bureau. he's dropped investigations, reduced meaningful settlements to slaps on the wrist. now he wants his protege to run the agency. for months i urged the administration to nominate someone to lead the cfpb who had a track record of working for consumers. unfortunately, ms. kraninger has no experience whatsoever in consumer protection. mr. mulvaney argues she should be approved because of her management and budget experience. it's hard to see how that's enough, especially given the nominee's refusal to provide information requested by committee members. every one of us on this side of the dais wanted this hearing postponed until we got information about that experience. when the nominee and i met, she said it was out of her hands, she would try to get a response. that was over a week ago. still nothing. the letter was four weeks ago. the response was one week ago. what is the administration hiding?
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my republican colleagues are concerned about transparency and about accountability and responsiveness, they should note this nominee's failure to reply to a simple request about her responsibilities and her current job. again, a request that was submitted four weeks ago. here's what we do know. at the office of management and budget, she signed off a $1.9 trillion tax break for millionaires. to pay for it, she helped write a budget. she called it an aspirational document to me that would triple the rent for families that are already struggling to get by. 1 p $1.9 trillion in tax cuts, 80% of those tax cuts go to the richest 1% and this administration with the approval of the designee to be head of cfpb is willing to triple the rates for families that are already struggling to get by. she's been involved in the management of one disastrous policy after another. the botched response to hurricanes in puerto rico has left american citizens, american
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citizens, to fend for themselves. a housing policy that undoubtedly will increase homelessness. the administration's cruellest policy yet, separating children from their parents at the border. i hope we will know more by the end of the hearing. these issues go to the heart of how she will handle any new job. management is supposed to be ms. kraninger's one qualification. nobody wants mr. mulvaney out of cfpb faster than i do but american consumers can't afford five years of someone who stands with the bankers and the administration and stands with the bankers in wall street. we need a cfpb director who will sit with hardworking families at their kitchen tables. i know my republican colleagues are eager to move this nominee in spite of the administration's stonewalling. i wish they showed a little of this kind of urgency when it comes to the jobs that have been put at risk by the failure to have a functional export import
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bank. ms. reed has returned for her second appearance before the banking committee. she's well qualified to lead. our committee voted overwhelmingly to support her nomination as first vice president last december. there are 109 export credit agency and credit programs throughout the world that support american -- that support foreign manufacturers, but the u.s. has literally -- has unilaterally and literally disarmed. when it comes to helping exporters, the policy of some of our colleagues seem to be america last. it's been four years since the senate confirmed an xm nominee, leaving xm partially shut down for three years. american businesses have transactions worth more than $40 billion pending at the bank, yet there's been stonewalling from this committee and this republican leadership for years. those deals and the resulting jobs will move overseas unless the board -- the bank's board is
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restored. if president trump and republicans are serious about helping american manufacturers after three years of obstruction, there's no other word to describe it, they should urge the majority leader to schedule consideration of ms. reed and the other xm board members immediately. and one since you brought it up at the end of your opening statement, mr. chairman, i want to say one more thing. there is -- there is, simply put, no comparison to rich cordry in this process. 730 days passed between his nomination and his confirmation. july 18, 2011, to july 16, 2013. almost two full years. ms. kraninger was nominated one month ago. two years, one month comparison. mr. cordry, look at his qualifications. ohio attorney general, slolicitr general, check for supreme court justice kennedy, argued in front of the supreme court six times, deep experience with consumer rights and civil rights laws. his qualifications were never under question, but 44
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republicans signed a letter saying they would support no one, no one, to head the agency unless we changed the law to weaken the agency. his first nomination died in the senate when he was renominated again, even after having a clear track record at cfpb, republicans continued to oppose his nomination until we defanged the cfpb. you know, that's what wall street wanted so, like, one bird flying off the wire, they all fly off the wire. continued to side with wall street to defang this agency. all we ask for with ms. kraninger is a response to basic questions regarding ms. kraninger's current job so we can evaluate her management skills, which this nomination hangs on. again, it's not her work in consumer protection. it's her management skills. tell us more about those management skills. republicans held up mr. cordry for two years, demanding changes to the law before they would even consider a nomination, so
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the comparison between that process and this, mr. chairman, is specious. >> well, thank you, senator brown. since you decided to go into that, i will also go into a little further discussion of the document request. it's been described here it's been described here today as a simple request. that goes into ms. kraninger's relationship to some of these policies. the fact is it's a document request that goes into virtually every conceivable document related to the deliberative process, the budgeting process and the implementation concerning administration policies ranging from an immigration to hurricane relief. now we've had the tax code thrown in as well. ms. kraninger is not the custodian of these documents. she has forwarded this request to the white house. these document requests are obviously designed to go after various policies of the administration, with which the requesters disagree and go far beyond any precedent of this committee in what it requires of nominees. these requests seek to open up
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extensive document production in five different agencies, omb, doj, dhs, treasury and hud. including also, the white house itself. this is a multifaceted battle with the president being played out in the context of this committee's nomination process. indeed, i would not expect this administration or frankly any administration to release these types of documents related to its deliberative process. as i said before, ms. kraninger has provided all documents and information which this committee requires of nominees. and we will get answers from her today on the issues you said we needed to get information on. >> one more statement. we've never done this before. but i just kind of amazed by this. i'm sorry, mr. chairman, you have to explain the inexplicable in part of this trump white house that won't step up on this. if there's a claim, if there's a claim of deliberative process, the white house never has used that claim. they have never even responded to the letter. let alone any details, has she
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been willing to share with any of the members with whom she met one-on-one, including me. she also has not been willing, nor has the white house, to give us an answer to the letter, even if the answer is we claim deliberative process, so i just don't, hope the committee is not going to start acting like this. that the white house doesn't have to answer letters, doesn't have to answer questions from members of the senate. >> it's unfortunate that the committee is starting to get into these kind of battles, too. i'm discouraged by that and i hope this does not change the tenor of cooperation that we have on many other issues. i understand the importance of this nomination. i understand the long-term battle we've had over the cfpb and its leadership. and the bottom line is, i don't know, i, as i understand ms. kraninger has passed this document request on to the white house. there are processes by which we can all seek documents from agencies and the white house. and i assume you're engaged in that process now. that she has passed this document on.
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i don't know what their answer going to be. i don't know what their answer will be. but i don't know what it will be. that issue is an issue that goes beyond this nomination process. that's my point today. >> i just think there's no incentive for, we continue on their merry way, just like all of you on this committee, that have spoken with justified outrage, particularly senator sasse and senator corker with the president's performance on monday night in moscow, or in helsinki. but there's never a consequence for this administration, because we all continue to do the administration's, all of you continue to do the administration's bidding, whether it's confirmation of ms. kraninger or whether it's passing confirming another judge. or whether it's passing another tax cut for rich people in this country. if the, why should the president change his behavior when there is never a price to pay? one price would be, let's not do this nomination until they actually give us an answer on some of these questions.
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>> like i said. i understand the battle that you're having with the president on many issues. i don't agree with transporting that battle into this nomination process. and so today, we will proceed. >> would the witnesses please rise? and raise your right hands, please? do you swear or affirm that the testimony you're about to give is the truth, the whole truth and nothing but the truth, so help you god? and also do you agree to appear and testify before any duly constituted committee of the senate if asked? >> i do. >> thank you, you may be seated. >> each of your written statements will be made part of this record in their entirety. before you begin your statements, as your turn comes, i invite to you introduce your family, who are here with you, if you would like to do so. and ms. kraninger, we will start with you, you may please proceed. >> members of the committee. thank you for the opportunity to
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appear before you today. it is a privilege to be here as the president's nominee, for the director of the bureau of consumer financial protection. i want to thank president trump for this honor and the confidence he's placed in me for with this nomination and i would like to express my deepest gratitude to my family and friends who have joined me today. my parents, dave and pat as senator brown mentioned are from cleveland, ohio. my older brothers, dave and dan and their families have traveled from wisconsin and connecticut. my older brother matt and his family are watching online. i'm incredibly lucky to have an amazing family who has encouraged me in every endeavor and have taught me that hard work and dedication, with that, everything is possible in this country of ours. i'm also especially grateful for their steadfast support. as i have followed my call to public service and pursued a career serving the american people. my love for our country, its
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ideals and promise drives my commitment to public service. it sparked my interest in my university summer internship program where i worked for my hometown congressman, senator brown. it inspired my decision to join the peace corps and serve for two years overseas teaching in the former soviet union. there i saw firsthand the devastating impact of communism, the economic consequences of central planning and the absence of free markets and the rule of law. following the attacks of september 11th, 2001, i felt the call even more deeply to serve our country in the time of need. i'm very proud to have served on the leadership teams at both the department of transportation and homeland security during that extraordinarily challenging time for our nation. i've also been honored to serve three committees, congressional committees. including the senate
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appropriations committee under senator shelby's leadership. in my current position as associate director of the office of management and budget i've take an broader leadership role and i oversee $250 billion in budgetary resources and related policies for seven cabinet agencies and 30 other federal agencies, including the bureau, any other financial regulators. throughout my career i've focused on implementing common-sense solutions to complex problems and delivering real value for the american people. while i will not prejudge and cannot predict every decision that will come before me, as director, if confirmed, i can assure you that i will focus solely on serving the american people. congress established the bureau for consumer financial protection to insure all consumers have access to markets for consumer financial products and services that are fair, transparent and competitive. i am firmly committed to fulfilling that congressional
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mandate. to do so, i will establish four initial priorities. first, the bureau should be transparent and fair. insuring its actions empower consumers to make good choices and provide certainty for marketplace participants. in particular, the bureau should make robust use of cost benefit analysis as required by congress. to facilitate competition, and provide clear rules of the road. in my experience, effective use of notice and comment rule make something session to proper balancing of all interests. it also enables consideration of tailoring to reduce the burden of compliance. particularly on consumers and smaller-place market participants. second, the bureau should work closely with other financial regulators in the states on supervision and enforcement. nothing is more destructive to competitive markets and consumer choice than fraudulent behavior. under my stewardship, the bureau
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will take aggressive action against bad actors. who break the rules by engaging in fraud and other illegal activity. third, the bureau must recognize its profound duty to the american people to protect the data in its possession. under my leadership, the bureau would limit data collection to only what is required under law and is necessary to carry out its mission and insure that that data is protected. the issue needs more attention because consumers are unaware of the vulnerabilities they face and unsure what steps to take to protect themselves. fourth, the bureau must be accountable for its actions. including its expenditure of resources. as a former congressional staffer, i appreciate the importance of overseeing this agency. i value the advice and perspectives you've shared with me in the meetings over the past month. conversations that i welcome going forward should i be confirmed in this important position. thank you for your consideration. >> thank you, ms. reed?
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>> chairman crapo, rarnging member brown, senators, thank you for the opportunity to appear before you today. thank you as well for this committee's favorable bipartisan vote to advance my previous nomination to serve as first vice president of the export import bank of the united states. i now return to you as the president's nominee to serve as president of xm. a position that includes serving as chairman of the bank's board of directors, i thank president trump for his confidence in me to advance xm's mission. creating and supporting american jobs by facilitating the export of u.s. goods and services. if confirmed, i will be both the first woman and the first west virginian to be president and chairman of this 84-year-old institution. i also appreciate the encouragement and support of the president's national economic council chairman larry kudlow, and diverse organizations focused on american prosperity. i would like to recognize my father terry and sister ashley.
