Chairman Jeb Hensarling


Posted by Staff on June 23, 2014
The Financial Services Committee will hold the following hearings this week:

Tuesday, June 24 at 10 a.m. – The Committee will hear from Treasury Secretary Jacob Lew on the Annual Report of the Financial Stability Oversight Council.

Wednesday, June 25 at 10 a.m. – The Committee will hold a hearing entitled:  “Examining Reauthorization of the Export-Import Bank:  Corporate Necessity or Corporate Welfare?”

Thursday, June 26 at 9:15 a.m. – The Subcommittee on Capital Markets and Government Sponsored Enterprises will hold a hearing entitled:  “Oversight of the SEC’s Division of Trading and Markets.”

All hearings will take place in Room 2128 of the Rayburn House Office Building.  Further information about the hearings can be found at

Posted by Staff on June 20, 2014
Committee Seeks Accountability at the CFPB

On Tuesday, the full committee held a hearing with Director Richard Cordray to receive the fifth Semi-Annual Report of the Consumer Financial Protection Bureau. 

"Since Director Cordray last appeared before our committee in January, we have learned much. First, we have learned in the first quarter of this year we actually had negative economic growth of one percent. And when you speak to practically any small businessperson, any community banker they will tell you the sheer weight, volume, complexity of the regulatory red tape burden is one of the primary reasons that they cannot expand and hire more people," said Chairman Jeb Hensarling (R-TX).

Chairman Hensarling and Members of the committee addressed further troubling issues at the Bureau and highlighted the need for accountability at the CFPB.

"These disturbing developments once again demonstrate, I believe conclusively, why there must be substantial structural reform at the CFPB.  Consumers deserve accountability – not only from Wall Street but they deserve it from Washington, too.  Yet, by design the CFPB remains arguably the least accountable Washington bureaucracy in the history of America and it shows.  This must change," Chairman Hensarling said.

Subcommittee Hears Testimony from Subpoenaed CFPB Witnesses

The House Financial Services Oversight and Investigations Subcommittee heard testimony this week from two more whistleblowers as part of its ongoing investigation into discrimination and retaliation at the CFPB.

“CFPB’s funding and structure afford Congress an extremely limited ability to influence the Bureau’s operations and policies, and yet these allegations of discrimination and retaliation at the CFPB underscores the significant need for greater Congressional oversight of the CFPB,” said Subcommittee Chairman Patrick McHenry (R-NC).

The whistleblowers -- CFPB Examiner Ali Naraghi and former Bureau employee Kevin Williams – asked to be subpoenaed in order to guard against further retaliation by the Bureau.

Naraghi and Williams described a hostile work environment at the CFPB.

“After being subjected to disparate treatment, I asked my management in May 2012 about the reason for being treated like this,” said Naraghi. “Management responded that they did not like me asking questions about the reason behind orders and what my rights may be, and how I raised questions about certain aspects of CFPB management practices.”

“They proceeded to make my professional and personal life a living hell by repeated retaliation and creating a hostile work environment,” Naraghi added.

Williams told the Subcommittee of similar discrimination and retaliation.  “Sadly, instead of the positive, modern government agency I had expected, my experience at the CFPB was reminiscent of past eras of injustice, cronyism, discrimination, and retaliation,” he said.

Committee Passes TRIA Reform and FSOC Accountability and Transparency Bills

The House Financial Services Committee on Friday passed 3 bills, to bring much needed reforms to the Terrorism Risk Insurance Act (TRIA) and much needed transparency and accountability to the Financial Stability Oversight Council (FSOC).

"I remind all that TRIA, when originally envisioned, was meant to be a transitional program.  Let me quote from the statute: “The purpose of this title is to establish a temporary Federal program that provides for a transparent system of shared public and private compensation… and allow for a transitional period for the private markets to stabilize ….” Yet here we are discussing the third reauthorization. If passed, TRIA, a temporary program, would be in existence for nearly 20 years," said Chairman Jeb Hensarling (R-TX).

The Chairman called for accountability and transparency at FSOC, "an agency that has no discernible standard by which to designate these non-bank firms. They operate in a complete secretive and opaque fashion. They themselves can create systemic risk in our economy," he said.

"The two bills we will consider today, one will bring more transparency and an open process; the other will simply call a one-year “timeout” so that Congress has a chance to assess this work.  Again, there has been great concern by Members on both sides of the aisle. I think these are reasonable bills to begin to address an incredibly important issue before our committee. I urge Members on both sides of the aisle to support
all the legislation before us," Hensarling added.


Rep. Ed Royce | Rep. Royce Presses Cordray at Financial Services Committee Hearing 

Rep. Ed Royce (R-CA) said at Tuesday's full committee hearing that the CFPB "appears to be making policy without obtaining public input. This trend is a cause for concern, as the lack of public input during policy formulation often leads to unintended consequences including regulatory confusion and less consumer choice."

