Senate Hearing, 112TH Congress - Nominations Of: Patricia M. Loui, Larry W. Walther, and Richard Cordray

S. HRG.
112342
NOMINATIONS OF: PATRICIA M. LOUI, LARRY

W. WALTHER, AND RICHARD CORDRAY
HEARING
BEFORE THE
COMMITTEE ON
BANKING, HOUSING, AND URBAN AFFAIRS
UNITED STATES SENATE
ONE HUNDRED TWELFTH CONGRESS
FIRST SESSION
ON
NOMINATIONS OF:
PATRICIA M. LOUI, OF HAWAII, TO BE A MEMBER OF THE BOARD OF
DIRECTORS, EXPORT-IMPORT BANK OF THE UNITED STATES
LARRY W. WALTHER, OF ARKANSAS, TO BE A MEMBER OF THE BOARD
OF DIRECTORS, EXPORT-IMPORT BANK OF THE UNITED STATES
RICHARD CORDRAY, OF OHIO, TO BE DIRECTOR, CONSUMER FINANCIAL
PROTECTION BUREAU
SEPTEMBER 6, 2011
Printed for the use of the Committee on Banking, Housing, and Urban Affairs
(
Available at: http: //www.fdsys.gov /
U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON
73757 PDF
2012
For sale by the Superintendent of Documents, U.S. Government Printing Office

Internet: bookstore.gpo.gov Phone: toll free (866) 5121800; DC area (202) 5121800
Fax: (202) 5122104 Mail: Stop IDCC, Washington, DC 204020001
VerDate Nov 24 2008
12:20 Apr 26, 2012
Jkt 048080
PO 00000
Frm 00001
Fmt 5011
Sfmt 5011
L:\HEARINGS 2011\09-06 NOMINATIONS OF LOUI, WALTHER AND CORDRAY\HEARING\
COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS

TIM JOHNSON, South Dakota, Chairman
JACK REED, Rhode Island
RICHARD C. SHELBY, Alabama
CHARLES E. SCHUMER, New York
MIKE CRAPO, Idaho
ROBERT MENENDEZ, New Jersey
BOB CORKER, Tennessee
DANIEL K. AKAKA, Hawaii
JIM DEMINT, South Carolina
DAVID VITTER, Louisiana
SHERROD BROWN, Ohio
MIKE JOHANNS, Nebraska
JON TESTER, Montana
PATRICK J. TOOMEY, Pennsylvania
HERB KOHL, Wisconsin
MARK KIRK, Illinois
MARK R. WARNER, Virginia
JERRY MORAN, Kansas
JEFF MERKLEY, Oregon
ROGER F. WICKER, Mississippi
MICHAEL F. BENNET, Colorado
KAY HAGAN, North Carolina
DWIGHT FETTIG, Staff Director
WILLIAM D. DUHNKE, Republican Staff Director
CHARLES YI, Chief Counsel
LAURA SWANSON, Policy Director
PAT GRANT, Counsel
CATHERINE GALICIA, Counsel
WILLIAM FIELDS, Legislative Assistant
BRIAN FILIPOWICH, Professional Staff Member
ANDREW OLMEM, Republican Chief Counsel
BETH ZORC, Republican Counsel
DAWN RATLIFF, Chief Clerk
RIKER VERMILYE, Hearing Clerk
SHELVIN SIMMONS, IT Director
JIM CROWELL, Editor
(II)
VerDate Nov 24 2008
12:20 Apr 26, 2012
Jkt 048080
PO 00000
Frm 00002
Fmt 0486
Sfmt 0486
C O N T E N T S
TUESDAY, SEPTEMBER 6, 2011
Page
Opening statement of Chairman Johnson .............................................................

Prepared statement ..........................................................................................
Opening statements, comments, or prepared statements of:
Senator Shelby ..................................................................................................
Prepared statement ...................................................................................
Senator Reed .....................................................................................................
Senator Akaka ..................................................................................................
Introduction of Nominee ...........................................................................
Prepared statement ...................................................................................
Senator Brown ..................................................................................................
Introduction of Nominee ...........................................................................
Senator Hagan ..................................................................................................
Senator Menendez ............................................................................................
WITNESSES
Senator Daniel K. Inouye of Hawaii
Introduction of Nominee ..................................................................................
Senator Mark L. Pryor of Arkansas
Senator John Boozman of Arkansas
1
40
15
41
17
18
3
42
19
23
21
22
2
4
5
NOMINEES
Patricia M. Loui, of Hawaii, to be a Member, Board of Directors, ExportImport Bank of the United States ......................................................................
Larry W. Walther, of Arkansas, to be a Member, Board of Directors, ExportImport Bank of the United States ......................................................................
Richard Cordray, of Ohio, to be Director, Consumer Financial Protection
Bureau ...................................................................................................................
ADDITIONAL MATERIAL SUPPLIED
FOR THE
6
42
7
43
25
44
RECORD
Letter of support for nominee Richard Cordray from John Glenn, retired
U.S. Senator from the State of Ohio ...................................................................
Letter of support for nominee Richard Cordray from the National Fraternal
Order of Police ......................................................................................................
Letter of support for nominee Richard Cordray from Steve Rasmussen, Chief
Executive Officer, Nationwide Mutual Insurance Company ............................
Letter of support for nominee Richard Cordray from the Ohio Bankers
League ...................................................................................................................
Letter of support for nominee Richard Cordray from various Ohio CEOs .........
Letter of support for nominee Richard Cordray from various Ohio Sherriffs ....
Letter of support for nominee Richard Cordray from various civil rights
groups ....................................................................................................................
47
48
49
50
52
54
56
(III)
VerDate Nov 24 2008
12:20 Apr 26, 2012
Jkt 048080
PO 00000
Frm 00003
Fmt 5904
Sfmt 5904
VerDate Nov 24 2008
12:20 Apr 26, 2012
Jkt 048080
PO 00000
Frm 00004
Fmt 5904
Sfmt 5904
NOMINATIONS OF:
PATRICIA M. LOUI, OF HAWAII,
TO BE A MEMBER OF THE BOARD OF DIRECTORS,
EXPORT-IMPORT BANK OF THE UNITED STATES;
LARRY W. WALTHER, OF ARKANSAS,
TO BE A MEMBER OF THE BOARD OF DIRECTORS,
EXPORT-IMPORT BANK OF THE UNITED STATES; AND
RICHARD CORDRAY, OF OHIO,
TO BE DIRECTOR, CONSUMER FINANCIAL PROTECTION
BUREAU
TUESDAY, SEPTEMBER 6, 2011
U.S. SENATE,
URBAN AFFAIRS,
Washington, DC.
The Committee met at 2:36 p.m., in room SD538, Dirksen Senate Office Building, Hon. Tim Johnson, Chairman of the Committee, presiding.
COMMITTEE
ON
BANKING, HOUSING,
AND
OPENING STATEMENT OF CHAIRMAN TIM JOHNSON
Chairman JOHNSON. Good morning. I call this hearing to order.

Thanks to all of you for joining us here today and a special thanks
to our witnesses and their family members who are with us.
Today we consider three distinguished individuals nominated to
serve in critical positions within the Obama administration. On the
first panel we have two individuals nominated to serve as Members
of the Board of Directors of the Export-Import Bank of the United
States, the official export credit agency of the U.S. On the second
panel we will hear testimony from the Presidents nominee to lead
the Consumer Financial Protection Bureau.
The first nominee is Ms. Patricia Loui. She is the founder and
Chair of OmniTrak Group, a marketing and research company
based in Hawaii. Ms. Loui has had extensive experience in working
with U.S. companies as they seek to expand into Asia. In addition,
earlier in her career she worked at the Bank of Hawaii and at
UNESCO.
Todays second nominee is the Honorable Larry Walther. Mr.
Walther served as the Director of the U.S. Trade and Development
Agency under President George W. Bush. He served for over 3
years as the Executive Director of the Arkansas Department of
(1)
VerDate Nov 24 2008
12:20 Apr 26, 2012
Jkt 048080
PO 00000
Frm 00005
Fmt 6633
Sfmt 6633
2
Economic Development and worked for SBC Communications, now
AT&T, for 30 years.
I look forward to hearing their testimony. After this panel we
will turn to our second panel. I encourage Senators who wish to
make an opening statement about the nominee for the CFPB to
wait until the second panel begins.
I would now turn to Senator Shelby for any opening remarks he
may have for panel one. Senator Shelby.
Senator SHELBY. Mr. Chairman, thank you. I have a written
statement that I would ask to be made part of the record. I would
look to hear from the nominees and also from my colleagues here.
Thank you.
Chairman JOHNSON. Would any other Senators like to make an
opening statement about panel one?
[No response.]
Chairman JOHNSON. We will now proceed to witness introductions. Senators Inouye and Akaka will introduce Patricia Loui. Senator Inouye.
INTRODUCTION OF NOMINEE PATRICIA M. LOUI BY DANIEL K.
INOUYE, A U.S. SENATOR FROM THE STATE OF HAWAII
Senator INOUYE. Mr. Chairman and Members of the Committee,

it gives me great pleasure to present to you Ms. Patricia Loui, the
nominee to serve as a Member of the Board of Directors of the Export-Import Bank of the United States.
Before I proceed, Mr. Chairman, I would like to present to you
her family. Her husband, Michael, is in the back of me, and her
son, Christopher, and her brother, Steven, are sitting right behind
me; and her sister, Kathleen, and her niece, Kristyn. They are here
to give a Hawaiian aloha here.
I strongly support the nomination of Ms. Loui as a Member of
the Board. She is an outstanding professional. She is diligent and
extremely bright. Ms. Loui is an accomplished international businesswoman who will bring extensive experience in banking and
Government to her new role.
Ms. Loui is the founder and Chair of the OmniTrak Group, as
you noted, a woman-owned small business that provides marketing
and research consulting to companies in the United States and
Asia. She has led OmniTraks expansion into the Pacific Rim where
it is known for its multicountry studies on product and market development, brand equity marketing, and leisure entertainment and
travel expertise. She cofounded the American-Thai-Singaporean
joint venture starting company in Thailand, which has become a
leading research company in the Association of Southeast Asian
Nations.
Prior to becoming the chief executive officer of OmniTrak, she
was a financial services industry vice president of marketing, planning, and development at the Bank of Hawaii. She served as an alternate on the founding board of the ATM system. She was the
first woman member of the ATM Board and the youngest woman
vice president of the Bank of Hawaii.
Currently Ms. Loui serves as an appointed member of Asia Pacific Economic Cooperation (APEC) 2011 Hawaii Host Committee.
President Barack Obama will host leaders of 21 APEC countries in
VerDate Nov 24 2008
12:20 Apr 26, 2012
Jkt 048080
PO 00000
Frm 00006
Fmt 6633
Sfmt 6633
3
our home State in November of this year. I hope the Committee
can make it.
She has several volunteer activities, including the Governor of
Hawaiis Economic Revitalization Task Force, the Governors International Congress Steering Committee, the University of Hawaii
Foundation Board of Trustees, Palama Settlement Board to help
disadvantaged youth, and the Honolulu Academy of Arts Christmas
Auction Fundraiser.
On a personal note, Mr. Chairman, I have known her family, beginning with her great-grandparents. We lived as neighbors a long,
long time ago.
Finally, I firmly believe that Ms. Louis skill will be of great
value to the Export-Import Bank of the United States, and I am
confident that she will serve with great distinction. So, accordingly,
I urge my colleagues to approve and confirm her nomination, and,
Mr. Chairman and Members of the Committee, I thank you very
much, sir.
Chairman JOHNSON. Thank you, Senator Inouye.
Senator Akaka.
INTRODUCTION OF NOMINEE PATRICIA M. LOUI BY DANIEL K.
AKAKA, A U.S. SENATOR FROM THE STATE OF HAWAII
Senator AKAKA. Thank you very much, Mr. Chairman and Members of the Senate Banking, Housing, and Urban Affairs Committee. I am very, very proud to join you in welcoming a distinguished constituent and a long-time friend of mine and her family.
Ms. Patricia Loui has been nominated by President Obama to serve
as a Member of the Board of Directors of the Export-Import Bank
of the United States.
As an accomplished international businesswoman who brings a
wealth of experience in banking, business, and economic development, she is an excellent nominee for the Eximbank. I am pleased
to join Senator Inouye in introducing her to the Committee.
This is an exciting and challenging time for the Eximbank. It
helps to create and maintain U.S. jobs by filling gaps in private export financing at no cost to American taxpayers. It just set a new
all-time record for export finance authorizations. It had loans of
over $24.5 billion at the beginning of August at a time when credit
has been tight.
It is providing opportunities for U.S. businesses to contribute to
our Nations international economic competitiveness at a time
when the Nation is struggling to recover from the recession. It
helps the small businesses that have always been the engine of our
economy, the workers who are still seeking employment, and the
families and communities that they support. During this exciting
and challenging time for the Eximbank, Ms. Loui is the right nominee to join the Board.
Under Ms. Louis leadership over the past 30 years, her company, OmniTrak, has become a leading research and planning firm
in Hawaii. It is recognized for its expertise and work in Asian markets in tourism, finance, health, communications, telecom, retail,
Government, real estate, and land development. Ms. Loui previously served as president of the East West Center Association, as
vice president of the Bank of Hawaii, and as a development plan-
VerDate Nov 24 2008
12:20 Apr 26, 2012
Jkt 048080
PO 00000
Frm 00007
Fmt 6633
Sfmt 6633
4
ner for the United Nations Development Programme and UNESCO
in Asia. And, of course, her work in the communitywhich includes being a member of the APEC Host Committee for the Leaders meeting in Honolulu in November of this yearhas been invaluable.
In short, Ms. Loui has developed an expertise in business that
perfectly aligns with her soon-to-be new role on the Eximbank.
With her passion for business and drive for success, I have every
confidence that she will make tremendous contributions to the
Bank.
But her qualifications for this appointment go beyond her impressive education, resume, and extensive experience. The entrepreneurial spirit runs in her family. Not only is OmniTrak Hawaiis largest market research firm, Pats parents, brothers and sisters, and in-laws have all run business ventures ranging from restaurants, marine design and engineering, insurance, flowers, and
furniture. And, according to family members, it is no surprise that
business runs in the family: The matriarch and patriarch of the
Loui family met because of business.
Four generations ago, Shizuko Katashima owned a large market
in Kapahulu, which she sold to Alicia Loui. Shizukos daughter,
Alyce, met and married Alicias son Fred. And family and island
history was made.
Ms. Loui, please accept my congratulations on your nomination.
Mahalo thank you for your dedication to public service.
Thank you very much, Mr. Chairman.
Chairman JOHNSON. Thank you, Senator Akaka.
Senators Pryor and Boozman will now introduce Mr. Walther.
Senator Pryor.
INTRODUCTION OF NOMINEE LARRY W. WALTHER BY MARK L.
PRYOR, A U.S. SENATOR FROM THE STATE OF ARKANSAS
Senator PRYOR. Thank you, Mr. Chairman, and I want to thank