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i lost my mother, janet reed, an ohioan to cancer when i was nine years old. and tomorrow would be her 70th birthday. so i send her my love and i know that she is with us. i thank you for your encouraging and supportive individual meetings, to discuss your views in the positive impact it's made for the workers in your states and the potential to do more to support them. if confirmed, i will work especially hard to maintain open lines of communication with you and the congress. i'm grateful for the support of my home state senators, shelly moore caputo and joe manchin, i would bring the grounding of my west virginian upbringing to xm. in 1985 senator caputo's father, governor arch moore bestowed upon me a golden horseshoe pin for an academic award that i wear today, its inscription reads mountaineers are always free. i believe that freedom in the
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form of free market principles is the best way to foster economic opportunity for all americans. throughout my 22-year career, i've embraced these principles to make a positive difference for our nation's businesses and workers. while also protecting the american taxpayer. i would bring these values to xm. there's room for improvement to keep america on this road to prosperity and xm is no exception. if confirmed, i will work to insure xm faithfully implements all laws and reforms enacted by congress. i would launch a review to insure that xm truly is the bank of last resort and not the other way around. there are now 109 foreign export credit agencies or ecas in other countries, up from 95 when i testified before you last november. xm recently reported the increasing weaponization of export trade credit by the world's ecas to complement
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increasingly nationalistic policies, particularly those by china. if confirmed i look forward to working with the administration and congress on an aggressive response to china's unfair trade policies. in a perfect world there would be no eca financing. if confirmed i will work with the u.s. government and as appropriate, the oecd, g20, wto, and other forums to move towards the ultimate goal of the eliminating all eca financing. on that, you have my pledge. until that goal is reached, the united states should not unilaterally disarm in a fiercely competitive global economy. while we negotiate, we should not place our nation in a worst position than our foreign counterparts, as president trump stated regarding export financing, when other countries give it, we lose a tremendous amount of business. if the senate confirms a bank board quorum i will take responsible steps to get xm operational so america can compete on a more level playing field. xm has more than $40 billion in pending applications. supporting 250,000 u.s. jobs.
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we need to keep and support these jobs in the united states. while we at the same time work to reform the export subsidies of our competitors to save even more. we can do both. xm must also treat all american companies fairly. especially small and medium enterprises i would insure that xm, working with community banks and community development financial institutions funds that i'm so familiar with, helps small business and agricultural sector, which is vital to rural america in closing i would like to underscore the good governance is critical. xm, which has a very low, 0.4% default rate is self-sustaining because of the fees and loans it charges to the foreign purchasers. and has returned $14.6 billion to the u.s. treasury since the year 2000. we need to insure that it stays that way. building on my time in the congress on oversight investigations and government reform, i would focus on strong standards of conduct.
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increased transparency, and sound risk management practices. i would work with you and our inspector general to insure we are doing all we can to eliminate waste, fraud and abuse and give better value to the taxpayer. thank you for your consideration and i'll be pleased to answer any questions. >> thank you, ms. reed. i'll start my questioning with you, ms. kraninger. as was obvious in the opening discussions between senator brown and myself there's a desire on some, on the part of some of the senators on the committee to know what involvement you had, if any, in certain policy decisions that have been made by the administration. can you discuss to what extent, if any, you were involved in the development of the administration's zero tolerance policy? >> senator, i appreciate the question. i had no role in setting the zero tolerance policy as i have said to many members in our meetings. they've recognized the reason for the question being asked. it is important to note that the office of management and budget has an extensive role in
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supporting agencies as they implement the president's priorities and agenda. that includes legislative proposals, regulatory proposals, budgetary resources and those kinds of facets of things. so it is clear that since the beginning of the administration, immigration policy border security policy, broadly has been a very detailed discussion within the administration, there have been myriad meetings at all levels of the administration that i have attended that the director and deputy director and my staff have attended. and in addition to that senator, to your note, i do believe that the protection and preservation of the deliberative process is critical to the ability of the administration to develop policy and implement policy. i am not, i don't believe it's appropriate or fair or right for me to articulate the advice that i gave or to characterize the discussion that others may have had or brought to the table.
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but i can assure you and all of the members that in every position that i have ever held and every individual that i have supported in my career, that i've given my best advice based on the best information available at the time. and that's what i have done in the area of immigrations and border security. i would note i had no role in setting the policy. >> thank you. and the same question basically with respect to the administration's response to hurricane maria in puerto rico. >> senator, with respect to hurricane response, the office of management and budget, including myself, my staff, the director, we have a role in reviewing disaster declaration recommendations that go to the president. so we are involved from that point. we also put together at the office of management and budget, the supplemental requests, that the administration puts forward to the hill when they are necessary. obviously last fall was a devastating hurricane season in
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the atlantic. that included puerto rico being hit by two hurricanes. one after the other. with irma and maria. so there were devastating impacts to that. clearly, additional resources were needed and the office of management and budget supported the president in putting forward those requests that congress considered and obviously responded to. and provided the resources necessary. >> thank you, ms. reed? u.s. companies are increasingly challenged by subsidized export financing from china and other foreign nations. right now who is the picking the winners and losers in the global marketplace? and who if anyone should be? >> right now, sir, the united states is not picking winners for the united states workers. because we are not operational. so as i mentioned in my testimony, we have 250,000 jobs that potentially could be
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supported by a reported $40 billion in it applications waiting for an export import bank quorum if i'm confirmed i will not pick winners and losers, i will treat all applicants equally and fairly. that is what the charter passed by the congress dictates. i will uphold the law and do all i can to help our small businesses in this country. it's very important to me and i have a long track record on that. >> i'm sure you are aware that there are a number of renorms that many are seeking to see implemented at the xm bank. if you are confirmed, are there reforms you will prioritize? >> yes, sir. as i outlined in my testimony i'm very dedicated to increased transparency. we also have to protect our american company applicants from releasing their proprietary confidential business information. but i will take a hard look if confirmed in how we can do things to make what xm does more
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transparent. i also believe that we need to be focused on good ethics and if confirmed and a quorum is confirmed we will be standing up a risk committee and be approving our chief ethics officer and chief risk officer. i believe we need to take a really hard look to insure that the bank is the bank of last resort. so taking a look at some tests that xm currently administers on additionality and economic impact. take a look at those again and seek input from all the experts, many diverse opinions on this. i think it's important as we look at reauthorization in 2019, that we take a look at that. >> thank you very much. my time has expired. senator brown? >> thank you, mr. chairman. a week or so ago, ms. kraninger, we had a good discussion in our office, i appreciate you taking the time and the conversation we had. one of the, i asked a number of questions about tripling the rent for low income people. about the 600% interest that
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people payday, that people often more often than not pay when they get payday loans. the speaker of the house in ohio resigned as you probably know under a scandal about payday loans recently, first time in our history. your answer to all of those seemed to be that the market will take care of this. and i only just suggest to you that i don't think that philosophy recognizes how expensive it is to be poor in this country. and i would as i ask you and as i ask secretary carson, that you, that you spend three or four hours and read the book "evicted" by matthew desmond. i think it speaks in a way that is really important to understand those issues better. a couple of questions. your response to the chairman was that you did not set policy. i understand that that's the term you used in my office and a number of other officing and it's the term you used twice in response to the chairman, did not set policy.
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but you you do help to execute policy. would you talk about, talk about, i'm interested if what you did, not what you didn't do. talk about executing policy. talk about what, what resources you moved around, on the zero tolerance policy. and since neither you nor the administration will even tell us, seem to want to tell us that in response to that letter. >> senator, i appreciate the question. with respect to the zero tolerance policy as i noted again i will repeat that i did not have any role in setting it. when the attorney general announced it, it was his prerogative to do so. and the department of justice has repeatedly asserted that they do have the resources to support their mission underneath that policy and have done that. so the attorney general has announced -- >> i understand, i'm sorry to interrupt. we have five minutes. i understand what you didn't do. tell me what you did do with the zero tolerance policy. >> similarly, with the
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department of justice, articulating it had sufficient resources, the department of homeland security and then the health and human services department as well which not under my purview, but i'm aware of some of the things they're seeking there, they, those secretaries have looked at what the resources are available within their flexibilities, provided through the appropriations process, to see what resources may be necessary to move around. there were discussions within the administration on those matters. but it is the -- >> what did you, i understand the other agencies, i apologize for cutting you off. but what did you actually do in your position at omb on that policy? >> so senator, there were meetings after the announcement of the policy as the secretaries raised questions about and were looking at their own resources to try to figure out how to support that implementation. and again, the office of management and budget is there to support those agencies, to
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ask questions and again in terms of the advice and details, it would be chilling to the deliberative process to give you extensive details on the substance of the discussion. i appreciate why you're asking. at the same time i don't think that's appropriate to get into the particular details of my advice. but i can say generally that the office of management and budget supports those agencies and analyzing the need and looking at the appropriations law and the needs that are, that are made known to us. >> sort of the same nonanswer to the letter. when we met last week i asked you to name some enforcement agencies that director cordray had taken that you support. you didn't come up with any answers then. do you have any now that you've had a little time to think about it? >> senator, it was a good conversation in your office, i appreciate you alluding to it as well. i would say on that point specifically as i noted in my statement, i do support the
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bureau exercising its authority to take enforcement matters, when bad actors are operating in the system -- >> i'm sorry to interrupt -- >> specifically two areas that the investigations that were launched under director cordray's leadership and continued under the current administration i can note equifax certainly, a lot of members, we discussed extensively concerns about credit reporting agencies and their practices, the equifax fallout going to be something that's going to be with us for a long time. as a nation and an issue that many are grappling with and if confirmed i would be grappling with the steps that need to be taken there. that's something launched under his leadership. and i would say, too, the wells fargo enforcement actions as well. that's an area that again, completely inappropriate. >> even though my colleagues here said the cfpb didn't do its job. one last question. one of the enforcement actions that director cordray took was
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against a company scamming 9/11 first responders. the judge in the 9/11 first responders struck down cfpb's claims, agreeing with the president's supreme court that the bureau is unconstitutional. would you challenge that ruling, instead of the cfpb? >> senator -- >> in other words, are you going to take -- i'm sorry, are you going to take the side of the 9/11 scammers or are you going to take the side of those who were scammed as you decide what to do in this court case? >> please make your response prompt. >> absolutely. i'm aware of the constitutionality question, senator, i think they're important, but they're not for me in this position to answer. the director has a responsibility to carry out the law as it is written and run the agency as it is established now and that's my focus. >> senator corker? >> thank you, mr. chairman. thanks to both of you for your willingness to serve. i do want to respond to ranking member brown with sincere warmth. we came in together and i've enjoyed serving with you.
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it seems to me that what's been happening is if -- if we don't like something the president does, and i'll take a back seat to no one in challenging foreign policy issues, tariff issues with every ounce of energy that i have. but if we don't like some of the things the president is doing, we should then block nominees that we like. i got a call after the helsinki press conference, which to me was one of the worst i've seen, from a leading democrat, i've shared this with some of my friends, he said corker, you need to block the supreme court nominee. well i could hit myself in the knee with a sledgehammer, too. but why would i block someone that i generally like over something that the president has done? i just want to say that -- i
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take a back seat to no one, senator menendez and i had a conversation about this yesterday. but it's actually you that's done the president's bidding on tariffs. senator toomey and i tried to block this terrible policy that's costing americans jobs. taxing americans. taxing americans. and you're actually doing his bidding. so i could throw that right back. and what i would like to see happen is, is if we could somehow depoliticize this bureau, i mean it started out in a way that was controversial under dodd-frank. it did. it was the thing that kept us from having a bipartisan bill, dodd-frank. it was this agency that kept us from having a bill that would have stood the test of time. i think we could have come to an agreement if it weren't for the way this was set up without a board and dividing all of us. i'd like to see somewhat figure out a way for this agency to go forward. there are abuses that happen there are abuses that happen. and the bureau has done some really good things in that regard. it's also in some cases, it
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feels done some things that were somewhat political. somewhat. i had a good relationship with cordray. i enjoyed working with him. i would like to ask our nominee, what is it that you can do, leading the department. to try to cause this whole political atmosphere around it to diminish? as its leader, so that we don't have these types of processes every time anything comes up regarding this bureau. >> thank you, senator, for that question, because it's critical and central to the discussion that's happening here today and has been happening for years on the bureau. what i bring to this position and why i was selected by the president to this position is precisely that. 20 years of government service working for common-sense solutions across the aisle. working with members on both sides to support the best outcome for the american people.
