Desmoines, IA: Field Hearing on Consumer Complaint Database

Good morning, everyone. Welcome to the Consumer
Financial Protection Bureau’s field hearing in Des Moines, Iowa, to highlight the Bureau’s
expanded Consumer Complaint Database. The Consumer Financial Protection Bureau is an
independent federal agency whose mission is to help consumer finance markets work by making
rules more effective, by consistently and fairly enforcing those rules, and by empowering
consumers to take more control over their economic lives. My name is Zixta Martinez. I am the Associate
Director for External Affairs at the Bureau. Today’s field hearing is being livestreamed
at, and you can follow CFPB on Twitter and Facebook. We will begin today’s field hearing with remarks
from Iowa’s Attorney General. Then you will hear from the CFPB’s Director, Richard Cordray.
Next, the CFPB’s Assistant Director for Consumer Response, Scott Pluta, will lead a discussion
with a distinguished panel about the Bureau’s expanded Consumer Complaint Database. Following the panel discussion, we will kick
off the audience participation portion of the field hearing. The audience participation
portion gives you an opportunity to share your stories and your observations about what
you are seeing and hearing in consumer finance in your own community here in Iowa. Today’s
audience also includes community leaders, advocates, industry representatives, and,
of course, consumers. We also have with us by bipartisan congressional
staff from both Senator Tom Harkin and Senator Chuck Grassley’s offices, as well as staff
from the offices of Congressman Tom Latham and Congressman Steven King. So let’s get started with the first speaker,
Attorney General Tom Miller. At General Miller is serving in his eighth 4-year term as Attorney
General for Iowa. Protecting consumers is one of General Miller’s highest priorities.
Since he was first elected in 1978, General Miller has earned a reputation for integrity,
high-quality legal work, and strong work on behalf of ordinary Iowans. Most recently,
General Miller was the lead State Attorney General in the joint state-federal investigation
into mortgage servicing practices by the nation’s five biggest mortgage servicers. His work
led to a landmark settlements initially estimated at 25 billion, which has now grown to 46 billion
in relief to consumers. He has a long record of achieving results through cooperation with
other state attorneys general and with local state and federal officials, regardless of
political affiliation. I’m happy to say he extended that same spirit of friendship and
collaboration to the CFPB from day one and continues to be one of our key state partners
in protecting consumers in Iowa and across America. Attorney General Miller. [Applause.] ATTORNEY GENERAL TOM MILLER: Thank you, and
thanks to the Consumer Financial Protection Bureau for coming to Iowa and doing this program,
and thanks to them for doing so much on consumer complaints, because the more we know about
consumer complaints, the more we can find patterns that can direct really efficient
and wise enforcement. So the project today is something that is going to help the Bureau,
but we will be working with them and sharing with them, as I understand it, and we all
will be more intelligently able to enforce the law and use the somewhat limited resources
that we have. Dodd-Frank legislation, I guess it’s about
that tall or maybe taller, and there’s a lot in it, but there are two that really affect
the Iowa Attorney General’s office and the Attorney General’s offices all over the country,
two parts, and one is the creation of the Consumer Financial Protection Bureau, just
an incredibly important idea that always made a lot of sense, but as we see the work of
Rich and his staff unfold, we realize in a concrete way the extraordinary idea that was
there, that there be this one Bureau at the federal level that protects the financial
interests of American consumers. They are off to just a great start. They have done
a whole series of rules, as required by the Act, that’s going to have a beneficial effect
for a long time to come, including in the mortgage area. We worked with them in the
mortgage area, in the mortgaging servicing standards, and other areas in terms of mortgage,
and that is going to have an effect for a long time to come, and dovetails nicely with
our agreement that has a 3-year life. They will extend that life and do the protections
that are necessary for consumers, including the idea that it’s unfair and wrong and bad
for consumers to get a loan that they really can’t afford, that there’s no way they’re
going to be able to sustain that loan. That’s not a good thing for consumers. It’s a very
harmful thing and a very harmful thing for the economy, as well. We have developed a great relationship in
a relatively short time with the Bureau. They are always there reaching out and working
with us. We are talking about and working on a number of cooperative projects that I
think will lead to some very beneficial results for Americans, and, of course, the Act, too,
Dodd-Frank, gives additional powers to the Attorneys General. The Comptroller of the
Currency and a few federal cases sort of took away some of our authority and power as dealing
with national banks. Dodd-Frank gives a much better standard for preemption and gives us
more authority to work for consumers throughout the country when it comes to national banks,
so remarkable legislation in both aspects. I also would comment, too, on cooperation
with federal people, with this administration. I’ve been Attorney General a long time now,
and I’ve never seen the kind of working relationship we have across the board with federal agencies.
A primary one evolving is with the Bureau, but, also, we have a great relationship with
the Department of Justice. We worked together with them on the mortgage case. We’re working
together with them on the Standard & Poor’s litigation, which I think is very important
litigation. There is the trust and the willingness to work together to cooperate, to support
each other at a state-federal level that never has happened before. There’s always been sort
of a divide, sometimes a fight between state and federal, but this cooperation that is
taking place now with DOJ, never seen before, same thing with Department of HUD. Shaun Donovan
has just been terrific to work with as a partner, and we have started to work with the Comptroller
of the Currency, which a few years ago, the people that know sort of the battle lines
that we had with them would think it unbelievable, but it is true. There is a terrific Comptroller
of the Currency, Tom Curry, former Superintendent of Banking in Massachusetts. He was one of
our partners in the Ameriquest case. We are working a lot with Tom and developing a totally
new relationship with the Comptroller of the Currency that, more importantly, is going
to give us ability to protect consumers in a way that we never have before. So, in a
lot of ways, this is the greatest opportunity to protect consumers in the financial area
that we’ve ever had, at least in a long, long time, with the right agency, the right tools,
the right people, the cooperation that’s taken place. So, Rich, I want to thank you for being such
a great partner and reaching out to us and working with us so much. I have known Rich
for a few years now. He was the Attorney General of Ohio before he assumed this position, and
I can tell you that there’s nobody better in this whole country to nobody as good to
head the Bureau as Rich. He’s extraordinarily bright. He’s incredibly hardworking. He has
an enormous commitment to consumers. He has a real sense of fairness that he deals with
the industry, and he has great judgment. In that position, among other things, you need
to have great judgment to make it work efficiently, to make it work effectively, to make it work
fairly, and those are exactly the qualities that you want in the position that Rich is
in, and he possesses them, in my view, better than anybody in the country. Rich, I look
forward to your confirmation. You certainly should be confirmed by the Senate, and all
questions or doubts should be removed, and full speed ahead to your great mission, that
the law and the people that you have hired to protect consumers in the financial areas
in this country, it’s a great opportunity. And I’m glad that you came to Iowa, glad you’re
going to have this program, and I’m glad we’re going to have a Consumer Complaint base like
perhaps never before. Thanks for everything. [Applause.] ZIXTA Q. MARTINEZ: Thank you, General Miller. Director Cordray became the CFPB’s first director
when he was appointed by the President on January 4th, 2012. Before his prior role,
Director Cordray led the CFPB’s Enforcement Office. Before that, he served on the front
lines of consumer protection as Ohio’s Attorney General. In this role, he recovered more than
2 billion for Ohio’s retirees, investors, and business owners, and took major steps
to help protect its consumers from fraudulent foreclosures and financial predators. Before
being elected Attorney General, he also served as Ohio’s State Representative, Ohio Treasurer,
and Franklin County Treasurer. Director Cordray. [Applause.] RICHARD CORDRAY: Thank you. It is a distinct
pleasure to be here in Des Moines today with my great friend, your Attorney General, Tom
Miller, who has worked with me on a number of things in a reasonably short time and become
a trust friend and ally, and with my new friend, the Iowa State Superintendent of Banks, Jim
Schipper, who is in the front row here with us as well today. And let me just say leave
it to the citizens of Iowa. It seems to be a specialty of the Hawkeye state to be able
to organize a community meeting on short notice and really turn out a terrific crowd of knowledgeable
folks, and that’s what we’re looking forward to with the roundtable today. So thank you
for being with us today, both those of you here and those of us who are joining on the
Livestream. We are here to talk about the work we are
doing with consumer complaints to improve consumer financial markets. For us, consumer
complaints tap into the rich vein of personal experience that is generated every day as
people navigate the complex and confusing marketplace for household credit and other
financial products and services; and for a brand-new agency like the Consumer Financial
Protection Bureau, born out of the recent financial crisis, consumer complaints are
an opportunity for us to help consumers in three distinct and important ways. First, and most obviously, each complaint
is a chance for us to evaluate someone’s perceived problem and see if it can be resolved successfully.
Behind each complaint lie the troubles of real people, people like Roxanne from Iowa
whom I talked with this week. After losing her husband of 35 years to cancer, Roxanne
took over responsibility for their mortgage and successfully negotiated a loan modification,
as we know, no mean feat. Each month, after her Social Security check arrived, she would
dutifully make her mortgage payment by the due date of her grace period. Nonetheless,
she still got constant phone calls asking for her deceased husband. Some days, the mortgage
servicer would call three to six times to find out if, when, and how the payments would
be made. She told them to stop calling, but they did not. So Roxanne filed a complaint
with us. Less than one week later, her mortgage servicer sent her a letter of apology and
stopped the calls. Yesterday, we had the chance to visit the
Consumer Bureau’s Contact Center in Coralville, near Iowa City, where we were able to listen
in on several people asking for assistance. We heard from Lisa in Virginia about her foreclosure,
from Martina in Florida about her car loan, and from Jane in California about her credit
card. I share these stories with you because they
are the people behind the data. Once a consumer submits a complaint to us, it is individually
processed. We forward each complaint via secure web portal to the appropriate company, which
reviews the information, communicates with the consumer as needed, and determines what
action to take in response on a specific time frame. The company reports back to us and
to the consumer. We then invite the consumer to review the response and provide feedback.
We assess the feedback, and if the complaint merits further review, we elevate it to our
investigations unit. Throughout this process, consumers can call us or log onto our website
at to receive status updates, provide additional information, and review
the responses by the company. Thus far, the Consumer Bureau has received
more than 130,000 complaints from individual consumers, including complaints about mortgages,
credit cards, student loans, auto loans, bank accounts, credit reports, and more. We have
helped consumers secure millions of dollars in monetary relief and further satisfaction,
form of non-monetary relief, such as cleaning up their credit reports, which helps them
put problems behind them that have been affecting them for months or even for years. In this
way, our consumer response team is making a real difference in the financial marketplace
every day. The second important way these complaints
make a difference is by informing our work and helping us identify and prioritize problems.
