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tv   Senate Banking Committee Considers Executive Nominations  CSPAN  July 30, 2017 5:21am-7:01am EDT

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congress. the brookings institution discusses russia's latest intercontinental ballistic missile test. join the discussion. >> now, the confirmation hearing for nominees act to serve at the treasury department and federal board of governors. the presidents choice for comptroller of currency is the bank.f one west he testified alongside a former george w. bush treasury official -- g >> thank you very much. and would the witnesses for our hearing please come and take their seats and while they're doing that, senator shelby can't be here for his questioning time and so he's asked for just like a minute to make a quick
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statement. >> i'll be real quick today. i just want to say i won't be here. i've got to preside over a appropriation hearing. but i believe that president has sent us two goodnominees. i hope the hearing goes well and we can expedite the nominees and get them in place. thank you. >> thank you,senator shelby. all right. the hearing will come to order. this morning we'll consider the nominations of mr. joseph otting to be comptroller of the
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currency and randal quarrels to be a member of the board of governors of the federal reserve system and vice chairman for supervision of the board of governors of the federal reserve system. welcome to both of you. >> thank you. >> and congratulations to you on your nominations to the important offices. i see that you have friends and family sitting with you. i welcome them heretoday as well. these two positions are critically important to ensuring a safe, sound, and vibrant financial system. we're fortunate to have two highly qualified individuals to consider for these posts. mr. otting bringing a particular expertise and understanding of
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our banking from a long career in financial services. as head of the occ mr. otting would oversee supervision of all national bank ands federal savings associations as well as federal branches and agencies of foreign banks. having served in the lead positions at various institutions in the past, i'm confident that mr. otting will bring strong leadership to the occ. mr. quarrels has a wealth of government andprivate sector experience as well dealing with both domestic and international financial markets. he is no stranger to public service having previously served in multiple top posts in the treasury department. as vice chairman for supervision, mr. quarrels would play a key role in developing regulatory and supervisory policy for the federal reserve system.
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president obama never designated anyone for 24 role. insteld, former fed governor acted as the de facto vice chairman for supervisionin various ways. including by chairing the federal reserve board's committee on supervision and regulation, overseeing the large institution supervision coordinating committee and representing the fed at the financial stability board and in basul among other functions. chair yellen committed in a hearing she expected president trump's nominee for vice chairman for supervision will have the same responsibilities that the governor had including heading the federal reserve's committee on supervision and regulation and representing the fed at the financial stability board and in basul. i look forward to working with mr. quarrels in thiseffort. congratulations again on your nominations. thank you and your families for your willingness to serve. senator brown? >> thank you,mr. chairman. and welcome to the witnesses. i thank the witnesses for their willingness to enter public service. this committee under the
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previous chairman, not the gentleman who i respect sitting next to me waited two years, i never did hearings on two federal reserve nominees. i'm glad this chairman and the democrats are willing to move forward on a nominee of the president -- of the party that is not ours unlike what this body this committee failed to do for two long years. you're seeking all of you -- the two of you are seeking tofollow in the footstep two of people, each at the fed and occ who are dedicated public servants and did a great deal to make our financial system safer. mr. quarrels served as treasury's undersecretary for domestic finance in the years leading up to the 2008 financial crisis, his job was to coordinate oversight of the financial industry and ensure government watch dogs were looking out for the best interests of american taxpayers. however, many his statements leading up to the crisis lead me to wonder whether he was asleep at the switch or willfully turning a blind eye to wall street abuses and excesses. contrary to the predictions in 2006, the economy was "not strong." the financial sector was "healthy" and our future was not
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as he said, bright. the banks were not well capitalized and tax bares paid billions to bail the banks out and mr. quarrels and his company turned a profit off ofthe crisis. exotic mortgage products were not confined to as he said, "upper income individuals thatcan manage a sizable increase in their monthly mortgage payment."
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shady loans were pitched tosheet metalworkers in ohio, school teachers incleveland, ohio, service members from wright patterson air force base in dayton, ohio. the financial crisis devastated the ohio families thatlost their jobs, homes, and savings. but for wealthybank executives and investors, the crisis was hardly life changing. it was an opportunity toprofit by flipping failing banks bought at rock bottom prices and foreclosing on working families. all while raking in taxpayer dollars. i said this committee before, we live in 44105 in cleveland and 2007 the first half of that year more home were foreclosed on than any zip code in the united states of america. so i see the aftermath of that every day i'm in ohio which is four or five daysalmost every week. mr. otting's bank made money you about kicking seniors out of their homes andthen turned around and said the government made them do it. mr. quarrels bemoaned the roolle of the government as a player in
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the financial sector rather than a referee. these sent. would ring a little less hollow had their banks not accepted $2.5 billion from fdic to protect them from losses. parentally they believe in government help for wall street just not families and zip code 44105. in the wakest crisis, the fdic was forced to step in to sharelosz at failed banks, banks like indy mac and bank united to prevent a bigger hit on the insurance fund. mr. quarrels and mr. otting then stepped in and made good money after those banks had been propped up by taxpayers. according to the columbus dispatch, the most conservative newspaper, 2,000 ohioans were foreclosed on in onewest, our six largest counties alone from 2009 to 2015 while mr. otting was the ceo. he was accountable for robo signings by the office ofthrift supervision and he now hopes to run that company. my concern is not whether today's nominees have a wealth of experience. they do. whether they'll work for american taxpayers and working families. we made a lot prove gres inthe seven years since we passed wall street reform.one fifth of the rules, however, remain unfinished. instead of finishing the job, wall street's allies andthis town try to take us backward. weakening or eliminating important safeguards. we already see this in some of the agency that's removed wall
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street reform from their agenda. and tacked other agendas and other agencies for doing their jobs. they claim they're besieged bytheir overseered, the regulators. the banks refrain as to be expected. what is not acceptable is the referees to join the chorus. look forward to hearing from our witnesses. we will the nominees rise and raise your right handsand we'll administer the oath. 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? >> i do. >> i do. >> and then secondly, do you agree to appear and testify before any duelly constituted committee of the senate? >> i do. >> i do. >> thank you. take your seats. >> i think you've been advised. we allocate you five minutes for
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an interductry oral statement. i again remind my colleagues on the committee that the time for questioning is five minutes. before you begin your statement, i invite you if you would like to so to introduce any family member who are in attendance plchlt otting, you may proceed. >>thank you very much, chairman. i would like to introduce my wife and best friend bonnie otting who is sitting behind me. sometimes you get lucky in life and i'm forever grateful the day we had the opportunity to meet. she has always been my compass in life and for that i love you. i would like to recognize bonnie's father who could not be with us today due to his health and age of 94. herm san a first generation immigrant who came to the unitedstates to pursue the american dream so his family could live a better life. one of his proudest moments is when he was granted his u.s. citizenship. my mother grace ann otting is with us today also. she has been my guiding light in life and instilling inme a strong moral compass and helping me appreciate the values of sound family life. she taught school for 35 years