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and that is certainly what i pledge. this agency clearly needs solid management to take it forward, to become part of the financial regulatory framework of this nation, as a mature regulator and that is the direction that i would like to take it if confirmed. i firmly believe that we can continue to push for transparency and accountability at the bureau, again to really have a clear decision-making process. that takes into account all of the interests that are across, across the nation from consumer groups to the financial institutions, to all of you here today, to make the best decisions and put forward the best actions for the american people. >> so i'm chairman of the foreign relations committee. there are people on our staff that are just outstanding. finest people i've ever worked with in my life. and they are specialists in what they do. and i call upon them to help me
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in doing what i'm doing. it's my understanding that you have people like that already at the bureau who work -- who would be working underneath you, if confirmed. and one of the challenges that people have put to you is you haven't been in this area. but it's my understanding that you have some very capable people that work underneath, that are specialists in the areas that the bureau will be dealing with. is that correct? >> yes, senator, it is. i very much look forward to meeting all of them, understanding the details of the positions they have taken, the recommendations they have made, and moving the bureau forward. >> and if you would, state -- let me -- i know i have three seconds left. let me say to ms. reed, i enjoyed seeing you in uganda. i appreciate the meeting that we had in our office. i know that senator toomey and others have focused on some reforms they would like to see
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take place. many of us for years have hoped the department itself would reform. i hope we'll be able to work with you and others to make that happen. thank you both for your willingness to serve. with that, i'm going to call on senator menendez. >> thank you, mr. chairman. ms. kraninger, you have been nominated to lead the agency which is tasked with protecting american consumers, from seniors to service members, students to homeowners. we created the consumer financial protection bureau to be an independent cop on the beat for american consumers. when we met, you told me that your management experience at omb has prepared you for this role. so i want to ask you about that specifically about the administration's response to puerto rico. hurricane maria tragedy killed thousands of people, resulted in the longest blackout in u.s.
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history. and left puerto ricans without access to clean water for weeks. it took fema only two weeks to send the same amount of staff it sent to puerto rico two months later. i asked for a response by this past monday and you failed to provide one. as it turns out, i have e-mails that demonstrate your involvement in the trump administration's response to hurricane maria, although these are not e-mails that you provided to us. in my office, you told me that you were not only were you involved in the response to puerto rico through your oversight of fema, treasury and hud, but you oversaw the development of disaster aid requests to congress. so let me ask you here, and please provide some brief responses, because i think factually we both know the answers. in the first aid package that congress passed, most of puerto rico's aid came in the form of a
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community disaster loan that can only be forgiven at the discretion of the secretaries of homeland security. is it true that puerto rico had to wait five months to receive this funding, yes or no? >> not exactly, senator. the cdl loan was an unprecedented amount of resources being provided that congress deemed appropriate -- >> did they wait five months to get the money? >> no, senator, i don't believe that the governor has availed himself of this option yet. at the same time, sit an unprecedented amounted -- >> let me tell you what happened since you seem to have a different recollection. the administration withheld the loan from puerto rico, arguing it had a cash balance at the end of 2017 and didn't need the money. i'm sure there are cash balances in texas and florida. in november of 2017, the governor requested $94 billion in recovery funds.
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in response to this request, how much did you request from congress? >> senator, the request the administration submitted including an addendum to the letter that said additional funds would be requested -- >> can you give me the dollar figure? >> it was a specific amount for the disaster relief fund that applies to all the disasters. >> and that amount was $44 million, was it not? >> yes, i believe that's correct. >> that was to be split among texas, florida, puerto rico and the u.s. virgin islands, is that correct >> yes. >> in november of 2017, the request to congress, you requested budget cuts to offset aid dollars provided to puerto rico. in your disaster management experience, does congress typically require offsets for supplemental disaster funding. >> i'm sorry, does the congress -- >> typically require offsets for supplemental disaster funding?
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>> senator, my role specifically at omb is to make recommendations. these are the requests the president is making -- >> is the answer yes or no, does congress typically require offsets for supplemental -- >> it's been a common conversation in years, definitely. but -- >> the answer is no. you should know that. you know that. >> it's a conversation that has been had, senator, and i appreciate your perspective on it. >> amazing. did you advocate for unprecedented policies that would have conditioned puerto rico's receipt of disaster relief funding on the oversight of the island's unelected and unaccountable control board? >> senator, as i noted earlier in other discussions, i don't think it's appropriate to characterize my advice. you do see what the request was that the administration provided to the congress and that congress considered -- >> your e-mails, you say you see
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a role for the board. look, you were a significant architect of the trump administration's response in puerto rico, which was at best incompetent and botched. at worst, it reflects the administration's insidious views about hs tannispanic americans. they are american citizens like you and i are, faced their darkest hour, and instead of turning to help them, you pinched pennies. and worst of all, i think you treated them like second class citizens. that does not give me the faith that when you stand up for seniors, service members, students, homeowners against some of the biggest financial institutions in the country, that you'll do that. if you couldn't do it for the people of puerto rico, i don't know how you'll do it for anyone es. >> thank you. senator toomey? >> thank you, mr. acting chairman. and i want to thank our two guests today for their willingness to serve.
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let me start with ms. reed. thanks for coming by my office. i appreciate the conversation that we had, and i think it's no secret that i've been very concerned, a skeptic about xm, a skeptic about its fundamental mission. in my view, it is my nature forced to -- it forces taxpayers to subsidize concern companies, it distorts markets, it necessarily picks winners and losers. there have been episodes of waste, fraud and abuse and historically it's not been particularly responsive to congress. however, consistent with my interest in seeing reforms, i was pleased with your testimony. you emphasized a number of areas
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where you have committed to us that you want to pursue reforms. but i would like to just have a specific series of questions that i would pose to you and just give me a simple answer as to whether or not these are areas that you would work with us for reform. specifically, will you work with me and other members of this committee in the senate to increase transparency at the bank, to the greatest extent without divulging information >> yes, sir. >> will you work with me and the committee to strengthen taxpayer protections against losses from deals that go badly? >> yes, sir. >> will you work with me and member ofls the committee to improve protection for domestic companies from economic harm that might arise from xm financing with foreign competitors? >> yes, sir. >> will you work with us to assure xm is not crowding out private financing options that would otherwise be available?
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>> yes, sir. >> will you work with me and the committee to crack down on bad ak tors, whether they're employees of the bank or customers who shouldn't be dealing with the bank? >> yes, sir. >> and will you work with all of us and the administration to meet the statutory requirement that we work to reduce to rely on ecas globally? >> absolutely. >> thank you very much. ms. kraninger, two things. one, under the previous regime, the cfpb occasionally engaged in imposing policies that had the effect of being a rule without going through the administrative procedures act. they decided to use enforcement and guidance to impose their will without following the legal requirement that they subject such a proposal to the scrutiny that is called for in the apa. there's one case, in fact, where it was so egregious that the senate acted to repeal the rule, the indirect auto lending was such a case, where a guidance
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was the mechanism they used to impose what should have gone through the rule making process, never did. the congress recognized that, and has since repealed it. will you commit to using the administrative procedures act when the cfpb imposes new rules? >> absolutely. it's critical to the process. >> thank you. section 1071 of the dodd frank act instructs the bureau to compile data on small businesses. this is meant to be a consumer bureau, not a business bureau. but nevertheless, the law says what it says, and i understand you have to comply with the law. my understanding is that section 104 of 2155, which was recently passed and signed into law, addresses the challenge of overly intrusive data
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collection, but it's narrow and applies only to the small mortgage lenders. my understanding is that section 10 1 of dodd-frank allows the bureau to make exceptions. in complying with this requirement, will you commit to working to minimize the indue cost, burden, administrative aggravation for small business compliance with this part of the law? >> senator, i can absolutely commit to you that the law will be carried out and the authority given to the bureau to tailer that narrowly is certainly something i will look at. this is an ongoing action that the bureau is looking at, and it is an area to your point the law
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requires the bureau to act. so i don't want to presuj it. at the same time, i appreciate where you're coming from and i understand the need to live it. >> and very briefly, because i know i'm out of time, but can you confirm -- do you agree with my interpretation that 1071 is the only respect in which dodd-frank mandates the bureau to deal with small business? >> senator, it's very clearly one, and i have not read all of the enumerated consumer laws, as you know, there are many. at the same time, i believe that there is a limited intent for the bureau to be engaged in small business, oversight, or engagement there. so that's something that should be limited. >> thank you, mr. chairman. >> senator tester? >> thank you, senator corker. i appreciate the recognition. and i thank both of you for being here today. ms. kraninger, i'll start with
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you. it is no secret that mr. mulvaney is no fan of the cfpb. that aside, would you say that he's done a good job in his role as acting director? >> senator, i would say that the acting director is focused on two priorities -- >> no, no, no. please, i know how to filibuster, you know how to filibuster. just answer the question, has he done a good job? >> senator, he is my current boss who i respect greatly and he's been focused on implementing the law. so from that standpoint, i would say yes. >> so one of the four points you were going to bring to the cfpb, work closely with other regulators and aggressively take actions against bad actors. i think that's a noble thing to do. mr. mulvaney has pulled back the payday lending rule, pulled back
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the prepaid accounts rule and he's done more things than i've got fingers. did you support him in those, then? do you think that's the right actions to take? it goes, in my opinion, contrary to your plan of what you're doing to the agency. >> i understand, senator. i have to say i will take aggressive action if confirmed. and i do believe that the acting director -- >> do you plan on reinstating the payday lending rule? >> senator, it's under active consideration, and from that vantage point -- >> are you going to recommend that they reinstate the payday lending rule? >> i think it's important to let the process happen on this, because it is actively under reconsideration. so it's not appropriate to comment. >> no, no -- >> i understand your interest in this, sir. >> so, look, you probably got
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the votes to get confirmed. but i've got to tell you i've listened to the questions asked here today, and you can answer the questions, you really can. all you have to do is answer them. you're going to be the head of this agency. you're going to be lead thing agency. your recommendations are going to account for something. and so it would be helpful for me to know if i'm going to vote for you or not where you're at, where you're at. not the people under you. let me ask you another one. one of the other things that the previous -- that mulvaney did is he appointed political folks to track career folks at the agency, the same folks that you said you're going to be hooking forward to working with. do you intend to keep those political folks on board within the agency, if and when you become director in
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>> senator, i'm going to take each staff member individually, have a conversation with them to understand what they've been working on and what they would like to continue working on. but i have not prejudged having political career or staff continue. i think it's appropriate to give them that opportunity to have the conversation. >> okay. so you oversaw the treasury department in your position as omb, correct? >> yes, senator. >> earlier this week, the treasury department and the irs announced that it's one of the swatchiest decision swampiest decisions i've ever seen. they made a decision to allow for these c-4s not to have to report money they have received, non-profits, allowing donations to those c-4s over $5,000, not
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have to be reported to the irs. do you agree with that decision? >> senator, i understand that they published that decision. i can tell you i did not have a role in it. >> i know. but do you agree with that decision whether you had a role or mott? >> since i haven't read the law in that area -- >> it allows these organizations to basically hide their money. is that okay -- >> senator -- >> let me ask you this, the number one thing you're going to bring to the bureau is transparency and accountability. can you tell me how that decision, just sitting on the outside looking in, whether you're oversight of that agency or not, how you can actually say, you know, i don't have an opinion on it, when it deals exclusively with transparency? >> senator, i can tell you at the bureau, i am committed to that. >> let me -- i'm not going to