Weekend Must Reads

Washington Times | Examiner Editorial: Federal agency can't hide exploding cost of refurbishing its HQ

The truth is, as the Examiner's Richard Pollock has exhaustively reported using the bureau's own numbers and those of the General Services Administration, the cost of the CFPB's headquarters renovation has exploded. Many of the reasons behind the skyrocketing renovation costs ought to be, as Johanns accurately put it, “embarrassing” for Cordray. The projected cost total of $55 million came from the Office of Thrift Supervision, the previous occupant of the CFPB's headquarters. Members of the House Financial Services Committee have also demanded but not received answers for several years on why that total has more than doubled to $139 million.

Wall Street Journal The Asset-Rich, Income-Poor Economy

The Fed's extraordinary tools are far more potent in goosing balance-sheet wealth than spurring real income growth. The most recent employment report reveals the troubling story for Main Street. While 217,000 jobs were created in May, incomes for most Americans remain under stress, with only modest improvements in hours worked and average hourly earnings.
Posted by Staff on June 17, 2014

Note:  The Financial Services Committee will hold two hearings about the CFPB on Wednesday, June 18.  At 10 a.m., the full committee will hear from CFPB Director Richard Cordray.  At 2 p.m., the Financial Services Oversight and Investigations Subcommittee will hear from CFPB whistleblowers during its third hearing on allegations of discrimination and retaliation within the CFPB.  Both hearings will take place in room 2128 Rayburn House Office Building and will be webcast at


POLITICO PRO:  CFPB employee’s charges of retaliation to be aired at hearing


A Consumer Financial Protection Bureau employee will testify before Congress this week about a “culture of intimidation and retaliation” at the agency and raise allegations of mistreatment in the workplace — including that he was referred to as an “F-ing foreigner” by someone in management.

Ali Naraghi, an examiner with the division of supervision, fair lending and enforcement for the CFPB’s Southeast region, is one of two witnesses set to appear before the House Financial Services Oversight Subcommittee on Wednesday as a part of the panel’s ongoing investigation into allegations of discrimination and retaliation within the agency.

Naraghi — who is of Persian heritage — does not specify who in management allegedly called him an “F-ing foreigner” in his opening remarks, which were obtained by POLITICO.

“Like many others, I feel fortunate to have immigrated to the United States, and do not deserve to be referred to in derogatory terms by Bureau management,” Naraghi says in prepared testimony. Naraghi claims that several people at the agency made his life “a living hell” through repeated retaliation and hostile behavior.

Naraghi and Kevin Williams, a former CFPB employee who was a quality monitor at the bureau’s Office of Consumer Response, were issued subpoenas by the Oversight Subcommittee last week and are set to testify in a hearing Wednesday afternoon. The committee’s Republican staff said both individuals requested they be subpoenaed so that they could share their stories without risking further retaliation.

It is the second time this year that the committee exercised its subpoena powers to compel the testimonies of people connected to the CFPB, and Wednesday will mark the third hearing where witnesses discuss alleged mismanagement across the agency.

The CFPB has come under congressional scrutiny this year after it was first reported in March that white employees received higher ratings than minorities on a rating scale that the agency uses to determine employee benefits, including raises and bonuses. An internal review found disparities in the ways employees were evaluated in recent years based on factors like race ethnicity, age and pay, and the bureau announced last month that it would compensate workers who may have received unfair performance ratings as a part of the CFPB’s “corrective actions.”

The recent charges that have dogged the agency are also expected to be at the center of CFPB Director Richard Cordray’s testimony before the Financial Services Committee Wednesday morning.

Republicans opposed the creation of CFPB and have been critical of the agency since it opened for business in 2011, arguing it represents a government overreach and will make it harder for consumers to get credit. They have seized on the recent allegations of discrimination and retaliation at the agency. Democrats have expressed concerns about the charges as well but have urged panel Republicans to broaden the inquiry to all financial regulators rather than focus only on the bureau.

Naraghi, who formerly worked at the Federal Reserve, says in his opening remarks that his experience at the CFPB has demonstrated that “voicing a professional dissenting opinion that is any way at odds with Bureau management — even in the smallest of ways — will result in retaliation.”

“Unfortunately, the Southeast Region examination program is run by intimidation and, like a dictatorship, there are significant consequences for disagreeing and/or disobeying the King,” he says.

He directs criticism at several CFPB employees, including chief human capital officer Dennis Slagter. Naraghi alleges that when he offered feedback to Slagter about the large bank supervision program, the response he received was: “If you don’t like it, go back to the Federal Reserve Board.”

When he raised concerns to management about unfair treatment in 2012, Naraghi says he was told “they did not like me asking questions about the reason behind orders and what my rights may be, and how I raised questions about certain aspects of CFPB management practices.” And after he filed a complaint with the office of Equal Employment Opportunity, Naraghi claims he quickly became “one of the targets” of Regional Director Jim Carley and Assistant Director of Supervision Examination Paul Sanford.