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and was an inspiration to many students. i would like to acknowledge my late father. my father taught me valuable lessons in life not the least of which is business ethics and commitment to serving his community. i learned the value of kindness to others and love can solvemany things. lastly, i would like toinlt introduce my sister and brother who are also with us to day. over the years we have learned the value of love, companionship and the ability to be dependent on each other. thank you very much. >> thank you. again, welcome to your family. you may begin yourstatement. >> chairman, ranking member and members of the committee, it is an honor to appearbefore you today. i am grateful to be nominated by president trump to be the comptroller of thecurrency and if confirmed for this role i'd be honored to serve the citizens of united states ofamerica. thank you to all the committee members i had an opportunity to meet. i enjoyed the opportunity to meet some of you for first time
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and to get reacquainted with others. but most importantly, i appreciate the opportunity to learn more about the issues you feel are important to thepeople of america. for those who i did not get to meet, if confirmed, i look forward to meeting and working with you in the future. i grew up in a midwestern family where my father was an entrepreneurial business person and my mother as i indicated was a schoolteacher. at the young age of 10, i learned the value of business, client relationships and leadership for my father while working at his businesses, often doing the job thatage that nobody elimination wanted to do. i also observed how my father, how hard work, willingness to take risk and family support led to success. i learned from my mother who taught school during the day, raised three children and went to college at night that hard work and dedication can make a difference. i studied at the university of
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northern iowa following a family tradition of my mother, sister and ultimately my brother to the university. during holiday brakes, i would work at my father's businesses and including working at an electrical dam, a commercial construction and at a bakery. all great roles for building character and appreciation for people and individuality at how leadership can make a difference. after college, i was fortunate to be chosen to be part of bank of america's training program in california. it was an experience that forever changed my life. i gained insight into the banking system from the other side of the table and discovered how banks can help consumers and businesses go to services
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of others. the importance of serving employees, the community, customers and shareholders. my banking experiences allowed me to work for one of the largest banks in the united states, two well respected regional banks and a community bank. i touched virtually every segment of the industry including is serving consumers,businesses, trust functions, private banking, investment services, human resources, compliance, audit, treasury, financial manage ment andoperations. this experience provides a broad base of knowledge that would be helpful and insightful if i was chosen to be the comptroller. in 2010 i decided to leave an executive position at an established financial institution because i
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felt southern california was in need of a hometown bank. when i approached about the idea, i knew it would be challenging and a tremendous amount of work but ultimately an achievement for myself and the company. with the assistance of many dedicated men and women of one west bank, we were able to create the largest hometown bank in southern california. i was able to grow beyond being just a mortgage company and being able to serve the needs of local businesses, families and consumers. hopefully helping build this company is something that i will and will remain proud of. after successful merger in 2015, i left the organizationand became an entrepreneurial person returning to my roots in real estate and small business. the mission of the occ is to ensure that national banks, federal savings and loans and foreign operations of international banks operate in a safe and sound manner, provide fair access to financial services, treat customers fairly, and comply with applicable laws and regulations. if confirmed as the omptroller of the currency and given an opportunity to lead the men and women of the agency, i pledge to occ's mission andwork with the committee and all members of congress. thank you for your time today.
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i look forward to answering the questions the committee may have and i'm honored to share this hearing with mr. quarrels. >> thank you mr. otting. mr. quarrels, you may begin. >> thank you, mr. chairman. i'd like to introduce mywife, hope who is with me today. my parents ralph and beverly quarrels and our niece liza burnett who is interning on the hill. >> thank you. we welcome your family. >> my statement? >> yes, please go forward. >> chairman crapo, ranking member brown, members of the committee, thank you for this opportunity to appear before you today. i am honored that president is nominated me to serve as a member of the board of governors of the federal reserve system and as the board's vice chairman for supervision. and i'm grateful for the privilege of your consideration.
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i'm also very grateful for the support not only of my wife and family who are here but of our three children randy, spencer hope.and they have put up with a lot in their lives from their father's public service. the federal resevenrve system occupies a position in ourgovernment for a strong economy and the stability of the financial system and supporting robust job growth and a context to price stability.i can assure the committee that were i to be confirmed, i would be strongly committed to allthe objectives. the specific position for which i've been nominated has a particular role in ensuring the safety, soundness and efficient operation ofthe financial system. as recognized by the recent report, regulatory policies that have been enacted since the financial crisis haveimproved the safety and soundness of the
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system. but as with any complex undertaking, after the first wave of reform with the benefit of experience and reflection, some refinements will be in order. one of the principle architects said as much him snefl a speech he gave in april on the occasion of his leaving the board. stating that there are clearly some change that's can be made without endangering financial stability. the key question censuring that as we continue to refine the system over time, we do so while maintaining the robustresilience of the system. i believe that i'm well qualified to undertake that role as this committee knows, i've had experience over my career with the financial sector from many different points of view. i've been a practicing lawyer, versed in thegranular technicalities of the most complex aspects of the regulatory system, at the
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other end of the spectrum, i've been investor in small community banks and familiar with the particular benefits and challenges that those institutions face. and i've been a financial regulatory policymaker under two different presidents in two different decades. in fact, my first tour of duty in public service was during a similar period of response after financial crisis arriving in 1991 during the cleanup phase of the savings and loan crisis and facing the insol ven sieve the fdic's insurance fund. while this experience has given me subinstantive insight into the issues that federalreserve's vice chairman for supervision will face, it has also reinforced my commitment to what i think is the single most important characteristic of a good policymaker, that he be humble. humble about the constraints on our understanding of complexsystems, humble about the fallibility of ourjudgement s
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humble about our analyticalriven and conclusions. regime. four, the supplementary leverage ratio should be revisited. five, the $10 billion asset threshold for company run stress tests is too low. and, six, the federal reserve should consider eliminating the equally take theive portion of ccar for all banks. do you agree with all of these recommendations? >> i actually do agree with all of those recommendations. i think they're very much in line with how i would approach regulation. >> thank you. and this second part of this question may be something you
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want to take a little bit of time and think about and respond later. but if you have any ideas right now, are there any additional areas of regulatory relief that you think it would be appropriate for us to look at? >> i think that one important area that wasn't mentioned in that list is transparency. i would want that to be a theme of the federal reserve's regulatory activities were i confirmed for this position. i think that both as a appropriate relationship between the regulator and the regulated and also as a matter of improving the content of regulation, it's important for regulators to be very clear about the principle that's are driving their decisions and about the expectations they have for the regulated system. i think an example of that although it's only one example is the lack of transparency that
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surrounded the ccar stress tests up until now. so i do think that federal reserve can look at being more transparent about those activities and can do it in a way that does not in any way reduce the effectivenessst tests. >> well, thank you. i appreciate. that and as you have further observations, i welcome you relaying them to us. >> mr. otting, i enjoy meeting with you last week. and at our meeting we spent some time discussing your time as an executive. >> you would tlik take a munn or two to respond to the questions raised by one west and frankly to describe for the committee your tenure at one west? >> thank you, chairman. first of all, in 2008 was when indy mac failed. i was taken over by the fdic and operated until march of 2009.