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ask, i'm just going to make a statement. i liked your document that you gave us that was your opening statement. it said a lot of good things i agree with. protecting data, we could get into equifax. accountability for actions, tra transparency, holding bad actors. but your answers did not reflect those values at all. thank you mr. chairman. >> senator tillis? >> well, welcome. before i get into some of the questions primarily toward ms. kraninger, ms. reed, i want to talk a little bit about what we -- thanks to both of you for coming to the office, but i want to talk a little bit about what i believe -- why i believe the xm needs to become functioning again. i think if your opening testimony you talked about an
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increased number of agencies in the global market. i for one think that we have to get away from this either/or proposition and talk about the reality if we don't have this in our tool kit when we're competing and the global markets, that we disable ourselves, much the same way a state would get out of economic incentives. do you agree with that? >> yes, sir. >> do you agree there can be things to make xm bank less politicized if we can work on other things and can i get your commitment to come back to my office to tell us what that would look like so we can get to a better place and better certainty for the long-term interest. >> absolutely. >> thank you. thank you for your service. ms. kraninger, there's a lot of people that asked a lot of
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questions and gave you a limited amount of time to answer. anything that you would hike to respond to here before i ask you a couple of questions? >> thank you for that opportunity, senator. i realize senator tester wanted to mare more about my views. i can talk about the challenges with the payday lending arena. i take the point of the conversation i've had with senator brown on the challenges for hard-working americans out there. i think what would be helpful is continued competition in the small dollar lending space. it's something that cannot be prejudged, so i respect the process there. but certainly have spent some time looking at this issue and look forward to getting further into it. >> i think in the opening
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testimony, the rnking member talked about folks on our side of the aisle have been working hard to defang the cfpb. and i'm one of those. because i think if you look up defang in the dictionary, it has something to do with taking the fangs out of a snake to make it less threatening. in my opinion, cfpb, great title, but the reality is, i think that it's the first agency of its kind that is not accountable, arguably to anybody. after you get confirmed, for a period of time, you don't even really answer to the president. you certainly don't answer to the congress. when director mulvaney was here, i was struck by the -- his goal of trying to convince us that they should be an agency that's more accountable to the president. do you or do you not share director mulvaney's view that this is an agency that is sort
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of unlike anyone with great power and no accountability and that's not good for any area of government? >> clearly, senator, the congress gave the bureau incredible powers and incredible independence from the president and the congress in its structure. i noted that my focus is on running the agency as congress established it. and working with members of congress, i'm very open to changes in that, you know, that structure that will make the agency more accountable and more transparent. >> i for one, for those that are not going to support your fom nation, this is a great time to move that accountability and funding back into congress so that they could have some say. because the fact is, you don't have to care but for maybe your interest, you don't have to care one bit about our opinions about your activity.
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and unless we get to a point where it's accountable, it becomes accountable to congress, that's one contingent. i hope that you go out there and work on clawing back regulations that on the surface look like they're paths for protection of the consumer, but in many cases, it's harmful. i look forward to supporting your nomination and i welcome your family and friends here. the nominees are doing just type and i look forward to supporting both of you on the floor. >> senator warner. >> thank you, mr. chairman. i want to say welcome to the witnesses. ms. reed, i look forward to supporting you. you are a lucky witness this morning, since your colleague is receiving most of the attention. i would remind -- i'm sorry senator corker is no longer here -- the -- i was here at the
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start of dodd-frank and cfb. senator corker and i worked very closely together. the original proposals were to set it up with traditional oversight. and some members said they did not want to create a new box, a new entity. so it was put in this rather unique framework inside the fed. history would demonstrate that was how the rather unique aspects of the cfpb came to bear. i want to industrial down. to me data-driven decisions rather than agenda driven decisions. r warner and i expressed deep concern about director
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mulvaney's deep skepticism about data collection by the cpfb. he has been hostile to data collection, i think we froze data collection for six months. that'm deeply concerned one of your full priorities was to limit data collection to what law."eded and required by favors a0 that cost-benefit analysis, but how do you do a cost-benefit analysis that is going to be ifurate, and the fact based, you are not able to do appropriate data collection to influence your decision? how can we be assured it is not going to be a political-driven agenda rather than at databased driven agenda? ms. kraninger: i am absolutely
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committed to data-driven decision-making area that would be a focal point of the bureau. extent that it is supporting decision-making, the data collection would be needed and required. i also think it is important to distinguish between the data that comes through the request for information that is out in the public, and there are a number of sources of evidence that come beyond the entities the bureau is supervising directly. so ensuring consumer groups have the opportunity to respond, to provide information, using the benefit of a lot of the academics that are there. warner: if we are going to do rulemaking a debt collection practices without talking to those people who have been targets, customers, consumers, users of this debt-collection services, i
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don't know you can recite conclusion. on ranking member and many this side, i don't always agree. i generally, with a pro-business ias but i have to tell you, think the power in most business consumer relationships have shifted away from the consumer toward businesses. we discussed circumstances surrounding credit-reporting agencies. you and i don't have an option to be choosing to because tumors are not with credit-reporting agencies, and i am very concerned, not only in credit reporting, but as we move into icial media and other areas, am not sure that even a relatively-informed consumer can simple he sign away all of their with this growing in balance, where the business has all the information, all the
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data, all the tech tools, and you are stuck with a quick, i in print that no one reads or even if you could read, you couldn't necessarily understand. are you concerned about this imbalance between businesses' ability to collect consumer data, knowing and oftentimes unknowingly, and what do you b should do to protect consumers in this growing arena? specific to the credit-reporting agencies, because that is a critical area where the bureau is spending a significant amount of time, i look forward to the results of the equifax investigation to understand what is happening there, to look at what the bureau staff has found in terms of the concerns. and i do think that the customer relationship there is really between the agencies and the financial institutions.
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isensuring the consumer protected in that situation, and that they are really limiting the information that they are collecting to what is appropriate, and that they are collecting it, and that the consumer protecting it and that it is the consumer has a measure of control and involvement in that going forward is certainly something that makes sense to me and iok look forward to getting into that more with the federal trade commission and the bureau staff ifse confirmed. >> my time expired. mr. chairman, i just want to for the record, i appreciate your interest inha tm subject. the fact that we've had a couple hearings, i have to tell you, if this committee takes up any other legislative activities this year, it's going to be my intent to make sure that credit reporting appropriate guard rulesto and after equifax and something has happened, that's the top of my priority list. >> it's a high priority for me and data collection in general
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as i discusseded with several w you. senatornsum war snren? >> thank you, mr. chairman. something that consumers need is someone willing to stand up to powerful people. since march of 2017, you've been the head of the general governmentma programs at the office of management and budget, is that right? >> that's correct. >> it's an important job. the general government programs division is charge of overseeing both the department of justice and the department ofrt homelan security. is that right? >> yes, senator. >> andco according to the disclosures you submitted to this committee, you serve as the principle policy official for omb for issues related to the departments and agencies you oversee. is that right? >> yes, senator.ho >> so the justice department and homeland security are the two
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agencies most responsible for taking children away from their at the border. and you oversee policy issues at both agencies. but for a month now you have refused to respond to ranking member brown and my request for informationte for documents relating to your role in child separations. and when we met in my office last week, you refused over and over to give me a straight answer about your role. so today you've given a very lawyerly and limited answer. you're dodging. the answers have also been contradictory. you said you have no role in setting the policy. but you also can't describe the advice you gave on the policy. which means that it raises a question, which is y it? you had no role or you had a role and you can't describe it? so i'm going to ask you again under oath. were you involved in any way in
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developing or implementing the policies that led this administration to take thousands of children away from their parents at the border? >> senator, i had no role in setting the policy. we discussed -- >> please answer my question. it was developing or implementing. >> i had no role in developing terms of its announcement by the attorney general. >> so you didn't help the attorney general announce it but otherwise did you help develop or implement this policy? >> subsequent to the attorney general's announcement, there were meetings within the administration on the general topicag of the implementation a again the office of management and budget does participate in those meetings. >> so you were involved?ms that's a yes. >> senator, again, i don't want to characterize the advice as i noted to you. >> straight forward yes or no question. i will remind you. you're under oath and lying to congress is a crime.
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i'll also remind that you many of the documents i requested about your role in this policy coulde eventually become publi under the freedom of information act. so let me ask again the specific question were you involved in developing or implementing the policies that led to children being taken away from their parents at the border? >> , senator, it's difficult to separate the advice and so as i said, w i will not characterize theas advice that was provided the analysis or otherwise. >> i'm not asking you to characterize. i asked you a n simple yes or n question. according to epreports, in some cases thehe trump administratio isn'tld sure which children belg to which parents. as of monday the administration had not identified the parents of no71 separated children. which means right now they can't be reunited. dhs is the agency that took parents away from their young children. did you work with dhs to create a plan for eventually reuniting
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these children with their parents? >> senator,r, again, i can't characterize my advice. but as we also discussed, since i was not -- >> i asked, did you work with them on a plan? i didn't ask what the plan was, what advice you gave. did you work with them on a plan to reunite these children who were taken away from their parents? >> i qu understand the question, senator. but it becomes apeit slippery s in terms of c characterizing th advice that was provided or the analysis or the questions that were raised. >> no, it's not a slippery slope. you don't want to characterize because you don't wantt to admi that youhi had something to do with this. this was a policy that was designed to traumatize children and families. even if they were seeking asylum, even if they were fleeing death threats, gang violence, rape, domestic abuse, white house chief of staff kelly
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said that the whole point of this was "to be a tough deterent." the american academy of pediatrics says beinghi separat from their parents for weeks or months can cause these children irrepairable life long physical and psychological harm. do you think that purposefully on innocent at children is immoral? >> please make your answer brief. >> senator, i think there are many heartbreaking stories that appear in the news every day from the conversation we had about american families, hard-working who are affected by -- >> it's aor simple yes or no question. do you believe that it is immoral to set up a plan whose deliberate intent is to inflict harm' on children? >> senator, it's not appropriate for me to provide my personal opinion and internal deliberations in discussions on this matter. >> almost every member of this committee, democrat and
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republican, has denounced this policy. even president trump when he signed the executive order ending child separation said, and i'll quote, "i didn't like the sight or the feeling of families beingng separated." but you can't have an opinion on this? you know, i went to the border last month. i met a mother who was torn away from her 7-year-old little boy in the middle of the night. she could not stop crying. all she could say over and over and over is i never even had a chance to say good-bye. she had not seen her little boy for weeks. she had no idea where he was. you see the videos of some of these children being returned tu their parents after long separations. they're dazed, they're not smiling, they're dirty. it's like the life has been sucked out of them. these are innocent children who may be scarred forever by this policy. it is fund mentally immoral and you were participanta of it.