A bureau spokesperson declined to comment directly on Naraghi’s testimony. They pointed to a March report from CFPB’s inspector general that made recommendations on how the bureau can improve its supervisory activities. CFPB officials told the IG they have taken steps to address the audit’s findings, according to the report.

The opening statement also details what Naraghi says was his attempt to appeal to Liza Strong, a labor and employee relations official at CFPB, in July 2012. When he sent her an email detailing concerns about mistreatment and flagged what he considered to be “unprofessional” and “possibly illegal” conduct by field manager Jerome Uberu, Naraghi says Strong responded nearly three months later and did not investigate the complaint.

“Ms. Strong’s outright dismissal of my own legitimate concerns of mismanagement has caused Mr. Uberu to become more brazen in his intimidation and abuse of my fellow examiners,” he said.

Strong was one of the witnesses subpoenaed by the Financial Services Oversight Committee earlier this year. In a May hearing, Strong came under fire from House Republicans on whether the bureau acted promptly to address concerns raised in a September report about its hiring practices and employee diversity and whether the agency tried to sweep its findings under the rug during negotiations over a new employee evaluation system.

Strong’s lawyer, John Dowd, said Monday that the email Naraghi cites was directed to the head of the EEO and that Strong was cc’d on the note. Dowd said Strong offered “courteous advice” despite being “swamped with work and short of staff at the time,” and that Naraghi’s testimony “appears to be a deliberate, unfounded, and baseless leak of erroneous information about Ms. Strong’s responsibilities and obligations at the CFPB to cast her in a false light as earlier testimony before this Committee attempted to do.”

“Ms. Strong’s job is to investigate complaints, not become engaged in the EEO process,” Dowd added. “The EEO process is separate from her job. Indeed, it would be improper for her to become involved in the EEO process.”

The CFPB declined to make Slagter, Carley, Sanford and Uberu available for comment.



Posted by Staff on June 09, 2014

WSJ Editorial | June 9, 2014

One issue that has Republicans at the grass roots tearing at each other instead of fighting Democrats is the sense that the Beltway GOP protects Beltway special interests. We can't think of a better way for the party's Washington leadership to show they get that message than by pulling the plug on the Export-Import Bank.

Unless you are part of the Ex-Im brotherhood, you couldn't begin to guess when it was created—in 1934 by Franklin D. Roosevelt. It's now kept on life support by the U.S. Chamber of Commerce and an in-crowd of current and retired Congressional Republicans and Democrats.

The FDR antique provides taxpayer-backed loans, loan guarantees, working capital guarantees and export credit insurance to clients of some of America's largest corporations, such as Boeing and General Electric, and to politically favored concerns such as Elon Musk's Space X. Two years ago a bipartisan coalition waved through Ex-Im's reauthorization and increased its lending cap by $40 billion, to $140 billion. This year Ex-Im wants another five-year reauthorization and a lending cap boost to $160 billion.

Republicans serious about cleaning up their act might want to parse the following Ex-Im arguments for its existence before giving the bank another taxpayer fill-up.

Ex-Im does deals that private lenders shun. If a private bank won't do an export-financing deal, why should Congress put taxpayer money at risk to clinch the deal? In today's global financial markets, companies large and small can access trade financing, either in the capital markets or from lenders.

Private loans may be more expensive, but that's because competitive markets attempt to price accurately the trade-off between risk and reward. The Ex-Im subsidy also distorts economic decision-making in developing countries. Politicians love a national airline that's flying new Boeings, but maybe their citizens would be better served with better roads.

Ex-Im operates at "no cost" to taxpayers and even generates profits. Ex-Im CEO Fred Hochberg told the House last year that Ex-Im "has generated $1.6 billion for U.S. taxpayers over the past five years." That's true, but Ex-Im hasn't always been profitable, and as the Mercatus Center's Veronique de Rugy has noted, Ex-Im's exposure to "loans, guarantees, and insurance" and other miscellaneous claims has exploded, rising to $113.8 billion in 2013 from $57.4 billion in 2007.

The bank's own stress test in December predicted that its capital reserves could be wiped out in a crisis. The Congressional Budget Office recently estimated that if the bank used fair-value accounting that better measured market risk, Ex-Im would lose $2 billion over 10 years.

Other countries subsidize exports, so the U.S. should too. The illogic here is that because China subsidizes exports for American consumers at the expense of the Chinese taxpayer, American taxpayers should return the favor for Chinese consumers.

There is also little evidence showing that Ex-Im is a main export driver, and in practice its guarantees favor some U.S. companies over others. One of the unfavored is Delta Airlines, which must compete with the foreign airlines that Ex-Im assists through its loans to Boeing and General Electric. As Delta put it in a letter to Mr. Hochberg, "Ex-Im is inflicting real and lasting harm on the U.S. airline industry and American jobs" by helping Delta's foreign competitors buy cheaper airplanes.