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in march of 2009 an investment group acquired the bank and renamed the entity one west bank. as we all know this was a very difficult time in america. the investment group bought indy mac because they believed in an american recovery that, they could rebuild and create a regional bank and save thousands of jobs. going into indy mac, the bank had almost 200,000 loans in default. the men and women of one west bank were working diligently to save the homes of thousands of americans. some of those who focus on the homes that were lost and this is a tragedy, we like to focus on the 80% roughly of the 160,000 homes that were able to be saved and those americans are in those homes today. we did this by having creative initiatives. we had principle forgiveness, we lowered interest rates and
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modified payments and moved principle pal to the back so people could afford their homes. another area the bank received attention was servicing of mortgages. the bank through the acquisition of indy mac assumed a large port foal yoef mortgages. we were doing them for as a third party servicer. the portfolios had restrictive agreements that bank could action this is he could take regarding the agreements. in april of 2011, one west bank and all the large mortgage servicers in america signed a con sent order to remove and improve servicing practice staenld ardz. a significant part of this order was the review of foreclosures and modifications completed in 2009 and 2010. for one west bank, this involved reviewing borrowers in for closure. one west bank is the only bank, one out of 14 that, actually completed that look bafk the foreclosures. this is completed by an
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independent third party. >> narrator: engage ment of the occ. the results prove that one west bank had a very low error rate in independent government reviews routinely demonstrated we had the most effective loan modification program available. he had allowed us to have system lar actions against the portfolios. for any errors that were identified, and there were errors, but they were small and the small basis points, the bank made full rest constitution to the -- rest constitution. if it were not for the hard work of the employees of one west bank, i believe many more for closure was have happened, more job loss was have occurred and consume woerz have been left without an additional bank that could provide loans and products and services. thank you, chairman, for allowing me to address that. >> thawing. zblsh thank you. >> thank you, mr. brown.
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that zbl thank you for that explanation. i want to pursue that further. the article i mentioned, one of the most conservative newspapers in america, one west denied loan modifications or gave the run around to homeowners like carla duncan. social worker from cleveland heights who was current on her mortgage, ceo of one west you signed the consent order that i mentioned in my opening statement for shoddy services and improper foreclosures related to the practice of robo signing which you didn't mention in your -- robo signing, i dove belie don't believe you mentioned that. you let the bank break the rules and making life harder for homeowners across the country trying to stay in their homes. how do we trust you won't allow banks to skirt the roles and harm their customers as their regulator? >> thank you, senator brown, for the question. first of all, just for a correction, i did sign the con sent order but we cannot con firm or deny the actionizations in the con sent order. the follow up review reviewed 17
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a,000 borrowers in the area of did we not provide modifications. i believe the number, i could be wrong, was roughly 35 out of 29,000 modifications that were reviewed. we did make 29 mistakes and i apologize to the american people for that. but the error rate was incredibly low. and so my view point is that if you look at the actual facts, there is a false narrative out there about the one west bank servicing average. i think you would walk away feeling very good about our operations. >> well, it's false narrative to you, not to those that lost their homes. more on that in a moment. mr. quarrels, year before the beginning of the financial crisis while in charge the office of treasury responsible for financial regulation you down played the risks emerging in a financial sector. you touted the resiliency. you said i can assure that you my colleagues and i at treasury are doing everything in our power to make our financial system even more resill yenient
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the future. in retrospect, do you believe you and your colleagues at treasury did everything you could have and should have to prevent the crisis and if not, what more should have been done and be as precise as you can. >> thank you, senator. i appreciate that question. i have obviously reflected since the crisis on the measures that were taken leading up to the crisis. we were -- we were aware -- i guess the right way to put it is we believed that even given the information that we had from the regulatory system, that risks that were building up in the system were manageable. we did believe that there were measures that could be taken to improve the resiliency of the regulatory system and the abiflt the regulatory system to understand risk. and we were beginning a process
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of presenting a program for change that would have improved the regulatory system. with the benefit of hindsight, we could have been more aggressive in pushing that program forward in putting those ideas forward. as i think can you appreciate and all the members of this committee can appreciate in advance of the financial crisis the political obstacles to the change that's we thought would be appropriate to improve regulation would have been foremidable. and so we were proceeding cautiously with the ben fist hinld sight, hindsight, it was too cautiously. >> the power and influence of wall street on this committee? >> i wouldn't say it was so much the power and influence of wall street on this committee. i think, you know, one of the ways in which i think that on a clean slate financial regulation could be improved would to be have a much simpler, clearer,
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less kaleidoscopic construction of the regulatory system that would make it easier for the regulators to understand where risk is and where it isn't. and the political obstacles to that were less those of the industry versus the committee. and thoefz people of good will having differing views if a time that wasn't a crisis. it had been a long standing question that changing the rules was going to be difficult. so i do think it's a very fair question to say what could we have done differently? i think the answer would have been we could have been more -- we could have moved more quickly. we could have been more aggressive in pushing the regulatory change that's we wanted to push but believed would be politically difficult. >> treasury released the report
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and financial regulation is required about it president's executive order. much of that report focused on rolling back rules for the nation's largest banks including decreasing capital requirements. do you believe we should roll those rules back? >> i believe there were a lot of recommendations in that report and i do support a number of those specifically as they deal with community banks and small banks across america. >> but that wasn't my question. specifically, i knew -- i knew from our individual conversation that was the case. >> i think capital structure in -- that we have in place today is highly complex. i think it needs to be examined. i'd be welcome to sit down and have dialogue with you on that. >> well, you said in our conversation on tuesday that you think the rules for the largest banks are appropriate and shouldn't be weakened. >> well, i said i overall i think that regulatory system we have in place today is resulted in banks understanding their risks much better than they ever have and we have better capital levels. i do think that we've created in
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150 years we've had many provisions and laws that have come through the banking system. seven years ago when dodd-frank was put in place, i think it is open to look at the characteristics. i'm a believer of a well capitalized banking system and a banking system that understands the risk. >> i'm concerned that president who says we should drain the swamp as he surrounds himself with almost looking like a wall street executive retreat and president's cabinet, i'm concerned about a report coming from treasury suggesting decreasing capital requirements. i will just close with. that i just hope that you are not part of any effort to weaken capital requirements that clearly is the wrong direction for a stable banking system. >> senator toomey? >> thank you, mr. chairman and thank you gentlemen for joining us today. let me start with mr. quarrels. thanks for visiting with me recently in my office. i enjoyed our discussion.