Senator Shelby as well as all the Members of the Banking Committee who are here today to consider Larry Walthers nomination
to be a Member of the Board of Directors of the Export-Import
Bank of the United States. I believe he is an excellent choice. He
has 30 years of experience with the old Southwestern Bell Telephone Company, now AT&T. After he left there, he worked for the
Arkansas Economic Development Department, and he was instrumental in landing many, many big investments in our State, including Hino Motors and Denso Manufacturing. And so he has this
great mix of public and private sector experience, and I think he
brings that to the table.
Obviously, right now, given the state of our economy, we need
people who are well qualified, enthusiastic, and experienced in
these types of positions. He is exactly the right person for that.
And, last, let me say that the mission of the Export-Import Bank
is very needed today. About 85 percent of everything that they do
directly benefits small business in this country. They can be great
job creators here. They can help us export American goods and
services all over the world, and I certainly hope that this Committee will give him a favorable consideration.
Thank you, Mr. Chairman.
VerDate Nov 24 2008
12:20 Apr 26, 2012
Jkt 048080
PO 00000
Frm 00008
Fmt 6633
Sfmt 6633
5
Chairman JOHNSON. Thank you, Senator Pryor.
Senator Boozman.
INTRODUCTION OF NOMINEE LARRY W. WALTHER BY JOHN
BOOZMAN, A U.S. SENATOR FROM THE STATE OF ARKANSAS
Senator BOOZMAN. Thank you very much, Chairman Johnson

and Ranking Member Shelby, for allowing me to speak at this very
important meeting today. I am honored to be here and join with
Senator Pryor in introducing and supporting Larry Walthers nomination to the United States Export-Import Bank Board of Directors. His impressive background and extensive work experience
more than qualify him for this position.
A graduate of the University of Arkansas at Monticello, Larry
began his career as a switching engineer for Southwestern Bell
Telephone Company, which then led him to a 30-year career with
SBC Communications. He served for over 3 years as the Executive
Director of the Arkansas Department of Economic Development. In
this important position, he was responsible for the direction and
management of the department and for representing the Governor
and the State on all matters concerning statewide issues of economic development and, as Senator Pryor alluded to, did a very,
very good job.
Most recently, he served as the Director of the U.S. Trade and
Development Agency from March 2008 to January 2009. As our
Nation faces high unemployment, it is imperative that we have
leaders with managerial experience who best know how to create
jobs and help economies thrive.
Larrys nomination comes at a critical time, and we need his expertise as we work together to preserve Americas strength in the
global marketplace. I believe Larry Walther will do a great job, and
I know we will be proud of his future accomplishments at the Export-Import Bank. I congratulate him on this well-deserved nomination and strongly support his confirmation.
Thank you very much, and with that I yield bank.
Chairman JOHNSON. Thank you, Senator Boozman.
We will now proceed to the oath. Will the nominees please rise
and raise your right hand? Do you swear or affirm that the testimony that you are about to give is the truth, the whole truth, and
nothing but the truth, so help you God?
Ms. LOUI. I do.
Mr. WALTHER. I do.
Chairman JOHNSON. Do you agree to appear and testify before
any duly constituted Committee of the Senate?
Ms. LOUI. I do.
Mr. WALTHER. I do.
Chairman JOHNSON. Please be seated.
Please be assured that your written statements will be part of
the record. Please also note that the Members of this Committee
may submit written questions to you for the record, and you should
respond to those questions promptly in order for the Committee to
advance your nomination.
I invite the witnesses to introduce your family and friends in attendance before the beginning of your statements. Ms. Loui, you
may begin.
VerDate Nov 24 2008
12:20 Apr 26, 2012
Jkt 048080
PO 00000
Frm 00009
Fmt 6633
Sfmt 6633
6
STATEMENT OF PATRICIA M. LOUI, OF HAWAII, TO BE A MEMBER, BOARD OF DIRECTORS, EXPORTIMPORT BANK OF THE
UNITED STATES
Ms. LOUI. Yes, Senator Inouye has kindly introduced my family:

my husband, Michael Schmicker; my son, Christopher Schmicker;
brother, Steven; sister, Kathleen; and niece, Kristyn. Thank you
again.
Chairman Johnson, Senator Shelby, and distinguished Members
of the Committee, thank you for the honor of appearing before you
as a nominee for the Board of Directors of the Export-Import Bank
of the United States. I am deeply grateful to President Obama for
nominating me. May I also warmly thank Senator Inouye and Senator Akaka for their friendship, generous introduction, and ongoing
support.
Though not here, thank you to my mother, Alyce, and late father,
Fred, for their unconditional support.
I feel that my professional career in small business, in banking,
and in international development helps qualify me to make meaningful contributions to Eximbanks programs, and, if confirmed, I
will work diligently to help Eximbank create and preserve U.S.
jobs. As a woman-owned small business, our company has introduced Midwestern manufacturers to new markets in East Asia, has
assisted an American entertainment corporation explore expansion
from China to India, and has helped U.S. farmers increase market
penetration in Southeast Asia. Born into a small business family,
I learned at the dinner table and then as an entrepreneur the challenges small businesses face when working capital financing dries
up, as it did in 1998 and 2008. This gives me a visceral commitment to Eximbanks congressional mandate on small business.
If confirmed, I look forward to contributing to American export
growth, particularly to Asia. Fifty-five percent of world population
and almost 40 percent of current global GDP is there, as are three
of nine Eximbank target countries which represent 1.5 billion people: India, Indonesia, and Vietnam. Whether at home or as tourists
to the U.S., Asians look with hope and optimism to the United
States and express strong interest in buying American products.
U.S. exports in infrastructure, energy, medical equipment, transportation, and brand name durables have tremendous export potential. This fastest-growing region can generate jobs for America. My
cross-cultural training at the East West Center, development work
with the United Nations, and 30 years in international marketing
position me to contribute to the promotion of Eximbank services in
the culturally diverse countries where the Bank is open for business.
Besides increasing foreign market demand, it is important to
grow domestic awareness of Eximbanks services as only 1 percent
of American companies currently export. As a former regional
banker, I am especially interested in joining Eximbanks promotion
of its services to community and regional banks as well as directly
to small businesses. I understand both the benefits and risks of
lending given my career as banker and businesswoman. By continuing sound financial practices and basing credit decisions on
reasonable assurance of repayment, Eximbank can remain financially self-sustaining while fulfilling its jobs mandate. This is a core
VerDate Nov 24 2008
12:20 Apr 26, 2012
Jkt 048080
PO 00000
Frm 00010
Fmt 6633
Sfmt 6633
7
covenant between Congress, Eximbank, and the American people
that I am fully committed to uphold.
Even as our economy recovers, Eximbank can, I believe, be mutually beneficial for private enterprises, for labor and management,
and for your constituents across our Nation. Last year, the excellent team at Eximbank supported more than a quarter million jobs,
and its mission benefits diverse stakeholders. By mitigating credit
risk and providing competitive terms, Eximbank encourages banks
both small and large to finance exports. Businesses can sell American products more competitively by offering financing, and a robust, exporting economy creates jobs for American workers and
benefits for local communities.
This is why I respectfully ask for your support to serve on the
Board of Directors of Eximbank. If confirmed, it would be an honor
to give back to our country that has enabled my grandparents, my
parents, and me to build successful careers and families around
small business.
Thank you for the opportunity to appear before you. I look forward to answering your questions.
Chairman JOHNSON. Thank you, Ms. Loui.
Senator Inouye, you may be excused, if you wish.
Senator INOUYE. Thank you.
Chairman JOHNSON. Mr. Walther.
STATEMENT OF LARRY W. WALTHER, OF ARKANSAS, TO BE A
MEMBER, BOARD OF DIRECTORS, EXPORT-IMPORT BANK OF
THE UNITED STATES
Mr. WALTHER. Thank you. I would like to introduce my wife and

my best friend for 41 years, Janice, and along with me also is my
son, Bill, an engineer with the Department of Army.
Thank you very much, Chairman Johnson, Senator Shelby, and
Members of the Committee. It is a great honor for me to be here
today as a nominee to the Board of the Export-Import Bank of the
United States. I am deeply grateful to President Obama for his
nomination of me and to Senator McConnell for his recommendation and his support. I would also like to acknowledge the support
of Senators John Boozman and Mark Pryor of Arkansas, two men
I have known for many years and for whom I have great respect.
I consider myself extremely fortunate to be here today. Early in
my career, I entered the private sector with Southwestern Bill
Telephone Company, where I rose from an entry-level switching engineer to Vice President of Corporate Services, and I was Chairman
of the SBC Foundation. During that time, I had a wide variety of
assignments, including engineering, economic analysis, marketing
and pricing policy, regulatory relations, and philanthropic work.
The majority of my career was spent in regulatory and public affairs, where I worked with State regulatory commissions and State
government both in the legislative and executive branches.
Since retiring from SBC, my career has focused on increasing
commercial development both domestically and in the international
arena. As the Executive Director of the Arkansas Department of
Economic Development, I was charged with increasing inward investment into the State of Arkansas as well as supporting Arkansas companies in their effort to export their products and services
VerDate Nov 24 2008
12:20 Apr 26, 2012
Jkt 048080
PO 00000
Frm 00011
Fmt 6633
Sfmt 6633
8
overseas. In my 3-plus years as Executive Director, I played a
major role in bringing companies like Hino Motors, Denso Manufacturing, auto parts supplier Eakas Corporation, to Arkansas. I
also was involved in initial discussions and negotiations with recruiting Welspun of India to invest in the manufacturing facilities
in Arkansas.
Following my tenure at ADED, in 2007, I had the honor of being
nominated by President Bush and being confirmed by the U.S. Senate to be the Director of the United States Trade and Development
Agency, a sister organization to the Export-Import Bank of the
United States. I consider it a great privilege and honor to have
served as the Director of USTDA and to have played an important
part in assisting U.S. companies develop export opportunities
throughout the world.
As I have prepared for the opportunity to join the Board of the
Export-Import Bank, I have found that my passion and experience
complement nicely the work of the Bank. Finding innovative ways
to assist businesses, both small and large, to expand their markets
beyond the borders and in the process create more and better jobs
for the American workforce is something that I am passionate
about. I know U.S. products are in great demand around the globe
and it is vitally important that we make them available to those
buyers that would otherwise not have access to the best products
in the world. The Export-Import Bank is playing a critical role in
bringing this important aspect of commerce and job growth to the
U.S. business, and if confirmed, I look forward to being a part of
Eximbanks team.
Mr. Chairman, Senator Shelby, and Members of the Committee,
thank you again for the opportunity to appear before you today as
I seek your support for my nomination to be a member of the
Board of Directors of the Export-Import Bank of the United States.
Thank you.
Chairman JOHNSON. Thank you, Mr. Walther.
Senator Boozman, you may be excused if you wish.
Ms. Loui, throughout your career, you have worked with American companies as they seek to enter the Asian market. What are
the biggest challenges and opportunities facing U.S. companies as
they seek to expand into Asia?
Ms. LOUI. Some of the challenges facing American businesses as
they export start with the lack of knowledge, perhaps, of the size
of the markets and the opportunities that it provides. Currently, 95
percent of the worlds customers now live outside the United
States, yet only 1 percent of American businesses export. And I
think that Ex-Im plays a very important role in both promoting exports as well as mitigating the risk of going overseas.
If confirmed, I would look to participate very actively in
Eximbanks global outreach program, an interagency program that
brings the exporters, the financiers, the success stories together
with small businesses in rural areas as well as in urban centers.
Second, it is very important for small business to have access 24/
7. Most small businesses do not operate on weekdays and nine-tofive. They use technology. They use their weekends to explore new
strategies. And so thiscontinuing to expand the Web access and
webinars, for example, will be extremely important.
VerDate Nov 24 2008
12:20 Apr 26, 2012
Jkt 048080
PO 00000
Frm 00012
Fmt 6633
Sfmt 6633
9
And finally, I would recommend, if confirmed, working strongly
through professional networks. Strategic alliances with communitybased financial organizations as well as professional networks will
help to leverage Eximbanks efforts into some of the smaller markets that we do not knowthat know less now about exporting to
Asia.
Chairman JOHNSON. Thank you.
Mr. Walther, as the former head of the Economic Development
in Arkansas, what can you do to make the Bank more responsive
to the needs of rural U.S. exporters throughout the country? My
home State of South Dakota is very rural and I want to ensure
that the bank reaches out to even more small businesses in rural
parts of the country that might need individualized assistance to
reach their export markets.
Mr. WALTHER. Mr. Chairman, that is an excellent point. There
are a great number of businesses, both small and large, within the
United States that really do not have access or knowledge about
the export arena, about what they can do with the products and
services that they are involved in, and so the outreachpart of it
is the international arena, but even as important, maybe more important, is providing an outreach to the businesses here in the
United States.
I am from a rural State and I understand the issues. We have
created a World Trade Center in Northwest Arkansas for that very
purpose, to provide information to businesses in the area or in the
geographical area around Northwest Arkansas so that they understand what they can do internationally, what their products are
worth internationally.
And so the Export-Import Bank has a program where they are
doing a tremendous outreach, and I think we need to continue to
do that. It is critically important in order for the U.S. to continue
to export their products.
Chairman JOHNSON. For both nominees, information technology
is an important tool in ensuring that the Bank is operated effectively and transparently. What can the Bank do to improve how it
works with technology to make its interactions with customers
more efficient and transparent? Either of you.
Mr. WALTHER. Well, technologyI am from a technology company, Southwestern Bell and then AT&T, and I was involved a
great deal with Bell Labs whenever that company existed, and so
technology is just continuing to move rapidly. It is almost at warp
speed. And we at the Bank need to stay pace with that. Industry
is. The young people of this country are technologically savvy and
we at the Bank need to stay at the same pace they are so that we
can communicate with them.
We can communicate around the world instantaneously now to
the markets that are around the world, China, Africa, South America. They arethey have the technology and continue to grow their
technology just like the United States. So I think it is critically important that we keep pace with technology in order to provide that
access for the U.S. businesses.
Chairman JOHNSON. Ms. Loui, do you have anything to add?
Ms. LOUI. Yes. I understand that Eximbank is currently undertaking a study on its IT capacity. It has introduced already some
VerDate Nov 24 2008
12:20 Apr 26, 2012
Jkt 048080
PO 00000
Frm 00013
Fmt 6633
Sfmt 6633
10
very important new Web access-based programs and it has improved the turn-around of loan requests using technology. But as
Larry alluded to, without technology, we really cannot reach the
many rural communities and small businesses across our vast
country to educate them and to encourage them to use the services
of Eximbank and to export.
So I do look forward, if confirmed, to reviewing this IT report
that is being produced now and hope that we can, indeed, keep up
with the technology requirements that are required to do global
business.
Senator Shelby.
Senator SHELBY. Thank you, Mr. Chairman.
Mr. Walther, the Bank is required to provide 20 percent of its financing to small business exporters. Over the years, the Bank has
had a mixed record in meeting this goal. Ms. Loui mentioned the
fact that only about 1 percent of American businesses actually export. We know it is a new world, but we have got great challenges
and opportunities, as you well know, in this country.
Are you satisfiedeither one of you, but I will direct the first
question to youare you satisfied with the type and amount of financing the Bank provides for small businesses, which is the backbone of our economy, and do you think there is more that the Bank
can do, and if you are confirmed, as I believe you will be, are going
to push this initiative?
Mr. WALTHER. Senator Shelby, I understand what you are saying. The Bank has been fairly successful at keeping the 20 percent.
It is difficult. Now, you remember that we are a portion of the financial community
Senator SHELBY. We understand.
Mr. WALTHER. and so it is difficult, but it is something that
we have to keep our eye on. I know the Bank considers it very important, and if I am confirmed, I will continue the vigilance to
make sure that small business gets the 20 percent or more, if we
possibly can.
Senator SHELBY. Ms. Loui.
Ms. LOUI. Yes. Reviewing Eximbanks annual reports, I believe
there have been new records set in the small business arena over
the last few years. That said, there reallybecause small business
is the engines of our economy, we really need to continue to be aggressive, and I would continue, if confirmed, to support the innovative product development that has been going on.
For example, Eximbank recently developed a supply chain product which permits not only the lead manufacturer but their suppliers to obtain financing, and I saw the importance of this when
our company consulted with General Motors to develop its first
plant in Pudong, China, which is now the biggest profit center in
the world. If you can not only assist General Motors but all the
small automotive manufacturers spread out through this country,
the jobs potential will be a multiple of just supporting the large
manufacturer, and so I would continue, if confirmed, to support
that aggressive product development and outreach.
Senator SHELBY. Thank you.
VerDate Nov 24 2008
12:20 Apr 26, 2012
Jkt 048080
PO 00000
Frm 00014
Fmt 6633
Sfmt 6633
11
In the area of sanctionsIranto both of you, with respect to
the sanctions on companies that do business with Iran, are you
committed, if you are confirmed, as I believe you both will be, to
making sure that the Eximbank adheres to the law prohibiting the
financing of transactions involving Iran? Mr. Walther.
Mr. WALTHER. Yes, sir. We are a country of laws and we and I
will always abide by those laws and I understand exactly what
those laws are about with regard to Iran.
Senator SHELBY. Ms. Loui.
Ms. LOUI. Yes. I believe there are six countries that are currently
under the trade sanctions and I will abide by the law and respect
the law in regards to all six.
Senator SHELBY. Thank you.
Ms. Loui, one of the primary problems that the Eximbank seeks
to address, among others, is the uneven playing field that U.S. exporters, as you well know, face in the global economy, both with
respect to OECD and non-OECD countries. Do you think there are
additional policies that the Bank could pursue to level the playing
field for American exports globally? In other words, if they are
playing with one deck of cards and we with another, we are at a
big disadvantage. What can the Bank do to make us more competitive?
Ms. LOUI. Yes, Senator. You know, I completely concur and am
confident that on a level playing field, American products and services compete with any other foreign country in the world. The challenge, of course, is that the playing field is not always level. I believe the recent report by Eximbank that was submitted to Congress indicates that compared with our traditional OECD competitors, Eximbank is doing a very effective job in competition. The
challenge comes from the fact that there are nontraditional competitors who are not signatories to OECD, such as Brazil, China,
India, and emerging Russia. So we do need to evaluate how we will
compete with the non-OECD signatories.
The other area of competition comes from nonregulated OECD
products, and Japan and Canadas ECAs have been very active in
this area. If confirmed, I would support and would welcome participating in a review of the model Eximbank currently uses, that of
the lender of last resort, to look at the trends in the current external marketplace and to determine whether this model is really the
best model going forward.
Senator SHELBY. Mr. Walther.
Mr. WALTHER. Well, I 100 percent agree with what Ms. Loui
said. If we can compete on the same level, we willwe canwe
will generally win. The problem is identifying where those anomalies exist, and if I am confirmed, I will continue to, as the Bank
has done, to find those areas and to work to resolve them.
Senator SHELBY. Thank you. Thank you, Mr. Chairman.
Chairman JOHNSON. Senator Akaka.
Senator AKAKA. Thank you, Mr. Chairman. I have no questions
but urge the Committee to expedite the confirmation of these nominees.
Chairman JOHNSON. Thank you, Senator Akaka.
Senator Brown.
VerDate Nov 24 2008
12:20 Apr 26, 2012
Jkt 048080
PO 00000
Frm 00015
Fmt 6633
Sfmt 6633
12
Senator BROWN. Mr. Chairman, thank you, and I welcome both
Ms. Loui and Mr. Walther to the Committee and support your confirmation.
Only one comment, and that is just last week, the Chairman of
the Eximbank, Chairman Hochberg, was in Toledo, Ohio, with
Scott Schlegel [phonetic] and others, and I appeared with him at
First Solar, one of the leading solar manufacturers. I believe it is
the leading solar manufacturer in the United States and Toledo is
the second largestOhio, with Toledo leading, is the second largest
solar manufacturing State in the country. We are third in State
manufacturing overall in all products. The work of the Eximbank
that both of you, Mr. WAlther and Ms. Loui, continue is essential
for ourparticularly in light of this Congresss work, not always
good work, on trade agreements which we see continuing a larger
and larger and larger trade deficit.
And while I have argued in this Committee to the Chairman of
the Fed and others how important it is, rather than passing more
trade agreements that tend to too often dismantle American manufacturing, that we should enforce the trade rules that we have.
Today, the WTO concurred on a Chinese tire issue with the International Trade Commission, which will bring jobs directly back to
our communities, to communities in Ohio, for example.
And your work in leading in exports is such an important part
of that, so I thank you for your past work, both of you in business,
and your work in Government, too, and the work you will continue
to do with Chairman Hochberg and all that the Eximbank means
for our country. Thank you.
Chairman JOHNSON. Senator Hagan.
Senator HAGAN. Thank you, Mr. Chairman, and I, too, wanted to
welcome both of you to our Committee today. I wanted to just echo
what you have heard today, but also that I think Chairman
Hochberg is doing a very good job.
Ms. Loui and Mr. Walther, as you know, U.S. businesses operate
in a dynamic environment and business conditions are constantly
changing. Sometimes, business conditions change due to policies
that our Government imposes. Trade policies is an example from
my home State, where many industries had to change when
NAFTA and CAFTA were enacted. I am from North Carolina.
What do you see as the role of the Board of Directors in ensuring
policies and products meet the changing nature of industries and
their supply chains, and will you take steps to ensure that the
Bank is meeting industry needs?
Ms. LOUI. In our global world, I think the only given is change,
and Eximbank has been quite aggressive in ensuring that its outreach promotion efforts to educate small businesses and large businesses about the opportunities in foreign markets is ongoing. It is
also intra-agency, so it not only is Eximbank staff, but also participants from Commerce and other related trade promotion agencies
working together. This is a very effective and efficient model and
benefits the small user, to have several people in the same place
at the same time.
Also, in preparing for this hearing, I have had the benefit of
using Eximbanks Web site, which has been expanded considerably.
They now offer webinars, and that is another important tool for
VerDate Nov 24 2008
12:20 Apr 26, 2012
Jkt 048080
PO 00000
Frm 00016
Fmt 6633
Sfmt 6633
13
education. And as I previously mentioned, I think that some of the
specific product development that they have done has been very responsive to changes in needs in the marketplace, such as the supply chain financing product as well as Solar Express, which is a
very rapid turnaround program for clean energy requests.
So theseif confirmed, I would continue to support these. Information is power, and so the more information we can get to the
small and large businesses of America, the better chance we have
to get those 99 percent that are not currently exporting to export.
Senator HAGAN. Thank you.
Mr. WALTHER. I agree. Again, I agree a hundred percent. The
Bank needs to stay in tune with what is going on in the business
arena and what the business conditions are out there. Technology
is a great way to continue to do that. So as we move forward, we
have to keep our technological systems, our Web sites and other
communications systems at the same pace that business is. And so
in order for us to assist them, where we can come in and provide
assistance to the businesses to do export, but we also need to make
sure that they understand what the marketplace is out there, and
that is critically important that we do that. So that is all I would
add.
Senator HAGAN. Thank you. And we all know, I know, that small
business is the backbone of our economy, and if we can certainly
help small business export more, we will certainly help our countrys economy, and I think that is critically important at this stage.
And also, over the last several years in response to our economic
crisis, the Eximbank has increased its authorized transactions. If
we continue to see an extended downturn in the global economy,
how do you think the Eximbank will be affected?
Mr. WALTHER. It seems to me that because of the downturn in
the economy, there is going to be a greater need for Eximbank financing and guarantees where the normal business community will
not step in and do it. So because of that situation, it has put a
greater pressure on Eximbank, and, therefore, a greater need for
the authorization for additional money.
Ms. LOUI. Yes, and the only thing I would add is that Eximbank,
I think, has increased about 70 percent in assets over the last 2
years and it will be bumping up against the current levels of authorization soon. And so it is important looking forward.
That said, I am of the philosophy that Eximbank should not compete with the private sector but rather supplement it, and many of
their products that provide working capital guarantees, that provide credit insurance, that provide take-out options for small banks
are really win-win, and this is the spirit in which I would hope
Eximbank would continue to operate in the future, even beyond our
very difficult economic times at present.
Senator HAGAN. Thank you. I look forward to your confirmations,
and thank you, Mr. Chairman.
Chairman JOHNSON. Thank you, Senator Hagan.
Thank you, Ms. Loui and Mr. Walther, for your testimony today
and for your willingness to serve our Nation. I ask that all Members of the Committee submit any questions for the record by close
of business on Friday, September 9. Ms. Loui and Mr. Walther,
VerDate Nov 24 2008
12:20 Apr 26, 2012
Jkt 048080
PO 00000
Frm 00017
Fmt 6633
Sfmt 6633
14
please promptly submit your answers to these questions in order
for the Committee to advance your nomination.
Now, we will turn to our next panel.
Mr. WALTHER. Thank you.
Ms. LOUI. Thank you.
[The first panel witnesses are excused.]
Chairman JOHNSON. On our next panel we will consider the nomination of Richard Cordray to be the first Director of the Consumer
Financial Protection Bureau.
Mr. Cordray, welcome to the Senate Banking Committee and a
warm welcome to your family and friends who are here this afternoon.
The CFPB was born out of the failure by prudential regulators
to hold financial companies accountable for complying with consumer protection laws. Congress created the CFPB to be a robust
and independent agency focused on protecting consumers like military families and older Americans from abusive financial products.
The CFPB was also created to streamline disclosures so consumers
can make the best financial choices for themselves and their families. In fact, one of the CFPBs first projects is to simplify the long,
confusing mortgage disclosure forms.
The CFPB is an agency that the American public wants. A recent
bipartisan survey shows that Americans strongly support the creation of the CFPB. The Director of the CFPB will play an important role in maintaining the agencys independence, promoting an
equitable and transparent consumer financial marketplace, and exercising enforcement of consumer protection laws.
On July 18, President Obama nominated Mr. Cordray to be the
first-ever Director of the CFPB. The purpose of todays hearing
should be to consider whether Mr. Cordray is qualified for that job.
Instead, a vocal minority is playing games with the process and
holding Mr. Cordrays nomination hostage. This political gamesmanship is preventing Americans from receiving the consumer protections they deserve and putting community banks and credit
unions at a competitive disadvantage to nonbank financial companies. This vocal minority insists on rehashing the same debate Congress had last year when it created the CFPB as an accountable
yet independent regulator.
The fact is that every regulatory agency is structured with different features that make it accountable. Each agency has a unique
combination that fits its mission and independence. Last year, Congress decided on a structure for the CFPB which borrows some accountability features from other regulators but also includes several new features unique to the consumer agency.
The chart on display lists many of the ways the CFPB is accountable. For example, the Financial Stability Oversight Council has
the power to overturn CFPBs regulations. By law the CFPBs
budget is capped, and the President has the power to fire the CFPB
Director. So the misleading claim of no CFPB accountability
trumped up by special interests and put forth by a vocal minority
should be exposed for what it is: an attempt to destroy the Bureaus ability to do its job of protecting American consumers.
I would remind my colleagues that in 2008 a bipartisan Senate,
including Members on both sides of the aisle sitting here today,
VerDate Nov 24 2008
12:20 Apr 26, 2012
Jkt 048080
PO 00000
Frm 00018
Fmt 6633
Sfmt 6633
15
help to create the Federal Housing Finance Administration. FHFA
is also an independent agency headed by a sole Director subject to
a GAO audit and purposefully not subject to the congressional appropriations process.
Now let us talk about what the focus of a nomination hearing
should be. Richard Cordray has spent his career in public service
caring about people. He has taken the time to understand and
come up with the best, most practical solutions for their problems.
Mr. Cordray supports small businesses and honest companies. He
has been a member of his local Chamber of Commerce for 22 years.
He believes in leveling the playing field so that small companies
can compete fairly and that playing by the rules is good for business.
I ask unanimous consent to include several letters of endorsement in the hearing record.
Mr. Cordray also believes that people and corporations must be
responsible for their own behavior, and if they act responsibly, they
should get a fair shake.
It is my hope that, if confirmed, Mr. Cordray will use his knowledge and experience as a law enforcement official and public servant to better protect American consumers and to enhance the quality of our consumer financial markets.
We have seen many important nominations blocked in the Senate and denied an up-or-down vote on confirmation. The stability
of our financial system and of our economy is simply too important
to put at risk by political games. It is time to allow the CFPB to
do its job to the fullest extent of its authority with a Senate-confirmed Director in his place.
I now turn to Senator Shelby.
STATEMENT OF SENATOR RICHARD C. SHELBY
Senator SHELBY. Thank you, Mr. Chairman.