Ex-Im finances small businesses and creates jobs. Let's put that differently: Congress requires Ex-Im to finance small business and purports to create jobs. Congress has layered mandates on the bank to support women- and minority-owned businesses, green companies, and firms in sub-Saharan Africa. But the bulk of its business is with very large corporations like Boeing, GE and Caterpillar.

The process by which the bank counts its jobs numbers is opaque. A May 2013 Government Accountability Office report said the bank can't distinguish between jobs "newly created" or jobs "maintained." The GAO found so many other problems that it asked the bank to "increase transparency by improving reporting on the assumptions and limitations in the methodology and data used to calculate the number of jobs Ex-Im supports."

The 80-year old bank doesn't much care for criticism. At Ex-Im's annual conference in April, a testy Mr. Hochberg said the bank's critics "can't stomach the thought that the government might have a role to play in empowering U.S. businesses to compete across the globe."

Not quite, Mr. Hochberg. What they can't abide is a government that continues to practice crony capitalism even after the failures of Fannie Mae, Fisker Automotive and Solyndra. Republican voters in particular want the cronyism to stop. House leaders need to show they get the message.


Posted by on June 06, 2014

Why Is Obama Stockpiling Your Personal Financial Records?

IBD Editorial | June 6, 2014

Diversity Police: Republicans are scratching their heads over the Obama regime's privacy-invading "National Mortgage Database Project." What's it for? That's easy: redistribution of wealth.

In an unprecedented federal intrusion, the president's most radical financial regulators — Mel Watt of the Federal Housing Finance Agency and Richard Cordray of the Consumer Financial Protection Bureau — are creating a massive discrimination database on as many as 230 million Americans.

It will encompass a mortgage holder's entire credit history — including credit scores and account balances — and all credit lines, from credit cards to student and car loans.

"Why are we collecting this amount of data on this many individuals?" asked GOP Rep. Randy Neugebauer of the House banking panel.

The key data that the agencies plan to collect involve "household demographics" — namely, "race/ethnicity." The database will be used to compare the credit outcomes of minority vs. white borrowers. Any statistical disparities will be used to make "disparate impact" bias cases against private creditors in a vast redistribution scheme.

The agencies even allude to this in their proposed rule, recently posted in the Federal Register and opened to public comment for just 30 days, half the normal time.

The FHFA and CFPB explain that they're going to use all these intimate details on families and their financial lives to "conduct research, performance modeling and examination monitoring." They're also going to share it with Attorney General Eric Holder, as well as state attorneys general and trial lawyers, to aid in their "investigations" of, and "litigation" against, the financial industry, which they've already shaken down for an estimated $100 billion since the mortgage crisis. Apparently, they're just getting started.

Then there are the privacy concerns.

In their data dragnet, Obama's diversity police will snag your Social Security number and all account numbers. Don't worry about hacking, identity theft or cyberfraud, they assure us. They'll store your personal info in "locked file rooms, locked file cabinets" inside a building with "security cameras" and 24-hour security guards.

As for computerized records, they'll be "safeguarded through use of access codes." Only the proposed rule lists no fewer than 14 entities outside the agencies who will have access to those codes and files — including outside contractors, as well as "advisers," "volunteers" and "interns." No chance of mischief there.

Here's the full rundown of data they plan to gather on you and your family:

"Records in the system may include without limitation: (1) Borrower/co-borrower information (name, address, zip code, telephone numbers, date of birth, race/ethnicity, gender, language, religion, social security number, education records, military status/records, employment status/records); (2) Financial information (account number, financial events in the last few years, life events in the last few years, other assets/wealth); (3) Mortgage information (current balance, current monthly payment, delinquency grid, monthly payment, refinanced amount, bankruptcy information); (4) Credit card/other loan information (account type, credit amount, account balance amount, account past due amount, account minimum payment amount, account actual payment amount, account high balance amount, account charge off amount, second mortgage); (5) Household composition (single male, single female, etc., presence of children by various age categories, number of wage earners in household, household income, credit score(s) of borrower/co-borrower at origination (Vantage Score), deceased indicator, marital status); (6) Property attributes (property type ... census tract/block/latitude/longitude)" and on and on.

Those clamoring for impeachment might want to also focus on the Orwellian nature of this presidency.


Posted by Staff on May 23, 2014
Committee Examines the Dangers of FSOC’s Designation Process

On Tuesday, the full committee held a hearing to examine the Financial Stability Oversight Council’s (FSOC) designation process for deeming banks and non-bank firms as “systemically important” and the impact of such designations.

"FSOC was established—or so its supporters tell us—to make it easier for regulators to communicate and share information with each other. But the regulators didn’t need an act of Congress to do that, and information-sharing is not what FSOC is really about. Instead, FSOC is about one thing: increasing Washington’s control over the U.S. economy thus curtailing both economic freedom and economic prosperity. And FSOC does this through its power to designate “Systemically Important Financial Institutions”—or, in bureaucrat-speak, “SIFIs,” said Chairman Jeb Hensarling (R-TX).