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and i want to follow up a little bit on one aspect of that which relates to the resolution authority of dodd-frank. as you know, i made it clear among the many very serious flaws in dodd-frank, one that has bothered me from the beginning is the resolution authority and puts taxpayers at risk. for having to bail out a failing financial institution. it's been my view that right way to resolve the failure of a big fanl institution is to do it in bankruptcy. where the losses would be taken by shareholders and unsecured creditors, where creditors could know whether w. complete transparency how they'll be treated because it's a matter of precedent and law. and where similarly situated creditors are treated the same way. and yet it seems to me as long
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as long as we have this authority, a bankruptcy code that needs to be modified. there is a danger. we would use this flaw. so i have legislation that would amend the bankruptcy code. it is designed to enable bankruptcy to work for even a very large, very complex financial institution. and i just like to get your thoughts on whether, a, you believe it is necessary and appropriate to amend the bankruptcy code for this purpose, and whether you would work with me in this committee to try to get to that goal so that we would never have to worry about taxpayers having to bail out a financial institution again. >> thank you, senator.
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the discretion of policymakers and recollectors should be particularly regulators should be as constrained as possible. it should be as clear as possible about how they will exercise it in future so that their actions are predictable and less uncertainty as to what the policy should be. in connection with that, i do think that the -- it's a very valuable effort and the right way a financial institution could fail like any other institution could fail and the rules should be with as little exercise as discretion as possible. i think that as you have noted there is more work that needs to be done to improve the
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bankruptcy code. a lot of questions that surround how quun do that and i believe that is achievable. and i'd be happy to work with you and your staff on that effort. >> great, thank you. >> i'm going to run out of time. i want to be quickly -- i want to touch on ccars. you mentioned earlier, if i understood you correctly that, you think there should be more transparency in the methodology. i just want to mention for the committee's benefit a reminder, the gao report on ccars, in addition to -- we know how incredibly costly it is to comply with this regime. but the models and testing procedures are not transparent according to jao. but not only that, the fed has not done enough to assess whether ccar is pro cyclical. and, of course if, it is, there is a dafrpger that it actually could contribute to systemic risk through the dynamic of the crowded trades that you eluded to. i would urge you to seriously
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consider that possibility and the extent to which really ccar is even necessary anymore given the new mechanism. mr. otting, if i could just ask you a question. one of the other things about dodd-frank that i find problematic is the sifi designations. i object to the concept. i acknowledge that is the law. nevertheless, the process by which the fsoc has made the designations has been so badly flawed that as you know a court ruled that it is impermissible in one case. you would be a member of the committee making designations. there is -- i think it's irrefutable that the process is opaque. that institutions subject to the designation do not know the criteria by which they are designated. there is no well defined process by which firm could choose to discontinue the activity that
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would cause a designation. there is no well defind process for a d designation. given all of the funneled. al flaws that one court has agreed, do you think it's a appropriate that there wouldn't be any additional nonbank sifi designations until this process has changed. >> i agree with all the points you made. i think as a committee to sit down and bring greater definition to those before we would designate another sifi. i do agree with you. >> thank you, thank you, mr. chairman. >> thank you. senator warren? >> thank you, mr. chairman. so after the 2008 congress, put the fed in charge of supervising the big environment banks and created a new position this vice chair for supervision that was supposed to lead that effort. that means if you're confirmed to this position, mr. quarrels, you'll have more influence than any other person over the regulation of the big banks.
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now given that enormous power, the number one thing we need from the fed's vice chair for supervision is a demonstrated willingness to stand up to the trfz the big banks that threaten the financial institutions. spinning through the revolving door of the private sector, mr. quarrels, i just don't see it. you got 15 years representing big banks at a new york law firm working on some of the mergers that created the too big to fail bank that's we have today. you have two stints at the treasury department including shortly before the 2008 crisis where you insisted that the banks were well capitalized enough to survive a housing down turn. turns out they weren't. and more than a decade in private equity and investment management where you have argued repeatedly for weaker rules for
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the biggest banks. so that's not a track record that should give americans a whole lot of confidence in you. but what i want to do is try to look ahead on this. the big banks and financial firms have a lobbying organization called financial services roundtable or fsr. and it has no community bank members. it's pure lly the big guys. fsr recently submitted a 124-page wish list of financial rule rollbacks for the treasury department. so i want to go through some of these and see how your views line up with the views of the big banks. fsr would like to see the stress tex relaxed for the fed and give it stress test models to the banks before the actual test. they want to see the test. do you support the changes? >> well, not having read the
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fsr's report, dmoint all of the -- >> wait. you've been nominated to bed head of fed supervision and you haven't read this from the fsr? >> i have not read that report. >> okay. so we'll ask the question then more generally. do you think that stress test standards need to be relafrmed and the banks knee to see them in advance? >> i think that transparency around the content of the test with the public in general -- >> so they ought to be able to see the test in advance? >> i believe that -- >> and you thought they ought to be relaxed? >> i don't have a view as to whether they ought to be relaxed. in part because i am not, you know, because of the lack of transparency, i'm not perfectly familiar with all of the content of the tests. >> you think that seeing the test in advance is what they're asking for. you don't have an opinion on whether or not they ought to be weakened. how about capital? fsr would like a bunch of changes to the calculation of
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how capital and leverage requirements that would have the effect of lowering these standards. do you believe that capital and leverage standards should be lowered? i think we can be more sensitive to the character of each institution. >> so you think it should be lowered for some but raised for others? >> again, in advance of the analysis, i couldn't tell you -- >> so you don't have an opinion on that? what about the volker rule which prohibits the banks from making bets with their own money? fsr wants to cut the rule back so that the banks can make more of those kinds of investments. do you agree with fsr that the volker rule should be cut back so they place fewer restrictions
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on the banks? >> i agree with the former governor that complextive the rule makes it very difficult to apply and that we should work to try to simplify. >> that's easy. if you just want to simplify it, you'd support glass steeg wiagl? >> well, as you know, senator, the key provisions of glass steagle are still in force? >>, no the key provisions are not enforced anymore. they've been repealed. >> no. the ancillary provisions which are section 20 and 32 -- >> which are the ones that permit the big banks to be able to engage in these combined activities that glass steagle were supposed to separate. that's what's now permitted? >> well, the core provisions actually sprent the bank from engaging in that. so section 16 and 21 -- >> so you think we're perfectly froeblgt protected? >> i'm sorry? >> we're protected if we took away volker and didn't put glass steagle in its place. that's why nothing went wrong in
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2008. >> i don't it this reposition of the govern ago fill yachts which are sections 20 and 32 would have made a difference in the financial crisis. usually when people are talking about today about the reimpositions of glass steagle, they're talking about ensuring that depository institution is protected from risks in other parts of large financial institutions. that's a very worthy goal. >> i'm over my time. and so i want to be respectful here. but i'm just looking for any area where you disagree with the major financial institutions. and i'm not hearing it. the primary purpose of this job is to be able to stand up to the largest financial institutions in this country. you have no history of having done that and sitting here right now all you can say is, gee, i haven't thought about that. we just went through devastating financial crisis less than a decade ago. because powerful people in government let powerful financial institutions call the shots. we can't go down that road
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again. we need people willing to stand up to large financial institutions. we need people that have a demonstrated history of. that you simply don't, mr. quarrels. i apologize for running over. >> mr. quarrels, i'm just curious and give you a chance to respond on the comments here. do you believe that a strong regulatory process is appropriate? >> absolute lou. do you think a regulatory process that clearly defines is rules is appropriate? >> i do. >> do you believe the regulations should be such that there is an understanding of what the expectations are of any bank regardless of its size should be in place? >> i think that that's not only appropriate it's necessary for the regulations to be infective. >> do you think that there are regulations in place today that make it difficult for financial