I do not think it will surprise anyone to hear that we believe that
todays hearing is quite premature. We do not believe that the
Committee should consider any nominee to be the Director of the
Bureau of Consumer Financial Protection until reforms are adopted
to make the Bureau accountable to the American people.
Earlier this year, Mr. Chairman, 43 of my Senate colleagues and
I sent a letter to President Obama expressing our serious concerns
about the Bureaus lack of accountability. We also proposed three
reasonable reforms to the structure of the Bureau. We had hoped
to work with the majority to address this issue before the President
nominated a Director.
Unfortunately, neither the President nor the majority has made
any effort to work with us to improve the accountability of the Bureau. Instead, the President has nominated Mr. Cordray to be the
first Director. It is regrettable that the President and the majority
have chosen to ignore our request rather than work with us to improve the Bureaus accountability. It may be good politics for them,
but it is certainly bad policy for the American people.
One of our Nations founding principles is that the Government
should be accountable to the people. Yet the majority structured
the Bureau to grant its Director unprecedented authority over the
lives of the American people without any real effective checks. All
VerDate Nov 24 2008
12:20 Apr 26, 2012
Jkt 048080
PO 00000
Frm 00019
Fmt 6633
Sfmt 6633
16
of the Bureaus power is concentrated in the hands of a Director.
The Director determined which rules are enacted and which enforcement actions are brought. The Director makes all hiring decisions and decides how the agency spends its resources.
Because of the expansive jurisdiction of the Bureau, every American will be affected by the Directors decisions. The Director will
singlehandedly determine the financial products consumers can
buy as well as which consumers have access to credit and which
do not.
Accordingly, the Directors decisions will impact whether Americans can buy a home, a car, or even basic household goods. It is
staggering the amount of control the Director will exert over the
daily financial choices available to the American people.
Despite having such broad powers, however, there is no meaningful check on the Directors authority. The Director cannot be removed except on extremely limited grounds of inefficiency, malfeasance, or neglect of duty. In other words, the Director cannot be removed for poor policy choices.
In addition, bank regulators do not have a meaningful ability to
ensure that the Directors actions do not needlessly undermine the
safety and soundness of our banks. While some claim that the Financial Stability Oversight Council couldcouldoverrule the Director, this so-called check is simply illusory. The requirements
needed for the Council to act are so onerous that, in practice, the
Council will never be able to exercise this authority. That should
not surprise anyone, especially here. That was the way it was designed.
For example, the Director of the Bureau sits on the Council and
will vote to determine whether or not the Council should overturn
one of his decisions. It is not hard to guess how the Director will
vote. As a result, the Director will be virtually free of any constraints on his authority during the 5-year term.
No one person, I believe, should have so much unfettered power
over the American people. It blatantly violates the spirit of our
democratic system of Government. Our pursuit of better consumer
protections should not require us to compromise our basic constitutional values. This should be something on which we can all agree.
Moreover, the principle involved will have real consequences. Unless the Bureau is reformed, it is only a matter of time before this
concentration of power is abused or misused to the detriment of
American consumers and the economy. The job figures we have
seen over the summer demonstrate how the Administrations
heavy-handed regulatory agenda is crippling the economy with unnecessary costs and legal uncertainty. There could not be a worse
time, I believe, to give an unelected and unaccountable bureaucrat
a blank check to impose even more ill-considered rules that could
further undermine our weak economy. At a time when our Nations
unemployment rate is over 9 percent, this would be a very dangerous gamble.
In closing, the Chairman today here has attempted to turn the
phrase, I believe, vocal minority into a pejorative. Over the years,
however, Senators from both parties, Democrats and Republicans,
have agreed upon rules governing this chamber that are designed
to protect the rights of the minority, be it Democrats or Repub-
VerDate Nov 24 2008
12:20 Apr 26, 2012
Jkt 048080
PO 00000
Frm 00020
Fmt 6633
Sfmt 6633
17
licans. The requests made by this particular vocal minority seek
only to preserve the system of checks and balances embodied in the
Constitution. That is not what I would call a radical undertaking.
Chairman JOHNSON. Senator Reed.
STATEMENT OF SENATOR JACK REED
Senator REED. Well, thank you very much, Mr. Chairman, and
I am someone who believes very strongly that the work of the Consumer Financial Protection Bureau must go forward and should go
forward under the direction of Mr. Cordray. I think to block his appointment simply to express displeasure with either the process or
the substance of the law is the wrong way entirely.
As the Chairman pointed out, the Federal Housing Finance Administration was created with virtually the same authority and on
a bipartisan basis supported by most, if not all, of my colleagues
on the other side. There was no discussion of preemption of the
Constitution or of checks and balances or anything else. The Consumer Financial Protection Bureau was trying to deal with a very
serious problem, and that is protecting consumers, protecting consumers throughout this country. That is the one voice, when we
think about voices, that is seldom heard loudly enough in Washington, seldom heard certainly from bank regulators. That is one
of the lessons from what took place in the decade from 2000 to
2008or at least 8 yearsin which consumers were being systematically preyed upon. There was no agency. And as Attorney General, I think you were frustrated by your attempts that were preempted by Federal banking regulators, that were preempted by
Federal law, that were preempted by many things.
We want consumers to have a voice, and, frankly, the notion that
this is unchecked, unbounded power is simply wrong. All of the
rules that the Director will enforce are created by Congress. We
voted on them. Sometimes we disagreed, but they are all congressional laws. And, frankly, if he goes beyond what the law is, the
courts will very quickly be involved, as has been demonstrated
and there are a huge number of financial institutions in a court
today to protect their self-interests and protect the process. And if
they are arbitrary and capricious, the rules will be struck down.
But if those rules are consistent with the laws we pass through a
democratic process to protect consumers, then consumers will receive protection.
And so I think that this whole debate has been sort of extended
much too long, and as a result consumers are being and potentially
will be harmed.
I particularly, because I worked on this issue along with my colleague Senator Brown from Massachusetts, am concerned about
military personnel. They will not have the benefit of some of the
protections that we put in place because there will be no one sticking up for them. Right now, Holly Petraeus is leading the office,
but she can makeand she doesspeeches. She can go out and
talk to soldiers and sailors and marines and airmen, but until
someone stands up with the ability to enforce the rules for their
benefit, they will still be preyed upon. And they are.
VerDate Nov 24 2008
12:20 Apr 26, 2012
Jkt 048080
PO 00000
Frm 00021
Fmt 6633
Sfmt 6633
18
I think the other thing that we have to recognize, too, is as we
go forward we are, I think, trying to ensure that we do not replicate the crisis of 2008, that we do not have a financial collapse.
Much of that was predicated and based upon the predatory behavior of institutions. One of the great aspects, I think, of the DoddFrank Act is that for the first time we tried to shine some light on
the shadow banking system. The FDIC regulates financial institutions. The OCC regulates national banks. The Federal Reserve regulates banking holding companiesbut for the first time we decided to say let us take an across-the-board position with respect
to the shadow financial system.
So, this notion of let us wait until we get it perfect before we appoint somebody would have delayed, I think, the election of George
Washington for many decades.
So, Mr. Cordray, let me just askI have very little timeone
specific question. You already have authority transferred to you
from seven agencies that is in this organization that is being implemented today. Is that correct? Go ahead.
Mr. CORDRAY. Yes.
Chairman JOHNSON. He has not given his statement.
Senator REED. Oh, I am sorry. I want to be sensitive to my colleagues. So this is opening statements. I wanted to do both. Forgive
me.
[Laughter.]
Senator REED. I am a man with a mission. Then let me quickly
conclude in 20 seconds.
I think we have got to move forward. We essentially know what
this is about. The Chairman has pointed it out. This is not, I think,
about sensible proposals to make a reform. It is hard to do that
until you see the agency operate in the field, on the ground. And
I hope very quickly we can confirm you, Mr. Cordray, so we can
do that.
Chairman JOHNSON. Senator Corker.
Senator CORKER. Mr. Chairman, as is the norm, I do not have
an opening statement, but since I do not and it looks like everybody is going to take a lot of time, I sure would like to have a little
leeway with the questions. But I certainly welcome the witness and
look forward to his testimony and thank him for bringing his impressive family. I do not know how his children continue to smile
as we are up here, but they do a great job.
Thank you.
[Laughter.]
Chairman JOHNSON. Senator Akaka.
STATEMENT OF SENATOR DANIEL K. AKAKA
Senator AKAKA. Thank you very much, Mr. Chairman. I am

pleased to join you in welcoming Mr. Richard Cordray and his familya lovely familywho has been nominated by President Obama
to serve as the first Director of the Consumer Financial Protection
Bureau. I am confident that he will make the CFPB a strong defender for consumers. This has been needed in our country. He
knows the markets and has the demonstrated track record.
He has been a fierce advocate for consumers and middle-class
families as Attorney General of Ohio and then as the head of en-
VerDate Nov 24 2008
12:20 Apr 26, 2012
Jkt 048080
PO 00000
Frm 00022
Fmt 6633
Sfmt 6633
19
forcement at CFPB. We will count on him to fight against the predatory lending practices that contributed to the economic crisis from
which we are still recovering.
I look forward to Mr. Cordrays testimony today to hear about his
vision for the landmark CFPB and what he hopes to accomplish as
its first Director.
Mr. Cordray is a highly qualified nominee and an excellent pick
to become the first Director of the Consumer Financial Protection
Bureau, and I ask the Committee to consider his nomination favorably.
Thank you very much, Mr. Chairman.
Senator Brown.
Senator AKAKA. I have questions that I will submit for the record
later.
Chairman JOHNSON. Senator Brown.
STATEMENT OF SENATOR SHERROD BROWN
Senator BROWN. Thank you, Mr. Chairman. Ranking Member

