Lawmakers Review Consumer Financial Protection Bureau's Track Record

good morning today we welcome mr rohit chopra the newly confirmed director of the consumer financial protection bureau before our committee dr chopra you have inherited an agency that was undermined by the trump administration which actively worked to reduce consumer protections and enable predatory behavior against the most vulnerable for example mick mulvaney and kathy cranninger weaken the c fpb's office of fair lending and equal opportunity during their tenure only a total of forced cfpb fair lending enforcement actions were taken and regulator referrals and regulator referrals to the department of justice for potential equal credit opportunity act violations declined by 58 thankfully their efforts to eliminate the cfpb were unsuccessful the cfpb was founded on the principles of protecting consumers from unfair deceptive or abusive acts or practices in the financial marketplace since its inception the cfpb has uncovered illegal predatory and discriminatory conduct toward consumers returning over 13.4 billion dollars to cover 175 million consumers who were taken advantage of by bad actors unfortunately at a critical time during the covet 19 pandemic the trump administration left consumers exposed the cfpb reported earlier this year that homeowners of color continue to face significant challenges specifically while black and latin x bars represent only 18 percent of all mortgage bars they are nearly three times as likely as white bars to report being behind on their mortgage payments or having a mortgage in forbearance it is critical that the cfpb provides strong oversight of mortgage services to ensure they proactively work with all borrowers providing affordable loan modifications to avoid unnecessary foreclosures furthermore the covet 19 crisis highlighted the predatory behavior of debt collectors as thousands of people struggle to make ends meet and keep up with rent legal aid attorney from texas testified that debt collectors made record profits by aggressively pursuing default judgments in some cases seizing stimulus payments and unemployment benefits deposited into bank accounts and let's not forget the role of the cfpb in promoting responsible innovation with the rise of financial technology the cfpb must take action to ensure that consumers have more control over their own data and are protected from discrimination and predatory products or services last week you issued orders for information from big tech firms operating digital payment systems to learn among other things how they're handling sensitive consumer data and to what extent they're following the consumer protection laws so direct chopra i look forward to your testimony and your leadership at a revitalized cfpb that can be strong and be the strong watchdog congress always intended to protect consumers especially those who have experienced historical discrimination such as people of color women and low-wage workers among others i now recognize the ranking member of the committee the gentleman from north carolina mr mchenry for five minutes well thank you madam chair for holding the hearing today um and i'm glad to see the committee following up on uh our statutorily required uh oversight hearings um and uh holding the semi annual review of the cfpb on time uh and i want to congratulate you on that because there's been an alarming trend that committee democrats are scrapping these statutory required hearings and um i hope that we're back on track now so director chopra welcome uh before the committee um thank you for being here i know you've been in this room many times before but thank you for your first time testify as you know we have a lot to discuss over the last several months the cfpb has issued many new and concerning rules guidance as as well as policy statements and revoked some important actions completely completed under previous leadership the bureau has also delayed implementation of major rulemakings causing regulatory uncertainty it's problematic i'd like to hear more about how the bureau came to those conclusions and why those actions were necessary but i know you've only been director for a month none of those decisions were of your making it was acting director uh uh who was calling the shots for the last nine months and he was unconfirmed he acted as a unaccountable bureaucrat making those decisions and i think the decisions were harmful to small businesses and consumers but now we have you a senate confirmed uh but still wholly unaccountable uh under the organizational structure under the law of the cfpb uh a wholly unaccountable democrat cfpb director and i think we've seen this one before this is not new um and as you pointed out in your statements to bureau's staff you were there at the inception of the bureau one of the first employees more than a decade ago and under the leadership of senator warren and former director cordray you were an active participant in the cfpb's regulation by enforcement i'd like i would hope that having uh witnessed the harmful impacts of that style of regulation uh you'd come to a different conclusion about how you will act as director uh the bureau's overreach um was substantial at the time um and um and but frankly uh what we've heard from you in your statements is that uh you or like many of the democrats we've been dealing with here on the hill uh the democrats seem to have learned nothing and yet forgotten nothing and you've made it clear in your statements that the cfpb will be run by basically richard cordray 2.0 and i'd like to hear some differences but so far i've yet to hear substantial differences the name the main difference between now and then is that the supreme court has recognized that what republicans were saying is that the cfpb's leadership structure is unconstitutional um we think this is a good first step but now it's time for congress to rein in the bureau and create an accountable agency um there are a number of republican proposals to accomplish uh such uh such a goal uh take for instance congressman barr's tabs act to bring the cfpb's funding under annual congressional appropriations or congressman luke meyer's bill to make the bureau of five-member commission we also have congressman loudermilk's taylor act to tailor regulatory actions to limit the burden on institutions and give great greater clarity we also have congressman williams bill to remove remove abusive from the udap and and make the make sure that the bureau can't make rules of the road as they sort of go along and congressman emmer's bill to require a review of all proposed and existing guidance orders rules and regulations and create a whistleblower reward program at the cfpb i think there are things that we can come to terms with in this basket of republican policy offerings here these are simple common sense solutions that we should talk more about today um instead i know that democrats have attached a long list of their partisan priorities uh uh to this hearing because they continue to uh you know focus on a far left agenda trying to pass here in the in the house of representatives and through the senate um republicans are more interested in getting answers about your agenda uh director chopra and and um how your decisions will impact small businesses and american families um and um we want it to be different than last time we do um and my hope is that you have um a different approach um than your predecessors um madam chair ask unanimous consent to insert for the record uh the list of republican initiatives in more detail of the reforms of the bureau to ensure that actually helps consumers thank you you're back thank you ranking member mchenry i now recognize the gentleman from colorado mr perlmutter for one minute thank you madam chair mr chopra congratulations on your appointment and welcome back to our committee i'm excited to have a champion for consumers at the cfpb the pandemic has produced a great deal of fear and uncertainty in our country and having strong consumer protections during the economic recovery is critical to building back better when consumers know they have someone on their side it helps them have a little more faith in the economic system and their own future the bureau is faced with many important issues like helping consumers have more control over their own data ensuring lenders aren't engaged in sharp practices and making sure student borrowers are treated fairly now as is this committee's tradition with cfpb directors i'm sure mr chopra will get nothing but softball questions today and there will be broad bipartisan agreement on the mission scope and structure of the bureau madam chair i look forward to hearing mr chopra's testimony and i yield back thank you i want to welcome today's distinguished witness the honorable aroha chopra director of the consumer financial protection bureau without objection your written statement will be made part of the record you will have five minutes to summarize your testimony you should be able to see a timer on the desk in front of you that will indicate how much time you have left i would ask you to be mindful of the timer and quickly wrap up your testimony when your time has expired director chopra you are now recognized for five minutes to present your oral testimony thank you chairwoman waters ranking member mchenry and all members of the committee i appreciate you holding this hearing today 2021 is very different than 2020. the economy is reopening and growing labor demand is strong and employers have added millions of new jobs household spending is increasing and demand for housing is robust while these macro indicators are promising the recovery has been uneven in many parts of our country conditions remain fragile many families are struggling to afford their mortgages and their rent payments and many small businesses are facing very severe challenges to make ends meet many communities especially those that have been historically disadvantaged have not felt much of a recovery american families now owe 15 trillion dollars in household debt roughly 800 billion dollars more than at the end of 2019 before the pandemic over the course of 12 months mortgage origination hit historic highs at 4.6 trillion dollars the cares act has kept delinquency rates on mortgages and student loans at relatively low levels however many of the borrower forbearance programs have expired so we lack a complete picture about distress many family farmers continue to confront significant challenges in staying afloat and medical debt in collections continues to grow as a concern for households congress has asked the cfpb to monitor market conditions to spot risks and meet other statutory objectives most importantly right now i've asked staff at the cfpb to carefully monitor the mortgage market including foreclosures it is critical for our economy that families do not experience unnecessary hardship or errors and that disruptions in the mortgage market do not impede a fragile recovery we are keen on understanding how homeowners from different segments of the population are faring including communities of color military-connected families older americans first-time homeowners and family farmers technological progress holds the potential for enormous benefits for households and the economy particularly with respect to real-time consumer payments in recent years though big tech has sought to gain greater control over the flow of money and data in our economy last week the cfpb issued orders to dominant firms such as facebook google apple and amazon to shed light on their payment system practices how will these giants harvest track and monetize data about our spending habits how will they decide who gets kicked off their payment platforms we will also be studying some of the practices of chinese tech giants like wechat pay and alipay this effort will inform other initiatives to ensure that of our evolving payments landscape is in alignment with competition consumer protection and our national interest more broadly the cfpb intends to use its tools to promote an equitable and inclusive recovery and given the existing economic conditions and these tools i expect to have several areas of focus first we must find ways to create more competition in markets under our jurisdiction for example i am concerned that many americans could be paying lower rates on their mortgages and credit cards and earning higher rates on their savings we plan to listen carefully to local financial institutions and nascent competitors on the obstacles they face when seeking to challenge dominant incumbents including in big tech second the cfpb will sharpen its focus on repeat offenders repeat offenders that violate agency and court orders harm families and law-abiding businesses third we must work to restore relationship banking in this era of big data too many households and businesses have no place to turn to when they need help especially when they face errors problems and other issues in their financial lives the inability to cut through red tape and get help in one's financial life can be a major obstacle when seeking a job or when applying for credit preserving relationship banking is critical to our nation's resilience and recovery particularly in these times of stress thank you again for this opportunity to appear before you today and i look forward to your questions director chopra it is refreshing to have a consumer financial protection expert leading the cfpb once again so i will now recognize myself for five minutes for questions while i knew a republican administ administration would appoint individuals to run the cfpb with a different approach to consumer protection it was appalling to watch the former and twice impeached president appoint individuals lacking in qualifications with the sole mission to destroy the cfpb after this effort failed i sincerely hope my republican colleagues will cease politicizing the cfpb and drop their efforts to undermine its work director chopra there are many important issues the cfpb can play where they can play a meaningful role including fair lending payday lending credit reporting debt collection student lending and promoting responsible innovation that helps all consumers will you commit to not only reversing prior efforts to weaken consumer protections on many of these fronts but re-examine ways to provide even greater protections for consumers for example instead of simply restoring cfpb's 2017 payday loan rule that mick mulvaney and kathy cranninger weakened will you realize the full extent of your authority to strengthen the original rule so we can put an end to the debt trap too many borrowers including borrowers of color have experienced at the hands of predatory payday lenders thank you for the question madam chairwoman um of course we are doing everything to monitor every single one of those markets carefully there's obviously a lot of fluxes in the economy things are changing and we need to make sure we're acting before it's too late um and anticipate those risks you know i i was very affected by the foreclosure crisis after lehman brothers and i think we saw that regulators acted too late missed some of the key smoke signals and the results were very devastating to homeowners and with respect to all of the issues you've raised i'm going to be looking at all of those markets carefully to see how we can make the markets more fair transparent and competitive as the law directs us to do thank you one policy area that i believe warrants more attention by the cfpb and by congress is mortgage servicing as we saw during the 2008 financial crisis shoddy mortgage servicing practices led to far too many unnecessary foreclosures when a reasonable loan modification would have made such a difference to keep homeowners in their homes with additional benefits for their neighbors and communities i'm glad the cfpb issued a rule earlier this year to provide some safeguards for homeowners exiting forbearance doing the pandemic to ensure mortgage services are communicating with them about loan modification options before initiating foreclosures however those enhanced protections expire at the end of the year data in indicate that over 800 000 homeowners will still be seriously delinquent at the expiration of the bureau's rule approximately twice the number at the start of the pandemic a significant portion of those homeowners have fha insured loans which are disproportionately held by the bars of color hit hardest by the pandemic for moreover money from the homeowner assistance fund will not be available to many homeowners until next year have you seen lenders proactively offer affordable loan modifications to help homeowners stay in their homes do you expect to see a significant increase in the number of foreclosures in the next future in the near future based on the data that you're analyzing right now so the issue of foreclosures is is a number one on my mind um what we saw a decade ago was that problems in the mortgage market rebounded through the entire financial system and the effect on individual homeowners and that was disproportionately those neighborhoods historically disadvantaged they suffered the most so as i understand we are closely monitoring the servicers activities working with the other bank regulators to make sure we understand where there are risks of illegal foreclosures to make sure we're using all of our tools to stop them we can the cfpb will not be successful unless it is carefully monitoring what is happening in housing and particularly related to foreclosures thank you very much the gentleman from north carolina mr mchenry who is the ranking member of the committee is now recognized for five minutes well director chopra i'm going to start with the same question i asked director cordray in 2012 and it was about the uh the word abusive uh roadshow letter about this thank you for the response thank you for the timely response um we're off to a good start um you know director cranster granger kranigar put in some a policy statement about abusive providing clarity but you wrote in your letter quote articulated principles actually have the effect of hampering certainty over time in quote how so uh so i think what i intended to say there is that the way in which that policy statement was previously written it did not actually provide clarity on the analytical framework that would be used so your intention to do so i have i have huge huge aspirations to create a durable jurisprudence and with respect to that and that durable jurisprudence does that mean that the courts will define what abusive is so it could be a mix it could be a mix of of course our judicial branch interpreting statute it's also about how the cfpb may use rules and guidance to help articulate those standards so rules rules are very important right rules are very important clear uh clarity for those that you're regulating is important and there therefore they can follow the rules and they'll know what the rule book says don't you acknowledge that that's important especially on something that is a new standard well there's without going into too much boredom oh i love the boredom fantastic the history of i used to serve at the ftc and the ftc had an unfairness standard that took some time to litigate cases to develop rules to develop a clear analytical framework and i agree we all need to make sure that we are living up to what congress was seeking to prohibit with abusive there is actually much okay so a decade in a decade in what you're saying is we don't yet have a standard for abusive well we have a standard in the statute that has a of essentially multi-prong approach the courts so far have not had too much of a difficult time as i understand it interpreting it but that being said there is place for guidance there is place for litigation there is place for rules and right now what we see from your bureau from your actions previously and previous democrat directors is that regulation is how they're gonna is not how they're gonna do it it's gonna be through enforcement are you going to emphasize regulation or enforcement so when you say regulation you mean through the rule writing process right we have a normal apa process do you intend to adhere to the administrative procedures act well all right we will always adhere to the administrative procedure act but the issue of abusive rulemaking just to as a matter of statutory construction congress required rulemaking under that section to trigger two things one is state a g uh enforcement over national banks and the second is ftc enforcement over non-banks other sections of the law required rulemaking prior sections uh going into effect but as i said i'm very committed to try and create a durable jurisprudence let me ask you just a couple things for the record uh do you fully intend to cooperate with inspector general's um uh investigations all of them all right um and is it um what's your view of congressional oversight well i as you may know i have a peer or congress we like to hear that you like it right whether or not you personally like is kind of not relevant to the question but i've appeared many many times i have responded and testified many times and i'll tell you i came from an agency at the ftc that in many ways had in my view absolute contempt for congress and ignored statutes letters and and i hope to be able to provide uh and be responsive so you hope to be better than the ftc got it so we had the sila litigation for the supreme court in effect the court ruled that that your agency is in effect part of the executive branch as you can see considered part of it so my question is is it your intention to hear the executive orders issued by president biden uh so executive orders as i understand i are not binding on the cfpb there may be some other types of regulations that are required by statute to apply to all agencies regardless of their independent or not but i take the cfpb's you know it is a the newest part of the federal reserve system and we the entire federal reserve system let me ask you final question executive order 12866 which is issued by president clinton requires significant regulatory actions to be submitted for review by the office of information regulatory affairs oaira do you intend to submit significant regulations as i understand from our statute that that is not part of the process but um with respect to certain principles we will adhere to all the statutory requirements on rulemaking thank you madam show thank you the gentlewoman from new york mrs maloney who is also the chair of the house committee on oversight and reform is now recognized for five minutes i thank the the chairwoman for yielding director chipra congrats congratulations on your confirmation i must say it is welcome news to again have a cfpb director who is dedicated to putting consumers first i want to touch on two issues today as you know i was the author of the credit card act of 2009 which ended the unfair deceptive abusive practices of the credit card industry and leveled the playing field between card holders and credit card companies a 2015 cfpb study estimated that this legislation alone saved consumers over 16 billion dollars in the first years of its enactment other studies have shown that it saves 20 billion a year this uh 2015 study was the last year cfpb reported the cumulative benefits to consumers the 2017-29 and 2021 reports don't do so and i worry that if we stop talking about the benefits of the card act or take our eye off the ball that industry may attempt to roll back some of these important protections again or our resort to its past abusive practices so director chopra yes or no will you reinstitute cfpb's past practice of reporting the cumulative benefits for consumers of the card act in future reports as the obama administration did congresswoman i do believe i i may be mistaken that that is required to give a full picture of the card market and i fully intend to make sure we report to congress appropriately on that thank you and are there any other areas of particular concern for you in today's credit card market that you believe merits further consideration by the cfpb or by congress so i think if you look at many