"Having failed to prevent the last financial crisis, notwithstanding having every regulatory power necessary to do so, regulators were rewarded with even more power by the Dodd-Frank Act. The Dodd-Frank Act represents a breathtaking outsourcing of legislative power to the executive branch. Federal agencies now have virtually unfettered discretion to expand their regulatory control through a designation process that is opaque, secretive, vague, open-ended, and highly subjective," he said.

Chairman Hensarling and Members of the committee called on FSOC "to cease and desist further SIFI designations until Congress can review the entire matter." Witnesses argued that FSOC's designations would harm the U.S. financial system and hurt the economy. 

Subcommittee Discusses Legislative Proposals to Reform Domestic Insurance Policy

On Tuesday, the Housing and Insurance Subcommittee held a hearing to examine five legislative proposals addressing domestic insurance issues. 

"We turn our attention to some insurance reform legislation that focuses on protecting policyholders, offering more consumer choice for insurance products and providing regulatory relief to reduce costs to domestic policyholders," said Subcommittee Chairman Randy Neugebauer (R-TX).

Subcommittee Hears Testimony from Subpoenaed CFPB Witnesses

On Wednesday, the Oversight and Investigations Subcommittee received testimony from CFPB officials who were recently subpoenaed as part of the subcommittee’s ongoing investigation into allegations of discrimination and retaliation at the CFPB.

“The fact is that discrimination on the basis of race, sex or other prohibited factors is destructive, morally repugnant, and against the law. All government agencies, including the CFPB, must continue to combat discrimination in employment and punish those responsible for discrimination,” said Oversight and Investigations Subcommittee Chairman Patrick McHenry (R-NC).

Wednesday's hearing comes nearly a month after subcommittee members voted 20-0 to issue subpoenas to Stacey Bach, Assistant Director of the CFPB’s Office of Equal Employment Opportunity; Liza Strong, Director of Employee Relations at the CFPB; and Ben Konop, Executive Vice President of the CFPB’s employee union, Chapter 335 of the National Treasury Employees Union.

Konop testified that the employees union repeatedly raised concerns with the CFPB about its employee performance review system.

“[W]e alleged that women and minority employees were being underpaid when compared to similarly situated white male colleagues. To date, the Bureau has denied each of these grievances at all stages, often using inconsistent reasoning, despite what I feel is convincing evidence of low pay for numerous women and minority workers,” Konop told the subcommittee.

During the hearing, the subcommittee discussed a report commissioned by the CFPB and conducted by Deloitte Consulting. The findings of Deloitte’s report corroborate whistleblower and CFPB employee Angela Martin’s testimony that there have been problems related to the CFPB’s hiring, staff promotions, performance reviews and employee pay since the Bureau’s inception.

Subcommittee Discusses Legislative Proposals to Improve Transparency and Accountability at the CFPB

On Wednesday, the Financial Institutions and Consumer Credit Subcommittee held a hearing to examine legislative proposals to improve transparency and accountability at the CFPB.

Subcommittee Chairman Shelley Moore Capito (R-WV) said the bills discussed at today’s hearing represent “a continuation of this committee’s efforts to make the Consumer Financial Protection Bureau a more transparent and accountable agency. I would like to thank the sponsors of the legislation before us for their hard work in crafting common sense reforms to the Bureau.”

Witnesses at today’s hearing described the CFPB as a uniquely unaccountable, secretive, and powerful agency whose actions make it harder for American businesses to create jobs and that is in need of greater transparency, accountability and oversight.

Committee Passes Job Growth and Regulatory Relief Bills

The House Financial Services Committee on Thursday passed 11 bills to enhance capital formation for small and emerging growth companies and provide regulatory relief for community financial institutions.

“When we, as a committee, have the opportunity to help put Americans back to work, to help create jobs, we have the responsibility to do so and hopefully to do so on a bipartisan basis. This is why our committee has already guided 22 regulatory relief bills to House passage. The vast majority of those bills, once again, have received strong -- not just token -- but strong bipartisan support,” said Chairman Jeb Hensarling (R-TX).

“Now it is most regrettable that the Senate, where all good ideas go to languish and fail, has indeed failed to take up a single one of those bipartisan bills. I would strongly encourage my Democratic colleagues, who may spend more quality time with the Senate Majority Leader and the President than do I, to encourage them to take up these bills, to contact their friends and colleagues in the Senate and in the White House and urge them to pay attention to what our committee has put forth on a bipartisan basis. This would indeed be very, very constructive. But again, despite the Senate’s failure to act, we must act,” Hensarling added.


Rep. Randy Neugebauer | VIDEO: PATH Act on CNBC

Rep. Neugebauer discussed housing finance reform and the PATH Act with CNBC's Rick Santelli.

Weekend Must Reads

Investor's Business Daily | At Last, Congress Checks Obama's Rogue Consumer Bureau

CFPB has the power to police virtually every financial transaction in the economy. Yet it holds its meetings in secret, has no inspector general and is funded outside the normal congressional budget process. On Wednesday, the House Financial Services Committee [took up] 11 bills that would make the bureau more accountable and transparent to Americans.