Shelby, thank you.
In a moment I will have the honor of introducing Richard
Cordray, devoted family man, a distinguished lawyer and advocate,
a public servant. I will hold that until right before he gives his testimony.
We should not have to remind our colleagues that just 3 years
ago our economy was on the brink of collapse. Millions of Americans lost their jobs. Hundreds of thousands of people in my State
lost their homes. People all over the country lost much of their retirement security. Hundreds of banks failed. Thousands of businesses have been shuttered. This Committee was forced to take extraordinary actions.
This was a man-made catastrophe that could have been avoided
if we had had, as Senator Reed said, a better regulatory system.
But the network of agencies tasked with protecting consumers was
full of holes. Ohio, for example, was far too slow to enact meaningful consumer protections. Local efforts to try to curb rip-off loans
were blocked by Federal regulators. Efforts to convince Federal regulators to act were ignored until too late. Yet just 3 years after that
near depression, profits of financial firms now make up the same
percentageabout 40 percent of all corporate profits in this country go to financial firms. The profits of financial firms now make
up about the same percentage of all corporate profits as they did
before the financial crisis. The banks that were too big to fail because of mergers, because of what shook out of these last 3 years,
have become even bigger.
After decades of coddling Wall Street, Main Street still needs our
help. Americans are struggling to find jobs. Their homes are still
underwater. Their pensions are still being drained.
To protect against future wealth-destroying crises, Congress created, with bipartisan approvalwith bipartisan approvalthe Consumer Financial Protection Bureau to help ensure that consumer
protection is a priority rather than an afterthought. It is an independent agency with a single Directornot all that uncommon in
the Federal Government. Its mission is to bring oversight and
VerDate Nov 24 2008
12:20 Apr 26, 2012
Jkt 048080
PO 00000
Frm 00023
Fmt 6633
Sfmt 6633
20
transparency to checking accounts, to credit cards, to mortgages, to
student loans. It is empowered with the tools to ensure our financial system supports job creation. By ending the tricks and the
traps families and small businesses will keep more of their hardearned money, will be able to build middle-class wealth and help
businesses thrive.
The Bureau is subject, as Chairman Johnson said, to stringent
notice, consultation, analysis requirements under Dodd-Frank,
under the Administrative Procedures Act, under the Small Business Regulatory Enhancement Fairness Act, and the Regulatory
Flexibility Act. Through the Financial Stability Oversight Council,
the other banking regulators have unprecedented authority to overturn CFPBs rules.
Already CFPB is ensuring that mortgage contracts are written in
ways that consumers can more easily understand. It has earned
positive reviews from industry and consumer groups alike for the
substance and the process involved in creating a new model mortgage loan disclosure form. It is helping men and women in uniform,
as Senator Reed pointed out, preventing them from being targeted
by bad actors who profit from financial practices that defraud and
deceive those serving the cause of freedom.
Mr. Chairman, I called the Senate historian recently and asked
him when was the last time or was there a time when the Senate
actuallywhen a minority in the Senate pledged to block a nominee because that party actually opposed the agencys very existence. When was the last time that a group of Senators44, as Senator Shelby points outsigned a letter threatening a filibuster implicitly, saying they will not confirm somebody until we get our
way, until we change the law, the structure of the agency? Never
happened before until right now. It is unprecedented. And that
kind of partisanship is why people are so unhappy with their Government. They see a dysfunctional Government that simply cannot
do this.
We already had this debate once about the structure of this agency. Amendments were offered that would have watered down the
agencys authority. They were considered, fairly, in Committee, on
the Senate floor. They were rejected by Senators from both parties.
Now is not the time to undermine an agency that a bipartisan
majority in Congress created. What kind of precedent does this
setdemanding and then accusing the majority of not even working with them, demanding We will not confirm somebody as qualified as Richard Cordray? Nobody questions his qualifications as
his background, his qualifications, and his performance in office of
the various jobs he had, no one questions that. They only want to
block his nomination, or anybody elses nomination, simply because
they do not like the agency. They apparently do not want an agency representing consumers. That is what got us into this.
The minority, the result of their actions is to tilt the playing
fieldin addition to what else this has done, to tilt the playing
field so that traditional banks right now are regulated while
nonbank lenders, which bear the lions share of the responsibility
for the recession, are left untouched. That is why prominent bankers in this day in this country and many, many, many in Ohio are
supporting Rich Cordray and want to get this agency empowered
VerDate Nov 24 2008
12:20 Apr 26, 2012
Jkt 048080
PO 00000
Frm 00024
Fmt 6633
Sfmt 6633
21
and want to get this agencyget the Director in place so the agency can do its full panoply of responsibility. And instead, right now
the agency regulates traditional banks but not nonbank lenders,
where many of the problems come from this whole meltdown in our
economy. The minoritys own witness in the Subcommittee I chair
on Financial Institutions and Consumer Protection said as much on
August 3rd.
I hope my colleagues will set aside their fears, their anger, their
dislike of this consumer agency and do their job, and their job is
to confirm someone who is qualified to head up this agency that
was created under the law and is the law in this country. Consumers need these protections. The banking industry needs this
kind of fair-minded kind of comprehensive way of doing its job.
Rich Cordrays distinguished career as a Supreme Court clerk for
two Supreme Court Justices, attorney, Ohio Solicitor General, Ohio
Treasurer, Ohio Attorney General, State legislator has shown he is
the right person for the job at the right time for our country. It is
time to put the consumer cop, Mr. Chairman, on the beat.
Chairman JOHNSON. Thank you, Senator Brown.
Senator Hagan.
STATEMENT OF SENATOR KAY HAGAN
Senator HAGAN. Thank you, Mr. Chairman.

We all know that the Consumer Financial Protection Bureau was
a key component of the Dodd-Frank Act and it is time to put a Director in place so that the Bureau can fulfill its important mission.
I appreciate you coming today and I certainly do appreciate your
family being here with you.
For too long, Americans have fallen victim to financial abuses at
the hands of predatory lenders that operate with impunity outside
of consumer finance laws and away from the regulatory oversight.
Payday lenders took advantage of people in North Carolina for
many years, until, after considerable legislation and litigation, we
put a stop to the practice. I am optimistic that with a confirmed
Director in place at the CFPB, we can start to rein in those predatory lenders in parts of the country where they continue to prey on
American families outside the regulatory environment.
And offices within the Bureau have already embarked on important work, and once again, it is time to put a Director in place to
support these offices. The Office of Servicemembers Affairs, for example, was set up within the Bureau to ensure that military personnel and their families are educated and empowered to make
better informed decisions regarding financial products, and the office is already doing tremendous work.
In May of this year, I held a roundtable at Fort Bragg in North
Carolina with Holly Petraeus, the Director of that office, and Mrs.
Petraeus and I heard directly from the men and women in uniform
about the challenges that they face as consumers of financial products and the lengths to which the officers must go to actually protect the troops from financial abuses at the hand of predatory lenders. And I think that a strong Director is going to be crucial to ensure that the momentum of the office continues and can be translated into meaningful financial protections to our men and women
in uniform.
VerDate Nov 24 2008
12:20 Apr 26, 2012
Jkt 048080
PO 00000
Frm 00025
Fmt 6633
Sfmt 6633
22
I am aware that a number of concerns have been raised about
the impact that the Bureau will have on lending. I am going to be
particularly interested in how, Mr. Cordray, you intend to balance
the needs of consumer protection with the need for community financial institutions to provide loans to homeowners and to small
businesses, and I am hopeful that we can mitigate these concerns
and move forward. It is time to put a Director in place so that the
Bureau can get on with its important work.
Chairman JOHNSON. Senator Menendez.
STATEMENT OF SENATOR ROBERT MENENDEZ
Senator MENENDEZ. Thank you, Mr. Chairman.

Mr. Chairman, first of all, I want to thank you for moving forward with this hearing and I want to thank Attorney General
Cordray for accepting a nomination under very difficult circumstances and for his appearance here today. I can just tell you,
if I had the smile of your son and daughter, I would win my election hands down all the time, so
[Laughter.]
Senator MENENDEZ. I am going to have to learn it, because
it does not come naturally to me. They have beautiful smiles.
However, you know, consumer protection and the Director of the
Consumer Financial Protection Bureau are important topics. But
unfortunately, progress has been fleeting, progress, that is, in holding Wall Street accountable and protecting consumers. The Consumer Financial Protection Bureau officially opened its doors in
July. Mr. Cordray was nominated days before, but months before
months beforemy colleagues on the other side of the aisle said
that they would be siding with Wall Street and blocking any nomineelet me repeat that, any nomineefrom heading the Consumer
Financial Protection Bureau.
Not only would they be blocking anyone, regardless of qualifications, and I think we might agree that we have an eminently qualified candidate here who not only receives the approval and support
of consumer groups throughout the country, but the regulated industries that, in fact, they would oversee have positive things to
say about him as an individual.
So not only would they block anyone regardless of qualifications,
they demand that we radically change the structure of this new
consumer protection agency months before it had even opened its
doors and many more months after this matter was legislatively
settled.
Now, the last time I checked, in a democracy, when there is an
election of the people, they choose their representatives. You have
votes both in committee and on the floor, and then those votes ultimately lead to passage of legislation signed by the President of the
United States. It is the law of the land unless we want to change
the dynamics of what democracy means in this country.
In other words, before they even had a chance to objectively
evaluate the work and the effort of the Consumer Financial Protection Bureau, and despite the glowing reviews that many industry
members were already giving it, my colleagues said, no, shut it
down, before it had even begun its important work.
VerDate Nov 24 2008
12:20 Apr 26, 2012
Jkt 048080
PO 00000
Frm 00026
Fmt 6633
Sfmt 6633
23
So, Mr. Chairman, I am looking forward to this hearing which
is in the pursuit of confirming someone for the chairmanship subject to existing law. Now, Americans may be free and are free to
disagree with the law, but they are not free to disobey it. We, in
fact, may be free to say we do not like a law that was passed, but
that does not mean we should block it as the way in which we conduct the course of actions of this country.
It seems to me that minority rights are very important, but that
does not nullify majority rights as elected by the people of this
country, especially when that majority, particularly in passage of
this law that is the law of the land, was the majority not just of
a singular party but a majority of both parties.
Now, a minority has a right, but it does not have the right to
nullify the law by virtue of its actions of insisting that it will not
approve a chair regardless of that individuals capacity, regardless
of that individuals intellect, regardless of that individuals ability.
So, Mr. Chairman, I hope that we will be able to make some
progress so that we can hold Wall Street accountable.
And finally, I have to say, I have the greatest respect for my distinguished colleague, the Ranking Republican on this Committee,
but I just take a different point of view with him, because when
we talk about what has happened in this economy, what has happened in this economy is that we had not a free market, which I
support, but a free-for-all market, and in that free-for-all market,
where regulators were asleep at the switch and other entities were
not in existence to protect the consumer, we ended up with not just
a great recession but on the verge of a new depression.
And so we do not want to relive that history so that we can, in
fact, protect consumers and ensure that our economy can move forward and not run these risks again. The Consumer Financial Protection Bureau is an essential part of that, recognized by a majority
of both sides of the aisle, and that is why it is the law of the land
and that is why it needs a chairman.
Now, for an introduction of our nominee, Senator Sherrod Brown
will introduce Richard Cordray.
Senator Brown.
INTRODUCTION OF NOMINEE RICHARD CORDRAY BY
SENATOR SHERROD BROWN
Senator BROWN. Thank you again, Mr. Chairman. It is my honor

to introduce one of the finest public servants I have ever met, Richard Cordray.
Richs mother was a social worker. His father, who has been legally blind since birth, worked with the developmentally disabled
for 43 years. It is clear where Rich Cordray and his family learned
about public service.
As Ohios Attorney General, he was a strong voice for Ohioans
who struggled to stay in their homes and consumers who faced unfair practices by deceptive lenders. He targeted financial institutions, including Fannie Mae, that used accounting fraud to undermine investments by pension funds that provided retirement security for teachers and janitors and secretaries. He took on unscrupu-
VerDate Nov 24 2008
12:20 Apr 26, 2012
Jkt 048080
PO 00000
Frm 00027
Fmt 6633
Sfmt 6633
24
lous actors. He worked closely with Ohios banks to craft effective
targeted legislation to prevent banks from engaging in predatory
lending.
He was a treasurer at the county level in Franklin County, this
county the States second-largest county and home of the State capital, and at the State level as State Treasurer, he promoted financial literacy efforts in schools and with seniors. Throughout his career, as solicitor of Ohio, as a law professor, as an attorney in private practice, Rich has been a strong voice for his clients and for
consumers.
The top executives of Ohios Fortune 500 companies, Proctor and
Gamble, Limited Brands, Forest City, American Electric Power,
strongly endorse his nomination. Two fine representatives of Ohio
financial institutions, both of whom are here today, Mike Van
Buskirk of the Ohio Bankers League, John Koslowski of the Ohio
Credit Union League, are here today in support of Richs confirmation. Steve Rasmussen, the CEO of Nationwide Insurance, a Fortune 500 company and national leader in insurance and banking
and mortgage products, believes Rich will embrace the partnerships he has built with the business community as leader of the
CFPB.
Rich has the bipartisan support of former Ohio Attorneys General, including the current one, former Republican U.S. Senator
Mike DeWine. That he would win the praise of his former opponent
speaks to his integrity and his professionalism.
And, Mr. Chairman, I have letters that I would like to submit
for the record, one signed by Mike Van Buskirk of the Ohio Bankers League, one signed by Steve Rasmussen, the CEO of Nationwide Insurance, one signed by our former colleague and national
hero John Glenn, all of whom are supporting this fine public servant.
Mr. Chairman, if for no other reason we should confirm him,
Rich Cordray was a five-time Jeopardy champion.
[Laughter.]
Senator BROWN. I actually tried out for Jeopardy once and I did
not get through the first round, so
[Laughter.]
Senator BROWN. I am not sure what that says, but nonetheless,
Rich Cordray is I was very excited about this appointment. I am
very proud to introduce my friend and a terrific public servant in
Ohio, Richard Cordray.
Chairman JOHNSON. Thank you, Senator Brown.
Mr. Cordray, I look forward to hearing your testimony. Will the
nominee please rise and raise your right hand.
Do you swear or affirm that the testimony you are about to give
is the truth, the whole truth, and nothing but the truth, so help
you God?
Mr. CORDRAY. I do.
Chairman JOHNSON. Do you agree to testify before any duly constituted committee of the Senate?
Mr. CORDRAY. Yes, I do.
Chairman JOHNSON. Please be seated. Please be assured that
your written statement will be part of the record. Please also note
that the Members of this Committee may submit written questions
VerDate Nov 24 2008
12:20 Apr 26, 2012
Jkt 048080
PO 00000
Frm 00028
Fmt 6633
Sfmt 6633
25
to you for the record and you should respond to these questions
promptly in order for the Committee to advance your nomination.
Mr. Cordray, if you would like, please introduce your family and
friends who are in attendance before beginning your statement.
STATEMENT OF RICHARD CORDRAY, OF OHIO, TO BE
DIRECTOR, CONSUMER FINANCIAL PROTECTION BUREAU
Mr. CORDRAY. Thank you, Mr. Chairman. I will take you up on