We know that if we hear about a particular problem from fifty consumers, that likely
means it looms larger than if we hear about it from two. We know that if we begin to see
a disturbing trend among the complaints we receive, that we should consider allocating
some of our limited resources to combat that particular problem. For these reasons, we examine issues raised
in consumer complaints as we go about our own work. They’re a source of information
that we consult in approaching our supervisory work of examining financial institutions.
They provide leads for our enforcement work of investigating, addressing potential wrongdoing,
and they help guide our efforts as we deal with issues of concern through consumer education
and engagement. In fact, we find complaint information to be so helpful that we also
access the FTC’s Consumer Sentinel database, a terrific database, to supplement our own,
which has been invaluable to our work, and we are mindful of the need to share such data
in return. So we recently launched our secure Government Portal to allow other federal and
state law enforcement officials to view our data and inform their work. As we are able
to wield each of these tools in a more informed manner, we are acting to clean up problems
and improve the workings of consumer financial markets. So it’s important to recognize that even for
those consumers whose complaints do not lead to an individual solution or restitution,
their complaints are still making a difference. If they are students who took out more than
they could afford in private student loans and who are now working two or three jobs
to make ends meet, we still hear them and understand the effect on their lives. If they
are homeowners having trouble making their mortgage payments, but they cannot qualify
for a loan modification, we take note; or if they are elder Americans who were hurt
by a reverse mortgage, we are sensitized to the kinds of problems their experiences highlight.
People who contact the Consumer Bureau are constantly informing our priorities and improving
our work. But there is also a third way that consumer
complaints can matter to our work, which is the specific focus of our discussion today.
The accumulation of complaints from many thousands of individual consumers yields an ever-more
informative impression of what is happening to consumers en masse in the marketplace,
and so, quite apart from how this information informs our own work at the Bureau, it can
have real consequences and ramifications for the operations of the financial marketplace.
To put it most bluntly, if we find, as we do, that this information can be helpful to
us in going about our own work, then almost certainly it can be helpful to industry and
to consumers themselves in figuring out how they approach consumer financial issues as
well. For here is the key point: Not all, or even most, consumer protection comes from
government agencies, after all. Instead, the first two places to look for consumer protection
are out in the marketplace, in how a business decides to treat its customers and in how
effectively those customers are able to stand up for themselves when they are mistreated. Let me try to come at these points from a
different direction. Think for a moment about the American economy or even just about the
American financial marketplace. These are among the single largest uncoordinated aggregations
of human behavior ever developed. They operate not according to some central plan, but by
the endless interactions of hundreds of millions of independent actors, each with their own
needs, wants, experiences, expectations, patterns, and reactions. The basic task even of understanding
what is happening in these huge, sprawling arenas of human life is formidable. Each month,
some of the best minds make predictions about growth, employment, prices, and many other
economic and financial variables. Immense sums are riding on the accuracy of their views.
Each month, they routinely get it more or less wrong and are surprised by what they
find to be actually happening. Even after the fact, their estimates of these variables
are frequently shown to be wrong and in need of revision, sometimes over the course of
months, other times over the course of many years. The humbling lesson is that every additional
piece of data that can shed more light on hard subjects like these is well worth having. In this imperfect world of ours, the ability
to create and utilize new data that illuminates what is happening to consumers, in real time,
can be immensely valuable. Think of the old parable about a group of blind men and an
elephant. Each man touches the elephant to learn what it is like. Each one feels a different
part and comes away with a vastly different impression. To one who touches the leg, the
elephant seems to be a pillar. To another who touches the tail, it seems to be a rope.
To one who touches the trunk, it seems to be a snake. All of them are partly right,
and all of them are partly wrong. The elephant, like the consumer financial marketplace, can
be many different things, depending on how we encounter it, but the more data we can
assemble, process, and share, the more complete and accurate picture we can forge of this
immense and seemingly contradictory creature, and the more we can come to a better understanding
of it. Today, the Consumer Financial Protection Bureau
is going live with the largest collection of complaint data on federal consumer financial
products and services ever made public. We are immediately expanding our existing Consumer
Complaint Database from roughly 19,000 credit card complaints to more than 90,000 complaints
about mortgages, bank products, student loans, consumer loans, and credit cards. By opening
up this searchable data to public scrutiny, we are helping to enable all the players in
the consumer financial marketplace, including consumers themselves, to see a much bigger
whole. By sharing these complaints with the public, we are creating greater transparency
in consumer financial products and services, which ultimately will lead to a better marketplace
for consumers. Looking through the database, you will see
12 fields of information, including the type of complaint, the consumer’s zip code, the
company to whom we sent the complaint for response, and how the company responded. Essentially,
the database allows the public to see the who, what, when, where, and why of each consumer
complaint. There are two important things to note. First,
no personal information about a consumer is included other than the consumer’s zip code;
and second, while we do not verify each and every allegation that consumers make in their
complaints, we do verify that a commercial relationship exists between the consumer and
the named company. The complaint only gets uploaded onto the database after the company
verifies that the consumer is in fact its consumer. To offer another metaphor, think of the database
as like a mosaic. While every tile on the mosaic is certainly not perfect, you can still
step back from it and see something new, and as the mosaic comes to contain more and more
tiles, each tile becomes like a pixel and begins to blend together with the others to
give a sharper and clearer view of the whole picture. The static generated by individual
cases tends to get canceled out by the weight of cumulative information. This is what the
database offers : an aggregate of an increasing number of consumer complaints that gives you
a more complete and refined view of the consumer financial marketplace. It is a live database, updated daily. So,
as the Consumer Bureau handles more complaints, more information will be added, and as we
accept other types of consumer complaints, they also will be added in time. For example,
credit reporting complaints, which we recently began to accept, will be included in the database
in the near future, as the processing of those complaints ripens to the point of yielding
data for all of the 12 information fields. Today’s launch will allow the public, be it
individual consumers, analysts, private groups, or the companies themselves, easily to track,
sort, search, and download this data. With all of this information being assembled, the
most interesting thing to watch will be not what we do with it, but what you do with it.
Users will be able to filter across any of the fields and build their own visualizations,
such as charts and graphs. They can also embed the data on other websites and share it through
social media. They can normalize the information to make meaningful apples-to-apples comparisons,
since the raw data typically needs context to fully understand its various possible meanings.
Larger companies, for example, typically show up on the database as having more complaints,
when they might just have a much larger number of customers. It will be possible to slice and dice the
data in countless ways; for example, a third of complaints about bank accounts concern
deposits and withdrawals. About 6 percent have to do with using a debit or ATM card.
In Iowa, about two-thirds of all the complaints concern mortgages or credit cards. One of
10 Iowa mortgage complaints has to do with mortgage brokers and mortgage applications. The amount of information you can glean from
our Consumer Complaint Database—and this will be increasing over time—is gigantic.
So we are most excited to be making this information available because we believe that disclosure
is one of the best tools that government has to improve the operation of the marketplace.
People across the spectrum can draw their own conclusions from the database, but let
me home in on two users in particular, financial companies and consumers. For financial companies, this data can help
them identify their pain points, so they can detect and understand the problems. If they
want to do so, they can use this information to improve their customer service and their
general practices. Data can help them detect regulatory risks and address problems before
they are faced with potential enforcement action or private litigation. They can also
view the strengths and weaknesses of their competitors in a new light, and perhaps they
can find things to tout in the data; taking credit, for example, for having the highest
resolution rates or the quickest response times. Most good companies already access
all the information available to them to assess these data points. Now they will have another
significant source of information to evaluate. If the data informs us and it informs companies,
then it should also inform consumers. So we are making the information about each complaint
broadly accessible, not only to the company, the regulator, and those willing to pursue
a formal inquiry through the Freedom of Information Act, but to anyone who wants to make ready
use of it. Consumers can see, for example, which companies provide timely responses or
higher rates of resolution. They can draw their own conclusions. For consumers, this
will become a valuable educational and shopping tool.
It will also be possible for anyone who wishes to do so to use this information to rate companies
in these areas. Just as Consumers Union uses publicly available information to rate the
safety of cars in their Consumer Reports, it will now be possible for third-party sources
to rate the performance of different financial products and services by evaluating what the
public, in the aggregate, has to say about them. No doubt, the companies will respond with
their own take on the data, and we encourage them to do so, for that is exactly where these
matters should be fought out, in the marketplace of ideas, subject ultimately to the verdict
rendered by the court of public opinion, which is just how economic marketplaces are designed
to work. For those who have criticized our database
and suggested that this information should be suppressed, we would respond in the words
of that noted consumer advocate, Justice Louis Brandeis. As he once wrote for the Supreme
Court, for those, and I quote, with confidence in the power of free and fearless reasoning,
in responding to concerns raised about possible falsehoods and fallacies of information, the
remedy is more speech, not enforced silence. By providing consumers with this timely and
understandable information about financial products and services, we will help to improve
the functioning of the consumer financial market. So in this age of data and transparency, we
believe sharing this information is in everyone’s best interest. Indeed, the Consumer Bureau
generally supports an open-data agenda. As part of our Project Catalyst, a program designed
to support innovation in the consumer finance space, we will be using this and other upcoming
opportunities to participate in more open-data initiatives. Right now, however, we want everyone to take
a look through this data-rich window into consumers’ financial lives. So we encourage
the public, including consumers, the companies that serve them, analysts, data scientists,
civic hackers, developers, policy-makers, journalists, and academics, to analyze, augment,
and build on the public database. We want you to do whatever you want with this data,
including developing ways for consumers to access the data more easily or mashing it
up with other public data sets to reveal potential trends. To borrow a phrase, we have faith
that you can help us sift through the data and help us separate the signal from the noise,
and we ask you to share your work, from visualizations to new tools, by tweeting @CFPB, using the
#CFPBdata. We are eager to see what people will be able
to do with the growing universe of data about consumer financial issues included in our
Consumer Complaint Database. The insights you glean and the perspective you bring will
help consumers all across America. We have a deep confidence that the marketplace of
ideas, driven by human ingenuity, can do great things with this data, and as we go along,
we will be glad to share those things with all of you. Thank you. [Applause.] ZIXTA Q. MARTINEZ: At this time, I would like
to introduce Scott Pluta, who will provide a brief presentation and then lead us through
today’s panel discussion about the Bureau’s expanded Consumer Complaint Database. Scott Pluta is the CFPB’s Assistant Director
for Consumer Response. He joined the Bureau in the fall of 2010. Since then, he has been
involved in every major facet of Consumer Response’s growth, including being the principal
driver within the Bureau of the public-facing Consumer Complaint Database. Assistant Director Pluta, you have the floor. [Applause.] SCOTT PLUTA: Thank you, Zixta. My name is
Scott Pluta. I am the Assistant Director of Consumer Response. With no disrespect to the
Director or the rest of my colleagues here, I have the best job in the Bureau. I have
the best job in the Bureau because my office and I get to hear from over a thousand consumers
every single day, and I will talk about two things today out of the three that we do in
the office. We answer questions. So anyone in America can call our 1-855 number, 1-855-411-CFPB.