Wall Street Journal | The Fed's Blueprint for Financial Control

Federal Reserve regulation of U.S. capital markets would be a huge mistake. It would retard economic growth, lower investor returns and dull the vibrancy of the country's financial system.
    In the News

Pensions & Investments | FSOC hears from money managers, House critics on systemically important designations

American Banker | CFPB Moved Slowly to Fix Evaluation Disparities: Lawmakers

Politico Pro | GOP: CFPB too slow to address diversity, hiring problems

Housing Wire | New evidence shows CFPB knew about discrimination well before AB article

Washington Examiner | CFPB misses diversity mark, outside consultant says

The Hill | House GOP: Consumer bureau discrimination probe will continue

Reuters | U.S. consumer bureau slow to fix age, minority bias -union leader

Plain Dealer | More must be done to fix discrimination at Richard Cordray’s federal agency, union representative tells Congress

Posted by Staff on May 16, 2014

“It is easy reverse engineer and identify the people in our database.”

“At present we are allowed to have any federal employee gain access” to the database.

House Financial Services Committee Chairman Jeb Hensarling and Senate Banking Committee Ranking Member Mike Crapo this week sent a letter to the CFPB and FHFA raising serious privacy concerns about the massive federal mortgage database the two agencies are creating.  

A recent notice in the Federal Register outlined how expansive the agencies’ database will be. Specifically, the notice proposes to vastly expand the scope of their data collection to include highly personal information that is unrelated to the purchase of a home.  For example, data fields would include one’s religion, Social Security number, education and military records, languages spoken, ages of children at home, and major life events.

At a January 28, 2014 hearing with CFPB Director Richard Cordray, the House Financial Services Committee highlighted comments from Bob Avery, the Project Director for the mortgage database.  In a video shown at the hearing, Avery says the mortgage database is vulnerable to hackers.

“It is easy to reverse engineer and identify the people in our database,” Avery is seen saying on the video.  “We have the date the mortgage was taken out, the size of the mortgage and we have the Census tract [of the mortgage holder]. Ninety-five percent of these are unique.”

Avery also said on the video that “any federal employee” at present can gain access to the mortgage database.

Wall Street Journal:  Republicans Call Federal Mortgage Database an ‘Unwarranted Intrusion’
By: Alan Zibel
May 15, 2014

WASHINGTON — Congressional Republicans are taking aim at a national database of mortgage information being developed by two federal regulators, arguing it doesn’t provide enough privacy protections for consumers.

The GOP lawmakers are seizing on a notice placed in the Federal Register last month, in which the Federal Housing Finance Agency detailed plans to collect a wide range of information on U.S. mortgage borrowers.

The agency, which regulates mortgage giants Fannie Mae and Freddie Mac, is creating the database along with the Consumer Financial Protection Bureau as part of an effort to develop a better understanding of trends in the housing market.

According to the notice, regulators may collect information including borrowers’ names, address, zip code, telephone numbers, date of birth, race, gender, language, religion and social security numbers, plus detailed information on their finances.

Republicans are crying foul. The collection of such information “represents an unwarranted intrusion into the private lives of ordinary Americans, and can be easily perceived as an abuse of the trust placed in your agencies by the American people,” wrote Rep. Jeb Hensarling (R., Texas), the chairman of the House Financial Services Committee and Sen. Mike Crapo (R., Idaho), the top Republican on the Senate Banking Committee in a letter sent Thursday to the leaders of both agencies

The lawmakers asked FHFA Director Mel Watt and CFPB Director Richard Cordray to justify why the agencies should college “intimate personal information about borrowers and their famiiles.” They also asked the officials to explain why information on religion should be added to the database.

The move is the latest in a series of criticisms against the CPFB by Republicans, who have questioned whether the agency provides enough data security and privacy for consumers. At the request of Mr. Crapo, the Government Accountability Office has been studying the amount of data collected by the CFPB.

The FHFA and CFPB are required under a 2008 law to collect information on home sales prices and other mortgage data, so as to make a timely database of mortgage market information available to the public.

In announcing the database project in November 2012, the agencies said they would take precautions to ensure consumers’ privacy. But Republicans question whether they agencies are truly taking enough steps to do so.

A spokeswoman for FHFA said the agency would respond to the letter. A CFPB spokesman did not immediately comment.

Posted by Staff on May 12, 2014


Last week, the Financial Services Committee met to take up a number of strategies designed to spur job growth. Watch Rep. Mick Mulvaney (Twitter|Facebook) discuss those ideas and more in this week's FSC Video Message.

Posted by Staff on May 09, 2014
On Wednesday, the full committee marked up several bills designed to grow the economy, create jobs, and relieve the regulatory burden for community financial institutions. 