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institutions to understand the direction that the regulators expect them to go without going back in and asking for additional information time and time again? >> i think that in many areas of the current system that that is true. i've been aware of concerns that certain bank risks have inadvertently impacted liquidity in the listed options market. the regulations failed to account for the risk mitigating nature of options and impeding access to central clearing and hampering market liquidity by constraining clearing members. and their customers who make markets. it is concerning when markets effectively provide portfolio insurance to investors are -- well, adversely impacted by banking regulations because the regulations are not sufficiently precise to account for the offsetting characteristics of
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options. you are committed to kplorg wex ways to fix this error? >> i think that is an appropriate area to look into. i don't have all of the details around that question. i think that question and questions like it are important areas for the board to examine. >> post crisis, our nation's banks especially lit largest hold significant levels of capital. governor powell and secretary have echoed this in the past while testifying before congress. additionally, you recently noted you do not believe that we will likely -- you believe that we will likely not see another financial crisis in our lifetimes due to post crisis reforms. the fed announced that all banks had enough capital to pass the stress test including the quaun take theive and equally take theive elements of ccar and did you not object to a single bank's capital planning. i heard proposal of the
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surcharge in the ccar as the new post stress minimum capital requirements. you would support the inclusion of the sur charge in c-car? >> i'd have to look at that question more in more depth. that is something definitely worth looking at. >> you would drop us a note and take it for the record, please? >> thank you. i'd like to discuss a question that i recently had the chance to ask federal reserve governor paul at another recent hearing. as i told governor powell, it's a blunt instrument that fails to account for very safe investments like catch deposited. in particular, institutions provide custodial services have raised concerns that the slr fails to account for very safe
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fails to account like cash deposited within the central banks. and chairman yellin announced these concerns for the record and said the federal reserve board is actively considering these suggestions and other suggestions about how to improve the cost benefit analysis. can both you discuss suggestion said you have for improving the slr and eslr. my concern is this, if we want investors to have the least expensive approach, then one of the ways we do that is by considering whether or not investments in the central bank, like they invest bank into treasuries in a cust toadial nature, should we include that or take that out-of-the denominator? is that something that should be fairly considered just to bring down the price to investors to mutual funds? >> well, i think the practice
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and consequences with any regulations in particular especially with the regulations, should particular be taken into account. in looking at that whole range, i think that is something we ought to be looking at, yeah. >> i too think it should be examined as we discussed in your office. i think the complexity we built makes it incredibly difficult for bank tuesday bounce around between the all the category risk space, leverage. and they really have limited to no risk. and i do think it is impairing certain segments of the industry as you described. >> thank you. thank you, mr. chairman. >> gentleman, welcome.
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thank you for your willingness to serve and your family members as well. i appreciate the opportunity to meet with you in person. sorry, our meeting had to be rescheduled. but mr. quarrels, would like to start with you. and let me just say i think your actions in the past are important for us to figure out how you're going to pursue your roles currently you're going to be nominated for. so some of the questions are going to be past actions -- work you've done in the past. mr. quarrel, one of the things i want to understand is you've been a director there since 2015, correct? >> yes, ma'am. >> finra is the organization supposed to serve as a watchdog for wall street. it's a slot that's meant to represent the investing public when it comes to how finra operates, correct? >> that's correct.
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>> and as a qualified public interest representative, you qualified even though you have investments and lines of credit from many firms regulated by finra. and you also serve currently on the board of directors for the u.s. chamber of commerce during that time, is that correct? >> yes, ma'am. >> and the chamber of commerce has repeatedly sued reporter agencies to protect investments over its wall street investors. how can we trust to balance the interest given the obvious conflicts in your current role? can you explain that to me? >> in the same way that in representing the public on the finra board i have done that without any influence from or even is discussion with the chamber of commerce. i think that is possible to exercise responsibilities given
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the nature of theduraties that a person has. >> so when the chamber of commerce which includes some of wall streets banks overturns rules on their behalf, are you in a role of supporting those actions by the chamber of commerce even though you sit on the opposite side as a public interest representative of finra? >> if there's any specific decisions that involved the matter of which the chamber of commerce is a party, i would recuse myself. but that's never happened while i've been on the board. >> so you never recused yourself from finra. >> no issues have arised on that. >> and would you stop the arbitration rule? >> yoefbl i have a role with respect to that. >> so that's a no?
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>> i haven't given any thought as to how i would affect that. the sfvp is an independent regulator and appropriately so. with regard to it, i think the robust enforcement of the consurm rules is a policy matter, and i support that. >> thank you. did you advocate on position for the arbitration? >> no, ma'am. >> thank you. my time is running low, so let me jump back to some questions in a follow-up to the conversation you were having with senator graham. if i understand this correctly, you said 160,000 homes were sachbed. and they were actually modified, people were able to stay in their homes, is that correct? >> they did not go throughfore cloekser, that is correct. >> and then 175,000 homes i guess were not in your portfolio
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were part of a separate -- >> there were 175,000 loans that went through a look back which was done by an independent consultitant under the guise of the occ. >> and it's true only one bank was one that did not settle, correct? >> that is correct. >> and can you -- >> the other bank settled. one west bank was the one that completed the look back that had the actual results associated with the consent order. >> okay, thank you. and can you tell me actually how many loan modifications provide during your tenure there? >> i do not have that number. >> okay, i appreciate that. can you -- let me just say this, you're going to be trust said with tremendous responsibility. the decisions the comptroller
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makes impacts whether the bar keeps their home and impacts the economic crisis. we talked about this when we were together. can you point to a single area where you think additional protection is needed? >> i think there's a lot of discussion today about small ticket dollar amounts for lending activities and what came out of dodd/frank was a fairly high complicated product that almost requires you to underwrite a $25 million loan like those products. we kind of pugtsed that out-of-the banking sector, and i think they should be back into the banking sector. >> to the exclusion to the cfpb? >> no, not to the exclusion. >> thank you. my time is up. >> thank you chairman for having
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us today and thank you for joining us today. due to bank nominations from fsop, i think it's time to reconsider the designation process. the president agrees per his executive order earlier this year. insurance has primarily been regulated on the state level. fsop and its federal regulators lack understanding between business models of its banks and companies. the added cost associated with the council's designations have an outsized impact on the economy at large. for example, life insurers are the largest investors in the
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u.s. the same bonds leverage growth. 14% of ira assets. many americans have entrusted life insurers with their savings. i'll ask mr. quarrels first and then mr. odding. does the business of insurance pose the same systemic risk as banking the. >> well, i think that it's -- i think it would be difficult to say the business of insurance has the same systemic risk. when you have organizations that can run, short-term liabilities that can all be called very quickly that are funding activities that are very interconnected and usual aat a size that a disruption of that
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interconnectedness would result in severe problems for the sls. >> insurance companies, in particular life insurance companies i guess in some theoretical way could have a run if all of the policyholders showed up and asked for cash value of their policies all at the same time. but that is such a remote and historically unprecedented palt, that i don't think it's a practical one to consider. so i think that the risk that are posed by insurance companies are quite different. >> thank you. >> senator scott, thank you for the question. i agree with mr. quarrels. i do not agree it poses the same risk as a financial institution. >> thank you. do you spirit legislative efforts to ensure there's always a voting member on fsop with regard to voting expertise?