of the consumer complaints and you look at some other market data obviously people are concerned about uh whether assessments of certain types of fees are have been appropriate um whether they're actually due to system errors um i think in the credit card industry writ large i am concerned that not enough americans are taking advantage of moving their balances or finding lower rates many of americans qualify for lower rates than they might be paying and a competitive and fair market would mean that those consumers could move or find lower rates and that could save them a lot of money i believe in 2019 congresswoman americans paid i think 90 or 100 billion dollars in credit card interest and fees and obviously a more competitive market would be to the benefit of all issuers and uh and consumers as well thank you uh changing gears director chopra what if i told you that i had a regular cup of coffee to sell you and it was going to cost you 40. uh yes or no would you buy this cup of coffee uh i've not had a cup of coffee that would be worth it for that much of course night and i i can't imagine anyone who would say yes to that offer unfortunately a forty dollar cup of coffee or sandwich from a bodega is too common of an occurrence today due to the abuse of unfair and excessive overdraft fees charged by our nation's financial institutions taking billions of dollars out of the pockets of hard-working americans every year that's why i've introduced with many of my colleagues on this committee h.r 4277 the overdraft protection act legislation that would crack down on predatory overdraft fees and establish fair transparent uh programs in 2012 uh the cfpb launched an inquiry into overdraft practices and the bureau has published a research reports that show that these fees is taking a heavy unjustified toll out of many vulnerable consumers uh and and in the past 10 years our nation's financial institutions have drained roughly 125 billion uh from account holders struggling day to day uh director chopra what under your leadership will the cfpb do to address these abusive unfair practices and this profoundly influenced influential driver of racial and equal in inequity so congresswoman as i understand uh the data overdraft fees are actually disproportionately paid by a relatively small sliver of borrowers so some of those borrow some of those account holders are paying a very high amount of overdraft fees in a single calendar year we will obviously enforce the law as written as well as implement any implementing regulations that have been promulgated by the the fed or the cfpb and we will closely monitor this market to make sure it is free of unfair deceptive practices thank you thank you and i yield back and i hope you reinstate the studies that you've been doing thank you the gentlewoman from missouri mrs wagner is now recognized for five minutes i uh thank you madam chairwoman and director chopra thank you for appearing before us today i look forward to hearing from you on the cfpb's actions over the past several months under the bide administration and what your priorities are as a bureau's new director since the cfpb's creation we have seen the obama administration put in place frankly egregious regulations that made it harder for americans to qualify for mortgages obtain an auto loan and access other forms of credit that families depend on every day additionally the cfpb has continually shunned due process in bringing enforcement cases against businesses and is a perfect example of how a lack of proper checks and balances lends to a downward spiral of expanded power and overreach all of the consumers expense the cfpb's structure and funding mechanism must be reformed to ensure accountability to the american people director chopra do you agree that all rule making should be done in compliance with administrative procedures act requirements and that the public should have the opportunity to notice and comment for any major regulatory rule changes or shifts yes congresswoman yeah when whenever the cfpb seeks to promulgate a uh rule we should always and as as i understand have always complied with the administrative procedure act but if there are places where you think not always compliant i'm glad to hear your commitment no but i would love to hear and and happy to hear where there are places where there hasn't been so i can look into that wonderful and i appreciate your commitment to following the apa do you agree that the bureau should foster a better environment for consumers by rewarding companies that are self-identifying and self-reporting compliance concerns rather than seeking to punish companies and finding them when they have already taken corrective action so based on my record i think you'll be able to see that where companies have come forward remediated and fixed issues these things can be solved often without public enforcement action good that is a place where we i want to encourage self-reporting um but of course um where they have flagrantly violated the law and not taken steps to fix things you know enforcement action is is usually appropriate just so that we're clear that self-identifying self-reporting um concerns um i hope that we're not going to seek to punish companies and find them when they've already taken as i said the corrective act active action and done the right thing yes and congresswoman in the law uh under title 10 that actually relates to the factors in civil penalties assessing good faith all of those issues under under the obama administration we witnessed how regulation by enforcement creates uncertainty in the consumer financial markets which in turn impacts consumers ability to access innovative and affordable credit products director chopra will you commit the cp cfpb under your leadership to clearly communicate enforcement expectations to its supervised financial services company that is absolutely my aspiration i think markets work well when rules are easy to follow and easy to enforce and i think often bright lines um can be one pla and bands can be one way of doing it but also we have to enforce the law as written we can't decide to invalidate parts of the law we don't like we you the congress makes the laws and and we have to enforce the uncertainty that i think has been um in question over time director chopra do you believe that the bureau is accountable to congress through your testimony today that's really for you to decide about that but i hope that all of the all of the requirements that congress has put in place for not just the cfpb but the occ and others similarly situated to us that we are adhering to high standards would you would you agree that the cfpb should be funded through the annual congressional appropriations process similar to other financial regulatory agencies to further increase the agency's accountability to congress and the american people so again that's really a decision for congress but just as a factual matter what's your opinion on it you have opinion on it the other banking regulators have a similar type of independent funding and the cfpb is subject to the appropriations process for requests above the base budget so there are two elements of how the funding works to date the cfpb has not requested money above the base budget and is subject to the normal banking my time is expired i yield back thank you the gentleman from georgia mr scott who is also the chair of the house agricultural committee is now recognized for five minutes thank you uh chair lady director show showbar let me ask you this at the time of the cfpb civil penalty fund was established in dodd-frank we in congress ensured that in statute money money from this fund could be used for payments for financial literacy and financial education programs and before this hearing i got a chance to review the cfpb's urine financial report and i was very pleased to discover that there is now more than 576 million dollars in are not allocated funds within the cfpp's civil penalties fund um and so however while the cfp has written policies that describe the agency's role and the process for making financial allocations to consumer education zero zero money has been allocated for financial education uh so the question i have for you is can you explain what factors the cfpb considers when determining the allocation of funds for consumer education and financial literacy programs so congressman as i understand the civil penalty fund has two purposes the primary purpose is to redress victims where the cfpb could not recover funds so many defendants may be judgment proof maybe many scammers may have taken away the money so in those situations where the cfpb has assessed a civil penalty the fund can be used to make those individual families whole from the the funds that were illegally taken from them the second part as you say can be used for certain financial literacy uh initiatives i'm happy to follow up and provide you there's a set of rules that are in place currently to make determinations generally speaking it goes through a process covered by certain procurement laws but i'm happy to follow up with you with more specifics on it but i agree that the civil penalty fund it really is important to redress those victims and of course the cfpb uses its own allocated budget to engage in in financial education initiatives as well well thank you so much for that let me just say that we have on this uh financial services committee many members on both sides of the aisle who are vitally concerned and would like to see us move in a direction to allocate some of this money for financial education that is the way we protect the consumers we arm them with the education with the literacy program that's what will help us to keep our consumers away from these predators and so with you as you have indicated there is a clear linkage between the cfp's ability to prevent consumers from falling victim to these scams and you i think you also agree with many of us on this committee that we will be able as written in the law to be able to allocate some of this half billion dollars to educating our consumers so with this in mind first of all i appreciate you extending that offer to get back with us but director sean brock can i get a real clear commitment from you today that the cfpb plans on using a portion of the more than 570 million dollars in unallocated civil penalties funds to support financial literacy financial education and consumer education programs so i i totally agree with the spirit of what you're saying i want to be upfront that because it also is used for victim redress i think we should all have a discussion about what's the right allocation between victim redress and consumer education as the chairwoman said i want to make sure that if people are foreclosed upon illegally and and we need to be able to use those funds to make them whole as well so it's it's a balance but you have you are agreeing to work with me on course of course of course thank you thank you um the gentleman from oklahoma mr lucas is now recognized for five minutes thank you madam chair director chopra last week you ordered six big technology firms to turn over information about how they collect use and store consumer data could you describe your intent in requesting this type of information yes sir so i am very very worried i think as many in the regulatory community have been about big tech taking more control of the us dollar and the global flow of payments you know there are so many innovators who are trying to break in and they feel that big tech can just turn them off there are so many people who feel that their data is being misused and abused many of us have no transparency whatsoever as to how some of these firms determine how they kick people off platforms and we have no transparency at all into a number of other issues the orders that we have issued cover a number of topics and i'm hoping that we'll be able to use that information to report to you all because i think safeguarding our nation's payment system is so critical to our economy it's critical to small businesses it's critical to our national security and i want to make sure that payment system is vibrant and serving everybody given your experience in this area in your view has the growing landscape of digital payment services been a net positive consumers oh innovations from that heavily have been driven from mobile device adoption have been terrific for many many businesses and consumers the ability to be able to transfer money is is more seamless than it was but what i want to make sure is that those payment systems still adhere to consumer protection that they don't really undermine a fast fair and transparent system and that they're not squelching out innovators or kicking people off with no understanding as to why this is an example of a mass amount of information and really insightful and critical to the developers i suspect so i have to ask do you commit to remaining within the confines of the bureau statutory authority in relation to payments oh of course uh but congressman the the electronic funds transfer act the their gram leach bliley privacy rules that are under our jurisdiction those are deeply implicated by these payment systems when it comes to surveillance of our payments and transactions privacy and misuse of data you know squarely in our jurisdiction but let's not by an intention create fewer options for the consumers out there oh no we want more efficiency of the system we want more options i respect that a proposal for cfpb to take a role in government-run credit reporting bureau has gained support among some of my colleagues i'm concerned that a government-run credit reporting bureau would decrease privacy and accountability director do you support the creation of a government-run credit uh reporting bureau uh i imagine along with that what would you see as potential positives and negatives so i have to be blunt with you i have not actually given much thought to this because i don't know how mechanically it would work um i know in some countries they do have that but that would be an enormous undertaking um that it would be a big mountain to move i'm much more concerned in the near term given the pandemic about law violations of the fair credit reporting act how the credit reporting agencies are investigating disputes and to make sure that new types of credit reporting agencies are adhering to the law because there are serious privacy implications of how our data is being trafficked without our knowledge director it's important for financial institutions to be able to collect and close out on previous loans which allows them the opportunity to have the resources to continue to extend credit to those who need it would you describe what the economic impact would be if the ability for small business and lenders to recover debts were restricted i i if i am understanding the question correctly credit reporting obviously can play a very important role in the financial ecosystem and be beneficial where there are severe errors and inaccuracies that can be huge pain points for a business or a consumer to be able to move forward with their financial life so i i if you're asking whether i think we should delete everyone's credit report the answer is no but we want to make sure credit reporting is adhering to all aspects of the law including the fair credit reporting act thank you madam chair thank you the gentleman from texas mr greene who is also the chair of the subcommittee on oversight and investigations is now recognized for five minutes thank you very much madam chair and i thank you mr director for appearing today greatly appreciate the fact that seem to take an interest in bringing our consumers in ways that quite frankly are beneficial to consumers mr director i recently introduced hr 5484 the financial compensation for cfpb whistleblowers act get this to create at the bureau whistleblower protection program model on the one created by dodd-frank at the securities and exchange commission as facebook and its whistleblower have currently made headlines and remind us that insiders are uniquely positioned to bring large-scale corporate wrongdoing fight i'd like to know what do you think about the notion of this type of action taking place through the cfpb think about whistleblowers bringing these kinds of actions to the attention of the cfpb so as to timely report fraud abuse and other corporate misconduct so congressman i i have to say i do believe in um the power of whistleblowers particularly when reporting this type of fraud um you know director craninger my predecessor i believe put forth a proposal around whistleblowers as well obviously we will have our policy differences but this is an area where more whistleblowers will lead to better enforcement a reduction of fraud i think the sec's model is one but i'm happy to work with you in your office to figure out how we can create an appropriate cfpb whistleblower program well thank you for that comment uh i would take it that you are somewhat familiar with the sdc's model can you tell me how that model is beneficial or some of the positives associated with it please yes so you know as i understand there have been a number of very severe deficiencies of law severe law breaking that has occurred in financial institutions that were often alerted to authorities by employees or by those with direct knowledge these whistleblower laws can in some circumstances depending on how it's crafted provide protections for those individuals and also financial compensation we do know that the united states has actually recovered quite a bit of money when it comes to medicare fraud based on these whistleblower programs i mean i think it's something that can be very beneficial to enforcement and what about stronger protections do you think they're needed this time for misconduct such that uh persons can report this to the cfpb to get some sort of redress and i apologize sir maybe just the uh your mask or the video but stronger protections for what specifically i apologize i couldn't hear do you think stronger protections are needed in the law for persons who report misconduct to the cfpb uh i would need to get back to you with more specifics on that but we want to make sure that uh like other agencies whistleblowers are not retaliated against or have the ability to provide information and are safe in doing so i will look forward to working with you you've indicated a willingness to do so i'd like to work with you so that we can uh present a bill that i'm favor with you as well as trying to accomplish here in congress i've always found it beneficial to be aligned with the agency that is trying to that we'll have to implement i'm happy to do so well thank you very much i yield back the balance of my time thank you the gentleman from texas mr sessions is now recognized for five minutes chairman thank you very much uh director thank you for taking time to be with the committee this morning uh we do appreciate your time and respect uh the role that you have mr director uh you're engaged in now rulemaking uh procedures and that would be about what is called section 1071 which is known as the small business lending data collection and this is important to uh it was important to us when dodd-frank was passed and it has two overwhelming really reasons of what this is about intended to do facilitating uh enforcement in other words giving an opportunity for the data collection to match up with what enforcement so you can see it and secondly enabling opportunities for people would you mind taking a minute and giving us your viewpoint of this small business lending data collection rule that you're preparing and giving us some parameters about how those people that collect the data lenders might might gain some access of knowledge that you're thinking yeah thanks for this question so the cfpb has proposed before i arrived proposed a rule to implement those requirements i'll tell you i think the public was at a disadvantage during the pandemic including with respect to the ppp program by not having reliable small business data available there are many good reasons to have that small business data including to understand a complete picture of how our small businesses are accessing financing but also how we can determine trends spot risks and avoid discrimination so i do want to uh encourage everyone to submit comments to this because i think like the home mortgage disclosure act database there will actually be certain data that may be publicly available that can be useful to local officials to the small business community to financial institutions and others so i'm eager to work with everybody to make sure we get this right and implement it according um to the the deadline established by the court director thank you very much i think that my my feedback to you would be is grabbing the congressman's phone so he's able to vote i'm sorry i did not hear that that wasn't me sir okay uh director it my personal feedback is is that i hope we take this and the rulemaking would be a part of this as data and information that would enable us to do the two things that are their reasons instead of it being used as a weapon i think that data like this needs an opportunity to be vetted and us understand the the type of information that also could have changed dramatically from the time alone was taken out and as you know during the last few years a lot of money was rushed to small businesses without the rules in place and the knowledge of those rules and how that data and information may have been gathered and then material pieces of the business and the loan may have changed dramatically as a result of covid so it's my hope that we would use this as a tool as an opportunity to gain more information and work with and learn how cfpb would want to use this data working with the industry but not the weapon i agree with you sir i agree with you right that's that's my whole point and i will look forward to following up with you and you may count on me as someone who would want to be uh interested in this issue and thank you for your time madam chairman i yield back my time with the with the choice here that i would like to add that i think the director was very clear and gave us a good answer and i appreciate it very much thank you thank you very much the gentleman from colorado mr perlmutter who is also the chair of the subcommittee on consumer protection and financial institutions is now recognized for five minutes uh thank you madam chair and again mr chopra it's good to have you here uh just one thought from my point of view from my perspective and mr heisenga and i a number of years ago had an issue where a title company in michigan uh had the roof brought down on them uh it was a five hundred thousand dollar fine uh brought really out of nowhere it was it seemed like that way to me and so i just like to reiterate um you know in terms of just bringing the enforcement bludgeon that there be an effort and this is an anecdote it doesn't happen all the time but i think from my point of view i want to make sure that we have good regulations in place that you are following them and you are giving uh businesses who might be under your jurisdiction an opportunity to correct whatever mistakes that they have made can you give me sort of your philosophy on this yes i've thought about this issue a lot i think one of the things that drives me a little crazy is when federal agencies don't focus their efforts on nationwide or systemic or severe harm and instead i saw this at the ftc on one hand the ftc is letting facebook and google off the hook on the other hand you know chasing after small businesses many of them you know with with questionable strong arming them into settlements i believe that we should focus most of our resources on the largest firms that are engaged in nationwide harm that are really um you know totally beyond the pale where they should where they clearly knew what the rules were often where they clearly knew what they were doing or they hit you know buried their head in the sand focusing on larger participants in the market i think is one of the best ways we can accomplish our mission i don't know about the specific case you