that suggestion. I am glad to have with me today, and I feel like
I do not need to introduce them at this point because they have
been commented upon, my wife Peggy and our twins, Danny and
Holly, who are 12 years old and they are excited to be here today,
in part because they missed a day of school, I think.
I also would echo Senator Brown in thanking Mike Van Buskirk,
the President of the Ohio Bankers League, and John Koslowski,
the General Counsel of the Ohio Credit Union League, who are in
the hearing room today. I thank them for their help and support
over the past month and for the work we have done together over
many years.
And I also want to acknowledge, I believe that Chairman Jon
Leibowitz of the Federal Trade Commission was here earlier and
had to leave. Commissioner Julie Brill of the FTC is here. They
have been tremendous partners to our bureau in helping us set up
operations and have forged a collaborative enterprise for us that I
think will mark the years ahead.
There are other friends here, but I will not task the Committees
patience. I am grateful for their presence.
If it is appropriate at this time, Senator, I do have an opening
statement.
Chairman JOHNSON. Yes.
Mr. CORDRAY. OK. Thank you, Chairman Johnson, Ranking
Member Shelby, and Members of the Committee. I am honored to
be here as nominee to be the Director of the Consumer Financial
Protection Bureau.
I appreciate deeply the confidence that the President has shown
in me, and I thank Professor Elizabeth Warren for her painstaking
and thoughtful work to turn the Consumer Bureau from an abstract idea into what is now a tangible, vibrant agency.
And I am grateful to the Committee Members for your courtesy
to me and your advice over the past month, which I have welcomed
and will always welcome.
Let me briefly discuss how my background and experience may
help inform your consideration. As was mentioned, from childhood,
my parents taught me the value of work that seeks to improve the
lives of others. My dad, Frank, who is now 93 years old, spent his
entire career working with children and adults who have developmental disabilities. My mom, Ruth, who died of cancer when I was
in college, was a social worker who founded the first foster grandparent program for the developmentally disabled in Ohio at the
same time she was doing all the things that a mother does to raise
three pretty rambunctious boys.
Over the past 20 years, through my work in State and local government, I became deeply engaged in consumer finance issues and
I developed a deep resolve to address these issues that I have
VerDate Nov 24 2008
12:20 Apr 26, 2012
Jkt 048080
PO 00000
Frm 00029
Fmt 6633
Sfmt 6633
26
found to be so basic to our communities. Working with troubled
taxpayers, I quickly learned there is no one-size-fits-all solution as
you seek to help people who just want to do the right thing and,
when necessary, to thwart those who would take advantage of others.
On a variety of issues, I sought to find new partners, and we,
frankly, experimented with new approaches. Seeing the struggles
people had to make basic financial decisions, a group of people and
I pushed our legislature successfully to pass a new law requiring
high school students to receive personal finance education before
they graduate. We then implemented that law by developing a curriculum and training hundreds of teachers.
As we saw the foreclosure crisis wreaking havoc in many neighborhoods and I sawthis is in early 2004, 2005I saw subdivisions where a dozen foreclosures would wreck the dreams of every
resident in the subdivision, we created a Save Our Homes task
force that brought together businesses and banks, nonprofits and
Government, to combine their perspectives to assist people who
were just frantic not to lose their homes.
As State Treasurer, I continued to work on financial literacy
issues and foreclosure prevention, now on a State level. I also noticed that we had a neglected low-interest lending program to help
small businesses create jobs and to help farmers access affordable
credit in our rural communities. We revived that program, sought
to expand it, and reached out to community banks to work with
them to understand how we could make the program accessible and
usable for them. Over the time I was Treasurer, we pumped hundreds of millions of dollars in low-interest lending into our communities, especially the smaller towns where community banks are
the economic backbone of those communities. All of this work reinforced for me how imaginative strategies can benefit both businesses and consumers who have many interests in common.
Immediately before coming to the Bureau as Chief of Enforcement, I served as Ohios Attorney General. In that role, I worked
with law enforcement, police and sheriffs throughout the State. I
represented our pension systems in the courts. And I enforced the
State consumer protection laws. My main objectives in consumer
protection in particular were to help empower people to make better informed financial decisions for themselves and their families
and to stop the scams and frauds that not only cheat consumers,
but also undercut law-abiding businesses.
At every stage of this work, I believed and I believe today that
law enforcement which is evenhanded, fair, and reasonable not
only protects consumers, but it also supports what I call the honest
businesses in two key ways. First, the businesses that cheat can
gain a significant and unfair advantage and law enforcement protects the honest businesses against the cheaters. Second, keeping
the marketplace clean is crucial to giving consumers the confidence
they need to be encouraged to participate in that market.
At the Consumer Bureau, I have found that Congress has given
us a broad range of tools to address these issues, including research reports, rulemaking, enforcement, market guidance, and
consumer education. Congress also gave us the critical ability to examine both large banks and nonbanks so that participants in the
VerDate Nov 24 2008
12:20 Apr 26, 2012
Jkt 048080
PO 00000
Frm 00030
Fmt 6633
Sfmt 6633
27
same market would be subject to the same rules and the same burdens and to resolve compliance issues, in many instances more
quickly and effectively, without resorting to litigation.
I am alsoI have become convinced that we will find many opportunities to streamline regulations and disclosures. For example,
our Know Before You Owe project is already working to combine
the mortgage disclosure forms under overlapping mortgage laws in
order to make the costs, risks, and responsibilities of a home loan
clearer to consumers, but at the same time reducing the paperwork
burden for lenders. That is a true win-win. I believe that we will
find that same sweet spot as we review now the thicket of regulations that we have inherited from other Federal agencies.
In closing, Chairman Johnson, Ranking Member Shelby, and
Members of the Committee, I appreciate your consideration. If I
were to be confirmed as the first Director of the Consumer Financial Protection Bureau, I can promise you that you would have one
person who is accountable to you for how we carry out the laws
that you, the Congress, enact, and that I will always be keenly interested in your thoughts about our work.
Thank you again, and I appreciate the opportunity to answer any
questions you may have.
Without a Director in place, CFPB will not be able to exercise its
examination and enforcement powers over nonbank financial institutions like private student lenders and credit bureaus. Do you
agree that this authority is essential to level the playing field between responsible small community banks and their nonbank competitors?
Mr. CORDRAY. I do, Senator, Mr. Chairman. I think it was one
of the key principles that was embodied in this new law. And I can
tell you, I remember a conversation I had with a community banker in Ohiothis would have been around 2007 when I was the
State Treasurertalking to me about the fact that people were
coming in seeking loans that were not feasible, that were not sustainable loans. And when he would tell the customers that, he
would see them go down the street to unlicensed, unregulated, unscrupulous lenders who would make those loans even though those
loans were destined to fail.
So our good community banks and credit unions for their pains,
because of the imbalance in the market, were losing market share
by upholding their standards. And then, of course, it was that imbalance and the mortgage lending that it led to that was so terrible, liars loans, no document loans, people often on mass scale
falsifying income and occupation that led in part to the financial
crisis. And now the community banks have suffered the second
double whammy, which is credit has dried up and it is very difficult for them to maintain their operations.
One of the things that we absolutely will not do at the Bureau,
at least under my leadership, is to impose further burdens on the
community banks and credit unions, who, as I said, from working
with them and recognizing how we had to overhaul programs to
make them accessible to them so they could use them have different constraints, they have different abilities to comply with excessive regulations, and that is something that we will not do on
VerDate Nov 24 2008
12:20 Apr 26, 2012
Jkt 048080
PO 00000
Frm 00031
Fmt 6633
Sfmt 6633
28
my watch. We can exempt them. We can do two-tier regulation.
And we can listen closely to their concerns, which I will do.
Chairman JOHNSON. When I was home in South Dakota this past
month, I heard a lot of concerns from small community banks and
credit unions about the CFPB adding to the regulatory burden. Mr.
Cordray, can you elaborate, if you are confirmed, how do you propose to have the CFPB address these concerns?
Mr. CORDRAY. Mr. Chairman, we have heard the same concerns
directly, and I will say that I have heard those concerns over and
over again from the Senators on this Committee, those who have
taken the time to meet with me. So it is impressed upon me how
important this is for us to get this right. I will refer again to my
own experience. I have worked closely with larger banks and community banks on our low-interest lending program where the easy,
convenient way for us to have administered that program was to
pass all the money out through the large banks. The harder way
was to sit down and work with community banks, understand that
they needed a form that could be filled out in 30 minutes or less.
We put it on line. That we gave them a decision. We promised it
within 72 hours of turn-around time and we met that standard.
And that made it possible for them to work with us.
So they are a different character. They thrive on customer relationships. They thrive on their knowledge of the community. If they
can have a level playing field to compete, they will do very well.
One thing that we will not do, we do not examine those institutions
of $10 billion in assets or less. We do not enforce the law against
them under the new statute. We do have regulatory power, but
again, through exemptions, through two-tier regulation, and
through listening closely to their concerns, which is something I did
both as Treasurer and as Attorney General, we will be able to take
account of those burdens and avoid heaping more difficulties on our
community banks.
Chairman JOHNSON. As we have discussed, there are a number
of mechanisms in place to make the Director and Bureau accountable. As Director, what steps would you take to ensure accountability?
Mr. CORDRAY. Mr. Chairman, there are a number ofit is kind
of a mosaic of interlocking pieces in the law that create accountability for the Bureau. I can also say that from my own experience,
the most important thing in any Federal independent agency is to
follow the law, follow it carefully, follow it closely. That includes as
we do rulemaking that we comply with the requirement that we
consider costs and burdens carefully before we embark on any rulemaking. It means that we should be attentive to legislative oversight, which I have been as a State executive official at the State
level and would be here.
And it means that we pay close attention to audits. I have found
that to be a very useful tool in the offices I have headed. Every office I came into had audit findings against it. In each case, we
cleaned those up. At the CFPB, we will take our audit obligations
very seriously, and I have found that an internal audit, make sure
that the policies you have do not just gather dust on a shelf but
they are actually lived in practice by the agency. That is something
I commit to, as well.
VerDate Nov 24 2008
12:20 Apr 26, 2012
Jkt 048080
PO 00000
Frm 00032
Fmt 6633
Sfmt 6633
29
Chairman JOHNSON. Senator Shelby.
Senator SHELBY. Mr. Chairman, I yield to Senator Corker.
Senator CORKER. Thank you, Mr. Chairman, and thank you,
Ranking Member.
We have been on recess and I went to 60 events or so and I am
a little bit shocked coming back into the Banking Committee,
which has typically been very nonpartisan, to hear the spewing
that I have heard from almost everyone on the other side of the
dais. I have got to tell you, I am a little shocked by that and some
of the half-truths, mistruths, untruths that have been stated.
The fact is, the only two people that I am aware of on this dais
that were directly involved in negotiations to create this consumer
agency are sitting on this side of the dais. That is an absolute fact.
The only two people that I am aware of sitting at this dais today
that negotiated day after day after day to create this organization
are sitting on this side of the dais.
So I am a little shocked at some of the comments that have been
made and actually disappointed at the rancor here in this meeting.
The fact is that what we have talked about, and you and I talked
about this in the office, is the fact that the only way any of this,
the Oversight Council can challenge something that the head of
this agency puts in place is if it threatens the stability of the financial system, which is a pretty big hurdle. The Chairman of this
Committee compared this to the SEC and the FDIC and the Fed,
all of which are either commissions or boards. Therefore, they have
people who help the executive in prudent rulemaking.
So I am stunned at the untruths that have been stated today and
the partisan nature in which they have been relayed. I am sorry
that you are caught up in all of this. I know that you and I talked
in our office about the fact that almost all of this would go away
if the Administration would just sit down and put appropriate
checks and balances in place. I talked to Mrs. Warren about this
and I talked with you about this. And I am wondering how those
conversations went between you and the Administration regarding
the conversation that we had and the possibility of actually just
having some degree of check and balance for this new position that
you hope to hold.
Mr. CORDRAY. Senatorand I appreciated the opportunity to
meet with you and hear your concerns firsthand as well as today
at the hearingI did convey the substance of those conversations
back to the Administration. I have not sought to inject myself in
legislative discussions that may be between the Congress and the
President.
My job at the Bureau has been, as you know, Chief of Enforcement, and our role there is to take the laws that Congress has enacted, whatever they may be, and to enforce them to the letter, and
that is what we are trying to do. We are trying to do that very
carefully. I think the initial Inspector General reports on the Bureau were good in suggesting that we did, in factin fact, finding
that we did identify all of our required mandates under the law,
that we have begun implementing those in a sensible way, and we
have communicated broadly to our stakeholders and to other agencies, which goes in part to your question about the Financial Stability Oversight Council.
VerDate Nov 24 2008
12:20 Apr 26, 2012
Jkt 048080
PO 00000
Frm 00033
Fmt 6633
Sfmt 6633
30
We are required by law to communicate and consult with our fellow banking agencies. We would be a very poor example of Government at work if we did not take that very seriously. I would hope
and expect that concerns that they may have about our work or
concerns we may have about their work are things that we will discuss regularly, that we will work those issues out when we do have
disagreements, as I am sure will occur from time to time, and it
would never be necessary to actually invoke some sort of super
process to override our rules.
If they talk to us about their legitimate concerns that a rule
might threaten the safety and soundness of the banking system, we
should take that to heart. We should think very carefully about
what we are doing and we should work toward a consensus. I think
that is what we will do.
Senator CORKER. Would the agency, though, be not independent
if it had a board? Would that make it not an independent board,
or
Mr. CORDRAY. I think, Senator, that different independent agencies are structured in different ways. The Comptroller of the Currency has had a single director for 100 years and Congress has
blessed that. FHFA has a single director. Other agencies do have
a board. It can work both ways. But the Congress created us and
gave us a director. We are trying to implement that law. It is difficult not having a director in place, as the Chairman mentioned,
a level playing field
Senator CORKER. Is the threshold pretty high, meaning that unless a rule that you create threatens the stability of the entire financial system, it cannot be challenged. That is a pretty high
threshold, is it not?
Mr. CORDRAY. I do not know how to evaluate that in the abstract. I know this provision does not apply
Senator CORKER. Well, justdo not do it in the abstract. I mean,
would you agree that unless you create a rule that destabilizes the
entire financial system, that that is a pretty big threshold for any
of the other regulators to challenge whatever you solely decide
again?
Mr. CORDRAY. Again, it is a standard that does not apply to any
other agency in Government, solely to the Consumer Bureau. It is
a high hurdle, but not an inappropriate one, I think, because we
will be consulting regularly, both in the examination function and
as they do safety and soundness regulation, we do consumer protection regulation. I think the two are largely in harmony and it will
make sense for us to go together as we do our work. That would
be my intention if I were the director.
Senator CORKER. Well, I do hope that we will continue to work
on this. I still do not understand why the Administration will not
work in some way to solve this, nor why they allowed this to be
the lightning rod that it did not have to be when there was support
on both sides of the aisle, large support, for a Consumer Protection
Agency.
But let me just move to you for one moment.
Mr. CORDRAY. Sure.
Senator CORKER. First of all, I have had a very pleasant meeting
with you and again compliment you on your family. One of the
VerDate Nov 24 2008
12:20 Apr 26, 2012
Jkt 048080
PO 00000
Frm 00034
Fmt 6633
Sfmt 6633
31
things we talked about in the meeting that we had in our office
was the fact that it is not typical to have sort of a political activist
in State party politics announced to be head of a national organization. Typically, you pick people who have had experiences in that
regard. And when weand that is not the case with you, and
again, you seem like an outstanding individual in many ways.
You had announced that you wanted to run for Governor of Ohio,
which makes it even more odd. Typically, we do not have regulators come up here running agencies that can make rules over the
entire financial system, quote, that might be able to make a name
for themselves in doing so when their goal is to go back to their
home State and run for Governor. You seem to indicate maybe that
was not the case now, but I wonder if you would speak to that, because as you can imagine, especially in the way this organization
has been set up, that would create some question marks and flags.
Mr. CORDRAY. Yes, and I appreciate the opportunity to address
that issue squarely. I did say that last year before I came to work
at the new Consumer Bureau. I can tell you, Senator, I have no
plans to run for any political office. I understand that the work of
a Federal independent agency and law enforcement work, in particular, must be completely absolved of politics. The two do not
mix. And that is how I have approached my job.
Senator CORKER. How do you feel about late fees on credit cards
and mortgages?
Mr. CORDRAY. When I was the Treasurer of Ohio, the Federal Reserve was first proposing some rules and regulations to curb some
of the practices that had come up with late fees and I supported
those changes in the rules, which eventually were adopted by Congress in the CARD Act, which I think was a good set of reforms
in the credit card industry. One of the jobs of the Bureau will be
to monitor compliance with those new laws, and we had a conference early this year at which we found, interestingly, that compliance was pretty good with the new laws and that it had not restricted credit and did not seem to be raising the price of credit for
people and so those seemed to be sound and sensible reforms that
Congress had adopted.
Senator CORKER. So you are not concerned about people who pay
their bills on time having fees higher because of people who do not
pay their bills on time, and while you are answering that, just strategic defaults in general. I mean, we are creating an environment,
it appears to me, in this country where we are encouraging people
on economic grounds, self-interest grounds, to default. I mean, we
have actually agencies of Government that now are encouraging
that. Do any of those kinds of things concern you, as especially
someone who is going to be in major ways overseeing big parts of
this?
Mr. CORDRAY. They do, Senator, and I think that is part of the
balance that has to be drawn with any of these types of regulations. I am somebody whoI have credit cards. I try to pay those
balances very diligently on time. I do not want to pay any additional fees beyond what I have to. I do not want to be billed for
the problems of others. I also think that the credit card practices,
as they were reformed by the CARD Act, have been good reforms.
I think Congress acted wisely there, and we will be attempting to
VerDate Nov 24 2008
12:20 Apr 26, 2012
Jkt 048080
PO 00000
Frm 00035
Fmt 6633
Sfmt 6633
32
ensure that that law is being followed as Congress enacted it. So
I guess that is my attitude toward the issue.
Senator CORKER. The Chairman has been very generous. I thank
you, and I might stay for a second round. Thank you.
And thank you for your testimony and thank you for bringing
your family.
Mr. CORDRAY. Thank you, Senator.
Chairman JOHNSON. Senator Reed.
Senator REED. Well, thank you very much, Mr. Chairman, and
thank you for your willingness to serve, Mr. Cordray, in a very difficult time and in a very challenging office.
You also served as the State Treasurer in Ohio. That is correct?
Mr. CORDRAY. I did, yes.
Senator REED. And so you come to this job with multiple skills.
One is as an Attorney General who had to go out and protect people, but, two, as essentially the chief financial manager for the
State of Ohio. And so suffice it to sayand you can elaborateyou
are certainly, I think, aware of and not only aware of but sensitive
to some of the legitimate concerns of the banking industry about
the predictability, about the soundness of financial institutions,
about the needs that they have. Is that fair to say?
Mr. CORDRAY. I think I am, Senator. As you mentioned, I was
both a State and a county treasurer. It was a AAA-rated county,
which is an unusual thing in American local government finances.
But most notable perhaps is my tenure as Treasurer at the State
was the time leading up to the financial crisis. It was 200708. It
was one of the most difficult times to try to manage and safeguard
public funds that I think we have seen in my lifetime. We were
very careful and conservative about how we invested the publics
money, how we safeguarded that money. We suffered no losses
when I was the State Treasurer in any of our funds, including our
local government fund, which was not true of a number of States
around the country. I am very proud of that.
But I also think that work gave me a very close working relationship with banks in Ohio because they partnered with us in a lot
of the work we did to manage the States finances, both as
custodians of pension funds and in terms of debt management and
debt issuance and the like, both large and small banks. So it gave
me a good working sense of their operations, of their concerns. I
created a Banking Advisory Council when I was State Treasurer
and carried forward the same approach as Attorney General. So we
would meet regularly, I would hear their concerns, and they would
talk to me about whatever issues were on their mind. I think that
is the accessibility I have tried to foster, and I would bring that to
the Bureau.
But I do have that background, and I think it is part of what
maybe would be kept in mind in assessing my qualifications.
Senator REED. One office within your proposed purview is the Office of Servicemember Affairs, led now by Holly Petraeus. Can you
comment upon your view of its importance? Many of us here think
it is critical because these are employees of the Federal Government and they are usually far from their homes, and their ability
to connect with a local Attorney General or a States attorney is
limited. And, you know, this goes back about 35-plus years. I can
VerDate Nov 24 2008
12:20 Apr 26, 2012
Jkt 048080
PO 00000
Frm 00036
Fmt 6633
Sfmt 6633
33
recall how they were victims of many consumer frauds, and now I
am hearing because of the Internet it is even worse and even more
difficult for local authorities to deal with it. But now we have a
Federal office so you might comment on that.
Mr. CORDRAY. Thank you, Senator. I had some awareness of
these issues. When I was Ohio Attorney General, we had a pro
bono group that provided legal advice to soldiers, servicemembers
who were being deployed, often on short notice, and to their families. But I will say that since coming to the Bureau, I have learned
a lot, and I expect to continue to learn a lot. And part of what I
have learned has been from Mrs. Petraeus, who, as you say, is an
outstanding colleague of mine and heads our Office of
Servicemember Affairs. She has taught us all, I think, about the
special needs of servicemembers, how deployments and even forced
transfers within this country create hardships for their families.
She herself talks about how she and her husband have movedI
think she said23 times in 36 years over the course of his long
and distinguished career. But also the fact that they are now finding that if you have consumer finance issues as a citizen, they are
bad enough, they are tough enough. You might face bankruptcy or
foreclosure. As a servicemember, you can lose your security clearance. You may not be able to continue to do the job you are trained
for. That is not good for the servicemember, it is not good for the
military, it is not good for the country. So these are very serious
issues, and she continues to bring them to our attention.
Recently, she and I met with the JAG Corps of all branches of
the service to begin to coordinate on enforcing the law to protect
servicemembers and the special needs around military bases, which
are a magnet for a lot of financial predators. And so this is something we are excited about. It is something we hope to be able to
deliver for those servicemembers, that someone will stand on their
side. And I hope that that will be one of the marked successes of
the new Bureau.
Senator REED. Thank you very much.
Chairman JOHNSON. Senator Shelby.
Senator SHELBY. I have no questions. I do have an observation.
I enjoyed talking with you when you visited me in the office. I am
sure that you have a good background. You have got a fine family.
I do like those smiles, like all of us do.
Mr. CORDRAY. Thank you.
Senator SHELBY. But you are caught between a big substantive
debate here, as you well know, and that is going to have to be resolved, I think, before we move this nomination farther. I discussed
that with you in the office, and I think Senator Corker did, too.
Mr. CORDRAY. Yes.
Senator SHELBY. But I want to join Senator Corker. Just for the
record, Mr. Chairman, Senator Corker and I were very involved in
the banking legislation. We had advocated a consumer agency. But
we wanted accountability with it, and we still do.
Chairman JOHNSON. Senator Brown.
Senator BROWN. Thank you, Mr. Chairman. I appreciate Senator
Shelbys comments, because that is really the point, that during
VerDate Nov 24 2008
12:20 Apr 26, 2012
Jkt 048080
PO 00000
Frm 00037
Fmt 6633
Sfmt 6633
34
this whole process, Senator Corker, Senator Shelby, Senator Dodd,
and others were in the midst of a negotiation to work out legislation. That is what we do around here. Many, many elements of the
consumer part of the bill in Title X, especially, I know, Senator
Corker, that you worked with Elizabeth Warren on, were done with
major concessions on both sides. There were some things in that
billSenator Shelby supported an amendment I had that the largest banks were, in fact, too large and we should find a way to do
something about those six largest banks. He and I tried on the
Senate floor. We lost. We had
Senator SHELBY. They were too big to exist.
Senator BROWN. Yes. And so, you know, that is what happens
here. You win some, you lose some. But I guess I am puzzled by
Senator Corkers comments about excessive partisanship here because, you know, we wrote this bill, it passed with some number
of Republican votes. It got over 60 votes. But there was certainly
consistent and frequent Republican input, much of which was accepted in this bill. I understand in the end you did not vote for the
legislation, but it passed both Houses. It was signed by the President. And I go back to what the Senate historian told me, that
never have we seen in this Senate a party say no to confirming
putting people in place to run an agency because the one party, a
minority party, a large minority, is opposed to parts of the law, so
we are going to just take our ball and go home and then call it partisanship. I do not reallyI just do not quite understand that.
I think in the end, the question is: Is Richard Cordray qualified
for this position? And I do not think anybody has made the case
that he is not, and most of us have made the case that he is. And
it is a pretty strong case.
So, you know, I hear sort of the unaccountability question, that
one Senator said this is unaccountable consumer protection czar.
And I want to run through and then get your commentsand I will
speak for a couple of minutes walking through thiswhat I think
the bill does about the so-called unaccountable rulemaking process.
I will give just a couple of examples on each.
Before proposing the law, if there is a consumer disclosure involved, the Paperwork Reduction Act requires you to seek the review and clearance of OMB. You must consider the potential benefits and costs to consumers and financial services provides, consult
with banking regulators and other Federal agencies regarding the
rules. This is all before proposing the role. If there is a significant
economic impact, you must follow the Small Business Regulatory
Enforcement Fairness Act. You must under the Regulatory Flexibility Act prepare an initial regulatory flexibility analysis.
When proposing the role, the way I read the law, you must give
public notice of proposed rules, offer the public the opportunity to
comment under the Administrative Procedures Act, consult with
the appropriate banking agencies, pursuant to the Regulatory
Flexibility Act conduct a final regulatory flexibility analysis.
After the rule has been finalizedagain, this is allthis does not
sound unaccountable to me, but after the rule has been finalized,
if any member of the Financial Stability Oversight Council objects
to a regulation, they can petitionthe member agency that objects
can petition the FSOC to get it removed. They can stay or set aside
VerDate Nov 24 2008
12:20 Apr 26, 2012
Jkt 048080
PO 00000
Frm 00038
Fmt 6633
Sfmt 6633
35
any regulation passed. Pursuant to the Congressional Review Act,
submit a report to the House, the Senate, and the GAO. Under
Dodd-Frank, it requires the CFPB to review each with significant
rules or orders within 5 years of enactment to address the rules
effectiveness.
Is your understanding similar to that of the whole process of accountability, the statutory requirements that you would face as Director to issue a rule? And I will ask a couple other questions and
answer it generally if you would. Does a private party have an opportunity to challenge one of your regulations in court? What recourse ultimately does the President have? Can the President remove a runaway Director because he or she is unhappy with the
Directors ideology or direction or rulemaking or whatever? And are
these checks similar to those that apply to other agencies? I would
like you to sort of spell that out for us.
Mr. CORDRAY. All right. That was several questions, Senator. I
will do my best to address them.
First of all, as with any independent agency, the leadership of
the Consumer Bureau, as with every other agency, is not subject
to direct removal by the President, as are Cabinet departments. My
understanding is Congress sets up agencies in that manner in
order to keep those agencies close to Congress. Our job is to carry
out the laws enacted by Congress, and we are subject to your oversight in doing so.
The long list of restrictions and/or process guidance that you laid
out in terms of rulemaking by the Bureau I believe was pretty comprehensive. I was trying to take notes as you went.
I would also say that for us in particular, one thing I want to
emphasize is I think we have a real opportunity here inheriting
many regulations from other agencies that we did not help to write,
and that in the aggregate may have created undue burdens, particularly as there was sort of a fever for disclosure over the last 30
years, and it got to the point where often the disclosures were so
long and confusing that they did not really help consumers but
they certainly imposed burdens on lenders. There is an opportunity
to try to streamline that and cut that back, and that is something
that will be a priority for me if I am the Director of this Bureau.
We also are subject to oversight, you asked, by the courts. The
D.C. Circuit Court of Appeals recently rendered a pretty, I would
say, tough decision on rulemaking by Federal agencies in terms of
making sure that the agencies do a careful cost/benefit assessment
of any rule and that they not simply reach a conclusion and then
rationalize it after the fact. That is something we will take to heart
in the work we do at the agency.
But there are a number of checks that are similar to those of
other agencies, and there are some checks on the Bureau that were
imposed in the law that, in addition, are new compared to other
agencies. But we will live with them all. Our job is to carry out the
laws enacted by Congress, and we intend to do that to the letter.
Chairman JOHNSON. Senator Schumer.
Senator SCHUMER. Thank you, Mr. Chairman, and thank you,
Mr. Cordray.
As you may know, my interest in this agencyI was one of the
original sponsorscame about after 10 years of trying to get very
VerDate Nov 24 2008
12:20 Apr 26, 2012
Jkt 048080
PO 00000
Frm 00039
Fmt 6633
Sfmt 6633
36
simple legislation, credit card disclosure legislation, or get the Fed
actually to require that there be disclosure of what credit card interest rates are, and I just got basic they are busy with other
things kind of thing. That is why I feel this agency is necessary.
None of the other agencies put the consumer at the top of the list.
It is not their mission. The Feds is safety and soundness. And so
an independent agency had a great deal of appeal to me, and that
is why I was a strong advocate of it. It is an agency designed to
finally put consumers first. It is under attack even before it is fully
on its feet. And I do not want to go back to the old days where we
go to the Fed or some other agency and say the consumer needs
this reasonable protection. What I was asking with credit cards
we have gone beyond that nowis simple Adam Smith disclosure.
No one knew what the interest rates were when they signed up for
credit cards, and the Feds interest was, to put it kindly, sporadic.
And I like the Fed in generalbut not on this area. They were not
very good.
And so here we have an attack that is sort of not in the ordinary.
It is extraordinary, where two sides make their arguments, seek
support from their colleagues, and put it to a vote. That is the ordinary. We fought those battles last year. Consumers won, I think in
part because many people experienced what I did.
But now that consumer protection has become the law of the
land with its own agency to guard it, some of our colleagues want
to reopen last years debate. Because they could not win it through
the ordinary legislative process, they have promised to block this
nomination or any nomination until they get their way. It is hijacking the legislative process. You have a legislative battle, you lose,
and then you say, I am not going to appoint anybody because I
lost the legislative battle. It is not how things should work around
here.
So let us ask this question, which is a fair question: If this nominee loses, who wins? Well, consumers do not win. Many of the
abuses we saw leading up to the financial crisis will be allowed to
continue, and the new cop on the beat for consumers will be forced
to stand down.
Seniors do not win. They are going to remain vulnerable to predatory reverse mortgages, and the CFPB will have to fight with one
hand tied behind its back to protect them.
Servicemembers do not win. They will remain at the mercy of
private lenders and debt collectors, and the CFPB will not be there
to help.
And banks that play by the rules do not win. They will be forced
to compete with unscrupulous lenders, unregulated mortgage
servicers. All the kinds of people who created a good part of this
financial crisis because they were unregulated will remain unregulated while many of the banking institutions that are regulated
will still be abiding by the rules. No doubt that is why the Ohio
Bankers League supports your confirmation.
So, in short, without a Director the CFPB has the least authority
where it needs it the most. We should not relitigate the existence
of the CFPB. We should be here to debate the qualifications of Mr.
Cordray to lead the CFPB, a question that I think would be an-
VerDate Nov 24 2008
12:20 Apr 26, 2012
Jkt 048080
PO 00000
Frm 00040
Fmt 6633
Sfmt 6633
37
swered easily in the affirmative. So I am going to ask you a few
quick questions.
First, now Senator Shelby has met with you. He has said that,
and that is to his credit. But how many of the other 43 who signed
the letter saying they would block your nomination actually met
with you or asked you questions before they sent the letter?
Mr. CORDRAY. Well, Senator, I was not a nominee at that time
so I do not know that they would have known to seek me out to
ask me any questions then.
Senator SCHUMER. How about subsequently? Anybody?
Mr. CORDRAY. Since I was nominated, we have made an effort to
meet with each Member of the Banking Committee. I have not
reached out extensively beyond the Banking Committee at this
point, although I hope to do so in the near future.
Senator SCHUMER. How many meetings did you get?
Mr. CORDRAY. I got a number of meetings.
Senator SCHUMER. Thanks. OK.
I read a little bit about your background this morning, learned
you got your first job at McDonalds. What did you do? And how
much did you earn?
[Laughter.]
Mr. CORDRAY. I was a hamburger flipper, although it seemed like
the manager always nominated me to clean the parking lot whenever it rained.
Senator SCHUMER. I hope you used different tools for each job.
[Laughter.]
Senator SCHUMER. And how does a kid from Grove City, Ohio,
who worked at McDonalds end up earning scholarships to Michigan State, Oxford University, and the University of Chicago Law
School?
Mr. CORDRAY. I worked hard in school, I had some really terrific
teachers, and I think I was fortunate.
Senator SCHUMER. And, finally, last question. What has it meant
to you that Mike DeWine, who defeated you for Attorney General
last year in the election, supports your confirmation?
Mr. CORDRAY. Attorney General DeWine and I have attained a
friendly relationship in the aftermath of what was a tough election.
I think that is to his credit. I hope it is to my credit. And I have
appreciated what he has had to say about me very much.
Senator SCHUMER. OK. Well, let me conclude because my time is
up.
Mr. Chairman, in my opinion, Mr. Cordrays background and his
experience show that he is the epitome of a public servant, and it
will not only be bad for consumers if his nomination is hijacked.
It will be bad for the country if he continues to be treated as a
pawn in a cynical Washington game. So I hope you are here, and
I hope my colleagues will change their mind, having met you and
seen the quality that you show as a nominee.
Mr. CORDRAY. Thank you.
Senator SCHUMER. Thank you, Mr. Chairman.
Chairman JOHNSON. Senator Menendez.
Senator MENENDEZ. Well, thank you, Mr. Chairman.
Mr. Attorney General, in my estimation you seem to have a
strong record on consumer protection issues, and you have been en-
VerDate Nov 24 2008
12:20 Apr 26, 2012
Jkt 048080
PO 00000
Frm 00041
Fmt 6633
Sfmt 6633
38
dorsed by several consumer advocates, but you have also been endorsed by Ohio businesses and bankers as well. Is that not fair to
say?
Mr. CORDRAY. I have been, yes, Senator.
Senator MENENDEZ. Now, as a matter of fact, Mr. Michael Van
Buskirk I hope I am pronouncing his name wellwho is the CEO
of the Ohio Bankers League, wrote a letter of endorsement on your
behalf, saying, While I retain reservations about the CFPBs structure, I believe Mr. Cordray would be an able Director. I know him
to be very bright, ethical, committed to the public good. And while
he and I have differed on specific policy decisions, you should know
the consistency in his process to reach those decisions. He has welcomed competing ideas. Moreover, he has systematically reached
out to encourage a steady flow of information that might bring him
better insight.
So, in other words, while Mr. Van Buskirk may have reservations about the agency and may even disagree with you on some
policy matters, he has still recognized your qualifications to lead
the CFPB. Is that not correct?
Mr. CORDRAY. Well, I do not want to speak for anyone else, Senator, but I will say of my relationship with the Ohio Bankers
League I have always been open to hearing from them about their
concerns, and I think that listening to those concerns made me do
a better job as State Treasurer and as State Attorney General.
Senator MENENDEZ. Well, I appreciate your modesty, but couldnt
you deduct from that letter that, in fact, there is an endorsement
of your capability to do the job even if there may be disagreement
about what the agency is about?
Mr. CORDRAY. I think that they have come to respect my public
service and understand that I try to be honest and straightforward
and do the right thing. Sometimes it is difficult to know what the
right thing is, but by getting broad advice and input from a lot of
sources, including the bankers and businesses that I work with, I
have found that it makes for better decision making.
Senator MENENDEZ. Let me ask you this: Have any of my colleagues on the other side of the aisle, to your knowledge, called into
question your qualifications for this position?
Mr. CORDRAY. I do not know of that, Senator.
Senator MENENDEZ. In your meetings with my colleagues on the
other side of the aisle, has anyone called into question your qualifications?
Mr. CORDRAY. We have had good, cordial meetings in which peoplewe had a frank exchange of views, and I tried to listen carefully to what was said to all the Senators, and I hope I will always
have thatdevelop that reputation, and I think it will make my job
easier and make my work better if I am listening closely to what
you all have to say.
Senator MENENDEZ. Let me try again. Anyone say to you, Mr.
Cordray, I have problems with your qualifications to do this job?
Mr. CORDRAY. They have not.
Senator MENENDEZ. All right. Thank you.
So let me ask you, I understand my colleague Senator Brown has
gone through all the checks and balances that some believe do not
exist, but, in fact, there is a large number of them. But let me ask
VerDate Nov 24 2008
12:20 Apr 26, 2012
Jkt 048080
PO 00000
Frm 00042
Fmt 6633
Sfmt 6633
39
you this: Isnt it trueor maybe you can enlighten me if I am
wrong about thisthat without a Director the Consumer Financial
Protection Bureau does have supervisory authority over large
banks and the ability to enforce existing banking laws, but it will
not have supervisory authority for nonbank financial service providers such as payday lenders?
Mr. CORDRAY. Senator, it is one of the unfortunate difficulties of
the current situation, that without a confirmed Director the Bureau, it is widely agreed, has inherited full powers over the large
banks, but there is considerable difficulty about what powers we
have over some of the nonbank entities that are competing in the
same market with them. And I am haunted by that conversation
I mentioned earlier with an Ohio community banker in 2007 where
they talked about what it meant for them that only part of the
market was being regulated and they were consistently losing market share to the unscrupulous, unlicensed, unregulated lenders who
did not play by the same rules and did not meet the same standards. And that is something I would hope we would not repeat.
Senator MENENDEZ. So, in other words, there will be an uneven
and unbalanced playing field where community banks have to
abide by the rules but their competitors, like private student loan
lenders and payday lenders, will not have to?
Mr. CORDRAY. That is the unfortunate difficulty of the current
situation. We are hampered in that other authority, yes.
Senator MENENDEZ. It would certainly seem to me that community banks would think that is highly unfair.
Furthermore, without a Director the Bureau cannot protect students from exploitative student loans, protect seniors from deceptive financial products marketed by nonbanks, and protect our
troops from deceptive products by nonbank lenders. How is that
fair for those banks that play by the rules and yet could lose business to competitors who do not have to play by the same set of
rules?
Mr. CORDRAY. I think it is not fair and it is not wise as a regulatory approach. I talked in my opening statement about law enforcement that is evenhanded, fair, and reasonable. By putting people under the same rules they can compete, and the good consumer-facing businesses that base their business on customer service and customer delivery, like our good community banks and
credit unions, I think will prosper.
Senator MENENDEZ. Thank you, Mr. Chairman.
Chairman JOHNSON. Thank you, Mr. Cordray, for your testimony
today and for your willingness to serve our Nation.
I ask that all Members of the Committee submit any questions
for the record by close of business on Friday, September 9, and, Mr.
Cordray, please promptly submit your answers to these questions
in order for the Committee to advance your nomination.
This hearing is adjourned.
[Whereupon, at 4:49 p.m., the hearing was adjourned.]
[Prepared statements and additional material supplied for the
record follow:]
VerDate Nov 24 2008
12:20 Apr 26, 2012
Jkt 048080
PO 00000
Frm 00043
Fmt 6633
Sfmt 6633
40
PREPARED STATEMENT OF CHAIRMAN TIM JOHNSON
On our next panel, we will consider the nomination of Richard Cordray to be the
first Director of the Consumer Financial Protection Bureau.
Mr. Cordray, welcome to the Senate Banking Committee and a warm welcome to
your family and friends who are here this afternoon.
The CFPB was born out of the failure by prudential regulators to hold financial
companies accountable for complying with consumer protection laws. Congress created the CFPB to be a robust and independent agency focused on protecting consumers, like military families and older Americans, from abusive financial products.
The CFPB was also created to streamline disclosures so consumers can make the
best financial choices for themselves and their families. In fact, one of the CFPBs
first projects is to simplify the long, confusing mortgage disclosure forms.
The CFPB is an agency that the American people want. A recent bipartisan survey shows that Americans strongly support the creation of the CFPB.
The Director of the CFPB will play an important role in maintaining the agencys
independence, promoting an equitable and transparent consumer financial market
place and exercising enforcement of consumer protection laws.
On July 18, President Obama nominated Mr. Cordray to be the first ever Director
of the CFPB.
The purpose of todays hearing should be to consider whether Mr. Cordray is
qualified for that job. Instead, a vocal minority is playing games with the process
and holding Mr. Cordrays nomination hostage. This political gamesmanship is preventing Americans from receiving the consumer protections they deserve and putting community banks and credit unions at a competitive disadvantage to nonbank
financial companies.
This vocal minority insists on rehashing the same debate Congress had last year
when it created the CFPB as an accountable yet independent regulator.
The fact is that every regulatory agency is structured with different features that
make it accountable. Each agency has a unique combination that fits its mission
and independence. Last year, Congress decided on a structure for the CFPB which
borrows some accountability features from other regulators, but also includes several new features unique to the consumer agency.
The chart on display lists many of the ways the CFPB is accountable, for example:
The Financial Stability Oversight Council has the power to overturn CFPB regulations;
By law, the CFPBs budget is capped; and
The President has the power to fire the CFPB Director.
So the misleading claim of no CFPB accountabilitydrummed up by special interests and put forth by a vocal minorityshould be exposed for what it is: an attempt
to destroy the Bureaus ability to do its job of protecting American consumers.
I would remind my colleagues that in 2008 a bipartisan Senate, including Members on both sides of the aisle sitting here today, helped to create the Federal Housing Finance Administration. FHFA is also an independent agency, headed by a sole
Director, subject to a GAO audit and purposely not subject to the Congressional appropriations process.
Now lets talk about what the focus of a nomination hearing should be: the nominee. Richard Cordray has spent his career in public service caring about people. He
has taken the time to understand and come up with the best, most practical solutions for their problems.
Mr. Cordray supports small business and honest companies. He has been a member of his local chamber of commerce for 22 years. He believes in leveling the playing field so that small companies can compete fairly and that playing by the rules
is good for business. Ask unanimous consent to include several letters of endorsement into the hearing record.
Mr. Cordray also believes that people and corporations must be responsible for
their own behavior and if they act responsibly they should get a fair shake.
It is my hope that, if confirmed, Mr. Cordray will use his knowledge and experience as a law enforcement official and public servant to better protect American consumers and to enhance the quality of our consumer financial markets.
We have seen many important nominations blocked in the Senate and denied an
up-and-down vote on confirmation. The stability of our financial system, and of our
economy, is simply too important to be put at risk by political games. Its time to
allow the CFPB to do its job to the fullest extent of its authority with a Senateconfirmed Director in place.
VerDate Nov 24 2008
12:20 Apr 26, 2012
Jkt 048080
PO 00000
Frm 00044
Fmt 6621
Sfmt 6621
41
PREPARED STATEMENT OF SENATOR RICHARD C. SHELBY
I dont think it will surprise anyone to hear that we believe that todays hearing
is premature. We do not believe that the Committee should consider any nominee
to be the Director of the Bureau of Consumer Financial Protection until reforms are
adopted to make the Bureau accountable to the American people.
Earlier this year, 43 of my Senate colleagues and I sent a letter to President
Obama expressing our serious concerns about the Bureaus lack of accountability.
We also proposed three reasonable reforms to the structure of the Bureau.
We had hoped to work with the majority to address this issue before the President
nominated a Director. Unfortunately, neither the President nor the majority has
made any effort to work with us to improve the accountability of the Bureau. Instead, the President has nominated Mr. Cordray to be the first Director.
It is regrettable that the President and the majority have chosen to ignore our
request rather than work with us to improve the Bureaus accountability. It may
be good politics for them, but it is certainly bad policy for the American people.
One of our Nations founding principles is that the Government should be accountable to the people. Yet, the majority structured the Bureau to grant its Director unprecedented authority over the lives of the American people without any effective
checks.
All of the Bureaus power is concentrated in the hands of its Director. The Director determines which rules are enacted and which enforcement actions are brought.
The Director makes all hiring decisions and decides how the agency spends its resources. Because of the expansive jurisdiction of the Bureau, every American will
be affected by the Directors decisions. The Director will single-handedly determine
the financial products consumers can buy, as well as which consumers have access
to credit, and which do not. Accordingly, the Directors decisions will impact whether
Americans can buy a home, a car or even basic household goods. It is staggering
the amount of control the Director will exert over the daily financial choices available to Americans.
Despite having such broad powers, however, there is no meaningful check on the
Directors authority. The Director cannot be removed except on extremely limited
grounds of inefficiency, malfeasance, or neglect of duty. In other words, the Director
cannot be removed for poor policy choices. In addition, bank regulators do not have
a meaningful ability to ensure that the Directors actions do not needlessly undermine the safety-and-soundness of our banks. While some claim that the Financial
Stability Oversight Council could overrule the Director, this so-called check is simply illusory. The requirements needed for the Council to act are so onerous that in
practice the Council will never be able to exercise this authority. That shouldnt surprise anyone, it is the way it was designed.
For example, the Director of the Bureau sits on the Council and will vote to determine whether or not the Council should overturn one of his decisions. It is not hard
to guess how the Director will vote. As a result, the Director will be virtually free
of any constraints on his authority during his 5-year term.
No one person should have so much unfettered power over the American people.
It blatantly violates the spirit of our democratic system of Government. Our pursuit
of better consumer protections should not require us to compromise our basic Constitutional values. This should be something on which we can all agree.
Moreover, the principle involved will have real consequences. Unless the Bureau
is reformed, it is only a matter of time before this concentration of power is abused
or misused to the detriment of American consumers and the economy.
The jobs figures we have seen over the summer demonstrate how the Administrations heavy-handed regulatory agenda is crippling the economy with unnecessary
costs and legal uncertainty. There could not be a worse time to give an unelected
and unaccountable bureaucrat a blank check to impose even more ill-considered
rules that could further undermine our weak economy. At a time when our Nations
unemployment rate is over 9 percent, this would be a very dangerous gamble.
In closing, the Chairman today has attempted to turn the phrase vocal minority
into a pejorative. Over the years, however, Senators from both parties have agreed
upon rules governing this chamber that are designed to protect the rights of the minority. The requests made by this particular vocal minority seek only to preserve
the system of checks and balances embodied in the Constitutionthat is not what
I would call a radical undertaking.
VerDate Nov 24 2008
12:20 Apr 26, 2012
Jkt 048080
PO 00000
Frm 00045
Fmt 6621
Sfmt 6621
42
PREPARED STATEMENT OF SENATOR DANIEL K. AKAKA
Mr. Chairman, I am very proud to join you in welcoming a distinguished constituent and a long-time friend of mine and her family. Ms. Patricia Loui has been
nominated by President Obama to serve as a Member of the Board of Directors of
the Export-Import Bank of the United States.
As an accomplished international businesswoman who brings a wealth of experience in banking, business, and economic development, she is an excellent nominee
for the Ex-Im Bank. I am pleased to join Senator Inouye in introducing her to the
Committee.
This is an exciting and challenging time for the Ex-Im Bank. It helps to create
and maintain U.S. jobs by filling gaps in private export financing at no cost to
American taxpayers. It just set a new all-time record for export finance authorizations. It had loans of over $24.5 billion at the beginning of August at a time when
credit has been tight.
It is providing opportunities for U.S. businesses to contribute to our Nations
international economic competitiveness at a time when the Nation is struggling to
recover from the recession. It helps the small businesses that have always been the
engine of our economy, the workers who are still seeking employment, and the families and communities that they support.
During this exciting and challenging time for the Ex-Im Bank, Ms. Loui is the
right nominee to join the Board.
Under Ms. Louis leadership over the past 30 years, her company, OmniTrak, has
become a leading research and planning firm in Hawaii.
It is recognized for its expertise and work in Asian markets in tourism, finance,
health, communications, telecom, retail, Government, real estate, and land development. Ms. Loui previously served as President of the East West Center Association,
as Vice President of the Bank of Hawaii, and as a development planner for the
United Nations Development Programme and UNESCO in Asia. And of course, her
work in the communitywhich includes being a member of the APEC host committee for the Leaders meeting in Honolulu in Novemberhas been invaluable.
In short, Ms. Loui has developed an expertise in business that perfectly aligns
with her soon-to-be new role on the Ex-Im Bank. With her passion for business and
drive for success, I have every confidence that she will make tremendous contributions to the bank.
But her qualifications for this appointment goes beyond her impressive education,
resume, and extensive experience. The entrepreneurial spirit runs in the family.
Not only is OmniTrak Hawaiis largest market research firm, Pats parents, brothers and sisters, and in-laws have all run business ventures ranging from restaurants, marine design and engineering, insurance, flowers, and furniture. And, according to family members, it is no surprise that business runs in the familythe
matriarch and patriarch of the Loui family met because of business.
Four generations ago, Shizuko Katashima owned a large market in Kapahulu,
which she sold to Alicia Loui. Shizukos daughter Alyce met and married Alicias
son Fred. And family and island history was made.
Ms. Loui, please accept my congratulations on your nomination. Mahalothank
youfor your dedication to public service.
TO BE
PREPARED STATEMENT OF PATRICIA M. LOUI