You can call that and ask a question about anything about a consumer product. The second
thing we do is we handle complaints. The third thing we do is share the data to those complaints. [Technical interruption.] SCOTT PLUTA: I hope this microphone is working.
Laura, my colleague, will help drive. So I will walk over a little bit here, once we
get it pulled up. I want to walk you through the complaint life
cycle. Everyone in the room and the people watching in the live cast can see literally
where the complaint goes in, how it works its way through the system, and then at the
end of the day how it works its way into the Complaint Database. So the first thing you will see if you go
to our home page—this is it—if you want to submit a complaint, you have an issue with
a consumer financial product or service, you can come over to the right side here and click
on Submit a Complaint. Laura clicks on that. This is the landing page for Consumer Response.
You can scroll down, and there is a button. So right at the top, you can pick one of these
categories. So if you have an issue with your credit card, if you have an issue with money
transfers, if you have an issue in this case with a student loan, which Laura will click
on, you click on that product. There we go. Let’s see if it’s working. So we have not
been blessed with the fastest of Internet today. This is the parts of the program where
I tell jokes. [Laughter.] SCOTT PLUTA: Thankfully, it works. So you file a student loan complaint. As you
can see, there’s five steps to the complaint process: what happened, the desired resolution
by the consumer, the consumer’s information, the product information, and then finally
review. And at the end of that, you would submit it. So we will just walk through the first page.
This, again, is the example of the student loan complaint. In this case, the bureau handles
nonbank student loan complaints, so we will close that. In this case, you would click on the second
button. So you would come to us. If you click on the first, it would point you to the Department
of Education. They handle complaints for federal loans. The second radio button is for nonbank
student loans, which we handle. The dynamic box drops down. This is very, very important
to us. We did a lot of usability testing about how to make our complaint form look. Very
important to make it as easy and user friendly as possible. So, at this point, we collect a whole host
of unstructured data. First thing, before we collect your information, the bank’s, anything,
tell us what happened. So you came to our website. You want to say something. You want
to tell us about something that happened to you. The first thing we ask you to do is tell
us what happened. So there’s a narrative field. There’s a lot of characters you can drop in
there, believe several versions of the King James Bible of text you can drop in. [Laughter.] SCOTT PLUTA: So feel free to make your fingers
tired and work yourself out in that box. You slide down. You select one of the issues;
in this case, say “repaying your loan.” That gives us a little bit of an orientation as
to what you want to talk about, and then you would say whether or not you believe you had
been involved in discrimination. Then you would click to the next box. So we’ll skip this. So you’d work your way
all the way through the system, and we’ll click to the PowerPoint. So now I want to
show you very quickly what our process looks like, so a bunch of icons here. There are
six of them. So the complaint is received. So you fill out the complaint. You go to the
last page. You click Submit. You review the information. We get that complaint. Next, it’s review and route. So it comes into
our system. We’ve got an intake staff, and they look for three things. Is this a duplicate?
Some consumers will file a complaint on a daily basis, and while that is their right,
what we want to do is really consolidate that into one complaint. It is fair to the company,
so they are not receiving duplicates, and it is also good for accounting and for our
system, so we merge duplicates. If it’s not within our jurisdiction. So, for
example, if someone comes to us with an issue on flood insurance, we will send that to our
sister agency over at the FDIC. Is the complaint complete? So we will take
complaints over the phone. We will take them by mail. We will take them by fax, ironically.
We will take them obviously by the web. So you can come. You can file a complaint through
multiple avenues. It is very, very important to us, so we take complaints over the phone.
The FCC does an annual study on broadband penetration, and we found that a lot of our
wheelhouse constituencies don’t have access to broadband, the rural, the poor, minorities,
uneducated. Very, very important to us that we make this, while more expensive for us,
an essential channel for folks to file complaints with us—and like I said by mail. So we can
have someone in Iowa who decides they want to, longhand, write out a complaint and send
it to our mail facility, which is in Iowa. It gets scanned. It gets put into our system.
If we don’t have all the information we need, we will reach back out to you and ask you
those questions. The next step is we went it to the company.
As Rich indicated, we have a secure web portal. We’ve got over 600 companies in the portal
right now. The complaint comes in, folks match it to a company. It goes off in a secure portal
to the company. The company then has it. It’s time for the company response. They have two
requirements. They have to get back to us and respond within 15 days or close within
60. What I mean by that, we encourage them to close it as quickly as possible. So we
try and get them to close it within 15 days, identify the consumer, work through the issue,
and provide a response. We’ve got some response categories I’ll talk about in a minute. If
it is a particular thorny issue, such as mortgages, which we understand, within 15 days, just
let us know it’s in progress. If you do that, it buys you additional time, up to 60 days
from the time we receive the complaint, so, again, 15 days to respond, 60 to close. At
closure, you have to tell us what you did with that complaint. You have to tell us what
you plan to do about that complaint and if there’s anything left, and also what communications
you’ve had with the consumer. The next piece, it goes to the consumer. So
one of the complaints of the traditional complaint-handling model at the federal level was that it was
a bit of a black box; that is, you sent your complaint in, and you weren’t quite sure when
you’d hear stuff, what you’d hear, what the end would look like, what you could do and
could not get out of the process. It is very important for us to be constantly in communication
with the consumer. So you can pick up the phone, you can call us, and you can ask us,
“Where is my complaint in the system?” and we’ll tell you. You can go onto the web, and
you can login, and you can see. Just like Dominos Pizza delivery, Dell computers, and
other very good companies that treat their consumers very well, we can tell you exactly
where a complaint is in the system. As we get more mature, what I’d like to be able
to do is share with people right when they file complaints, this is how long on average
it takes to this step and this step and this step. I want to be very specific about these
are the things we can do for you and can’t do. Obviously, we have a legislative mandate
that provides some restrictions around what we can and can’t do. So we want to be very
careful about managing consumer expectations. So it goes to the consumer. Another unique piece of our system, they have
the ability within 30 days to let us know what they think about the resolution. There’s
the Dispute button. We leave it a little bit ambiguous as to what that means. So you come,
you have some level of dissatisfaction with the process, either on our side or the other
company’s, you can click that button, and you can tell us why. At that point, it goes through review and
investigations. While I would love it if there was a world of infinite resources and I had
investigators that could dig into each and every one of these complaints and spend a
ton of time, unfortunately that’s not the world we live in. So I’ve got a fine group
of investigators who are very talented, a lot of lawyers, accountants, and others who
are very good at this stuff, and what we do is, of all the complaints that we receive,
we put it through an algorithm that correlates with consumer risk and harm. We focus very
specifically on those complaints because, at the end of the day, we are a financial
institution regulator. We put that hat on, and we are looking for legal violations for
the 18 consumer protection laws that we do supervise, enforce, and provide fair lending
for. So folks look at those complaints. At the end of that process, another communication
will go out to those consumers. And then, finally, the third thing that we
do in consumer response is data. We share data. We will go back to the web, and I can
talk about the Complaint Database. So you follow the complaint. It goes through all
those steps. As Rich indicated, the sooner, within 15 days of you, the company, either
taking ownership of that complaint, that is, the commercial relationships established,
or 15 days elapsed and the company has not told us that is not their consumer, at that
point, it makes its way into the public database. You can come to the home page. You go to Participate. This is the landing page for the Consumer
Complaint Database. I encourage everyone to go check it out, very cool stuff. The data
by products, you can click on any of one of these. Laura clicked on All. So this is Socrata.
Socrata is a third-party data player that we procured at the Bureau to help us share
this data with the marketplace. As Rich indicated, there are 12 fields of data, from product
ID to the company involved, when the complaint was submitted to us, when we sent it to the
company. Very important that we hold ourselves responsible for operational metrics, as well
as the companies. So you can actually see how quickly we move things to the company;
again, very focused on the consumer experience. So this is the very, you know, Excel spreadsheet-looking
version of the database. You can use all these filters. You can do fun stuff with it. You
can download it, and you can cut through the data. Laura is now going to go back. Another
feature of this page is the ability to start visualizing the data. Again, the data player,
Socrata, allows you to do visualizations. We have three examples here. Laura clicks
on one. Now, these are all our products in the response
categories. Like I said, at the end, we ask the company, please put your closure into
one of four buckets: close with monetary relief, close with nonmonetary relief, close with
an explanation, or was it simply closed. One of the Internet gods graced us with their
presence, as they did. Thank you. You can see—and its’ a little hard to read, but
at the bottom, this is credit cards, l believe, or are these all consumer? I’m sorry. Okay.
This is just creditors. So just credits, and below are the issues, and you can see by each
of the different resolution ranks. So, for example, with respect to if someone
calls with a billion dispute, in about a quarter of the cases, you see that there was some
type of monetary relief. If you look at, for example, credit reporting, they call because
of an issue with respect to their credit card that touches on their credit report. The largest
incidence of closure is closed with explanation. What that is, is the credit card company communicating
to the credit reporting company to fix the issue on the credit report. So this is just
one example of how you can visualize the data, and you can see how the different products
tough the complaint database. So, with that, I am going to ask all of our
external panelists to come up onto the floor. We are going to do a little bit of rearranging
of the furniture here. ZIXTA Q. MARTINEZ: While the panelists and
the table take the stage, I am going to take a moment to thank those joining us today by
Livestream. You can access the web link via Twitter or Facebook. In addition to Director Cordray and Assistant
Director Pluta, we also have our Acting Deputy Director, Steve Antonakes, who in addition
to serving as the Acting Deputy Director is also doing his regular daytime job, which
is the Associate Director for Supervision, Enforcement, and Fair Lending. All right, Scott. You can take it away. SCOTT PLUTA: So, with that, I will do very
brief introductions. I want to introduce our panel of distinguished speakers today. We
are going to start going from left to right. I’ve got Sonia Ashe from Iowa PIRG; Carl Spradlin
from Comerica Bank; Spencer Cowan from Woodstock Institute; Ruth Susswein, to my left here,
from Consumer Action; David Pommerehn from Consumer Bankers Association; and then finally,
Professor Cathy Mansfield from Drake Law School. SONIA ASHE: So thank you all for being here
today. Again, my name is Sonia Ashe, and I am the Director with the Iowa Public Interest
Research Group. Iowa PIRG is proud to be one of the founding members of Americans for Financial
Reform, a coalition that continues to champion the Wall Street Reform and Consumer Protection
Act of 2010, which has the Consumer Financial Protection Bureau as its centerpiece. As many
of you know, the CFPB is the sole federal financial regulator with only one purpose,
to protect consumers no matter where they are purchasing their financial products. Congress gave the CFPB numerous tools to accomplish
this goal, but all of those tools from its authority to write rulemaking, its authority
to supervise and examine large banks, and its power to enforce the law and hold corporate
wrongdoers accountable as dependent on its ability to have two-way communication with
consumers. The Consumer Complaint Database is at the
core of this communication, and collecting consumer complaints aids in the CFPB’s research,
helps it identify trends for supervisory or enforcement action, and also allows it to
improve its future rule writing. Collecting and investigating and acting on these complaints
helps consumers directly. It also helps the other customers of firms that have received
complaints by making sure that problematic activities are being addressed, and not in
the least, the publication of consumer complaints publicly helps other consumers to make wiser
decisions in many ways, perhaps most importantly by allowing reporters and researchers to analyze
the data and rank firms, which incentivizes good actors to race to the top and incentivizes
bad actors to clean up their act. But I want to point out that several other
agencies already have these publicly accessible databases, and that the experience has been
good. Despite baseless claims by opponents, existing product complaint databases have
not unfairly created a black list for products or irreversibly tarnished companies’ reputations.