mentioned and in fact i don't know the facts it may have been very severe i just don't know but that is generally my philosophy and i think what we saw over the past many years under both democrats and republicans um of failures at the ftc i don't i don't want to repeat that at the cfpb okay no thank you i appreciate your sharing that um let me change a little bit to the to the big platforms since you just mentioned some of them in terms of you know 1033 and dodd-frank and the ability for the cfpb to kind of keep an eye on transparency keep an eye on fairness uh you you talked about getting kicked off a platform a payment platform or the like explain to us what you're what you're talking about and and if you want to name names i'm okay with that too well a payment system that is that works well is one that is open resilient and fast and i think there are questions we've seen it in the app store context we've seen it in other types of platforms how are they making decisions about who they include and who they kick off and how are they deciding on how much to charge them i'm worried that some of these big tech platforms may start competing businesses and therefore want to foreclose potential competitors that's bad for consumers that's bad for businesses and we need to understand those policies in many cases of course if someone is being it has red flags related to money laundering if people are not eligible for other specified reasons that may be totally appropriate but when payment networks may be using their own business incentives to kick off consumers or businesses we need we should know why okay um in the rulemaking process in terms of this data you know understanding the data and how these platforms are working can you share where you are in the rule making process so with you're referring to section 1033 which is about consumer control of data as i understand it last year there was an issuance of an advanced notice of proposed rulemaking um there has been comment collected on that i'm very eager to engage on what we know so far because i think section 1033 holds promise to really make sure there's a more competitive environment and that consumers have more choices and that there's not just a handful of incumbents who control everything competition is good here at the same time we're going to need to make sure we're protecting privacy security and other things that um are critical so there's a lot of issues and and we're very much eager to hear from everybody on this as we think through um this this tool that congress has has put into place thank you sir my time has expired i yield back thank you the gentleman from florida mr posey is now recognized for five minutes thank you very much chairman waters for holding this hearing uh mr chopra over several congresses i've introduced legislation to direct the cfpb to permit regulated entities to ask the cfpb to resolve uncertainties in the interpretation of regulations of statutes by the advisory opinions available in more recent years i asked the previous director mrs kranzer to implement an advisor opinion program administratively and i'm very grateful that you can do that uh in more just wonder if you can give us an update on the status of the program for advisory opinions and how it's being used the applications and results you've obtained so far and how you might plan to expand or improve the program as we go down the road yes sir so um i think i'm i may only be on day 12 or 13 of the job so i i don't have all the exact information which i apologize but just so you know my views um i do believe there is a role for as you mentioned the interpretive rules advisory opinions and others to be able to develop the law in many cases that is helpful to everybody at the same time i want to be upfront that i don't think the cfpb should be picking winners and losers you know crowning an individual company to be able to own a market i think we are better off when we can go through the rulemaking process go through interpretive rules guidance advisory opinions in ways that everybody can understand and not just one individual firm that it you know is seeking it well for example you say they have to paint the office furniture red there's a lot of variations of the color red and somebody might want to ask for the benefit of many what particular color code are you talking about i i totally agree with you i think that the more that this can be elucidated and i think generally speaking i prefer um you know pretty clear easy to understand easy to follow easy to enforce rules but where you know of course we have inherited the cfpb an enormous number of rules from the federal reserve board many of them are so complicated and uh yes there are places where uh i hear exactly what you're saying it can be the benefit for everybody okay great thank you in march 2021 the cfpb noticed a rule change to postpone the compliance date for the new qm rule to october 1st two um does your postponement reflect a change in policy direction uh from the december 2020 rule that would replace qm loan definitions forty three percent limit on debt to income uh with a price-based approach or is there some other explanation for the postponement so sir uh obviously that was before me but as i understand um the new definitions from the uh you know general qm rule they have taken effect the thing that was the aspect that was delayed was the mandatory compliance date so lenders can use one of multiple definitions and as i understand from the federal register notice that it was because there was dislocations and potential disruptions in the mortgage market during the time of the pandemic and the goal was actually to create more certainty for lenders or at least more flexibility for lenders on the mechanisms that they could comply with that rule in order to continue to extend mortgage credit you know with respect to the qm writ large i'm always eager to hear of places where um it needs to be changed but as uh i want to be clear though that the rule has taken effect well i i thank you for your responses i thank you for your appearing here and and i see my time is about to expire so i'll yield back to balance thank you thank you sir thank you thank you the gentleman from new york mr meeks who is also the chair of the house committee on foreign affairs is now recognized for five minutes thank you madam chair thank you mr director so good to see you and uh i i you know i'm really happy to see you because i believe i've been here for a while and i know when uh we created the uh consumer protection uh financial protection it was for consumers never had anything before for consumers and somewhere in the last few years we've lost our way that we were not focused on consumers and so it's good to see you and listening to you that we're back to focus on consumers again so you know the dodd-frank that gave the cfpb the authority under section 1033 to promulate a rule that would allow consumers full electronic access to their financial data there's a growing need and desire for the concept of open finance with that open finance marketplaces are offering greater competition to financial services and products so my question to you is will you prior to prioritize cbcf's cfpb excuse me section 1033 rulemaking and can you provide any insight into how you're going to balance the continued data access for hundreds of millions of americans who use fintechs every day and the need for consumer protections in the financial data access base i appreciate the question uh congressman so let me just say as a as a general matter congress has made it clear to the cfpb we need to make sure that markets are fair transparent and competitive and a competitive market means that consumers aren't locked in to a product that they you know want to get out of or that they want to get a lower price on or want to get a better service on so section 1033 i think aspirationally could unlock more competition could unlock more opportunities but at the same time we also need to make sure that banks and non-banks are operating under the same set of rules that there's not regulatory arbitrage so we're going to be looking at all these issues i will tell you i have studied a bit the united kingdom's open banking system as well as what other jurisdictions have done to create more consumer control of data um and how we can harness technologies to do it and i'm very interested in seeing what we can do there i don't know any timelines or anything more again only on i think day 12 or 13 of the job but but very very interested in what we can unlock for businesses consumers alike craig i know it's only day 12 13 but as i said there's high expectations that we've got you and you'll be focused on on um consumers the pandemic has also highlighted that the impact that access to credit has on particularly women and minority-owned businesses and there's a tremendous need to increase that access and it seems to me clear that under the binding administration the cfpb is putting financial inclusion and racial equality at the forefront and of course for that you know i want to commend you and your colleagues earlier last month the cfpb issued a proposed rule under the equal credit opportunity act that would require covered financial institutions to report small business lending data and annual reports on small businesses in the credit application so can you please explain how the cfpb expects to use its infuse its enforcement authority under the ecoa and how the data that it will collect will further advance these initiatives for women and minority-owned businesses congressman i'm i'm reminded i believe in 2013 or 2014 you invited me to jamaica to have a town hall with you and and this issue actually came up there absolutely no one people not being able to find help or not knowing where to turn and not necessarily having access because they did there was not a sense of relationship banking locally and i think we need to restore that and make sure that we our markets are free of discrimination i think the rulemaking you referred to will give the cfpb insight into whether there is any discriminatory patterns but also macro data on what communities are being served well when it comes to small business loans in many ways it is similar to the home mortgage disclosure act data collection on mortgages but there's some important differences but i think if we want a vibrant growing economy across the country regardless of neighborhood regardless of of race or ethnicity we want to make sure small business and entrepreneurship is in people's sights and that they can access the capital to do so thank you my time has expired i'm excited to work with you excited you're there thank you very much the gentleman from michigan mr heisinger is now recognized for five minutes uh thank you madam chair appreciate the opportunity and uh i know he's uh left but my colleague from colorado mr perlmutter brought up something that was very important and i know you may not know the details of the case but to to round it out a little bit it was a small title company that that was put in the crosshairs of the cfpb to be made an example of to the larger companies and at best well let me put it this way at worst their actions were in a gray area at worst uh and they literally were put uh put in the crosshairs and uh levy to find that would have bankrupted them and uh when i could not even receive a return phone call i went to my friend and colleague across the aisle who then on my behalf called and started getting some answers and had me be a part of that and i'm forever grateful for him and hopefully have tried to re repay that that kindness but i i i want to just reinstate make sure i heard what i think i heard which is that is not your philosophy to to pound on a little guy to make sure that the message gets sent to these larger operators is that accurate that is accurate and i want to be clear though that doesn't mean small businesses and medium-sized businesses should not follow the law correct but it's that the federal government should be focused on us particularly going after the biggest harms in the market and rather than kind of picking on people i saw this at the ftc i was constantly distressed about the bullying of small businesses rather than willing to take the big companies to court yeah who are well resourced today well it was it's really regulation through enforcement and uh and i and i'm glad to hear that that isn't uh isn't the case and and as i said in this particular uh situation um it was a shift in policy from the cfpb that was not a legislative shift and uh it was uh like i said at worst a gray area but they decided to make an example of that um so moving on um i i am kind of curious though and concerned uh whether you would agree with this notion that having wild swings in in policy coming out of the cfpb or any regulator could actually cause harm not to the company but by extension the consumer that that company is is trying to uh trying to serve and i just want to know if you understand those challenges implementing uh pretty severe and and wide uh rule changings and swings and policy what that might do yeah i think where we are is we always want to make sure that um obviously the policies represent those that congress has put into place and administered those laws but i completely appreciate particularly for our small businesses being able to understand what they need to do to comply um and that they spending less time hiring lawyers and all these things and focusing on their business so it can really divert resources basically that are that should be going to service though yeah and and as you know the law many lawyers want to put money in their own pockets by creating hysteria and creating uncertainties and so it's important for the regulator to also be clear on on what the rules are wherever we can when we are implementing the laws and this one might be a little outside your lane but it dovetails with something that i asked chairman ginsler you happen to bring up large tech companies and lots of concerns i think on both sides of the aisle about this i'd like to know when do you think that a service provider might actually morph into becoming a utility and then has a different possibly a different set of regulations on that so just give me a little your philosophy on what you think um it doesn't it probably is most applicable with tech firms at this point but when do these tech firms get to be so big and powerful and direct because you talked about them setting up competition to put others out of business when do those companies become utilities in your mind yeah so uh historically we have a number of different frameworks for this um the communications act the you know railroad regulations i think the way our country has dealt with it is one of two ways i think and i trust sort of breaking up firms and making sure that they're not monopolies or abusing it or utility style regulation where there is a natural monopoly you know like the electric electric company or whatever it might be so it you're right it's a little bit distant from the laws that i'm administering but i think that is something that there are many places um and this is something chairline khan at the ftc has has described before about ways in which policy makers can approach these issues the communications act obviously has a number of vehicles in which this is done but again some of this is a little distant from but you will be enforcing some of those concerns at presumably as as those companies that's right and i will say that there are a number of of of firms that have a huge amount of power in the financial ecosystem um there's you know very few credit bureaus there are almost everyone uses the fico score um so you know we have to figure out how to make sure that they're fair transparent and competitive of course thank you very much so gentleman's time has expired the gentleman from missouri mr cleaver who is also the chair of the subcommittee on housing community drill development and insurance is now recognized for five minutes thank you madam chair uh mr director congratulations um and we certainly look forward to working with you i'm going to try to squeeze three questions in uh if possible and uh on tuesday uh cnbc reported that mastercard is uh preparing to announce that uh any of the thousands of banks and millions of merchants on its uh payment net network uh will be able to integrate crypto into their products um every time i see one of these statements i it caused me to tremble a little bit because i'm not sure we have con have successfully dealt with the whole issue of double spending uh of bitcoins and you know spending the the the balance more than once which you couldn't do if you had a dollar uh but the the capitalization uh i was with mr meeks in new york at one of these uh tech companies and uh they talked about the capitalization is now at about 2.6 trillion with the t dollars uh does that create any nervousness on your part or do you think we have everything under control based on dodge rank uh so with respect to um bitcoin and the stable coin this is something secretary yellen and and chair powell and all of the regulators have started to discuss some of the risks that involve systemic risks obviously there may be risks to investors or consumers so there is a great deal of interagency discussion about how to approach this problem because what we do i think in many ways facebook's libra proposal in 2019 was a wake-up call to all of us about really what could be the damage that is done to our dollar and to really our our economy and our household so i think it's really all for all of us to be working with and really to be working with all of you too because this is something we need to make sure that fast pay fast seamless payments have so many benefits but we need to make sure um we're guarding against risks as well well in that regard are there things that you would recommend to us that we should legislatively uh pursue in order to reduce the threats that we can experience not just you know here at home with mascara but internationally uh the hoodlum governments uh you know would love to be able to uh create problems for us uh in this area yeah yeah congressman cleaver i know you and i have had a lot of discussions about small business loans student loans and i think this is a new one where there are uncertain risks and we need to get get down to the bottom of it all of the banking regulators and securities regulators i'm very happy to continue to work with you on that i don't have any recommendations off the top of my head but i think we all need to make sure that we are protecting our payment systems and flow of currency well thank you very much by the way i i i try not to be a crow magna or trochlodytic in my attitudes about this new technology it does create some fright uh but uh [Music] the the the issue is is is so serious to me uh that we that we may need to uh you know have have ongoing dialogue as you just suggested to make sure that we um are on top of the issues that could be born out of this uh amazing uh new technology um uh if this ex if what you may not even be able to do with this if mastercard can go this direction what if all of i mean what happens if we have a flood of institutions lending institutions going into this arena uh like this what i mean yeah so i think that's really something to watch out for with respect to um you know the stable coin stable coins are right now primarily used for speculative purposes but one could imagine that if it starts riding the rails of some of the large networks or big tech companies it could scale very very quickly and so that is something that and i apologize i don't have all the answers for you on that but i'm attuned to really where some of the places we need to analyze collect data that's part of the reason that i issued those orders to the big tech companies so that that may be a place where certain digital currencies scale very very quickly and globally in ways that we may not fully understand the implications well again congratulations and i look forward to working with you thank you madam chair thank you the gentleman from kentucky mr barr is now recognized for five minutes director chopra good to see you congratulations on your appointment great to see you again and i look forward to working with you during your tenure to promote consumer protection not from a heavy-handed central planning approach but instead as you describe a competitive marketplace where consumers retain access to choices and i was encouraged to hear you say that you want to restore relationship banking that was really really a positive comment in your prepared testimony in the way i think of it and in fact i think you used the words cut through red tape and i'm going to hold you to that because i believe relationship banking and relationship lending can't happen when lenders are deterred by a regulation through enforcement approach so first question do you believe that regulated entities should know the rules of the road in advance of any supervision or enforcement action yes the laws that you have passed um we should make sure that do our best so that everyone knows what they are i believe that we work best when laws are clear easy to follow easy to uh enforce right and i think that will facilitate that relationship style of lending let's talk about udap and um your predecessors actually acting director ouijio's rescission of the craninger uh policy statement from 2020 and and i appreciated what you said about durability and a durable abusive jurisprudence but you also in an answer to my colleague's question talked about how the bureau could provide some durability through uh through um uh in interpreting or applying uh the abusiveness standard and here's where i i think where your your immediate process predecessor went wrong on rescinding rescinding the guidance because i i don't believe rescinding the bureau's guidance promoted durability i think it was the opposite it created a chaotic discontinuity and unpredictability and and and i think um um arguably it was arbitrary and capricious to just upend abruptly um a a guidance offered by uh director krenniger so my question to you is given the fact that acting director ouijio did not in his rescission did not offer an alternative interpretation of abusive what in your mind is the the in the correct definition of abusive so uh many questions there i'll try my best and tell me if i don't so with respect to abusive congress has laid out what the definition is in the multi-prong approach so that exists that's the law and that is enforceable not just by the cfpb the prudential banking regulators but also state attorneys generally right but kranninger defined it the problem market participants didn't have clarity on what the statutory language actually meant and that's why there was this dual pleading position in there and so let's get a little bit congressman can i just say more specific on this on this that statement was not binding on this on the state attorney's general it was not binding on the state regulators it was not binding on the other so let's get to that durability piece yeah so the way the way in which i think the way you build jurisprudence there's many many ways you do that but particularly you raise the issue of dual pleading right when when a agency finds a violation of law and doesn't plead it that's actually abrogating what congress directed and it's also bad for the developers okay so what's the difference in your mind between abusive and unfair so unfairness and abusive are two different frameworks unfairness requires an analysis of substantial injury it requires an analysis of avoidability and it also requires an analysis of countervailing benefits to consumers in competition in the interest of time because we only have five minutes i would have also asked you what's the difference between abusive and deceptive but the point here is that in the cranager policy statement uh she specifically said that the bureau would avoid challenging conduct of abusive where the alleged violation relied on all or nearly the same facts as an unfairness or deception violation this is exactly what you're