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>> absolutely. >> i think that would be wise. >> looking forward to our chairman and ranking member to make this a reality. for regulatory purposes a federal reserve often uses regulatory tlegt holds like $50 billion or $10 billion. these levels seem to come with very little rhyme or reason. at the same time multiple regulations which utilize this framework includes language that allows the fed to exercise discretion on a case by case basis. in other words, you can tailor regulations as you see fit. mr. quarrels, would you use this discretionary power under the law, and if so under what circumstances? >> well, i think that the one of the important general themes of regulation is ensuring that the character of the regulation is adapted to the character of the
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institution being regulated. what has become the word tailoring. i fully support that, i think it's not only appropriate to recognize the different levels of risk and types of risk that different institutions in the system pose, but it also makes for better and efficient regulation. and efficient regulation allows the financial system to more sufficiently support the real economy. so i do think that we should look really carefully and certainly be an advocate for that if i were confirmed at tailoring capital regulation and other types of regulation to the particular character of the institutions that are regulated. and that inclusds their size and other aspects of their character. >> thank you very much. mr. chairman. >> thank you.
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first of all, thank you both for being here today. i appreciate it. when you were enmy office earlier in this week, we talked a little bit about neighborworks and at that moment iptime you weren't up to speed on it. so i was going to ask you some questions on neighborworks in this hearing. hopefully you've gotten up to speed. have you gotten a chance to look at it? >> i have. i went to graduate school over the last 24 hours. >> oh, good for you. the question is what is your view on neighbor works? you're going to be a director of that program. it is an affordable housing program. what's your view of it? >> senator tester, there is a representative from the occ. it is not currently the acting or mr. curry in that role when
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he left, but it is a more senior person that does sit on the board. i would say i've spent a lot of time -- i've looked at the budget $180 that came from appropriations, about $120 that came from gifts. i also went out to speak to the people of nevada on the east coast here and learned about organizations. what they do going back to the community really across the united states and offering consultative data on how you do that. and you know my perspective on affordable housing and our economy. and i think we have to find a way like an organization like work neighbor to find a place. >> so i assume in your previous statement you don't intend to be a rep on the neighbor works? >> i did not say that. i was just clarifying when you were on that. >> oh,ia, i'm sorry. i meant to say your position.
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>> yeah. >> do you intend to fill that -- >> it's a role i've historically played where i live. so i would be honored to have a part in that. >> good. as you know the budget slashed and also cut a lot of other affordable housing programs. i asked you this in the office, and i'll ask you this. if these are programs you believe in, are you willing to push back and talk about the positive impact of these programs and potentially help us get to where the funding is an obvious level? >> i would. >> i appreciate that. the next line of questioning is something we also took in my office that is critically important for my support of view. i'll just tell you this because when we talked about robo signing in my office, your exact
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words were this is a false narrative. and i went back and looked at the consent orders with the office of supervision, which no longer exists. and here's what it said about one west, which you were a big part of. it says numerous affidavits or other documents were not properly notarized. that was a quote, and this is a quote, too. litigated proceedings not always ensuring the mortgage documents or others were properly endorsed or signed. can you tell me what that is, if it's not robo signing? >> well, i don't believe that is robo signing. first of all, when we sign the consent order, we did not
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confirm or deny the accusations in the consent order. it was a fairly generic consent order that all banks were asked to sign and really did not have a choice. the issue of robo signing are two different things. there was a provision at that time where you could use the merse system to be able to do foreclosures. and when the occ came in and the ots, they found there were lots of errors in that system and forced the banks to cleanup. >> i got it. i appreciate -- >> but if i could comment on the robo signing for you. so in my mind there are a lot of definitions to it. the first is did we have the process and controls to review the affidavits and complete
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those at west bank? we did. were their errors from time to time, i don't have that s statistic, but i can tell you there were. people signing other people's names, i can tell you that was never done at west bank. that bill jones signed for sally smith. the third issue is were they properly notarized. we had all our notarization activity occur in one location. they knew those people. they were not doing it remotely. and lastly the critical that the person signing that affidavit, validated principle due, amount due, and past due. and frankly wreesh found no errors when that person was doing that work. >> and i'll just say this. and i'm over time, mr. chairman. just bear with me for a second. but if in fact you were to sign-off on an agreement that was not accurate, i don't know why you would do that being in
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the business, especially in the banking business. >> i agree with you. >> and this is pretty darn clear when it says litigatedfore closure proceedings without always ensuring that the promissory note or notary document were properly endorsed or signed. i would imagine that if the office found that happen once or twice, this wouldn't be in there. it had to happen with some regularity. and i got it. i'm not saying that -- but it does say properly endorsed or assigned. >> i would appreciate having a follow up with you. but i can tell you similar to secretary mnuchin, we have kicked this thing five ways to sunday. >> i know. but there were errors. >> i don't want you to think we
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never made errors because we did make errors. >> i'm going to close it outreal quick. you're going to be supervising people that potentially did the same thing. >> yes. >> congratulations to your and your family for your nominations. someone earlier said mr. quarrels that they were concerned with you doing the revolving door between regulatory roles in the non-profit sector. i actually find that refreshing than bureaucrats that actually ride this escalator and regulate and regulate more. i appreciate your past experience in both settings. first, to either one of you, do you think the -- caused the 2008 financial crisis? >> well, as i had mentioned in
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the -- >> give me a real quick i don't know or maybe because i've got a couple of other ones. >> i do not believe so. i believe keeping the depository institutions safe from other activities are important -- >> i'm going to get to that but follow up, how about you mr. otting? >> i do not. now the former fed chair said he actually believes the roles should be simplified. do you believe the fed chair? >> i do. >> you and i talked about this briefly, and i've done the math since our meeting the other day. some of the larger more complex banks will submit as many as 80 to 100,000 pages. 80 to 100,000 pages annually to
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be compliant with the ccar or the stress test submission. if you line up those pieces of paper long end, that's 17 miles. it is 81 volumes of war and peace. it is close to 20 or 30 feet of shelf space. now, after they submit it we hear regulators going to these agencies a week or so later. i don't know if anyone here can read 80 volumes of war and peace. my guess is no regulator can. it raises how valuable that information is. many of these larger bangs and smaller banks regularly do stress tests. can you talk about why the transparency is not -- some people are suggesting it's koond of giving somebody the answer key before they take the exam. can you tell me why that