MEMBER, BOARD OF DIRECTORS, EXPORT-IMPORT BANK OF THE UNITED
STATES
SEPTEMBER 6, 2011
Chairman Johnson, Senator Shelby, and distinguished Members of the Committee, thank you for the honor of appearing before you as a nominee for the Board
of Directors of the Export-Import Bank of the United States. I am deeply grateful
to President Obama for nominating me. May I also warmly thank Senator Inouye
and Senator Akaka for their generous support.
I would especially like to thank my husband, Michael Schmicker, and son, Christopher Schmicker, and other family kindly attending: Steven Loui, Kathleen LouiYasui, Kristyn Yasui, John and Annette Schmuecker. Though not here, thank you
to my mother, Alyce, and late father, Fred, for their unconditional support.
I feel that my professional career in small business, banking, and international
development helps qualify me to make meaningful contributions to Ex-Ims programs, and, if confirmed, I will work diligently to help Ex-Im create and preserve
US jobs. As a woman-owned small business, our company has introduced Midwestern manufacturers to new markets in East Asia, assisted an American enter-
VerDate Nov 24 2008
12:20 Apr 26, 2012
Jkt 048080
PO 00000
Frm 00046
Fmt 6621
Sfmt 6621
43
tainment corporation explore expansion from China to India, and helped U.S. farmers increase market penetration in Southeast Asia. Born into a small business family, I learned at the dinner table and then as an entrepreneur the challenges small
businesses face when working capital financing dries up, as it did in 1998 and 2008.
This gives me a visceral commitment to Ex-Ims Congressional mandate on small
business.
If confirmed, I look forward to contributing to American export growth, particularly to Asia. Fifty-five percent of world population and almost 40 percent of current
global GDP is there, as are 3 of 9 Ex-Im target countries representing 1.5 billion
people: India, Indonesia, and Vietnam. Whether at home or as tourists to the U.S.,
Asians look with hope and optimism to the United States and express strong interest in buying American products. U.S. exports in infrastructure, energy, medical
equipment, transportation, and brand name durables have tremendous export potential in this fastest growing region. My cross cultural training at the East West
Center, development work with the United Nations, and 30 years in international
marketing, positions me to contribute to the promotion of Ex-Im services in the culturally diverse countries where it is open for business.
Besides increasing foreign market demand, it is important to grow domestic
awareness of Ex-Ims services as only 1 percent of American companies export. As
a former regional banker, I am especially interested in promoting Ex-Ims services
to community and regional banks and small businesses. I understand both the benefits and risks of lending given my career as banker and businesswoman. By continuing sound financial practices and basing credit decisions on reasonable assurance of repayment, Ex-Im can remain financially self-sustaining while fulfilling its
jobs mandatea core covenant between Congress, Ex-Im, and the American people
that I am committed to uphold.
Even as our economy recovers, Ex-Im can, I believe, be mutually beneficial for private enterprises, for labor and management, and for your constituents across our
Nation. Ex-Ims authority to lend, guarantee and insure benefits diverse stakeholders. By mitigating credit risk and providing competitive terms, Ex-Im encourages banks both small and large to finance exports. Businesses sell American products more competitively by offering financing, and a robust, exporting economy creates jobs for American workers and benefits for local communities.
This is why I respectfully ask for your support to serve on the Board of Directors
of Ex-Im. If confirmed, it would be an honor to give back to our country that has
enabled my grandparents, my parents, and me to build successful careers and families around small business.
Thank you for the opportunity to appear before you. I look forward to answering
your questions.
TO BE
PREPARED STATEMENT OF LARRY W. WALTHER