"We received some bad news recently that more than 800,000 Americans, almost a million, left the workforce last month alone. Many simply could not find a job to make ends meet, no matter how hard they tried. Millions of others remain out of work. The latest economic figures show that during the first quarter of this year the economy slowed to a stall, with a barely discernable 0.1 percent annual growth rate," said Chairman Jeb Hensarling (R-TX).

"So when we, as a committee, have the opportunity to help arrest this trend, to help put Americans back to work, to help create jobs, we have the responsibility to do so and hopefully to do so on on a bipartisan basis. This why our committee has already guided 22 regulatory relief bills to House passage. The vast majority of those bills, once again, have received strong -- not just token -- but strong bipartisan support,” he said.

H.R. 3211, the Mortgage Choice Act of 2013 sponsored by Rep. Bill Huizenga (R-MI), was agreed to by a voice vote. The markup will continue and final passage of the bills will take place after the upcoming District Work Period.

Committee Holds Oversight Hearing with Treasury Secretary, Raises Transparency Concerns

On Thursday, the full committee held a hearing with Treasury Secretary Jacob Lew to receive the annual testimony on the state of the international financial system. 

Several members, including Reps. Garrett, Royce and McHenry, discussed the Financial Stability Oversight Council’s disturbing lack of transparency and accountability.

Chairman Hensarling said FSOC “should cease and desist” from designating more financial firms as “too big to fail” until there is an opportunity for greater congressional oversight of the council’s decision-making process.

“There is increasingly bipartisan concern about the immense discretionary power that FSOC has and how frankly little transparency it has,” Chairman Hensarling said to Secretary Lew. “I would simply call upon you as head of FSOC to cease and desist with these designations until all of our questions can be answered fully and Congress can exercise its oversight authority over this incredible process,” he said. (Watch the video here.)

Members also expressed disappointment that Secretary Lew could fit only two hours into his schedule to appear at Thursday’s statutorily required hearing.

Because of this unusual time constraint, “there's 20 members of this committee that won't get a chance to talk to you today. That represents roughly 14 million people," Rep Mick Mulvaney (R-SC) said.


Rep. Scott Garrett | Federal Debt Not Only Liability Taxpayers On Hook For 

It is no secret that Washington's finances are in a dire state. What might come as a shock, however, is that the American people are on the hook for a lot more than just our national debt. Today, nine of 10 new mortgages are insured by you, the taxpayers...The PATH Act is a comprehensive plan for building a mortgage market that avoids the problems of the past. This legislation would wind down Fannie and Freddie and build a new, more open mortgage market based on private capital, not taxpayer guarantees.

Weekend Must Reads

Wall Street Journal | The Feds Target Money Managers

The conceit of the Obama era is that regulators know best in all things, and so the more of finance that can be put under their sway the better. We'll all learn just how wrong that is if regulators bring high leverage and taxpayer backing from the world of banking into the rest of the financial economy.

American Banker 'Skin in the Game' Rule Unnecessary for CLOs

The House recognized the importance of CLOs to the economy and recently passed bipartisan legislation exempting certain legacy CLOs from Dodd-Frank's Volcker rule. Regulators would be wise to craft a workable solution for the risk retention requirements regarding the CLO market. After which they can perhaps turn their attention to dealing with the actual causes of the financial crisis.

American Action Forum | The Cumulative Impact of Regulatory Cost Burdens on Employment

AAF research finds that for every billion dollars in regulatory compliance, affected industry employment declines by 3.6%.
    On the Horizon 

The House is not in session next week.

  In the News

American Banker | Lawmakers Press Treasury's Lew on Mortgage Servicing, FSOC

Credit Union Times | House Passes Three Key Reg Relief Bills

The Hill | House Votes to Amend Dodd-Frank Rule

Ludington Daily News | Bipartisan Huizenga legislation to help low and middle income borrowers sails through committee

American Banker | FSOC Pledges to Disclose More Amid Criticism by Lawmakers

Wall Street Journal | As One-Time Gains Fade, Fannie and Freddie Face a Less-Profitable Future

Posted by Staff on May 02, 2014

Committee Holds SEC Accountable

On Tuesday, the full committee held an oversight hearing with SEC Chair Mary Jo White to discuss the Commission's agenda, operations, and 2015 budget. 

"The SEC’s budget has grown substantially in recent years. In fact, the SEC’s budget has increased by 80 percent in the last 10 years and by nearly 300 percent since the year 2000. I again note that when my Democratic colleagues were in the majority even after the passage of the Dodd-Frank Act, they never called for the dramatic budget increases they call for now," said Chairman Jeb Hensarling (R-TX). 

"Not many other agencies throughout the entirety of the Federal Government have seen such hefty budget increases during this same period of time. I don’t know many constituents in Texas’s Fifth Congressional District -- that I have the honor of representing -- whose family budget has seen an 80 percent increase in the last 10 years. In addition, as we see the national debt clock regrettably continually turn at the pace we have observed, this is something that must loom large over all of our budgetary decisions," he said. 