In practice, disclosure has led to better products and more satisfied customer. For
example, increasing accessibility to rating and complaint information has improved the
National Highway Traffic Safety Commission’s new car assessment program by encouraging
manufacturers to achieve high ratings and voluntarily increase their safety of vehicles.
Similarly, the relatively new Consumer Product Safety Commission complaint disclosure has
helped to protect people, particularly children and the elderly, from product hazards by encouraging
manufacturers to implement stronger safety standards as well. In both of these cases,
there has been no evidence showing that complaint disclosure has unfairly to irrevocably harmed
automakers or product manufacturers, and in realty, this transparency has improved markets. So we are excited that the Bureau is expanding
their database to cover additional financial complaints and encourage it to expand it to
the fullest of its ability as soon as possible, and we also urge the CFPB to publicly provide
greater narrative detail about complaints and the resolution through the database, which
we believe can be done without jeopardizing consumer privacy. That’s all I have today, so thank you so much,
and thank you again to the CFPB. [Applause.] SCOTT PLUTA: Carl, I think you’re next. CARL SPRADLIN: Sure. Thank you for the opportunity
to participate in today’s field hearing regarding the CFPB’s Consumer Compliance Database. Our financial institution uses that process
that feeds the public database on a daily basis, and we find it an effective way to
assist our customer. We are providing communication a couple different ways. We receive three
separate e-mails each morning from the CFPB. The first e-mail highlights any new complaints.
The second highlights any that are under review by the CFPB, and the third contains a list
of all active compliance. This process helps us to understand the status of the active
complaints and assists us to make sure we are adhering to the designated timelines for
responses to the customer . Each morning, our team downloads data provided
by the CFPB into our internal databases. This option became available the middle of last
year in one of the CFPB’s upgrades to the portal. We appreciate the upgrade and have
found it very helpful for viewing the overall status of complaints. We are now able to maintain
an ongoing database of all CFPB complaints, along with other applicable complaint avenues,
such as those generated internally by our customers. In addition, the downloading feature of last
year’s release also provided us the opportunity to submit technical issues and ask general
questions through the portal. This is helpful. The Consumer Complaint Database portal is
a good method for transparency with our customer and allows overall accountability. For example,
the complaint has specific service levels that must be met. Upon receipt of the complaint,
we have up to 15 days to address the complaint. In some isolated situations where the complaint
needs particular research for a response, we are able to ask for more time, up to 60
days. The consumer is also able to classify the
complaint by the product or service type. In addition, the process provides a dropdown
list for the issue. This helps us guide the analysis and in some cases to use the correct
category for the complaint. Well, that can provide some challenge. It’s not stopped us
from addressing the issue raised in the complaint. In addition, the customer is provided the
ability to determine what they believe would be a desired or fair resolution to the issue.
This can provide some challenge to the financial institution, but, overall, we find it helpful
to understand the customer’s desires. It allows us to determine how we may be able to address
those desires. Overall, we find the declaration of what the customer views as the desired
fair resolution helps promote communication. Overall, we have had a very positive experience
with the CFPB’s consumer compliance process. We found that the process has been enhanced
over time and provides our company a consistent and meaningful way to address disputes with
our customers. Again, thank you for the opportunity to appear at the hearing. [Applause.] SCOTT PLUTA: Spencer, you’re next. SPENCER COWAN: Thank you for the opportunity
to participate here. I am Spencer Cowan, Vice President of Research at Woodstock Institute. One of my principal responsibilities is analyzing
data concerning financial conditions and patterns of transactions affecting people and communities
of color and lower-wealth individuals and neighborhoods in the Chicago six-county region.
The data analysis that Woodstock does highlights some of the disparities that adversely impact
those people and communities and helps inform the policy debate over how to address those
issues. For me, data are the basis for sound decision- and policy-making in both the public
and private sectors. That’s why private sector businesses spend so much to gather data about
the cost of materials, production, processes, distribution, customers, every other aspect
of their operations. They use the data they gather to find out where they are not performing
optimally, to find new markets, and to seek out opportunities to improve corporate profitability.
Data serve exactly the same function in the public sector. The difference is that performance
is not measured by market share and profitability. An agency such as the Consumer Financial Protection
Bureau is established to address conditions that adversely affect people in communities,
and data allow the agency to determine the nature and extent of the problem, who or what
is contributing to the problem, and who is being harmed. They allow the agency to tailor
its response to address those specific issues. Data also allow the agency to measure its
own performance to establish baselines and benchmarks to show whether it is achieving
the purposes for which it was established. The Consumer Complaint Database that the CFPB
is compiling is exactly that kind of tool and goes to exactly the core functions of
the CFPB. Some of the data about the complaint and financial
institution’s response, excluding personally identifiable information, is available to
the public for downloading and analysis. As a person who analyzes data as an integral
part of his work, I can offer several reasons why this is necessary. The CFPB Consumer Complaint
Database is necessary and should be made public in as much detail as possible. It allows the
CFPB to determine exactly what the nature of the problem is and to gage its own performance.
These are internal reasons, however. The reason the database should be made public is, from
my perspective as an analyst and as a citizen and member of the community, it allows me
to see how well the CFPB is performing its job. I wish every part of government operated
at maximum efficiency and vigorously fulfilled its obligations. Unfortunately, I know that’s
not always the case. Publicly available data would allow me to independently assess the
performance of agencies like the CFPB, to hold it accountable to the public it was meant
to serve. It is not enough for any agency to expect the public to trust it. The public
needs to be able to verify that the agency is doing its job, and that requires data. Making data publicly available serves another
important function. It allows the public to do additional analysis, to look at issues
and the data in ways that perhaps the agency is not doing. This has been true in my research,
and for evaluating the CFPB, I wish the data were more complete. I wish there were other
elements. The data need to include the basic elements of fair lending analysis, including
the race, ethnicity, gender, and age of the person filing the complaint, and they need
to be aggregated at the smallest geography that still protects the privacy of the consumer,
preferably at the Census Tract level, as is currently done with the Home Mortgage Disclosure
Act data that I use. I would like to have the customer to have the option of having
the entire narrative included in the publicly available dataset to provide more detail about
the nature of the problems. Finally, I appreciate the fact that making
detailed complaint data public might create an impression that is unfavorable about some
providers, but as Director Cordray said, providers are already using the data to find where they
can improve and where they are doing better than their peers. That is important for consumers
to know and is a powerful incentive for providers to follow best practices when they are dealing
with consumers. Thank you. [Applause.] SCOTT PLUTA: Thank you, Spencer. Ruth? RUTH SUSSWEIN: Hi. I am Ruth Susswein with
Consumer Action. I’m Deputy Director of National Priorities, in from D.C. today. Thank you
for inviting me on this panel today. I want to say, first of all, that the CFPB
deserves quite a bit of credit for taking this bold step in creating a publicly searchable
database and kudos for now expanding that database in such a big way. Public access
to consumer complaints is a public service. The database is a prime example how the Bureau
has tried to be a responsive and different type of federal agency. The CFPB is the only
consumer agency that works to assist consumers individually with their individual problems
and the only financial regulator to make complaints public. The CFPB complaint process not only helps
individuals, but it has the potential to allow the Bureau and the public to detect dangerous
trends before they mushroom out of control. Imagine the impact the Bureau could have had
on the foreclosure crisis had it been able to sound the alarm bells years ago on a flood
of complaints about mortgage brokers and unscrupulous lenders’ exploding ARMs and predatory loans.
The Complaint Database can be a very effective pre-purchase tool for all of us to identify
problems and to learn how a company deals with its problems. Consumers have high hopes
for this database that it will soon become the outstanding tool it has the potential
to be, but currently, it’s of limited value to the average consumer. Today’s database information, although it
has 10 or 12 different categories which are excellent, the information itself is too limited.
The information needs to be detailed, accessible, and understandable. Right now, the complaint
categories are too broad. The number-one complaint is billing disputes. Is that a dispute with
a merchant, with a card issuer? Where is that dispute? Complaint resolutions are too vague.
If the complaint is closed with relief, what does that mean to the consumer? Closed with
explanation, what type of explanation? This information needs to be much more specific
to be of true meaning to the consumer. We urge the Bureau to include actual complaint
details in summary form in the public database, of course, without personal information. Access
to actual complaint information allows consumers to judge the validity of a complaint, to track
trends, to evaluate a company’s complaint process and their perspective on a problem,
and it encourages wise shopping decisions at the exact point where it can make a difference. The public database can also assist with complaint
resolution. It can encourage companies to compete on excellent customer service. No
decent business wants to be known as number one in lousy customer care, and there have
already been some reports that because of the CFPB database, companies are changing
the way they evaluate complaints and handling complaints. Complaint narratives can also help shed light
on how lending discrimination may occur. We believe the CFPB should request information
on race, age, ethnicity, gender in each complaint form. Collecting this type of data can help
the Bureau strengthen its means of detecting harmful patterns of lending discrimination. We congratulate the CFPB for expanding this
very valuable tool, because we know that a fully functional Complaint Database can help
the Bureau make a significant impact on each of our daily lives. It can hold businesses
to a higher standard, and it can spot dangerous trends before they do the utmost damage. Thank you. [Applause.] SCOTT PLUTA: Thank you, Ruth. David? DAVID POMMEREHN: Yes. My name is David Pommerehn.