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it is a a moral stain that will follow you for thet rest of yo life. and if the senate votes to give a big promotion to you after this, then it is a stain on the senators who do so. >> senator cortez? excuse me.r: i apologize. i didn't see senator moran come in. senator moran. excuse me. rounds. >> thank you, mr. chairman. mr. chairman,ha what i would li to do is once we got the noise cleared up here, we'll turn around and we'll go back and ask the questions about withan bothf our two witnesses. thank you. let me just begin -- miss reid, your role m coming in as a
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chairperson is to make certain that this particular institution this bank is capable of competing with other similar type institutions from around the country. and providing services so that we can again properly export to other i think some people think that's inappropriate that a government would provide a service. i don't. i think that's appropriate that we be competitive. can you share your thoughts of competing with other countries and providing our businesses with that same type of service so they can compete? >> absolutely, sir. as i mentioneded in my opening statement, if we're not at the table, we're disarmed and our competitors will take those jobs that should be u.s. jobs through
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their own programs. i want to be sure when we have 109 other ecas competing against the united states that we're there. i think that is so important. it's a tool in the toolbox. they published an op-ed in the hill earlier this week. he lays out the world of china, you know, they're using export-import bank along with many other tools to be present through the policy. all around the world. and we need to be there not only because we need to be for national security reasons pashgts . part of the president's economic security is national security.
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>> i was pleased with your response to senator tomby. i was very happy to hear you comment ongs the fact that you' work with us to make certain that some of those things that may have occurred in the past with regard to picking winners and losers would not be in the future. so thank you for that. i nars understand that we run o time here and we try to get a lot of questions in a short period of time. but sometimes that means we don't give you an opportunity to clearly lay out your thoughts and to answer questions. i think that's occurred today. and, in fact, you've been the object so that individuals here that have disagreements with the administration's policies and their attempts to enforce border security and so forth and they used you as the object.
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i'd like to give you an opportunity to answer questions that you feel you haven't had an opportunity to answer with regard toiz your activity at om and the responsibilities you had at omb recognizing in many cases it simply is to provide advice. you would like to share with us a little bit perhaps more fully answer the questions that some other members really were interested in but probably didn't have enough time to allow you to answer? >> thank you, senator. i appreciate that opportunity. we have a broad reach across government. and my portfolio is the broadest. so the levelti of engagement th i have in any particular issue or d with any particular department or agency does vary substantially so the question with respect to the irs rule, i was staware of it. i know that my staff reviewed it.
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but again, i did not have a role in developing that. with respect to the horrible disasters last fall, because there is clear need for additional resources, the offices of management and budget was very engaged. in addition with respect to puerto rico,e the treasury department hadnt a deep role working with the government with the okoversight board that was established by congress to look at the future of puerto rico. so that is something that again there have been many meetings on. i'd also like to note that there are many hard-working men and women across the administration at the state level inte the private and nonprofit sectors that were very engaged in the hurricane response. it's an honor to support them and look at the resource needs that were brought forward and to submit to congress the resources that we believe were fully
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justified and for congress to consider that. >> i know my time expired. i ask the chairman for a little leniency after the last questions that were asked just to clarify this. you're responsible for $250 billion in budget aiary resourc for seven cabinet departments andry 30 other federal agencies including the treasury department, department of housing and urban development, the bureau and all other financialso regulators. i justt get the sense that with the huge number of items that are inpe front of you, how mucho you get into the specific details? and do you have the opportunity to come back and say, wait a minute, i disagree with the particularar policy. i can stop it or i can change it? or do you offer advice? >> and again, please keep your remarks brief. >> it isdv definitely an opportunity to offer advice. and the involvement level really does vary substantially based on the president's priorities, the
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director's priorities, the agency head's priorities, how much authority they have on -- >> one last item. is your advice always taken? >> senator, i wish that it were, about, no. my advice is not always taken. at the same time, i'm also fallible. i offerer o my best advice base the information available. >> thank you. >> thank you, mr. chairman. i want to follow up on the line of questioning around family separation. i understand kunyou can't characterize the advice you gave. i'm wondering if we can get a sense of what categories they were in. was it legal advice? was it compliance advice? was it advice related to execution? i think if -- i'm not sure i agree with you about the deliberative product. i'm not sure i agree with you about the sort of vague
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assertion of -- i don't know if it's privilege that you're asserting or a personal judgement that you're making or onle the advice of counsel and maybe we can get into that. let's set that aside for a moment. we want to broadly know what you not how you adviced people or executed. but were you advising on implementation? were you advising on compliance? were you providing legal counsel?we were you providing political advice? can you characterize what you were doing? >> so, senator, with respect to the office of management and s budget's role which does characterize my role, the director's role, meetings talking about the agencies as they were executing the policy. we do have at omb a role for providing perspective on the budget ai budgetary resources necessary. >> why the third person here? like we have a role. every time we ask you about what you did, you say omb has a role and that it becomes this kind of
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description of this far away bureaucrat. it was you, i'm just asking you so we can establish a little trust. can you talk about what you talked about, not to describe the contents of what talked about but broadly were you ng giving legal advice? were you giving political advice? let's start with that? were you giving legal advice? >> senator, if i can respond to the point you're making because it goes to the heart ofar the matter. my conversation with senator rounds, the reason why i'm saying the office of management and budget is because as senator warren and i discussed in her office, i am responsible for my staff. >> i get that. >> i do have a staff involvement. >> i get that. >> i'm also providing advice to the director. >> i don't have a lot of time. did you give legal advice? >> senator, it's not appropriae for me to give legal advice really. it's the per view of the office of management and budget to weigh in on regulations, budgetary resources, those kinds ofof things. >> weighing in on regulations,
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what does that mean? >> so, for example, anything that involves a data collection. it requires notice under the privacy act, whether it's a system of records notice submission -- >> so compliance? can you just, please, like ratherou than me playing 20 questions with you, can you please try to characterize your role in this without running afoul of whatever principle that you articulated earlier? and in as simple and personal terms as we cann get to.i you can say this is what i did for them. i won't tell you how i advised them or get into deliberative product. i understand your position on that. but can you not characterize anything more than omb generally does this and that would apply to this situation? >> avsenator, i said i had no re ins setting the policy. and there were a number of
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meetings on l immigration and border security policy at large that i participated in.pu that i supported the director and the deputy director in their participation. andn then my staff participate in and then came back and told me the nature -- >> i don't -- i don't do hearings so i can put a clip up on youtube. i don't operate that way. i'm trying to get an answer from you and i just can't. and itth is maddening. this is not a trivial aspect of your basic qualifications for the job. you're coming in and asserting you're a manager.t you can't characterize anything that you are doing as a manager. is your position which is that gets into deliberative product, is that on the advice of
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counsel? >> this is something i i shared with the appropriate officials and thatra includes the office management and budget general counsel. okay. did counsel give you advice and tell you not to answer the questions? >> senator, we certainly had a lot of preparationon for this hearing and discussion about thd right answers. i will say my answers are my own. >> did you get legal advice? >> not per se legal advice. i'm not asserting privilege. it's not for me to do that. but i am saying that i want to preserve the deliberative process and that that's an important things to preserve similar to conversations that many of youou have had or i hav had with senators that i worked with.ou it is important to keep those discussions internal. >> is that your personal judgement or is that on the basis of advice from either the gc or from the white house?
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>> senator, it's fair to say there were discussions in preparation for this process that i did have. others weigh in in terms of giving me advice on how to respond. but my responses are my own. >> thank you. >> senator moran. >> senator, thank you very much. i look forward toca working wit both off you should you be confirmed in the capacities that you've been nominated to fill. i would start with you. i want to let you know how much i appreciate the working relationship that you and i have had in your capacity here on the appropriations committee in the united states senate. as well as your work on the omb and i appreciate the responses you gave to me in both capacities. thee thoughtful and articulate way that yous communicated with me about responses and the lack
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of partisanship and issues that we were dealing with was clearly dplon straight demonstrated to me. i'm grateful for your approach and the way you conducted your work. my observation about the hearing today on your nomination reminds megi of the first piece of legislation that ien introduceds a united states senator related to a financial services and banking. and that's what among other things the belief that this entity should bee governed by board while there seems to be relish in having the opportunith to question you as a potential director of the consumer financial protection bureau, maybe we would enjoy it if we had three or four or five more opportunities to do so.
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the point i would make is there is a diversity of views on this committee and in c this country about the role of consumer financial protection bureau. i'm of the view that republicans made a significant error at least in some in saying we're goingre to repeal dodd-frank an end the reign and the reaction is many democrats who say you're noth going to touch the issues associated with dodd-frank. so we put ourselves in corners that then cause us to be unable to solve problems that clearly existed as a result of the passage of dodd-frank with two sides saying we're goinge to d this and we'reng not going to l you do this. it didn't allow us to find a middle ground in very many instances. at least until recently in which we can make improvements in dodd-frank. one change that i made isd a board or commission that would oversee theon consumer financia
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protection bureau would make sense. i raise this with my colleagues to suggest not only would it give us the opportunity to have more input with those in charge, members of that commission of the consumer financial protection bureau, but it would also allow us to better reflect and perhaps avoid the swings that may occur from one administration to another in the approach that we have had -- the approach that cfpb have had in regard to the regulatory world of protecting consumers. i indicatee that it will be valuable to me and i would allow you to respond to this it will be valuable to me to confirm what i expect you to confirm that you'll a operate in your capacity if confirmed in a very trans pare transparent and open way so that have a of congress better opportunity to influence and make points to you then i sometimes felt i had with one of yource predecessors in his administration, his directorship of the bureau.
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and i would also make the point that those being regulated could use greater transparency because rulemaking was not accomplished and therefore the rules were unknownn and you became what wa the rules of the road became known only once there was an enforcement action. and so i would give you the opportunity to confirm to me first of all how you would operate in a trans parent way with me and my colleagues as members oful the united states senate and secondly, if you have thoughts about how we make certain that those who you are regulating know what theti regulations are before they suffer the enforcement action that often results in a fine. > absolutely, senator. thank you so much for your omments and for your perspective on this. it is a priority for the bureau to be transparent and accountable. i'm committed to working with both sidesr. of the aisle and congress to move the bureau forward in that kind of manner.