MEMBER, BOARD OF DIRECTORS, EXPORT-IMPORT BANK OF THE UNITED
STATES
SEPTEMBER 6, 2011
Thank you very much Chairman Johnson, Senator Shelby, and Members of the
Committee. It is a great honor for me to be here today as a nominee to the Board
of the Export-Import Bank of the United States. I am deeply grateful to President
Obama for my nomination and to Senator McConnell for his recommendation and
support.
I would also like to acknowledge the support of Senators John Boozman and Mark
Pryor of Arkansas, two men I have known for many years and for whom I have
great respect.
If I may, I would like to take this opportunity to acknowledge my wife of 41 years
and my best friend Janice. Also here is my son Bill, an engineer for the Department
of Defense in Pine Bluff, Arkansas. I am sorry that Bills wife Tammy, a high school
teacher, ultra marathoner, and the mother of two of our grandchildren could not be
here. My daughter Mandy, a homemaker and the mother of five of our grandchildren and her husband Dr. Justin Carswell, a dean at the College of the Ozarks
in Missouri also could not be here today. I appreciate each of them for the support
they have always provided.
I consider myself extremely fortunate to be here with you today. Early in my career, I entered the private sector with Southwestern Bell Telephone Company where
I rose from an entry-level position as a switching engineer to Vice President of Corporate Services and Chairman of the SBC Foundation. During that time, I had a
wide variety of assignments including engineering, economic analysis, marketing
VerDate Nov 24 2008
12:20 Apr 26, 2012
Jkt 048080
PO 00000
Frm 00047
Fmt 6621
Sfmt 6621
44
and pricing policy, regulatory relations, and philanthropic work. The majority of my
career was spent in regulatory and public affairs where I worked with State regulatory commissions and State governments in both the legislative and executive
branches.
Since retiring from SBC, my career has focused on increasing commercial development both domestically and in the international arena. As the Executive Director
of Arkansas Department of Economic Development (ADED), I was charged with increasing inward investment into the State of Arkansas as well as supporting Arkansas companies in their effort to export their products and services overseas. In my
3-plus years as the Executive Director, I played a major role in bringing companies
like Hino Motors, Denso Manufacturing, and automotive parts supplier Eakas Corporation to Arkansas. I was also involved in the initial discussions and negotiations
in recruiting Welspun of India to invest in manufacturing facilities in Arkansas.
Following my tenure at ADED, in 2007, I had the honor of being nominated by
President Bush and confirmed by the United States Senate to be the Director of the
U.S. Trade and Development Agency, a sister organization to the Export-Import
Bank of the United States. I consider it a great privilege and honor to have served
as the Director of USTDA and to have played an important part in assisting U.S.
companies develop export opportunities throughout the world.
As I have prepared for the opportunity to join the Board of the Export-Import
Bank, I have found my passion and experience to complement nicely the work of
the Bank. Finding innovative ways to assist businesses, both small and large, to expand their markets beyond our borders and in the process create more and better
jobs for the American workforce is something that I am passionate about. I know
U.S. products are in great demand around the globe and it is vitally important to
make them available to those buyers that would otherwise not have access to the
best products in the world. The Export-Import Bank is playing a critical role in
bringing this important aspect of commerce and job growth to U.S. business and,
if confirmed, I look forward to being a part of the Ex-Im Banks team.
Mr. Chairman, Senator Shelby, and Members of the Committee, thank you again
for the opportunity to appear before you today as I seek your support for my nomination to be a member of the board of the Export-Import Bank of the United States.
PREPARED STATEMENT OF RICHARD CORDRAY
TO BE DIRECTOR, CONSUMER FINANCIAL PROTECTION BUREAU
SEPTEMBER 6, 2011
Thank you, Chairman Johnson, Ranking Member Shelby, and Members of the
Committee. I am honored to be here today as the nominee for the position of Director of the Consumer Financial Protection Bureau.
I am glad to have my wife Peggy and my twins Danny and Holly here with me
today. I deeply appreciate the confidence that President Obama has shown by nominating me to serve as the first Director of the Bureau. I thank Professor Elizabeth
Warren for all her painstaking and thoughtful work to turn the Bureau from an abstract idea into a tangible, vibrant new agency. And I am grateful to the Committee
Members for all your personal courtesy and advice over the past month.
From childhood, my parents taught me the value of work that seeks to improve
the lives of others. My Dad, Frank, now 93, spent his entire career in programs that
served children and adults who have developmental disabilities. My Mom, Ruth,
who died of cancer when I was in college, founded the first foster grandparent program for the developmentally disabled in Ohio, in addition to doing all the things
that a mother does to raise three rambunctious boys.
After completing degrees in political theory, economics, and law, I worked for
years as an attorney in the private sector with individual and business clients, and
was in and out of public service, including a brief stint in the Ohio legislature. In
2002, however, my life took a different direction when I became the Franklin County Treasurer.
The job required me to develop managerial skills and the knowledge needed to
run a financial office and safeguard public funds. But there was also another, very
significant dimension of the county treasurer work. From the beginning, I set out
to collect millions of dollars of unpaid property taxes. The people who evade their
taxes take advantage of all the law-abiding taxpayers and businesses who meet
their obligations. I thought that was wrong, and I tried to fix it by leveling the playing field.
As I went about that task, I was deeply impressed by the importance of consumer
finance issues and the growing difficulties they pose for families and households. Al-
VerDate Nov 24 2008
12:20 Apr 26, 2012
Jkt 048080
PO 00000
Frm 00048
Fmt 6621
Sfmt 6621
45
though I found that many delinquent taxpayers were not willing to pay their share
until we moved aggressively to enforce the law against them, I also found something
different and noteworthy: many individuals did not want to be in trouble, and wanted to pay their share, but were in tough circumstances through no fault of their
own. Sometimes it was because of the loss of a job. Other times I would find that
it was because of a death or serious illness in their family or because of a divorce
that heaped on the added expense of running two households instead of just one.
Out of these experiences, I developed a strong resolve to address these kinds of
financial difficulties that confront our communities. I quickly learned that there is
no such thing as a one-size-fits-all solution as we seek to aid those who want to do
the right thing and, when necessary, to thwart those who seek to take advantage
of others. On a variety of issues, we experimented with new approaches, and we always sought to find new partners. We successfully pushed for a new law requiring
high school students to receive personal finance education before they could graduate. As we saw the foreclosure crisis wreaking havoc in many neighborhoods, we
created a Save Our Homes task force to bring together businesses and banks, nonprofits, and Government, to work together in assisting people who were just frantic
not to lose their homes.
Later I became the State Treasurer. In that position, it was my primary duty to
protect the publics money during the financial crisis, a job I fulfilled by steering
clear of risky investments. In addition, I continued to work on consumer issues. We
expanded the Save Our Homes program into a statewide effort, and I cochaired
a task force to work with mortgage servicers on a voluntary basis to seek fair treatment of their customers. The Chief Justice of the Ohio Supreme Court and I teamed
up to start a foreclosure mediation program in the courts. And we implemented the
new personal finance education law by developing a curriculum and training hundreds of teachers.
Another major initiative we undertook during my time as Treasurer was the dramatic expansion of a low-interest loan program to help small businesses create jobs
and to help farmers obtain needed funds on an affordable basis. We went out of our
way to make this initiative available to the community banks that make credit
available to borrowers and form the backbone of our smaller and medium-sized
towns. All of this work reinforced for me how imaginative strategies can benefit both
consumers and honest businesses, who share many common interests.
Before coming to the Bureau as the chief of Enforcement, I also served as the
Ohio Attorney General. There too, with a different set of tools, my main objectives
in consumer protection were to help empower people to make sound financial decisions in managing their affairs. To protect seniors, we took on sweepstakes scams
and other frauds targeting the elderly. We pursued many actions against foreclosure
rescue scammers who were reaching into the pockets of desperate people in an effort
to steal what little remained as they sought to keep their homes. And where necessary, we pursued those mortgage servicers who, despite strong warnings, repeatedly violated consumer protection laws.
At every stage of our work, I believedand I believe todaythat law enforcement
which is evenhanded, fair, and reasonable not only protects consumers, but it also
supports what I call the honest businesses in two key ways. First, the businesses
that cheat can gain a significant and unfair advantage, and law enforcement protects honest businesses against the cheaters. Second, keeping the marketplace clean
makes sure consumers are treated fairly and gives them confidence they need to
participate in that market.
These are the experiences that brought me to the Consumer Financial Protection
Bureau, where I have found that Congress provided us with both a range of tools
and the resources to analyze and address the problems that consumers face. As
Ohios Attorney General, when I saw something wrong I typically had only two options to choose from: do nothing, or open an investigation that might lead to a lawsuit. We used that tool when it was necessary, though I deliberately instituted an
early warning policy of notifying parties and giving them a chance to tell us their
side of the story before we filed a lawsuit. On a number of occasions, this policy
allowed us to resolve issues without going to court.
At the Bureau, our bigger and more flexible toolbox includes research reports,
rulemaking, market guidance, consumer education and empowerment, and the ability to supervise and examine both large banks and many nonbank institutions. I
know from my own experience that lawsuits can be a very slow, wasteful, and needlessly acrimonious way to resolve a problem. The supervisory tool, in particular, offers the prospect of resolving compliance issues more quickly and effectively without
resorting to litigation. We are continuing to build our capacity to make effective use
of this entire range of tools.
VerDate Nov 24 2008
12:20 Apr 26, 2012
Jkt 048080
PO 00000
Frm 00049
Fmt 6621
Sfmt 6621
46
Enforcement, of course, will still have an important role at the Consumer Bureau.
If people are ignoring or evading consumer protections lawsand seeking to gain
an unfair advantage over their law-abiding competitorsthen litigation is an essential tool, and we will use it judiciously.
I also am convinced that the Bureau will find many opportunities to streamline
regulations and disclosures. Our Know Before You Owe project is working to combine the mortgage disclosure forms required under two distinct but overlapping statutes to make the costs, risks, and responsibilities of a home loan clearer to consumers and at the same time to reduce paperwork burdens for lenderswhich is
a true win-win. We are looking to find the same sweet spot in the thicket of other
regulations we have inherited from other agencies.
In closing, Chairman Johnson, Ranking Member Shelby, and Members of this
Committee, I very much appreciate your consideration. If I were to have the privilege of being confirmed as the first Director of the new Consumer Financial Protection Bureau, I promise that you will have one person who will always be accountable to you for how we are carrying out the laws laid down by Congress and I will
be eager to hear your thoughts about how we should do our work. Thank you again,
and I will be pleased to answer your questions.
VerDate Nov 24 2008
12:20 Apr 26, 2012
Jkt 048080
PO 00000
Frm 00050
Fmt 6621
Sfmt 6621
47
ADDITIONAL MATERIAL SUPPLIED
FOR THE
RECORD
VerDate Nov 24 2008
12:20 Apr 26, 2012
Jkt 048080
PO 00000
Frm 00051
Fmt 6621
Sfmt 6621
90611001.eps
LETTER OF SUPPORT FOR NOMINEE RICHARD CORDRAY FROM JOHN