I’m with the Consumer Bankers Association, and I also would like to express my gratitude
for being here today. At the Consumer Bankers Association, we are
dedicated to the retail banking industry as it strives to fulfill the financial needs
of the American consumer and small business. CBA commends the Bureau’s commitment to this
important issue, and we share the agency’s overall objective in promoting transparency
and efficiency in financial products. Accordingly, CBA is committed to assisting the agency in
the creation of a fair and efficient Complaint Database that produces useful and objective
data. We believe the Complaint Database needs to be properly balanced—needs to properly
balance the need to provide meaningful and useful information, with the need to safeguard
consumers and financial institutions from the possible negative consequences that may
result from inaccurate or invalid information—I’m sorry—unverified information. Members of the CFPB have reported relatively
positive experiences with the current database. For example, although some of our members
have reported significant delays in response times from the Bureau’s Consumer Response
Unit, many others have reported that their engagement with the unit has been positive
and that the unit has been very receptive to questions about complaints and access to
the system. Additionally, we have heard from members of
the daily reports that Carl mentioned earlier had been very useful for individual institutions
to analyze the data and to prove their internal processes. However, as we previously have
noted to the Bureau in many forms, including written comments, we still remain concerned
about several aspects of the database. Specifically, the CBA believes the agency’s
current practice of publicly identifying institutions in the database has the potential to create
serious adverse implications for consumers and financial institutions alike. The Bureau
has stated that the primary purpose of the database is to provide consumers with timely
and understandable information to make reasonable decisions about financial transactions and
to enhance the market’s ability to operate transparently and efficiently. We maintain that the public identification
of institutions can work against this principle, given the unverified nature of the complaints.
These potentially inaccurate and unverified complaints could become the very basis on
which consumers make their financial decisions. Furthermore, institutions under the $10 billion
asset mark are not included in the public database. If it is the Bureau’s intention
to publicly release the names of issuers in order to make consumers to better shop in
the financial market, it would give institutions under than $10 billion asset range an unfair
advantage, as they will not be listed in that database. By making this information public,
the Bureau, the agency created to level the playing field, has in fact created an un-level
playing field. Also, the mere number of complaints can become
a significant concern for larger institutions if the numbers are not put into context and
normalized. The lack of information on the number of consumers for different products
and services results in the comparison of gross complaints only, unfairly targeting
some institutions over others. The CBA remains dedicated to this issue, and
we look forward to working with the Bureau going forward. Thank you. [Applause.] SCOTT PLUTA: Thank you, David. Lastly, Professor
Mansfield. PROFESSOR CATHY MANSFIELD: So the disadvantage
with going last in a forum like this is everybody has said almost everything I had in my outline,
including the elephant, which is what I was going to start with, so… [Laughter.] PROFESSOR CATHY MANSFIELD: But I think the
elephant is actually a pretty good comparison in the sense that different people, different
agencies can bring different information to the market that can be usable for everyone.
So to the extent industry has concerns about misinformation in the market, you know, bring
more information to the market. That’s sort of my thinking about that. I think what I want to say is that problems
trickle up, and I think that what is instructive in terms of my experience with the subprime
mortgage market is that the problem started to show itself in the late 1990s. I’m a former
legal aid attorney, and I am active with a lot of consumer attorney organizations, and
we were starting to hear the same story over and over and over at conferences that we went
to. We would bring those people to hearings on the Hill, and the response was, “What a
terrible story! It must be anecdotal. There really isn’t a need for a public policy response,
because this has to be anecdotal.” So I took it on as a researcher and as a professor that
it was my job to try and prove that some of these stories were not anecdotal, and proving
that became almost impossible. I did two studies in the early 2000s. One
was looking at what the interest rates were on subprime mortgages. In order to gather
that data, I had 20 research assistants go through 454(b) filings with the Securities
and Exchange Commission, and we’ve turned that into a table. It was impossibly long,
and it was inaccurate in the sense that it wasn’t statistically significant, because
I wasn’t able to look at the non-securitized mortgages. Then I decided to do a study with a colleague
about whether or not the subprime mortgage market was having a net gain or a net drain
on homeownership, sustainable homeownership, and for that study, the material that I was
able to get to make that study was even more sporadic. I always say it was my “fruit salad
piece of writing,” because I couldn’t compare apples to apples. I had a banana and an orange
and grapes, but it was what was available. So I think that the role that this database
can play is to recognize that these problems do trickle up. The people who are getting
these products that are the most problematic are the people who have no political voice,
and so in order to see what’s going on, we need to have a place to see what they’re experiencing
as it trickles up to those of us who were in policy positions and those sorts of things.
And so my comment on the database is similar to some of the ones that are made, which is
it’s not specific enough. It’s not enough for me to know that there were, you know,
59 complaints about arbitration if I don’t know that that someone is unable to find a
credit card without an arbitration clause or that they’re facing a motion to dismiss
a lawsuit, being forced into arbitration. What exactly does that mean? And the other thing is that one complaint
may have multivariable problems. So in the subprime mortgage market, you could get a
single loan where you had a borrower of color who got upsold in the interest rate, but they
also had a prepayment penalty. They also had some other thing that should be categorized
separately, because it’s a bellwether of a different—related but different problem. So I encourage the Bureau to continue to make
the information available. It’s certainly key to the work I do. It’s key to public policy,
but I think it needs to be somewhat disaggregated and more detailed in order for it to be usable
by those of us who are trying to make public policy suggestions based on what’s happening
in the market. Thank you. [Applause.] SCOTT PLUTA: Thank you, Cathy. Just to say
a word, we launched the public database last June. We’ve done subsequent releases. As Rich
indicated and as we’ve indicated in the blog posted today in the press release, we will
continue to evolve the public database, so this is a fantastic opportunity for us to
hear from the learned panelists and others and you all out in the audience about the
specific ways that we can improve the public database, because the requirements for the
subsequent releases have yet to be written, and when we hear very good feedback from industry
and from consumer groups and from academia and researchers, that feeds directly into
the next release of the database. So we will start working on making things more specific.
We will start looking at figuring out how to normalize the data with input from industry
and companies. So, with that, thank you very much for that
portion of the problem. Now we are going to move on to some Q&A. Steve Antonakes, who
is the Acting Deputy Director for the Bureau and the Associate Director for Supervision,
Enforcement, and Fair Lending, will begin with the first question. STEVE ANTONAKES: So, great. So, thanks, Scott,
but I also want to thank our panelists for their time and their thoughtful remarks today.
We’ll have a few questions. So, Professor Mansfield, since you were kind
enough to wait to be last, I will direct the first question to you. PROFESSOR CATHY MANSFIELD: Okay. STEVE ANTONAKES: And it’s simply this. Currently,
the Bureau has simply made data available to the public without analysis, and the question
is, do you view it to be more appropriate for us to be sharing trends and analysis as
we see it in the data, or should we simply leave it to the market to do that type of
analysis? PROFESSOR CATHY MANSFIELD: I think that you
are right to not analyze the data because you don’t have, necessarily, a representative
sample, which is I think some of what you were talking about, and I think the benefit
of having the data out there is that it’s just available to be combined with other data,
looking at all sorts of things, maybe what I am interested in, in researching maybe what
somebody else is, maybe what Senators or Congress people are interested in. So I think that
unless you are going to try and do a market study where you are actually looking not only
at consumer complaints, but also at other market information, it is the right thing
not to analyze it. I think in other forums, where you are doing
a market analysis, it is the right thing to do the analysis, but taking other things into
consideration. STEVE ANTONAKES: Thank you. SCOTT PLUTA: So I’ve got the second question.
I’ll ask Rush. So, Ruth—and this dovetails off of what I talked about a little bit, which
are—is there data that the Bureau is either collecting currently or not currently collecting,
very specific instances of things that we are either collecting now or not collecting
that would be positive additions to subsequent releases of the public database? RUTH SUSSWEIN: So I’ll just start by saying
I do think we would come up with a different answer to Steve Antonakes’ question. We do
think that the Bureau should—has a responsibility to when a trend is identified, to report it
and disclose it to the public. That can be a way to avoid enforcement action. If some of the foreclosure problems were identified
early, some of the abuse could have been stopped. If debt collection going forward, if, for
instance, up-front fees on loan modifications were—you had loads of complaints about that,
saw the trend, and disclosed it early, that could be the kind of thing that you could
alert consumers, educate them, and ban that practice prior to it causing the problems
it’s caused, as an example. STEVE ANTONAKES: Yep. So I’ll only note that
we will obviously be analyzing the data, and it’s a rich source for us as we determine
our enforcement and supervision as well as financial education priorities, as well. RUTH SUSSWEIN: Thank you. RICHARD CORDRAY: I also would want to emphasize
there are, as I mentioned, other data sources that the Bureau is attempting to put together
and to compile, and, to the extent possible, sometimes depending on where the source of
that information is not possible, we will have a bias towards sharing that information
with the public. And I think the Bureau will become a significant source of information
for the public to analyze, not only on consumer complaints, but in other areas as well. RUTH SUSSWEIN: Thank you. I’ll just add that
when it comes to data collection, I just want to be clear that the more detail, the more
specificity you can provide on these complaints, the more value it is to people. It puts the
issue in context. If it’s just a category, it’s very hard, as the Professor noted, to
understand really what the problem was and does the consumer have a legitimate complaint.