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and in terms of the, you know, regulation by enforcement that many have been concerned about in terms of the prior approach the bureau, i completely agree that it is critical to have clear rules so that the lenders andld creditors know wh the rules arere and they're not somehow told after the fact that they broke a rule they weren't even aware of or that it had somehow changed without any proper notice and comment to really understand themp impacts and opportunity to tailor. i completely agree that is not appropriate in something that i would not engage in. >> i appreciate your response. i have run out of time. i would tell you i look forward to working with you. i've been on the banking committee long enough to remember the days in which you would have been a controversial nominee and i'm glad to see that
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xm is back in a position in which we can move forward and protect theer competitive interests in a global economy of united states businesses. >> thank you, ma'am. >> senator? >> thank you. welcome. congratulations on both your nominations. thank you to both of you for taking the time to visit with me and answer my questions. ii really appreciate. that welcome to your family as well. i'm going to start with you and these are similar to the questions that we have together when you were willing to meet with me. let me just start with this. i heard you say time and again in response to all of my colleagues questioning that you intent is to ensure the bureau is transparent and accountable. but my concern is based on the questionings that you -- and the answers that you have given today, wee can't even get you t
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be transparent and accountable about the work you're doing at thee omb. so i have concerns that if you can't even tell us what you're doingg on a day to day basis, hw can we trust that you're going to carry that over to the cfpb? let me follow up with this. state regulators and attorneys general should play an active role in enforcing consumer protection laws and the banking industry. however, as a former attorney general myself, i know that ags can't be thely only cop on the beat. the cfpb has been vital in uncovering widespread and massive fraud and holding those companies accountable. and they are the first stop in the states to protect consumers. thatat is your role as well, my understanding from the statutes i read and from what you said in your statements. let me give you an example of where the cfpb was instrumental
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for us in the states. wells fargo, as you well know, theirll actions affect third ed 3.5 million people. after an investigation by the cfpb, they paid a $500 million penalty. can you enumerate the powers that state ags or state regulatorsst do not? >> senator, certainly as we discussed discussed in your office, i appreciate your experience in this area.taat this is essential to the point that you noted the states have been engaged in the enforcement -- >> why do you believe it's essential? >> certainly because a the law actually stipulate lats thas th think that is important. they existed prior to the bureau and engaged in this activity
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prior to the bureau's existence. and the statute specifically calls. out that important coordination role whether it's with -- i will tell new the state of nevada, the regulators weren't there when the crisis occurred. nobody stopped it. nobody was working to prevent it. >> this is key to what happens across this country when we look to consumer financial protection to work with the states. let me ask you this. without a strong federal he e regulator, how do you anticipate stateses will be able to uncove and put togetherl patterns of wrongdoing, potential wrongdoing across the country? >> senator, i'm committed to carrying out the responsibilities of thehe burea under theng law which does incle
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working with the states to look for those kinds of things. we talked about the information sharing that is vital and certainly i am committed to sharing that appropriate information and support their efforts and looking at the right opportunity for thena bureau to step in from a national stand point. >> outside of serving as a partner for state regulators and ag rules issued by the cfpb can also be enforced by state ags. do you support empowering the ags by issuing rules through the cfpb? >> i believe it is an essential responsibility of the bureau to engage in the rulemaking activities, setting clear rules. the example -- >> so that's a yes? >> yes, senator. >> thank you. a
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>> have you ever seend a bi contra -- signed a contract with someone that included an arbitration clause. >> i'm sure you did. >> you're a lawyer. did you read the clause before you signedd it? >> as a lawyer, i do try to read those things. and i have actually read them in the past. >> were you aware you were foregoingtr your right to sue wn you signed theas contract? >> i was aware of what was in the contract. i can't assure you that's what was there. >> do you believer that ordinary americans page through and read the fine print of the contracts and know they're signing away rights?. kr >> there are disclosures and responsibility of theth bureau d statute is important and understanding that the bureau has a role for looking at those things. >> do you support thehe cfpb's mandatory arbitration rule?
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>> congress certainly acted through the congressional review act to preclude that rule from going forward. from that standpoint, it's addressed in that manner. >> do you believe that all consumers have a right to their day in contract? >> i believe through contract relationships and in general there are opportunities for consumers to take action and to submit complaints. >> have you ever invested in a credit card zmp. >> i supported investigations in many of my roles. i believe actually in terms of financial crimes that the secret service oversees, there is involvement with those inconstitutions. >> personally you've never been involved in the investigation?an >> not of financial institutions directly, no. >> have you ever brought a legal action? and formulated a a a case again
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bank or credit card company?na >> please be brief. >> no, senator, i have not. >> thank you. i see my time is up. thank you both for being here. i will tell you i do as well have concerns about someone without the experience to leadda consumer financial protection bureau. 1600 employees, billion dollars -- excuse me, millions ofrs dollars and consumers and financial package. it has been the right person. they lead. let me also say, miss reed, i look forward to supporting your nomination. thank you. >> thank you very much. thank you both. >> i assume you're familiar with the military lending act. so as a service member prefer to go to court to enforce their
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rightsts and be forced into arbitration, do you think they should be protected. >> the military lending act. it has been recently strengthened by the department of defense with new regulations. to close loopholes and to preventli preying upon service members. >> earlier there had been a company andup i've seen this firsthand. do you support the rules and if confirmed, willl you enforce thm to the fullest extent possible? >> senator, i'm completely committed to enforcing the law. >> the rulemaking pointed out that one of the impacts on service members and military careers is the financial instability caused by being
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exploited and that affects their performance. so the military, lending act, m very concerned and involved in. it helps our readiness. one thing we had to accept was theo limit on interest charged o an individual service member is 36%. do you that i is too high given the current market rates? >> senator sh certainly the rate varies based on the products and risks available. i support competition in the marketplace such thater service members and others have the opportunity too avail themselve of different options in the market. >> we stat torely set the rate, top rate atth 36%.
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but given current rates in the market withit roughly 16% for t return on the dow jones, my view is i think we should be able to lower those i think it depends on the conditions and terms are. there are various products in the marketplace s certainly whe it comes to short dollar lending oep options that are there. >> i would hope that we could work, my colleagues and i to lowerha the interest rate to ma it more competitive to what is available in the market. did you or anyone you worked with on omb or home land security ever refer to the administration's policy of separating immigrantg familiest the boarder as a deterent.
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>> i'm not sure that may have been in public comments by u individuals. but i'm not >> have you ever used that? >> recognizing in 2014 that was discussed and courts ruled on. that that was determined at least in i believe the southern districtop of california as not appropriate. >> do you feel it's not appropriate right now? >> these are very difficult and challenging nations. a sovereign nation should defend bored aernz at the same ti borders and there are a lot of circumstances from people around the world. >> do you think separating children from their parents is the way to deterou border crossing?o >> senator, again, i don't want to talk about the --
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>> you don't want to talk about it. i'm asking you a question. would you like the response? >> i don't want to characterize the internal conversation. >> i'm asking whatwa you feel, ma'am. >> i iin understand, senator. but it does go down the road of advising and personal opinion. >> it is values and personal judgements. >> that's where it goes down the road to. you don't want to go down that i suspect people have done that. you feel that >> senator, i don't believe my personal opinions are on thiss issue are the appropriate line there are many places in the world and i spent time in guatemala. i understand the country and there is an amazing country where we have many freedoms and others in the world do and i certainly appreciate that this is a place where people would like to come to enjoy those
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freedoms. >> i canan only assume that you in erfact, use the term deterre and didn't object to it. andop you feel that's appropria policy and consideration. thank you very much. thank you. >> senator? >> thank you. first, thanks to my colleagues let meg go ahead of them. i'm great appreciative. i don't know what it will cost me but i'm sure a big favor coming their way. miss reid, i want to again encourage the chairman to move this nomination. he knows how diligent we've been working to get the xm bank up and running. i want to say where i appreciate senatorte tomby's concerns, i d not want to associate myself with theee characterizations th he made about the xm bank. i think it's been a tragedy. i'm glad you are moving forward. i want to encourage the chairman toe move enough of these nomins now forward with majority leader mcconnell to get the xm bank up andd running. and song obviously great
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credentials. we liked you the last time you werere i think you're perfect for thisg job. good luck. and we wants to do everything can to get you across the finish line. i have a series of yes and no questions. just yesha or no. if we can do that. >> have you ever worked at a bank or credit union? >> i have not.a >> have you ever had oversight or regulated a bank or credit union? >> no. >> have you ever been responsible for oversight or leadership in supervising pay day lenders? >> no, senator, i have not. >> have you had experience working with credit coburs, insurance companies, debtt collectors and student loan processors? >> senator, in aro professional capacity like many other nominees, i have not had direct experience with that. >> have you had any financial
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decision making responsibility forer enforcing federal -- stat or federal consumer protection laws? >> senator, again, like many other nominees approaching differento. positions, i have n had direct experience. >>l have you had any experienc underr the equal credit opportunity act? any final responsibilities for leadership there? >> senator, i have not. but i certainly am familiar with the acts and the responsibilities of the bureau. >> you have ever worked or volunteered your time on matters related to consumer protection?u >> no, senator. i don't believe that i have. i certainly volunteered my -- >> have you ever done financial literacy or donated time to promote financial literacy? >> yes, i actually have done that. i have experience in working with individuals on that, particularly when i was in college we did have a program to promote financial literacy. >> and what did you do to --
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what was your involvement in that program? >> working a little bit on curriculum in theef something t definitely important. >> do you have a phd or masters degree in economics or finance? >> like many other nominees in these positions, no, i do not. >> while you're in law school, what classes did you take regarding consumer protection?ag >> senator, it was a long time ago. i don't>> remember every class took. i certainly did take the administrative procedures. >> but you remember what did you in college relative to financial literacy. >> well, the administrative procedures act was certainly something that i studied extensively. i took a class in privacy law. i did take a class in other add -- cybersecurity law actually as a matter of fact. those are all relevant to the discussion that's we're having here today as well as corporations which i know is required of every individual in the program that i took.
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>> okay. thank you. i think the point that i'm trying to make is this is highly technical job. simply having a law degree, i think gets us to a point where we have to i'm not asking you about morality. i'm not asking you about anything. i'm just asking you about your core competencies for the job you've been nominated for. i think obviously you're highly competent in -- and a trained professional. i just think that maybe we ought to have somebody who understands kind of the hurt who has had experience as senator cortez talked about with the crisis has had experience in dealing with people who have -- and has empathy. i think to senator reed's point, it may seem irrelevant. t
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but this is a job where literally people are on the edge where they don't know if they'rt going to make payroll. they don't know if they're going to be able to put food on the table. we want somebody in that job that not only has core competency but empathy. my time is up. thank you to my colleagues. >> thank you. senator? >> thank you, mr. chairman. i thank both of you for your testimony here today. and just to follow up on some of the questions. i understood some of the concerns you expresseded about not getting too deeply into the internal deliberations. i understood that part. but now you're heading up an independent agency. this is an independent agency, is it not? >> yes, it is. >> and it's not that you're goingbo to be in a line positio simply enforcing the policy from above. you're going to play aic key ro.
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sows i do believe your personal views on range of issues are important in that context.t. and i want here for all the questions. senator warren, i heard senator reed's question. and is it your position that you're not going to answer the question about whether or not you personally supported the policy of family separation, separating kids from their parents? >> senator, i appreciate the questions that you're raising and happy to discuss qualifications and my i judgeme. i have given my best advice to every person that i have worked for in my career. that is very important tois me. >> i think the difference here is it's one thing to not share
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openly advice that you're giving within the administration. but given the fact that you are now going to head an independent agency. >> i think it is troubling you won't share that information with the committee. let met y ask you about the of of fair lending and equal opportunity. we have had a bad history of discrimination in lending in many places. there was a case against wells fargo in baltimore, a little more than ten years ago. there have been other cases where it was established that they discriminated against african-americans and people of color. do you agree this is a continuing problem that we have to face in this country, fighting discrimination and lending? >> yes,ar i do. discrimination should have no place in society but in markets but it certainly exists. >> one of the things established
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when the cfpb was established was the officeng of fair lendin equal opportunities. i mentioned. and one of the first things that the acting director is move that out of that office. would you be willingng to put t enforcement authorities back into the office of fair lending and equal snunt. >> senator, i can assure that you enforcing the fair lending laws is a critical responsibility. whether it happens in the division to supervision or whether it happens in a reconstituted fair lending office, it is definitely something that i can commit to you that i will look at and h review freshly and talking to the staff that are there and understanding how the responsibilities have changeded in this change. >> you know, i think it was rightfully interpreted at the time as weakening the authority. the idea was the folks who are
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paying closey attention every dy and doing the supervising are probably in the best position to do the enforcement and having thes th enforcement authority obviously helps them in terms of getting the attention from folks they're overseeing. also with the office of student lending. theth acting director abolished the office of student lending. that is not to mean there are not efforts going on in student lending. but are you willing to re-estabilsh that given theon ft that we have students who have trillions of dollars of debt and in many cases they're also issues with respect to the contract, their contracts as you know there are a number of lawsuits going on. so would you be willing to re-estabilsh that office given the centrality of that issue? >> student lending is an important issue.
