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JOHNSON ON CFPB’S SEMI-ANNUAL REPORT TO CONGRESS

June 10, 2014

WASHINGTON – Today, Senate Banking Committee Chairman Tim Johnson (D-SD) held a hearing titled “The Consumer Financial Protection Bureau’s Semi-Annual Report to Congress.”

Below is Chairman Johnson’s statement as prepared for delivery:

“I call this hearing to order.

“Director Cordray, welcome back to the committee. Today, we continue our regular oversight of the CFPB. In the three years since the CFPB opened its doors, it has had a noticeable impact on nearly every aspect of the consumer’s experience with the financial system, from student loans to credit cards, mortgages, financial education, debt collection, prepaid cards, and credit reports. The Bureau has conducted extensive outreach to both industry and consumers and has proven itself to be a careful regulator, in many cases over industries that previously had no federal supervision. Importantly, the CFPB has also proven itself up to the task Congress set out for it, which is to protect consumers. To date, the Bureau has obtained nearly $900 million of refunds and fielded over 310,000 consumer complaints.

“During the crisis, we saw that mortgage lending, from underwriting to servicing, had serious problems. Fittingly, many of the CFPB’s most significant actions relate to mortgage lending. For example, the Bureau recently finalized its mortgage disclosure rules to improve closings and provide key loan terms and costs to consumers in clear, understandable forms. While the consumer experience at the mortgage table is an important aspect of mortgage lending, the ability of consumers to access affordable mortgage credit in the first place is critical. The CFPB’s rules to strengthen mortgage standards, including the QM and servicing rules, went into effect this past January. Director Cordray, I look forward to hearing how these rules impact mortgage lending, particularly by small lenders or lenders in rural areas such as South Dakota. While I support strong mortgage standards, it is also important to ensure that lenders can continue to lend in all communities.

“Since Director Cordray testified last November, the Bureau finalized its rule to supervise nonbank student loan servicers who service over 49 million borrower accounts. For the first time, the nation’s second largest consumer debt market will have federal supervision. I am encouraged by this action, but remain concerned about the high level of student debt, which stands at $1.2 trillion. This issue is particularly important to me, as South Dakota has the highest proportion in the country of residents with student loan debt. I am interested to hear from Director Cordray about actions the Bureau plans to take to address this growing problem.

“According to Federal Reserve data released last Friday, consumer credit growth jumped to its fastest pace in three years, with credit card debt rising at a pace unseen since 2001. This serves as a reminder that as memories of the last crisis fade, we need a diligent CFPB that guards against abusive practices and ensures consumers are able to make responsible financial decisions while having fair access to affordable credit. I applaud the CFPB’s work so far and look forward to your testimony.”

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