So the more detail, the better. There are a couple of key areas. I would say
when it comes to foreclosure relief, that kind of data could be gathered and shared
to see who was actually getting help, where, what communities are being helped, and where
is there still a huge problem. I’ll leave it at that. Thank you. SCOTT PLUTA: Thank you, Ruth. ZIXTA Q. MARTINEZ: I also want to add my thanks
to the distinguished panel of experts joining us today. It’s obviously a very thoughtful
panel. You’ve already helped us think and frame this discussion further. This next question is for Carl. Carl, you
sent through some detail about how your company has been able to find the process useful for
your consumers and your customers. Can you tell us whether the consumer complaint information
has informed your company’s business practices? CARL SPRADLIN: Well, it always has. I mean,
the consumer complaint process is something we take very seriously, and through our quality
process area, all of the complaints are dealt with there. I think what this has given us database-wise
is another tool, and it gives us transparency, and it gives us an ability to have rigor with
the customer in regards to responding. So it’s an enhancement. Let’s think of it that
way. It’s evolving, and it continues to do that, and that’s what it really should do. ZIXTA Q. MARTINEZ: Thank you. STEVE ANTONAKES: Sonia, a common criticism
by some in industry has been that the complaint data that we have published is not a fair
representation of what consumers are really experiencing, and we would appreciate your
viewpoint on that criticism. SONIA ASHE: So I think that that question
would likely best be answered by the Bureau’s researchers, but the universe in which the
sample is drawn is all consumers with credit card complaints, and the size of—the number
of complaints seems to be large enough to be representative. I understand that there’s over 130,000 complaints
that you have already received, and that number continues to grow. So if not necessarily statistically
valid, if you aren’t able to normalize it at this point, it’s certainly large enough
to be representative and large enough to inform not only your decisions, but the choices that
consumers are making out in the public. STEVE ANTONAKES: The one thing I think we
have to keep in mind is that it is not a normal average citizen who actually takes their complaint
to a government agency. So there’s a certain degree of assertiveness and persistence, or
maybe it’s frustration and answer there. We do want to make it easier and feel more normal
to people that if you have a complaint, feel free to file it with the Bureau and submit
it to us, because we do want this to become as representative a picture of society as
we can make it. SONIA ASHE: And I would add to that, that
it is to a large extent the responsibility of organizations like ours and other organizations
that are certainly represented in this room to encourage community members that we work
with to go to the CFPB website and actually issue their complaints as well. SCOTT PLUTA: Just as a reminder, I get paid
by the complaint, so I strongly stand by that sentiment. [Laughter.] SCOTT PLUTA: David, a question for you, and,
again, this is similar to what I asked Ruth. Very important that we—you know, the industry
has concerns about the database, and we want to be very responsive to that. Carl and you
mentioned that we have reiterated both our complaint handling system and also the database
to be somewhat responsive or as responsive as we can to those concerns. Are there additional,
very specific adjustments in the way that we share the data that you believe would address
some of the industry’s concerns? DAVID POMMEREHN: Well, I mean, first, I would
go back to the validation issue. I mean, I think that is our chief concern, and it’s
a difficult one. It’s difficult to validate these complaints. We give a lot of credit
to the Bureau, and it’s not an easy task to undertake. You know, it’s just problematic, obviously,
for us in a lot of ways, and we think that there might be better ways to handle that
data or that issue or specific as far as credit cards are concerned, identifications, perhaps
to hold off until there’s final resolution, and then you can do the analyses that way,
as well. I would mention that the narratives have been
brought up here several times today, and although they’re not currently included, we would caution
for several reasons, and, primarily, it’s because of privacy issues under Gramm-Leach-Bliley.
We have expressed these concerns a number of time to the Bureau through our written
remarks, but we would just caution that this is approached very carefully. This provides
a forum where there’s a lot of issues with consumer privacy and how we deal with the
folks that we have in our membership. SCOTT PLUTA: Thank you, David. ZIXTA Q. MARTINEZ: This next question is for
Spencer. Spencer, thank you for some of the criticism connected to the need for additional
components. It’s greatly appreciated. Can you tell us a little bit more about how Woodstock
has used publicly available government data in the past and point to how it was effective,
either for Woodstock or for the public? SPENCER COWAN: Well, our most recent report
in fact used Home Mortgage Disclosure Act data from the Chicago six-county region for
2010 and looked at whether women had equal access to mortgage credit. What we found looking
at data overall, after cleaning it and making sure it was consistent, was that female applicants
were about 8 percent less likely to have loans originated than male applicants, but we also
observed in the data that there were some systematic differences. Women, for example,
were much more likely to apply without a co-applicant than males. So we looked at female applicants
with a male co-applicant and compared that with results from male applicants with a female
co-applicant. What we found was that female applicants with a male co-applicant were 24
percent less likely to have a loan originated for purchase and 39 percent less likely to
have a loan originated for refinance than male applicants with a female co-applicant. I discussed this with representatives of two
federal regulatory agencies last week. Both expressed considerable surprise at the results
and said that in fact this might indicate some issues and asked for further research
to try to narrow down—oh, I should mention that I controlled for loan-to-income ratio
in all the analyses. So they asked for additional analysis to try to narrow down the reasons
for the apparent disparity, so that’s the kind of research you can do. They hadn’t looked
at it that way. It’s not that they don’t do their job. They just haven’t thought of looking
at it in that context. ZIXTA Q. MARTINEZ: Thank you. We appreciate. RICHARD CORDRAY: That’s a good example of
how people outside these agencies can see something new or something that has not occurred
to people within the agencies. That’s what we’re trying to stimulate. I would also note that when I mentioned other
databases that we will be developing, it is part of a mandate Congress gave us. They didn’t
put a deadline on it, but it’s a high priority for us to review and reevaluate and revise
the HMDA data gathering to consider whether the right data is being gathered, whether
there’s other data not being gathered that should be. We also think there’s an opportunity
for us as we update previous provisions on this to think about newer technology, so that
we could get that information more easily with less burden on industry but get it in
a very effective way. So that these are all things, as we do other data projects at the
Bureau, that this is one of them. ZIXTA Q. MARTINEZ: At this time, I would ask
the guest panelists to rejoin the audience, and we’re about to start the public participation
component of the field hearing. SCOTT PLUTA: Thank you. [Applause.] ZIXTA Q. MARTINEZ: Now it’s time to hear from
audience participants here today. As I noted, our audience includes community leaders, advocates,
industry representatives, and, of course, hopefully consumers. The open mic portion
of today’s field hearing is an opportunity for the CFPB to hear your perspective about
today’s discussion regarding the expanded Consumer Complaint Database as well as to
hear about consumer financial trends and practices here in Iowa. Each person has about 2 minutes. What we hear from you is really important
and really invaluable. It’s a very efficient way for us to take additional feedback back
to the Bureau, but we have a number of you who signed up. So I would encourage you to
try and stick to the 2 minutes, so that we can hear from everyone that signed up to provide
public comment. So our first audience participant is Joe Henry.
There you are. Chris is going to give you a mic. JOE HENRY: Joe Henry with the League of United
Latin American Citizens. It’s great to see a Latina up there. Thank you. Director Cordray, now, the website is not
enough when it comes to communities. So we would like to know how would you promote the
agency to the public. Will your agency be noted on all financial documents that consumers
sign, like mortgage documents, credit cards? Will you have regional offices? Will you have
field staff who can go out to the public and do town hall meetings to explain what your
agency does, so that we have more than just an aggressive complainer who can reach out
and let you all know what’s going on? ZIXTA Q. MARTINEZ: Mr. Henry, you asked several
parts of that, some of it to the consumer complaint. So I’m going to invite Scott to
address consumer complaint portion of it, and then Director Cordray can talk more broadly
about some of the many field hearings we’ve undertaken in the past year. SCOTT PLUTA: Sure, so just very quickly. So,
first of all, thank you for coming. Second, Dodd-Frank was passed. We had a relatively
short period of time to set up a complaint intake function for 300 million Americans,
so we decided to do a phased rollout. So we started with the credit cards. We moved to
mortgages, bank products, so on. This year, we will get to debt collection and payday. The reason I point that out is we had to set
up the operation to make sure it worked and it was fully functional, so the water went
through the pipes and nothing burst. To the extent there were leaks, we could find and
fix them. At some point, once we feel very confident that those pipes can handle larger
amounts of volume, it’s at that point that we would then start to work very aggressively
with outreach efforts to go to what the Director said, to make people feel more comfortable
about coming to us when they have issues with these products. So there is money in our budget to start doing
outreach. We will start doing that and also start working with groups such as yours to
reach out to constituents and make them aware of the services that we can provide and then
help them out. RICHARD CORDRAY: But, frankly, Joe, this is
from the Director’s standpoint. You framed some of the issues that bound my life. We’ve
been given a budget cap by Congress. Unlike the other banking agencies, we are firmly
capped at a level. We have to have enough personnel to do our main job, which is, as
we mentioned, supervision, enforcement, regulation, consumer education engagement. We do not at this point anticipate that we
will have a deep field staff around the country. We just will not be able to afford it and
do our work. So what we are counting on is that an aggressive outreach effort by us,
but we’re also going to be counting—to throw it back at you, we are going to be counting
on folks in the field who care about consumer protection in the consumer groups and community
groups to help us spread the word about the CFPB. I do think that it is still the case
that we are not well known to the average citizen. I think over time, as we prove ourselves
and as we demonstrate value for citizens, that will change, but we don’t have some significant
advertising budget. Government agencies typically don’t, and we’re going to have to rely on
you to help us with that, so we ask you to do that. ZIXTA Q. MARTINEZ: And if we haven’t already
mentioned this already, when a consumer calls to talk to our consumer response specialists,
we have language translation capability for 187 languages, and we will get you a live
translator. Our next audience participant is Kyle Kalen. KYLE KALEN: Thank you. I am here as a consumer
to enlighten you and your staff on some of the background. I have actually been dealing
with a mortgage servicing issue for almost 4 years now, going back previous to, obviously,
before this organization’s existence. I believe mine was one of the first. Through congressional
means, I was able to get it to your organization. I didn’t go through the website, because I
believe it was on your desks when you started on the mortgages. It’s been a very long process, no disrespect.
It took some time. We’re still at it, but I am here to just acknowledge and thank Richard
Cordray and their staff for their diligence and reaction and continuing forward and changing.
I know it’s a growing, growing organization. I have been on your website more hours than
probably just about anybody else in this room as a consumer, and I feel it’s a good website.
And I haven’t used it again for the complaint process, but there’s a lot of good information.
I learned a lot, felt I needed to with the process that I’m in, and just seeing the press
releases and what’s going on, especially those that are associated with my situation, are
huge. It means a lot, and I thank you. [Applause.] ZIXTA Q. MARTINEZ: Thank you, Mr. Kalen. Sue Ravenscroft. SUE RAVENSCROFT: We live in the world—I
guess I’m a consumer. I’m also a professor. Right now, I’m lucky I don’t have any mortgage
issues to complain about. But we live in the world that’s not perfect, so that means when
there are disagreements, when there are problems, the fact that it was resolved one way or another
doesn’t mean that the truth was necessarily arrived at. So I say that because I think
it would be too restrictive to say we can put information about which institution, which
lender was involved, only if there was a resolution. We need to name those resolutions. Right now, we live in the world that’s awash
with information. You can go to any website of any company and get complaints. You can
get reviews from consumers. Some of them are positive, some of them are negative, but we
don’t say, “I need to know the truth before I can read that review.” Consumers know how
to use information these days, and we are getting better at it. So thank you very much
for providing all the information, and I would definitely be a supporter of identifying institutions.