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it is certainly something congress is looking at and there have been a lot of changes in that law under recent years. >> the last thing i will ask regarding the child separation policy, you know there has been a court decisionh ordering the administration to reunite these children with their parents within a certain period of time. they pay the cost of complying with the court order. i think that we would be better served if we find the resources tort meet this court order witht
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robbing another department of education. can you work with uss? on that your nomination continues to work its way through the process? >> senator, i'm not -- it must be within the department of health and humanan services whi is not -- >> i'm sorry. that's okay. >> it is not in my per view. j but i'm happy to take your concerns back. >> thank you. >> senatornd jones? >> thank you, mr. chairman. thank you for this hearing and to our nominees. apologize for being in and out. schedules get kind of crazy sometimes. i do apologize. i want to follow up a little bit on a couple things. i know that the director and i think you have talked about getting back to the statutory politician of the agency. but one of the missions, one of the objectives consumers are being protected from unfair to abusive acts and practices and from a discrimination. for millions and millions of
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americans, that last clause may be the most important. particularly people of color. folks these days, someone can look just like i do which is really sad to be honest with you, but they can look like i do, have the same credit, have the samean income, same profession. and, yet, another person who has a different skin color would get offered a different financial product. >> senator, to your inatpoint, think it is abhorrent that discrimination exists in tow site and in the markets. i'm committed to enforcing the law.
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i'd like to look at a broader section of a mi yort group and whether that will come into play and what your feelings are. that's used a lot in a lot of legal cases. you can't always prove the specific intent. i how do you see that in your cases? >> senator, i appreciate the question and m appreciate the point that you're raising because, yes, in many cases this could be a more subtle action. i think there are a few things that the bureau can do in this area. certainly in terms of working through the supervision process
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to your point if, there is no intent this is something that can be looked at. ayou're well the arguments about the impact are very complicated and it is a challenging area and legally speaking. so i can commit to you that should i be confirmed in this position that when i getsa to t bureau, i will have a detailed conversation with the staff on thisis area to understand what positions the bureau has taken in the pastnd on this issue. and what the status of litigation is on the issue and take thehe appropriate actions ensure that we are promoting fair lending. >> i think they used it in the past. and they usedy it successfully. thee director seld he wanaid he get away from it. will you be willing to take another look at using this on an entire community, whether or not there is a sign that says we're not going to give this person a loan because they're black or
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asian but if it's affecting a broad swath of minority consumers, would youth be willi to take a look at using the impact theory to resolve the issues of discrimination? >> i'll commit to youol in establishing clear rules and l making sure that they are enforced that i'll lookm at th issueo. absolutely. >> i'm not sure if that is a yes or no. i'm going to take it as a yes. i'm going to go back to a little bit of -- senator tester, i was here for his comments. i appreciate you coming in and talking to me about the pay day lending rules that have been worked back. and i guess what concerns me a little bit in our meeting and in our meeting with senator tester, you talked about a respect for the process and rulemaking process. but the pay day lending rule went through a five-year it went through a lot of
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comments, i mean thousands if not tens w of thousands or a million. it was a ton. for a five year process, it got finalized. and then director mull vainy decided to walk that back and start that process all over again. so i'm a little bit concerned that we're respecting a process that hasn't been sprektrespecte before. i'd like you to comment on that. because it is a huge issue in my state. i mean 250,000 people took out two millionpe loans. that's an average of eight of these loans per person. and it is a huge process. it's really hurting these people a lot. so i'd like to get a little bit better clarity when p you talk aboutt respecting a process tha is already going on. what do you mean with the consumer lending right now? >>ic senator, i truly appreciat yourta time and i recognize thi is a difficult issue in many states. they have taken different
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actions for a myriad of reasons whether it's authority or, you know, willingness frankly on pay day lending. what i mean in terms of the process is that the acting director has announced the reconsideration of that rule and from that standpoint that's -- the basis for that reconsideration sand what aspecs are reconsidered is not something that i am privy to no has it been discussed publicly. so that's the process that is on going within the bureau right now under active consideration. >> all right. that's all my time. >> senator? >> thank you, mr. chairman. i want to thank the witnesses and your families. i am a strong supporter of the export-import bank. our country's credit agency. it helps american businesses export goods and services and compete in our global marketplace. the xm bank doesn't cost taxpayers a dime. in fact, it returned billions to the treasury. it protects and creates
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countless jobs across the country. in indiana, since 2012, the xm bank directly helped 84 hoosier companies including 63 small businesses to export more than $2 billion in goods and services overseas. in 2015 i worked with senator hidecamp and a group of colleagues to end a six month shutdown of the bank and enact a long term re-authorization. xm is still not running at full steam because it lacks a three fifths board membership and approve transactions over $10 million. as a result, there is a backlog of $42 billion in deals representing 250,000 jobs stuck in aim pup line waiting approva. we need a fully operating export-import bank now more than ever. while the u.s. has handcuffed its own export credit agency in recent years, our international competitors have significantly increased their efforts. there is at least 85 foreign export credit agencies
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aggressively supporting their own domestic industries, countries like china, brazil, india are doubling down on their export credit agencies. not only that, but current trade policies are damaging the foreign markets, our hoosier farmers andad manufacturers hav spent decades developing. our exporters were already at a disadvantage from a weakened kpo export-import bank and now it's worse. we need to send american goods, indiana goods all over the world. ourev businesses deserve a leve playing field withma their foren competitors. policymakers should make it easier not harder for businesses to do that. miss reid, these are fairly simple questions. you don't have to a go into a lg explanation on them. do you agree foreign countries are aggressively investing in their own export credit agencien in order to boost their domestic industries? >> yes. >> do you agree the u.s. is hurting its several by not having a fully functioning xm bank when the ketors are increasing lresources fexport
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credit agencies? >> yes. >> do you believe this helps hoosier banks develop foreign markets for u.s. goods and services? >> absolutely. >> just months ago this president with an overwhelming 20-3 vote. now she's nominated as presidens of ex/im.ll i encourage that confirmation as soon as possible to bring fresh leadership. hopefully her confirmation will be followed by fellow board nominees and we can allow the fo ex/im bank to return to full strength for the first time in several years creating more i american jobs again. a strong ex/im bank whose exports create jobs and returns money to our taxpayers. ms. kraninger, two months under, new leadership, the cfpb announced it would eliminate itr student loan office and merge it into another i don't know of an area where young people in my state have
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incurred more debt than in the area of student loans. for many of them it's prevented them from being able to buy en homes, being able to buy cars, being able to fully participate in our country and our economy. a recent report finds 60% of indiana's college graduates leave with student loan debt. and the average is $29,000 per student. i saw your answer to mr. van holland before about reinstating the student loan office. i'm a strong supporter of that.s you're going to review that. you're going to review that.nt i would urge you very, very much to do that. what are your plans for protecting student borrowers? >> senator, this is an important issue, and certainly under the law, the bureau was provided the responsibility for looking at student loan -- private student loans. >> well, now that they've closed down the office, what are you plans? do you plan -- you said you'd look at reopening it. what specific plans do you have right now in regards to student loans? >> so, senator, there is the position of the private student
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loan ombudsman created in the statute, a position that still exists. so certainly first order issue is going to be sit down with thn individuals in that office to ti understand the activities that they have ongoing.ap i appreciate the priority you're placing in this, and it is certainly something i want to understand better. at the same time, with the federal role in student lending, both origination with 92% of the originations today happening at the department of education, and with their efforts to actually bring servicing into the department of education, i thinn that is another area that i can tell you is a priority. it's sitting down with the t officials at the department of ed to talk through what their efforts are there, where the re bureau can be helpful and what role the bureau -- >> for many of our young people, not only in my state, they're looking to you for help because interest rates are -- ir you look at the interest rate on a house and student loan, and, obviously, they're different products, but you have young
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people paying incredibly high interest rates who look and feel they may never get out from under this burden that they have. and they'll never be able to buy a home. and they'll never be able to buy a car. and that's an extraordinarily discouraging situation for people across our country. one other question i want to ask. mr. mulvaney once call the cfpb a joke in a sad, sick kind of way. do you share his sentiments? >> senator mulvaney has responded to those comments. i support the bureau as it was established in congress and the roles and responsibilities it was given. >> but what i asked you is did you think it was a sad, sick joke the way it was being run?ol >> that was a good answer. >> senator, again, i support the bureau's mission and look forward to, if confirmed, rigorously -- >> this is simple yes or no. do you like peanut butter or not? do you think it was a sad, sick joke the way it was being run or not?t?
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>> senator, those are words i would not use and i believe the director has responded to those comments since.e >> thank you, mr. chairman. >> thank you, senator. we've had a request by several members of the committee for a second round. i will agree to that, although we'll hold it to five minutes. the senators have been taking quite a bit of liberty today and we're well past the time we should have allocated. >> i did not take much liberty, mr. chairman. >> i will accept your comments, senator donnelly. so we will do that. senator brown, i turn to you. >> thank you, mr. chairman. you talked a lot about accountability and transparency at the cfpb. when you submitted paperwork to this committee you had to disclose any campaign contributions from the last eight years above $500, correct? >> yes, senator, i believe -- im don't have the form in front of me, but i believe that was the request. >> you didn't make a $500 donation to governor kasich's campaign but you made two separate $250 donations. you didn't disclose that,
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correct? >> i believe the -- again, i did disclose exactly what was s requested by the committee, senator. i don't remember the exact facts. w i don't have the paper in front of me, if you do, to note if it was above $500. >> i don't believe what you just said was true. you -- well, let me ask did you disclose -- you didn't disclose the contributions to mitt romney's campaign that were under the $500 threshold but more than $600 total. so two contributions. you didn't think that qualified for what you should disclose? >> senator, i believe there was a time period. again, i don't have the b documents in front of me. if you have them i'd be happy to look at them. >> we do. you made contributions to kasich, to jeb bush. do you know -- and that should have been disclosed under law or under the rules of this committee. did you make any other donation? to the 2016 presidential campaign? >> senator, i believe those are the only two that i did make, yes.
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>> you didn't answer in that al first round my question of whether you would appeal the 9/11 scammer case. you said you'd implement the law.r who decides whether to appeal on not? >> senator, i'm not familiar with the details of where that case is. i certainly appreciate -- >> but who decides whether to appeal a case or not at the cfpb? >> the director does have the authority to determine these things. at the same time, if a case is actually headed to the supreme court, the bureau does not havep independent representation re authority. >> so do you plan to defend the agency in this case when the -- on the scammer 9/11 case? >> senator, without the benefit of being inside the bureau to understand the positions and litigation strategy that was taken, that's a very challenging question to answer. and i don't want to prejudge that either. the opportunity to speak with the general counsel to understand the positions they have taken, to understand the conversations they may have had with the department of justice
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given the fact that the bureau cannot represent itself is something that i would certainly undertake should i be confirmed. >> not long ago, i think it was in may, director mulvaney teamed up with a group of payday lenders to sue the cfpb, the agency he claimed to be leadinge and to delay its payday rule. you are a lawyer. do you think agencies should sue themselves to present -- prevent consumer protections from beingm implemented? >> senator, i think the responsibility is clear in the statute for the director to carry out the law and manage the bureau appropriately. that is certainly what i would pledge to do. and i'd certainly pledge to work with all of you in carrying out those responsibilities. >> do you think it's proper for an agency to sue -- for an agency chief to sue itself, to sue himself or herself, itself?f >> senator, i'm not familiar with the details or the internat deliberations -- >> i think you must know -- it's not a question of internal l deliberations.s.