GLENN, RETIRED U.S. SENATOR FROM THE STATE OF OHIO
48
VerDate Nov 24 2008
12:20 Apr 26, 2012
Jkt 048080
PO 00000
Frm 00052
Fmt 6621
Sfmt 6621
90611002.eps
LETTER OF SUPPORT FOR NOMINEE RICHARD CORDRAY FROM THE

NATIONAL FRATERNAL ORDER OF POLICE
49
VerDate Nov 24 2008
12:20 Apr 26, 2012
Jkt 048080
PO 00000
Frm 00053
Fmt 6621
Sfmt 6621
90611003.eps
LETTER OF SUPPORT FOR NOMINEE RICHARD CORDRAY FROM

STEVE RASMUSSEN, CHIEF EXECUTIVE OFFICER, NATIONWIDE MUTUAL INSURANCE COMPANY
50
VerDate Nov 24 2008
12:20 Apr 26, 2012
Jkt 048080
PO 00000
Frm 00054
Fmt 6621
Sfmt 6621
90611004.eps
LETTER OF SUPPORT FOR NOMINEE RICHARD CORDRAY FROM THE

OHIO BANKERS LEAGUE
VerDate Nov 24 2008
12:20 Apr 26, 2012
Jkt 048080
PO 00000
Frm 00055
Fmt 6621
Sfmt 6621
90611005.eps
51
52
VerDate Nov 24 2008
12:20 Apr 26, 2012
Jkt 048080
PO 00000
Frm 00056
Fmt 6621
Sfmt 6621
90611006.eps

VARIOUS OHIO CEOS
VerDate Nov 24 2008
12:20 Apr 26, 2012
Jkt 048080
PO 00000
Frm 00057
Fmt 6621
Sfmt 6621
90611007.eps
53
54
VerDate Nov 24 2008
12:20 Apr 26, 2012
Jkt 048080
PO 00000
Frm 00058
Fmt 6621
Sfmt 6621
90611008.eps

VARIOUS OHIO SHERRIFFS
VerDate Nov 24 2008
12:20 Apr 26, 2012
Jkt 048080
PO 00000
Frm 00059
Fmt 6621
Sfmt 6621
90611009.eps
55
56
VerDate Nov 24 2008
12:20 Apr 26, 2012
Jkt 048080
PO 00000
Frm 00060
Fmt 6621
Sfmt 6621
90611010.eps

VARIOUS CIVIL RIGHTS GROUPS
VerDate Nov 24 2008
12:20 Apr 26, 2012
Jkt 048080
PO 00000
Frm 00061
Fmt 6621
Sfmt 6621
90611011.eps
57

Senate Hearing, 112TH Congress - Nominations Of: Patricia M. Loui, Larry W. Walther, and Richard Cordray

Uploaded by

Copyright:

Available Formats

Senate Hearing, 112TH Congress - Nominations Of: Patricia M. Loui, Larry W. Walther, and Richard Cordray

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Senate Hearing, 112TH Congress - Nominations Of: Patricia M. Loui, Larry W. Walther, and Richard Cordray

Uploaded by

Copyright:

Available Formats

S. HRG.

NOMINATIONS OF: PATRICIA M. LOUI, LARRY

U.S. GOVERNMENT PRINTING OFFICE

For sale by the Superintendent of Documents, U.S. Government Printing Office

VerDate Nov 24 2008

12:20 Apr 26, 2012

L:\HEARINGS 2011\09-06 NOMINATIONS OF LOUI, WALTHER AND CORDRAY\HEARING\

COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS

VerDate Nov 24 2008

12:20 Apr 26, 2012

L:\HEARINGS 2011\09-06 NOMINATIONS OF LOUI, WALTHER AND CORDRAY\HEARING\

Opening statement of Chairman Johnson .............................................................

VerDate Nov 24 2008

12:20 Apr 26, 2012

L:\HEARINGS 2011\09-06 NOMINATIONS OF LOUI, WALTHER AND CORDRAY\HEARING\

VerDate Nov 24 2008

12:20 Apr 26, 2012

L:\HEARINGS 2011\09-06 NOMINATIONS OF LOUI, WALTHER AND CORDRAY\HEARING\

TUESDAY, SEPTEMBER 6, 2011

OPENING STATEMENT OF CHAIRMAN TIM JOHNSON

Chairman JOHNSON. Good morning. I call this hearing to order.

VerDate Nov 24 2008

12:20 Apr 26, 2012

L:\HEARINGS 2011\09-06 NOMINATIONS OF LOUI, WALTHER AND CORDRAY\HEARING\

Senator INOUYE. Mr. Chairman and Members of the Committee,

VerDate Nov 24 2008

12:20 Apr 26, 2012

L:\HEARINGS 2011\09-06 NOMINATIONS OF LOUI, WALTHER AND CORDRAY\HEARING\

VerDate Nov 24 2008

12:20 Apr 26, 2012

L:\HEARINGS 2011\09-06 NOMINATIONS OF LOUI, WALTHER AND CORDRAY\HEARING\

Senator PRYOR. Thank you, Mr. Chairman, and I want to thank

VerDate Nov 24 2008

12:20 Apr 26, 2012

L:\HEARINGS 2011\09-06 NOMINATIONS OF LOUI, WALTHER AND CORDRAY\HEARING\

Senator BOOZMAN. Thank you very much, Chairman Johnson

VerDate Nov 24 2008

12:20 Apr 26, 2012

L:\HEARINGS 2011\09-06 NOMINATIONS OF LOUI, WALTHER AND CORDRAY\HEARING\

Ms. LOUI. Yes, Senator Inouye has kindly introduced my family:

VerDate Nov 24 2008

12:20 Apr 26, 2012

L:\HEARINGS 2011\09-06 NOMINATIONS OF LOUI, WALTHER AND CORDRAY\HEARING\

Mr. WALTHER. Thank you. I would like to introduce my wife and

VerDate Nov 24 2008

12:20 Apr 26, 2012

L:\HEARINGS 2011\09-06 NOMINATIONS OF LOUI, WALTHER AND CORDRAY\HEARING\

VerDate Nov 24 2008

12:20 Apr 26, 2012

L:\HEARINGS 2011\09-06 NOMINATIONS OF LOUI, WALTHER AND CORDRAY\HEARING\

VerDate Nov 24 2008

12:20 Apr 26, 2012

L:\HEARINGS 2011\09-06 NOMINATIONS OF LOUI, WALTHER AND CORDRAY\HEARING\

VerDate Nov 24 2008

12:20 Apr 26, 2012

L:\HEARINGS 2011\09-06 NOMINATIONS OF LOUI, WALTHER AND CORDRAY\HEARING\

VerDate Nov 24 2008

12:20 Apr 26, 2012