Otherwise, that information isn’t very valuable to potential lends. I’m a professor, so I’m concerned about my
students who are taking on enormous loans with sometimes very onerous and punitive conditions.
Thank you. ZIXTA Q. MARTINEZ: Thank you, Professor Ravenscroft. Susie Petra. SUSIE PETRA: Hello. I’m an activist. I belong
to Iowa CCI. I’m a member of the League of Women Voters. I’m also a community member
who helped our small city do something about a payday lender—excuse me—payday loan
ordinance. All that we can do, of course, is zoning, since we are waiting on Congress
or our State legislators to do something about that. My question is, what is your Bureau doing
to protect consumers from the usury interest rates, up to 400 percent, that payday loans
charge, and does this information get to Congress or to the State legislators? RICHARD CORDRAY: So, just briefly, the first
field hearing we held after I was appointed Director by the President was on payday lending
and short-term high-cost loan products, and we had that in Birmingham, Alabama, and sent
out a request for information indicating our interest in this subject and broadly soliciting
people’s input. We have since that time launched our first
round of examinations, which is on-site scrutiny of both storefront payday lenders and the
banking institutions that offer a payday like advanced product, and that is yielding significant
information about how those products work, what the effect is on the customers and the
like, all of which will inform our action. We further will be, I think in the course
of this year, beginning to accept specific complaints about payday loan problems on this
consumer response portal and include those, begin to include those in the database, and
then the question becomes what action will we be taking in light of that. That is something
that we will be considering during this year at the Bureau. We did just come through a significant task
of having to write massive and very important mortgage rules that Congress had given us
a deadline to complete by January of this year, so now we’re turning to other issues,
and we’re also working with other regulators. And it’s important for us, and we are working
with state governments and local cities who have a very specific role to play here on
these issues, as well. I would encourage you to continue to work at the state and local
level on this, even as we’re now entering the scene at the federal level, also. ZIXTA Q. MARTINEZ: Thank you, Ms. Petra. Deborah Fink? DEBORAH FINK: I’m passing. ZIXTA Q. MARTINEZ: Okay. Joe Fagan? JOE FAGAN: It sounds like from—as you laid
out what you did here for us, how people are going to get the word out, what companies
have done, this or that, to them, that ultimately you are going to find some bad actors. Statistically,
you may say, well, it doesn’t add up because the number has got to be a bigger number,
et cetera, but you will find out some bad actors. Bad actors have a history of hanging
around a long time. We’ve had bad actors in the financial industry around a real long
time, and the government stewed with statistics, numbers, et cetera, and they’re still around.
And people have been fine, but individuals basically have never had a criminal charge
hired against them and/or gone to jail, and the economy has crashed because of the bad
actors. So, under this, my question is, when the bad
actors appear on your screen from all this display you showed, as you are helping, one
at a time, people solve their individual problem, will you be urging policy changes and making
it by these companies and by the government, and as you hear these horrid stories and you
say, God, something has really got to be done, are you going to just keep doing it one on
one and let the marketplace figure it out, or are you going to actually take a public
stance and call them a bad actor and ask state and federal government to deal with these
bad actors in a way that there’s true consequences, not that they’ll get a slap on the wrist,
but if there’s maybe a mortgage servicer or a student loan servicer, is there really—hurting
a lot of people, are you just going to say don’t do it again, or are you going to make
it public and get the government to actually do something solid that’s going to result
in consequences? That’s my question. [Applause.] ZIXTA Q. MARTINEZ: Thank you so much, Mr.
Fagan. RICHARD CORDRAY: So we’ve always had bad actors,
and we will always have bad actors, and that’s why we have law enforcement. That’s why we
have prosecutors. That’s why we have attorneys general. That’s why we have bank superintendents,
and in part, that’s now why we have this new Bureau. And we have been given not only this
consumer complaint authority and not only consumer education engagement authority, but
supervision authority, enforcement authority, and regulatory authority. So, in terms of
whether we will be suggesting policy change, we will be making policy change when it’s
within our authority to do so, and we— [Applause.] RICHARD CORDRAY: And we’ve already—we are
well underway with our supervision and enforcement work. Supervision work creates a lot of corrective
action for institutions that has to be done under compulsion, not voluntary, and cleans
up a lot of problems, but enforcement action is important and an important part of the
question. We’ve taken some significant enforcement actions to date, but we are still just underway,
and when there are—when that’s necessary and important to do—and it’s often important
to the industry to see that they are being policed—we will do that. We will do that
when it’s appropriate and when the facts justify it, but we certainly won’t hesitate to do
it when the facts justify it. [Applause.] ZIXTA Q. MARTINEZ: John Blasingame. JOHN BLASINGAME: I’m John Blasingame and a
retired construction worker, member of CCI. What exactly is your budget for your department,
your total budget? And you mentioned you didn’t have very much money to spend to publicize
your services. Exactly how much can you spend, say, on radio and TV advertising just to get
the word out to the general public that you exist and what you can do? ZIXTA Q. MARTINEZ: If I could take a crack
at it, I think relative to the need and relative to what we hear from consumers every day,
we’ve been traveling around the country for some time, even before we became a federal
agency, and we hear from folks. And we hear about the troubles that they are facing, the
challenges connected to the economy. Relative to what is going on to consumers, it’s certainly
not adequate, but we do have a very complex and well-developed——as Director
Cordray, we have a Consumer Complaint Database. We have enforcement authority. We have supervision
authority. We also have a division dedicated entirely to financial education, because the
most important thing we can do is make sure that consumers have the information they need
to make the right kinds of choices to their specific situation. So rather than getting into a detailed discussion
about what is or isn’t in our budget, I think the important point is that we see a lot of
need. We will do our part, but we also need your help in helping us getting out the word,
making sure that as you’re seeing problems and trends in your neighborhoods and your
communities, you bring that to us. We listen. I think one of the things that I’m most proud
of as a member of the Bureau is the fact that we execute on our promise to listen, and it
has served us extremely well, because we have the benefit of a wide range of very important
perspective. It helps us calibrate our movement forward. Thank you for being here today. Cherie Mortice? RICHARD CORDRAY: Let me just add. Let me just
add to that. Our budget is capped. It’s capped in such a way that we will almost certainly
never reach 2,000 people at the Consumer Bureau. So then the question becomes optically how
do you justify spending any significant amount on radio and TV advertising when that is a
direct tradeoff with having the examiners to go into these banks and financial institutions
and scrutinize their activities, with having lawyers bring enforcement actions, with having
rule writers and economists to write the rules to rein them in. That has got to be our priority,
and the other, we’re going to be relying in the first instance on all of you to help us
spread the word about the CFPB, and we will be justifying that over time as we deliver
on the actual substantive work that we’re doing. ZIXTA Q. MARTINEZ: Cherie Mortice. CHERIE MORTICE: Hi. My name is Cherie Mortice,
and I am a neighborhood grassroots organizer, also a member of Iowa CCI. I’ve seen and witnessed firsthand the impact
of these unfair and fraudulent foreclosures on my neighbors. I now have neighbors that
are living out in apartments and living with family, and they’re still waiting for payment
and restitution. Director Cordray, I’m actually going to invite
you to join a chorus, and then I’ll frame it as a question, but although I know that
your agency has no actual administrative or legal authority to lead a charge for the removal
of Ed DeMarco, the people that I have been talking about are essentially the invisible
walking wounded, and so I would just like to pose this question to you. Would you be
willing to lead the CFPB to join the chorus of neighborhood and grassroots organizations
across this country that are calling on the President to remove Ed DeMarco from the position
that he holds that is blocking Fannie Mae and Freddie Mac from releasing money to give
relief to people that have been thrown out of their homes? [Applause.] RICHARD CORDRAY: So I will say here what I
say frequently to groups that we meet with, community groups, consumer groups. You have
your role to play; we have our role to play. It is your role to play to do just what you
described, if you see fit, and advocate and apply pressure to the government and to us
when you think it’s appropriate to try to get action. It is not my role to play to be
trying to make personnel decisions at other agencies that do not fall within my authority,
and so that’s something for you all to consider how you all want to proceed, but my job is
to run this Bureau and to work with the other agencies. And as for those other questions,
there are people who have that responsibility, but that’s not my responsibility. ZIXTA Q. MARTINEZ: Thank you, Ms. Mortice. Ken Bowen. KEN BOWEN: That was close. ZIXTA Q. MARTINEZ: I apologize. KEN BOWEN: That’s all right. “Bowen.” ZIXTA Q. MARTINEZ: “Bowen.” Of course! [Laughter.] KEN BOWEN: It’s a familiar name. To me, anyway. [Laughter.] KEN BOWEN: Okay. Since I’ve been limited to
2 minutes, very restrictively limited to 2 minutes—sorry—we have seen in the State
of Iowa what can happen with a legitimate and necessary organization having its funds
hacked, especially in the area of field inspection, and I would like to—as has been mentioned
that the CFPB has limited resources, it is absolutely essential that the Bureau be fully
funded. I would like to ask those who represent legislative individuals, our Congressmen,
Senators, those that have the wherewithal to impact the CFPB’s budget to pledge to support
and fund the CFPB and not—well, not cut the program’s budget in the name of fiscal
expediency or to score a coup or whatever it is. We are currently seeing a round of
that in Congress, and I would like to ask those individuals who represent our legislative
personnel to make that pledge today and stand by that. We need this agency. We need the
work they do. We’re getting—well, never mind on that part. So that’s my question: Will they stand up?
Will they support the American consumer, and will they do the job that we need to have
done in Washington? Thank you. [Applause.] ZIXTA Q. MARTINEZ: Thank you, Mr. Bowen. Jess Mazour. JESS MAZOUR: I am going to tell my story,
and it’s a story I’m not proud of, but when you graduate from college in the height of
an economic crisis, you kind of take whatever job you can get. I worked at Wells Fargo Home
Mortgage from May 2009 to October 2010 at the height of the mortgage crisis. While working
there, it was hammered into me that these people signed contracts, and if they can’t
make their payments, it’s their fault, not ours. There were many meetings on what we couldn’t
do to help homeowners—remove fees, forgive payments, stop credit reporting, or promise
assistance—but there were no meetings on compassion, hardships, or how we can help
the most people. I received daily calls from homeowners who
had submitted their complete modification application documents on time. They were calling
to check on the status of their modification, and we would always say, “We received your
documents. We’ll work on them. We’ll get back to you. You don’t need to call every day.” When a modification specialist finally got
around to reviewing their application, their financial statements were out of date, because
Wells Fargo simply didn’t have enough people to process these modifications. We had to
request the homeowner send them in again and again and again, over and over again, and
start this whole process over. This happened every day, multiple times a day, and it happened
to each customer many, many times. It seemed impossible for someone to work through the
system for help, and all along, we were trained to think, “You shouldn’t have gotten a loan
you couldn’t afford. This is the process. Get used to it.” If someone’s application finally got reviewed,
they were put on a 3-month trial payment period to see if the customer would be able to afford
lower payments. The customers paid this new amount for 3 months. They were hopeful that
they finally got through the system they were going to be able to save their home. Most
of the time, these 3-month trial periods were still denied for various reasons. At this point, the customer had only been
making partial payments for 3 months, and now they’re even farther behind on their loan.