During the hearing, Members also questioned Chair White regarding market structure and high frequency trading.  In response to a question from Rep. Scott Garrett (R-NJ), Chairman of the Subcommittee on Capital Markets and Government Sponsored Enterprises, Chair White said, "the markets are not rigged."

On 20-0 Vote, Subpoenas Approved in Investigation of CFPB

Republicans and Democrats on the Oversight and Investigations Subcommittee voted 20-0 to subpoena two CFPB officials and a union representative as part of its ongoing investigation into allegations of discrimination and retaliation at the Bureau.

The CFPB and the National Treasury Employees Union (NTEU) did not allow the officials to appear as witnesses at a subcommittee hearing on April 2. At that hearing, CFPB employee and whistleblower Angela Martin and Misty Raucci, an outside investigator hired by the CFPB, described a culture of racial and gender discrimination and retaliation against employees at the CFPB.

CFPB Director Richard Cordray refused to allow Stacey Bach, Assistant Director of the Office of Equal Employment Opportunity, and Liza Strong, Director of Employee Relations, to testify at the April 2 hearing. A third official, Ben Konop, the executive vice president of the CFPB employees’ union, was also not allowed to testify by the union. All three were subpoenaed today.

“Unfortunately, the CFPB and the NTEU refused to provide the requested witnesses to testify at the April 2 hearing. And yet, we maintain it is imperative that we are able to question Ms. Bach, Ms. Strong, and Mr. Konop. Through our investigation, it has become quite clear to this Subcommittee that they are the three individuals with the most knowledge of the disturbing treatment which women and minority employees were subjected to while at the Bureau,” said Oversight and Investigations Subcommittee Chairman Patrick McHenry (R-NC).

Subcommittee Examines How Technology Can Promote Consumer Financial Literacy

On Wednesday, the Financial Institutions and Consumer Credit Subcommittee held a hearing to discuss the impact of technology on promoting consumer financial literacy.  

"In 2012, the Government Accountability Office released a report that provided an overview of the federal government’s activities and programs to promote financial literacy. They found 13 different programs, operated by 13 different agencies, spent approximately $31 million dollars on financial literacy efforts in 2010. The report also found that there was significant overlap among these agencies and recommended consolidation of the federal government’s to promote financial literacy. Furthermore, the GAO found that there was no mechanism to evaluate the effectiveness of these efforts," said Financial Institutions and Consumer Credit Chairman Shelley Moore Capito (R-WV).

The subcommittee heard from private-sector witnesses who have successfully developed mobile applications and other programs to promote financial literacy.   

Subcommittee Continues Efforts to Spur Economic Growth and Job Creation

On Thursday, the Capital Markets and Government Sponsored Enterprises Subcommittee held a hearing to discuss legislative proposals to enhance capital formation and spur job creation.

"Thanks in large part to the JOBS Act, 2013 was the best year for initial public offerings since 2000, with more than 175 IPOs raising over $40 billion in much-needed growth capital. At least 80% of these companies qualified as Emerging Growth Companies under the JOBS Act. While this is a very positive development, more work needs to be done" said Subcommittee Chairman Scott Garrett (R-NJ).

"According to one small business survey, government regulation and red tape remain at the very top of the list of the most important problems facing America’s job creators. Another survey shows that small business demand for private capital continued to outpace access in 2013, while at least 60% of respondents found it difficult to raise new external financing," he said.

The subcommittee focused on three discussion draft bills: the Equity Crowdfunding Improvement Act of 2014, the Startup Capital Modernization Act of 2014, and a bill to direct the Securities and Exchange Commission to revise its proposed amendments to Regulation D, Form D, and Rule 156.


Rep. Andy Barr (R-KY) | House Passes Volcker Rule Fix

Rep. Andy Barr (R., Ky.), said a small bank in his district feared a loss if it has to sell its CLO holdings at below their current value. “The consequence will be a fire sale in the market that will cause significant losses,” he said Tuesday on the House floor.

Weekend Must Reads

National Review | Consumer Finance Protection Bureau: Hotbed of Discrimination?

Furthermore, the CFPB has been accused of actual disparate treatment race discrimination. One CFPB attorney testified before the House Financial Services Committee regarding her experience, stating that since her arrival at the CFPB in June 2011, she hasn’t received a single case or enforcement matter, despite a successful legal career prior to arriving at the Bureau. She further alleges she was retaliated against after she filed an EEO complaint, and described the Bureau as having a “culture of retaliation and intimidation.” The investigator assigned to the complaint testified that she ”became a veritable hotline for employees at CFPB, who called to discuss their own maltreatment at the Bureau.” The investigator also found that the complainant was, in fact, retaliated against after filing her EEO complaint.

Wall Street Journal The Growth Deficit

The biggest current obstacles are the regulatory burdens still moving through the economy from Dodd-Frank, ObamaCare, and the rest of the damage from the Pelosi Congress. Hard to believe, but Dodd-Frank is only half implemented.