saying you're making distinctions between the two kreniger was clarifying that why is the rescission the acting acting director we just rescission in any way clarifying the situation i think the resistion is undermining durability here i totally disagree respectfully with you when we when we don't plead those courts cannot analyze that they cannot issue opinions to determine whether whether the the conduct at hand i'm running out of time let's work together on durability i'm very eager to create a durable running out of time let's work together on that on civil investigative demands are you open to guard rails on the factual predicates to initiate a cid and other parameters a lot of uh regulated parties feel that this is a phishing expedition i want to know how your agency and your leadership intends to to put guard rails on on cid so it's not a fishing expedition i'm i'm happy to review the existing policies on the issuance of civil investigative demand while i was commissioner i closely reviewed them and often um you know ask that changes be made to them so i i'll look at that i'll i take that feedback look forward to working with you thanks you're back the gentleman from illinois mr foster who is also the chair of the task force on artificial intelligence is now recognized for five minutes thank you madam chair and congratulations director chopra so as you take the reins at the cfpb you're going to have to generate a workforce plan and particularly in the area of a high-tech workforce plan to deal with ai and related issues and this is going to be particularly important in the context of the ongoing merger and blurring of the lines between financial services and big tech as was just pointed out chair waters has impaneled a task force on ai which i'm chairing together with ranking the number gonzalez and um and so now on this whole issue we're gonna have to escape to where the puck is going here uh this this transformation will happen over the coming decade if current trends persist soon the great majority of financial services transactions are going to be marketed and transacted online and actually if mark zuckerberg's dreams come true in a decade we are all going to be wandering around in the metaverse where we will encounter some ai avatar who is in fact a non-fiduciary robo-advisor and he will be using all of facebook's psychological profiles that they worked up on us to figure out exactly what to say to us to gain our confidence so that they can sell us you know overpriced life insurance or crummy investment products you know not too different than than the abuses we see in the human area and now to defend the consumer against this sort of potential abuse you are going to need a cfpb workforce that is not overmatched against the tech companies um and so that means competitive salaries among other things so what are your thoughts on how you're going to do this and what is there that congress can help you make this standing up this workforce easier so i appreciate that congressman and one of the things i did immediately was i appointed a chief technologist of the bureau i appointed erie meyer who has served at several federal agencies and has worked closely with me in the past on identifying technological talent that can enter public service so that it's not just lawyers trying to figure all of this out but actual uh individuals with real experience and not just engineering but a whole host of issu of skills related to technology i think one of the things that we should just understand is reality is that unless we can understand the technology that is being used we won't be able to effectively police it and we're never going to have the resources of the big tech companies we're never going to have the resources of the big banks we're never going to have the big resources of the the credit bureaus but we need to make sure we have the skill sets in house so that when new products and new markets are shifting we actually have a data-driven way of looking at that problem and that we're looking at the right set of interventions you know when i when i see the problems in mortgage servicing that the chairwoman have mentioned a lot of those problems were also related to lousy software and and decisions that mortgage servicing companies a decade ago did not take to upgrade that software the equifax data breach was an absolute disgrace and because the regulators i think need to make sure that they're understanding how data is guarded data is protected all of those are places that the workforce of course across federal agencies are going to need to evolve it's an area where i've discussed with the states with our counterparts in europe as well and it's an imperative for our country to be competitive yeah and well you know congress has understood that there is a need for oh i guess a lot of people have already complained about dr fauci's salary being higher than members of congress and that is actually okay with us because of the extreme important to have of having you know a certain number of really highly skilled jobs that are paid competitive salaries to the private sector and this is a very tough uh conversation to have when you're managing a mixed workforce of you know traditional scheduled federal employees and and others so what is your um yeah so what are the what what are the challenges there uh do you do you find that there are significant number of people who made their careers and their fortunes in silicon valley companies that are really willing to come and spend several years or is that really not enough and we're going to have to do something on the sale yeah it's a great question so the experience i think in some places has been yes there may be people who have you know very financially comfortable willing to serve of course at the same time we have to guard against conflicts of interest though they may have very substantial stock holdings i think what you see um in the financial regulatory agencies is many especially the lawyers they go through the revolving door and make huge amounts of money on the other end and we're not going to be able to you know pay them the same but i think what we want to be able to do is offer um a real good value proposition on how they can serve the public serve congress um and serve the future of our markets um and you know the goal is to be able to recruit those people with that in mind but of course you're right on the margins um you know when you figure all this stuff out let me know okay okay and then my time's up yield thank you sir thank you the gentleman from texas mr williams is now recognized for five minutes thank you madam chairman and uh earlier uh my colleague pearlmiter called you a champion for small business we got something in common i'm a champion for small business uh and before we get started i gotta say i'm a small i'm a small business owner in texas but before we get started i gotta tell you in the past uh your agency every every way it turned costs jobs on main street america and you can't you can't have competition and you can't help main street america by adding regulations on top of regulations now businesses need to know the rules of the road we've talked about that this morning before they hit they're hit with arbitrary enforcement actions and under director cordrey's supervision the cfpb had an awful track record of issuing massive fines and penalties we've heard about that today for things that have never previously been deemed harmful to consumers and i'm very concerned that this practice of regulation through enforcement we will once again come back under uh under this new leadership your leadership and it will force market participants out of the marketplace more jobs and we're already seeing this trend in the student loan service servicer space and the cfpb's own report from the student loans ombudsman it states four of the nine federal student loan servicers have either stopped or announced that they are going to stop serving federal student loans this will require the largest transfer of student loan over 16 million borrowers with a loan volume of over 650 billion it's the largest in the history of higher education and presents heightened risk of borrower harm so it will be impossible for a business to create a regulatory compliance system if they're unaware of what they're even going to avoid or what they're expected director uh shopri do you understand that the uncertainty coming out of your agency is causing businesses to drastically change their practices in a way that limits competition and we you've talked about you want competition and will ultimately uh harm consumers yeah so since the about 1982 or three we've seen small businesses as a proportion of total firms in the economy go on a constant decline and there's a host of reasons for that and i always want to figure out what is it that we can do to make sure that people can challenge the big guys that they can enter you've raised the issue of regulation it's part of the reason why i believe that you know we always want to aspire for laws regulations to be easy to enforce easy to understand but at the same time i do want to be up front with you that i think based on my conversations with many in venture capital and others a big reason people don't want to enter is that they think they're going to get squashed by the big guys that they have so little ability to be able to compete and particularly when it comes to small financial institutions ones that do offer relationship banking they have a tough time doing it and i think we need to really look at that to see what are those barriers that they face and i take your feedback seriously about what you see as them but i think there's a a story there that we have to actually conquer together small business is is what generates our economy and we all know that there are many rule makings the cfpb is undertaking that have banks and main street america very concerned one of the proposals is the 1071 data collection regime that will force banks uh to report uh demographic data on all small business loans it this proposed rule is 918 pages long is a nightmare for anyone that is going to be forced to comply some of the most laughable provisions this terrible rule are that that lenders will be forced to guess a loan applicant race and ethnicity based on the borrower's appearance and last name if they leave that information blank now this will force loan officers to racially profile every applicant now i'm old enough very few in here remember the 60s i was in business in the 60s and we we couldn't ask those questions they took those questions away because it was racist now here we are back doing doing the very same thing so small businesses would be forced to have significant amounts of information on their business made public on cfpb's website many small businesses do not want metrics like gross annual revenue or the purpose of the loan to be accessible to the public so not only will this rule force sensitive information be made public but it would add a significant new compliance cost on financial institutions which will lead to credit becoming more expensive and less available all in the midst of serious inflationary pressures that we see today and supply chain issues so instead of hiring more loan officers businesses are going to have to hire more compliance officers so quickly how will you ensure that access to credit will not be hampered under this rule and will not allow for borrowers to opt out of complying with the democratic of small demographic or small business information requirements in order to get a loan may answered uh so we will faithfully seek to implement the congressional directive on section 1071 with respect to the specific issues that i'll be quick we really need people to file comments on this so that we can actually implement the statutory directive and consider all the issues you've raised including with respect to privacy thank you madam chairman welcome the gentleman from california mr sherman who's also the chair of the subcommittee on investor protection entrepreneurship and capital markets is now recognized for five minutes hello director first i want to thank you and your staff for providing technical assistance and coordinating with us on drafting the bill to deal with the great libor problem we now have language that i think every consumer group that's focused on this is at least okay with every business group now uh we've got to work out some language with the fed since they're the ones that are actually going to have to to do the work but your office has been very helpful uh pace loans are well-intentioned in that they help people get new air conditioning systems and other that are energy efficient um in almost every instance your predecessor came before our committee i asked whether the cfpb was close to finishing the regulations required by statute since spring of 2019 the bureau has taken no action beyond issuing uh advanced notice of proposed rulemaking are you getting there how close so uh as i understand the process is ongoing i i just want to be upfront with you i know it's not optional so we're going to do it um i need i i is the decade in which it's to be completed optional that that was a rhetorical question well you know for the record uh uh please give me a definitive response as to when the next step is going to be completed i don't want to nail you down no no no no no unless you want to be nailed down no no give me a moment absolutely i'm happy to take a question for the record on that again i'm i think only day 12 or 13 i'm still making sure i understand what is in the record i'm going to count on you to actually answer definitively for the record and move on to another question yes sir uh our good colleague from florida mr posey already asked you what the bureau plans to do on the qm rule i'd like to follow up and ask has the bureau seen any market evidence or concerns since april of this year when the qm patch was extended i believe that you think require another round of revisions to qm um do you have concerns or um yeah you know so we did have a pretty very robust 12 months from july of last year to june of this year in terms of mortgage origination and i believe it was a record um so on the other hand it's hard to make that determination given the flux of the economy and the recovery of the pandemic so what i've asked the staff to do is to really let me know what are we seeing in some of the more specific borrower segments and geographies so that we can identify what's going on and sir as you know treasury and the fhfa have changed the the preferred share agreement so obviously there's some changes in the housing capital markets as well that is dictated by factors outside of the qm rule but of course qm is a key part of the mortgage market and the mortgage regulatory guidelines so i want to make sure that we're always looking at it to see whatever we can do to make sure we're promoting the objectives that congress laid forward in dodd-frank with that on that front want to move on to another question and that is consumers are tricked into wiring usually the down payment of the how on their house which they've saved their whole life for to the wrong account um they're told that's the account of the escrow agent or the title company because somebody went phishing and hacking and sent them an email that looks like that the reason they get away with this is because we don't have a system where you identify the person that you're or or company you're sending the money to just the number so if you can convince them that acme escrow company is number one two three four five and that's really the account of a nigerian prince then your money is going to support royalty in nigeria um i pushed chairman powell on this this week i've pushed governor uh brainard over on the fed it's their system but it's your job to protect consumers uh can you work with us to get a system like they have in britain so that uh when you wire money you wire money to name of person or company you're wiring money to and the um uh the account number yeah so as i understand um the standards in which wiring it uses the swift code plus some but but as you say it doesn't require an identifier right for a specific name so i'm very happy to discuss this further with other parts of the federal reserve system i i take seriously we are there to protect consumers but the systemic answer may be in fact you're the one with the mission yes thank you the gentleman from arkansas mr hill is now recognized for five minutes well thank you chairwoman and thank you for holding the hearing and congratulations director we're glad to have you before us today and your oversight responsibility and just a quick note i would say having been in community banking for really on and off for 40 years i have to take a little issue that it's not big bank competition i really don't think that's the case i think it really is the overhead cost is a percentage of assets that is a real detriment to bank formation and smaller banks being successful and competitive on an roe and ro basis and to mr williams point a lot of that is in the detailed level of compliance and how it's even grown more dense for banks and so really banks under uh one billion dollars i think really do struggle with that so keep that in mind as you refer and look at your work and in that regard i assume you believe that the administrative procedures act the apa is the best way for a regulatory agency to communicate with the broad public on a proposal is that your view to communicate yeah communicate and ask for comment and actually outline your legal proposals yeah so so i don't i don't know i'd characterize best it's the law so we have to use the administrative procedure act to so you know regulations and it provides for notices a comment period yeah i know what it provides thank you i just wanted to make sure you're supportive of it and likewise do you think that regulatory agencies should do a cost benefit analysis to all the parties involved before a proposal becomes a final rule so in the dodd-frank act the agency is required to consider certain issues related to benefits costs other things so we we will follow what this statute requires thank you for that so on the subject of the qm rule i listened to mr posey and now my friend from california mr sherman and i don't know that either got the kind of answer they're looking for after you so i'm going to go for three strikes here with you in the postponement which was as you say delivered due to the pandemic we have had a robust housing market we've had a record number of closings i don't see in your complaint data any spike in complaints my question for you is real simple do you support the proposed change in the qm rule that was proposed by the cfpb after hours and weeks and years of work with the stakeholders i don't know but i'll take a question for the record on that i want to make sure i understand the full basis of it but i just want to be clear that rule has gone into effect yeah that is now a way that people can comply and they have an option they haven't i just want to know if you if you think it's uh a good compromise it was hard to get to where we were they have an option now but that creates uncertainty in the market or it certainly could and it creates programming uncertainty for it professionals for banks so i think we ought to not postpone it anymore and move forward and i'd like i will ask you on that in the record and madam chair i'd like to submit a letter to the record from the coalition dated september of 2019 expressing their strong views without objection such as the order i appreciate it sir oh sorry i'm also [Music] i'm also keen to understand specifically in the mortgage origination market how we can stimulate more refinancings across the board so um i've been asking questions about that because one of the ways that um the interest rate environment can transmit to households well let me let me i invite you able to look at where the impediments to refinancing thank you well you you should look at that but i mean the market has driven refinancings to an all-time high and uh every month my household uh a current mortgage holder got uh from 10 or 15 different companies bank and non-bank alike offering refinance assistance and i hope i hope almost all homeowners get that i i understand that it's yeah i'll let you do your research on that point okay but uh refinances and i'd like you i'll ask a submit a record question should fannie mae and freddie mac be disproportionately buying refinance loans or should they focus on first home mortgages what's your view on that what's their mission helping low moderate income people is that principally done by helping that first time homeowner jenny may does that but for low moderate income people is that should that be an emphasis of freddie and fannie or should they refinance jeff bezos second home so as you know three seconds the federal housing finance agency is not the agency i lead i am not the conservator of fannie and freddie and i'm happy to take questions for the record we will do that i yield back madam chair the gentlewoman from ohio mrs beatty who is the chair of the subcommittee on diversity and inclusion is now recognized for five minutes uh first of all let me say thank you chairwoman waters for this hearing and uh mr director thank you for being here so early uh in your uh term or in your tenure uh i wanna thank you for all your work and especially for your investment in small businesses as i too am a former small business as i also support our service members and our veterans and i want to thank you and the previous acting director for your work because many of us will remember under the last administration that veterans and service members were not protected as they should have been with the cfpb i don't know if you or everybody has heard of or remember the mulvaney discount well for you or those who have not heard of this term the melvani discount was a term that was used under the trump's administration's leadership of the cfpb where cfpb would bring an enforcement action against someone who had broke our consumer protection laws but they would drop their fine to a mere one dollar because the defendant simply said well i can't pay the bill or i can't pay the fine uh for example under the cfpb and the trump's administration they would actually if they and we know how our veterans and service members have been out on the front line and all of the things that affected them so it's very important to me and should be to all of our members that we don't go back to that previous administration and what the trump administration what melvani did so is this a practice that you're aware of or you plan to uh change or continue uh during your administration so congresswoman we will apply the civil penalty factors as congress um and the courts have directed us and have interpreted um of course with respect to service members and veterans i've already had a chance to speak with some other agencies about how to revitalize some of the work that we'll do there we need to make sure the military lending act and other key protections are enforced i will share with you that there may in fact be some instances where the civil penalty um is a dollar i don't know the individual circumstances but assessing a civil penalty for against a judgment-proof defendant if they are truly judgment proof can open up redress under the civil penalty fund but under no circumstances will we not we deviate from the the legislative and court administered factors to do that let me go to another uh question uh under the previous administration i confronted the cfpb for refusing to bring enforcement actions of violation of fair lending laws they only brought us three cases under the leadership of not only mulvaney but often also under cranninger so i guess my question is you've already brought in in the 10 months that you've been in there more than what they did throughout their entire administration now give me your opinion do you think it is that all of a sudden people started having these fair lending violations or they turned a blind eye to it because i had a hard time believing and after talking