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transparency key is important and still provides you that regulatory compliant -- i mean having the lens into that it's not an issue to be transparent and letting the institutions know what they're up against? >> i think there are a number of aspects of that. it's not giving the entity the answer key. it's giving them the questions, giving them the test. so it's a little difficult. the situation we're in now -- >> well, the suggestion is they get it and they can gain the sls. but i don't get that particularly for these institutions that are doing stress tests anyway. >> i certainly think the benefits of transparency utah weigh any theoretical cost. because if you are clear about what you will expect, you will inevitably get compliance and get feedback not only from the banks but the public on how it can be improved. >> and who ultimately pay frz
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the cost of in this. >> the consumer. >> yeah, the little guy. >> exactly. >> i wanted to ask you a question about -- and mr. otting, i'll start with you, how many tips are on a sphere? a clasric sphere? >> two. >> so we have four or five. and let's deal with the community banks or mid-sized banks. we've got four regulatory agencies on any given day going into a bank pretending to be at the tip of the sphere. does that make sense? is there any way we can get to a point where we have certainty around the regulators whether you're a small community bank or super bank actually knows who they should be answering to for
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a given set of regulatory regimens? >> well, i'll say for the record i misspoke. it should be one tip, not two. >> i was going to give you a pass. >> complexity when you talk to the financial institutions often similar institutions are asking for the same regulation. ones coming in the door when the other is coming out. and the lack of coordination is -- >> and this is a snare ye where i'll ask you to commit to not being territorial and deciding you're right, there's 1 tip of the sphere and you're the tip. i think the logical assignments are rational basis for one to take the lead and the other to follow and provide that clarity to the financial services industry. if you really do want to help the little guy, you better stop passing the regulatory costs down to them by adding the regulatory burden. put my kids through college, but i think we have to simplify
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these things so we get to right sized regulations. otherwise, that money goes down to that individual depositor, that individual small business, these people using the financial institutions. i hope you all will get in there, right size regulation, regulations exist for a reason, but do it in a way that actually is responsible, predictable and as lean as possible. because i think it'll have an enormously positive impact on this country and getting growth where it needs to be. and mr. quarrels, i hope you don't have an opportunity to deal with the arbitration rule. because i hope we repeal it long before you ever get there. >> senator donely. >> thank you, mr. chairman. thank you both for being here. obviously these are positions of incredible important and tat the american people are counting on
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you. i just want to quickly let you know the results of what happened in 2008. in my congressional district that i represented at the time. elcart county, 20% plus unemployment. the chrysler transmission plant that was in my district, over 5,000 people worked there. a little bit later, less than 100. so that's 4,900 people who are wondering how they're going to pay their mortgage, how they're going to feed their family, how they're going to be able to make ends meet. small businesses in my district, i met with one after another, that had lines of credit that were all culled. and these lines of credit that were culled, these were small business men and women who had worked all their lives and had to then have a small business
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assets in order to cull the line of credit. 20% unemployment, lines of credit being culled, people losing jobs because we had a financial collapse caused by wall street. but it was not wall street who at the end of the day got the pain. it was the folks i live with in indiana. and so when you miss it, the real result is people losing their houses who did nothing wrong other than show up for work every day and work nonstop to take care of their family. and that's the obligation and the responsibility of these jobs that you're walking into. and i just wanted to ask a couple of questions. mr. quarrels, one of the things i saw was that the ratings agencies were basically selling
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ratings. were you aware they were taking b and, you know, double b, stuffing them together and then having that be rated triple a by the agencies at the time? >> the exact mechanics of some of that agency rating practice i was not aware of. but it was look at rating agencies and their practices is something we were in the process of doing while i was there. >> did you see anything that caused you to have concern back then when you looked at the practices? because you could see the products they happen putting together. >> i would say that we -- while we didn't appreciate the depth of the problem, it was something that we were looking at. i think that was an issue that was evident and should have been more evident to us. >> synthetic cdo's, pure gambling is what it struck me as. do those things concern you?
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do you think they're appropriate? >> i spoke at the time of complex excess derivative products. so yes, they concern me. >> whatilous ones do you take from the crasis that you would bring to this job? rating agencies that would take b's and c's, and you put enough of them together and all of a sudden you have a triple a. and as i said the people that suffer and lose their jobs. >> senator doneally, thank you for the question. i too have experienced the pain of people who went through thefore closure process. it's a life changing event for those people especially as you said they're hardworking americans. at the time time of the crisis i worked at u.s. bank, and we never participated in any of those activities. we always felt that people, you know, needed to have the proper
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credit, proper underwriting merchandise. >> when you were working at the other people there, did you ever look at this and say this was crazy the. >> we did. in fact there was a point in time where there used to be a point of matrix and if somebody had a really good fico, maybe they had a -- >> i'm almost utof time so want to ask one more question, which is as you look ahead, obviously i want to make sure it doesn't happen again, everybody does. what concerns you the most? is there anything on the horizon you look at go and say this could be a problem? >> i think student loans are an issue if you really look at it from an underwriting per speskt. and i think the auto loan market got a little cooked where terms were getting aggressive and the
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occ examining it, they pulled back some of the auto loan activities. >> mr. quarrels? >> i would agree with both of those points. >> anything else that concerns you as you look? >> i continue to be concerned about the -- some of the level of complexity in the system. i don't think we've given enough thought, and we can give more thought as to how various parts relate to one another. >> could i add one thing, chairman? you asked me about what concerns me about america today? the big concern is that a lot of people on the lower end of the etch lawn of banking are not qualifying for banking products and suvgss. you have branches going away, people concerned when they walk into branches the questions people are concerned about opening up accounts. and we need to ask how we open
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it up -- >> senator menendez. >> thank you, mr. chairman. mr. quarrels, you left the treasury department in 2006 and joined the carlyle group, a private ectie group in 2007. after you left the administration, you publicly advocated to change the rule, elementing private investment, is that correct? >> that is correct, senator. >> the carlyle group acquire would other firms carlyle bank united, is that correct? >> that is correct, sir. >> the total the fdic made $1.6 billion in payments, more than any other loss sharing agreement during the financial
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crisis. it cost the fdic $5.7 billion. and the carlyle group and other private ectie investors walked away with $2 billion. that sounds to me like mac and one west. so it seemed me you used the administration to change the rules to turn the american community of struggling regional banks into cash cows. and in so doing you gave little regard for the communities served by these banks. and i hope my colleagues are acutely aware of the consolidation of community banks, that they understand what we're talking about here. mr. quarrels lobbied the government so his employer could invest in deals where the fdic would take on all the risk, the private investors would reap all the benefits, and thuch future of the community banks involve said was merely an afterthought.