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do you think it's proper for the head of an agency to sue that -- to team up with outside interests, whether you generally are pro payday lenders as mulvaney from his travels and exhortations and political contributions certainly was.s. but whether or not you are close to or supportive of an interest group, do you think it's proper for an agency to join outside interest groups and an agency chief to sue that agency? >> senator, being unfamiliar with the specific facts that you wn are articulating here, i don't know the basis, i will tell you, it would certainly be unusual. it would certainly be -- >> that was not my -- i i appreciate your agility. that was not my question, commenting on that case. i'm saying do you think it's proper for an agency chief to join -- you're a lawyer. i'm maybe you're at an advantage here.
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but is it proper for an agency chief to join an outside interest group to sue the agency itself? >> it is certainly unusual. >> thank you. i know -- we've established it's unusual. s we know that. you don't know the specifics, at least you say you don't know the specifics of the case. that's fine too. is it proper for an agency chief to sue its own agency with or on behalf of an interest group that has business in front of that agency? >> senator, i can tell you that i come to this position without any particular special interests other than serving the american people. >> can't you just say no it's not proper or yes, it is proper? or no, i'll never do it or yes, acote i will do it? >> it's unusual and i'm sure again there are reasons that action may have been taken that i'm not privy to. but, again, i certainly pledge to you that i will carry out the duties and responsibilities of this position to the best of my ability. >> senator warren?
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>> thank you, mr. chairman. all so you don't have any experience in consumer finance or consumer protection. no qualifications at all. evidently, the one thing that you have done in your career is work on president trump's 2019 fiscal year budget request for the cfpb. and the trump administration has used that, now claiming that this gives some insight into how you would run the agency. so this is an "are you qualified" question that at least according to the trump administration should be directly in your area of supposed expertise. the cfpb sets its own budget. so the budget you proposed had no effect on the agency? >> that is correct. >> and on top of that, the budget for the cfpb is a single top line number.r. it doesn't break down how the cfpb would adjust its spending
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to reach that number. >> that is correct.ud >> you are the budget expert. let's talk about how the cfpb would meet the budget that you drafted. your budget for 2019 calls for a 23% cut relative the cfpb's proposed 2019 budget. that's about a $147 million cuth cfpb's number one expense representing more than half its total cost is compensation and benefits of its employees. other than the director and the dozen new political appointees that mick mulvaney has brought to the agency, every other cfpb employee is a civil so in order to achieve the 23% cut you've proposed, would you fire civil servants? >> senator, first let me clarify that it is the president's budget request and not mine. certainly i did -- >> can we just do this? we're going to be held tight on time. would you fire civil servants? is that your plan? >> senator, to your point, 53%
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of the funds that were utilized under director cordray were for salaries and benefits of people. so -- >> so are you saying -- can you just give me a yes or no? will you fire civil servants? >> senator, there are laws in place that protect civil servants. >> so is the answer no? good. >> the answer is 53% with salaries and benefits which leaves a significant amount of fund ar -- funds for other activities.ti >> i'm going to ask for extra time if we're going to keep playing this game. it's a straight forward, will you fire civil servants. it's not hard. this is your area of expertise, your budget that you put forward. do you contemplate firing civil servants to meet your $147 million cut? yes? no? >> it's not my budget. it's the president's budget. >> then does the president's budget, as drawn up by you and offered as your expertise for this job, contemplate firing civil service employees? >> senator, the proposal to congress is what the president's
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budget reflects, and it was a discussion on the debt and deficit situation. that was certainly the -- >> so in other words we're just playing dodgeball here. you're not going to fire civil servants, then let's see how you'll try and make this up. let me try another one. the next largest set of expenditures for outside contracts, big chunk goes to maintaining the agency's cybersecurity. do you plan on reducing cybersecurity? >> so 31% of the funds in fy-17 was for outside contractor services. that certainly is a big part. >> can we stop playing to dodgeball? do you plan to cut expenditures? the next biggest investment is on cybersecurity.. do you plan to cut on cybersecurity?la >> senator, i do believe that li other contract services line iss something that does need to be >> do you plan to cut on cybersecurity? it's the next biggest line. >> sentaor, cybersecurity and i.t. investment are important to the organization's carrying
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out -- anth >> is that a no? you won't cut?li >> i think it's something that needs to be examined. absolutely. every line item does. >> does that mean cut or not cut? >> without being inside the bureau and going through line by line -- yo >> so you might cut cybersecurity. >> there could be opportunity within the contract. >> so the next largest expense is travel costs. as i assume you know, most of s the agency's travel cost is because the agency sends examiners to visit the financial companies that they supervise so they can actually make sure that they're complying with the law. that supervision is required by dodd/frank. would you cut back on examinations and supervision in order to achieve the 23% cut you need to achieve? >> senator, looking at travel, i think is a legitimate consideration. >> recognizing that this is ks travel to go enforce the law at the banks. you would cut that back? >> i think looking at the travel and looking at the efficient ar distribution of staff is certainly something that's --
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>> so you're thinking about cutting back so we don't send a many back to enforce. i just want to be clear on this. even if you got travel costs to zero, you would not be anyplace close to what you put forward as the proposed budget. so where is the $147 billion, the 23% cut coming from? can you just tell me where the areas are you plan to cut that's going to get us there?e? >> please keep your response brief.ev >> senator, this was the president's budget request, and i pledge to you that i'll look at every line item within this bureau's budget. >> no, you don't get to dance e away by saying it's the e y president's budget. the president has offered you up as saying this is your expertise. your one piece of consumer so protection expertise is you put together a budget for the cfpb. so what i want to know is you proposed a 23% cut. $147 million.
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give me some ideas about how you actually would make a $147 million cut at that agency. >> please respond briefly. >> senator, i believe there are opportunities for efficiency in consideration and it may involve spending funds on other by activities that are underfunded. so i pledge that i'll look at carefully the budget of the bureau. >> so let's just be clear. >> senator -- >> i want to be clear on this. she has dodged around this for this entire question -- line of questions. the one thing you've done in your career that is related to the cfpb is to come up with a budget number. and the budget number simply doesn't add up. you cannot explain how that i agency can do its work if it has a 23% budget cut that you put together and the trump administration offers as your expertise. the only thing you can come up with is, well, maybe you'll cutw travel, which means there will n be less enforcement. and i know that will make bank lenders happy, payday lenders
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happy, but it doesn't reflect any acknowledge of the cfpb or any commitment to the cfpb's central mission of trying to e protect consumers and level the playing field. >> senator tillis. >> ms. kraninger, a lot of people have tried to boil complex subjects down into simple yes/no answers. there's only one that i heard i feel we deserve a yes-or-no answer from. do you or do you not like peanut butter? >> senator, i like peanut butter. t >> because outside of that question, it's absurd for anybody up here to say that this was nothing more than the sort of gotcha tactics that some to members use to try and, well, support their narrative. now i'm going to get on to omb. how big is the cfpb? how many employees?stth >> about 1,600 employees. >> do you think within that
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employee base that you have a few economists and finance experts and people that have worked for credit agencies or worked for business lending or, you know, any number of financial fields? >> yes, senator, i have a wide b variety of skill sets and expertise that's being brought to bear. >> if you were the manager, would you see yourself coming in early and writing out the policies or directing the affairs of the agency and the priorities? >> senator, it is certainly thed latter. directing the priorities and expecting the staff to put forward the policies that align. >> thank you. how big was the scope of your portfolio, or how big is the scope of your portfolio at omb, with respect to the whole of the administration?e >> it is roughly one-fifth of the total government.. $250 billion in resources. 37 agencies. >> so you have a lot of time in your day. i was in research and in development early in my career in the '80s in i was a product manager. when we were formulating a technology policy, i'd bring
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r&d, i'd bring manufacturing, finance, i'd bring marketing together. it was the scientists that worked under my matrix t supervision who came up with the ideas. and then it was these other organizations to figure out the complexities, the pipes, all ay that you needed to do to pay for it, administer it.t would you kind of consider that to be an analog to your role in office of budget and management, not formulating policy but implementing it? >> yes, senator, that certainlya is the case, and with a wide variety of staff and variety of topics. >> which is why i find it remarkable that anybody would suggest that you were actively engaged in the formulation of the policy on child separations. you have certain -- if you look at child separations, it's something i know a lot about because i've proposed -- i love the passion here about solving the child separation problem. i'd like to see that rhetoric go from this senate committee to the floor where we have a solution.
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and i'll be talking about it on the floor a little bit later today. because i sometimes wonder th whether or not people really want to solve this problem or if they want to use it to come here and pretend that only the president can solve the problem. it's the congress that can solve that problem. and once we pass that bill, in x your current capacity, we would expect you to figure out how to implement the policy. it's frustrating to me to see the passion expressed about certain issues in this committee in an absolute vacuum in the chamber where we can actually produce a result. this, by the way, is not leading up to a yes/no question. but can you tell me, just a little bit more about, again, on a day-to-day basis, to what t ve extent in your entire tenure in office at omb that you have ever been actively engaged in crafting the policy choices. >> senator, that's a very fair question.
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in terms of what generally comes before the office of management and budget, it is what the agencies are formulating. they put forward what their leadership would like to pursue. or they have received direction from the president about activities that they should undertake, and they are formulating the manner and how to address what the president's priorities are and what he's e asked of them. and then we are supporting that effort. >> so again, first off, i want to congratulate you on your nomination and for the family members, thank you all for being here. i know that these hearings can be somewhat troubling, but you should never forget the fact that these two nominees have had very distinguished careers and are very deserving of the a nomination. you all should be proud of it. again, i just want to say, i hope that the focus on child separations that i saw in this room translate to people who want to solve the problem. we are down to what i consider
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to be very minor differences, if people look at it and within their hearts they truly want tos keep families together, congress needs to fix this problem. you didn't craft the legislation. you were trying to determine how to implement the policy, and we should put a mirror on the members of the u.s. senate and say why aren't you fixing this problem? thank you, mr. chair. >> thank you, senator tillis. that does conclude the questioning for senators wishing to submit questions for the record they are due in one week, on tuesday, july 24th. we ask both nominees to respond to these questions by tuesday, july 31, so that we can vote that week on the nominations. we thank you both for joining the committee today. as senator tillis indicated, sometimes these committee hearings get intense. we appreciate you be willing to come forward and put yourself forward for service to the country. with that, this hearing is adjourned. [captions copyright national
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thshgs -- c-span's "washington journal" coming up tuesday morning. mary ellen mcintyre discusses the future of the affordable care act. and ryan costello will be on to talk about the trump administration's foreign and trade policies. and then democratic maryland congressman john sarbanes will
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be with us to talk about democrats' role in the midterm elections. that's tuesday morning starting at 7:00 eastern. and be sure to watch "washington journal" on wednesday morning when members of the agriculture committee discuss how president trump's trade and tariff policies are impacting their bottom line. and then on friday, join us for a discussion on the opioid crisis live from baltimore, maryland. c-span, where history unfolds daily. in 1979, c-span was created as a public service by america's cable television companies. and today, we continue to bring you unfiltered coverage of congress, the white house, the supreme court, and public policy events in washington, d.c., and around the country. c-span is brought to you by your cable or satellite provider. the house transportation and infrastructure subcommittee on


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