to some of the long-term staff over there that and not being getting an answer to that uh i believe that there were some fair lending uh issues going on so can you address that well all i can do is speak for myself um i am very determined to make sure that we are administering the laws that forbid illegal discrimination on friday um i joined the attorney general in a law enforcement action against trustmark bank for some pretty egregious uh discriminatory behavior again i we want to make sure that we are not disadvantaging those financial institutions who follow the law play by the rules and treat people equally it's not fair to them and we need a market that is free of discrimination well thank you so much and we'll continue to have a dialogue as we talk about fair lending certainly we're having a lot of movement uh thanks to our chair in the housing area and we'll come back and also talk about diversity and how you're moving forward with that thank you and i yield back thank you very much the committee will break for a short five-minute recess so [Music] [Music] now foreign uh uh man foreign i couldn't hear that madam chair you're being recognized mr emmer thank you madam chair i i have a lot to get uh on so i'm gonna jump right into it uh director chopra uh ranking member mchenry referred to reports that former acting director wigio unlawfully removed career cfp cfpb staff to make room for your hand-picked replacements here's the specific allegation in case anyone missed it this is from a story that appeared in gov exec on june 14 2021 it states quote the biden administration is taking unusual steps to ensure it can install its own hires into top career positions at the consumer financial protection bureau and push out officials who served under president trump according to several current and former employees cfpb in recent months has offered separation incentives including early retirement and launched investigations into career senior executives to sideline them targeting about a half dozen of the ranked non-political staffers at the bureau close quote these are serious allegations if the inspector general finds these allegations to be true it is clear that president biden's political team violated a law stating that discrimination based on political affiliation is prohibited the supreme court held that the president can remove the director of the cfpb for any reason or for no reason at all but let me be clear the supreme court did not exempt the cfpb from laws that prohibit removing career civil servants based on their political affiliation mr chopra were you aware of the biden administration's plan to push out career officials who were hired during the trump administration i don't believe there was a plan to do that but i just asked the allegations well were you aware just be aware if there wasn't a plan so it's no did anyone at the white house ever discuss cfpb personnel with you sir i was a nominee so i was nominated and that was through presidential again i'm gonna i'm trying to be very clear and i have a limited amount of time did anyone at the white house who i'm assuming you've had communications with before you were nominated once you were nominated since you've been confirmed before you were actually confirmed did you have any anyone at the white house ever discuss cfpb personnel with you there has been never been any discussions with the white house about career civil servants or any indications of that matter since i took office thank you very much again i could move on to my next question sir i'll reclaim my time did you discuss the cfpb workforce with leander leandra english at any time since the election last november no the workforce director i no i'll say it again did you discuss people that work at the cfpb i think it's pretty self-explanatory did you ever discuss people who work at the cfpb with leandra english at any time since the election last november i don't recall ever speaking to her about personnel issues thank you director chopra if there are people on your senior political team who hired or fired career staff because of their political affiliation i expect you'll take some sort of corrective action and my question to you sir will you re-hire the people who were wrongfully terminated if there are findings of any prohibited personnel practice we will take appropriate disciplinary action would you rehire anyone who was wrongfully terminated because of their political affiliation well it if there is a finding of that which i have no indication to suggest yes it will be i will take all the steps that i am required to under the law including if required rehiring i hope that yes thank you i also think it will be important to know whether any of the actions and questions occurred with your knowledge or at your direction if so i think you may need to consider whether to recuse yourself from any decisions related to this matter if it turns out sir that you are implicated in the scheme to remove career staff based on their perceived political affiliations can i have your commitment that you will recuse yourself from any decision any decision making related to corrective action i will not be implicated in it because i did not engage in that behavior but if you were you would recuse yourself correct if if on any directive about law findings of course i will adhere to that but you can trust me i did not engage in the allegations you are suggesting thank you will you fully cooperate with the ig's investigation into this matter i will always cooperate with the inspector general the federal reserve system and will you instruct the agency's political staff to come up cooperate with the investigation everyone must cooperate with the ig and you'll tell them that they must right yes and i've also told them that they must adhere to all ethics rules as well we need to make sure that all of those are being followed and that they're not prepared i see my time is expired we'll wait and see what the ig finds in this case i yield back thank you it's time has expired we will now hear from the gentlewoman from iowa ms axne who is also the vice chair of the subcommittee on housing committee development and insurance she's now recognized for five minutes thank you chairwoman and congratulations uh director chopra on your new position and thank you so much for being here and i also want to thank the cfpb for listening to me and others on this committee and finally resuming the military lending act examinations that you're supposed to have been doing for a long time to protect our service members so thank you so much for stepping up for our service members in the way that we should and i hope that will continue and i really hope to hear about any other issues that you find that we can be helping you with here in congress now i do intend to ask you questions about the work that you're doing because i think that's important for these hearings so let me get right to it i know you've only been there for a couple of weeks now but i want to check on the status and planning of a couple of other areas that i've been asking the cfpb about first i asked your predecessor about the student loan servicers and whether the cfpb was actually uh you know doing the exams to protect the 40 million americans who have these student loans i've asked for that a couple times never got a straight answer i know this used to be your department so can you give me an update on where those things are right now with the cfpb's oversight of student loan services so i i want to be mindful of the protections in the law about confidential supervisory information but i will share that student loan servicers the large ones are subject to the supervisory authority of the cfpb and i intend to make sure we are supervising them appropriately we will of course work with other regulators including the department of education to do so but unless the law is being followed we cannot be certain that um our borrowers are going to be able to be on the road to repayment or be protected from from uh unlawful practices okay thank you for that and what are the actual benefits i'm i'm hoping that you can tell us for those borrowers having the agency looking out for them and actually having this oversight happen for the first time in years well i think it's important to make sure that we're protecting both the borrowers and the honest companies who are engaged in these businesses it's not fair to the law abiding businesses when some get a free pass so when it comes to student loans for example good servicing on student loans mortgages helps avoid defaults helps avoid foreclosures and ultimately adheres to the congressional directives to the cfpb perfect well that will certainly help folks out thank you so much for that um i also know that over the last couple of months homeowners have had some new protections from foreclosures including now they have the right to a new streamlined loan modification options because of cobit hardships can you walk us through uh what those protections are and a little bit of how you see those working so far yes so as i understand the amended rule it provides a way for servicers to help transition borrowers from the forbearance programs back into repayment this is obviously can be very challenging you know especially for borrowers who have been dealing who've been struggling during the pandemic so i think the win-win here is for servicers to be able to evaluate borrowers for these alternatives to foreclosure that's good for the investors that's good for the borrower and it's really good for the economy so of course it's a temporary rule to assist with the orderly transition but we want to make sure we do not repeat what happened last time which was unnecessary avoidable and illegal foreclosures and there were too many of them and the effects were devastating i would say congresswoman i'm also particularly interested in farm bankruptcies in rural areas i know that's of interest to you and i think we need to understand all of the issues facing family farms it's an area i've worked on for many years we cannot have a resilient and strong country without a base of thriving family farms who can afford their obligations i'll tell you what uh director you're talking my language there so thank you so much for bringing that up and as i'm currently working uh to get affordable housing extensions you know more funding through the usda but we need a lot of help in our rural areas and i'm so glad to hear you say that and of course we want to make sure that we prevent foreclosures as much as possible so these loan modifications are a great way to do this i just want to let you know this is one of my top priorities to make sure that people can actually benefit from these programs so i made sure we got a hundred million dollars to support housing counselors to help people walk through this process and i'm wondering last question are you working with these housing counselors on those modifications to make sure that they're doing the best they can to serve americans yeah housing counselors are often on the front lines of helping borrowers not only get a home but to keep their home so i don't have the details handy this early but you have my commitment that we will not be forgetting about the housing counselors and i know firsthand how much a vehicle they are to really helping people when it comes to the dream of homeownership general women's time thank you aspire time i appreciate it the gentleman from georgia mr loudermilk is now recognized for five minutes well thank you madam chair uh director chopra thank you for being here several topics i would like to discuss the first being the rule making to implement dodd-frank section 1033. as part of that i hope the cfpb will take into account the significant progress the private sector is making on consumer data issues specifically moving away from screen scraping of login credentials and transitioning to apis i think it would be counterproductive to impede or duplicate the work that the private sector is doing so the question is do you intend to build on the work that's being done in the private sector as part of section 1033 rulemaking and will you make sure to not interfere with that work i think that makes sense i think um the way we can realize a lot of the benefits of any section 1033 rule making and i i it's too early to say what the timeline would be on that we've got to look at actually what are the systems and protocols and technologies that are already being in use and how they're working are not working i think i am to be transparent with you gonna look at it with the eye of course of competition security privacy in many cases open apis or apis will will be a huge vehicle to do so but i take what you're saying seriously if there's already um a movement or there's developments that we can learn from to help expand i'm totally on board with that and i i hear what you're saying well i appreciate that because quite frankly it's the private sector that are innovators not the federal government more than often the federal government tends to be suppressors of innovation so anything that we can do to encourage innovation and keep things going in the right direction i applaud can i add one point it's just that i want to make sure though that i'll look at private sector initiatives to make sure that there can't be kind of one dominant controller of it you know the more that we have an open system right that people can enter they don't need a lot of permission slips and you know red tape corporate red tape to cut through i'm going to be looking at that all right the cfpb has also proposed a rule to implement dodd-frank section 1071 which will require lenders to collect and report data on the demographics of small business borrowers i hope you'll minimize the burden of these requirements the 1071 rulemaking the 1071 rule proposes making the data available to the public annually to determine what data is released the rule proposes a balancing test to measure the risk and benefits of publicly publicly disclosing the data what risk do you believe should be considered in this test so uh you know again i i'm just on the job but i'll just share my personal views on this is that we need to be thinking very hard always about re-identification risk so um in many cases technologies have advanced that there are more data points that can be put together to re-identify and so what i'm going to be looking for is making sure we're implementing the objectives to make sure we're collecting this data that it's being able to be used to guard against discrimination and other violations but also that any data sets we make available you know are still consistent with the objectives of safeguarding privacy as well so far cfpb hasn't accepted public comment on this issue will you be open to accepting public input on the balance test before it goes into effect um i need to check on this i thought that in the proposed rule um it did discuss um implementing a balancing test and i think we are collecting comment on all aspects of the rule if i'm mistaken um we're happy to follow up with you but of course um all agencies need guidance when it comes to protecting data so our understanding is it hasn't been done if it isn't will you yeah i'm definitely eager to hear views on how to make sure we are we're balancing that right okay so you will ask for public input if it hasn't been done before if it hasn't been for sure i would want to make sure we ask for input particularly from technology and data experts and others okay um last question if i have time in april the cfpb issued an interim final rule regarding debt collection practices during covet 19 the rule classified landlords as debt collectors and accused landlords of refusing to accept tenants self-attestation of hardship based on unverified anecdotal evidence from activist groups fortunately that rule no longer applies because the supreme court struck down cdc's illegal eviction moratorium but is still troubling understand you weren't in this position during that time period but in any issue going forward could we get your commitment that your policies will be based on concrete facts and data not unverified antidotes especially from activist organizations so just to be clear you're saying that that rule covered landlords the yes the rule classified landlords as debt collectors okay that wasn't my understanding i'm happy to look into that i understood that um you know pursuant to the fdcpa that it was third parties collecting on behalf of landlords who are covered um but i th to your question i of course want to make sure we are being analytically robust whenever we gentlemen's time has expired the gentleman from illinois mr caston who is also the vice chair of the subcommittee on investor protection entrepreneurship and capital markets is now recognized for five minutes thank you madam chair and uh thank you so much to director chopra for your time and your patience with all of us today um i got some questions about um discriminatory lending and i want to go through just ridiculous hypotheticals to start but um so bear with me but i wanted to leave enough time for the substance on the back end as you know the equal credit opportunity act of 1974 prohibits lending institutions from discriminating on the basis of all the usual protected classes race religion national origin what have you um so i wanted to start with just a completely softball hypothetical if a lending institution was to intentionally or unintentionally but effectively market their products to groups of people that had the practical effect of reducing minorities certain religious groups access to to loans would that constitute a violation of the ecoa as i'm sure you know um all of us in the banking regulatory area like to avoid these type of hypotheticals but i'll speak to i'll try my best to answer the equal credit opportunity act um implicates not just underwriting decisions but in across the entire credit transaction so it can affect collections it can affect marketing and advertising you may be aware secretary carson issued a complaint against facebook for violations of the fair housing act that related to some of these issues about advertising there is some corollary uh between the fair housing act and the equal credit opportunity act and we're happy to follow up with some of the specific regulations um well i've been i appreciate the nuance i appreciate the nuance and and that's the challenge of these five-minute hearings that sometimes there's not a time for nuance but the stipulate that that there are some things that within that nuance are indeed problematic is does the cfpb under your leadership have the authority and or the obligation to investigate and prosecute crimes under the ecoa of the type we just talked about yes okay um and if a company was violating those is knowledge that they're that their marketing techniques were discriminatory um a prerequisite for for prosecution or if they are if if if they're loaning the lending practices are discriminatory but we're not intentional does that absorb them with liability yeah so the supreme court um there's jurisprudence on this it's also in the regulation um there's there's disparate treatment um and disparate impact and so in the disparate impact context um you you need not necessarily uh prove intentionality um to get to liability okay well that's consistent with my understanding so here's now the substantive reason for the question it has been brought to my attention that a number of folks in the in the lending industry when they make a decision whether or not to advertise on facebook facebook cannot share and has refused to share any information about whether the algorithms they use to boost their ad tracking are in fact intentionally targeting certain racial groups certain you know classes of people and could have the practical effect especially in light of all this news over the last you know weeks that facebook's algorithms have a habit of you know targeting and amplifying and boosting signals from white supremacist groups like the proud boys given your prior answers is a lender that is advertising on a platform that uses algorithms that may prove to be discriminatory or maybe have already been proven to be discriminatory is that lender potentially guilty of an ecowa violation uh it really depends on the facts and circumstances but in fact facebook in your circums in your hypothetical may be liable for that um and would you have liability or the jurisdiction to pursue a claim against the platform as opposed to the lender or both you know it depends on the exact activities but just in like secretary carson's complaint where facebook was making those decisions um in your hypothetical um when a tech company like that or is making the decision uh they may in fact be liable okay so um last just a question for as we sit here if the platform cannot guarantee that their marketing channels are not in some fashion discriminatory in a way that would violate the ecoa would you advise a lender to continue advertising on that platform well i i i'm happy to take you know i'd rather take this question for the record because it's a complex one to answer in nine seconds but i am very worried about black box algorithms that we have no accountability as to how decisions are made this is the opposite of relationship banking and we need to make sure that they that firms cannot dodge fair lending laws and anti-discrimination laws under the guise of their secret algorithm thank you very much i'm out of time look forward to following up with your staff gentleman's time has expired the gentleman from tennessee mr acosta is now recognized for five minutes thank you madam chair and director congratulations on your confirmation thank you for being here today um we've heard a lot obviously in the past several months about cryptocurrencies and digital assets they've gotten a lot of attention what do you see as the cfpb's role with respect to cryptocurrencies and digital assets so depending on the laws that uh are implicated obviously there is a fact-based determination as to any sort of law that cryptocurrencies or digital currencies have to comply with um this is obviously something that the cfpb is working with the other regulators on but i will tell you where digital payments is involved the electronic fund transfer act is a key law with key consumer protections obviously the gram leach bliley act the privacy provisions of that are a key law that we enforce this is part of the reason the bureau issued orders to the tech companies about how they are trafficking payments what data they are collecting how they are using it how they are engaged in you know surveillance or denial of service um all of those matter and i think there's some intersections there with digital currencies as well i i i don't like using absolute terms but uh paraphrase what you just said do you see your the cfpb's only lane as being in terms of the in terms of the payments um i would need to review all of our laws there there may be certain circumstances um where there may be lending go involved i need to really think through that and get back to you on it um i do want to make sure that we are guarding our payment system and taking care of the consumer protections um that you all have passed fair enough in your prior role at the ftc almost two years ago in november of 2019 you commented on the fed now service you may remember i'm i'm quoting from the opening paragraph of your comment you said you want to you like to outline support for the federal reserve's proposal to develop the fed now service a new round-the-clock real-time payment system the proposal is a natural extension of the federal reserve's existing role in check clearing wire transfers and the automated clearing cal system a private mega bank monopoly over our faster payment system would suppress innovation and distort incentives in our markets the federal reserve should not seed control of the plumbing of our future payment systems to wall street now that was that was in your in your prior role in your current role what what do you see as the cfpb's role as it relates to the fed now service if any that's a good question i think the