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and that worries me of some of what we discussed yesterday about your views on regulatory over sight changes in that regulatory reform, changes in the wall street reform that came in the aftermath of the nation's worst financial crisis, where we were told by ben ber nacky we were going to have a global financial melt down. so i worry about that. i heard the answers you gave to senator tester in robo signing. and i think just like secretary mnuchin, i think there's a misstatement of the facts here. but i think senator testing did a good job on that. >> mr. menendez, that was an industry practice. i didn't ask you that --
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>> i do not have access to thatidaty and you could request that information from them, but i would not have any influence -- >> you don't have the where withal to ask them to do that the. >> i do not. >> i understand while you don't have access to director information, you certainly could be helpful prior to the committee voting on your nomination. i hope you would do that. >> are you asking for me to request that information? >> yes. >> i don't think that's my position, senator, to request that information. >> let me just say new jersey was particular hard hit by the
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2008 financial crisis and continues to have the highestfore closure rate in the nation. and as long as they continue to struggle withfore closure, i'm not going to forget one west's practices and expect you'll take seriously my request for information. and you're going to a position of which this information is critical. i can't understand nominees who must understand that based upon the positions they've been nominated to and positions they have taken in the past that one doesn't come prepared to reconcile or try to reconcile those views. so i have a problem with that. finally, mr. quarrels, you i spoke about a rules based approach to monetary pall olicy. and you tell me you do support a rules based approach to monetary
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policy. do you accept the analysis that following a strict tailor rule would undermine the ability to achieve the full employment mandate -- we talked a lot about that one side about that nomination but not about the full employment side and your views on that. >> certainly, senator. i think that the tailor rule is merely one example of a rule and is not advocating the adoption of the tailor rule to guide fed policy. with respect to the employment mandate as part of the dual mandate that faces the federal reserve, i think that's an important element of the federal reserve's obligations that were taken very seriously. >> thank you, senator. that concludes the questioning except that senator brown has asked to have two more questions. so we will do that, and then the
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hearing will conclude. >> i was a little -- perhaps the collective amnesia has spread to me personally from this. but my understanding in my office when i pointed out the information that senator menendez had asked you for, i had asked for secretary mnuchin, and i believe he signed a couple of those letters asking for the information he just asked you about. i thought you said in my office you would be willing to make that request to get that information for us -- >> if i left that impression -- i said i would help participate. but it's solely at cit's decision -- >> i understand that, but i think the request from the designee to be the controller might get their attention, and it didn't get their attention through the whole process. secretary mnuchin nominated, we
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all had a number of us ask repeatedly he wouldn't disclose that, and i sent a number of letters. so i would like you to help us commit to that -- >> like i said, i would be happy to support, but i don't feel it's my position to -- >> i want to follow-up on the occ's april 2014 consent orders we discussed founds that one west to do not confirm with rules -- the consent order said that there were 10,700, not the 38 number i believe you cited tan order ago. why not apologize to the 10,700? >> the 10,000, number there was
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an accepted practice when escrow would close, you would get a bid for title policy, an appraisal policy for other activities. and often these would be two sense. and the thought that was between relatively small dollar amounts, we didn't ask for refunds. when the occ came in, we said we had to be 100% accurate. we gave them the actual dollar amount, and in certain circumstances, it was 10 cents plus $25. and we scaled that up. but we ended up reimbursing every one of those dollar amounts. >> okay. i want to know more about that. mr. quarrels, last question. earlier you said, quote, markets are always ahead of the regulators. frankly, that's how it should be. it's anagilous to my advice my father provided me, that, quote, if you don't miss at least two
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or three planes a year you're spending too much time in airports, unquote. you went onto say if the regulators aren't a little behind the market at any given time, they would be stifling innovation, unquote. what concerns me that is that this world view contradicts the idea you were doing everything in your power to prevent a crisis. it concerns me even more you believe that over sight agencies would in fact miss a plane here or there, miss a risk in the -- the last time you missed a risk that cost my zip code, my state -- you claim it's in the name of innovation. but the question is at what price. so do you standby your statement that regulators should be quote, unquote, behind the market? >> that is probably the most
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unfortunate use of language i have ever made, and i do not stand behind that statement. >> thank you. thank you for what you said in your earlier statement about humility. those are two things we don't always see in this committee. when chairman yellin was nominated and confirmed, i asked her to come to cleveland and see what the real economy looked like and learn a little more about manufacturing and what decisi decisi decision she would make as chair and considering what mr. ottings bank, the impact it had on my neighborhood and beyond, considering what some of the statements from mr. quarrels -- and i so much appreciate your comments a minute ago -- i would like to invite both you of once confirm today come to my state.
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president lincoln once said i have to get my public opinion bath and go out among people. and i'd like to invite each of you if confirmed to ohio to join me in learning more about an economy in the midwest. >> eyed be delighted to. >> so mr. otting, in your answers to senator tester, did i hear right that you said one west did not engage in robo signing? >> i said when i answered the question, there could have been errors. they weren't identified in the robo signing, but our process is in place. and again i comment on and i think a lot of people have different deaf negzs orphrobo signing. mine is did we have a process of affidavits. did anyone sign an affidavit of another person's name?
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third was the data check where somebody signed had affidavit, and lastly was the notarize iegz process done. and my response was we did do those accurately. >> here's my concern, and very briefly i have in front of me the consent order between the office of thrift supervision and one west, specifically it states that one west engaged in -- specifically those unsound practice included filed of local land offices -- and this in alabama, numerous documents that were not probably noterized specifically that were not signed or connorfirmed in the presence of a notary.
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initiated nonjudicial proceedings without always ensuring the promissory note or documents were properly signed. that is robo signing. that is what is in this consent order that was said -- >> we did not confirm or deny. you have to look at the results that came from -- >> then why did you sign the consent order? if you didn't agree with the decision -- >> basically do not have a choice. >> so you're telling me your company did not engage in this, but you were forced under duress to sign this consent order? >> i had to for the benefit of our employees sign that consent order. the words inserted in there do not confirm or deny.
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i think i would encourage you to look at the results from 2014. >> i appreciate your comments. thank you very much. it was very instructive. >> thank you. and that does conclude the questioning and had hearing with the exception of a few phenyl announcements. before i do that, though, i want to again thank you both for coming in and participating at the hearing and i thank you for your willingness to -- tuesday august 1st. and for our witnesses response to those questions are due by the following monday morning, august 7th. so please respond quickly to questions as you receive them. with that, the hearing is
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adjourned. >> thank you.
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>> here on c-span this morning, washington journal is next. gang violence and transnational organized crime. on today's washington journal, we will take a look at the foreign agent registration act and its relevance and -- and its relevance to the ongoing russian investigation. we discuss the
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public opinion of the trump administration and congress and some of the key issues they are likely to face in the months ahead. and later, north korea's most long-range ballistic missile test and how the international community is responding. host: good morning, and welcome to "washington journal" for this sunday, july 30, 2017. congress begins its month-long recess. president trump swears in new chief of staff, john kelly, on monday, this following a week when the president received criticism for remarks to the boy scouts jamboree, changing military policy regarding transgender members, and speaking to police officers, suggesting he'd be ok with rougher treatment of criminal suspects in a speech on friday. that's where we'll start the program, asking you your thoughts on the president's comments, potential police

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