This practice was so immoral to me. I hated telling people, “Sorry your husband got cancer.
You signed this contract, and this is the process if you want help,” “Sorry your life
lost her job. You should have been saving for this circumstance.” “Your interest rate
jumped up to 15 percent. Well, you should have read your loan documents before signing
an ARM loan,” said to the person who barely spoke English. Customers were angry, and rightfully so. Wells
Fargo was playing ball with their home. Wells Fargo was making record profits and not passing
that along to their customers. Customers called in over and over again asking what the fees
on their account were. Many had thousands and thousands of dollars of fees, and I couldn’t
tell them what their fees were for even if I wanted to. Most fees were coded with numbers,
and we weren’t told what those numbers meant. There is a whole department there that the
job is to turn those numbers into names of fees. It’s not right. It’s not right at all. I could go on and on about the awful things
that I was required to do while working at Wells Fargo. Wells Fargo and the big banks
created this crisis, put millions of homeowners out on the street, and made record profits
in the process. This is wrong, and I’m sure it’s still happening today, because no one
has made them stop. [Applause.] ZIXTA Q. MARTINEZ: Thank you, Ms. Mazour.
Thank you for having the courage to share that with us today. It informs and bolsters
our perseverance and persistence and keeps our nose to the grindstone. We know why this
work we do is important. Barb Kalbach. BARB KALBACH: My name is Barb Kalbach. I’m
a nurse and a family farmer from west of Des Moines here and also an activist with Iowa
Citizens for Community Improvement. And I just want to reiterate on the payday
lending issue that we have a scourge of payday lenders at least in this state and probably
across the nation, and as Jess talked about Wells Fargo, at the very time they couldn’t
help people with their mortgages, they couldn’t hire enough people to government through the
mortgage problems, they were bankrolling payday lenders to leach money out of the poorest
of our citizens. And I want to especially emphasize that the
CFPB needs to get busy and make sure that they disallow the use of disability, Social
Security, and unemployment insurance checks as collateral with these payday lenders, and
even as the banks have maybe—maybe—I’m not sure that they have—withdrawn a little
bit about funding these payday lenders by the millions of dollars, they are doing it
themselves now out of their own offices. So they need to be—have their toenails trimmed
as quickly as you can do it. I can give an example of Creston, Iowa. I
think it has a population of about 5,500. They have three, at least, payday lenders.
That’s the last time I checked. Now, why would they be in the rural southwestern town of
Creston, Iowa? Well, let me see. There’s a community college there, read students, and
there’s a large elderly population, read desperation. So while we appreciate the fact that you guys
have come out here, what we need you to do are things like write rules that will crack
down on payday lenders, really enforce the laws on the books, refer Wall Street criminals
to the Justice Department for prosecution, and make the fines for breaking the law big
enough that you get their attention. We appreciate that, and that you’ll do it as quickly as
possible. Thank you. [Applause.] ZIXTA Q. MARTINEZ: Thank you, Ms. Kalbach. Alex Kornya? [No response.] ALEX KORNYA: Hi. My name is Alex Kornya. I’m
a staff attorney at Iowa Legal Aid here in Iowa, and a considerable part of my caseload
is consumer defense. I wanted to ask a couple of questions about
a couple of very narrow areas, which I believe are under CFPB’s regulatory purview or are
shared with other agencies that affect our clients quite a lot, and those would be debt
buyers and foreclosure rescue scams. Starting with debt buyers, just to sort of
explain what I mean by that term, a debt buyer is a company which purchases defaulted loans,
credit card obligations, things of that nature, and then conducts collection activity upon
those loans. I seem to remember at a webinar for legal services providers that was held
a few weeks ago that there was some discussion of making information in the database or making
an element of a complaint involving a debt buyer that this particular debt buyer who
is a subject of the complaint in part of the response to CFPB would have to provide some
sort of information relating to proving up chain of title, which is just a problem with
these cases. Taking them on a defense stance, as I do quite
often, oftentimes they are unable to make these connections. Sometimes they will provide
documents that just have completely wrong data, where they claim to acquire—this happened
in more than one occasion—claim to acquire the debt before the debt was actually created
in the first place, which is always fun to point out in court, I have to add as an aside. The second group, of course, that I had mentioned
is foreclosure rescue scams. I know that this is an enforcement area that CFPB shares with
the FTC, is my understanding anyway, and I know that CFPB is currently in charge of the
MARS rule, if there’s any further changes to that. Is there any plans to include this
as a separate category on the website, on the database, something that would be searchable?
And the reason I think this would be very, very useful is that a lot of times, I think,
you know, we’re talking about providing information to consumers to be able to make informed choices,
to be able to make sure they don’t end up in my office, needing my assistance later
on down the road, and I think specifically with these foreclosure rescue scams, if there
was information about particular companies and a place where consumers knew to be able
to go and look up a particular company to see complaints, point of purchase, people
under a lot of pressure, put under a lot of pressure by these companies and misled by
these companies, they had a place to go get good information where they could actually
feed a specific company’s name in, I think that that could be very helpful. Are there any plans to do either one of those
things with the database? ZIXTA Q. MARTINEZ: Mr. Kornya, I am going
to invite Assistant Director Scott Pluta to talk about the complaint portion, and as to
your comments in connection to debt buyer and debt collection notices, we actually have
an expert with us today, John Pitts, who is behind way back there. Hi, John. I would invite
you to talk to him about some of the work in that area. Scott, why don’t we start with you. SCOTT PLUTA: Thank you, Zixta. So, just very
quickly, this summer we’ll be starting to intake complaints on debt collection. Just
to give you some idea of scale, last year the FTC received somewhere in the neighborhood
of 190,000 complaints about debt collection, so that’s one area that we have to move into
very carefully, given what I talked about with respect to modest volume, be careful
of their operation. That said, we are moving ahead very quickly. We will be intaking complaints
this summer. What we are working on, what I am working
on right now is building exactly what that looks like, so what does that mean, and the
issue that you point out—I may have been on that webinar—that’s something that we
are examining very closely, which is when we send a complaint to whether a debt buyer
or a collector, you know, how do we get them to——that they actually do
have a right to collect on that. Is it by some type of affirmation? Is it actually asking
for documentation? So that’s something that we’re in conversation with, both consumer
groups and the trades and some of the individual companies, about what that exactly looks like,
but that issue specifically is very much on our radar. We’re building that, and that’s
very helpful to hear that. Additional input like that is very helpful as we are in this
very important phase of building that operation. Thank you. RICHARD CORDRAY: So the fact of the matter,
Alex, is we have work ongoing right now on undocumented debt selling and documented debt
buying and documented debt collection, and it is a serious issue and a serious problem,
particularly coming out of the crisis. We estimate—the best estimates are there are
30 million Americans coming out of the financial crisis who have debt collectors chasing them,
and it’s an ongoing problem. There’s a variety of things that we’re doing,
some of which I can’t talk about publicly. We’re also working up and working with some
of the states on model debt collection rules that courts can adopt to require documentation
of debts before you can file a complaint, certainly before you can get a judgment. Maryland
and North Carolina have taken some action on this, and we’re looking to spread that
across the country. On the foreclosure rescue scams, we have a
couple of public enforcement actions in that area. The trouble with foreclosure rescue
scams is they can come and go so quickly. They’re very fly-by-night, many of them. When
I was Ohio Attorney General, I think we filed 30 actions in 2 years there, and it was just
a drop in the bucket. So this is something we have to work with the FTC, with the state
attorneys general, and all of us together on it, but they come and go very fast, and
it’s a very frustrating area of law enforcement. But one of the things we’ve seen is some of
that activity is moving into and behind LLC designations, thinking it would be more difficult
for us to get at if it’s some version of a sort of legal practice. We think it’s very
important for us to send a message that that doesn’t shield you with in fact your violating
the law, including taking up-front fees before you do any work. SCOTT PLUTA: Jo Rod. JO ROD: I really appreciate being here today
to hear about all of your efforts, which I certainly approve of. Right now, there are 43 Senators in Congress
who are saying you should not exist, as you are existing today, and this really upsets
me. I’m a consumer. I lost a $8,000 bond with Lehman Brothers because it was deemed AAA-rated,
and 1 month later, it was DDD-rated. So I understand how consumers can suffer. I am very concerned that you are still here
a year from now, and I just want to say to anyone here who is fighting against this agency
as it is set up, we don’t want it changed. We want it to be independent, and we appreciate
Mr. Cordray very much. Thank you. [Applause.] ZIXTA Q. MARTINEZ: Thank you, Ms. Rod. Claudia Hawkins? CLAUDIA HAWKINS: Good morning, and thank you
very much for being here this morning. As a credit counselor and a financial educator,
I am trying my best here to get ahead of the complaints. Please send people to 211. Have
them come in and talk to a credit counselor, a budget coach, before we have these complaints.
We have the services. Send people to meet with a credit counselor before, so we can
try to get ahead of some of the complaints before they go to this agency. Thank you. [Applause.] ZIXTA Q. MARTINEZ: Thank you, Ms. Hawkins.
Thank you for the important work you do here in Iowa. Stephen Tews. STEPHEN TEWS: Hello. My name is Stephen Tews.
I’m a retired UAW member and also a social justice activist with Iowa CCI. I see the—as a matter of fact, I have a
couple of comments I’d like to make quickly. In regard to the consumer financial trends,
an observation that payday lenders are a depression sign that our national community is depressed,
thereby necessitating even the thought of dealing with these predatory lenders. Likewise, the great student loan debt is depressing
our national economy—I heard an academic refer to this—thereby disallowing primarily
young persons the options of adding to our gross domestic product to purchase a new car,
for example. Thank you. ZIXTA Q. MARTINEZ: Thank you, Mr. Tews. That concludes the field hearing in Iowa about
the Bureau’s expanded Consumer Complaint Database. Thank you for taking time from your busy day
to join us here at the Central Library in downtown Des Moines. We greatly appreciate
your feedback, and thank you to those of you who joined us by Livestream. [Applause.]

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