extent to which they're creating the fed now service i think we can serve as appropriate as experts on consumer protection within the federal reserve system i know this is an area of great importance to our local financial institutions and community banks the cfpb has a community bank advisory committee that you know i want to engage on payments issues but obviously our core is the consumer protection laws and there are certain places perhaps related to fraud or error resolution where we may have relative expertise is there potential for the fed now service to if you will crowd out the private sect private sector i would have a tough time seeing that i think our payments ecosystem is always going to be diverse there's going to be many different ways in which money is transferred i do think from a national security perspective and global competitiveness we need to have faster payments in our country i think the fact that we're being beaten out when it comes to speedy payments by china and others is a concern for me so i think it's really the public sector and the private sector all have to really work to make sure that we can compete in that way thank you director in your prior life maybe in your current life also you were a prolific tweeter almost like a member of congress uh march of last year march 6th your tweet it's time to end the era of law breaking mega banks their empire building brought our economy to the brink their scale made them too big to fail and their executives have turned boring banking into a risky business model built to break the law two questions who are you talking about and secondly is it within your purview to quote in the law breaking mega banks well i have to tell you one of the things that bothers me so much is when small players break the law they get shut down and when the large players repeatedly break the law it feels like nothing happens in my testimony i submitted one of the areas that is going to be a focus for me is the issue of repeat offenders we cannot have a system where a small financial player you know is caught and then totally gets wiped out while a big one gets to just pay fines over and over and over again and the law breaking continues if we find the regulators not just the cfpb but the occ the federal reserve and others that they do not have the managerial acumen and operational plans to follow agency and and federal court orders we have a serious problem there this was my experience in at the ftc where some of the largest players repeatedly violated the law and nothing happened who were the law breaking gentleman's time has expired the gentlewoman from massachusetts miss presley who is also vice chair of the subcommittee on consumer protection in financial institutions is now recognized for five minutes thank you so much and i want to express my gratitude to our chair for a continued commitment to this issue and congratulations to you director chopra it's good to see you i'm excited and grateful that you'll be a partner at the helm of the cfpb i wanted to speak to you about an issue that i've been signing the alarm on uh for over a year now what i know you're very familiar with the issue of educational redlining borrowers who attended an hbcu or other minority serving institutions have faced thousands of dollars in additional charges because of these discriminatory algorithms and we have companies like upstart and stride funding who are practicing educational redlining uh continue to be engaged in this practice in the student loan market and these companies are using information about where borrowers went to school their major or their parents educational attainment to price loans or make credit decisions uh so director shobra um what is the bureau doing to address the risk that black and brown borrowers that arise from the use of algorithm decision-making in lending and the reliance on so-called alternative underwriting criteria such as borrowers educational background so congresswoman there has been a myth that algorithms can be completely neutral in reality many of those algorithms reinforce the biases that already exist i joined the attorney general on friday to talk about how we need to make sure that there's some a level of accountability on algorithmic decision making that we can make determinations about whether the law is being followed and you know a traditional financial institution that uses more traditional methods they shouldn't be held to a standard while others get to hide behind their algorithm so that is something that we will need to look carefully at not just the cfpb but others and i would hate to see that we are reinforcing biases based on the enrollment of a particular school particularly as you mentioned if they went to a historically black college or university thank you director now during the trump administration the bureau renewed a no action letter which allowed upstart to act with impunity under the guise of spurring quote financial innovation unquote with respect to educational redlining and algorithmic bias do you agree um just one more time for the record the discrimination is wrong that no regulator should make capital carve outs that allow people to discriminate i under no circumstances believe any regulator should give a permission slip to engage in illegal discrimination okay wonderful good to hear um uh transitioning uh to a topic um that you're very familiar with i wanted to talk with you about student debt cancellation again to be clear the most efficient way for president biden to provide relief for millions of borrowing families is to provide across the board student debt cancellation we are approaching the mark where those uh payments could uh restart and the fact that we would consider doing such a thing during an ongoing pandemic induced recession is really unconscionable um as you well know there are more than four and ten federal direct loan borrowers would have to be transferred to a new student loan service if these payments resumed director chopra given these simultaneous risks what is the cfpd doing within its oversight authority to ensure that borrowers are not harmed should these payments resume it is very important that just like the chairwoman talked about with mortgage servicing the resumption to repayment um could be really messy and we need to do everything we can to make sure it's not and the same goes for student loans if 40 million people all need to resume payments we will need to make sure that servicers and others are doing so in an orderly and lawful way and i intend to use our tools to contribute to efforts to make sure that they are doing so well thank you for uh that commitment to uh use your oversight authority to ensure that borrowers are not harmed should these payments resume i know unlike president biden you do not personally have the authority to cancel student debt but i do think the cfpb's job would be much easier if the president honored his promise and finally canceled student debt we're speaking about hbcus a moment ago and they those presidents are using their funds uh to cancel student debt because this is a racial justice issue and an economic justice issue uh and one i think a critical to a a just a recovery as well but in closing i look forward to working together to address the unprecedented student loan debt crisis and other issues that my constituents care about like ending discriminatory lending in the housing market debt collection harassment and harmful credit reporting practices uh congratulations once again and thank you thank you ma'am general zwollen simon has expired the gentleman from tennessee mr rose is now recognized for five minutes thank you i want to thank chairwoman waters and ranking member mchenry for holding this hearing and directors chopra thank you for appearing before us and it's good to meet you face to face for this we appreciate you being here for this annual review of the consumer financial protection bureau i'm going to dive right in director chopra the bureau has previously acknowledged the key role that small dollar loans can play in helping consumers meet credit needs usually resulting from unexpected expenses that americans often incur according to the spring 2021 semi-annual report of the bureau what percent of consumer complaints received by the bureau were related to short-term small-dollar loans do you know off the top of your head i don't i think the vast bulk of complaints um i think maybe even 40 to 50 percent relate to credit reporting and debt collection issues that's by far the largest component well it might not surprise you then to learn that the number that the report shows that it was 0.2 or 2 in every 1000 complaints so given the amount of resources that the cfpb has focused on small dollar lenders i was surprised to learn from the bureau's own data that only point two percent of complaints received by the bureau were attributed to short-term or small-dollar lenders um director chopra yes or no do you believe that small dollar lending can play a positive role in helping consumer meet consumers meet their credit needs yes there are many short term liquidity products whether it's a credit card whether it's any sort of small dollar loan of course that plays an important role and it would be good to see many more financial institutions offering them thank you i agree very very much about that switching topics i wanted to discuss the bureau's recently proposed rule and request for public comment for small business lending data collection under the equal credit opportunity act this proposed rule seeks to require covered financial institutions to collect and report to the bureau data on applications for credit for small business as several of my colleagues have noted there is a lot of uncertainty regarding this rule making according to the proposed rule the bureau is aiming to create the first comprehensive database of small business credit applications in the united states if this rule is finalized how will the bureau protect and safeguard the information collected and stored in this government-run database that's a great question so i believe in the notice of proposed rulemaking there is a section on how there will be balancing to protect privacy to protect re-identification risk ultimately the bureau is seeking to implement the statutory directive and there is a court order to do so in a timely fashion um i'm going as i mentioned to one of your colleagues i think there's many ways we can look at uh how we can make sure we're implementing those objectives while also protecting some of the issues you've raised in many ways it's a similar exercise to the home mortgage disclosure act database that currently exists when collects information on mortgage origination but obviously there's some very important differences sure to follow up there on the topic of information security earlier this year the office of inspector general for the cfpb issued a memorandum entitled 2021 major management challenges for the bureau i'm sure you're familiar with that memorandum the memo listed the management challenges in order of significance and the number one challenge number one challenge listed for the bureau was ensuring that an effective information security program is in place the memo noted that although the bureau is working toward implementing effective identity and access management controls challenges to effectively safeguarding sensitive agency data remain the irs is currently trying to get their hands uh on this account data of millions of americans and the cfpb also wants to collect massive amounts of data it seems like the biden administration is attempting a major grab of information why should we trust the government to successfully protect all of this information and can i get a commitment from you that this government-run database will not be live until there is absolute confidence in the security of the system yeah so almost every federal agency right now because of uh many of the cyber attacks from state and non-state actors we all know the united states is a big target and every agency needs to be at the top of its game when it comes to protecting our cyber security there are many many ways in which every agency needs to push forward i i was very closely involved in a lot of the data security issues in my last job at the ftc and i intend to make sure that we not only follow that directive but we're constantly looking for ways to improve general time has expired thank you director chopra and i yield back the gentleman from new york mr taurus is now recognized for five minutes how are you director congratulations on your thank you so much sir um in his executive order advocating for anti-trust reforms president biden called upon the consumer financial protection bureau to complete rulemaking on section 1033 of dodd-frank which as you know establishes the right of consumers to access and transfer their own financial information what is your timetable for finalizing section 1033 rulemaking in accordance with the president's executive order so uh i am very very interested in making sure that consumers are not trapped or stuck in a product they don't want that they can switch that they have more opportunities i think competition is something every agency including the cfpb should promote i want to be able to give you a firm timeline two weeks in i can't do that but there is a process underway there has been an advanced notice of proposed rulemaking we're assessing more we're consulting experts i've been personally trying to learn about the uk's open banking system but i really see this as a great opportunity for all of us but i'm pleased to see that you believe as as i do that consumer control of data is critical to competition and consumer choice uh ensuring open markets if i as a consumer ask a bank to share my financial information with a competing financial institution should the bank be required to comply with that request well as a general matter i think people need to control their personal data i'm very uncomfortable with the surveillance style system that i think we are seeing not just in china but also here where companies are collecting all sorts of highly detailed information on us sometimes without our consent sometimes without our knowledge i actually ask about that um please because it brings to my data aggregators is your agency going to play a greater role in supervising and regulating data aggregators what are your thoughts on that so in some circumstances depending on the activities of them um there are many laws that they have to follow there may be privacy rules there but general supervision and regulation yeah no aggregators are a key part of something we have to look at including to understand the section 1033 rulemaking i'm going to ask you the same question that i asked the sec commissioner about neither admit nor deny settlements and i'll offer a perspective that i've heard from constituents you know if you're a poor kid from the bronx who commits a minor crime and then enters into a plea bargain as part of the process of entering into a plea bargain that young kid would be expected to admit wrongdoing to plead guilty that young kid would likely have a criminal record that would haunt him for much of his life but if a rich corporation defrauds millions of people out of millions of dollars and then enters into a settlement with cfpb that corporation will likely enter into settlement without ever admitting wrongdoing that corporation could move on as if it had done nothing wrong you know financial regulators like sec and cfpb essentially protect corporate bad actors from the consequences of their bad behavior the reputational consequences of their bad behavior does that seem fair to you because it seems unfair to me and it's certainly unfair to the people i represent no and in fact in criminal law it's almost unheard of to be able to allow this kind of outright denial one of the things that i have written about in the past and intend to explore is what is the role of findings and admissions to promote compliance promote fairness in our markets and i i i agree with you i'm uncomfortable with this sort of blanket approach of constant denials of liability so are you committed to either banning the practice or radically reducing the practice well i want to i want to talk about it with you further there are some trade-offs um but i do think we need a policy that actually makes it um figure out when we will actually do it because right now i think it is overused and i think you you referenced that you were studying examples of open finance elsewhere in the world is is is there a country that you look to as a model no for the united states i have to tell you i i want to learn from all of those countries but we have to do something that works for our people we have a much more diverse country we have a large country i'm not wanting to replicate what the chinese or the british are doing we need to do something that is uniquely ours and that suits our people and our financial system my time is about to expire so again congratulations on your appointment thank you sir the gentleman yells back the gentleman from north carolina mr budd is now recognized for five minutes i thank the chair and director thanks for being here in person today and congrats on your new role um director chopra under former director cordray the bureau was notorious for carrying out regulation by enforcement essentially the bureau expected financial services providers to figure out the rules based on press releases and announcing enforcement actions instead of providing ahead of time clear guidance or actual rule makings on the front end so in your confirmation hearing i think it's relevant and this is your quote i also will commit that the cfpb in every federal agency should be focused on fixing harms making it clear to market participants what's expected of them end quote so will you commit to avoiding the practice of regulation by enforcement so i always want to make sure and i've shared with some of your colleagues the best situation is when the law is clear it's easy to administer easy to follow easy to enforce so i do aspire with respect to our laws to be able to make sure it's durable understandable but we will also need to enforce the law as written and how the congress has written that statute it's not we don't have the ability to veto laws we do have to administer the laws you pass and i want to make sure that it is uh understandable um and that we can figure out ways to do that sure but the kind of the question is regulation by enforcement when there's an unknown out there where there's lack of clarity where the standard that you just mentioned isn't there and then all of a sudden there's there's regulation through the mechanism of enforcement and do you see any problems with that approach well regulation by enforcement i think what i shared with one of your colleagues is i think we need to go up and focus our resources against large players engaged in wide-scale harms i don't believe in strong-arming small businesses into settlements to create some sort of law i think we need to litigate more and we need to make sure that the courts are developing the law with us so that that creates more understanding and greater jurisprudence do you agree do you agree that there should be clarity ahead of time before they're before they're attacked by regulation by enforcement do you think they should have had a standard ahead of time rather than some enforcement mechanism uh just regulation through enforcement also there's an enforcement without having a clarity ahead of time well in in the context of a litigation a court would not say that a firm is liable if it did not believe if it was violating the law so we also have to enforce the laws you have written and in many cases we can develop it further but we can't just stop enforcing a law that you all have told us to enforce thank you i want to shift gears i know a lot of my colleagues have asked about this today and it's become quite popular but you mentioned earlier today that there are interagency discussions between fed chairman powell and treasury secretary yellen on the regulation of cryptocurrency and stable coins but chairman powell told me sitting at that very desk um earlier this month that he had no intention to ban or over regulate cryptocurrency so director do you have a different view than chairman powell on the regulation of cryptocurrency sorry if i misspoke i thought what i said to your colleague was that the issue of virtual currencies stable coins cryptocurrency it is a subject of discussion um across the administration there is a working group on the president's working group that is covering some of these issues so i apologize if i misspoke earlier i just want to clarify thank you for that uh director as a matter of policy is it your intention to use your regulatory authority to ban or limit the use of cryptocurrency or blockchain technology no no is is yeah i just want to make sure that we're that we're clear see if it's your intention to regulate um or ban the use of cryptocurrency or blockchain technology just so we're using the same that doesn't mean that the cfpb should not be um looking at payments so payments is and this is part of why i issued the orders last week to collect information from the big tech companies some of those laws that we administer may implicate um virtual currencies but as you've asked no i don't have the intention but i do want to make sure we're administering the laws that protect our payment system that's fine but you do not have an intention to ban or limit the use of cryptocurrency or blockchain technology as a whole no okay thank you i yield back gentlemen yields back the gentleman from massachusetts mr lynch who is also the chair of the task force on financial technology is now recognized for five minutes thank you madam chair uh welcome uh director good to see you and uh congratulations on your appointment uh i know that some of my colleagues have raised this issue uh previously but i did want to talk about something i uniquely uh believed that uh both my my friends on the other side of the aisle as well as my fellow democrats uh believe is important um and that is uh that consumers own their own data and they should have control over their their data um and i know that you're you're engaged in a rule making on on uh dodd-frank 1033. um do you have a time frame in terms of uh you know being two weeks in i don't um but i will share with you as i shared with others that i think this is a real um opportunity to create more competition to create more opportunities and i'm going to be reviewing the work to date um to see what we can accomplish but i apologize that i don't have a timeline at this point yeah yeah i i know you did you did in section 3.5 of your your annual report you did have a vague reference to the ongoing uh uh comment period but uh as you know uh this industry is moving at light speed and we are standing still so um i would just implore you to move quickly yeah please i i hear that i'm hearing that from everybody um we want to go through and understand how to do it right i really encourage you and others um you know to have discussions with us on the objectives you see i really see promoting competition promoting choice um allowing new entrants to be able to challenge dominant players to be able to give people more options um as as critical to this i i am uh keenly interested in in consumer protection like like you uh and and i'm wondering as we look at 1033 and and the rulemaking does the gdpr offer any uh instruction uh to how we handle consumers uh privacy i mean gdpr offers you know the ownership and access to information the portability of information from one institution to another the right to be forgotten the right to rectification are those are those elements that you would would embrace in terms of our own response i need to give that some more thought i think the gdpr and frankly other state laws in the u.s that are about privacy and greater control of data are something that you know as you said has been evolving i think some of those principles about control and moving market power toward a family so that they have more bargaining leverage they have more ability to protect their data too i think that's that's all right look i i do appreciate what the states have done and are doing my own state uh our uh secretary of state bill galvin has done a wonderful job on this uh in in protecting consumers but i do think there should be a a you know a unified baseline and if states want to do more in their particular jurisdictions uh they they have that right but i think it would be much better for a a cohesive and and competitive industry if we did have a uh a common set of standards that uh fintech country companies uh could uh could adhere to and and uh you know i think it would move us all forward in a very positive way i'm just wondering uh as well whether glba uh offers uh enough protections from a statutory standpoint um you know or whether something additional is needed no the glba privacy provisions are are outdated yeah i don't personally of course we will enforce that law we will and make sure administer it i personally do not believe that the glba privacy provisions are working effectively okay well that's great uh again i i welcome your your uh invitation to be engaged on this issue i wish you the very best it is it's great to have you uh with your background in this position i thank you for your willingness to serve uh we got a lot of work to do madam chair i yield back the gentleman yields back the gentleman from west virginia mr mooney is now recognized for five minutes mr mike thank you uh thank you madam chairwoman and director chopra for coming here today congratulations on your confirmation in the past the consumer finance protection bureau has taken a punish first and asked questions later approach under former director corduray's leadership enforcement actions had to be reined in after the fact by the courts this kind of approach makes it more challenging for businesses large and small to understand the rules they need to follow when the rules are confusing or enforced unevenly businesses pour resources into compliance and attorneys it's better for everyone consumers included if they can use those resources to create more jobs and expand their business although you're newly sworn in as director we know that you're not new to the cfpb you serve her as assistant director under mr corduray and help steal the bureau during that era my concern is that as director you'll take the same approach to enforcement as quarter a uh earlier today you did commit to ranking member mchenry to follow the notice and comment apa rulemaking process i was pleased to hear that and i hope you'll stick to that commitment so director in january the cfpb finalized a joint agency rule clarifying that supervisory guidance is non-binding do you agree that super supervisory guidance does not carry the force of law and you commit to follow your agency's january rule yes uh just to be clear i as i understand that was a interagency rulemaking clarifying that supervisory guidance is you know not enforceable in a court does not carry the force of law frankly i think that's been agency practice forever um but it is now in regulation okay good to have that clear also director chopra in your testimony you mentioned that restoring relationship banking is a priority for you can you can you explain what you mean when you say that you want to emphasize relationship banking and how would the cfpb play a role in that goal so i am very concerned that there are many many situations where consumers have no place to turn in order to get help you know the credit reporting industry is a great example of this where consumers are not really the customer they're the product they're it's their data that's being bought and sold so they know those bureaus may not necessarily have the market incentive to serve consumers well whereas many financial institutions especially local ones that serve their communities they have repeat business they [Music] know their local communities i think we are um disadvantaged as a country the more relationship banking goes away and i think i want to under figure out what we can do to revitalize that so that there's a greater sense about the customer having more leverage and and and the institutions being more responsive to them and i think there's some places where institutions simply are not adequately responsive to customers and their needs and i think we all can play a role in figuring out what we should do to restore that we need that for the resilience of our country thank you and you mentioned earlier choice and competition which i also i think does benefit consumers i agree with you on that uh in your testimony you outlined a host of priorities for the cfpb under your leadership notice and comment rulemaking forces regulators to take their time and listen to the public before finalizing regulations and a comment period is important for getting these rules right as you begin to take action on these priorities i'd remind you that congress makes the laws not the agencies and you said that earlier in your testimony that we make the laws and you're enforcing them and therefore it's not within your power to create new policy and avoid the notice and comment rule making process i would also echo some of my colleagues comments today on the issue of regulation by enforcement before pursuing penalties it's important to ask whether the rules are clear if they're not then enforcement action is not likely appropriate thank you madam chair and i yield back the balance of my time the gentleman yields back the gentlewoman from north carolina miss adams is now recognized for five minutes uh thank you thank you chairwoman uh for holding the meeting today and to um director chopra thank you for being with us today i know you were just sworn in a few weeks ago so i want to echo the sentiments of my colleagues and say it's nice to have someone like you behind the wheel of the consumer financial protection bureau so uh director for 40 years i was a professor at bennett college in greensboro north carolina college for women and that's why it's so concerning to me that higher education has become so expensive for so many to the point of putting it out of reach for many and i do want to just commend my colleagues from massachusetts who uh spoke about uh student debt and so forth earlier but it's why the failures of the pslf program are at the top of my mind so uh can you um uh it's a point do you plan to ensure that the bureau is committed to helping our dedicated public service workers access the student loan relief that they were promoted under the public service loan forgiveness program yes ma'am so a cfpb report from many years ago underscored very severe challenges that borrowers were facing in enrolling this statutorily authorized program i understand ma'am that there's been some changes that the department of education is announcing to ensure greater enrollments but in as much that firms are lying to borrowers about that program to discourage them or dissuade them that's how that obviously can be in violation of the law so you have my commitment that we will work with the department of education and others to make sure that that program is meeting the directives of congress great well thank you so much for that it is an important issue and we want to make sure that they are protected but let me switch gears for a moment and ask about for-profit institutions of higher education there are plenty of good actors in the for profit space i want to say that and i know that you're standing up uh or you're standing up start standing starting up a a new enforcement unit within ssa so how do you plan to collaborate with the education department to hold predatory for-profit schools accountable for student outcomes that's a great question so to be clear the cfpb's jurisdiction is not necessarily related to schools it's related to the offering of financial services so in the past the cfpb has done enforcement work in this area particularly where those schools are offering lending products recently the federal trade commission also announced some work to be able to trigger penalties and sanctions against those schools that lie about certain types of earnings representations obviously we want to make sure that public resources are being used efficiently and that we're coordinating across the board there's some existing memoranda of understanding and i will certainly look to determine whether anything needs to be updated to ensure that there's adequate cooperation with that office that you've referenced right you know the rise of interest in cryptocurrency has led to an increase in complaints submitted to the cfpb a lot of folks in congress are considering legislators proposed to regulate and and oversee this crypto market and to protect consumers so what role does the cfpb play in overseeing the crypto market and all that plans to work with sec and chief enzo so as i reference as some of your colleagues obviously the change in the payments landscape is one that everyone is paying close attention to last week the cfpb issued a set of orders to facebook apple google amazon and others to gain information on their business practices related to their payment platforms of course some of the most of those payment platforms are primarily using the us dollar but of course um there has been discussions in the marketplace about big tech also offering virtual currencies um we will obviously be working with all the regulators to make sure that our payment system is fair fast and competitive okay so what types of complaints would push you to begin examining possible deceitful practices when consumers are buying selling and trading crypto products so um we do know that there is a good amount of fraud in this marketplace in some cases that implicates um you know various state law enforcement various federal law enforcement there has been an uptick in those complaints so um i i will make sure that we review that sir i'm i'm out of time and i need to yield back we'll send it to him right thank you madam cheer you back thank you very much uh the gentleman from wisconsin's mr style is now recognized for five minutes thank you very much madam chairwoman director thank you for being here today i'm glad we get the chance uh to question you early on in your tenure at the cfpb i want to ask to start with a pretty straightforward question related to the limits of the bureau's authority does the cfpb possess regulatory oversight over insurance products or insurance companies so um there's actually in this statute a specific exemption entitled the authority uh for the business of insurance business of insurance is is defined there so no perfect thank you very much let me let me continue on the cfpb has udaap authority uh with the two a's that's unfair deceptive abusive acts and practices as you know but for those listening at home i think it's important to say it for many years the cfpb seemed content with the uncertain definition of the term abusive leaving the term vaguely defined allowed the bureau to regulate by enforcement this has created real uncertainty for businesses and it stretched into and it stretched the cfpb's authority into new areas and i was encouraged when the cfpb issued a policy statement in january 24 2020 providing a framework for how it would apply the abusiveness standard in that statement the bureau outlined clear principles explaining how and when it would rely on abusiveness to take a regulatory or supervisory action i understand your predecessor your predecessor in his acting capacity withdrew the policy statement and so i want to build on ranking member mchenry's in my colleague mr barr's comments earlier on this issue when he asked if you would restore the previous abusive statement or provide a new one you suggested it wasn't necessary why is that i don't think they suggest it wasn't necessary i think i said the abusive policy statement that was rescinded by my predecessor i don't think it provided much of an analytical framework at all what it said was that it would not plead even when they believed there was a law violation abusive if it was also pled as unfair during certain circumstances i don't think that's appropriate at all that suggests that the agency can somehow you know veto legislation that congress has passed congress has put forth a number of prongs that would involve a prohibited abusive practice i do though have a view that it's important for the cfpb to create a develop a durable abusive jurisprudence there's many ways in which we can do this but certainly the policy statement that was issued would not accomplish that let me lim with our with our limited time you're saying there's many ways that you could do this are you looking to go and litigate this through the courts are you planning to put forward a new policy statement on this to give clarity i think all options are on the table there's many ways in which agencies can help develop and clarify the law a bedrock of the american system is our common law system in our in our courts courts can review they can issue opinions we we look at precedent but also administrative agencies have the ability to issue policy statements interpretive rules guidance and formal rules as well so i think we can look at all of those it's going to be you know based on the facts and circumstances there are certain triggers where congress has required the cfpb to issue rules under udap one is to have state ag enforcement against national banks and the second is for ftc enforcement against non-banks but as it stands there are many ways to do that but i do not agree that the policy statement that was previously issued offered much clarity at all well we'll respectfully disagree on that point and that's okay i suppose for today's hearing uh but i will caution that i think there's real concern uh for the for the for the certainty that's needed in the market uh to not move back to try to define this through a judicial process in enforcement um through regulation by enforcement i think there's some real concerns there let me shift gears once again in our in our short remaining time last we've discussed the value of predicted data to make important credit and underwriting decisions i'm a big believer that more data is better allowing us to really provide credit to underserved communities it can also help us control risk get more substantial or more stable financial systems do you believe that more data is helpful will help those who are struggling to obtain credit i think it depends it often can lead to better credit decisions what i worry about is when there's no transparency at all in how the decision was made and then so we have a two-tiered system where the local bank serving their community is held to account and the algorithm maker or lender depending on that who can't even explain sometimes how a decision was made doesn't have to adhere to i don't think that's fair but i think we want to make sure that we have an approach on how algorithms machine learning and ai um are doing their work thank you for your on your your testimony today recognizing the time i yield back thank you sir the gentlewoman from pennsylvania ms dean is now recognized for five minutes thank you madam chair uh for recognizing me and director chopra we are delighted to have you here today to echo my colleagues thank you for coming before us and congratulations uh on your confirmation and appointment to cfpb director i'm especially uh thankful that the former student loan ombudsman is now the bureau director um i want to associate myself with representatives axne and presley in some of their remarks and questions uh and to that end some of the latest federal student loan servicers or excuse me the largest federal student loan servicers currently servicing federal student loan borrowers are ending or transferring their contracts with the department of education they include naviant fia and granite state this is in addition to the end of the cares act forbearance on federal student loan payments back in january given these companies checkered record of servicing borrowers i am worried that both of these transitions could leave borrowers confused or without proper communication tools causing potential record-keeping mistakes or the potential for increased defaults directors chopra and i recognize you're on the job uh two weeks but with great depth of experience uh how are you and the cfpb working or developing uh to work on plans to ensure that borrowers are protected as their loan services are changed thank you so much for this question you know sloppy servicing when it comes to student loans has caused real pain for people the errors that have been in their accounts it has sometimes even spawned scams because people can't actually get things fixed so it you know these bad actors come and prey upon them i think when it comes to large servicing transfers we're going to have to work carefully with all the regulators but especially the education department for the federal student loan book because there needs to be an appropriate set of preparation for testing moving records with fidelity if we have systemic errors um in that transfer and you know i don't know maybe there are already systemic errors with some of their books but if it gets worse and creates more disruptions or is unfairly penalizing people it will create a lot of hardship and many of those are younger people who are just starting out in life so you have my commitment that we will use our tools and work with the other agencies to make sure we limit that exposure thank you for your focus on that and you're absolutely right i worry about the transfer of records that are already corrupted or inaccurate do you have the resources you need to make sure these transitions are made or to to monitor and review how servicers are communicating with borrowers as they leave one servicer and move to another well resources are always very constrained and will have to be agile when it comes to you know what we're facing especially in the mortgage and student loan market two of our biggest markets for of of debt that's owed by families yeah thank you very much for that uh promise uh during the trump administration i was concerned as i sat here on financial services committee about their proposal to require the position of the student loan ombudsman to be reframed as the private education student loan ombudsman under your leadership will the student loan ombudsmen coordinate with the department of education and once again provide support and guidance for all borrowers not just private student loan borrowers yes i'm going to assess uh where we are with the activities related to our work and for students and borrowers and including the ombudsman's office to make sure that it's not necessarily it's looking at the market in totality because we need to understand the full market not just one part of it exactly right uh and and again i will echo my concern that you have the resources you need for these extraordinarily important uh economic tasks and oversight and i share your concern about that and and i will be sure to work with you and report back further wonderful thank you that's great and final question uh one specific instance on the private student loan space that i've been working on is the discharge of private student loans in the case of total and permanent disability of a borrower a protection that exists for federal student loan borrowers this actually came to us by way of a constituent would you support efforts to ensure that this type of discharge is required on private student loans ensuring that those in a seriously dire health situation do not have to be burdened by cascading debt so many years ago the cfpb put together a report on the auto defaults that were occurring when a borrower's often parent or grandparent died and they were immediately thrown into default it was a gruesome practice that i think was totally unacceptable but with respect to an individual's disability or death i think i need to look at our authorities on that i'm happy to get back to you but i know some lenders are offering that others are not and it is a huge shock to people when they're when their parent gets a bill for the whole balance exactly i thank you madam chair you're back thank you the gentleman from texas mr gordon is now recognized for five minutes thank you madam chair there are countless examples of big tech companies shutting down competition and controlling the flow of information and free speech across the globe many have argued federal regulators in congress missed the boat by allowing these tech companies to turn into the monopolies we have today as one policy maker said big tech companies can migrate from too small to care to too big to ignore to too big to fail very quickly around the world big tech companies accounted for 700 billion dollars of credit in 2020 which is a 40 increase on the prior year additionally these big tech companies have come to account for 94 percent of mobile payments in china in just a few years i want to caution the financial services industry that while working with big tech may look appealing now you're making a deal with the devil director if big tech companies continue to operate unregulated in the financial services industry like they have in other sectors do you have concerns they could eventually have a monopoly in yet another industry yes i am worried that the big tech companies are coming for financial services and while obviously we want technological progress and innovation i'm uncomfortable with us not knowing almost anything about what they're up to including their data surveillance and as you mentioned how they decide who gets kicked off how are they going to use their own incentives to make decisions this is why the cfpb has issued orders to facebook apple google amazon and others we need to understand this because this is an issue of consumer protection systemic risk and the protection of our country writ large it is something that i think this whole committee i hope we can all work together on this because it is something we need to get right i agree totally and thank you as a former ftc commissioner you bring a unique perspective to the cfpb do you believe federal regulators like the ftc and cfpb have the necessary tools to monitor big tech that's a good question [Music] i certainly want to look at every tool we have as it relates to how they're entering into financial services but as you know most of those tech companies are not subject to supervision the way the banks are so i need to think about that more i will say that it is a very very difficult circumstance i think we find ourselves in where a new market entrant has to constantly have the fear that one of those companies will just turn them off one day i don't think that's very good and what i see what is happening in china actually it makes me worried i don't think we should go in that direction thank you as also as a former ftc commissioner of course you're familiar with allegations that several of these big tech companies have abused their market dominance at the expense expense of their consumers and their commercial partners which you touched on briefly why in your belief is it appropriate to continue exploring anti-competitive conduct by big tech in your new role as director and what ability does the cfpb have to restrain anti-competitive conduct that it might find in big tech's payment markets so we actually have a different authority it's a different set of laws but many of the concerns are similar so the congress has directed the cfpb to make sure that markets are fair transparent and competitive there are many places in the statute that suggest that competition should be one we really think about innovation so of course i want to be mindful about how i comment because i participated in the decision to file some of those lawsuits and that litigation is ongoing with the ftc but there are many places where regulators should be promoting competition and innovation in ways that are good for small businesses good for families and not just another way for dominant firms to control more and more about our lives thank you and with respect to your efforts against these big tech monopolies i thank you for your work yield back madam chair thank you the gentlewoman from michigan ms talib is now recognized for five minutes thank you so much chairwoman thank you director chopra um i'm so pleased to see cfpb uh december i think 2020 um you all have a final debt collection rule that goes into effect november 30th so i'm really pleased because you know cfpb was just you know established to protect consumers to protect our residents i know there's been a lot of questions about the business sector in certain industries but that's not why we created the cfpb and so i hope we center on the residents and the consumers um and uh as we move forward and prioritizing them director do you think all debt should be treated the same i think the answer is no well good because nearly 20 percent of adults have one or more medical debt cards yes yeah listed on their credit report and 90 of bankruptcies in our country director is due to medical debt uh and did you know that at the height of the pandemic last year the three largest healthcare insurance companies ranked in 10.8 billion in a single quarter while nearly 20 million of our neighbors were became unemployed so director i'm worried i'm worried that the pandemic not only left my residents with emotional trauma but economic distress that could forever alter their ability to thrive because we treat all debt the same i'm sure you are familiar that the december 2020 rule allows for the debt collectors to submit a physical or electro electronic message to the consumer and wait quote reasonable period of time to receive a notice of undeliverability and you're not in your because you know this is very concerning especially because uh baby yesterday she said well we need to do something like so you know that these debt collectors are likely to increase their use of electronic communication to consumers and so director given that digital divide that we have in our country and been exposed i think during the pandemic what steps are cbs cp cfpb taking to implement this rule in a way that protects communities like mine yeah so i i just have to share congresswoman that um what has happened to family balance sheets in many neighborhoods it's been pretty devastating and i think while there has been a recovery for many many neighborhoods and households they are still in deep debt from the struggles they face and so i am worried about them being permanently scarred by that and i think we want if we want an equitable recovery we're going to need to take a very close look at debt collection and credit reports yeah and director you know this some of these emails end up in spam uh some of our folks are not you know broadband internet is not reliable i i'm just really increasingly worried because they are going to check it off and say sent to electronic understood and so please if you can follow up with my office on some of the steps you're going to take in addition you know that the rule would prohibit debt collectors from bringing or threatening to bring legal action to collect a time barred debt very important here however debt collectors often try to deceive consumers in restarting the statute of limitations the center for a responsible lending has argued that cfpb would should go further and outright prohibit the revival of debt bar debt um director will cfpb implement similar protections to prohibit the revival of time bar debt and fool because several states are as you probably know enacted law stating that the partial payments or other acknowledgement of debt would not revive the statute of limitations yeah i am worried that some of this debt is getting bought sold that's right resold resold and um you know investment vehicles are trying to monetize it by squeezing them and collecting debt that is not owed anymore so um i want to take a look at the rule um the rule is going into effect but as i understand the rule does not create any sort of safe harbor for collecting time bar debt yeah but we should work together to prove that yes i would be happy to time our debt and full i mean again more states are acknowledging yes especially with respect to the renewal of statute of limitations that's right finally you know a national consumer law center has suggested cfpb's existing complaint database may not be adequate for tracking new complaints regarding electronic communication such as receiving communication even after opting out or being able to read or open file attachments director does the cfpb plan on adopting new debt collection complaint categories with regards to electronic communications following the december 2020 rule i don't think there's current plans but i would like to explore that because that seems like a good given those changes we need to make sure that sometimes people have a piece of paper we need to make sure they can provide that evidence yeah thank you and and know this i'm working hard with the chairwoman to ban medically necessary debt on people's credit report i think that's going to help a tremendous deal especially with the complaints that you get but again people's um lives are forever altered uh of what debt gets on these credit reports that prohib you know impact employment and housing so thank you and i yield if i may madam chairwoman just on the issue of medical debt on credit reports there has been evidence in the past that it is completely not predictive of other performance and i i'm constantly worried that a patient is in just feels coerced to pay while their insurance company and a hospital are in an endless doom loop and we cannot make with the credit reporting system cannot be a way to extort payments out of patients thank you very much the gentleman from texas mr taylor is now recognized for five minutes thank you madam chair appreciate this director thank you for being here congratulations on your confirmation um if i could just talk to you about your enforcement perspective you've shared a little bit of that during this hearing particularly in your uh statement that repeat offenders should be taken more severe and i certainly concur with you on that point um and the reason i ask you about that in my in my time in the texas legislature dealing with the office of consumer credit which oc o triple c which would slightly analogous to what you do their perspective was if we find something going wrong we're going to work with the business to try to fix it if they keep doing it wrong then we're going to hammer them my experience with your predecessors is that they have the opposite perspective we're going to hammer them every time we're not going to actually try to correct fix help anybody the the problem with that at least as i see it is that then people don't want to talk to you they don't want to tell you what's going on because they're afraid that if they show you show the book so to speak and then you find something they're here to hammer them is it your job to put pelts on the wall or is it your job to make the consumer space safer is it to make the financial services safe space safer for consumers yeah our job is to make it fair transparent and competitive and i'll share with you directly that of course and and there are ways to resolve problems through the confidential supervisory process not all issues need to go to public law enforcement matters but i just want to put a finer point on something which is when someone has been subject to a law enforcement order that they often have consented to where they have agreed to make certain changes and they egregiously or don't follow it i mean this is a very severe problem to me sure and when there is an order in place that order is not a suggestion that is has it is a binding it's the as the force of law and we cannot have large players feel that these are just optional tip lists no i certainly concur with you on that point can i can can i get a do you think it's fair uh that someone is pulled over and told hey this the speed limit here is 20 miles an hour and there are no signs on the road is that fair there are no signs of any kind and i totally hear your point on this that people should you know not be harshly penalized for something that was not clear and of course you know that the law does specify a number of factors that the bureau must adhere to when seeking those penalties those are reviewable by the courts and so we have to make sure that we are applying those factors fairly and and i share the view that when there is um you know an honest desire to play by the rules it's it's not appropriate to kind of harshly penalize that and that's what the factors in the law push us to do and i guess what i'm asking is for you to allow the rules you make to season i mean to have a chance for people to know about them i have seen agencies not yours but i've seen agencies produce rules in the middle of the enforcement saying we got you here's this new rule you've never seen it before you're seeing it now and you're wrong and i think you and i would agree that's unfair to that potential it would also you know this the fact pattern you mentioned may actually be unconstitutional and that you know there is the in the legal process when going to court a court will assess you know the entire notice issues a number of factors so this is why i raised with some of your colleagues the importance of the cfpb focusing on large market actors causing widespread harm of course they'll be smaller players that may need to be addressed and i'm sure the enforcement docket and there's a lot of backlog but generally we should be focusing those resources against those who we know they know the rules they know the law they're well resourced they can fight in court um but going after small players you know this is just i saw this too much at the ftc um under republicans and democrats and and i just it didn't sit well with me at all sure in in my final 30 seconds i'll just share my own thought on why smaller players are having a more difficult time operating the market and i think actually mr hill mentioned that in his in his uh cockpit with you is that the the increased regulations as a result of dodd-frank have created a very difficult environment for smaller financial institutions speaking speaking of banks uh you know when dodd-frank passed there were about they're about 8 500 banks the united states are now about 5 000. and that that compression that smaller group of banks they're all bigger the average size of banks has gone up is the only way to survive financially is to consolidate be bigger so that you have a bigger core of assets to handle the regulatory burden that's been thrust upon them by this body madam chair i yield back thank you thank you sir the gentleman from illinois mr garcia is now recognized for five minutes thank you madam chair and the ranking member for holding this important hearing and of course i want to thank director chopra for your service at the cfpb and for joining us today i can say the cfpb is in good hands a financial regulatory agency focused on consumers is crucial it's easy for other financial regulators to forget that in every loan every refinancing every repossession every deposit every fee we're talking about a family home or the car they use to get to work or cash for groceries the cfpb doesn't forget that and that's critical consumer data is an important issue in almost every industry but it's particularly important for the financial industry because who knows more about you than your bank this is one reason why the his the historic separation of banking and commerce has become more important in the 21st century not less the trust and data access in a banking relationship is dangerous in the hands of a commercial company not only for customers but for commercial markets and competition in february of this year the fdic issued an order subjecting uh ilc's to the privacy standards in the graham lychee bliley act but the debt protection doesn't extend to their parent companies mr chopra as you know and other committees uh congress has extensively covered uh just how aggressive and invasive companies like facebook and amazon are with customer data questions is if these companies own the bank through an ilc would it be hard for regulators like the cfpb or fdic to tell if they truly kept consumer data in the bank behind a firewall and do you think that this lack of oversight could pose a real risk to consumers and competitors sir firewalls are extremely difficult to monitor in force and once they're breached it's almost impossible to undo so you know with respect to your question about particularly tech companies getting into financial services and the un imaginable amounts of data that they collect on all of us it would be very hard to administer that thank you for that succinct response i represent a working class immigrant district in chicago remittances mean a lot to my constituents and to their families in other countries we know the problem with our remittance system but cryptocurrencies are coming into the market fast el salvador adopted bitcoin as a national currency facebook is launching a new digital currency under the guise of sending remittances between the us and guatemala is the cfpb examining cryptocurrency as a consumer financial product and what laws rules and regulations must be in place to protect consumers seeking services like remittances so the electronic funds transfer act and its implementing regulations including the remittance rule that was required by congress govern remittance transfers you know congressman it's obviously something that's changing very very rapidly about how families are sending money to their families especially those families overseas i think we want a remittance market that is fast fair cheap um i don't have an exact answer for you at this point it's only been two weeks but i hear you loud and clear that we need to make sure we fully understand the changes in the market so that we can administer our enforcement and that we can make sure that those families are protected uh fair enough it has only been two weeks i hope to follow up uh on this uh subject with you it affects many people in many communities throughout the country uh a diverse immigrant community that uh you know is engaged in remittances very deeply uh thank you so much and i wish you a really good luck in your position sir thank you so much yieldback manager thank you the gentleman from south carolina mr timmins is recognized for five minutes thank you madam chair and congratulations director shopper on your recent confirmation i hope we can find some areas to work together on to serve the american people in the coming years i'm going to start with a question about post post offices uh do you know how many complaints the cfpb has received about the united states post office this year probably yeah mail delivery you got a lot of people sending bills allegedly nobody's getting them i've had some issues myself it is an issue i i do believe maybe you can look into it get back to me but um you know all these efficiencies and the arguable incompetence of the post office have resulted in many of my constituents and my colleagues constituents across the country having late payments to creditors i've recently discovered that despite the post office's inability to accomplish their mission of delivering the mail in a timely manner many people now want them to offer financial services products that would compete with the private sector so would you agree or would you not agree that the post office maybe ought to focus simply on delivering the mail to make sure that our constituents have their payments delivered on time instead of expanding in areas that distract from their core mission well i don't have a view on your specific question i do know that the post office has been looking to change and make sure it's more financially sustainable by offering ancillary services by leveraging their existing post office footprint i do understand that there's some places where they sell prepaid cards or were they um maybe helping with money orders or other sorts of transfers but i i i take your point um it's not an area that i've studied very carefully sure i have a gym in a yoga studio i really hope the federal government doesn't start paying to allow people to work out for free and you know do yoga but moving on to a different topic many enforcement actions issued recently by the bureau have named company owners by name the reason for these allegations appears to simply be the fact of ownership of a business this would appear to penalize small businesses small business owners over public companies whose shareholders and ceos are not being named in cfpb enforcement actions and lawsuits earlier today you talked about how enforcement actions against smaller players often kills their business while having a much more marginal impact on larger players so it would appear that you might agree this discrepancy should end will you commit to naming individuals only in circumstances where facts show those people actually committed unlawful acts yeah this is actually a very important issue i think one of my experiences as a regulator including at the federal trade commission which was the ftc essentially said if you're a small company we're naming we're naming the individuals if it's a big firm whatever we took big steps to change that i vigorously opposed the ftc settlement that gave mark zuckerberg in the facebook manner an immunity clause you have my commitment that when it comes to large financial institutions if there is evidence to suggest that individuals who are involved in directing law breaking we will look to determine whether to name them and conversely perhaps stop naming individuals with small businesses unless they in fact were possibly uh well of course we should we should not name an individual unless we have reason to believe in the evidence to suggest that and to the extent there is a discrepancy between how we're treating small businesses and big businesses i agree that we have not paid enough attention to individual liability on large firms and i take your point on the small firm aspect sure i really do appreciate that answer um one more question can you commit to publicly releasing all of the facts and data that are used to support your decisions during the rulemaking and enforcement process um just a transparency component i think with respect to that question there may be places where we are not able to release all of the information there's rules governing that as particularly in the enforcement process and supervisory process here's one thing i am trying to do for certain types of matters in addition to just you know a press release i've also uh have been trying in certain circumstances to issue an accompanying statement that outlines some of the logic and analytical framework that was used we recently did an enforcement action where i explained um a little bit more about the claims and counts that were in it so i i agree with you on wanting to be more transparent and communicate more but i i we have to respect laws wherever possible um the helping people understand that the decision making is helpful thank you for being here today and uh madam chairwoman i yield back thank you thank you the gentleman from texas the gentlewoman from texas ms garcia who is also the vice chair of the subcommittee on diversity and inclusion is now recognized for five minutes thank you madam chair and um i too want to add my congratulations to the director and hopefully to work with you in the next couple of years as we work through some of these processes in my district which is very similar to mr garcia of chicago financial services are not broadly used in fact many still rely on credit more rely more on credit unions check cashing services remittances money orders and still a lot of cash activity we're a community of hardworking diverse families who rely on critical financial services only to try usually to excess credit and as you know access to credit is also about accumulating wealth uh so for us it it means that without all of that closing and and being able to access that credit we'll never do much about reducing the racial wealth gap i think you're you've talked about that some and the equal credit opportunity act allows institutions to develop special purpose credit programs sbcps which include tailored approaches to meet the credit needs of and directly benefit economically and socially disadvantaged groups again my district is about 77 latino it's over 50 percent disadvantaged according to recent reports by the national fair housing alliance in the national consumer law center spcps can be critical tools for addressing the legacy of discrimination in the mortgage market promoting equity and inclusion and closing the racial wealth gap last december the cfpb issued an advisory opinion promoting the use of spcp programs among creditors what steps has the cfpb taken to facilitate the use of these programs in the financial marketplace it's a great question and i want to share i share this interest completely about how we can both simultaneously increase trust in the financial system but also make sure that the financial system isn't widening inequities and gaps but is actually part of closing it and part of making sure that everyone can access the opportunities that they seek to particularly when it comes to housing i've i'm going to ask the staff to give me more of a review of the use of special purpose credit programs it's something i know that i'll be keen to talk to the other regulators in the treasury department about but i do think it is one of many ways that we can ensure there is not discriminatory lending but also take steps to reverse some of the you know disgusting redlining practices of the past right and um and just to be clear you are the head of the consumer financial protection bureau right emphasis on consumers that's exactly right so what are you doing to ensure that your agency is is inclusive and diverse um in its practices in its programs uh and specifically i'm always concerned about financial literacy and in materials from your agency and in programming that would be be reflective of the language the language spoken in around different languages spoken around the country yeah there's a lot of language barriers in financial transactions there is and i think we should be embracing the fact that a strength of our country is um you know having so many people from all over the world and being able to engage in commerce and banking in a way that they can understand and is comfortable i do want to look at our authorities to be able to support those institutions who share that points of view being inclusive it's not just about having you know one one brochure in spanish it has to go much much farther than that so um i don't have a great specific answer for you right now but i completely share um what you're saying and and i'm going to think more and look into what what authorities we have to advance that goal right but within your own materials your own implementation of some of your programs you will work to ensure that they are reflective of the language that is spoken in the different parts of the country that's right and i want to make sure in particular i've set a goal that our consumer complaints should be broadly reflective in terms of the geographies that we serve across our country and including the languages we serve already we image in the past there has been more languages where consumers can call file complaints i want to see how that's going well thank you and i see my time is up i yield back thank you very much the gentleman from massachusetts mr arkhan claus who is also the vice chair of the full committee is now recognized for five minutes i understand that mr achenkloss has left the room um so at this time i'd like to thank our very distinguished witness for his testimony today without objection all members will have five legislative days within which to submit additional written questions for the witness to the chair which will be forwarded to the witness for this response i asked director chopra to please respond as properly as you're able without objection all members will

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Published: Wed Oct 27 2021